Commercial Courts Act · Dispute Resolution
Mandatory Pre-Institution Mediation in Commercial Disputes
Review of Section 12A of the Commercial Courts Act 2015, exceptions for urgent interim relief, and strict compliance mandates established by the Supreme Court.
This page summarizes the legal framework and judicial precedents for educational and informational purposes only. It does not state or imply that Advocate Sunil Kumar Upadhyay represented a party or was involved in the matter.
Section 12A and the Legislative Purpose
Section 12A was incorporated into the Commercial Courts Act, 2015 via the 2018 amendment to alleviate commercial docket congestion and encourage institutional alternative dispute resolution. The provision mandates that a commercial suit not contemplating urgent interim relief shall not be instituted unless the plaintiff exhausts the remedy of pre-institution mediation.
Mediation under Section 12A is conducted through District Legal Services Authorities (DLSA) in Delhi within a strict statutory timeline of three months, extendable by two months with mutual consent. A settlement arrived at in such mediation is enforceable as a court decree under Section 12A(5).
The Landmark Patil Automation Doctrine
In the seminal judgment Patil Automation Pvt. Ltd. v. Rakheja Engineers Pvt. Ltd. (2022) 10 SCC 1, the Supreme Court declared Section 12A to be mandatory and non-negotiable. Commercial suits instituted without exhausting pre-institution mediation or seeking bona fide urgent interim relief are liable to rejection at the threshold under Order VII Rule 11 of the Code of Civil Procedure.
The Court held that the legislative intent was to make mediation an indispensable gateway rather than an optional formality. The rule applies across all commercial suits with a specified value exceeding ₹3 Lakhs.
Evaluating Urgent Interim Relief under Yamini Manohar
Litigants frequently seek to bypass mediation by incorporating pro-forma prayers for ad-interim injunctions. Addressing this loophole, the Supreme Court in Yamini Manohar v. T.K.D. Keerthi (2023) SCC OnLine SC 1382 held that commercial courts must apply meaningful judicial scrutiny to determine whether the urgent relief sought is genuine or a mere artifice to evade Section 12A.
In Delhi Commercial Courts, plaintiffs must demonstrate imminent peril, irreparable injury, or risk of dissipation of assets to justify dispensing with pre-institution mediation.
