TMI Blog2022 (8) TMI 1494X X X X Extracts X X X X X X X X Extracts X X X X ..... ts to the object of the legislature to make pre-litigation mediation compulsory. Timelines are contemplated, both in the matter of pleadings and also other steps to be taken. They are geared to ensure an expeditious culmination of the proceedings. Originally, the specified value within the meaning of Section 2(i) was fixed as 'which shall not be less than one crore rupees'. Within three years of the birth of the Act, Parliament found that it was necessary to reduce the specified value from the sum of Rs. 1 crore to Rs. 3 lakhs, which is what is reflected in the present avatar of the definition of the word 'specified value'. It is simultaneously with the reduction of the specified value and by the same amendment that Section 12A came to be inserted. Parliament is presumed to be aware of the felt necessities of the times. It best knows the manner in which the problems on the ground are redressed. Section 89 of the Code of Civil Procedure, does contemplate mediation ordered by a Court. However, it must be noticed that Section 12A contemplates mediation without any involvement of the Court as it is done prior to the institution of the suit. Mediation can become a potent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at while initially the doctrine was confined to matters arising under the Constitution, later on it has been applied to other areas of law as well. 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. Still further, we however direct that in case plaints have been already rejected and no steps have been taken within the period of limitation, the matter cannot be reopened on the basis of this declaration. Still further, if the order of rejection of the plaint has been acted upon by filing a fresh suit, the declaration of prospective effect will not avail the Plaintiff. Finally, if the plaint is filed violating Section 12A after the jurisdictional High Court has declared Section 12A mandatory also, the Plaintiff will not be entitled to the relief. Petition disposed off. - HON'BLE JUDGES K.M. JOSEPH AND HRISHIKESH ROY JJ. For the Appellant : Ayus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted so that the genuine cases come before the Court. Further, it also appears to the court that the said procedure has been introduced to de-congest the regular courts. It is pertinent that the Hon'ble Bombay High Court in case Ganga Tara Vazirani (supra), held that the procedure provided Under Section 12A of the Commercial Courts Act is not a penal enactment for punishment and there is no embargo in filing the suit without exhausting the remedy of mediation specially when an attempt is clear to show that the intention of the applicant has already been made and failed. The fact is clear that before filing the suit, the Respondent/Plaintiff has sent e-mail and legal notice and despite that the applicant/Defendant failed to make the payment of the dues. Moreover, it is well settled that the procedure and law are for advancement of justice and not to thwart on technical grounds. Thus, in the larger interest of justice, the court deems it appropriate that the civil suit can be kept in abeyance and both the parties are directed to appear before the Secretary, District Legal Services Authority, Faridabad on 26.08.2021 for the purpose of mediation as per the provisions of Section 12A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ith Section 12A of the Act. In other words, we have permitted intervention, though in the application for permission to file SLP, which application shall stand, accordingly, disposed of. So also the SLP. SUBMISSION OF THE APPELLANTS 10. Shri Sanjeev Anand, learned Senior Counsel, appearing for the Appellant in civil appeal arising out of SLP(C) No. 5737 of 2022, would submit that the Court, in the impugned Order, held, inter alia, as follows. 23. The Central Government by notification dated 03.07.2018, has framed Rule and the Rule 3(1) and 3(7) of the Commercial Courts Act, 2015 (Pre-Institution Mediation and Settlement) Rules, 2018, reads as under: 3. Initiation of mediation process.- (1) A party to a commercial dispute may make an application to the Authority as per Form-1 specified in Schedule-I, either online or by post or by hand, for initiation of mediation process under the Act along with a fee of one thousand rupees payable to the Authority either by way of demand draft or through online; ...... ...... (7) Where both the parties to the commercial dispute appear before the Authority and give consent to participate in the mediation process, the Authority shall assign the comm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the view it has taken. He would submit that the Act came into force in the year 2015. It is by the amendment in the year 2018 that Section 12A came to be incorporated. 12. He took us through the Statement of Objects and Reasons. He would commend for the Court's acceptance the view that the legislation was put in place with a definite object of enhancing the ease of doing business in India and de-clogging of Commercial Courts which were assigned with an important task of quickly disposing of commercial matters and that must be uppermost in the mind of the Court. 