SECTION 12-A OF COMMERCIAL COURTS ACT 2018- WHETHER PRE-LITIGATION MEDIATION- MANDATORY?

 

SECTION 12-A OF COMMERCIAL COURTS ACT 2018- WHETHER PRE-LITIGATION mediation- mandatory?

 

The hon’ble Supreme court in a matter reported as M/S. PATIL AUTOMATION PRIVATE LIMITED AND ORS. versus RAKHEJA ENGINEERS PRIVATE LIMITED 2022 LiveLaw (SC) 678 had to deal with a seminal question -whether the statutory pre-litigation mediation contemplated under Section 12A of the Commercial Courts Act, 2015  as amended by the Amendment Act of 2018 is mandatory? In other words whether before instituting a suit of commercial nature, whether prior mediation shall be necessary. The issue has generated much deliberation in legal circuit in view of conflicting views of various high courts in past. It may therefore be apt to discern the tenets of The Commercial Courts Act that was enacted in the year 2015 and more particularly, the Amendment Act of 2018, since, by virtue of the said amendment only , section 12 A is brought in the statute book. In 2015, when the Act was enacted for the first time, the monetary limit for a suit liable to be tried by the Commercial Court was fixed at Rs.1 Crore only. In the course of three years, it was felt that certain changes are necessary and hence, Parliament had decided to amend the Act. Consequently, in the year 2018, the Act came to be amended by the Commercial Courts, Commercial Division and Commercial Appellate Division of High Courts (Amendment) Act, 2018. The provisions are as under:

The Commercial Courts, Commercial Division and Commercial Appellate Division of High Courts (Amendment) Act 2018 inter alia, provides for, the following, namely :

(i) to reduce the specified value of commercial disputes from the existing one Crore rupees to Three Lakh Rupees, and to enable the parties to approach the lowest level of subordinate courts for speedy resolution of commercial disputes;

(ii) to enable the State Governments, with respect to the High Courts having ordinary original civil jurisdiction, to constitute Commercial Courts at District Judge level and to specify such pecuniary value of commercial disputes which shall not be less than Three Lakh rupees and not more than the pecuniary jurisdiction of the district courts;

(iii) to enable the State Governments, except the territories over which the High Courts have ordinary original civil jurisdiction, to designate such number of Commercial Appellate Courts at district judge level to exercise the appellate jurisdiction over the commercial courts below the district judge level;     

(iv) to enable the State Governments to specify such pecuniary value of a commercial dispute which shall not be less than Three Lakh rupees or such higher value, for the whole or part of the State; and

(v) to provide for compulsory mediation before institution of a suit, where no urgent interim relief is contemplated and for this purpose, to introduce the Pre-Institution Mediation and Settlement Mechanism and to enable the Central Government to authorise the authorities constituted under the Legal Services Authorities Act, 1987 for this purpose.

By virtue of the Amending Act , Section 12A came to be inserted and published in the Gazette and thereby came into force on 03.07.2018. Rule 3 reads as follows:

“3. Initiation of mediation process. –

 

(1) A party to a commercial dispute may make an application to the Authority as per Form-1 specified in Schedule-I, either online or by post or by hand, for initiation of mediation process under the Act along with a fee of one thousand rupees payable to the Authority either by way of demand draft or through online;

(2) The Authority shall, having regard to the territorial and pecuniary jurisdiction and the nature of commercial dispute, issue a notice, as per Form-2 specified in Schedule-I through a registered or speed post and electronic means including e-mail and the like to the opposite party to appear and give consent to participate in the mediation process on such date not beyond a period of ten days from the date of issue of the said notice.

(3) Where no response is received from the opposite party either by post or by e-mail, the Authority shall issue a final notice to it in the manner as specified in sub-rule (2).

(4) Where the notice issued under sub-rule (3) remains unacknowledged or where the opposite party refuses to participate in the mediation process, the Authority shall treat the mediation process to be a non-starter and make a report as per Form 3 specified in the Schedule-I and endorse the same to the applicant and the opposite party.

(5) Where the opposite party, after receiving the notice under sub-rule (2) or (3) seeks further time for his appearance, the Authority may, if it thinks fit, fix an alternate date not later than ten days from the date of receipt of such request from the opposite party.

(6) Where the opposite party fails to appear on the date fixed under sub-rule (5), the Authority shall treat the mediation process to be a non-starter and make a report in this behalf as per Form 3 specified in Schedule-I and endorse the same to the applicant and the opposite party.

(7) Where both the parties to the commercial dispute appear before the Authority and give consent to participate in the mediation process, the Authority shall assign the commercial dispute to a Mediator and fix a date for their appearance before the said Mediator.

