Document Fragment View

Matching Fragments

The Commercial Courts Act was promulgated in the year 2015 with the avowed object of securing the speedy disposal of the high value commercial disputes through a special forum i.e. by establishing the commercial Courts, Commercial Division and the Commercial Appellate Division of the High Court. At the time of birth of the said Act, there was no concept of pre- institution mediation which sees the light of the day after introduction of Chapter III-A of the said Act by Act 28 th of 2018 w.e.f 3.5.2018. The said chapter contained only one section i.e. Section 12A which mandating that the suit shall not be instituted unless the plaintiff exhausts the remedy of pre- institution mediation. The aforesaid provisions further contained the provision that the period within which the pre-institution mediation has to be completed shall be excluded from the purview of the Limitation Act, 1963. The most important facet of the aforesaid provision introduced subsequently can further be visualised that the settlement arrived in a mediation process shall have the same status and effect that of the arbitral award and it can be reasonably inferred that the same is capable of being executed and/or enforced as a decree in accordance with the provision of the Code of Civil Procedure, 1908. The legislatures were conscious that the mediation process may consume a considerable time and the reliefs may be delayed, fixed the time in which the mediation process should be completed putting outer cap beyond which cannot be extended even a party consented for such extension. The object is laudable that the aforesaid newly inserted provision was not only to avoid the unnecessary explosion in the docket of the Court but acknowledges the party autonomy in resolving the disputes through such recognised process to avoid the time consumed in a conventional adjudicatory system and cost effected although the schedule prescribed therein includes a cost to be shared by both the parties which is minimal in comparison to the litigations travelling in the ordinary Civil Courts. The process of mediation is unique in the sense that the carriage of the proceedings remained with the parties as opposed to an ordinary litigation before the Civil Courts and the settlement bring the solace and/or satisfaction but restore the relationship which may have been temporarily broken and therefore, it is conventionally known as a win-win situation. There was a common discordant amongst the legal fraternity that the activation of the process of pre-institution mediation simply delayed the adjudicatory process and imposition of unnecessary expenditures. It is no doubt true that every dispute may not be settled through a mediation process and the innumerable cases received a death as the defendant either chose not to undergo such process or there is a failure on account of non-consensus between the litigating parties. The rules framed under the aforesaid Act contained the provision and in the event the defendant chose not to participate in the proceedings the report would be treated as non-starter. The concept of mediation though claimed to be new in the legal system yet, being introduced after a long discourse, it is a collective duty of the citizenry to accept the legislative intent as sensitised themselves to make it workable than to render it a dead letter. The object and purpose of introduction of a new chapter in the said Act not only helps in resolution of the disputes effectively but to achieve the goal envisioned by the law framers in propelling the concept of ease of doing business. The legislature was conscious that every litigation must not mandatorily undergo with the pre-institution litigation and taking into consideration where an urgent interim relief is sought, the plaintiff can approach the special forum without exhausting such a statutory provision which can be visualised from Section 12 A (1) of the said Act which runs thus:

The meaningful reading of the aforesaid observations culled out from the Patil Automation Private Limited (Supra) leads no ambiguity that the moment the jurisdictional High Court have taken a view that the provision contained under Section 12A is mandatory even if the suit filed prior to the judgement rendered in the said report, the same will be regarded as violative of said provision and there is no fetter on the part of the Court to reject the plaint on such count alone.

It takes us to a Single Bench decision rendered in case of Laxmi Polyfab Pvt. Ltd. Vs. Eden Realty Ventures Pvt. Ltd. & Anr. reported in AIR 2021 CAL 190. The said case relates to the suits pending before the Commercial Division and the Ordinary Original Civil Jurisdiction of the High Court and the proceedings under Arbitration and Conciliation Act, 1996 in the aforesaid jurisdiction in relation to the provision contained under Section 12A and Section 15 of the Commercial Courts Act, 2015. The first issue framed in the said judgement as evident therefrom, relates to whether Section 12A of the Commercial Courts Act is mandatory or directory. The said judgment was decided on April 7, 2021 and it was held that Section 12A of the Act is mandatory as it achieved the twin object of expeditious disposal and avoidance of a docket explosive. It was further held that the failure of the plaintiff to exhaust the remedy under Section 12A of the Act may result in dismissal of the suit provided the plaintiff does not seek an urgent interim relief in the following: