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IN THE HIGH COURT OF JUDICATURE AT MADRAS
V. SIVAGNANAM, J.
T.V. Krishna Moorthy & Others - Petitioners
Versus
Kanakadhara Finance, Rep. By its Joint Managing Partner, N. Prabakaran, Namakkal & Others - Respondents
C.R.P. No. 4244 of 2023 & C.M.P. No. 25820 of 2023
Decided On : 15-03-2024
Commercial Court Act - Rejection of Plaint - Section 12A of the Act
Fact of the Case:
The plaintiff filed a suit against the defendants for a direction to pay a sum and to declare a sale deed as void. The defendants filed a petition to reject the plaint under Order VII Rule 11(d) of CPC, which was dismissed by the Trial Court. The plaintiff failed to comply with the pre-litigation mediation and settlement as mandated by Section 12A of the Commercial Courts Act.
Finding of the Court:
The Court found that the plaintiff's suit did not contemplate urgent interim relief and failed to comply with the mandatory pre-litigation mediation and settlement under Section 12A of the Act. The Trial Court erred in dismissing the petition to reject the plaint, and the plaint was rejected in the Civil Revision Petition.
Issues: The issues revolved around the compliance with Section 12A of the Commercial Courts Act, the urgency of the relief sought, and the rejection of the plaint under Order VII Rule 11(d) of CPC.
Ratio Decidendi: The Court relied on the Supreme Court's interpretation of Section 12A, emphasizing the mandatory nature of pre-litigation mediation and the need for the suit to contemplate urgent interim relief. It held that the plaintiff's failure to comply with Section 12A warranted the rejection of the plaint.
Final Decision: The Civil Revision Petition was allowed, the impugned order was set aside, and the plaint in the original suit was rejected.
JUDGMENT :
(Prayer: Civil Revision Petition has been filed under Article 227 of the Constitution of India to allow the Civil Revision Petition, by setting aside, the fair and decreetal order dated 30.08.2023, passed in I.A.No.14 of 2023 in C.O.S. No.21 of 2022, on the file of the Commercial Court, Namakkal/Principal District Court, Namakkal.)
1. Challenging the order of dismissal passed by the learned Principal District Judge, Commercial Court, Namakkal/Principal District Court, Namakkal in I.A.No.14 of 2023 in C.O.S.No.21 of 2022 dated 30.08.2023, the present Civil Revision has been filed.
2. The fact of the case is that the first respondent/plaintiff had filed the suit in C.O.S.No.21 of 2022 before the Commercial Court/Principal District Court, Namakkal against the revision petitioners/defendants 1 to 4 and the respondents 2 and 3/defendants 5 & 6 for a direction to the defendants 1 to 4 to pay the suit claim of Rs.1,65,90,669/- along with subsequent interest at the rate of 18% per annum till the date of realization and to create a charge on the suit B, C and D schedule properties till the suit claim is settled by the defendants 1 to 4 and to declare that the sale deed dated 24.03.2021 registered as Doc. No.1255/2021 executed by the 2nd defendant in favour of the 5th defendant is ab-initio void and illegal, and consequential permanent prohibitory injunction restraining the 5th defendant and his men from further alienating A schedule property till the realisation of the decree amount. In the said suit, the revision petitioners/defendants 1 to 4 had filed a petition to reject the plaint in I.A.No.14 of 2022 under Order VII Rule 11(d) of Civil Procedure Code, which was dismissed by the Trial Court on 30.08.2023. Aggrieved over the same, the present revision has been filed.
3. The learned counsel for the petitioners submitted that the suit was filed by the first respondent/plaintiff alleging that the first petitioner/1st defendant herein had approached the first respondent/plaintiff and sought for financial help for the business floated by the second and third petitioners in the name of the fourth petitioner, hence, the first respondent transferred the financial assistance directly in the second and fourth petitioner's bank account, for which, the petitioners 1 and 2/defendants 1 & 2 jointly executed promissory notes in favour of the first respondent/plaintiff. The plaintiff in the plaint stated that the 2nd respondent/5th defendant is one of the creditors of the revision petitioners and the property mentioned as suit schedule 'A' was transferred to the 5th defendant in March 2021 and hence, the plaintiff has filed the suit in C.O.S.No.21 of 2022, under Commercial Courts Act 2015, before the Commercial/Principal District Court, Namakkal. The Commercial Courts Act mandates for pre-litigation mediation and settlement under Section 12-A of the Act, but no such procedure was adopted by the first respondent/plaintiff before initiation of the suit. However the first respondent/plaintiff has failed to plea specifically in the plaint averments regarding urgent interim relief sought for in I.A.Nos.1 to 4 of 2022 and as to why the procedure contemplated under Section 12-A of the Act has to be waived. It is a statutory mandate cast upon the 1st respondent/plaintiff to have specifically pleaded in his plaint as to why he had directly approached the Court without approaching and exhausting the pre-litigation mediation and settlement. So, the plaint filed by the plaintiff without complying Section 12A of the Act, is liable to be rejected and hence, the petitioners herein have filed the petition under Order VII Rule 11(d) of CPC to reject the plaint as the plaint is barred by law. The Trial Court without considering the legal preposition, dismissed the rejection of plaint petition filed by the petitioners.
4. The learned counsel for the petitioner further submitted that the plaintiff had also failed to plead specifically in the plaint regarding the
The main legal principle established is the mandatory nature of pre-litigation mediation and the requirement for the suit to contemplate urgent interim relief under Section 12A of the Commercial Cour....
The Commercial Courts Act mandates pre-institution mediation only for suits that do not seek urgent interim relief. Courts must assess the necessity for such relief based on the facts presented.
Urgent interim relief can be granted without prior mediation under Section 12A of the Commercial Courts Act if urgency is established, allowing plaintiffs to proceed with their suit.
Rejection of plaint – Commercial suit which does not contemplate any urgent relief under Commercial Courts Act shall not be instituted unless plaintiff exhausts remedy of Pre-Institution Mediation.
Section 12A of the Commercial Courts Act, 2015 is mandatory, but non-compliance may be excused if the necessary mediation infrastructure was unavailable at the time of filing.
The mandatory requirement of pre-institution mediation under Section 12-A of the Commercial Courts Act, 2015 must be complied with for a suit to be maintainable.
Pre-litigation mediation under Section 12A of the Commercial Courts Act is mandatory; however, if mediation has occurred prior to suit registration, further mediation is not required.
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