Full Text
HIGH COURT OF DELHI
Date of Decision: 07th JULY, 2026
IN
ASCEND MEDIA PVT LTD .....Plaintiff
Through: Dr. Alex Joseph, Mr. Mayank Dwivedi, Ms. Supriya Verma, Ms. Albina Sebastian, Ms. Dhruvi Sikarwar, Advocates
Through: Ms. Hemlata Rawat, Mr. Abhay Singh, Advocates
JUDGMENT
1. This Application under Order VII Rule 11 of CPC has been filed by the Defendant seeking rejection of the Plaint.
2. The present Suit has been instituted by the Plaintiff for recovery of the outstanding amount arising out of unpaid invoices for advertising and media display services.
3. The facts of the case, as mentioned in the Plaint, are as under: a. It is stated that in the beginning of 2019 the Defendant approached and engaged the Plaintiff for executing an 'Outdoor 18.05.31 Campaign' under the brand 'Mission Shakti' in the State of Odisha. Pursuant thereto, the Defendant issued two purchase orders: the first dated 14.01.2019 for Rs.4,26,24,751/- and the second dated 15.03.2019 for Rs.38,40,192/-, thereby creating a contractual relationship between the parties. b. It is stated that following the issuance of the purchase orders, the Plaintiff executed the assigned works at various project sites in Odisha. It is stated that for successful execution of the campaign, the Plaintiff engaged several sub-vendors, including Torrent Advertisers, Hyber Trade International Pvt. Ltd., Raj Outdoor Advertising Pvt. Ltd., Deshkar Advertising Pvt. Ltd., Gurudev Behara and Annie Advertising. The Plaintiff claims to have arranged funds and paid these sub-vendors without waiting for payment from the Defendant, thereby ensuring timely completion of the work. c. It is stated that upon completion of the work, the Plaintiff raised thirteen tax invoices in favour of the Defendant. According to the Plaint, all the invoices were duly acknowledged by the Defendant under its seal and signature, and no dispute or objection was ever raised regarding the quality of work or the invoices. The total value of the invoices amounted to Rs.3,95,04,573/-. d. It is stated that out of the total billed amount, the Defendant paid only Rs. 1,25,78,913/-, leaving an outstanding balance of Rs.2,69,25,660/-. The Plaintiff asserts that this outstanding 18.05.31 liability was repeatedly communicated to the Defendant. The Plaintiff also states that it had already discharged its statutory obligations by depositing GST amounting to Rs.60,26,121/-, while the Defendant deducted TDS, reflected the same in Form 26AS, and also availed the benefit of Input Tax Credit (ITC), thereby acknowledging the underlying transactions. e. It is stated that the Plaintiff repeatedly approached the Defendant through personal visits, emails and reminders requesting release of the outstanding payment. It is stated that despite these repeated demands, the Defendant maintained complete silence and failed to clear the dues. f. It is stated that as the outstanding amount remained unpaid, the Plaintiff issued a legal notice dated 22.04.2021, calling upon the Defendant to pay Rs.2,69,25,660/- within fifteen days of receipt of the notice. It is stated that since the Defendant neither replied to the notice nor complied with the demand for payment, the Plaintiff has approached this Court by filing the present Suit seeking recovery of Rs.2,69,25,660/-, along with interest at 12% per annum, along with other consequential reliefs.
