TaxTMI 
TaxTMI 
2022 (8) TMI 1494
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....ot allowing the applications filed Under Order VII Rule 11 of the Code of Civil Procedure, 1908 (hereinafter referred to as 'CPC'), to reject the plaints filed by the Respondents in these appeals without complying with the procedure Under Section 12A of the Act. 3. In Civil Appeal arising from SLP (C) No. 14697 of 2021, the Respondent filed a commercial suit Under Order XXXVII of the Code of Civil Procedure before the Additional District Judge, District Court, Faridabad, praying for recovery of Rs. 1,00,40,291/- along with 12 per cent interest on a certain sum which detail need not detain us. The suit was laid on 12.10.2020. 4. The Appellant is the Defendant in the said suit. It filed an application on 05.02.2021 Under Order VII Rules 10 and 11 read with Sections 9 and 20 of the Code of Civil Procedure, inter alia contending that the suit was filed without adhering to Section 12A of the Act. The Respondent filed its reply on 23.03.2021. It contested the matter contending that the suit was not barred for non-compliance of Section 12A of the Act. 5. A written statement came to be filed on 23.03.2021. On 16.08.2021, the trial Court rejected the contention of the Appel....
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....ation centre is to explore settlement. If the suit is filed without taking recourse to the procedure, it is further found, it should not entail rejection of the plaint. This could not have been the intention of the legislature. It is further observed that an enactment is to be interpreted in a manner that it does not result in delivery of 'perverse justice'. It was noted that the trial Court had directed that the civil suit be kept in abeyance and the parties were to appear before the Secretary of the District Legal Services Authority for the purpose of mediation. Reliance was placed on the judgment of the High Court of Bombay in Ganga Taro Vazirani v. Deepak Raheja. 7. In the other appeal arising out of SLP (C) No. 5737 of 2022, the impugned Order has been passed by the High Court of Madras, rejecting a similar application filed by the Appellant-Defendant in a commercial suit instituted without having resorted to pre-litigation mediation Under Section 12A of the Act. 8. There is yet another special leave petition which was filed, viz., SLP Diary No. 29458 of 2021. This is filed with an application for permission to file special leave petition. In this special leave p....
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.... if the both the parties appear and give consent to participate in the mediation process. Thus, it is very clear that on combined reading of the Commercial Courts Act and the Rules framed thereunder, pre-litigation mediation is subject to urgency for any interim relief and the consent of the sparing parties. 25. In such circumstances, the Harmonious Interpretation takes us to the irresistible conclusion that Section 12-A of the Commercial Courts Act, is not a mandatory provision. The right to access justice which is a Constitutional Right cannot be denied or deprived for not resorting to mediation. The Court is not substitute to Alternative Dispute Redressal, it is otherwise. The litigant cannot be denied the doors of justice for directly approaching the Court without exploring the possibility of mediation. There can be no prejudice to the Defendant, if the Defendant is ready for mediation, even after Institution of the suit. Also there is no impediment either for the party or for the Court to refer the pending matter to be resolved through mediation or any other Alternative Dispute Redressal mechanism. This provision is meant for the parties to work out an amicably settle....
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.... the provision in the parent enactment must be treated as only directory. He would submit that the sublime object of the legislation is clearly to de-clog the court particularly having regard to the reduction of the monetary value from Rs. 1 crore to Rs. 3 lakhs. In other words, by virtue of the amendment, the Legislature was conscious of the fact that there would be a phenomenal increase in the cases which would be treated as commercial cases. Bearing in mind also, the larger object of promoting India as a desired destination for economic activity which in large measure would depend upon the ease of doing business, the purpose is clear as daylight. The High Court has clearly erred in the matter. 15. Shri Ayush Negi, learned Counsel for the Appellant in other appeal, would also address arguments on similar lines. In his case, he would submit that the trial Court has proceeded on the footing that the commercial suit as such cannot be thrown out for non-compliance of Section 12A and the trial Court has erroneously considered post institution mediation as tantamounting to compliance with pre litigation mediation contemplated Under Section 12A. 16. He would submit that the plain ....
