Bombay High Court imposed a cost of Rs 25 lakh on a financial company for vexatious and mischievous proceeding that unnecessarily wasted the court’s time. The court has directed the company to deposit the amount within two weeks. Failure to pay the fine will carry 9% interest on the amount.
“Plaintiffs such as this one will understand that Courts are not playgrounds, and litigation is not a pastime,” Justice Gautam Patel directed La Fin Financial Services Pvt Ltd.
The order came after giving several chances to withdraw the petition. The HC order passed on September 21 has now been challenged in Supreme Court and will be heard on Friday.
The plaintiff, La Fin Financial Services Pvt Ltd had sought directions against the defendant for failing to file their written statement within the 120-day limitation under the Commercial Court Act.
However, the court noted that the lawsuit was filed as a regular suit and therefore, limitation would not apply.
“It was only a year later that the suit was transferred to the commercial division, therefore, the limitation would run from the time the Commercial Courts Act would apply and not retrospectively. In a case such as this, when a suit is initially instituted as a regular suit and not a commercial suit, there is no statutory limitation that runs against a defendant. The Commercial Courts Act does not apply to a regular suit. It only begins to apply from the date when the suit is registered as a commercial suit in the commercial division… This hardly needed re-stating,” the court noted.
Justice Patel added, “The initial delay is attributable only to the plaintiff. It cannot take advantage of this. No court will permit an injustice to be caused, especially when the party seeking an order is itself found to be in default. The Interim Application is certainly frivolous, mischievous and vexatious. It is an unconscionable waste of very, very scarce judicial time. It seeks to paper over the plaintiff’s slothful handling of its filing…No statute will be read by a court, especially not a court of equity, to yield an unjust result.”
Commercial Courts Act Not Anti-Defendant And Meant For Expeditious Disposal Of Commercial Disputes
“The purpose and ambit of the Commercial Courts Act is not anti-defendant. It is not merely intended to put a defendant under a strict time limit for entering a defence. It is intended to ensure that Commercial Suits are disposed of expeditiously,” the bench observed.
The High Court bench further held that even the plaintiff must adhere to reasonable timelines, even if there is no strict limitation.
“What unfortunately the Commercial Courts Act does not say but must reasonably be held to say, is that there is a corresponding duty and obligation on the part of each plaintiff in a Commercial Suit to act with the utmost dispatch and to adhere to reasonable timelines, even if there is no strict limitation. The quantum of costs could not be trivial as Amended Section 35 clearly intends the power of ordering costs to be used as a deterrent to prevent parties from making such frivolous applications. It would be meaningless to order a paltry amount,” the court said.