sj.45.2019.

doc

dik
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
Dhanappa
I. Koshti
Digitally signed by
Dhanappa I. Koshti
SUMMONS FOR JUDGMENT NO. 45 OF 2019
Date: 2021.02.16
11:35:26 +0530
IN
COMM. SUMMARY SUIT NO. 972 OF 2019

Ganga Taro Vazirani …Applicant/Plaintiff

Vs
Deepak Raheja ... Defendant

Mr. Zal Andhyarujina Sr. counsel a/w Ms. Ishani Khanwilkar a/w Mr. Ativ
Patel a/w Darshit Dave i/b AVP Partners for the applicant/plaintiff

Mr. Arif Bookwala Sr. counsel a/w Jyoti B. Singh, Sakil Ansari i/b The Law
Office of Jyoti B. Singh for the defendant.

CORAM : B. P. COLABAWALLA, J.
Reserved on :11th December, 2020
Pronounced on : 16th February, 2021

JUDGEMENT :

1. This Summons for Judgment seeks a decree against

the defendant in the sum of Rs.5,54,00,000/- along with an

amount of Rs.1,49,75,342.47 towards interest calculated on the

amount of Rs.5,00,00,000/- @ 12% per annum from 1st January,

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2017 to 30th June, 2019 (aggregating to Rs.7,03,75,342.47) and

further interest @ 12% p.a. on the amount of Rs.5,00,00,000/-

from the date of filing of the suit till payment and/or realization.

2. The above suit has been filed as a Commercial

Summary Suit under the provisions of Order XXXVII of the Code

of Civil Procedure, 1908 (for short “the CPC”) seeking a decree of

the amounts mentioned above. The suit is based on two

dishonoured cheques, one for Rs.5,00,00,000/- and the other for

Rs.54,00,000/-. These two cheques were given by the defendant

to the plaintiff. Both the aforesaid cheques were dishonoured

when presented for payment, hence the present suit.

3. To understand in what circumstances these two

cheques were issued by the defendant to the plaintiff, it would be

necessary to refer to the facts and which are undisputed. In 2011,

pursuant to the defendant’s request for financial assistance, the

plaintiff agreed to disburse a sum of Rs.5 Crores to the defendant

as a loan for business purposes. The said loan was repayable

along with interest @ 19 % p.a. According to the plaintiff, on the

basis of the defendant’s assurance of repayment along with the

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agreed rate of interest, the plaintiff issued a cheque of Rs.5

Crores dated 1st January, 2011 in favour of the defendant. The

said cheque was duly encashed by the defendant and honoured by

the plaintiff. On 3rd January, 2011, the defendant also drew a Bill

of Exchange in favour of the plaintiff in the sum of Rs.5 Crores as

a security for the said loan.

4. It is the case of the plaintiff that the defendant

continued to pay interest on the loan to the plaintiff as per the

agreed terms until 9th December, 2016. Thereafter, as the

defendant wanted a reduction in the rate of interest, on 9th

December, 2016, the defendant addressed a letter to the plaintiff

inter alia acknowledging the plaintiff’s loan of Rs.5 Crores and

requested the plaintiff to reduce the rate of interest to 12% p.a.

By the said letter, the defendant requested confirmation of the

revised terms, namely, that the interest amount of Rs.27,22,192/-

at the rate of 12% p.a. till 31st December, 2016 would be paid

through RTGS and thereafter the interest rate would be 12% p.a.

payable at the end of the calendar year i.e. 31st December, 2017.

Acceding to this request, the plaintiff obliged to reduce the rate of

interest from 19% p.a. to 12% p.a. Accordingly, on 20th December,

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2016, the defendant and four others gave an undertaking

(Exhibit “D” to the plaint) to the plaintiff as well as two other

persons, under which, inter alia, the defendant acknowledged the

loan of Rs.5 Crores taken from the plaintiff and also agreed to

issue the post-dated cheques for repayment. Accordingly, the

defendant issued two post-dated cheques, one in the sum of Rs.5

Crores dated 1st January, 2018, and the other in the sum of Rs.54

Lacs dated 31st December, 2017 respectively. The cheque for Rs.5

Crores was towards the principal amount and the cheque for

Rs.54 Lacs was towards interest.

5. On 26th March, 2018, the plaintiff deposited the

aforesaid two post-dated cheques, which were dishonoured on

27th March, 2018. The cheques were returned with the remark

“Funds Insufficient”. In these circumstances, on 17th April,

2018 the advocates for the plaintiff sent a notice under section

138 of the Negotiable Instruments Act, 1881 to the defendant

inter alia stating that the defendant had acknowledged the debt

due and payable to the plaintiff and in case of failure to pay, the

plaintiff would be constrained to initiate criminal action under

section 138 of the said Act. The defendant failed to respond to the

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said notice or make repayment. Hence, on 6th July, 2019, the

plaintiff was constrained to file the present suit.

6. After the present suit was filed, the writ of summons

was duly served and the advocates for the defendant filed their

appearance as contemplated under Order XXXVII Rule 2(3) of

the CPC. Thereafter, the present Summons for Judgment was

filed on 16th August, 2019. Since, there was a delay in filing a

reply to the Summons for Judgment, the defendant filed an

Interim Application seeking condonation of the delay and which

was allowed by this Court vide its order dated 10th December,

2019. Thereafter, the Defendant filed an affidavit-in-reply dated

11th December, 2019 to which the plaintiff filed an affidavit-in-

rejoinder dated 18th December, 2019 and the defendant filed an

affidavit in sur-rejoinder dated 10th January, 2020. Thereafter,

the matter was adjourned from time to time. Finally, on 4th

November, 2020 the defendant, who was represented by an

advocate, made a request to the Court that the defendant is

desirous of sending a settlement proposal to the plaintiff to see if

the matter can be resolved. He, therefore, requested that the

matter be kept on 24th November, 2020. Acceding to this request,

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this Court adjourned the matter. Since no settlement fructified,

finally, the matter was heard on 9th December, 2020 and 11th

December, 2020 when the arguments were concluded and the

order was reserved.

