Aditya Khaitan vs Il And Fs Financial Services Limited

2023INSC867 REPORTABLE

IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION CIVIL APPEAL NOS. 6411-6418 OF 2023 (Arising out of SLP (C) Nos. 4789-4796 of 2021)

Aditya Khaitan & Ors. … Appellant (s) Versus

IL and FS Financial Services Limited ...Respondent(s)

JUDGMENT

K.V. Viswanathan, J.

1. Leave granted.

2. The present appeals challenge the judgment of the High

Court at Calcutta dated 26.02.2021 passed in General

Application Nos. 3,4,5,6,7,8,9 and 10 of 2021 in Civil Suit

Signature Not Verified No. 177 of 2019. By the said judgment, the High Court had Digitally signed by Nidhi Ahuja Date: 2023.10.03 17:22:09 IST Reason: dismissed the said applications and consequently denied the

1 applicants/defendants prayer to take on record their written

statements. According to the High Court, the applications

cannot be allowed as the period of 30 days to file the written

statements had expired on 08.03.2020. The High Court has

held that the order dated 23.03.2020 passed by this Court in

Suo Motu Writ Petition (C) No. 3 of 2020 [In Re: Cognizance

for Extension of Limitation], which is to be effective from

15.03.2020 would not enure to the benefit of the

applicants/defendants since the limitation period for filing the

written statements had expired on 08.03.2020. The High

Court has further held that, as held in Sagufa Ahmed and

Others Vs. Upper Assam Plywood Products Private Limited

and Others (2021) 2 SCC 317, since the orders of this Court

under Article 142 of the Constitution of India extended only

“the period of limitation” and not the period up to which

delay can be condoned, the applications for taking on record

the written statements cannot be entertained.

2 Relevant Facts:

3. To understand the correctness or otherwise of the

judgment impugned, the following basic facts are necessary:-

i) On 30.08.2019, the respondent herein – IL and FS

Financial Services Limited (the plaintiff) filed a suit for

recovery of money along with other consequential reliefs in

C.S. No. 177 of 2019 on the file of the High Court at

Calcutta. There were nine defendants. The said nine

defendants are appellants before us.

ii) On 07.02.2020, summons was served in the suit on the

defendants. Being a Commercial Suit, the 30-day period for

filing written statements expired on 08.03.2020. On

06.06.2020, the further condonable period of 90 days also

expired.

iii) No written statements having been filed within the said

timelines, the appellants, on 20.01.2021, filed in all eight

applications for the nine defendants. The prayer in the

applications was that the written statements of the defendants 3 be accepted by extending the time. The reasons set out in the

affidavit were that the World Health Organization declared

COVID-19 as a pandemic on 11.03.2020; that the

Government of India and the State Governments issued

advisories related to the pandemic; that on 11.03.2020, orders

were promulgated by the Government of India under the

Disaster Management Act, 2005 to enhance the preparedness

and containment of the pandemic; that the Government of

West Bengal on 22.03.2020 imposed lockdown w.e.f.

23.03.2020; that during the month of April, 2020, the office

of the answering applicants was completely closed. Most

importantly, the affidavits relied on the order of this Court

dated 23.03.2020 in In Re: Cognizance for Extension of

Limitation in Suo Motu W.P. (C) No. 3 of 2020 whereby this

Court took suo motu cognizance of the situation and extended

the period of limitation w.e.f. 15.03.2020 till further orders.

The applicants also referred to the order of 10.07.2020

wherein this Court further extended the period of limitation, 4 in connection with certain specific statutes. They averred

that since the further period of 90 days had not expired at the

time when the aforesaid order of 23.03.2020 was passed, they

sought refuge under the orders of this Court dated 23.03.2020

and 10.07.2020.

iv) These applications were vehemently opposed by the

plaintiffs by their reply of 17.02.2021. Their objection was

that the orders of this Court dated 23.03.2020 and 10.07.2020

would not come to the rescue of the applicants since the

limitation period had expired prior to 15.03.2020.

v) The plaintiff relied on the judgment of this Court dated

18.09.2020 in Sagufa Ahmed (supra) in support of its

contention. The High Court having accepted the stand of the

plaintiff did not take the written statements on record.

