LIMITATION: GROUND FOR REJECTION OF PLAINT OR FOR FRAMING PRELIMINARY ISSUE

 

Limitation: Ground for rejection of plaint OR FOR FRAMING PRELIMINARY ISSUE  

 

The law of limitation in a suit or proceedings are often deliberated and debated as regards its applicability. Whether question of limitation should be treated as a law point or a point of facts, or still further, mixed question of law and facts. Whether on the basis of issue of limitation i.e if a plaint is found ex facie time barred, the provisions of Order VII Rule 11 (d) of Code of Civil Procedure could be invoked or not? If so, whether, on that premise itself plaint could be rejected or not ? Another dimension to that will be, when the aspect of limitation could be treated as preliminary issue and it should be decided accordingly. Yet another aspect could be that rather than framing a preliminary issue, the issue of limitation should be framed for a full dress trial while deliberating all other issues. What shall be the apt course? No doubt, there are plethora of judgments/judicial precedents in this regard, still, there are several convergence and divergence on the aforesaid aspect. Recently, Supreme Court has reduced the ambiguity in a great deal while deliberating a case captioned as M/s Mongia Realty and Buildwell Private Limited Vs Manik Sethi Civil Appeal No. 814 of 2022 Arising out of SLP (C) No 26930 of 2019.

In the above case, the ld trial court had rejected the plaint on the ground of limitation and that was upheld by the Delhi High Court. The original plaintiff was therefore before the Supreme Court as appellant.

                                        FACTUAL MATRIX OF “MONGIA REALTY”

The plea of the appellant (Plaintiff) in paragraph 10 of the plaint was that though two and a half years had elapsed since the date for repayment of the loan, the respondent had failed to pay the outstanding loan amount. The appellant has also set up the case that a running account has been maintained between the parties in pursuance of which, the last payment was made on 24 October 2013.

Per contra, in the written statement filed by the respondent the defence set out was that the respondent provided real estate services to the appellant for which commission was being paid by the appellant. It was alleged that payments made for business transactions are in a mala fide manner portrayed as loan transactions. It was also alleged that on some occasions, payments were made for carrying out renovation work in the properties. The respondent(defendant) has denied that there were any loan transactions, and had set up a plea that the transactions between the parties pertain to the payment of commission by the appellant to the respondent in connection with real estate transactions.

 

The preliminary issue was framed on the question of limitation, but, no evidence was adduced by the respondent/defendant. The trial Judge heard the preliminary issue only on the basis of arguments at the Bar. The trial Judge held that the admission in paragraph 10 of the plaint was to the effect that the last payment was made on 20 June 2013 by the appellant (plaintiff), and since the suit was instituted on 1 April 2017, three years delay of Nine Months and Ten days thereafter, hence, it was barred by limitation and the plaint was accordingly rejected.    

What is of pertinence, according to appellant/plaintiff, that in paragraph 5 of the plaint an express plea was set up to the effect that the loan was repayable within one year from the date of the payment of the last installment i.e, by 9 April 2014. Hence, the suit which was instituted on 31 March 2017 was within limitation. If that is so, this is a matter which has to be tried on the basis of evidence and could not have been disposed of purely on the basis of oral arguments. Moreover, it was also contended that there was an open and running current account, between the parties having been set up in the plaint and hence, such aspect should be decided on the basis of evidence adduced at the trial.  

It is held by Supreme Court in M/s Mongia Realty (Supra) para 12:

12 The issue as to whether the claim of the appellant is barred by limitation cannot be isolated from the nature of the transactions between the parties. In any event, whether the plea of the appellant as set up in paragraph 5 of the plaint is proved would depend upon evidence adduced at the trial. The course of action which was followed by the learned trial Judge of directing the parties to address arguments on the issue of limitation was irregular. The issue of limitation in the present case would require evidence to be adduced.

