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Synopsis

The Supreme Court has said that a plea for urgent interim relief cannot be used as guise or mask to wriggle out of pre litigation mediation and settlement mandated in a suit filed under the Commercial Courts Act.

"We are of the opinion that when a plaint is filed under the CC Act, with a prayer for an urgent interim relief, the commercial court should examine the nature and the subject matter of the suit, the cause of action, and the prayer for interim relief. The prayer for urgent interim relief should not be a disguise or mask to wriggle out of and get over Section 12A of the CC Act," a bench of Justices Sanjiv Khanna and SVN Bhati said.

The division bench has said that facts and circumstances of a case have to be considered holistically from the standpoint of the plaintiff. 

Non-grant of interim relief at the ad-interim stage, when the plaint is taken up for registration/admission and examination, will not justify dismissal of the commercial suit under Order VII, Rule 11 of the Civil Procedure Code, at times, interim relief is granted after issuance of notice, it said.

Court has further added the suit be dismissed under Order VII, Rule 11 of the Code, because the interim relief, post the arguments, is denied on merits and on examination of the three principles, namely, (i) prima facie case, (ii) irreparable harm and injury, and (iii) balance of convenience.

"The fact that the court issued notice and/or granted interim stay may indicate that the court is inclined to entertain the plaint," the court pointed out.

Top court spelt out contours of the exercise to be undertaken by the Commercial Courts while dismissing a special leave petition filed by Yamini Manohar against the Delhi High Court's order which had rejected the application under Order VII, Rule 11 of the Code of Civil Procedure, 1908 by the defendant.

"It is difficult to agree with the proposition that the plaintiff has the absolute choice and right to paralyse Section 12A (pre litigation mediation and settlement) of the CC Act by making a prayer for urgent interim relief. Camouflage and guise to bypass the statutory mandate of pre-litigation mediation should be checked when deception and falsity is apparent or established. The proposition that the commercial courts do have a role, albeit a limited one, should be accepted, otherwise it would be up to the plaintiff alone to decide whether to resort to the procedure under Section 12A of the CC Act," the bench said.

The court further said an ‘absolute and unfettered right’ approach is not justified if the pre-institution mediation under Section 12A of the CC Act is mandatory, as held by this Court in Patil Automation Private Limited case.

"The words ‘contemplate any urgent interim relief’ in Section 12A(1) of the CC Act, with reference to the suit, should be read as conferring power on the court to be satisfied. They suggest that the suit must “contemplate”, which means the plaint, documents and facts should show and indicate the need for an urgent interim relief. This is the precise and limited exercise that the commercial courts will undertake. This will be sufficient to keep in check and ensure that the legislative object/intent behind the enactment of section 12A of the CC Act is not defeated," the bench said.

In the present case, the bench said, it is an accepted fact that an urgent interim relief has been prayed for and the condition that the plaint “contemplates” an urgent interim relief is satisfied.

Therefore, the judgement/order of the Delhi High Court of May 08, 2023, which upheld the order of the District Judge (Commercial Court)-01, South District at Saket, New Delhi of February 06, 2023, rejecting the application under Order VII, Rule 11 of the Code, is correct and in accordance with law, the bench said.

"An application seeking wavier on account of urgent interim relief setting out grounds and reasons may allay a challenge and assist the court, but in the absence of any statutory mandate or rules made by the central government, an application per se is not a condition under Section 12A of the CC Act; pleadings on record and oral submissions would be sufficient," the bench said.

The bench further said words used in Section 12A of the CC Act are - “A suit which does not contemplate any urgent interim relief”, wherein the word “contemplate” connotes to deliberate and consider. Further, the legal position that the plaint can be rejected and not entertained reflects application of mind by the court viz the requirement of ‘urgent interim relief’.

Case Title: Yamini Manohar vs. TKD Keerthi