Recently, the single judge bench of the Jammu and Kashmir High Court held that the plaintiff does not have any absolute choice and right to bypass mandatory provision under Section 12-A of the Commercial Courts Act of 2015 (hereinafter ‘Act’), by making a prayer for urgent interim relief without justifying any reasonable ground.
Brief facts:
The factual matrix of the case is that Defendant No. 1 issued a notice inviting tender along with the request for proposal (REP) for a concession to design, fit-out, finance, develop, market, operate, maintain, and manage the food and beverage outlets at Srinagar international airport and the Plaintiff qualified as a successful bidder and Defendant no. 4 conveyed his approval for the Award of contract. Subsequently, the plaintiff came to know that the defendant had fraudulently induced the plaintiff into executing the contract by concealing material facts that multiple litigations are pending in respect of the Srinagar Airport and status quo orders, protecting M/s Saptagiri Resturant Pvt. Limited (SRPL), the previous licensee of the airport premises, are in operation. The plaintiff made substantial financial commitments, including furnishing, a bank guarantee of INR 8,94,89,000, assuming that business operations would commence in the month of March 2024. Thereafter, the Plaintiff urged that the urgency of the suit renders pre-institution mediation inapplicable under Section 12-A of the Act of 2015, as the plaintiff faces an eminent risk of irreparable financial loss, particularly the threat of Bank Guarantee encashment by the defendant.
Contentions of the Petitioner:
The learned counsel appearing on behalf of the Petitioner contended that if his application for the dispensation of pre-institution mediation under Section 12-A of the Act of 2015 is not allowed, there is every possibility that the defendants would encash the Bank Guarantee duly deposited by the plaintiff on 24.01.2024, amounting to ₹ 8, 94, 89, 000/-. It was furthermore contended that the Letter of Intent of Award (LOIA) was issued and Concession Agreement was executed but the defendants have fraudulently induced the plaintiff into executing the contract by concealing the fact of multiple pending litigation and statusquo orders passed in favour of M/S Saptagiri restaurants, Private Limited.
The counsel further relied upon the judgment titled Dr Reddys Laboratories Limited v. Smart Laboratories Pvt. Ltd.
Observations of the Court:
The Hon’ble Court observed that the procedure provided in Section 12-A of the Act of 2015, is mandatory in nature. The intent of the legislature is to ensure that before a commercial dispute is filed before the court, alternative means of resolution are adopted so that genuine cases come before the court and the courts are also decongested. It is not a penal enactment for punishment. The object of the prescribing procedure is to advance the cause of justice.
It was furthermore observed that whenever a plaint is filed under the Act of 2015 with a prayer for an urgent interim relief, the commercial court should examine the nature and the subject matter of the suit, the cause of action and the prayer for interim relief. The prayer for urgent interim relief should not be a disguise or mask to wriggle out of and get over Section 12 of the Commercial Court Act. The facts and circumstances of the case have to be considered holistically from the standpoint of the plaintiff.
The court noted that the plaintiff does not have any absolute choice and right to bypass mandatory provision under Section 12-A of the Act of 2015, by making a prayer for urgent interim relief without justifying any reasonable ground.
The court relied upon the judgments titled Patil Automation Private Limited v. Rakheja Engineers Pvt. Ltd., and Yamini Manohar v. T.K.D. Keerthi.
The court furthermore noted that the plaintiff prima facie appears to have rushed to this Commercial Division in anticipation of the show cause notice dated 13.03.2025 which was issued pertaining to the non-compliance of clause 10.4 of article 10 (concession fee) of the concession agreement. The intention of the defendants clearly reflects that they want the dispute raised by the plaintiff through emails to be settled. While as the plaintiff has chosen not to pay the concession fees which makes the Bank Guarantee vulnerable for encashment.
The decision of the court:
Based on these considerations, the court rejected the plaint and dismissed the application.
Case Title: M/s Devyani International Limited V. Airport Authority of India and others
Coram: Hon’ble Mr. Justice Moksha Khajuria Kazmi
Case No.: CS (OS) no. 01/2025
Advocates for the Plaintiff: Mr Anil Bhan, Sr. Advocate with Mr Danish Majid, Advocate
Advocates for the Defendants: Mr Vikas Malik, Advocate
