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The Hon’ble Supreme Court of India Delivers Landmark Decision Clarifying Section 12A of the Commercial Courts Act

Fox & Mandal The Hon’ble Supreme Court of India Delivers Landmark Decision Clarifying Section 12A of the Commercial Courts Act

In a significant legal development, the Hon’ble Supreme Court has brought much-needed clarity to the divergent interpretations of Section 12A within the Commercial Courts Act, 2015. This pivotal ruling squarely addresses the contrasting perspectives held by the Hon’ble High Court of Delhi in comparison to those upheld by the Hon’ble High Courts at Bombay and Madras.

The central issue at hand was whether the Plaintiff possesses an exclusive and unrestrained authority to determine the urgency under Section 12A, as asserted by the Hon’ble Delhi High Court. Conversely, the Hon’ble High Courts at Bombay and Madras emphasized that the Court should play an active role in evaluating whether the plaintiff’s plea genuinely envisions the need for urgent relief, rather than passively observing.

In paragraphs 3, 7 and 8 of its judgment, the Hon’ble Supreme Court presented a discerning and nuanced approach. It calls for a comprehensive assessment of the nature, subject matter, cause of action, and the prayer for interim relief within the suit. This methodical evaluation ensures that the request for interim relief is not a mere subterfuge intended to circumvent the mandatory provisions of Section 12A. The Court firmly rejects the notion of an ‘absolute and unrestricted right,’ emphasizing that the language ‘contemplate urgent interim relief’ in Section 12A empowers the Court to make assessments grounded in the contents of the plaintiff’s submission, accompanying documents, and the factual intricacies of the case.

In consonance with the Court’s wisdom, we firmly believe that this precision and limited exercise should serve as the cornerstone of the Commercial Courts’ proceedings. This approach, ensures that the legislative objectives and intent behind the enactment of Section 12A of the Commercial Courts Act remain intact, protecting the sanctity of the law and the interests of justice. The ruling promises to bring much-needed clarity to the interpretation of Section 12A, thereby creating a balanced approach that respects the rights of the Plaintiff while preventing potential misuse of the provisions.

The Petitioner in this case was represented by our team led by Kunal Mimani, Partner, Kartikey Bhatt, Principal Associate, and Shraddha Chirania, Associate.

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