Justice J.B. Pardiwala and Justice R. Mahadevan Uphold Strict Limitation Rules in Commercial Disputes

Introduction

One of the most important decisions in the case of Jharkhand Urja Utpadan Nigam Ltd. & Anr. v. M/s Bharat Heavy Electricals Limited was handed down by the Supreme Court of India on April 15, 2025. The decision was handed down by a division bench consisting of the Honorable Mr. Justice J.B. Pardiwala and the Honorable Mr. Justice R. Mahadevan. When it came to this particular case, the question at hand was whether or not Section 5 of the Limitation Act of 1963 would allow for a delay of 301 days in the filing of a commercial appeal. In spite of the fact that the petitioners having missed the deadline for filing their appeal, they attempted to obtain a pardon on the grounds that the statute of limitations had not yet begun because they had not been provided with a certified copy of the judgment. In a decision that reaffirmed the stringent and time-bound nature of commercial litigation, the Supreme Court of the United States rejected this argument and dismissed the appeal.

A Concise Summary of the Situation

The disagreement originated from a business lawsuit that was submitted by M/s Bharat Heavy Electricals Limited (BHEL) with the intention of recouping more than ₹26 crore, along with interest. Specifically, this sum was determined by an award that was granted by the MSME Council in Kanpur. These petitioners, Jharkhand Urja Utpadan Nigam Ltd. (JUUNL), attempted to dispute a judgment that was handed down by the Commercial Court in Ranchi. The ruling was against the petitioners. On the other hand, they postponed their appeal by 301 whole days. This delay was asked by JUUNL to be excused by the High Court in accordance with Section 5 of the Limitation Act; however, the High Court did not grant the request. They then submitted a petition for special leave to the Supreme Court of the United States.

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The Most Important Legal Concern

For the petitioners, the most important legal question that needed to be answered was whether or not the delay of 301 days in filing an appeal under Section 13(1-A) of the Commercial Courts Act, 2015 could be excused on the grounds that the limitation period had not yet begun because the petitioners had not been served with a certified copy of the judgment.

The individuals who submitted the petition contended that in accordance with Order XX Rule 1 of the Civil Procedure Code (CPC), which was modified by the Commercial Courts Act, copies of the judgment shall be sent to the parties in question using electronic means or any other means, and that the limitation period should begin only once the judgment has been communicated. They maintained that the Commercial Court had failed to fulfill this responsibility, and as a result, the delay ought to be excused without further explanation.

The Supreme Court’s Decision and the Reasoning Behind Our Decision

The Commercial Courts Act, 2015, which was passed into law in order to enable the promptly resolution of high-value commercial disputes, was subjected to a thorough examination by the Supreme Court, which focused on both its aim and its framework. The Court reaffirmed that the overall framework of the Act is designed to encourage efficiency, cut down on delays, and bring finality to commercial litigation within predetermined time limits. The sections of the CPC that have been altered as a result of the Act are intended to promote this objective.

In their observations, Justice Pardiwala and Justice Mahadevan pointed out that the mere fact that a statute mandates that the court to distribute copies of the judgment does not absolve the parties involved in the dispute of the burden to pursue and acquire copies on their own. They made it very plain that Order XX Rule 1 is a directory rather than a mandatory rule. This means that although the court is required to distribute copies, the failure to do so does not prevent or postpone the beginning of the limitation period. Parties are required to take initiative and cannot remain inactive.

It was highlighted by the Court that litigants who are involved in business disputes, particularly government agencies and enterprises that have legal departments, are required to be alert and efficient. Not until eight months after the verdict was handed down did the petitioners submit their request for a certified copy of the original document. The actions in question were deemed to be irresponsible and lacking in good faith.

Provisions of Significant Importance Are Discussed

This judgment placed a significant emphasis on three important legal provisions:

A judgment issued by a Commercial Court can be appealed within sixty days, as stipulated by Section 13(1-A) of the Commercial Courts Act. This provision allows for the filing of an appeal within the time limit. The purpose of this rule is to ensure that appeals are filed in a timely manner, which is in line with the standard of commercial law.

Second, Section 5 of the Limitation Act, which gives the courts the authority to excuse delays provided they can demonstrate that there is “sufficient cause.” On the other hand, the Court made it clear that this section must be utilized in a limited manner and only in extraordinary circumstances when it comes to commercial affairs. It is almost never acceptable to allow a delay that is longer than 120 days (60 days plus 60 days grace).

Third, the Order XX Rule 1 of the CPC, as revised for commercial cases, which states that judgments should be pronounced within ninety days and copies should be issued electronically or in some other manner. According to the decision of the court, this does not imply that the limitation period begins as soon as the copy is turned over. Pronunciation in open court is sufficient to begin the clock, as opposed to other methods.

Within the realm of commercial litigation, the doctrine of diligence

The Court emphasized a fundamental principle, which is that the exercise of due diligence in commercial action is not a choice but rather a need. The purpose of the statute of limitations is to incentivize litigants to take action right away. During the proceedings of this particular case, the petitioners were accompanied by legal counsel, were represented in court, and were present when the verdict was announced. In spite of this, they waited more than three hundred days before filing an appeal. The court stated that this delay demonstrated an obvious lack of effort and negligence on the part of the defendant.

With reference to previous decisions, such as the case of Government of Maharashtra v. Borse Brothers Engineers & Contractors Pvt. Ltd., the Court made the observation that “sufficient cause” is not a magic wand. In order to achieve the purpose of prompt justice, it is necessary to interpret it in light of the Commercial Courts Act. The Court came to the conclusion that in order to frustrate the purpose of the Act and weaken judicial efficiency, it would be necessary to extend limitation without restriction.

The Results of the Decision’s Impact

In the context of business disputes, this ruling underscores that the limitation period must be rigorously adhered to. The Supreme Court has made it very clear that business plaintiffs cannot shield themselves from culpability by pointing the finger at procedural violations. The requirement that there be punctuality in accordance with the law cannot be circumvented by delays in obtaining certified copies or administrative failures.

It also demonstrates that organizations that are part of the public sector and government undertakings do not have the right to get preferential treatment. They are need to adhere to the same regulations as private parties. Because of the bureaucracy that existed in the past, the courts were allowed to be more indulgent with government departments. However, this verdict demonstrates that this forbearance is no longer applicable in business disputes.

When it comes to the enforcement of judicial discipline in commercial litigation, the judgment that was handed down by the Honorable Mr. Justice J.B. Pardiwala and the Honorable Mr. Justice R. Mahadevan makes a significant contribution. It offers clarity on the manner in which limitation periods are to be understood in proceedings that are bound by the Commercial Courts Act, which was passed in 2015. A lengthy delay that was caused solely by negligence and not by any actual difficulty was one that the court, for the correct reasons, did not allow to be tolerated.