(8) The Authority shall ensure that the mediation process is completed within a period of three months from the date of receipt of application for pre-institution mediation unless the period is extended for further two months with the consent of the applicant and the opposite party.”

What is significant in the context is that Section 12A contemplated only for a class of suits not requiring urgent relief- suits which contemplate urgent interim relief, the Law-giver has carefully prescribed immediate access to justice as contemplated ordinarily through the courts. The carving out of a class of suits and selecting them for compulsory mediation is in sync the object of the law. The underlying intent is to alleviate the dockets of judges so as to enable the overburdened judiciary to concentrate on matters craving for urgent relief or interim relief. The legislature was guided by a definite object of enhancing the ease of doing business in India and de-clogging of Commercial Courts so as to focus on important task of quickly disposing of commercial matters.

                          SCRUTINY OF SECTION 12 A

In this perspective, it may be worthwhile to examine the provisions contained in Section 12 A of Amendment Act.

Section 12A of the Act reads as follows:

12 A. Pre-Institution Mediation and Settlement—

(1) A suit, which does not contemplate any urgent interim relief under this Act, shall not be instituted unless the plaintiff exhausts the remedy of pre institution mediation in accordance with such manner and procedure as may be prescribed by rules made by the Central Government.

(2) The Central Government may, by notification, authorise the Authorities constituted under the Legal Services Authorities Act, 1987 (39 of 1987), for the purposes of pre-institution mediation.

(3) Notwithstanding anything contained in the Legal Services Authorities Act, 1987 (39 of 1987), the Authority authorised by the Central Government under sub-section (2) shall complete the process of mediation within a period of three months from the date of application made by the plaintiff under sub-section (1):

Provided that the period of mediation may be extended for a further period of two months with the consent of the parties:

Provided further that, the period during which the parties remained occupied with the pre-institution mediation, such period shall not be computed for the purpose of limitation under the Limitation Act, 1963 (36 of 1963).

(4) If the parties to the commercial dispute arrive at a settlement, the same shall be reduced into writing and shall be signed by the parties to the dispute and the mediator.

(5)The settlement arrived at under this section shall have the same status and effect as if it is an arbitral award on agreed terms under sub-section (4) of section 30 of the Arbitration and Conciliation Act, 1996 (26 of 1996).”

The Conflict

The High Court of Punjab and Haryana in M/S. PATIL AUTOMATION PRIVATE LIMITED (which is set aside by the hon’ble Supreme Court) has held that the Courts are meant to deliver substantial justice. The rules of procedure are handmaid of justice and are meant to advance the ends of justice and they are not to be bogged down by the technicalities of procedure so as to lose sight of its main duty which is to dispense justice. The purpose of referring the dispute to mediation centre is to explore settlement. If the suit is filed without taking recourse to the procedure it should not entail rejection of the plaint. This could not have been the intention of the legislature. It is further observed that an enactment is to be interpreted in a manner that it does not result in delivery of ‘perverse justice’. It was noted that the trial Court had directed that the civil suit be kept in abeyance and the parties were to appear before the Secretary of the District Legal Services Authority for the purpose of mediation.

The Hon’ble Bombay High Court in case Ganga Tara Vazirani Deepak Raheja 2021 SCC OnLine Bom 195 has held that the procedure provided under Section 12A of the Commercial Courts Act is not a penal enactment for punishment and there is no embargo in filing the suit without exhausting the remedy of mediation specially when an attempt is clear to show that the intention of the applicant has already been made and failed. The fact is clear that before filing the suit, the respondent/plaintiff has sent e-mail and legal notice and despite that the applicant/defendant failed to make the payment of the dues. Moreover, it is well settled that the procedure and law are for advancement of justice and not to thwart on technical grounds. Thus, in the larger interest of justice, the court deems it appropriate that the civil suit can be kept in abeyance and both the parties are directed to appear before the Secretary, District Legal Services Authority, Faridabad for the purpose of mediation as per the provisions of Section 12A of the Commercial Courts Act and the Rules framed thereunder.

It is however necessary to point out that Ganga Taro (supra) has been reversed by the Division Bench in Deepak Raheja v. Ganga Taro Vazirani 2021 SCC OnLine Bom 3124. The different high courts have expressed different views. Pertinently, mere reference to Statement of Objects and Reasons and the plain language used coupled with the intention of the Law giver makes it clear that Section 12A is mandatory.