13. He would submit that if the application Under Order VII Rule 11 is allowed and the plaint is rejected for non-compliance with Section 12A, in view of Order VII Rule 13 of the Code of Civil Procedure, there is no prejudice caused as on the same cause of action, the Plaintiff can bring a fresh suit after complying with the mandate of Section 12A of the Act. 14. He would point out that most pertinently the law giver has used the word 'shall' in Section 12A. The word 'shall' in the context of the object of the legislation must be construed as mandatory. He would complain that the High Court has not prope ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he further submission of Shri Sharath Chandran that decision of the learned Single Judge of the Bombay High Court in Ganga Taro (supra) has been reversed by the Division Bench in Deepak Raheja v. Ganga Taro Vazirani. He has brought to the notice of this Court the different views expressed by the other High courts. It is his contention that on a reference 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 makes it clear that Section 12A is mandatory. He, however, drew a distinction between the presentation of the plaint and the institution of the suit. He also submits that this Court has taken notice of pre-litigation mediation in matrimonial disputes and disputes under Motor Vehicles Act. He would further contend that the Court can suo motu reject the plaint without any application. He relies on the judgment of this Court in Madiraju Venkata Ramana Raju v. Peddireddigari Ramachandra Reddy and Ors. (2018) 14 SCC 1. He however, contends that the embargo against institution of the suit may not necessarily affect inherent jurisdiction of the Court. He has further submitted in regard to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gation mediation contemplated in Section 12A does not pertain to inherent jurisdiction of a Court. While mediation is to be encouraged, the Court may not lose sight of the fact that a half-way house between the two extremes has been attempted by the Court in the case, which suffices, having regard to the fact also that no penal consequences are provided and no right of the Defendant is imperilled. 23. He next draws our attention to the aspect of court fees. He would submit 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. This is one of the consequences which this Court should not lose sight of, it is contended. Here again, the procedure which has been adopted in the case is commended for our acceptance as substantial compliance with Section 12A which at the same time, will not reach such disastrous consequences for the litigants. He also touches upon the possible consequence of a plea of limitation overwhelming a fresh suit of the Plaintiff after rejection of the first suit. ANALYSIS 24. Section 12A of the Act reads as follows: 12A. Pre-Insti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... High Courts for adjudicating commercial disputes of specified value and for matters connected therewith or incidental thereto. 2. The global economic environment has since become increasingly competitive and to attract business at international level, India needs to further improve its ranking in the World Bank 'Doing Business Report' which, inter alia, considers the dispute resolution environment in the country as one of the parameters for doing business. Further, the tremendous economic development has ushered in enormous commercial activities in the country including foreign direct investments, public private partnership, etc., which has prompted initiating legislative measures for speedy settlement of commercial disputes, widen the scope of the courts to deal with commercial disputes and facilitate ease of doing business. Needless to say that early resolution of commercial disputes of even lesser value creates a positive image amongst the investors about the strong and responsive Indian legal system. It is, therefore, proposed to amend the Commercial Courts, Commercial Division and Commercial Appellate Division of High Courts Act, 2015. 3. As Parliament was not in sess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te and thereby came into force on 03.07.2018. Rule 3 reads as follows: 3. Initiation of mediation process.- (1) A party to a commercial dispute may make an application to the Authority as per Form-1 specified in Schedule-I, either online or by post or by hand, for initiation of mediation process under the Act along with a fee of one thousand rupees payable to the Authority either by way of demand draft or through online; (2) The Authority shall, having regard to the territorial and pecuniary jurisdiction and the nature of commercial dispute, issue a notice, as per Form-2 specified in Schedule-I through a registered or speed post and electronic means including e-mail and the like to the opposite party to appear and give consent to participate in the mediation process on such date not beyond a period of ten days from the date of issue of the said notice. (3) Where no response is received from the opposite party either by post or by e-mail, the Authority shall issue a final notice to it in the manner as specified in Sub-rule (2). (4) Where the notice issued Under Sub-rule (3) remains unacknowledged or where the opposite party refuses to participate in the mediation process, the Author ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alia, the nature and the design of the statute, and the consequences which would follow from construing it the one way or the other, the impact of other provisions whereby the necessity of complying with the provisions in question is avoided, the circumstance, namely, that the statute provides for a contingency of the non-compliance with the provisions, the fact that the non-compliance with the provisions is or is not visited by some penalty, the serious or trivial consequences that flow therefrom, and, above all, whether the object of the legislation will be defeated or furthered. 