Calcutta High Court
Samar & Samar Infrastructure ... vs Mackintosh Burn Limited & Anr on 27 February, 2023
IN THE HIGH COURT AT CALCUTTA
(Ordinary Original Civil Jurisdiction)
COMMERCIAL DIVISION
Present:
The Hon'ble Justice Krishna Rao
IA No. GA 4 of 2022
In CS/72/2022
Samar & Samar Infrastructure Development Private Limited
Vs.
Mackintosh Burn Limited & Anr.
Mr. Abhrajit Mitra
Mr. Chayan Gupta
Mr. Kausik De
Mr. Pourush Bandyopadhyay
Mr. Roshan Pathak
...for the plaintiff.
Mr. Arnab Chakraborty
Ms. Pragya Bhoumick
...for the defendant no.1.
Mr. Anirban Ray
Mr. Domingo Gomes
Mr. Paritosh Sinha
Mr. Joydeep Roy
...for the defendant no. 2.
Hearing Concluded on : 31.01.2023
Judgment on : 27.02.2023
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Krishna Rao, J.:
The defendant no. 2 has filed the instant application being GA 4 of 2022 under Order VII Rule 11 of the Code of Civil Procedure, 1908 for rejection of plaint. The defendant no. 2 says that the plaintiff has filed the instant suit without complying with the provisions as enumerated under Section 12A of the Commercial Courts Act, 2015.
The plaintiff has filed the instant suit before the Commercial Division on the ground that the suit filed by the plaintiff relates to commercial dispute within the meaning of Commercial Courts Act, 2015.
Mr. Anirban Ray assisted by Mr. Domingo Gomes, Learned Advocates representing the defendant no. 2 submits that the plaintiff has not exhausted the remedy of pre-institution mediation in accordance with the manner and the procedure as prescribed under law.
Mr. Ray further submits that even the plaintiff has not prayed for any urgent interim relief in the suit and thus the suit filed by the plaintiff is required to be dismissed for not following the procedure as prescribed under law.
Mr. Ray submits that the suit filed by the plaintiff is barred by limitation as the work order was issued on 19.01.2015 and the suit was filed in the month of March, 2022. He further submits that the plaintiff has also admitted in the plaint that there is no cause of action arose against the defendant no. 2.
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Mr. Ray relying upon the Judgment reported in (2022) 10 SCC 1 (Patil Automation Private Limited & Ors. -vs- Rakheja Engineers Private Limited) submits that Section 12A of the Commercial Courts Act, 2015 is mandatory and the plaintiff has instituted the suit by violating the mandate of Section 12A of the Act of 2015.
Mr. Ray relying upon the Judgment reported in (2020) 15 SCC 585 (Ambalal Sarabhai Enterprises Ltd. -vs- K.S. Infraspace LLP & Anr.) submits that as per the Statement of Objects and Reasons of the Commercial Courts Act, 2015 and the various amendments to the Civil Procedure Code and insertion of new rules to the Code applicable to suits of the commercial disputes shows that it has been enacted for the purpose of providing an early disposal of high value commercial disputes.
Mr. Ray relying upon the Judgment reported in (1977) 4 SCC 467 (T. Arivandandam -vs- T. V. Satyapal & Anr.) submits that the trial courts would insist imperatively on examining the party at the first hearing so that bogus litigation can be shot down at the earliest stage.
Mr. Ray relying upon the Judgment reported in (2003) 1 SCC 557 (Saleem Bhai & Ors. -vs- State of Maharashtra & Ors.) submits that the provisions of under Order 7 Rule 11 of the CPC makes it clear that the relevant facts which need to be looked for deciding an application thereunder are the averments in the plaint. The trial court can exercise the power under Order 7 Rule 11 of the CPC.
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Mr. Ray relying upon the Unreported Judgment passed by the Hon'ble Division Bench of Calcutta High Court in FMAT No. 360 of 2022 (M/s. Odisha Slurry Pipeline Infrastructure Limited & Anr. -vs- IDBI Bank Limited & Anr.) submits that compulsory mediation is foisted only on a plaintiff who does not contemplate urgent interim relief. It is implicit that it is only the plaintiff, that can contemplate the relief that it seeks in a suit and, pre-institution mediation is necessary only in cases where a plaintiff does not contemplate urgent relief.
