The Code of Civil
Procedure, 1908 - Order V Rule 1 (1), Order VIII Rule 1 and Rule 10
- Procedure when party fails to present written statement called for by Court.
A perusal of these provisions would
show that ordinarily a written statement is to be filed within a period of 30
days. However, grace period of a further 90 days is granted which the Court may
employ for reasons to be recorded in writing and payment of such costs as it
deems fit to allow such written statement to come on record. What is of great
importance is the fact that beyond 120 days from the date of service of
summons, 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. This
is further buttressed by the proviso in Order VIII Rule 10 also adding that the
Court has no further power to extend the time beyond this period of 120 days.
The consequence of forfeiting a right to file the written statement;
non-extension of any further time; and the fact that the Court shall not allow
the written statement to be taken on record all points to the fact that the
earlier law on Order VIII Rule 1 on the filing of written statement under Order
VIII Rule 1 has now been set at naught. Clearly, 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 to do the
opposite of what is stated therein.
Res Judicata - Doctrine
of - Res judicata cannot stand in the way of an erroneous interpretation of a
statutory prohibition.
IN THE SUPREME COURT OF
INDIA
CIVIL APPELLATE
JURISDICTION
(ROHINTON FALI NARIMAN)
AND (VINEET SARAN) JJ.
February 12, 2019
CIVIL APPEAL NO. 1638
OF 2019
(Arising out of Special
Leave Petition (C) No. 103/2019)
M/S SCG CONTRACTS INDIA
PVT. LTD. Appellant(s)
VERSUS
K.S. CHAMANKAR
INFRASTRUCTURE PVT. LTD. & ORS. Respondent(s)
J U D G M E N T
R.F. Nariman, J.
1. Leave granted.
2. In the present case, a Suit was filed
on 10.03.2017 claiming a sum of Rs. 6,94,63,114/-. The Defendant No.1 was
served with the summons in the Suit on 14.07.2017. 120 days from this date
takes us to 11.11.2017, by which date no written statement had been filed.
Meanwhile, however, an Order VII Rule 11 application was filed. This
application was taken up and rejected by the first impugned order dated
05.12.2017. After rejecting the Order VII Rule 11 application, the learned
Single Judge recorded that none appeared for the plaintiff inspite of advance
copy stated to have been given. He also records that the counsel for the
defendant No.1 now states that seven days time be granted tofile a written
statement. Para 14 of the aforesaid order then reads as follows:
“14. Subject to the defendant No.1
paying costs of Rs.25,000/- to the counsel for the plaintiff on or before 15th December, 2017, the time for filing the written
statement is extended till 15th December, 2017. If either of the
conditions is not complied with, the right of the defendant No.1 to file
written statement shall stand closed without any further order.”
3. In obedience to this order, a written
statement was filed on 15.12.2017 by the defendant No.1. By a belated
application dated 06.08.2018, it was averred that the recent changes that have
been made in the Code of Civil Procedure were not adhered to as a result of
which the written statement which had yet to be taken on record could not so to
be taken on record in view of the fact that 120 days had elapsed from the date
of service of summons of this Suit.
4. On 24.09.2018, another learned Single
Judge took up this application and held that the 05.12.2017 order being final,
even though the provisions of law may provide otherwise, the defendant No.1’s
written statement which was filed on 15.12.2017 should be taken on record. The
petitioner has filed a Special Leave Petition against the aforesaid two orders.
5. Learned counsel appearing on behalf
of the petitioner has taken us through the recent amendments made in the Code
of Civil Procedure and argued, laying great emphasis on State ofBihar and Others vs. Bihar Rajya
Bhumi Vikas Bank Samiti, (2018) 9 SCC 472 as well as Canara Bank vs. N.G.
Subbaraya Setty and Anr. AIR 2018 SC 3395 for the proposition
that the amendments so made now provide for the consequence of nonfiling of
written statement, and as this is so, the provisions of Order VIII Rules 1 and
10 can no longer be said to be directory but can only be said to be mandatory.
In this view of the matter, since a statutory prohibition now exists, the
doctrine of res judicata cannot be availed.
6. As against this, learned counsel
appearing on behalf of the respondents has argued, basing himself on the
decisions in Bhanu Kumar Jain vs. Archana Kumar and Another, (2005) 1 SCC 787 and Shaikh Salim
Haji Abdul Khayumsab vs. Kumar and
Others, (2006) 1 SCC 46 that the vital difference between res judicata in a subsequent suit and res judicata in two different stages of the same
proceeding must be kept in view. He stated that as the 05.12.2017 order had
attained finality and could only now be challenged after the decree in the Suit
is passed, clearly, the order of 24.09.2018 is correct. He also stated that by
now the order dated 05.12.2017 had been acted upon and a wrongful act of the
Court therefore, cannot prejudice him. He also argued citing the judgment of R.K. Roja vs. U.S. Rayudu
and Another, (2016) 14 SCC 275 that as an Order
VII Rule 11 application had been filed and that had to be answered before trial
of the Suit could commence, it was clear that a written statement could not be
filed. He thenrelied upon Section 151 of the Code of Civil Procedure which
preserves the inherent power of the court, more particularly, that of a Court
of record - the High Court, and can be invoked in cases like the present where
grossly unjust consequences would otherwise ensue.
