Calcutta High Court

Perfecto Electricals And Ors vs Rail Vikas Nigam Limited (Rvnl) And Ors on 2 May, 2025

                 IN THE HIGH COURT AT CALCUTTA
                             ORIGINAL SIDE
                       COMMERCIAL DIVISION




Present:

The Hon'ble Justice Krishna Rao



                         IA. No. G.A. 2 of 2023

                                      In

                      C.S. (Com) No. 388 of 2024

                       [Old No. C.S. 136 of 2022]



                     Perfecto Electricals and Ors.

                                    Versus

              Rail Vikas Nigam Limited (RVNL) and Ors.



           Mr. Joy Saha, Sr. Adv.
           Mr. Avishek Guha
           Mr. Ishaan Saha
           Mr. Ankush Majumder
                                              ... For the plaintiffs.
           Mr. Debraj Sahu
           Mr. R. Sengupta
           Mr. Abhishek Banerjee
                                             ... For the defendant no.2.


Hearing Concluded On : 17.03.2025

Judgment on           : 02.05.2025
                                        2


Krishna Rao, J.:

1. The defendant no. 2 has filed the present application being G.A. No. 2

of 2023 praying for revocation of leave granted for dispensation of

requirement of Section 12A of the Commercial Courts Act, 2015 and for

rejection of plaint.

2. Mr. Debraj Sahu, Learned Advocate representing the defendant no.2

submits that solely on the basis of the averments made in paragraph

75 of the plaint, the plaintiffs have obtained leave for dispensation of

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

submits that the plaintiffs have prayed for dispensation on the ground

that mediation or settlement in the matter had failed and there was no

further scope for mediation and that the defendant no.1 had already

terminated the agreement and invoked the bank guarantee and

received payment of the same and there is no scope for mediation/

settlement. He further submits that the plaintiffs also alleged that there

are several insolvency cases and proceedings have been filed by various

parties against the defendant no.2.

3. Mr. Sahu submits that the defendant no.2 only after filing of the

application for rejection of plaint and revocation of leave, the plaintiffs

have filed an application for grant of interim relief. He submits that the

plaintiffs have obtained leave for dispensation for compliance of

requirements of Section 12A of the Commercial Courts Act, 2015 upon

misrepresentation.

4. Mr. Sahu submits that the conduct of the plaintiffs clearly establishes

that the plaintiffs never had any urgency in filing the suit without

having exhausted pre-institution mediation. He submits that in the

plaint also there is no prayer for any perpetual injunction or mandatory

injunction or any urgent interim relief. In support of his submissions,

he has relied upon an unreported judgment in the case of Mazhar

Hussain Vs. M/s India Construction Company and others dated

13th April, 2023 in APOT No. 90 of 2023. In the said case, the

Hon'ble Division bench of this Court held that "there is no prayer either

for perpetual or mandatory injunction in the plaint though an omnibus

way of incorporating the word "injunction" in the plaint is adopted which,

in our opinion, does not satisfy the basic ingredients required to be

pleaded for the purpose of dispensation of the provisions contained in

Section 12A of the Act".

5. Mr. Sahu relied upon the judgment in the case of Yamini Manohar

Vs. T.K.D. Keerthi reported in (2024) 5 SCC 815 and submitted that

the plaintiff does not have the absolute right to paralyze Section 12A of

the Commercial Courts Act, 2015.

6. Mr. Sahu relied upon the judgement in the case of Patil Automation

Private Ltd. and Others Vs. Rakheja Engineers Private Limited

reported in (2022) 10 SCC 1 and submitted that 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 plaintiff in a suit under the

Commercial Courts Act, 2015, does not plead circumstances to take his

case out of the requirement of Section 12A of the said Act, the plaint

should be rejected without issuance of summons. He further submits

that even on issuance of summons, it will be always open to the

defendant to make an application as well under Order 7 Rule 11 of the

CPC.

7. Per Contra, Mr. Joy Saha, Learned Senior Advocate representing the

plaintiffs submits that the plaintiffs have sought for leave for

dispensation of the provisions of Section 12A of the Commercial Courts

Act, 2015, on the grounds that several attempts were made to resolve

the disputes amicably and through mediation but had failed. The

contracts in respect of both packages II and III had already been

terminated by the defendant no.1 and the work had already been

awarded to third (3rd) parties. The defendant nos. 1 and 2 having

terminated the contract of the plaintiffs and illegally and wrongfully

invoked the bank guarantee and received payments. He submits that

three insolvency proceedings were pending against the defendant no.2

before the NCLT at the time of filing of the suit.