7. In this factual backdrop, Mr. Andhyarujina, the

learned senior counsel appearing on behalf of the plaintiff,

submitted that there is absolutely no defence to the present suit.

He submitted that taking of the loan is undisputed. He further

submitted that the defendant has time and again acknowledged

his liability and this is clear from the letter dated 9th December,

2016 as well as the undertaking executed on 20th December,

2016. He submitted that in furtherance of the said undertaking,

the defendant also issued two post-dated cheques, one for the sum

of Rs.5 Crores towards the principal amount of the loan and the

second for Rs.54 Lacs towards interest. Both these cheques,

when presented for payment, were dishonoured with a remark

“Funds Insufficient”. This was also brought to the notice of the

defendant by the plaintiff’s advocate’s notice dated 17th April,

2018 to which there was no reply. This being the case, he

submitted that there is absolutely no defence to the present

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Summary Suit, and therefore, the Summons for Judgment be

made absolute.

8. On the other hand, Mr. Bookwala, the learned senior

counsel appearing on behalf of the defendant, submitted the

following :-

(i) the above suit is filed for recovery of a loan and is

therefore, barred by section 13(1) of the Maharashtra

Money Lending (Regulation) Act, 2014 (for short the

“Money Lenders Act”). This being the case, the

present suit is not maintainable, and therefore,

unconditional leave ought to be granted to the

defendant. To buttress this argument, Mr. Bookwala

submitted that the Money Lenders Act, categorically

defines the words “Money Lender”, “debtor”,

“business of money lending”, and “loan”. He

submitted that the present plaintiff is squarely

covered under the definition of a “Money Lender” and

is therefore, required to obtain a license from the

office of the Assistant Registrar of the area, as per the

provisions of section 5 of the Act. He submitted that

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admittedly the plaintiff does not have any license, and

therefore, by virtue of the provisions of section 13(1)

of the Money Lenders Act, the present suit is barred.

(ii) Without prejudice to the aforesaid argument, the

present suit is barred for non-compliance of the

provisions of section 12A of the Commercial Courts

Act, 2015 (for short the “CC Act”). Mr Bookwala

submitted that section 6 of the CC Act stipulates that

the Commercial Court shall have jurisdiction to try all

suits and applications relating to a commercial

dispute of a Specified Value. He submitted that it can

hardly be disputed that the cause of action in the

present suit would be a commercial dispute. The use

of the word “all suits” appearing in section 6 of the CC

Act clearly implies that a Commercial Court under the

Commercial Courts Act, 2015 is authorized to try all

commercial suits including a summary suit filed

under Order XXXVII of the CPC. He submitted that

section 12A, and which was inserted on 21st August,

2018, clearly contemplates that no suit, except one

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which contemplates any urgent interim relief, can be

instituted, unless the plaintiff exhausts the remedy of

pre - institution mediation in accordance with the

manner and procedure as may be prescribed by Rules

framed by the Central Government in that regard. He

submitted that this attracts the application of the

“doctrine of exhaustion of remedies”. Therefore, this

Court cannot entertain the suit if the remedy of pre-

institution mediation is not exhausted. He submitted

that in fact the objects and reasons clearly stipulate

this also. To give effect to this section, the

Government has also issued notifications providing

for rules for pre-institution mediation and settlement

proceedings, namely, the Commercial Courts (Pre-

institution Mediation and Settlement) Rules, 2018.

He submitted that in the present case, admittedly, the

remedy of pre-institution mediation has not been

availed of by the plaintiff. This being the case, the suit

itself is barred under section 12A of the CC Act. To

substantiate this argument, Mr. Bookwala relied upon

the following decisions:-

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(a) Anil Gupta Vs. Babu Ram Singla (CS (OS)

201/2020), decided by Single bench comprising of
Ms. Justice Mukta Gupta of Delhi High Court, vide
order dated 30th September, 2020

(b) Terai Overseas Pvt. Ltd. Vs. Kejriwal Sugar Agencies

Pvt. Ltd. & Ors (C.S. No.78 of 2020) decided by
Single Bench comprising of Mr. Justice Debangsu
Bask of Calcutta High Court vide order dated 3rd
September, 2020

(c) Re. Cognizance For Extension of Limitation

(MANU/SC/0654/2020) decided by Full Bench
comprising of Mr. CJI S. A. Bobde, Mr. Justice R.
Subhash Reddy and Mr. Justice A.S. Bopanna,
Supreme Court on 10th July, 2020.

(d) GSD Constructions Pvt. Ltd. Vs. Balaji Febtech

Engineering Pvt. Ltd. (MANU/MP/0451/(2019)

9. Lastly, Mr. Bookwala contended that the present suit has

been filed in contravention of the CPC for the following reasons:-

(a) The plaint does not comply with Rule 2(a) of Order VII as

inserted by section 16 of the Act 4 of 2016 in its

application to a suit in respect of commercial disputes in

as much as the plaint is silent on the method and

manner in which interest has to be calculated and

averred;

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(b) the particulars of the claim and paragraph 17 and 22(a)

of the plaint wrongly mentions an interest amount of

Rs.54 Lacs as a part of the principal amount. He,

therefore, submitted that for all the aforesaid reasons

above Summons for Judgment be dismissed and

unconditional leave to defend the above suit be granted

to the defendant.

10. I have heard the learned counsel for parties at length

and have perused the papers and proceedings in the above suit.