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....he bathwater. He would also point out that the High Court was in error in not finding that mediation is one of the best forms of conflict resolution. Further, error in understanding of Rule 3 of the Rules is pointed out. 20. Per contra, Shri Saket Sikri, learned Counsel who appears in civil appeal arising from SLP (C) No. 14697 of 2021, would contend that Section 12A is actually to be understood as directory. He submits 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. He would point out that no penal consequence is spelt out in Section 12A for instituting a suit without complying with Section 12A. 21. Next, he would point out that instituting a suit without complying with the provisions of Section 12A does not affect any legal right of the Defendant. It is only a procedure intended to bring about a settlement between the parties. He further contends that the course adopted by the Court in his case has addressed the concerns of the Defendant as well. This is for the re....
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....ses 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). 25. The Act was enacted in the year 2015. At the time....
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....ndment) Ordinance, 2018 on 3rd May, 2018. 4. It is proposed to introduce the Commercial Courts, Commercial Division and Commercial Appellate Division of High Courts (Amendment) Bill, 2018 to replace the Commercial Courts, Commercial Division and Commercial Appellate Division of High Courts (Amendment) Ordinance, 2018, which inter alia, provides for the following namely: (i) to reduce the specified value of commercial disputes from the existing one crore rupees to three lakh rupees, and to enable the parties to approach the lowest level of subordinate courts for speedy resolution of commercial disputes; (ii) to enable the State Governments, with respect to the High Courts having ordinary original civil jurisdiction, to constitute commercial courts at District Judge level and to specify such pecuniary value of commercial disputes which shall not be less than three lakh rupees and not more than the pecuniary jurisdiction of the district courts; (iii) to enable the State Governments, except the territories over which the High Courts have ordinary original civil jurisdiction, to designate such number of Commercial Appellate Courts at district judge le....
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....ks further time for his appearance, the Authority may, if it thinks fit, fix an alternate date not later than ten days from the date of receipt of such request from the opposite party. (6) Where the opposite party fails to appear on the date fixed Under Sub-rule (5), the Authority shall treat the mediation process to be a non-starter and make a report in this behalf as per Form 3 specified in Schedule-I and endorse the same to the applicant and the opposite party. (7) Where both the parties to the commercial dispute appear before the Authority and give consent to participate in the mediation process, the Authority shall assign the commercial dispute to a Mediator and fix a date for their appearance before the said Mediator. (8) The Authority shall ensure that the mediation process is completed within a period of three months from the date of receipt of application for pre-institution mediation unless the period is extended for further two months with the consent of the applicant and the opposite party. We shall advert to the effect of this Rule and also advert to the other Rules later on. DOWN THE MEMORY LANE 29. A Bench of five learned Judges in....
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....ne in the prescribed manner or form but does not set out the consequences of non-compliance, the question whether the provision was mandatory or directory has to be adjudged in the light of the intention of the legislature as disclosed by the object, purpose and scope of the statute. If the statute is mandatory, the thing done not in the manner or form prescribed can have no effect or validity: if it is directory, penalty may be incurred for non-compliance, but the act or thing done is regarded as good. As observed in Maxwell on Interpretation of Statutes, 10th Edn., p. 376: It has been said that no Rule can be laid down for determining whether the command is to be considered as a mere direction or instruction involving no invalidating consequence in its disregard, or as imperative, with an implied nullification for disobedience, beyond the fundamental one that it depends on the scope and object of the enactment. It may perhaps be found generally correct to say that nullification is the natural and usual consequence of disobedience, but the question is in the main governed by considerations of convenience and justice, and when that result would involve general inconvenienc....
