Delhi District Court
M/S Eco Coatings vs M/S Raheja Developers Limited on 4 April, 2022
IN THE COURT OF DISTRICT JUDGE
(COMMERCIAL COURT-2)
SOUTH DISTRICT, SAKET COURTS: NEW DELHI
CS (COMM) 43/21
M/s ECO Coatings .........Plaintiff
office at 2, Anyday Market,
Opp. Acheivers Builders, Gate no. 4,
Sainik Colony, Sector-49,
Faridabad - 121001
Versus
M/s Raheja Developers Limited .........Defendant
office at W4D, 204/5, Kehsav Kunj,
Carippa Marg, Western Avenue
Sainik Farms, New Delhi - 110062
also at 406, 4th Floor Rectangle One
D-4, District Centre, Saket,
New Delhi -110017
Date of institution : 16.01.2021
Date of arguments : 31.03.2022
Date of judgment : 04.04.2022
JUDGMENT
1. This common judgment shall dispose off an application for recalling of order dated 04.12.2021 and application for condonation of delay in filing the written statement u/s 151 CPC as well as an application U/s 8 of the Arbitration & Conciliation Act, filed on behalf of the defendant.
2. This court has heard the submissions advanced by the Ld. Counsels for the parties and perused the material placed on record.
Eco coatings vs Raheja Developers Ltd. page no. 1 of 11
3. Brief background facts of the case are that on 16.01.2021, the plaintiff filed a suit for recovery of money i.e. Rs.38,67,088/- pursuant to the purchase order issued by the defendant. Thereafter, defendant appeared through counsel on 06.10.2021, who was directed to file written statement alongwith statement of admission/denial of documents and there being elements of settlement, the matter was referred to the Mediation Centre and the matter was listed for settlement, alternate for case management hearing. On 04.12.2021, parties informed that no settlement could be arrived at between them. It was noted that defendant has not filed written statement and statement of admission/denial of documents despite order dated 06.10.2021 till then. In view of this, right of the defendant to file written statement was forfeited and its defence was struck off. Case management hearing was held. The points which emerged for consideration were framed and schedule of dates for the further proceedings was fixed. On 01.02.2022, Ld counsel for the defendant submitted that she had filed an application U/s 8 of Arbitration & Conciliation Act on 11.01.2022 and thereafter also e-filed written statement alongwith an application for condonation of delay in filing written statement on 31.01.2022.
4. Ms. Anjali Diwvedi and Shri Chandan Malav, Ld. Counsels appearing for the defendant submits that defendant was served on 25.08.2021 and defendant appeared through counsel on 06.10.2021, on which date court had ordered defendant to file written statement within the prescribed period alongwith the statement of admission/denial of documents. It is submitted that parties were trying to settle the matter as court had also referred Eco coatings vs Raheja Developers Ltd. page no. 2 of 11 the parties for mediation on 06.10.2022, however, no settlement could be arrived at between the parties in the mediation despite efforts by the parties. A report in this regard dated 26.11.2021 is on record.
5. Ld. Counsel for the defendant further submits that written statement could not be filed in time as defendant was under the bonafide impression that amicable settlement would be arrived at between the parties. It is submitted that if time for filing the written statement is reckoned from 26.11.2021, even then, defendant could have filed the written statement within 30 days thereof i.e. by or before 26.12.2021.
6. It is submitted by the Ld. Counsel for defendant that right of defendant was forfeited vide order dated 04.12.2021 for not filing written statement and statement of admission/denial of documents. It is submitted that in view of the order of the Hon'ble Supreme Court in Suo Moto Writ Petition No. 3/2020, the limitation for filing written statement for the period 15.03.2020 till 02.10.2021 stood excluded vide order dated 23.09.2021 and thereafter the said order was further extended vide order dated 10.01.2022 of the Hon'ble Supreme Court up to 28.02.2022 in the aforementioned case. It is further submitted that the time period for filing the written statement ought to be counted from 01.03.2022 and due to the prevailing pandemic situation and the difficulties faced due to it by the defendant, the written statement could not be filed in time and that there is no intentional delay on part of the defendant in filing the written statement.