11. The first contention raised by Mr. Bookwala is that the

present suit is barred by virtue of section 13(1) of the said Act. I

find no substance in this submission whatsoever. Firstly, the

present Summary Suit is filed on the basis of dishonoured cheques

and not on the antecedent transaction of the loan. Section 2(13)

defines the word “loan” to mean an advance at interest whether of

money or in kind, but does not include inter alia an advance of any

sum exceeding rupees three lakhs made on the basis of a negotiable

instrument as defined in the Negotiable Instruments Act, 1881 (26

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of 1881), other than a promissory note [see section 2(13)(j)]. In the

present case, monies were advanced by the plaintiff by cheque. For

repaying the said advance (including interest), the defendant issued

2 post-dated cheques, one for Rs.5 Crores towards the principal

amount and the other for Rs.54 Lacs towards interest. Both these

cheques were dishonoured when presented for payment. Since the

advance made by the plaintiff cannot be termed as a “loan” [as it is

specifically excluded under section 2(13)(j)], the question of the bar

set out in section 13(1) cannot and does not arise. This is for the

simple reason because section 13(1) of the Money Lenders Act

clearly stipulates that, no Court shall pass a decree in favour of a

“money-lender” in any suit unless the Court is satisfied that at the

time when the “loan” or any part thereof, to which the suit relates

was lent, the money lender held a valid license. If the Court is

satisfied that the money lender did not hold a valid license, it shall

dismiss the suit. On bare reading of section 13(1), it is ex-facie clear

that the bar applies when a money lender seeks a decree in any suit

with reference to recovery of a loan or any part thereof. If the

money advanced cannot be termed as a “loan” under the Money

Lenders Act, then the question of the suit being barred as set out in

section 13(1) does not arise at all.

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12. I must note that a similar issue came up before another

learned Single Judge of this Court in the case of Bipin Vazirani Vs. V.

Raheja Design Construction Pvt. Ltd. & Anr. (Summons for

Judgment No.101 of 2018 in Comm. Summary Suit No. 424 of 2018,

decided on 12th December, 2018). In the facts of that case also there

were two cheques that were issued by the 1st defendant to the

plaintiff and which were dishonoured for the reason “Funds

Insufficient”. There too, an argument with reference to money

lending was raised. Negating the contention of the defendants in

that case, this Court held as under :-

“7. In that decision I considered the settled law on the subject

including amendments to the Money Lending Act and the
interpretation of the expressions ‘loan’, ‘money lender’, ‘business of
money lending’, and, in particular how such a defence could be
raised. In paragraph 36 of the Base Industries Group decision I
culled out propositions that seemed to me to emerge from that
discussion:-

“36. From this discussion, the following propositions emerge:

(a) Not every loan is axiomatically a money-lending

transaction for the purposes of the 1946 or the 2014 Acts.
There is no such presumption in law.

(b) It is doing of the ‘business of money-lending- that

attracts the provisions of the statute. In interpreting the
phrase, the correct emphasis is on the word ‘business’, not

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‘money-lending’. It is the word ‘business’ and not the

expression ‘money-lending’, that is determinative. Simply put,
every instance of lending money is not money-lending. Not
every lender is a Shylock.

(c) To constitute ‘business’, a single isolated instance does

not, and even several isolated stray instances do not,
constitute ‘the business of money-lending’. To be engaged in
the ‘business of money-lending’, the activity must be
systematic, regular, repetitive, and continuous, and must
generate an appreciable revenue. The fact that the borrower
is a stranger to the lender does not on its own make the latter
a ‘money-lender’.

(d) A loan recovery action is not barred merely because

there is a loan. It has to be shown that the loan was part of
‘the business of money-lending’.

(e) A plaintiff seeking a recovery of a loan is not required

to show that his suit is not barred by the Money Lenders Act.
It is always for the defendant who puts up money-lending as a
defence to show that the transaction is forbidden by the
Money Lenders Act.”

8. The transactions in question in Base Industries (and also in

case of Ashok Commercial Enterprises & Anr Vs. Parekh Aluminex
Ltd. to which I referred in Base Industries) stand on a different
footing from the present suit. This action is altogether simpler
because it is focused narrowly on the dishonour of the two cheques
admittedly issued by the Defendant. That, as I have held, is exempted
from the purview of the Money Lending Act, and therefore the bar of
that Act cannot apply to a transaction such as this.”

(emphasis suppled)

13. Apart from the fact that the present suit is based on two

dishonoured cheques and hence would not attract the rigours of the

Money Lenders Act, even otherwise there is nothing on record to

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establish that the present suit would be barred under the provisions

of the said Act. As set out in the aforesaid judgment referred to

earlier, not every loan is axiomatically a money lending transaction

for the purposes of the Money Lenders Act. There is no such

presumption in law. It is doing the business of money-lending that

attracts the provisions of the statute. In interpreting that phrase,

the correct emphasis is on the word ‘business’, not ‘money-lending’.

It is the word ‘business’ and not the expression ‘money-lending’,

that is determinative. Simply put, every instance of lending money

would not amount to a money-lending transaction as contemplated

under the Money Lenders Act. To constitute ‘business of money

lending’, a single isolated instance does not, and even several

isolated stray instances do not, constitute ‘the business of money-

lending’. To be engaged in the ‘business of money-lending’, the

activity must be systematic, regular, repetitive, and continuous, and

must generate an appreciable revenue. The fact that the borrower is

a stranger to the lender does not on its own make the latter a

‘money-lender’. A loan recovery action is not barred merely because

there is a loan. It has to be shown that the loan was part of the

‘business of money-lending’. A plaintiff seeking a recovery of a loan

is not required to show that his suit is not barred by the Money

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Lenders Act. It is always for the defendant who puts up money-

lending as a defence to show that the transaction is forbidden by the

Money Lenders Act. In the instant case, the defendant has not been

able to satisfy any of these tests. In these circumstances, I find

absolutely no substance in the first argument canvassed by Mr.

Bookwala.

14. The second contention raised by Mr. Bookwala and

which was pressed into service was that the present suit ought to be

dismissed as the plaintiff has instituted the suit without complying

with the provisions of section 12A of the CC Act. In other words, it

was his contention that unless the plaintiff exhausts the remedy of

pre - institution mediation as contemplated under section 12A of the

CC Act, the present suit cannot be instituted. It was his contention

that in the facts of the present case, pre-institution mediation has

admittedly not been resorted to by the plaintiff and hence the suit be

dismissed.

