Case: One Square Investment Limited. (Formerly Known As Capri Uk Investments Limited) and 4 Other Vs. Remedial Resolutions Advisors Private Limited and 2 Others

the enactment of the Commercial Courts Act, 2015 and have been subsequently transferred as Commercial Suits to be heard by a Commercial Division of this Court and that Commercial Division or Commercial Court, as the case may be, may hold Case Management Hearings in respect of such transferred suits under the newly introduced Order XV-A of the CPC to prescribe new timelines or issue further directions including prescribing a new time period within which a written statement shall be filed, appears to be well founded. 36. I am thus persuaded to hold that the order of the Prothonotary and Senior Master fixing a time line for filing the written statement, especially after passing a direction to convert the suit to a commercial suit, was not competent. The order passed by the Prothonotary and Senior Master on 21st March 2017 transferring the suit to the list of undefended suits is therefore without legal sanction. Post transfer to a Commercial Division, by the force of the provisions of Section 15(3), the jurisdiction to prescribe the time limit for filing the written statement under section 15(4) ought to have been exercised by the Commercial Court and not by the Prothonotary and Senior Master. The necessary corollary of the aforesaid conclusion is that the very substratum of the ex-parte order passed by this Court, namely nonfiling of the written statement within the stipulated period, gets dismantled. Resultantly, the ex-parte decree becomes unsustainable. 37. This leads me to the consideration of the justifiability of the cause sought to be ascribed by the defendants for non-appearance on the day, the decree came to be passed. Mr.Tulzapurkar would submit that the reason of the defendants having missed to entrust the papers and proceedings of the instant suit to a new advocate, after those papers and proceedings were returned by M/s. Dhruve Liladhar and Company, does not satisfy the test of sufficient cause enunciated in the case of Parimal (Supra). It was submitted that there is no material on record on the aspect of the return of papers and proceedings by M/s. Dhruve Liladhar and Company and their subsequent nonappearance in the instant suit. This fact could have been adequately proved by the defendants by placing reliable material, urged Mr.Tulzapurkar. 38. Mr.Dwarkadas countered by inviting the attention of the Court to the fact after the matter came to be transferred to the list of undefended suits and listed before the Court in that category, the plaintiffs mentioned the matter on a couple of occasions and filed an affidavit of evidence. Neither the notice of mentioning of the matter was given to M/s. Dhruve Liladhar and Company nor the copy of the affidavit of evidence was served on the advocate for the defendants. Had notice been given or affidavit of evidence been served on the advocate for the defendants, the defendants would have got an opportunity to appear before the Court. 39. In the light of the aforesaid view, which this Court is persuaded to take, and the nature of instant proceedings, it is not strictly warranted to delve deep into the controversy on facts. However, it is pertinent to note that the averments in paragraph 15 in the affidavit in support of the notice of motion, which incorporate the aforesaid grievance of non-service of notice of mentioning and affidavit of evidence, have been merely denied in paragraph 9.16 of the affidavit in reply. 40. It is well neigh settled that the term sufficient cause, whenever used by the legislature to relieve a party of the consequence of default or inadvertence ordinarily receives a liberal construction. The Courts lean in favour of a liberal construction for the purpose of advancing the cause of substantive justice. The law favours determination of a lis, on merits, after providing an effective opportunity to the parties. This overriding objective warrants a liberal consideration of the cause assigned by a party where a delay or inaction is sought to be condoned. The term sufficient cause in a broader sense, implies that there was no negligence, malafide or deliberate inaction, on the part of the party seeking the relief. 41. Viewed through the aforesaid prism, in the facts of the case, the reason assigned by the defendants cannot be said to be wholly unreasonable or inconceivable. The defendants claim that they became aware of the ex-parte decree only upon being served with the execution letter dated 2nd July 2019 could not be shown to be incorrect. There is no material to indicate that at an earlier point of time the defendants had the opportunity to know about the passing of the ex-parte decree. Thus, I am persuaded to hold that the defendants have made out a case for condonation of delay in seeking setting aside of the ex-parte decree. The cause ascribed by the defendants, in the totality of the facts and circumstances of the case, appears justifiable. 42. Since this Court is of the considered view that the Prothonotary and Senior Master could not have prescribed the time limit for filing the written statement and passed an order transferring the suit to the list of undefended suits, upon failure of the defendants to file the written statement within the stipulated period, having noted that the suit was required to be dealt with as a commercial suit, governed by the provisions of Commercial Courts Act, 2015, the defendants deserve an opportunity to file written statement within the period to be prescribed by the Commercial Court under section 15(4) of the Commercial Courts Act, 2015. 43. The conspectus of the aforesaid consideration is that the notice of motion deserves to be allowed. 44. At this juncture, it is necessary to note that the learned Senior Counsel for the plaintiffs, in the alternative, urged that the defendants be put to terms in the nature of deposit of specified amount to protect the interest of the plaintiffs, in the event the ex-parte decree is set aside, in terms of the provisions contained in Rule 13 of Order IX.

