The Supreme Court has ruled against the decision of the Calcutta High Court to reject the defendants' requests for more time to submit their written statements. The written statements, originally due by March 8, 2020, and with a grace period that extended until June 6, 2020, were filed by the defendants on January 20, 2021, after the High Court had already rejected their extension applications in a lawsuit initiated by the plaintiff.
The division Bench comprising Justice J.K. Maheshwari and Justice K.V. Viswanathan clarified that in accordance with Order 8 Rule 1 of the Commercial Courts Act, defendants are required to submit a written statement within 30 days of receiving a summons. The court has the discretion to grant an extension of up to 120 days for this purpose. However, if the defendant fails to file the written statement within this stipulated timeframe, they lose their right to submit it.
The Court held, “As has been set out hereinabove, while summons was served on 07.02.2020, the 30 days period expired on 08.03.2020 and the outer limit of 120 days expired on 06.06.2020. The application for taking on record the written statements and the extension of time was filed on 20.01.2021. Applying the orders of 08.03.2021 and the orders made thereafter and excluding the time stipulated therein, the applications filed by the applicants on 19.01.2021 are well within time.”
The defendants contended that their inability to file their written statements was because of the COVID-19 pandemic.
The Supreme Court emphasized that during the Covid times, the Supreme Court observed that parties were not sleeping over their rights. In response, the Court had taken suo motu cognizance and issued orders under Article 142 of the Indian Constitution to extend deadlines, ensuring that parties' rights were protected.
The Court said that in the suo motu proceedings titled "In Re: Cognizance for Extension of Limitation," several orders were passed, which extended the limitation period. Among them the orders of March 23, 2020 and March 08, 2021 were contrasted. The first order extended the period of limitation due to the COVID-19 pandemic, allowing parties to file proceedings remotely. The second order further extended the limitation period, with specific guidelines.
“..while summons was served on 07.02.2020, the 30 days period expired on 08.03.2020 and the outer limit of 120 days expired on 06.06.2020. The application for taking on record the written statements and the extension of time was filed on 20.01.2021. Applying the orders of 08.03.2021 and the orders made thereafter and excluding the time stipulated therein, the applications filed by the applicants on 19.01.2021 are well within time,” the Court concluded.
Considering previous orders, the Court concluded held that the defendants' applications, filed on January 20, 2021, were well within time when applying the orders of March 08, 2021 and subsequent ones. Therefore, the Court allowed the appeals, directing the written statements filed on Januray 20, 2021 to be taken on record, and instructed the proceedings to continue.
Cause Title: Aditya Khaitan & Ors. v. IL and FS Financial Services Limited
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