[S.12A Commercial Courts Act] Delay In Instituting Suit Does Not Always Mean No 'Urgent Interim Relief' Is Required: Allahabad High Court

The Allahabad High Court has upheld the order of a Commercial Court at Lucknow rejecting the application of a Petitioner against the maintainability of a commercial suit without availing pre-institution mediation as contemplated in Section 12 A of the Commercial Courts Act 2015.It rejected the contention of the Petitioner that institution of suit challenging contract termination after 2 months indicated there was no urgency to waive off pre-institution mediation. A bench of Justice Manish Mathur held,"The aspect as to whether a suit has been filed after a considerable delay, would not be a criteria required to determine urgent interim relief. There may be instances when an order of termination has been passed but is not enforced for a certain length of time and it is only its enforcement that would require filing of a suit, which would thus contemplate urgent interim relief being sought for in the plaint."Counsel for Petitioner/ Defendant relied on M/s. Patil Automation Private Limited and others v. Rakheja Engineers Private Limited 2022 (10) SCC (1) and decision of the Madras High Court in M/s Microlabs Limited v. Mr. A.Santosh to argue that since time had lapsed since the issuance of termination order, no urgency could be made out to waive the mandatory pre-institution waiver as per Section 12 A.Counsel for Respondent/Plaintiff argued that vide termination of contract, the Petitioner invoked provisions of Clause 6.13 (b) of the contract pertaining to price adjustments for delays, including actions against it, including forfeiture of security deposits, holiday listing or initiating any other penal action as deemed fit by the Petitioner. Suit was filed along with an application for temporary injunction for restraining the petitioner/defendant from invoking the termination letter only after action in terms of the aforesaid clause had been initiated. Counsel also relied on judgment of the Apex Court in Patil Automation in support of his submissions. Further reliance was placed on the judgment of the Delhi High Court in Chandra Kishor Chaurasiya v. R A Perfumery Works Private Limited.After hearing both parties, the Court framed the following question:“Whether contemplation of urgent interim relief as envisaged under Section 12 A of the Commercial Courts Act 2015 requires consideration by the Court only as per averments made in the plaint/Temporary Injunction application or other incidental aspects as well?”Relying on the judgment of the Supreme Court (supra), Justice Manish Mathur held that the word 'contemplate' in Section 12 A(1) requires the Court to examine and determine if relief prayed in the suit as well as urgency shown in the plaint necessitates waiver of the mandatory provision of Section 12 A of the act of 2015. Delay in filing the suit would be considered to see if any action had been taken after passing of the order sought to be challenged so as to give rise to any urgency.“Further, in the considered opinion of this Court, it is not solely the plaintiff who is the only arbiter of urgent interim relief, but it is also the Court concerned which has to look into the factor of urgent interim relief in terms of relief sought in plaint or in the application for temporary injunction”, observed the Court while agreeing with the aforesaid judgment of the Delhi High Court.With respect to the decision of the Madras High Court in M/s Microlabs Limited, the Court said that the suit was presented after four months after service of cease and desist notice and in the meantime no action had be taken by either parties. Therefore, no urgency could be made out for waiver of Section 12 A.While dismissing the petition under Article 227 of the Constitution of India, the Court observed, if the order of termination is not being enforced, no urgency can be made out. Since in the present case, termination order is being enforced and actions against Respondent/ Plaintiff has been initiated, waiver of Section 12 A is warranted.Case Title: Indian Oil Corporation Ltd. Mumbai Having Divisional Office,Lko. Thru. G.M. Engineering Department vs. Commercial Court-II, Lko. And Another [Matters u/Article 227 1220 of 2023]Case Citation: 2023 LiveLaw (AB) 210Counsel For Petitioner: Ashok Kumar SinghCounsel For Respondents: Ashish ShuklaClick Here To Read Order

[S.12A Commercial Courts Act] Delay In Instituting Suit Does Not Always Mean No 'Urgent Interim Relief' Is Required: Allahabad High Court

Upasna Agrawal

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