Decision (1 = appeal accepted, 0 = rejected): 1

Explanation:
1[ds]21. The aforesaid judgment, after noticing the governing precedents holds in no uncertain terms that in the absence of a notice of motion having been taken out which Rule 90 mandates, no decree under the provisions of Order VIII of the Code can be passed. Such a decree is entirely a nullity and cannot be sustained22. It is imperative to note that the ex-parte decree, which was set aside in Madhu (Supra), was passed on 7th March 2014. This Court is, however, confronted with a situation which arises in the commercial suits governed by the provisions of the Commercial Courts Act23. On a plain reading of the aforesaid provisions it becomes evident that that sub-section (1) amends the provisions of the Code in the manner specified in the Schedule, in their application to any suit in respect of a commercial dispute. Sub-section (2) enjoins the Commercial Division and Commercial Court to follow the provisions of the Code of Civil Procedure, 1908, as amended by this Act, in the trial of a suit in respect of a commercial dispute. Sub-section (3) is of material significance. It provides that where any provision of any Rule of the jurisdictional High Court or any amendment to the Code of Civil Procedure, 1908, by the State Government is in conflict with the provisions of the Code of Civil Procedure, 1908, as amended by the said Act, the provisions of the Code of Civil Procedure as amended by the said Act shall prevail. Sub-section (3), thus, gives an overriding effect to the provisions of the Code, as amended by the said Act, in the trial of the commercial suits24. I am conscious of the fact that in the case of Iridium India Telecom Ltd. (Supra) the Supreme Court has, after elaborately considering the statutory scheme of the Code and the chronological perspective of the legislative enactments, held that the Legislature had made a distinction between the proceedings in other civil courts and the proceedings on the Original Side of the Chartered High Courts. This distinction was made for good historical reasons and it had continued unabated, through the consolidating Acts, and continued unaffected even through the last amendment of the Code in the year 2002. In the face of this body of evidence, it is difficult to accede to the contention of the appellant that the force of the non obstante clause is merely declaratory and not intended to operate as a declared exception to the general body of the Civil Procedure Code25. The Supreme Court, thus held that the time limit prescribed in Order VIII, Rule 1 for filing written statement, is not applicable to the suits on the Original Side of the Chartered High Courts, which continued to be governed by the High Court (Original Side) Rules26. The aforesaid pronouncement of the Supreme Court, in my considered view, is required to be understood in the backdrop of the fact that the Commercial Courts Act, 2015 introduces a substantially different procedure with the object of expeditious resolution of the commercial disputes. The Parliament was aware of Rule making power of High Court, including the Chartered High Courts, and the existence of the Rules which contained provisions which were at variance with the provisions of the Code as well as the Code as amended by the Commercial Courts Act, 2015. Thus, it was specifically provided that any provision of any Rule of the jurisdictional High Court which is in conflict with the provisions of the Code of Civil Procedure, 1908, as amended by the Commercial Courts Act, 2015 shall yield to the amended provisions of the Code28. The written statement in a commercial suit is required to be filed within a period of 120 days and in view of proviso to Rule 10 of Order VIII, the Court has no power to extend the time beyond the said period of 120 days. Thus, the provisions of Order VIII Rule 10 as amended by the Commercial Courts Act, 2015 were held to be mandatory29. On the aforesaid touchstone, reverting to the controversy at hand, if it is held that the provisions of the Original Side Rules still prevail over the provisions of the Code, as amended by the Commercial Courts Act, 2015, the object of expeditious disposal of the commercial causes suits, for which a special machinery and procedure is enshrined by the Commercial Courts Act would be defeated. Thus, in my view, the interdict contained in Rule 90 of the Original Side Rules may not apply with equal force to the suit in respect of a commercial dispute filed on the Commercial Division of the High Court.30. The second submission on behalf of the defendants regarding the competence of the Prothonotary and Senior Master to direct the filing of the written statement within the stipulated period, and transfer the suit to the list of the undefended suits, in the event of default, also revolves around the applicability of the provisions of the Commercial Courts Act, 2015. Section 15 of the Commercial Courts Act mandates transfer of pending suits and applications relating to a commercial dispute of a specified value pending in the High Court to the Commercial Division. The only exception carved out is in respect of the suit or application where the final judgment has been reserved by the Court prior to the constitution of the Commercial Division. Subsection (3) provides that where any suit or application shall stand transferred to the Commercial Division, the provisions of the said Act, shall apply to those procedures that were not complied at the time of transfer34. Evidently, the aforesaid order came to be passed after the Commercial Courts Act, 2015 came into force and a Commercial Division came to established in the High court. The Prothonotary and Senior Master noted in the order that the suit pertains to a commercial dispute of the specified value. A direction was given to convert the suit as a commercial suit and update CMIS Programme accordingly. Yet, the Prothonotary and Senior Master, proceeded to issue direction for filing written