Samar & Samar Infrastructure ... vs Mackintosh Burn Limited & Anr
2023 Latest Caselaw 561 Cal/2

                 IN THE HIGH COURT AT CALCUTTA

                 (Ordinary Original Civil Jurisdiction)

                        COMMERCIAL DIVISION



Present:

The Hon'ble Justice Krishna Rao

                           IA No. GA 4 of 2022
                             In CS/72/2022


     Samar & Samar Infrastructure Development Private Limited
                                   Vs.
                   Mackintosh Burn Limited & Anr.



           Mr. Abhrajit Mitra
           Mr. Chayan Gupta
           Mr. Kausik De
           Mr. Pourush Bandyopadhyay
           Mr. Roshan Pathak
                                         ...for the plaintiff.
           Mr. Arnab Chakraborty
           Ms. Pragya Bhoumick
                                         ...for the defendant no.1.
           Mr. Anirban Ray
           Mr. Domingo Gomes
           Mr. Paritosh Sinha
           Mr. Joydeep Roy
                                         ...for the defendant no. 2.

Hearing Concluded on   : 31.01.2023

Judgment on            : 27.02.2023
                                       2


Krishna Rao, J.:


       The defendant no. 2 has filed the instant application being GA 4 of

2022 under Order VII Rule 11 of the Code of Civil Procedure, 1908 for

rejection of plaint. The defendant no. 2 says that the plaintiff has filed the

instant suit without complying with the provisions as enumerated under

Section 12A of the Commercial Courts Act, 2015.


       The plaintiff has filed the instant suit before the Commercial Division

on the ground that the suit filed by the plaintiff relates to commercial

dispute within the meaning of Commercial Courts Act, 2015.


       Mr. Anirban Ray assisted by Mr. Domingo Gomes, Learned Advocates

representing the defendant no. 2 submits that the plaintiff has not

exhausted the remedy of pre-institution mediation in accordance with the

manner and the procedure as prescribed under law.


       Mr. Ray further submits that even the plaintiff has not prayed for any

urgent interim relief in the suit and thus the suit filed by the plaintiff is

required to be dismissed for not following the procedure as prescribed under

law.


       Mr. Ray submits that the suit filed by the plaintiff is barred by

limitation as the work order was issued on 19.01.2015 and the suit was filed

in the month of March, 2022. He further submits that the plaintiff has also

admitted in the plaint that there is no cause of action arose against the

defendant no. 2.
                                       3


      Mr. Ray relying upon the Judgment reported in (2022) 10 SCC 1

(Patil Automation Private Limited & Ors. -vs- Rakheja Engineers

Private Limited) submits that Section 12A of the Commercial Courts Act,

2015 is mandatory and the plaintiff has instituted the suit by violating the

mandate of Section 12A of the Act of 2015.


      Mr. Ray relying upon the Judgment reported in (2020) 15 SCC 585

(Ambalal Sarabhai Enterprises Ltd. -vs- K.S. Infraspace LLP & Anr.)

submits that as per the Statement of Objects and Reasons of the

Commercial Courts Act, 2015 and the various amendments to the Civil

Procedure Code and insertion of new rules to the Code applicable to suits of

the commercial disputes shows that it has been enacted for the purpose of

providing an early disposal of high value commercial disputes.


      Mr. Ray relying upon the Judgment reported in (1977) 4 SCC 467 (T.

Arivandandam -vs- T. V. Satyapal & Anr.) submits that the trial courts

would insist imperatively on examining the party at the first hearing so that

bogus litigation can be shot down at the earliest stage.


      Mr. Ray relying upon the Judgment reported in (2003) 1 SCC 557

(Saleem Bhai & Ors. -vs- State of Maharashtra & Ors.) submits that the

provisions of under Order 7 Rule 11 of the CPC makes it clear that the

relevant facts which need to be looked for deciding an application

thereunder are the averments in the plaint. The trial court can exercise the

power under Order 7 Rule 11 of the CPC.
                                        4


      Mr. Ray relying upon the Unreported Judgment passed by the Hon'ble

Division Bench of Calcutta High Court in FMAT No. 360 of 2022 (M/s.

Odisha Slurry Pipeline Infrastructure Limited & Anr. -vs- IDBI Bank

Limited & Anr.) submits that compulsory mediation is foisted only on a

plaintiff who does not contemplate urgent interim relief. It is implicit that it

is only the plaintiff, that can contemplate the relief that it seeks in a suit

and, pre-institution mediation is necessary only in cases where a plaintiff

does not contemplate urgent relief.


