M/S. PATIL AUTOMATION PRIVATE LIMITED AND ORS. v. RAKHEJA ENGINEERS PRIVATE LIMITED

A 19. This Bench is of firm opinion that mediation is a new dimension of access to justice. As it is one of the best forms, if not the best, of conflict resolution. The concept of Justice in mediation is advanced in the oeuvres of Professors Stulberg, Love, Hyman, and Menkel-Meadow (Self-Determination Theorists). Their definition of justice is drawn primarily from the exercise of party self-determination. They are hopeful about the magic that can occur when people open up honestly and empathetically about their needs and fears in uninhibited private discussion. And, as thinkers, these jurists are optimistic that the magnanimity of the human spirit can conquer structural imbalances and resource constraints. xxx xxx xxx 19.³. Professor Carrie Menkel-Meadow presents a related point of view in making the case that settlement has a political and ethical economy of its own and writes: D “Justice, it is often claimed, emerges only when lawyers and their clients argue over its meaning, and, in turn, some authoritative figure or body pronounces on its meaning, such as in the canonical cases of the late twentieth century … For many years now, I have suggested that there are other components to the achievement of justice. Most notably, I refer to the process by which we seek justice (party participation and empowerment, consensus rather than compromise or command) and the particular types of outcomes that might help to achieve it (not binary win-lose solutions, but creative, pie-expanding or even shared solutions).” [Emphasis supplied]

57Copy pinpoint57. On the one hand, the staunchest criticism against mediation has been that it is opposed to the fundamental principle of access to justice. It is in keeping with the traditional notions of the right of a person to have a dispute adjudicated by an impartial and a trained Judge. On the other hand, as noticed by this Court in Vikram Bakshi(supra), mediation offers a completely new approach to attaining the goal of justice. A win- win situation resulting from assigning a greater role to the parties themselves, with no doubt, a spirit of accommodation represents a better H

M/S. PATIL AUTOMATION PRIVATE LIMITED AND ORS. v. 851 RAKHEJA ENGINEERS PRIVATE LIMITED [K. M. JOSEPH, J.]

and what is more in the era of docket explosion, the only meaningful choice. The realisation has been growing over a period of time, that formal court rooms, long drawn-out proceedings, procedural wrangles, mounting and crippling costs, delay, which never wanes but only increases with the day that at least, in certain categories of cases, mediation can be the way out. It, undoubtedly, requires a complete change in the mindset. The change in approach, undoubtedly, can be achieved only if the litigants become aware of its benefits in comparison with the great disadvantage in waiting in the serpentine queue for the day of reckoning to arrive in a court of law. The role of the Bar is vital in taking mediation forward. With increase in population and a skewed Judge-population ratio and a huge spiralling of litigation in the courts, it is logical, just and imperative, to attempt and persevere in out of the box thinking.We can no longer afford to remain in the past. A clean break with the past is urgently needed. What was a mere writing on the wall as early as in the last decades of the previous century has become the harsh reality. It is important that the courts also adapt to the changing times. At least when the Parliament has decided to move ahead, it becomes the court’s duty not to greet it with undue scepticism. It becomes necessary to fulfil the intention of the Parliament by realising the true role of judiciary.

58Copy pinpoint58. A perusal of the Act and the Rules reveal the existence of a complete Code. Mediation contemplated under Section 12A and the Rules, E may not succeed in every case. To begin with, the figures may not be reassuring but even if success does not elude the Mediator, in a few of the cases, a good part of the object of the Legislature, would stand achieved. Such is the condition of the docket explosion perceived particularly in commercial disputes. It is not difficult to appreciate the concern of the people through their elected representatives. Particularly F with the lowering of the monetary limit from rupees one crores to rupees three lakhs, there would be a stupendous load on the courts to achieve the timeline and dispose of commercial matters by the conventional mode of adjudication, even with the amended provisions of the CPC as applicable under Section 16 of the Act. G

59Copy pinpoint59. We are not impressed by the argument of Shri Saket Sikri that Section 12A does not provide for any penalty and, therefore, the provision is not mandatory. No doubt, he does admit that it is only one of the aspects to be considered whether the word ‘shall’ is to be treated as mandatory. If the argument of learned Counsel is accepted, neither H

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A Section 80 of the CPC nor Section 69 of the Partnership Act, which do not provide for any penalty for a suit brought in contravention of their terms, would be mandatory. However, it is a settled law that a plaint instituted transgressing the mandate of Section 80, that is, when there is no notice at all and no urgent relief is contemplated and leave sought, the plaint would have to be rejected, as the suit would not be maintainable. B The position is equally the same in regard to absence of registration contemplated under Section 69 of the Indian Partnership Act. Therefore, the principle canvassed by the learned Counsel would not apply.

