Karnataka High Court
M/S Central Restaurant And Cafe vs Bhavin Tolia on 18 July, 2025
Author: M.Nagaprasanna
Bench: M.Nagaprasanna
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NC: 2025:KHC:27021
WP No. 4479 of 2025
HC-KAR
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 18TH DAY OF JULY, 2025
BEFORE
THE HON'BLE MR. JUSTICE M.NAGAPRASANNA
WRIT PETITION NO. 4479 OF 2025 (GM-CPC)
BETWEEN:
1. M/S. CENTRAL RESTAURANT AND CAFE
A PARTNERSHIP CONCERN
HAVING ITS OFFICE AT NO. 130
KHB COLONY, 17TH 'H' MAIN
MIG 5TH BLOCK, KORAMANGALA
BENGALURU - 560 095
REPRESENTED BY ITS PARTNERS
MR. MOHAMMED SHABAZ
MR. MOHAMMED AFSHAN.
2. MR. MOHAMMED SHABAZ
S/O MOHAMMED ANWAR
AGED ABOUT 33 YEARS
RESIDING AT NO. 26/A
Digitally signed by
NAGAVENI 6TH CROSS, 2ND MAIN
Location: High Court of
Karnataka MINAJ NAGAR, KADIRENAHALLI
BENGALURU SOUTH
BENGALURU - 560 078.
3. MR. MOHAMMED AFSHAN
S/O MOHAMMED ALIJAN
AGED ABOUT 30 YEARS
R/AT NO. 13-6, J.J.RESIDENCY
4TH CROSS, JAYANAGAR
3RD BLOCK, EAST RBI EXTENSION
BYRASANDRA, BENGALURU SOUTH
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NC: 2025:KHC:27021
WP No. 4479 of 2025
HC-KAR
BENGALURU - 560 011.
...PETITIONERS
(BY SRI SUNIL KUMAR H., ADVOCATE)
AND:
BHAVIN TOLIA
S/O SHARAD CHANDULAL TOLIA
AGED ABOUT 34 YEARS
R/AT NO.15, HOSAKEREHALLI ROAD
BYATARAYANAPURA, MYSORE ROAD
BENGALURU - 560 036.
...RESPONDENT
(BY SRI SKANDA KUMAR, ADVOCATE A/W.,
SRI M.D.RAGHUNATH, ADVOCATE)
THIS WP IS FILED UNDER ARTICLE 227 OF THE
CONSTITUTION OF INDIA PRAYING TO SET ASIDE THE ORDER
PASSED BY THE COURT OF LXXXIII ADDL. CITY CIVIL AND
SESSIONS JUDGE, COMMERCIAL COURT AT BENGALURU (CCH-
84) IN COM OS NO. 1127/2024 DATED 25-01-2025 IN IA NO.
5 VIDE ANNEXURE-A.
THIS PETITION, COMING ON FOR ORDERS, THIS DAY,
ORDER WAS MADE THEREIN AS UNDER:
CORAM: HON'BLE MR. JUSTICE M.NAGAPRASANNA
ORAL ORDER
The petitioners are before this Court calling in question an order dated 25.01.2025, passed by the Court of LXXXIII Additional City Civil and Sessions Judge, Commercial Court, Bengaluru, whereby, the application - I.A.No.5, filed by the -3- NC: 2025:KHC:27021 WP No. 4479 of 2025 HC-KAR plaintiff under Order VIII Rule 6C of the CPC seeking rejection of the counter claim registered by the petitioners - defendants, on the score that the defendants have not complied with the requirement of pre-institution mediation under Section 12A of the Commercial Courts Act (for short 'the Act'), is allowed.
2. Heard Sri Sunil Kumar H., learned counsel for the petitioners and Sri Skandha Kumar H., learned counsel along with Sri M.D.Raghunath, learned counsel for the respondent.