      Mr. Ray relying upon the Judgment reported in 2021 SCC OnLine

Cal 1457 (Laxmi Polyfab Private Limited -vs- Eden Realty Ventures

Private Limited & Anr.) submits that the distinction between 'filing' of a

suit and its 'institution' requires the Courts to apply its mind at the time of

the suit being presented before it, as to whether the plaintiff in a suit which

does not contemplate any urgent relief under the Act of 2015 exhausted the

remedy of pre-institution mediation in accordance with the manner and

procedure prescribed or not. He submits that Sub-Section (1) of Section 12A

of the Act of 2015 casts a duty upon the Court to ensure that a suit is

instituted by a plaintiff in accordance with the procedure laid down therein.


   Per contra, Mr. Abhrajit Mitra assisted by Chayan Gupta representing the

plaintiff submits that before filing of the instant suit, the plaintiff through

the Learned Advocate had issued notice under Section 80 of the Code of

Civil Procedure, 1908 to the defendant no. 2 on 08.12.2021 and on receipt

of the said notice, the defendant no. 2 by a letter dated 24.01.2022 had

called for the plaintiff for hearing on 02.02.2022 at the office of the
                                       5


Additional Chief Secretary, Department of Youth Services and Sports,

Government of West Bengal and accordingly the plaintiff along with the

Learned Advocate have participated in the said hearing but the dispute was

not resolved amicably and thus the plaintiff has complied with the provision

of Section 12 A of the Commercial Courts Act, 2015.


   Mr. Mitra further submits that as the defendant no. 2 failed to settle the

matter amicable and further attempt of mediation would be futile exercise.

He further submits that the plaintiff came to know that the defendant no. 1

is taking steps to close down its business without paying the amount due

and payable to the plaintiff and as such there is an urgency to file the

instant suit.


   Mr. Mitra relying upon the Judgment reported in 2021 SCC Online Bom

195 (Ganga Taro Vazirani - vs- Deepak Raheja) and submits that the

purpose of Section 12A of the commercial Courts Act, 2015 appears to be

that parties should try and resolve their disputes before coming to the

Court. This is for the simple reason that if parties resolve their disputes,

they need not approach the Court at all. He further submits that when

parties have tried to resolve the dispute unsuccessfully, it would be futile to

the said provision, it would militate against the very object for which,

Commercial Courts Act, 2015 was brought into force. He further submits

that it would have the effect of delaying the proceedings are rather than

having a quick resolution of the dispute and which is the very object for

which the Commercial Court was brought on the statute book.
                                       6


   Mr. Mitra relied upon the judgement reported in (2022) 10 SCC 1 (Patil

Automation Private Limited & Ors. -vs- Rakheja Engineers Private

Limited) and submits that the proviso to Section 80 (2) of the Code of Civil

Procedure, 1908 contemplates that Court shall, if, after hearing the parties,

is satisfied that no urgent or immediate relief need be granted in the suit,

return the plaint for presentation to the Court after compliance but Section

12A does not contemplate such a procedure and the Hon'ble Supreme Court

has held that the matter which may engage attention of the lawmakers.


      Mr. Mitra relied upon the judgement reported in (2015) 8 SCC 331

(P.V. Guru Raj Reddy & Anr. -vs- P. Neeradha Reddy & Ors.) and

submits that rejection of plaint under Order 7 Rule 11 of the Code of Civil

Procedure is a drastic power conferred in the Court to terminate a civil

action at the threshold. The conditions precedent to the exercise of power

under Order 7 Rule 11 of the CPC, therefore, are stringent and have been

consistently held to be so by the Court. The averments in the plaint that

have to be read as a whole to find out whether it discloses a cause of action

or whether the suit is barred under any law.


   Mr. Mitra relied upon the judgement reported in AIR 1962 SC 776

(State of West Bengal -vs- B.K. Mondal & Sons) and submits that the

work was done at the request of the officers of the Government who had no

authority to make the request for the Government and the respondent was

aware of this, it would follow that the work had been done at the request

made by the officers in their personal capacity.

Mr. Mitra relied upon the unreported Judgment passed by the

Coordinate Bench in CO No. 135 of 2022 dated 24.02.2022 (Bluestar

Engineering & Electricals Limited -vs- H.L.G. Memorial Hospital

Private Limited) and submits that the Coordinate Bench of this Court held

that Court cannot expect pre-litigation settlement from such defendant

company.

Mr. Mitra further upon the Judgement reported in 2022 SCC OnLine Del

2639 (Bolt Technology OU -vs- Ujoy Technology Private Limited & Anr.)

and submits that in the similar circumstances, the Hon'ble Delhi High Court

held that on perusal of correspondences no doubt in the mind of the Court

that the defendants were in no way interested in an amicable resolution of

the dispute and hence requirement of Section 12-A of the Commercial

Courts Act, 2015 stands satisfied.

Mr. Mitra relied upon the Judgement reported in 1984 SCC Online Cal

118 (Jadavendra Narayan Choudhury -vs- State of West Bengal) and

submitted that in the present case also Section 70 of the Contract Act is

applicable and the suit is not barred by limitation.