60Copy pinpoint60. Equally, we are unimpressed by the contention of the learned Counsel Shri Saket Sikri that contravention of mandate of Section 12A C does not affect any legal right of the defendant and therefore, the suit filed without resorting to compulsory mediation must be countenanced. It may be true that it may be relevant input to inquire as to whether, not following a mandate of a statute, will violate the right of another person.

61Copy pinpoint61. We may proceed on the basis that if the suit is brought without complying with Section 12A, where no urgent interim relief is sought, may not in one sense, affect the legal right of the defendant. But this argument overlooks the larger picture which is the real object of the law. This object is not to be viewed narrowly with reference to the impact on the parties alone. This is apart from also remembering that if the parties were to exhaust mediation under Section 12A, the opposite side may be, if mediation is successful, saved from the ordeal of a proceeding in court, which, undoubtedly, would entail costs, whereas, the mediation costs, as we have noticed, is minimal, and what is more, a one-time affair, and still further, to be shared equally between the parties. Each time the plaintiff is compelled to go in for mediation under Section 12A there is a ray of hope that the matter may get settled. The chief advantage and highlight of mediation is that it is a win-win for all sides, if the mediation is successful. Therefore, it cannot, in one sense, be argued that no legal right of the defendant is infracted.Further, on the same logic, Section 80(1) of the CPC and Section 69 of the Indian Partnership Act would not be mandatory. This is however not the case.

62Copy pinpoint62. One of the arguments of Shri Saket Sikri is that, if a plaint is rejected under Order VII Rule 11, the plaintiff would be saddled with the deprivation of the court fee paid. He would contend that this aspect may be considered, when the Court decides the question as to whether the provision is mandatory or not. Whenever a plaint is rejected on the

M/S. PATIL AUTOMATION PRIVATE LIMITED AND ORS. v. 853 RAKHEJA ENGINEERS PRIVATE LIMITED [K. M. JOSEPH, J.]

ground that the suit is barred under any law, this consequence is inevitable. A [We may only, in this context, observe, that under Section 4A of the Kerala Court Fee and Suit Valuation Act, 1959, the plaintiff needs to pay only one-tenth of the total court fee at the time of institution of the suit. The balance is to be paid not later than fifteen days from the date of framing of issues, inter alia. Section 4A further provides that if the parties further settle the dispute within the period specified or extended by the Court for payment of the balance court fee, the plaintiff shall not be called upon to pay the balance court fee.] If a plaint is rejected for failure to give a notice, as contemplated in Section 80 of the CPC, the court fee paid, may be lost. Equally, for violation of Section 69 of the Indian Partnership Act, if the plaint is rejected, the plaintiff loses the court fee. While it may appear to be hard on the plaintiff, the effect of the provision contained in Order VII Rule 11, cannot be diluted. Therefore, we are not impressed by the argument, subject to what we will hold later on.

63Copy pinpoint63. One of the aspects which weighed with the learned single judge of the Bombay High Court in Ganga Taro (supra) is that in a case where the suit is instituted under Section 80 of the CPC without issuing any notice, if the defendant does not take up the plea of violation of Section 80, there can be waiver. Thus, even if Section 12A in a given case, where the defendant does not set up the case there can be waiver and therefore, Section 12A is not mandatory. No doubt, the Division E Bench of the Bombay High Court while reversing the learned single judge proceeded to hold that there cannot be waiver as Section 12A is based on public interest. The approach of the learned Single Judge does not commend itself to us. The question as to whether Section 12A is mandatory or not, must be decided with reference to language used, the object of the enactment and a host of other aspects. The fact that if a defendant does not raise the plea about compliance of Section 12A, it may result in a given case of waiver cannot result in Section 12A not being mandatory. If it were so, then in a case where there is no notice under Section 80, a plaint can never be rejected. It is legally untenable and defies logic. Another argument raised by Shri Saket Sikri, learned counsel is that by the impugned order, the High Court has affirmed the trial Court order that the suit be kept in suspended animation and referred the parties for mediation. According to him, it is substantial compliance of Section 12A of the Act. It is eminently just.He also points out the conduct of the appellant in not even cooperating in the mediation process. H

