Kabir Singh

The Indian judiciary’s clogged pipelines of justice are a problem which has been ongoing for decades. One of the largest contributors to the same has been the delay of filing written statements in commercial civil suits. To resolve this dilemma, the Apex Court in the landmark judgment of SCG Contracts laid a hard time limit of 120 days for filing of written statement under Order VIII Rule I of the Civil Procedure Code, 1908. The author argues that in furtherance of the efforts for faster delivery of justice, it is essential that the approach laid in SCG Contracts with respect to written statements, should also be applicable on filing of counter-claims, and concludes by calling for stricter enforcement of time constraints in the Indian judiciary.

Introduction

“All the rules of procedure are the handmaids of justice. The language employed by the draftsman of procedural law may be liberal or stringent, but the fact remains that the object of prescribing procedure is to advance the cause of justice.”

The above extract belongs to the opinion penned by erstwhile CJI Lahoti in the landmark Supreme Court judgment of Kailash vs. Nanhku. The judgment clarified the position of law on the outer limit regarding the filing of written statements, by holding the limit of 90 days prescribed under the proviso to Order VIII Rule 1 as being merely directory, and not mandatory. It was noted that the Civil Procedure Code’s provisions must not be construed in a manner which would leave Courts helpless under extraordinary situations to achieve justice.

This position of law was further solidified by the Apex Court in the case of Salem Bar Association v. Union of India, wherein Rules 1, 9 and 10 of Order VIII were harmoniously construed, while re-affirming Kailash’s ratio of holding the time limit of 90 days under Order VIII Rule 1 as only being directory. While there exists no doubt that the Supreme Court’s interpretation enables the achievement of justice in Courts, it also resulted in increasing the backlog of the already over-burdened Indian Judiciary. The tragic tale of pending cases in India is an old one, with a huge body of research serving as evidence for the same. As of May 2022, there were roughly 4.7 crore cases pending across various Courts of different levels. The Supreme Court itself had 71,411 cases pending, of which a majority were civil cases, with a strength of 56,365 cases.

Thus, it comes as no surprise that one of the major driving forces behind the enactment of the Commercial Courts Act, 2015 was expeditious disposal of cases. This objective was further clarified by the Supreme Court’s seminal judgment in M/s SCG Contracts India vs. K.S. Chamankar Infrastructure, wherein it was declared that the limit of 120 days with respect to commercial suits under Order VIII Rule 1 is mandatory. This decision is often hailed as evidence indicative of a pivotal shift in the Indian judiciary’s outlook towards meeting statutory deadlines. In continuation of the same, the objective of this paper is to determine whether the positive shift in outlook was a mere flash in the pan, or indictive of something more. It achieves this, by analysing whether the mandatory nature of time limits under Order VIII Rule 1’s written statements is also applicable to Counter-Claims filed in commercial suits, under Order VIII Rule 6.

This piece begins by laying down the legislative framework of Order VIII, and understanding the theoretical background of written statements and counter-claims. The next part traces the genesis and enactment of the Commercial Courts Act, 2015 and further evaluates its impact on written statements and counter-claims. Part IV delves into the landmark judgment of SCG Contracts, while exploring its factual matrix and ratio. On the basis of the legal groundwork laid till this point, Point V ponders upon whether the ratio of SCG Contracts is also applicable to counter-claims, by exploring and analysing contemporary judicial decisions. Part VI concludes, while calling for stricter enforcement of time constraints for unclogging the pipelines of justice in the Indian Judiciary.