3. The respondent is the plaintiff, the petitioners, the defendants. The plaintiff institutes a commercial suit in Com.O.S.No.1127/2024 seeking arrears of rent from the hands of the defendants and also an injunction. Before the commercial suit could be registered, it transpires that the parties were directed to complete the process with regard to pre-institution mediation as obtaining under Section 12A of the Act. On the failure of the pre-institution mediation, respondent is before the concerned Court by registering the Com.O.S.No.1127/2024. The petitioners - defendants then registers a counter claim. The concerned Court was of the opinion that another 3 months should be spent in the pre- -4-
NC: 2025:KHC:27021 WP No. 4479 of 2025 HC-KAR institution mediation qua the counter claim and therefore, answers the application - I.A.No.V filed by the plaintiff under Order VIII Rule 6C of the CPC, seeking the counter claim to be kept in abeyance or be rejected as the case would be, until the pre-institution mediation as obtaining under Section 12A of the Act would be completed and allows the application in favour of the plaintiff, by rejecting the counter claim. The allowing of the application, by rejecting the counter claim of the defendants is only on the score that the pre-institution mediation has not taken place qua the counter claim, is what has driven the defendants to this Court in the subject petition.
4. Sri Sunil Kumar H., learned counsel appearing for the petitioners would vehemently contend that the process of pre- institution mediation did take place prior to the registration of the commercial suit as obtaining under Section 12A of the Act. Therefore, all over again, when the counter claim is registered, notwithstanding the fact that it is an independent suit by itself, need not refer the matter for pre-institution mediation as obtaining under Section 12A of the Act. He would submit that the very object behind the constitution of the Commercial -5- NC: 2025:KHC:27021 WP No. 4479 of 2025 HC-KAR Courts was expeditious disposal of commercial suits. The learned counsel would submit that the petitioners have filed the written statement along with the counter claim. Now, after filing of the written statement, sending the parties to pre- institution mediation all over again, is not the purport of the Act. He would seek to place reliance upon two judgments of the High Court of Calcutta rendered in the case of OGO USA INC VS. KRISHNA TISSUE PVT. LTD. in CO 3441 OF 2024 and the other is of the division bench of the High Court of Delhi rendered in the case of SANJANA AGARWAL VS. NAMOSHIVAI APPARELS PRIVATE LIMITED reported in 2024 SCC OnLine Del 9272.
5. Per contra, learned counsel appearing for the respondent - plaintiff would refute the submissions, contending that the counter claim so registered by the defendants was itself a suit and if it is to be treated as an independent suit, compliance with Section 12A of the Act is mandatory. He would seek to place reliance upon the judgment of the High Court of Delhi in the case of ADITYA BIRLA FASHION AND RETAIL LIMITED VS. SAROJ TANDON reported in 2024 -6- NC: 2025:KHC:27021 WP No. 4479 of 2025 HC-KAR SCC OnLine Del 6099. He would further contend that the judgment in the case of ADITYA BIRLA (supra) was tossed before the Apex Court only to be rejected in limine. He would thus contend that it is the affirmation by the Apex Court of the findings rendered by the High Court of Delhi and therefore, it is to be followed.
6. I have given my anxious consideration to the submissions made by the learned counsel for both the parties and have perused the material on record.
7. The afore-narrated facts are not in dispute. The issue in the lis lies in a narrow compass, as to whether before the counter claim could be registered by the defendants, compliance under Section 12A of the Act should be followed all over again, notwithstanding the fact that Section 12A of the Act had been complied prior to the institution of the suit.
8. The afore-narrated facts, link in the chain of events are not in dispute. Section 12A of the Act reads as follows:
"12A. 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 -7- NC: 2025:KHC:27021 WP No. 4479 of 2025 HC-KAR plaintiff exhausts the remedy of preinstitution 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, authorise the Authorities constituted under the Legal Services Authorities Act, 1987 (39 of 1987), for the purposes of pre-institution mediation.