15. Before I deal with the scope and ambit of section 12A of

the CC Act, it would be apposite to understand why the Commercial

Courts Act, 2015 was brought into force. The Law Commission of

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India, in its 253rd Report, had recommended the establishment of

Commercial Courts and the Commercial Division and the

Commercial Appellate Division in the High Courts for disposal of

commercial disputes of a Specified Value. The purpose for

establishing such a Law was to provide for speedy disposal of

commercial disputes and which was under consideration of the

Government for quite some time. The Government felt that high

valued commercial disputes involve complex facts and questions of

law, and therefore, there was a need to provide for an independent

mechanism for their early resolution. Early resolution of

commercial disputes would create a positive image to the investor

world about the independent and responsive Indian legal system. It

was in these circumstances that a Bill namely, the Commercial

Courts, Commercial Division and Commercial Appellate Division of

High Courts Bill of 2015 was introduced. As per this Bill, all suits,

appeals or applications relating to commercial disputes of a

Specified Value were to be dealt with by the Commercial Courts or

the Commercial Division of the High Court. This Bill was then made

into an Act, namely, The Commercial Courts, Commercial Division

and Commercial Appellate Division of High Courts Act, 2015.

Thereafter, the name of the Act was changed to The Commercial

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Courts Act, 2015 w.r.e.f 03-05-2018. To put it in a nutshell, to

ensure quick resolution of commercial disputes and which is very

important in the business world, as well as to boost the image of

India with the international investor community, the aforesaid Act

was brought into force. The entire Act and the provisions

thereunder are basically to achieve the aforesaid objectives.

16. After this Act (the CC Act) was brought into force,

Chapter IIIA was inserted by Act 28 of 2018 with retrospective

effect from 3rd May, 2018. Under this Chapter, section 12A was

brought on the statute book and which reads as under:-

“12A. Pre-Institution Mediation and Settlement.- (1) A suit, which

does not contemplate any urgent interim relief under this Act,
shall not be instituted unless the plaintiff exhausts the remedy
of pre-institution mediation in accordance with such manner
and procedure as may be prescribed by rules made by the
Central Government.

(2) The Central Government may, by notification, authorise the

Authorities constituted under the Legal Services Authorities
Act, 1987 (39 of 1987), for the purposes of pre-institution
mediation.

(3) Notwithstanding anything contained in the Legal Services

Authorities Act, 1987 (39 of 1987), the Authority authorised by
the Central Government under sub-section (2) shall complete
the process of mediation within a period of three months from

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the date of application made by the plaintiff under sub-section

(1);

Provided that the period of mediation may be extended for a

further period of two months with the consent of the parties:

Provided further that, the period during which the parties

remained occupied with the pre-institution mediation, such
period shall not be computed for the purpose of limitation
under the Limitation Act, 1963 (36 of 1963).

(4) If the parties to the commercial dispute arrive at a settlement,

the same shall be reduced into writing and shall be signed by
the parties to the dispute and the mediator.

(5) The settlement arrived at under this section shall have the
same status and effect as if it is an arbitral award on agreed
terms under sub-section (4) of section 30 of the Arbitration
and Conciliation Act, 1996 (26 of 1996).”

(emphasis supplied)

17. Section 12A of the CC Act stipulates that where a suit,

which does not contemplate any urgent interim relief under the

Commercial Courts Act, shall not be instituted unless the plaintiff

exhausts the remedy of pre-institution mediation. The manner in

which and the procedure to be followed, are also set out under the

said section. The time period for completion of the mediation process

is also restricted to three months from the period of the application

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made by the plaintiff for mediation under sub-section (1). In

furtherance of this provision, the Government has, under section

21A(2)(a) read with sub-section (1) of section 12A issued a

notification No.G.S.R. 607(E) dated 3rd July, 2018 which inter alia

enacts rules for pre-institution mediation and settlement, namely,

The Commercial Courts (Pre-Mediation and Settlement) Rules,

2018. A separate notification No. S.O. 3232 (E) dated 3rd July, 2018

has been issued by the Central Government under sub-section (2) of

section 12A authorizing the State Authorities and District

Authorities constituted under the Legal Services Authorities Act,

1987 for conducting mediation contemplated under section 12A of

the CC Act.

18. Firstly, on perusing section 12A of the CC Act it is clear

that it is a procedural provision and there is no absolute embargo in

instituting the suit unless the plaintiff exhausts the remedy of

mediation. This is clear from sub-section (1) of section 12A of the

CC Act which contemplates that where any urgent interim relief is

applied for under the Act, the plaintiff is not required to exhaust the

remedy of mediation before approaching the Court. It is not as if the

Court lacks inherent jurisdiction to entertain the suit because the

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remedy of mediation is not resorted to before approaching the

Court. The purpose of section 12A of the CC Act appears to be that

parties should try and resolve their disputes before coming to the

Court. This is for the simple reason that if parties resolve their

disputes, they need not approach the Court at all. However, when

parties have tried to resolve their disputes unsuccessfully, it would

be futile to still drive the parties to pre-institution mediation. If

such an interpretation is put on the said provision, it would militate

against the very object for which the Commercial Courts Act, 2015

was brought into force. As mentioned earlier, the purpose of

bringing the said Act into force was to ensure speedy disposal of

commercial disputes of a Specified Value and to instil confidence

that disputes of a commercial nature would be resolved as quickly as

possible either through mediation or by approaching the Court of

Law. Take a case, where through correspondence, the parties have

tried to resolve their disputes before approaching the Court without

any success. Can it then be contended that parties are still to be

referred to mediation to resolve their disputes when an attempt has

already been made and failed? I think not. To my mind, one has to

interpret this provision to see that there is substantial compliance,

namely, that an attempt has been made to resolve the disputes

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amicably which has failed, and therefore, the plaintiff is constrained

to approach the Court for redressal of his grievances. Whilst

interpreting this section, one must not lose sight of the primary

object of the CC Act, namely, to resolve commercial disputes as

quickly as possible and at the same time, if possible, to reduce the

burden on the Court. To put it simply, the defendant, by his conduct,

can in a given case, waive the privilege to drive the plaintiff to go to

mediation. There could be a case where the defendant just does not

want to amicably settle the matter or he may feel that he has valid

defences to the claim of the plaintiff and there is nothing to resolve.

