Compliance with mandatory provisions of Section 12-A of the Commercial Courts Act 2015 is necessary before instituting suits, but earlier submissions for rejection based on non-compliance are invalid if made prior to the law's effective date.

JUDGMENT :

GAURI GODSE, J.

1. This application is filed by defendant no. 1 for rejection of the plaint under Order VII Rule 11(a) and (d) of the CIVIL PROCEDURE CODE , 1908 (“CPC”). Defendant no. 1 has prayed for rejection of the plaint on the ground that it does not disclose any cause of action against defendant no.1, the plaint is barred for non-compliance with the mandatory provision of Section 12- A of the COMMERCIAL COURTS ACT , 2015 (“the said Act”) and on the ground that the suit is barred by limitation.

Facts In Brief In The Plaint:

2. According to the plaintiffs, they supply bunkers to ocean- going vessels. The plaintiffs have entered into a commercial agreement under which the orders procured by them were executed. The plaintiffs have referred to them as ‘the Asean Group’. The suit is filed for a money decree against defendant nos. 1 to 11, directing them to jointly and severally pay an amount of Rs. 83,57,70,274/- to plaintiff no. 2, being the outstanding amount payable to Asean Group Credit Facility. The plaintiffs have prayed for directing defendant nos. 1 to 11 to jointly and severally pay a sum of USD 6,326,895.05 towards outstanding payable to plaintiff no. 1 towards outstanding bunker invoices. As per the plaintiff's case, defendant nos. 1 to 9 are the banking companies and financial institutions that had advanced funds to Varun Resources Limited (“Varun”) and were members of the Joint Lenders Forum (“JLF”) for restructuring the debts of Varun.

3. Defendant no. 10 is the security trustee for defendant nos. 1 to 9 under the debt restructuring documents pertaining to Varun. Defendant no. 11 is the account bank nominated by defendant nos. 1 to 10 for the purpose of the debt restructuring scheme for Varun. Defendant no. 12 is one of the promoters of Varun’s group of companies. Varun is now in liquidation; hence, defendant no. 13, who is appointed as a Resolution Professional, is added as a party defendant.

4. The plaintiffs have claimed recovery of monies from the defendants towards the monies advanced by the plaintiffs and for the supply of bunker fuel to the vessels of Varun.

Submissions on behalf of the Applicant (Defendant no. 1):

5. The submissions made on behalf of defendant no. 1 for rejection of the plaint are summarised as under :

(a) The plaintiffs have asserted that they attempted pre-litigation mediation through a private mediator; however, that attempt was unsuccessful. Hence, the suit was filed. According to the learned counsel for defendant no. 1, a private mediation is not contemplated under the said Act, and pre-litigation mediation is contemplated as per The Commercial Courts (Pre- Institution Mediation and Settlement) Rules, 2018 (“the said Rules).

(b) In view of Section 12-A of the said Act, read with the said Rules, due compliance with the mandate of Section 12-A of the said Act is through the procedure as contemplated under the said Rules. Hence, the plaintiffs’ contention that pre-litigation mediation was attempted; however, the same failed, cannot be termed as compliance with the mandatory provision under Section 12-A of the said Act. The plaintiffs relied upon the mediation failure report dated 23^rd June 2021 issued by the private mediator. The plaintiffs thus relied on the non-starter certificate dated 23^rd June 2021, issued by the private mediator, to justify their purported compliance with Section 12-A. However, addressing a request for mediation cannot be construed as compliance with the mandatory provision under Section 12