Bombay High Court
Sh. R. K. Mishra vs M/S. Poonam Resorts Ltd. Nagpur Thr. ... on 4 December, 2023
Author: Avinash G. Gharote
Bench: Avinash G. Gharote
2023:BHC-NAG:16723
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1
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
NAGPUR BENCH AT NAGPUR
WRIT PETITION NO.5984/2023
5
PETITIONER : Sh. R.K. Mishra
Indian Bank [erstwhile Allahabad Bank],
Aged about Major, Occu. : Service
Presently serving as Zonal Manager of
Indian Bank at Asansol Zone, Asansol, Pashchim
Bardhaman, District West Bengal
[Ori. Deft. No.5]
...VERSUS...
RESPONDENTS 1. M/s. Poonam Resorts Ltd.
Having its office at 1st Floor, "B", Poonam
Chambers Byramji Town, Chhindwada Road
Nagpur through its Directors Nandkumar
Harchandani Aged Major, r/o Byramji Town,
Nagpur -13
[Ori. Plaintiff]
2. Sh. Rakesh Sethi
Aged Major, Occu. : Retired
Ex-chairman, Allahabad Bank
R/o Villa No.2, 10/22
S.O. No.103-A, B/H Babu Khal Arena,
Besides Kokhapeth Lake Rajendra Nagar,
Mandala, Dist. Rangareddi Telangana 500075.
[Ori. Deft. No.1]
3. Sh. Sanjay Agrawal
Aged Major, Occu. Services
Posted as Chief Finance Officer Head Office,
Calcutta 2, Netaji Subhash Road BBD Bagh,
Kolkata, West Bengal 700001.
[Ori. Deft. No.2]
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4. Sh. Vipul Singla
Aged Major, Occu. : Service Posted
as GM (Credit Monitoring) 2, Netaji
Subhash Road, BBD Bagh, Kolkata,
West Bengal 700001.
[Ori. Deft. No.3]
5. Sh. R.S. Bhatt
Aged Major, Occu. : Service Posted as
Dy. General Manger Palm Road, Reserve Bank
of India Sq. Nr. RBI, Civil Lines, Nagpur.
[Ori. Deft. No.4]
6. Sh. M.V. Rao
Aged Major, Occu : Service
Head Office, Calcutta 2, Netaji Subhash Road
BBD Bagh, Kolkata, West Bengal 700001.
[Ori. Deft. No.6]
7. N. Kumar Housing & Infrastructure Pvt. Ltd.
Registered office at 1st Floor, "B" Poonam
Chambers, Byramji Town Chhindwada Road,
Nagpur - 13.
[Ori. Deft. No.7]
(Respondent nos.2 to 7 are deleted)
----------------------------------------------------------------------------------------------
Mr. A.T. Purohit, Advocate for petitioner
Mr. D.V. Chauhan, Advocate for respondent no.1
-------------------------------------------------------------------------------------------------------------
CORAM : AVINASH G. GHAROTE, J.
Date of reserving the judgment : 03/11/2023
Date of pronouncing the judgment : 04/12/2023
5
JUDGMENT
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1. Heard Mr. A.T. Purohit, learned counsel for the
petitioner and Mr. D.V. Chauhan, learned counsel for the respondent
No.1. Rule. Rule made returnable forthwith. Heard finally with the
consent of the learned counsels for the rival parties.
2. In view of the pursis Stamp No.3/2023, filed by the
petitioner, the respondent nos. 2 to 7, stand deleted, as according to
the petitioner, they are not the contesting respondents. The petition
is now between the petitioner and the respondent no.1, alone.
3. The petition questions the order dated 20/01/2023
(pg. 249), by which an application below Exh.45 preferred by the
petitioner/defendant No.5 seeking liberty to file written statement
on record after completion of 120 days, has been rejected by the
4. Mr. Purohit, learned counsel for the
petitioner/defendant No.5, does not dispute that the defendant No.5
was served and appeared on 06/10/2018 through counsel. When
the matter was posted on 19/12/2018, the petitioner/defendant 20
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No.5 alongwith defendant Nos.1 to 4 and 6 filed an application
below Exh.30 for grant of time to file written statement, which came
to be allowed (pg. 60). An application under Section 12-A of the
Commercial Courts Act, 2015 (for short the "C.C. Act, 2015"
hereinafter) read with Rule 3 of the Commercial Courts (Pre- 5
Institution Mediation and Settlement) Rules, 2018, for dismissal of
the suit was also filed at Exh. 32 (pg.58). Exh. 32, the application
for dismissal of the suit claimed to be decided by the order dated
27/07/2022 (pg.63), by which the suit was referred for pre-
institution mediation for a period of two months, till which period 10
the proceedings of the suit were kept in abeyance (pg.69). On
27/07/2022 itself, the petitioner/defendant No.5 alongwith the
other defendants filed a joint application for grant of permission to
file written statement, in view of the order dated 19/12/2018
passed below Exh.30, which according to him granted time to file 15
written statement till the application under Section 12-A of the C.C.