Eco coatings vs Raheja Developers Ltd. page no. 3 of 11
7. It is urged by the Ld. Counsel for defendant that this suit filed by the plaintiff is the subject matter of arbitration agreement/work order dated 20.07.2015 and defendant has applied U/s 8 of A&C Act for referring the parties to arbitration on 11.01.2022. As per Clause 23 of the work order dated 20.07.2015, in case of any dispute, question or controversy arising between the employer and the contractor relating to this contract and if the same could not be resolved amicably, then in every case, the matter in dispute shall be referred to arbitrator, appointed as per the details given therein. It is submitted that in view of the arbitration agreement, parties in this case are required to be referred to arbitration and, therefore, this suit is not maintainable U/s 8 of A&C Act. It is prayed that the order dated 04.12.2021 vide which right of the defendant to file written statement was forfeited and his defence was struck of be recalled and the delay be condoned and the matter be referred to arbitration.
8. Ld. Counsel for the defendant has relied upon the cases titled as "Prakash Corporates Vs. Dee Vee Projects Limited", Civil Appeal No(s). 1318 of 2022; "Vinod Kumar Kad & Ors. Vs. Girish Kumar Kad & Ors." , FAO (OS) 60/2020 & C.M. No. 29846/2020 and "Eli Lilly & Company & Anr. Vs. Nateo Pharma Limited & Anr.", CS (Comm) 183/2020.
9. Attention of the court by Ld. Counsel for the applicant/defendant particularly towards para 20 to 23 of Prakash Corporates Vs. Dee Vee Projects Limited (Supra) of the Hon'ble Supreme Court in support of their submissions that while having considered the difficulties being faced by all litigants and parties Eco coatings vs Raheja Developers Ltd. page no. 4 of 11 during the pandemic and placing reliance on orders passed in Suo Moto Writ Petition 03/2020 condoned the delay in filing the written statement. Hon'ble Supreme Court held that putting all these factors together, we are unable to accept the submissions made on behalf of the respondent that because of earlier appearance or prayer for adjournment, the defendant-appellant would not be entitled to the relaxation available under the extra ordinary orders passed by this court.
10. In, Vinod Kumar Kad & Ors. Vs. Girish Kumar Kad & Ors. (Supra), the Hon'ble Delhi High Court has held "We cannot lose sight of the fact that in most cases, when it comes down to filing written statements, the defendant often has to visit his counsel personally at his office to give appropriate instructions for preparation thereof; unfortunately, this has not been possible for many litigations in the last one year owing to lockdown as well as the social distancing practices imposed on account of the pandemic. We therefore, see no reason to disregard the respondent's version that the written statement could not be filed within the time granted by the Court, since the respondents could not visit the office of their counsel, especially between March-July, 2020, when the pandemic had just set in."
11. In "Eli Lilly & Company & Anr. Vs. Nateo Pharma Limited & Anr." (Supra), Hon'ble Delhi High Court observed that "A perusal of order of the Supreme Court in Re: Cognizance for Extension of Limitation (Supra) clearly shows that the Supreme Court has extended the period of limitation in all the proceedings irrespective of the limitation prescribed under the general law or special law whether condonable or not which was to be extended Eco coatings vs Raheja Developers Ltd. page no. 5 of 11 with effect from 15.03.2020 till further orders that were to be passed by the Supreme Court. It is not the case of the plaintiffs that there has been any modification in the said order dated 23.03.2020 passed by the Supreme Court in the aforenoted judgment. In my opinion, the plea of the plaintiffs that the reasons granted for seeking condonation of delay by defendant no. 1 do not pertain to any activity relating to the Covid-19 pandemic appears to be misplaced. Normal functioning has been disrupted. In most cases, staff is mostly working from home and not reporting to the office. All such factors would have contributed towards the delay in filing of the written statement. The factors are implicit given the situation."