Aggrieved the applicants/defendants are before us.

5 Contentions:

4. We have heard Mr. Sanjoy Ghose, learned Senior

Counsel for the appellants and Mr. Sahil Tagotra, learned

Counsel for the respondent/plaintiff.

5. Mr. Sanjoy Ghose, learned Senior Counsel for the

appellants, by placing reliance on the judgment of this Court

in Prakash Corporates vs. Dee Vee Projects Limited, (2022)

5 SCC 112 submitted that much water has flown after the

judgment of Sagufa Ahmed (supra).

6. According to the learned Senior Counsel, Prakash

Corporates (supra) while noticing the orders of 23.03.2020,

06.05.2020 and 10.07.2020 also deals with the directions in

the orders of 08.03.2021, 27.04.2021 and 23.09.2021 made in

the same In re: Cognizance for Extension of Limitation.

Noticing these subsequent orders, according to the learned

Senior Counsel, the Court has, in paras 28.1, 28.2 and 33.4 of

Prakash Corporates (supra) has, for the reasons set out

6 therein, distinguished Sagufa Ahmed’s case (supra). The

said paragraphs are extracted herein below:-

“28.1. 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, we are clearly of the view that the period envisaged finally in the order dated 23.09.2021 is required to be excluded in computing the period of limitation even for filing the written statement and even in cases where the delay is otherwise not condonable. It gets perforce reiterated that the orders in SMWP No. 3 of 2020 were of extraordinary measures in extraordinary circumstances and their operation cannot be curtailed with reference to the ordinary operation of law.

28.2. 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.

33.4 Having regard to the orders subsequently passed by the three-Judge Bench of this Court in SMWP No. 3 of 2020 (and MA No. 665 of 2021 therein), as also having regard to the fundamental difference of facts and the 7 surrounding factors, the said decision in Sagufa Ahmed, in our view, is also of no application to the present case.”

According to the learned Senior Counsel, the above

paragraphs squarely cover his case, since the extended period

expired on 06.06.2020.

7. Mr. Sahil Tagotra, learned Counsel for the plaintiff

reiterated the findings of the High Court and submitted that

the applicants have forfeited their right to file the written

statements.

8. In the above background, the only question that arises

for consideration is, was the High Court justified in rejecting

the application for extension of time dated 20.01.2021 and in

not taking the written statements on record?

Discussion and Conclusion:

9. “Vigilantibus non dormientibus jura subveniunt” - the

law assists those who are vigilant, not those who sleep over

their rights is a fundamental legal maxim on which statutes of

limitations are premised.

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10. When the whole world was in the grip of devastating

pandemic, it could never have been said that the parties were

sleeping over their rights. It is, at this juncture, that this

Court stepped in and after taking suo motu cognizance passed

orders under Article 142 of the Constitution of India

extending the deadlines. The extraordinary situation was

dealt with rightly by extraordinary orders protecting the

rights of parties by ensuring that their remedies and defences

were not barred.

11. In suo motu proceedings titled In Re: Cognizance for

Extension of Limitation, series of orders came to be passed.

Those orders are dated 23.03.2020, 06.05.2020, 10.07.2020,

08.03.2021, 27.04.2021 and 23.09.2021. The orders are not

repeated since the relevant portions are extracted in Prakash

Corporates (supra).

12. However, the orders of 23.03.2020 and 08.03.2021 are

extracted herein below to show the contrast between the

orders that obtained when Sagufa Ahmed (supra) was 9 pronounced and the orders passed post- Sagufa Ahmed

(supra). Sagufa Ahmed (supra) was pronounced on

18.09.2020 when the orders of 23.03.2020, 06.05.2020 and

10.07.2020 were in vogue. The order of 23.03.2020 in In Re:

Cognizance for Extension of Limitation reads as under: -

“This Court has taken Suo Motu cognizance of the situation arising out of the challenge faced by the country on account of Covid-19 Virus and resultant difficulties that may be faced by litigants across the country in filing their petitions/applications/suits/appeals/all other proceedings within the period of limitation prescribed under the general law of limitation or under Special Laws (both Central and/or State).