The Calcutta High Court in a judgment reported in Dredging and Desiltation Company Pvt. Ltd. v. Mackintosh Burn and Northern Consortium and Others 2021 SCC Online Calcutta 1458  took the view that there is a distinction between filing of a Suit and institution of a Suit under the Code of Civil Procedure. It was further found that the bar under Section 12A is absolute w.e.f. 12.12.2020, being the date immediately subsequent to the date after the standard operating procedure for undertaking pre-litigation procedure under Section 12A was made. This is after finding that the standard operating procedure had been made and Rules were published on 11.12.2020. In the judgment reported in Laxmi Polyfab Pvt. Ltd. v. Eden Realty Ventures Pvt. Ltd. and Another AIR 2021 Calcutta 190 , elaborately considered the question as to whether Section 12A is mandatory. It is held so.

The Division Bench of the High Court of Madhya Pradesh, in Curewin Pharmaceuticals Pvt. Ltd. v. Curewin Hylico Pharma Pvt. Ltd AIR 2021 MP 154, followed the judgment of the learned Single Judge of High Court of Bombay, in Ganga Taro (supra), and held that if a suit does not contemplate an urgent interim relief, the same cannot be instituted, unless, pre litigation mediation is exhausted. A learned Single Judge of the Allahabad High Court in the decision reported in Awasthi Motors v. Managing Director M/s. Energy Electricals Vehicle and Another AIR 2021 Allahabad 143, has observed that there is a clear purpose provided for pre-institution mediation. The Statement of Objects and Reasons were referred to and it was concluded that the provision is mandatory.

Section 2(c) defines ‘commercial dispute’ as encompassing various specified transactions, which are 21 in number. There is a residuary provision in Section 2(c)(xxii). The said provision empowers the Central Government to notify other commercial disputes as a commercial dispute. The explanation amplifies/clarifies the scope of commercial dispute. Section 2(i) defines the words ‘specified value’ as follows:

“2(i) “Specified Value”, in relation to a commercial dispute, shall mean the value of the subject-matter in respect of a suit as determined in accordance with section 12 which shall not be less than three lakh rupees or such higher value, as may be notified by the Central Government.”

[The amount was Rs 1 crore when the Act was enacted in 2015 and it was reduced by the Amendment in 2018.]

The cursory perusal of the Amendment Act of 2018 shall throw some light as regards the details. Under Chapter II, the legislature has contemplated, Commercial Courts at the District Level, a Commercial Appellate Court at the District Judge Level. Similarly,  a Commercial Division in the High Court for all High Courts having Ordinary Original Civil Jurisdiction (Section 4) and a Commercial Appellate Division in the High Court. What is noteworthy in the context is that revision petition arising out of commercial suits against an interlocutory order are barred as per Section 8. Then, Section 12 deals with the determination of the Specified Value, whereas, Section 14 contemplates that the Commercial Appellate Court and the Commercial Appellate Division shall endeavour to dispose of appeals before them, within six months from the date of filing of such appeals. It is also provided under Section 15(2) that all suits and applications, including under the Arbitration and Conciliation Act, relating to a commercial dispute of a specified value, pending in any Civil Court, is to be transferred to the Commercial Court, where such Court has been constituted. Under Section 16, the provisions of the CPC, in respect of its application to any suit in respect of a commercial dispute of a specified value, is to stand amended as provided in the Schedule.

The legislature has also emphasized that the State shall provide the necessary infrastructure to facilitate working of the Commercial Court or Commercial Division of a High Court. The aforesaid provisions are contained in Section 19 of the Act.

 

Since, Section 12A of the Act has also contemplated the making of Rules to give effect to the scheme of pre-litigation mediation. The Rules were promptly made and published on 03.07.2018. Rule 3 elaborately provides for the manner in which the mediation process is initiated. It contemplates that a party, to a commercial dispute, may make an application to the Authority. This Rule speaks about a party. Section 12A declares that the plaintiff must exhaust the remedy of pre-litigation mediation. What, apparently is required is that the Suit cannot be filed except after the remedy of pre-litigation mediation, contemplated under the Act and the Rules, is attempted and exhausted. What Rule 3(1) provides is the form in which the application is to be made, viz., Form-I, as specified in Schedule-I. The making of the Form can be by online transmission or by post or by hand. The view expressed by the High Court of Madras that the use of the word ‘may’, detracts from the mandatory flavour of Section 12A has not found muster from the apex court. Section 12A is part of the parent enactment. The Supreme Court has held that Rule 3, being a subordinate legislation, must be interpreted harmoniously, in the first place, with the parent enactment. That apart, on a proper understanding of Rule 3, there is really no conflict between Section 12A and Rule 3. Rule 3 only gives a discretion to the applicant, in regard to the mode of making the application.