 

The Order XIV Rule 2 of the Code of Civil Procedure stipulates that when issues of both law and facts arise in the same suit, the Court may dispose the suit by trying the issue of law first. For this purpose, the provision specifies two questions of law, which are (i) jurisdiction of the Court; and (ii) a bar to the suit created by any law for the time being in force.

 

The provision is extracted below:

14(2)  Court to pronounce judgment on all issues.—

(1) Notwithstanding that a case may be disposed of on a preliminary issue, the Court shall, subject to the provisions of sub-rule (2), pronounce judgment on all issues. (2) Where issues both of law and of fact arise in the same suit, and the Court is of opinion that the case or any part thereof may be disposed of on an issue of law only, it may try that issue first if the issue relates to :

(a) the jurisdiction of the Court, or

(b) a bar to the suit created by any law for the time being in force, and for that purpose may, if it thinks fit, postpone the settlement of the other issues until after that issue has been determined, and may deal with the suit in accordance with the decision on that issue.]

 

The para 14 of the M/s Mongia Realty (Supra) is of significance:

14 Before this Court in Nusli Neville Wadia v. Ivory Properties (2020) 6 SCC 557 , the issue was whether the issue of limitation can be determined as a preliminary issue under Order XIV Rule 2. The three-judge bench of this court observed that if the issue of limitation is based on an admitted fact, it can be decided as a preliminary issue under Order XIV Rule(2)(b). However, if the facts surrounding the issue of limitation are disputed, it cannot be decided as a preliminary issue. This Court observed as follows:

“51. […] As per Order 14 Rule 1, issues arise when a material proposition of fact or law is affirmed by the one party and denied by the other. The issues are framed on the material proposition, denied by another party. There are issues of facts and issues of law. In case specific facts are admitted, and if the question of law arises which is dependent upon the outcome of admitted facts, it is open to the court to pronounce the judgment based on admitted facts and the preliminary question of law under the provisions of Order 14 Rule 2. In Order 14 Rule 2(1), the court may decide the case on a preliminary issue. It has to pronounce the judgment on all issues. Order 14 Rule 2(2) makes a departure and the court may decide the question of law as to jurisdiction of the court or a bar created to the suit by any law for the time being in force, such as under the Limitation Act. CA 814/2022”.

 

“52. In a case, question of limitation can be decided based on admitted facts, it can be decided as a preliminary issue under Order 14 Rule 2(2)(b). Once facts are disputed about limitation, the determination of the question of limitation also cannot be made under Order 14 Rule 2(2) as a preliminary issue or any other such issue of law which requires examination of the disputed facts. In case of dispute as to facts, is necessary to be determined to give a finding on a question of law. Such question cannot be decided as a preliminary issue. In a case, the question of jurisdiction also depends upon the proof of facts which are disputed. It cannot be decided as a preliminary issue if the facts are disputed and the question of law is dependent upon the outcome of the investigation of facts, such question of law cannot be decided as a preliminary issue, is settled proposition of law either before the amendment of CPC and post amendment in the year 1976”.

 

The Supreme Court has therefore concluded in 15 M/s Mongia Realty (Supra) that:

“ Since the determination of the issue of limitation in this case is not a pure question of law, it cannot be decided as preliminary issue under Order XIV Rule 2 of the CPC. Hence, we allow the appeal and set aside the judgment of the trial Judge dated 16 August 2018 and of the Single Judge of the High Court dated 4 September 2019. The issue of limitation which has been framed by the learned trial Judge may be decided, along with other issues at trial. The appeal shall stand allowed in the above terms”.

In view of the above discussion, the Supreme Court has held in Mongia Realty (Supra) that the determination of the issue of limitation in this case is not a pure question of law, it cannot be decided as preliminary issue under Order XIV Rule 2 of the CPC. The appeal was therefore allowed and concurrent judgments of trial court and High Court were set aside. The issue of limitation framed by the learned trial Judge as preliminary issue while rejecting plaint subsequent to that was directed to be decided, along with other issues during full dress trial.

