Peoples Empowernment Group Through Its ... vs Mr. Sachin Sonawane And Ors

President Mr. Pramod Kumar Shrivastava ...Petitioner

Versus

1. Sachin Sonawane

SANTOSH

SUBHASH 2. Saroja Rajendra Asthana

KULKARNI

3. Harishankar Srivastava (deceased)

Digitally signed by

SANTOSH SUBHASH

KULKARNI

4. Shantidevi Srivastava (deceased)

Date: 2025.03.11 14:30:53 +0530

5. Suvira Asthana (deceased)

6. Subramaniam Jayraman

7. Dr. Chitra Asthana (deceased)

...Respondents

Mr. S. S. Panchpor, a/w Pratibha Gavhane and Akshay

Rabade, for the Petitioner.

Mr. Akil Kupade, for Respondent No.1.

CORAM: N. J. JAMADAR, J.

DATED: 10th MARCH, 2025

JUDGMENT:

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1. Rule. Rule made returnable forthwith and with the consent of the learned Counsel for the parties, heard finally.

2. The challenge in this petition is to an order dated 27 th April, 2022 passed by the learned District Judge presiding over

the Commercial Court at Pune, whereby an application

(Exhibit-41) preferred by the petitioner - defendant No.1 and co- defendant Nos.2, 3 and 7, to provide a fresh timeline for the actions in the commercial suit, being Special Civil Suit No.228

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of 2016, and take the written statement filed on behalf of defendant Nos.1 and 2 on record, purportedly under the provisions of sub-section (4) of Section 15 of the Commercial Courts Act, 2015, came to be rejected.

3. The petition arises in the backdrop of the following facts:

3.1 The respondent instituted a suit for recovery of an amount of Rs.1,32,62,401.88 alongwith interest thereon at the rate of 18% p.a. asserting that defendant No.1 Trust and defendant Nos.2 to 8, the trustees of defendant No.1, had placed a work order for extension and maintenance of the Engineering College building of defendant No.1. The plaintiff had executed the work in accordance with the terms of the contract. Bills were raised.

However, the defendants committed default in payment of bills.

3.2 Initially the suit was filed before the Court of Civil Judge, Senior Division, Pune, and was numbered as Special Civil Suit No.1094 of 2016. It seems, after scrutiny, the suit came to be transferred to the Commercial Court. Pursuant to an order dated 20th October, 2016 the said suit i.e. Special Civil Suit No.228 of 2016 (new) came to be assigned to the Commercial Court presided over by District Judge-1, Pune.

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3.3 The Commercial Court issued the summons. The summons was served on the defendants. Defendant No.1 appeared before the Commercial Court on 27th January, 2017.

Defendant Nos.2, 3 and 7 entered appearance on 20 th March, 2017.

3.4 The written statement was not filed within the period stipulated by the proviso to Order VIII Rule 1 of the Code of Civil Procedure, 1908 ("the Code"), as amended by Act No.4 of 2016 in its application to commercial disputes. On 6 th July, 2017, defendant Nos.1 and 2 filed an application for condonation of delay in filing the written statement (Exhibit-23) alongwith written statement.

3.5 In the meanwhile, it seems the Commercial Court remitted the suit back to the Court of Civil Judge, Senior Division, to determine as to whether the dispute in the said suit was a commercial dispute under clause (c) of sub-section (1) of Section 2 of the Commercial Courts Act. The learned Civil Judge heard the parties and by an order dated 17 th April, 2019 ruled that the dispute was of commercial nature and, thus, the suit was required to be tried and decided by the Commercial Court.

3.6 Upon the transfer of the suit back to the Commercial Court, defendant Nos.1, 3 and 7 filed application (Exhibit-41) for

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fixing a fresh timeline purportedly under Section 15(4) of the Commercial Courts Act, and also prayed for taking the written statement filed on behalf of defendant Nos.1 and 2 on 6 th July, 2017, on the record of the Court.

3.7 The plaintiff resisted the application asserting, inter alia, that the provisions of Section 15(4) had no application and the maximum time prescribed under proviso to Order VIII Rule 1 of the Code, in its application to the Commercial Courts, had elapsed and the defendants cannot be permitted to file the written statement thereafter.

3.8 By the impugned order, the learned District Judge was persuaded to reject the application observing that, the defendants themselves had filed an application for condonation of delay in filing the written statement specifically acknowledging that, they were required to file written statement within 120 days and after realizing that such an application was not maintainable, the defendants turned around and filed an application purportedly under Section 15(4), of the Commercial Courts Act, to fix a fresh timeline. The defendants attempted to take an undue advantage of the order passed by the learned Civil Judge on 17th April, 2019 though the time to file the written statement was over long back.

