Gujarat High Court
Sbs Polychem Pvt. Ltd vs M/S Chemical Compound Llc on 17 February, 2025
Author: Sunita Agarwal
Bench: Sunita Agarwal
NEUTRAL CITATION
C/FA/300/2025 ORDER DATED: 17/02/2025
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IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/FIRST APPEAL NO. 300 of 2025
With
CIVIL APPLICATION (FOR INJUCTION) NO. 1 of 2024
In R/FIRST APPEAL NO. 300 of 2025
With
CIVIL APPLICATION (FOR AMENDMENT) NO. 1 of 2025
In R/FIRST APPEAL NO. 300 of 2025
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SBS POLYCHEM PVT. LTD.
Versus
M/S CHEMICAL COMPOUND LLC & ORS.
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Appearance:
MR. VISHAL J. PATEL, ADVOCATE WITH NIMIT Y SHUKLA(8338) for the
Appellant(s) No. 1
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CORAM:HONOURABLE THE CHIEF JUSTICE MRS. JUSTICE SUNITA
AGARWAL
and
HONOURABLE MR. JUSTICE PRANAV TRIVEDI
Date : 17/02/2025
ORAL ORDER
(PER : HONOURABLE THE CHIEF JUSTICE MRS. JUSTICE SUNITA AGARWAL)
[1] The amendments are formal in nature. The amendment
application is allowed. Necessary incorporation be made within 24
hours.
[2] By means of the present petition, two orders dated 25.10.2024
passed by the Commercial Court rejecting the suit for non
compliance of the requirement of Section 12A of the Commercial
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Courts Act, 2015 (hereinafter referred to as “the Act, 2015”) are
subjected to challenge on the ground that the rejection of suit in
exercise of suo moto power by the Commercial Court invoking the
provisions of Order VII Rule 11 of the Code of Civil Procedure, 1908
(hereinafter referred to as “the CPC“) is an illegal exercise of power.
[3] The contention is that none of the clauses of Rule 11 of Order
VII of the CPC would be attracted in the present case, inasmuch as,
neither it can be said that the claim does not disclose a cause of
action nor the suit can be said to be barred by any law as per clauses
(a) and (d) of Rule 11 of under Order VII of the CPC. Apart from
these two clauses, no other clause contained in Rule 11 can be taken
aid of, to reject the plaint. It is argued that Section 12A of the Act,
2015 only requires mandatory process of pre-institution mediation to
be exhausted by the plaintiff in view of sub-section (1) of Section 12A
before instituting a suit under the Act, 2015. The requirement is that
the plaintiff filing the commercial suit shall first undergo the process
of pre-institution mediation and only in case of failure thereof, the
suit can be instituted. The period of 3 months for completion of the
process of mediation has been provided in sub-section (3) of Section
12A of the Act, 2015.
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of Section 12A, it can be seen that the requirement to exhaust the
remedy of pre-institution mediation in accordance with Section 12A
can be dispensed with and the plaintiff may be exempted from taking
recourse of the said remedy, in a suit which contemplates any urgent
interim relief under the Act, 2015. The submission, thus, is that
there is no absolute bar from institution of the suit without
exhausting remedy of pre-institution mediation under Section 12A of
the Act, 2015. The Commercial Court has, thus, erred in dismissing
the suit by taking recourse to the provisions of Order VII Rule 11 of
the CPC.
[5] Taking note of the above submissions, we may record that the
Hon’ble Apex Court in case of M/s Patil Automation Private
Limited and Others versus Rakheja Engineers Private Limited
reported in (2022) 10 SCC 1 as followed in case of Yamini
Manohar versus T.K.D. Keerthi reported in (2024) 5 SCC 815
has discussed the scope of Section 12A of the Act, 2015 and it is
held therein that the said provision is mandatory and any suit
instituted violating the mandate of Section 12A must be visited with
rejection of the plaint under Order VII Rule 11 of the CPC. The
observations of the Hon’ble Apex Court in case of M/s Patil
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Automation Private Limited and Others (supra) in paragraphs
‘113.1’ to ‘113.3’ are relevant to be extracted hereinbelow:-
“113.1 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.
