NON-REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO(S). 4266-4267 OF 2018

ATCOM TECHNOLOGIES LIMITED .....APPELLANT(S)

VERSUS

Y.A. CHUNAWALA AND CO. & ORS. .....RESPONDENT(S)

J U D G M E N T

A.K. SIKRI, J.

The present  appeal  is  filed  impugning the final  judgment

and order dated November 21, 2016 passed by the High Court of

Judicature at Bombay in Commercial Appeal No. 33 of 2016 in

Notice of Motion No. 1211 of 2015 in Suit No. 3813 of 2000 with

Notice of Motion No. 1706 of 2016 in Appeal No. 420 of 2016 in

Notice of  Motion No.  1211 of  2015 in  Suit  No.  3813 of  2000,

whereby the High Court  has dismissed the appeal filed by the

appellant challenging the order dated March 15, 2016 passed by

the learned Single Judge in Notice of Motion No. 1211 of 2015 in

Suit No. 3813 of 2000.

2. The  Notice  of  Motion  filed  by  the  respondents  was  for

condonation of delay in filing the written statement.  Delay was of

Civil Appeal Nos. 4266-4267 of 2018 Page 1 of 15

15 years and 54 days (though according to the appellant it is 14

years and 166 days).  The learned Single Judge condoned the

delay vide order dated March 15, 2016 with a cost of Rs.5 lakhs

which  was  ordered  to  be  paid  by  the  respondents  to  the

appellant.   Aggrieved  by  the  said  order  condoning  such  an

inordinate  delay,  the  appellant  preferred  appeal  before  the

Division Bench which has affirmed the order passed by the Single

Judge and dismissed the appeal of the appellant.   

3. The  dispute  between  the  parties  is  with  regard  to  the  dues

allegedly payable by the respondents to the appellant of about

Rs.11.9 crores with additional  interest  as per the particulars of

claim annexed to the suit.  According to the appellant and as per

the  arrangement  between  the  parties,  the  respondents  have

failed and neglected deliberately with ulterior motives and  mala

fide intentions to refund the money or handover possession of

certain  flats  in  a  building  named  ‘Emerald  Court’  situated  at

Andheri (E) in Mumbai in respect of which Agreements for Sale

have been executed.   

4. The case set up by the appellant is somewhat like this:

(a) It may be mentioned that respondent Nos. 1, 3 and 4 are

the  owners  of  a  parcel  of  land  admeasuring  30,262  sq.  mtrs.

Civil Appeal Nos. 4266-4267 of 2018 Page 2 of 15

situated at Village Kondivita, Ramkrishna Mandir Marg, Andheri

(E),  Mumbai  (hereinafter  referred  to  as  the  ‘Kondivita  Plot’).

Respondent No. 1 and respondent No. 2 (partner of M/s. Shree

Siddhivinayak  Developers  Ltd.)  entered  into  an  agreement

whereby  respondent  No.  2  was  permitted  to  develop  the

Kondivita Plot by constructing buildings and sell the premises on

ownership basis.  Memorandum of Understanding was executed

between M/s.  Shree  Siddhivinayak Developers  Ltd.  and  ATCO

Securities and Finance Ltd. (sister concern of the appellant – now

known as Kimaya Wellness Ltd.) (hereinafter referred to as the

‘appellant’s sister concern’) pursuant to which appellant’s sister

concern  was  granted  development  and  marketing  rights  of

2,00,000 sq. ft. FSI in a property to be constructed on the piece

and parcel of land bearing S. No. 3(P) and 4(P) CST No. 5P and

6 admeasuring 26,033 sq. mtrs. and further S. No. 3(P) CST No.

5(P), 6(P) and 7(P) admeasuring 7,341 sq. mtrs. of the Revenue

Village Kopri, Powai Road, Taluka Kurla within Greater Bombay

(hereinafter referred to as the ‘Kopri Plot’) for a consideration of

Rs.44,00,00,000/- (Rupees Forty Four Crores) only.   

Earlier  Kimaya Wellness Ltd.  name was ATCO Securities

and Finance Ltd. The name was subsequently changed to Saral

Civil Appeal Nos. 4266-4267 of 2018 Page 3 of 15

Disha  Investments  Ltd.  and  again  the  said  name  changed  to

Kimaya Wellness Ltd.   