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3.9 By an order of even date, the learned District Judge also rejected the application to take the written statement on record (Exhibit-23) observing that, the Court had no jurisdiction to take the written statement on record after 120 days.

4. Being aggrieved by the order rejecting the prayer to take the written statement on record (Exhibit-41), the defendants have invoked the writ jurisdiction.

5. Mr. Panchpor, the learned Counsel for the petitioner, submitted that the learned District was in error in holding that the period stipulated for filing the written statement cannot be extended on an incorrect premise that the proviso to Rule 1 of Order VIII, as amended by Act No.4 of 2016, was attracted to the facts of the case. It was urged, with a degree of vehemence, that in the case at hand till the learned Civil Judge decided the issue that the dispute was a commercial dispute within the meaning of Section 2(c) of the Commercial Courts Act, 2015, the proceedings cannot be said to have been instituted and pending before the Commercial Court. Since much before such determination by the learned Civil Judge, defendant Nos.1 and 2 had already filed the written statement on 6 th July, 2017, the amended proviso to Order VIII Rule 1 had no application at all.

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6. Mr. Panchpor would further urge that merely because defendant Nos.1 and 2 had stated in their application (Exhibit-

23) to condone the delay in filing the written statement that the written statement was required to be filed within 120 days, it could not have been held that the amended proviso to Order VIII Rule 1 was attracted. The said application (Exhibit-23) was preferred by defendant Nos.1 and 2 under an incorrect impression of the nature of the proceedings then pending before the Commercial Court. Therefore, the defendants cannot be bound down by the averments in the said application.

7. Mr. Panchpor further submitted, that the written statement of defendant Nos.1 and 2 had already been filed. It would advance the cause of substantive justice if defendant Nos.1 and 2 are permitted to file the written statement and contest the suit, on merits. In a situation of this nature, where the very nature of the suit as a commercial suit was in the corridor of uncertainty, the suit can be said to have been transferred to the Commercial Court under Section 15 of the Commercial Courts Act, 2015 only after the order dated 7 th April, 2019 passed by the learned Civil Judge. Therefore, the Commercial Court was competent to determine a fresh timeline.

In that event, the proviso to sub-rule (1) of Rule1 of Order V

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does not operate. Thus, having regard to the substance of the matter, the defendants deserve an opportunity of defending the suit, urged Mr. Panchpor.

8. Mr. Kupade, the learned Counsel for respondent No.1, countered the submissions on behalf of the petitioner. It was urged that the defendants having themselves sought condonation of delay in filing the written statement, by filing application (Exhibit-23), cannot be now permitted to take an advantage of the order passed by the Civil Judge determining the nature of the Commercial Dispute. According to Mr. Kupade, the provisions contained in Section 15(4) of the Commercial Courts Act have no application at all. The said provision applies to the suits which were pending on the date of the enforcement of the Commercial Courts Act, 2015 and were required to be transferred to the Commercial Courts. In essence, sub-section (4) of Section 15 applied only to the suits pending on the date of the enforcement of the Commercial Courts Act.

9. On facts, Mr. Kupade would submit, the contention of the defendants that the summons were served on 23 rd January, 2017 is not correct. In fact, the defendants were enjoined to file written statement within 120 days, in the maximum, of the service of the writ of summons. The defendants have

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conveniently computed the period of delay from the date of appearance before the Court which is not germane for deciding the period stipulated for filing the written statement. As the period of 120 days was over much before the Commercial Court remitted the matter back to the Civil Court for determining the question as to whether the dispute was cognizable by the Commercial Court, the defendants cannot be permitted to draw any mileage from the subsequent orders passed by the Civil Court on 17th April, 2019.

10. The facts are not much in dispute. Initially, the suit was instituted before the Civil Court, Pune, on 30 th August, 2016.

The suit came to be transferred to the Commercial Court.

Summons to the defendants were issued by the Commercial Courts. Defendant No.1 appeared on 27 th January, 2017 and defendant Nos.2, 3 and 7 appeared on 20 th March, 2017.

Indisputably, the written statement was not filed within 30 days or the extended period of 120 days. On 6 th July, 2017, defendant Nos.1 and 2 filed an application to condone the delay in filing written statement (Exhibit-23). While the said application was awaiting adjudication, the matter was remitted back to the learned Civil Judge by an order dated 17 th April, 2019, the learned Civil Judge determined that the suit was

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cognizable by the Commercial Court. Thereafter on 1 st February, 2020, defendant Nos.1, 3 and 7 have filed the instant application.

