Case Note & Summary
The plaintiff, Ekta Housing Private Limited, filed a Commercial Summary Suit against Shraddha Shelters Pvt. Ltd. and two individual guarantors for recovery of Rs.35,03,62,620/- under a Development Management Agreement dated 28th December 2017 and a Deed of Guarantee dated 15th February 2018. The suit sought recovery of outstanding development manager's fees, GST, security deposit, and interest. The plaintiff also filed an interim application seeking attachment of assets before judgment. The defendants filed applications under Order VII Rule 11(a) and (d) read with Section 151 CPC and alternatively under Order VII Rule 10 CPC, seeking rejection or return of the plaint on the ground that the suit was filed without complying with the mandatory pre-institution mediation under Section 12-A of the Commercial Courts Act, 2015. The defendants argued that the suit did not contemplate any urgent interim relief, as the plaintiff had waited for three years after initial demands and the interim application contained only bald and vague averments of urgency. The plaintiff contended that there was urgency due to the defendants' alleged attempts to dispose of assets. The court, after considering the pleadings and the decision of the Supreme Court in Patil Automation Private Limited v. Rakheja Engineers Private Limited, (2022) 10 SCC 1, held that Section 12-A is mandatory and that the plaintiff had failed to demonstrate genuine urgency. The court found that the averments in the plaint and interim application were insufficient to establish urgency, as the plaintiff had delayed action for three years and the interim relief sought was only attachment before judgment without specific instances of imminent threat. Consequently, the court allowed the defendants' applications and rejected the plaint under Order VII Rule 11 CPC for non-compliance with Section 12-A of the Commercial Courts Act, 2015.
Headnote
A) Commercial Law - Pre-Institution Mediation - Section 12-A Commercial Courts Act, 2015 - Mandatory Compliance - The suit was filed for recovery of development management fees and security deposit under a Development Management Agreement and Deed of Guarantee without prior mediation. The court held that Section 12-A is mandatory and non-compliance, in the absence of genuine urgency, warrants rejection of plaint under Order VII Rule 11 CPC. (Paras 1-10)
B) Commercial Law - Urgency - Section 12-A Commercial Courts Act, 2015 - Requirement of Genuine Urgency - The plaintiff alleged urgency based on vague averments of apprehension of disposal of assets. The court found no genuine urgency as the plaintiff had waited for three years after initial demands and the interim application sought only attachment before judgment without any specific instances of imminent threat. (Paras 5-7, 11-12)
C) Civil Procedure - Rejection of Plaint - Order VII Rule 11 CPC - Non-Compliance with Section 12-A - The court, relying on Patil Automation Private Limited v. Rakheja Engineers Private Limited, (2022) 10 SCC 1, held that non-compliance with Section 12-A is a ground for rejection of plaint under Order VII Rule 11 CPC, and the court can exercise this power suo motu. (Paras 8-10)
Issue of Consideration
Whether the Commercial Summary Suit filed without complying with the mandatory pre-institution mediation under Section 12-A of the Commercial Courts Act, 2015, on the ground of urgency, is liable to be rejected under Order VII Rule 11 CPC.
Final Decision
The court allowed the defendants' applications and rejected the plaint under Order VII Rule 11 CPC for non-compliance with Section 12-A of the Commercial Courts Act, 2015.
