Case Title: Extreme Coating Private Ltd V. Jotun India Private Ltd
The Delhi High Court has ruled that the procedural formalities in the CPC are intended to facilitate litigation by outlining the procedure to be followed, which is not to be abused as an instrument of oppression, to frustrate proceedings that have been lawfully instituted. The Delhi High Court has asked the petitioner to pay the cost of Rs 11,000 for his attempt to prolong the proceedings in a commercial suit.
A petition concerning a business lawsuit was being considered by Justice C. Hari Shankar's bench under Article 227 of the Constitution. Under the terms of the Business Courts Act of 2015, which revised the Code of Civil Procedure, 1908 (CPC), the respondent filed this commercial lawsuit against the petitioner.
In order to have the lawsuit dismissed, the petitioner—who was also the defendant in the case—moved an application under Order VII Rule 11 of the CPC, arguing that it had been filed in violation of Section 12-A of the Commercial Courts Act, which mandates that the plaintiff first attempt pre-institution mediation before turning to the court. As the defendant in the lawsuit, the petitioner requested that the litigation be dismissed in accordance with Order VII Rule 11 of the CPC since the respondent had not taken the specified route.
The Commercial Court noted that pre-institution mediation was only reached on November 27, 2018, when the DLSA put into effect a Standard Operating Procedure (SOP) for pre-institution mediation. Therefore, a plaintiff filing a lawsuit could no longer exhaust the pre-institution mediation process envisioned by Section 12-A prior to doing so.
In light of this, the ADJ rejected the petitioner's objection to the suit's maintainability and, as a result, dismissed the petitioner's application under Order VII Rule 11 of the CPC, noting that it was impossible for the respondent to have exhausted the protocol envisioned by Section 12-A before filing the Commercial Suit.
The petitioner's request for a review before the Commercial Court was denied. Both of these rulings were challenged in the petition submitted in accordance with Article 227 of the Indian Constitution.
The Bench noted that there could never be a question of implementing Section 12-A(1) once the plaintiff filed or submitted the lawsuit in the appropriate court. The Court said “In its plain words, Section 12-A(1) applies only at the stage of the institution of the suit, i.e. at the stage when the suit is filed or presented in the Court competent to try it. It has no application whatsoever after the suit has been instituted.”
The Bench noted that even in the absence of such grounds, a suit can only be returned on grounds specified in Order VII Rule 10 of the CPC and not because there was no pre-institution mediation mechanism in place because there was no pre-institution mediation protocol in place on the date the respondent filed his lawsuit. As a result, the suit should have been returned to the respondent for representation after the protocol for pre-institution mediation was in place.
The application of the petitioner was manifestly flawed, according to the Bench, and it was impossible for the respondent to have complied with the pre-institution mediation provision envisioned by Section 12-A(1) on September 22, 2018. The petitioner not only filed a review petition, which took another six months to be decided but also dragged the matter further to this Court by invoking Article 227 of the Constitution of India. The Court noted that the same was an attempt to prolong the proceedings in the suit and was strengthened in this impression by the fact that, despite the order of the Commercial Court has clearly clarified this position, the petitioner had not only preferred a review petition, which took another six months to be decided.
The case was thus rejected by the Bench, with costs of Rs 11,000 due from the petitioner within two weeks in the form of a crossed cheque or demand draft in the respondent's favour.