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2025 DIGILAW 2298 (KER)

Kitco Ltd. v. P. H. Shebuna

2025-08-25

K.NATARAJAN

body2025
JUDGMENT : K. NATARAJAN, J. 1. The petitioners/defendants filed this petition for setting aside the order passed by the Commercial Court-II (Additional Sub Judge-II), Ernakulam, in I.A. No.13 of 2025 in C.S. No.10 of 2023, for having dismissed the application filed by the petitioner under Order VII Rule 11(d) of C.P.C., for rejection of the plaint. 2. Heard the arguments of the learned counsel for the petitioners and the learned senior counsel for the respondents. 3. The case of the petitioners is that the respondents herein filed a Commercial Suit before the Commercial Court- II, Ernakulam, in C.S. No.10 of 2023, for realisation of money, for an amount of Rs.29,20,426/-. Along with the suit, the respondents filed an I.A., for attaching the bank accounts of the petitioners under Order 38 Rule 1 of C.P.C., which came to be allowed, and the accounts of the petitioners have been attached. Later, the petitioners appeared, furnished security to the said amount, and got lifted the order of attachment. Subsequently, the petitioners have filed an application, I.A. No.13 of 2025, under Order VII Rule 11(d) of C.P.C., for rejection of the plaint on the ground that there is a violation of Section 12A of the Commercial Court Act (hereinafter referred to as ‘C.C. Act’), the suit was not filed before the pre-trial mediation settlement before filing the suit in the Court. Therefore, there is a violation of the mandatory provision of Section 12A of the C.C. Act. Hence, prayed for the rejection of the plaint. 4. Whereas the respondents filed a counter and contended that the plaintiffs filed a suit for granting urgent interim relief by way of attachment before judgment in the above suit. Therefore, Section 12A of the C.C. Act has no application, and subsequent to the filing of the suit, the matter has been referred to the Mediation Center, but it was not settled. Therefore, it is contended that there is no violation of the mandatory provision of Section 12A , and due to the urgency, the suit was filed and obtained urgent order of attachment before judgment; otherwise, the petitioners/defendants have flee away from justice, and the plaintiffs are unable to recover the same, hence, prayed for dismissing the application. 5. Therefore, it is contended that there is no violation of the mandatory provision of Section 12A , and due to the urgency, the suit was filed and obtained urgent order of attachment before judgment; otherwise, the petitioners/defendants have flee away from justice, and the plaintiffs are unable to recover the same, hence, prayed for dismissing the application. 5. After hearing the arguments, the Commercial Court dismissed the application of the petitioners, holding that due to the urgency for getting the interim relief, the suit could be filed and obtain the attachment order. Therefore, there is no need for compliance with the provision under Section 12A of the C.C. Act. Hence, the application filed by the petitioners came to be dismissed by the interim order dated 13.03.2025; hence, the petitioners are before this court. 6. The learned counsel for the petitioners mainly contended that, as per Section 12A of the C.C. Act, it is a condition precedent before filing the suit before the Commercial Court, the suit be filed before the pre-mediation settlement, and thereafter the suit should be filed before the court. The learned counsel further contended that even filing an application for attachment or injunction along with the suit is not permissible, and there should be pleading in the suit itself regarding the urgency of getting the interim relief, but no such pleadings were mentioned in the plaint. Therefore, there is a clear violation of the mandatory provision of Section 12A of the C.C. Act. Therefore, the suit itself is not maintainable and the plaint is required to be rejected. In support of his contention, the learned counsel for the petitioners relied upon various judgments of the Hon’ble Supreme Court. 7. The respondents appeared and filed a counter claim by raising a main objection regarding the maintenance of the petition under Article 227 of the Constitution of India, contending that, the suit came to be filed before the Commercial Court under the C.C. Act, and if any order passed by the Commercial Court, that has to be challenged by filing appeal before the Commercial Appellate Court under Section 13(1) of the C.C. Act. Therefore, filing the Original Petition before the High Court is not maintainable. 8. Therefore, filing the Original Petition before the High Court is not maintainable. 