WARANA SUGAR LIMITED vs IL AND FS FINANCIAL SERVICES LTD

2026:BHC-OS:5554
2-IA-5723-2025-COMS-93-2022.docx

IN THE HIGH COURT OF JUDICATURE AT BOMBAY
rrpillai
ORDINARY ORIGINAL CIVIL JURISDICTION
INTERIM APPLICATION NO. 5723 OF 2025
IN
COMMERCIAL SUMMARY SUIT NO. 93 OF 2022
1. Warana Sugar Limited
Commercial Complex
Warananagar, Tal – Panhala
Dist : Kolhapur, Pin – 416113
2. Vinay Kore
Warana Sugar Limited
Commercial Complex
Warananagar, Tal – Panhala
Dist : Kolhapur, Pin – 416113
3. Shri Tatyasaheb Kore Warana
Sahakari Sakhar Karkhana Ltd
A/P Warananagar, Tal – Panhala
Dist : Kolhapur, Pin – 416113 … Applicants

Vs.
IL & FS Financial Services Limited
a Company Incorporated under the
provisions of the Companies Act, 1956
and having its Registered Office at
The IL & FS Financial Centre, Plot C-22
G Block, Bandra-Kurla Complex
Digitally signed
by RAJESHWARI
RAMESH PILLAI
Date:
2026.03.04
17:58:19 +0530
RAJESHWARI
RAMESH
PILLAI
Bandra (East), Mumbai 400 051 … Respondents
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Mr. Zal Andhyarujina, Senior Advocate a/w. Ms. Ishani
Khanwilkar, Mr, Sachin Chandarana, Mr. Jaiveer Dharan i/b.
Manilal Kher Ambalal & Co. for the Plaintiff.
Mr. Phiroze Colabawalla a/w. Mr. Niharika Jalan i/b. Mr.
Indrajeet Hingane for the Defendants.
CORAM : GAURI GODSE, J.
th
RESERVED ON : 11 NOVEMBER 2025
th
PRONOUNCED ON : 4 MARCH 2026
JUDGMENT :
1. This application is filed by the defendants under Order
VII Rule 11 of the Code of Civil Procedure, 1908 (“CPC”),
praying for rejection of the plaint at the threshold on the
ground that it is barred for non-compliance with the
mandatory provision under Section 12A of the Commercial
Courts Act, 2015 (“the said Act”).
2. The suit is filed for recovery of an amount of
approximately Rs. 123,50,10,401/-, which, according to the
th
plaintiff, is due and payable as on 30 September 2022. The
plaintiff is a non-banking financial company engaged in
financial and advisory services. As pleaded in the plaint,
defendant no. 1 is the borrower, and defendant no. 2 is the
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personal guarantor who has guaranteed the facility availed
by defendant no. 1 from the plaintiff. Defendant no. 3 is the
corporate guarantor. According to the plaintiff, a loan
agreement was executed, and defendant no. 1
unconditionally agreed and undertook to secure the loan
amount by creating a charge over its assets in favour of the
plaintiff. To secure the loan amount due and payable,
defendant no. 2 executed a personal guarantee, and
defendant no. 3 executed the corporate guarantee, and
unconditionally agreed and undertook and guaranteed to pay
an amount on demand to the plaintiff. The plaintiff has also
relied upon copies of the undertakings, pledge agreements
and a power of attorney in favour of the plaintiff. Since
defendant no. 1 failed to comply with the terms and
conditions and committed default in payments, plaintiff
issued demand letters and legal notice calling upon the
defendants to make the payment due and payable towards
the loan.
