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2024 DIGILAW 822 (TS)

Kartikeya Interiors v. N. Himabindu

2024-10-01

ANIL KUMAR JUKANTI, MOUSHUMI BHATTACHARYA

body2024
ORDER : (Moushumi Bhattacharya, J.) : The present Civil Revision Petition (C.R.P) arises out of an order dated 18.04.2024 passed by the Additional Commercial Court in the Cadre of District Judge for Trial and Disposal of Commercial Disputes at Hyderabad (Commercial Court), in I.A.No.323 of 2023 in C.O.S.No.42 of 2023. 2. The petitioners before us are the defendants in the Suit (C.O.S.No.42 of 2023) filed by the respondent/plaintiff for declaration of dissolution of the defendant No.1-partnership firm and a direction on the defendant Nos.2 and 3 for rendition of accounts. 3. By the impugned order dated 18.04.2024, the petitioners’ application for rejection of the plaint under Order VII Rule 11 of The Code of Civil Procedure, 1908 (C.P.C) was dismissed. 4. Learned counsel appearing for the petitioners/ defendants submits that the application under Order VII Rule 11 of the C.P.C was filed on the Suit not complying with the statutory mandate of section 12A of The Commercial Courts Act, 2015 (2015 Act) which declares that a Suit, which does not contemplate any urgent interim relief under the Act, shall not be instituted unless the plaintiff exhausts the remedy of Pre-Institution Mediation as prescribed by the Rules made by the Central Government. 5. Counsel submits that the statements in the plaint make it clear that there was no urgency for any interim orders and that the respondent/plaintiff should hence have first explored the alternative dispute resolution as mandated under section 12A of the 2015 Act. Counsel submits that the cause of action pleaded in the plaint begins from October, 2021, whereas the Suit was filed in October, 2023. Counsel places the individual paragraphs of the plaint in support of his contention and the dates in a tabulated statement in paragraph 32 of the plaint. 6. Counsel further submits that the C.R.P. is maintainable since the High Court can invoke its power under Article 227 of the Constitution of India, even in the face of the bar contained in section 8 of the 2015 Act, when there is a grave injustice or gross failure of justice. 7. Learned counsel appearing for the respondent/plaintiff supports the impugned order to urge that the Suit required urgent interim orders as would be evident from the statements made in the plaint. 8. We have heard learned counsel appearing for the parties. 9. 7. Learned counsel appearing for the respondent/plaintiff supports the impugned order to urge that the Suit required urgent interim orders as would be evident from the statements made in the plaint. 8. We have heard learned counsel appearing for the parties. 9. It is settled law that for considering rejection of a plaint under Order VII Rule 11 of the C.P.C., the Court must look most meaningfully at the statements made in the plaint in its entirety. The rejection, if granted, must also be under one of the sub-rules of Order VII Rule 11 of the C.P.C including absence of the cause of action of a Suit or where the Suit appears from the statements in the plaint to be barred by law (Order VII Rule 11 (a) & (d) of the C.P.C respectively). Therefore, we only propose to look at the statements made in the plaint filed by the respondent. 10. The dispute between the plaintiff and the defendants, as reflected from the plaint, relate to the defendant No.1, which is a partnership firm. The plaintiff is one of the partners against 2 other partners i.e., defendant Nos.2 and 3, respectively. The Suit was filed for dissolution of the defendant No.1-partnership firm and for a direction on the defendant Nos.2 and 3 for rendition of accounts of the partnership firm and for appointment of a Receiver for conducting Audit of the books of accounts of the partnership firm. 11. The relevant paragraphs of the plaint are as follows: 11.1. Paragraph 14 states the plaintiff’s role in sourcing clients and meeting of the architects as partners to the firm and the role of the defendant Nos.2 and 3 for handling the Bank Accounts and accounting of the firm. The plaintiff’s grievance is that the defendant No.2 did not share any information with regard to the accounts of the defendant No.1- partnership firm with the plaintiff. 11.2. Paragraph 17 states that the show room of the partnership firm was shifted in 2021 to a prime commercial location which also resulted in the growth of business of the partnership firm in relation to the brand name ‘REFLECT’. 11.3. Paragraph 18 states that the defendant Nos.2 and 3 requested the plaintiff in October, 2021 to invest a sum of Rs.50,00,000/- into the partnership firm for expansion to which the plaintiff expressed her inability. 11.4. 11.3. Paragraph 18 states that the defendant Nos.2 and 3 requested the plaintiff in October, 2021 to invest a sum of Rs.50,00,000/- into the partnership firm for expansion to which the plaintiff expressed her inability. 11.4. Paragraph 19 states that the plaintiff went on leave in May, 2021 for personal reasons. 11.5. Paragraph 20 states that the defendant Nos.2 and 3 pressurized the plaintiff to bring further investments, without providing accounts of the partnership firm. Paragraph 20 also refers to an email sent by the plaintiff to the defendant Nos.2 and 3 on 12.03.2022 for account details of the firm. 11.6. Paragraph 21 refers to the visit of the defendant Nos.2 and 3 to Italy in May, 2022 for business purposes. 11.7. Paragraph 23 refers to the oral and email communications between the plaintiff and the defendant Nos.2 and 3 by which they agreed to share the accounts of the partnership firm by 30.06.2022 which ultimately the defendant Nos.2 and 3 failed to provide. 11.8. Paragraph 26 states that the defendant Nos.2 and 3 shared the accounts of the partnership firm with the plaintiff on 11.07.2022 without any supporting documents and the plaintiff replied by an email dated 20.07.2022. The plaintiff also found that the accounts shared by the defendant Nos.2 and 3 were fraudulent and fabricated. 