So understood, it is clear that, if Section 12A is otherwise mandatory, Rule 3(1) can only be understood as providing three different modes for making the application, contemplated in Section 12A(1). Whether the application must be made, must depend upon, among other things, upon the peremptory nature of the language employed in section 12 A(1). Rule 3 further contemplates that the Authority, which again, has been clearly defined as the Authority notified by the Central Government under Section 12A (2), has to issue a notice to the opposite party to appear and to give his consent to participate within the time as provided in Rule 3(2). Should there be no response, a final notice is to be given again in the manner articulated in Rule 3(2). Should there be again no response by the notice remaining unacknowledged or upon there being refusal to participate, the mediation process becomes what is described, a non-starter. The Authority then makes a report in Form-III, which is called a Non-Starter Report. The copy of the Report is served on the applicant and the respondent. There is a provision for accommodating the request of the opposite party appearing and seeking time, subject to the date being not later than ten days from the date of request of the parties. If, in such a case, there is failure to appear by the opposite party, again a non-starter report in Form-III has to be made. If, on the other hand, where both parties appear, gives consent, the Authority is to assign the matter to a Mediator and also to assign a date. The period of mediation being three months and the possibility of an extension by two months, with the consent of both sides, is the subject matter of Rule 3. The role of the Mediator is carved out in Rule 5 to be one to facilitate the voluntary resolution of the dispute and assist the parties in reaching a settlement. Rule 6 provides for authority with the party to either appear personally or through his duly authorised representative or counsel. The significance of being represented by counsel in pre-litigation mediation cannot be overstated. Apart from the fact that the Legislature must be treated as aware, that, both, public interest, as also the interest of the parties, lies in an expeditious disposal of, what is described as, commercial litigation, with a sublime goal of fostering the highest economic interests of the nation, allowing the Counsel to appear before the Mediator is intended to facilitate in arriving at a settlement, which is legally valid and otherwise just. It is also generally noticed that a settlement arrived at in pre litigation mediation under Section 12A, is to be treated as an award under Section 30(4) of the Arbitration and Conciliation Act. Section 30(4) of the Arbitration and Conciliation Act, 1996, reads as follows:

“30(4) An arbitral award on agreed terms shall have the same status and effect as any other arbitral award on the substance of the dispute.”

 

A mediation settlement arrived at under Section 89 of the CPC must be scrutinised by the court and only on its imprimatur being given it is effective [see paragraph 40 of Afcons Infrastructure Limited and Another v. Cherian Varkey Construction Company Private Limited and Others (2010) 8 SCC 24]. Since a settlement under Section 12A of the Act is accorded the status of an award under the Arbitration & Conciliation Act, it unerringly points to the object of the legislature to make pre-litigation mediation compulsory. According to Supreme Court the lawyers have vital role to play and they must discharge that role in arriving at a just and valid settlement translating into an effective award and therefore, a decree.

                      

                            SUPREME COURT            

According to the Supreme Court the argument that Section 12A does not provide for any penalty and, therefore, the provision is not mandatory cannot be accepted. A corollary to that is drawn by Supreme Court that non- compliance of Section 80 of the Code of Civil Procedure and Section 69 of the Partnership Act, also do not provide for any penalty for a suit brought in contravention of their terms, but still it is mandatory in effect.

The absence of mandatory registration contemplated under Section 69 of the Indian Partnership Act does not therefore mean that registration is not necessary. Similarly, to contend that contravention of mandate of Section 12A does not affect any legal right of the defendant and therefore, the suit filed without resorting to compulsory mediation must be countenanced cannot be treated as correct.

 The Supreme Court has held in M/S. PATIL AUTOMATION PRIVATE LIMITED AND ORS (supra) para 61 :

 

“61.     We may proceed on the basis that if the suit is brought without complying with Section 12A, where no urgent interim relief is sought, may not in one sense, affect the legal right of the defendant. But this argument overlooks the larger picture which is the real object of the law. This object is not to be viewed narrowly with reference to the impact on the parties alone. This is apart from also remembering that if the parties were to exhaust mediation under Section 12A, the opposite side may be, if mediation is successful, saved from the ordeal of a proceeding in court, which, undoubtedly, would entail costs, whereas, the mediation costs, as we have noticed, is minimal, and what is more, a one-time affair, and still further, to be shared equally between the parties. Each time the plaintiff is compelled to go in for mediation under Section 12A there is a ray of hope that the matter may get settled. The chief advantage and highlight of mediation is that it is a win-win for all sides, if the mediation is successful. Therefore, it cannot, in one sense, be argued that no legal right of the defendant is infracted. Further, on the same logic, Section 80(1) of the CPC and Section 69 of the Indian Partnership Act would not be mandatory. This is however not the case”.

