Aditya Khaitan & ors. V. IL&FS Financial services

FACTS OF THE CASE-

1. On August 30, 2019,the respondent herein – IL and FS Financial Services Limited (the plaintiff) filed a lawsuit in C.S. No. 177 of 2019 on the High Court of Calcutta’s file seeking money recovery and other consequential remedies. Nine people were accused. We have nine de- defendants in front of us as appellants.
2. The defendants received a summons in the lawsuit on February 7, 2020. The Commercial Suit’s 30-day window for submitting written comments closed on March 8, 2020. The additional 90-day condonable time also ended on June 6, 2020. 
3. The appellants failed to provide written submissions within the time frame provided constraints, and on January 20, 2021, they filed all eight petitions for the nine defendants.
4. It was requested in the petitions that the time be extended in order to receive the defendants’ written statements. The World Health Organization declared COVID-19 a pandemic on March 11, 2020; the Indian government and state governments issued advisories regarding the pandemic; the Indian government promulgated orders under the Disaster Management Act, 2005 on March 11, 2020 to improve preparedness and containment of the pandemic; the West Bengal government-imposed lockdown on March 22, 2020, with effect from March 23, 2020; and the answering applicant’s office was completely closed in April 2020. These were the reasons outlined in the affidavit.

ISSUES RAISED BY THE COURT –

1. Was the High Court justified in rejecting Sagufa Ahmed, in our view, is also of no application to the present case?
2. Was the High Court correct to deny the request for a time extension dated January 20, 2021, and to refuse to enter the written statements into the record?

           CONTENTIONS OF THE PETITIONER- 

1. We have heard from Mr. Sahil Tagotra, the learned counsel for the respondent/plaintiff, and Mr. Sanjoy Ghose, the learned senior counsel for the appellants.
2. Mr. Sanjoy Ghose, the appellants’ knowledgeable Senior Counsel, relied on this Court’s ruling in Prakash Corporates v. Dee Vee Projects Limited, 2022.
3. SCC 112 stated that a lot of water has flowed since Sagufa Ahmed’s ruling (above).
4. The learned Senior Counsel, Prakash Corporates (supra), states that in addition to observing the directives in the orders dated 23.03.2020, 06.05.2020, and 10.07.2020, the orders dated 08.03.2021, 27.04.2021, and 23.09.2021 made in the same In re: Cognizance for Extension of Limitation also address the directives.
5. Taking note of these later developments, the learned Senior Counsel states that the Court has distinguished Sagufa Ahmed’s case (supra) in paragraphs 28.1, 28.2, and 33.4 of Prakash Corporates (supra) for the reasons stated therein. Below is an excerpt from the aforementioned paragraphs:-
6. It firmly believe that the period finally specified in the order dated 23.09.2021 must be excluded from the calculation of the period of limitation, even for filing the written statement and even in situations where the delay is otherwise not excused, having regard for the purpose for which this Court had exercised the plenary powers under Article 142 of the Constitution of India and issued necessary orders periodically in SMWP No. 3 of 2020. It is once again reiterated that the orders in SMWP No. 3 of 2020 were extraordinary measures taken in extraordinary circumstances, and that their application to the ordinary operation of the law cannot be restricted.