It thus follows that on the premise of limitation, the plaint could be rejected, only, if ex facie, as per the averment in the plaint and documents attached along with plaint, the same  appears to be time barred. In such an event, a plaint can be rejected as per the principles of Order VII rule 11 (d) of Code of Civil Procedure, but, to invoke the said principle, prima facie the plaint should appear to be time barred. In case, disputed facts emerged and/or contradictory pleas are taken, the same should be treated as mixed question of law and facts and the proper course would be to adjudicate the entire issues including the issue of limitation in full dress trial, rather than by taking recourse to framing of preliminary issues. In other words, framing of preliminary issues could only be necessitated, if the substantive plea of lack of jurisdiction is raised or if the suit may appear to be barred by law and not on the premise of limitation.   

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                                  Anil K Khaware

Founder & Senior Associate

Societylawandjustice.com

 

THE LIMITATION PERIOD FOR FILING WRITTEN STATEMENT IN A NON COMMERCIAL SUIT

 

THe LIMITATION PERIOD for filing WriTten statEment IN A NON COMMERCIAL SUIT

In a recent judgment rendered on 23^rd August 2024 in a matter captioned as Manhar Sabharwal Vs High Court of Delhi & Ors bearing no. W.P.(C) 15091/2023, the division bench of Delhi High Court in a petition in the nature of public interest was called upon to decide constitutionality of Rule 4, Chapter VII of the Delhi High Court (Original Side) Rules, 2018 (“DHC Original Side Rules”), which mandates a strict timeline of 120 days for filing of written statement even in non-commercial matters. It was contended that the said rules creates unfair discrimination and unfair treatment to a litigant before Delhi High Court in original side and that too only on the basis of pecuniary limit of jurisdiction in non commercial matters. According to petitioner, the District Courts in Delhi are vested with the power to condone delay beyond 120 days in filing written statement in non commercial matters, since, it is governed by Order VIII Rule 1 of Code of Civil Procedure, but such delays cannot be condoned on account of Rule 4, Chapter VII of DHC Original Side Rules. It was thus prayed that the aforesaid rule applicable to Delhi High Court be declared ultra vires and unconstitutional.

The grounds raised by petitioner in support of their contentions are as under:

(i)          The DHC Original Side Rules, as they exist in the present form, are discriminatory and violative of Article 14 in as much as the power of a Judge to take written statement on record post 120 days, is retained for litigants in District Courts of Delhi, where the DHC Original Side Rules, do not apply. There is no rationale for taking away such discretion only from the High Court Judge for litigants before the High Court, who differ only on pecuniary jurisdiction with litigants in Subordinate Courts;

(ii)        The above Rule takes away discretion in a Judge of the High Court in  condoning delay in filing written statement, thus, causing hardship to litigants;

(iii)       The  Rule is contrary to Articles 14, 141, 142 and 144 of the Constitution of India;

(iv)       The said rules cannot apply in high court as it runs counter to the Clause 13 of List III – Concurrent List of Seventh Schedule of the Constitution of India, read with Sections 122 to 128 of the CPC;

(v)         The Clause 13 of List III – Concurrent List of Seventh Schedule of the Constitution of India provides legislative competence to Union and States for framing laws relating to civil procedure, including all matters that are included in the CPC at the commencement of the Constitution. In this backdrop, the power of High Court to make Rules under Section 129 of CPC is confined to what a court can do in a particular suit, in exercise of powers under Original Civil jurisdiction. The Rules therefore could only be made in sync with Sections 122 to 128 of CPC and recourse to Section 129 CPC may not be proper, given a clear mechanism under Sections 122 to 128 CPC.