4. Summons in the Suit were issued on 06.10.2022. Written Submission has been filed by the Defendant.
5. The present application has been filed by the Defendant under Order VII Rule 11 CPC seeking rejection of the plaint on the ground that the Plaint does not disclose any cause of action and that the suit is barred by law. 18.05.31
6. According to the Defendant, the application has become necessary because the Plaintiff instituted the present commercial suit without complying with the mandatory requirement of pre-institution mediation under Section 12A of the Commercial Courts Act, 2015. Learned Counsel appearing for the Defendant submits that the dispute between the parties is essentially a commercial dispute concerning the quantum of work executed under the Mission Shakti outdoor campaign and the amount payable thereunder. She states that since the parties admittedly had a commercial relationship and the dispute pertains only to the extent of work executed and the corresponding payment, there existed ample scope for settlement through pre-institution mediation, however, the Plaintiff bypassed this statutory requirement and directly instituted the present Suit and, therefore, the present Suit barred by law. Learned Counsel for the Defendant states that the object of Section 12A is to provide an effective opportunity to the parties engaged in commercial transactions to amicably resolve their disputes before commencing litigation, thereby reducing unnecessary litigation, saving costs and judicial time, and promoting ease of doing business. She states that Parliament intentionally made the provision mandatory through the 2018 amendment, and that entertaining suits filed without exhausting this remedy would defeat the legislative intent. She places reliance on the Judgment of the Apex Court in M/s Patil Automation Private Limited & Ors. v. Rakheja Engineers Private Limited & Anr., (2022) 10 SCC 1, wherein the Apex Court has held that Section 12A is mandatory and that a commercial suit instituted without exhausting the remedy of pre-institution mediation is liable to rejection under Order VII Rule 11(d) CPC. 18.05.31
7. The second ground raised in the Application is that the Plaint does not disclose any cause of action. Learned Counsel for the Defendant states that the Plaintiff has stated in the Plaint that the dispute pertains exclusively to the Mission Shakti project. She states that both parties had a mutual understanding whereby the Plaintiff would execute only the outdoor campaign component of the Mission Shakti tender while the Defendant would retain an agency commission of 10%. She states that the Plaintiff itself admits having received Rs.1,17,41,876/- towards the Mission Shakti project and that there is no dispute relating to any other project. According to the learned Counsel for the Defendant, the total work awarded to the Defendant under the Mission Shakti project was covered by an invoice dated 07.01.2020 for Rs.90,17,442/-, out of which the Plaintiff could at best claim 90%, i.e., Rs.81,15,687/-. She states that since the Defendant has already paid Rs.1,25,78,912/- (including TDS), the plaintiff has actually received Rs.44,63,225/- in excess of what was payable and, therefore, no enforceable cause of action survives in favour of the Plaintiff for claiming any further amount.
8. The third ground raised by the Defendant is that the suit suffers from misjoinder/non-joinder of a necessary party. It is stated by the learned Counsel for the Defendant that the disputed work pertains solely to the Mission Shakti project floated by the Directorate of Mission Shakti, and that adjudication of the dispute necessarily requires examination of the scope of work under the tender awarded by the Directorate. She states that since the Directorate of Mission Shakti is the authority which awarded the project and is central to determination of the parties' respective rights and obligations, it 18.05.31 is both a proper and necessary party and in its absence, the dispute cannot be effectively adjudicated. On these grounds the Defendant urges that the Plaint be rejected.
9. Per contra, learned Counsel for the Plaintiff states that the present Application is wholly misconceived, devoid of merits and has been filed only with the object of delaying the adjudication of the Suit. He contends that the application has been filed after completion of pleadings merely as a dilatory tactic and deserves to be dismissed on that ground alone. With regard to the Defendant's principal objection concerning non-compliance with Section 12A of the Commercial Courts Act, 2015, learned Counsel for the Plaintiff submits that the Plaint itself discloses sufficient reasons for not resorting to pre-institution mediation. He states that in paragraph 11 of the plaint the Plaintiff has stated that it had received reliable information that the Defendant was likely to alienate its assets and siphon off its funds and, therefore, apprehending frustration of the decree, the Plaintiff had filed an application seeking urgent interim relief for freezing the defendant's bank accounts and had also sought exemption from the requirement of preinstitution mediation. He states that since Section 12A expressly exempts suits which contemplate urgent interim relief, the institution of the suit without pre-institution mediation was legally permissible and, therefore, the defendant's plea for rejection of the plaint on this ground is wholly untenable.
10. Learned Counsel for the Plaintiff states that the reliance placed by the learned Counsel for the Defendant on the judgment of the Apex Court in Patil Automation (supra) is misconceived. He states that while the Apex 18.05.31 Court in the said judgment has held that compliance of Section 12A is mandatory, it simultaneously declared that the said judgment would operate prospectively with effect from 20.08.2022 and since the present suit was filed on 18.09.2021, which is much prior to the effective date fixed by the Apex Court, the ratio of the said judgment cannot be invoked for rejecting the Plaint in the present proceedings.
