M/S. PATIL AUTOMATION PRIVATE LIMITED & Ors. v. RAKHEJA ENGINEERS PRIVATE LIMITED

Judgment

808 SUPREME COURT REPORTS [2022] 11 S.C.R. 808 [2022] 11 S.C.R. A M/S. PATIL AUTOMATION PRIVATE LIMITED AND ORS. v. RAKHEJA ENGINEERS PRIVATE LIMITED (Civil Appeal No. 5333 of 2022) AUGUST 17, 2022 [K. M. JOSEPH AND HRISHIKESH ROY, JJ.] Commercial Courts Act, 2015 – s.12A – Statutory pre-institution mediation contemplated u/s.12A – Held: Is mandatory – Exhausting pre-institution mediation by the plaintiff, with all the benefits that may accrue to the parties and, more importantly, the justice delivery system as a whole, would make s.12A not a mere procedural provision – The design and scope of the Act, as amended in 2018, by which s.12A was inserted, would make it clear that Parliament intended to give it a mandatory flavour – Any other interpretation would not only be in the teeth of the express language used but, more importantly, result in frustration of the object of the Act and the Rules – Any suit instituted violating the mandate of s.12A must be visited with rejection of the plaint under Or. VII r. 11 CPC – This power can be exercised even suo moto by the court – This declaration effective from 20.08.2022 – Code of Civil Procedure, 1908 – Order VII r.11. Mediation – Role of the Bar – Held: Mediation offers a completely new approach to attaining the goal of justice – A win- win situation resulting from assigning a greater role to the parties themselves, with no doubt, a spirit of accommodation represents a better and what is more in the era of docket explosion, the only meaningful choice – The role of the Bar is vital in taking mediation forward – It is important that the courts also adapt to the changing times. Interpretation of Statutes – Golden rule of interpretation – Held: The decisive element in the search for the answer, in the interpretation of a Statute, must be to ascertain the intention of the Legislature – The first principle must be the golden rule of interpretation, which means, the interpretation in conformity with the plain language, which is used. 808 B C D E F G H M/S. PATIL AUTOMATION PRIVATE LIMITED AND ORS. v. RAKHEJA ENGINEERS PRIVATE LIMITED 809 Mediation – Statutory pre-institution mediation contemplated u/s.12A of the Commercial Courts Act, 2015 – Held: Is provided only in suits, which do not contemplate any urgent interim relief – Therefore, pre-institution mediation has been mandated only in a class of suits – This is for the reason that in suits which contemplate urgent interim relief, the Law-giver has carefully vouchsafed immediate access to justice as contemplated ordinarily through the courts – The carving out of a class of suits and selecting them for compulsory mediation, harmonises with the attainment of the object of the law – Commercial Courts Act, 2015 – s.12A. Code of Civil Procedure,1908 – Or.VII, r.11– No absolute right to file civil suit – A civil suit can be barred by a law, either expressly or by necessary implication – The jurisdiction of a civil court can be ousted – There is no fundamental right with anyone to contend that he has a right to file a civil suit, which cannot be taken away – Presence of Order VII Rule 11(d) which mandates rejection of a plaint where a suit is barred is a reminder of the principle that there is no absolute right to file a civil suit. Code of Civil Procedure,1908 – Order VII, r.11(d) – Stage at which power to reject plaint can be exercised – Whether the power under the rule can be exercised only on application filed by defendant – Held: Or.VII r.11 does not provide that the court is to discharge its duty of rejecting the plaint only on an application – Power u/Or. VII r.11 is available to the court to be exercised suo motu – In a clear case, where on allegations in the suit, it is found that the suit is barred by any law, the plaint should be rejected without issuing summons. Disposing of the appeals, the Court HELD: 1. Section 12A of the Commercial Courts Act, 2015 cannot be described as a mere procedural law. Exhausting pre- institution mediation by the plaintiff, with all the benefits that may accrue to the parties and, more importantly, the justice delivery system as a whole, would make Section 12A not a mere procedural provision. The design and scope of the Act, as amended in 2018, by which Section 12A was inserted, would make it clear that Parliament intended to give it a mandatory flavour. Any other interpretation would not only be in the teeth of the express language used but, more importantly, result in frustration of the A B C D E F G H 810 SUPREME COURT REPORTS [2022] 11 S.C.R. A B C D E F G H object of the Act and the Rules. If the object of the law is defeated by non-compliance with the provision, then, it would be regarded as mandatory. The right to institute the Suit in a plaintiff who does not contemplate urgent interim relief in a commercial matter under the Act, is clearly conditioned by the fulfilment of certain conditions as provided in Section 12A. This cannot be likened to allowing a party to file his written statement. Bearing in mind the object also, the conclusion is inevitable that the right of suit itself will fructify only when the conditions in Section 12A are fulfilled. Treating the provision as procedural, also, the result cannot be different. Any other view would remove the basis for treating Section 80(1) of the CPC as mandatory. [Para 43][838-E-H; 839- A-B]