(vi)       The Rule making power with a High Court cannot extend to make Rules that restrict time provided in a Statute. When CPC prescribes time to file written statement, which is permissible to be extended by a Judge hearing the matter;

(vii)     When Sections 124 to 126 of CPC require previous approval of Government of the State or Central Government, which provide that Rules made under the said provisions of CPC and that will be subject to the previous approval of the Government. Such Rules are required to be published under Section 127. Therefore, the Rules, even under Section 122 or 129, can only be procedural. Removal of discretion from a Judge altogether, may not be procedural;

(viii)    Assuming that the impugned Rule could have been made under Section 129 CPC, still, it should still have been subject to procedures and pre-requisites, as provided under Sections 122 to 128 of CPC;

(ix)       The impugned Rule in the present form is beyond the competence of The High  Court, since, it takes away discretion of a Judge of the High Court to condone the delay in filing written statement. It is thus a substantive rule and does not remain procedural;

(x)         The Delhi High Court Rules cannot be construed in a manner so as to do  away with the discretion of a Judge conferred upon him by a statute, i.e., the CPC, to condone delay,

 

 

                                                   RELIANCE

To buttress their point, the petitioner relied upon the following judicial precedents:

S.N	PARTICULARS/Title	Citation
1.	Vinay Kumar GB Vs. Sudhir Kumar and Another	2023 SCC OnLine Del 968
2.	State of Uttar Pradesh & Others. Vs. M/s Satish ChandShivhare and Brothers	2022 SCC OnLine SC 2151
3.	Desh Raj Vs. Balkishan	(2020) 2 SCC 708
4.	Atcom Technologies Limited Vs. Y.A. Chunawala and Company and Others	(2018) 6 SCC 639
5.	Raj Kumar Yadav Vs. Samir Kumar Mahaseth & Others	(2005) 3 SCC 601
6.	Vinod Seth Vs. Devinder Bajaj and Another	(2010) 8 SCC 1
7.	Sambhaji & Ors. Vs. Gangabai & Ors.	(2008) 17 SCC 117
8.	Salem Advocate Bar Association, T.N. Vs. Union of India	(2005) 6 SCC 344
9.	Kailash Vs. Nanhku & Others	(2005) 4 SCC 480

 

                          CONTENTIIONS OF RESPONDENT

 

Per contra, the respondent’s contentions were as under:

 

(i)          As the DHC Original Side Rules are traced to Section 7 of the DHC Act. And since, Section 7 of the said Act has not been challenged. Therefore, Rule 4 is not open to challenge on the ground of ultra vires.

(ii)        Section 129 of the CPC specially refers to the Rules framed by a High Court by overriding provisions of the CPC. Section 129 CPC is non- obstante;

(iii)       The impugned Rule has overriding effect and thus is protected, even if the same is inconsistent or contrary to the CPC,

(iv)       The judgment of Supreme Court in the case of Kailash Vs. Nanhku & Others (supra) was in the context of interpretation of Order VIII Rule 1 of CPC only and shall have no applicability on Delhi High Court Rules;

(v)         Under Section 129 CPC, the Rules of the High Court prevail over other provisions of the CPC. As such, Rule 4 cannot be challenged on the ground, being contrary to the judgment of the Supreme Court qua Order VIII Rule 1 CPC.

 

Reliance on behalf of respondent

S.N	PARTICULARS/Title	Citation
1.	Ram Sarup Lugani and Another Vs. Nirmal Lugani and Others	2020 SCC OnLine Del 1353
2.	Iridium India Telecom Ltd. Vs. Motorola Inc.	(2005) 2 SCC 145
3.	M/S. Print Pak Machinery Ltd. Vs. M/S. Jay Kay Papers Converters	1979 SCC OnLine Del 123
4.	Gautam Gambir Vs. Jai Ambay Traders and Others	2020 SCC OnLine Del 2621
5.	Akash Gupta Vs. Frankfinn Institute of AIR Hostess Training,	2006 SCC OnLine Del 66

 

FINDINGS AND ANALYSIS:

The high court has noted that that the DHC Original Side Rules have been framed by the High Court in terms of the authority, as vested under Section 129 of the CPC, which reads as under:

 

129. Power of High Courts to make rules as to their original civil procedure –

“Notwithstanding anything in this Code, any High Court [not being the Court of a Judicial Commissioner] may make such rules not inconsistent with the Letters Patent [or order] [or other law] establishing it to regulate its own procedure in the exercise of its original civil jurisdiction as it shall think fit, and nothing herein contained shall affect the validity of any such rules in force at the commencement of this Code.”