(b) Pursuant to the MOU dated December 20, 1995, appellant’s

sister  concern  advanced  a  sum of  Rs.14,23,50,000/-  (Rupees

Fourteen Crore Twenty Three Lakhs Fifty Thousand) only to  M/s.

Shree Siddhivinayak Developers Ltd.  All the payments are made

through  proper  banking  channels.   Thereafter,  a  Tripartite

Agreement  dated  April  1,  1996  was  executed  between  the

appellant,  appellant’s  sister  concern  and   M/s.  Shree

Siddhivinayak Developers  Ltd.  whereby it  was agreed that  the

development  and  marketing  rights  under  the  MOU  dated

December  20,  1995  would  be  shared  equally  between  the

appellant’s  sister  concern  and  the  appellant.   It  was  further

agreed  that  out  of  the  sum  of  Rs.14,23,50,000/-  already

advanced  by  appellant’s  sister  concern  to   M/s.  Shree

Siddhivinayak Developers Ltd., 50% would be treated as having

been advanced by the appellant and the remaining 50% would be

treated  as  having  been  advanced  by  the  appellant’s  sister

concern.  It was followed by MOU dated May 30, 1996 between

the  appellant  and  M/s.  Shree  Siddhivinayak  Developers  Ltd.

regarding the terms of the aforesaid Tripartite Agreement dated

April 1, 1996.

Civil Appeal Nos. 4266-4267 of 2018 Page 4 of 15

(c) As per the appellant, in December 1996, by mutual consent,

parties  cancelled  the  said  Tripartite  Agreement  dated  April  1,

1996.

(d) Various  further  documents  were  executed  between  the

parties and it is not necessary to give detailed narration thereof.

Suffice is to state that as per the version of the appellant, it was

agreed that out of Rs.7,11,75,000/- advanced by the appellant to

M/s.  Shree  Siddhivinayak  Developers  Ltd.,  Rs.3,77,30,000/-

would be adjusted towards purchased consideration for 11 flats

that would be purchased by the appellant in a building known as

‘Emerald Court’ at  the Kondivita  Plot.   The balance amount of

Rs.3,34,45,000/-  was  agreed  to  be  refunded  by  M/s.  Shree

Siddhivinayak  Developers  Ltd.  to  the  appellant.   This

arrangement  was  on  account  of  M/s.  Shree  Siddhivinayak

Developers Ltd. expressing their inability to repay the appellant

entirely.   However,  even  when  some additional  amounts  were

paid towards the aforesaid flats, the respondent No. 2 failed to

deliver the 11 flats in respect of which agreement was entered

into.  The appellant and respondent No. 2 has also  entered into

12 separate registered Agreements for purchase of 12 more flats.

According to the appellant, these flats were also not delivered.

Civil Appeal Nos. 4266-4267 of 2018 Page 5 of 15

(e) To cut the long story short, it is suffice to note that when the

possession  of  the  flats  was  not  delivered,  the  appellant

demanded back the amount paid to respondent No. 2.  According

to the appellant, the amount paid was not refunded.  It led to filing

of the following three cases:

(i) Summary Suit  No. 4870 of 1999 by the sister concern of

the appellant in the High Court of Judicature at Bombay seeking

decree of Rs.4,91,60,000/- along with interest @18% p.a.

(ii) Suit No. 3813 of 2000 by the appellant in the High Court of

Judicature at Bombay for decree in the sum of Rs.7,88,90,000/-

along with interest @18% p.a.

(iii) M/s.  Shree  Siddhivinayak  Developers  Ltd.  (respondent

No. 2) and its all  partners also filed suit  No. 305/2001 against

Saral Disha Investment Limited (sister concern of the appellant).

5. Various developments which took place in these three suits need

not be noted except that  in Notice of  Motion taken out by the

appellant  in  its  suit,  Court  Receiver  was  appointed  to  take

physical  possession  of  23  flats  in  ‘Emerald  Court’.   Further,

unconditional leave to defend was granted to the respondents in

Suit No. 4870 of 1999 vide order dated March 16, 2002 and the

Court also directed that all the three suits shall be tried together.

