Grant Of Leave For Dispensation Of Mandated Pre-Institution Mediation U/S 12-A Of Commercial Courts Act Is A Judicial Act: Calcutta HC

The Calcutta High Court has recently held that the grant of leave for dispensation of the mandatory requirement of pre-institution mediation as prescribed under section 12-A of the Commercial Courts Act, 2015 would constitute a judicial act.

Section 12-A of the Commercial Courts Act provides that a suit which does not contemplate any urgent interim relief, shall not be instituted unless the plaintiff exhausts the remedy of pre- institution mediation under the prescribed rules.

Justice Moushumi Bhattacharya was adjudicating upon an application for the recalling of two orders passed by the Master under the Original Side Rules of the High Court granting leave to the plaintiff under section 12-A of the Commercial Courts Act.

Th issue for consideration before the Court was whether the Master, under the Original Side Rules of the High Court has the power to grant leave under section 12-A of the Commercial Courts Act, 2015 in a suit instituted under the Commercial Division of a High Court.

Background

The Master had granted leave for dispensation of the mandatory requirement of pre-institution mediation and had allowed the plaintiff to amend the plaint to this effect on January 9, 2020. Thereafter, a Single Judge had passed a decree in an application filed under Order XII Rule 6 of CPC. 

 In February, 2020, the defendant came to learn about the leave granted by the Master under section 12- A of the 2015 Act and subsequently the defendant challenged the decree before a Division Bench and was permitted to withdraw the appeal with the leave to file a review on July 1, 2020. The review, filed by the defendant, of the judgment and decree dated January 16, 2020 was dismissed by the Single Judge on February 11, 2021.

A Special Leave Petition was filed by the defendant challenging the decree dated January 16, 2020 and the order dismissing the review dated February 11, 2021 was disposed of as withdrawn on July 16, 2021.

Observations

The Court observed that a purposive construction of Section 12A of the Commercial Courts Act would lead to the conclusion that grant of leave for dispensation of the mandatory requirement of section 12-A is a judicial act since it requires the concerned Single Judge sitting in the Commercial Division of a High Court to be satisfied of the two conditions expressed in the statutory provision namely that the claim is in relation to a commercial dispute as defined in the Act and that the plaintiff seeks an urgent interim relief.

"The accepted practice in the Original Side of this Court is that grant of leave for institution of suits filed in the commercial division is a judicial act and not an administrative act. Leave under the Letters Patent, 1865, including under Clauses 12 and 14 is always granted by the Court and is not an administrative act which can be delegated", the Court elucidated further. 

Reliance was also placed on the Calcutta High Court judgment in Laliteshwar Singh v. Rameshwar Singh wherein a 5 judge Bench while considering the terms of Clause 12 of the Letters Patent had held that the nature of the act of granting leave to sue has been uniformly regarded as a judicial act, as opposed to a ministerial and administrative act and the order has been treated as a judgment appealable under Clause 15 of the Letters Patent. 

"It must be recognized that the practice adopted and continued is that of a Single Judge sitting in the Commercial Division passing a judicial order for grant of leave for dispensing with the statutory requirement of exhausting the remedy provided under section 12A of the Act. This practice is being followed from the time the courts familiarized themselves with the new regime under the Commercial Courts Act. Granting leave under section 12-A has now been accepted as judicial business within the exclusive domain of the Court / Commercial Division", the Court underscored further. 

The Court further opined that a failure to obtain leave may be a factor in refusing interim relief or delay the stage at which the interim relief is sought for but would not amount to a fundamental error capable of nullifying all subsequent acts. As long as the plaintiff has a legal and a valid claim and the suit satisfies the territorial and pecuniary jurisdictional aspect, the defect of non-grant of leave under section 12-A can be cured on a case-to-case analysis by the Court, it was highlighted further. 

Justice Bhattacharya averred further, 

"The conclusion draws strength from the unlikely - and hitherto unheard of - prospect of a defendant applying for revocation of leave granted under section 12-A of the Commercial Courts Act, as opposed to similar applications in relation to Clause 12 of the Letters Patent. The reason is surely the uphill task of a defendant to prove that the suit did not contemplate any urgent interim relief under the Commercial Courts Act at the time of institution and that the plaintiff was therefore required to exhaust the pre-institution mediation option before instituting the suit. Seeking revocation of leave on a territorial jurisdiction issue would any day be a much simpler task!"

Pursuant to the perusal of the record, the Court further noted that the defendant has availed of opportunities before different fora, changed its stand and chose to withdraw from the proceedings at various points of time. Accordingly, it was opined that the conduct of the defendant suggests misuse of Court processes and hence neutralises the contentions which the defendant seeks to take before the Court.

"The litigant himself must also show by conduct that the litigant has been vigilant of its rights and has availed of every recourse to protect the same. The conduct of the defendant does not inspire such credibility or persuade the Court to grant the relief prayed for", the Court ruled. 

Accordingly, the Court dismissed the application for recalling the orders. 

Case Title: Ramesh Co. v. Imperial Tubes Pvt. Ltd

Case Citation: 2022 LiveLaw (Cal) 119

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