8. The learned senior counsel appearing for the respondents has further contended that the Trial Court rightly rejected the application, as there was an urgency pleaded by the petitioners, and he sought urgent relief, which is found in the I.A., by filing an affidavit. The Trial Court also verified the submission made by the plaintiff’s counsel and then posted it before the court, after overruling the objection raised by the office in the office objection. Thereafter, the bank account of the petitioners has been attached, and then the petitioners came and got lifted the attachment by furnishing the security for the suit claim amount. Such being the case, an oral pleading is enough to show the urgency. Therefore, the Commercial Court rightly rejected the application, and the plaint cannot be rejected. He has further contended that the petitioners were tenants who vacated the premises without paying the arrears of rent and other damages, therefore, it is not possible for the respondents /plaintiffs to recover the said amount, and there is urgency for attaching the movable property of the petitioners in the bank account, hence, there is no violation of provisions of Section 12A of the C.C. Act, and prayed for dismissing the petition. 9. The learned senior counsel appearing for the respondents also relied upon various judgments of the Hon’ble Supreme Court, as well as this Court are as follows:- (i) Santiago Martin v. Union of India, 2023 (5) KHC 322 (ii) Samuel Varghese v. State of Kerala, 2024 KHC Online 1627 10. Having heard the arguments and perused the records. 11. The points that arise for consideration are:- (i) Whether the petition filed by the petitioners under Article 227 of the Constitution of India is not maintainable in view of Section 13(1) of the C.C. Act? (ii) The impugned order under challenge call for interference? Upon hearing the arguments and perusal of the records, it is not in dispute that the petitioners were tenants under the respondents, and they were said to have vacated the premises where there were arrears of rent and damages. Therefore, the respondents filed a Commercial Suit before the Commercial Court in C.S.No.10 of 2023 for recovery or realization of money/damages. Upon hearing the arguments and perusal of the records, it is not in dispute that the petitioners were tenants under the respondents, and they were said to have vacated the premises where there were arrears of rent and damages. Therefore, the respondents filed a Commercial Suit before the Commercial Court in C.S.No.10 of 2023 for recovery or realization of money/damages. It is also an admitted fact that initially, the office of the Commercial Court raised the objection that the suit was not filed before the pre-mediation settlement as required under Section 12A of the C.C. Act. The Presiding Officer of the Court considered the oral objection of the office and the submission made by the respondents/plaintiffs in respect of the urgency in the suit for attaching the bank account of the defendants in the I.A., under Order 38 Rule 1 of C.P.C. The Court below permitted the office to assign the suit number and then issued the order of attachment before the judgment, and I.A. No.1 of 2023, by attaching the bank accounts of the petitioners/defendants. 12. It is also an admitted fact that the petitioners appeared in the Commercial Court, and they offered the guarantee by filing I.A. No.5 of 2023, and the suit was advanced, the Commercial Court accepted the security amount, and lifted the attachment by accepting the bank guarantee on 25.01.2023. It is also an admitted fact that on 25.01.2023, the matter was referred to the Mediation Center as per Section 89 of C.P.C., and the matter came back to the Court on 18.11.2023, as mediation failed. Subsequently, the petitioners/defendants filed a written statement on 03.02.2024 before the court, but the written statement was not accepted by the Trial Court, as there was a delay in filing the written statement. Subsequently, the defendants/petitioners filed I.A. No.8 of 2024 on 03.02.2024, for accepting the written statement, by condoning the delay, and also I.A. No.9 of 2024, for condoning the delay in filing the written statement. But the Commercial Court dismissed both I.A. Nos.8 and 9 of 2024, did not take the written statement on record, and the suit is posted for trial, for adducing evidence on 04.02.2025. But the Commercial Court dismissed both I.A. Nos.8 and 9 of 2024, did not take the written statement on record, and the suit is posted for trial, for adducing evidence on 04.02.2025. When the matter was posted for evidence, the petitioners/defendants filed I.A. No.13 of 2024 under Order 7 Rule 11 of C.P.C., for the rejection of the plaint, which came to be dismissed on 13.03.25; hence, the petitioners are before this court. 