7. Having heard learned counsel for both
parties, it is important to first set out the statutory provisions.
8. The Commercial Courts, Commercial
Division and Commercial Appellate Division of High Courts Act, 2015 came into
force on 23.10.2015 bringing in their wake certain amendments to the Code of
Civil Procedure. In Order V, Rule 1, sub-rule (1), for the second proviso, the
following proviso was substituted:
“Provided further that where the
defendant fails to file the written statement within the said period of thirty
days, he shall be allowed to file the written statement on such other days, as
may be specified by the Court, for reasons to be recorded in writing and on
payment of such costs as the court deems fit, but which shall not be later than
one hundred twenty days from the date of service of summons and on expiry of
one hundred and twenty days from the date of service of summons, 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.”
Equally, in Order VIII Rule 1, a new
proviso was substituted as follows:
“Provided that where the defendant
fails to file the written statement within the said period of thirty days, he
shall be allowed to file the written statement on such other day, as may be
specified by the court, for reasons to be recorded in writing and on payment of
such costs as the Court deems fit, but which shall not be later than one
hundred and twenty days from the date of service of summons and on expiry of
one hundred and twenty days from the date of service of summons, 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.”
This was re-emphasized by re-inserting
yet another proviso in Order VIII Rule 10 CPC, which reads as under:-
“Procedure when party fails to present
written statement called for by Court.- Where any party from whom a written
statement is required under Rule 1 or Rule 9 fails to present the same within
the time permitted or fixed by the Court, as the case may be, the Court shall
pronounce judgment against him, or make such order in relation to the suit as
it thinks fit and on pronouncement of such judgment a decree shall be drawn up.
Provided further that no Court shall
make an order to extend the time provided under Rule 1 of this Order for filing
of the written statement.”
A perusal of these provisions would
show that ordinarily a written statement is to be filed within a period of 30
days. However, grace period of a further 90 days is granted which the Court may
employ for reasons to be recorded in writing and payment of such costs as it
deems fit to allow such writtenstatement to come on record. What is of great
importance is the fact that beyond 120 days from the date of service of
summons, 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. This
is further buttressed by the proviso in Order VIII Rule 10 also adding that the
Court has no further power to extend the time beyond this period of 120 days.
9. In Bihar Rajya
Bhumi Vikas Bank Samiti (supra), a question was raised as to
whether Section 34(5) of the Arbitration and Conciliation Act, 1996, inserted
by Amending Act 3 of 2016 is mandatory or directory. In para 11 of the said
judgment, this Court referred to Kailash vs. Nanhku, (2005) 4 SCC 480 referring to the text of Order 8 Rule 1 as it stood
pre the amendment made by the Commercial Courts Act. It also referred to the Salem Advocate Bar Association vs. Union of
India, (2005) 6 SCC 344, which, like the Kailash judgment, held that the mere
expression “shall” in Order 8 Rule 1 would not make the provision mandatory.
This Court then went on to discuss in para 17 State vs. N.S. Gnaneswaran, (2013) 3 SCC 594 in which Section 154(2) of the Code of Criminal
Procedure was held to be directory inasmuch as no consequence was provided if
the Section was breached. In para 22 by way of contrast to Section 34, Section
29-A of the Arbitration Act was set out. This Court then noted in para 23 as
under:
“23. It will be seen from this
provision that,unlike Sections 34(5) and (6), if an award is made beyond the
stipulated or extended period contained in the section, the consequence of the
mandate of the arbitrator being terminated is expressly provided. This
provision is in stark contrast to Sections 34(5) and (6) where, as has been
stated hereinabove, if the period for deciding the application under Section 34
has elapsed, no consequence is provided. This is one more indicator that the
same Amendment Act, when it provided time periods in different situations, did
so intending different consequences.”
10. Several High Court judgments on the
amended Order VIII Rule 1 have now held that given the consequence of
non-filing of written statement, the amended provisions of the CPC will have to
be held to be mandatory. [See Oku Tech
Private Limited vs. Sangeet
Agarwal & Ors. by a learned Single Judge of the Delhi
High Court dated 11.08.2016 in CS (OS) No. 3390/2015 as followed by several
other judgments including a judgment of the Delhi High Court in Maja Cosmetics vs. Oasis
Commercial Pvt. Ltd. 2018 SCC Online Del 6698.