11.9. Paragraph 27 states that the defendants hatched a conspiracy to ouster the plaintiff by an email dated 11.08.2022. 11.10. Paragraph 28 states that the plaintiff suspected foul play on the part of the defendant Nos.2 and 3 and their Chartered Accountants in terms of manipulating the accounts of the company and filed false Income Tax Returns for the Financial Years 2019-2022. 11.11. Paragraph 32 states that the plaintiff visited the partnership firm in October, 2023 and demanded to be shown the bank accounts of the firm and subsequently found that the defendant Nos.2 and 3 have misused the funds of the partnership firm. The table in Paragraph 32 gives a “Chart of the Misused Funds” by the defendant Nos.2 and 3 from 06.03.2018 to 23.05.2023. 12. The cause of action paragraph states that the plaintiff lodged a complaint with the police on 30.10.2023 and issued a Notice of Dissolution of the partnership firm on the same day i.e., 30.10.2023. 13. The table in Paragraph 32 gives a “Chart of the Misused Funds” by the defendant Nos.2 and 3 from 06.03.2018 to 23.05.2023. 12. The cause of action paragraph states that the plaintiff lodged a complaint with the police on 30.10.2023 and issued a Notice of Dissolution of the partnership firm on the same day i.e., 30.10.2023. 13. Although the petitioners/defendants state that the Suit does not contemplate any urgent interim relief, it is clear from the statements made in the plaint that the plaintiff’s visit to the partnership firm in October, 2023 and the discovery of fraud and the Notice for Dissolution of the partnership firm on 30.10.2023 reflected the necessity of urgent interim relief. 14. Whether a Suit contemplates urgent interim relief is purely a question of the averments in the plaint touching the benchmark of a case for urgency. It is for the plaintiff to satisfy the Court of the need for urgent intervention and the Court being convinced that the plaintiff should be exempted from the mandate of section 12A of the 2015 Act. 15. Although counsel for the petitioners/defendants submits that the cause of action arose in 2021 (paragraphs 18 and 19 of the plaint) and hence there could not be a case for urgent interim relief in October, 2023, we cannot accept the submission since the cause of action shown in paragraphs 27 and 32 plead that the plaintiff filed the Suit right after suspecting foul play by the defendants in October, 2023. 16. The cause of action paragraph also avers the Notice of Dissolution of the partnership firm and the police complaint dated 30.10.2023. The plaintiff lost no time thereafter in filing the Suit on 31.10.2023. 17. Needless to say, the urgency pleaded in a plaint does not stand frozen on the date on which the cause of action arises but extends to the last pleaded date where the plaintiff relies on a continuing cause of action. The case of urgency must therefore be decided on the basis of the last trigger for filing of the Suit which becomes the basis of the assessment of urgency as on the date of institution of the Suit within the contemplation of section 12A of the 2015 Act. 18. The case of urgency must therefore be decided on the basis of the last trigger for filing of the Suit which becomes the basis of the assessment of urgency as on the date of institution of the Suit within the contemplation of section 12A of the 2015 Act. 18. The purpose of a continuing cause of action is to give a platform to the plaintiff to plead a sequence of events over a period of time notwithstanding the period between the first date and the last date forming part of the bundle of facts. The last trigger for filing of the Suit becomes all-important for deciding whether the Suit requires urgent interim relief within the contemplation of section 12A of The Commercial Courts Act, 2015. 19. In the present case, although the cause of action commenced from 2021, there is no doubt that the cause of action continued through several events thereafter till October, 2023. Forcing the respondent/plaintiff to opt for Pre-Institution Mediation would, hence, have frustrated the Suit. 20. We are accordingly of the view that the contention of the plaint not fulfilling the rigour of section 12A of the 2015 Act is without any basis. In any event, the Commercial Court considered the scope of Section 12A of the 2015 Act and came to the specific finding that the Suit contemplates urgent interim relief. The Commercial Court took into account the statements made in the plaint and the events pleaded therein. We do not find any error in the findings of the Commercial Court. 21. We are also of the view that Article 227 of the Constitution can be invoked by the High Court in limited circumstances in the face of the bar under section 8 of the 2015 Act in relation to Civil Revision Petitions against an interlocutory order. The dismissal of the petitioners’ application under Order VII Rule 11 of the C.P.C results in an interlocutory order as opposed to a final judgment. As stated above, the dismissal is based on reasons and the impugned order has not resulted in failure of justice in general or grave injustice to the parties in particular. The dismissal of the petitioners’ application under Order VII Rule 11 of the C.P.C results in an interlocutory order as opposed to a final judgment. As stated above, the dismissal is based on reasons and the impugned order has not resulted in failure of justice in general or grave injustice to the parties in particular. It also cannot be said that the Commercial Court assumed jurisdiction in the absence of jurisdiction to entertain the matter: M.V. Ramana Rao v. N.Subash : 2019 SCC OnLine TS 3530 and State of Gujarat v. Union of India : 2018 SCC OnLine Guj 1515. 22. Apart from being of the view that the impugned order dated 18.04.2024 does not call for any interference, we are also of the view that the Civil Revision Petition is not maintainable. 23. C.R.P.No.2665 of 2024 is accordingly dismissed. I.A.No.1 of 2024 is also dismissed. There shall be no order as to costs.