Calcutta High Court
Dredging And Desiltation Company ... vs Mackintosh Burn And Northern ... on 7 April, 2021
1
IA No. GA 6 of 2020
With
IA No. GA 7 of 2021
CS 242 of 2018
IN THE HIGH COURT AT CALCUTTA
Ordinary Original Civil Jurisdiction
Commercial Division
DREDGING AND DESILTATION COMPANY PVT. LTD.
Vs.
MACKINTOSH BURN AND NORTHERN CONSORTIUM & ORS.
For the Petitioners : Mr. Sakya Sen, Sr. Adv.
Mr. Sankarsan Sarkar, Adv.
Mr. Sunil Singhania, Adv.
For the Respondent : Mr. Debnath Ghosh, Adv.
Nos. 1 & 2 : Mr. Arnab Chakraborty, Adv.
: Ms. Pragya Bhattacharya, Adv.
Respondent No. 3 : Mr. Jishnu Chowdhury, Adv.
Hearing concluded on : March 24, 2021
Judgment on : April 07, 2021
DEBANGSU BASAK, J. :-
1. Two applications have been heard analogously as they relate to the
same suit. By IA No. GA 7 of 2021. The defendant Nos. 1 and 2 have
applied for rejection of the plaint and revocation of leave granted under
clause 12 of the Letters Patent, 1865 and for other reliefs. By IA No. GA
6 of 2020 the plaintiff has sought leave to dispense with pre-institution
mediation under Section 12A of the Commercial Courts Act, 2015.
2. Learned advocate appearing for the defendant Nos. 1 and 2 has
submitted that, the suit should be dismissed on the ground of non-
compliance with the provisions of Section 12A of the Commercial
Courts Act, 2015, failure to lodge fresh writ of summons after
amendment and for non-service of the notice under Section 80 of the
Code of Civil Procedure, 1908.
3. Learned advocate appearing for the defendant Nos. 1 and 2 has
submitted that, the suit was initially filed in the Commercial Division
without obtaining leave for dispensation of the pre-institution
mediation as contemplated under Section 12A of the Act of 2015. The
plaintiff has not pleaded anything regarding dispensation of the
provisions of Section 12 A nor has the plaintiff made any prayer to
such effect in the plaint as originally filed.
4. Relying upon 2020 SCC Online Cal 1591 (Terai Overseas
Private Ltd. and Others v. Kejriwal Sugar Agencies Private Ltd.
and Ors.). Learned advocate for the defendant Nos. 1 and 2 has
submitted that, since the plaintiff did not contemplate urgent interim
reliefs, prior leave for dispensation of pre-institution mediation and
settlement should have been obtained.
5. Relying upon 1997 Volume 9 Supreme Court Cases 132 (Mohan
Singh and Ors. v. International Airport Authority of India &
Ors.).Learned advocate appearing for the defendant Nos. 1 and 2 has
submitted that, the word "shall" appearing in Section 12A is
mandatory as it would be evident from the object of the Act of 2015. A
strict interpretation of the provisions of the Act of 2015 should be
adhered to. The user of the word "shall" gives the impression of the
same being mandatory in character.
6. Learned advocate appearing for the defendant Nos. 1 and 2 has
relied upon 2019 SCC Online SC 1311 (Ambalal Sarabhai v. K. S.
Infraspace) in support of the proposition that, the provisions of the
Act of 2015 have to be strictly construed.
7. The defendant No. 3 has supported the application of the
defendant Nos. 1 and 2. Learned advocate appearing for the defendant
No. 3 has submitted that, Section 12A of the Act of 2015 is mandatory.
According to him, the user of the word "shall" in the Section raises a
presumption that the provision is mandatory. In support of such
contention, he has relied upon 2018 volume 15 Supreme Court
Cases 99 (ITC Ltd v. Blue Coast Hotels Ltd. and Ors.) and All India
Reporter 1957 Supreme Court 912 (State of UP v. Manbodhan Lal
Srivastava). According to him, the onus is on the plaintiff to establish
that the Section is directory. He has referred to the objects of the Act of
2015 and submitted that, the intention of the legislature is an
expeditious disposal of commercial dispute. In support of his
contention, he has relied upon All India Reporter 1962 Supreme
Court 779 (State of West Bengal v. B K Mondal and Sons).
