SM Retd v. Delhi Gymkhana Club

13. The controversy raised as to whether filing of the written statement and condonation of delay in filing the same, would be governed by Order VIII Rule 1 CPC or Rule 4 of the DHC Rules has surfaced in many cases.

14. In Kailash (Supra), Supreme Court, while considering the object and purpose behind enacting Rule 1 of Order VIII, opined that the provision is to be construed as directory and not mandatory, and at the same time it was cautioned that only in exceptional cases, the Court may extend the time for filing written statement, though the period of 30 days and 90 days had expired. Again in R.N. Jadi & Brothers & Ors v. Subhashchandra11, Supreme Court, while referring to its earlier decision in Kailash (Supra), held that extension of time beyond 90 days was not automatic and satisfaction of the Court has to be recorded, as to the existence of sufficient justification, for departing from the time limit fixed by the Court. The Court again cautioned that the decision in Kailash (Supra) should not be considered as an authority for receiving written statement after the expiry of period permitted by the law, in a routine manner. The decision in Kailash (Supra) was again referred to by the Supreme Court in Bharat Kalra (Supra), while condoning a delay of 193 days in filing of the written statement.

15. Recently, in Desh Raj (Supra), a decision rendered by a three Judge Bench, the provision again came up for consideration before the Supreme Court. The defendant had failed to file the written statement within the period of 120 days of notice, resulting in closure of opportunity to file the same and his defence being struck off. While considering the effect of Commercial Courts Act, 2015, it was held that after the coming into force of the said Act, two regimes of civil procedure came into existence. While commercial disputes, as defined under Section 2(c) of the Commercial Courts Act, were governed by Section 16 of the said Act, all other noncommercial disputes fell within the ambit of the unamended (or original) provisions of CPC. It was held that the unamended Order VIII Rule 1 CPC would continue to be directory, and thus would not come in the way of inherent jurisdiction of the Court, to condone certain delays. Notably, in this case, the effect of Rule 4 and 5 of the DHC Rules was not the matter for court’s consideration.

16. The interpretation of Order VIII Rule 1 CPC vis-à-vis Rule 4 and 5 of the DHC Rules first came up before this Court in Gautam Gambhir & Ors. v. Jai Ambey Traders & Ors.12 and connected matter being Ram Swarup Lugani v. Nirmal Lugani & Ors., wherein the Court dealt with a Chamber 2020 SCC OnLine Del 2621 Appeal against an order of Joint Registrar rejecting the application for condonation of delay. The Court taking note of the fact that the DHC Rules came into effect in 2018 i.e., after the Commercial Courts Act was notified, opined that use of expression ‘but not thereafter’ in Rule 4 would mean that a total 120 days (30 + 90) was granted for filing written statement. Further, both Rules 4 and 5 were held to be mandatory.

17. Ram Swarup Lugani laid a challenge to the aforesaid decision by filing an appeal. A Division Bench of this Court, while considering the scope and object of Chapter VII of the DHC Rules, especially Rules 4 and 5 as well as Rules 14 and 16 of Chapter I, concluded that the use of ‘but not thereafter’ in Rule 5 indicated the intention of the rule-making authority to make the provision mandatory and not directory. While coming to the aforesaid conclusion, the Division Bench also relied upon the decision of this Court in DDA v. K.R. Builders13 and HTIL Corporation BV v. Ajay Kohli & Ors.14. The relevant extract of the decision is as below:-

27. Since the language of Rule 5 shows that the intention of the Rule making Authority was to exclude the provisions of the Limitation Act, 1963, giving no power to the court to condone any delay beyond the period of 45 days for accepting the replication, learned counsel for the appellants/plaintiffs cannot be heard to state that Rule 16 could have been very well invoked by the learned Single Judge to take on record the belatedly filed replication. The sanctity of the period of 30 days, extendable by another period of 15 days cannot be diluted by giving such an interpretation. In view of the specific provision and the timeline stated in Rule 5 of Chapter VII, that precludes the court from extending the timeline beyond 45 days for accepting the replication, the argument advanced by Mr. Mehta, learned counsel for the appellants/plaintiffs that notwithstanding Rule 5, provisions of Rule 16 and Rule 14 of Chapter I of the DHC Rules empower the court to take on record, the replication even beyond the period of 45 days and ought to have been resorted to by the learned Single Judge, cannot be accepted.