Civil Appeal Nos. 4266-4267 of 2018 Page 6 of 15

When these suits were listed for hearing before the Single Judge

on January 29, 2015, it was noticed that no written statement was

filed in Suit  Nos. 4870 of  1999 and 3813 of  2000 filed by the

appellant’s sister concern and appellant respectively.  The Court

adjourned the case to  February  12,  2015 for  ex-parte  decree.

These cases were again adjourned and came up for hearing on

May 06,  2015 on which date order was passed recording that

written statement in these two suits was yet to be filed.  Cases

were adjourned to June 22, 2015.  When the things rested at that

stage, respondent No. 2 filed Notice of Motion No. 1212 of 2015

in Suit No. 4870 of 1999 on July 24, 2015 seeking setting aside of

order dated January 29, 2015 and further sought condonation of

delay of  13 years  and 41 days in  filing  the written statement.

Likewise, Notice of Motion No. 1211 of 2015 was also filed in Suit

No. 3813 of 2000 seeking condonation of delay of 5 years and 54

days in filing the written statement (though as per the appellant,

delay was 14 years and 166 days).

6. Notice of Motion No. 1212 of 2015 in Suit No. 4870 of 1999 was

taken up for hearing and vide order dated October 28, 2015, it

was  dismissed  by  the  learned  Single  Judge  who  refused  to

condone the delay with, inter alia, following observations:

Civil Appeal Nos. 4266-4267 of 2018 Page 7 of 15

“4.  It is obvious from the affidavit in support of Notice of Motion that the defendants had completely and knowingly neglected the proceedings.

………….

The facts of the case on hand disclose patent inordinate delay on the part of the defendants and as such attracts the doctrine of  prejudice.   The delay  is  to  the extent  of completely ignoring the proceedings.  Taking a liberal view of  such gross facts  would amount  doing injustice to  the plaintiff  and  allowing  premium on  the  negligence  of  the defendants.”

7. Intra-Court appeal was filed by the respondents against the said

order before the Division Bench of the High Court which was also

dismissed by the Division Bench on January 6, 2016 holding that

‘the  Defendants  had  completely  and  knowingly  neglected  the

proceedings’.  It would be pertinent to mention at this stage that

Special  Leave  Petition  was  filed  challenging  the  order  of  the

Division Bench dated January 6, 2016 (SLP No. 28775 of 2016)

has been dismissed by this Court on September 4, 2017.   

8. Insofar as Notice of Motion No. 1211 of 2015 in Suit No. 3813 of

2000 is  concerned,  it  resulted in  altogether  opposite  outcome.

The  learned  Single  Judge  passed  the  order  dated  March  15,

2016 allowing the same thereby condoning the delay in filing the

written statement with the imposition of cost of 5 lakhs upon the

respondents.  The reason given by the learned Single Judge was

that till  the year 2009, Writ  of  Summons had not been served

Civil Appeal Nos. 4266-4267 of 2018 Page 8 of 15

upon the respondents and, therefore, the delay was of 5 years

and 54 days and was condoned on the ground that the appellant

also  took  number  of  years  in  serving  the  summons  upon  the

respondent.  Appeal against this order filed by the appellant has

been  dismissed  vide  impugned  order  dated  April  18,  2016

affirming  the  order  of  the  learned  Single  Judge.   The  entire

reasoning in support of this order is contained in para 5 of the

judgment of the High Court which reads as under:

“5 In the impugned order, the learned Judge has assigned reasons. He has found from the record and the affidavits placed, that even the Appellant / Plaintiff did not take any concrete steps. In a suit filed in the year 2000, the writ of summons  was  not  prepared  and  served  till  2009.  In paragraph 6 of  the impugned order,  the explanation that the writ  of  summons was served promptly  has not been accepted.  The learned Judge has  found that  the writ  of summons was not served for a period of nine years after institution or  filing of  the  suit.  In  such circumstances  an overall view of the matter was taken and by balancing the rights  and  equities,  the  learned  Judge  has  granted  the request of the Respondents to allow them to file the Written Statement  and defend the suit  /  claim on merits.  In  the process,  the  learned Judge has relied  upon well  settled principle that all procedural rules are handmaids of justice. So long as there is no irreparable loss or prejudice or a case made out of  malafides ordinarily a party should be allowed to defend legal proceedings is the rule invoked and applied,  then,  we  do  not  think  that  in  the  facts  and circumstances of the present case, the application of such rule can be faulted. Once the rights and equities have been balanced,  then,  we do not  think  that  in  further  appellate jurisdiction  such  an  order  deserves  interference.  The Appeal is devoid of merits and is dismissed. By consent of parties, the time to take inspection of the documents and complete pretrial formalities is extended by eight weeks.”