11. We are of the view that the view taken
by the Delhi High Court in these judgments is correct in view of the fact that
the consequence of forfeiting a right to file the written statement;
non-extension of any further time; and the fact that the Court shall not allow
the written statement to be taken on record all points to the fact that the
earlier law on Order VIII Rule 1 on the filing of written statement under Order
VIII Rule 1 has now been set at naught.
12. However, learned counsel appearing
for the respondents relied strongly upon the judgment in Bhanu Kumar Jain (supra) and Shaikh Salim Haji Abdul Khayumsab (supra) and, in particular, paras 22
and 27 of the first judgment and paras 4 & 19 of the second judgment.
13. We are of the view that since both
these judgments dealt with the pre-amendment position, they would not be of any
direct reliance insofar as the facts of the present case is concerned.
14. Learned counsel appearing for the
respondents also relied upon R.K. Roja vs. U.S. Rayudu and Another (supra) for the proposition that the defendant is entitled to file an application
for rejection of plaint under Order VII Rule 11 before filing his written
statement. We are of the view that this judgment cannot be read in the manner
sought for by the learned counsel appearing on behalf of the respondents.
Order VII Rule 11 proceedings are
independent of the filing of a written statement once a suit has been filed. In
fact, para 6 of that judgment records “However, we
may hasten to add that the liberty to file an application for rejection under
Order 7 Rule 11 CPC cannot be made as a ruse for retrieving the lost
opportunity to file the written statement”.
15. Learned counsel appearing for the
respondents then argued that it cannot be assumed that the learned Single Judge
didnot know about these amendments when he passed the first impugned order
dated 05.12.2017. We do not wish to enter upon this speculative arena. He then
argued that since this judgment permitted him to file the written statement
beyond 120 days, it was an act of the Court which should prejudice no man. This
doctrine cannot be used when the res is not yet judicata. The 05.12.2017 order is res sub judice inasmuch as its correctness has been challenged before us.
16. Learned counsel for the respondents
then strongly relied upon the inherent powers of the Court to state that, in
any case, a procedural provision such as contained in the amendment, which may
lead to unjust consequences can always, in the facts of a given case, be
ignored where such unjust consequences follow, as in the facts of the present
case. We are again of the view that this argument has also no legs to stand on,
given the judgment of this Court in Manohar Lal
Chopra vs. Rai Bahadur
Rao Raja Seth Hiralal, [1962] Suppl 1 SCR 450. In this
judgment, the Court held:
“The suit at Indore which had been
instituted later, could be stayed in view of s.10 of the Code. The provisions
of that section are clear, definite and mandatory. A Court in which a
subsequent suit has been filed is prohibited from proceeding with the trial of
that suit in certain specified circumstances. When there is a special provision
in the Code of Civil Procedure for dealing with the contingencies of two such
suits being instituted, recourse to the inherent powersunder s.151 is not
justified...”
(at page 470)
Clearly, 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 to do the
opposite of what is stated therein.
17. Clearly, therefore, the 05.12.2017
order which applies in the face of the amendments made to the Civil Procedure
Code cannot be sustained. When we come to the second order dated 24.09.2018,
the only reason for this order is that 05.12.2017 has attained finality.
18. Factually speaking, this is not
correct as a Special Leave Petition from the said order has been filed. Even
otherwise, this Court in Canara Bank vs. N.G. Subbaraya Setty and Anr. (supra) has held (page 3414):
“(ii) An issue of law which arises
between the same parties in a subsequent suit or proceeding is not res judicata
if, by an erroneous decision given on a statutory prohibition in the former
suit or proceeding, the statutory prohibition is not given effect to. This is
despite the fact that the matter in issue between the parties may be the same
as that directly and substantially in issue in the previous suit or proceeding.
This is for the reason that in such cases, the rights of the parties are not
the only matter for consideration (as is the case of an erroneous
interpretation of a statute inter parties), as the public policy contained in
the statutory prohibition cannot be set at naught. This is for the same reason
as that contained inmatters which pertain to issues of law that raise
jurisdictional questions. We have seen how, in Natraj Studios (AIR 1981 SC 537)
(supra), it is the public policy of the statutory prohibition contained in
Section 28 of the Bombay Rent Act that has to be given effect to. Likewise, the
public policy contained in other statutory prohibitions, which need not necessarily
go to jurisdiction of a Court, must equally be given effect to, as otherwise
special principles of law are fastened upon parties when special considerations
relating to public policy mandate that this cannot be done.”
The aforesaid para applies on all
fours to the facts of the present case, as even assuming that the 05.12.2017
order is final, res judicata cannot stand in the way of an erroneous interpretation of a statutory
prohibition. The present is one such case. Therefore, the second order must
also be set aside.
19. The appeal is allowed, with the
consequence that the written statement of Defendant No.1 must be taken off the
record.
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