Statement of Truth in Commercial Suits: Calcutta High Court Establishes Curable Defect Standard

Introduction

The case of Harji Engineering Works Pvt. Ltd. v. Hindustan Steelworks Construction Ltd. adjudicated by the Calcutta High Court on September 14, 2021, addresses a pivotal issue concerning the procedural requirements in commercial litigation. Specifically, the case examines whether the absence of a Statement of Truth in a Written Statement under The Commercial Courts Act, 2015, constitutes a mandatory violation that warrants the striking out of a defense. The plaintiffs, Harji Engineering Works Pvt. Ltd., argue that failing to include a Statement of Truth is an incurable defect, while the defendants, Hindustan Steelworks Construction Ltd., contend that such a defect can be remedied. This dispute centers around the interpretation of Order VI Rule 15A of The Civil Procedure Code (CPC), 1908, as amended by The Commercial Courts Act, 2015.

Summary of the Judgment

The Calcutta High Court analyzed the amendments introduced by The Commercial Courts Act, 2015, particularly focusing on Order VI Rule 15A of the CPC. The court deliberated on whether the omission of a Statement of Truth in a Written Statement is a curable defect or an incurable one that justifies striking out the defense. After thorough examination of relevant statutes, precedents, and the legislative intent behind the Commercial Courts Act, the court concluded that the absence of a Statement of Truth does not render the defense incurable. Instead, it empowers the court with discretion to allow the defect to be remedied. Consequently, the application to strike out the defense (G.A.5 of 2021) was dismissed, and the defendant was permitted to rectify the omission by filing the Statement of Truth within three weeks (G.A.6 of 2021).

Analysis

Precedents Cited

The judgment references several key cases to underpin its reasoning:

Salem Advocate Bar Association, T.N v. Union Of India (2005): Highlighted the increased responsibility of the verifier in pleadings post-amendment, emphasizing truthfulness in statements.
Bachahan Devi v. Nagar Nigam, Gorakhpur (2008): Clarified the interpretative weight of "shall" versus "may" in statutory provisions, influencing how mandatory and discretionary elements are distinguished.
Vidyavati Gupta v. Bhakti Hari Nayak (2006): Emphasized that procedural technicalities should not undermine substantive rights, supporting a lenient approach towards procedural defects.
Shiv Ratna Paper (P) Ltd. v. Ridhi Petrochem Pvt. Ltd. (Delhi High Court): Took a stringent stance against missing Statements of Truth, although its applicability was limited per the Calcutta High Court.
Haier Telecom (India) Pvt. Ltd. v. Drive India Enterprise Solutions Ltd. (Bombay High Court): Recognized the defect as curable, aligning with the Calcutta High Court’s decision.
Ambalal Sarabhai Enterprises Ltd. v. K.S. Infraspace LLP (Supreme Court): Focused on the classification of disputes under the Commercial Courts Act, indirectly supporting the permissive approach towards procedural defects.

These precedents collectively support a balanced interpretation that favors remedying procedural defects over outright dismissal of defenses in commercial disputes.

Legal Reasoning

The court’s legal reasoning was anchored in a purposive interpretation of The Commercial Courts Act, 2015. Recognizing the Act’s objective to expedite commercial dispute resolutions, the judiciary sought to minimize procedural delays caused by technical deficiencies in pleadings. The court examined Order VI Rule 15A, particularly Sub-rules (4) and (5), noting that while Sub-rule (4) disallows reliance on unverified pleadings, Sub-rule (5) grants the court discretion to strike out such pleadings if not verified by a Statement of Truth.

By interpreting the usage of "shall" and "may" in their respective contexts, the court concluded that the discretion afforded by Sub-rule (5) aligns with the Act’s intent to facilitate swift justice. The court further opined that the ability to cure defects prevents the litigant from being unduly penalized for procedural oversights, thereby upholding substantive rights.

Impact

This judgment sets a significant precedent in commercial litigation, affirming that procedural lapses, such as the absence of a Statement of Truth, are not automatically fatal to a defense. Instead, courts are empowered to allow remedial measures, promoting fairness and efficiency. The ruling encourages parties to rectify technical defects without jeopardizing their substantive claims or defenses, thereby aligning legal procedures with the overarching goal of expeditious dispute resolution.

Furthermore, this decision harmonizes interpretations across various jurisdictions by reinforcing the curative approach observed in the Bombay High Court, thereby fostering consistency within the Indian judicial system.

Complex Concepts Simplified

Statement of Truth: A formal declaration in court documents affirming that the contents are true to the best of the declarant’s knowledge.

Order VI Rule 15A: A specific rule under the CPC, enhanced by The Commercial Courts Act, 2015, that mandates verification of pleadings in commercial disputes.

Curable vs. Incurable Defect: A curable defect can be corrected without severe consequences, whereas an incurable defect cannot be remedied and leads to dismissal of the case or defense.

Purposive Interpretation: A method of interpreting statutes by considering the purpose behind the law rather than just its literal wording.

Conclusion

The Calcutta High Court's judgment in Harji Engineering Works Pvt. Ltd. v. Hindustan Steelworks Construction Ltd. marks a progressive interpretation of procedural requirements under The Commercial Courts Act, 2015. By deeming the absence of a Statement of Truth as a curable defect, the court upholds the principles of fairness and efficiency in commercial litigation. This decision underscores the judiciary’s intent to facilitate swift dispute resolution without compromising the substantive rights of the parties involved. Legal practitioners and litigants alike should note this precedent, which emphasizes the importance of substantive justice over procedural technicalities, thereby contributing to a more pragmatic and equitable legal landscape.