In such a case it would, therefore, be futile to refer the parties to

mediation. Despite this, if the Court was to take a view that the

parties must compulsorily go for mediation as contemplated under

section 12A of the CC Act, the same would run counter to the very

purpose for which the CC Act was brought into force. It would have

the effect of delaying the proceedings rather than having a quick

resolution of the dispute and which is the very object for which the

CC Act was brought on the statute book. I am, therefore, clearly of

the view that the provisions of section 12A of the CC Act being

procedural in nature, have to be interpreted keeping in mind the

doctrine of substantial compliance. A procedural provision has to be

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interpreted in such a manner that it aids in meting out justice

rather than frustrate it. As Justice Vivian Bose has so eloquently

put it, [AIR 1955 SC 425] “It is procedure, something designed to

facilitate justice and further its ends: not a penal enactment for

punishment and penalties; not a thing designed to trip people up.

Too technical a construction of sections that leaves no room for

reasonable elasticity of interpretation should therefore be guarded

against (provided always that justice is done to both sides) lest the

very means designed for the furtherance of justice be used to

frustrate it”. To put it simply, section 12A being a procedural

provision, the Court has to see if the object sought to be achieved

thereby is substantially complied with. If there is substantial

compliance, then the plaintiff cannot be non-suited.

19. There is one more facet to this. The objection of non-

compliance of the provisions of section 12A must be taken by the

defendant at the earliest opportunity. If he doesn’t, then, at least for

the purposes of section 12A, it would be presumed that the

defendant does not want to resolve his dispute through mediation.

To my mind, such an interpretation would not only further the

object sought to be achieved by section 12A but also the main object

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of the CC Act i.e. quick resolution of commercial disputes.

20. I agree with Mr. Andhyarujina that a similar provision to

section 12A (of the CC Act) can be found in section 80 of the Code of

Civil Procedure, 1908 (for short “the CPC”). Section 80 of the CPC

reads thus:-

“80. Notice.— (1) Save as otherwise provided in sub-section (2), no suit

shall be instituted against the Government (including the Government of
the State of Jammu and Kashmir) or against a public officer in respect of
any act purporting to be done by such public officer in his official
capacity, until the expiration of two months next after notice in writing has
been delivered to, or left at the office of—

(a) in the case of a suit against the Central Government, except

where it relates to a railway, a Secretary to that Government;

(b) in the case of a suit against the Central Government where it

relates to a railway, the General Manager of that railway;

(b) [* * *]

(bb) in the case of a suit against the Government of the State of

Jammu and Kashmir, the Chief Secretary to that Government or
any other officer authorised by that Government in this behalf;

(c) in the case of a suit against any other State Government, a

Secretary to that Government or the Collector of the district;

(d) [* * *]

and, in the case of a public officer, delivered to him or left at his office,
stating the cause of action, the name, description and place of residence
of the plaintiff and the relief which he claims; and the plaint shall contain
a statement that such notice has been so delivered or left.

(2) A suit to obtain an urgent or immediate relief against the Government

(including the Government of the State of Jammu and Kashmir) or any
public officer in respect of any act purporting to be done by such public

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officer in his official capacity, may be instituted, with the leave of the
Court, without serving any notice as required by sub-section (1); but the
Court shall not grant relief in the suit, whether interim or otherwise,
except after giving to the Government or public officer, as the case may
be, a reasonable opportunity of showing cause in respect of the relief
prayed for in the suit:

Provided that the Court shall, if it is satisfied, after hearing the parties,
that no urgent or immediate relief need be granted in the suit, return the
plaint for presentation to it after complying with the requirements of sub-
section (1).

(3) No suit instituted against the Government or against a public officer in

respect of any act purporting to be done by such public officer in his
official capacity shall be dismissed merely by reason of any error or
defect in the notice referred to in sub-section (1), if in such notice—

(a) the name, description and the residence of the plaintiff had been
so given as to enable the appropriate authority or the public officer
to identify the person serving the notice and such notice had been
delivered or left at the office of the appropriate authority specified
in sub-section (1), and
(b) the cause of action and the relief claimed by the plaintiff had been
substantially indicated.”

(emphasis supplied)

21. Section 80(1) also stipulates that no suit can be

instituted against the Government or a public officer until the

expiration of 2 months of giving notice as contemplated in the said

section. Sub-section (2) of section 80 of the CPC contemplates that a

suit to obtain an urgent or immediate relief against the Government

or any public officer in respect of any act purporting to be done by

such public officer in his official capacity, may be instituted, with the

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leave of the Court without serving any notice as required by sub-

section (1). However, the Court shall not grant relief in the suit,

whether interim or otherwise, except after giving to the

Government or public officer, as the case may be, a reasonable

opportunity of showing cause in respect of the relief prayed for in

the suit.

22. The similarity between section 80 of the CPC and section

12A of the CC Act are (i) that before institution of the suit, a

prescribed act has to be performed/fulfilled; and (ii) where urgent

interim relief is sought for, the suit can be instituted without

performing or fulfilling the prescribed act. Under section 80 of the

CPC, the prescribed act is to serve a notice in writing to the

Government or the public officer (as the case may be) and wait for 2

months before instituting the suit. Under section 12A of the CC Act a

suit cannot be instituted unless the plaintiff exhausts the remedy of

pre-institution mediation. Both sections allow institution of the suit

without fulfilment of the prescribed act, namely, service of notice

(under section 80) or going for pre-institution mediation in the

prescribed manner (under section 12A) respectively, where the suit

contemplates urgent interim relief. The only difference is that

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under section 80 of the CPC the suit has to be instituted with the

leave of the Court [see section 80(2)].

23. In this regard, Mr. Andhyarujina relied upon a decision

of this Court in the case of Chandrashekhar Purushottam Rathi v. State

of Maharashtra [2002(2) Mh. L. J. 181] to contend that just as a notice

under section 80 of the CPC is capable of being waived, so also is the

requirement of the plaintiff to first invoke pre-institution mediation

before filing a suit as contemplated under section 12A of the CC Act.

This was a case where this Court was considering whether a notice

under section 80 of the CPC is capable of being ‘waived’ or

contemplates even a ‘deemed waiver’. Answering this question in

the affirmative, this Court held as under:-

“15. From the ratio of the cases cited above that the notice under section
80 of Civil Procedure Code is capable of being waived, it further follows
that if the notice is waived, the plaint need not be returned for
compliance.