113.2. 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.
113.3 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.
[6] In the case of Yamini Manohar (supra), the challenge was to
the rejection of the application under Order VII Rule 11 of the CPC
filed by the petitioner / defendant therein. The Hon’ble Apex Court
in case of Yamini Manohar (supra) taking note of the provisions of
Section 12A of the Act, 2015 and the previous decision in the case of
M/s Patil Automation Private Limited and Others (supra) has
observed that Section 12A of the Act, 2015 does not contemplate
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leave of the Court nor does the provision necessarily require an
application seeking exemption. The pleadings on record and oral
submissions would be sufficient. The words used in Section 12A of
the Act, 2015 “a suit does not contemplate any urgent interim relief”
had been taken note of with the special emphasis on the word
“contemplate”, which connotes to deliberate and consider. The legal
position stated therein, thus, is that the plaint can be rejected and
not entertained reflects application of mind by the court viz. the
requirement of ‘urgent interim relief’. In the facts of the said case, it
was noted in Yamini Manohar (supra) that an urgent interim relief
has been prayed for and the condition that the plaint “contemplates
an urgent interim relief” was satisfied and, therefore, there was no
error in rejection of the application under Order VII Rule 11 of the
CPC. Further, taking note of the decisions of the High Court of
Bombay and Delhi in the case of Kaulchand H. Jogani v. M/s
Shree Vardhan Investment & Ors. and in the case of Chandra
Kishore Chaurasia versus R. A. Perfumery Works Private
Limited, it was finally observed in paragraph ‘7’ as under :-
“7. We are of the opinion that when a plaint is filed under
the CC Act, with a prayer for an urgent interim relief, the
commercial court should examine the nature and the subject
matter of the suit, the cause of action, and the prayer for
interim relief. The prayer for urgent interim relief should not bePage 5 of 17
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a disguise or mask to wriggle out of and get over Section 12A of
the CC Act. The facts and circumstances of the case have to be
considered holistically from the standpoint of the plaintiff. Non-
grant of interim relief at the ad-interim stage, when the plaint is
taken up for registration/admission and examination, will not
justify dismissal of the commercial suit under Order VII, Rule 11
of the Code; at times, interim relief is granted after issuance of
notice. Nor can the suit be dismissed under Order VII, Rule 11
of the Code, because the interim relief, post the arguments, is
denied on merits and on examination of the three principles,
namely, (i) prima facie case, (ii) irreparable harm and injury,
and (iii) balance of convenience. The fact that the court issued
notice and/or granted interim stay may indicate that the court is
inclined to entertain the plaint.”
[7] It was, thus, held by the Hon’ble Apex Court that the
Commercial Court should examine the nature and subject matter of
the suit, the cause of action, and the prayer for interim relief to
consider holistically from the standpoint of the plaintiff, the
requirement of Section 12A of the Act, 2015 can be dispensed with.
It was clarified that the prayer for urgent interim relief should not be
a disguise or mask to wriggle out of and get over Section 12A of the
Act, 2015. It was further clarified that non-grant of interim relief at
the ad-interim stage, will not justify dismissal of the commercial suit
under Order VII, Rule 11 of the CPC, inasmuch as, at times, the
interim relief is granted after issuance of notice. It was also clarified
that the suit cannot be dismissed under Order VII, Rule 11 of the
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CPC, because the interim relief, post the arguments, has been denied
on merits on examination of the three principles, namely, (i) prima
facie case, (ii) irreparable loss and injury, and (iii) balance of
convenience.
[8] Having said that, it was further observed by the Hon’ble Apex
Court that the commercial court does have a role, albeit a limited
one, to check that the mandatory requirement of pre-litigation
mediation may not be bypassed by creating a camouflage and guise
and such situation should be checked when deception and falsity is
apparent or established. The plaintiff alone cannot have an ‘absolute
and unfettered right’, inasmuch as, such an approach is not justified
as the pre-institution mediation under Section 12A of the Act, 2015 is
mandatory.