28. In our opinion, reliance placed by Mr. Mehta on Desh Raj (supra), is also misplaced. No doubt, the Supreme Court has held that a reading of proviso 2 appended to Rule 1 of Order VIII would show that the said Rule is only directory and not mandatory, ultimately the Supreme Court has refused to condone the delay in that case. In fact, the said decision is not applicable to the facts of this case for the reason that in the said judgment, there was no occasion to deal with the scope and effect of Rule 5 of Chapter VII of the DHC Rules. In any event, the DHC Rules will have an overriding effect on the CPC. Notably the Code does not provide for filing of any replication. Order VI, Rule 1 describes “pleadings” to mean plaint or written statement. It is the Delhi High Court (Original Side) Rules, 2018 that provides a time limit for filing the replication and since the said Rules regulate the procedure, the same will have to prevail over the Code. We are in complete agreement with the view taken by the Division Bench of this court in DDA Vs. K.R. Builders (P) Ltd., reported as (2005) 81 DRJ 708 and relied on in HTIL Corporation, B.V. & Ors. v. Ajay Kohli, reported as (2006) 90 DRJ 410, where it was observed as under:

8. In view of this amendment, the Delhi High Court (Original Side Rules) give the same time schedule for filing a written statement. Written statement, therefore, can be filed within 30 days and thereafter on sufficient ground for such extension being shown on an affidavit but such extension shall not be later than 90 days from the date of service.” (emphasis supplied)

18. Rule 4 of the DHC Rules came up for interpretation in a noncommercial suit before a Single Judge of this Court in Amrendra Dhari (Supra). The court drew a distinction between the discretionary powers of condonation of delay envisaged under Rule 4 and Rule 5 for filing of the written statement and replication, respectively. Court was of the considered view that the construct of the two Rules has different outcomes, even though textually they are perceived to be the same merely because of the use of the expression “not thereafter” in the two Rules. The court held that (not necessarily in the same words) while Rule 5 circumscribes the courts discretion to 45 days -and not a day beyond- in permitting the filing of replication, no such hard stop date is envisaged to apply to Rule 4, as far as written statements filed beyond 120 days are concerned. The court found a nuanced distinction in the two Rules, because of the use of words “may” in Rule 4 and “shall” in Rule 5, the Court was of the view that “may” signifies existence of discretion unlike “shall” used in Rule 5. The court was also persuaded by the dictum of law that a party should not be condemned unheard. Closing the right to file written statement was considered to be a serious consequence that could not be undermined due to a procedural breach.

19. The ruling in Amrendra Dhari (Supra) was scrutinised in Charu Agrawal v. Alok Kalia & Ors.15, wherein a Co-ordinate Bench of this Court examined the width of Rule 4. While traversing the entire case law on the subject and agreeing with the conclusion in earlier decision of the Division Bench in Ram Swarup Lugani (Supra) and of the Co-ordinate Bench in Harjyot Singh (Supra), it was held as under:- “35. It must with due respect be observed that neither Order VIII as originally standing in the Code nor its provisions as 2023 SCC OnLine Del 1238 adopted by the 2015 Act employ the phase “but not thereafter”. The said expression stands enshrined in both Rules 4 and 5 of 2018 Rules. It was the adoption of the aforesaid phrase which was understood by the Division Bench in Ram Sarup Lugani to be of critical and vital significance. The Court is further constrained to observe that once the Division Bench had on an extensive review of Rule 5 come to conclude that the usage of the expression was indicative of a terminal point having been constructed, it would have been impermissible to take a contrary view. Ram Sarup Lugani had tested the provisions of Rule 5 based on a textual interpretation, the adoption of a special period of limitation, the recognition of the Order VIII principles not being applicable and even the inherent power not being liable to be invoked in light of the emphatic language of the provision itself. Ram Sarup Lugani had also noticed the earlier Division Bench judgments in DDA vs K.R. Builders Pvt Ltd., HTIL Corporation B.V vs Ajay Kohli as well as in Print Pak Machinery Ltd. v. Jay Kay Papers Converters. all of which had consistently upheld and recognised the primacy of the Rules over the provisions of the Code. The Court in Ram Sarup Lugani had also duly noticed the judgment of the Supreme Court in Desh Raj. The former decision thus constituted a binding precedent on the scope of the Rules, the mandatory nature of the timelines prescribed thereunder and that neither Order VIII nor the inherent powers of the Court being liable to be invoked to extend the period of limitation as stipulated in Rule 5.

36. While the aforesaid discussion would have been sufficient to lay the controversy at rest, since Amarendra Dhari Singh also proceeds on a perceived distinction between Rules 4 and 5, the Court deems it apposite to observe as follows. As was noticed in the preceding parts of this decision, both Rules employ the phrase “but not thereafter”. Both the phrases “not exceeding” and “but not thereafter” must clearly be accorded due weight and consideration. This was an aspect which was duly noticed in Ram Sarup Lugani.

