The Supreme Court of India, recently, put to rest a highly debated question in respect of the nature of statutory requirement of undertaking pre-litigation mediation in commercial disputes as prescribed by Section 12A of the Commercial Courts Act, 2015 (“Act”). After extensively analyzing the opinions expressed so far, the Apex Court in the case of Patil Automation Private Limited and Ors. v. Rakheja Engineers Private Limited, vide its judgment dated 17 August 2022 has decided the issue.
Brief facts of the matter are that a commercial suit was filed for recovery of monies along with interest. In response an application under Order VII Rules 10 and 11 read with Sections 9 and 20 of the Code of Civil Procedure, 1908 was filed, inter alia contending that the suit was filed without adhering to Section 12A of the Act and thus, was not barred for non-compliance of Section 12A of the Act.
The District Court relying on a judgment passed by the Bombay High Court, dismissed the application on the ground that non-adherence of the procedure established by Section 12A of the Act is not an embargo on the maintainability of a commercial suit and the pre-litigation mediation can be kept in abeyance. The High Court of Punjab and Haryana confirmed the finding and held that not resorting to pre-litigation mediation would not entail rejection of the plaint. Aggrieved thereof the matter was brought before the Supreme Court.
The Supreme Court was along with the main matter also reflecting on similar issues raised in other matters arising of decisions of various High Courts.
THE ISSUE AT HAND
The seminal question which arose for consideration of the Supreme Court was whether the statutory pre-litigation mediation contemplated under Section 12A of the Act as amended by the 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 the CPC, to reject the plaints filed by the respondents in these appeals without complying with the procedure under Section 12A of the Act.
Contentions by the parties
During the course of arguments on behalf of the Appellant, emphasis was laid on the usage of the word “shall” by the Legislature in Section 12A of the Act, thereby indicating a mandatory requirement. Reference in this regard was also made to Section 80 of the CPC and Section 69 of the Partnership Act, 1932. It was also brought to the attention of the Supreme Court that the decision in Ganga Taro was reversed by the High Court in its subsequent decision by the Division Bench of the said High Court. Reference was made to the Statement of Objects and Reasons, the speech made by the Law Minister and the plain language used coupled with the intention of the Lawgiver to state that the same makes it clear that Section 12A is mandatory. It was contended that the embargo against institution of the suit may not necessarily affect inherent jurisdiction of the Court.
On the other hand, the Respondent emphasised and stressed upon the directory nature of the requirement enshrined by Section 12A of the Act. It was submitted that in order that the word ‘shall’ in a statutory provision be considered as mandatory, one of the cardinal tests employed by the Courts is to ask the question whether the provision contemplated penal consequences for disobedience of the provision. It was highlighted that non-adherence to the procedure under Section 12A of the Act does not invite any penal consequence. It was submitted that the procedure does not prejudice the rights of the defendant and only provides room for settlement. It was also brought to the attention of the Court that the plaintiff is bound to pay the whole court fee under the law in question. When the plaint gets rejected under Order VII Rule 11, the plaintiff suffers a loss of the entire court fee. The possible consequence of a plea of limitation overwhelming a fresh suit of the plaintiff after rejection of the first suit was also highlighted.
ANALYSIS BY THE COURT
Examining the issue, the Supreme Court, inter alia, referred to the language of Section 12A of the Act, the Act itself, subsequent amendments, Statement of Objects and Reason, relevant Rules of the Act, judgments dating back to 1961 onwards. The varying views expressed by the High Courts were also carefully looked into. The Court referred to its views expressed on mediation as noted in the matter of Vikram Bakshi and Others v. Sonia Khosla (Dead) by Legal Representatives.
After a thorough scrutiny of the various facets held that a perusal of the Act and the Rules reveal the existence of a complete Code. It held that it is a settled law that a plaint instituted transgressing the mandate of Section 80 of the CPC, that is, when there is no notice at all and no urgent relief is contemplated and leave sought, the plaint would have to be rejected, as the suit would not be maintainable. It further held in respect of Order VII Rule 11 CPC that where on allegations in the suit, it is found that the suit is barred by any law, as would be the case, where the plaintiff in a suit under the Act does not plead circumstances to take his case out of the requirement of Section 12A, the plaint should be rejected without issuing summons. Undoubtedly, on issuing summons it will be always open to the defendant to make an application as well under Order VII Rule 11. In other words, the power under Order VII Rule 11 is available to the court to be exercised suo motu.