Civil Appeal Nos. 4266-4267 of 2018 Page 9 of 15

9. As is clear from the above, the circumstance which weighed with

the High Court in condoning the delay was that though the suit

was filed in the year 2000, summons were served only in the year

2009.  Plea of the appellant that summons were actually served

in the year 2000 itself was not accepted.  On this basis, the High

Court came to the conclusion that since appellant itself took time

of 9 years after institution or following of the suit,  to serve the

summons upon the respondents herein, equities were balanced

by allowing the respondents to file the written statement, more so,

when no irreparable loss or prejudice was caused to the appellant

and no case of mala fides was made out against the respondents.

10. Notice in the Special Leave Petition was issued on July 18, 2017

which was duly served upon all the five respondents. However,

none of the respondents have entered appearance. Accordingly,

the Registry processed the matter for listing before the Court and

it was listed for hearing on March 26, 2018.  On that day also,

nobody appeared on behalf of the respondents.  Still in order to

give one more opportunity, the matter was directed to be listed

after three weeks.  It again came up for hearing on April 20, 2018.

Since respondents failed to appear in spite of all  the aforesaid

chances given to them, this  Court  is left  with no option but  to

Civil Appeal Nos. 4266-4267 of 2018 Page 10 of 15

proceed ex-parte against the respondents and heard the matter in

their absence.

11. Mr.  Amar  Dave,  learned  counsel  appearing  for  the  appellant

submitted that the reason given by the High Court in condoning

the delay was totally erroneous inasmuch as Writ  of Summons

were served upon the respondents immediately after the filing of

the suit and not in the year 2009 as mentioned.  It was further

argued that, in any case, even if when the summons were served

in the year 2009, there was no satisfactory explanation submitted

by  the  respondents  seeking  condonation  of  delay  which  was

more than 5 years 54 days even on counting the period from the

year 2009.  He also submitted that the High Court failed to notice

that, on identical grounds, Notice of Motion No. 1212 of 2015 in

Suit No. 4780 of 1999 for condonation of delay in filing the written

statement was filed by the respondents which was dismissed by

the  learned  Single  Judge  and  that  order  was  affirmed  by  the

Division Bench (and now even by this Court).  While dealing with

the instant matter, the High Court failed to consider those orders

passed by the co-ordinate Benches.   

12. We find force and due merit in the aforesaid submissions of the

learned counsel for the appellant.   

Civil Appeal Nos. 4266-4267 of 2018 Page 11 of 15

13. We shall proceed on the basis that summons in Suit No. 4870 of

1999 were served only in the year 2009. In this behalf, it may be

stated that in this suit, unconditional leave to defend was granted

by the learned Single Judge on March 16, 2002.  By the same

order, all three suits were directed to be tried together. Therefore,

Vakalatnama in the suit  was also filed and on the dates fixed

before the Court, respondents were appearing having knowledge

about the Suit No. 4870 of 1999 as well.  Obviously, this leave to

defend was granted after the respondents had put in appearance

and filed application for grant of leave to defend.  Thus, summons

in the suit were served upon the respondents, albeit, in Form 4 of

Appendix B, as stipulated in Rule 2 of Order XXXVII of the Code

of Civil Procedure, 1908.  May be, thereafter, Writ of Summons

were not served again upon the respondents.  However, in any

case, these summons were served in the year 2009.  Therefore,

it  was incumbent upon the respondents to show as to in what

manner they were prevented from filing the written statement.