11. Learned Counsel for the plaintiff has also denied the Defendant's contentions that the Plaint does not disclose any cause of action and that the Defendant has already paid amounts in excess of its liability, or that the suit is bad for non-joinder of the Directorate of Mission Shakti. He states that these objections are merely a repetition of the pleas already taken in the written statement and have been adequately answered in the replication filed by the Plaintiff.
12. In answer to the contention of non-joinder of necessary party, learned Counsel for the Plaintiff states that there was never any tripartite agreement between the Plaintiff, the Defendant and the Directorate of Mission Shakti. Learned Counsel for the Plaintiff asserts that it is a stranger to the agreement entered into between the Defendant and the Directorate of Mission Shakti and that its rights arise solely from the work orders issued by the Defendant. According to the Plaintiff, having executed the work in terms of the Defendant's work orders, the Defendant cannot evade its contractual liability to make payment by relying upon its independent arrangement with the Directorate of Mission Shakti. He, therefore, states that the Directorate of Mission Shakti is neither a necessary nor a proper party to the present proceedings. 18.05.31
13. Lastly, learned Counsel for the Plaintiff submits that the present application has been filed by the Defendant with the sole object of protracting the proceedings and depriving the Plaintiff of the fruits of the litigation. It is, therefore, prayed that the application under Order VII Rule 11 CPC be dismissed.
14. In rejoinder, learned Counsel for the Defendant emphatically denies that the suit was validly instituted on 18.09.2021 and contends that the suit was legally instituted only after 15.09.2022, upon removal of defects. To substantiate the above contention, learned Counsel for Defendant refers to the defect sheets issued by the Registry which shows that on 19.02.2022 the Registry raised several objections, including non-payment of ad valorem court fees, absence of a statement certifying the authenticity of documents, non-compliance with Section 12A of the Commercial Courts Act, defects in the vakalatnama, and several other filing deficiencies. She submits that these objections continued to remain unremoved despite subsequent defect sheets dated 25.04.2022 and 02.08.2022, and that only on 15.09.2022 was the matter validly re-filed. On this basis, the learned Counsel for the Defendant asserts that all earlier filings were non est and cannot be treated as the date of institution of the suit. She, therefore, states that since the suit was validly instituted only after 20.08.2022, the judgment of the Apex Court in Patil Automation squarely governs the present case and renders the Plaint liable to rejection for non-compliance with Section 12A.
15. Heard the learned Counsels for the parties and perused the material on record.
16. For the adjudication of the present Application, it is pertinent to refer 18.05.31 to Order VII Rule 11 of the CPC, which reads as under:
17. The law relating to rejection of a plaint under Order VII Rule 11 of the CPC is crystallized through various judgments of the Apex Court. The Apex Court in Popat and Kotecha Property v. State Bank of India Staff Assn., (2005) 7 SCC 510, has held as under: 18.05.31 “13. Before dealing with the factual scenario, the spectrum of Order 7 Rule 11 in the legal ambit needs to be noted.
14. In Saleem Bhai v. State of Maharashtra [(2003) 1 SCC 557] it was held with reference to Order 7 Rule 11 of the Code that the relevant facts which need to be looked into for deciding an application thereunder are the averments in the plaint. The trial court can exercise the power at any stage of the suit — before registering the plaint or after issuing summons to the defendant at any time before the conclusion of the trial. For the purposes of deciding an application under clauses (a) and (d) of Order 7 Rule 11 of the Code, the averments in the plaint are the germane; the pleas taken by the defendant in the written statement would be wholly irrelevant at that stage.
15. In I.T.C. Ltd. v. Debts Recovery Appellate Tribunal [(1998) 2 SCC 70] it was held that the basic question to be decided while dealing with an application filed under Order 7 Rule 11 of the Code is whether a real cause of action has been set out in the plaint or something purely illusory has been stated with a view to get out of Order 7 Rule 11 of the Code.
16. The trial court must remember that if on a meaningful and not formal reading of the plaint it is manifestly vexatious and meritless in the sense of not disclosing a clear right to sue, it should exercise the power under Order 7 Rule 11 of the Code taking care to see that the ground mentioned therein is fulfilled. If clever drafting has created the illusion of a cause of action, it has to be nipped in the bud at the first hearing by examining the party searchingly under Order 10 of the Code. (See T. Arivandandam v. T.V. Satyapal [(1977) 4 SCC 467].) 18.05.31
17. It is trite law that not any particular plea has to be considered, and the whole plaint has to be read. As was observed by this Court in Roop Lal Sathi v. Nachhattar Singh Gill [(1982) 3 SCC 487] only a part of the plaint cannot be rejected and if no cause of action is disclosed, the plaint as a whole must be rejected.