30. In Bhikraj Jaipuria v. Union of India AIR 1962 SC 113, a Bench of five learned Judges dealt with the question arising out of Section 175(3) of the Government of India Act, 1935. The Court, inter alia, had to deal with the question, whether enactment should be considered directory or obligatory: 17. The question still remains whether the purchase orders executed by the Divisional Superintendent but which were not expressed to be made by the Governor-General and were not executed on behalf of the Governor-General, were binding on the Government of India. Section 175(3) plainly requires that contracts o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ice of its intention to add to or omit from or otherwise amend the Second Schedule. The primary key to the problem whether a statutory provision is mandatory or directory, is the intention of the law-maker as expressed in the law, itself. The reason behind the provision may be a further aid to the ascertainment of that intention. If the legislative intent is expressed clearly and strongly in imperative words, such as the use of must instead of shall , that will itself be sufficient to hold the provision to be mandatory, and it will not be necessary to pursue the enquiry further. If the provision is couched in prohibitive or negative language, it can rarely be directory, the use of peremptory language in a negative form is per se indicative of the intent that the provision is to be mandatory. (Crawford, The Construction of Statutes, pp. 523-24). Here the language of Sub-section (2) of Section 6 is emphatically prohibitive, it commands the Government in unambiguous negative terms that the period of the requisite notice must not be less than three months. A distinction was, thus, perceived between the words 'must' and 'shall'. 32. Learned Counsel for the Appellants sou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any act purporting to be done by such public officer in his official capacity shall be dismissed merely by reason of any error or defect in the notice referred to in Sub-section (I), if in such notice. (a) the name, description and the residence of the Plaintiff had been so given as to enable the appropriate authority or the public officer to identify the person serving the notice and such notice had been delivered or left at the office of the appropriate authority specified in Sub-section (1), and (b) the cause of action and the relief claimed by the Plaintiff had been substantially indicated. 33. In fact, Sub-sections (2) and (3) of Section 80 came to be inserted by virtue of the amendment. In Section 80(1), in view of the insertion of Sub-section (2), the opening words save as otherwise provided in Sub-section (2) came to be inserted. There were other changes which were brought about in Section 80 as it stood, as can be discerned from Section 80(1) as substituted. The judgment of the Privy Council, in the decision reported in Bhagchand Dagadusa Gujrathi and Ors. v. Secretary of State for India AIR 1927 PC 176, set at rest the controversy about the mandatory nature of the require ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... suit if and when it is instituted. There is clearly a public purpose underlying the mandatory provision contained in the Section insisting on the issuance of a notice setting out the particulars of the proposed suit and giving two months' time to Government or a public officer before a suit can be instituted against them. The object of the Section is the advancement of justice and the securing of public good by avoidance of unnecessary litigation. 35. We may also notice, what this Court had said in Bihari Chowdhary(supra) about the course of action to be taken, if a Suit is filed without serving a notice: 6. It must now be regarded as settled law that a suit against the Government or a public officer, to which the requirement of a prior notice Under Section 80 Code of Civil Procedure is attracted, cannot be validly instituted until the expiration of the period of two months next after the notice in writing has been delivered to the authorities concerned in the manner prescribed for in the Section and if filed before the expiry of the said period, the suit has to be dismissed as not maintainable. 36. We must finally also, for reasons, which will be clear, refer to the view expr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of a firm against any third party unless the firm is registered and the persons suing are or have been shown in the Register of Firms as partners in the firm. 39. In the decision reported in Seth Loonkaran Sethia and Ors. v. Ivan E. John and Ors. AIR 1977 SC 336, this Court held: 21. A bare glance at the Section is enough to show that it is mandatory in character and its effect is to render a suit by a Plaintiff in respect of a right vested in him or acquired by him under a contract which he entered into as a partner of an unregistered firm, whether existing or dissolved, void. In other words, a partner of an erstwhile unregistered partnership firm cannot bring a suit to enforce a right arising out of a contract falling within the ambit of Section 69 of the Partnership Act. ... 