11. It is imperative to note, at this stage, there is no controversy over the fact that the dispute in question falls in the realm of a commercial dispute. The order passed by the learned Civil Judge, Senior Division on 17 th April, 2019 making such declaration has not been challenged and has attained finality.

In fact, by resorting to the provisions of Section 15(4) of the Commercial Courts Act, the defendants have prayed for framing a fresh timeline and taking the written statement on record.

12. Having regard to the nature of the controversy, this Court considered it appropriate to direct the petitioner to place the copies of the summons and reports of service of the summons on the defendants. From the perusal of the copies of the summons and the report of Bailiffs overleaf, it appears that summons was issued by the District Court on 3 rd December, 2016 and it was served on defendant Nos.2 and 3 on 9th December, 2016 itself. However, the defendants claimed to have been served with the summons on 23 rd January, 2017. The date of service of summons on defendant Nos.1 and 2 assumes significance.

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13. Under the provisions of Order VIII Rule 1 and the Order V Rule 1, the time to file the written statement commences from the date of service of summons on the defendants. The proviso to Rule 1 Order VIII in its application to the Commercial Court provides that the Court may allow the defendant who fails to file the written statement within the said period of 30 days but not later than 120 days from the date of service of summons and on expiry of the said period of 120 days, 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. In view of the aforesaid provisions, the period of 120 days, at least in case of defendant No.1 - petitioner herein, and defendant No.2, was required to be computed from the date of service of summons.

Therefore, the computation of the period of delay from the date of appearance as was professed to be done in the application (Exhibit-23) does not merit acceptance.

14. Evidently, the said period of 120 days had expired much before 6th July, 2017 on which day the defendant Nos.1 and 2 filed application seeking condonation of delay in filing the written statement (Exhibit-23). Incontrovertibly, the said application could not have been allowed as no Court has the power to condone the delay in filing the written statement

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beyond 120 days, in a commercial suit. The matter would have thus attained a quietus but for the subsequent development, in the nature of remittance of the suit back to the Civil Court for deciding the question as to whether the dispute was of commercial nature and the findings thereon by the learned Civil Judge on 17th April, 2019.

15. The moot question that arises for consideration is whether the provisions contained in Section 15(4) of the Commercial Courts Act are attracted. If the answer is in the affirmative, then the second proviso to sub-rule (1) of Rule 1 of Order V may not be attracted. In other words, but for the consequences that emanate from the subsequent development, the defendants had forfeited their right to file the written statement.

16. As noted above, initially the learned Civil Judge, Senior Division made reference to the District Judge and thereupon the suit came to be transferred to the Commercial Court. Later on, after the parties entered their appearance and the time to file written statement had elapsed, the Commercial Court again remitted back the suit to the Civil Court.

17. This Court was anxious to consider as to whether these actions of the Civil Court and the Commercial Court caused any prejudice to the defendants. In a case where a commercial suit

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is instituted before a Civil Court, the proper course is to return the plaint for the presentation to the Commercial Court. In the case of Ambalal Sarabhai Enterprises vs. KS Infraspace LLP Limited and another1, the Supreme Court has enunciated that the object of the Commercial Courts Act, 2015 would be defeated, if every other suit is entertained by the Commercial Court merely because it is filed before the Commercial Court.

The suits which are actually not relating to the commercial dispute but being filed merely because of the high value and with the intention of seeking early disposal would only clog the system and block the way for the genuine commercial disputes, which may have to be entertained by the Commercial Courts as intended by the lawmakers. In commercial disputes as defined a special procedure is provided for a class of litigation and a strict procedure will have to be followed to entertain only that class of litigation in that jurisdiction. If the same is strictly interpreted it is not as if those excluded will be non-suited without any remedy. The excluded clause of litigation will in any event be entertained in the ordinary civil courts wherein the remedy has always existed. In that view it is also necessary to carefully examine and entertain only disputes which actually answer the definition of "commercial disputes" as

1 (2020) 15 SCC 585.

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provided under the Act. If the courts come to the conclusion that an ordinary suit is filed in the Commercial Court, the plaint be returned under Order VII Rule 10 for being presented to the proper Court.

18. In the case at hand, it appears that the said course was not adopted by the Civil Court in the first instance, and by the learned District Judge, when the suit was again remitted back to the Civil Judge for a decision as against the nature of the dispute. It would have been in the fitness of things for the District Judge to himself examine whether the dispute fell within the ambit of the commercial dispute and, thereafter, pass an appropriate order. These infractions, however, in the facts of the case, do not seem to have caused any prejudice to the defendants.