[9] It was held by the Hon’ble Apex Court in case of Yamini
Manohar (supra) that the words ‘contemplate any urgent interim
relief’ in Section 12A of the Act, 2015, with reference to the suit,
should be read as conferring power on the court to be satisfied.
Meaning thereby, from the plaint, documents and facts on record,
the Court should be satisfied that the suit must “contemplate” an
urgent interim relief so as to exempt the requirement to exhaust the
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remedy of pre-institution mediation under Section 12A of the Act. It
is observed that this is a precise and limited exercise of power
conferred upon the commercial court in order to keep a check and
balance to ensure that the legislative object / intent behind the
enactment of Section 12A of the Act, 2015 is not defeated.
[10] Taking note of the above decisions of the Hon’ble Apex Court,
we may also take note of the judgment of this Court relied by the
learned counsel for the petitioner in Special Civil Application No.13
of 2025, wherein after reading the above noted two decisions of the
Hon’ble Apex Court, it was observed in paragraphs ’17 to 21′ as
under:-
“17. From an exhaustive reading of the law laid down by
the Apex Court in Patil Automation Private Limited (supra) and
Yamini Manohar (supra), it is pertinent to note that when the
plaint is presented before the Commercial Court under the
C.C.Act’ 2015 without adhering to the provisions of Section 12A
of the C.C.Act’ 2015, it is required to :-
(i) examine in exercise of its suo motu powers as to whether the
suit itself contemplated “any urgent interim relief” and then
decide as to whether the mandatory requirement of Section 12A
of the C.C.Act, 2015 can be relaxed,
(ii) the Commercial Court should examine the nature and
subject matter of the suit, the cause of action and the prayer forPage 8 of 17
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interim relief to ascertain as to whether the prayer for urgent
interim relief is a disguise or mask to wriggle out of and get
over Section 12A of the C.C.Act, 2015,
(iii) the facts and circumstances of the case have to be
considered holistically from the stand point of the plaintiff, (iv)
non-grant of interim relief at the ad-interim stage, i.e. at the
time of registration/admission and examination of the plaint,
will not justify dismissal by the Commercial Court under Order
VII Rule 11, CPC, inasmuch as, interim relief may be granted
after issuance of notice,
(iv) the suit cannot be dismissed under Order VII Rule 11, CPC
on the ground of non-compliance of Section 12A of the C.C.Act’
2015, because the interim relief has been denied on merits.
18. In its precise and limited exercise of powers, the
Commercial Court will be required to examine from the reading
of the plaint as a whole and the prayers made therein that the
suit must contemplate an urgent interim relief, if filed without
complying with the provisions of Section 12A of the C.C.Act’
2015. The word “contemplate” as explained by the Apex Court
should be read as conferring powers on the Court to be satisfied
about the requirement of an urgent interim relief and the plaint
documents and facts should show and indicate the need for an
interim relief.
19. However, while making such an inquiry, the
Commercial Court in its limited exercise of powers with the idea
to keep check that the legislative intent behind the enactment of
Section 12A of the C.C.Act’ 2015 is not defeated, can not enter
into the merits of the relief sought by the plaintiff to examine as
to whether the plaintiff is entitled to any relief either in the
nature of interim relief or final relief. The plaint cannot be
rejected or returned in the manner as has been done in the
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present case where the Commercial Court having gone through
the plaint averments and the documents on record, has even
gone to the extent of holding that there does not exist any
binding contract between the parties and has proceeded to
observe that no contract took place between the plaintiff and
the defendants, and consequently the Court is not inclined to
grant any urgent interim relief to the plaintiff. The line which
was required to be drawn by the Commercial Court at the time
of making inquiry as to whether the mandatory requirement of
Section 12A can be exempted at the time of registration of the
plaint, has been crossed by it. The inquiry made by the
Commercial Court at the pre-institution stage by making
observations on the merits of the claim of the plaintiff, in fact,
resulted into denial of any relief to the plaintiff, at the
preinstitution stage itself.