The Legislative Framework of Order VIII: Written Statements vis-à-vis Counter-Claims

Order VIII of the Civil Procedure Code, 1908 contains the relevant Rules concerning Written Statements, Set-off and Counter-Claims. While a definition of the term ‘written statement’ is not present in the CPC, courts have defined the same to signify a reply to the plaintiff’s plaint. Counter-claims on the other hand, are claims made by the defendant in a suit against the plaintiff.[1] It essentially refers to a cross-action, and was made a specific provision in the CPC by the Amendment Act of 1976. While the Code originally prescribed a time limit of 30 days from the day of service of summons for filing written statements, the same was increased to 90 days by the Amendment Act, 2002. As explained earlier, this limit was interpretated to be merely directory and permissive, rather than imperative by the Supreme Court in Kailash and Salem Bar. Whereas in accordance with Order VIII Rule 6A (3), the plaintiff has the liberty to file a written statement in response to a counter-claim as per the limit fixed by Courts. However, the same must be read with Order VIII Rules 6A (4) and 6G, according to which a counter-claim must be treated as a plaint, and that the rules applicable on a written statement by a defendant are also applicable on the written statement filed in response to the counter-claim.

The Legislative Journey of Commercial Courts Act, 2015: Time as a Cornerstone

The legislative history of the Commercial Courts Act, 2015 (herein after ‘the Act’) can be traced as far as back to December 2003, where the idea was proposed in the 188^th report of the 17^th Law Commission of India, as the proposal for constitution of hi-tech fast track Commercial Divisions in High Courts. Taken up suo moto, the Law Commission proposed the same with the objective of expedient & efficient resolution of commercial disputes, especially keeping in mind India’s new economic policy from 1991. Another major propellant for the Act’s enactment was to respond to international judgments, such as Shin-estu vs. ICICI Bank and European Asian Bank vs. Punjab & Sind Bank, which had explicitly negatively noted the Indian judiciary’s slow-response time, alongside the humungous backlog. After being the subject of more discussion, ranging from the 2009 Conference of Chief Justices of the High Courts to the Commercial Division of High Courts Bill, 2009, in January 2015, the 253^rd Report of the Law Commission of India published the Commercial Division and Commercial Appellate Division of High Courts Bill, 2015. The new Bill placed a much higher emphasis on speedy trials, by including provisions for stricter timelines for filing of pleadings, and mandating time bound judgment delivery. It is pertinent to note at this juncture, that the aforementioned Bill is exclusively applicable only on commercial disputes which meet the threshold of ‘specified value’, which is elaborated upon within Section 12 of the same.

This proposed bill was eventually placed before both the Houses, and passed by December 2015. In May 2018, the Act was amended with the objective of increasing India’s commercial attractiveness, and emphasis was yet again laid on improving Court’s response time in delivering justice. Another example of the importance levied on time by the Drafters is Order VIII of the CPC. One of the most affected provisions of the CPC by the Commercial Courts Act was Order VIII, under which a maximum limit of 120 days for submission of written statement was prescribed, by virtue of Section 16 and the Schedule of the Act. Hence, it is evident from the Act’s legislative journey that the framers had placed speedy delivery of justice as one of the cornerstones of the Act. An extension of this is precisely what the Supreme Court dealt with, and clarified in the landmark case of SCG Contracts.

SCG Contracts: Enforcing the Hard Limit of 120 Days

Being a watershed moment for stricter enforcement of time limits set in statutes, and playing a significant role in future similar cases, it is necessary to undertake an analysis of SCG Contracts.

The Petitioner filed a civil case against the Respondent before the Delhi HC, while claiming a compensation of roughly Rs. 7 crores. The case was listed as a commercial dispute, and the Respondent was served summons on 14/07/17, and was mandated to reply by 11/11/17, in accordance with Order VIII Rule 1. After a subsequent challenge against the Plaintiff’s suit, which was rejected, the Respondent filed his written statement on 15/12/17. However, before the Respondent’s response, the Plaintiff on 6/08/17 raised an objection against taking the former’s written statement on record, since the same was in violation of the Commercial Court Acts and its Amendment.

The Delhi HC rejected the Plaintiff’s contention, and accepted the Respondent’s written statement. Aggrieved by the same, the Plaintiff challenged the same before the Supreme Court. Hence, the primary question before the Apex Court was whether a Court may take on record a written statement in a commercial dispute, despite the passage of the time limit of 120 days.

