The Supreme Court has held that plaintiffs in commercial suits are equally bound by the strict 120-day timeline prescribed under the Commercial Courts Act, 2015, for filing a written statement in response to a defendant’s counterclaim.
The bench of Justice Sanjay Kumar and Justice K. Vinod Chandran ruled that failure to comply with this mandatory timeline results in forfeiture of the right to file such a reply, bringing plaintiffs and defendants under the same procedural framework for timely completion of pleadings.
The litigation arose from a commercial dispute involving the supply of printing paper. The plaintiffs claimed that the defendants owed them over ₹74.65 lakh along with interest and, after the claim was denied, instituted a recovery suit before the Calcutta High Court. During the proceedings, the defendants filed their written statement and simultaneously raised a counterclaim.
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Copies of the written statement and counterclaim were served on the plaintiffs in July 2023. However, instead of responding within the prescribed period, the plaintiffs approached the High Court only after approximately 238 days seeking permission to file their written statement to the counterclaim. The Commercial Division rejected the request, and the Division Bench subsequently affirmed that decision, holding both that the application lacked merit and that the appeal itself was not maintainable.
The principal question before the Supreme Court was whether the mandatory timeline contained in the proviso to Order VIII Rule 1 of the Code of Civil Procedure, as modified by the Commercial Courts Act, applies only to defendants filing written statements or also extends to plaintiffs responding to counterclaims.
The plaintiffs argued that Order VIII Rule 6A(3) CPC permits the Court to fix the time for filing a written statement to a counterclaim and that, unless the Court specifically fixed such a timeline, the rigid 120-day limitation could not be invoked against them. They contended that the statutory bar applicable to defendants should not automatically extend to plaintiffs replying to counterclaims.
The defendants, however, argued that Order VIII Rule 6G expressly provides that all rules governing written statements filed by defendants equally apply to written statements filed in answer to counterclaims. Consequently, the mandatory timeline under the Commercial Courts Act also governs replies to counterclaims.
Examining the legislative framework, the Supreme Court traced the evolution of Order VIII of the Code of Civil Procedure and the amendments introduced through the Commercial Courts Act.
The Court observed that a counterclaim substantially functions as a cross-suit. Once a defendant files a counterclaim, the plaintiff effectively assumes the position of a defendant in respect of that counterclaim and must therefore file a written statement in response.
Importantly, the Bench noted that Order VIII Rule 6G explicitly extends all rules governing written statements by defendants to written statements filed in answer to counterclaims. The language of the provision, the Court said, is clear and leaves no room for limiting its application only to the contents of the pleading while excluding procedural timelines.
The Court placed considerable emphasis on the legislative objective behind the Commercial Courts Act.
It observed that Parliament enacted the legislation to ensure speedy disposal of high-value commercial disputes by imposing strict procedural timelines. Allowing plaintiffs unlimited or uncertain time to respond to counterclaims merely because the Court had not expressly fixed a deadline would defeat the very purpose of the statute.
According to the Bench, such an interpretation would permit parties to prolong commercial litigation and undermine the objective of expeditious adjudication that underpins the Commercial Courts Act.
The Supreme Court examined several High Court decisions that had adopted a more liberal approach towards delayed filing of written statements to counterclaims, including judgments of the Rajasthan, Madras and Bombay High Courts.
The Bench expressly disagreed with the Bombay High Court’s view that Order VIII Rule 6G governs only the contents of the written statement and not the time for filing it. Likewise, it rejected the Madras High Court’s interpretation that the statutory clock begins only after the trial court specifically fixes a deadline under Order VIII Rule 6A(3).
The Court held that such interpretations would leave procedural timelines uncertain whenever courts omitted to specify them, frustrating the legislative intent of ensuring speedy commercial adjudication.
The Supreme Court laid down the governing principles applicable to commercial suits:
- A plaintiff must ordinarily file a written statement to a counterclaim within 30 days from receipt of the counterclaim.
- Upon showing sufficient cause, the Court may extend the period.
- However, the extension cannot exceed 120 days from the date of service of the counterclaim or summons.
- After expiry of 120 days, the plaintiff forfeits the right to file the written statement, and the Court has no jurisdiction to accept it.
The Supreme Court also upheld the Calcutta High Court’s finding that the appeal itself was not maintainable under Section 13 of the Commercial Courts Act.
The Bench reiterated that the right of appeal is purely statutory and that appeals under the Commercial Courts Act are confined only to orders specifically enumerated under Order XLIII of the CPC or Section 37 of the Arbitration and Conciliation Act. Since an order refusing leave to file a delayed written statement under Order VIII is not one of the appealable orders, no statutory appeal was available.
Dismissing the appeals, the Supreme Court affirmed the decisions of both the Commercial Division and the Division Bench of the Calcutta High Court. It held that the plaintiffs had lost their right to file a written statement to the counterclaim after the expiry of the mandatory 120-day period and that neither the trial court nor the appellate court committed any error in refusing to entertain the delayed pleading.
The interim stay granted earlier by the Supreme Court was vacated, all pending applications were disposed of, and the parties were directed to bear their own costs.
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