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2023 Supreme(Cal) 1471

IN THE HIGH COURT AT CALCUTTA
I.P. MUKERJI, BISWAROOP CHOWDHURY, JJ.
Gavrill Metal Pvt. Ltd. – Appellant
Versus
Maira Fabricators Pvt. Ltd. – Respondent
APD No. 3 of 2022, CS No. 130 of 2020, IA No. GA 1 of 2022
Decided On : 25-08-2023

Advocates:
Advocate Appeared:
For the Appellants : Suman Dutt, Debmalya Ghoshal, Jit Ray, S.N. Dutt, Niladri Khanra
For the Respondents: Debraj Saha, Indranil Karfa

Headnote:(A) Commercial Courts Act, 2015 - Section 12A - Pre-Institution Mediation - Leave granted to institute suit without mediation was revoked on grounds of no urgent interim relief sought for two years - Court clarified that leave cannot be revoked without exceptional circumstances - Suit involved recovery of price for goods supplied and accepted by the defendant with outstanding dues - Statutory intent of promoting mediation should not impede urgent claims. (Paras 1-2, 24, 26-36)

(B) Urgent Relief - The court established that the need for interim relief should be determined at the time of filing, and not restricted to immediate requirements, emphasizing the prevention of potential fraud or asset disposal by defendants. (Paras 8-9, 18-19)

Facts of the case:
The appellant sold zinc ingots to the respondent and sought recovery for unpaid dues while claiming urgent relief due to the defendant’s history of defaulting.

Findings of Court:
The appellate court found it improper for the lower judge to revoke the leave, emphasizing the criteria for determining urgent reliefs as articulated in the Commercial Courts Act.

Issues: Whether the learned judge erred in revoking leave under Section 12A based on the absence of immediate interim relief claims.

Ratio Decidendi: The court ruled that the mere absence of a claim for immediate relief does not justify revocation of leave granted under Section 12A, which should focus on potential future needs for urgent relief related to the case.

Result: Appeal allowed; revocation of leave set aside.

Table of Content
1. pre-institution mediation requirements under section 12a (Para 1 , 2 , 3)
2. nature of the commercial dispute and urgency for relief (Para 5 , 22)
3. interpretation of urgent relief requirements under the statute (Para 6 , 8 , 10 , 12 , 14 , 15 , 18)
4. implications of the defendant's actions on seeking interim relief (Para 19 , 20)
5. court's discretion and reasons for granting or revoking leave (Para 24 , 25 , 27)
6. grounds for granting leave under section 12a and potential revocation (Para 30 , 31 , 32 , 33 , 34 , 35 , 36 , 37)

JUDGMENT :

I.P. MUKERJI, J.

1. Chapter IIIA was introduced into the COMMERCIAL COURTS ACT , 2015 by Section 11 of Act XXVIII of 2008 with effect from 3rd May, 2018. It inserted one solitary section, 12A. It is in the following terms:

    “12-A. Pre-Institution Mediation and Settlement:

    (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 Service Authorities Act, 1987 (39 of 1987), for the purposes of pre-institution mediation.”

2. Sub-Section 3 of Section 12A provides that the process of mediation would have to be completed within three months from the date of application made by the plaintiff under Sub-Section 1. It may be extended by two months by consent of parties.

3. If a suit contemplates “an urgent relief” it may be instituted without undergoing pre-litigation, mediation. The rule of practice which is followed in this court is that if a suit under the said Act is to be instituted without pre-litigation, mediation, leave has to be obtained from the court dispensing with the requirement at the time of institution of the suit. In other words, the court has to certify that the suit “contemplates” urgent reliefs and that is why, such leave is being granted.

4. On 3rd November, 2020 the learned single judge of this court granted leave to the appellant plaintiff to institute the suit without undergoing pre-litigation, mediation. On 4th July, 2022 another single judge of this court in an application for revocation of such leave and for dismissal of the suit ruled that since for two years after institution of the suit no interim application for an urgent relief had been moved by the appellant plaintiff, the Section 12A leave was liable to be revoked and the suit dismissed. An order was passed accordingly on that date.

5. At this point of time, let us examine the nature, purport and scope of the suit. Between April, 2015 and November, 2017 the appellant plaintiff had sold and delivered to the respondent defendant more than 126 metres of zinc ingots. The respondent defendant accepted the goods unconditionally. The respondent defendant made payment for part of the supplies amounting to Rs.1,68,99,341/- leaving outstanding a sum of Rs.87,36,945/-. The respondent defendant purportedly made payment of part of the claim by several cheques. All of them were dishonoured with the remark “fund insufficient”. It is a simple claim for recovery of price of goods, sold and delivered together with interest.

6. The question which has now arisen is whether the learned judge was right in granting the leave or whether the appellant plaintiff should have been compelled to invoke the mediation process and complete it before filing the suit.

7. As the section postulates, if in a suit no urgent relief is contemplated, then Section 12A leave is mandatory.

8. It is the appellant’s case that such leave was not required for institution of the present suit because urgent reliefs were contemplated.

9. The learned judge has ruled that no interim application was moved for two years which provided his lordship a reason to revoke the 12A leave.

10. Was that the correct test applied by the court?

11. The legislatu

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