13. On perusal of these admitted facts, now coming to the case of the defendants, though the defendants appeared in the Commercial Court on 20.01.2023 by filing I.A. No.5 and got the attachment lifted before judgment by offering security, and the same was accepted by the Commercial Court. Subsequently, the matter was referred to the mediation center on 25.01.2023, and the mediation was failed. The defendants /petitioners did not file the written statement within 120 days as prescribed under the law, which clearly reveals there is no written statement as of now. When the matter was posted for evidence, the petitioners chose to file the application for rejection of the plaint. 14. On this background, now coming to the contention of the respondents’ counsel that the original petition filed under Article 227 of the Constitution of India is not maintainable and the petitioners ought to have filed appeal under Section 13(1) of the C.C. Act, therefore, the original petition is not maintainable. In this regard, the petitioners counsel has seriously contended as per Section 13(1) of the C.C. Act, that the petitioners cannot file an appeal, as there was a Proviso to Section 13 wherein the petitioners can only file the appeal as enumerated in the provision under Order 43 of C.P.C., and under Section 37 of the Arbitration and Conciliation Act, otherwise he cannot file any appeal as against the impugned order. Therefore, the only remedy available to the petitioners is under Article 227 of the Constitution of India by filing an Original Petition before the High Court. Therefore, it is necessary to refer to Section 13 of the C.C. Act, which is as under: 13. Appeals from decrees of Commercial Courts and Commercial Divisions : (1) Any person aggrieved by the judgment or order of a Commercial Court below the level of a District Judge may appeal to the Commercial Appellate Court within a period of sixty days from the date of judgment or order. Appeals from decrees of Commercial Courts and Commercial Divisions : (1) Any person aggrieved by the judgment or order of a Commercial Court below the level of a District Judge may appeal to the Commercial Appellate Court within a period of sixty days from the date of judgment or order. (1-A) Any person aggrieved by the judgment or order of a Commercial Court at the level of District Judge exercising original civil jurisdiction or, as the case may be, Commercial Division of a High Court may appeal to the Commercial Appellate Division of that High Court within a period of sixty days from the date of the judgment or order. Provided that an appeal shall lie from such orders passed by a Commercial Division or a Commercial Court that are specifically enumerated under Order XLIII of the Code of Civil Procedure, 1908 (5 of 1908) as amended by this Act and section 37 of the Arbitration and Conciliation Act, 1996 (26 of 1996). 15. Section 37 of the Arbitration and Conciliation Act reads as follows: 37. Appealable orders : (1) Notwithstanding anything contained in any other law for the time being in force, an appeal] shall lie from the following orders (and from no others) to the court authorised by law to hear appeals from original decrees of the Court passing the order, namely:- (a) refusing to refer the parties to arbitration under section 8; (b) granting or refusing to grant any measure under section 9; (c) setting aside or refusing to set aside an arbitral award under section 34. (2) An appeal shall also lie to a court from order of the arbitral Tribunal: (a) accepting the plea referred to in sub-section (2) or sub- section (3) of section 16; (b) granting or refusing to grant an interim measure under section 17. (3) No second appeal shall lie from an order passed in appeal under this section, but nothing in this section shall affect or take away any right to appeal to the Supreme Court. 16. (3) No second appeal shall lie from an order passed in appeal under this section, but nothing in this section shall affect or take away any right to appeal to the Supreme Court. 