S.12 A Commercial Courts Act | Allowing Suit To Remain In Records On Contingency That Urgency May Arise Later, Patently Contradictory: Calcutta HC

The Calcutta High Court has held that when pleading urgency under Section 12 A of the Commercial Courts Act, allowing the suit to remain in records on a contingency of urgency which may arise at a later date, is patently contradictory. 

A single bench of Justice Moushumi Bhattacharya held:

The words used in section 12-A makes it clear that the contemplation of urgency begins and ends at the point of institution, i.e. material point of time when the contemplation must fructify into a proved and pleaded case for urgent interim relief. Hence allowing the suit to remain in the records despite an absence of urgency on the contingency that urgency may arise at a later point of time is patently contrary to the mandate of section 12-A.

Brief facts

The defendant moved the present application for revocation of leave granted to the plaintiff under Section 12A of the act. It was stated that an earlier order had recorded that there was no urgency for moving the affidavit of arrest on an earlier occasion.

Counsel for the defendant argued that the plaintiffs suit was instituted on the basis of leave granted to dispense with the mandatory compliance of provisions of pre-institution mediation under the 2015 act.

It was argued that the affidavit of arrest and plaint were missing any pleadings on urgency and that the cause of action arose in 2016. It was submitted that there was also an order which recalled the order of arrest and that the plaintiff could not have instituted the suit without pre-institution mediation since there was no urgent interim relief sought.

Counsel for the plaintiff submitted that an order under Section 12A was not revocable, since the need for urgent relief may arise even during the pendency of the commercial suit. It was argued that the case fell under the exclusive maritime jurisdiction of the Calcutta HC and that they only had to establish a maritime claim for an order of arrest to be issued under the Admiralty Act.

Findings of Court

It was found that the plaintiff had prayed for dispensation with pre-institution mediation under Section 12A, and leave was granted on the basis of urgency shown by the plaintiff. Accordingly, the Court had passed orders for the arrest of the vessel which was lying off the coast of Port Blair, and the defendants were directed to furnish security of Rs 1.5 crores to redeem the vessel.

Upon an application by the defendant, the Court vacated the order of arrest and inter alia observed that there was no urgency in ordering the arrest of the vessel as had been claimed by the plaintiff. 

The questions for consideration, hence, were whether the dispensation granted under Section 12A could be revoked, and whether the suit can be dismissed under Order VII Rule 11 of the CPC.

In perusing Section 12A, the Court noted that in the absence of urgent interim relief, a suit cannot be instituted without pre-institution mediation and that the question for urgent relief is to be decided at the time of institution of the suit and not at a later stage. Court held:

Plaintiff does not have the option of any later or subsequent contemplation of urgent interim relief post institution of the suit. To reiterate one last time, a suit which does not contemplate urgent interim relief shall not be instituted without resorting to pre-institution mediation. Period.

It was further held that the onus for proving that there was a case requiring urgent relief lay with the plaintiff and that under Section 12A, even the Court had the power to decide whether the suit contemplated an urgent interim relief whereby the plaintiff -needed to be permitted to bypass pre-institution mediation.

Accordingly, it was held that in the present case, there was a specific finding upon the defendant's application that there was no urgency pleaded in the plaint by the plaintiff.

The High Court is hence entitled to revoke the dispensation granted under section 12-A. The power to revoke the dispensation granted under section 12-A can be made even suo motu without being tethered to an application made by the defendant in that regard, it was stated.

On the issue of whether the suit could be dismissed under Order VII Rule 11 upon a finding of 'no urgency', the Court noted that it may be entitled to dismiss the suit under sub-clause (d) upon a finding that the urgency as claimed by the plaintiff did not exist.

It was held that such a statutory bar would also hold good even if established at a subsequent stage to the institution of the suit.

Court also rejected the plaintiff's stance that contemplation of urgent interim relief may be revived after the institution of the suit or even at the stage of trial.

It was held that the words in Section 12A clearly spelt out the fact that the time when the contemplation of urgency must fructify began and ended with the institution of the suit, and allowing the suit to remain in situ contemplating urgency to arise at a later date may be patently contradictory to the mandate of Section 12A. It concluded:

“Urgent interim relief” by its very definition means relief which the plaintiff seeks at the interlocutory/interim stage and one that cannot wait for a later adjudication on affidavits or at the time of trial. It hence stands to reason that the plaintiff would be under an obligation to explore mediation as an alternative dispute redressal mechanism before the institution of a suit where the plaintiff does not need such urgent interim relief."

Citation: 2024 LiveLaw (Cal) 65

Case: Proactive Ship Management Private Limited. vs. The Owners and Parties Interested in the Vessel Green Ocean. 

Case No: AS 6 of 2023

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