Act, 2015 (Exh. 32) is decided (pg.241). In this application, a
statement was made that the written statements of the defendants
were ready and duly sworn on 19/01/2019 and 21/01/2019 and
they could not be filed earlier, as time was already granted to file 20
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written statement till the decision of Exh. 32. It was therefore
contended, that the already sworn written statement ought to be
permitted to be filed on record.
5. The said application has been rejected by the learned 5
Commercial Court by the order dated 20/01/2023 (pg. 249),
holding that the period of 120 days as contemplated by the Order
VIII Rule 1 of the Code of Civil Procedure, as applicable to the
Commercial Courts was mandatory, and therefore, the Court did not
6. Mr. Purohit, learned counsel for the petitioner submits,
that since the Court itself had granted the application at Exh. 30 and
thereby extended the time to file the written statement till the
application under Section 12-A of the C.C. Act, 2015 was decided, 15
the petitioner relying upon the same, though the written statement
was ready on 19/01/2019, did not file it on record under the bona
fide impression that the time was extended. He invites my attention
to the contents of the application at Exh.30 (pg. 60), its prayer
clause, and the order passed therein, which according to him 20
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supports this submission. He therefore submits, that consequent to
the decision of Exh. 32, the application under Section 12-A of the
C.C. Act, 2015, the learned Court ought to have granted Exh. 45
(pg. 241) by permitting the petitioner/defendant No.5 to file his
written statement on record. He further contends, that the petitioner 5
cannot be put to any prejudice on account of the act of the Court as
the petitioner was let to believe on account of grant of the
application at Exh. 30 that time to file the written statement was
extended by the Court till the decision of Exh. 32.
7. In that view of the matter, it is contended, that such an
impression was bona fide, and therefore, considering this fact
position and the fact that the application below Exh. 32 came to be
decided only on 27/07/2022 (pg. 63), the application filed below
Exh. 45 on the same day for placing the written statement on record 15
ought to have been allowed. He further invites my attention to the
written statement at page 157 to indicate that the same was already
sworn in on 19/01/2019 (pg.212), and therefore, indicated the
bona fides on behalf of the petitioner/defendant No.5. In support of
his contention, he places reliance upon Prakash Corporates Vs. DEE 20
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VEE Projects Limited, (2022) 5 SCC 112, to contend that the delay
in filing of the written statement in a commercial suit has been
condoned by the Court which has been accepted by the Hon'ble
Apex Court (para 39 and 40); Pratishtha Commercial Private
Limited Vs. Orissa State Cooperative Milk Producer's Federation 5
Limited, 2023 SCC OnLine Cal 1404 ; Shaikh Salim Haji Abdul
Khayumsab Vs. Kumar and others, 2006 (1) Mh.L.J. 178, which on
the mandate of Order VIII Rule 1 of the Code of Civil Procedure,
holds that the last day i.e. the 90 th day being a holiday filing of the
written statement on the 91st day was permissible. 10
8. Mr. Chauhan, learned counsel for the respondent No.1,
by relying upon SCG Contracts (India) Private Limited Vs. K.S.
Chamankar Infrastructure Private Limited and others, (2019) 12
SCC 210, contends that the Hon'ble Apex Court has held that the 15
provisions of Order VIII Rule 1 of the Code of Civil Procedure fixing
of outer time limit of 120 days for filing of the written statement by
the defendant from the date of service in commercial suits to be
mandatory and not open to extension of time. He also places
reliance upon Flipkart India Pvt. Ltd. and another Vs. Flipkart India 20
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Pvt. Ltd. and another, 2020 SCC OnLine Bom 664 (paras 7 and 8), to
contend that failure to file the written statement within the time
limit results in forfeiture of the right thereto and there is no power
in the Court to allow its filing subsequent to the expiration of the
time indicated in Order VIII Rule 1 of the Code of Civil Procedure. 5
Reliance is also placed upon K.R. Anand Vs. Commissioner of
Central Goods and Services Tax and another, 2021 SCC OnLine Del
3220 (para 13), to contend, that any liberty granted for following a
statutory provision to any party, would not have the effect of
extending the time mandated by the statute. He further relies upon 10
Garment Craft Vs. Prakash Chand Goel, (2022) 4 SCC 181 (para
15), regarding the scope of interference by this Court in its
jurisdiction under Article 227 of the Constitution. It is also
contended, that the judgment in Prakash Corporates (supra), was
passed in Covid-19 pandemic situation, and therefore, sought to 15
address an unprecedented situation and could not be made
applicable to a situation which is otherwise normal (para 23 and
24). Reliance is also placed upon S.S. Nikade and Company (JV),
Yavatmal and another Vs. Vidarbha Irrigation Development
Corporation, Nagpur and others, 2021 (1) Mh.L.J. 297. 20
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9. The petition poses an interesting question :
"Whether the period of 30 days and further extended period
of 90 days, total 120 days under Order VIII Rule 1 CPC as
applicable to Commercial Courts, commences from the date 5
of service of the suit summons or the date of failure of the
Pre-Institution Mediation and Settlement. ?"