16. On reading of Section 37 of the Arbitration and Conciliation Act, the petitioners is required to file an appeal only when they refused to refer the parties to arbitration under Section 8 and refused to grant any interim measure under Section 9, and either setting aside or refusing to set aside the arbitral award under Section 34 and accepting the plea referred to 2 and 3 of Section 16 of the Act regarding jurisdiction of the Arbitral Tribunal and refusing to grant interim measures under Section 17. Therefore, the petitioners cannot file any appeal under Section 37 of the Arbitration and Constitution Act. 17. As per the proviso to Section 13(1-A), it defines the appeals that lie before the Commercial Appellate Court, specifically enumerated under Order 43 of C.P.C. Order 43 Rule 1 of C.P.C., an appeal can be filed against the interlocutory orders only as provided under Order 43 Rule 1 of C.P.C. 18. On reading of the Order 43 Rule 1, an appeal under Order 43 Rule 1 is permissible only if the return of the plaint under Order 7 Rule 10 of C.P.C., except the procedure specified in Rule 10A of Order 7, and if Order 7 Rule 11 application is allowed, it is nothing but a decree and it is appealable under Order 41 Rule 1 of C.P.C., as the rejection of the plaint is deemed to be a decree. Therefore, the petitioners cannot file an appeal under Order 43 Rule 1 of C.P.C., as it is specifically mentioned that the orders shall be challenged under Order 43. 19. Now coming to Section 13(1) and 13(1-A) and proviso, the learned counsel for the petitioners contended that in view of the proviso to sub Section 1, the petitioners cannot file any appeal under Order 43 Rule 1 of C.P.C. or Section 37 of the Arbitration and Conciliation Act. Therefore, it is contended that the recourse available to the petitioner is only before the High Court under Article 227 of the Constitution of India and not under Section 13(1) of the Commercial Court Act. Therefore, it is contended that the recourse available to the petitioner is only before the High Court under Article 227 of the Constitution of India and not under Section 13(1) of the Commercial Court Act. In this regard, learned senior counsel for the respondents has contended that the proviso under Section 13 is only meant for sub-section 13(1-A) of the C.C. Act, but not applicable to sub-section 1 of Section 13 of the C.C. Act. 20. In support of the arguments, learned senior counsel for respondents relied upon the judgment of the Hon’ble Supreme Court reported in Indore Development Authority v. Manoharlal and others , (2020) 8 SCC 129 wherein the Hon’ble Apex Court held at paragraph 176 of the judgment, which is referred to as under: 176. Parliament has used the full stop (.) after Section 24(1) and colon (:) after Section 24(2). It cannot be gainsaid that punctuation plays a vital role, particularly when an attempt is made to relocate any part of the provision. The use of the colon is to introduce a sub-clause that follows logically from the text before it. We are examining this aspect of the colon, additionally. Though as the interpretation of the provision of Section 24(2) and its proviso needs no further deliberation regarding its placement, the same is to be read as a proviso to Section 24(2) and not Section 24(1)(b). Use of punctuation colon reinforces our conclusion and punctuation mark has been an accepted method of statutory interpretation when such a problem arises. Though sometimes punctuation can be ignored also but not generally. The full stop after Section 24(1)(b) expresses deliberate intent to end a particular sentence and detach it from the next part. With regard to the meaning of the punctuation colon, the University of Oxford Style Guide states as under: "Use a colon to introduce a sub-clause which follows logically from the text before it, is not a new concept and depends logically on the preceding main clause. Do not use a colon if the two parts of the sentence are not logically connected." (emphasis supplied) Wherein the Hon’ble Apex Court has held that the proviso is meant for only sub-section 24(2), but not applied to Section 24(1)(b) of the New Land Acquisition Act. 21. The Hon’ble Supreme Court has further held at Para 178 as under: 178 . 21. The Hon’ble Supreme Court has further held at Para 178 as under: 178 . It is clear that the colon (:) has a reference to the previous statement and enlarges the same and extends the meaning of the sentence. The colon 9 indicates that the text is intrinsically linked to the previous provision preceding it ie. Section 24(2) in this case and not Section 24(1). The colon indicates that what follows. The colon proves, explains, defines describes or lists elements of what precedes it. In case the proviso is bodily lifted and placed after Section 24(1)(b), Section 24(2) will end with a "colon" which is never done to end a provision. Certain decisions have been referred to saying that importance and weightage are to be given to punctuation marks. The earlier view was that punctuations were added by the proof readers, and the Acts