Allahabad High Court Overturns Commercial Court's Order on Non-Compliance with Section 12-A of the Commercial Courts Act

Judgment Clarifies Prospective Application of Mandatory Pre-Institution Mediation Requirement

In a significant ruling, the Allahabad High Court has overturned a decision by the Commercial Court, Kanpur Nagar, which had returned a plaint filed by M/s Jay Chemical Works for non-compliance with Section 12-A of the Commercial Courts Act, 2015. The High Court clarified that compliance with Section 12-A, which mandates pre-institution mediation for commercial suits, is only applicable prospectively from August 20, 2022, following the Supreme Court's ruling in Patil Automation Private Limited v. Rakheja Engineers Private Limited.

The appeal, filed by M/s Jay Chemical Works, challenged the Commercial Court's order dated September 19, 2024, which returned the plaint under Order VII Rule 10 of the Civil Procedure Code (CPC) due to non-compliance with Section 12-A. The suit, originally instituted on August 12, 2020, sought a permanent injunction against M/s Sai Chemicals for allegedly infringing on a registered trademark.

The High Court, comprising Chief Justice Arun Bhansali and Justice Kshitij Shailendra, emphasized that the Supreme Court's declaration of Section 12-A as mandatory was intended to have prospective effect, allowing suits filed before August 20, 2022, to proceed without the requirement of pre-institution mediation. Consequently, the Commercial Court's reliance on the judgment in Patil Automation Private Limited to return the plaint was deemed incorrect.

Furthermore, the High Court addressed the respondent's preliminary objection regarding the appeal's maintainability. It was asserted that the appeal was indeed maintainable under Section 13(1A) of the Commercial Courts Act, 2015, as the order in question involved a return of plaint under Order VII Rule 10 CPC, which is appealable under Order XLIII Rule 1(a) CPC.

In conclusion, the High Court quashed the Commercial Court's order and remanded the matter back to the Commercial Court, Kanpur Nagar, instructing it to proceed with the suit from the point before the challenged order was passed. The High Court also urged the Commercial Court to handle the case with expedience, considering the suit's prolonged pendency since 2020.

This judgment serves as a crucial clarification for stakeholders regarding the applicability of mandatory pre-institution mediation under Section 12-A of the Commercial Courts Act, highlighting the importance of prospective application to ensure fairness and informed compliance.

Bottom Line:

Section 12-A of the Commercial Courts Act, 2015 is mandatory for suits filed after 20.08.2022 - However, suits instituted prior to this date cannot be returned or rejected based on non-compliance with Section 12-A.

Statutory provision(s):  

• - Commercial Courts Act, 2015 Section 12-A  
• - Civil Procedure Code, 1908 Order VII Rule 10  
• - Civil Procedure Code, 1908 Order XLIII Rule 1(a)  
• - Commercial Courts Act, 2015 Section 13(1A)

M/s Jay Chemical Works v. M/s Sai Chemicals, (Allahabad)(DB) : Law Finder Doc Id # 2803053