In CM(M) 767/2022-DEL HC- Sec.12-A(1) of Commercial Courts Act, which requires plaintiff to resort to pre-institution mediation before approaching Court, applies only at stage of institution of suit: Delhi HC Justice C.Hari Shankar [03-08-2022]

Read Order: EXTREME COATING PRIVATE LTD v. JOTUN INDIA PRIVATE LTD 

Tulip Kanth

New Delhi, August 5, 2022: Asking the petitioner to pay cost of Rs 11,000 for his attempt to protract the proceedings in a commercial suit, the Delhi High Court has opined that the procedural formalities in the CPC are intended to facilitate litigation by chalking out the procedure to be followed which is not to be abused as an instrument of oppression, to frustrate proceedings validly instituted.

The Bench of Justice C.Hari Shankar was considering a petition filed under Article 227 of the Constitution pertaining to a commercial suit. This commercial suit was preferred by the respondent against the petitioner under the provisions of the Code of Civil Procedure, 1908 (CPC), as amended by the Commercial Courts Act, 2015.

The petitioner, as the defendant in the suit, had moved an application under Order VII Rule 11 of the CPC, seeking rejection of the suit on the ground that it had been filed in violation of Section 12-A of the Commercial Courts Act, which requires the plaintiff to resort to pre-institution mediation before approaching the Court. The respondent having not traveled the said route, the petitioner, as defendant in the suit, prayed that the suit be rejected under Order VII Rule 11 of the CPC.

The Commercial Court noted that the stage of pre institution mediation was crossed only on November 27, 2018, when a Standard Operating Procedure (SOP) was enforced for pre-institution mediation by the DLSA. It was only thereafter, therefore, that a plaintiff, instituting a suit, could, prior thereto, exhaust the pre-institution mediation protocol envisaged by Section 12-A.

In view thereof, the ADJ, observing that it was impossible for the respondent to have exhausted the protocol envisaged by Section 12-A before filing the Commercial Suit, rejected the petitioner’s objection to the maintainability of the suit and, accordingly, dismissed the petitioner’s application under Order VII Rule 11 of the CPC.When the petitioner sought a review before the Commercial Court, the same was dismissed. This Petition filed under Article 227 of the Constitution of India assailed both of these orders.

Observing that there can be no question of applying Section 12-A(1) at any point of time after the suit was filed or presented by the plaintiff in the competent Court, the Bench said, “ On its plain words, Section 12-A(1) applies only at the stage of institution of the suit, i.e. at the stage when the suit is filed or presented in the Court competent to try it. It has no application whatsoever after the suit has been instituted.”

Considering that no pre-institution mediation was in place on the date when the respondent filed his suit, so the suit ought to have been returned to the respondent for representation after the protocol for pre-institution mediation was in place, the Bench noticed that even otherwise, return of a suit can only be on grounds envisaged by Order VII Rule 10 of the CPC, and not because there was no mechanism in place for pre-institution mediation.

As per the Bench, it was impossible, on September 22, 2018, for the respondent to have complied with the provision of pre-institution mediation envisaged by Section 12-A(1) and the application of the petitioner was obviously misconceived. Noting that the same was an attempt to protract the proceedings in the suit, the  Court was fortified in this impression by the fact that, despite the order of the Commercial Court having clarified this position unequivocally, the petitioner not only preferred a review petition, which took another six months to be decided but had also dragged the matter further to this Court by invoking Article 227 of the Constitution of India.

Thus, the Bench dismissed the Petition with cost of Rs 11,000 to be paid by the petitioner by way of a crossed cheque/demand draft favouring the respondent within two weeks.