Case Note & Summary
The dispute arose from a commercial summary suit filed by Respondents, a non-banking financial company, against Applicants for recovery of approximately Rs. 123,50,10,401/- due as of 30th September 2022. The plaintiff alleged that defendant no. 1 was the borrower, defendant no. 2 the personal guarantor, and defendant no. 3 the corporate guarantor under a loan agreement, with defaults leading to demand notices and invocation of guarantees. Alongside the suit, the plaintiff filed an application for interim relief seeking deposit of the due amount, security for the claim, asset disclosure, appointment of a Court Receiver, and an injunction against asset disposal, citing apprehension that defendants might sell assets to defeat the claim. The defendants filed an application under Order VII Rule 11 of the Code of Civil Procedure, 1908, seeking rejection of the plaint on the ground that it was barred for non-compliance with Section 12A of the Commercial Courts Act, 2015, which mandates pre-institution mediation for commercial suits unless urgent interim relief is contemplated. The core legal issue was whether the suit genuinely contemplated urgent interim relief to justify exemption from Section 12A. The defendants argued that the plaintiff created a false urgency to bypass mediation, pointing to delays in seeking relief post-filing and citing precedents like Exclusive Capital Limited vs. Clover Media Private Limited and M/s. Kamla Landmarc Real Estate Holding Pvt. Ltd. And Others vs. M/s. Image Developer and Another, which emphasized the need for immediate peril or irreparable harm. The plaintiff contended that sufficient grounds existed for urgency, based on defendants' avoidance of payment and likelihood of asset disposal, relying on Novenco Building and Industry A/S. vs. Xerox Energy Engineering Solutions Pvt. Ltd. and Another, Future Corporate Resources Pvt. Ltd. Vs Edelwise Special Opportunities Fund and Another, and Westin Infra World Pvt. Ltd. Between Vistra ITCL India Ltd. Vs Darvesh Properties Pvt. Ltd. and others to support that courts should examine pleadings and documents to assess genuineness of urgency. The court analyzed the pleadings, application for interim relief, and conduct of parties, concluding that the plaintiff's apprehension was well-founded and that urgent interim relief was contemplated. The court held that the exemption under Section 12A applied, and thus the plaint should not be rejected. The application under Order VII Rule 11 was dismissed, allowing the suit to proceed.
Headnote
A) Civil Procedure - Rejection of Plaint - Order VII Rule 11 CPC - Commercial Courts Act, 2015, Section 12A - Defendants filed application under Order VII Rule 11 CPC seeking rejection of plaint for non-compliance with mandatory pre-institution mediation under Section 12A - Court examined whether suit contemplated urgent interim relief to justify exemption - Held that plaintiff's pleadings and application for interim relief demonstrated genuine apprehension of defendants disposing assets to defeat claim, thus urgent interim relief was contemplated and exemption from Section 12A was justified (Paras 1-5, 11-13). B) Commercial Law - Pre-Institution Mediation - Section 12A Commercial Courts Act, 2015 - Urgent Interim Relief Exemption - Suit for recovery of money with interim relief application - Plaintiff sought directions for deposit, security, asset disclosure, appointment of Court Receiver, and injunction against asset disposal - Court considered plaintiff's conduct and pleadings to assess urgency - Held that plaintiff's apprehension of defendants avoiding payment and likely asset disposal constituted grounds for urgent interim relief, exempting suit from Section 12A mediation requirement (Paras 4-5, 11-13).
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Issue of Consideration: Whether the plaint should be rejected under Order VII Rule 11 of the Code of Civil Procedure, 1908 for non-compliance with Section 12A of the Commercial Courts Act, 2015, on the ground that the suit does not contemplate urgent interim relief justifying exemption from pre-institution mediation
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Final Decision
The court dismissed the application under Order VII Rule 11 CPC, holding that the suit contemplated urgent interim relief justifying exemption from Section 12A of the Commercial Courts Act, 2015, and thus the plaint should not be rejected