(3) Notwithstanding anything contained in the Legal Services Authorities Act, 1987 (39 of 1987), the Authority authorised 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)."-8-
NC: 2025:KHC:27021 WP No. 4479 of 2025 HC-KAR Section 12A of the Act mandates that parties before the institution of the suit should mandatorily be referred for mediation, which would be pre-institution mediation.
9. It is not in dispute when the respondent wanted to institute the suit, the parties were referred to pre-institution mediation and after the failure of pre-institution mediation, the aforesaid commercial O.S. is registered. Therefore, it is a fact that both the parties being the same, have already mediated and have failed in such mediation. The defendants file their written statement along with the counter claim. The plaintiff now uses this to file the application - I.A.No.V under Order VIII Rule 6C of the CPC seeking that the counter claim to be kept in abeyance or be rejected.
10. The reason that the learned counsel for the respondent - plaintiff projected before the concerned Court was that the pre-institution mediation qua the counter claim has not happened and therefore, the counter claim should not be accepted. The concerned Court accedes to the contention of the plaintiff and rejects the counter claim on an altogether under a different provision i.e. invoking Order VII Rule 11(d) of -9- NC: 2025:KHC:27021 WP No. 4479 of 2025 HC-KAR the CPC, as the application was never filed under Order VII Rule 11(d) of the CPC.
11. The reference made by the learned counsel for the plaintiff - respondent to buttress his submission by relying upon the judgment rendered in the case of ADITYA BIRLA FASHION (supra), which has been subsequently considered by the High Court of Delhi and the High Court of Calcutta respectively to be distinguished. The High Courts of Delhi and Calcutta take a common view that the establishment of the Commercial Court is for expeditious disposal with an outer limit of 1 year. Once the pre-institution mediation has happened, when the plaintiff wanted to institute a suit, pre-institution mediation need not happen all over again, notwithstanding the fact that the counter claim is an independent suit by itself. Therefore, both the Courts after considering the issue have held as follows:
12. The High Court of Delhi in the case of SANJANA AGARWAL VS. NAMOSHIVAI APPARELS PRIVATE LIMITED reported in 2024 SCC OnLine Del 9272, has held as follows:
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NC: 2025:KHC:27021 WP No. 4479 of 2025 HC-KAR "Analysis and Reasoning
21. The first issue raised by Molmek is with regard to the fact that a separate pre-institution mediation was not initiated for the Counter-Claim. Relying on the judgment of the Supreme Court in Patil Automation case, Molmek has contended that the pre-institution mediation is also compulsory for instituting a Counter-Claim.
22. The Commercial Courts (Pre-Institution Mediation and Settlement) Rules, 2018 [hereinafter referred to as "Pre-Institution Mediation Rules"] provides that a party to a commercial dispute is required to initiate mediation prior to the filing of a suit. Sub-rule (8) of Rule 3 of Pre-
Institution Mediation Rules provides that the mediation process should be completed within a period of three months.
22.1 A commercial dispute is defined as a dispute referred to in Section 2(1)(c) of Commercial Courts Act, 2015 [hereinafter referred to as "CC Act"]. Section 2(1)(xviii) of the CC Act includes "agreements for sale of goods or provision of services". Concededly, the dispute between the parties is commercial in nature and is subject to the Pre-Institution Mediation Rules.
23. The Supreme Court in the judgment of Yamini Manohar v. T.K.D. Keerthi, relying on the Patil Automation case, has held that pre-litigation mediation is mandatory unless the suit contemplates urgent relief. It was further held that a plaintiff should not be permitted to file an application for interim relief as a subterfuge to wriggle out of the requirement of mandatory pre- institution mediation. The Court held that in order that the provision is not bypassed, the learned Commercial Court has a role, although a limited one, to examine whether the suit contemplates an urgent relief so as to keep a check that legislative intent behind the enactment of Section 12A of the CC Act is not defeated. The relevant extract of the decision in Yamini Manohar case is set out below:
"11. Having stated so, it is difficult to agree with the proposition that the plaintiff has the absolute choice and right to paralyse Section 12-A 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
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NC: 2025:KHC:27021 WP No. 4479 of 2025 HC-KAR 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 12-A of the CC Act. An "absolute and unfettered right" approach is not justified if the pre- institution mediation under Section 12-A of the CC Act is mandatory, as held by this Court in Patil Automation [Patil Automation (P) Ltd. v. Rakheja Engineers (P) Ltd., (2022) 10 SCC 1 : (2023) 1 SCC (Civ) 545].