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A We are unable to accept this argument. We will refer to Section 80 of the CPC to assist us in justifying our conclusion. Under Section 80 (1) of the CPC, a suit not covered by Section 80(2), which is filed in defiance of the former provision, that is without serving any notice, is not maintainable. The suit would be barred and liable to be rejected under Order VII Rule 11. The only exception is what is provided in Section 80 B (2).It contemplates a suit to obtain an urgent or interim relief. Such a suit may be instituted with the leave of the court without serving any notice as required under Section 80 (1). In a case where a plaintiff does not seek urgent interim relief under Section 80(2), the suit would fall within the four walls of Section 80(1). Section 80(1) is mandatory. In regard to such suit, there is no question of substantial compliance. The suit must culminate in rejection of the plaint on invoking power under Order VII Rule 11. We may immediately draw a parallel between Section 80(1) of the CPC and 12A of the Act. In Section 12A also, the bar of institution of the suit is applicable only in a case in which plaintiff does not contemplate urgent interim relief. The situation is akin to what is contemplated in Section 80(1) of the CPC. In other words, the suit under the Act which does not contemplate urgent interim relief is like a suit covered by Section 80(1) of the CPC which does not project the need for any urgent or interim relief. In regard to a suit covered under Section 12A of the Act, namely, in a suit where interim relief is not contemplated, there can be no substantial compliance by way of post institution reference to mediation. The argument of the plaintiff overlooks the object apart from the language used besides the design and scheme of the law. It will, if accepted, lead to courts also spending their invaluable time on such matters which follow from adjournments, objections and hearings. There is no need to adopt such a course. F

64Copy pinpoint64. Take a case where notice is given under Section 80(1). A contention is taken that the notice is not effective as it does not comply with what is required in Section 80(1). In such a case, it may be a different matter that the Court may take a liberal view as to whether there is compliance. In fact, Section 80(3) makes this position clear. G Even before Section 80 was substituted by Act 104 of 1976 by which 80(3) was inserted, in Raghunath Das v. Union of India& Another27 while dealing with a case where a notice was given, this Court inter alia held as follows:

H 27 AIR 1969 SC 674

M/S. PATIL AUTOMATION PRIVATE LIMITED AND ORS. v. 855 RAKHEJA ENGINEERS PRIVATE LIMITED [K. M. JOSEPH, J.]

“8. The object of the notice contemplated by that section is to A give to the concerned Governments and public officers opportunity to reconsider the legal position and to make amends or settle the claim, if so advised, without litigation. The legislative intention behind that section in our opinion is that public money and time should not be wasted on unnecessary litigation and the Government B and the public officers should be given a reasonable opportunity to examinethe claim made against them lest they should be drawn into avoidable litigations. The purpose of law is advancement of justice. The provisions in Section 80 of the CPC are not intended to be used as boobytraps against ignorant and illiterate persons. In this case we are concerned with a narrow question. Has the C person mentioned in the notice as plaintiff brought the present suit or is he someone else? This question has to be decided by reading the notice as a whole in a reasonable manner.

9. In Dhian Singh Sobha Singh v. Union of India [(1958) SCR 781, 795] this Court observed that while the terms of Section 80 D of the CPC must be strictly complied with that does not mean that the terms of thesection should be construed in a pedantic manner or in a manner completely divorced from common sense. The relevant passage from that judgment is set out below: “We are constrained to observe that the approach of the High E Court to this question was not well founded. The Privy Council no doubt laid down in Bhagchand Dagadua v. Secretary of State that theterms of section should be strictly complied with. That does not however mean that the terms of the notice should bescrutinised in a pedantic manner or in a manner completely divorced from commonsense. As was stated by Pollock C.B. F in Jones v. Nicholls, “we must import a little common sense into notices of this kind”. Beaumont, C.J. also observed in Chandu Lal Vadilal v. Government of Bombay ”One mustconstrue Section 80 with some regard to common sense and to the object with which it appears to have been passed.” G

65Copy pinpoint65. The period of mediation is three months. If parties warm-up to the prospect of settlement through mediation, on their consent, it can be extended for another two months. Thus, for payment of a one-time fee, in the case, which is successfully mediated by a skilled Mediator and with the assistance of Counsel, the very dispute gets settled. The H

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A pressure on the courts is taken off to the extent that the parties, without reference of the court, are compelled to undergo mediation.

66Copy pinpoint66. Section 12A of the Act provides for mediation. This is a provision, which was inserted as per the Amending Act (Act 28 of 2018) enacted in the year 2018 and it came into force w.e.f. 03.⁵.2018. By B the said amendment, in fact, Chapter IIIA was inserted and Section 12A is the sole Section in the said Chapter. A plain reading of Section 12A makes the following position clear: The Law-giver has declared that if a Suit under the Act does not ‘contemplate’ any urgent interim relief, then, it cannot be instituted unless the plaintiff seeks pre-litigation mediation. The pre-institution mediation is to be done in the manner, procedure, which is to be prescribed by the Central Government. The pre- litigation mediation is to be completed within a period of three months from the date of the application made by the plaintiff under Sub-Section (1) [See Section 12A sub-Section (3)]. The period of three months can, however, be extended for a period of two months provided there is consent to the same by the parties [See the first proviso to Section 12A sub-Section (3)]. By the second proviso, the Legislature has taken care to provide that the period, during which the parties remained occupied with the pre-litigation mediation, is not to be reckoned for the purpose of computing the period of limitation under the Limitation Act, 1963. As to what would happen, if the parties arrive at the settlement, is provided for in Section 12A sub-Section (4). The settlement is to be reduced into writing and signed by the parties to the dispute and the Mediator. The effectiveness of a settlement arrived at in the course of the pre-institution mediation contemplated in Section 12A, has been dealt with in Section 12A sub-Section (5). Parliament has accorded the settlement, 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. Spread over five sub-Sections, this standalone Section in Chapter IIIA, no doubt, supported by the Rules, in our view, substantially manifests a definite scheme to effectively deal with the perceived urgent problem of acute clogging of the justice delivery system, which had to be de-congested. Section 12A cannot be perceived as merely intended to reach quicker justice, and what is more, on terms, H