3. As pleaded in the plaint, defendant no. 1 failed to
comply with the demand notice, thereby breaching the
contractual obligations. Defendant nos. 2 and 3 were also
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called upon to comply with the terms and conditions of the
guarantee. The plaintiff has relied on various correspondence
with the defendants, including a settlement proposal they
submitted. The board of directors of the plaintiff considered
the same; however, the proposal was rejected as not
commercially viable for the plaintiff. Accordingly, the
defendants were called upon to submit a revised settlement
proposal. Despite all efforts, the defendants failed to repay
the dues. Hence, the plaintiff called upon the defendants to
repay the entire amount due and invoked the personal and
corporate guarantees. The plaintiff has also pleaded about
the proposal for the one-time settlement. However, according
to the plaintiff, the defendants failed and neglected to
discharge their obligations. Hence, the plaintiff filed this
summary suit to recover the amount.
4. The plaintiff filed a separate application for interim relief
for a direction to the defendants to deposit the due amount in
this court as per the particulars of the claim in the suit. The
plaintiff also prayed for an order directing the defendants to
furnish security for the suit claim. In the same application, the
plaintiff prayed for directions to the defendants to disclose
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their assets and for the appointment of a Court Receiver to
take charge of the disclosed assets. The plaintiff thus also
prayed for an injunction restraining the defendants from
disposing of or creating a third-party interest in respect of the
disclosed assets. In the application for interim relief, the
plaintiff pleaded that the defendants, with a view to avoiding
and delaying payment and defeating the plaintiff's legitimate
claim, were likely to sell, transfer, and dispose of the assets
and properties by creating third-party rights. Hence, to
secure the plaintiff’s claim, the application for interim relief
was also filed along with the summary suit.
5. The defendants have prayed, by this application, to
reject the plaint at the threshold on the ground that, to
bypass the mandatory compliance under Section 12A of the
said Act, the plaintiff has created a false urgency. The suit for
recovery of money would not contemplate any urgent interim
relief that would justify non-compliance with the mandatory
provision of Section 12A of the said Act.
Submissions on behalf of the Defendants (Applicants):
6. The learned counsel for the defendants submitted that,
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after the suit was filed on 11 November 2022, the filing
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department of this court raised certain objections on
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13 December 2022. The plaintiff moved the matter before
nd
the court only on 2 January 2023. However, no ad-interim
urgent relief was granted, and the defendants were directed
to file an affidavit-in-reply. Accordingly, affidavit-in-reply and
rd
rejoinder were filed. On 3 July 2023, a summons for
judgment was served upon the defendants, and an
application for unconditional leave was filed. He submits that,
except for the filing of the suit, no efforts were made to move
the court immediately for any urgent interim relief, which itself
shows that no urgent interim relief was contemplated in the
suit, and the application for interim relief was filed only to
bypass the mandatory provision under Section 12A.
According to the learned counsel for the defendants, the
plaintiff's failure to take any immediate steps to seek urgent
interim relief would show that no such relief is contemplated
in the suit.
7. Learned counsel for the defendants submits that the
use of the words “shall not be instituted” in Section 12A of the
said Act clearly mandates that the suit of a commercial
nature for recovery of money cannot be filed unless pre-
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institution mediation is followed. The plaintiff has failed to
show any apprehension for filing the suit without adopting the
process of pre-institution mediation and settlement as
contemplated under Section 12A of the said Act. To support
the submissions for rejection of the plaint at the threshold,
learned counsel for the defendants relied upon the decision
of the Delhi High Court in the case of Exclusive Capital
1
Limited vs. Clover Media Private Limited , and the decision
of this court in the case of M/s. Kamla Landmarc Real Estate
Holding Pvt. Ltd. And Others vs. M/s. Image Developer and
2
Another .
8. Learned counsel for the defendants submits that the
Delhi High Court, after considering the legal principles on the
issue of urgent interim relief contemplated as per Section
12A of the said Act, held that on a plain reading of the reliefs
sought in the application, the allegation may require a
detailed examination of the facts and evidence. The Delhi
High Court held that the plaintiff in the said case may have a
case to argue for the grant of interim relief, but the same
cannot be said to be urgent, thereby justifying non-
1
2025 SCC Online Del 5221
2
Interim Application (L) No. 5452 of 2025 in Commercial Suit (L) No. 39332 of 2024
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compliance under Section 12A of the said Act. The Delhi
High Court has therefore held that the plaintiff is required to
plead or demonstrate an immediate or irreversible action that
threatens to alter its legal status or cause irreparable harm in
the interregnum, so as to justify an exemption from the
mandate of Section 12A.