According to him, Section 12A of the Act of 2015 cannot be read as
directory. He has relied upon 2005 Volume 1 Supreme Court Cases
368 (State of Jharkhand and Ors. v. Ambay Cements and Anr.).
8. Learned advocate appearing for the defendant No. 3 has contended
that, directory provisions are where the time is extendable and where
there is a public duty to be performed and where the concerned person
has no control over an authority which has to do the work within a
particular time. He has relied upon 2021 Volume 2 Supreme Court
Cases 392 ( C. Bright v. District Collector and Ors.) and 2018
Volume 9 Supreme Court Cases for 72 (State of Bihar and Ors. v.
Bihar Rajya Bhumi Vikas Bank Samiti) in this regard.
9. Relying upon 2020 volume 15 Supreme Court Cases 585
(Ambalal Sarabhai Enterprises Ltd. v. K S Infraspace LLP and
Anr.) learned advocate appearing for the defendant No. 3 has
submitted that, the provisions of the Act of 2015 are to be strictly
construed. According to him, it is a binding precedent. In support of
such contention, he has relied upon 2011 volume 9 Supreme Court
Cases 354 (Delhi Airtech Services Private Limited v. State of UP
and Ors.).
10. Learned advocate appearing for the plaintiff has submitted that,
when the suit was filed, the various provisions of Section 12 A of the
Act of 2015 were incapable of being implemented in the sense that, the
requisite infrastructure for the same were not in place. He has
contended that, the mediation Centre had become operational and
started accepting application for mediation and settlement under the
provisions of the Act of 2015 only after December 11, 2020. He has
referred to the notification dated December 11, 2020 in this regard.
According to him, the plaintiff cannot be non-suited for not availing of
a remedy which was not available to the plaintiff at the time of
institution of the suit or at the time of amending the plaint on January
7, 2020.
11. Learned advocate appearing for the plaintiff has contended that,
Section 12A does not contemplate inherent lack of jurisdiction of the
Court to entertain the suit. According to him, only the suit which does
not contemplate any urgent relief falls within the category of the
embargo envisaged under Section 12A of the Act of 2015. He has
contrasted the provisions of Section 11 of the Act of 2015 with that of
Section 12A of the Act of 2015. He has submitted that, the bar under
Section 11 of the Act of 2015 is absolute and is not contemplated
under Section 12A of the Act of 2015.
12. Learned advocate appearing for the plaintiff has submitted that the
requirement to exhaust the remedy of pre-institution mediation or
settlement is a procedural provision. In support of such contentions,
he has relied upon Rule 3 (2) of the mediation rules.
13. Relying upon 2021 SCC Online Cal 429 (Dhanbad Fuels Ltd v.
Union of India & Ors.) and 2021 SCC Online Bom 195 ( Ganga
Taro Vaziram v. Deepak Raheja) learned advocate appearing for the
plaintiff has submitted that, provisions of Section 12A of the Act of
2015 are directory and not mandatory.
14. Relying upon All India Reporter 1969 Supreme Court 439
(Mussamia Imam Haider Bax Razvi v. Rabari Gobindbhai
Ratnabhai & Ors.) learned advocate appearing for the plaintiff has
submitted that, the provisions of Section 12A is only an attempt to
encourage mediation and does not oust the jurisdiction of the Court if
recourse to mediation is not availed of. According to him, the bar of
jurisdiction must be expressed by necessary implication.
15. Relying upon 2006 Volume 2 Supreme Court Cases 777
(Vidyawati Gupta & Ors. v. Bhakti Hari Nayak & Ors.) learned
advocate appearing for the plaintiff has submitted that, if the pre-
condition prescribed under Section 12A of the Act of 2015 is not
complied with, the same will not render the plaint invalid since such
non-compliance is curable in nature and will date back to the
presentation of plaint.
16. On the issue of purposive interpretation learned advocate
appearing for the plaintiff has relied upon All India Reporter 1955
Supreme Court 661 (Bengal Immunity Company Ltd. v. State of
Bihar & Ors.).
