The Supreme Court of India, recently, put to rest a highly debated question in respect of the nature of statutory requirement of undertaking pre-litigation mediation in commercial disputes as prescribed by Section 12A of the Commercial Courts Act, 2015 (“Act”). After extensively analyzing the opinions expressed so far, the Apex Court in the case of Patil Automation Private Limited and Ors. v. Rakheja Engineers Private Limited, vide its judgment dated 17 August 2022 has decided the issue.
Brief facts of the matter are that a commercial suit was filed for recovery of monies along with interest. In response an application under Order VII Rules 10 and 11 read with Sections 9 and 20 of the Code of Civil Procedure, 1908 was filed, inter alia contending that the suit was filed without adhering to Section 12A of the Act and thus, was not barred for non-compliance of Section 12A of the Act.
The District Court relying on a judgment passed by the Bombay High Court, dismissed the application on the ground that non-adherence of the procedure established by Section 12A of the Act is not an embargo on the maintainability of a commercial suit and the pre-litigation mediation can be kept in abeyance. The High Court of Punjab and Haryana confirmed the finding and held that not resorting to pre-litigation mediation would not entail rejection of the plaint. Aggrieved thereof the matter was brought before the Supreme Court.
The Supreme Court was along with the main matter also reflecting on similar issues raised in other matters arising of decisions of various High Courts.
THE ISSUE AT HAND
The seminal question which arose for consideration of the Supreme Court was whether the statutory pre-litigation mediation contemplated under Section 12A of the Act as amended by the Amendment Act of 2018 is mandatory and whether the Courts below have erred in not allowing the applications filed under Order VII Rule 11 of the CPC, to reject the plaints filed by the respondents in these appeals without complying with the procedure under Section 12A of the Act.
Contentions by the parties
During the course of arguments on behalf of the Appellant, emphasis was laid on the usage of the word “shall” by the Legislature in Section 12A of the Act, thereby indicating a mandatory requirement. Reference in this regard was also made to Section 80 of the CPC and Section 69 of the Partnership Act, 1932. It was also brought to the attention of the Supreme Court that the decision in Ganga Taro was reversed by the High Court in its subsequent decision by the Division Bench of the said High Court. Reference was made 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 to state that the same makes it clear that Section 12A is mandatory. It was contended that the embargo against institution of the suit may not necessarily affect inherent jurisdiction of the Court.
On the other hand, the Respondent emphasised and stressed upon the directory nature of the requirement enshrined by Section 12A of the Act. It was submitted that in order that the word ‘shall’ in a statutory provision be considered as mandatory, one of the cardinal tests employed by the Courts is to ask the question whether the provision contemplated penal consequences for disobedience of the provision. It was highlighted that non-adherence to the procedure under Section 12A of the Act does not invite any penal consequence. It was submitted that the procedure does not prejudice the rights of the defendant and only provides room for settlement. It was also brought to the attention of the Court 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. The possible consequence of a plea of limitation overwhelming a fresh suit of the plaintiff after rejection of the first suit was also highlighted.
ANALYSIS BY THE COURT
Examining the issue, the Supreme Court, inter alia, referred to the language of Section 12A of the Act, the Act itself, subsequent amendments, Statement of Objects and Reason, relevant Rules of the Act, judgments dating back to 1961 onwards. The varying views expressed by the High Courts were also carefully looked into. The Court referred to its views expressed on mediation as noted in the matter of Vikram Bakshi and Others v. Sonia Khosla (Dead) by Legal Representatives.
After a thorough scrutiny of the various facets held that a perusal of the Act and the Rules reveal the existence of a complete Code. It held that it is a settled law that a plaint instituted transgressing the mandate of Section 80 of the CPC, that is, when there is no notice at all and no urgent relief is contemplated and leave sought, the plaint would have to be rejected, as the suit would not be maintainable. It further held in respect of Order VII Rule 11 CPC that where on allegations in the suit, it is found that the suit is barred by any law, as would be the case, where the plaintiff in a suit under the Act does not plead circumstances to take his case out of the requirement of Section 12A, the plaint should be rejected without issuing summons. Undoubtedly, on issuing summons it will be always open to the defendant to make an application as well under Order VII Rule 11. In other words, the power under Order VII Rule 11 is available to the court to be exercised suo motu.