2. On a conspectus of the Act, as from its birth till the Law- giver stepped- in with the amendment in 2018, the Act read with the Rules represent an economic experiment as much as it deals more directly with a vital aspect of administration of justice. Commercial disputes have been clearly identified. The value has been fixed. Courts, at different stages, have been contemplated. Timelines are contemplated. The whole object of the law is clear as day light. Disputes of a commercial hue, must be extinguished with the highest level of expedition. The dispute resolution would witness a termination of the lis between the feuding parties. More importantly, it would prepare the ground for the country becoming a destination attracting capital by enhancing the ease of doing business. It does not require much debate to conclude that there is a direct relationship between ease of doing business and an early and expeditious termination of disputes, which may arise in commercial matters. The speed with which the justice delivery system in any country responds to the problem of docket explosion, particularly in the realm of commercial disputes can be regarded as a very safe index of the ease of doing business in that country. The Act, therefore, is, in the said sense, a unique experiment to push the pace of disposal of commercial disputes. It is in this background that the Court must approach the issue of whether Section 12A has been perceived as being a mandatory provision. This is for the reason that the decisive element in the search for the answer, in the interpretation of such a Statute, must be to ascertain the intention of the Legislature. The first principle, M/S. PATIL AUTOMATION PRIVATE LIMITED AND ORS. v. RAKHEJA ENGINEERS PRIVATE LIMITED 811 of course, must be the golden rule of interpretation, which means, the interpretation in conformity with the plain language, which is used. There cannot even be a shadow of a doubt that the language used in Section 12A is plainly imperative in nature. However, this Court will not be led by the mere use of the word ‘shall’. Even going by the sublime object of the Act, this Court is fully reinforced in its’ opinion that the pre-institution mediation is intended to produce results, which has a direct bearing on the fulfilment of the noble goals of the Law-giver. It is apparent that the Legislature has manifested a value judgement. [Para 53][847- C-H; 848-A-B]

3. Section 9 of the CPC is not the law, which creates a right to file a civil suit. It would require a law, to invade, absolutely or conditionally, the vital civil right of a person to take his grievance to a civil court. A civil suit can be barred by a law, either expressly or by necessary implication. The jurisdiction of a civil court can be ousted. In other words, there is no Fundamental Right with anyone to contend that he has a right to file a civil suit, which cannot be taken away. It is another matter that the courts will not lightly infer the ouster of a jurisdiction of a civil court. The very presence of Order VII Rule 11(d), which mandates rejection of a plaint, where a suit is barred, is a reminder of the principle that there is no absolute right to file a civil suit. [Para 55][848-G-H; 849-A]

4. On a consideration of the scheme of the Orders IV, V and VII of the CPC, the Court arrives at the following conclusions: (A) A suit is commenced by presentation of a plaint.The date of the presentation in terms of Section 3(2) of the Limitation Act is the date of presentation for the purpose of the said Act. By virtue of Order IV Rule 1 (3), institution of the plaint, however, is complete only when the plaint is in conformity with the requirement of Order VI and Order VII. (B) When the court decides the question as to issue of summons under Order V Rule 1, what the court must consider is whether a suit has been duly instituted. (C) Order VII Rule 11 does not provide that the court is to discharge its duty of rejecting the plaint only on an application. A B C D E F G H 812 SUPREME COURT REPORTS [2022] 11 S.C.R. Order VII Rule 11 is, in fact, silent about any such requirement. Since summon is to be issued in a duly instituted suit, in a case where the plaint is barred under Order VII Rule 11(d), the stage begins at that time when the court can reject the plaint under Order VII Rule 11. No doubt it would take a clear case where the court is satisfied. The Court has to hear the plaintiff before it invokes its power besides giving reasons under Order VII Rule 12. In a clear case, where on allegations in the suit, it is found that the suit is barred by any law, as would be the case, where the plaintiff in a suit under the Act does not plead circumstances to take his case out of the requirement of Section 12A, the plaint should be rejected without issuing summons. Undoubtedly, on issuing summons it will be always open to the defendant to make an application as well under Order VII Rule 11. In other words, the power under Order VII Rule 11 is available to the court to be exercised suo motu. [Para 68][858-E-H; 859-A-C]

