2023 (10) TMI 1375 - SCH - Indian Laws

Pre-litigation Mediation and Settlement - Order VII, Rule 11 of the Code of Civil Procedure, 1908 - HELD THAT - In the present case, it is an accepted fact that an urgent interim relief has been prayed for and the condition that the plaint contemplates an urgent interim relief is satisfied. Therefore, the impugned judgment/order of the Delhi High Court, which upholds the order of the District Judge (Commercial Court)-01, South District at Saket, New Delhi dated 06.02.2023, rejecting the application under Order VII, Rule 11 of the Code, is correct and in accordance with law. When a plaint is filed under the CC Act, with a prayer for an urgent interim relief, the commercial court should examine the nature and the subject matter of the suit, the cause of action, and the prayer for interim relief. The prayer for urgent interim relief should not be a disguise or mask to wriggle out of and get over Section 12A of the CC Act. The facts and circumstances of the case have to be considered holistically from the standpoint of the plaintiff. Non-grant of interim relief at the ad-interim stage, when the plaint is taken up for registration/admission and examination, will not justify dismissal of the commercial suit under Order VII, Rule 11 of the Code; at times, interim relief is granted after issuance of notice. Nor can the suit be dismissed under Order VII, Rule 11 of the Code, because the interim relief, post the arguments, is denied on merits and on examination of the three principles, namely, (i) prima facie case, (ii) irreparable harm and injury, and (iii) balance of convenience. The fact that the court issued notice and/or granted interim stay may indicate that the court is inclined to entertain the plaint. The proposition that the commercial courts do have a role, albeit a limited one, should be accepted, otherwise it would be up to the plaintiff alone to decide whether to resort to the procedure under Section 12A of the CC Act. An absolute and unfettered right' approach is not justified if the pre-institution mediation under Section 12A of the CC Act is mandatory, as held by this Court in PATIL AUTOMATION PRIVATE LIMITED AND ORS VERSUS RAKHEJA ENGINEERS PRIVATE LIMITED 2022 (8) TMI 1494 - SUPREME COURT - The words contemplate any urgent interim relief' in Section 12A(1) of the CC Act, with reference to the suit, should be read as conferring power on the court to be satisfied. They suggest that the suit must contemplate , which means the plaint, documents and facts should show and indicate the need for an urgent interim relief. The present special leave petition is dismissed.

Summary

Issues involved:
The issues involved in the judgment are the application under Order VII, Rule 11 of the Code of Civil Procedure, 1908, the mandatory nature of pre-litigation mediation under Section 12A of the Commercial Courts Act, 2015, and the interpretation of "contemplate urgent interim relief" in the context of filing suits.

Application under Order VII, Rule 11 of the Code:
The Supreme Court upheld the dismissal of the application under Order VII, Rule 11 of the Code of Civil Procedure, 1908, filed by the petitioner, as it was found to be rightly dismissed. The judgment emphasized that urgent interim relief was prayed for in the present case, meeting the condition that the plaint "contemplates" an urgent interim relief, leading to the correctness of the impugned judgment/order of the Delhi High Court.

Mandatory Pre-Litigation Mediation under Section 12A of the CC Act:
The Court reiterated the mandatory nature of pre-litigation mediation under Section 12A of the Commercial Courts Act, 2015, unless the suit contemplates urgent interim relief. The judgment referred to previous cases to emphasize that the provision is compulsory for a plaintiff to exhaust the remedy of pre-institution mediation before instituting a suit. It was clarified that the court cannot exempt a plaintiff from the applicability of Section 12A(1) of the CC Act, and the determination of whether a suit involves urgent interim relief is solely based on the plaintiff's pleadings and the relief sought.

Interpretation of "Contemplate Urgent Interim Relief":
The Court discussed the interpretation of "contemplate urgent interim relief" in the context of filing suits under the Commercial Courts Act. It was highlighted that the plaintiff's pleadings and the relief sought determine whether a suit involves urgent interim relief. The judgment emphasized that the commercial court should examine the nature of the suit, cause of action, and prayer for interim relief to prevent misuse of urgent interim relief as a way to bypass pre-litigation mediation. The Court rejected the proposition that the plaintiff has the absolute choice to avoid pre-litigation mediation by seeking urgent interim relief, emphasizing the limited role of commercial courts in ensuring compliance with Section 12A of the CC Act.

Separate Judgment by High Court of Delhi:
The High Court of Delhi's judgment in a related case emphasized that a suit not contemplating urgent interim relief cannot be instituted without exhausting pre-institution mediation as required under Section 12A(1) of the Commercial Courts Act, 2015. The Court clarified that the plaintiff's request for urgent interim relief should be genuine and not a means to bypass pre-litigation mediation, highlighting the importance of complying with the statutory mandate.