In the case of M/s SCG Contracts India Pvt. Ltd. v. K.S. Chamankar Infrastructure Pvt. Ltd. & Ors., the Hon’ble Supreme Court of India in its judgment while considering legality of the written statement filed by the defendant after the statutory time period of 120 days, held that the failure to file written statements within the statutory time period of 120 days in a commercial suit will result in the forfeiture of the right of the defendant to file a written statement.

In the Hon’ble High Court of Delhi, M/s SCG Contracts India Private Limited filed a commercial suit against K.S Chamankar Infrastructure Private Limited. The Respondent in the present suit filed their written statement on 15.12.2017, which was beyond the statutory time period of 120 days for filing the written statement as the summons in the suit were served upon the Respondent on 14.07.2017. The Petitioner filed an application for striking the Respondent’s written statement off the record for being time-barred under Order VIII Rule 10 of the Code of Civil Procedure, 1908 as amended by the Commercial Courts Act, 2015. However, the said application of the Petitioner was not allowed, and the written statement was taken on record.

Accordingly, the Petitioner filed a Special Leave Petition before the Supreme Court on the ground that the provisions of Order VIII Rules 1 and 10 of the Code of Civil Procedure, 1908 as amended by the Commercial Courts Act, 2015, no longer gives discretion to courts to allow written statements to be filed beyond 120 days from receipt of summons and therefore a written statement filed beyond the said time period cannot be allowed.

Originally, there was no distinction between commercial disputes and other disputes under the Code of Civil Procedure. Courts allowed the filing of the written statement even after the prescribed statutory period of 30 days and the grace period 90 days. The Commercial Courts Act brought about certain amendments to the Code of Civil Procedure, which is exclusively applicable to commercial suits, with the object of laying down the certain stringent timeline for timely disposal of commercial suits.

In allowing the appeal, the Supreme Court observed that the added proviso to the Code of Civil Procedure is mandatory. The following proviso was added to order VIII rule 1 to the Code of Civil Procedure by the act and was made applicable to commercial disputes of a specified value with effect from 23 October 2015, the day on which the Act came into force along with certain amendments to the Code of Civil Procedure.

The bench of the Supreme Court examined the amendments brought to Code of Civil Procedure, by the Commercial Courts Act especially amendments to Order V Rule 1 (1), Order VIII Rules 1 and 10 of the Code of Civil Procedure and held as follows:

1. It is Mandatory for filing of written statement within 120 days from receipt of summons The Supreme Court reviewed the provisions of Order V Rule 1 (1), Order VIII Rules 1 and 10 of the Code of Civil Procedure, as amended by the Commercial Courts Act, and held that under the aforesaid provisions a party is granted 30 days’ time to file its written statement and a grace period of 90 days is provided, wherein, a court can, after recording the reasons for delay in filing and after imposing costs, allow a written statement to be taken on record. However, if the written statement is filed after 120 days from receipt of summons, the Defendant will be considered to have forfeited its right to file its written statement and the court will have no power to take the same on record in light of the amended provisions laid down in Order VIII Rule 10 of the Code of Civil Procedure for commercial disputes.

2. The Pendency of Order VII Rule 11 Application filed by the Respondent Infrastructure is not a valid ground for the delay in filing written statement.
   The Supreme Court held that an application for rejection of plaint is independent of filing of the written statement and the filing of such an application cannot be used as an opportunity to retrieve the lost right to file a written statement, which was upheld in R K Roja v U S Rayudu & Ors, as cited by the Respondent.

3. A court cannot use its inherent powers to avoid the consequences ensuing from a procedural provision. The Supreme Court by relying on Manohar Lal Chopra v Rai Bahadur Rao Raja Seth Hiralal, held that where there is a special provision in the Code of Civil Procedure that deals with a particular procedure, the same cannot be simply overlooked by taking recourse to the inherent powers of the court and hence the written statement cannot be ordered to be placed on record by exercising the inherent powers of the court.

The Supreme Court concluded that a reading of these provisions would show that ordinarily, a written statement is to be filed within a period of 30 days. However, a grace period of 90 days is granted, the reasons for which the court must record in writing, and the payment of costs as it deems fit to allow such a written statement to be put on the record. What is of importance is the fact that beyond the 120 days from the date of service of summons, the defendant shall forfeit the right to file the written statement and it should not be taken on record by the court.

This is further buttressed by the proviso in order VIII rule 10, adding that the court has no further power to extend the time beyond this period of 120 days. The appeal was thus allowed with the consequence that the written statement of defendant No. 1 was directed to be taken off the record.

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