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....y Act 104 of 1976, Section 80 reads as follows: (1) Save as otherwise provided in Sub-section (2), no suits shall be instituted against the Government (including the Government of the State of Jammu and Kashmir) or against a public officer in respect of any act purporting to be done by such public officer in his official capacity, until the expiration of two months next after notice in writing has been delivered to, or left at the office of, (a) in the case of a suit against the Central Government, except where it relates to a railway a Secretary to that Government; (b) in the case of a suit against the Central Government where it relates to railway, the General Manager of that railway; bb) in the case of a suit against the Government of the State of Jammu and Kashmir, the Chief Secretary to that Government or any other officer authorized by that Government in this behalf; (c) in the case of a suit against any other State Government, a Secretary to that Government or the Collector of the district; and, in the case of a public officer, delivered to him or left at his office, stating the cause of action, the name, description and ....
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.... 80. We need only notice what this Court held in the judgment in State of Madras v. C.P. Agencies and Ors. AIR 1960 SC 1309: 1. ... The very language of Section 80 makes it clear,-- and it has been so held by the Judicial Committee in Bhagchand Dagdusa v. Secy. of State, 54 Ind. App. 338 : (AIR 1927 PC 176) which decision has been adopted by the same tribunal in many later cases--that Section 80 is express, explicit and mandatory and admits of no implications or exceptions. ... 34. In Bihari Chowdhary and Anr. v. State of Bihar and Ors (1984) 2 SCC 627, while on the effect of Section 80 of the Code of Civil Procedure, this Court laid down as follows: 3. ..... The effect of the Section is clearly to impose a bar against the institution of a suit against the Government or a public officer in respect of any act purported to be done by him in his official capacity until the expiration of two months after notice in writing has been delivered to or left at the office of the Secretary to Government or Collector of the concerned district and in the case of a public officer delivered to him or left at his office, stating the particulars enumerated in the last p....
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....ourt in the following paragraph: 7. On behalf of the Appellants, strong reliance was placed on the decision of a learned Single Judge of the High Court of Kerala in Nani Amma Nannini Amma v. State of Kerala [AIR 1963 Ker 114 : 1962 Ker.L.J. 1267]. Therein the learned Judge has expressed the view that Section 80 is not a provision of public policy and there is nothing in the Section expressly affecting the jurisdiction of the Court to try a suit instituted before the expiry of the period prescribed therein. The reasons stated by the learned Judge in justification of his taking the said view despite the clear pronouncement of the Judicial Committee of the Privy Council in Bhagchand case [AIR 1927 PC 176: 54 IA 338, 357] do not appeal to us as correct or sound. In the light of the conclusion expressed by us in the foregoing paragraphs about the true scope and effect of Section 80 Code of Civil Procedure, the aforecited decision of the learned Single Judge of the Kerala High Court cannot be accepted as laying down good law. (Emphasis supplied) 37. In this context, we may refer to the judgment of this Court in Gangappa Gurupadappa Gugwad, Gulbarga v. Rachawwa, Widow of Lo....
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....e may notice the following paragraph: 9. The difference between a mandatory Rule and a directory Rule is that while the former must be strictly observed, in the case of the latter substantial compliance may be sufficient to achieve the object regarding which the Rule is enacted. Certain broad propositions which can be deduced from several decisions of courts regarding the Rules of construction that should be followed in determining whether a provision of law is directory or mandatory may be summarised thus: The fact that the statute uses the word "shall" while laying down a duty is not conclusive on the question whether it is a mandatory or directory provision. In order to find out the true character of the legislation, the court has to ascertain the object which the provision of law in question has to subserve and its design and the context in which it is enacted. If the object of a law is to be defeated by non-compliance with it, it has to be regarded as mandatory. But when a provision of law relates to the performance of any public duty and the invalidation of any act done in disregard of that provision causes serious prejudice to those for whose benefit it is enacted a....
