Dolphin Hosiery And Garments vs. Delta Fabrics PVT LTD

Facts

The petitioner, Dolphin Hosiery & Garments, filed a money suit (Money Suit No. 11 of 2021) against Delta Fabrics Private Limited. Simultaneously, the petitioner filed an application seeking leave to proceed with the suit without complying with Section 12A of the Commercial Courts Act, 2015, citing urgency due to the respondent's alleged attempts to dispose of properties and the potential for the suit to become infructuous. The Commercial Court granted this leave on July 28, 2021. The respondent filed a written statement and a counter-claim, and subsequently, on November 21, 2022, applied to recall the order granting leave and to return the plaint, arguing the dispute was not a commercial dispute and that the leave should have been sought within the plaint itself. Both applications were rejected by the Commercial Court.

Held

The Court held that the Commercial Court correctly rejected the defendant's application for recalling the order. Firstly, regarding the contention that leave under Section 12A of the Commercial Courts Act, 2015, must be sought within the plaint, the Court found that the law does not mandate this, and a separate application is maintainable, as supported by the decision in Patil Automobile Private Limited & Ors. vs. Rakheja Engineers Private Limited. The Court noted that the plaintiff had indeed filed a separate application for leave, which was allowed, and the urgency was sufficiently pleaded in the plaint. The Court distinguished the case of Bachhaj Nahar vs. Nilima Mandal & Anr., stating it did not apply as it concerned reliefs claimed within the suit, not a procedural leave. Secondly, concerning whether the dispute was a commercial dispute, the Court found that the Commercial Court had made a prima facie finding that the dispute involved commercial activities, including supply of raw materials, fabric production, GST invoices, and an outstanding debt. The existence of a counter-claim by the defendant further supported this. The Court stated that the question of whether the definition of a commercial dispute was fully met would be decided at the final hearing, but there was enough material to proceed as a commercial suit at this stage. The observations made were tentative.

Key Issues

1. Whether the Commercial Court erred in granting leave to the plaintiff to proceed with the suit without complying with Section 12A of the Commercial Courts Act, 2015, when such leave was sought via a separate application and not within the plaint itself, as contended by the defendant (respondent). 2. Whether the dispute, involving transactions of supply of raw materials and fabric, raising of GST invoices, and an outstanding debt of Rs. 30,69,557/-, qualifies as a commercial dispute under the Commercial Courts Act, 2015, as argued by the defendant (respondent). Petitioner's arguments: The plaintiff (petitioner) argued that a separate application for leave under Section 12A was permissible and that sufficient urgency was pleaded in the plaint to justify exemption. They relied on the fact that the court granted leave on the basis of these pleadings and the separate application, and that the defendant's application to recall was an afterthought filed after a significant delay. Respondent's arguments: The defendant (respondent) contended that the leave under Section 12A should have been prayed for within the plaint itself, citing Bachhaj Nahar vs. Nilima Mandal & Anr. They also argued that the dispute did not meet the definition of a commercial dispute, and therefore, the suit should not have been entertained by the Commercial Court.