14. It has to be borne in mind that as per the provisions of Order VIII

Rule 1 of  the Code of Civil  Procedure, 1908, the defendant is

obligated  to  present  a  written  statement  of  his  defence  within

thirty days from the date of service of summons.  Proviso thereto

Civil Appeal Nos. 4266-4267 of 2018 Page 12 of 15

enables the Court to extend the period upto ninety days from the

date of  service of  summons for  sufficient  reasons.   Order  VIII

Rule 1  of the Code of Civil Procedure, 1908 reads as under:

“1. Written  statement.-  The  defendant  shall,  within thirty  days from the date  of  service of  summons on him, present a written statement of his defence: Provided  that  where  the  defendant  fails  to  file  the written statement within the said period of thirty days, he shall be allowed to file the same on such other day, as may be specified by the Court,  for reasons to be recorded in writing, but which shall not be later than ninety days from the date of service of summons.”

15. This provision has come up for interpretation before this Court in

number of cases.  No doubt, the words ‘shall not be later than

ninety days’ do not take away the power of the Court to accept

written statement beyond that  time and it  is  also held that  the

nature  of  the  provision  is  procedural  and  it  is  not  a  part  of

substantive law.  At the same time, this Court has also mandated

that time can be extended only in exceptionally hard cases.  We

would like to reproduce the following discussion from the case of

Salem  Advocate  Bar  Association,  Tamil  Nadu  v.  Union  of

India, (2005) 6 SCC 344:

“21.  ...There is no restriction in Order 8 Rule 10 that after expiry of ninety days, further time cannot be granted. The court has wide power to “make such order in relation to the suit as it thinks fit”. Clearly, therefore, the provision of Order 8 Rule 1 providing for  the upper limit  of  90 days to  file written statement is directory. Having said so, we wish to make it clear that the order extending time to file written

Civil Appeal Nos. 4266-4267 of 2018 Page 13 of 15

statement  cannot  be  made  in  routine.  The  time  can  be extended only in exceptionally hard cases. While extending time,  it  has to be borne in mind that  the legislature has fixed the upper time-limit of 90 days. The discretion of the court  to  extend  the  time shall  not  be  so  frequently  and routinely exercised so as to nullify the period fixed by Order 8 Rule 1.”

16. In such a situation, onus upon the defendant is of a higher degree

to plead and satisfactorily demonstrate a valid reason for not filing

the  written  statement  within  thirty  days.   When  that  is  a

requirement, could it be a ground to condone delay of more than

5  years  even  when  it  is  calculated  from the  year  2009,  only

because of the reason that Writ of Summons were not served till

2009?  

17. We fail to persuade ourselves with this kind of reasoning given by

the High Court in condoning the delay, thereby disregarding the

provisions of Order VIII Rule 1  of the Code of Civil Procedure,

1908 and the spirit behind it.  This reason of the High Court that

delay was condoned ‘by balancing the rights and equities’ is far-

fetched and, in the process, abnormal delay in filing the written

statement is condoned without addressing the relevant factor, viz.

whether the respondents had furnished proper and satisfactory

explanation for such a delay.  The approach of the High Court is

clearly erroneous in law and cannot be countenanced.  No doubt,

the provisions of Order VIII Rule 1 of the Code of Civil Procedure,

Civil Appeal Nos. 4266-4267 of 2018 Page 14 of 15

1908  are  procedural  in  nature  and,  therefore,  hand  maid  of

justice.  However, that would not mean that the defendant has

right  to  take  as  much  time  as  he  wants  in  filing  the  written

statement,  without  giving  convincing  and  cogent  reasons  for

delay and the High Court has to condone it mechanically.  It is

also  to  be  borne  in  mind  that  when  the  matter  was  listed  on

January  29,  2015,  it  was  specifically  recorded  that  no  written

statement was filed and the two suits were adjourned for ex-parte

decree.  In other suit i.e. Suit No. 3813 of 2000, similar Notice of

Motion  seeking  condonation  of  delay  was  rejected  though  it

contained  same  kind  of  explanation  and  that  order  has  been

upheld till this Court.  On this ground also, there was no reason to

take a contrary view in the instant  matter  when both the suits

were taken up together and proceed simultaneously.   

18. We  accordingly  allow  these  appeals,  set  aside  the  impugned

order and dismiss Notice of Motion No. 1212 of 2015.

No cost.

.............................................J. (A.K. SIKRI)

.............................................J. (ASHOK BHUSHAN)

NEW DELHI; MAY 07, 2018.

Civil Appeal Nos. 4266-4267 of 2018 Page 15 of 15