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....y situations in the ends of justice. The observations made by Krishna Iyer, J. in Sushil Kumar Sen v. State of Bihar [(1975) 1 SCC 774] are pertinent: (SCC p. 777, paras 5-6) The mortality of justice at the hands of law troubles a judge's conscience and points an angry interrogation at the law reformer. The processual law so dominates in certain systems as to overpower substantive rights and substantial justice. The humanist Rule that procedure should be the handmaid, not the mistress, of legal justice compels consideration of vesting a residuary power in judges to act ex debito justitiae where the tragic sequel otherwise would be wholly inequitable. ... Justice is the goal of jurisprudence -- processual, as much as substantive. xxx xxx xxx 30. It is also to be noted that though the power of the court under the proviso appended to Rule 1 Order 8 is circumscribed by the words "shall not be later than ninety days" but the consequences flowing from non-extension of time are not specifically provided for though they may be read in by necessary implication. Merely because a provision of law is couched in a negative language implying mandatory char....
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....rt uses the word "shall" when it stipulates that the "court shall formulate terms of settlement". The use of the word "may" in later part of Section 89 only relates to the aspect of reformulating the terms of a possible settlement. The intention of the legislature behind enacting Section 89 is that where it appears to the court that there exists an element of a settlement which may be acceptable to the parties, they, at the instance of the court, shall be made to apply their mind so as to opt for one or the other of the four ADR methods mentioned in the Section and if the parties do not agree, the court shall refer them to one or the other of the said modes. Section 89 uses both the words "shall" and "may" whereas Order 10 Rule 1-A uses the word "shall" but on harmonious reading of these provisions it becomes clear that the use of the word "may" in Section 89 only governs the aspect of reformulation of the terms of a possible settlement and its reference to one of ADR methods. There is no conflict. It is evident that what is referred to one of the ADR modes is the dispute which is summarised in the terms of settlement formulated or reformulated in terms of Section 89. 45. Lastly....
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....12A need not be undergone. It was further observed that it was not, as if, the Court lacks inherent jurisdiction to entertain a Suit without complying with Section 12A. Still further, he refers to Section 80 of the Code of Civil Procedure. He refers to AL. AR. Vellayan Chettiar (Decd.) and Ors. v. Government of the Province of Madras Through the Collector of Ramnad at Madura and Anr. AIR 1947 PC 197, for the proposition that Notice thereunder is given for the protection of the Authority concerned and he can lawfully waive his right to the Notice. Reliance was also placed on the judgment in State of A.P. and Ors. v. Pioneer Builders, A.P. (2006) 12 SCC 119, wherein this Court declined to interfere with the finding that having participated in the proceeding without raising objection about the maintainability of the Suit, there would be waiver. learned Single Judge also took the view that even Under Section 12A of the Act, in a given set of facts, the Defendant could be held to have waived his right to set up Section 12A. It is further found that, if there is substantial compliance, the Plaintiff cannot be non-suited, i.e., if an attempt has been made for settling the dispute, which h....
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....andard operating procedure had been made and Rules were published on 11.12.2020. The very same learned Single Judge (Debangsu Basak, J.) in the judgment reported in Laxmi Polyfab Pvt. Ltd. v. Eden Realty Ventures Pvt. Ltd. and Anr. AIR 2021 Calcutta 190, elaborately considered the question as to whether Section 12A is mandatory. He went on to hold that Section 12A was mandatory. The Division Bench of the High Court of Madhya Pradesh, in Curewin Pharmaceuticals Pvt. Ltd. v. Curewin Hylico Pharma Pvt. Ltd. AIR 2021 MP 154, followed the judgment of the learned Single Judge of High Court of Bombay, which we have noticed in Ganga Taro (supra), and after finding that a Suit, which does not contemplate an urgent interim relief, cannot be instituted unless pre-litigation mediation is exhausted. A learned Single Judge of the Allahabad High Court in the decision reported in Awasthi Motors v. Managing Director M/s. Energy Electricals Vehicle and Anr. AIR 2021 Allahabad 143, found that there is a clear purpose provided for pre-institution mediation. He referred to the Statement of Objects and Reasons. He concluded that the provision is mandatory. A SURVEY OF THE ACT AND THE RULES 49. Sec....
