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CIVIL APPELLATE JURISDICTION
COMMERCIAL APPEAL FROM ORDER (ST) NO. 35389 OF 2023
IN
NOTICE OF MOTION NO. 1823 OF 2023
IN
COMMERCIAL SUIT NO. 137 OF 2022
Ajay S. Kathuria
Age: 45 years, Occ.- Business
Proprietor of Salt Clothing Co.
Having his office at Unit No. 1, Laxmi Nagar Damu Nagar, Last
Bus Stop, Akruli Road, Kandivili
(East), Mumbai – 400101. ...Appellant
Having its office at 6, Happy House, Govindji Keni Road, Hindmata, Dadar, Mumbai – 400014. …Respondent
JUDGMENT
1. This commercial appeal is filed against the final judgment/order dated 4 September 2023 passed in Notice of Motion no. 1823 of 2023, in commercial suit No. 137 of 2022, by the District Judge, City Civil Court, Mayur Adane, PA Mumbai (“Impugned Order” for short). Considering that a short issue is involved the appeal is taken up final disposal at the stage of admission. It appears from the record that the respondent (plaintiff) has not entered apperance as also observed by us in our order dated 16 January 2025.
2. The respondent (plaintiff) filed the commercial suit no. 137 of 2022 on 17 January 2022, before the City Civil Court, Mumbai with the following substantive prayer:- “a. That the Defendants be decreed and ordered to pay to the Plaintiffs the sum of Rs. 11,77,464/along with the interest on Rs. 11,77,464/- at 18% per annum or such other rate that may be awarded by this Honourable Court from the date of filing of the suit till realisation.”
3. By the impugned order, the appellant’s (defendant’s) right to file the written statement has been forfeited, on the ground that the conditional order passed by earlier the trial court 30 November 2022 taking the written statement on record was subject to the apellant (defendant) paying cost of Rs. 1500/-, which was not complied with. As the delay in filing the written statement had passed the statutory period of 120 days as on 4 September 2023, the trial court by the impugned order rejected the Notice of Motion No. 1823 of 2023 of the appellant (defendant) to take such written statement on record. Factual Matrix The relevant facts are noted below:-
4. Purusant to the filing of the commercial suit on 7 January 2022 the defendant was served with writ of summons in the suit on 2 May 2022. The appellant (defendant) presenteed his written statement on 17 August 2022 along with a notice of motion no. 3232 of 2022 filed by appellant (defendant) before trial court to take the written statement on record.
5. The trial court by an order dated 30 November 2022 held that the written statement was filed within the stipulated period of 120 days from the date of receipt of service of summons by the appellant (defendant) as required under Order VIII Rule 1 of Civil Procedure Code, 1908 (‘CPC’ for short) However, the trial court made such order conditional on the appellant (defendant) to pay cost of Rs. 1,500/- to the respondent (plaintiff) only after which the written statment would be taken on record.
6. It was on 7 January 2023 that the suit of the respondent (plaintiff) was listed for hearing before trial court. However, the appellant (defendant) did not appear on said date. In view thereof, the trial Court directed that as the conditional order of payment of cost was also not complied by the appellant (defendant) the suit shall proceed without the written statement and was placed for recording evidence on the next date, i.e., 4 February 2023.
7. Pursuant to the above, the appellant (defendant) filed a another Notice of Motion No. 1823 of 2023 in April 2023 for taking his written statement on record. The trial court by the impugned order dated 4 September 2023 rejected the said Notice of Motion No. 1823 of 2023 of the appellant (defendant) by refusing to take such written statement on record, for the reasons recorded in the impugned order. Submissions:-
8. In the above backdrop, Mr. Kapil Shah, learned counsel for the appellant (defendant) would emphatically oppose the impugned order of the trial Court dated 4 September 2023 and would pray that the impugned order be quashed and set aside.
9. Mr. Shah referring to the order of the trial Court dated 30 November 2022 would submit that the court found that the written statement of the appellant (defendant) was within a period of 120 days from the date of service of summons by the appellant (defendant). Thus the undisputed position would be is that the written statement has been filed by the appellant (defendant) within the statutory time period when the same was presented on 17 August 2022 by the appellant (defendant) before the trial Court by way of notice of motion for taking the written statement on record.
10. Mr. Shah would next refer to the order dated 7 January 2023. He would not dispute the fact that the appellant (defendant) was not present on the said date and the condition precedent of payment of cost by the appellant (defendant) was not complied with. He would reiterate that the appellant (defendant) had presented his written statement initially on 17 August 2022 which was within 120 days period as noted in the trial court’s order dated 30 November 2022. He would place reliance on the provision of Order VIII Rule 1 of CPC to submit that the proviso therein will not apply in the given facts and therefore his right to file the written statement is not forefeited.
11. Mr. Shah, would urge that the appellant (defendant) is ready, willing and undertakes to pay the cost of Rs. 1500/- to the respondent (plaintiff) as directed by the trial court promptly, without any delay if been given an opportunity to pay such costs. However, the appellant (defendant) could not get an opportunity to comply with such order of the trial court, when the appellant (defendant) had no intention whatsoever to act contrary thereto or in breach thereof.