THE APEX COURT IN ITS CONCLUDING REMARKS HELD AS UNDER:
“We declare that Section 12A of the Act is mandatory and hold that any suit instituted violating the mandate of Section 12A must be visited with rejection of the plaint under Order VII Rule 11. This power can be exercised even suo moto by the court as explained earlier in the judgment. We, however, make this declaration effective from 20.08.2022 so that concerned stakeholders become sufficiently informed.”
NOTEWORTHY OBSERVATIONS BY THE COURT
“Section 12A [of the Act] cannot be described as a mere procedural law. Exhausting pre-institution mediation by the plaintiff, with all the benefits that may accrue to the parties and, more importantly, the justice delivery system as a whole, would make Section 12A not a mere procedural provision. The design and scope of the Act, as amended in 2018, by which Section 12A was inserted, would make it clear that Parliament intended to give it a mandatory flavour. Any other interpretation would not only be in the teeth of the express language used but, more importantly, result in frustration of the object of the Act and the Rules.”
“At this juncture, it must be immediately noticed that the Law-giver has, in Section 12A, provided for pre-institution mediation only in suits, which do not contemplate any urgent interim relief. Therefore, pre-institution mediation has been mandated only in a class of suits. We say this for the reason that in suits which contemplate urgent interim relief, the Law-giver has carefully vouch-safed immediate access to justice as contemplated ordinarily through the courts. The carving out of a class of suits and selecting them for compulsory mediation, harmonises with the attainment of the object of the law. The load on the Judges is lightened. They can concentrate on matters where urgent interim relief is contemplated and, on other matters, which already crowd their dockets.”
“… as noticed by this Court in Vikram Bakshi (supra), mediation offers a completely new approach to attaining the goal of justice. A win-win situation resulting from assigning a greater role to the parties themselves, with no doubt, a spirit of accommodation represents a better and what is more in the era of docket explosion, the only meaningful choice. The realisation has been growing over a period of time, that formal court rooms, long drawn-out proceedings, procedural wrangles, mounting and crippling costs, delay, which never wanes but only increases with the day that at least, in certain categories of cases, mediation can be the way out. It, undoubtedly, requires a complete change in the mindset. The change in approach, undoubtedly, can be achieved only if the litigants become aware of its benefits in comparison with the great disadvantage in waiting in the serpentine queue for the day of reckoning to arrive in a court of law.”
The Hon’ble Court by putting to rest the conundrum has provided the much needed clarity and certainty that was required in commercial suits. In doing so, the Court has emphasised the importance of mediation in resolving disputes and being the way forward. The Court also gave highlighted importance and need for the role of the parties and the Bar in getting disputes between parties settled as being the logical option, especially since the application of the Act pertains to commercial disputes, thereby stressing on the need to focus on business efficacy. The Court also clarified that the requirement of pre-litigation mediation is mandatory in a certain classes of cases, and in those cases where urgent relief is sought by the parties, the requirement is not mandatory, as is also evident from the bare language of the Section.
Ajay Bhargava, Senior Partner and Shivank Diddi, Senior Associate are part of the Dispute Resolution Team at Khaitan & Co LLP at the NCR Office of the Firm, inter alia, specialising in commercial disputes.
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Court sends Waqf Board scam co-accused to 14 day judicial custody
A Delhi court on Monday remanded Kausar Imran Siddiqui alias Laddan, co-accused in Delhi Waqf board scam case, to 14 days custody.
AAP MLA Amanatullah Khan is the primary accused in the case and is out on bail. The Anti-Corruption Bureau (ACB) has stated that Laddan is a fund manager for Khan. The Duty Sessions Judge at Rouse Avenue Court also expressed its displeasure over the non-presence of ACB on the previous date.
ACB had submitted to the court Ladan’s “handwriting sample” and sought 7 days of custody for him.
The court observed that the agency had not given any reasonable answer for its absence on previous occasion. Thereafter, he was sent to 14 day judicial custody.
AAP MLA was arrested for alleged irregularities in appointment in Delhi Waqf Board during his chairmanship.
Accused Kausar Imran Siddiqui alias Laddan was produced on a production warrant before the court on 27th September. He was interrogated and arrested with the permission of the court.
Laddan’s name came into the frame, when additional public prosecutor Anil Srivastava opposed Khan’s bail plea. He stated that a diary was recovered from Ladan’s house. It was alleged that he was Khan’s fund manager. Earlier, the (ACB) had said that money was sent to Dubai and other money transactions need to be investigated. It also stated that a large amount of money was transferred to a party via Dubai. There were 100 people who either received or paid money to Laddan. Out of these 37 people have transactions of crores of rupees.
