Adhering to Statutory Timelines: A Step Towards Better Case Management of Civil Trials

Introduction

This article discusses a new approach of Indian Courts in upholding statutory timelines as absolute, non-discretionary deadlines. This approach of courts has the potential to significantly reduce court delays, at least, in commercial matters.

Any discussion about the Indian legal system meets the gigantic issue of delays in courts. All governments try to enact the best possible laws they can. But if administration of a statute’s legal remedies requires treacherous delays, the letter and spirit of a statute dies soon. The problem of litigation delays becomes acute in commercial law. Businesses run on the concept of “time value of money”. If a business dispute takes decades to resolve, the underlying value of an asset or a claim in dispute is effectively a negative value.

Civil procedure of courts in India is regulated by the venerable Civil Procedure Code, 1908 (“CPC”). While the CPC has served well as a pan-India, unified code for civil court procedure, it has also allowed many suits to linger for decades. The CPC has a Judge-driven model of case management where timelines are extendible if the Judge wishes to do so. CPC permits, in general, relaxation of most timelines in the trial of a suit “in the interests of justice”. In most cases, the only requirement is for the Judge to record reasons in writing. Further, under CPC’s Section 148 (“Enlargement of time”), a court is allowed, in its discretion, to extend from time to time, any time period granted by the court or specified by the CPC to a maximum of 30 days in total. While the CPC’s Sections 35, 35-A, 35-B, Order XX-A (“Costs”), and Order XXV (“Security for Costs”) provide a general framework to control litigation delays through costs, they have not helped to reduce delays in courts.

Statutory Timelines for Filing a Defence
The CPC has several statutory deadlines. The timeline of focus here is one for the filing of a written statement by a defendant in response to a plaint filed by the plaintiff. Order 8, Rule 1 [and also Order 5, Rule 1 (1)], states that defendant in a suit has 30 days from the date of service of summons to file her written statement. Per the first proviso of Order 8, Rule 1, the period of 30 days to file the written statement is extendible up to 90 days from the date of service of summons.

While the language of the CPC’s Order 8, Rule 1 firmly states that the defendant shall present his written statement in 30 days from service of summons and even if period is extended the maximum time limit is set to 90 days.  Even with such statutory language, which came only after the 2002 CPC Amendment, courts have ruled that 90 days is not a firm deadline to file a written statement under Order 8, Rule 1 (for non-Commercial Court suits). Next, let us review how courts have interpreted such a clear firm deadline of Order, Rule 1.

Supreme Court since Salem[1] case onwards has held that time limit specified under Order 8, Rule 1 to file written statements in ordinary civil suits is directory and not mandatory. R.N. Jadi case[2] had reiterated that Order 8, Rule 1, as amended by 2002 CPC amendment, specifying a time limit of 90 days for filing a written statement was directory and not mandatory quoting an earlier precedent[3]. Interpreting the statutory time limit of 90 days to file a written statement into a mere directory guideline reopened the flood-gates of delay. Not filing a written statement in time was and remains (in non-Commercial Court suits) a favourite tactic to delay a civil suit in Indian Courts.

In the Interests of Justice, Delays are Acceptable

CPC uses an interesting device to control discretion of a Judge across its rules. The device is to ask the Judge to record her reasons for exercising discretion. This device does not ipso facto control incorrect use of discretion by a trial Judge, but it records reasons for an appeal court to review and correct in future. For example, CPC’s Section 35(1) mandates that costs shall be in the discretion of the court, but Section 35(2) permits departure from the same norm if the court records its reasons in writing for costs not following the event.

A trial court under various CPC rules can extend time by recording its reasons for exercising its discretion. For example, under the CPC’s Order 8, Rule 1 (Written Statement), if the defendant, “…fails to file the written statement within the said period of thirty days, he shall be allowed to file the same on such other day, as may be specified by the Court, for reasons to be recorded in writing, but which shall not be later than ninety days…” (emphasis supplied). Another example is Order 7, Rule 11 (Rejection of Plaint), “…Provided that the time fixed by the Court for the correction of the valuation or supplying of the requisite stamp-paper shall not be extended unless the Court, for reasons to be recorded, is satisfied…”(emphasis supplied).

