Reasonable Cause Must Be Beyond Control, Not Due to Negligence: Delhi High Court in Commercial Suit

The Delhi High Court has dismissed a petition filed by Bharat Agarwal and others seeking to introduce additional documents in an ongoing commercial suit against NMDC Limited. Justice Shalinder Kaur emphasized the necessity for strict adherence to the procedural timelines set forth in the Commercial Courts Act, 2015, and ruled that the petitioners failed to establish a reasonable cause for not disclosing the documents at the time of filing the suit.

The dispute centers around a tenancy matter involving the property at 109-109A, First Floor, Surya Kiran Building, 19, Kasturba Gandhi Marg, New Delhi. NMDC Limited, the respondent, had been a tenant since 1972, with the last lease ending on April 30, 2020. Upon vacating the premises on August 31, 2020, the petitioners, who are the property owners, found extensive damage to the property. Subsequently, the petitioners refused to issue a no dues certificate and sought a decree of possession, a money decree of Rs.1,34,10,100/- for occupation charges, and mesne profits.

Justice Shalinder Kaur underscored that the petitioners’ explanation for not filing the documents initially was insufficient. The petitioners claimed that the documents were with a previous counsel, but this was not deemed a valid reason. “Reasonable cause,” the court noted, must be beyond the control of the petitioners and not due to negligence or oversight.

The court referred to the Supreme Court's decision In Sudhir Kumar @ S. Baliyan v. Vinay Kumar G.B., 2021 SCC OnLine SC 734, which established that plaintiffs must demonstrate a compelling reason for non-disclosure of documents within the prescribed time. Similarly, in Bela Creation Pvt. Ltd. V. Anuj Textiles, 2022 SCC OnLine Del 1366, it was held that “reasonable cause” cannot extend to negligence in filing documents before the court.

Strict Interpretation of the Commercial Courts Act:
The judgment reiterated the necessity for strict compliance with the procedural norms under the Commercial Courts Act to ensure expeditious resolution of disputes. The court cited the Supreme Court’s ruling in Ambalal Sarabhai Enterprises Ltd. V. K.S Infraspace LLP, 2020 SCC 15 585, emphasizing that liberal interpretations would undermine the Act’s objective of speedy disposal of high-value commercial disputes.

Justice Kaur reasoned that the petitioners’ inability to present the additional documents at the time of filing the suit was due to their own oversight and lack of due diligence. The petitioners had ample opportunity to ensure that all relevant documents were submitted with the plaint, especially considering their consultations with multiple advocates.

“The necessity for strict timelines in commercial suits is paramount to avoid the delays typical in ordinary suits. Extending undue leniency in procedural compliance would defeat the purpose of the Commercial Courts Act,” Justice Kaur stated.

Justice Shalinder Kaur remarked, “Reasonable cause, within the meaning of Order XI Rule 1(10) of the CPC, as amended by the Commercial Courts Act, cannot extend to negligence in filing of documents before the Court. ‘Reasonable cause,’ necessarily, must refer to a cause which was outside the control of the petitioner.”

The Delhi High Court’s dismissal of the petition highlights the judiciary’s commitment to maintaining procedural rigour in commercial litigation. By upholding the Commercial Court’s decision, the judgment reinforces the importance of timely disclosure of documents and adherence to the procedural requirements under the Commercial Courts Act. This ruling is expected to serve as a precedent, ensuring that commercial disputes are resolved swiftly and efficiently, aligning with the legislative intent behind the Act.

Date of Decision: June 27, 2024
Bharat Agarwal & Ors. V. NMDC Limited