 

The above shall reflect that the said Section contains a non-obstante clause, meaning thereby, that the provisions, as contained in the said Section, will have an overriding effect on other provisions of the CPC. The effect of non-obstante clause is to give the enacting part of the Section, an overriding effect over the provisions of the Act, in case of any conflict.

It was further observed that there cannot be any doubt about the principle of harmonious construction. However, what confronts us is not a mere question of two independent provisions of CPC being in conflict. The provisions of CPC, which we have extracted, and the historical development of the different sections to which we have referred, do not suggest a situation of mere conflict.

The High Court has held that taking into account the extrinsic evidence i.e. the historical circumstances in which the precursor of Section 129 was introduced into the 1882 Code by a specific amendment made in 1895, we are of the view that the non obstante clause used in Section 129 is not merely declaratory, but indicative of Parliament's intention to prevent the application of CPC in respect of civil proceedings on the original side of the High Courts.

The High court has further noted that with regard to operation of a non-obstante clause, Supreme Court in the case of Union of India and Another Vs. G.M. Kokil and Others 1984 Supp SCC 196, has held as under:

 

11. .......It is well-known that a non obstante clause is a legislative device which is usually employed to give overriding effect to certain provisions over some contrary provisions that may be found either in the same enactment or some other enactment, that is to say, to avoid the operation and effect of all contrary provisions.....

 

Thus, it is held as under in Manhar Sabharwal (Supra) in  para 8:

 

“Considering the aforesaid discussion, it is evident that Section 129 CPC, which is couched in a non-obstante clause, will have an overriding effect over other provisions of the CPC, in case of any conflict. Thus, the DHC Original Side Rules, which have been enacted in terms of the authority conferred by Section 129 CPC, will essentially and necessarily have an overriding effect over other provisions of the CPC. In case of any conflict, the DHC Original Side Rules shall prevail”.

 

The High Court also relied upon a Full Bench of the High Court in the case of M/S. Print Pak Machinery Ltd. Vs. M/S. Jay Kay Paper Converters 1979 SCC OnLine Del 123 and   held that in case of any inconsistency, the DHC Original Side Rules shall prevail over the CPC. It has been held that Section 129 CPC, subordinates the other provisions of the CPC, to Rules made by a High Court for its Original Side. Further, the Rules made by High Court to regulate its practice and procedure, are in the nature of Special Law, and have precedence over the CPC, which is a General Law.

 

Accordingly, it is held that  in the event of inconsistency, the Original Side Rules prevail on the original side of this Court and not the Civil Procedure Code; and, the amending Act of 1976 has made no difference in this respect. Moreover, In Chapter VII, Rule 4 of the DHC Original Side Rules, the phrase “but not thereafter‟ is used, to stipulate that the period of filing written statement may be extended beyond the period of thirty days, for a further period not exceeding ninety days, but not thereafter. The phrase “but not thereafter‟, as used in various Legislations, and interpretation of the said phrase, as given in various judgments, have been dealt with by the Division Bench of the Delhi High  Court in the case of Ram Sarup Lugani and Another Vs. Nirmal Lugani and Others 2020 SCC OnLine Del 1353, wherein, it has been held, as under:

 

15. This is not the first time that the phrase, ―but not thereafter‖ have been used in the statute. The said preemptory words have been used in other provisions that have come up for interpretation before the Supreme Court. In Union of India v. Popular Construction Co., reported as (2001) 8 SCC 470, the words ―but not thereafter‖ were used in relation to the power of the court to condone the delay in challenging the award beyond the period prescribed under Section 34 of the Arbitration and Conciliation Act, 1996 and the Supreme Court observed as below:—

 