passed by Parliament did not contain any punctuation. However, it was submitted that in the past century, the English courts realised that the drafts placed before the Parliament also carry punctuations and, thus, it is important to give meaning to the same. Bennion on Statutory Interpretation has this to say regarding punctuation marks: "16.8. Punctuation is a part of an Act and may be considered in construing a provision. It is usually of little weight, however, since the sense of an Act should be the same with or without its punctuation. Although punctuation may be considered, it will generally be of little use since the sense of an Act should be the same with or without it. Punctuation is a device not for making meaning, but for making meaning plain. Its purpose is to denote the steps that ought to be made in oral reading and to point out the sense. The meaning of a well-crafted legislative proposition should not turn on the presence or absence of a punctuation mark." 22. The Proviso is applicable only to Section 13(1-A) of the C.C. Act and not to the Section 13(1) of the C.C. Act. The proviso clearly reveals, any order passed by the Commercial Court at the level of District Judge, then it has to be appealable before the Commercial Division of the High Court within 60 days. Therefore, I am of the view, the proviso will be applicable to Section 13(1-A) of the C.C. Act, but not applicable to Section 13(1) of the C.C. Act. Therefore, I am of the view, the proviso will be applicable to Section 13(1-A) of the C.C. Act, but not applicable to Section 13(1) of the C.C. Act. Therefore, any judgment or order passed by the Commercial Court, below the level of a District Judge, has to be appealed before the Commercial Appellate Court under Section 13(1) of the C.C. Act. The Commercial Court is a sub court that passed the order. Hence, I am of the view that the order of dismissal of the application filed by the petitioner is required to be appealed before the Commercial Appellate Court under Section 13(1) of the C.C. Act before the District Judge and not before the High Court under Article 227 of the Constitution of India. 23. This Court in Dr. Sethulakshmi V.R. v. Canara Bank, Kottayam , 2025 (5) KHC 153 wherein it has held that any order passed by the Commercial Appellate Court under Section 13(1), they can approach the High Court either under Article 227 of the Constitution of India or under Section 115 of C.P.C. by filing the revision. In view of the judgments passed by this Court, where revision under Section 115 of C.P.C., as well as Article 227 of the Constitution of India, is maintainable. The petition shall be permissible before the High Court, only if any order or judgment passed by the Commercial Appellate Court under Section 13(1) of the C.C. Act, but not any order passed by the Commercial Court, the level of a Sub Judge. Therefore, the petition under Article 227 of the Constitution of India filed by the petitioners is not maintainable before this Court. The petitioners ought to have filed appeal under Section 13(1) of the C.C. Act before the District Judge. Accordingly, I answered Point No.1 against the petitioner. 24. As far as the order under the challenge, the Hon’ble Supreme Court in Patil Automation Pvt. Ltd. v. Rakheja Engineers (P) Ltd . (2022) 10 SCC 1 where the Hon’ble Apex Court has held that, in Section 12A , pre-mediation settlement is mandatory and it is not a mere procedural act. The plaintiff cannot file the suit without fulfilling the conditions provided under Section 12A of the C.C. Act. (2022) 10 SCC 1 where the Hon’ble Apex Court has held that, in Section 12A , pre-mediation settlement is mandatory and it is not a mere procedural act. The plaintiff cannot file the suit without fulfilling the conditions provided under Section 12A of the C.C. Act. In a subsequent judgment, the Hon’ble Supreme Court in Yamini Manohar v. T.K.D. Keerthi, 2023 (6) KLT SN 37 (C. No. 20) (SC) case, once again, the Hon’ble Apex Court considered the rejection of the plaint under Order 7 Rule 11 of C.P.C and held that Section 12A of C.C. Act is necessary. Wherein, the Hon’ble Supreme Court has held that the Court is required to consider a prima facie case, irreparable harm and injury, and balance of convenience, to be pleaded in the petition for maintaining the suit without going to the pre-litigation settlement. And if any urgent relief has been prayed by the plaintiffs and if the plaint contemplates any urgent relief that is satisfied, then the plaint cannot be rejected under Order 7 Rule 11 of C.P.C., and the Hon’ble Apex Court upheld the dismissal of the application under Order 7 Rule 11 of C.P.C. in