Kiran Raj

The Calcutta High Court, in its judgment, addressed the applicability of statutory timelines for filing replies to counterclaims in commercial disputes. The division bench, comprising Justice Soumen Sen and Justice Biswaroop Chowdhury, adjudicated on an appeal challenging the rejection of an application for an extension of time to file an additional written statement beyond 120 days. The court stated that "the Rules relating to a written statement by a defendant shall apply to a written statement filed in answer to a counterclaim."

The case arose from an order rejecting an application seeking an extension of time to file an additional written statement in response to a counterclaim. The question before the court was whether the time limit specified under Order VIII Rule 1, as amended by the Commercial Courts Act, 2015, applied to replies to counterclaims. The single judge had observed that "failure to file the additional written statement within 120 days results in forfeiture of the right to respond."

During the proceedings, the respondents raised the issue of maintainability of the appeal, citing Section 13 of the Commercial Courts Act, 2015, which restricts appellate jurisdiction to orders enumerated under Order XLIII of the Code of Civil Procedure. Reference was made to Kandla Export Corporation v. OCI Corporation, where the Supreme Court interpreted the scope of appealable orders. The appellants argued that the provisions governing counterclaims in Order VIII Rule 6A(3) of the Code of Civil Procedure had not been amended, and the time limit for filing a reply to counterclaims remained within judicial discretion.

The court referred to previous decisions, including SCG Contracts India Pvt. Ltd. v. K.S. Chamankar Infrastructure Pvt. Ltd., in which the Supreme Court interpreted the statutory deadline for filing written statements. The court stated that "once the 120-day period expires, the right to file a written statement is forfeited." The same principle was applied to replies to counterclaims.

Additionally, the court referred to Rule 12A of the Original Side Rules of the High Court at Calcutta, which mandates that a reply to a counterclaim be filed within 10 days of receiving notice. The bench stated that "service of the counterclaim initiates the filing obligation." The argument that the timeline should commence only upon scrutiny and formal acceptance of the counterclaim was not accepted.

The court noted the practice directions required for procedural compliance under the Commercial Courts Act, stating that "counterclaims shall be processed following the same scrutiny procedure as original suits." The court further observed that "no provision allows for relaxation of the statutory timeline for filing replies beyond the prescribed limit."

The judgment also referenced the Supreme Court decision in Prakash Corporates v. Dee Vee Projects Ltd., wherein it was held that procedural timelines in commercial matters are mandatory and must be adhered to strictly. The court recorded that "in commercial litigation, statutory deadlines serve the purpose of expediting dispute resolution and preventing delays."

Further, the court examined submissions concerning the application of the Commercial Courts Act and its overriding effect over general provisions of the Code of Civil Procedure. It was stated that "the Commercial Courts Act imposes specific procedural restrictions to ensure expeditious resolution of disputes, which must be adhered to without exception."

The judgment also examined the principle set forth in Nasima Naqi v. Todi Tea Company Ltd., which addressed the procedural aspect of counterclaims. The court stated that "procedural compliance is a fundamental requirement under the Commercial Courts Act, and failure to adhere to prescribed timelines results in automatic forfeiture of rights."

The bench issued additional procedural clarifications, stating that "in commercial suits, counterclaims must be processed in accordance with strict procedural guidelines and timelines as set forth under statutory provisions." It held that "registry officials must ensure procedural integrity before counterclaims are served upon plaintiffs."

Concluding the judgment, the court stated that "an appeal is a creature of statute," and no right of appeal exists beyond what is expressly provided by law. The appeal was dismissed, and the single judge’s order was upheld with no order as to costs. This order shall be immediately forwarded to the Registrar, Commercial Division of this court.

Case Title: A K Ghosh and Company and Ors. v. Biman Bose and Ors.
Case Number: AO-COM/35/2024 with CS-COM/440/2024
Bench: Justice Soumen Sen and Justice Biswaroop Chowdhury

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