Law Points
- Pre-institution mediation under Section 12-A of Commercial Courts Act
- 2015 is mandatory for commercial suits not contemplating urgent interim relief
- Non-compliance with Section 12-A is a ground for rejection of plaint under Order VII Rule 11 CPC
- The power to reject plaint for non-compliance with Section 12-A can be exercised suo motu by the Commercial Court
- Urgency must be genuine and evident from the plaint and interim application
- Bald and vague averments of urgency are insufficient to bypass pre-institution mediation
Case Details
2024 LawText (BOM) (11) 116
Interim Application No.920 of 2024 in Commercial Summary Suit No.47 of 2023, Interim Application (L) No.2333 of 2024 in Commercial Summary Suit No.47 of 2023, Interim Application (L) No.21357 of 2023 in Commercial Summary Suit No.47 of 2023
Mr. Gaurav Joshi, Senior Advocate a/w Ms. Pooja Kshirsagar, Mr. Laxman Jain and Ms. Trisha Choudhary for Applicant in IA No.920 of 2024 and Defendant No.1; Mr. Chetan Kapadia, Senior Advocate a/w Mr. Yash Momaya, Mr. Krishkumar A Jain and Mr. Kalpesh A. Bandre i/b Mr. Ritesh K Jain for Applicant in IAL No.21357 of 2023 and for Defendants No.2 and 3; Mr. Zal Andhyarujina, Senior Advocate a/w Mr. Jenil Shah i/b Mr. Ganesh and Co. for Plaintiff
Shraddha Shelters Pvt. Ltd. (Defendant No.1) and Kirti Kedia & Rishi Todi (Defendants No.2 & 3)
Ekta Housing Private Limited (Plaintiff)
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Nature of Litigation
Commercial Summary Suit for recovery of money under a Development Management Agreement and Deed of Guarantee, along with interim application for attachment before judgment.
Remedy Sought
Defendants seek rejection of plaint under Order VII Rule 11 CPC or return of plaint under Order VII Rule 10 CPC for non-compliance with Section 12-A of Commercial Courts Act, 2015.
Filing Reason
The suit was filed without complying with mandatory pre-institution mediation under Section 12-A of the Commercial Courts Act, 2015, as the plaintiff allegedly failed to demonstrate genuine urgency.
Issues
Whether the Commercial Summary Suit filed without complying with Section 12-A of the Commercial Courts Act, 2015, on the ground of urgency, is liable to be rejected under Order VII Rule 11 CPC.
Whether the plaintiff has demonstrated genuine urgency to bypass the mandatory pre-institution mediation requirement.
Submissions/Arguments
Defendants argued that the suit does not contemplate any urgent relief, as evident from the plaint and interim application, and that the plaintiff's averments of urgency are bald, vague, and baseless, created to evade compliance with Section 12-A.
Defendants submitted that the plaintiff waited for three years after initial demands before filing the suit, indicating no urgency.
Plaintiff contended that there is urgency due to the defendants' alleged attempts to dispose of assets, but the court found the averments insufficient.
Ratio Decidendi
Section 12-A of the Commercial Courts Act, 2015 is mandatory and requires a plaintiff to exhaust pre-institution mediation before instituting a commercial suit that does not contemplate urgent interim relief. Non-compliance with Section 12-A is a ground for rejection of plaint under Order VII Rule 11 CPC, and the court can exercise this power suo motu. The plaintiff must demonstrate genuine urgency in the plaint and interim application; bald and vague averments are insufficient.
Judgment Excerpts
Section 12-A of the said Act has to be mandatorily complied with and non-compliance with Section 12-A forms a ground for rejection of the Plaint under Order VII Rule 11 of the CPC, further holding that the power to reject a Plaint under Order VII Rule 11 of the CPC for non-compliance with Section 12-A can be exercised by a Commercial Court suo motu.
The Plaintiff has only made bald, vague and baseless averments in the Plaint and Interim Application which are general in nature without setting out any particulars or specific instances to demonstrate any urgency.
Procedural History
The plaintiff filed Commercial Summary Suit No.47 of 2023 on 28th July 2023 along with Interim Application (L) No.21357 of 2023 seeking attachment before judgment. The defendants filed Interim Application No.920 of 2024 (by Defendant No.1) and Interim Application (L) No.2333 of 2024 (by Defendants No.2 & 3) seeking rejection of plaint under Order VII Rule 11 CPC or return of plaint under Order VII Rule 10 CPC for non-compliance with Section 12-A of the Commercial Courts Act, 2015. The court heard the applications and reserved judgment on 3rd July 2024, pronouncing it on 11th November 2024.
Acts & Sections
- Commercial Courts Act, 2015: Section 12-A
- Code of Civil Procedure, 1908: Order VII Rule 11, Order VII Rule 10, Section 151