10. Order VIII Rule 1 of the Code of Civil Procedure as
applicable to Commercial Courts, being material is quoted as under : 10
"Order VIII Rule 1 of CPC
1. Written Statement.--The Defendant shall, within thirty
days from the date of service of summons on him, present
a written statement of his defence:
Provided that where the defendant fails to file the 15
written statement within the said period of thirty days, he
shall be allowed to file the same on such other day, as may
be specified by the Court, for reasons to be recorded in
writing, but which shall not be later than ninety days from
Provided that where the defendant fails to file the
written statement within the said period of thirty days, he
shall be allowed to file the written statement on such other
day, as may be specified by the Court, for reasons to be
recorded in writing and on payment of such costs as the 25
Court deems fit, but which shall not be later than one
hundred twenty days from the date of service of summons
and on expiry of one hundred twenty days from the date
of service of summons, the defendant shall forfeit the right
to file the written statement and the Court shall not allow 30
the written statement to be taken on record."
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11. Section 12-A of the Commercial Courts Act, 2015 also
needs consideration and is quoted as under :
"Section 12A. Pre-Institution Mediation and Settlement--
(1) A suit, which does not contemplate any urgent
interim relief under this Act, shall not be instituted unless 5
the plaintiff exhausts the remedy of pre-institutio n
mediation in accordance with such manner and
procedure as may be prescribed by rules made by the
Central Government.
(2) The Central Government may, by notification, 10
authorise the Authorities constituted under the Legal
Services Authorities Act, 1987 (39 of 1987), for the
purposes of pre-institution mediation.
(3) Notwithstanding anything contained in the Legal
Services Authorities Act, 1987 (39 of 1987), the 15
Authority authorised by the Central Government under
sub-section (2) shall complete the process of mediation
within a period of three months from the date of
application made by the plaintiff under sub-section (1):
extended for a further period of two months with the
consent of the parties:
Provided further that, the period during which the
parties remained occupied with the pre-institution
mediation, such period shall not be computed for the 25
purpose of limitation under the Limitation Act, 1963 (36
of 1963).
(4) If the parties to the commercial dispute arrive at
a settlement, the same shall be reduced into writing and
shall be signed by the parties to the dispute and the 30
mediator.
(5) The settlement arrived at under this section shall
have the same status and effect as if it is an arbitral
award on agreed terms under sub-section (4) of section
30 of the Arbitration and Conciliation Act, 1996 (26 of 35
1996)."
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It is necessary to note that Chapter III-A, which contains
Section 12-A, which provides for Pre-Institution Mediation and
Settlement was inserted in the C.C. Act, 2015 by virtue of Section 11
of Act No.28 of 2018 w.e.f. 03/05/2018. The process of mediation
has to be completed within a period of 3 months from the date of 5
application made by the plaintiff under sub-section (1). The process
of mediation is only to be exhausted in case no urgent relief is
claimed in the suit. Under sub-section 2 of Section 12-A of the C.C.
Act, 2015 the Central Government may by notification authorize the
Authorities constituted under the Legal Services Authorities Act, 10
1987 for the purposes of pre-institution mediation.
12. The Commercial Courts (Pre-Institution Mediation and
Settlement) Rules, 2018, in my considered opinion, cast an
obligation upon the plaintiff in the suit to make an application to the 15
authority as per Form-1 as specified in Schedule-I for initiation of the
mediation process under the Act, for at that point of time the
defendant is not in the picture at all. Thus, the obligation to ensure
that there is a pre-institution mediation is upon the plaintiff.
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13. In Patil Automation Private Limited and others Vs.