16. The learned A.G.P. contended that in the instant case, the issuance of
the notice under section 80(1), Civil Procedure Code was not waived by
the defendants. He pointed out that in the written statement filed on
behalf of the State of Maharashtra and Collector, Yavatmal, on the trial
Court's record, which is at Exhibit 16, the defendants, at the end of para 2,
have pleaded that it was not necessary to reply the averments of the
plaintiff as regards the dispensing with notice since the Court had
granted leave to the plaintiff under section 80(2), Civil Procedure Code to

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institute the suit by dispensing with the mandatory notice. The learned
A.G.P. canvassed that these pleadings indicate that the defendants were
under the impression that the leave under section 80(2), Civil Procedure
Code to bring the suit without notice was granted to the plaintiff and,
therefore, the defendants did not raise any objection as to the non-
issuance of notice.

17. The material on record shows that the State Government and the
Collector had not waived the notice under section 80(1), Civil Procedure
Code in express terms. However, the learned counsel for the plaintiff-
appellant submitted that there was a deemed waiver of the notice on the
part of the defendants (State of Maharashtra and Collector, Yavatmal). The
question is whether such deemed waiver is contemplated in law and if it
is so, whether in the instant case, the defendants are deemed to have
waived the issuance of notice under section 80, Civil Procedure Code and
what is its effect. In this connection, the learned counsel for the plaintiff-
appellant cited Paleti Sivarama Krishnaiah v. Executive Engineer, N.C.
Canals Sathenapalli, AIR 1978 AP 389. In this cited case, the principle that
although the notice under section 80, Civil Procedure Code is mandatory,
even a mandatory provision can be waived if it is not concerned in public
interest, but in the interest of the party that waives it, is followed and it
was held that the notice under section 80 is meant for the benefit of the
party to whom it is intended and it can be waived by the party for whose
benefit it is intended. In this cited case, an objection was raised in respect
of non-issuance of notice in the written statement, but no issue was
framed on that point and no objection was taken subsequently on that
score at any stage of the trial nor any application was made for the
amendment of issues. It was held that the defendant was deemed to have
waived the notice. An elaborate discussion of the facts and law on the
above point was made in this case. The observations in the earlier
authorities were reproduced.

18. In para 14, the observations in Vellayan v. Madras Province, AIR 1947
PC 197 were quoted as below:—
“The notice required to be given under section 80 is for the
protection of the authority concerned. If in a particular case he
does not require that protection and says so, he can lawfully waive
his right to the notice.”

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19. Then the aforesaid observations, which are already reproduced above
from Dhirendra Nath Gorai plus Subal Chandra Nath v. Sudhir Chandra
Ghosh, AIR 1964 SC 1300, as regards the distinction between irregularity
and nullity are also relied upon in this cited case in para 16. The aforesaid
principles are concluded in para 18 of the cited case. While considering
the facts of that particular case, which were indicating that the party was
deemed to have waived the notice, it was pointed out that though the
plea raising an objection to the non-issuance of notice was taken in the
written statement, no issue in that respect was framed, no objection in
that respect was taken in suit at any stage and even in the grounds of
appeal, the plea of want of notice was not taken but the said plea was
taken for the first time in the arguments in appeal. In such circumstances,
it was held that the defendant concerned was deemed to have waived the
notice.

20. The learned counsel for the plaintiff-appellant submitted that the case
of the plaintiff herein is on a better footing. He pointed out that in the
cited case, the plea of want of notice was raised, whereas in the present
case no such plea was taken and the absence of urgency was not
pleaded. Further in the cited case, the plea of want of notice was taken
for the first time at the time of arguments in the appeal, whereas in the
present case that plea was not taken by the defendants even at the stage
of arguments in the appeal and the lower Appellate Court itself suo
motu dealt with that issue.

21. Again the following observations in Purna Chandra

Sarkar v. Radharani Dassya, AIR 1931 Cal. 175, which are reproduced in
para 21 of the abovesaid authority, are relevant. They are as under:
“The plea of want of notice under section 80, Civil Procedure Code,
which is a clear bar to the institution of proceedings against public
officer must be taken at the earliest possible opportunity and must
be specifically pleaded. Where such a plea is taken by the
defendant at a very late stage of the suit and at a time when the
plaintiff would be precluded by the law of limitation from bringing
a further suit against the defendant, the defendant must be
deemed to have waived the privilege of notice.”

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(emphasis supplied)

24. There is also a Supreme Court judgement in the case of

State of A.P. v. Pioneer Builders, [(2006) 12 SCC 119], wherein the

Supreme Court has taken a similar view and held as under:

“19. Bearing in mind the aforenoted legal position, we advert to the facts
in hand. As noted above, the Subordinate Judge, vide order dated 2-2-
1993 came to the conclusion that “there was no tenable ground to refuse
the relief asked for”. Though there may be some substance in the
submission of Mr Chaudhari, learned Senior Counsel appearing for the
State, that the order allowing the application, seeking dispensation of the
requirement of notice, is cryptic but the fact remains that by allowing the
application, after hearing the defendant State, the Judge has opined that
the suit is for the purpose of obtaining an urgent and immediate order.
Had the satisfaction been against the contractor, the court was bound to
return the plaint to the contractor for re-presentation after curing the
defect in terms of sub-section (1) of Section 80. Although we do not
approve of the manner in which the afore-extracted order has been made
and the leave has been granted by the Subordinate Judge but bearing in
mind the fact that in its reply to the application, the State had not raised
any specific objection about the maintainability of the application on the
ground that no urgent and immediate relief had either been prayed for or
could be granted, as has now been canvassed before us, we are of the
opinion that having regard to the peculiar facts and the conduct of both
the parties it is not a fit case where the matter should be remanded back
to the Subordinate Judge for reconsideration. We find it difficult to hold
that the order passed by the Subordinate Judge on the contractor's
application under Section 80(2) CPC was beyond his jurisdiction.
Accordingly, we decline to interfere with the finding recorded by the High
Court on this aspect of the matter. The High Court has held that having
participated in the original proceedings, it was not now open to the State
to raise a fresh issue as to the maintainability of the suit, in view of
waiving the defect at the earliest point of time. The High Court has

