In cases dealing with transfer of proceedings from a court
having jurisdiction to another court, the discretion vested in
court by Sec.24(2) and 25(3) either to retry the proceedings or
proceed from the point at which such proceeding was
transferred or withdrawn is in marked contrast scheme to
scheme under O 7 R 10 R/W R 10 A, where no such discretion is
given and the proceeding has to commence denovo.
Further also observed, in peculiar facts and circumstances
of the case, because the Appellant did not raise the objection
under clause 16 B of the agreement at the very first opportunity
the first order of rejection attained finality. The objection under
clause 16B was raised more as an after thought. The second
application under Order 7 Rule 10 had been preferred by the
respondent, when pleadings of the parties have been
completed, evidence led and that the matter was fixed for final
Argument. We are of considered opinion that despite
having concluded that the impugned order is not
sustainable in view of the law, in exercise
of discretionary jurisdiction under Art. 136 of the
Constitution and to do complete and substantial justice
between the parties under Art.142 of the Constitution
nonetheless, we decline to set aside the impugned order of the
High court.
In this case, the order of the High court dated 13.03.2018
was challenged, wherein High court has held that suit at Delhi
shall proceed from stage at which it was pending at Gurgaon,
before the return of plaint and not denovo.
As the law is clear, contention of the plaintiff, this is a
transferred suit U/sec. 15 of the Commercial Courts Act and
U/sec 23 of CPC and compliance of Sec. 12A of CCA is not
mandatory, holds no substance.
On the other hand, in the authorities relied by the learned
counsel for the Plaintiff :
AIR Online 2021 P and H 1065 in case of M/s. Patil
Automation Private Limited Office and others -Vs- Rakheja
Engineers Private Limited and another- while dismissing an
application of defendants for rejection of plaint, trial court had
directed that civil suit be kept in abeyance and both parties
were directed to appear for purpose of mediation as per
provisions of Sec. 12 А. Defendant's cannot insist that suit of
plaintiff's be dismissed for violation of Sec. 12A. Dismissal of
application for rejection of plaint proper.
As seen, in the Full bench decision reported in 2020 (4)
Supreme 178 in case of M/s. Exl Careers and another -Vs-
Frankfinn Aviation Services Private Limited (FB) - it was
observed, if a plaint is returned under O 7 R 10 and 10A of CPC
for presentation in court, in which it should have been
instituted, suit shall proceed Denovo.
To be noted, nowhere it was observed, for non
compliance U/sec. 12A of Commercial Court Act, suit has to
rejected at threshold.
It is also seen from the other sheet, that IA No.5 for
rejection of plaint was filed by advancing the case, when
settlement was not arrived and case was posted for plaintiff
Evidence, till then there was no whisper by the defendant as to
point of jurisdiction. As defence cannot be taken at one's whims
and fancies and court's are having duty to sub-serve justice. No
prejudice will be caused to the defendant, in referring the
parties to mediation by keeping the suit in abeyance for the
purpose of mediation as per provisions of Sec. 12 A of
Commercial Courts Act.
8. The learned senior counsel V.Vigneshwar S.Shastri,
mandate of Section 12A cannot be given a go-bye. Therefore, the
Commercial Court in the event of failure of pre-institution
mediation/settlement. Therefore, it becomes necessary to notice
the purport of Section 12A of the Commercial Courts Act. Section
(ii) a mediation service provider as defined under
clause (m) of Section 3 of the Mediation Act, 2023.
(3) Notwithstanding anything contained in the Legal
Services Authorities Act, 1987 (39 of 1987), the Authority or
mediation service provider authorised by the Central
Government under sub-section (2) shall complete the process of
mediation within a period of one hundred and twenty days 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 sixty days with the consent of the parties:
Provided further that, the period during which the parties
spent for pre-litigation mediation shall not be computed for the
purposes 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 and the mediator.
(5) The mediated settlement agreement arrived at under
this section shall be dealt with in accordance with the provisions
of Sections 27 and 28 of the Mediation Act, 2023."
(Emphasis supplied)
Section 12A mandates pre-institution mediation and settlement. It
reads that a suit which does not contemplate, any urgent interim
relief, shall not be instituted unless the plaintiff exhausts the
remedy of pre-institution mediation and settlement. The soul of the
provision is to avoid multiplicity of litigation. If parties could not
settle prior to institution of the suit, an opportunity to arrive at such
settlement must be afforded.
9. Heavy reliance is placed by the learned senior counsel for
the petitioners on the judgment of the Apex Court in the case of
PATIL AUTOMATION PRIVATE LIMITED v. RAKHEJA
ENGINEERS PRIVATE LIMITED reported in (2022)10 SCC 1.
The Apex Court holds that it would be without jurisdiction, if the
suit is entertained prior to mandatory compliance of Section 12A.
10. The High of Delhi interprets PATIL AUTOMATION in the
case of AAONE DEVELOPERS PRIVATE LIMITED v. SABITA
JHA1. The Delhi High Court holds as follows:
".... .... ....
