2023 (10) TMI 1374 - HC - Indian Laws

Rejection of plaint under Order VII Rule 11(d) for non-compliance of Section 12A of the Commercial Courts Act 2015 - suit for recovery of arrears of rent with interest - whether the learned DJ could have dismissed the suit only on the ground that the appellant has not complied with Section 12-A of the CCA? - HELD THAT - It is settled law that that in terms of the judgment Patil Automation Pvt. Ltd. 2022 (8) TMI 1494 - SUPREME COURT the compliance of Section 12-A of the CCA is mandatory unless urgent relief is contemplated. A notification has been issued by the Government of India on July 03 2018 by which the Central Government has made rules in respect of Commercial Courts (Pre-Institution of Mediation and Settlement) Rules 2018 as contemplated under sub-section 21A read with sub-section (1) of Section 12-A of the CCA. The sub-section 2 of Section 12-A mandate the Central Government may by notification authorise the authorities constituted under the Legal Services Authorities Act 1987 for the purposes of Pre-Institution Mediation - In the present case the appellant has not made his claim in terms of the notification of July 03 2018 before the District Legal Services Authorities (DLSA) but had approached the DHCMCC(S) which held the proceedings on three occasions and the defendant/respondent despite service did not appear resulting in Non-starter report being submitted by the DHCMCC. This report was not accepted by the learned DJ as the report is not that of DLSA. The issue which falls for consideration is whether the learned DJ was right in rejecting the plaint only on the ground that the appellant has approached DHCMCC(S) and not DLSA by invoking the provisions of Order VII Rule 11(d). It is true that the provisions of the Section 12-A of the CCA specifies Pre-Institution Mediation as mandatory in the sense that any litigation must be preceded by an attempt on the part of the parties to settle their inter se dispute but the fact that the appellant had invoked the process of mediation before the DHCMCC(S) under the aegis of the Delhi High Court and the defendant/respondent did not appear in the proceedings resulting in a Non-starter report would surely be construed to mean that an attempt has been made by the appellant to settle his dispute with the defendant/respondent amicably which failed. So the DHCMCC(S) being a court-annexed mediation centre though under the Mediation Act 2023 and not under the CCA Act we are of the view that there has been a compliance of the spirit underlying Section 12A of the CCA. The issue can be seen from another perspective as the respondent had neither appeared before the DHCMCC(S) nor before the learned District Judge despite service the likelihood of effective pre-litigation mediation to be undertaken under the aegis of DLSA is highly unlikely as the respondent/defendant will not appear making it a futile exercise. The impugned order/judgment dated May 15 2023 rejecting the plaint under Order VII Rule 11(d) is set aside - Appeal allowed.

Summary

Issues Involved:

1. Compliance with Section 12A of the Commercial Courts Act, 2015 (CCA).
2. Validity of Pre-Institution Mediation conducted by DHCMCC(S).
3. Rejection of plaint under Order VII Rule 11(d) CPC.

Summary:

1. Compliance with Section 12A of the Commercial Courts Act, 2015 (CCA):

The appellant filed a suit for recovery of arrears of rent and interest. Before filing the suit, the appellant approached the Delhi High Court Mediation and Conciliation Centre (DHCMCC(S)) for Pre-Institution Mediation, but the defendant did not appear, resulting in a Non-starter report. The learned District Judge (DJ) questioned the validity of the Non-starter report, stating that the DHCMCC(S) is not authorized for Pre-Institution Mediation under Section 12A(2) CCA.

2. Validity of Pre-Institution Mediation conducted by DHCMCC(S):

The appellant argued that the DHCMCC(S) is attached to the High Court of Delhi and its report should be treated as valid. The appellant also contended that the Supreme Court's judgment in Patil Automation Pvt. Ltd. & Ors. Vs. Rakheja Engineers Pvt. Ltd., which mandates compliance with Section 12A CCA, should not apply retroactively to suits filed before August 20, 2022. The appellant emphasized that the defendant's non-appearance in mediation and court proceedings indicates no intention to settle the dispute amicably.

3. Rejection of plaint under Order VII Rule 11(d) CPC:

The learned DJ rejected the plaint under Order VII Rule 11(d) for non-compliance with Section 12A CCA. The DJ concluded that compliance with Section 12A CCA is mandatory unless urgent relief is contemplated. The appellant argued that the learned DJ adopted a hyper-technical approach and should have decided the case on merits, considering the procedural compliance and the defendant's non-appearance.

Court's Decision:

The court observed that the appellant had attempted Pre-Institution Mediation through DHCMCC(S) and the defendant did not appear, resulting in a Non-starter report. The court noted that the spirit of Section 12A CCA is to attempt an amicable settlement before litigation, which the appellant had done. The court held that the learned DJ's rejection of the plaint solely on the ground of non-compliance with Section 12A CCA was not justified, especially given the defendant's non-appearance.

The court allowed the appeal, set aside the impugned order/judgment dated May 15, 2023, and revived the suit/application before the learned DJ for a decision on merits. The matter was listed before the learned DJ on November 20, 2023.