Rakheja Engineers Private Limited, (2022) 10 SCC 1, the Hon'ble
Apex Court has held that the provisions of Section 12-A of the C.C.
Act, 2015 are mandatory in the following words:
"48. In contrast, Section 12-A cannot be described as a 5
mere procedural law. Exhausting pre-institution mediation
by the plaintiff, with all the benefits that may accrue to
the parties and, more importantly, the justice delivery
system as a whole, would make Section 12-A not a mere
procedural provision. The design and scope of the Act, as 10
amended in 2018, by which Section 12-A was inserted,
would make it clear that Parliament intended to give it a
mandatory flavour. Any other interpretation would not
only be in the teeth of the express language used but,
more importantly, result in frustration of the object of the 15
Act and the Rules.
62. Since, Section 12-A also contemplated the making of
Rules to give effect to the scheme of pre-litigation
mediation. The Rules were promptly made and published
on 3-7-2018. Rule 3 elaborately provides for the manner 20
in which the mediation process is initiated. It
contemplates that a party, to a commercial dispute, may
make an application to the Authority. This Rule speaks
about a party. Section 12-A declares that the plaintiff must
exhaust the remedy of pre-litigation mediation. What, 25
apparently is required is that the suit cannot be filed
except after the remedy of pre-litigation mediation,
contemplated under the Act and the Rules, is attempted
and exhausted. What Rule 3(1) provides is the form in
which the application is to be made viz. Form I, as 30
specified in Schedule I. The making of the Form can be by
online transmission or by post or by hand.
63. The view expressed by the High Court of Madras that
the use of the word "may", detracts from the mandatory
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flavour of Section 12-A is clearly untenable. Section 12-A
is part of the parent enactment. Rule 3, being a
subordinate legislation, must be interpreted harmoniously,
in the first place, with the parent enactment. That apart,
on a proper understanding of Rule 3, there is really no 5
conflict between Section 12-A and Rule 3. Rule 3 only
gives a discretion to the applicant, in regard to the mode
of making the application. So understood, we are of the
clear view that, if Section 12-A is otherwise mandatory,
Rule 3(1) can only be understood as providing three 10
different modes for making the application, contemplated
in Section 12-A(1).
64. As to whether the application must be made, must
depend upon, among other things, upon the peremptory
nature of the language employed in Section 12-A(1). Rule 15
3 further contemplates that the Authority, which again,
has been clearly defined as the Authority notified by the
Central Government under Section 12-A(2), has to issue a
notice to the opposite party to appear and to give his
consent to participate within the time as provided in Rule 20
3(2). Should there be no response, a final notice is to be
given again in the manner articulated in Rule 3(2).
Should there be again no response by the notice
remaining unacknowledged or upon there being refusal to
participate, the mediation process becomes what is 25
described, a non-starter. The Authority then makes a
report in Form III, which is called a non-starter report.
The copy of the report is served on the applicant and the
respondent. There is a provision for accommodating the
request of the opposite party appearing and seeking time, 30
subject to the date being not later than ten days from the
date of request of the parties. If, in such a case, there is
failure to appear by the opposite party, again a non-starter
report in Form III has to be made. If, on the other hand,
where both the parties appear, gives consent, the 35
Authority is to assign the matter to a mediator and also to
assign a date.
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65. The period of mediation being three months and the
possibility of an extension by two months, with the
consent of both sides, is the subject-matter of Rule 3. The
role of the mediator is carved out in Rule 5 to be one to
facilitate the voluntary resolution of the dispute and assist 5
the parties in reaching a settlement. Rule 6 provides for
authority with the party to either appear personally or
through his duly authorised representative or counsel. The
significance of being represented by counsel in pre-
litigation mediation, cannot but be underlined. Apart from 10
the fact that the legislature must be treated as aware, that,
both, public interest, as also the interest of the parties, lies
in an expeditious disposal of, what is described as,
commercial litigation, with a sublime goal of fostering the
highest economic interests of the nation, allowing the 15
counsel to appear before the mediator is intended to
facilitate in arriving at a settlement, which is legally valid
and otherwise just.
67. A mediation settlement arrived at under Section
89CPC must be scrutinised by the court and only on its 20
imprimatur being given it is effective [see para 40 of
Afcons Infrastructure Ltd. v. Cherian Varkey Construction
Co. (P) Ltd. [Afcons Infrastructure Ltd. v. Cherian Varkey
Construction Co. (P) Ltd., (2010) 8 SCC 24 : (2010) 3
SCC (Civ) 235] ]. Since a settlement under Section 12-A 25
of the Act is accorded the status of an award under the
Arbitration and Conciliation Act, it unerringly points to
the object of the legislature to make pre-litigation
mediation compulsory. We again underscore the vital role,
the lawyers engaged can and must discharge in arriving at 30
a just and valid settlement translating into an effective
award and therefore, a decree.
