Court’s decision
The Delhi High Court allowed a commercial first appeal challenging dismissal of a recovery suit on technical grounds of non-compliance with Order VI Rule 15A of the Code of Civil Procedure. The Division Bench held that failure to file a Statement of Truth in a commercial suit, though mandatory, is a curable procedural defect and cannot defeat a decree on merits after full trial. Setting aside the impugned judgment, the Court granted the plaintiff four weeks to comply and directed the trial court to pass a fresh decree based on findings already recorded in her favour.
Facts
The dispute arose from a long-standing commercial relationship between a sole proprietor engaged in the business of craft paper trading and the defendant purchaser. Goods were supplied on credit under various invoices, and a running account was maintained reflecting payments and outstanding dues.
The plaintiff asserted that after adjusting payments made between 2013–2018, an outstanding principal of ₹34,50,580 remained due. To discharge this liability, the defendant issued twelve cheques dated 08.05.2017. Most cheques were dishonoured for “funds insufficient,” and one was returned with remarks “wrongly delivered/not drawn on us” and subsequently “account closed.”
Following issuance of legal notice and initiation of proceedings under Section 138 of the Negotiable Instruments Act, the plaintiff instituted a recovery suit for ₹45,35,025, comprising principal and interest. The suit was initially filed under Order XXXVII CPC and later treated as a commercial suit.
Issues
The trial court framed five issues, including limitation, maintainability, discharge of liability, entitlement to recovery, and pendente lite interest.
Although the trial court held that the suit was within limitation and that the plaintiff was entitled to recovery of ₹29,64,404 as principal with interest at 18% per annum up to filing of the suit, it ultimately dismissed the suit solely on the ground of non-compliance with Order VI Rule 15A CPC.
The High Court was called upon to determine whether such procedural non-compliance justified dismissal of a suit after full adjudication on merits.
Appellant’s arguments
The plaintiff contended that non-filing of a Statement of Truth occurred because the suit was originally instituted as a summary suit and later converted into a commercial suit. It was submitted that the defect was curable and that she was willing to file an appropriate application to comply with Order VI Rule 15A CPC.
The appellant argued that once the trial court had returned categorical findings on merits and quantified the recoverable amount, dismissal on a technical ground amounted to elevating procedure over substance. The plaintiff sought restoration of the decree based on merits.
Respondent’s arguments
The defendant argued that Order VI Rule 15A CPC is mandatory and requires strict compliance in commercial disputes. It was submitted that the plaintiff had ample opportunity to cure the defect before framing of issues but failed to do so.
Reliance was placed on a previous Division Bench judgment in M/s A.V. Industries v. M/s Neon Electricals Pvt. Ltd., where non-compliance with Order VI Rule 15A led to setting aside of an ex parte decree. The respondent maintained that the impugned judgment required no interference.
Analysis of the law
The High Court examined Order VI Rule 15A CPC, which mandates verification of pleadings by way of a Statement of Truth in commercial disputes. The Court acknowledged that the provision is couched in mandatory language and intended to ensure discipline and sanctity in commercial litigation.
However, the Bench underscored that procedural law is a “handmaid of justice.” A procedural defect that neither strikes at jurisdiction nor causes irremediable prejudice cannot override substantive rights adjudicated after full trial.
The Court also noted that sub-rule (5) of Order VI Rule 15A uses the word “may,” indicating discretionary power to strike out pleadings rather than automatic invalidation.
Thus, non-compliance with the Statement of Truth requirement, though serious, remains a rectifiable defect.
Precedent analysis
The Bench distinguished the ruling in M/s A.V. Industries, observing that the earlier case involved an ex parte decree where one party had no opportunity to lead evidence. Moreover, in that case, no undertaking had been offered to cure the defect.
In contrast, the present case involved a fully contested trial where evidence was led, witnesses were cross-examined, and documentary material was scrutinised. Findings on Issues 3 and 4 clearly established the plaintiff’s entitlement to ₹29,64,404 as principal.
The Court clarified that precedent must be applied contextually and not mechanically. The discretion embedded in Order VI Rule 15A(5) CPC had not been considered in depth in the earlier decision.
Court’s reasoning
The Court emphasised that the lis between the parties had been completely adjudicated. The ledger account, invoices, dishonoured cheques, and witness testimonies were meticulously examined by the trial court.
Having reached a definitive finding in favour of the plaintiff on merits, dismissal of the suit solely for non-filing of a Statement of Truth amounted to procedural rigidity overriding justice.
The defect neither rendered proceedings void nor caused prejudice to the defendant. The omission was curable, especially given that the suit was originally instituted as a summary suit and later converted into a commercial suit.
Accordingly, the Court held that the impugned judgment could not be sustained.
Conclusion
The Delhi High Court set aside the dismissal of the commercial recovery suit. The plaintiff was granted four weeks to file an appropriate application complying with Order VI Rule 15A CPC.
Upon compliance, the trial court was directed to pass a fresh decree consistent with findings already recorded regarding entitlement to ₹29,64,404 and to determine pendente lite and future interest in accordance with law.
The appeal was disposed of in these terms.
Implications
This ruling clarifies that while Order VI Rule 15A CPC is mandatory in commercial suits, non-compliance does not automatically nullify proceedings after full adjudication.
The judgment reinforces a key procedural principle: courts must balance procedural discipline with substantive justice.
For commercial litigants, the decision underscores the importance of filing Statements of Truth but also assures that inadvertent procedural lapses, if curable and non-prejudicial, will not defeat meritorious claims.
The ruling provides significant guidance on interpretation of Order VI Rule 15A and strengthens judicial discretion in commercial litigation.
Case law references
M/s A.V. Industries v. M/s Neon Electricals Pvt. Ltd. (Delhi High Court)
Held that non-compliance with Order VI Rule 15A CPC led to setting aside of an ex parte decree. Distinguished in the present case on factual and contextual grounds.
FAQs
1. Is filing a Statement of Truth mandatory in commercial suits?
Yes. Order VI Rule 15A CPC mandates filing of a Statement of Truth in commercial disputes.
2. Can a suit be dismissed for failure to file a Statement of Truth?
While the requirement is mandatory, courts retain discretion. If the defect is curable and no prejudice is caused, dismissal may not be justified.
3. What did the Delhi High Court clarify in this case?
The Court clarified that procedural non-compliance under Order VI Rule 15A CPC cannot override substantive findings on merits after a full trial.