19. This Court finds it difficult to accede to the submission of Mr. Panchpor that on account of the order passed by the learned Civil Judge on 17th April, 2019, there was a transfer of the suit to the Commercial Court and, therefore, the provision of Section 15(4) are attracted. On a plain reading of Section 15(2), it becomes abundantly clear that the said provision applies to the suits which were pending on the date of the enforcement of the Commercial Courts Act, 2015. Consequently, the issue of

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prescription of new timeline or further directions under sub- section (4) of Section 15 would arise only in the suits which were transferred in terms of sub-section (2) of Section 15 of the Commercial Courts Act, 2015.

20. It is equally well settled that if a plaint is returned under Order VII Rule 10 for presentation to the proper court, the proceedings before the proper court, in the said suit, shall commence de nova. The proceedings that had taken place before the Court which had no jurisdiction are of no relevance.

The proceedings before the proper court do not continue from the stage at which the plaint was returned to the plaintiff for presentation to the proper court. Therefore, the endeavour of the defendants to bank upon the provisions contained in Section 15(4) of the Commercial Courts Act, 2015 does not merit countenance.

21. Reliance placed by Mr. Kupade on the judgment of the Delhi High Court in the case of Virendra Kumar vs. Rekha Bhayana2 appears to be well-founded. In the said case, it was enunciated that the provisions contained in Section 15(2) of the Commercial Courts Act cannot be treated as provisions which can apply in futuro for all times to come, so as to permit 2 CM(M)/842/2022 dtd.25.8.2022.

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litigants to file commercial suit before the Civil Court and have the suit transferred to the Commercial Court.

22. A useful reference can also be made to a Division Bench judgment of this Court in the case of Reliance General Insurance Co. Ltd. vs. Colonial Life Insurance Company (Trinidad) Ltd and another3 wherein while determining the question as to "whether the mandatory timeline of 120 days in filing a written statement in a commercial suit is applicable to suits which were filed prior to the enactment of the Commercial Courts Act, 2015 and which came to be transferred as commercial suits to be heard by the Commercial Division of the High Court in accordance with the provisions of Section 15 of the Commercial Courts Act", the Division Bench construed the scope and import of the provisions contained in Section 15 of the Act and emphasised that it applies to pending suits. The following observations in paragraph 13 are material and hence extracted below:

"13. ..... Chapter V of the Commercial Courts Act, dealing with the subject, is entitled "Transfer of pending suits". Sub- section (1) of Section 15 provides for compulsory transfer of all suits and applications including applications under Arbitration and Conciliation Act, 1996, relating to commercial disputes of specified pending in a High Court where a Commercial Division has been constituted, to such commercial division. The condition for application of this provision is "pendency" of a suit or application. The provisions which follow [Sub-sections (2) to 3 2021 SCC OnLine Bom 14147.

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(5)] deal with such pending suits transferred to the commercial division. There is no scope for distinguishing between these suits on the basis of service or want of service of writ o summons. Sub-sections (2) to (5) of Section 15 apply to all commercial suits irrespective of the date of service of writ of summons."

(emphasis in origin)

23. I also find substance in the submissions of Mr. Kupade that the defendants themselves proceeded on the premise that the suit, while it was pending before the Commercial Court, was a commercial suit. Thus, in the application seeking condonation of delay (Exhibit-23) the defendants had conceded that the written statement was required to be filed within 120 days. That being the understanding of the parties to the suit, no prejudice can be said to have been caused.

24. It is also imperative to note that, as noted above, the summons was served on defendant Nos.1 and 2 on 9 th December, 2016 itself and consequently the maximum period of 120 days expired much earlier. Secondly, what further exacerbates the situation is the delay post determination of the nature of the suit by the learned Civil Judge. The learned Civil Judge passed the order on 17th April, 2019. The instant application (Exhibit-41) was filed on 1 st February, 2020. This gives heft to the submission on behalf of the respondent No.1, that the said application (Exhibit-41) was preferred to obtain a

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litigative advantage of the order passed by the learned Civil Judge on 17th April, 2019. If considered as a whole, the defendants were conscious of the fact that the written statement was to be filed within 120 days, there was default in filing and also the impermissibility of the extension of period beyond 120 days.

25. In the aforesaid view of the matter, this Court does not find any infirmity in the impugned order. The petition, therefore, deserves to be dismissed.

26. Hence, the following order:

:ORDER:

(i) The petition stands dismissed.

(ii) Rule discharged.

No costs.

[N. J. JAMADAR, J.]

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