What is therefore culled about from above is that Section 12A of the Act providing mediation is included in the statute book as per the Amending Act (Act 28 of 2018) and it came into force w.e.f. 03.05.2018. Section 12A is inserted by the said amendment and is a part of Chapter IIIA. The broad contour of Section 12 A clearly stipulates that if a Suit under the Act does not ‘contemplate’ any urgent interim relief, then, it cannot be instituted unless the plaintiff seeks pre-litigation mediation. The pre institution mediation is to be done in the manner, procedure, which is to be prescribed by the Central Government. The pre-litigation mediation is to be completed within a period of three months from the date of the application made by the plaintiff under Sub Section (1) [See Section 12A sub-Section (3)]. The period of three months can, however, be extended for a period of two months provided there is consent to the same by the parties [the first proviso to Section 12A sub-Section (3)].

Quite, significantly, the second proviso contains the provision that the period, during which the parties remained occupied with the pre-litigation mediation, is not to be reckoned for the purpose of computing the period of limitation under the Limitation Act, 1963. In case, the parties arrive at the settlement that may be reduced into writing and signed by the parties to the dispute and the Mediator. Parliament has accorded the settlement, the same status and effect as if it is an Arbitral Award, on agreed terms under sub-Section (4) of Section 30 of the Arbitration and Conciliation Act, 1996. Therefore, section 12A cannot be perceived as merely intended to reach quicker justice, but the consent of parties are of paramount importance. The Statement of Objects and Reasons for enacting the Act also cannot be lost sight of. The ease of doing business shall have the propelling effect for foreign investment and thus show casing of a vibrant, dynamic and quicker justice delivery system of commercial disputes shall be of immense value.

CONCLUSION

 

The aforesaid discussion leaves no window of doubt that the Section 12 A of Commercial Courts (Amendment) Act 2018 as regards pre-litigation mediation in a commercial disputes shall be a sine qua non and only exception carved out in this regard is to the effect that if any urgent relief is prayed for, as, in that event the process of mediation may defeat the very purpose of urgent relief. In all other cases, pre-litigation mediation shall be necessary. The ambiguity stands settled and conflicting views of various high courts are put to rest. To conclude, the para no. 84 of Patil Automobile (Supra) as rendered by hon’ble Supreme Court is self contained and self explanatory:

“We declare that Section 12 A 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. 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. 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”.

                 --------------------------

Anil K Khaware

Founder & Senior Associate

Societylawandjustice.com                  

SECTION 138 NI ACT-FRAMING OF NOTICE NOT MANDATORY

 

SECTION 138 NI Act-Framing of notice not mandatory

The criminal Justice System is based on set of procedure as codified and illustrated in Code of Criminal Procedure 1973. The substantive offence emanating from Indian Penal Code or any other enactment is generally governed by the Code of Criminal Procedure. The framing of charge in a warrant or F.I.R case is a vital stage as the statement of allegation is read over to the accused and if accused pleads guilty, he can be convicted at that stage itself. In case the accused pleads not guilty, then after framing of charge, the evidence commences. The framing of charge in a criminal case is a substantive stage and the defence is also heard on the aspect of charge and then order of framing of charge is passed before framing charge. It is also a settled proposition in law that the court has to apply its mind on the allegation on prima facie basis, though at that stage weighing of evidence is not required. The significance of framing of charge is therefore cannot be overstated in the warrant case/F.I.R case. As regards the procedure to be followed relating to offence u/s 138 of Negotiable Instruments Act, the section 251 of Cr.PC is invoked for framing of notice. It may be noted that in the case u/s 138 of Negotiable instruments Act the framing of notice is analogous to framing of charge. The broad parameter of framing of notice and framing of charge are similar, however, there are departure in a sense that u/s 139 and 118 (a) of Negotiable instruments Act coupled with Section 20 of the said Act the presumption of liability of accused is presumed and the accused has to rebut the presumption with cogent evidence to shift the onus back on the complainant. In conventional criminal cases, under Indian Penal Code, the prosecution has to prove the guilt of the accused beyond reasonable doubt. In other words no one shall be held guilty unless his guilt is proved beyond reasonable doubt. What is of paramount importance is that whether even non framing of charge in F.I.R case shall be fatal or it could be dispensed with? The same shall be illustrated later.                         

