The Bombay High Court has ruled that for the purposes of Section 12-A of the Commercial Courts Act, the determinative test is whether, on a wholesome reading of the plaint and supporting documents, urgent interim relief is genuinely contemplated from the plaintiff’s standpoint in light of the nature of the suit, subject matter, and cause of action. The Court clarified that it is not whether such interim relief is ultimately granted. If that test is satisfied, non-compliance with pre-institution mediation does not justify rejection of the plaint under Order VII Rule 11 CPC.
The Court further held that where the suit’s substantive reliefs concern specific performance and enforcement of agreements, the plaint cannot be rejected at the threshold under Order VII Rule 11 merely because SARFAESI measures are also in the background, unless the matter sought to be adjudicated is one that the DRT or Appellate Tribunal is empowered to determine under the SARFAESI Act. The Court held that no ground under Order VII Rule 11 CPC was made out and accordingly dismissed the interim applications seeking rejection of the plaint.
A Single Judge Bench of Justice Gauri Godse observed, on the plaint as pleaded, that there was sufficient cause of action against all three defendants because the suit was founded on enforcement of the Framework Agreement against defendant nos. 1 and 2 and the profit-sharing agreement against defendant no. 3. As regards Section 34 of the SARFAESI Act, the Bench observed that the substantive prayers in the suit were for performance of the Framework Agreement and the profit-sharing agreement, reliefs which could not be decided under the SARFAESI machinery. Hence, it opined that the plaint could not be rejected at the threshold on that ground.
The Bench also rejected the submission that the plaint was barred under Section 41 of the Specific Relief Act at the threshold, holding that the pleadings warranted a trial and that merits of the cause of action and reliefs could not be dealt with under Order VII Rule 11 CPC at this preliminary stage.
On Section 12-A of the Commercial Courts Act, the Bench treated the law as settled by the Supreme Court, especially in cases of Yamini Manohar vs. T.K.D. Keerthi [(2024) 5 SCC 815] and Dhanbad Fuels Private Limited vs. Union of India [2025 SCC Online SC 1129]. The correct test is not whether interim relief is ultimately granted, but whether, upon examination of the nature and subject matter of the suit and the cause of action, urgent interim relief could be said to be contemplated from the plaintiff’s standpoint.
The Bench expressly noted that urgent interim relief must not be a disguise or camouflage to bypass mandatory pre-institution mediation, but equally, mere non-grant of ad interim relief or later rejection of interim relief on merits does not justify rejection of the plaint under Order VII Rule 11 CPC.
The Bench further observed that post-filing stages of the suit are not relevant for deciding whether the plaint should be rejected under Order VII Rule 11(d) for non-compliance with Section 12-A. The Bench found that the plaintiffs had pleaded precipitative action by the defendants, threatened enforcement of security, possession action, alleged breach of the Framework Agreement and profit-sharing arrangement, and apprehended loss of their protected interests. Seen from the plaintiffs’ standpoint, urgent interim relief was therefore contemplated.
Briefly, a suit had been filed by the plaintiffs for specific performance of a Framework Agreement dated 20 December 2024. The plaintiffs sought discharge of themselves and the Mordani Group from liabilities arising from loan facilities availed from defendant nos. 1 and 2, release of security interests, and a declaration that no amounts remained payable in view of the Framework Agreement. The plaintiffs also sought interim relief on the footing that defendant nos. 1 and 2 were likely to take precipitative steps against secured assets and enforce security under the loan documents. On that basis, the suit was filed without complying with pre-institution mediation under Section 12-A of the Commercial Courts Act.
Defendant no. 1 contended that the Framework Agreement itself recorded that if the Mordani Group failed to perform by 31 December 2024, the agreement would automatically stand revoked, cancelled and terminated, with the parties relegated to their pre-agreement position; and that, admittedly, the plaintiffs had failed to comply with their obligations. Defendant no. 2 contended that it had already initiated SARFAESI proceedings, including a possession notice dated 18 February 2025, that the plaintiffs delayed for about two months thereafter, and that defendant no. 2 had not signed the Framework Agreement. It therefore argued both absence of urgency and absence of cause of action against it, apart from the bar under Section 34 SARFAESI. Defendant no. 3 contended that no urgent interim relief was really contemplated and that there was no cause of action pleaded against it.
The plaintiffs answered that they had pleaded urgency from their standpoint; that the Framework Agreement had been acted upon; that defendant no. 3 had entered into a profit-sharing arrangement relating to the projects; and that the possession notice and apprehended enforcement steps compelled the filing of the suit without Section 12-A compliance.
Aggrieved, interim applications were filed by the defendant seeking rejection of the plaint under Order VII Rule 11 of the Code of Civil Procedure, 1908, on the grounds of: (i) non-compliance with Section 12-A of the Commercial Courts Act, 2015; (ii) bar under Section 41 of the Specific Relief Act, 1963; and (iii) bar under Section 34 of the SARFAESI Act.
Appearances:
S. Godbole, Senior Advocate a/w Karl Tamboly a/w Neuty Thakkar a/w Kausar Banatwala a/w Rajesh Shah a/w Dhaval Gandhy a/w Karan Aiya i/b Tushar Goradia for the Plaintiff
Gaurav Joshi a/w Yash Momaya a/w Parag Kabadi a/w Vidhi Porwal i/b DSK Legal for the Applicant in IA/4596/2025 and for Defendant No.1
Shanay Shah a/w Tejas Popat a/w Simantini Mohite a/w Munaf Virjee a/w Rushabh Parekh a/w Tirtha Mukherjee a/w Pranav Shetty i/b AMR Law for the Applicant in IA(L)/22220/2025 and for Defendant No.2
Rohaan Cama a/w Phiroze Mehta i/b Prakruti Joshi for the Applicant in IA/7764/2025 and for Defendant No.3