9. Learned counsel for the defendants relied upon the
decision of this court in M/s . Kamla Landmarc Real Estate
Holding Pvt. Ltd. to support his submissions that the conduct
of the plaintiff before filing the suit and post-filing of the suit
needs to be considered in examining whether non-
compliance under Section 12A is justified. He submits that
this court has taken a view that the plaintiff’s conduct, pre-
filing of the suit and post-filing of the suit, is required to be
considered for deciding whether non-compliance with
Section 12A is justified.
10. Learned counsel for the defendants, therefore, submits
that in the present suit, which is purely seeking a money
decree, no urgent interim relief is contemplated to justify non-
compliance with Section 12A. None of the pleadings in the
plaint or the application for interim relief expresses any
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apprehension for seeking urgent interim relief for justifying
non-compliance with Section 12-A. Hence, the plaint
deserves to be rejected at the threshold as barred for non-
compliance with the mandatory provisions under Section
12-A.
Submissions on behalf of the plaintiff (respondent):
11. Learned senior counsel appearing for the plaintiff relied
upon the relevant pleadings in the plaint and the application
for interim relief to support his submissions that sufficient
grounds are made out by the plaintiff for seeking urgent
interim relief. He submits that the defendants were likely to
create third-party rights in respect of their assets, which
would defeat the plaintiff’s claim. Despite various proposals
for settlement of the dues, the defendants failed to make any
payments towards the amount due. Thus, to secure the
plaintiffs’ claim, a separate application for interim relief is filed
along with the suit.
12. In a suit to recover the due amounts as per the loan
granted to defendant no. 1, the plaintiff is required to secure
the claim. The plaintiff has pleaded sufficient grounds to
indicate that defendant no. 1, who is the principal borrower,
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and the other defendants, who are the guarantors, are
avoiding repayment of the dues on the ground of submitting
a settlement proposal. Thus, the plaintiff's apprehension is
well-founded that the defendants are avoiding making
payments of the legitimate dues and thus are likely to defeat
the plaintiff’s claim. Hence, sufficient grounds are made out
by the plaintiff to show that urgent interim relief is
contemplated if viewed from the standpoint of the plaintiff.
13. Learned senior counsel for the plaintiff relies upon the
decision of the Apex Court in Novenco Building and Industry
A/S. vs. Xero Energy Engineering Solutions Pvt. Ltd. and
3
Another 2025 SCC Online SC 2278 to support his
submissions that the court must look at the plaint, pleadings
and supporting documents to decide whether urgent interim
relief is genuinely contemplated, and the court may also look
for immediacy of the peril, irreparable harm, risk of losing
rights/assets . He relied upon the decision of the learned
division bench of this Court in Future Corporate Resources
Pvt. Ltd. Vs Edelwise Special Opportunities Fund and
4
Another and submitted that it held that Section 12A cannot
be used to say that the court is powerless to pass an interim
3
2025 SCC Online SC 2278
4
2022 SCC Online Bom 3744
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order. Learned division bench observed that Section 12A
cannot be used by the party as a weapon against the plaintiff
to oppose the grant of any interim relief. He also relied upon
the decision of this court in Westin Infra World Prv. Ltd.
Between Vistra ITCL India Ltd. Vs Darvesh Properties Pvt.
5
Ltd. and others to support his submissions that the legal
principles interpreting the words “contemplate urgent interim
relief” under Section 12A of the said Act are no longer res
integra .
14. Learned senior counsel for the plaintiff submitted that,
in view of the well-settled legal principles, the post-filing
conduct of the plaintiff would be irrelevant for deciding the
objection for rejection of the plaint at the threshold for non-
compliance under Section 12A. The decision of this court in
the case of M/s. Kamla Landmarc Real Estate Holding Pvt.