Courts turn to high moral principles when they want to balance a statute’s harshness with practical realities of justice administration. Supreme Court in an early challenge to amended Order 8, Rule 1’s time limit of 90 days to file a written statement, held that said time limit was directory despite the word “shall” used in the rule[4]. This judicial relaxation of time to file written statements beyond the statute’s stated time limit led to late filing of written statements as a matter of common practice instead of being a rare exception. In R.N. Jadi[5] case, the Supreme Court reiterated that Order 8, Rule 1’s 90-day time limit was directory and not mandatory. The Supreme Court said, “The mortality of justice at the hands of law troubles a judge’s conscience and points an angry interrogation at the law reformer” and then went to apply a “humanist” rule that the procedure should be “handmaid, not mistress of legal justice”.

A Law’s Future Saved by Court

Central Government enacted the The Commercial Courts, Commercial Division And Commercial Appellate Division Of High Courts Act , 2015, Act 4 of 2016 that came into effect from 23 October 2015[6], which after a later amendment in 2018 has had a short title, “The Commercial Courts Act, 2015” (“2015 Act”). A new class of commercial courts was created in both trial courts and High Courts with original sides for specified commercial disputes of certain pecuniary value. The parliamentary Bill for the 2015 Act stated the law’s purpose as, “The high value commercial disputes involve complex facts and question of law. Therefore, there is a need to provide for an independent mechanism for their early resolution. Early resolution of commercial disputes shall create a positive image to the investor world about the independent and responsive Indian legal system.”[7]

The Commercial Courts Act, 2015 is an ambitious attempt to improve the administration of justice in commercial disputes. The mode chosen by the 2015 Act was to amend the existing CPC by having alternative provisions or amendments to existing provisions of CPC that would apply specifically to a selected list of “commercial disputes” enumerated in Section 2(1)(c). The Commercial Courts Act, 2015 amended the Order 8, Rule 1 by adding a second proviso. As per Section 16 of the Commercial Courts Act, 2015, the provisions of CPC amended by the 2015 Act apply to suits for “commercial disputes” of “specified value”. Hence, the second proviso to CPC’s Order 8, Rule 1 applies only to “commercial disputes” of “specified value”.

The second proviso to the CPC’s Order 8, Rule 1 specifies:  (i) a maximum limit of 120 days from the date of service of summons to file a written-statement, (ii) defaulting defendant forfeits the right to file a written statement, and (iii) court shall not be allowed to take the delayed written statement to be taken on record. Order 8, Rule 15’s second proviso, which applies to “commercial disputes” under the 2015 Act, provides clear consequences of a bar on taking the written statement on record, while the first proviso that applies to all suits (excluding those covered by 2015 Act) provides no such consequence if the 90-day time limit from the date of service of summons to file the written statement is breached by a defendant. Further, the the 2015 Act (and its later 2018 Amendment) amended the Order 8, Rule 10 to stipulate that in matters governed by the 2015 Act, “…no Court shall make an order to extend the time provided under Rule 1 of this Order [8] for filing of the written statement”.

Supreme Court in SCG Contracts[8] case explained the import of 2015 Act’s amendments to Order 8 as, “…What is of great importance is the fact that beyond 120 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.” This is further buttressed by the proviso in Order 8 Rule 10 also adding that “the court has no further power to extend the time beyond this period of 120 days”[9].