12. Mr. Shah, would next submit that grave and irreparable prejudice would be caused to the appellant (defendant), if the written statement is not taken on record. Despite having strong case on merit, he would be rendered defenceless. In view thereof he would urge that the appellant (defendant) be permitted to file his written statement upon payment of cost as directed by the trial court by its order dated 30 November 2022. Analysis and Conclusion
13. On perusal of the factual matrix we may at the very outset note that the writ of summons was received by the appellant (defendant) on 2 May
2022. He had presented his written statement on 17 August 2022 along with the Notice of Motion No. 3232 of 2022 before the trial court. The trial court pertinently observed in its order dated 30 November 2022 that such written statement of the appellant (defendant) was filed within a period of 120 days from the date of service of summons under the provisions of Order VIII Rule 1 of the CPC. The said provision was introduced by an amendment in the CPC under section 16 of the Commercial Courts Act, 2016 under the schedule thereto, which read thus:- ORDER VIII [WRITTEN STATEMENT, SET-OFF AND COUNTER- CLAIM] High Court Amendment -Order 8, title-[Bombayl.- For the existing title of Order VIII, substitute the following title:- "Written Statement, Set-off, Counter-claim, and Third Party Procedure." - (1-10-1983). 9[1. Written statement. -The defendant shall, within thirty days from the date of service of summons on him, present a written statement of his defence: "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 twenty days from the date of service of summons and on expiry of one hundred 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". - [Vide Act 4 of 2016, S. 16 and Sch. (w.r.e.f. 23-10-2015)]. The trial court was dealing with a commercial suit filed under the provisions of the Commercial Court Act 2016. In view thereof, the trial court ought to have been circumpsect in interpreting its provisions which is extremely crucial and significant in commercial matters, considering its far reaching ramifications. In view thereof, the trial court ought to have considered that the mandatory provision of Order VIII Rule 1 of the CPC as noted above was complied with, as the written statement was presented by the appellant (defendant) within the period of 120 days from the date of service of summons as noted in the order dated 30 November 2022 of the trial court. As this requirement was duly met in the given facts, there was no occasion to apply the later part of the said provisions which provide for forfeiting the right to file the written statement, which did not arise in the given facts.
14. On perusal of the impugned order we find that the trial Judge does refer to the earlier order dated 30 November 2022 where the court had categorically recorded that the written statement of the appellant (defendant) was presented within 120 days, as provided under Order VIII Rule 1 of CPC. However, as the conditional cost of Rs. 1500/- was not paid by the appellant (defendant) the trial court in the impugned order proceeds to hold that the said order of 30 November 2022 stood vacated and the appellant (defendant) forefeited his right to file the written statement. For such reason the notice of motion no. 1823 of 2023 of the appellant (defendant) to take his written statement on record was rejected, which is now assailed by the appellant (defendant) in this appeal. We are unable to agree with the findings and conclusion in the impugned order of 4 September 2023 for reasons more than one as noted by us below.
15. The trial court in the impuged order does refer to the order dated 30 November 2022 where the fact of the appellant presenting the written statement within the statutory time frame of 120 days was categorically recorded. The trial court proceeded on a fallicious premise that the conditional payment of cost as ordered partakes, subsumes noncompliance of filing the written statement. However, despite such clear position of the written statement being presented in time by the appellant (defendant), the impugned order clearly overlooked such vital aspect, making it vulnerable and legally unsustainable.
16. The trial court erred in not considering that when the written statement is presented in time cannot bring about a situation that only for non payment of cost, it can be presumed that the written statement was not filed within the statutory period of 120 days as provided under Order VIII Rule 1. The trial court in the impugned order has committed a fundamental error by attributing non payment of such cost to not filing the written statement within the given time frame, which is contrary to the facts on record. In any event, there was no fetter in imposing further conditions to recover such cost from the appellant (defendant).
17. We cannot countennace a situation where non payment of cost would result in defeating the substantive rights of a party as the law would provide, in the given case where the written statement was presented well within the statutory time frame of 120 days as noted by the trial court in its order dated 30 November 2022.
18. In the peculiar facts and circumstances it would be unduly harsh and unjust to take away the defence of the appellant (defendant) merely for the reasons that he did not pay the conditional cost of Rs. 1,500/despite the fact that such written statement was presented within time. The consequences of not accepting the written statement of the appellant (defendant) and to proceed without it being taken on record would meet out grave and irreparable prejudice who would be rendered defenceless if the view of the trial court in the impunged order is accepted. We are therefore in agreement with Mr. Shah on the submissions canvassed by him before us. We cannot in the factual scenario take a pedantic view and shut the doors of the appellant (defendant) by not taking his written statement on record. We cannot subscribe to the view taken by the trial court by its impugned order which would only result in travesty of justice in so far as the appellant (defendant), is concerned in the given facts and circumstances.
19. For the reasons above the impugned order of the trial court dated 4 September 2023 cannot be sustained. It is accordingly quashed and set aside.
20. The trial court is directed to take the written statement of the appellant (defendant) on record within two weeks from the date this order is made available to the registry of the trial court subject to payment of cost of Rs. 1500/- by the appellant (defendant) and further cost of Rs. 1500/- to be deposited, as a condition precedent.
21. The appeal is allowed in the above terms. No order as to costs. [ADVAIT M. SETHNA, J.] [G. S. KULKARNI, J.]