Ltd., which refers to the pre-filing and post-filing conduct of
the plaintiff, is with reference to the facts of the said case.
Hence, in view of the well-settled legal principles by the Apex
Court, to examine the bar under Section 12A, only the plaint
and its supporting documents justifying non-compliance with
Section 12A need be considered.
5
IA(L) No. 22747 of 2025 in Coms (L) No. 13824 of 2025
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15. Learned senior counsel for the plaintiff, therefore,
submits that in view of the well-settled legal principles as
discussed in the aforesaid decisions, the urgent interim relief,
whether contemplated or not, for not following the mandatory
provision of Section 12A is to be seen from the standpoint of
the plaintiff. The result of the application seeking urgent
interim relief would be irrelevant to the question of whether
non-compliance under Section 12A is justified. He therefore
submits that in the present case, the plaint cannot be
rejected at the threshold as prayed by the defendants.
Consideration and Analysis:
16. I have carefully perused the pleadings and the
supporting documents to the plaint as well as the interim
application seeking urgent interim relief. As set out in the
earlier paragraphs, the plaintiff has pleaded all relevant
factors calling upon the defendants to make payments
towards the amounts that became due and payable to the
st
plaintiff as of 1 June 2018. All the particulars regarding the
undertakings and the guarantee agreements, as well as the
share pledge agreements, are pleaded in detail in the plaint.
According to the plaintiff, defendant no. 1 has availed a
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short-term loan facility of Rs. 60 crores under the sanction
th
letter dated 16 August 2017. A loan agreement of Rs. 60
th
crores was executed on 18 August 2017. The plaintiff has
pleaded about the unconditional undertakings and the
guarantee agreements executed by defendant nos. 2 and 3.
17. The plaintiff has relied upon various correspondence
calling upon defendant no.1 to make payments towards the
due amounts and clear the outstanding of Rs. 65,45,98,855/-
th
as on 26 September 2018. The plaintiff has also pleaded
the particulars about a correspondence calling upon
defendant no. 2 to provide the information in connection with
the guarantee provided by defendant no. 2. The request
made by defendant no. 1 seeking no objection regarding the
transfer of shares and the pledged units held by the then
pledgor to defendant no. 1 is also pleaded by the plaintiff.
18. According to the plaintiff, the defendants constantly
failed and neglected to pay the dues and cure the default
committed by each of the defendants. The pleadings about
the default notice within the conditional period granted by the
plaintiff, which was beyond the permitted cure period under
Clause 22 of the sanctioned letter, are substantially pleaded
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by the plaintiff. The plaintiff has referred to the defendants'
settlement proposal. Thus, according to the plaintiff, despite
availing the facility of a short-term loan and the repayment
guaranteed by defendant nos. 2 and 3, they omitted to make
payments towards the legitimate dues in favour of the
plaintiff.
19. Considering the apprehensions that defendants would
indulge in creating third-party rights, the plaintiff filed a
separate application seeking urgent interim relief. The
defaults committed by the defendants are pleaded along with
the supporting documents and the settlement proposals
given by defendant no. 1, which indicate that there was no
dispute regarding the defaults committed by defendant no. 1
and the breaches committed by the defendants in complying
with the guarantee agreements and the share pledge
agreement. Hence, if the pleadings in the plaint and the
interim application for seeking interim relief are viewed from
the standpoint of the plaintiff, urgent interim relief is
contemplated for non-compliance with the mandatory
provision of Section 12A.
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Legal Position:
20. The legal principles for examining and deciding the
non-compliance with Section 12A of the said Act are no
longer res integra. The Apex Court in Dhanbad Fuels Pvt.
6
Ltd. vs. Union of India and Another observed that the aim
and object of Section 12-A is to ensure that, before a
commercial dispute is filed in court, alternative means of
resolution are adopted, so that only genuine cases come
before the courts. The said procedure has been introduced to
decongest the regular courts.