18. In Raptakos Brett & Co. Ltd. v. Ganesh Property [(1998) 7 SCC 184] it was observed that the averments in the plaint as a whole have to be seen to find out whether clause (d) of Rule 11 of Order 7 was applicable.
19. There cannot be any compartmentalisation, dissection, segregation and inversions of the language of various paragraphs in the plaint. If such a course is adopted it would run counter to the cardinal canon of interpretation according to which a pleading has to be read as a whole to ascertain its true import. It is not permissible to cull out a sentence or a passage and to read it out of the context in isolation. Although it is the substance and not merely the form that has to be looked into, the pleading has to be construed as it stands without addition or subtraction of words or change of its apparent grammatical sense. The intention of the party concerned is to be gathered primarily from the tenor and terms of his pleadings taken as a whole. At the same time it should be borne in mind that no pedantic approach should be adopted to defeat justice on hair-splitting technicalities.
20. Keeping in view the aforesaid principles the reliefs sought for in the suit as quoted supra have to be considered. The real object of Order 7 Rule 11 of the Code is to keep out of courts irresponsible law suits. Therefore, Order 10 of the Code is a tool in the hands of the courts by resorting to which and by searching 18.05.31 examination of the party in case the court is prima facie of the view that the suit is an abuse of the process of the court in the sense that it is a bogus and irresponsible litigation, the jurisdiction under Order 7 Rule 11 of the Code can be exercised.”
18. Perusal of the above observations of the Apex Court shows that the remedy under Order VII Rule 11 of the CPC is an independent and special remedy, wherein the court is empowered to summarily dismiss a suit at the very threshold, without proceeding to record evidence or conduct a trial, on the basis of the evidence adduced, if it is satisfied that the action should be terminated on any of the grounds contained under Order VII Rule 11 of the CPC. The whole purpose of conferment of such powers is to ensure that a litigation, which is meaningless and bound to prove abortive, should not be permitted to occupy the time of the court.
19. While deciding an application under Order VII Rule 11 of the CPC, this Court is confined only to examining the averments in the Plaint and the documents filed and to see as to whether a real cause of action has been set out in the Plaint or not and to make sure that the plaint is not manifestly vexatious and meritless.
20. The principal ground urged by the Defendant is that the suit is barred by Section 12A of the Commercial Courts Act while the Plaintiff has taken the ground that in paragraph 11 of the Plaint it had mentioned that it had received reliable information that the Defendant was likely to alienate its assets and siphon off its funds and, therefore, apprehending frustration of the decree, the Plaintiff had filed an application seeking urgent interim relief for freezing the defendant's bank accounts and also sought exemption from the 18.05.31 requirement of pre-institution mediation. Paragraph No.11 of the Plaint is reproduced herein and the same reads as under:
21. A perusal of paragraph 11 of the Plaint shows that the Plaintiff has specifically pleaded that it had received information that the Defendant was likely to alienate its assets and siphon off its funds and, therefore, instituted the suit along with an application seeking urgent interim relief for freezing the Defendant's bank accounts. Whether such apprehension was ultimately justified or whether the Plaintiff would be entitled to the interim relief sought are matters entirely distinct from the question whether the Plaint, as framed, contemplates urgent interim relief.
22. At the stage of Order VII Rule 11 CPC, the Court is confined to the averments in the Plaint and cannot embark upon an enquiry into the correctness or bona fides of those assertions. The exception contained in Section 12A itself applies to suits which contemplate urgent interim relief. The legislative intent is that where the Plaint itself discloses circumstances necessitating immediate judicial intervention, the Plaintiff is not obliged to 18.05.31 first undergo pre-institution mediation. Whether the Plaintiff ultimately succeeds in obtaining interim relief is immaterial while considering the maintainability of the Suit at the threshold. The Defendant's contention that the application for interim relief has remained pending or was not pressed involves factual considerations which cannot be imported into the limited jurisdiction exercised under Order VII Rule 11 CPC. Equally, the submission that no separate application seeking exemption from preinstitution mediation was filed does not persuade this Court. Section 12A does not prescribe filing of a separate exemption application as a condition precedent to the institution of the suit. The material question is whether the suit, as instituted, contemplates urgent interim relief. Once such pleadings are contained in the Plaint and an application seeking interim protection accompanies the suit, the issue whether the Plaintiff was genuinely entitled to such exemption becomes a matter requiring adjudication on merits and cannot furnish a ground for rejection of the Plaint under Order VII Rule 11(d) CPC.