8. Mr. Saha submits that immediately after termination of contract and

invocation of bank guarantee, the plaintiffs have initiated proceedings

under Section 9 of the Arbitration and Conciliation Act, 1996 on 7th

December, 2017 but the same was dismissed on 8th December, 2017.

He submits that after dismissal of the application under Section 9 of

the Arbitration and Conciliation Act, 1996, the plaintiffs have filed a

suit before the Alipore Court on 20th September, 2018 with respect to

Package II and Package III for recovery of money. The suit filed by the

plaintiffs was withdrawn on 10th October, 2018.

9. Mr. Saha submits that after withdrawal of the suit from the Alipore

Court, the plaintiffs have filed the present suit. He submits that the

instant suit filed by the plaintiffs is continuous to the proceeding

initiated by the plaintiffs under Section 9 of the Arbitration and

Conciliation Act, 1996 as the plaintiffs have filed Section 9 application

for urgent relief which justifying the grant of leave for dispensation of

provisions of Section 12A of the Commercial Courts Act, 2015 on 6th

July, 2022.

10. Mr. Saha submits that the law requires that the plaint must only

contemplate or indicate the need for urgent reliefs. He submits that

there is no requirement of law that the interim reliefs prayed for are

likely to succeed, interim orders prayed for, if not granted, will justify

any order of dismissal of the suit or the suit can be dismissed under

Order VII Rule 11 merely because interim reliefs, post argument is

denied on merit. In support of his submissions, Mr. Saha relied upon

the following judgements:

                   i.     Yamini Manohar Vs. T.K.D.          Keerthi
                          reported in (2024) 5 SCC 815.

                   ii.    Gavrill Metal Pvt. Ltd.        Vs. Maria
                          Fabricators Pvt. Ltd.         reported in
                          MANU/WB/1793/2023.

                   iii.   Shristi     Infrastructure  Development
                          Corporation Ltd. Vs. Sarga Hotel Private
                          Ltd. reported in MANU/WB/1688/2024

iv. Kohinoor Seed Fields India Pvt. Ltd. Vs. Veda Seed Sciences Pvt. Ltd. & Anr.

reported in MANU/ TL/1081/2024.

11. Mr. Saha submits that in the Commercial Courts Practice Direction,

2021, there is no provisions for revocation of leave already granted

under Section 12A of the Commercial Courts Act, 2015. He submits

that in the absence of any provisions in the Practice Direction for

revocation of the leave granted under Section 12A of the Commercial

Courts Act, 2015, is not maintainable.

12. Heard the Learned Counsel for the respective parties, perused the

materials on record and the judgements relied by the parties. In

paragraph 75 of the plaint, the plaintiffs have pleaded leave for

dispensation of the provisions of Section 12A of the Commercial Courts

Act, 2015 which are as follows:

i. The plaintiffs have made several attempts to resolve the

disputes by and between the parties amicably and through

mediation but the defendants ignored the same. As regard to

the package 3, has already been reallotted to third party thus,

there is no possibility of any further mediation and settlement.

ii. The defendant no.1 already terminated the agreement and

illegally and fraudulently invoked and received payment of the

Bank Guarantee, thus there is no chance of settlement.

iii. Numerous insolvency proceedings have been filed by various

parties against the defendant no.2 and as such urgent reliefs

are required against the defendants to preserve and protect

the rights and claim of the plaintiffs.

13. Apprehending that the defendant no. 2 is in collusion with the

defendant no.1 would invoke the Bank Guarantee furnished through

the State Bank of India on behalf of the plaintiff no.1 with respect to

Package -3, the plaintiffs have filed an application before this Court

under Section 9 of the Arbitration and Conciliation Act, 1996 being A.P.

No. 1050 of 2017, praying for an order of injunction restraining the

defendant no.2 from invoking the Bank Guarantee but the plaintiffs

could not succeed to get any order in the said proceeding and on 8th

December, 2017, the application filed by the plaintiffs was dismissed.

14. After dismissal of the application filed by the plaintiffs under Section 9

of the Arbitration and Conciliation Act, 1996, the plaintiffs have filed a

suit being Title Suit No. 320 of 2018 before the Learned Civil Judge,

Senior Division, Alipore, South 24 Parganas on 20th September, 2018

but on 10th October, 2018, the plaintiffs have withdrawn the suit with

the liberty to file afresh.

15. After withdrawal of the suit from the Learned Court, the plaintiffs have

filed the present suit before this Court on 21st May, 2022 but the same

was presented on 6th July, 2022 and leave for dispensation of the

requirement under Section 12A of the Commercial Courts Act, 2015

was also granted on the same day.