This diary also has an entry about one Zeeshan Haider, who received crores of rupees. He is also a close associate of the accused, ACB had argued. The ACB has also submitted that Laddan is a nominated functionary of a political party. He has photographs with the accused during an iftar party. Additionally, 14 crores sale deed is recovered, which is said to be a ‘Benami property’.
Previously, Ladan was in judicial custody in another case lodged at Jamia Nagar police station. He was arrested from Telangana.
Solicitor General Tushar Mehta incharge of allocation of cases to ASG’s
An office memorandum issued by the Ministry of Law and Justice Indicates that Solicitor General Tushar Mehta would be assigned the responsibility of allocation of cases of ASG’s and panel counsels.
The office memorandum issued September 13th states, A Modification is made in procedure of allocation of cases to Law Officers, Counsel by lncharge Central Agency Section, Branch Secretariats for cases before the Supreme Court and High Courts at Delhi, Mumbai, Kolkata, Chennai & Bengaluru.
In respect of the cases before the Supreme Court, the list of cases on daily basis, will first be placed before the Ld. Attorney General for India for the purpose of his selecting the matters in which he considers his appearance to be necessary. Thereafter, the list of cases will be placed before the Ld. Solicitor General of India who will mark the matters to himself, to the Additional Solicitors General of India to appear alone or with Attorney General for India, Solicitor General of India to the counsel from Group’A’l’B’ l’C’Panel.
Further, in respect of the cases before the High Courts of Delhi, Bombay (PB), Calcutta (PB), Madras (PB) and Karnataka (PB), cases on daily basis will be allocatedand will be marked by the lncharge, Litigation, theBranch Secretariats in consultation with the Additional Solicitor General of India concerned.
It is being directed to ensure strict compliance of the procedure being modified as above to all the subordinate offices of this Department including the Central Agency Section, Litigation (High court) section and all the four Branch Secretariats at Mumbai, Kolkata, Chennai and Bengaluru.
The same being issued with the approval of the competent authority, the office memorandum says.
Allahabad High Court: Censures Woman Who Protested In Courtroom Against Grant Of Bail To Accused; Unbecoming Of A Fair Litigant
The Allahabad High Court in the case Sapna v. State of U.P. observed and censured the conduct of a woman who protested in the courtroom against the grant of bail to an accused. The court noting that she was purportedly from the informant’s side.
The bench comprising of Justice Siddharth called her conduct to be unbecoming of a fair litigant.
However, when the Court granted bail to accused Sapna, a woman, who was standing in court room protested in loud voice and was taken out forcibly by the lawyers and litigants. The court noted that she created lots of disturbance outside the court as well.
On September 23, the incident took place before the bench of Justice Siddharth when it was dealing with the bail plea of one Sapna who was arrested in December 2019 in connection with the murder of one named Vivek Kumar Gupta.
Further, the accused was booked for the murder of Gupta on the basis of information received from an informer that the applicant, her husband and other co-accused were responsible for the murder of the deceased.
Before the court, it was argued by her counsel that the dead body of the deceased was not recovered on the pointing of the applicant and her signatures were forcibly obtained on the recovery memo. Thus, the cause of the death of the deceased was not ascertained in post-mortem nor time of death was ascertained.
Further, it was contended that the applicant had been implicated in this case only on the basis of her confessional statement and the recovery of one spade and one Sabble was allegedly made from the pointing out of the co-accused and that no blood stains were found thereon. Also, it was argued that the accused was implicated in this case only because she is the wife of the co-accused.
It was observed by the court that the entire prosecution case was based on the confessional statements of the applicant and the co-accused and that even in the confessional statement of the applicant and the role of causing the murder of the deceased had not been assigned to her.
The Court further noting that the trial is not likely to be concluded in near future and that the applicant is in jail along with her two years old son, it has been decided by the court to grant her bail on the condition of her furnishing a personal bond and two sureties each in the like amount to the satisfaction of the court concerned.
CBDT Extended Due Date For Filling Various Reports Of Audit For AY 2022-23 To October 7
The Central Board of Direct Taxes (CBDT) has extended the timeline for filing various reports of audit for Assessment Year 2022-23 under the Income Tax Act, 1961, for the certain categories of assessees.
Vide Circular No. 19/2022, dated 30.09.2022, the CBDT has extended the due date from 30th September, 2022 to 7th October, 2022.
However, The Circular provides on considering the of difficulties faced by the taxpayers and other stakeholders in electronic filing of various reports of audit under the provisions of the Income-tax Act,1961 (Act), the Central Board of Direct Taxes (CBDT), in exercise of its powers under Section 119 of the Act, wherein extending the due date of furnishing of report of audit under any provision of the Act for the Previous Year 2021- 2022, which was 30th September 2022 in the case of assessees referred in clause (a) of Explanation 2 to sub-section (1) of section 139 of the Act, to October 7th, 2022.
