Case Note & Summary
The dispute arose from a commercial summary suit filed by the respondent against the appellant for recovery of Rs.5.54 crores with accrued interest. The respondent had advanced a business loan of Rs.5.00 crores to the appellant at 19% per annum interest, which the appellant acknowledged and partially repaid as interest until 9 December 2016. The appellant sought reduction of interest to 12% and issued a bill of exchange and post-dated cheques towards principal and interest. When the cheques were deposited on 26 March 2018, they were dishonoured for insufficient funds, and a statutory notice under Section 138 of the Negotiable Instruments Act, 1881 was issued on 17 April 2018. No payment followed. The respondent then filed Commercial Summary Suit No.972/2019 on 6 July 2019 under Order XXXVII of the Code of Civil Procedure, 1908. The appellant appeared and contested the summons for judgment. The learned Single Judge of the Commercial Division rejected the appellant's contentions that the suit was barred under the Maharashtra Money Lending (Regulation) Act, 2014, that there was non-compliance with Section 12A of the Commercial Courts Act, 2015, and that the plaint did not comply with Order VII Rule 2(a) of CPC. The Single Judge held that Section 12A is procedural and directory, not mandatory, and that substantial compliance suffices. The court further held that the appellant had waived the pre-institution mediation objection by not raising it at the earliest. Accordingly, by order dated 16 February 2021, the Single Judge granted conditional leave to defend, requiring the appellant to deposit Rs.5.54 crores within twelve weeks, failing which the respondent could apply for an ex parte decree. In the commercial appeal before the Division Bench, the main legal issue was whether Section 12A of the Commercial Courts Act, 2015 is mandatory or directory. The appellant argued that the suit did not seek urgent interim relief and that pre-institution mediation under Section 12A was not exhausted, thus the suit was not maintainable. The respondent contended that Section 12A is directory, procedural, and that any objection was waived. The court noted that the suit was filed on 6 July 2019 when Section 12A was already in force, and the appellant raised the objection at the summons for judgment stage. The judgment text provided ends while quoting Section 12A, without revealing the final appellate determination on the mandatory or directory nature of the provision. However, the Single Judge's reasoning that Section 12A is directory and that waiver applies was central to the impugned order. The final decision of the appellate bench is not included in the available text.
Headnote
A) Commercial Courts Act, 2015 - Pre-Institution Mediation - Mandatory vs Directory Nature of Section 12A - Section 12A, Commercial Courts Act, 2015 - The Single Judge held that Section 12A is procedural and directory, not mandatory, based on the urgent interim relief exception and the object of speedy disposal; substantial compliance suffices and the defendant may waive the requirement. In this appeal, the High Court identified the main controversy as whether Section 12A is mandatory or directory but the provided text ends before final determination. (Paras 4, 9-11) B) Code of Civil Procedure, 1908 - Summary Suit - Conditional Leave to Defend - Order XXXVII Rule 2(3), Code of Civil Procedure, 1908 - The Single Judge rejected the appellant's defences as to bar under money lending law, non-compliance with Section 12A, and plaint defects, and granted leave to defend conditional on depositing Rs.5.54 crores within twelve weeks, with written statement to be filed after deposit. (Paras 4-5) C) Maharashtra Money Lending (Regulation) Act, 2014 - Bar of Suit - Applicability to Commercial Loan - The Single Judge observed that the suit is not barred under the Maharashtra Money Lending (Regulation) Act, 2014, rejecting the appellant's preliminary objection. (Para 4) D) Code of Civil Procedure, 1908 - Pleadings - Compliance with Order VII Rule 2(a) - The Single Judge held the plaint complies with Order VII Rule 2(a) of CPC, rejecting the contention of non-compliance. (Para 4) E) Waiver - Doctrine of Waiver - Pre-Institution Mediation Objection - The Single Judge observed that the defendant had not raised the Section 12A objection earlier and therefore is deemed to have waived it. (Para 4)
Issue of Consideration
Whether Section 12A of the Commercial Courts Act, 2015 is mandatory or directory in nature; whether the suit is barred under the Maharashtra Money Lending (Regulation) Act, 2014; whether the plaint complies with Order VII Rule 2(a) of CPC; whether conditional leave to defend was rightly granted.
Final Decision
The Single Judge by order dated 16 February 2021 disposed of the summons for judgment granting conditional leave to defend upon deposit of Rs.5.54 crores within twelve weeks; the appeal against this order was pending and the final appellate decision is not included in the provided text.
Law Points
- Section 12A of Commercial Courts Act
- 2015 is procedural and directory as held by Single Judge
- substantial compliance with pre-institution mediation sufficient
- urgent interim relief exception indicates non-mandatory nature
- objection as to non-compliance must be taken at earliest
- doctrine of waiver applicable to pre-institution mediation
- conditional leave to defend requires deposit of suit amount.