In view of the aforesaid discussion, it is held by the Division bench of Delhi High Court that in case of any inconsistency, the provisions of the Delhi High Court (Original Side) Rules, 2018 will prevail over the Civil Procedure Code. The inherent powers contemplated in Rule 16 are not to be exercised to overcome  the period of limitation expressly prescribed in Rule 5 for filing the replication. Nor can Rule 5 be circumvented by invoking any other provision or even the inherent powers of the court, contrary to the scheme of the Rules. The phrase, “but not thereafter” used in Rule 5 makes it crystal clear that the Rule is mandatory in nature and the court cannot permit the replication to be taken on the record after the plaintiff has exhausted the maximum prescribed period of 45 days. Any other interpretation will result in causing violence to the DHC Rules.

Thus, it was held that the phrase “but not thereafter‟, provides for an action, which is mandatory in nature. While holding that DHC Original Side Rules, being Special Rules, shall prevail over the provisions of the CPC, which are General in nature, in the aforesaid judgment of Ram Sarup Lugani (supra), it has been observed, as under:

24. A reading of the relevant provisions of the DHC Rules shows that it is a special provision within the meaning of Section 29(2) of the Limitation Act (for short „the Act‟), that contemplates that where any special or local law prescribes a time limit that is different from the one provided for under the Limitation Act, 1963, then Section 4 to Section 14 of the Limitation Act, 1963 would be expressly excluded. It is well settled that even in a case where the special law does not exclude the provisions of Section 4 to Section 14 of the Limitation Act, 1963 by an express provision or reference, then too, if it is clear from the mandate or the language of the statute, the scheme of the special law will exclude the application of Section 4 to Section 14 of the Limitation Act, 1963. (Ref: Hukumdev Narain Yadav v. Lalit Narain Mishra, reported as (1974) 2 SCC 133).

 

 

It is reiterated by the High Court that Section 7 of the DHC Act confers authority on the High Court to make Rules with respect to practice and procedure for the exercise of its original civil jurisdiction. The words „practice and procedure‟ have a very wide connotation, and will include the power to regulate and specify the method, by which the court will conduct its proceedings. (Ref: Akash Gupta Vs. Frankfinn Institute of Airhostess Training, 2006 SCC OnLine Del 66)

 

Hence, it is concluded that Rule 4 of Chapter VII of DHC Original Side Rules, has been framed under Section 129 of the CPC and Section 7 of the DHC Act. Section 129 of the CPC empowers the High Court to regulate its own procedure in exercise of its civil jurisdiction. Section 7 of the DHC Act further empowers this Court to make Rules and Orders with respect to practice and procedure for exercise of its ordinary original civil jurisdiction. The DHC Original Side Rules, being special law, will prevail over the CPC, and have an overriding effect over the general provisions of the CPC. Accordingly, it is held that the plea raised by the petitioners regarding Rule 4, Chapter VII of the DHC Original Side Rules, being discriminatory in nature, is totally misplaced. The very distinction, between procedures of the High Court and Civil Court, is found ingrained in Section 129 of the CPC. The said Section recognizes special Rules for the High Court, and thereby, itself makes a distinction between High Court and Civil Court. When the CPC itself envisages distinction in the practice and procedure between High Court and Civil Court, the Rules framed thereunder, cannot be challenged on the anvil of discrimination. Therefore, Rule 4 Chapter VII of DHC Original Side Rules cannot be challenged on the ground of being contrary to the aforesaid judgment, which was delivered in the context of Order VIII Rule 1 CPC. The amended provisions of Order VIII Rule 1 CPC, would not apply to the suits on the Original Side of the High Court, and such suits would continue to be governed by the High Court Original Side Rules.

Thus, it is clearly reflected that in a non commercial suit before Delhi High Court in terms of Delhi High Court Rules as referred to above, the limitation period in filing written statement  cannot be condoned beyond 120 days.

        

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                                           Anil k Khaware

Founder & Senior Associate

Societylawandjustice.com