Appeal Allowed: Supreme Court Permits Filing of Written Statement and Right to Cross‑Examine in Commercial Suit, Remands for Fresh Trial

A bench of Justices Aravind Kumar and N.V. Anjaria heard an appeal by M/s Anvita Auto Tech Works Pvt. Ltd. challenging the Karnataka High Court’s affirmation of a commercial trial court decree in a recovery suit filed by M/s Aroush Motors. The principal question before the Court was whether non-filing of a written statement in a commercial suit, within the statutory 120‑day period, extinguished the defendant’s right to cross‑examine the plaintiff’s witnesses, and whether the period of limitation affected by the COVID‑19 pandemic should have been excluded.

The Court allowed the appeal, set aside the orders of the High Court and the trial court, and remanded the matter for fresh disposal after permitting the appellant to file the written statement and exercise the right to cross‑examine, subject to payment of costs. The Court observed that procedural law must advance substantive justice and should not become a “tyrant” over rights of defence. The Court, in its reasoning, observed: The Court directed that the trial court should permit filing of the written statement on payment of Rs. 1,00,000 as costs, allow cross‑examination of the plaintiff’s witnesses, and dispose of the suit preferably within six months.

Background The dispute arose from a dealership arrangement for motorcycles marketed as CFMOTO. The plaintiff invested substantial sums—security deposit, showroom expenses and purchases of stock and service equipment—after a provisional appointment as dealer in September 2019. Nineteen BS‑IV motorcycles were supplied, eight of which were sold. Following the Government ban on sale of BS‑IV vehicles from April 1, 2020, the plaintiff alleged that the defendant failed to supply upgrade kits promised to convert machines to BS‑VI, stalling its business. The plaintiff terminated the dealership in September 2020 and filed Commercial Original Suit No. 372 of 2021 claiming recovery of investments and costs.

Summons were served in July 2021. The defendant entered appearance but failed to file its written statement within the 120‑day statutory period prescribed for commercial suits. The defendant repeatedly sought extension and filed applications seeking condonation, which the trial court rejected on March 22, 2022; the written statement was not taken on record. The plaintiff’s witness gave evidence and the trial court recorded the defendant’s cross‑examination as “Nil.” On November 15, 2022 the suit was partly decreed in favour of the plaintiff; the defendant’s appeal was dismissed by the High Court on May 20, 2025.

Before this Court, the appellant relied on the Court’s suo motu orders excluding the period from March 15, 2020 to February 28, 2022 for computation of limitation and on precedents where COVID‑relief had allowed later filing of pleadings in commercial matters. The respondent argued that the consequence of statutory forfeiture was correctly applied and that the defendant had acquiesced to the procedural orders and pursued dilatory tactics.

The Supreme Court examined the statutory mandate in Order VIII Rule 1 (as amended for commercial courts) and the earlier decisions, including the Court’s own orders excluding the pandemic period from limitation and precedents treating the 120‑day rule as mandatory. Applying those orders and the principle that procedural rules should not defeat substantial justice, the Court held that the pandemic‑affected period should have been excluded, and that the defendant’s right to cross‑examine survived despite non‑filing of the written statement. The Court therefore allowed the appeal, set aside the impugned judgments and remanded the suit with directions noted above.

Case Details: Case No.: [Civil Appeal No. of 2025 (Arising out of Special Leave Petition (Civil) No. 21917 of 2025)] Case Title: [M/s Anvita Auto Tech Works Pvt. Ltd. v. M/s Aroush Motors & Anr.] Appearances: For the Petitioner(s): Shri Pb. Suresh, Learned Senior Counsel For the Respondent(s): Shri Balaji Srinivasan, Learned Counsel