20. At the pre-institution stage, as per the law laid down
by the Apex Court in Yamini Manohar (supra), the Commercial
Court could not have gone into the merits of the claim for grant
of urgent interim relief. The only issue required to be examined
at the preinstitution stage by the Commercial Court, was as to
whether the plaintiff requires an urgent relief by consideration
of the facts and circumstances of the case from the stand point
of the plaintiff. What could go against the plaintiff at the time of
consideration of the prayer for interim relief was not required to
be examined while analyising the plaint averments, documents
on record and the prayer made in the suit. The Commercial
Court was required to only ascertain as to whether the prayer
for interim relief is a camouflage or disguise to wriggle out of or
bypass the statutory mandate of pre-litigation mediation under
Section 12A of the C.C.Act’ 2015. Though the plaintiff has no
absolute and unfettered right to approach the Commercial
Court without adhering to the pre-institution mediation under
Section 12A of the C.C.Act’ 2015 which is held mandatory by
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the Apex Court in Patil Automation Private Limited (supra), but
where the plaintiff seeks exemption, the Commercial Court has
no jurisdiction to enter into the merits of the prayer for interim
relief. Non-grant of interim relief at the adinterim stage or even
after issuance of notice is not relevant for the purposes of the
limited inquiry to be made by the Commercial Court under
Section 12 of the C.C.Act’ 2015 to keep a check that the
legislative mandate is followed in its true letter and spirit.
21. The only limited scope of examination in the exercise
of powers conferred under Section 12A of the C.C.Act’ 2015 is
that the Court should be satisfied that the prayer for interim
relief has not been made simply to overcome the bar under
Section 12A of the C.C.Act’ 2015 and the interim relief
application is not presented without any justification
whatsoever. The inquiry is not contingent whether the Court
accedes the plaintiff’s request.
[11] Considering the above, we may record that in the present case,
the trial court has made a suo motu inquiry on the presentation of
the suit as to whether the requirement to exhaust remedy of pre-
institution mediation can be dispensed with in the present case. We
may record that having gone through the plaint, injunction
application and the documents appended thereto, the trial court has
recorded that from a perusal of the whole plaint, it transpires that
the suit has been filed with regard to infringement of plaintiff’s
trademark. Though the plaintiff has prayed relief in the nature of
injunction against defendants No. 1, 2 and 3 as well, apart from
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defendant Nos. 3 and 4 against whom relief of infringement of the
plaintiff’s trademark had been prayed for. It is also noted by the trial
court that the basis of bringing infringements suit by the plaintiff is
the screenshots of the computer screen vide mark 4/5 to show that
the plaintiff’s registered trademark RHEOL is being infringed by the
defendants No. 3 and 4.
[12] Besides the above, the trial court has further recorded that the
plaintiff has raised a demand notice on 15.05.2024 towards unpaid
invoices dated 01.12.2021 and 14.12.2021 against defendants No. 1
and 2. However, there is no relief against defendant Nos.1 and 2
directly for infringement of the trademark. In so far as, the
allegations against defendant No.3 and 4 about infringement of the
plaintiff’s trademark, it is further recorded by the trial court that the
plaintiff had produced board resolution of the plaintiff – company
resolving to file a commercial trademark suit which is dated
01.08.2024. However, the plaintiff had filed the suit on 19.10.2024,
after a period of 2 months 19 days, which fact further indicates that
there is no urgency for passing of an interim injunction order. As far
as the cause of action disclosed in the suit, as per own case of the
plaintiff, the cause of action to file the suit arose in June, 2024.
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[13] The trial court has, thus, recorded that when the plaintiff came
to know about infringement of its trademark in June, 2024, when it
has waited for 4 months to bring its own action, it shows that the
plaintiff has no urgency. With these findings, the trial court came to
the conclusion that the plaintiff has failed to show and establish that
it is in need of urgent interim relief and, therefore, cannot be
permitted to dispense with the requirement to pre-institution
mediation under the provisions of Section 12A of the Act, 2015,
which is mandatory as per the law laid down by the Hon’ble Apex
Court in the case of M/s Patil Automation Private Limited and
Others (supra).
[14] Placing these observations made by the trial court, it was
vehemently argued by the learned counsel for the petitioner that the
trial court could not have gone into the merits of the interim
injunction application and, moreover, in an infringement suit, the
delay cannot be said to be fatal. Reliance is placed on the decision of
the Hon’ble Apex Court in the case of M/s Patil Automation
Private Limited and Others (supra) to submit that in an
infringement action, if the Court is satisfied about prima facie
existence of the case of infringement, an interim injunction order
needs to be passed.