68. Rule 7 deals with the procedure to be adopted by the
mediator. Rule 9 enshrines the principle of confidentiality
of mediation. The mediator, the parties, their authorised 35
representatives or counsel are to maintain confidentiality
about the mediation. Rule 9 further declares that the
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mediator is not to allow stenographic or audio or video
recording of the mediation sittings.
91. Section 12-A of the Commercial Courts Act provides
for mediation. This is a provision, which was inserted as
per the Amending Act (Act 28 of 2018) enacted in the 5
year 2018 and it came into force with effect from 3-5-
2018. By the said amendment, in fact, Chapter III-A was
inserted and Section 12-A is the sole section in the said
chapter. A plain reading of Section 12-A makes the
91.1. The lawgiver has declared that if a suit under the
Act does not "contemplate" any urgent interim relief,
then, it cannot be instituted unless the plaintiff seeks pre-
litigation mediation. The pre-institution mediation is to be
done in the manner, procedure, which is to be prescribed 15
by the Central Government. The pre-litigation mediation
is to be completed within a period of three months from
the date of the application made by the plaintiff under
sub-section (1) [see Section 12-A sub-section (3)].
91.2. The period of three months can, however, be 20
extended for a period of two months provided there is
consent to the same by the parties [see the first proviso to
Section 12-A sub-section (3)]. By the second proviso, the
Legislature has taken care to provide that the period,
during which the parties remained occupied with the pre- 25
litigation mediation, is not to be reckoned for the purpose
of computing the period of limitation under the Limitation
Act, 1963.
91.3.------
93. In Patasibai v. Ratanlal [Patasibai v. Ratanlal, (1990) 2
SCC 42] , one of the specific contentions was that there was
no specific objection for rejecting of the plaint taken earlier. In
the facts of the case, the Court observed as under : (SCC pp. 35
47-48, para 13)
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"13. On the admitted facts appearing from the record
itself, the learned counsel for the respondent, was
unable to show that all or any of these averments in
the plaint disclose a cause of action giving rise to a
triable issue. In fact, Shri Salve was unable to dispute 5
the inevitable consequence that the plaint was liable
to be rejected under Order 7 Rule 11CPC on these
averments. All that Shri Salve contended was that the
court did not in fact reject the plaint under Order 7
Rule 11CPC and summons having been issued, the 10
trial must proceed. In our opinion, it makes no
difference that the trial court failed to perform its
duty and proceeded to issue summons without
carefully reading the plaint and the High Court also
overlooked this fatal defect. Since the plaint suffers 15
from this fatal defect, the mere issuance of summons
by the trial court does not require that the trial
should proceed even when no triable issue is shown
to arise. Permitting the continuance of such a suit is
tantamount to licensing frivolous and vexatious 20
litigation. This cannot be done."
(emphasis supplied)
94. On a consideration of the scheme of Orders 4, 5 and
7CPC, we arrive at the following conclusions: 25
94.1. A suit is commenced by presentation of a plaint. The
date of the presentation in terms of Section 3(2) of the
Limitation Act, 1963 is the date of presentation for the
purpose of the said Act. By virtue of Order 4 Rule 1(3),
institution of the plaint, however, is complete only when the 30
plaint is in conformity with the requirement of Order 6 and
Order 7.
94.2. When the court decides the question as to issue of
summons under Order 5 Rule 1, what the court must
consider is whether a suit has been duly instituted. 35
94.3. Order 7 Rule 11 does not provide that the court is to
discharge its duty of rejecting the plaint only on an
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application. Order 7 Rule 11 is, in fact, silent about any such
requirement. Since summon is to be issued in a duly
instituted suit, in a case where the plaint is barred under
Order 7 Rule 11(d), the stage begins at that time when the
court can reject the plaint under Order 7 Rule 11. No doubt 5
it would take a clear case where the court is satisfied. The
Court has to hear the plaintiff before it invokes its power
besides giving reasons under Order 7 Rule 12. In a clear
case, where on allegations in the suit, it is found that the suit
is barred by any law, as would be the case, where the 10
plaintiff in a suit under the Act does not plead circumstances
to take his case out of the requirement of Section 12-A, the
plaint should be rejected without issuing summons.