THE APEX COURT IN ITS CONCLUDING REMARKS HELD AS UNDER:
“We declare that 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.”
NOTEWORTHY OBSERVATIONS BY THE COURT
“Section 12A [of the Act] cannot be described as a mere procedural law. Exhausting pre-institution mediation by the plaintiff, with all the benefits that may accrue to the parties and, more importantly, the justice delivery system as a whole, would make Section 12A not a mere procedural provision. The design and scope of the Act, as amended in 2018, by which Section 12A was inserted, would make it clear that Parliament intended to give it a mandatory flavour. Any other interpretation would not only be in the teeth of the express language used but, more importantly, result in frustration of the object of the Act and the Rules.”
“At this juncture, it must be immediately noticed that the Law-giver has, in Section 12A, provided for pre-institution mediation only in suits, which do not contemplate any urgent interim relief. Therefore, pre-institution mediation has been mandated only in a class of suits. We say this for the reason that in suits which contemplate urgent interim relief, the Law-giver has carefully vouch-safed immediate access to justice as contemplated ordinarily through the courts. The carving out of a class of suits and selecting them for compulsory mediation, harmonises with the attainment of the object of the law. The load on the Judges is lightened. They can concentrate on matters where urgent interim relief is contemplated and, on other matters, which already crowd their dockets.”
“… 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 Hon’ble Court by putting to rest the conundrum has provided the much needed clarity and certainty that was required in commercial suits. In doing so, the Court has emphasised the importance of mediation in resolving disputes and being the way forward. The Court also gave highlighted importance and need for the role of the parties and the Bar in getting disputes between parties settled as being the logical option, especially since the application of the Act pertains to commercial disputes, thereby stressing on the need to focus on business efficacy. The Court also clarified that the requirement of pre-litigation mediation is mandatory in a certain classes of cases, and in those cases where urgent relief is sought by the parties, the requirement is not mandatory, as is also evident from the bare language of the Section.
Ajay Bhargava, Senior Partner and Shivank Diddi, Senior Associate are part of the Dispute Resolution Team at Khaitan & Co LLP at the NCR Office of the Firm, inter alia, specialising in commercial disputes.
The Daily Guardian is now on Telegram. Click here to join our channel (@thedailyguardian) and stay updated with the latest headlines.
For the latest news Download The Daily Guardian App.
Disproportionate assets case: Delhi High Court stays Lokpal proceedings initiated against Jharkhand Mukti Morcha chief Shibu Soren
On Monday, the Delhi High Court has stayed the proceedings initiated by Lokpal of India under the provisions of the Lokpal & Lokayuktas Act, 2013 against Jharkhand Mukti Morcha (JMM) Chief and Rajya Sabha MP Shibu Soren in connection with a disproportionate case of assets.
The bench comprising of Justice Yashwant Varma observed and has passed an order on Soren’s plea challenging the validity of the said proceedings, claiming that the same was ex facie bad in law and without jurisdiction.
In the present case, the proceedings were initiated by Lokpal of India pursuant to a complaint dated August 5, 2020 filed by BJP’s Nishikant Dubey. Therefore, it has been directed by the CBI to make a preliminary enquiry into the Complaint under section 20(1)(a) of the Lokpal and Lokayuktas Act, 2013. It was claimed by Soren that the said order was not served on him.
While claiming the complaint was false, frivolous and vexatious, Soren in his plea submitted that according to section 53 of the Act and there is a statutory bar against the Lokpal of India assuming jurisdiction to investigate or inquire into any Complaint made after the expiry of seven years from the offence alleged.
The plea reads that the initiation of the proceedings under the Complaint, or at the very least, continuation thereof, once it has been demonstrated by the preliminary inquiry that it pertains to alleged acquisitions prior to the 7-year period and is clearly barred by statute, without jurisdiction and the same is liable to be quashed.
Further, the petition filled submits that the maximum period of 180 days for completion of preliminary enquiry from the date of Complaint expired on February 1, 2021. In this backdrop, it has been stated that by this time, only on July 1, 2021, the comments were sought from Soren which is beyond the prescribed statutory period.
