Commercial Courts Act | Institution Of Suit Means Presentation, Not Registration, For Mandatory Mediation: Bombay High Court

The Bombay High Court has held that the requirement of pre-institution mediation under Section 12-A of the Commercial Courts Act does not apply where a suit was instituted before the provision was declared mandatory, even if the suit was registered after that date.

The court clarified that, for the purposes of Section 12-A, a suit is instituted when the plaint is presented before the court and not when it is subsequently registered by the registry.

A Single Judge Bench of Justice Gauri Godse explained that the obligation to exhaust pre-institution mediation arises before filing of the suit and not at the stage of registration.

“In the context of Section 12-A of the said Act, exhausting the remedy of pre-institution mediation and settlement is before filing of a suit and not its registration. Thus, the word “institution” in Section 12-A of the said Act means the filing of a suit by presenting the plaint and the documents in the registry or before the Court or such officer appointed in that behalf and not before registration of the suit.”, it said.

The ruling came in a commercial suit filed by Asean International Limited and another plaintiff seeking recovery of dues relating to bunker supplies and amounts advanced under a credit facility. A consortium of lenders was arrayed as defendants, with State Bank of India as the first defendant. The plaint was presented before the High Court on July 31, 2021. The Bombay High Court had declared Section 12-A mandatory with effect from October 1, 2021. The suit, however, came to be registered later, on December 18, 2021.

SBI sought rejection of the plaint, contending that since the suit was registered after October 1, 2021, it was barred for non-compliance with the mandatory requirement of pre-institution mediation under Section 12-A. SBI also raised objections on limitation and contended that the plaint disclosed no cause of action against it.

Rejecting the application, the court held that since the suit had been instituted prior to October 1, 2021, there was no requirement to comply with pre-institution mediation. The subsequent registration of the suit did not alter the date of institution. On the objections relating to limitation and cause of action, the court held that these raised triable issues which could not be decided at the threshold.

“Thus, the question whether the plaintiffs' cause of action is sustainable or defective presents a triable issue that warrants trial and cannot be decided at this stage.”

The application seeking rejection of the plaint was accordingly dismissed.

For Applicant: Advocates Nirman Sharma, Deeshank Doshi, Dhruva Sikarwar, with Desai and Diwanji

For Respondents: Advocates Siddhesh Bhole and Yakshay Chheda with SSB Legal and Advisory for Original Plaintiff; Advocate Vidhi Sharma with Indus Law for Defendant No. 4; Advocate Mohd. Riyaz Khan for Defendant No 9.