17. Referring to Section 80 of the Code of Civil Procedure, 1908,
learned advocate appearing for the plaintiff has submitted that, no
notice is required to be served upon the defendant Nos. 1 to 3. No relief
has been prayed for and against the defendant Nos. 4 and 5. He has
relied upon 2011 volume 12 Supreme Court Cases 695 (National
Textile Corporation Ltd. v. Nareshkumar Badrikumar Jagad &
Ors.) and 1994 volume 2 Law Weekly (Madras) 96 (Hindustan
Petroleum Corporation Ltd. v. Mr. A.K. Annadurai & Anr.) in this
regard.
18. The plaintiff has filed the present suit against five defendants. The
plaintiff has claimed money decree against the first three defendants in
the suit. The plaintiff has no claim against the fourth and the fifth
defendant in the suit. The fifth defendant is the government of West
Bengal. The fifth defendant has been mis-described. The fifth
defendant ought to have been the State of West Bengal.
19. The defendant Nos. 1 and 2 have urged primarily two grounds for
rejection of the plaint and for revocation of leave granted under Clause
12 of the Letters Patent, 1865. One of the grounds that the defendant
Nos. 1 and 2 have urged is lack of notice under Section 80 of the Code
of Civil Procedure, 1908. The plaintiff has admittedly not issued a
notice under Section 80 of the Code of Civil Procedure, 1908.
20. In International Textile Corporation Ltd. (supra) the Supreme
Court has held that, the identity of a government company remains
distinct from the government. The Madras High Court in Hindustan
Petroleum Corporation Ltd. (supra) has noted that, a government
company is not a government within the meaning of Section 80 of the
Code of Civil Procedure, 1908.
20. None of the defendants apart from the fifth defendant is a legal
entity in respect of which, a notice under Section 80 of the Code of
Civil Procedure, 1908 is required to be issued prior to filing of the suit
or the rigours of Section 80(2) of the Code of Civil Procedure, 1908 are
to be followed. Since the plaintiff has not claimed any relief as against
the fifth defendant, and the State of West Bengal or its officers are not
required to redress any grievance of the plaintiff, Section 80 of the
Code of Civil Procedure, 1908 is not attracted in the facts and
circumstances of the present case. Non issuance of notice under
Section 80 of the Code of Civil Procedure, 1908 is therefore not fatal to
this suit.
21. The plaintiff had presented the instant suit on December 7, 2018
when leave under clause 12 of the Letters Patent, 1865 was granted.
The plaintiff had caused issuance of the writ of summons on February
22, 2019. The defendant No. 2 had received the writ of summons on
April 4, 2019. The defendant had entered appearance on April 17,
2019. The defendant Nos. 1and 2 had taken out an application for
extension of time to file written statement. The plaintiff had filed an
application under Chapter XIIIA of the Calcutta High Court Original
Side Rules. The plaintiff had thereafter filed an application for
amendment of the plaint. The first application for amendment was
allowed on November 20, 2019. The plaintiff thereafter had withdrawn
the application under chapter XIIIA. The application of the defendant
Nos. 1 and 2 for extension of time to file written statement was
disposed of with direction that the defendants would be at liberty to file
the written statement within a fortnight from the date of receipt of the
writ of summons of the amended plaint. The application for
amendment and the order passed therein was mentioned subsequently
when, by an order dated December 6, 2019, the order dated November
20, 2019 was recalled with the liberty to the plaintiff to apply afresh if
it was so entitled to in law. The plaintiff had filed the second
application for amendment by a Master Summons dated December 20,
2019. Such application for amendment was allowed by the order dated
January 7, 2020. The plaintiff had served a copy of the amended plaint
on the defendants on February 12, 2020. However, the plaintiff did not
take any steps for issuance of fresh writ of summons for the amended
plaint. The defendants have prayed for rejection of the plaint and for
extension of time to file written statement if the plaint is not rejected.
22. Admittedly, the plaintiff has not undertaken pre-institution
mediation as envisaged under Section 12A of the Act of 2015. Section
12A of the Act of 2015 has come into the statute book with
retrospective effect from May 3, 2018. Section 12A of the Act of 2015
has been introduced to the Act of 2015 through the Commercial
Courts, Commercial Division and Commercial Appellate Division of
High Courts (Amendment) Act, 2018. The Amendment Act of 2018 has
been published in the Gazette of India on August 21, 2018.