The plea adds that the final preliminary enquiry report was submitted by the CBI on 29.06.2022, about a year and a half after expiry of the 180- day period. Such purported report is void and null and non-est in the eyes of law and cannot be received or considered by the Respondent No.1.
Thus, the court took note of the order passed by Lokpal of India dated August 4, 2022 directing that proceedings under section 20(3) of the Lokpal Act be initiated to determine whether a prima facie case existed to be proceeded against Soren. It is Soren’s case that the order was passed without considering the preliminary objection on jurisdiction being raised by him.
In the said order, the court noted that all the Lokpal of India recorded was that the comments received from the petitioner were forwarded to CBI so as to examine and submit an enquiry report.
It was ordered by the court that the challenge to assumption of jurisdiction by respondent no. 1 (the Lokpal of India) has neither been answered and nor dealt with. Matters require consideration. Subsequently, there will be a stay of proceedings pending before the Lokayukta.
Accordingly, the court will now hear the matter on 14 December.
DELHI HC SETS ASIDE MURDER CONVICTION & LIFE SENTENCE OF MAN WHO WAS UNPRESENTED BY LAWYER; REMANDS CASTE BACK TO TRIAL COURT
The Delhi High Court in the case Narender @ Lala v. State Of NCT Of Delhi observed and has set aside the orders of conviction for murder and sentence of life imprisonment awarded to a man in 2018 who was unrepresented by a lawyer before the Trial Court. Thus, the Delhi High Court has remanded the case back to the Trial Court for cross examination of certain prosecution witnesses.
The division bench comprising of Justice Mukta Gupta and Justice Anish Dayal observed and was of the view that there had been a grave miscarriage of justice to the man as when number of witnesses were examined, he was not represented by a counsel and that the legal aid counsel, who was present before Trial Court and was appointed on the same day and asked to cross- examine the witnesses on the same day.
On March, 2018, Narender was convicted for offence of murder punishable under section 302 of Indian Penal Code, 1860. On 4th May, 2018, he was sentenced by the Trial Court for life imprisonment and also to pay a fine of Rs. 10,000.
In the present case, the case of the prosecution was that the man had committed murder of his wife by strangulating her to death.
In a appeal, it was argued by the man that during the substantial course of trial, he was not represented by a lawyer and hence the trial in the absence of a lawyer had seriously prejudiced him. He thus sought recalling of all the prosecution witnesses and thereby ensuring a fair trial.
The Court observed that the manner in which the trial is conducted, there was a serious denial of fair trial to the appellant and the appellant is required to be given an opportunity to cross-examine the witnesses i.e., the witnesses examined in the absence of the lawyer, or the lawyer having been appointed on the same day from the legal aid and is asked to cross-examine the witnesses.
Further, the court remanded the back to Trial Court for cross-examination of ten prosecution witnesses. Also, the court directed the Trial Court Judge to follow due process of law and also to record the statement of the man under Section 313 CrPC and permit leading the defence evidence if so required.
The Court ordered that the case be listed before the learned Trial Court on 26th September, when Superintendent Tihar Jail will product the appellant before the learned Trial Court and the learned Trial Court is requested to expedite the trial and conclude the same preferably within four months.
SUPREME COURT REFUSES TO ENTERTAIN PLEA CHALLENGING EXCLUSION OF SC/ST RESERVATION IN JHARKHAND DISTRICT JUDGES APPOINTMENT
The Supreme Court in the case Dr. B.R. Ambedkar Educational And Cultural Trust v. Hon’ble High Court Jharkhand And Ors. observed and has refused to entertain a plea challenging the non-inclusion of reservation for Scheduled Castes, Scheduled Tribes and Other Backward Classes communities in the process of appointment of District Judges in pursuant to an advertisement issued in March, 2022 by the High Court of Jharkhand. The present petition claimed that the exclusion of reservation violates Jharkhand State Reservation Policy and constitutional guarantee under Article 16(4). Apart from this, it is also in derogation of a resolution being passed by the High Court vouching to implement reservation in the Jharkhand Superior Judicial Service.