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also observed that knowing fully well about non-issue of notice under
Section 80 CPC the State had not raised such a plea in the written
statement or additional written statement filed in the suit and, therefore,
deemed to have waived the objection. It goes without saying that the
question whether in fact, there is waiver or not necessarily depends on
the facts of each case and is liable to be tried by the court, if raised,
which, as noted above, is not the case here.
(emphasis supplied)

25. As can be seen from the aforesaid two decisions,

though serving a notice under section 80 of the CPC is mandatory,

the same is capable of being waived. Naturally, whether there is a

waiver or not, would depend on the facts and circumstances of

the case. In fact, the plea for want of notice under section 80,

and which is a clear bar to the institution of proceedings against

the Government or a public officer, must be taken at the earliest

possible opportunity and must be specifically pleaded. Where

such a plea is taken by the defendant at a very late stage of the

suit and at a time when the plaintiff would be precluded by the

law of limitation from bringing a further suit against the

defendant, the defendant must be deemed to have waived the

privilege of the notice.

26. Having seen that the provisions of section 12A of the

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CC Act and section 80 of the CPC are similar, I do not see why on

parity of reasoning, it cannot be held that in a given set of facts

and circumstances, the defendant has waived the privilege of

asking the plaintiff to first invoke the remedy of pre-institution

mediation before instituting a suit in this Court. As mentioned

earlier, without considering the facts and circumstances of a

particular case, to mechanically drive the plaintiff to go for

mediation under section 12A of the CC Act before allowing him to

institute the suit, would in fact run counter to the very object and

purpose for which the CC Act was brought into force. This

interpretation, which I have held earlier would sub-serve the ends

of justice, would not in any event cause prejudice to the

defendant. A defendant who genuinely desires to resolve the

disputes through mediation, can always request the Court to

invoke the provisions of section 89 of the CPC to send the parties

to mediation.

27. Having taken a view on the interpretation and scope

of section 12A, I shall now see how they apply to the facts of the

present case. As narrated earlier, the present suit came to be

lodged on 6th July, 2019. After the suit was filed, the writ of

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summons was served on the defendant and the plaintiff

thereafter filed the above Summons for Judgement on 16th

August, 2019. The defendant also filed an affidavit-in-reply dated

11th December, 2019 to the Summons for Judgment as well as an

affidavit in sur-rejoinder dated 10th January, 2020 to rejoinder

filed by the plaintiff on 18th December, 2019. At no point of time

has the defendant ever raised the contention that the present suit

cannot be instituted because the plaintiff has not invoked the

remedy of pre-institution mediation as contemplated under

section 12A of the CC Act. This argument is, for the first time,

canvassed only across the Bar by Mr. Bookwala when it was

argued on 9th December, 2020 and 11th December, 2020. I am,

therefore, of the opinion that not having raised this issue at the

earliest point of time, the defendant is now precluded from doing

so. In fact, if I were to allow such a plea at this stage, it takes the

plaintiff by surprise. The scope and ambit of section 12A is not to

defeat a just claim of the plaintiff. As mentioned earlier, section

12A is a procedural provision and it is well settled that procedure

cannot defeat justice. I am, therefore, clearly of the view that in

the facts of the present case, the plaintiff cannot be non-suited on

this ground considering that the plea of requiring the plaintiff to

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invoke pre-institution mediation has not even been raised in the

pleadings before me and is only argued across the Bar for the first

time in December, 2020.

28. Even otherwise, in the facts of the present case, I find

that the provisions of section 12A have been substantially complied

with. As mentioned earlier, the scope and ambit of section 12A is to

try and see if the parties can resolve their disputes before

approaching the Court of law. If they cannot, then naturally the

parties have to approach the Court for redressal of their grievances.

In the facts of the present case, after the suit was filed, the parties

did try to resolve their disputes. This is clear from the order passed

by this Court on 4th November, 2020, wherein it was specifically

recorded on behalf of the defendant that the defendant is desirous of

sending a settlement proposal to the plaintiff to see if the disputes

can be resolved. Such a proposal was, in fact, sent by the defendant

to the plaintiff and which was rejected by the plaintiff. This would,

therefore, clearly go to show that in the facts of the present case, the

parties did try to resolve their disputes amicably, albeit after the

filing of the suit, but without any success. This being the case, it

would not only be ridiculous, but highly unjust to now hold that the

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plaintiff ought to be non-suited merely because he did not avail of

the pre-institution mediation process as contemplated under section

12A of the CC Act. Such a rigid interpretation of section 12A would,

in fact, do more injustice than justice to the parties. Such an

interpretation should always be avoided. I, therefore, am clearly of

the view that in the facts of the present case, the contention raised

by Mr. Bookwala regarding dismissal of the suit for non-compliance

of the provisions of section 12A is without any merit and is rejected.

29. Before concluding on this issue, it would only be fair to

deal with the judgments that were relied upon by Mr. Bookwala. The

first decision is in the case of Anil Gupta (supra), which is a decision

of a single Judge of the Delhi High Court dated 30th September,

2020. I have carefully gone through the aforesaid decision. In the

facts of that case, it was the argument on behalf of the plaintiff that

since the plaintiff had filed an application seeking urgent interim

reliefs under Order XXXVIII Rule 5 and another application under

Order XXXIX Rule 10 of the CPC, there was no requirement for

compliance of section 12A of the CC Act. This contention of the

plaintiff was negated stating that the application did not satisfy the

test of urgency. However, instead of dismissing the suit, the Delhi

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High Court issued summons in the Suit, subject to the plaintiff filing

an application seeking exemption under section 12A of the CC Act. I

fail to see how this decision can be of any assistance to the

defendant. In the facts of that case, the Court came to a finding that

since the test for urgency was not met, the plaintiff could not

contend that he was not required to comply with the provisions of

section 12A. That is not the case before us at all. In the facts of our

case, as narrated above, the objection that section 12A has not been

complied with, has never been taken at all, except across the Bar.