37. Regard must also be had to the fact that while the penultimate part of Rule 4 is not replicated in Rule 5, that too would be of little significance when one holistically reads Rule

4. It becomes pertinent to note that the obligation to file a written statement in 30 days is originally placed by Rule 2 falling in Chapter VII. Rule 4 deals with the extension of time for filing a written statement. As is manifest from a plain reading of that provision, it confers a power on the Court to condone the delay that may have been caused and a written statement having not being filed within 30 days if it be satisfied that the Defendant was prevented by sufficient cause and for exceptional and unavoidable reasons to file the same within the prescribed period. Rule 4 then and upon such satisfaction being arrived at empowers the Court to extend the time for filing a written statement by a further period not exceeding 90 days but not thereafter.

38. The penultimate part of Rule 4 talks of the power of the statement if it be found that the same has not been tendered within the extended time. The use of the phrase “extended time” cannot possibly run beyond the maximum period of 120 days. In any case, the said provision as made in Rule 4 cannot possibly be countenanced or interpreted to recognise the the period of 120 days. The reliance which has been placed on various decisions noticed above and delivered in the context of Order VIII as found in the Code would have to be duly understood bearing in mind what had been held by the earlier Division Benches of our Court in K.R. Builders Pvt Ltd, HTIL Corporation as well as in Print Pak. The said judgments had consistently held that the Rules as adopted by the Court would clearly prevail over and above those which may find place in the Code. All the four decisions noticed above, had been rendered prior in point of time to Esha Gupta and had neither been noticed nor considered in the said judgment. Ram Sarup Lugani while relying on the aforenoted decisions, had drawn sustenance from those decisions in support of its ultimate conclusion that Order VIII and the principles underlying the same would not apply to Rule 5.

39. The Court also deems it necessary to observe that the Rules directly fell for consideration of the Division Bench in Ram Sarup Lugani as well as the learned Judges who authored Gautam Gambhir and Harjyot Singh. The facial distinction between Rules 4 and 5 which appears to have weighed with the Court in Amarendra Dhari Singh would, in any case, not justify taking a contrary view. The Court notes that both Gautam Gambhir and Harjyot Singh were decisions rendered directly in the context of Rules 4 and 5 as enshrined in Chapter VII. This Court thus finds itself unable to accord an interpretation upon Rule 4 or 5 which would run contrary to what had been held in the earlier decisions and which necessarily bind this Court.

40. In conclusion, this Court is of the considered opinion that Gautam Gambhir, Ram Sarup Lugani and Harjyot Singh are binding precedents on the scope of Rules 4 and 5 as falling in Chapter VII of the Rules. The mere fact that the argument of a perceived discretion vesting in the Registrar in Rule 4 was not specifically raised or addressed would not justify the judgment of the Division Bench being either ignored or doubted. The Court has already noticed the issues that arise out of the judgment of the Division Bench in Esha Gupta. The earlier decisions of the Division Benches of the Court in K.R. Builders, HTIL Corporation, and Print Pak do not appear to have been cited for the consideration of the Bench. Ram Sarup Lugani was a judgment which came to be rendered upon an exhaustive analysis of the earlier precedents rendered in the context of the Rules and the Code, the peremptory language in which Rule 5 stood couched, of how the creation of a special rule relating to limitation would exclude the permissibility of condonation or extensions being granted. While the order of the Division Bench in Tushar Bansal was based on a concession that was made, the judgment in Jamaluddin came to be pronounced with neither side having drawn the attention of the Court to the decision in Ram Sarup Lugani. The said decision proceeded on the principles which underlie Order VIII of the Code and the judgments of the Supreme Court in Kailash and Bharat Kalra rendered in the context of that provision. The Court notes that the adoption of Order VIII principles already stood negated by the earlier Division Benches in K.R. Builders, HTIL Corporation, Ajay Kohli and Print Pak. Those decisions too do not appear to have been cited for the consideration of the Court in Jamaluddin.”

20. In Charu (Supra), the Co-ordinate Bench has very emphatically held the inviolability of the hard stop period of 120 days prescribed in Rule 4 for filing the written statement. Court re-stated the principles laid down in Gautam Gambhir (Supra) and Harjyot Singh (Supra), and declared that they act as binding precedents on the issue. As of now, Charu (Supra) has laid to rest the debate on the ability of courts to condone delay in filing of written statement beyond 120 days in a noncommercial suit. Rule 4 circumscribes the power of court to condone the delay beyond the maximum permissible time of 120 days.

21. Resultantly, this Court has no hesitation in holding that that the decision of Registrar is in conformity with the law as it stands and the exhaustive decisions of Co-ordinate Bench of this Court.

22. The chamber appeal merits dismissal and is accordingly rejected.

23. As a necessary sequitur, the application filed by defendant No.1 being I.A. 14512/2022 seeking condonation of delay of 120 days in filing of written statement is also dismissed.” The order passed today in the present matter be placed with the Judgement passed on 21.08.2023.

MANOJ KUMAR OHRI, J SEPTEMBER 5, 2023