12. In response, Shri Idrish Ahmad, Ld. Counsel appearing for the plaintiff submits that defendant was served through e-mail on 08.04.2021 and through courier service on 10.04.2021 and by way of registered post on 30.04.2021 at one of the address and summon at the second address was received with the report 'Left'. It is further submitted that plaintiff had filed report stating that defendant was served through speed post for appearing on 25.08.2021. As an abundant caution, fresh summons were ordered to be issued to the defendant and defendant appeared before the court on 06.10.2021 when defendant was ordered to file written statement and statement of admission/denial of documents. It is submitted that benefit of Hon'ble Supreme Court's order in Suo Moto Writ Petition cannot be availed by the defendant as he had appeared on 06.10.2021 and then had to show sufficient cause for not complying with the order and had to assign a specific ground. It is submitted that Eco coatings vs Raheja Developers Ltd. page no. 6 of 11 defendant is delaying the trial from its inception and this suit was filed in January, 2021. It is submitted that therefore, the delay is not liable to be condoned and the order dated 04.12.2021 should not be recalled.
13. Ld. Counsel for the plaintiff has relied upon following cases as Sagufa Ahmed & Ors. Vs. Upper Assam Polywood Products Private Limited & Ors. , Civil Appeal No. 3007-3008 of 2020 of the Hon'ble Supreme Court of India; Love Chauhan Vs. Ajay Kumar Kathuria, CM(M) 848/2021 decided on 27.10.2021 and HT Media Limited & Anr. Vs. Brainlink International, Inc & Anr., CS (Comm) 119/2020 decided on 17.12.2021, to contend that benefit of extension of time pursuant to order of the Hon'ble Supreme Court dated 23.03.2020 and thereafter was not automatically available to defendant.
14. Ld. Counsel for the plaintiff submits that in HT Media case (Supra), Hon'ble Delhi High Court has observed in para 10 that "It is thus, more than apparent that the conditions that prevailed due to the pandemic did not actually impact the defendants to prevent them from interacting with their counsel and filing appropriate applications and replies before this court. To that extent, the orders of the Supreme Court in Cognizance For Extension of Limitation (supra) would not be applicable to the facts of the present case."
15. Ld. Counsel for the plaintiff submits that in Love Chauhan' case (Supra), the Hon'ble Delhi High Court has observed that allowing the petitioner/defendant the benefit of this period would amount to rewarding a litigant for his own defaults/lapses.
Eco coatings vs Raheja Developers Ltd. page no. 7 of 11
16. Ld. Counsel for the plaintiff submits that in Sagufa Ahmed's case (Supra), it was observed in para 19 that "But we do not think that the appellants can take refuge under the above order. What was extended by the above order of this court was only "the period of limitation' and not the period up to which delay can be condoned in exercise of discretion conferred by the statute. The above order passed by this court was intended to benefit vigilant litigants who were prevented due to the pandemic and the lockdown, from initiating proceedings within the period of limitation prescribed by general or special law. It is needless to point out that the law of limitation finds its root in two latin maxims, one of which is Vigilantibus Non Dormientibus Jura Subveniunt which means that the law will assist only those who are vigilant about their rights and not those sleep over them."
17. As regards, Section 8 A&C Act application, Ld. Counsel for the plaintiff submits that there is no dispute about the work order dated 20.07.2015 and existence of arbitration agreement in clause 23 of the agreement. It is however, submitted that the dispute which is the subject matter of this suit is not covered by the arbitration clause as the dispute covered only the dispute arising during the completion of the contract and during the pendency of the work order up to its completion.
18. Ld. Counsel for the plaintiff relied upon a case titled as "SSIPL Lifestyle Pvt. Ltd. Vs. Vama Apparels (India) Pvt. Ltd. & Anr., CS(Comm) 735/2018 decided by the Hon'ble High Court of Delhi on 19.02.2020 wherein in para 31, it is observed that "The arbitration clause, can thus be waived by a party under dual circumstances - one by filing of a statement of defence or Eco coatings vs Raheja Developers Ltd. page no. 8 of 11 submitting to jurisdiction and secondly, by unduly delaying the filing of the application under Section 8 by not filing the same till the date by which the statement of defence could have been filed. Under both these situations, there can be no reference to arbitration."