Even otherwise, as stated earlier, in the facts of the present case, the

defendant, in fact, albeit after the filing of the suit, had given a

settlement proposal to the plaintiff to try and resolve the disputes

amicably. This was rejected by the plaintiff. In these circumstances,

the fact situation before the Delhi High Court was totally different

from the facts before me. The aforesaid decision, therefore, has no

application in the present case.

30. The next decision is that of the Calcutta High Court in

the case of Terai Overseas Private Ltd. & Ors. (supra). In this

decision, the plaintiff filed an application for leave to institute a suit

without complying with the provisions of section 12A of the CC Act.

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In paragraph 23 of the plaint it was stated that the plaintiff

apprehends that the defendants are acting in collusion and,

therefore, there is no chance for any conciliation as mandated under

the CC Act. It was in these circumstances that the Court, at the very

first instance, came to the conclusion that what was stated in

paragraph 23 of the Plaint would not come within the ambit and

scope of section 12A of the CC Act. This judgment too will not be of

any assistance to the defendant.

31. The next decision relied upon is the decision of the

Supreme Court - In Re: Cognizance For Extension of Limitation

dated 10th July, 2020. This order of the Supreme Court was passed

in view of the fact that the parties had prayed to the Court for

extending the time where limitation is to expire during the period

when the lock-down was in operation due to the Covid-19 Pandemic

or the time to perform a particular act is to expire during the said

lock-down. It is in these circumstances that the Supreme Court in

paragraph 8 stated that under section 12A of the CC Act, the time

prescribed for completing the process of compulsory pre-litigation

mediation and settlement is also liable to be extended. On reading

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this order, I do not think that the Supreme Court has, in any way,

opined that pre-institution mediation, in the given facts and

circumstances of the case, cannot be waived. That was never in

issue at all. All that the Supreme Court says is that even for pre-

litigation mediation and settlement time needs to be extended in

view of the lockdown. I, therefore, find that even this decision is of

no assistance to the decision.

32. The last decision relied upon by Mr. Bookwala was the

decision of the Madhya Pradesh High Court in the case of GSD

Constructions Pvt. Ltd. (supra). Even this judgment, I find, is

wholly inapplicable to the facts of the present case. In fact, in this

case too, the appellants before the Madhya Pradesh High Court had

filed a civil suit for a declaration, recovery of money and for grant of

injunction and they also moved applications under Order VII Rule 1

and Order XXXIX Rules 1 and 2 read with section 151 of the CPC.

The learned Trial Court, taking into account the provisions of

section 12A, returned the Plaint by directing the plaintiff to

approach the authority as per the provisions of section 12A(1) of

the CC Act by exhausting the remedy of pre-institution mediation.

This order was challenged before the Madhya Pradesh High Court in

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Appeal and the Madhya Pradesh High Court, after hearing the

parties and going through the record, directed the Trial Court to

hear the applications filed by the appellants and proceed ahead in

the matter without forcing the appellants to invoke the remedy of

pre-institution mediation. Again, I fail to see how this judgment in

any way supports the defendant. In fact, the Trial Court had

returned the Plaint and had directed the plaintiff to exhaust the

remedy of pre-institution mediation. This direction was set aside by

the Appeal Court. In these circumstances, this judgment also is of

no assistance to the defendant.

33. I, therefore find that all these decisions have no

application to the facts of the present case and do not assist the

defendant in any manner whatsoever.

34. The last contention canvassed, and I must fairly say not

seriously pressed by Mr. Bookwala, was that the present suit has

been filed in contravention of certain provisions of the CPC, namely,

that the plaint does not comply with Rule 2-A of Order VII of the CPC

inasmuch as the plaint is silent on the mode and manner in which

the interest has to be calculated.

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35. I find this argument to be totally fallacious. In the

present case, the plaintiff has made his claim on two dishonoured

cheques. One cheque is for the principal amount of Rs.5 Crores and

the second cheque is for the amount of Rs.54 lacs towards interest.

Both the aforesaid cheques were dishonoured. The claim for interest

in the plaint has been made at the agreed rate of interest of 12% p.a.

on the sum of Rs.5 Crores and not Rs.5.54 Crores. This is clear from

merely looking at the calculations given in the particulars of the

claim. I, therefore, find that there is absolutely no merit in the

aforesaid contention either.

36. In the facts of the present case, I find that there is no

dispute whatsoever with reference to the merits of the claim of the

plaintiff. From the facts narrated above, it is clear that the

defendant had taken moneys from the plaintiff and has not repaid

the same. In fact, the defendant, to repay the moneys advanced by

the plaintiff to the defendant, had also issued a post-dated cheque of

Rs.5 crores which was dishonoured when presented for payment.

Similarly, even the cheque issued for the payment of Rs.54 lakhs

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(towards interest) was dishonoured. The reason for dishonour of

both the aforesaid cheques was ‘funds insufficient’. There is also no

dispute with reference to the rate of interest payable. When one

looks at the overall facts of the matter, it is abundantly clear that the

defendant has absolutely no defence on the merits of the claim of the

plaintiff. The only defences raised are defences in law and which I

have negated by my discussion earlier. In these circumstances, and

finding that there is no defence whatsoever, I would be fully justified

in allowing the Summons for Judgment and ordering the defendant

to pay the sums claimed therein to the plaintiff. However, purely out

of mercy and to allow the defendant to file a written statement and

contest the suit, I grant conditional leave to the defendant and pass

the following order:-

(a) The defendant shall deposit in this Court, a sum of

Rs.5.54 crores within a period of twelve weeks

from today. On the aforesaid condition being

complied with, the defendant is granted leave to

defend the suit and he shall file his written

statement within a period of eight weeks from the

date of deposit.

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(b) If the aforesaid condition of deposit is not adhered

to within the stipulated time, the plaintiff shall be

entitled to apply for an ex-parte decree after

obtaining a non-deposit certificate from the

Prothonotary & Senior Master of this Court.

37. The Summons for Judgment is, accordingly, disposed of.

There shall be no order as to costs.

38. This order shall be digitally signed by the Private

Secretory /Personal Assistant of this Court. All concerned shall act

on production by fax or e-mail of a digitally signed copy of this order.

(B.P. COLABAWALLA, J. )

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