Mr. Ray relying upon the Judgment reported in 2021 SCC OnLine Cal 1457 (Laxmi Polyfab Private Limited -vs- Eden Realty Ventures Private Limited & Anr.) submits that the distinction between 'filing' of a suit and its 'institution' requires the Courts to apply its mind at the time of the suit being presented before it, as to whether the plaintiff in a suit which does not contemplate any urgent relief under the Act of 2015 exhausted the remedy of pre-institution mediation in accordance with the manner and procedure prescribed or not. He submits that Sub-Section (1) of Section 12A of the Act of 2015 casts a duty upon the Court to ensure that a suit is instituted by a plaintiff in accordance with the procedure laid down therein. Per contra, Mr. Abhrajit Mitra assisted by Chayan Gupta representing the plaintiff submits that before filing of the instant suit, the plaintiff through the Learned Advocate had issued notice under Section 80 of the Code of Civil Procedure, 1908 to the defendant no. 2 on 08.12.2021 and on receipt of the said notice, the defendant no. 2 by a letter dated 24.01.2022 had called for the plaintiff for hearing on 02.02.2022 at the office of the 5 Additional Chief Secretary, Department of Youth Services and Sports, Government of West Bengal and accordingly the plaintiff along with the Learned Advocate have participated in the said hearing but the dispute was not resolved amicably and thus the plaintiff has complied with the provision of Section 12 A of the Commercial Courts Act, 2015.
Mr. Mitra further submits that as the defendant no. 2 failed to settle the matter amicable and further attempt of mediation would be futile exercise. He further submits that the plaintiff came to know that the defendant no. 1 is taking steps to close down its business without paying the amount due and payable to the plaintiff and as such there is an urgency to file the instant suit.
Mr. Mitra relying upon the Judgment reported in 2021 SCC Online Bom 195 (Ganga Taro Vazirani - vs- Deepak Raheja) and submits that the purpose of Section 12A of the commercial Courts Act, 2015 appears to be that parties should try and resolve their disputes before coming to the Court. This is for the simple reason that if parties resolve their disputes, they need not approach the Court at all. He further submits that when parties have tried to resolve the dispute unsuccessfully, it would be futile to the said provision, it would militate against the very object for which, Commercial Courts Act, 2015 was brought into force. He further submits that it would have the effect of delaying the proceedings are rather than having a quick resolution of the dispute and which is the very object for which the Commercial Court was brought on the statute book. 6 Mr. Mitra relied upon the judgement reported in (2022) 10 SCC 1 (Patil Automation Private Limited & Ors. -vs- Rakheja Engineers Private Limited) and submits that the proviso to Section 80 (2) of the Code of Civil Procedure, 1908 contemplates that Court shall, if, after hearing the parties, is satisfied that no urgent or immediate relief need be granted in the suit, return the plaint for presentation to the Court after compliance but Section 12A does not contemplate such a procedure and the Hon'ble Supreme Court has held that the matter which may engage attention of the lawmakers.
Mr. Mitra relied upon the judgement reported in (2015) 8 SCC 331 (P.V. Guru Raj Reddy & Anr. -vs- P. Neeradha Reddy & Ors.) and submits that rejection of plaint under Order 7 Rule 11 of the Code of Civil Procedure is a drastic power conferred in the Court to terminate a civil action at the threshold. The conditions precedent to the exercise of power under Order 7 Rule 11 of the CPC, therefore, are stringent and have been consistently held to be so by the Court. The averments in the plaint that have to be read as a whole to find out whether it discloses a cause of action or whether the suit is barred under any law.
Mr. Mitra relied upon the judgement reported in AIR 1962 SC 776 (State of West Bengal -vs- B.K. Mondal & Sons) and submits that the work was done at the request of the officers of the Government who had no authority to make the request for the Government and the respondent was aware of this, it would follow that the work had been done at the request made by the officers in their personal capacity.
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Mr. Mitra relied upon the unreported Judgment passed by the Coordinate Bench in CO No. 135 of 2022 dated 24.02.2022 (Bluestar Engineering & Electricals Limited -vs- H.L.G. Memorial Hospital Private Limited) and submits that the Coordinate Bench of this Court held that Court cannot expect pre-litigation settlement from such defendant company.
Mr. Mitra further upon the Judgement reported in 2022 SCC OnLine Del 2639 (Bolt Technology OU -vs- Ujoy Technology Private Limited & Anr.) and submits that in the similar circumstances, the Hon'ble Delhi High Court held that on perusal of correspondences no doubt in the mind of the Court that the defendants were in no way interested in an amicable resolution of the dispute and hence requirement of Section 12-A of the Commercial Courts Act, 2015 stands satisfied.
Mr. Mitra relied upon the Judgement reported in 1984 SCC Online Cal 118 (Jadavendra Narayan Choudhury -vs- State of West Bengal) and submitted that in the present case also Section 70 of the Contract Act is applicable and the suit is not barred by limitation.
Section 12A of the Commercial Courts Act, 2015 reads as follows :
"12-A : Pre-institution Mediation and Settlement :-
1. A suit, which does not contemplate any urgent interim relief under this Act, shall not be instituted unless the plaintiff exhausts the remedy of pre-institution mediation in accordance with such manner and procedure as may be prescribed by rules made by the Central Government.
2. The Central Government may, by notification, authorize the Authorities constituted under the Legal Services 8 Authorities Act, 1987 (39 of 1987), for the purpose of pre institution mediation.