the said case. 25. Learned senior counsel for the respondents contended that filing the application for an interim order for attaching the accounts of the petitioner, an oral or written submission is enough for filing the suit before the Commercial Court, and there cannot be a violation of Section 12A of C.C. Act. 26. The Hon’ble Supreme Court in the recent Judgment M/s. Dhanbad Fuels Private Limited v. Union of India , 2025 KHC Online 6489 in paragraph 62 clause (f) & (h), the Hon’ble Apex Court has held and concluded as under: 62. xxxxxxx f. The test for 'urgent interim relief ‘is if on an examination of the nature and the subject matter of the suit and the cause of action, the prayer of urgent interim relief by the plaintiff could be said to be contemplable when the matter is seen from the standpoint of the plaintiff. g. xxxxx h. Even if the urgent interim relief ultimately comes to be denied, the suit of the plaintiff may be proceeded with without compliance with S.12A if the test for ’urgent interim relief’ is satisfied notwithstanding the actual outcome on merits. 27. g. xxxxx h. Even if the urgent interim relief ultimately comes to be denied, the suit of the plaintiff may be proceeded with without compliance with S.12A if the test for ’urgent interim relief’ is satisfied notwithstanding the actual outcome on merits. 27. The Hon’ble Supreme Court, considering all the aspects, by holding that, the provision 12A, C.C. Act, it is mandatory to file the suit before the Commercial Court. However, it is held that if any urgency is pleaded, then the court can entertain the suit. Here, in this case, the respondent filed the suit along with the interlocutory application and pleaded that there was urgency for attaching the accounts of the petitioner. The office raised objections regarding non- compliance of Section 12A , where the Commercial Court/sub Judge, after hearing, allowed to register the commercial suit, and on the very same day, an order was issued for attaching the bank account. The very next day, within 2 days, the petitioner came and got lifted the attachment by furnishing security. Thereafter, the matter was referred to mediation, but it was not settled. It is also relevant to note, the petitioners, being defendants not file any written statement within the prescribed time. Subsequently filed a written statement beyond the limitation, which was not allowed by the Commercial Court, and refused to file the written statement, also not challenged by the petitioners/defendants. On the other hand, trying to file an application for rejecting the plaint under the guise of non- compliance of Section 12A of C.C. Act. Therefore, the Commercial Court initially verified the urgency, then allowed the plaintiffs to file the commercial suit before the court, and thereafter attachment order was issued, and it was pleaded that even oral pleading is also acceptable, and the plaintiff can get exemption for non-compliance under Section 12A of the C.C. Act. 28. In paragraph 42 of the Dhanbad Fuel’s case, the Hon’ble Supreme Court has held as under: 42 iii. How the expression ’urgent interim relief is to be construed Further, it is also pertinent to note that S.12A of the 2015 Act does not contemplate leave of the court for filing a suit which contemplates an urgent interim relief, as is clear from the language and words used in the provision. The provision also does not necessarily require an application seeking exemption if a suit is being filed without pre-institution mediation. The provision also does not necessarily require an application seeking exemption if a suit is being filed without pre-institution mediation. An application seeking waiver on account of urgent interim relief setting out grounds and reasons may allay a challenge and assist the court, but in the absence of any statutory mandate or rules made by the Central Government, an application per se is not a condition under S.12A of the 2015 Act. Pleadings on record and oral submissions would be sufficient in ordinary course. In view of the judgment of the Hon’ble Supreme Court in Dhanbad Fuel’s case cited (supra), the plaintiffs made out a case by oral submission for urgency and also filed an interlocutory application and got attachment of the bank account of the petitioner. Therefore, it cannot be said that it is a violation of the mandatory provision of Section 12A . Hence, I am of the view that the Commercial Court, after considering the various aspects, rightly dismissed the application of the petitioner. Therefore, the impugned order under challenge does not call for any interference. Accordingly, this Original Petition is dismissed.