The Court answered the question in negative, and held that the time limit of 120 days to file written statements is mandatory in nature, and not directory, as is the case in normal civil suits. If the party fails to file said statement within 120 days, then their right stands forfeited. It was further held that Courts lacks the power to take on record any such written statement, which has passed 120 days, or extend the maximum date. It was further reiterated that Courts cannot abuse the power granted to them under Section 151 of the CPC for the sake of bypassing or circumventing a mandatory procedural procedure and its consequences. The judgment affirmed the ratios of other High Court judgments in the same vein, such as Oku Tech Pvt Ltd v Sangeet Agarwal & Ors, Maja Cosmetics v Oasis Commercial Pvt Ltd etc. The implications of MCG Contracts are huge, given how it is the first Supreme Court judgment on commercial suits, which enforces the time limit prescribed by the statute, and makes a clear deviation from the previous approach followed under non-commercial suits, under which the time limits are merely directory.

Continuing the SCG Contracts Approach: Time Limit for Counter-Claims

There exists no doubt regarding the positive reception of SCG Contracts approach of adhering to statutory time limits, as not only does it result in speedier delivery of justice, but also permits one to respect the language of the law. Hence, it is imperative to evaluate whether the mandatory following of time limits in commercial suits is restricted only to filing of written statements, or if it also extends to other provisions of the Code, such as counter-claims.

A recent Madras High Court judgment answered the same in negative, while holding that the mandatory limit of 120 days for a written statement, is inapplicable to a counter-claim’s written statement. The Court’s raison d’etre behind the same was the fact that SCG Contracts merely referred to Order VIII Rule 1, and that since counter-claims are governed by Rule 6, there is no applicability of the former. This argument, while ex facie sound, does not stand further detailed analysis. The Madras HC relies on a 2010 High Court judgment as the basis of their judgment, to conclude that counter-claims are governed under Order VIII Rule 6-A.

While the same in itself may be legally valid, the judgment ignores Rule 6-G of Order VIII, by selectively excluding its applicability on the time limit on counterclaims. Rule 6-G explicitly states that rules governing written statements are also applicable on written statement filed in response to a counter-claim. Hence, keeping the same in mind, it may be soundly concluded that the 120 day’s mandatory time limit fixed for written statements shall also govern written statement filed as a reply to the counter-claim. Not only is the same in alignment with the aim of the Commercial Courts Acts, 2015, it also falls in line with the objective behind counter-claims, which is to save time, and assist in avoiding multiplicity of cases and prolonged trials i.e., to ensure speedy justice. Thus, it is submitted that the Madras High Court has erred in holding counter-claims free from the mandatory time limit of 120 days. Afterall, the principle of vigilantibus et non dormientibus jura subveniunt i.e., law only assists those who are vigilant with their rights, and not those are asleep on them, is a core tenant of law. This matter has been escalated to the Apex Court, and it is hoped that the Supreme Court corrects the position of law.

Conclusion: Call for Pivotal Shift

The humongous backlog of cases has plagued the Indian judiciary since the last few decades. One of the keys for solving the same is ensuring a quick response time. As proved earlier, the enactment of the Commercial Courts Acts, 2015 alongside the Supreme Court’s judgment in SCG Contracts are signs of a change in outlook with respect to speedy justice, and represent a future full of hope. However, judgments akin to that of the Madras High Court, dampen the possibility of such a future, by following an overly expansionist approach. Not only does the same delay the process of justice, it ends up contributing to the overflowing case backlog.

Keeping the same in mind, the author hopes that there continues to be judgments in the same vein as SCG Contracts, and prays that the shift in outlook towards speedy justice persists, in turn leading to greater justice, since justice delayed is justice denied.

The author is an undergraduate student of law at the OP Jindal Law School

[1] Takwani CK, Civil Procedure (Eastern Book 2018) 264.