21. The Apex Court referred to the legal principles settled
in Patil Automation Private Limited and others vs. Rakheja
7
Engineers Private Limited and also discussed the power of
the Court to reject the plaint, which is held to be a drastic
measure, as it terminates a civil action at the threshold, and
therefore must be exercised strictly in accordance with the
conditions enumerated under Order VII Rule 11 of the CPC.
The Apex Court held that the use of the word “shall” in Order
VII Rule 11 of the CPC denotes that the courts are under an
obligation to reject the plaint if the conditions specified
6
(2025) SCC OnLine SC 1129
7
(2022) 10 SCC 1
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therein are satisfied. It is observed that t he word
“contemplate” connotes to deliberate and consider. Further,
the legal position that the plaint can be rejected and not
entertained reflects the application of mind by the court as
regards the requirement of “urgent interim relief”. The Apex
Court further observed that the prayer of urgent interim relief
should not act as a disguise to get over the bar contemplated
under Section 12-A. However, at the same time, the mere
non-grant of the interim relief, when the plaint is taken up for
admission and examination, would not justify the rejection of
the plaint under Order VII Rule 11 of CPC. Further, even if
after the conclusion of arguments on the aspect of interim
relief, the same is denied on merits, that would not by itself
justify the rejection of the plaint under Order VII Rule 11. It is
held that the facts and circumstances of the case have to be
considered holistically from the standpoint of the plaintiff.
35. In the decision of this court in M/s. Kamla Landmarc
Real Estate, the relevant observations regarding the material
and statement in the plaint and pre-filing and post-filing
conduct of the plaintiff are with reference to the facts of the
said case, and the test applied is for considering whether the
urgent interim relief is contemplated from the standpoint of
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the plaintiff in the said case. As held by the Hon’ble Apex
8
Court in the decisions of Yamini Manohar v. T. K. D. Keerthi
and Dhanbad Fuels Private Limited, the facts and
circumstances should be considered holistically from the
standpoint of the plaintiff.
36. The Delhi High Court in Exclusive Capital Limited relied
upon the legal principles settled by the Apex Court in Patil
Automation and Yamini Manohar and held that it is
imperative that Courts remain vigilant against attempts by
unscrupulous litigants to abuse the exemption under Section
12A by mechanically appending a plea for urgent interim
relief as a façade to circumvent the statutory mandate of pre-
institution mediation. It is held that the prayer for urgent relief
must be substantiated through specific pleadings and
demonstrable facts. With reference to the facts of that case,
it is further held that the plaintiff was aware of the impugned
transactions for over a year before instituting the suit and
despite such knowledge, failed to act in a prompt manner
and that the inaction was attributable solely to the plaintiff's
own conduct and undermines any plea of urgency. Hence,
the court also referred to the suit remaining pending under
8
(2024) 5 SCC 815
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the defects, which conclusively established that the plea of
urgency did not inspire confidence.
37. This court, in the decision of Future Corporate
Resources Pvt. Ltd., held that Section 12-A is not meant to
be weaponised by a defendant to prevent a court from
passing an order where the court believes an order is
justified and necessary. In Westin Infra World Pvt. Ltd., this
Court relied upon the legal principles for rejection of the
plaint under Order VII Rule 11 of the CPC settled by the
Hon’ble Apex Court in the decision of Dahiben v. Arvindbhai
9
Kalyanji Bhanusali . The Apex Court held that the power
conferred on the court to terminate a civil action is a drastic
one, and the conditions enumerated in Order VII Rule 11 are
required to be strictly adhered to.
38. In Novenco Building and Industry , the Apex Court held
that a plaintiff can be exempted from the requirement of
Section 12A only when the plaint and the documents
attached to it clearly show a real need for urgent interim
intervention and on a wholesome reading of the plaint and
the material annexed to the plaint ought to disclose the need
for urgent relief. It is held that the court must look at the
9
(2020) 7 SCC 366
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plaint, pleadings and supporting documents to decide
whether urgent interim relief is genuinely contemplated, and
the court may also look for immediacy of the peril, irreparable
harm, risk of losing rights/assets, statutory timelines,
perishable subject-matter, or where delay would render
eventual relief ineffective.