M/S. PATIL AUTOMATION PRIVATE LIMITED AND ORS. v. 857 RAKHEJA ENGINEERS PRIVATE LIMITED [K. M. JOSEPH, J.]

which are mutually acceptable to the parties concerned. Even, A more importantly, it was to produce a vital and significant effect on the very interest of the nation. We have perused the Statement of Objects and Reasons. To attract foreign capital by enhancing its rather low standard in the ease of doing business, it was and is still necessary to showcase an efficient and quick justice delivery B system in commercial matters. In fact, India, which was ranked at 142 out of 189 countries, in the Ease of Doing Business Index, in 2015, climbed-up to only 130 in the year 2016. By 2020, India stood at the 63rd position. THE REGIME UNDER ORDER VII RULE 11 OF THE CPC C

67Copy pinpoint67. Order VII Rule 11 declares that the plaint can be rejectedon 6 grounds. They include failure to disclose the cause of action, and where the suit appears from the statement in the plaint to be barred. We are concerned in these cases with the latter. Order VII Rule 12 provides that when a plaint is rejected, an order to that effect with reasonsmust D be recorded. Order VII Rule 13 provides that rejection of the plaint mentioned in Order VII Rule 11 does not by itself preclude the plaintiff from presenting a fresh plaint in respect of the same cause of action. Order VII deals with various aspects about what is to be pleaded in a plaint, the documents that should accompany and other details. Order E IVRule 1 provides that a suit is instituted by presentation of the plaint to the court or such officer as the court appoints. By virtue of Order IVRule 1(3), a plaint is to be deemed as duly instituted only when it complies with the requirementsunder Order VIand OrderVII. Order V Rule 1 declares that when a suit has been duly instituted, a summon may be issued to the defendant to answer the claim on a date specified therein. F There are other details in the Order with which we are not to be detained. We have referred to these rules to prepare the stage for considering the question as to whether the power under Order VII Rule 11 is to be exercised only on an application by the defendant and the stage at which it can be exercised. In Patasibai and Others v. Ratanlal28, one of the G specific contentions was that there was no specific objection for rejecting of the plaint taken earlier. In the facts of the case, the Court observed as under:

28 (1990) 2 SCC 42 H

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A “13. On the admitted facts appearing from the record itself, learned counsel for the respondent, was unable to show that all or any of these averments in the plaint disclose a cause of action giving rise to a triable issue. In fact, Shri Salve was unable to dispute the inevitable consequence that the plaint was liable to be rejected under Order VII Rule 11, CPC on these averments. All that Shri B Salve contended was that the court did not in fact reject the plaint under Order VII Rule 11, CPC and summons having been issued, the trial must proceed. In our opinion, it makes no difference that the trial court failed to perform its duty and proceeded to issue summons without carefully reading the plaint and the High Court C also overlooked this fatal defect. Since the plaint suffers from this fatal defect, the mere issuance of summons by the trial court does not require that the trial should proceed even when no triable issue is shown to arise. Permitting the continuance of such a suit is tantamount to licensing frivolous and vexatious litigation. This cannot be done.” D (Emphasis supplied)

68Copy pinpoint68. On a consideration of the scheme of the Orders IV, V and VII of the CPC, we arrive at the following conclusions: (A) A suit is commenced by presentation of a plaint. Thedate E of the presentation in terms of Section 3(2) of the Limitation Act is the date of presentation for the purpose of the said Act. By virtue of Order IV Rule 1(3), institution of the plaint, however, is complete only when the plaint is inconformity with the requirement of Order VI and Order VII. F (B) When the court decides the question as to issue of summons under Order V Rule 1, what the court must consider is whether a suit has been duly instituted. (C) Order VII Rule 11 does not provide that the court is to discharge its duty of rejecting the plaint only on an G application. Order VII Rule 11 is, in fact, silent about any such requirement. Since summon is to be issued in a duly instituted suit, in a case where the plaint is barred under Order VII Rule 11(d), the stage begins at that time when the court can reject the plaint under Order VII Rule 11. No doubt it would take a clear case where the court is satisfied. H

M/S. PATIL AUTOMATION PRIVATE LIMITED AND ORS. v. 859 RAKHEJA ENGINEERS PRIVATE LIMITED [K. M. JOSEPH, J.]

