Court’s Decision
The Supreme Court, while invoking the principle that “procedural law is not to be a tyrant but a servant, not an obstruction but an aid to justice”, allowed the appeal filed by the appellant company and set aside the Karnataka High Court’s order affirming the rejection of its written statement in a commercial suit. The Bench of Justice Aravind Kumar and Justice N.V. Anjaria held that the rigid adherence to procedural timelines under the Commercial Courts Act must yield to the overarching mandate of justice, particularly in light of the COVID-19 limitation exclusion orders.
The Court restored the appellant’s right to file the written statement and cross-examine the plaintiff’s witnesses, observing that the pandemic period had been excluded for computation of limitation by earlier suo motu orders of the Supreme Court. The matter was remanded to the Commercial Court with directions to permit the filing of the written statement upon payment of ₹1,00,000 as costs and to conclude the trial within six months.
Facts
The appellant company, a motorcycle manufacturer, appointed the respondent as a dealer through a letter of intent. The respondent invested substantial sums towards the dealership setup, purchase of spare parts, and showroom infrastructure. However, due to the government’s ban on BS-IV category vehicles from April 2020 and the appellant’s failure to supply conversion kits to upgrade to BS-VI, the dealership was terminated. The respondent filed a commercial suit seeking recovery of ₹1.78 crore from the appellant and ₹7.06 lakh from another company for refund of service equipment payments.
Despite being served with summons on 17 July 2021, the appellant failed to file its written statement within the statutory 120-day limit prescribed under Order VIII Rule 1 of the Code of Civil Procedure (as amended by the Commercial Courts Act, 2015). The trial court consequently rejected the written statement and decreed the suit partly in favour of the plaintiff. The Karnataka High Court upheld this order. The appellant approached the Supreme Court, challenging the denial of the opportunity to defend and cross-examine.
Issues
The Supreme Court confined the dispute to one pivotal question:
“Whether the High Court was correct in observing that on account of non-filing of the written statement, the defendant’s right to cross-examine is taken away?”
Petitioner’s Arguments
The appellant contended that the rejection of its written statement was contrary to the orders passed in In Re: Cognizance for Extension of Limitation (2022) 3 SCC 117, which had extended all limitation periods between 15 March 2020 and 28 February 2022 owing to the COVID-19 pandemic. Relying on Babasaheb Raosaheb Kobarne v. Pyrotek India Pvt. Ltd. (2022 SCC OnLine SC 1315) and Prakash Corporates v. Dee Vee Projects Ltd. (2022) 5 SCC 112, it argued that the exclusion applied equally to commercial suits, rendering its delayed written statement valid.
It further submitted that Order VIII Rule 10 CPC does not permit automatic decrees upon non-filing of a written statement. The appellant’s right to cross-examine could not be extinguished merely due to procedural default. Citing Asma Lateef v. Shabbir Ahmad (2024) 4 SCC 696 and Ranjit Singh v. State of Uttarakhand (2024 INSC 724), it argued that even an unrepresented defendant retains the right to cross-examine to disprove the plaintiff’s case. The counsel urged that technicalities should not be allowed to defeat substantive justice.
Respondent’s Arguments
The respondent opposed the appeal, contending that the appellant had deliberately defaulted despite several opportunities. Its conduct reflected an intention to delay proceedings. The right to file a written statement and to cross-examine stood forfeited under the Commercial Courts Act after the lapse of 120 days. The respondent maintained that the appellant never sought recall of the order closing the cross-examination nor challenged it in appeal or writ, and thus had acquiesced. It was further alleged that the appellant’s petition was an abuse of process and an attempt to obstruct the execution of a lawful decree.
Analysis of the Law
The Supreme Court noted that while Order VIII Rule 1 CPC, as amended under the Commercial Courts Act, 2015, prescribes a strict 120-day period for filing a written statement, this limitation stood suspended between 15 March 2020 and 28 February 2022 due to the Court’s suo motu orders in In Re: Cognizance for Extension of Limitation. These orders categorically excluded the said period from computation of limitation across all proceedings.
