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Whether time to file written statement gets extended if application for rejection of plaint is filed?

In the High Court of Delhi at New Delhi
(Before S. Muralidhar, J.)

Navilan Merchants Pvt. Ltd. .
Sejal Glass Ltd. & Ors.

C.S.(Comm.) 330/2016
Decided on September 7, 2016
Citation: 2016 SCC OnLine Del 6580

S. Muralidhar, J.

I.A. No. 9930/2016 (filed by the Defendants u/O VII R 11 CPC)
1. This is an application filed by the Defendants under Order VII Rule 11 of the Code of Civil Procedure, 1908 (‘CPC’) seeking the rejection of the plaint.

2. The background to the present application is that the suit has been filed by the Plaintiff Navilan Merchants Private Limited, having two addresses, one of which is in New Delhi and the second in West Bengal. Defendant No. 1, M/s. Sejal Glass Limited, has its office in Mumbai. Defendant No. 2, Mr. Amrut Shavjibhai Gada, is its Managing Director. Defendant Nos. 3 to 4, Mr. Dhiraj Shivji Gada, and Mr. Mitesh Kanji Gada are its Directors. The suit is for recovery of Rs. 1,44,01,365 together with interest @ 18% per annum.

3. The case of the Plaintiff is that the Defendants, by letter dated 25th October 2010, made a request for a temporary friendly loan for meeting their business liabilities. The loan was advanced by the Plaintiff to Defendant No. 1 for a period of six months carrying rate of interest @ 18% per annum. This letter was issued on behalf of Defendant No. 1 and signed by Mr. Amrut Shavjibhai Gada, Managing Director of Defendant No. 1. According to the Plaintiff, “Defendant Nos. 2 to 4 also assured and gave their personal guarantee towards repayment of the loan amount alone with interest and TDS payments to Mr. Amit Gupta”, a representative of the Plaintiff. Along with the abovementioned letter, seven post dated cheques signed on behalf of Defendant No. 1 towards repayment of the principal amount together with interest were also enclosed. The Defendants confirmed the credit balance of the loan amount in their books by the letter dated 14th April 2011.

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4. By a further letter dated 15th April 2011, the Defendant No. 1 requested for a rollover of the loan and issued seven post dated cheques afresh in favour of the Plaintiff. Another letter acknowledging the outstanding amount and assuring payments in four instalments was issued on 19th August 2011. It is stated that the scheduled date of payment for the instalments were on 30th October, 30th November, 30th December 2011 and 30th January 2012 for Rs. 25 lakhs each. By the letter dated 7th March 2014, the Defendant No. 1 enclosed an undated cheque for Rs. 1 crore in favour of the Plaintiff with a request to deposit it only after obtaining a written confirmation from Defendant No. 1. A photocopy of the said cheque has been placed on record as part of the documents filed by the Plaintiff.

5. The Defendant No. 1 again issued a cheque on 23rd June 2015 for a sum of Rs. 1,22,23,330 signed by Defendant No. 2 on behalf of Defendant No. 1 which when presented for payment was dishonoured by the bank. The Plaintiff thereafter issued a legal notice dated 6th October 2015 to Defendant Nos. 1 and 2 under Section 138 of the Negotiable Instruments Act, 1881 as regards the dishonour of the cheque.

6. It is pointed out by the Defendants in the present application that the suit is bad for misjoinder of parties as far as Defendant Nos. 2 to 4 is concerned. It is denied that any personal guarantee was given by Defendant Nos. 2 to 4. It is further stated that since the causes of action cannot be bifurcated, the plaint should be rejected in toto.

7. Learned counsel for the Plaintiff pointed out that under Section 126 of the Indian Contract Act, 1872 a guarantee may be either oral or written.

8. However, on a perusal of the plaint it is seen that there is no specific plea that there was an ‘oral’ guarantee given by the Defendant Nos. 2 to 4 to the Plaintiff. No legal notice was issued by the Plaintiff to Defendant Nos. 3 and 4 seeking to enforce such oral guarantee. Even as regards Defendant No. 2 to whom notice was sent jointly along with Defendant No. 1 in respect of the dishonour of the cheque issued by Defendant No. 1, it is seen that throughout Defendant No. 2 has only acted in his capacity as Managing Director of Defendant No. 1. He has signed all cheques in that capacity. There is nothing to indicate that there was any oral guarantee given by Defendant No. 2. Therefore, as far as Defendant Nos. 2 to 4 are concerned, it appears that the plaint does not disclose any cause of action qua them.

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9. However, the documents placed on record prima facie show that a loan was borrowed by Defendant No. 1 for six months which was to repaid with interest @ 18% per annum. The Defendant No. 1 in fact issued post-dated cheques towards repayment of the loan and interest.

10. Accordingly, this application is allowed to the extent of Defendant Nos. 2 to 4 and not Defendant No. 1. The suit is dismissed as far as Defendant Nos. 2 to 4 are concerned but will proceed against Defendant No. 1. The amended memo of parties be filed in one week.
C.S.(Comm.) 330/2016

11. It is submitted by learned counsel for Defendant No. 1 that no cause of action arose within the jurisdiction of this Court since both the Plaintiff and Defendant No. 1 are located outside Delhi.

12. The Court is unable to agree with the above submission. Apart from the fact that Plaintiff’s address is also at Kirti Nagar, New Delhi, the documents placed on record show that all the correspondence addressed by Defendant No. 1 were to the Plaintiff at its Delhi address. Further, there is a specific averment in para 17 of the plaint that the cause of action arose in Delhi where a request for loan was made. The loan amount was advanced to Defendant No. 1 from the office of the Plaintiff at Delhi. In any event this is a matter for evidence. Also, there is no averment to that effect by the Defendants under Order VII Rule 11 of the CPC.

13. Learned counsel for Defendant No. 1 then sought time to file written statement. This being a commercial suit, summons having been served upon Defendant No. 1 on 2nd May 2016, written statement ought to have been filed within 30 days from the date of service. In terms of the Commercial Courts, Commercial Division and Commercial Appellate Division of High Courts Act, 2015 (‘Commercial Act’), an application has to be filed seeking extension of time beyond 30 days in terms of the proviso to Order V Rule 1 CPC. If such application is made, the Court can extend the time for reasons recorded in writing. However, such extension cannot even by a High Court on the original side be granted beyond 120 days from that date of service of summons. No such application has been made by Defendant No. 1.

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14. Learned counsel for Defendants states that since the present application under Order VII Rule 11 of the CPC was filed, Defendant No. 1 was under the impression that till the disposal of the present application under Order VII Rule 11 of the CPC the written statement could not be filed. The above submission is misconceived. As far as the Commercial Courts, Commercial Division and Commercial Appellate Division of High Courts Act, 2015 (Commercial Courts Act) is concerned, the time for filing written statement does not get extended only because an application under Order VII Rule 11 of the CPC may be pending. Therefore, the submission of Defendant No. 1 is, therefore, misconceived. The right of Defendant No. 1 to file written statement stands closed.

15. List before the Joint Registrar on 17th November 2016 for admission/denial of documents in accordance with the Commercial Courts Act.

16. List before the Court for framing of issues on 16th December 2016.

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