Delhi High Court Reiterates Mandatory 120-Day WS Deadline In Commercial Disputes, Dismisses Appeal

The Delhi High Court on 4 May reaffirmed that the 120-day outer limit for filing written statements in commercial disputes under the Commercial Courts Act, 2015 is mandatory, holding that once the statutory period expires, courts have no discretion to condone delay or permit filing.

The Division Bench of Justices Anil Kshetarpal and Amit Mahajan dismissed the appeal filed by Avon Enterprises, upholding the decree passed by the District Judge, Saket Courts, on 16 January 2024 in favour of Chibba Agro Pvt. Ltd. The Court observed:

“…it is abundantly clear that the Defendant, despite being granted multiple opportunities to place on record the WS, failed to file the same within the prescribed limit of 120-day period. Further, it is an admitted position that the summons was served upon the Defendant on 11.07.2023, and as such, the statutory period of 120 days expired on 09.11.2023.”

Avon Enterprises, through its proprietor Anita Gupta, had challenged a decree arising from a commercial recovery suit. The dispute stemmed from goods supplied by Chibba Agro Pvt. Ltd. on credit since 2017. The plaintiff maintained a running ledger, adjusting payments against invoices, and alleged that an amount of Rs 12,45,778 remained unpaid by 2021 despite repeated reminders.

Chibba Agro instituted the suit in May 2023. Summons were served on Avon Enterprises on 11 July 2023, and the defendant entered appearance on 4 August 2023. However, no written statement was filed within the statutory period, which expired on 9 November 2023.

On 7 December 2023, the District Judge closed the defendant's right to file the written statement and proceeded ex parte. The suit was decreed on the basis of unchallenged invoices, ledger accounts, and deposition of the plaintiff's witness.

Avon Enterprises contended before the High Court that it had filed a belated written statement on 18 December 2023 along with an application seeking condonation of delay. It argued that medical exigencies prevented timely filing and that it was denied a fair opportunity, including cross-examination of the plaintiff's witness (PW-1).

Chibba Agro opposed the appeal, submitting that multiple opportunities were granted but not availed, and that the written statement filed after 120 days was statutorily barred. It further maintained that the defendant had an opportunity to cross-examine PW-1 but failed to do so.

The High Court relied on Section 16 of the Commercial Courts Act, 2015 and the amended provisions under Order V Rule 1 and Order VIII Rules 1 and 10 of the Code of Civil Procedure, reiterating that the written statement must be filed within 30 days of service of summons, extendable up to 120 days, beyond which the right stands forfeited.

The Bench also referred to the Supreme Court decision in SCG Contracts India Pvt. Ltd. v. K.S. Chamankar Infrastructure Pvt. Ltd. (2019), which held that the 120-day timeline is mandatory and not subject to judicial extension.

The Court noted that summons were served on 11 July 2023 and the statutory period expired on 9 November 2023, while the written statement filed on 18 December 2023 was clearly beyond the permissible limit. It further observed:

“…the conduct of the Defendant, as borne out from the record, reflects a clear lack of diligence and an attempt to delay the proceedings. The procedural timeline prescribed under law is not merely directory but is intended to ensure certainty and expedition in adjudication. To condone such delay in the absence of sufficient cause would dilute the legislative mandate and undermine the discipline that governs commercial proceedings.”

Accordingly, the High Court dismissed the appeal.

For the Appellants: Advocates Kiran Bhardwaj, Ranjana Pathak and Prema

For the Respondents: Advocates Ishaan Chawla and Anubhav Gupta