Undoubtedly, on issuing summons it will be always open to
the defendant to make an application as well under Order 7 15
Rule 11. In other words, the power under Order 7 Rule 11 is
available to the court to be exercised suo motu. (See in this
regard, the judgment of this Court in Madiraju Venkata
Ramana Raju [Madiraju Venkata Ramana Raju v.
Peddireddigari Ramachandra Reddy, (2018) 14 SCC 1] .) 20
98. The contention appears to be that it may be a fair view
to take that there is no institution of the suit within the
meaning of Section 12-A, until the court admits the plaint
and registers it in the suit register. In other words, 25
presentation of the plaint may not amount to institution of
the suit for the purpose of Order 4 Rule 1CPC and Section
12-A of the Act. If this view is adopted, it is pointed out that
before the plaint is registered after presentation and there is
non-compliance with Section 12-A, the plaintiffs can, then 30
and there, be told off the gates to first comply with the
mandate of Section 12-A. This process would not involve the
courts actually spending time on such matters. In the facts,
this question does not arise and, it may not be necessary to
99.3. The language used in Section 12-A, which includes the
word "shall", certainly, goes a long way to assist the Court to
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hold that the provision is mandatory. The entire procedure
for carrying out the mediation, has been spelt out in the
Rules. The parties are free to engage counsel during
mediation. The expenses, as far as the fee payable to the
mediator, is concerned, is limited to a one-time fee, which 5
appears to be reasonable, particularly, having regard to the
fact that it is to be shared equally. A trained mediator can
work wonders.
99.4. Mediation must be perceived as a new mechanism of
access to justice. We have already highlighted its benefits. 10
Any reluctance on the part of the Court to give Section 12-A,
a mandatory interpretation, would result in defeating the
object and intention of Parliament. The fact that the
mediation can become a non-starter, cannot be a reason to
hold the provision not mandatory. Apparently, the value 15
judgment of the lawgiver is to give the provision, a modicum
of voluntariness for the defendant, whereas, the plaintiff,
who approaches the court, must, necessarily, resort to it.
Section 12-A elevates the settlement under the Act and the
Rules to an award within the meaning of Section 30(4) of 20
the Arbitration Act, giving it meaningful enforceability. The
period spent in mediation is excluded for the purpose of
limitation. The Act confers power to order costs based on
conduct of the parties.
104. On the findings we have entered, the impugned orders 25
must be set aside and the applications under Order 7 Rule
11 allowed. This would mean that the plaints must be
rejected. Necessarily, this would involve the loss of the court
fee paid by the plaintiffs in these cases. They would have to
bring a fresh suit, no doubt after complying with Section 12- 30
A, as permitted under Order 7 Rule 13. Moreover, the
declaration of law by this Court would relate back to the
date of the Amending Act of 2018.
113.1. We declare that Section 12-A of the Act is mandatory
and hold that any suit instituted violating the mandate of 35
Section 12-A must be visited with rejection of the plaint
under Order 7 Rule 11. This power can be exercised even
suo motu by the court as explained earlier in the judgment.
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We, however, make this declaration effective from 20-8-2022
so that stakeholders concerned become sufficiently informed.
113.2. Still further, we however direct that in case plaints
have been already rejected and no steps have been taken
within the period of limitation, the matter cannot be 5
reopened on the basis of this declaration. Still further, if the
order of rejection of the plaint has been acted upon by filing
a fresh suit, the declaration of prospective effect will not
avail the plaintiff.
113.3. Finally, if the plaint is filed violating Section 12-A 10
after the jurisdictional High Court has declared Section 12-A
mandatory also, the plaintiff will not be entitled to the
relief."
14. In Chandra Kishore Chaurasia Vs. R A Perfumery Works
Private Ltd. 2022 SCC OnLine Del 3529 the learned Division Bench
of the Delhi High Court after considering Patil Automation (supra)
has held as under :
"32. Second, a suit, which does not contemplate urgent 20
interim relief, cannot be instituted without exhaustion of
pre-institution mediation, as required under Section
12A(1) of the Commercial Courts Act, 2015. As noted
above, the Supreme Court has held that the said
provision is mandatory and it is compulsory for a plaintiff 25
to exhaust the remedy of pre-institution mediation, in
accordance with the rules before instituting a suit. The
Court has no discretion to exempt a plaintiff from the
applicability of Section 12A(1) of the Commercial Courts
Act, 2015. It is not permissible for the court to pass an 30
order contrary to law; therefore, an application seeking
exemption from engaging in pre-institution mediation, in
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a suit that does not involve urgent interim reliefs, would
not lie.