The decision in SCG Contracts[10] case avoided the fate that fell on CPC’s Order 8, Rule 1’s limit of 90 days from service of summons to be a directory guideline and not mandatory. The SCG Contracts[11] case simply respected that statute’s clear time limit of 120 days from the service of summons to file a written statement in suits governed by the 2015 Act. The Court stated, “…fact that the consequence of forfeiting a right to file the written statement; non-extension of any further time; and the fact that the Court shall not allow the written statement to be taken on record all points to the fact that the earlier law on Order 8 Rule 1 on the filing of written statement under Order 8 Rule 1 has now been set at naught.”[12]

The Supreme Court by its SCG Contracts[13] decision closed doors for any kind of relaxation of timeline by judicial interpretation that will allow written statements to be filed beyond 120 days from the date of service of summons in suits to which the 2015 Act applies. But for the SCG Contracts[14] decision and the stability of its ratio, so far, the commercial courts under the 2015 Act would have become redundant as being no different from regular civil courts in delayed filing of written statements.

More Discipline is Welcome

Another instance of statutory timelines being made absolute and non-discretionary is from the consumer law: New India case[15]. Consumer Protection Act, 1986 is designed to make it easy for consumers to claim damages from the providers of deficient goods or services but the same problem of filing late replies to consumer complaints as in ordinary civil courts had made a progressive legislation’s remedy cumbersome.

Supreme Court in New India[16] case answered two queries referred to it. The first of the two queries which is of interest in present analysis[17] was: whether the District Forum had the power to extend time for filing response to a complaint beyond 45 days (15 days and plus a 30 day extension) statutory deadline of Section 13(2)(a), Consumer Protection Act, 1986?

In the New India[18] case, Supreme Court held that the legislature by enacting Section 13 of the Consumer Protection Act, 1986 has chosen to remedy the “justice delayed is justice denied” situation. The discretion to extend time to file a response to a complaint has been curtailed beyond a total of 45 days even if in some cases there would be hardships[19].

The key commonality in the interpretation of statutes in SCG Contracts[20] case and New India case[21] is that both decisions recognised that the legislature has provided consequences for late filing unlike Order 8, Rule 1 where, as noted in R.N. Jadi[22] case, the absence of consequences of late filing in the statute was a key factor in holding Order 8, Rule 1’s 90-day time limit to file the written statement as directory[23].

One more example of courts respecting statutory timelines is described next. In a civil suit, the trial court has power to refer the dispute to an arbitration where there is an arbitration agreement between the parties provided the referral request is made to so refer “not later than the date of submitting her first statement on the substance of the dispute”[24]. But neither the CPC nor the Arbitration and Conciliation Act, 1996 provide any fix number of days as a time limit to apply for transferring a civil suit dispute in a trial court to an arbitration tribunal. The Delhi High Court in SSIPL[25] case held that a suit cannot be referred to an arbitration if a referral application is not made till the date on which statement of defense could have been filed. Hence, effectively in a suit for a commercial dispute of specified value governed by the 2015 Act, any application under Section 8 of Arbitration and Conciliation Act, 1996 will have to be made within the time available to file the written statement, which under Order 8, Rule 1 would be a maximum of 120 days from the date of service of summons.

Policy Issues
Supreme Court had earlier chosen to make time limit to file a written statement in a suit within 90 days from service of summons as directory and not mandatory in ordinary civil suits since Salem[26] case. But in case of commercial disputes of specified value governed by the 2015 Act, the Supreme Court chose to strictly limit the time to file a written statement to a maximum of 120 from the date of service of summons[27]. Also, the Supreme Court strictly limited the time to file a response to a complaint under the Consumer Protection Act, 1986 to 45 days[28].

Why would Supreme Court interpret similar provisions of time limits in Order 8, Rule 1 diametrically opposite way? While courts have undertaken only statutory analysis in interpreting various amendments to Order 8, Rule 1, there is a dynamic that can be inferred. Ordinary civil suits in thousands of courts spread across India involve litigants with varied economic and social backgrounds. When a suit is filed against a poor, helpless litigant, she may not have immediate resources to locate and engage a lawyer and prepare a defence within 90 days from the service of summons. Then there are several other barriers for any defendant, for example, poverty, illiteracy, remoteness, etc. The flexibility given to the courts to allow filing of delayed written statement beyond 90 days from service of summons is underpinned by the realities of life in a vast developing country but this power to allow delayed filing of written statements was to be exercised exceptionally and for just cases. Instead, the exception was claimed, “in the interests of justice”, by every defendant who sought delayed filing of written statements.