To obviate such difficulties and to ensure that lawyers/litigants do not have to come physically to file such proceedings in respective Courts/Tribunals across the country including this Court, it is hereby ordered that a period of limitation in all such proceedings, irrespective of the limitation prescribed under the general law or Special Laws whether condonable or not shall stand extended w.e.f. 15th March 2020 till further order/s to be passed by this Court in present proceedings.

We are exercising this power under Article 142 read with Article 141 of the Constitution of India and declare that this order is a binding order within the meaning of Article 141 on all Courts/Tribunals and authorities.

This order may be brought to the notice of all High Courts for being communicated to all subordinate Courts/Tribunals within their respective jurisdiction.

10 Issue notice to all the Registrars General of the High Courts, returnable in four weeks.”

(emphasis supplied)

13. The order of 06.05.2020 directed that the limitation

prescribed under the Arbitration & Conciliation Act, 1996

and under Section 138 of the Negotiable Instruments Act,

1881 shall stand extended w.e.f. 15.03.2020 until further

orders. It also provides that in case the limitation had expired

after 15.03.2020, the period between 15.03.2020 and lifting

of lockdown in the jurisdictional area would be extended for

a period of 15 days after the lifting of lockdown. Thereafter,

on 10.07.2020, taking note of the submission of the learned

Attorney General, this Court extended the order of

23.03.2020 and 06.05.2020 to Section 29A of the Arbitration

and Conciliation Act, 1996 and also to Section 23(4) which

provided for timelines for completion of statement of claim

and defence and also extended time under Section 12A of the

11 Commercial Courts Act, 2015 which prescribed time limit for

completing the process of compulsory pre-litigation,

mediation and settlement. What is significant is that there

was no change in the basic order of 23.03.2020, namely, that

what was extended was the period of limitation.

14. It was on this basis that Sagufa Ahmed’s case (supra)

decided on 18.09.2020 held in para 17 as under:-

“17. But we do not think that the appellants can take refuge under the above order in Cognizance for Extension of Limitation, In re. What was extended by the above order of this Court was only “the period of limitation” and not the period up to which delay can be condoned in exercise of discretion conferred by the statute…….”

15. Contrasting the order of 23.03.2020 with 08.03.2021,

which order of 08.03.2021 is reiterated in the orders of

27.04.2021 and 22.09.2021, the following emerges. The

order of 08.03.2021 needs to be extracted first.

“1. Due to the onset of COVID-19 pandemic, this Court took suo motu cognizance of the situation arising from difficulties that might be faced by the litigants across the country in filing petitions/applications/suits/appeals/all other proceedings within the period of limitation prescribed under the general law of limitation or under any special laws (both Central or State). By an order

12 dated 27.03.2020 this Court extended the period of limitation prescribed under the general law or special laws whether compoundable or not with effect from 15.03.2020 till further orders. The order dated 15.03.2020 was extended from time to time. Though, we have not seen the end of the pandemic, there is considerable improvement. The lockdown has been lifted and the country is returning to normalcy. Almost all the Courts and Tribunals are functioning either physically or by virtual mode. We are of the opinion that the order dated 15.03.2020 has served its purpose and in view of the changing scenario relating to the pandemic, the extension of limitation should come to an end.

2. We have considered the suggestions of the learned Attorney General for India regarding the future course of action. We deem it appropriate to issue the following directions: -

2.1. In computing the period of limitation for any suit, appeal, application or proceeding, the period from 15.03.2020 till 14.03.2021 shall stand excluded.

Consequently, the balance period of limitation remaining as on 15.03.2020, if any, shall become available with effect from 15.03.2021.

2.2. In cases where the limitation would have expired during the period between 15.03.2020 till 14.03.2021, notwithstanding the actual balance period of limitation remaining, all persons shall have a limitation period of 90 days from 15.03.2021. In the event the actual balance period of limitation remaining, with effect from 15.03.2021, is greater than 90 days, that longer period shall apply.