23. Section 12A of the Act of 2015 contemplates pre institution
mediation in accordance with such manner and procedure as may be
prescribed by the rules made by the central government. The Standard
Operating Procedure had been made and published rules on December
11, 2020. The mechanism stipulated under Section 12A of the Act of
2015 was not complete till December 11, 2020. The plaintiff had
presented the present suit on December 7, 2018. On such date of
presentation of the plaint of the present suit, the mechanism under
Section 12A of the Act of 2015 was not complete. Therefore, on the date
of presentation of the plaint of the instant suit, the plaintiff cannot be
held responsible for a mechanism which the statute contemplated to be
in place and was not so.
24. Section 12A of the Act of 2015 has stipulated pre-institution
mediation. Post institution mediation is possible under Section 89 of
the Code of Civil Procedure, 1908. Mediation post institution of the suit
cannot be said to be mediation within the meaning of Section 12A of
the Act of 2015.
25. The parties have raised the issue as to whether Section 12A of the
Act of 2015 is mandatory or not. Section 12A of the Act of 2015
prohibits institution of a suit by a plaintiff without the plaintiff
undertaking a pre-institution mediation, unless such plaintiff seeks
urgent interim relief. Section 12 A of the Act of 2015 has specified an
embargo in the institution of a suit without the plaintiff undertaking a
pre-institution mediation in such case where the plaintiff is not seeking
urgent interim relief.
26. The object of the Act of 2015 is to expedite the disposal of a
commercial dispute. Such object is achieved through compulsory pre-
institution mediation. The time frame provided under the compulsory
pre-institution mediation allows a commercial dispute to be
successfully resolved consuming such a time span within which it is
not possible for the Court to finally adjudicate the suit.
27. In Terai Overseas Private Limited (supra) the plaintiff therein
did not plead anything about Section 12A of the Act of 2015 in the
plaint. There the plaintiff did not seek urgent interim relief for
dispensation with pre-institution mediation.
28. Section 12A of the Act of 2015 has used the word "shall". Mohan
Singh (supra) has held that the word "shall" is not always decisive as
to whether the provision is mandatory or directory. It has observed
that, regard must be had to the context, subject matter and object of
the statutory provision in question in determining whether the same is
mandatory or directory.
29. In Haridwar Singh (supra) the Supreme Court has observed that
prohibitive or negative words can rarely be directory and are indicative
of the intent that the provision is mandatory. ITC Ltd. (supra) has
observed that the word "shall" invariably raises a presumption that the
particular provision is imperative. In Manbodhan Lal Srivastava
(supra) the Supreme Court has construed the provisions of Article 320
(3)(c) of the Constitution not to be mandatory and that non-compliance
of such provisions does not afford a cause of action to approach a
Court of law. In B. K. Mondal (supra) the Supreme Court has observed
that in dealing with the question as to whether any provision is
mandatory or directory, no general or inflexible rule can be laid down.
In Ambay Cements (supra) the Supreme Court has observed that, the
conditions prescribed by the authorities for grant of exemption under
the Bihar Industrial Promotion Policy, 1995 are mandatory. In C.
Bright (supra) the Supreme Court has held that, when the provisions
of the statute relate to the performance of a public duty and the case is
such that to hold acts done in neglect of this duty as null and void,
would cause serious general inconvenience or injustice to persons who
have no control over those entrusted with the duty, the practice of the
Courts should be to hold such provisions as directory. In Bihar Rajya
Bhumi Vikas Bank Samiti (supra) the Supreme Court has observed
that, the rules of procedure are made to advance the cause of justice
and not to defeat it. Construction of the rule or procedure which
promotes justice and prevents miscarriage has to be preferred. In
Delhi Airtech Services Private Limited and others (supra) the
Supreme Court has observed that, the word "shall" would normally be
mandatory while the word "may" would be directory.