12. The words "contemplate any urgent interim relief"
in Section 12-A(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, the contours of which have been explained in the earlier paragraph(s). This will be sufficient to keep in check and ensure that the legislative object/intent behind the enactment of Section 12-A of the CC Act is not defeated."
[Emphasis is ours]
24. In the present case, pre-litigation mediation was initiated by Molmek prior to instituting the suit. Molmek has relied upon the copy of the Non-Starter Report of the authority appointed for pre-institution mediation, South- West, DLSA, Dwarka Courts, New Delhi, dated 15.03.2022 to submit NAPL did not attend the Mediation proceedings as these were closed as a "non-starter". NAPL filed its combined Written Statement and Counter- Claim on 31.08.2022 raising a Counter-Claim of Rs. 7,62,930/- against Molmek before the learned Commercial Court.
24.1 The record of the learned Trial Court shows that although an objection was taken by Molmek before the learned Trial Court, it was conceded by Molmek before the learned Commercial Court, on 27.09.2022, that for the filing of the Counter-Claim, NAPL is not required to exhaust the remedy of pre-institution mediation. The order dated 27.09.2022 passed by learned Commercial Court records the following:
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NC: 2025:KHC:27021 WP No. 4479 of 2025 HC-KAR "27.09.2022 at 12.15 PM Present : Mr. Vishwajeet Dubey, Ld. Counsel for plaintiff Mr. Samuel David, Ld. Counsel for defendant Ld. Counsel for defendant submits that for filing of the counter claim, the defendant is not required to exhaust the remedy of pre-
institution mediation. Ld. Counsel for plaintiff has fairly conceded to the same.
Replication not filed by the plaintiff. Ld. Counsel for plaintiff submits that plaintiff does not want to file replication. This fact is recorded accordingly."
[Emphasis is ours]
25. There is no cavil that under the provisions of the Civil Procedure Code, 1908, a counter-claim is to be treated as a plaint and governed by the rules applicable to plaint. However, in the case of commercial disputes to say that each counter-claim will be subject to pre-institution mediation process separately when the Plaintiff has already exhausted the remedy of pre-institution mediation, may not be apposite. The object of the CC Act is to ensure speedy resolution of commercial disputes to accelerate economic growth and improve the international image of the Indian Justice System and to restore the faith of the investors. Once a party has taken steps to exhaust the remedy of pre- institution mediation to then ask the opposite party in a case where the subject matter of dispute is entirely the same, to once again undertake pre- institution mediation, prior to filing its counter- claim would defeat the very purpose of the CC Act and delay adjudication of the commercial dispute between the parties.
25.1 The Supreme Court in Ambalal Sarabhai Enterprises Ltd. v. K.S. Infraspace LLP case has held that the statement of object and reasons for the enactment of the CC Act was the early and speed resolution of the commercial disputes and thus, there was an amendment made and fast track procedure set in place by the CC Act. The relevant extract is set out below:
"31...
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NC: 2025:KHC:27021 WP No. 4479 of 2025 HC-KAR The object and purpose of the Commercial Courts Act is to ensure that the Commercial Courts, Commercial Appellate Courts, Commercial Division and Commercial Appellate Division of the High Courts and also to ensure that the commercial cases are disposed of expeditiously, fairly and at reasonable cost to the litigant.
...
