2022 Supreme(SC) 710

SUPREME COURT OF INDIA
K.M. Joseph, Hrishikesh Roy, JJ.
M/s. Patil Automation Private Limited and Ors. - Appellants
Versus
Rakheja Engineers Private Limited - Respondents
Civil Appeal No. 5333 of 2022 (Arising out of SLP (C) No. 14697 of 2021) With Civil Appeal No. of 2022 (Arising out of SLP (C)No. 5737 of 2022) Along With Special Leave Petition (C) Diary No.29458 of 2021
Decided On : 17-08-2022

IMPORTANT POINTS
(1) Section 12A of Commercial Courts Act, 2015 is mandatory – Any suit instituted violating mandate of Section 12A must be visited with rejection of plaint under Order VII Rule 11 – This power can be exercised even suo motu by court.
(2) Alternate Dispute Resolution – There is need to have a dedicated bar for mediation.

Headnote:

(A) Commercial Courts Act, 2015 – Section 12A – Civil Procedure Code, 1908 – Order VII Rule 11 – Rejection of plaint – Section 12A of Act is mandatory – Any suit instituted violating mandate of Section 12A must be visited with rejection of plaint under Order VII Rule 11 – This power can be exercised even suo motu by court – However, this declaration will be effective from 20.08.2022 so that concerned stakeholders become sufficiently informed – In case plaints have been already rejected and no steps have been taken within period of limitation, matter cannot be reopened on the basis of this declaration – If order of rejection of plaint has been acted upon by filing a fresh suit, declaration of prospective effect will not avail plaintiff – If plaint is filed violating Section 12A after jurisdictional High Court has declared Section 12A mandatory also, plaintiff will not be entitled to relief. (Para 84)

(B) Civil Procedure Code, 1908 – Section 80 – Commercial Courts Act, 2015 – Section 12A – Indian Partnership Act, 1932 – Section 69 – Pre-litigation notice – Right to institute suit in a plaintiff who does not contemplate urgent interim relief in a commercial matter under the Act, is clearly conditioned by fulfilment of certain conditions as provided in Section 12A – This cannot be likened to allowing a party to file his written statement – Right of suit itself will fructify only when conditions in Section 12A are fulfilled – Treating the provision as procedural, also, result cannot be different – Any other view would remove basis for treating Section 80(1) of CPC as mandatory – Plaint instituted transgressing mandate of Section 80, when there is no notice at all and no urgent relief is contemplated and leave sought, plaint would have to be rejected, as suit would not be maintainable – Position is equally the same in regard to absence of registration contemplated under Section 69 of Indian Partnership Act. (Paras 43 and 59)

(C) Civil Procedure Code, 1908 – Section 89 – Commercial Courts Act, 2015 – Section 12A – Mediation settlement – A mediation settlement arrived at under Section 89 of CPC must be scrutinised by court and only on its imprimatur being given it is effective – Since a settlement under Section 12A of Act is accorded status of an award under Arbitration & Conciliation Act, it unerringly points to object of Legislature to make pre-litigation mediation compulsory – Section 89 of CPC, does contemplate mediation ordered by a Court – However, Section 12A contemplates mediation without any involvement of Court as it is done prior to institution of suit – Pre-institution mediation has been mandated only in a class of suits – Carving out of a class of suits and selecting them for compulsory mediation, harmonises with attainment of object of law – Load on Judges is lightened – They can concentrate on matters where urgent interim relief is contemplated and on other matters which already crowd their dockets. (Paras 51, 53 and 54)

(D) Civil Procedure Code, 1908 – Section 9 and Order VII Rule 11 – Right to file suit – Section 9 of CPC is not the law which creates a right to file a civil suit – It would require a law to invade, absolutely or conditionally, vital civil right of a person to take his grievance to a civil court – A civil suit can be barred by a law, either expressly or by necessary implication – Jurisdiction of civil court can be ousted – There is no Fundamental Right with anyone to contend that he has a right to file a civil suit, which cannot be taken away – It is another matter that courts will not lightly infer ouster of a jurisdiction of a civil court – Very presence of Order VII Rule 11(d) which mandates rejection of a plaint where a suit is barred, is a reminder of principle that there is no absolute right to file a civil suit. (Paras 55 and 72)

(E) Civil Procedure Code, 1908 – Order VII Rule 11 – Limitation Act, 1963 – Section 3(2) – Commercial Courts Act, 2015 – Section 12A – Rejection of plaint – Order VII Rule 11 does not provide that court is to discharge its duty of rejecting plaint only on an application – Order VII Rule 11 is silent about any such requirement – Since summon is to be issued in a duly instituted suit, in a case where plaint is barred under Order VII Rule 11(d), stage begins at that time when court can reject plaint under Order VII Rule 11 – In a clear case where on allegations in suit, it is found that suit is barred by any law, as would be the case, where plaintiff in a suit under the Act does not plead circumstances to take his case out of requirement of Section 12A, plaint should be rejected without issuing summons – On issuing summons it will be always open to defendant to make application as well under Order VII Rule 11 – Power under Order VII Rule 11 is available to court to be exercised suo motu. (Para 68)

(F) Civil Procedure Code, 1908 – Section 89 – Alternate Dispute Resolution – Mediation can become a potent alternate dispute resolution device – Knowledge of laws which are subject matter of suits under the Act, is indispensable for a Mediator to effectively discharge his duties – His role is supreme and it is largely shaped by his own knowledge of law that governs commercial cases – There must be training by Experts, including at State Judicial Academies – This must be undertaken on a regular and urgent basis, particularly keeping in mind when there is a dearth of trained mediators – There is need to have a dedicated bar for mediation – Effective participation of bar which must be adequately remunerated for its service will assist in mediation evolving – Concerned High Court may also undertake periodic exercise to establish a panel of trained mediators in District and Taluka levels as per need. (Para 74)

Facts of the case:

Seminal question which arises for consideration is whether the statutory pre-litigation mediation contemplated under Section 12A of Commercial Courts Act, 2015 as amended by Amendment Act of 2018 is mandatory and whether the Courts below have erred in not allowing the applications filed under Order VII Rule 11 of Code of Civil Procedure, 1908, to reject plaints filed by the respondents in these appeals without complying with the procedure under Section 12A of the Act.

Findings of Court:

Statute which has generated the controversy is Amending Act of year 2018. There is undoubtedly a certain amount of cleavage of opinion among High Courts. The other feature which is to be noticed is that, this is a case where the law in question, Amending Act containing certain Section 12A is a toddler. The law necessarily would have teething problems at the nascent stage.

Result : Reference answered.