The Court has to hear the plaintiff before it invokes its power besides giving reasons under Order VII Rule 12. In a clear case, where on allegations in the suit, it is found that the suit is barred by any law, as would be the case, where the plaintiff in a suit under the Act does not plead circumstances to take hiscaseout of the requirement of Section 12A,the plaint should be rejected without issuing summons. Undoubtedly, on issuing summons it will be always open to the defendant to make an application as well under Order VII Rule 11. In other words, the power under Order VII Rule 11 is available to the court to be exercised suo motu.(See in this regard, the judgement of this Court in C Madiraju Venkata Ramana Raju (supra). PRESENTATION OF PLAINT AND INSTITUTION OF SUIT

69Copy pinpoint69. Another area of debate has been about the distinction between the presentation of a plaint and institution of a suit. Section 3(2) of the D Limitation Act, 1963, provides that for the purpose of the Limitation Act, a suit is instituted in the ordinary case, when the plaint is presented to the proper Officer. In the case of a pauper, the suit is instituted when his application to leave to sue as a pauper is made. Order IV Rule 1 of the CPC reads as follows: E “Order IV Rule 1. Suit to be commenced by plaint.—(1) Every suit shall be instituted by presenting a plaint in duplicate to the Court or such officer as it appoints in this behalf. (2) Every plaint shall comply with the rules contained in Orders VI and VII, so far as they are applicable. F (3) The plaint shall not be deemed to be duly instituted unless it complies with the requirements specified in sub-rules (1) and (2).”

70Copy pinpoint70. Sub-Rule (3) of Order IV Rule 1 was inserted by Act 46 of 1999 w.e.f. 01.07.2002. Shri Sharath Chandran has drawn our G attention to the Judgment of the High Court of Madras reported in Olympic Cards Limited v. Standard Chartered Bank 29. In the said case, the question, which arose was, whether there was an abandonment or withdrawal of suit within the meaning of Order 29 (2013) 1 CTC 38 H

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A XXIII Rule 1 of the CPC, which would operate as a bar to file a fresh suit. In this context, we notice the following discussion: “16. Rule (1) of Order 4 of C.P.C. provided for institution of Suits. Rules 3 & 4 of Order 4 contains the statutory prescription that the Plaint must comply with the essential requirements of a valid Plaint B and then only the process of filing would culminate in the registration of a Suit. Rule 21 of Civil Rules of Practice contains the basic difference between presentation and institution. There is no dispute that the date of filing the Plaint would be counted for the purpose of limitation. However, that does not mean that the Suit was validly instituted by filing the Plaint. The Plaint, which does not comply with the Rules contained in Orders 4 & 7, is not a valid Plaint. The Court will initially give a Diary Number indicating the presentation of Suit. In case the Plaint is returned, it would remain as a “returned Plaint” and not a “returned Suit”. The act of numbering the Plaint and inclusion in the Register of Suits alone would constitute the institution of Suit. The stages prior to the registration of Suit are all preliminary in nature. The return of Plaint before registration is for the purpose of complying with certain defects pointed out by the Court. The further procedure after admitting of the Plaint is indicated in Rule 9 of Order 7. This provision shows that the Court would issue summons to the parties after admitting the Plaint and registering the Suit. Thereafter only the Defendants are coming on record, exception being their appearance by lodging caveat. Even after admitting the Plaint, the Court can return the Plaint on the ground of jurisdiction under Rule 10 of Order 7 of C.P.C. The fact that the Plaintiff/Petitioner F served the Defendant/respondent the copies of Plaint/Petitions before filing the Suit/Petition would not amount to institution of Suit/filing Petition. It is only when the Court admits the Plaint, register it and enter it in the Suit register, it can be said that the Suit is validly instituted.

G 17. It is, therefore, clear that any abandonment before the registration of Suit would not constitute withdrawal or abandonment of Suit within the meaning of Order 23, Rule 1, C.P.C., so as to operate as a legal bar for a subsequent Suit of the very same nature. It is only the withdrawal or abandonment during the currency of a Legal proceedings would preclude the Plaintiff H

M/S. PATIL AUTOMATION PRIVATE LIMITED AND ORS. v. 861 RAKHEJA ENGINEERS PRIVATE LIMITED [K. M. JOSEPH, J.]

to file a fresh Suit at a later point of time on the basis of the very same cause of action.”

71Copy pinpoint71. The contention appears to be that it may be a fair view to take that there is no institution of the suit within the meaning of Section 12A, until the Court admits the plaint and registers it in the suit register. In other words, presentation of the plaint may not amount to institution of the suit for the purpose of Order IV Rule 1 of the CPC and Section 12A of the Act. If this view is adopted, it is pointed out that before the plaint is registered after presentation and there is non-compliance with Section 12A, the plaintiffs can, then and there, be told off the gates to first comply with the mandate of Section 12A. This process would not involve the Courts actually spending time on such matters. In the facts, this question does not arise and, it may not be necessary to explore this matter further.