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[15] Placing the observation made by this Court in the aforesaid
decision in the case of Jindal Flexiflims Limited versus MHM
Holding GMBH & Ors, it was further argued that this Court has
outlined the limitations on the exercise of power of the commercial
court under Section 12A of the Act, 2015 by reading of judgments in
M/s Patil Automation Private Limited and Others (supra) and
Yamini Manohar (supra) and has clarified that the suit cannot be
dismissed under Order VII Rule 11 of the CPC on the ground of non-
compliance of Section 12A of the Act, 2015, because the interim
relief has been denied on merits.
[16] It is, thus, argued that within the limited scope of exercise of
power under Section 12A of the Act, 2015, it was not permissible for
the trial court to reject the plaint by invoking the provisions of Order
VII Rule 11 of the CPC. Attention of the Court is invited to an order
dated 07.02.2024 passed by the Hon’ble Apex Court in Special Leave
to Appeal (c) No.2753/ 2025 to submit that the question whether, due
to non-compliance with Section 12A of the Act, 2015, suit should be
dismissed under Order VII Rule 11 of the CPC or whether it should
be kept in abeyance, directing the parties to first explore the
possibility of settlement by instituting mediation, has been posed by
the Court to itself which is pending consideration.
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[17] Taking note of all these arguments made by learned counsel
for the petitioner, suffice it to note that as per the settled position of
law as on date, as stated in M/s Patil Automation Private Limited
and Others (supra), a suit instituted violating the mandate of
Section 12A must be visited with rejection of the plaint under Order
VII Rule 11 of the CPC and the said power can be exercised even suo
moto by the commercial court. The position of law that Section 12A
of the Act, 2015 is mandatory also stands as on date.
[18] In view of the current settled law by the Hon’ble Apex Court in
two decisions, namely M/s Patil Automation Private Limited and
Others (supra) and Yamini Manohar (supra), it is not possible for
us to make any inquiry as to whether the suit violating the mandate
of Section 12A must be visited with the rejection of the plaint under
Order VII Rule 11 of the CPC. The said question, as placed before
us, is subject matter of consideration before the Hon’ble Apex Court.
[19] Coming to the merits of the order passed by the commercial
court, suffice it to note that on a holistic consideration of the plaint,
injunction application and the documents produced by the plaintiff
and the inaction on the part of the plaintiff, the trial court came to
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the conclusion that it is not a case worth granting exemption of the
mandatory requirement of Section 12A of the Act, 2015. This finding
returned by the trial court in its limited scope of inquiry under
Section 12A of the Act, 2015, cannot be said to suffer any error of
law. The observations made in the order impugned cannot be said to
be the observations on the merits of the interim injunction
application, rather it was in order to explore from the facts of the
case as to whether the mandatory requirement of Section 12A of the
Act, 2015 can be dispensed in the facts and circumstances of the
present case.
[20] For the above, we do not find any error in the decision of the
trial court, both the orders of rejection of the application seeking
exemption from the provisions of Section 12A of the Act, 2015 and
the resultant dismissal of the suit under Order VII Rule 11 of the CPC
for violating Section 12A of the Act, 2015. No interference is called
for. The present petition stands dismissed, accordingly.
[21] However, it goes without saying that the plaintiff / petitioner
herein is at liberty to institute a fresh suit after complying with the
requirement of Section 12A of the Act, 2015 by undertaking the
proper procedure for the purpose. The dismissal of the present suit
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by the trial court by the orders impugned or the dismissal of the
present petition by this order, will not come in the way of the
petitioner. It is further clarified that none of the observations made
by the trial court in the orders impugned or in this order hereinabove
will come in the way of the plaintiff in any of the subsequent
proceedings.
[22] Connected Civil Applications stand disposed of.
(SUNITA AGARWAL, C.J.)
(PRANAV TRIVEDI, J.)
DHARMENDRA KUMAR
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