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....ng with costs. It provides that the Court has the discretion in the matter of quantum of costs. Section 35 of the Code of Civil Procedure in the Schedule, inter alia, contemplates that in making an Order for payment of costs, the Court shall have regard to the conduct of the parties and whether any reasonable offer to settle, is made by a party and unreasonably refused by the other party. Sections 35(3) and 35(4) read as follows: 35(3) In making an order for the payment of costs, the Court shall have regard to the following circumstances, including-- (a) the conduct of the parties; (b) whether a party has succeeded on part of its case, even if that party has not been wholly successful; (c) whether the party had made a frivolous counterclaim leading to delay in the disposal of the case; (d) whether any reasonable offer to settle is made by a party and unreasonably refused by the other party; and (e) whether the party had made a frivolous claim and instituted a vexatious proceeding wasting the time of the Court. 35(4) The orders which the Court may make under this provision include an order that a party must pay- ....
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....a notice to the opposite party to appear and to give his consent to participate within the time as provided in Rule 3(2). Should there be no response, a final notice is to be given again in the manner articulated in Rule 3(2). Should there be again no response by the notice remaining unacknowledged or upon there being refusal to participate, the mediation process becomes what is described, a non-starter. The Authority then makes a report in Form-III, which is called a Non-Starter Report. The copy of the Report is served on the applicant and the Respondent. There is a provision for accommodating the request of the opposite party appearing and seeking time, subject to the date being not later than ten days from the date of request of the parties. If, in such a case, there is failure to appear by the opposite party, again a non-starter report in Form-III has to be made. If, on the other hand, where both parties appear, gives consent, the Authority is to assign the matter to a Mediator and also to assign a date. The period of mediation being three months and the possibility of an extension by two months, with the consent of both sides, is the subject matter of Rule 3. The role of the M....
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....iation fee, which is to be shared equally, as per the quantum of claim as specified in Schedule II. We may set out Schedule II. SCHEDULE-II Mediation Fee [See Rule 11] S.NO QUANTUM OF CLAIM MEDIATION FEE PAYABLE TO AUTHORITY (in Indian rupees). 1. From Rs. 3,00,000 to Rs.10,00,000. Rs. 15,000/- 2. From Rs. 10,00,000. to Rs. 50,00,000. Rs. 30,000/- 3. From Rs. 50,00,000. to Rs. 1,00,00,000. Rs. 40,000/- 4. From Rs.1,00,00,000. to Rs.3,00,00,000. `Rs. 50,000/- 5. Above Rs. 3,00,00,000. Rs. 75000/- 53. Timelines are contemplated, both in the matter of pleadings and also other steps to be taken. They are geared to ensure an expeditious culmination of the proceedings. Originally, the specified value within the meaning of Section 2(i) was fixed as 'which shall not be less than one crore rupees'. Within three years of the birth of the Act, Parliament found that it was necessary to reduce the specified value from the sum of Rs. 1 crore to Rs. 3 lakhs, which is what is reflected in the present avatar of the definition of the word 'specified value'. It is simultaneously with the reduction of the specif....
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.... of the noble goals of the Law-giver. It is apparent that the Legislature has manifested a value judgment. We are not called upon to decide the constitutionality of the provision. Parliament is presumed to be aware of the felt necessities of the times. It best knows the manner in which the problems on the ground are redressed. Section 89 of the Code of Civil Procedure, does contemplate mediation ordered by a Court. However, it must be noticed that Section 12A contemplates mediation without any involvement of the Court as it is done prior to the institution of the suit. 54. The potential of Section 89 of the Code of Civil Procedure for resolving disputes has remained largely untapped on account of the fact that mediation has become the product of volition of the parties. Courts, no doubt, have begun to respond positively. However, there was a pressing need to decongest the trial courts, in commercial matters in particular, as they bear the brunt of docket explosion. It is noteworthy that Section 12A provides for a bypass and a fast-track route without for a moment taking the precious time of a court. At this juncture, it must be immediately noticed that the Law-giver has, in S....
