'Courts Are Not Playgrounds And Litigation Is Not A Pastime' – Bombay HC Imposes Rs 25 Lakh Costs For Vexatious Application In Commercial Dispute

"Plaintiffs such as this one will understand that Courts are not playgrounds, and litigation is not a pastime," Justice Gautam Patel observed while directing plaintiff La Fin Financial Services Pvt Ltd to pay the Defendant Multi Commodity Exchange Of India Ltd Rs 25 lakh within two weeks.

The court imposed the cost after giving the plaintiff several chances to withdraw the application.

The order was passed on September 21 and has been challenged before the Apex Court.

Before the court, the plaintiff had sought orders against the defendant for failing to file their written statement within the 120-day limitation under the Commercial Court Act. However, the court noted that the plaintiff had filed the case as a regular suit, to which limitation wouldn't apply.

It was only a year later that the suit was transferred to the commercial division, therefore, the limitation would run from the time the Commercial Courts Act would apply and not retrospectively, the court said.

"In a case such as this, when a suit is initially instituted as a regular suit and not a commercial suit, there is no statutory limitation that runs against a defendant. The Commercial Courts Act does not apply to a regular suit. It only begins to apply from the date when the suit is registered as a commercial suit in the commercial division… This hardly needed re-stating," Justice Patel observed.

The court added that "The initial delay is attributable only to the plaintiff. It cannot take advantage of this. No court will permit an injustice to be caused, especially when the party seeking an order is itself found to be in default."

"The Interim Application is certainly frivolous, mischievous and vexatious. It is an unconscionable waste of very, very scarce judicial time. It seeks to paper over the plaintiff's slothful handling of its filing…No statute will be read by a court, especially not a court of equity, to yield an unjust result." the bench observed.

Commercial Courts Act Is Not Anti-Defendant

"The purpose and ambit of the Commercial Courts Act is not anti-defendant. It is not merely intended to put a defendant under a strict time limit for entering a defence. It is intended to ensure that Commercial Suits are disposed of expeditiously," the court observed.

The court held that even the plaintiff must adhere to reasonable timelines, even if there is no strict limitation.

"What unfortunately the Commercial Courts Act does not say but must reasonably be held to say, is that there is a corresponding duty and obligation on the part of each plaintiff in a Commercial Suit to act with the utmost dispatch and to adhere to reasonable timelines, even if there is no strict limitation."

The court said that the quantum of costs could not be trivial as "Amended Section 35 clearly intends the power of ordering costs to be used as a deterrent to prevent parties from making such frivolous applications. It would be meaningless to order a paltry amount."

Case Title: La Fin Financial Services Pvt Ltd v. Multi Commodity Exchange Of India Ltd

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