2.3. The period from 15.03.2020 till 14.03.2021 shall also stand excluded in computing the periods prescribed under Sections 23(4) and 29-A of the Arbitration and Conciliation Act, 1996, Section 12-A of the Commercial Courts Act, 2015 and provisos (b) and (c) of Section 138 13 of the Negotiable Instruments Act, 1881 and any other laws, which prescribe period(s) of limitation for instituting proceedings, outer limits (within which the court or tribunal can condone delay) and termination of proceedings.”

2.4. The Government of India shall amend the guidelines for containment zones, to state.

"Regulated movement will be allowed for medical emergencies, provision of essential goods and services, and other necessary functions, such as, time bound applications, including for legal purposes, and educational and job-related requirements."

3. The Suo Motu Writ Petition is disposed of accordingly”

16. A perusal of para 2.3 of the above order shows that this

Court directed that the period from 15.03.2020 till

14.03.2021 will stand excluded in computing:-

a) the period prescribed under 23(4) and 29-A of the

Arbitration and Conciliation Act, 1996;

b) Section 12-A of the Commercial Courts Act, 2015;

c) provisos (b) and (c) of Section 138 of the Negotiable

Instruments Act, 1881; and

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(d) any other laws which prescribe period of limitation for

instituting proceedings, outer limits (within which the court

or tribunal can condone delay) and termination of

proceedings.

17. As would be clear from hereinabove, the very basis of

the judgment in Sagufa Ahmed (supra) that under the

23.03.2020 order, only the period of limitation has been

extended and not the period up to which delay can be

condoned, has been taken away by expanding the protection

by excluding the period even for computing outer limits

within which the court or tribunal can condone delay. This is

an important subsequent aspect which has a great bearing in

deciding the present controversy.

18. Prakash Corporates case (supra) also notices the fact

that the order of 08.03.2021 and subsequent orders also by a

Bench of three Hon’ble Judges were not and could not have

been available for the Bench which decided Sagufa Ahmed’s

case (supra) since Sagufa Ahmed’s case (supra) was 15 decided on 18.09.2020. In Prakash Corporates (supra),

though the period of 30 days for filing written statements

expired on 05.02.2021 and the 120-day outer limit expired on

06.05.2021, written statements notarized on 07.07.2021 was

directed to be taken on record. The Court in Prakash

Corporates (supra) relied on the orders of 23.03.2020,

08.03.2021, 27.04.2021 and also noticed the order of

23.09.2021 while so ordering.

19. By virtue of Section 16 of the Commercial Courts Act,

2015 brought into force on 23.10.2015 some provisions of

the Code of Civil Procedure, 1908 in its application to the

commercial disputes were amended. The schedule to the

Commercial Courts Act amended Order 5 Rule 1(1), Order 8

Rule 1 and Order 8 Rule 10 insofar as their applicability to

commercial disputes was concerned. Order 8 Rule 1 reads as

under:

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“Order 8 Rule 1

“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.”

20. As would be seen from the above, the outer limit within

which the court or tribunal can condone the delay is 120 days

from the date of summons.

21. As has been set out hereinabove, while summons was

served on 07.02.2020, the 30 days period expired on

08.03.2020 and the outer limit of 120 days expired on

06.06.2020. The application for taking on record the written

statements and the extension of time was filed on 20.01.2021.

Applying the orders of 08.03.2021 and the orders made

17 thereafter and excluding the time stipulated therein, the

applications filed by the applicants on 19.01.2021 are well

within time. The judgment passed by the High Court, for the

reasons set out herein above, needs to be set aside. The

principle underlying the orders of this Court dated

08.03.2021, 27.04.2021 and 23.09.2021, in In Re:

Cognizance for Extension of Limitation, albeit those orders

being passed, subsequent to the impugned order, would enure

to the benefit of the applicants-defendants.

22. For the reasons stated above, the Appeals are allowed

and the written statements filed on 20.01.2021 are directed to

be taken on record. The suit be proceeded with thereafter.

The Appeals stand allowed with no order as to costs.

…..…………………J. (J.K. Maheshwari)

…..…………………J. (K.V. Viswanathan) New Delhi;

October 3, 2023.

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