40. In Sharif-ud-Din v. Abdul Gani Lone (1980) 1 SCC 403, relied upon by Shri Saket Sikri, the matter arose under the Jammu and Kashmir Representation of Peoples Act, 1957, the question arose whether the provision providing that copies of the election petition are to be attested by the Petitioner as true copies under his own signature, was mandatory. We may notice the following paragraph: 9. The difference b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by the proviso to Order VIII Rule I of the Code of Civil Procedure, is mandatory or not. The said provision dealt with the power of the Court to extend time for filing the written statement. The proviso fixes a period of ninety days from the date of service of summons as the maximum period for filing the written statement. This Court took the view that the provision is to be construed as directory and not mandatory. 42. In this context, we may notice paragraphs- 28 and 30 of Kailash (supra): 28. All the Rules of procedure are the handmaid of justice. The language employed by the draftsman of processual law may be liberal or stringent, but the fact remains that the object of prescribing procedure is to advance the cause of justice. In an adversarial system, no party should ordinarily be denied the opportunity of participating in the process of justice dispensation. Unless compelled by express and specific language of the statute, the provisions of Code of Civil Procedure or any other procedural enactment ought not to be construed in a manner which would leave the court helpless to meet extraordinary situations in the ends of justice. The observations made by Krishna Iyer, J. in S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f-ud-Din (supra), it has been held that, if the object of the law is defeated by non-compliance with the provision, then, it would be regarded as mandatory. The right to institute the Suit in a Plaintiff who does not contemplate urgent interim relief in a commercial matter under the Act, is clearly conditioned by the fulfillment of certain conditions as provided in Section 12A. This cannot be likened to allowing a party to file his written statement. Bearing in mind the object also, the conclusion is inevitable that the right of suit itself will fructify only when the conditions in Section 12A are fulfilled. Treating the provision as procedural, also, the result cannot be different. Any other view would remove the basis for treating Section 80(1) of the Code of Civil Procedure as mandatory. 44. In Salem Advocate Bar Association, T.N. v. Union of India (2005) 6 SCC 344, this Court, while dealing with the question, whether Section 89 of the Code of Civil Procedure was mandatory or not, held as follows: 55. As can be seen from Section 89, its first part uses the word shall when it stipulates that the court shall formulate terms of settlement . The use of the word may in later part of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... de. In a case not covered by Sub-section (2) of Section 80, it is provided in Sub-section (1) of Section 80 that no suit shall be instituted . This is therefore a bar to the institution of the suit and that is why courts have taken the view that in a case where notice Under Section 80 of the Code is mandatory, if the averments in the plaint indicate the absence of a notice, the plaint is liable to be rejected. For, in that case, the entertaining of the suit would be barred by Section 80 of the Code. The same would be the position when a suit hit by Section 86 of the Code is filed without pleading the obtaining of consent of the Central Government if the suit is not for rent from a tenant..... (Emphasis supplied) VIEWS OF HIGH COURTS: DISCORDANT NOTES? 46. In Ganga Taro Vazirani v. Deepak Raheja, the learned Single Judge of the High Court of Bombay, took the view that Section 12A is a procedural provision. The learned Single Judge found further that when urgent relief is applied for, the procedure Under Section 12A need not be undergone. It was further observed that it was not, as if, the Court lacks inherent jurisdiction to entertain a Suit without complying with Section 12A. Still ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... It was further noticed that there was no obligation on the part of the Defendant to respond to the initiative of the Plaintiff. Rejecting the plaint Under Order VII Rule 11(d) in view of Order VII Rule 13, which enables a fresh Suit to be filed upon rejection Under Order VII Rule 11, would show that the power Under Order VII Rule 11 should not be invoked as it would not be in accordance with the objectives of the Act and the Rules. 