16. The plaintiffs have made out a case that the plaintiffs have made

numerus attempts to resolve the disputes by and between the parties

amicably and through mediation but the defendants have ignored/

disregarded the same.

Section 12A of the Act of 2015 has been introduced to the Act of

2015 by an amendment. It has been introduced to the Act of 2015 with

retrospective effect from May 3, 2018. Sub-Section (1) of Section 12A of

the Act of 2015 has required the plaintiffs to exhaust the remedy of pre-

institution mediation to institute a suit which may fall within the

purview of the Act of 2015. Sub-Section (2) of Section 12A has required

the Central Government to authorize the Authorities constituted under

the Legal Services Authority Act, 1987 for the purposes of pre-

institution mediation. In exercise of powers conferred under Sub-

Section (2) of Section 12A of the Act of 2015, the Central Government

has by a notification dated July 3, 2018, published in the Gazette of

India on July 3, 2018, authorised the State of Authority and the

District Authority constituted under the Legal Services Authorities Act,

1987 for the purposes of pre-institution mediation and settlement

under Chapter IIIA of the Act of 2015, i.e., Section 12A of the Act of

2015.

The plaintiffs have not disclosed that the plaintiffs have

approached for mediation and notices were served to the defendants

and the defendants inspite of receipt of notice, failed to come forward

for settlement through mediation. Thus, the contentions raised by the

plaintiffs cannot be said to be true.

17. At first on 7th December, 2017, the plaintiffs have filed an application

under Section 9 of the Arbitration and Conciliation Act, 1996 but on

the very second day, the said application was dismissed. After dismissal

of the said application, the plaintiffs have not taken any steps till 19th

September, 2018 i.e. about nine months, on 20th September, 2018, the

plaintiffs have filed a suit before the Learned Court of Civil Judge,

Senior Division, Alipore but on 10th October, 2018, the said suit was

dismissed as withdrawn with the liberty to file afresh. The plaintiffs

have filed the present suit on 21st May, 2022 and was presented for

admission on 6th July, 2022. The plaintiffs have withdrawn the earlier

suit from the Learned Court of Civil Judge, Senior Division, Alipore on

10th October, 2018 but has filed the present suit after the period of

more than three and half years.

18. The suit which was filed before the Learned Court of Alipore and before

this Court, the prayers are mostly similar. All the claims of the

plaintiffs in the present case is of 2017 to 2019 as appearing in

paragraphs 50, 51, 52, 53, 55, 56 and 57 of the plaint. In the present

suit, the plaintiffs have not prayed for any urgent interim relief. The

plaintiffs at the time of hearing of the present application have handed

over the order passed by the Learned National Company Law Tribunal

to establish that against the defendant no. 2, the operational creditor

has initiated proceeding under the Insolvency and Bankruptcy Code,

2016 but from the said order, it reveals that the same was filed in the

year 2018.

19. In the case of Shristi Infrastructure Development Corporation

Limited reported in MANU/WB/1688/2024, the Hon'ble Division Bench

of this Court held that:

"33. Please note the wording of12A(1). The legislature does not mention "plaint". It uses the word "suit". It employs the word "contemplation".

Hence it avoids such words as "averments or statements in the plaint". In other words, the legislature does not say that from the statements or averments in the plaint urgent reliefs obtainable by the plaintiff should be apparent. I would interpret the Section as suggesting that if at the time of presentation of the plaint before the judge from the averment in the plaint and an affidavit to be filed by the plaintiff it would appear that in the contemplation of the plaintiff a situation for urgent relief might arise in the period when mediation has to be undergone, the court may allow the plaintiff to institute the suit without mediation.

34. On the basis of the declaration that urgent relief is contemplated, the plaintiff should be allowed to present the plaint. The court should not ordinarily interfere with such assertion unless it is shown to be palpably erroneous or mala fide. Once, the plaintiff is allowed to file a suit without pre- litigation mediation the discretion of the court should not be allowed to be interfered with at a later stage. Otherwise the proceedings are likely to become very dilatory. Even after filing of the suit the parties can be referred to mediation, if the facts so warrant."

20. In the case of Garvill Metal Pvt. Ltd. vs. Maira Fabricators Pvt. Ltd.

reported in MANU/WB/1793/2023, the Hon'ble Division Bench of this

Court held that :

"14. The section stipulates three months' time from the date of the application of the plaintiff which can be further increased by two months with the consent of parties for completion of the mediation process. Take the example of a suit for recovery of money lent and advanced. The defendant debtor has huge debts in the market. Several claims of creditors against him are pending. When the plaintiff is contemplating filing of the suit against him, he is in the process of transferring his immovable property so as to defeat the claim of the defendant as well as other creditors. Immediately with the filing of the suit, the plaintiff needs to move an interim application and obtain an order restraining the defendant from transferring the property and for the property to be taken possession of by a receiver to be appointed by the court.