The Bench emphasized that both the date of service of summons (17 July 2021) and the expiry date of limitation (14 November 2021) fell squarely within the pandemic exclusion period. Hence, the appellant’s written statement, filed on 7 January 2022, was within the legally permissible window.
The Court reaffirmed that the Commercial Courts Act’s intent is to promote efficiency, not to deny justice. It clarified that procedural rules must yield to the overriding principle of fairness, particularly when extraordinary circumstances such as a pandemic prevent compliance.
Precedent Analysis
- SCG Contracts (India) Pvt. Ltd. v. K.S. Chamankar Infrastructure Pvt. Ltd. (2019) 12 SCC 210
— Held that the 120-day timeline under the Commercial Courts Act is mandatory. However, the Court distinguished this principle in light of the COVID-19 extensions granted subsequently. - In Re: Cognizance for Extension of Limitation (2022) 3 SCC 117
— The Supreme Court, exercising powers under Article 142, directed exclusion of the entire period from 15.03.2020 to 28.02.2022 for all judicial and quasi-judicial proceedings. - Aditya Khaitan v. IL&FS Financial Services Ltd. (2023 INSC 867)
— Applied the same principle to commercial cases, allowing written statements filed beyond 120 days during the pandemic. - Babasaheb Raosaheb Kobarne v. Pyrotek India Pvt. Ltd. (2022 SCC OnLine SC 1315)
— Reinforced the right to file delayed pleadings owing to the COVID-19 limitation exclusion. - Prakash Corporates v. Dee Vee Projects Ltd. (2022) 5 SCC 112
— Affirmed that exclusion applied across all litigants and causes. - Ranjit Singh v. State of Uttarakhand (2024 INSC 724)
— Clarified that even in the absence of a written statement, a defendant’s right to cross-examine cannot be foreclosed. - Asma Lateef v. Shabbir Ahmad (2024) 4 SCC 696
— Reiterated that a court must still assess the plaintiff’s case on merits even in the absence of a written statement.
Together, these judgments fortified the Supreme Court’s conclusion that procedural lapses during the pandemic must not result in denial of a fair trial.
Court’s Reasoning
The Bench observed that the High Court failed to consider the suo motu COVID-19 orders extending limitation. Since both relevant dates—service of summons and the lapse of the 120-day period—fell within the excluded timeline, the appellant’s written statement was timely in law. The Court held that “technical rigidity cannot stand in the way of justice” and that denying the right to file a written statement and cross-examine amounted to denial of a fair hearing.
It further declared that cross-examination is an intrinsic part of the right to defence and cannot be nullified merely because a written statement is not on record. The trial court’s order taking the cross-examination as “Nil” was termed “perverse” and contrary to established legal principles.
Conclusion
Allowing the appeal, the Supreme Court set aside both the High Court and trial court orders, directed the trial court to accept the written statement upon payment of ₹1,00,000 as costs, and restored the appellant’s right to cross-examine the plaintiff’s witnesses. The matter was remanded with a direction to conclude the proceedings within six months. The Court reiterated that procedural rules are designed to facilitate, not frustrate, the cause of justice.
Implications
This ruling reinforces the liberal approach towards procedural compliance in extraordinary circumstances like the COVID-19 pandemic. It underscores that commercial litigation, while governed by strict timelines, cannot disregard the Supreme Court’s orders extending limitation. Moreover, it firmly establishes that the right to cross-examine persists even in the absence of a written statement, ensuring that substantive justice prevails over procedural formalities.
FAQs
1. Can a written statement be filed after 120 days in a commercial suit?
Ordinarily no, but the Supreme Court clarified that during the COVID-19 limitation exclusion period (15.03.2020–28.02.2022), such filing is permissible.
2. Does failure to file a written statement automatically forfeit the right to cross-examine?
No. The Supreme Court held that even without a written statement, a defendant retains the right to cross-examine the plaintiff’s witnesses to test their credibility.
3. What is the broader significance of this judgment?
It reaffirms that procedural rules serve justice, not the reverse, and that courts must adopt a liberal approach when rigid adherence defeats fairness.