34. The Schedule to the Commercial Courts Act amends various provisions of the Code of Civil Procedure and thereby makes significant departure from the Code. After Order 13 of the Code, Order 13-A -- "Summary Judgment" has been inserted. Order 13-A contains the scope and classes of suits to which Order 13-A applies, grounds for summary judgment, procedure to be followed, evidence for hearing of summary judgment, orders that may be made by Court in such proceedings for summary judgment, etc. After Order 15 of the Code, Order 15-A--"Case Management Hearing" has been inserted. Order 15-A provides for first case management hearing (Rule 1); recording of oral evidence on a day-to-day basis (Rule 4); powers of the court in a case management hearing (Rule 6); adjournment of case management hearing (Rule 7); consequences of non-compliance with orders (Rule 8). By way of amendment, several rules have been incorporated to make the matters of commercial disputes on fast track. In Order 20 of the Code -- "Judgment", Rule 1 has been substituted that within ninety days of the conclusion of arguments, the Commercial Court/Commercial Division/Commercial Appellate Division to pronounce the judgment and copies thereof shall be issued to all the parties to the dispute through electronic mail or otherwise.
35. Various provisions of the Act, namely, case management hearing and other provisions makes the court to adopt a pro-active approach in resolving the commercial dispute. A new approach for carrying out case management and strict guidelines for completion of the process has been introduced so that the adjudicatory process is not delayed. I have referred to the various provisions of the Act and the Schedule bringing in amendments
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NC: 2025:KHC:27021 WP No. 4479 of 2025 HC-KAR brought to the Civil Procedure Code to deal with the commercial disputes, only to highlight that the trial of the commercial dispute suits is put on fast track for disposal of the suits expeditiously. Various provisions of the Act referred to above and the amendments inserted to the Civil Procedure Code by the Schedule is to ensure speedy resolution of the commercial disputes in a time bound manner. The intent of the legislature seems to be to have a procedure which expedites the disposal of commercial disputes and thus creates a positive environment for investment and development and make India an attractive place to do business."
[Emphasis is ours] 25.2 The Supreme Court analysed the provisions of the CC Act and based on such analysis held that statutory provisions of the CC Act and the language therein should be interpreted purposefully to facilitate the swift resolution of commercial disputes, thereby benefiting litigants involved in trade and commerce and contributing to the country's economic growth. The relevant extract reads as follows:
"42. The object and purpose of the establishment of Commercial Courts, Commercial Divisions and Commercial Appellate Divisions of the High Court is to ensure that the cases involved in commercial disputes are disposed of expeditiously, fairly and at reasonable cost to the litigants. Keeping in view the object and purpose of the establishment of the Commercial Courts and fast tracking procedure provided under the Act, the statutory provisions of the Act and the words incorporated thereon are to be meaningfully interpreted for quick disposal of commercial litigations so as to benefit the litigants especially those who are engaged in trade and commerce which in turn will further economic growth of the country. On the above reasonings, I agree with the conclusion arrived at by my esteemed Brother A.S. Bopanna, J."
[Emphasis is ours]
26. In the present case, non-starter report which is available shows that the service of the pre-institution
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NC: 2025:KHC:27021 WP No. 4479 of 2025 HC-KAR mediation was done through email to NAPL and that there was no appearance of NAPL leading to the closure of the pre-institution mediation.
26.1 There is another reason as well. In the present case as both the plaint and the counter-claim emanate from the same series of transactions between the parties. The dispute revolved around the 5 disputed invoices and to that extent the counter-claim is an integral part of NAPL's defence to Molmek's claim as articulated in the plaint. In such a scenario, to relegate the parties a period to a second round of pre-institution mediation would be contrary to the object of the CC Act for a speedy resolution of commercial disputes."