Section 12A of the Commercial Courts Act, 2015 reads as follows :

"12-A : Pre-institution Mediation and Settlement :-

1. A suit, which does not contemplate any urgent interim relief under this Act, shall not be instituted unless the plaintiff exhausts the remedy of pre-institution 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, authorize the Authorities constituted under the Legal Services

Authorities Act, 1987 (39 of 1987), for the purpose of pre institution mediation.

3. Notwithstanding anything contained in the Legal Services Authorities Act, 1987 (39 of 1987), the Authority authorized 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):

Provided that the period of mediation may be 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 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 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 1996)."

As per the case of the plaintiff, the defendant no. 2 had engaged

defendant no.1 for carrying out balance work of two storied Club House

Building with four storied foundation to complete up to the first floor and

other allied infrastructure Development work within Kishore Bharati

Krirangan Jadavpur, Kolkata. In turn, the defendant no.1 had awarded the

said work to the plaintiff after observing all necessary formalities on 19th

January, 2015. In the work order issued to the plaintiff, it was specified that

the rates for entire work shall be 8% below the rates of the defendant no.1.

While the plaintiff was in process of completing the work, the plaintiff was

requested to stop the work and the work was delegated to Public Works

Department, Government of West Bengal. The gross value of the work

completed by the plaintiff was amounting to Rs. 1,98,26,973/- out of which

an amount of Rs. 1,02,84,526/- was received by the defendant no. 1 and the

defendant no.1 had paid an amount of ₹ 92,56,073.40/- after deduction of

Rs. 10,28,452.60/- as security deposit from a payable amount Rs.

1,02,84,526/-. A net amount of Rs. 87,79,051/- is due and payable by the

defendant no. 1 to the plaintiff. Time and again, the plaintiff had requested

the defendant for payment of the due amount. By a letter dated 6th January,

2020, the defendant no.1 had informed the plaintiff that the release of

payment against the bill submitted by the plaintiff depend upon receipt of

corresponding payment from the Department of Sports, Government of West

Bengal. In spite of several requests, no payment was made and accordingly

the plaintiff has filed the instant suit.

The question with regard to the limitation raised by the defendant, it

is found from the record that though on 18th July, 2016, the plaintiffs was

directed to stop the work but no payment was made to the plaintiff and by

letter dated 6th January, 2020, the defendant No.1 had informed the plaintiff

regarding the bill submitted by the plaintiff depend upon receipt of

corresponding payment from the Department and as such at this stage

without any trial it cannot be said that the suit is barred by limitation. It is

also the specific case of the plaintiff that the plaintiff had issued notice

under Section 80 of the CPC to the defendant no. 2 and the defendant no. 2

had issued notice for settlement but the same was not resolved. From the

letter dated 6th January, 2020 issued by the defendant no.1 it reveals that

there was a jural relationship between the parties.

As regard compliance of the provision of Section 12A of the

Commercial Courts Act, 2015, it is the specific case of the plaintiff that after

issuance of notice under Section 80 of the Code of Civil Procedure, 1908, the

defendant No.2 had issued notice for hearing on 2nd February, 2022,

accordingly, the plaintiff had attended the meeting but the dispute was not

resolved amicably between the plaintiff and the defendant.

In the case of Laxmi Polyfab Private Limited (supra), the

Coordinate bench of this Court held that Section 12A of the Commercial

Courts Act, 2015 is mandatory and it was further held that the suits filed

upto 11th December, 2020, the plaintiff cannot be non-suited for non-

compliance.

In the case of Patil Automation Private Limited (supra), the Hon'ble

Supreme Court declared that Section 12A of the Commercial Courts Act,

2015 is mandatory and held that any suit instituted violating the mandate

of Section 12A must be visited with the rejection of plaint under Order 7

Rule 11 of the CPC. But the Hon'ble Supreme Court clarified that the said

declaration will be effective from 20th August, 2022 so that stakeholders

concern become sufficiently informed.

This Court perused the plaint of CS No. 72 of 2022 and finds that the

plaintiff has filed the instant suit on 30th March, 2022 and the plaint was

presented before this Court on 30th March, 2022, accordingly, this Court has

granted leave under Section 12A of the Commercial Courts Act, 2015 on 30th

March, 2022.

In view of the above, this Court is of the view that the plaintiff has

filed the suit on 30th March, 2022 and on the same day this Court granted

leave to the plaintiff under Section 12A of the Commercial Courts Act,2 015.

As per the judgement in the case of Patil Automation Private Limited

(supra), the declaration of mandatory provision is effective from 20th August,

2022 but the plaintiff has filed the instant suit prior to 20th August, 2022

and thus plaintiff cannot be non-suited.

G.A No. 4 of 2022 is thus dismissed.

(Krishna Rao, J.)