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IN THE HIGH COURT AT CALCUTTA
I.P. MUKERJI, BISWAROOP CHOWDHURY, JJ.
Shristi Infrastructure Development Corporation Limited – Appellant
Versus
Sarga Hotel Private Limited and Another – Respondents
FMAT No. 222 of 2024, CAN No. 1 of 2024
Decided On : 23-08-2024
Mediation - Commercial Suit - Commercial Courts Act, 2015, Section 12A; Civil Procedure Code, Order 7 Rule 11 - The court emphasized the mandatory requirement of pre-institution mediation for suits not contemplating urgent relief, interpreting Section 12A as both procedural and substantive law, influencing the decision to allow the appeal.
Fact of the Case:
The plaintiff filed a commercial suit without undergoing pre-litigation mediation, seeking interim relief. The court rejected the plaint, ruling that no interim relief was contemplated, leading to the appeal.
Finding of the Court:
The court found that the rejection of the plaint was appealable and that the lower court erred in not allowing the plaintiff to institute the suit without mediation, as the plaintiff had indicated a need for urgent relief.
Issues: Whether the rejection of the plaint under Order 7 Rule 11 was appealable and whether the plaintiff was required to undergo pre-litigation mediation under Section 12A.
Ratio Decidendi: The court held that Section 12A of the Commercial Courts Act mandates pre-institution mediation for suits not contemplating urgent relief, and the rejection of the plaint constituted a decree, making it appealable.
Result: The appeal is allowed, and the lower court is directed to hear the suit expeditiously.
Certainly. Based on the provided legal document, here are the key points:
Section 12A of the Commercial Courts Act, 2015 mandates pre-institution mediation for suits that do not seek urgent interim relief. The section is interpreted as both procedural and substantive law, influencing the appealability of certain orders (!) (!) .
The rejection of a plaint under Order 7 Rule 11 of the Civil Procedure Code is considered a decree, which is appealable. Therefore, an order rejecting a plaint on this basis can be challenged through an appeal (!) (!) .
The court emphasized that the determination of whether a suit contemplates urgent relief should be based on a holistic examination of the nature, subject matter, cause of action, and relief sought in the plaint. The court must also consider whether the facts and circumstances indicate a need for urgent relief (!) (!) (!) .
The phrase "contemplates any urgent interim relief" in Section 12A(1) is interpreted to mean that the plaint and related documents should show an indication or possibility of urgent relief being required, rather than requiring explicit pleadings of such relief (!) (!) .
The court clarified that the process of instituting a suit involves the registration and acceptance of the plaint, but the actual institution is not complete until the court admits the plaint and issues summons. Rejection at the stage of Order 7 Rule 11 is a decree and appealable (!) (!) .
The court also noted that the procedural framework under Section 12A does not require obtaining specific leave to institute a suit where the mediation process has not been exhausted. Instead, the court has the discretion to assess whether the suit, based on the plaint's contents, contemplates urgent relief (!) (!) .
The importance of examining the facts holistically and ensuring that the suit is not dismissed at the threshold solely due to the absence of explicit pleadings for urgent relief was highlighted. The court should allow the suit to proceed while directing parties to consider mediation, especially if the suit involves significant Court fees and potential for settlement (!) (!) .
The appeal was allowed, and the lower court's order was set aside, with directions to proceed with the suit expeditiously. The court also noted that procedural irregularities in recording the institution of the suit could be remedied without invalidating the process (!) .
The interpretation of the relevant legal provisions underscores the importance of judicial discretion in assessing the nature of the suit and the need for urgent relief, to uphold the legislative intent of promoting alternative dispute resolution methods before formal adjudication (!) (!) .
The court reiterated that orders rejecting a plaint under Order 7 Rule 11 are decrees and thus appealable, reinforcing the procedural rights of the parties involved (!) (!) .
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JUDGMENT :
I.P. MUKERJI, J.
1. This appeal raises very interesting questions. These questions now arise in many appeals where the interpretation and application of Section 12A of the Commercial Courts Act, 2015 are involved. To appreciate the question, the facts need to be told.
2. This commercial suit was filed by the appellant/plaintiff in the learned court below, without undergoing pre-litigation mediation. The suit was accompanied by an application for interim relief under Order 39 Rule 1 and 2 of the Civil Procedure Code. After institution of the suit the appellant/plaintiff applied before the court asking for dispensation of pre-litigation mediation. As the defendants had filed a caveat in the court they were given notice of the above applications. On notice of the application the defendants filed an application under Order 7 Rule 11 of the Civil Procedure Code.
3. By a detailed examination of the plaint the learned judge went into the question whether an interim relief was “contemplated” in the suit. She ruled that no such interim relief could be said to be contemplated.
4. By a judgment and order dated 24th May, 2024 the plaint was rejected.
5. The other applications for interim injunction and for rejection of the plaint under Order 7 Rule 11 were “rejected as redundant.” The suit T.S (COM) 95/2024 was “disposed of.”
6. Hence this appeal.
7. A statute is enacted or an amendment to a statute is introduced to reach benefits to the people at large. Any undesirable state of affairs is also sought to be removed by introduction of a new law or amendment of the existing law.
8. At a point of time parliament felt that the courts in the country were unable to decide the cases pending before them within reasonable time. There was shortage of courts compared to the number of cases. There was lack of infrastructure. The procedure prescribed by law was dilatory. The number of cases filed was much more than the number disposed of or dealt with by the court. The situation was properly termed as “docket explosion.” The legislature conceived of means of resolution of disputes between the parties through alternative dispute resolution fora. Parliament enacted the Legal Services Authority Act, 1987, amended the Civil Procedure Code so as to promote settlement through Lok Adalats, mediation and so on.
9. Entertaining the belief that there was always scope of a settlement between the parties and if that happened there would be no need to prosecute litigation or would result in reduction in the number of cases, Section 12A of the Commercial Courts Act, 2015 was inserted by parliament by enacting Section 11 of Act 28 of 2018 with effect from 3rd May, 2018. It is in the following terms:
(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, authorise the Authorities constituted under the Legal Services Authorities Act, 1987 (39 of 1987), for the purposes of pre-institution mediation.
(3) Notwithstanding anything contained in the Legal Services Authorities Act, 1987 (39 of 1987), the Authority authorised 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
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