39. In Novenco Building and Industry , the prayer for
injunction was made in a suit alleging continuing infringement
of patent and design rights. The Apex Court held that a
prayer for an injunction cannot be characterised as mere
camouflage to evade mediation when it was a real grievance
founded on the continuing nature of infringement and
irreparable prejudice likely to be caused. It was held that the
court must look beyond the time lag and evaluate the
substance of the plea for interim protection. The Apex Court
held in paragraph 24 that “ …..The insistence of pre-
institution mediation in a situation of ongoing infringement,
in effect, would render the plaintiff remediless allowing the
infringer to continue to profit under the protection of
procedural formality. Section 12A of the Act was not
intended to achieve such kind of anomalous result. ”
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40. In view of the well-established legal principles as
discussed above, it is clear that there cannot be a straitjacket
formula while examining the justification for non-compliance
with Section 12A. Thus, after a meaningful reading of the
plaint as a whole, each suit has to be examined in the facts
and circumstances of that case for ascertaining whether non-
compliance with Section 12A is justified on the ground that
urgent interim relief is contemplated from the plaintiff’s point
of view.
Conclusions:
41. In the present case, the plaintiff has pleaded the
urgency of seeking interim relief, as the defendants have
failed to make payment of the legitimate dues to the plaintiff,
despite the plaintiff granting time for payment. It is therefore
a genuine apprehension expressed by the plaintiff that the
defendants are likely to create third-party rights in respect of
their assets to defeat the plaintiff’s claim. Thus, the legal
principles settled by the Hon’ble Apex Court in Novenco
Building and Industry , squarely apply to the facts of the
present case. The defendants in the present case cannot be
permitted to defeat the plaintiff’s claim by allowing them to
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continue to profit under the garb of raising an objection of bar
under Section 12A of the said Act by alleging that no urgent
interim relief can be contemplated in a suit for recovery of
money. The plaintiff’s pleadings clearly make out a case for
seeking urgent interim relief to protect their claim, as,
according to the plaintiff, the defendants are deliberately
refusing to make payment of their legitimate dues and are
likely to dispose of their assets, thereby defeating the
plaintiff’s claim.
42. Thus, in view of the legal principles settled in the Apex
Court’s decisions discussed in the above paragraphs, what is
important to examine is whether the pleadings in the plaint
demonstrate that urgent interim relief is contemplated
according to the plaintiff for not following the mandatory pre-
institution mediation under Section 12A of the said Act.
Hence, what is relevant is the reason to seek urgent interim
relief and whether it is well-founded. Therefore, the
circumstances post-filing of the suit are irrelevant to decide
the justification for not following the mandatory pre-institution
mediation under Section 12A of the said Act. The decision of
this Court in Kamla Landmarc Real Estate and the Delhi High
Court judgment in Exclusive Capital Ltd., which refers to the
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post-filing circumstances, is with reference to the facts of
those cases, holding that the reason seeking urgent interim
relief did not inspire confidence. Hence, those decisions
would not be of any assistance to the submissions made on
behalf of the defendants on the post-filing circumstances of
this suit.
43. It is a well-established legal principle, as held by the
Apex Court in the decisions referred to in the above
paragraphs, that the non-grant of ad-interim relief or the
refusal to grant interim relief after considering the application
on merits cannot justify the rejection of the plaint for non-
compliance with Section 12A. Hence, the circumstances
post-filing of the suit would not nullify the well-founded
circumstances based on the pleadings for not following pre-
institution mediation, on the ground that, according to the
plaintiff, the suit contemplates urgent interim relief.
44. The well-settled legal principles as discussed in the
above paragraphs and the averments in the plaint support
the plaintiff’s contention in the present case that the suit
contemplates urgent interim relief. Hence, in the present
case, non-compliance with the mandatory requirement under
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Section 12-A of the said Act would not warrant rejection of
the plaint at the threshold.
45. For the reasons recorded above, the interim application
is dismissed.
[GAURI GODSE, J.]
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