SCG Contracts (India) Pvt. Ltd. v. K.S. Chamankar Infrastructure Pvt. Ltd.

Supreme Court of India, 12 February 2019, 2 judges

The 120-day limit for filing a written statement under Order V Rule 1 and Order VIII Rules 1 and 10 CPC, as amended by the Commercial Courts Act, 2015, is mandatory; courts cannot extend it, even under Section 151.

Facts

A suit filed on 10 March 2017 claimed about Rs. 6.95 crores. Defendant No. 1 was served on 14 July 2017, and 120 days expired on 11 November 2017 without a written statement, though an Order VII Rule 11 application had been filed. On 5 December 2017 a Single Judge rejected that application and extended time to 15 December 2017 on payment of costs, and the written statement was filed that day. On the plaintiff's later application, another Single Judge on 24 September 2018 directed that the written statement be taken on record because the earlier order had become final. The plaintiff appealed against both orders.

Questions before the Court

Is the 120-day period for filing a written statement, under the provisos to Order V Rule 1 and Order VIII Rules 1 and 10 CPC as amended by the Commercial Courts Act, 2015, mandatory?
Can the court allow a written statement after 120 days by relying on its inherent power under Section 151 CPC, on the act of court doctrine, or on res judicata?

What the Court held

After the amendments by the Commercial Courts Act, 2015, a written statement must ordinarily be filed within 30 days, with a further 90 days at the court's discretion for recorded reasons and on costs. Beyond 120 days from service of summons the defendant forfeits the right and the court shall not take the written statement on record.
These provisions are mandatory, as the Delhi High Court had held. The earlier decisions in Bhanu Kumar Jain and Shaikh Salim dealt with the pre-amendment position and did not help the defendant.
Order VII Rule 11 proceedings are independent of filing a written statement. The clear and mandatory provisions cannot be circumvented by the inherent power under Section 151 CPC, and the act of court doctrine cannot apply where the order is under challenge.
Res judicata cannot stand in the way where an erroneous decision fails to give effect to a statutory prohibition. Both orders were set aside and the written statement directed to be taken off the record.

Why it matters

The judgment holds that the 120-day outer limit for a written statement under the provisions of the Code of Civil Procedure as amended by the Commercial Courts Act, 2015 is mandatory, with forfeiture of the right as the statutory consequence, and that neither inherent powers, a pending Order VII Rule 11 application nor res judicata permits a court to take a late written statement on record.

In the Court's words

Copied from the official judgment; each passage links to its page.

“What is of great importance is the fact that beyond 120 days from the date of service of summons, the defendant shall forfeit the right to file the written statement and the Court shall not allow the written statement to be taken on record. This is further buttressed by the proviso in Order VIII Rule 10 also adding that the Court has no further power to extend the time beyond this period of 120 days.”

R.F. Nariman, J.Page 6 of the judgment

“We are of the view that the view taken by the Delhi High Court in these judgments is correct in view of the fact that the consequence of forfeiting a right to file the written statement; non-extension of any further time; and the fact that the Court shall not allow the written statement to be taken on record all points to the fact that the earlier law on Order VIII Rule 1 on the filing of written statement under Order VIII Rule 1 has now been set at naught.”

R.F. Nariman, J.Page 7 of the judgment

“Clearly, the clear, definite and mandatory provisions of Order V read with Order VIII Rule 1 and 10 cannot be circumvented by recourse to the inherent power under Section 151 to do the opposite of what is stated therein.”

R.F. Nariman, J.Page 10 of the judgment

Provisions interpreted

Case and bench

Parties: M/s SCG Contracts India Pvt. Ltd. v. K.S. Chamankar Infrastructure Pvt. Ltd. & Ors.
Case: Civil Appeal No. 1638 of 2019 (arising out of Special Leave Petition (C) No. 103 of 2019)
Decided: 12 February 2019
Bench: Rohinton Fali Nariman, Vineet Saran
Opinions: Unanimous. Judgment delivered by R.F. Nariman, J.

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