72Copy pinpoint72. We may sum-up our reasoning as follows: The Act did not originally contain Section 12A. It is by amendment in the year 2018 that Section 12A was inserted. The D Statement of Objects and Reasons are explicit that Section 12A was contemplated as compulsory. The object of the Act and the Amending Act of 2018, unerringly point to at least partly foisting compulsory mediation on a plaintiff who does not contemplate urgent interim relief. The provision has been contemplated only with reference to plaintiffs who do not contemplate urgent interim E relief. The Legislature has taken care to expressly exclude the period undergone during mediation for reckoning limitation under the Limitation Act, 1963. The object is clear. It is an undeniable reality that Courts in India are reeling under an extraordinary docket explosion. Mediation, as an Alternative Dispute Mechanism, F has been identified as a workable solution in commercial matters. In other words, the cases under the Act lend themselves to be resolved through mediation. Nobody has an absolute right to file a civil suit. A civil suit can be barred absolutely or the bar may operate unless certain conditions are fulfilled. Cases in point, which amply illustrate this principle, are Section 80 of the CPC and G Section 69 of the Indian Partnership Act. The language used in Section 12A, which includes the word ‘shall’, certainly, go a long way to assist the Court to hold that the provision is mandatory. The entire procedure for carrying out the mediation, has been spelt out in the Rules. The parties are free to engage Counsel H

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A during mediation. The expenses, as far as the fee payable to the Mediator, is concerned, is limited to a one-time fee, which appears to be reasonable, particularly, having regard to the fact that it is to be shared equally. A trained Mediator can work wonders. Mediation must be perceived as a new mechanism of access to justice. We have already highlighted its benefits. Any reluctance on the part of the Court to give Section 12A, a mandatory interpretation, would result in defeating the object and intention of the Parliament. The fact that the mediation can become a non- starter, cannot be a reason to hold the provision not mandatory. Apparently, the value judgement of the Law-giver is to give the provision, a modicum of voluntariness for the defendant, whereas, the plaintiff, who approaches the Court, must, necessarily, resort to it. Section 12A elevates the settlement under the Act and the Rules to an award within the meaning of Section 30(4) of the Arbitration Act, giving it meaningful enforceability. The period spent in mediation is excluded for the purpose of limitation. The D Act confers power to order costs based on conduct of the parties.

73Copy pinpoint73. In the cases before us, the suits do not contemplate urgent interim relief. As to what should happen in suits which do contemplate urgent interim relief or rather the meaning of the word ‘contemplate’ or urgent interim relief, we need not dwell upon it. The other aspect raised E about the word ‘contemplate’ is that there can be attempts to bypass the statutory mediation under Section 12A by contending that the plaintiff is contemplating urgent interim relief, which in reality, it is found to be without any basis. Section 80(2) of the CPC permits the suit to be filed where urgent interim relief is sought by seeking the leave of the court. F The proviso to Section 80 (2) contemplates that the court shall, if, after hearing the parties, is satisfied that no urgent or immediate relief need be granted in the suit, return the plaint for presentation to the court after compliance. Our attention is drawn to the fact that Section 12A does not contemplate such a procedure. This is a matter which may engage attention of the lawmaker. Again, we reiterate that these are not issues which arise for our consideration. In the fact of the cases admittedly there is no urgent interim relief contemplated in the plaints in question. SOME CONCERNS

74Copy pinpoint74. Mediation can become a potent alternate dispute resolution device. There are, however, a few indispensable requirements. The first

M/S. PATIL AUTOMATION PRIVATE LIMITED AND ORS. v. 863 RAKHEJA ENGINEERS PRIVATE LIMITED [K. M. JOSEPH, J.]

requirement is the existence of adequate infrastructural facilities and, what is more important, availability of trained and skilled Mediators. The role of the Mediator, as per Rule (5) of the Rules, is to facilitate the voluntary resolution of a commercial dispute and assist the parties in this regard. How can a Mediator, who is not properly trained, fulfil his responsibility under Rule (5)? Another area of concern is the availability in the number of Mediators in the country, particularly, in the light of lowering of the monetary valuation from Rs. 1 crore to Rs. 3 lakhs. It is all well to pass a law with sublime objects as in this case. However, the goal will not be realised unless the State Governmentsand all other relevant Authorities bestow their attention in the matter of providing adequate facilities. Knowledge of the laws, which are the subject matter of the suits under the Act, is indispensable for a Mediator to effectively discharge his duties. His role is supreme and it is largely shaped by his own knowledge of the law that governs commercial cases. There must be training by Experts, including at the State Judicial Academies. This must be undertaken on a regular and urgent basis, particularly keeping in mind when there is a dearth of trained mediators. There is a need to have a dedicated bar for mediation. The effective participation of the bar which must be adequately remunerated for its service will assist in mediation evolving. The concerned High Court may also undertake periodic exercise to establish a panel of trained mediators in District and Taluka levels as per need. E

