Case Note & Summary
The Supreme Court allowed the appeal filed by M/s Dhanbad Fuels Private Limited against the Union of India and another, setting aside the judgment of the Calcutta High Court dated 22.02.2021. The dispute arose from a money suit filed by the Union of India on 09.08.2019 in the Commercial Court, Alipore, seeking recovery of Rs. 8,73,36,976/- towards differential freight and penalty. The suit did not seek any urgent interim relief. The appellant-defendant raised a preliminary objection in its written statement dated 20.12.2019 that the suit was not maintainable for non-compliance with Section 12A of the Commercial Courts Act, 2015, which mandates pre-institution mediation. The appellant later filed an application under Order VII Rule 11(d) CPC for rejection of the plaint. The Commercial Court rejected that application on 21.12.2020, holding that the application was belated and that infrastructure for mediation was lacking, but directed post-institution mediation. The High Court upheld this approach, directing the suit to be kept in abeyance for seven months to allow compliance with Section 12A. The Supreme Court framed the core legal issue: whether Section 12A is mandatory or directory. After analyzing the legislative intent, the court held that Section 12A is mandatory, and a suit filed without pre-institution mediation is not maintainable. The exception for 'urgent interim relief' is narrow and inapplicable here as no such relief was sought. The court also addressed the effect of its earlier decision in Patil Automation (supra), which declared Section 12A mandatory, and held that the declaration applies prospectively but covers pending cases. The court rejected the argument of impossibility due to lack of infrastructure, noting that the plaintiff could have approached the Legal Services Authority. Consequently, the Supreme Court set aside the High Court's order, allowed the appeal, and directed the Commercial Court to decide the application under Order VII Rule 11(d) afresh in light of the judgment.
Headnote
A) Commercial Law - Pre-Institution Mediation - Mandatory Nature of Section 12A - Section 12A of the Commercial Courts Act, 2015 - The provision requiring pre-institution mediation before filing a commercial suit is mandatory, not directory. A suit filed without exhausting this remedy is not maintainable and liable for rejection under Order VII Rule 11(d) CPC. The court held that the legislative intent is to reduce pendency and encourage settlement, and non-compliance cannot be cured by post-institution mediation (Paras 26-34). B) Commercial Law - Urgent Interim Relief - Exception to Pre-Institution Mediation - Section 12A of the Commercial Courts Act, 2015 - The exception for 'urgent interim relief' is narrow and applies only where the plaintiff genuinely requires immediate court protection. Mere filing of a suit without such prayer does not satisfy the exception. The court held that the plaintiff must plead and prove urgency; absence of such prayer indicates no urgency (Paras 35-38). C) Civil Procedure - Rejection of Plaint - Order VII Rule 11(d) CPC - Order VII Rule 11(d) of the Code of Civil Procedure, 1908 read with Section 12A of the Commercial Courts Act, 2015 - A plaint filed in violation of mandatory pre-institution mediation is barred by law and must be rejected. The court held that the remedy of rejection is available even if the defendant raises the objection belatedly, as the defect goes to the root of maintainability (Paras 26-34). D) Commercial Law - Prospectivity of Judicial Declaration - Patil Automation Case - Section 12A of the Commercial Courts Act, 2015 - The declaration in Patil Automation (supra) that Section 12A is mandatory applies prospectively, but cases pending at the time of that judgment are also covered. The court held that the appellant's suit, filed before Patil Automation, is still subject to the mandatory requirement, and the High Court's order keeping suit in abeyance was erroneous (Paras 39-40). E) Legal Maxims - Lex Non Cogit Ad Impossibilia - Impossibility of Compliance - Section 12A of the Commercial Courts Act, 2015 - The maxim 'law does not compel a person to do that which is impossible' applies only where infrastructure for mediation is truly absent. The court held that mere lack of notified panel or SOP does not excuse compliance; the plaintiff could have approached the Legal Services Authority or other authorized body (Paras 41-48).
Issue of Consideration
Whether Section 12A of the Commercial Courts Act, 2015, which mandates pre-institution mediation, is mandatory or directory, and whether a suit filed without complying with Section 12A is liable to be rejected under Order VII Rule 11(d) of the CPC
Final Decision
The Supreme Court allowed the appeal, set aside the High Court's order dated 22.02.2021, and directed the Commercial Court to decide the application under Order VII Rule 11(d) CPC afresh in light of the judgment, holding that Section 12A is mandatory and the suit filed without pre-institution mediation is not maintainable.
Law Points
- Section 12A of the Commercial Courts Act
- 2015 is mandatory
- pre-institution mediation must be exhausted before filing suit
- urgent interim relief exception is narrow
- rejection of plaint under Order VII Rule 11(d) CPC is proper remedy
- prospectivity of Patil Automation decision applies to pending cases