15. Now, if the plaintiff is to undergo mediation compulsorily, the defendant might keep it pending for three months. For three months the plaintiff would be unable to institute the suit and hence, unable to obtain any relief. In the meantime, the defendant could be successful in transferring the property, thus defeating the claim of the plaintiff. Hence, the justification for the exception in Section 12A that in suits contemplating urgent reliefs pre-litigation mediation could not be required.

16. The legislature, in my opinion, has used the expression "contemplated" to express the intention that an interim relief may be required at the time of filing of the suit or may be required any time the defendant expresses an intention to do some act to defeat the decree to be passed."

21. Recently another Division Bench of this Court in the case of Asa

International India Microfinance Ltd. Vs. Northern ARC Capital

Ltd. & Anr. passed in FMAT No. 3 of 2025 dated 17th January,

2025 taking into consideration of the judgments in the case of Gavrill

Metal Pvt. Ltd. (supra) and Shristi Infrastructure Development

Corporation Limited (supra) and held that:

"10. In this context, the legislative intent of the phrase "an urgent relief" and the expression "contemplate" are to be understood and applied.

11. Contemplation thus would not mean an instant immediacy but the prejudice and the irreparable loss and injury that the plaintiff is likely to suffer if the plaintiff is made to wait for pre- litigation mediation. The Court has to examine whether the facts and circumstances justify a genuine apprehension as opposed to a camouflage of an irreparable injury the plaintiff is likely to suffer.

16. Pre suit correspondence and conduct between the parties can be indicative of existence of genuine apprehension in the mind of the plaintiff since any further delay might cause irreparable and irretrievable prejudice to the plaintiff as there might be every likelihood of the assets and properties being dissipated or alienated"

22. In the case of Yamini Manohar (supra), the Hon'ble Supre Court held

that:

"10. We are of the opinion that when a plaint is filed under the CC Act, 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-A of the CC Act. The facts and circumstances of the case have to be considered holistically from the standpoint of the plaintiff. Non- grant of interim relief at the ad interim stage, when the plaint is taken up for registration/admission and examination, will not justify dismissal of the commercial suit under Order 7 Rule 11 of the Code; at times, interim relief is granted after issuance of notice. Nor can the suit be dismissed under Order 7 Rule 11 of the Code, because the interim relief, post the arguments, is denied on merits and on

examination of the three principles, namely : (i) prima facie case, (ii) irreparable harm and injury, and (iii) balance of convenience. The fact that the court issued notice and/or granted interim stay may indicate that the court is inclined to entertain the plaint.

11. Having stated so, it is difficult to agree with the proposition that the plaintiff has the absolute choice and right to paralyse Section 12-A of the CC Act by making a prayer for urgent interim relief. Camouflage and guise to bypass the statutory mandate of pre-litigation mediation should be checked when deception and falsity is apparent or established. The proposition that the commercial courts do have a role, albeit a limited one, should be accepted, otherwise it would be up to the plaintiff alone to decide whether to resort to the procedure under Section 12-A of the CC Act. An "absolute and unfettered right" approach is not justified if the pre-institution mediation under Section 12-A of the CC Act is mandatory, as held by this Court in Patil Automation.

12. The words "contemplate any urgent interim relief" in Section 12-A(1) of the CC Act, with reference to the suit, should be read as conferring power on the court to be satisfied. They suggest that the suit must "contemplate", which means the plaint, documents and facts should show and indicate the need for an urgent interim relief. This is the precise and limited exercise that the commercial courts will undertake, the contours of which have been explained in the earlier paragraph(s). This will be sufficient to keep in check and ensure that the legislative object/intent behind the enactment of Section 12-A of the CC Act is not defeated."

23. In the present case though the plaintiffs have prayed for leave for

dispensation of the provision of Section 12A of the Commercial Courts

Act, 2015 but considering the plaint as a whole, the documents relied

by the plaintiffs and the cause of action for filing of the suit, this Court

finds that initially on the same cause of action, the plaintiff has filed an

application under Section 9 of the Arbitration and Conciliation Act,

1996 on 7th December, 2017 and on dismissal of the same, the plaintiff

has filed a suit before the Alipore Court on 20th September, 2018 and

after withdrawal of the suit on 10th October, 2018, the plaintiff has filed

the present suit on 21st May, 2022. The plaintiff also not prayed for any

interim urgent relief in the plaint. Thus, from the facts and

circumstances of the present case, this Court finds that the judgments

relied by the plaintiffs in the case of Shristi Infrastructure

Development Corporation Limited (supra) and Gavrill Metal Pvt.