In the above backdrop, framing of charge in F.I.R case and framing of notice for the offence u/s 138 of Negotiable Instruments Act for cheque bouncing case are para materia same, subject to the finer line of difference as elucidated above. The question therefore arise that if framing of charge in F.I.R case cannot be dispensed with, whether, framing of notice for the offence u/s 138 of Negotiable Instruments Act u/s 251 of Cr.P.C can be dispensed with? The conventional wisdom may have the answer ‘No”. However, it is held by hon’ble Delhi High Court in a matter reported as 264 (2019) DLT 493 Nitin Gupta Va Akash Metal Industrial that framing of notice for the offence u/s 138 of Negotiable Instruments Act is not mandatory. The Supreme Court has also held accordingly even as regards framing of charge, in a matter reported as Sanichar Saini Vs State of Bihar V (2009) SLT 29.

ANALYSIS

The provision of section 251 of Cr.P.C may be perused before going further:

 

251.  Substance of accusation to be stated. When in a summons- case the accused appears or is brought before the Magistrate, the particulars of the offence of which he is accused shall be stated to him, and he shall be asked whether he pleads guilty or has any defence to make, but it shall not be necessary to frame a formal charge.

 

Moreover, as per the provisions of section 252 of Cr.P.C, if the accused pleads guilty, the Magistrate shall record the plea and may in his discretion convict him.

It is held in Nitin Gupta (Supra) in paragraph no.12 as under:

“In terms of Section 143 of Negotiable Instruments Act, subject to the provision as per normal rule, the proceedings u/s 138 of Negotiable Instruments Act are summary in nature. On appearance of the accused, the magistrate is required to explain the substance of accusation to the accused and ask him whether he would plead guilty or has any defence to make, however, in terms of mandate of the section, it would not be necessary to frame a formal notice”.

 

What could be deduced from above is that upon appearance of accused if the substance of accusation is stated to him and if he pleads not guilty and claims trial that is sufficient and there is no mandate to frame a formal notice. The hon’ble High court has further elicited support from the provision of Section 464 of Cr.P.C which provides that :

“ No findings , sentence or order by a court of competent jurisdiction shall be deemed invalid merely on the ground that no charge was framed or on the ground of any error, omission or irregularity in the charges, unless, in the opinion of the Court of appeal, confirmation or revision, w failure of justice is occasioned thereby”.

 

A Constitution Bench of Supreme Court in Willie (William) Slaney Vs State of M.P, AIR 1956 SC 116, considered the issue of non- framing of charges properly and conviction of an accused for the offences for which he has not been charged and reached the conclusion as under:-

"In such a situation, the absence of a charge under one or other of the various heads of criminal liability for the offence cannot be said to be fatal by itself, and before a conviction for the substantive offence, without a charge, can be set aside, prejudice will have to be made out. .... ..... .... If it is so grave that prejudice will necessarily be implied or imported, it may be described as an illegality. If the seriousness of the omission is of a lesser degree, it will be an irregularity and prejudice by way of failure of justice will have to be established".

The Supreme Court in Gurpreet Singh Vs State of Punjab (2005) 12 SCC 615 and State of A.P Vs Thakidiram Reddy, (supra) and held that unless there is failure of justice and thereby the cause of the accused has been prejudiced, no interference is required if the conviction can be upheld on the basis of evidence led against the accused. The Court should not interfere, unless, it is established that the accused persons were in any way prejudiced due to the errors and omissions in framing the charges against him.

A similar view has been reiterated by this Court in Ramji Singh Vs State of Bihar (2001) 9 SCC 528.

 

Therefore, the law on the issue can be summarized to the effect that unless, the convict is able to establish that defect in framing the charges has caused real prejudice to him and that he was not informed as what was the real case against him and that he could not defend himself properly, no interference is required on mere technicalities. Conviction order in fact is to be tested on the touchstone of prejudice theory.

 

The trial court had passed the following order in Nitin Gupta (Supra) case:

“ The complainant to supply the complete set of documents with acknowledgement of the accused and pone additional set be filed on court record. If the copies of documents are not supplied, accused can take same from Court Record.”

The matter was also referred to mediation , though, that  was failed. Therefore, the accused was well aware about the accusation. On the request of counsel for accused, the time was granted for filing application u/s 145(2) of Negotiable Instruments Act for seeking cross examination of complainant witness.

In the above perspective the Delhi High Court in Nitin Gupta (Supra) has held as under:

18. In my opinion, as per mandate of the Section 251, Cr.P.C no formal notice is required to be framed so long as the substance of the accusation is stated and the accused is asked whether he pleads guilty or intent to lead any defence evidence. During the course of arguments, learned counsel for petitioner failed to point out as to what prejudice has been suffered on account of non framing of formal notice”.

