Pre-Institution Mediation Necessary Only In Cases Where Plaintiff Does Not Contemplate Urgent Interim Relief: Delhi High Court

The Delhi High Court has ruled that pre-institution mediation under the Commercial Courts Act, 2015 is necessary only in cases where a plaintiff of the suit does not contemplate an urgent interim relief.

A division bench of Justice Vibhu Bakhru and Justice Amit Mahajan said the question as to whether a suit involves any urgent interim relief is to be determined solely on the basis of the pleadings and relief as sought by the plaintiff.

It further observed that if a plaintiff seeks any urgent interim relief, the suit cannot be dismissed on the ground that such a plaintiff has not exhausted the pre-institution remedy of mediation as contemplated under Section 12A(1) of the Commercial Courts Act, 2015.

"This Court is unable to accept that it is necessary for a court to read in any procedure in Section 12A of the Commercial Courts Act, 2015, which makes it mandatory for a plaintiff to file an application to seek leave of the court for filing a suit without exhausting the remedy of pre-institution mediation, irrespective of whether the plaintiff seeks urgent interim relief or not," the court said.

Analysing the provision further, the court said that institution of a suit, which does not contemplate any urgent interim relief, is proscribed unless the plaintiff exhausts the remedy of pre-institution mediation.

"There is no ambiguity that a suit, which contemplates urgent interim relief, is excluded from the rigor of Section 12A(1) of the Commercial Courts Act, 2015. Thus, a plaintiff seeking to institute a suit involving urgent interim relief(s) is not required to exhaust the remedy of pre-institution mediation," the court said.

The court was dealing with an appeal filed by one Chandra Kishore Chaurasia against an order passed by a District Judge, whereby the defendant's application under Order VII Rule 11 of CPC in the suit was allowed and the plaint was directed to be returned.

The suit was filed by the Uttar Pradesh resident against R A Perfumery Works Private Limited, claiming that he was a registered proprietor of the trademarks '1192' and 'JAGMAG 1192'. Chaurasia alleged that R A Perfumery Works Private Limited (respondent and defendant in the suit) was clandestinely manufacturing and selling chewing tobacco and other allied products under the trademark 'SIGNAL 1191', which was deceptively similar to his registered trademarks.

The Commercial Court, on a reading of the plaint along with its documents, found that the appellant plaintiff had failed to establish a prima facie case in respect of the territorial jurisdiction.

However, the commercial court had rejected defendant's prayer seeking dismissal of the suit on the ground that the plaintiff had instituted the said suit without complying with the mandatory provisions of pre-institution mediation under Section 12A of the Commercial Courts Act.

Apart from the appellant's appeal before the high court, the respondent defendant also filed a cross-objection challenging the impugned order to the extent the Commercial Court had rejected its prayer for dismissal of the suit.

Accordingly, the two issues before the high court were that whether the impugned order directing return of the plaint for want of territorial jurisdiction was erroneous and whether the plaint was liable to be rejected on account of failure on part of the appellant to exhaust the remedy of pre-institution mediation?

The division bench noted that at the stage of considering an application under Order VII Rule 10 of the CPC, the court is not required to examine the merits of the averments made by the plaintiff and to evaluate whether same would be proved or established.

It was observed that for the purpose of an application under Order VII Rule 10 of the CPC, the averments made in the plaint are required to be considered as correct.

Accordingly, the court set aside the impugned order to the extent that it allowed the respondent's application under Order VII Rule 10 of CPC and directed return of the plaint.

On the aspect of rejection of plaint in terms of Section 12A of Commercial Courts, the court was of the view that the provision is inapplicable and that it is not necessary for the plaintiff to enter into a pre-institution mediation where the suit involves urgent interim relief.

"The Court has no discretion to exempt a plaintiff from the applicability of Section 12A(1) of the Commercial Courts Act, 2015. It is not permissible for the court to pass an order contrary to law; therefore, an application seeking exemption from engaging in pre- institution mediation, in a suit that does not involve urgent interim reliefs, would not lie," the court said.

It added: "In the present case, indisputably, the plaintiff has sought urgent interim reliefs. Thus, it is not necessary for him to have exhausted the remedy of pre-institution mediation as contemplated under Section 12A(1) of the Commercial Courts Act, 2015. The cross-objections are unmerited and, accordingly, dismissed."

Title: CHANDRA KISHORE CHAURASIA v. R A PERFUMERY WORKS PRIVATE LTD

Citation: 2022 LiveLaw (Del) 1016

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