To allow a benign interpretation of 90-day time limit from service of summons to file a written statement even to relatively resourceful litigants like large corporations and government bodies would be an injustice of a different kind to a poor plaintiff. Hence, despite the courts cautioning all along that relaxation of time limit under Order 8, Rule 1 must be exceptional, nearly universal forgiveness of delays in filing written statements has become the norm with costs imposed at times. But it appears the tide has turned and Supreme Court in SCG Contract[29] and New India[30] cases has implicitly recognised that resourceful litigants in commercial disputes can be expected to adhere to statutory timelines. This differentiation of litigant classes (e.g. commercial versus non-commercial) in mandating non-negotiable, statutory timelines to progress the trial of suits can form the basis of future law reform that seeks to remedy the causes of delay in courts.

What Next?

The road to address delays using statutory timelines is not easy. The risk remains of any higher court in a particular factual scenario suddenly reading down the statutory timelines as being directory and not mandatory. The ensuing chaos and later stabilisation of law either by a larger Bench judgment or an amendment will keep the implementation of the law unstable. Only by consistent support from the higher courts to trial courts in enforcing statutory timelines and cost provisions, the culture of delay in filing of pleadings in courts can be remedied but a start has been made and hope springs eternal that delays in courts will become a relic of legal history books.

† Hasit B. Seth, Advocate, practices as an independent counsel in the Bombay High Court and in arbitrations

[1] Salem Advocate Bar Assn. (II) v. Union of India, (2005) 6 SCC 344 at 364.

[2] R.N. Jadi & Brothers v. Subhaschandra, (2007) 6 SCC 420, 427.

[3] Kailash v. Nanhkhu, (2005) 4 SCC 480.

[4] Salem, (2005) 6 SCC 344 at 364.

[5] R.N. Jadi, (2007) 6 SCC 420 at 424.

[6] Gazette of India, Extra., Pt. II, S. 1, No. 4, dated 1 January 2016.

[7] See Statement of Objects & Reasons, The Commercial Courts, Commercial Division And Commercial Appellate Division Of High Courts Bill, 2015, <https://www.prsindia.org/sites/default/files/bill_files/Commercial_courts_bill%2C_2015_dec_0.pdf>, accessed on 22-1-2021.

[8] SCG Contracts (India) Private Limited v. K.S. Chamankar Infrastructure Private Limited, (2019) 12 SCC 210.

[9] Ibid at 214.

[10] Ibid.

[11] Ibid.

[12] Ibid at 215.

[13] Ibid.

[14] Ibid.

[15] New India Assurance Company Limited v. Hilli Multipurpose Cold Storage Private Limited, (2020) 5 SCC 757.

[16] New India, (2020) 5 SCC 757.

[17] Ibid at 767.

[18] Ibid.

[19] Ibid at 771.

[20] SCG Contracts, (2019) 12 SCC 210 at 214.

[21] New India, (2020) 5 SCC 757 at 773.

[22] R.N. Jadi, (2007) 6 SCC 420 at 424-425.

[23] Ibid at 424.

[24] Section 8, Arbitration and Conciliation Act, 1996.

[25] SSIPL Lifestyle Private Limited v. Vama Apparels (India) Private Limited, 2020 SCC OnLine Del 1667.

[26] Salem, (2005) 6 SCC 344 at 364.

[27] SCG Contracts, (2019) 12 SCC 210.

[28] New India, (2020) 5 SCC 757.

[29] SCG Contracts, (2019) 12 SCC 210.

[30] New India, (2020) 5 SCC 757.

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  • […] with newer and shortened timelines. As has generally been the case with legislations prescribing timelines for actions to be taken, the prescriptions do not necessarily translate into a speedier process. […]

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