23. The reliance placed by the Defendant upon the Judgment of the Apex Court in Patil Automation (supra), is also misplaced. In the said Judgment, the Apex Court, while declaring Section 12A to be mandatory, expressly directed that the declaration would operate prospectively with effect from 20.08.2022. The Plaintiff asserts that the present Suit was instituted on 18.09.2021. On the other hand, the Defendant contends that owing to defects in filing, the Suit must be treated as having been instituted only after 15.09.2022. The Apex Court in Patil Automation (supra) has also made a distinction between the presentation of a plaint and institution of a suit and 18.05.31 has observed as under:
17. It is, therefore, clear that any abandonment before the registration of suit would not constitute withdrawal or abandonment of suit within the meaning of Order 23 Rule 1CPC, so as to operate as a legal bar for a subsequent suit of the very same nature. It is only the withdrawal or abandonment during the currency of a legal proceedings would preclude the plaintiff to file a fresh suit at a later point of time on the basis of the very same cause of action.””
24. In the present case, the Suit was instituted on 18.09.2021 though the defects were cured later. The fact that defects were cured later on does not make the filing non-est. There is nothing on record to show that the filing was non-est.
25. The Plaint clearly narrates that the Defendant engaged the Plaintiff for execution of the Mission Shakti outdoor campaign and issued purchase orders, the Plaintiff executed the work, raised invoices, part payments were received, and a quantified amount remains outstanding despite repeated demands and issuance of a legal notice. These averments unmistakably disclose a complete cause of action for recovery of money. Whether the Plaintiff has actually received amounts in excess of its entitlement, as alleged by the Defendant, is a matter of defence requiring evidence and cannot constitute a ground for rejection of the Plaint under Order VII Rule 11(a) CPC. Likewise, the plea that the Directorate of Mission Shakti is a 18.05.31 necessary party is also not a ground falling within the ambit of Order VII Rule 11 CPC. The Plaintiff's case, as pleaded, is founded upon contractual dealings between the Plaintiff and the Defendant. Whether any third party is necessary for effective adjudication is an issue relating to joinder of parties and cannot result in rejection of the plaint under Order VII Rule 11.
26. At any rate, the question whether the Directorate is a necessary or proper party is a mixed question of fact and law which cannot be decided at this preliminary stage. It is a settled principle that rejection of a plaint is a drastic power which can be exercised only where the Plaint, on its own showing, is barred by law or fails to disclose any cause of action. In the present case, the Plaint, when read as a whole, discloses a complete cause of action and does not, ex facie, appear to be barred by any statutory provision.
27. The contentions advanced by the learned Counsel for the Defendant essentially raise disputed questions of fact and matters requiring appreciation of evidence, which cannot be adjudicated in proceedings under Order VII Rule 11 CPC.
28. In view of the foregoing discussion, this Court finds no merit in the present application. The same is accordingly dismissed.
29. Needless to clarify, the observations made herein are confined solely to the adjudication of the present application under Order VII Rule 11 CPC and shall not be construed as an expression on the merits of the rival claims and defences, all of which shall be considered at the appropriate stage during trial. CS(COMM) 684/2022, I.A. 16209/2022
30. Keeping in mind the spirit of Section 12A of the Commercial Courts 18.05.31 Act, 2015, the parties are referred to Delhi High Court Mediation and Conciliation Centre to explore the possibility of an amicable settlement.
31. Parties are directed to appear before the Delhi High Court Mediation and Conciliation Centre on 14.07.2026 at 04:30 PM.
32. List before the Court on 05.10.2026 to see the progress in mediation.
SUBRAMONIUM PRASAD, J JULY 7, 2026