19. In rebuttal, Ld. Counsel for the defendant submits that the said judgment was passed in the pre-covid era and does not take into consideration the extra ordinary circumstances posed by the outbreak of Covid-19 and as held in Prakash Corporates' case (Supra), in para 20.1 as under :-
20.1. Having regard to the purpose for which this Court had exercised the plenary powers under Article 142 of the Constitution of India and issued necessary orders from time to time in SMWP No. 3 of 2020, we are clearly of the view that the period envisaged finally in the order dated 23.09.2021 is required to be excluded in computing the period of limitation even for filing the written statement and even in cases where the delay is otherwise not condonable. It gets perforce reiterated that the orders in smwp No. 3 of 2020 were of extraordinary measures in extraordinary circumstances and their operation cannot be curtailed with reference to the ordinary operation of law.
20. Ld. Counsel for applicant/defendant submitted that case referred by the Ld. Counsel for the non-applicant/plaintiff namely, Sagufa Ahmed & Ors. Vs. Upper Assam Polywood Products Private Limited & Ors. has been distinguished by the Hon'ble Supreme Court in Prakash Corporates Vs. Dee Vee Projects Limited (Supra) at para 22.2, 22.2.1, 22.2.2, 22.2.3 and hence cannot be relied on.
21. The second case as referred by the Ld. Counsel for the non-applicant/plaintiff namely Love Chauhan Vs. Ajay Kumar Kathuria, CM(M) 848/2021 decided on 27.10.2021 has Eco coatings vs Raheja Developers Ltd. page no. 9 of 11 been passed by placing reliance on the Sagufa Ahmad judgment (Supra) and hence the same can also not be relied on.
22. It is submitted that the third case as referred by the Ld. Counsel for the non-applicant/plaintiff namely, HT Media Limited & Anr. Vs. Brainlink International, Inc & Anr., CS (Comm) 119/2020 decided on 17.12.2021, stands overruled by Prakash Corporates Vs. Dee Vee Projects Limited (Supra) and is distinguishable on facts.
23. After hearing the submissions at bar and perusal of material on record, this court finds that applications filed by the defendant deserves to be allowed. The only limitation in Section 8 of A & C Act is that application is required to be filed "not later than the date of submitting first statement on the substance of the dispute". The closure of defence or striking of the defence of the defendant is not made ground for rejection of the application u/s 8 of A & C Act. Defendant has also not allowed to proceed in the suit to take place after striking of the defence.
24. In the present case, defendant appeared through his counsel on 06.10.2021 on which date admittedly, apart from directing defendant to file written statement and admission/denial of documents, parties were referred to the mediation. On the next date i.e. 04.12.2021, right of defendant to file written statement was forfeited as defendant failed to file written statement and no application for seeking extension of time was filed. The points for determination in the schedule was only framed on 04.12.2021. Defendant filed an application u/s 8 A & C Act before the date fixed and thereafter on 31.01.2021 also filed an application for recalling of order dated 04.12.2021.
Eco coatings vs Raheja Developers Ltd. page no. 10 of 11
25. As per the Order VIII Rule 1 proviso, Court can allow the defendant to file written statement not later than 120 days. There is no dispute that there exists an arbitration agreement and subject matter of dispute is covered by the arbitration clause. In view of aforenoted facts and circumstances and having regard to the ratio of Parkash Corporate's case (supra), application u/s 151 CPC filed by the defendant for recalling of order dated 04.12.2021 as well as application u/s 8 of A & C Act 1996 is allowed. A cost of Rs. 22,000/- is imposed upon the applicant/defendant in the totality of circumstances. Parties are referred to arbitration. Suit stands disposed off accordingly. File be consigned to record room. (dictated and announced in the open Court on 04.04.2022) (VINAY KUMAR KHANNA) District Judge (Commercial Court-02) South Distt., Saket, New Delhi Eco coatings vs Raheja Developers Ltd. page no. 11 of 11