(Emphasis supplied) The High Court of Calcutta OGO USA Inc. v. Krishna Tissue, CO 3441 of 2024, Calcutta HC, decided on 09/01/2025, has held as follows:
"8. Having heard the learned advocates appearing for the respective parties and having considered the materials on record, I find that in the instant case, the plaintiff/petitioner has contended that unless the defendant complies with the very provision of Section 12A of the said Act, the counter-claim filed by the defendant which is an additional right given to the defendant cannot be entertained. To appreciate the aforesaid provision, it is necessary to understand the scope of Section 12A of the said Act, which is reproduced hereinbelow:-
"12A. 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.
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NC: 2025:KHC:27021 WP No. 4479 of 2025 HC-KAR (2) The Central Government may, by notification authorize the Authorities constituted under the Legal Services 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) "
9. From a perusal of the aforesaid provision, it would clearly indicate that a suit shall not be instituted without exhausting the remedy provided under Section 12A of the said Act, unless the same contemplates an urgent interim relief. Admittedly in this case, the plaintiff having exhausted the aforesaid remedy provided therefore had instituted the suit. Although, the plaintiff contends that the defendant did not participate in the said proceeding, the fact that the defendant had a right to file a counter-claim even after the period for the pre-institution mediation cannot be ruled out. The Section, however, does not contemplate that a written statement would be required to be filed after having exhausted the
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NC: 2025:KHC:27021 WP No. 4479 of 2025 HC-KAR remedy provided for in Section 12A of the said Act. In this context it must be noted that ordinarily a counter-claim can only be entertained provided such counter-claim is filed along with the written statement in terms of Order VIII Rule 6A of the Code. Such claim/cause of action may arise not only before the filing of the suit but even after filing of the suit provided the same accrues before the defendant has delivered his defence or before the time limited for delivery of defence has expired. Having regard thereto, if the defendant chooses not to file counter-claim and waits for having its remedy by the way of mediation, the defendant may lose its valuable right of filing a counter-claim, since the said Act provides for outer time limit within which written statement is required to be filed. This apart, considering the object of the said Act, which is to ensure speedy resolution of the commercial dispute, any steps taken by the defendant to delay the filing of the written statement by reasons of pendency of a pre-institution mediation would defeat the very object for which the said Act has been enacted. Having regard thereto, I am of the view that there is no requirement in law for proceeding with pre-institution mediation prior to filing of a counter-claim. Similar view has also been taken by the Division Bench of the Hon'ble High Court at Delhi in the case of Sanjana Agarwal (supra). Having regard thereto, I respectfully disagree and I am not inclined to be persuaded by the view taken by the Coordinate Bench of the Hon'ble Delhi High Court in the case of Aditya Birla Fashion and Retail Limited (supra)."
(Emphasis supplied) In the afore-quoted judgments, what would unmistakably emerge is, the counter claim is an independent suit by itself and the pre-institution mediation on a counter claim need not be held all over again, as it was preceded before the institution of the suit.
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13. Learned counsel for the respondent - plaintiff would contend that the writ petition is not maintainable as the order of rejection of the plaint is an appealable order and this Court should not entertain. The said submission is noted only to be rejected for the reason that the concerned Court has committed a further illegality in taking recourse to Order VII Rule 11(d) r/w. Order VIII Rule 6A(4) of the CPC, on an application filed under Order VIII Rule 6C of the CPC and therefore, the submission would not merit any acceptance as it is not the issue in the case at hand.
14. The submission of the learned counsel for the respondent now is that, the judgment of the High Court of Delhi is tossed before the Apex Court and the SLP is dismissed in limine. He would seek to buttress his submission by placing reliance upon the judgment of the Apex Court in the case of BALBIR SINGH VS. BALDEV SINGH (D) THROUGH HIS LRS AND OTHERS reported in (2025) 3 SCC 543. There can be no qualm about the principles so laid down by the Apex Court. It reads as follows:
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NC: 2025:KHC:27021 WP No. 4479 of 2025 HC-KAR "31. The decision in Kunhayammed [Kunhayammed v.