48. Another learned Single Judge of the High Court of Calcutta, in a judgment reported in Dredging and Desiltation Co. Pvt. Ltd. v. Mackintosh Burn and Northern Consortium and Ors., took the view that there is a distinction between filing of a Suit and institution of a Suit under the Code of Civil Procedure. It was further found that the bar Under Section 12A is absolute w.e.f. 12.12.2020, being the date immediately subsequent to the date after the standard operating procedure for undertaking pre-litigation procedure Under Section 12A was made. This is after finding that the standard operating procedure had been made and Rules were published on 11.12.2020. The very same learned Single Judge (Debangsu Basak, J.) in the judgment reported in Laxmi Polyfab P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the Commercial Appellate Division shall endeavour to dispose of appeals before them, within six months from the date of filing of such appeals. Under Section 15(2), all suits and applications, including under the Arbitration and Conciliation Act, relating to a commercial dispute of a specified value, pending in any Civil Court, is to be transferred to the Commercial Court, where such Court has been constituted. Under Section 16, the provisions of the Code of Civil Procedure, in respect of its application to any suit in respect of a commercial dispute of a specified value, is to stand amended as provided in the Schedule. Section 19 provides that the State shall provide the necessary infrastructure to facilitate working of the Commercial Court or Commercial Division of a High Court. A Schedule relatable to Section 16, which provides for the amended version of the Code of Civil Procedure, inter alia, provides for a substituted version of Section 35 of the Code of Civil Procedure dealing with costs. It provides that the Court has the discretion in the matter of quantum of costs. Section 35 of the Code of Civil Procedure in the Schedule, inter alia, contemplates that in making an Orde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3, being a subordinate legislation, must be interpreted harmoniously, in the first place, with the parent enactment. That apart, on a proper understanding of Rule 3, there is really no conflict between Section 12A and Rule 3. Rule 3 only gives a discretion to the applicant, in regard to the mode of making the application. So understood, we are of the clear view that, if Section 12A is otherwise mandatory, Rule 3(1) can only be understood as providing three different modes for making the application, contemplated in Section 12A(1). As to whether the application must be made, must depend upon, among other things, upon the peremptory nature of the language employed in Section 12A(1). Rule 3 further contemplates that the Authority, which again, has been clearly defined as the Authority notified by the Central Government Under Section 12A(2), has to issue a notice to the opposite party to appear and to give his consent to participate within the time as provided in Rule 3(2). Should there be no response, a final notice is to be given again in the manner articulated in Rule 3(2). Should there be again no response by the notice remaining unacknowledged or upon there being refusal to partic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... settlement Under Section 12A of the Act is accorded the status of an award under the Arbitration Conciliation Act, it unerringly points to the object of the legislature to make pre-litigation mediation compulsory. We again underscore the vital role, the lawyers engaged can and must discharge in arriving at a just and valid settlement translating into an effective award and therefore, a decree. 52. Rule 7 deals with the procedure to be adopted by the Mediator. Rule 9 enshrines the principle of confidentiality of mediation. The Mediator, the parties, their authorised representatives or Counsel are to maintain confidentiality about the mediation. Rule 9 further declares that the Mediator is not to allow stenographic or audio or video recording of the mediation sittings. Rule 11 provides for the mediation fee. There is to be one-time mediation fee, which is to be shared equally, as per the quantum of claim as specified in Schedule II. We may set out Schedule II. SCHEDULE-II Mediation Fee [See Rule 11] S.NO QUANTUM OF CLAIM MEDIATION FEE PAYABLE TO AUTHORITY (in Indian rupees). 1. From Rs. 3,00,000 to Rs.10,00,000. Rs. 15,000/- 2. From Rs. 10,00,000. to Rs. 50,00,000. Rs. 30,000/- 3. F ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing a mandatory provision. We say this for the reason that the decisive element in the search for the answer, in the interpretation of such a Statute, must be to ascertain the intention of the Legislature. The first principle, of course, must be the golden Rule of interpretation, which means, the interpretation in conformity with the plain language, which is used. There cannot even be a shadow of a doubt that the language used in Section 12A is plainly imperative in nature. However, we will not be led by the mere use of the word 'shall'. Even going by the sublime object of the Act, as we have unravelled, we are fully reinforced in our opinion that the pre-institution mediation is intended to produce results, which has a direct bearing on the fulfillment of the noble goals of the Law-giver. It is apparent that the Legislature has manifested a value judgment. We are not called upon to decide the constitutionality of the provision. Parliament is presumed to be aware of the felt necessities of the times. It best knows the manner in which the problems on the ground are redressed. Section 89 of the Code of Civil Procedure, does contemplate mediation ordered by a Court. However, i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eferred for mediation at the hands of skilled Mediators. While on mediation, we may notice the following views expressed by this Court in the judgment reported in Vikram Bakshi and Ors. v. Sonia Khosla (Dead) by Legal Representatives (2014) 15 SCC 80: 16. According to us it would have been more appropriate for