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Prakash Corporates vs. Dee Vee Projects Limited

Civil Appeal · 2022 INSC 180Decided 14 Feb 2022
Civil Appeal No. 1318 of 2022

Background

Two companies with a sub-contracting relationship on government road projects fell into a payment dispute, leading Dee Vee Projects to sue Prakash Corporates for recovery of an alleged excess payment before the Commercial Court at Nava Raipur, Chhattisgarh. Under the Commercial Courts Act's amendment to the Civil Procedure Code, a defendant must file its written statement within 120 days of being served summons, after which the right is forfeited. Prakash Corporates was served on 06.01.2021, but repeated adjournments (including COVID-related court closures during the second wave) meant its written statement was still not on record when the 120-day deadline passed on 06.05.2021; the Commercial Court refused to accept it, and the Chhattisgarh High Court upheld that refusal, holding that the Supreme Court's COVID limitation-extension orders applied only to "limitation" and not to this kind of prescribed procedural time limit.

Decision Breakdown

The Supreme Court held that its own suo motu orders in Suo Motu Writ Petition (Civil) No. 3 of 2020, issued under Article 142 to protect litigants from pandemic-related hardship, excluded the period from 15.03.2020 to 02.10.2021 for computing limitation across all judicial and quasi-judicial proceedings, and that this extraordinary relief must be read broadly to cover the time for filing a written statement as well, not narrowly confined to limitation for filing suits or appeals. It also found the Trial Court had compounded the error by refusing to accept the written statement while simultaneously failing to decide a pending application under Section 10 CPC (for stay pending parallel insolvency proceedings) with due expedition, reiterating that procedural rules exist to serve justice, not to punish parties. The Court set aside both the Commercial Court's and the High Court's orders, directed that the appellant's already-prepared written statement be taken on record, and ordered the suit to proceed with the pending applications decided promptly.

Lesson Learnt

The Supreme Court's COVID-19 limitation-extension orders under Article 142 were meant to be given full, generous effect during the pandemic and extend to procedural deadlines like the 120-day period for filing a written statement in commercial suits, not just to limitation for initiating fresh proceedings. Courts should not read such extraordinary relief narrowly to defeat its protective purpose.

Official source (sci.gov.in)View Judgment (PDF)

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