Madhya Pradesh High Court Answers: Is Single Writ Appeal Against Two Separate Orders Of Writ Court Maintainable?
The Madhya Pradesh High Court in the case M/S Fort Crushing Metal Through Sunil Jian vs M.P. Paschim Kshetra Vidyut Vitran Co. Ltd. And Others, the Indore Bench observed and has recently upheld the maintainability of a writ appeal preferred against two separate orders passed by a Writ Court.
The bench comprising of Justice Subodh Abhyankar and Justice S.K. Singh observed while rejecting the contentions raised by the Respondents challenging the maintainability of the appeal.
In the present case, the court is of the considered opinion that it would only serve the interest of justice if the appellant can also challenge the order of rejection of review petition in the appeal preferred against the original order, in a review petition, as three are occasions when the appellate court itself is of the opinion that the appellant could have raised the grounds raised in the appeal.
Facts of the Case:
An appeal is preferred by the Appellant against the order passed by the Writ Court. Thus, in the same appeal, the Appellant was also challenging the rejection of its review petition against the same order passed by the Writ Court. Later, in the appeal, the respondent moved an application challenging the maintainability of the appeal.
Before the court, it was submitted by the respondents’ provisions under Section 2(1) of Madhya Pradesh Uchha Nyayalaya (Khand Nayaypeeth Ko Appeal) Adhiniyam, 2005, and the rules made thereunder do not provide for one appeal against the two separate orders. It was also referred by them the provisions under Order XLVII Rule 7 CPC, to assert that an order of a court rejecting an application for review is not appealable.
The Court while examining the submissions of parties and documents on record, the Court was not convinced with the arguments put forth by the Respondents. The court while dealing with the submission of the Respondents that pursuant to the provisions under Order XLVII Rule 7 CPC, the appeal was not maintainable, it was pointed out by the court that the appeal was not solely against the dismissal of review petition-
However, so far as the Rule 7(1) of Order 47 of CPC is concerned, it stipulates that an order of the Court rejecting the review application shall not be appealable. In the present appeal, the court has been preferred not only against the order passed by the writ court but also against the order passed in the review petition, and thus, it is not a case where the writ appeal has been preferred only against the order of rejection which has been passed in review petition, in such circumstances, even if the said order passed in review petition is also challenged in this writ appeal by the appellant, it cannot be said that it would render the writ appeal as not maintainable.
Accordingly, the court held that the writ appeal preferred by the Petitioner was maintainable. The court dismissed the application on the ground that it had been preferred against two orders was rejected.
SC Collegium Recommends elevation of Justice Prasanna B. Varale as Karnataka HC Chief Justice; Recommends New CJs For Orissa, J&K
The Supreme Court Collegium has recommended elevation of Justice Prasanna B. Varale, Bombay High Court Judge as the Chief Justice of Karnataka High Court.
Justice Prasanna B. Varale was born on 23rd June, 1962 and enrolled as an Advocate on 12th August, 1985. He also served as a lecturer in Law at Ambedkar Law College, Aurangabad from 1990 to 1992 and as the Assistant Government Pleader and Additional Public Prosecutor, High Court Bench at Aurangabad and also as an Additional Standing Counsel for Union of India.
On July, 18., he was elevated to the bench at Bombay High Court.
The Supreme Court Collegium also recommended to elevate of Orissa High Court Judge, Justice Jaswant Singh, as its Chief Justice.
Justice Singh was February 23, 1961 and was enrolled as an Advocate in 1986 in Haryana. In April 1988, he moved to Chandigarh and held the posts of Assistant Advocate General, Deputy Advocate General, Senior Deputy Advocate General and Additional Advocate General, in the office of Advocate General, Haryana, since March 1991.
On December 5, 2007., he was elevated as a Judge of Punjab and Haryana High Court and on 8th October, 2021., he was transferred to the Orissa High Court.
The Collegium also J&K High Court’s Judge, Justice Ali Mohammad Magrey to take charge as the Chief Justice.
Justice Magrey was born on 8th December, 1960 and enrolled as Advocate in the year 1984. However, he remained as standing counsel from 1986 onwards for various State instrumentalities and was appointed as Additional Advocate General in February, 2003. In September 2009, he was appointed as Senior Additional Advocate General.
On 8th March, 2013., he was appointed as Permanent Judge of the Jammu and Kashmir High Court.
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