 

The High Court has thus clearly recorded the fact that when the accusation was well known to the accused and when time for filing application u/s 145(2) of Negotiable Instruments Act was sought and yet the application was not filed and thereafter several opportunity were granted for this purpose and finally the right to file the said application u/s 145(2) of NI Act was closed. The statement of accused u/s 313 of Cr.P.C was recorded.  Even opportunity for leading defence evidence was given on multiple dated, but no defence evidence was lead. Ironically, after 2 ½ years the petition was filed for seeking to raise an issue of non framing of notice and therefore dilatory tactics is evident.   

                                 

                                     CONCLUSION

From the foregoing what transpires is as to whether framing of notice or even framing of charge shall be the sine qua non for conclusion of trial. The bare perusal of judgments of Supreme Court as illustrated above have clearly established that the same shall not be necessary, unless, miscarriage of justice is caused. The non framing of charge or non framing of notice therefore shall not be fatal to the case of prosecution. It is therefore no res integra that the court shall not interfere in the non framing of charge or non framing of notice, as the case may be, unless, any serious prejudice is caused and miscarriage of justice is occasioned to the accused. What therefore emerges is that notwithstanding the fact that framing of charge or framing of notice is an important stage of a criminal case whether a warrant case or a summon case, still, non framing of charge or non framing of notice in itself shall not vitiate the proceedings, unless any miscarriage of justice is occasioned thereby.

                                           ----------

                          Anil K Khaware

                          Founder & Senior Associate

Societylawandjustice.com     

ISSUE OF LACK OF JURISDICTION OF CIVIL COURT RAISED AFTER DECREE: DISCUSSED

 

ISSUE OF Lack of Jurisdiction of civil court raised after decree: discussed

The lack of jurisdiction whether relating to subject matter, territorial or pecuniary aspects goes into the root of the matter and needed to be ascertained by a court before going further with the lis. However, there may be a situation when a court may lack jurisdiction and yet the lis is decided. If that is so, what should be the fallout of such a judgment? That was an issue raised before Hon’ble Delhi High Court in a matter captioned as Gurmeet Singh Sethi Vs Harasharan Kaur Batra CM (Main) 195 of 2021.

On the very anvil, the Supreme Court in Morgan Stanley Mutual Fund Vs Kartick Das 1994 (4) SCC 225 has held that issue a judgment without jurisdiction shall be a nullity. However, the issue is whether all such judgments shall be a nullity is a moot point. For instance, if the issue of lack of jurisdiction is not raised before a court which eventually passed a judgment and decree, whether such a judgment and decree shall be liable to be set aside, more particularly, in execution proceedings. The Delhi High Court in the Gurmeet Singh (Supra) has dealt with the issue to set at rest, ambiguity, if any in this regard.

The judgments that is often referred to for claiming lack of jurisdiction in such cases are:  Kiran Singh & Ors Vs Chaman Paswan & Ors AIR 1954 SC 340 and also in Hindustan Zinc Ltd Vs Ajmer Vidyut Vitran Nigam Ltd (2019) 17 SCC 82  the hon’ble Supreme Court has held that a judgment without jurisdiction shall be a nullity. The Supreme Court in para 7 of Kiran Singh (Supra) was pleased to analyse Section 21 of Code of Civil Procedure relating to execution proceedings.  The same are reproduced for herein for ready reference:

“7. Section 11 enacts that notwithstanding anything in the section 578 of Code of Civil Procedure,(correspond to section 99 of CPC)  an objection that a Court which had 'no jurisdiction over a suit or appeal had exercised it by reason of over-valuation or under-valuation, should not be entertained by an appellate Court., except as provided in the section. Then follow provisions as to when the objections could be entertained, and how they are to be dealt with. The drafting of the section has come in-and deservedly for considerable criticism; but amidst much that is obscure and confused, there is one principle which stands out clear and conspicuous. It is that a decree passed by a Court, which would have had no jurisdiction to hear a suit or appeal but for over-valuation or under-valuation, is not to be treated as, what it would be but for the section, null and void, and that an objection to jurisdiction based on over-valuation or undervaluation should be dealt with under that section and not otherwise. The reference to Section 578, now Section 99, of the Civil Procedure Code, in the opening words of the section is significant. That section, while providing that no decree shall be reversed or varied in appeal on account of the defects mentioned therein when they do not affect the merits of the case, excepts from its operation defects of jurisdiction. Section 99 therefore gives no protection to decrees passed on merits, when the Courts which passed them lacked jurisdiction as a result of over-valuation or undervaluation. It is with a view to avoid this result that section 11 was enacted. It provides that objections to the jurisdiction of a Court based on over-valuation or under-valuation shall Dot be entertained by an appellate Court except in the manner and to the extent mentioned in the section. It is a self-contained provision complete in itself, and no objection to jurisdiction based on over-valuation or under-valuation can be raised otherwise than in accordance with it. With reference to objections relating to territorial jurisdiction, section 21 of the Civil Procedure Code enacts that no objection to the place of suing should be allowed by an appellate or revisional Court, unless there was a consequent failure of justice. It is the same principle that has been adopted in Section 11  of the Suits Valuation Act with reference to pecuniary jurisdiction. The policy underlying sections 21 and 99 of the Civil Procedure Code and Section 11 of the Suits Valuation Act is the same, namely, that when a case had been tried by a Court on the merits and judgment rendered, it should not be liable to be reversed purely on technical grounds, unless it had resulted in failure of justice, and the policy of the Legislature has been to treat objections to jurisdiction both territorial and pecuniary as technical and not open to consideration by an appellate Court, unless there has been a prejudice on the merits, The contention of the appellants, therefore, that the decree and judgment of the District Court, Monghyr, should be treated as a nullity cannot be sustained under Section 11 of the Suits Valuation Act”.

