Exclusive Capital Ltd. Vs. Silver and C.Z. International: May 2, 2025: RFA (COMM) 257/2025:2025:DHC:3212-DB:High Court of Delhi: Hon’ble Mr. Justice Navin Chawla, Hon’ble Ms. Justice Renu Bhatnagar
Facts:
Exclusive Capital Ltd. (the appellant) extended a Rs. 2 crore loan to Silver & C.Z. International (the respondent) under a Loan Agreement dated April 29, 2022. The respondent defaulted on multiple monthly installments starting from July 2022, despite making some payments. The appellant claimed that the respondent owed over Rs. 42 lakh, including penalties and interest, and initiated a suit for recovery, asserting the respondent's breach and seeking security and injunctions to prevent asset alienation.
Procedural Details:
The appellant filed a civil suit in the District Court of Delhi seeking recovery of dues along with interim relief. It also moved an application under Section 12A of the Commercial Courts Act, seeking to bypass the statutory pre-litigation mediation requirement, alleging urgency due to risk of asset disposal by the respondent. The trial court dismissed the application and rejected the plaint, holding that there was no justification for bypassing mediation, and that the suit did not demonstrate the urgency needed to exempt from mediation.
Issue:
Whether the appellant's suit and application for exemption from pre-institution mediation under Section 12A of the Commercial Courts Act should be entertained, considering the alleged urgency and nature of relief sought.
Decision:
The High Court upheld the decision of the trial court. It dismissed the appeal, affirming that the suit did not meet the conditions for exemption from mediation, as there was no sufficient urgency or circumstance justifying bypassing the statutory process. The court emphasized that prayers for interim relief cannot be used as a mask to circumvent Section 12A’s mandate.
