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2024 Supreme(Online)(DEL) 12884
HIGH COURT OF DELHI
Manoj Jain, J
ADITY A BIRLA FASHION AND RETAIL LIMITED – Appellant
Versus
MRS SAROJ TANDON – Respondent
CM(M)-459/2023
Pre-institution mediation is mandatory for all commercial disputes, including counter-claims, regardless of whether urgent relief is sought.
Headnote:(A) Commercial Courts Act, 2015 - Section 12-A - Civil Procedure Code - Order 7 Rule 11 and Order 8 Rule 6A - Pre-institution mediation is mandatory for suits not seeking urgent relief, including counter-claims - The court emphasized that counter-claims must adhere to the same procedural requirements as original suits, including pre-institution mediation, regardless of whether they seek urgent relief or not. (Paras 12, 27, 57)
(B) Counter-Claim - Nature and treatment - A counter-claim is treated as a separate suit and must comply with all procedural rules applicable to suits, including pre-institution mediation under Section 12-A of the Commercial Courts Act. (Paras 17, 21, 57)
Facts of the case:
The plaintiff leased a shop from the respondent and later sought to terminate the lease due to the Covid-19 pandemic, demanding the return of the security deposit. The respondent failed to return the deposit and filed a counter-claim for rentals without undergoing pre-institution mediation. (Paras 2, 3, 11)
Findings of Court:
The court held that the counter-claim must comply with the mandatory pre-institution mediation requirement, and the failure to do so would result in rejection of the plaint under Order 7 Rule 11. (Paras 57, 63)
Issues: The main issue was whether pre-institution mediation is obligatory for counter-claims in commercial disputes. (Paras 13, 27)
Ratio Decidendi: The court ruled that pre-institution mediation is mandatory for all commercial disputes, including counter-claims, emphasizing the importance of mediation in the resolution of disputes. (Paras 57, 58)
Result: The petition was disposed of, affirming the counter-claim's validity as it was lodged before the cut-off date established by precedent.
JUDGMENT
MANOJ JAIN, J
1. This petition poses an interesting proposition.
2. The respondent herein owned one shop which was leased out to plaintiff/petitioner on 15.03.2013. Plaintiff, eventually, in light of the Covid-19 pandemic, was constrained to decide upon closure of its business operation from such leased shop. It issued notice of termination of lease and demanded refund of its security. Since, the security was not returned by the defendant/respondent, it thought of filing a commercial suit against the lessor (respondent herein) seeking recovery.
3. Before institution of suit, plaintiff, however, filed an application in terms of Section 12-A of the Commercial Courts Act , 2015 before South District Legal Services Authority, Saket (South East) Courts (in short SDLSA) on 07.04.2021. Respondent/defendant, despite due service of the notice(s) summons by SDLSA, deliberately and intentionally avoided or failed to enter their appearance before the said authority. Accordingly, such process of mediation was declared as non-starter.
4. Resultantly, a suit was filed by plaintiff.
5. After institution of the suit, the defendant filed its written statement on 05.02.2022.
6. However, things did not stop there.
7. Defendant also lodged a counter-claim on 21.02.2022 seeking rentals etc.
8. Importantly, such counter-claim was also involving a commercial dispute and was, therefore, registered as a commercial suit.
9. Such counter claim was merely seeking recovery of money and did not contemplate any urgent relief.
10. However, since before lodging such counter-claim, the defendant had not invoked pre-institution mediation, the plaintiff filed an application under Order 7 Rule 11 CPC seeking rejection of such counter claim.
11. Such application has been dismissed which has compelled the plaintiff to knock the doors of this court by filing instant petition under Article 227 of Constitution of India.
12. According to learned Trial Court though such process was mandatory for a suit, it was not necessary for a counter-claim.
13. The question is whether such recourse is obligatory or should be treated as optional in context of a counter-claim.
14. Before adverting to answer the same, it is important to take note of relevant provisions of Civil Procedure Code ( CPC ).
15. Order VIII Rule 6A CPC reads as under:
―(1) A defendant in a suit may, in addition to his right of pleading a set- off under rule 6, set up, by way of a counter claim against the claim of the plaintiff, any right or claim in respect of a cause of action accruing to the defendant against the plaintiff either before or after the filing of the suit but before the defendant has delivered his defence or before the time limited for delivering his defence has expired, whether such counterclaim is in the nature of a claim for damages or not; Provided that such counter-claim shall not exceed the pecuniary limits of the jurisdiction of the Court.
(2) Such counter-claim shall have the same effect as a cross-suit so as to enable the Court to pronounce a final judgment in the same suit, both on the original claim and on the counter-claim.
(3) The plaintiff shall be at liberty to file a written statement in answer to the counter-claim of the defendant within such period as may be fixed by the Court.
(4) The counter claim shall be treated as a plaint and governed by the rules applicable to plaints.‖
16. Order IV Rule 1 & 2 CPC requires every plaint to be registered by the Court. The said provision reads as under:
―1. Suit to be commenced by plaint –(1) Every suit shall be instituted by presenting a plaint in duplicate to the Court or such officer as it appoints in this behalf.
(2) Every plaint shall comply with the rules contained in Orders VI and VII, so far as they are applicable.
(3) The plaint shall not be deemed to be duly instituted unless it complies with the requirements specified in subrules (1)
and (2)
2. Register of suits- The Court shall cause the particulars of every suit to be entered in a book