33. This Court also finds it difficult to accept that a
commercial court is required to determine whether the
urgent interim reliefs ought to have been claimed in a 5
suit for determining whether the same is hit by the bar of
Section 12A(1) of the Commercial Courts Act, 2015. The
question whether a plaintiff desires any urgent relief is to
be decided solely by the plaintiff while instituting a suit.
The court may or may not accede to such a request for an 10
urgent interim relief. But that it not relevant to determine
whether the plaintiff was required to exhaust the remedy
of pre-institution mediation. The question whether a suit
involves any urgent interim relief is not contingent on
whether the court accedes to the plaintiff's request for 15
interim relief.
34. The use of the words "contemplate any urgent interim
relief" as used in Section 12(1) of the Commercial Courts
Act, 2015 are used to qualify the category of a suit. This
is determined solely on the frame of the plaint and the 20
relief sought. The plaintiff is the sole determinant of the
pleadings in the suit and the relief sought.
35.This Court is of the view that the question whether a
suit involves any urgent interim relief is to be determined
solely on the basis of the pleadings and the relief(s) 25
sought by the plaintiff. If a plaintiff seeks any urgent
interim relief, the suit cannot be dismissed on the ground
that the plaintiff has not exhausted the pre-institution
remedy of mediation as contemplated under Section
The above would therefore make it apparent that the
provisions of Section 12-A of the C.C. Act, 2015 for Pre-Institution
WP 5984 of 2023.odt
Mediation and Settlement are mandatory, in a case where no urgent
relief is prayed for, and in case this is not done the plaint is liable to
be rejected under Order VII Rule 11 of the CPC. In no case where the
suit does not contemplate urgent relief, the provisions of Section
15. In the instant case, it cannot be disputed that the
procedure under Section 12-A of the C.C. Act, 2015 of pre-institution
mediation was never adopted. In fact, an application for adopting
the procedure under Section 12-A of the C.C. Act, 2015 was filed by 10
the petitioner (Exh. 32) which only came to be decided on
27/07/2022 (pg.63) by directing the suit to be referred for pre-
institution mediation for about a period of two months, for which
period the proceedings of the suit were kept in abeyance (pg.69).
Since pre-institution mediation is a mandatory provision, and even 15
the statutes of limitation have been held to be not applicable for the
pre-institution mediation duration it necessarily follows that the
liability to file the written statement by the defendant would not
commence, till such time the pre-institution mediation is completed
after which, depending upon the result of the pre-institution 20
WP 5984 of 2023.odt
mediation, in case it is a failure the suit is then registered and a
notice is issued to the defendants for their appearance in the suit.
This would be so, for the reason that the appearance of the
defendants in the pre-institution mediation cannot be considered as
an appearance in the suit which is subsequently registered on failure 5
of the pre-institution mediation. This position is further
substantiated from the language of Order VIII Rule 1 of the CPC as
applicable to Commercial Courts, which contemplates the period as
contemplated of 30 days therein to commence from the date of
service of summons, which summons can only be issued and served 10
consequent to the institution/registration of the suit, as a result of
failure of the pre-institution mediation. It therefore cannot be
disputed that the periods as contemplated in Order VIII Rule 1 of the
CPC as well as its provisos, commence only after the date of service
16. The instant case, however, presents a very peculiar
situation, inasmuch as, as indicated above, the suit was instituted
without compliance with the requirement of Section 12-A of the C.C.
Act, 2015. When this position was noticed an application came to be 20
WP 5984 of 2023.odt
filed below Exh.32 (pg.58) for dismissal of the suit on account of
non-compliance with Section 12-A of the C.C. Act, 2015 which
application was filed on 19/12/2018. On the same day, another
application for grant of time to file written statement came to be
filed on the same ground that the requirements of Section 12-A of 5
the C.C. Act, 2015 were not complied with and the institution of the
suit itself was infirm on that ground and therefore, the Court be
pleased to grant time to file written statement till the application
under Section 12-A of the C.C. Act, 2015 is decided. This application
was granted by the learned Commercial Court on 19/12/2018 which 10
order was never challenged by the respondents. The application
below Exh.32 for dismissal of the suit under Section 12-A of the C.C.
Act, 2015 filed by the defendants, including the present petitioner
came to be allowed by the order dated 27/07/2022 and the parties
were referred to mediation on which date itself an application below 15
Exh.45 came to be filed for placing the written statement on record.
