In a significant ruling, the Karnataka High Court has reinforced the mandatory nature of the 120-day limitation period for filing written statements in commercial disputes. The Court emphasized that courts lack the discretion to extend this period beyond the statutory limit, underscoring the legislative intent to expedite the resolution of commercial cases.
Background of the Case
The case at hand involved M/s. Imagex Technologies India Pvt. Ltd., the defendant in a commercial suit filed by M/s. Graintec Industries for the recovery of a monetary claim. The defendant sought to file its written statement beyond the prescribed 120-day period, arguing that if an application for extension was made before the expiry of this period, the court should consider and grant the extension. The trial court rejected this application, citing the statutory limitation under Order VIII Rule 1 of the Code of Civil Procedure (CPC).
Legal Framework: Order VIII Rule 1 of the CPC
Order VIII Rule 1 of the CPC mandates that a defendant must file a written statement within 30 days from the date of service of summons. However, the rule provides a proviso allowing an extension of time for filing the written statement, subject to the court's discretion, for a further period not exceeding 90 days. This extension is contingent upon the defendant's application and the payment of costs, and it must be granted for reasons recorded in writing. Importantly, the total period for filing the written statement, including any extensions, cannot exceed 120 days from the date of service of summons.
Beyond this 120-day period, the defendant forfeits the right to file a written statement, and the court is prohibited from taking it on record. This statutory provision aims to prevent undue delays in commercial litigation and ensure the swift adjudication of disputes.
Court's Analysis and Findings
Justice M. Nagaprasanna, delivering the judgment, observed that the statutory command under Order VIII Rule 1 is not merely directory but mandatory. The Court stated that while the provision grants the court discretion to extend the time for filing the written statement, this discretion is confined within the fixed contour of 120 days. Once this threshold is crossed, the defendant's right to file the written statement stands extinguished, and the court cannot allow it to be taken on record.
The Court rejected the petitioner's argument that the court should consider an application for extension if filed before the expiry of the 120-day period. Justice Nagaprasanna termed this submission as "preposterous," emphasizing that the statutory limitation is absolute and cannot be relaxed by the court's inherent powers under Section 151 of the CPC or Section 5 of the Limitation Act.
Implications of the Ruling
This ruling has significant implications for the conduct of commercial litigation in India:
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Strict Adherence to Statutory Timelines: The decision underscores the importance of adhering to the statutory timelines prescribed for filing written statements in commercial disputes. Defendants must ensure that their written statements are filed within the 120-day period to avoid forfeiture of their right to file.
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Limited Judicial Discretion: The Court's emphasis on the mandatory nature of the 120-day period indicates a limited scope for judicial discretion in extending this timeline. Courts cannot exercise inherent powers to condone delays beyond the statutory limit.
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Encouragement of Timely Litigation: By upholding the strict timelines, the Court aims to encourage timely litigation and discourage dilatory tactics that can impede the swift resolution of commercial disputes.
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Consistency in Legal Precedents: The ruling aligns with the Supreme Court's decision in SCG Contracts India Pvt. Ltd. v. K.S. Chamankar Infrastructure Pvt. Ltd. (2019), which held that the 120-day period for filing written statements in commercial suits is mandatory and cannot be extended beyond this limit.
Conclusion
The Karnataka High Court's decision serves as a stern reminder to litigants in commercial disputes about the importance of adhering to statutory timelines. The ruling reinforces the legislative intent to expedite the resolution of commercial cases and curtail unnecessary delays. Legal practitioners and parties involved in commercial litigation must be vigilant about the 120-day limitation period for filing written statements to safeguard their rights and interests in such proceedings.
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