statement by the defendants on or before 21st March 2017 on the pain of transfer of the suit to the list of undefended suits in the event of default. In view of the provisions contained in sub-sections (3) and (4) of the Commercial Courts Act, once the suit stood statutorily transferred to the Commercial Division, after establishment thereof, all the provisions of the Act became applicable to those proceedings that were not complete at the time of transfer. The prescription of a fresh time-period for filing the written statement was to be made by the Court as envisaged by the Proviso to sub-section (4). The Prothonotary and Senior Master having passed direction for transfer of the suit to the Commercial Division, albeit in the nature of the conversion of the suit to a Commercial Suit, could not have legitimately prescribed a time limit for filing the written statement35. The reliance placed by the learned Senior Counsel on an order passed by a learned Single Judge of this Court in the case of Reliance General Insurance Company Limited Vs. Colonial Life Insurance Company (Trinidad) LimitedNMCD No.561/2018 in COMS/29/2013 Dt.24-05-2019 , wherein this Court held that the mandatory time line of 120 days for filing a written statement in a Commercial Suit is not applicable to suits which were filed prior to the enactment of the Commercial Courts Act, 2015 and have been subsequently transferred as Commercial Suits to be heard by a Commercial Division of this Court and that Commercial Division or Commercial Court, as the case may be, may hold Case Management Hearings in respect of such transferred suits under the newly introduced Order XV-A of the CPC to prescribe new timelines or issue further directions including prescribing a new time period within which a written statement shall be filed, appears to be well founded36. I am thus persuaded to hold that the order of the Prothonotary and Senior Master fixing a time line for filing the written statement, especially after passing a direction to convert the suit to a commercial suit, was not competent. The order passed by the Prothonotary and Senior Master on 21st March 2017 transferring the suit to the list of undefended suits is therefore without legal sanction. Post transfer to a Commercial Division, by the force of the provisions of Section 15(3), the jurisdiction to prescribe the time limit for filing the written statement under section 15(4) ought to have been exercised by the Commercial Court and not by the Prothonotary and Senior Master. The necessary corollary of the aforesaid conclusion is that the very substratum of the ex-parte order passed by this Court, namely nonfiling of the written statement within the stipulated period, gets dismantled. Resultantly, the ex-parte decree becomes unsustainable37. This leads me to the consideration of the justifiability of the cause sought to be ascribed by the defendants for non-appearance on the day, the decree came to be passedNeither the notice of mentioning of the matter was given to M/s. Dhruve Liladhar and Company nor the copy of the affidavit of evidence was served on the advocate for the defendants. Had notice been given or affidavit of evidence been served on the advocate for the defendants, the defendants would have got an opportunity to appear before the Court39. In the light of the aforesaid view, which this Court is persuaded to take, and the nature of instant proceedings, it is not strictly warranted to delve deep into the controversy on facts. However, it is pertinent to note that the averments in paragraph 15 in the affidavit in support of the notice of motion, which incorporate the aforesaid grievance of non-service of notice of mentioning and affidavit of evidence, have been merely denied in paragraph 9.16 of the affidavit in reply40. It is well neigh settled that the term sufficient cause, whenever used by the legislature to relieve a party of the consequence of default or inadvertence ordinarily receives a liberal construction. The Courts lean in favour of a liberal construction for the purpose of advancing the cause of substantive justice. The law favours determination of a lis, on merits, after providing an effective opportunity to the parties. This overriding objective warrants a liberal consideration of the cause assigned by a party where a delay or inaction is sought to be condoned. The term sufficient cause in a broader sense, implies that there was no negligence, malafide or deliberate inaction, on the part of the party seeking the relief41. Viewed through the aforesaid prism, in the facts of the case, the reason assigned by the defendants cannot be said to be wholly unreasonable or inconceivable. The defendants claim that they became aware of the ex-parte decree only upon being served with the execution letter dated 2nd July 2019 could not be shown to be incorrect. There is no material to indicate that at an earlier point of time the defendants had the opportunity to know about the passing of the ex-parte decree. Thus, I am persuaded to hold that the defendants have made out a case for condonation of delay in seeking setting aside of the ex-parte decree. The cause ascribed by the defendants, in the totality of the facts and circumstances of the case, appears justifiable42. Since this Court is of the considered view that the Prothonotary and Senior Master could not have prescribed the time limit for filing the written statement and passed an order transferring the suit to the list of undefended suits, upon failure of the defendants to file the written statement within the stipulated period, having noted that the suit was required to be dealt with as a commercial suit, governed by the provisions of Commercial Courts Act, 2015, the defendants deserve an opportunity to file written statement within the period to be prescribed by the Commercial Court under section 15(4) of the Commercial Courts Act, 201543. The conspectus of the aforesaid consideration is that the notice of motion deserves to be allowed.