The Section 21 of Code of Civil Procedure may be perused before going further. The same are as under:

Objection to jurisdiction:-[(1)] No objection as to the place of suing shall be allowed by any appellate or Revisional Court unless such objection was taken in the Court of first instance at the earliest possible opportunity and in all cases where issues or settled at or before such settlement, and unless there has been a consequent failure of justice.

2[(2) No objection as to the competence of a Court with reference to the pecuniary limits of its jurisdiction shall be allowed by any Appellate or Revisional Court unless such objection was taken in the Court of first instance at the earliest possible opportunity, and in all cases where issues are settled, at or before such settlement, and unless there has been a consequent failure of justice..

(3) No objection as to the competence of the executing Court with reference to the local limits of its jurisdiction shall be allowed by any Appellate or Revisional Court unless such objection was taken in the executing Court at the earliest possible opportunity, and unless there has been a consequent failure of justice.

The provision for objection as contained in Code of Civil Procedure is self contained.

Based on the provisions as illustrated above and law settled in this regard, it may be construed from above that mere technicalities shall not come in the way of the judgment and decree passed by a court which may otherwise lack jurisdiction, unless the same has resulted in failure of justice. Similarly Hindustan Zinc (Supra) was in respect of improperly constituted Arbitral Tribunal. Thus, if an executing transfers a decree to other court observing that subject matter of the execution is within the territorial jurisdiction of another court shall not in itself render the judgment and decree a nullity, if no prejudice is caused to the party challenging the decree.

What is of paramount importance is the fact that the hon’ble Supreme Court in Mantoo Sarkar Vs Oriental Insurance co. Ltd & Ors (2009) 2 SCC 244 and Delhi High Court in Rehmania Academy of Science, Mathura Vs Shri B.B.D Bhargava & Ors 2011 IV AD (Delhi) 579 stipulates that only lack of subject matter jurisdiction may render a decree nullity, otherwise a party raising complaint must prove prejudice caused to him.  The judgment reported as Mantoo Sarkar (Supra) has examined the principles of section 21 of the Code of Civil Procedure and has held that a distinction is to be held with regard to a subject matter of the suit and that of territorial and pecuniary jurisdiction. In Rehmania Academy (Supra) the pre-requisites as ascertained by Supreme Court are as under:

(i)            The objection was taken in the court of first instance;

(ii)          It was taken at the earliest possible opportunity and in any case, before the issues were settled;

(iii)         There has been a consequent failure of justice;

(iv)         All the three conditions must co-exist.

What emerges therefore is that the appellate or revisional court shall not entertain any plea for lack of jurisdiction, unless raised before the court of first instance.

In the above backdrop, the Delhi High Court in Gurmeet Singh (Supra) has held that challenge to the judgment and decree on the premise that location of the suit property did not fall in the territorial limit of the court which has passed the judgment shall not aid the petitioner, unless any prejudice is shown to have been caused to him. Moreover, the high court has also observed that Delhi has peculiar problem of its own, in as much as some time vide several notifications  situation is altered and if a judgment and decree is to be set aside on such technical issue, then the cause of justice shall not be served.

What is of paramount importance is the fact that issue of jurisdiction or lack of it has to be raised at the very outset and at the earliest opportunity and if a party to the lis sits over it over the years and when the successful party after the toil and travail succeed, he cannot be precluded from reaping the fruit of decree by such objections raised belatedly with a view to cause roadblock. The lateral proceedings or appellate proceedings are sometimes undertaken only to cause impediment in a calibrated pursuit of causing delay and no one can be allowed to reap benefit from his own misdemeanor.  

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                          Anil K Khaware

                          Founder & Senior Associate

                          Societylawandjustice.com