Urgent Interim Relief Test Cannot Defeat Commercial Suit At Threshold: Bombay High Court

The Bombay High Court on 4 April held that a plea for urgent interim relief cannot be used to defeat a commercial suit at the threshold by invoking non-compliance with Section 12-A of the Commercial Courts Act.

Justice Gauri Godse held that whether a case involves “urgent interim relief” must be assessed from the plaintiff's standpoint at the time of filing, and not on the basis of the final outcome of the relief. On this reasoning, the Court dismissed interim applications filed by IIFL Finance Ltd and IIFL Home Finance Ltd seeking rejection of the Mordani Group's commercial suit under Order VII Rule 11 of the CPC. It observed:

“Hence, by applying the well-settled legal principles as discussed in the above paragraphs, when a suit contemplates urgent interim relief, it cannot be rejected at the threshold by applying the bar under Section 12-A of the said Act. I have recorded reasons in the above paragraphs that the bar under Section 34 of the SARFAESI Act and Section 41 of the Specific Relief Act cannot be applied for rejection of the plaint at the threshold.”

The dispute arose from a commercial suit filed by Mordani Group entities against IIFL Finance, IIFL Home Finance and Vensco Developers LLP seeking specific performance of a Framework Agreement dated 20 December 2024. The agreement allegedly related to settlement of loan facilities linked to redevelopment projects including “La Maison”, “Signature Suites” and “Celyn”, along with claims for discharge of liabilities, release of securities and enforcement of a profit-sharing arrangement involving Vensco Developers LLP.

The lenders sought rejection of the plaint on the ground that the suit was barred for failure to undergo mandatory pre-institution mediation under Section 12-A of the Commercial Courts Act and was also hit by Section 34 of the SARFAESI Act and Section 41 of the Specific Relief Act.

Rejecting these objections, the Court held that the Section 12-A inquiry is limited to whether the plaint, as filed, genuinely contemplates urgent interim relief from the plaintiff's perspective, without assessing the merits of the relief. It further held that neither Section 34 of the SARFAESI Act nor Section 41 of the Specific Relief Act could justify rejection of the plaint at the threshold, particularly where contractual enforcement is pleaded.

Accordingly, the Court dismissed the interim applications filed by IIFL Finance and IIFL Home Finance.