25. Thereafter, the defendants filed their written
statement, in which a preliminary objection was taken that since
the suit arises from a commercial dispute and is beyond the
specified value, therefore, the suit ought to have been instituted
in terms of the Commercial Courts Act, 2015. Considering the
said objection, this Court vide order dated 22-3-2024 converted
the suit to a commercial suit, to which the defendants did not
raise any objection. Even later on, no challenge was laid to the
said order.
26. Notably, when the suit was originally filed as an
ordinary suit, there was no occasion for the plaintiff to
resort to pre-institution mediation, as Section 12-A of the
Act is not applicable to the ordinary suits. However,
before the conversion of suit to commercial suit on 22-3-
2025 SCC OnLine Del.42
2024, the matter was referred to the mediation,
therefore, the mandatory requirement of pre-institution
mediation stood complied with, since the object of
compulsory pre-institution mediation is only to relieve
the courts from avoidable litigation in commercial
matters and the mediation, as an alternative dispute
mechanism, has been identified as a workable solution
for the said purpose4.
27. Thus, the mediation having been resorted to
prior to the conversion of ordinary suit to a commercial
suit and that too on a joint request of the parties, which
ended in as "not settled", it does not lie in the mouth of
the defendants to seek rejection of plaint and to burden
the plaintiff to avail pre-institution mediation all over
again and file a fresh suit thereafter."
(Emphasis supplied)
The Delhi High Court answers an identical circumstance. A suit was
instituted. It was referred to mediation on several occasions.
Mediation fails and the suit is then transferred to the Commercial
Court. The Commercial Court does not send it for pre-institution
mediation and settlement under Section 12A, but considers it by
itself holding that Section 12A mandates mediation and mediation
has already taken place and failed. The period of 3 months of
mediation was over. Merely because the suit is transferred it cannot
be that all over again mediation under Section 12A should be
permitted to be initiated. This is tossed before the Apex Court. The
Apex Court in its order dated 24-03-2025 in the case of SABITA
JHA v. AAONE DEVELOPERS PRIVATE LIMITED2 holds as
follows:
"1. Heard Mr. S.S. Ray, learned senior counsel appearing
for the petitioners.
2. The commercial suit came to be registered on
22.03.2024. Before the registration of the aforesaid commercial
suit, the parties were referred to mediation by the Civil Court on
05.10.2023 but the mediation was unsuccessful.
3. The contention of learned senior counsel for the
petitioners is that on account of non-compliance of
Section 12 A of the Commercial Courts Act, 2015 (for
short 'the Act'), the commercial suit is not maintainable.
4. The facts as stated above, clearly reveal that
there was substantial compliance of Section 12A as the
matter was referred to mediation before the registration
of the commercial suit.
5. In the peculiar facts and circumstances of this
case, we are not inclined to accept the contention of
learned senior counsel appearing for the petitioners.
6. The Special Leave Petition is dismissed. Pending
application(s), if any, shall stand disposed of."
(Emphasis supplied)
The Apex Court holds that commercial suit comes to be registered
on 22-03-2024. Before the registration of commercial suit, the
parties were referred for mediation by the civil court and the
mediation was unsuccessful. The very same contention was
advanced before the Apex Court. The Apex Court holds that the
facts would clearly reveal there was substantial compliance of
Section 12A, as the matter was referred to mediation before
registration of commercial suit at the civil Court and holds that it
was not necessary to refer it for mediation all over again.
11. The order sheet is quoted hereinabove. From January to
April 2024 the matter was adjourned on several occasions for the
purpose of talks of settlement and recording of settlement. In June
2024 the parties submit failure of talks of settlement. Then the
Court posted the matter for plaintiff's evidence. At that point in
time, an application is preferred for return of plaint to be presented
before the Commercial Court. The parties are the same, but the
Court is different. Talks of settlement had gone on for four months
and it had failed. The defendants who are sought to be evicted from
the premises are now wanting to buy time by resorting to these
methods, notwithstanding failure of settlement.
12. On a coalesce of the provision and the law laid down by
the High Court of Delhi and the Apex Court interpreting the said
provision, what would unmistakably emerge is, when
commercial O.S. is for the first time instituted before the
Court, Section 12A becomes mandatory. Without the pre-
institution mediation and settlement, the suit in commercial
O.S. cannot be entertained. The concerned Court should
suo-motu reject the plaint and send the parties to mediation
or keep the plaint in abeyance and send the parties to
mediation. In the event suit is presented before the
competent civil Court and the competent civil Court has
initiated efforts for mediation and those have failed, after
such failure, realising the fact that the plaint ought to be
presented before the commercial Court, the rigour of Section
12A need not all over again be followed by the commercial
Court before entertaining the plaint, as there would have
been substantial compliance of Section 12A, which mandates
efforts to be made to resolve the dispute by way of
settlement. That having happened in the case at hand, no fault
can be found with the order that is passed by the concerned Court
rejecting the application filed by the defendants/petitioners under
Order VII Rule 11 of the CPC. There is no travesty found in the
order, for this Court to entertain the petition under Article 227 of
the Constitution of India.
13. The petition lacking in merit stands rejected.
Sd/-
(M.NAGAPRASANNA)
JUDGE
Bkp
CT:MJ