So also on 27/07/2022 itself a pursis was also placed on record
below Exh.45 along with the written statement, sworn on
19/01/2019 whereby the said written statement was placed on
record. The said pursis contains a specific averment that the written 20
WP 5984 of 2023.odt
statement which was duly sworn in on 19/01/2019 could not be
filed earlier as the Court had granted time till decision of Exh.32, the
application for dismissal of the suit on account of non-compliance
with the mandatory provision under Section 12-A of the C.C. Act,
17. It is, thus, apparent that though the written statement
of the present petitioner/defendant no.5 was duly sworn in and
ready for filing on 19/01/2019 on account of the non-compliance
with the requirement of Section 12-A of the C.C. Act, 2015 the same 10
was not filed as time was granted to file the same till the application
under Section 12-A of the C.C. Act, 2015 was decided.
18. No doubt true that SGS Contracts (supra) holds that the
period contemplated under Order VIII Rule 1 of the CPC as 15
applicable to Commercial Courts was mandatory, which position has
been reiterated in Prakash Corporates (supra) and an exception was
made out on account of Covid-19, it is equally a settled position of
law that a party cannot be prejudiced on account of an act of the
WP 5984 of 2023.odt
19. In the instant matter, when the matter was presented to
the Registry of the Court, considering that it was a commercial suit
and no urgent relief was claimed therein, it was necessary for the
Registry to have referred the matter for pre-institution mediation.
However, that was not done and the suit was directly registered and 5
sent to the Commercial Court, which also without verifying whether
the mandate of Section 12-A of the C.C. Act, 2015 was complied
with, issued suit summons to the defendants. It is only when the
defendants by their application at Exh.32 dated 19/01/2019
brought it on record that the mandatory provisions of Section 12-A 10
of the C.C. Act, 2015 were not complied with, the learned
Commercial Court granted time to file the written statement, till the
decision of the application at Exh.32. Application (Exh.32) came to
be allowed by the order dated 27/07/2022 by referring the suit for
pre-institution mediation. All this would indicate that in the present 15
case there was a failure on part of the Registry, to refer the suit for
pre-institution mediation, which position also went unnoticed by the
learned Commercial Court before issuing the suit summons, which
situation came to be corrected only on 27/07/2022 when Exh.32
came to be allowed and the parties were referred to mediation. 20
WP 5984 of 2023.odt
Thus, in the peculiar circumstances existing in the instant case, since
the existence of the written statement duly sworn in on 19/01/2019,
copy of which is placed on record, cannot be disputed, would
indicate that the written statement was ready for filing on
19/01/2019 itself and the period of 120 days as contemplated by 5
Order VIII Rule 1 of the CPC as applicable to Commercial Courts was
expiring on 07/02/2019, the petitioner has been prejudiced on
account of the act of the Court in not referring the parties to pre-
institution mediation before issuance of the suit summons itself. As it
is a settled position of law the act of a Court cannot prejudice the 10
parties. In view of the peculiar circumstances existing in the instant
matter as indicated above, the written statement of the
petitioner/defendant no.5 will have to be permitted to be taken on
record.
20. Though S.S. Nikade and Company; Flipkart India Pvt.
Ltd. and K.R. Anand (supra) have been relied upon by Mr. Chauhan
learned counsel for the respondent no.1, all of which hold that the
period of 120 days as provided in Order VIII Rule 1 of the CPC
applicable to the Commercial Courts was mandatory, and the Court 20
WP 5984 of 2023.odt
had no jurisdiction to extend the period beyond 120 days, the
question of non-compliance with the mandatory provision of Section
12-A of the C.C. Act, 2015 did not fall for consideration there. There
also cannot be any dispute with the propositions as summarized in
Garment Craft (supra) regarding the exercise of the supervisory 5
jurisdiction of the High Court, however, as indicated above, the act
of the Court cannot cause a prejudice to a party, as indicated above
(see : Bhupinder Singh Vs. Unitech Limited 2023 SCC OnLine 321
(para 9), in view of which, in my considered opinion, Garment Craft
(supra) does not come to the assistance of Mr. Chauhan, learned 10
counsel for the respondent no.1
21. The impugned order dated 20/01/2023 below Exh.45
does not consider the failure of the Court to ensure compliance with
the requirement of the mandatory provision of Section 12-A of the 15
C.C. Act, 2015, considering which, the same cannot be sustained and
is hereby quashed and set aside and the application below Exh.45 in
the peculiar facts and circumstances as existing in the present
matter, is hereby allowed. The learned Commercial Court is directed
WP 5984 of 2023.odt
to take the written statement of the petitioner/defendant no.5 on
record and proceed with the matter.
22. Rule is made absolute in the aforesaid terms. No order
(AVINASH G. GHAROTE, J.)
Wadkar
Signed by: S.S. Wadkar (SSW)
Designation: PS To Honourable Judge
Date: 04/12/2023 18:03:47