3. Notwithstanding anything contained in the Legal Services Authorities Act, 1987 (39 of 1987), the Authority authorized by the Central Government under sub-section (2) shall complete the process of mediation within a period of three months from the date of application made by the plaintiff under sub-section (1):
Provided that the period of mediation may be extended for a further period of two months with the consent of the parties:
Provided further that, the period during which the parties remained occupied with the pre-institution mediation, such period shall not be computed for the purpose of limitation under the Limitation Act, 1963 (36 of 1963).
4. If the parties to the commercial dispute arrive at a settlement, the same shall be reduced into writing and shall be signed by the parties to the dispute and the mediator.
5. The settlement arrived at under this section shall have the same status and effect as if it is an arbitral award on agreed terms under sub-section (4) of Section 30 of the Arbitration and Conciliation Act, 1996 (26 of 1996)."
As per the case of the plaintiff, the defendant no. 2 had engaged defendant no.1 for carrying out balance work of two storied Club House Building with four storied foundation to complete up to the first floor and other allied infrastructure Development work within Kishore Bharati Krirangan Jadavpur, Kolkata. In turn, the defendant no.1 had awarded the said work to the plaintiff after observing all necessary formalities on 19th January, 2015. In the work order issued to the plaintiff, it was specified that the rates for entire work shall be 8% below the rates of the defendant no.1. While the plaintiff was in process of completing the work, the plaintiff was requested to stop the work and the work was delegated to Public Works 9 Department, Government of West Bengal. The gross value of the work completed by the plaintiff was amounting to Rs. 1,98,26,973/- out of which an amount of Rs. 1,02,84,526/- was received by the defendant no. 1 and the defendant no.1 had paid an amount of ₹ 92,56,073.40/- after deduction of Rs. 10,28,452.60/- as security deposit from a payable amount Rs. 1,02,84,526/-. A net amount of Rs. 87,79,051/- is due and payable by the defendant no. 1 to the plaintiff. Time and again, the plaintiff had requested the defendant for payment of the due amount. By a letter dated 6th January, 2020, the defendant no.1 had informed the plaintiff that the release of payment against the bill submitted by the plaintiff depend upon receipt of corresponding payment from the Department of Sports, Government of West Bengal. In spite of several requests, no payment was made and accordingly the plaintiff has filed the instant suit.
The question with regard to the limitation raised by the defendant, it is found from the record that though on 18th July, 2016, the plaintiffs was directed to stop the work but no payment was made to the plaintiff and by letter dated 6th January, 2020, the defendant No.1 had informed the plaintiff regarding the bill submitted by the plaintiff depend upon receipt of corresponding payment from the Department and as such at this stage without any trial it cannot be said that the suit is barred by limitation. It is also the specific case of the plaintiff that the plaintiff had issued notice under Section 80 of the CPC to the defendant no. 2 and the defendant no. 2 had issued notice for settlement but the same was not resolved. From the 10 letter dated 6th January, 2020 issued by the defendant no.1 it reveals that there was a jural relationship between the parties.
As regard compliance of the provision of Section 12A of the Commercial Courts Act, 2015, it is the specific case of the plaintiff that after issuance of notice under Section 80 of the Code of Civil Procedure, 1908, the defendant No.2 had issued notice for hearing on 2nd February, 2022, accordingly, the plaintiff had attended the meeting but the dispute was not resolved amicably between the plaintiff and the defendant.
In the case of Laxmi Polyfab Private Limited (supra), the Coordinate bench of this Court held that Section 12A of the Commercial Courts Act, 2015 is mandatory and it was further held that the suits filed upto 11th December, 2020, the plaintiff cannot be non-suited for non- compliance.
In the case of Patil Automation Private Limited (supra), the Hon'ble Supreme Court declared that Section 12A of the Commercial Courts Act, 2015 is mandatory and held that any suit instituted violating the mandate of Section 12A must be visited with the rejection of plaint under Order 7 Rule 11 of the CPC. But the Hon'ble Supreme Court clarified that the said declaration will be effective from 20th August, 2022 so that stakeholders concern become sufficiently informed.
This Court perused the plaint of CS No. 72 of 2022 and finds that the plaintiff has filed the instant suit on 30th March, 2022 and the plaint was presented before this Court on 30th March, 2022, accordingly, this Court has 11 granted leave under Section 12A of the Commercial Courts Act, 2015 on 30th March, 2022.
In view of the above, this Court is of the view that the plaintiff has filed the suit on 30th March, 2022 and on the same day this Court granted leave to the plaintiff under Section 12A of the Commercial Courts Act,2 015. As per the judgement in the case of Patil Automation Private Limited (supra), the declaration of mandatory provision is effective from 20th August, 2022 but the plaintiff has filed the instant suit prior to 20th August, 2022 and thus plaintiff cannot be non-suited.
G.A No. 4 of 2022 is thus dismissed.
(Krishna Rao, J.)