M/s Dhanbad Fuels Private Limited vs Union of India & Anr.

Held: Approach adopted by High Court in keeping the suit in abeyance and referring the parties to mediation, strikes a perfect balance between the mandatory nature of s.12A as well as the prospective applicability of the consequence of non-compliance with s.12A as held in Patil Automation’s case – Decision of this Court in Patil Automation’s case lays down the correct position of law as regards s.12A by holding it to be mandatory in nature, which relates back to the date of the Amending Act; and that any suit which is instituted under the 2015 Act without complying with s.12A is liable to be rejected u/Ord.VII r.11, however, this declaration applies prospectively to suits instituted on or after the date of the decision in Patil Automation’s case, i.e., 20.08.2022 – Suits instituted without complying with s.12A of the 2015 Act prior to 20.08.2022 cannot be rejected u/Ord.VII r.11 on the ground of non-compliance with s.12A unless they fall within the exceptions stipulated in Patil Automation’s case – In suits instituted without complying with s.12A prior to 20.08.2022 which are pending adjudication before the trial court, the court shall keep the suit in abeyance and refer the parties to time-bound mediation in accordance with s.12A if an objection is raised by the defendant by filing an application u/Ord.VII r.11, or where any of the parties expresses an intent to resolve the dispute by mediation – Respondent does not fall under any of the exceptions and it cannot be said that bar of s.12A would continue to apply to the money suit filed by respondents despite there being a prospective declaration in Patil Automation’s case – Money suit was filed by the respondents much prior to the decision in Patil Automation’s case and it is squarely protected by the prospective ruling – Harmoniously construing observations in Patil Automation’s case, it is clear that while s.12A is held to be mandatory from the date of inception of the provision itself, the consequence of rejection for non-compliance is only made applicable prospectively – Trial court and High Court did not commit any error in refusing to reject the plaint – Mediation proceedings to be completed within the time frame stipulated by s.12A and the PIMS Rules – Pre-Institution Mediation and Settlement Rules, 2018 – Code of Civil Procedure, 1908 – Ord.VII r.11. [Paras 46, 47, 58, 59, 62, 64]

Commercial Courts Act, 2015 – s.12A – Expression “urgent interim relief” – Construction of:

Held: Suit which contemplates an urgent interim relief may be filed under the 2015 Act without first resorting to mediation – Unlike s.80(2) CPC, leave of the court not required to be obtained before filing a suit without complying with s.12A – Test for “urgent interim relief” is if on an examination of the nature and the subject-matter of the suit and the cause of action, the prayer of urgent interim relief by the plaintiff could be said to be contemplable when the matter is seen from the standpoint of the plaintiff – Courts must also be wary of the fact that the urgent interim relief must not be merely an unfounded excuse by the plaintiff to bypass the mandatory requirement of s.12A. [Para 62]

Commercial Courts Act, 2015 – s.12A – Equitable maxim lex non cogit ad impossibilia – Meaning:

Held: Law does not compel an impossible performance – After the establishment of Commercial Court at relevant place, the statutory framework and corresponding rules were progressively implemented until December 2020 – Thus, during this intervening period, referring the matter to pre-suit mediation u/s.12A was impossible due to a persisting vacuum created by lack of appointment of necessary authorities and delineation of the procedural framework – Awaiting the establishment of the requisite infrastructure would unduly impede the recovery process in a money suit involving public funds, thereby defeating the very purpose and legislative intent of the 2015 Act, which aims to ensure the expeditious resolution of commercial disputes – Declaration of the mandatory nature of s.12A was given prospective effect in Patil Automation’s case keeping in mind the fact that s. 12A, being in its stages of infancy, had given rise to conflicting views by different High Courts and consequently an overall lack of clarity on the nature of the provision. [Paras 49, 51, 52, 53]