DHANBAD FUELS LTD. Vs. UNION OF INDIA
LAWS(CAL)-2021-2-48
HIGH COURT OF CALCUTTA
Decided on February 22,2021

Dhanbad Fuels Ltd. Appellant
VERSUS
UNION OF INDIA Respondents




JUDGEMENT

Shampa Sarkar, J. - (1.)This revisional application has been filed by the defendant in Money Suit No.28 of 2019, challenging the order dated December 21, 2020 passed by the learned Judge, Commercial Court at Alipore, rejecting an application being I.A. No. 190 of 2020. I.A. No. 190 of 2020 was an application filed by the defendant for rejection of the plaint being barred under Order VII Rule 11 (d) of the Code of Civil Procedure. It was the contention of the petitioner that only when an urgent interim relief was prayed for in a commercial suit, the suit could be instituted without exhausting the remedy of Pre-Institution Mediation. In all other cases, as per Section 12A of the Commercial Courts Act, 2015 (hereinafter referred to as the said Act) initiation of mediation was compulsory before filing the suit and Pre-Institution Mediation and Settlement Rules, 2018 (hereinafter referred to as the said Rules) would have to be followed. Thus, it was the bounden duty of the plaintiffs/opposite parties to first approach the Authority authorised by the Central Government for settlement of the dispute by way of mediation and on failure of settlement, the plaintiffs would be entitled to file the suit for the reliefs sought for. According to the petitioner, the Central Government in exercise of power conferred by sub-section (2) of Section 21A read with sub-section (1) of Section 12A, of the said Act, framed the said Rules which was published in the official gazette on July 3, 2018. The rules came into force with effect from July 3, 2018. The suit was filed sometime in August, 2019, and as such, the mandatory provision of Section 12A of the said Act was applicable to this case. The plaintiffs not having complied with the said provision, could not be allowed to maintain the suit and the suit should be rejected, being barred by law.
(2.)Mr. Jayanta Kumar Mitra, learned Sr. Advocate appearing on behalf of the petitioner submitted that the order impugned suffered from illegality and material irregularity. The learned Court below rejected the said application for reasons which were not backed by law. Delay in filing the application for rejection of the plaint and lack of proper infrastructure for conducting pre- litigation mediation, could not be valid grounds for rejection of the defendant's application. He further submitted that the learned Court mis-directed itself by further referring the matter to mediation by appointing one Mr. Jayanta Mukherjee as the mediator. Mr. Mitra submitted that the statute mandated Pre-Institution Mediation of the disputes before filing of a commercial suit. When a mandatory provision of a statute was not followed, it was the duty of the Court to reject the said plaint. He further submitted that the said Rules had come into force in 2018 that is, before the suit was filed and the plaintiffs ought to have approached the Authority as per the said rules. He submitted that the said Rules did not contemplate creation of further infrastructure or publication of any Standard Operating Procedure (in short SOP) by either the High Court or the State Legal Services Authority and the reason assigned by the learned Judge regarding lack of infrastructure was not tenable in law. That the said Rules already stipulated that a party to a commercial dispute may make an application to the Authority as per Form-1 specified in schedule-I of the Rules either online or by post or by hand, for initiation of a mediation process under the Act along with fee of Rs.1000/- payable to the Authority, either by way of demand draft or through online mode.
(3.)According to Mr. Mitra, Rules 3 and 7 of the said Rules laid down the procedure for such mediation and the Authority was defined as the Authority notified by the Central Government under sub-section (2) of Section 12A of the said Act. Mr. Mitra submitted that in exercise of power under sub-section (2) of Section 12A of the said Act, the Central Government by a notification dated July 3, 2018, authorised the State Authority or the District Authority constituted under the Legal Services Authorities Act, 1987 for the purpose of Pre-Institution Mediation and Settlement under chapter III A of the said Act. He further referred to a notification dated September 12, 2018 by which after assessment of the ADR centres and staff under SLSAs in every State, the Central Government notified that mediation may be conducted by the authorities constituted under the Legal Services Authorities Act, 1987, such as the National and District legal service authorities. It was further stated in the said notification that the mediation process was required to be completed within a period of three months, which could be extended by another two months as per the requirements of settlement between the parties. The settlement would have the same effect as an arbitral award under the Arbitration and Conciliation Act, 1996. Therefore, according to Mr. Mitra, the reasons assigned by the learned Court in rejecting the application for rejection of the plaint on the ground of delay and lack of proper infrastructure and absence of a SOP to be prescribed by the High Court at Calcutta, were not appropriate reasons for allowing the suit to continue, even after non-compliance of the mandatory provision of Section 12A of the said Act.
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