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....e relationship but also destroys it. And, so far as society is concerned it affects its peace. So what is required is resolution of dispute at the earliest possible opportunity and via such a mechanism where the relationship between individual goes on in a healthy manner. Warren Burger, once said: The obligation of the legal profession is ... to serve as healers of human conflict ... we should provide mechanisms that can produce an acceptable result in shortest possible time, with the least possible expense and with a minimum of stress on the participants. That is what justice is all about. Mediation is one such mechanism which has been statutorily brought into place in our justice system. It is one of the methods of alternative dispute resolution and resolves the dispute in a way that is private, fast and economical. It is a process in which a neutral intervenor assists two or more negotiating parties to identify matters of concern, develop a better understanding of their situation, and based upon that improved understanding, develop mutually acceptable proposals to resolve those concerns. It embraces the philosophy of democratic decision-making [Alfin, et al., M....
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...., 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 role of the Bar is vital in taking mediation forward. With increase in population and a skewed Judge-population ratio and a huge spiralling of litigation in the courts, it is logical, just and imperative, to attempt and persevere in out of the box thinking. We can no longer afford to remain in the past. A clean break with the past is urgently needed. What was a mere writing on the wall as early as in the last decades of the previous century has become the harsh reality. It is important that the courts also adapt to the changing times. At least when the Parliament has decided to move ahead, it becomes the court's duty not to greet it with undue scepticism. It becomes necessa....
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.... will violate the right of another person. 61. We may proceed on the basis that if the suit is brought without complying with Section 12A, where no urgent interim relief is sought, may not in one sense, affect the legal right of the Defendant. But this argument overlooks the larger picture which is the real object of the law. This object is not to be viewed narrowly with reference to the impact on the parties alone. This is apart from also remembering that if the parties were to exhaust mediation Under Section 12A, the opposite side may be, if mediation is successful, saved from the ordeal of a proceeding in court, which, undoubtedly, would entail costs, whereas, the mediation costs, as we have noticed, is minimal, and what is more, a one-time affair, and still further, to be shared equally between the parties. Each time the Plaintiff is compelled to go in for mediation Under Section 12A there is a ray of hope that the matter may get settled. The chief advantage and highlight of mediation is that it is a win-win for all sides, if the mediation is successful. Therefore, it cannot, in one sense, be argued that no legal right of the Defendant is infracted. Further, on the same logi....
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....her Section 12A is mandatory or not, must be decided with reference to language used, the object of the enactment and a host of other aspects. The fact that if a Defendant does not raise the plea about compliance of Section 12A, it may result in a given case of waiver cannot result in Section 12A not being mandatory. If it were so, then in a case where there is no notice Under Section 80, a plaint can never be rejected. It is legally untenable and defies logic. Another argument raised by Shri Saket Sikri, learned Counsel is that by the impugned order, the High Court has affirmed the trial Court order that the suit be kept in suspended animation and referred the parties for mediation. According to him, it is substantial compliance of Section 12A of the Act. It is eminently just. He also points out the conduct of the Appellant in not even cooperating in the mediation process. We are unable to accept this argument. We will refer to Section 80 of the Code of Civil Procedure to assist us in justifying our conclusion. Under Section 80(1) of the Code of Civil Procedure, a suit not covered by Section 80(2), which is filed in defiance of the former provision, that is without serving any not....
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....plated by that Section is to give to the concerned Governments and public officers opportunity to reconsider the legal position and to make amends or settle the claim, if so advised, without litigation. The legislative intention behind that Section in our opinion is that public money and time should not be wasted on unnecessary litigation and the Government and the public officers should be given a reasonable opportunity to examine the claim made against them lest they should be drawn into avoidable litigations. The purpose of law is advancement of justice. The provisions in Section 80 of the Code of Civil Procedure are not intended to be used as booby traps against ignorant and illiterate persons. In this case we are concerned with a narrow question. Has the person mentioned in the notice as Plaintiff brought the present suit or is he someone else? This question has to be decided by reading the notice as a whole in a reasonable manner. 9. In Dhian Singh Sobha Singh v. Union of India [(1958) SCR 781, 795] this Court observed that while the terms of Section 80 of the Code of Civil Procedure must be strictly complied with that does not mean that the terms of the Section shou....
