Commercial Courts Act | No Bar U/S 12A On Filing Suit Without Pre-Litigation Mediation When Urgent Relief Is Contemplated: Calcutta High Court
The High Court clarified that only if the plaintiff does not contemplate any urgent interim relief, then it is a mandatory requirement under the statute to avail of the remedy of pre-litigation mediation.
Justice Aniruddha Roy, Calcutta High Court
The Calcutta High Court has held that when a plaintiff contemplates urgent interim relief, the statute does not bar the institution of the suit without undergoing pre-litigation mediation.
The Court was hearing an application filed by the defendant in a commercial suit seeking recall of a previous order passed by the Coordinate Bench, which had dispensed with the requirement of Section 12A.
A Bench comprising Justice Aniruddha Roy, while deciding the matter, observed: “On a meaningful and harmonious reading of the said provision, this Court is of the view that, if the plaintiff does not contemplate any urgent interim relief then it is a mandatory requirement under the statute to avail of the remedy of pre-litigation mediation. Therefore, if an urgent interim relief is contemplated by the plaintiff, there is no bar under the Section upon the plaintiff to file the necessary civil action without exhausting the remedy of pre-litigation mediation.”
Anirban Ray, Senior Advocate, appeared for the plaintiff, while Advocate Suddhasatva Banerjee appeared for the defendant.
Background
The plaintiff instituted a commercial lawsuit based on an outstanding claim for unpaid consideration of goods sold and delivered. The plaintiff pleaded that the defendant maintained running and continuous accounts, and after adjustment of all payments, there remained an outstanding sum.
The plaint also recorded that the defendant, through meetings and emails, informed the plaintiff that the defendant was in urgent need of funds, intended to sell its plant, and had filed a scheme of compromise and arrangement before the National Company Law Tribunal for the settlement of dues of creditors. The plaintiff did not accept the proposed quantum of settlement.
On presentation of the plaint, the Coordinate Bench dispensed with the requirement of pre-litigation mediation under Section 12A of the Commercial Courts Act and admitted the plaint. An interim order of injunction was also passed.
The defendant thereafter filed the present application seeking withdrawal or revocation of that order, contending that there was no sudden urgency and that the plaintiff was required to exhaust pre-litigation mediation.
Court’s Observation
The Calcutta High Court examined the averments in the plaint and noted that the written communications showed that the defendant had contemplated selling its property to settle outstanding claims and had forwarded a scheme of compromise and arrangement. The Court held that these averments gave rise to contemplation of urgent interim relief by the plaintiff.
Referring to Section 12A, the Court held that a suit which does not contemplate any urgent interim relief shall not be instituted unless the plaintiff exhausts the remedy of pre-litigation mediation. Therefore, when a plaintiff contemplates urgent interim relief, there is no bar under the Section to file the suit without undertaking pre-litigation mediation.
The Court held that to ascertain whether urgent interim relief is contemplated, the averments in the plaint are to be taken as true, correct, and sacrosanct at that stage.
The Bench, quoting the observations of the Supreme Court in Yamini Manohar v. T.K.D. Keerthi held that the question of whether a suit involves urgent interim relief is to be determined solely based on the pleadings and reliefs sought, and if the plaintiff seeks urgent interim relief, the suit cannot be dismissed for non-compliance with Section 12A.
The Court also referred to the judgment of the Division Bench in Shristi Infrastructure Development Corporation Limited v. Sarga Hotel Private Limited & Another, which held that when the plaintiff contemplates urgent interim relief, Section 12A dispensation should not be interfered with unless palpably erroneous or mala fide.
The Bench further remarked that “it matters little, whether ultimately the plaintiff would succeed on its prayer for interim relief or with its suit on merit, what matters is that the averments in the plaint should show a contemplation by the plaintiff for an urgent interim relief”.
Conclusion
Holding that the plaint disclosed contemplation of urgent interim relief, the Court found no reason to recall the order granting dispensation of Section 12A.
The application was dismissed without any order as to costs.
Cause Title: Berger Paints India Limited v. GPHP Holdings Pvt. Ltd.
Appearances
Plaintiff: Senior Advocate Anirban Ray, with Advocates Soham Sen, Snehashis Sen
Defendant: Advocates Suddhasatva Banerjee, Kanishk Kejriwal, Aishwarya Kumar Awasthi