the parties to at least agree to resort to mediation as provided Under Section 89 Code of Civil Procedure and make an endeavour to find amicable solution of the dispute, agreeable to both the parties. One of the aims of mediation is to find an early resolution of the dispute. The sooner the dispute is resolved the better for all the parties concerned, in particular, and the society, in general. For parties, dispute not only strains the relationship but also destroys it. And, so far as society is concerned it affects its peace. So what is required is resolution of dispute at the earliest possible opportunity and via such a mechanism where the relationship between individual goes on in a healthy manner. Warren Burger, once said: The obligation of the legal profession is ... to serve as healers of human conflict ... we should provide mechanisms that can produce an acceptable res ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mediation has been that it is opposed to the fundamental principle of access to justice. It is in keeping with the traditional notions of the right of a person to have a dispute adjudicated by an impartial and a trained Judge. On the other hand, 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 role of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the plaint would have to be rejected, as the suit would not be maintainable. The position is equally the same in regard to absence of registration contemplated Under Section 69 of the Indian Partnership Act. Therefore, the principle canvassed by the learned Counsel would not apply. 60. Equally, we are unimpressed by the contention of the learned Counsel Shri Saket Sikri that contravention of mandate of Section 12A does not affect any legal right of the Defendant and therefore, the suit filed without resorting to compulsory mediation must be countenanced. It may be true that it may be relevant input to inquire as to whether, not following a mandate of a statute, will violate the right of another person. 61. We may proceed on the basis that if the suit is brought without complying with Section 12A, where no urgent interim relief is sought, may not in one sense, affect the legal right of the Defendant. But this argument overlooks the larger picture which is the real object of the law. This object is not to be viewed narrowly with reference to the impact on the parties alone. This is apart from also remembering that if the parties were to exhaust mediation Under Section 12A, the oppos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Taro (supra) is that in a case where the suit is instituted Under Section 80 of the Code of Civil Procedure without issuing any notice, if the Defendant does not take up the plea of violation of Section 80, there can be waiver. Thus, even if Section 12A in a given case, where the Defendant does not set up the case there can be waiver and therefore, Section 12A is not mandatory. No doubt, the Division Bench of the Bombay High Court while reversing the learned Single Judge proceeded to hold that there cannot be waiver as Section 12A is based on public interest. The approach of the learned Single Judge does not commend itself to us. The question as to whether Section 12A is mandatory or not, must be decided with reference to language used, the object of the enactment and a host of other aspects. The fact that if a Defendant does not raise the plea about compliance of Section 12A, it may result in a given case of waiver cannot result in Section 12A not being mandatory. If it were so, then in a case where there is no notice Under Section 80, a plaint can never be rejected. It is legally untenable and defies logic. Another argument raised by Shri Saket Sikri, learned Counsel is that by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... no need to adopt such a course. 64. Take a case where notice is given Under Section 80(1). A contention is taken that the notice is not effective as it does not comply with what is required in Section 80(1). In such a case, it may be a different matter that the Court may take a liberal view as to whether there is compliance. In fact, Section 80(3) makes this position clear. Even before Section 80 was substituted by Act 104 of 1976 by which 80(3) was inserted, in Raghunath Das v. Union of India and Anr. AIR 1969 SC 674 while dealing with a case where a notice was given, this Court inter alia held as follows: 8. The object of the notice contemplated by that Section is to give to the concerned Governments and public officers opportunity to reconsider the legal position and to make amends or settle the claim, if so advised, without litigation. The legislative intention behind that Section in our opinion is that public money and time should not be wasted on unnecessary litigation and the Government and the public officers should be given a reasonable opportunity to examine the claim made against them lest they should be drawn into avoidable litigations. The purpose of law is advancement ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f a Suit under the Act does not 'contemplate' any urgent interim relief, then, it cannot be instituted unless the Plaintiff seeks pre-litigation mediation. The pre-institution mediation is to be done in the manner, procedure, which is to be prescribed by the Central Government. The pre-litigation mediation is to be completed within a period of three months from the date of the application made by