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....ee the first proviso to Section 12A Sub-section (3)]. By the second proviso, the Legislature has taken care to provide that the period, during which the parties remained occupied with the pre-litigation mediation, is not to be reckoned for the purpose of computing the period of limitation under the Limitation Act, 1963. As to what would happen, if the parties arrive at the settlement, is provided for in Section 12A Sub-section (4). The settlement is to be reduced into writing and signed by the parties to the dispute and the Mediator. The effectiveness of a settlement arrived at in the course of the pre-institution mediation contemplated in Section 12A, has been dealt with in Section 12A Sub-section (5). Parliament has accorded the settlement, 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. Spread over five Sub-sections, this standalone Section in Chapter IIIA, no doubt, supported by the Rules, in our view, substantially manifests a definite scheme to effectively deal with the perceived urgent problem of acute clogging of the justice delivery system, which had to be de-conges....
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.... taken earlier. In the facts of the case, the Court observed as under: 13. On the admitted facts appearing from the record itself, learned Counsel for the Respondent, was unable to show that all or any of these averments in the plaint disclose a cause of action giving rise to a triable issue. In fact, Shri Salve was unable to dispute the inevitable consequence that the plaint was liable to be rejected Under Order VII Rule 11, Code of Civil Procedure on these averments. All that Shri Salve contended was that the court did not in fact reject the plaint Under Order VII Rule 11, Code of Civil Procedure and summons having been issued, the trial must proceed. In our opinion, it makes no difference that the trial court failed to perform its duty and proceeded to issue summons without carefully reading the plaint and the High Court also overlooked this fatal defect. Since the plaint suffers from this fatal defect, the mere issuance of summons by the trial court does not require that the trial should proceed even when no triable issue is shown to arise. Permitting the continuance of such a suit is tantamount to licensing frivolous and vexatious litigation. This cannot be done. (....
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....he Code of Civil Procedure reads as follows: Order IV Rule 1. Suit to be commenced by plaint.--(1) Every suit shall be instituted by presenting a plaint in duplicate to the Court or such officer as it appoints in this behalf. (2) Every plaint shall comply with the Rules contained in Orders VI and VII, so far as they are applicable. (3) The plaint shall not be deemed to be duly instituted unless it complies with the requirements specified in sub-rules (1) and (2). 70. Sub-rule (3) of Order IV Rule 1 was inserted by Act 46 of 1999 w.e.f. 01.07.2002. Shri Sharath Chandran has drawn our attention to the judgment of the High Court of Madras reported in Olympic Cards Limited v. Standard Chartered Bank (2013) 1 CTC 38. In the said case, the question, which arose was, whether there was an abandonment or withdrawal of suit within the meaning of Order XXIII Rule 1 of the Code of Civil Procedure, which would operate as a bar to file a fresh suit. In this context, we notice the following discussion: 16. Rule (1) of Order 4 of Code of Civil Procedure provided for institution of Suits. Rules 3 & 4 of Order 4 contains the statutory prescription that the Plai....
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.... to take that there is no institution of the suit within the meaning of Section 12A, until the Court admits the plaint and registers it in the suit register. In other words, presentation of the plaint may not amount to institution of the suit for the purpose of Order IV Rule 1 of the Code of Civil Procedure and Section 12A of the Act. If this view is adopted, it is pointed out that before the plaint is registered after presentation and there is non-compliance with Section 12A, the Plaintiffs can, then and there, be told off the gates to first comply with the mandate of Section 12A. This process would not involve the Courts actually spending time on such matters. In the facts, this question does not arise and, it may not be necessary to explore this matter further. 72. We may sum-up our reasoning as follows: The Act did not originally contain Section 12A. It is by amendment in the year 2018 that Section 12A was inserted. The Statement of Objects and Reasons are explicit that Section 12A was contemplated as compulsory. The object of the Act and the Amending Act of 2018, unerringly point to at least partly foisting compulsory mediation on a Plaintiff who does not contempla....
