Supreme Court Rules on Timely Filing of Written Statements in Commercial Suits: SCG Contracts India Pvt. Ltd. vs. K.S. Chamankar Infrastructure Pvt. Ltd.

The Supreme Court of India delivered a crucial judgment in SCG Contracts India Pvt. Ltd. vs. K.S. Chamankar Infrastructure Pvt. Ltd., reinforcing the importance of procedural timelines for filing written statements in commercial suits. This ruling clarifies the mandatory nature of the 120-day deadline for defendants to file their written statements, as prescribed under the amended Code of Civil Procedure (CPC) and the Commercial Courts Act, 2015.

Background of the Case

The dispute arose from a civil suit filed by M/S SCG Contracts India Pvt. Ltd. on March 10, 2017, seeking a claim of Rs. 6.94 crores. The defendant, K.S. Chamankar Infrastructure Pvt. Ltd., was served with summons on July 14, 2017. According to the amended CPC provisions applicable to commercial disputes, the defendant had 120 days from the date of service to file its written statement. This deadline expired on November 11, 2017, but the defendant failed to submit its written statement within this period.

Legal Developments

Before filing the written statement, the defendant moved an application under Order VII Rule 11 CPC seeking the rejection of the plaint. This application was dismissed by the trial court on December 5, 2017. During the same hearing, the trial court granted an additional seven days for filing the written statement, subject to a cost of Rs. 25,000 to be paid to the plaintiff.

The defendant filed its written statement on December 15, 2017. However, a subsequent application filed on August 6, 2018 contended that the recent amendments to the CPC prevented the court from taking the written statement on record beyond the 120-day period.

Key Legal Issues

The main question before the Supreme Court was:

• Whether a court has the discretion to accept a written statement filed beyond the 120-day statutory deadline prescribed under the Commercial Courts Act and the amended CPC.
• Whether the previous order dated December 5, 2017, allowing the defendant to file its written statement, was valid under the amended law.

Petitioner’s Arguments

The counsel for SCG Contracts India Pvt. Ltd. argued:

• The amendments to the CPC under the Commercial Courts Act imposed a mandatory deadline of 120 days for filing a written statement.
• The consequence of non-compliance with this timeline is clearly mentioned in the statute—the defendant loses the right to file a written statement.
• The December 5, 2017 order of the trial court granting an extension was contrary to the law and should be set aside.
• Relying on the Supreme Court judgments in State of Bihar vs. Bihar Rajya Bhumi Vikas Bank Samiti (2018) 9 SCC 472 and Canara Bank vs. N.G. Subbaraya Setty (2018) AIR SC 3395, the petitioner emphasized that procedural deadlines should be treated as binding and not discretionary.

Respondent’s Arguments

The counsel for K.S. Chamankar Infrastructure Pvt. Ltd. argued:

• The December 5, 2017 order had already attained finality and should not be revisited.
• The trial court had the inherent power under Section 151 CPC to allow the filing of the written statement beyond the statutory deadline to prevent injustice.
• They relied on the judgments in Bhanu Kumar Jain vs. Archana Kumar (2005) 1 SCC 787 and Shaikh Salim Haji Abdul Khayumsab vs. Kumar (2006) 1 SCC 46 to argue that procedural defects should not defeat substantive justice.

Supreme Court’s Judgment

The Supreme Court ruled in favor of the petitioner, holding that:

1. 120-Day Deadline is Mandatory

The Court emphasized that the amendments to Order VIII Rules 1 and 10 of the CPC under the Commercial Courts Act leave no room for judicial discretion once the 120-day period expires.

“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.”

2. December 5, 2017 Order Was Contrary to Law

The Supreme Court held that the trial court’s order granting an extension beyond 120 days was legally unsustainable. The Court ruled:

“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 CPC.”

3. No Inherent Power to Override Statutory Deadlines

The Court rejected the argument that Section 151 CPC (inherent powers of the court) could be used to override statutory limitations.

4. Written Statement to Be Struck Off

Since the defendant had filed its written statement beyond the 120-day limit, the Court directed that it be removed from the record.

Key Takeaways

• Strict Compliance with Timelines: In commercial cases, the 120-day deadline for filing written statements is non-negotiable.
• Limited Judicial Discretion: Courts do not have inherent power to extend the filing period once the statutory deadline has expired.
• Ensuring Speedy Commercial Litigation: This ruling reinforces the objective of the Commercial Courts Act, which aims to expedite dispute resolution.
• Impact on Defendants: Defendants in commercial cases must be diligent in responding to suits to avoid forfeiting their rights.

Conclusion

The Supreme Court’s decision in SCG Contracts India Pvt. Ltd. vs. K.S. Chamankar Infrastructure Pvt. Ltd. marks a significant shift in enforcing procedural discipline in commercial litigation. By categorically holding that the 120-day deadline is mandatory, the Court ensures that commercial disputes proceed efficiently without unnecessary delays. This ruling serves as a cautionary precedent for litigants in commercial suits to comply with procedural deadlines or face serious consequences.

Petitioner Name: M/S SCG Contracts India Pvt. Ltd..
Respondent Name: K.S. Chamankar Infrastructure Pvt. Ltd..
Judgment By: Justice R.F. Nariman, Justice Vineet Saran.
Place Of Incident: India.
Judgment Date: 12-02-2019.

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