the Plaintiff Under Sub-section (1) [See Section 12A Sub-section (3)]. The period of three months can, however, be extended for a period of two months provided there is consent to the same by the parties [See the first proviso to Section 12A Sub-section (3)]. By the second proviso, the Legislature has taken care to provide that the period, during which the parties remained occupied with the pre-litigation mediation, is not to be reckoned for the purpose of computing the period of limitation under the Limitation Act, 1963. As to what would happen, if the parties arrive at the settlement, is provided for in Section 12A Sub-section (4). The settlement is to be reduced into writing and signed by the parties to the dispute and the Mediator. The effectiveness of a settlement arrived at i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rule 1 declares that when a suit has been duly instituted, a summon may be issued to the Defendant to answer the claim on a date specified therein. There are other details in the Order with which we are not to be detained. We have referred to these Rules to prepare the stage for considering the question as to whether the power Under Order VII Rule 11 is to be exercised only on an application by the Defendant and the stage at which it can be exercised. In Patasibai and Ors. v. Ratanlal (1990) 2 SCC 42, one of the specific contentions was that there was no specific objection for rejecting of the plaint taken earlier. In the facts of the case, the Court observed as under: 13. On the admitted facts appearing from the record itself, learned Counsel for the Respondent, was unable to show that all or any of these averments in the plaint disclose a cause of action giving rise to a triable issue. In fact, Shri Salve was unable to dispute the inevitable consequence that the plaint was liable to be rejected Under Order VII Rule 11, Code of Civil Procedure on these averments. All that Shri Salve contended was that the court did not in fact reject the plaint Under Order VII Rule 11, Code of Ci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... egard, the judgment of this Court in Madiraju Venkata Ramana Raju (supra). PRESENTATION OF PLAINT AND INSTITUTION OF SUIT 69. Another area of debate has been about the distinction between the presentation of a plaint and institution of a suit. Section 3(2) of the Limitation Act, 1963, provides that for the purpose of the Limitation Act, a suit is instituted in the ordinary case, when the plaint is presented to the proper Officer. In the case of a pauper, the suit is instituted when his application to leave to sue as a pauper is made. Order IV Rule 1 of the Code of Civil Procedure reads as follows: Order IV Rule 1. Suit to be commenced by plaint.--(1) Every suit shall be instituted by presenting a plaint in duplicate to the Court or such officer as it appoints in this behalf. (2) Every plaint shall comply with the Rules contained in Orders VI and VII, so far as they are applicable. (3) The plaint shall not be deemed to be duly instituted unless it complies with the requirements specified in sub-rules (1) and (2). 70. Sub-rule (3) of Order IV Rule 1 was inserted by Act 46 of 1999 w.e.f. 01.07.2002. Shri Sharath Chandran has drawn our attention to the judgment of the High Court of Mad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ore the registration of Suit would not constitute withdrawal or abandonment of Suit within the meaning of Order 23, Rule 1, Code of Civil Procedure, so as to operate as a legal bar for a subsequent Suit of the very same nature. It is only the withdrawal or abandonment during the currency of a Legal proceedings would preclude the Plaintiff to file a fresh Suit at a later point of time on the basis of the very same cause of action. 71. The contention appears to be that it may be a fair view to take that there is no institution of the suit within the meaning of Section 12A, until the Court admits the plaint and registers it in the suit register. In other words, presentation of the plaint may not amount to institution of the suit for the purpose of Order IV Rule 1 of the Code of Civil Procedure and Section 12A of the Act. If this view is adopted, it is pointed out that before the plaint is registered after presentation and there is non-compliance with Section 12A, the Plaintiffs can, then and there, be told off the gates to first comply with the mandate of Section 12A. This process would not involve the Courts actually spending time on such matters. In the facts, this question does not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... modicum of voluntariness for the Defendant, whereas, the Plaintiff, who approaches the Court, must, necessarily, resort to it. Section 12A elevates the settlement under the Act and the Rules to an award within the meaning of Section 30(4) of the Arbitration Act, giving it meaningful enforceability. The period spent in mediation is excluded for the purpose of limitation. The Act confers power to order costs based on conduct of the parties. 