5. The Act did not originally contain Section 12A. It is by amendment in the year 2018 that Section 12A was inserted. The Statement of Objects and Reasons are explicit that Section 12A was contemplated as compulsory. The object of the Act and the Amending Act of 2018, unerringly point to at least partly foisting compulsory mediation on a plaintiff who does not contemplate urgent interim relief. The provision has been contemplated only with reference to plaintiffs who do not contemplate urgent interim relief. The Legislature has taken care to expressly exclude the period undergone during mediation for reckoning limitation under the Limitation Act, 1963. The object is clear. It is an undeniable reality that Courts in India are reeling under an extraordinary docket explosion. Mediation, as an Alternative Dispute Mechanism, has been identified as a workable solution in commercial matters. In other words, the cases under the Act lend themselves to be resolved through mediation. Nobody has an absolute right to file a civil suit. A civil suit can be barred absolutely or the bar may operate unless certain conditions are fulfilled. Cases in point, which amply illustrate this principle, are Section 80 of the CPC and Section 69 of the Indian Partnership Act. The language used in Section 12A,which includes the word A B C D E F G H M/S. PATIL AUTOMATION PRIVATE LIMITED AND ORS. v. RAKHEJA ENGINEERS PRIVATE LIMITED 813 ‘shall’, certainly, go a long way to assist the Court to hold that the provision is mandatory. The entire procedure for carrying out the mediation, has been spelt out in the Rules. The parties are free to engage Counsel during mediation. The expenses, as far as the fee payable to the Mediator, is concerned, is limited to a one-time fee, which appears to be reasonable, particularly, having regard to the fact that it is to be shared equally. A trained Mediator can work wonders. Mediation must be perceived as a new mechanism of access to justice. Any reluctance on the part of the Court to give Section 12A, a mandatory interpretation, would result in defeating the object and intention of the Parliament. The fact that the mediation can become a non-starter, cannot be a reason to hold the provision not mandatory. Apparently, the value judgement of the Law-giver is to give the provision, a modicum of voluntariness for the defendant, whereas, the plaintiff, who approaches the Court, must, necessarily, resort to it. Section 12A elevates the settlement under the Act and the Rules to an award within the meaning of Section 30(4) of the Arbitration Act, giving it meaningful enforceability. The period spent in mediation is excluded for the purpose of limitation. The Act confers power to order costs based on conduct of the parties. [Para 72][861-D-H; 862-A-D]

6. Section 12A of the Act is mandatory and any suit instituted violating the mandate of Section 12A must be visited with rejection of the plaint under Order VII Rule 11. This power can be exercised even suo moto by the court as explained earlier in the judgment. This declaration is made effective from 20.08.2022 so that concerned stakeholders become sufficiently informed. However, it is directed that in case plaints have been already rejected and no steps have been taken within the period of limitation, the matter cannot be reopened on the basis of this declaration. Still further, if the order of rejection of the plaint has been acted upon by filing a fresh suit, the declaration of prospective effect will not avail the plaintiff. Finally, if the plaint is filed violating Section 12A after the jurisdictional High Court has declared Section 12A mandatory also, the plaintiff will not be entitled to the relief. [Para 84][868-A-D] A B C D E F G H 814 SUPREME COURT REPORTS [2022] 11 S.C.R. A B C D E F G H Kailash v. Nanhku and others (2005) 4 SCC 480 : [2005] 3 SCR 289 – distinguished.