75Copy pinpoint75. In Civil Appeal arising out of SLP(C) No. 14697 of 2021, it is brought to our notice that after the filing of the Special Leave Petition, suit was proceeded with under Order XXXVII of the CPC, Shri Ayush Negi, would contend that the respondent\plaintiff has pressed the summary judgment and, in case, this Court does not grant relief to the appellant, F safeguard may be incorporated allowing the appellants written statement to be treated as leave to defend. THE RELIEF

76Copy pinpoint76. On the findings we have entered, the impugned orders must be set aside and the applications under Order VII Rule 11 allowed. This G would mean that the plaints must be rejected. Necessarily, this would involve the loss of the court fee paid by the plaintiffs in these cases. They would have to bring a fresh suit, no doubt after complying with Section 12A, as permitted under Order VII Rule 13. Moreover, the declaration of law by this Court would relate back to the date of the Amending Act of 2018. H

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77Copy pinpoint77. There is a plea by Shri Saket Sikri, that if this Courtholds that Section 12A is mandatory it may be donewith only prospective effect. He drew support of the judgment of this Court in, Jarnail Singh and Others v. LachhmiNarain Gupta and Others30. “35. While interpreting the scope of Article 142 of the Constitution, B this Court held that the law declared by the Supreme Court is the law of the land and in so declaring, the operation of the law can be restricted to the future, thereby saving past transactions.

36. The power of this Court under Article 142 of the Constitution is a constituent power transcendental to statutory prohibition C [(1997) 5 SCC 201].In Orissa Cement Ltd. v. State of Orissa [(1991) Suppl.1 SCC 430], this Court observed that relief can be granted, moulded or restricted in a manner most appropriate to the situation before it in such a way as to advance the interests of justice. The doctrine of prospective overruling is in essence a recognition of the principle that the Court moulds the reliefs claimed to meet the justice of the case, as has been held in Somaiya Organics (India) Ltd. v. State of U.P.[(2001 5 SCC 519]. It was further clarified that while in Golak Nath (supra), ‘prospective overruling’ implied an earlier judicial decision on the same issue which was otherwise final, this Court had used the power even when deciding on an issue for the first time. There is no need to refer to other judgments of this Court which have approved and applied the principle of prospective overruling or prospective operation of judgments. There cannot be any manner of doubt that this Court can apply its decision prospectively, i.e., from the date of its judgment to save past transactions.”

78Copy pinpoint78. The Doctrine of prospective overruling began its innings with the decision of this Court in L.C. Golak Nath and Others v. State of Punjab and Another31. This Court in the said case relied upon Articles 32, 141 and 142 of the Constitution and extended this doctrine which was in vogue in the United States. The principle involves giving effect to G the law laid down by this Court, from a prospective date, ordinarily the date of the judgment. There is no dispute that while initially the doctrine was confined to matters arising under the Constitution, later on it has been applied to other areas of law as well. 30 2022 SCC Online SC 96 H 31 AIR 1967 SC 1643

M/S. PATIL AUTOMATION PRIVATE LIMITED AND ORS. v. 865 RAKHEJA ENGINEERS PRIVATE LIMITED [K. M. JOSEPH, J.]

79Copy pinpoint79. In Taherakhatoon (D) By Lrs. v. Salambin Mohammad32, A this Court while dealing with its powers or rather limitation on its power even after grant of special leave under Article 136 held as follows: “20. In view of the above decisions, even though we are now dealing with the appeal after grant of special leave, we are not bound to go into merits and even if we do so and declare the law or point out the error — still we may not interfere if the justice of the case on facts does not require interference or if we feel that the relief could be moulded in a different fashion.…”

80Copy pinpoint80. In M/s. Somaiya Organics (India) Ltd. v. State of Uttar Pradesh33, the Court went on to hold as follows in regard to the doctrine of prospective overruling. “25.The words “prospective overruling” implies an earlier judicial decision on the same issue which was otherwise final. That is how it was understood in Golak Nath [AIR 1967 SC 1643: (1967) 2 SCR 762]. However, this Court has used the power even when deciding on an issue for the first time. Thus, in India Cement Ltd. v. State of T.N. [(1990) 1 SCC 12] when this Court held that the cess sought to be levied under Section 115 of the Madras Panchayats Act, 1958 as amended by Madras Act 18 of 1964, was unconstitutional, not only did it restrain the State of Tamil E Nadu from enforcing the same any further, it also directed that the State would not be liable for any refund of cess already paid or collected.

