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STRIKING OF DEFENSE IN COMMERCIAL SUITS

April 22, 2021
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By Nihit Nagpal and Anuj Jhawar

The foremost objective upon receipt of summons of a suit for a Defendant(s), is to prepare a defense and represent oneself, whether it be an individual or company. Every party is statutorily bound to appear before the Court and present their case within stipulated time.

The present article deals with the amendments made by the Commercial Court Act, 2015 in the Code of Civil Procedure, 1908 and the effect on striking of defense in Commercial Suits.

The Code of Civil Procedure, 1908 stipulates time period for filing written statement in ordinary suits and The Commercial Courts Act, 2015 came into force on October 23, 2015 along with certain amendments to the Code of Civil Procedure, 1908 with regard to filling of written statement in any suit of a commercial dispute of a specified value, which are as follows:

Filing of Written Statement- Ordinary Suits v. Commercial Suits

ORDINARY SUITS COMMERCIAL SUITS
In the Order V Rule 1 Sub-rule (1) of the Code of Civil Procedure, 1908, the second proviso applicable to ordinary suits  states that when a defendant has failed to file his written statement within the stipulated period of 30 days, the Court shall give him extension to file his written statement by recording his reason for the delay in writing. However, such extension should not be later than 90 days from the date of service of summons. In the Order V Rule 1 Sub-rule (1) of the Code of Civil Procedure, 1908, the proviso applicable to commercial disputes of a specified value states that when a defendant has failed to file his written statement within the stipulated period of 30 days, the Court shall give him extension to file his written statement by recording his reason for the delay in writing and on payment of costs as the Court deems fit. However, such extension should not be more than 120 days from the date of service of summons and on expiry of 120 days, the defendant shall forfeit his right to file the written statement and the written statement should not be taken on record by the Court.
Similarly, in the Order VIII Rule 1 of the Code of Civil Procedure, 1908, the proviso applicable to ordinary suits states that when a defendant has failed to file his written statement within the stipulated period of 30 days, the Court shall give him extension to file his written statement by recording his reason for the delay in writing. However, such extension should not be later than 90 days from the date of service of summons. Similarly, in the Order VIII Rule 1 of the Code of Civil Procedure, 1908, a new proviso was substituted applicable to commercial disputes of a specified value stating that the defendant must file written statement of his defense within 30 days from the date of service of summons upon him. In event of failure to do so, the Court has the discretion to extend the time for filing of the Written Statement, by recording the reasons for the delay. However, such extension should not be more than 120 days from the date of service of summons and on expiry of 120 days, the defendant shall forfeit his right to file the written statement and the written statement should not be taken on record by the Court.
In the Order VIII Rule 10 of Code of Civil Procedure, 1908 applicable to ordinary suits states that on the failure of the defendant to file his written statement within the permitted time, the Court shall pronounce judgment against the defendant, or make such an order in relation to the suit as it thinks fit which shall be of the nature of a decree. The above was re-emphasized in the Order VIII Rule 10 of Code of Civil Procedure, 1908, applicable to commercial disputes of specified value stating that the Courts do not have the power to grant further extension beyond the statutory time provided under Order VIII Rule I of Code of Civil Procedure, 1908.

The Supreme Court of India in SCG Contracts India Pvt. Ltd. Vs. K.S. Chamankar Infrastructure Pvt. Ltd. and Ors.[1] has upheld the abovementioned provisions under Code of Civil Procedure, 1908 applicable to commercial dispute stating that, the abovementioned provisions would show that ordinarily a written statement is to be filed within a period of 30 days. However, a grace period of further 90 days is granted to the defendant which the Court employ by recording the reasons in writing and payment of costs as it deems fit. The Apex Court reiterated that Court has no further power to extend the time beyond period of 120 days. Further, on expiration of period of 120 days from the date of service of summons, the defendant shall forfeit his right to file the written statement and the Court shall not allow the written statement of the defendant to be taken on record.

CONCLUSION

In a Commercial Suit, where the defendant has failed to file his written statement within the period of 30 days from the date of service of summons, the Court has the discretion to allow further period to make such submissions which may not exceed 90 days. If the Defendant has failed to file his written statement beyond the stipulated period of 120 days from the date of service of summons, the Defendant shall forfeit the right to file his written statement and the Court shall not allow the written statement of the Defendant to be taken on record.

[1] AIR 2019 SC 2691

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