Ltd. (supra) are distinguishable. The judgments relied by the

defendants in the case of Mazhar Hussain (supra) and Asa

International India Microfinance Ltd. (supra) are squarely

applicable in the present case.

In view of the above, this Court did not find any contemplation of

urgent relief.

24. Another contention raised by the plaintiffs is that there is no provisions

for revocation of leave already granted under Section 12A of the

Commercial Courts Act, 2015. It is true that in the Calcutta High Court

Commercial Courts Practice Direction, 2021, there is no provisions for

revocation of leave granted for dispensation of provisions of Section 12A

of the Commercial Courts Act, 2015. Order VII, Rule 11 of the Code of

Civil Procedure, 1908, has not amended. The Commercial suits also

governed under the Code of Civil Procedure, 1908. Order VII, Rule 11 of

the Code of Civil Procedure, 1908 reads as follows:

"O. VII. R. 11. Rejection of plaint.-- The plaint shall be rejected in the following cases:--

(a) where it does not disclose a cause of action;

(b) where the relief claimed is undervalued, and the plaintiff, on being required by the Court to correct the valuation within a time to be fixed by the Court, fails to do so;

(c) where the relief claimed is properly valued, but the plaint is returned upon paper insufficiently stamped, and the plaintiff, on being required by the Court to supply the requisite stamp-paper within a time to be fixed by the Court, fails to do so;

(d) where the suit appears from the statement in the plaint to be barred by any law;

[(e) where it is not filed in duplicate;]

[(f) where the plaintiff fails to comply with the provisions of rule 9:]

[Provided that the time fixed by the Court for the correction of the valuation or supplying of the requisite stamp-paper shall not be extended unless the Court, for reasons to be recorded, is satisfied that the plaintiff was prevented by any cause of an exceptional nature for correcting the valuation or supplying the requisite stamp-paper, as the case may be, within the time fixed by the Court and that refusal to extend such time would cause grave injustice to the plaintiff.]"

In the case of Madiraju Venkata Ramana Raju Vs.

Peddireddigari Ramachandra Reddy reported in (2018) 14 SCC 1,

the Hon'ble Supreme Court held that :

"24. Ordinarily, an application for rejection of election petition in limine, purportedly under Order 7 Rule 11 for non-disclosure of cause of action, ought to proceed at the threshold. For, it has to be considered only on the basis of institutional defects

in the election petition in reference to the grounds specified in clauses (a) to (f) of Rule 11. Indeed, non-disclosure of cause of action is covered by clause (a) therein. Concededly, Order 7 CPC generally deals with the institution of a plaint. It delineates the requirements regarding the particulars to be contained in the plaint, relief to be specifically stated, for relief to be founded on separate grounds, procedure on admitting plaint, and includes return of plaint. The rejection of plaint follows the procedure on admitting plaint or even before admitting the same, if the court on presentation of the plaint is of the view that the same does not fulfil the statutory and institutional requirements referred to in clauses (a) to (f) of Rule

11. The power bestowed in the court in terms of Rule 11 may also be exercised by the court on a formal application moved by the defendant after being served with the summons to appear before the Court. Be that as it may, the application under Order 7 Rule 11 deserves consideration at the threshold."

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

Supreme Court held that:

"94.3. Order 7 Rule 11 does not provide that the court is to discharge its duty of rejecting the plaint only on an 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 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 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 Rule 11. In other words, the power under

Order 7 Rule 11 is available to the court to be exercised suo motu."

26. In the present case, though at the time of presentation of plaint, this

Court granted leave for dispensation of requirement of Section 12A of

the Commercial Courts Act, 2015 but on receipt of writ of summons,

the defendant no. 2 filed the present application for revocation of leave

and for rejection of plaint. The plaintiffs have given an opportunity of

hearing of the present application and the plaintiffs have also filed

affidavit-in-opposition to the present application. Considering the

above, this Court finds that the issue raised by the plaintiffs that there

is no provisions for revocation of leave is not sustainable in view of the

provisions of Order VII, Rule 11 of the CPC.

27. In view of the above, leave granted for dispensation of requirement of

Section 12A of the Commercial Courts Act, 2015 dated 6th July, 2022,