30. Mussamia Imam Haider Bax Razvi (supra) the Supreme Court
has considered the provisions of Sections 70 and 85 of the Bombay
Tenancy and Agricultural Lands Act, 1948 and held that the same did
not bar the jurisdiction of the civil Court to decide the issue as to
whether the defendants were tenants. In Vidyawati Gupta (supra)
Supreme Court has noted that, the requirements of Order 6 and Order
7 of the Code of Civil Procedure, 1908 was procedural and that any
omission in respect thereof will not render the plaint invalid. The defect
can be cured and that the same shall relate back to the date of
presentation of the plaint. In Bengal Immunity Co. Ltd. (supra) the
Supreme Court has noted that purposive interpretation of the statute
can be made.
31. The Supreme Court in 1977 Volume 1 Supreme Court Cases 379
(Seth Loonkaran Sethiya and Ors. v. Mr. Ivan E. John and Ors.)
has held that Section 69 of the Indian Partnership Act, 1932 although
procedural is mandatory. The Supreme Court in 1977 Volume 1
Supreme Court Cases 257 (State of Maharashtra v. Chandrakant)
has held that, Section 80 of the Code of Civil Procedure, 1908 is
mandatory. In 2013 Volume 10 Supreme Court Cases 178 (State of
Kerala v. Sudhir Kumar) the Supreme Court has held that, a suit
filed without complying with the provisions of Section 80(1) of the Code
of Civil Procedure, 1908 cannot be regularised by filing an application
under Section 80(2). The Supreme Court in 2019 Volume 12
Supreme Court Cases 210 (SCG Contracts (India) Private Ltd. v.
K.S. Chamankar Infrastructure Private Ltd. and Ors.) has held
that, the time to file written statement as prescribed by the Act of 2015
is mandatory.
32. In Dhanbad Fuels Ltd. (supra) the Court had noted the fact that
the suit in that case was filed in August 2019 and that the Standard
Operating Procedure for Pre-institution Mediation and Settlement was
prescribed on December 11, 2020. The fact scenario in the present
case is different. In the Ganga Taro Vazirani (supra) the Bombay
High Court has held that, Section 12A of the Act of 2015 is a
procedural provision and if there is a substantial compliance, the
plaintiff cannot be non-suited.
33. Section 69 of the Indian Partnership Act, 1932 and Section 80 of
the Code of Civil Procedure, 1908 have prohibition against institution
of a suit without satisfaction of the parameters laid down therein. Both
provisions have been held to be procedural but mandatory. Similarly,
Section 12A of the Act of 2015 prohibits institution of a suit where the
plaintiff does not undertake pre-institution mediation in a case where
the plaintiff does not require urgent interim relief. The bar is on the
institution of the suit, keeping in mind the distinction between "filing"
and "institution" of a suit under the Code of Civil Procedure, 1908. To
my mind, the bar under Section 12A of the Act of 2015 is absolute
when the plaintiff has failed to comply with the parameters laid down
therein. Section 12A of the Act of 2015 has to be held to be mandatory
with effect from December 12, 2020 being the date immediately
subsequent to the date when the Standard Operating Procedure for
undertaking pre-institution mediation in terms of Section 12A of the
Act of 2015 was available from. This view has been garnered from C.
Bright (supra) were the Supreme Court has held that when the
obligation to perform a public duty rest upon a public servant, the
plaintiff cannot be faulted for it. Subsequent to December 11, 2020 the
entire mechanism under section 12A of the Act of 2015 has been fully
operational. Therefore, on and from December 12, 2020 a plaintiff
cannot take the shelter of absence of infrastructure to forego a pre-
institution mediation when it seeks no urgent relief.
34. The defendants and in fact the parties had concentrated on Section
80 of the Code of Civil Procedure, 1908 and Section 12A of the Act of
2015 in the course of their respective submissions. No other points
have been raised by the parties.
35. The defendants and in fact the parties had concentrated on Section
80 of the Code of Civil Procedure, 1908 and Section 12A of the Act of
2015 in course of their submissions. No other points have been raised
by the parties.
36. In view of the discussions above no order need be passed in IA GA
No. 6 of 2020 as the plaintiff cannot be non-suited due to the absence
of the infrastructure under Section 12A of the Act of 2015 at the time
of institutions of the suit. IA GA No. 7 of 2020 is dismissed without any
order as to costs.
[DEBANGSU BASAK, J.]