State of Kerala, (2000) 6 SCC 359 : (2000) 245 ITR 360 :
(2000) 119 STC 505] was followed by a three-Judge Bench decision of this Court in Chandi Prasad v. Jagdish Prasad [Chandi Prasad v. Jagdish Prasad, (2004) 8 SCC 724] , which held thus : (Chandi Prasad case [Chandi Prasad v. Jagdish Prasad, (2004) 8 SCC 724] , SCC p. 731, paras 23-24) "23. The doctrine of merger is based on the principles of propriety in the hierarchy of the justice delivery system. The doctrine of merger does not make a distinction between an order of reversal, modification or an order of confirmation passed by the appellate authority. The said doctrine postulates that there cannot be more than one operative decree governing the same subject-matter at a given point of time.
24. It is trite that when an appellate court passes a decree, the decree of the trial court merges with the decree of the appellate court and even if and subject to any modification that may be made in the appellate decree, the decree of the appellate court supersedes the decree of the trial court. In other words, merger of a decree takes place irrespective of the fact as to whether the appellate court affirms, modifies or reverses the decree passed by the trial court."
32. The decision in Chandi Prasad [Chandi Prasad v. Jagdish Prasad, (2004) 8 SCC 724] was followed by a two- Judge Bench of this Court in Shanthi v. T.D. Vishwanathan [Shanthi v. T.D. Vishwanathan, (2019) 11 SCC 419 : (2019) 4 SCC (Civ) 787] , rendered on 24-10-2018 in the following terms : (Shanthi case [Shanthi v. T.D. Vishwanathan, (2019) 11 SCC 419 : (2019) 4 SCC (Civ) 787] , SCC p. 421, para 7) "7. ... When an appeal is prescribed under a statute and the appellate forum is invoked and entertained, for all intents and purposes, the suit continues. When a higher forum entertains an appeal and passes an order on merit, the doctrine of merger would apply. The doctrine of merger is based on the principles of the propriety in the hierarchy of the justice delivery system. The
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NC: 2025:KHC:27021 WP No. 4479 of 2025 HC-KAR doctrine of merger does not make a distinction between an order of reversal, modification or an order of confirmation passed by the appellate authority. The said doctrine postulates that there cannot be more than one operative decree governing the same subject-matter at a given point of time."
33. Thus, once the High Court allowed the second appeals in favour of the plaintiffs, there was evidently a merger of the judgment of the trial court with the decision of the High Court. Once the High Court as an appellate court in second appeal renders its judgment it is a decree of the second appellate court which becomes executable hence, the entitlement of the decree-holder to execute the decree of the second appellate court cannot be defeated."
(Emphasis supplied) The afore-quoted judgment would indicate that the doctrine of merger had already taken place in this case before it, while in the regular second appeal before the High Court had affirmed the view of the concerned Court. Therefore, the doctrine of merger having taken place, whether the Apex Court has dismissed the SLP in limine or otherwise, would not matter, is what the Apex Court has held. The said judgment is distinguishable with the facts obtaining in the case at hand without much ado, as in the case at hand there is no merger that has taken place of an order of the concerned Court by the hands of this Court.
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NC: 2025:KHC:27021 WP No. 4479 of 2025 HC-KAR
15. Therefore, on all the aforesaid score, the concerned Court that has rejected the plaint on the score that Section 12A of the Act is not complied with, is on the face of it erroneous, which would lead to its obliteration.
16. For the aforesaid reasons, the following:
ORDER a. The writ petition is allowed.
b. The order dated 25.01.2025, passed by the LXXXIII Additional City Civil and Sessions Judge, Commercial Court, Bengaluru, stands quashed.
c. The counter claim is directed to be registered before the concerned Court and the procedure to be regulated thereafter.
Ordered accordingly.
SD/-
(M.NAGAPRASANNA) JUDGE NVJ List No.: 1 Sl No.: 21 CT:SS