Suit In Commercial Case Cannot Be Entertained Without Pre-Institution Mediation And Settlement: Karnataka High Court

1488348 karanataka hc justice m nagaprasanna


The Karnataka High Court held that a Suit in a commercial case cannot be entertained without the pre-institution mediation and settlement.

The Court held thus in a Writ Petition preferred against the Order of the Additional District and Sessions Judge in a Commercial Suit, by which an Application of Defendants under Order VII Rule 11 of the Civil Procedure Code, 1908 (CPC), was dismissed.

A Single Bench of Justice M. Nagaprasanna observed, “On a coalesce of the provision and the law laid down by the High Court of Delhi and the Apex Court interpreting the said provision, what would unmistakably emerge is, when commercial O.S. is for the first time instituted before the Court, Section 12A becomes mandatory. Without the pre institution mediation and settlement, the suit in commercial O.S. cannot be entertained. The concerned Court should suo-motu reject the plaint and send the parties to mediation or keep the plaint in abeyance and send the parties to mediation.”

The Bench explained that in the event Suit is presented before the competent Civil Court and the said Court has initiated efforts for mediation and those have failed, after such failure, realising the fact that the plaint ought to be presented before the Commercial Court, the rigour of Section 12A of the Commercial Courts Act, 2015 (CCA) need not all over again be followed by the commercial Court before entertaining the plaint, as there would have been substantial compliance of Section 12A, which mandates efforts to be made to resolve the dispute by way of settlement.

Senior Advocate Vigneshwar S. Shastri appeared on behalf of the Petitioners while Senior Advocate Dhananjay V. Joshi appeared on behalf of the Respondent.

Brief Facts

The Petitioners were the Defendants/Tenants and the Respondent was the Plaintiff/Owner in this case. The Plaintiff instituted a Suit in 2023 seeking delivery of vacant possession of the property and clearance of arrears of rent. In the Suit, for about six months, the matter was adjourned for settlement between the parties An Application was filed for return of the Plaint on the ground that the issue in the lis has to be adjudicated before the Commercial Court under the CCA. The Application was answered and the Plaint was returned to be presented before the Commercial Court.

It then became a commercial original suit. Once the Plaint was returned and presented before the Commercial Court, an Application was filed by the Defendants under Order VII Rule 11 CPC seeking rejection of the Plaint on the score that it is barred by law, as the mandate of CCA insofar as it concerns Section 12A is not followed. The concerned Court rejected the Application and held that there was no infirmity in the entertainment of the Suit, notwithstanding the fact of non-compliance with Section 12A of CCA. Therefore, the Defendants were before the High Court.

Reasoning

The High Court in the above regard, said, “The order sheet is quoted hereinabove. From January to April 2024 the matter was adjourned on several occasions for the purpose of talks of settlement and recording of settlement. In June 2024 the parties submit failure of talks of settlement. Then the Court posted the matter for plaintiff’s evidence. At that point in time, an application is preferred for return of plaint to be presented before the Commercial Court. The parties are the same, but the Court is different. Talks of settlement had gone on for four months and it had failed.”

The Court further took note of the fact that the Defendants who are sought to be evicted from the premises are now wanting to buy time by resorting to these methods, notwithstanding failure of the settlement.

“… no fault can be found with the order that is passed by the concerned Court rejecting the application filed by the defendants/petitioners under Order VII Rule 11 of the CPC. There is no travesty found in the order, for this Court to entertain the petition under Article 227 of the Constitution of India”, it added.

Accordingly, the High Court rejected the Writ Petition.

Cause Title- P. Vasudeva Kamath & Anr. v. Jayashri R. Kamath [Case Number: WRIT PETITION No.9697 OF 2025 (GM – CPC)]

Appearance:

Petitioners: Senior Advocate Vigneshwar S. Shastri and Advocate Dinesh Kumar Rao K.

Respondent: Senior Advocate Dhananjay V. Joshi and Advocate Ajay Prabhu M.

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