            CONTENTIONS OF REPONDENT –

1. The learned senior counsel for the Respondent . Stated differently, the orders issued by this Court in SMWP No. 3 of 2020 on 23.03.2020, 06.05.2020, 10.07.2020, 27.04.2021, and 23.09.2021 leave no room for doubt regarding the provision of special and extraordinary measures by this Court to further the cause of justice in the wake of challenges thrown by the pandemic, and their applicability in relation to the deadline for filing the written statement cannot be disputed. While this Court has allowed for the exclusion of the period for institution of the suit, it would be unrealistic and illogical to assume that a suit that would otherwise have been filed beyond limitation (i.e., if the limitation had expired between 15.03.2020 and 02.10.2021) could still be filed within 90 days of 03.10.2021; however, the period for filing written statement, if expired during that period, has to operate against defendant.
2. Having regard to the orders subsequently passed by the three-Judge Bench of this Court in SMWP No. 3 of 2020 (and MA No. 665 of 2021 therein), as also having regard to the fundamental difference of facts and the surrounding factors, the said decision in Sagufa Ahmed, in our view, is also of no application to the present case.” According to the learned Senior Counsel, the above paragraphs squarely cover his case, since the extended period expired on 06.06.2020.  Mr. Sahil Tagotra, learned Counsel for the plaintiff reiterated the findings of the High Court and submitted that the applicants have forfeited their right to file the written statements. The learned Senior Counsel claims that since the extended period ended on June 6, 2020, the aforementioned paragraphs fully address his case.  The plaintiff’s knowledgeable counsel, Mr. Sahil Tagotra, reaffirmed the High Court’s conclusions and contended that the applicants had given up their opportunity to submit written statements

           JUDGEMENT-

1. By dismissing the aforementioned motions, the High Court denied the applicants’ and defendants’ request to have their written statements added to the record. The applications could not be approved, according to the High Court, as there was no longer a 30-day period to submit written statements. The High Court cites precedents to support its claim that the applications for written statement recording cannot be granted because this Court’s decisions under Article 142 of the Indian Constitution have only extended “the period of limitation,” not the amount of time that a delay may be excused.
2. “The law assists those who are vigilant, not those who sleep over their rights,” the Supreme Court declared. Statutes of limitations are based on the fundamental legal principle “Vigilantibus non dormientibus jura subveniunt.” It was impossible to claim that the parties were neglecting their rights during the devastating pandemic that engulfed the entire world. At this point, the Court intervened and, after exercising suo motu cognizance, issued orders pursuant to Article 142 of the Indian Constitution, extending the deadlines. The extraordinary circumstances were appropriately handled by extraordinary orders that safeguarded the parties’ rights by making sure that their defenses and remedies were not precluded.
3. Because applicants-defendants would benefit from the general idea behind the court’s orders, the Supreme Court overturned the High Court’s ruling by restating a principle enshrined in its precedent cases on cognizance for limitation extension, even if those decisions were made after the assailed order. The appeals were allowed and a recording of the submitted written statements was mandated due to the previously mentioned reasons.

CASE ANALYSIS –

1. 23. Statements of claim and defence- (4) The statement of claim and defence under this section shall be completed within a period of six months from the date the arbitrator or all the arbitrators, as the case may be, received notice, in writing of their appointment.]
2. 29.Decision making by panel of arbitrators.—(1) Unless otherwise agreed by the parties, in arbitral proceedings with more than one arbitrator, any decision of the arbitral tribunal shall be made by a majority of all its members.
3. 12. Determination of Specified Value.—(1) The Specified Value of the subject-matter of the commercial dispute in a suit, appeal or application shall be determined in the following manner:–– (a) where the relief sought in a suit or application is for recovery of money, the money sought to be recovered in the suit or application inclusive of interest, if any, computed up to the date of filing of the suit or application, as the case may be, shall be taken into account for determining such Specified Value;
4. 138. Dishonour of cheque for insufficiency, etc., of funds in the account – 

• (b) the payee or the holder in due course of the cheque, as the case may be, makes a demand for the payment of the said amount of money by giving a notice; in writing, to the drawer of the cheque, 5 [within thirty days] of the receipt of information by him from the bank regarding the return of the cheque as unpaid; and
• (c) the drawer of such cheque fails to make the payment of the said amount of money to the payee or, as the case may be, to the holder in due course of the cheque, within fifteen days of the receipt of the said notice.

REFERENCES

1. https://www.scribd.com/
2. https://indiankanoon.org/
3. https://www.manupatrafast.com/?t=desktop 

This Article is written by Vedanti Jumde student of Shankkarao Chavan Law College; Intern at Legal Vidhiya.

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