73. In the cases before us, the suits do not contemplate urgent interim relief. As to what should happen in suits which do contemplate urgent interim relief or rather the meaning of the word 'contemplate' or urgent interim relief, we need not dwell upon it. The other aspect raised about the word 'contemplate' is that there can be attempts to bypass the statutory mediation Under Section 12A by contending that the Plaintiff is contemplating urgent interim relief, which in reality, it is found to be without any basis. Section 80(2) of the Code of Civil Procedure permits the suit to be filed where urgent interim relief is sought by seeking the leave of the court. The proviso to Section 80(2) contemplates that the court shall, if, after ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eave Petition, suit was proceeded with Under Order XXXVII of the Code of Civil Procedure, Shri Ayush Negi, would contend that the Respondent\Plaintiff has pressed the summary judgment and, in case, this Court does not grant relief to the Appellant, safeguard may be incorporated allowing the Appellants written statement to be treated as leave to defend. THE RELIEF 76. On the findings we have entered, the impugned orders must be set aside and the applications Under Order VII Rule 11 allowed. This would mean that the plaints must be rejected. Necessarily, this would involve the loss of the court fee paid by the Plaintiffs in these cases. They would have to bring a fresh suit, no doubt after complying with Section 12A, as permitted Under Order VII Rule 13. Moreover, the declaration of law by this Court would relate back to the date of the Amending Act of 2018. 77. There is a plea by Shri Saket Sikri, that if this Court holds that Section 12A is mandatory it may be done with only prospective effect. He drew support of the judgment of this Court in, Jarnail Singh and Ors. v. Lachhmi Narain Gupta and Ors. 35. While interpreting the scope of Article 142 of the Constitution, this Court held ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... we do so and declare the law or point out the error -- still we may not interfere if the justice of the case on facts does not require interference or if we feel that the relief could be moulded in a different fashion.... 80. In M/s. Somaiya Organics (India) Ltd. v. State of Uttar Pradesh AIR 2001 SC 1723, the Court went on to hold as follows in regard to the doctrine of prospective overruling. 25. The words prospective overruling implies an earlier judicial decision on the same issue which was otherwise final. That is how it was understood in Golak Nath [AIR 1967 SC 1643: (1967) 2 SCR 762]. However, this Court has used the power even when deciding on an issue for the first time. Thus, in India Cement Ltd. v. State of T.N. [(1990) 1 SCC 12] when this Court held that the cess sought to be levied Under Section 115 of the Madras Panchayats Act, 1958 as amended by Madras Act 18 of 1964, was unconstitutional, not only did it restrain the State of Tamil Nadu from enforcing the same any further, it also directed that the State would not be liable for any refund of cess already paid or collected. 28. In the ultimate analysis, prospective overruling, despite the terminology, is only a recog ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e in the decision reported in 2005 8 SCC 618. This is also not a case where this Court is pronouncing a law under which various transactions have been affected void. It may be true that the doctrine of prospective overruling may not be confined to either of the above circumstances as such and its ambit is co-extensive with the equity of a situation whereunder on the law being pronounced it is likely to intrude into or reopen settled transactions. This is not a matter where the court is overruling a decision of the High Court which has held the field for a long period. See in this regard, Harsh Dhingra v. State of Haryana and Ors. (2001) 9 SCC 550. In the said judgment this Court held as follows: 7. Prospective declaration of law is a device innovated by this Court to avoid reopening of settled issues and to prevent multiplicity of proceedings. It is also a device adopted to avoid uncertainty and avoidable litigation. By the very object of prospective declaration of law it is deemed that all actions taken contrary to the declaration of law, prior to the date of the declaration are validated. This is done in larger public interest. Therefore, the subordinate forums which are bound to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... declaration. Still further, if the order of rejection of the plaint has been acted upon by filing a fresh suit, the declaration of prospective effect will not avail the Plaintiff. Finally, if the plaint is filed violating Section 12A after the jurisdictional High Court has declared Section 12A mandatory also, the Plaintiff will not be entitled to the relief. 85. In Civil Appeal arising out of SLP (C) No. 14697 of 2021 taking note of the fact that it is a case where the Appellant would have succeeded and the plaint rejected, it is also necessary to order the following. The written statement filed by the Appellant shall be treated as the application for leave to defend filed within time within the meaning of Order XXXVII and the matter considered on the said basis. While we disapprove of the reasoning in the impugned orders we decline to otherwise interfere with the orders and the two appeals shall stand disposed of accordingly. In Civil Appeal arising out of SLP (C) No. 5737 of 2022, we set aside the order directing payment of costs of Rs. 10,000/-. The petition for permission to file SLP in SLP (C) Diary No. 29458 of 2021 and the said SLP shall stand disposed of as already indicat ..... X X X X Extracts X X X X X X X X Extracts X X X X
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