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....ts do not contemplate urgent interim relief. As to what should happen in suits which do contemplate urgent interim relief or rather the meaning of the word 'contemplate' or urgent interim relief, we need not dwell upon it. The other aspect raised about the word 'contemplate' is that there can be attempts to bypass the statutory mediation Under Section 12A by contending that the Plaintiff is contemplating urgent interim relief, which in reality, it is found to be without any basis. Section 80(2) of the Code of Civil Procedure permits the suit to be filed where urgent interim relief is sought by seeking the leave of the court. The proviso to Section 80(2) contemplates that the 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. Our attention is drawn to the fact that Section 12A does not contemplate such a procedure. This is a matter which may engage attention of the lawmaker. Again, we reiterate that these are not issues which arise for our consideration. In the fact of the cases admittedly there is no urgent interim relief contemplat....
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....nder Order VII Rule 11 allowed. This would mean that the plaints must be rejected. Necessarily, this would involve the loss of the court fee paid by the Plaintiffs in these cases. They would have to bring a fresh suit, no doubt after complying with Section 12A, as permitted Under Order VII Rule 13. Moreover, the declaration of law by this Court would relate back to the date of the Amending Act of 2018. 77. There is a plea by Shri Saket Sikri, that if this Court holds that Section 12A is mandatory it may be done with only prospective effect. He drew support of the judgment of this Court in, Jarnail Singh and Ors. v. Lachhmi Narain Gupta and Ors. 35. While interpreting the scope of Article 142 of the Constitution, this Court held that the law declared by the Supreme Court is the law of the land and in so declaring, the operation of the law can be restricted to the future, thereby saving past transactions. 36. The power of this Court Under Article 142 of the Constitution is a constituent power transcendental to statutory prohibition [(1997) 5 SCC 201]. In Orissa Cement Ltd. v. State of Orissa [(1991) Suppl. 1 SCC 430], this Court observed that relief can be grante....
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....ospective overruling" implies an earlier judicial decision on the same issue which was otherwise final. That is how it was understood in Golak Nath [AIR 1967 SC 1643: (1967) 2 SCR 762]. However, this Court has used the power even when deciding on an issue for the first time. Thus, in India Cement Ltd. v. State of T.N. [(1990) 1 SCC 12] when this Court held that the cess sought to be levied Under Section 115 of the Madras Panchayats Act, 1958 as amended by Madras Act 18 of 1964, was unconstitutional, not only did it restrain the State of Tamil Nadu from enforcing the same any further, it also directed that the State would not be liable for any refund of cess already paid or collected. 28. In the ultimate analysis, prospective overruling, despite the terminology, is only a recognition of the principle that the court moulds the reliefs claimed to meet the justice of the case -- justice not in its logical but in its equitable sense. As far as this country is concerned, the power has been expressly conferred by Article 142 of the Constitution which allows this Court to "pass such decree or make such order as is necessary for doing complete justice in any cause or matter pending....
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....ng pronounced it is likely to intrude into or reopen settled transactions. This is not a matter where the court is overruling a decision of the High Court which has held the field for a long period. See in this regard, Harsh Dhingra v. State of Haryana and Ors. (2001) 9 SCC 550. In the said judgment this Court held as follows: 7. Prospective declaration of law is a device innovated by this Court to avoid reopening of settled issues and to prevent multiplicity of proceedings. It is also a device adopted to avoid uncertainty and avoidable litigation. By the very object of prospective declaration of law it is deemed that all actions taken contrary to the declaration of law, prior to the date of the declaration are validated. This is done in larger public interest. Therefore, the subordinate forums which are bound to apply law declared by this Court are also duty-bound to apply such dictum to cases which would arise in future. Since it is indisputable that a court can overrule a decision there is no valid reason why it should not be restricted to the future and not to the past. Prospective overruling is not only a part of constitutional policy but also an extended facet of sta....