The bench comprising of Justice D.Y. Chandrachud and the Justice Hima Kohli observed and has granted liberty to the petitioner to file a petition under Article 226 of the Constitution before the Jharkhand High Court.
The court while considering that the process of appointment as per the concerned notification is underway, Justice Chandrachud asked the petitioner to approach the High Court with respect to future appointments.
It stated that “For the future you can file a petition before the High Court… We will give you liberty to approach the High Court under Article 226 of the Constitution.”
The bench of Justice Chandrachud observed that the Decisions of the Administrative side of the High Court can be challenged before the judicial side of the High Court. You can move the High Court.
In the present case, a writ petition challenging a similar notification was filed in 2017 before the High Court, which was eventually dismissed. It was observed by the High Court that there is no duty vested in the authorities to reserve seats for all posts, more particularly in higher judiciary. Moreover, it had already initiated the appointment process, the High Court opined that it cannot alter the rules midway. Thus, the appeal filed before the Apex Court was also dismissed.
However, in 2018 the Full Court of the Jharkhand High Court had agreed in principle to grant reservation in the recruitment for Jharkhand Superior Judicial Service. The advocates belonging to the SC/ST/OBC communities in 2021 had made representations to the Chief Justice of the High Court requesting for the implementation of the Reservation policy in appointment of District Judges (direct entry from Bar)/ superior judicial service. The impugned notification was issued without incorporating reservation for SC/ST/OBC communities in March 2022.
Mr. Arvind Gupta, Advocate on Record has filled the present petition.
Right to contest election is not a fundamental right; it is only a right conferred by statute: Supreme Court
The Supreme Court in the case Vishwanath Pratap Singh vs Election Commission of India observed that the right to contest an election is not a fundamental right but only a right conferred by a statute.
The bench comprising of Justice Hemant Gupta and the Justice Sudhanshu Dhulia observed while dismissing a Special Leave Petition filed by Vishwanath Pratap Singh that an individual cannot claim that he has a right to contest election and the said stipulation violates his fundamental right, so as is required under the Act, to file his nomination without any proposer.
Also, the court imposed a cost of Rupees one lakh on Singh.
In the present case, Singh had first approached the Delhi High Court challenging a notification issued by Election Commission of India for election to Rajya Sabha after he was not allowed to file his nomination without a proper proposer being proposing his name. His contentions were rejected by the High Court that his fundamental right of free speech and expression and right to personal liberty has been infringed.
While dismissing the SLP, the Apex Court observed that the writ petition before the High Court was entirely misconceived.
The bench observed while referring to earlier judgments viz Javed v. State of Haryana, (2003) 8 SCC 369 and Rajbala v. State of Haryana (2016) 2 SCC 445 wherein it was stated that the right to contest an election is neither a fundamental right nor a common law right. It is a right conferred by a statute.
However, the Supreme Court in Javed (supra) had made the following observations: Right to contest an election is neither a fundamental right nor a common law right and it is a right conferred by a statute. At the most, in view of Part IX having been added in the Constitution of India that a right to contest election for an office in Panchayat may be said to be a constitutional right and a right originating in the Constitution and given shape by a statute. But even if, it cannot be equated with a fundamental right. It is stated that there is nothing wrong in the same statute which confers the right to contest an election also to provide for the necessary qualifications without which a person cannot offer his candidature for an elective office and also to provide for disqualifications which would disable a person from contesting for, or from holding, an elective statutory office.
It was held in Rajbala (supra) that the right to contest for a seat in either of the two bodies is subject to certain constitutional restrictions and could be restricted further only by a law which the parliament made.
Further, the court added that Singh did not have any right to contest election to the Rajya Sabha in terms of the law made by the Parliament.
The Court stated while dismissing the SLP that the Representation of People Act, 1950 read with the Conduct of Elections Rules, 1961 has contemplated the name of a candidate to be proposed while filling the nomination form. However, it cannot be claimed by an individual that he has a right to contest election and the said stipulation violates his fundamental right, so as to file his nomination without any proposer as is required under the Act.