28. In the ultimate analysis, prospective overruling, despite the terminology, is only a recognition of the principle that the court moulds the reliefs claimed to meet the justice of the case — justice not in its logical but in its equitable sense. As far as this country is concerned, the power has been expressly conferred by Article 142 of the Constitution which allows this Court to “pass such decree or make such order as is necessary for doing complete justice in any cause or matter pending before it”. In exercise of this power, this Court has often denied the relief claimed despite holding in the claimants’ favour in order to do ‘complete justice’.”

32 (1999) 2 SCC 635 33 AIR 2001 SC 1723 H

p. 866 Copy page pinpoint

81Copy pinpoint81. We may next notice the judgment of this Court in, P.V. George & Ors. v. State of Kerala & Ors.³⁴ In the said case, the doctrine was sought to be invoked in a service matter. The Full Bench of the High Court overruled a Division Bench which had declared a rule unconstitutional. On the strength of the Full Bench decision the employees were sought to be reverted. This Court adverted to the decision of the B House of Lords reported in National Westminster Bank Plc. v. Spectrum Plus Ltd. & Ors.³⁵ wherein theCourt held: “9. Prospective overruling takes several different forms. In its simplest form prospective overruling involves a court giving a ruling of the character sought by the bank in the present case. Overruling C of this simple or ‘pure’ type has the effect that the court ruling has an exclusively prospective effect. The ruling applies only to transactions or happenings occurring after the date of the court decision. All transactions entered into, or events occurring, before that date continue to be governed by the law as it was conceived to be before the court gave its ruling.

10. Other forms of prospective overruling are more limited and ‘selective’ in their departure from the normal effect of court decisions. The ruling in its operation may be prospective and, additionally, retrospective in its effect as between the parties to the case in which the ruling is given. Or the ruling may be prospective and, additionally, retrospective as between the parties in the case in which the ruling was given and also as between the parties in any other cases already pending before the courts. There are other variations on the same theme.”

F (Emphasis supplied)

82Copy pinpoint82. This is not a case where this Court is overruling its previous decision, which was the case in the decision reported in 2005 8 SCC

M/S. PATIL AUTOMATION PRIVATE LIMITED AND ORS. v. 867 RAKHEJA ENGINEERS PRIVATE LIMITED [K. M. JOSEPH, J.]

83Copy pinpoint83. The statute which has generated the controversy is the E Amending Act of year 2018. We have noticed that there is undoubtedly a certain amount of cleavage of opinion among the High Courts. The other feature which is to be noticed is that, this is a case where the law in question, the Amending Act containing certain Section 12A is a toddler. The law necessarily would have teething problems at the nascent stage. The specified value has been lowered drastically from Rs.1 crore to F Rs.³ lakhs. The imperative need to comply with the mandate of Section 12A which we have unravelled if it has not been shared by the parties on the advice they received or on the view prevailing in the High Courts would necessarily mean that unless we hold that the law, we declare is prospective such suits must perish. The court fee paid would have to be G written off. In a fresh suit which would be otherwise barred by limitation, shelter can be taken only under Section 14 of the Limitation Act. The availability of the power under Section 14 itself may have to be decided by the court. 36 (2001) 9 SCC 550 H

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84Copy pinpoint84. Having regard to all these circumstances, we would dispose of the matters in the following manner. We declare that Section 12A of the Act is mandatory and hold that any suit instituted violating the mandate of Section 12A must be visited with rejection of the plaint under Order VII Rule 11. This power can be exercised even suo moto by the court as explained earlier in the judgment. We, however, make this declaration effective from 20.08.2022 so that concerned stakeholders become sufficiently informed. Still further, we however direct that in case plaints have been already rejected and no steps have been taken within the period of limitation, the matter cannot be reopened on the basis of this declaration. Still further, if the order of rejection of the plaint has been acted upon by filing a fresh suit, the declaration of prospective effect will not avail the plaintiff. Finally, if the plaint is filed violating Section 12A after the jurisdictional High Court has declared Section 12A mandatory also, the plaintiff will not be entitled to the relief.

85Copy pinpoint85. In Civil Appeal arising out of SLP (C) No. 14697 of 2021 D taking note of the fact that it is a case where the appellant would have succeeded and the plaint rejected, it is also necessary to order the following. The written statement filed by the appellant shall be treated as the application for leave to defend filed within time within the meaning of Order XXXVII and the matter considered on the said basis. While we disapprove of the reasoning in the impugned orders we decline to otherwise interfere with the orders and the two appeals shall stand disposed of accordingly. In Civil Appeal arising out of SLP (C)No.5737 of 2022, we set aside the order directing payment of costs of Rs.10,000/-. The petition for permission to file SLP in SLP (C) Diary No. 29458 of 2021 and the said SLP shall stand disposed of as already indicated in the judgment.

Bibhuti Bhushan Bose Appeals disposed of. (Assisted by : Neha Sharma, LCRA)