Limitation Extension Orders Passed Suo Moto Applicable To Filing Of Written Statements In Commercial Disputes - SC Clarifies

In this case, two such contract works: one being the work awarded by the Chhattisgarh Road Development Corporation Limited for construction of two laning with hard shoulder of Tara-Premnagar- Ramanunjnagar Road Section in the State of Chhattisgarh and the other being the work awarded by the Public Works Department of the Government of Chhattisgarh for the rehabilitation and upgradation of NH 111 in the State of Chhattisgarh were sub-contracted by the plaintiff-Respondent to the defendant- Appellant.

The Appellant approached the National Company Law Tribunal, Cuttack Bench seeking initiation of corporate insolvency resolution process against the Respondent with the allegations that the Respondent (corporate debtor) had failed to make payment of its unpaid operational debt.

The Respondent instituted the suit aforesaid against the Appellant for recovery of the said sum of Rs.3,73,24,821/- along with interest @ 12% p.a., allegedly being the excess payment made to the Appellant. The Respondent also filed an application under Order XXXVIII Rule 5 read with Section 151 CPC, seeking interim directions of attachment before judgment. The Trial Court referred to the applicable proviso to Order VIII Rule 1 CPC, and held that the Appellant had forfeited its right to file the written statement.

The Appellant preferred a writ petition under Article 227 of the Constitution of India before the Chhattisgarh High Court which found no reason to consider interference and proceeded to dismiss the writ petition. The Appellant had challenged the impugned judgment before the Supreme Court.

Counsel Joel, appeared for the Appellant while Counsel Ravi Bharuka represented the Respondent before the Apex Court.

The primary issue in this case was –

• Whether the opportunity of filing a written statement in the subject suit had rightly been declined or the Appellant could be extended further relaxation in view of the orders passed and issued in the wake of COVID- 19 pandemic.

The Appellant contended that the impugned orders were flawed and contrary to the mandate and directions of this Court in Suo Moto Writ Petition No. 3 of 2020. that the subject suit itself was filed by the Respondent at the time when the order was in operation, and summons were also served on the Appellant during that period. It was further claimed that the intention behind the orders in SMWP No. 3 of 2020 had been to protect the litigants from complications stemming from the pandemic and to do away with the need of explaining the individual circumstances in each and every case, and no delay could be imputed in this matter on the Appellant because any such question of delay in filing the written statement would have arisen only after the expiry of the extended period of limitation.

On the other hand, the Respondent contended that the Appellant could not claim the extension of the period of limitation by reference to the orders passed in SMWP No. 3 of 2020, particularly when its right to file the written statement stood forfeited by operation of law. It was argued that the orders passed in SMWP No. 3 of 2020 could not be of any aid or help to the Appellant because no indefeasible right accrued to claim in the discretionary extendable period to be determined by the Court.

The Supreme Court noted that the said suo motu petition was taken up by this Court in rather peculiar and extraordinary circumstances in the wake of the outbreak of the COVID-19 pandemic, where the normal functioning of almost all the institutions got disrupted due to serious illness of a large populace and due to various containment measures taken by the administrative authorities, including lockdowns.

It was observed that the functioning of Courts and other juridical institutions also suffered setbacks and, in fact, with a regular spike in COVID-19 cases, when the Governments announced lockdowns in the interest of public safety and health, it was obvious to this Court that the litigants and their authorized agents would be facing serious hardships and difficulties in relation to their litigations and more particularly, in relation to the period of limitation when it would be well-nigh impossible for them to file the proceedings within the prescribed period of limitation, if the same was expiring during the period of such health emergencies and enforcement of the measures of containment.

Thus, this Court had exercised its plenary powers under Article 142 of the Constitution of India and passed an order. Due to the reduction in the severity of the pandemic and when normalcy was being gradually restored, this Court considered it appropriate to dispose of the said suo motu petition while making specific provisions concerning the future course of action in relation to different eventualities, particularly those pertaining to the period between 15.03.2020 to 14.03.2021.

During the second wave, according to the Court, judicial notice of the steep rise in COVID-19 cases that had engulfed the entire country and found that the situation required extraordinary measures to minimize the hardship of litigant-public was taken. Therefore, it was directed that the period(s) of limitation, as prescribed under any general or special laws in respect of all judicial or quasi-judicial proceedings, whether condonable or not, stood extended until further orders. The aforesaid order remained in operation for a few months in view of the prevalence of the COVID-19 virus but, when the situation again started returning to near normal, this Court found it expedient to restore the aforesaid order.

The Court observed that, when the directions were read as a whole, it was but clear that the anxiety of this Court had been to obviate the hardships likely to be suffered by the litigants during the onslaughts of this pandemic. Hence, the legal effect and coverage of the orders passed by this Court in SMWP No. 3 of 2020 could not be unnecessarily narrowed, and rather, having regard to their purpose and object, full effect was required to be given to such orders and directions. Having regard to the purpose for which this Court had exercised the plenary powers under Article 142 of the Constitution of India and issued necessary orders from time to time in SMWP No. 3 of 2020, the Court held, that the period envisaged finally in the order dated 23.09.2021 was required to be excluded in computing the period of limitation even for filing the written statement and even in cases where the delay was otherwise not condonable.

The Court further noted the orders in SMWP No. 3 of 2020 were of extraordinary measures in extraordinary circumstances and their operation could not be curtailed with reference to the ordinary operation of law.

The Court asserted that - "in other words, the orders passed by this Court on 23.03.2020, 06.05.2020, 10.07.2020, 27.04.2021 and 23.09.2021 in SMWP No. 3 of 2020 leave nothing to doubt that special and extraordinary measures were provided by this Court for advancing the cause of justice in the wake of challenges thrown by the pandemic; and their applicability cannot be denied in relation to the period prescribed for filing the written statement. It would be unrealistic and illogical to assume that while this Court has provided for exclusion of period for institution of the suit and therefore, a suit otherwise filed beyond limitation (if the limitation had expired between 15.03.2020 to 02.10.2021) could still be filed within 90 days from 03.10.2021 but the period for filing written statement, if expired during that period, has to operate against the defendant." Thus, in view of the orders passed by this Court in SMWP No. 3 of 2020, the Court held that the time limit for filing the written statement by the Appellant in the subject suit did not come to an end on 06.05.2021.

Thus, the appeal was allowed and the impugned orders passed by the Commercial Court (District Level), Nava Raipur, Chhattisgarh, and the orders passed by the Chhattisgarh High Court were set aside. The Court further directed the written statement notarized by the Appellant to be taken on record. Moreover, the Trial Court was instructed to proceed with the suit in accordance with law.