Post-conviction compounding of offences is permissible: Himachal Pradesh High Court
The Himachal Pradesh High Court in the case Shri Kantu Ram v Shri Beer Singh recently observed that a court, while exercising powers under Section 147 of the Negotiable Instruments Act and can proceed to compound the offences even after recording of conviction by the courts below.
The bench comprising of Justice Sandeep Sharma observed in a case where the revision Petitioner, who was convicted under Section 138 of the NI Act by the Magistrate Court and was aggrieved by subsequent dismissal of appeal by the Sessions Court and had agreed to pay the amount due and settle the matter.
Thus, the petitioner had sought compounding of offences.
In the present case, the respondent admitted the factum with regard to receipt of the amount due from the accused and expressed that the prayer made on behalf of accused for compounding of offence can be accepted.
However, the High Court allowed the prayer and the offence committed by the Petitioner under Section 138 NI Act was ordered to be compounded.
The Court observed that the Reliance was placed on Damodar S. Prabhu V. Sayed Babalal H. (2010) 5 SCC 663, wherein the Apex Court has categorically held that court, while exercising power under Section 147 of the NI Act and can proceed to compound the offence even after recording of the conviction by the courts below.
‘Pensionary benefits to employee, who is removed from service for misconduct, is not at par with those who retire on superannuation’
The Jammu and Kashmir and Ladakh High Court in the case Bashir Ahmad Wani v Jammu and Kashmir Grameen Bank and Another recently observed and stated that an employee who is removed from service for misconduct is not at par with those who is being retired on superannuation.
The bench comprising of Justice Sanjeev Kumar observed while dismissing the pension claim made by a former employee of the J&K Grameen Bank, who was removed from service in 2011.
In the present case, the petitioner had sought benefit of the J&K Grameen Bank (Employees) Pension Regulations, 2018 whereby provision was made for terminal benefits.
However, the court disallowed the claims on two grounds:
Firstly, that at the time of removal of the petitioner from service when there were no norms, rules or regulations providing for the benefit of pension to the employees of the respondent-Bank.
In the year 2011, the employees of the respondent-Bank were governed by the J&K Grameen Bank ( the Officers and Employees) Service Regulations, 2010… it is abundantly clear that it does not prescribe imposition of a penalty of removal along with the pensionary benefits.
Secondly, it was opined by the court that though the 2018 Regulations had been made applicable to those employees who were in service between 1st day of September, 1987 and 31st day of March, 2010 and the employees retired from the services of the Bank before 31st day of March, 2018, however, this leeway cannot come to aid of the Petitioner.
The Curt observed that the reason for finding that the Petitioner was not an employee who had “retired” on superannuation from the bank. Rather, he was “removed” for misconduct.
The Court stated that the regulations apply to those employees who retired from the service of the Bank before 31.03.2018 and not the employees who were terminated for misconduct. Viewed thus, the order of removal of the petitioner dated 02.09.2011 holding the petitioner entitled to terminable benefits and cannot, by any stretch of reasoning, be construed to be an order of removal with the benefit of the pension. Neither, the petitioner, at the time of his removal from service, nor with the promulgation of Pension Regulations of 2018, is entitled to the benefit of pension.
Accordingly, the court dismissed the petition.
India’s well set as fastest growing major economy, schemes changing common lives: FM
India primed for 8% growth, NITI Aayog VC Bery bets
India’s carbon footprint expected to rise 8.2% in 2023
These ’90s fashion trends are making a comeback in 2017
The old and New Edition cast comes together to perform
The final 6 ‘Game of Thrones’ episodes might feel like a full season
Fashion6 years ago
These ’90s fashion trends are making a comeback in 2017
Entertainment6 years ago
The old and New Edition cast comes together to perform
Entertainment6 years ago
The final 6 ‘Game of Thrones’ episodes might feel like a full season
Opinion2 years ago
Environment day with a missing spring and lost souls
Policy&Politics1 year ago
A successful SME must understand his 5 wives
Business6 years ago
Uber and Lyft are finally available in all of New York State
Business News1 year ago
India Becomes World’s 5th Biggest Economy
Uncategorized2 years ago
Venus, Mars, Jupiter, Saturn in straight line