Is Pre-Mediation Mandatory in all Commercial Suits?

Section 12 A of The Commercial Courts Act, 2015 (Act), mandates that every suit, which does not contemplate any urgent interim relief, shall not be instituted unless the Plaintiff first exhausts the remedy of pre-institution mediation. The object of this Act is the adjudication of commercial disputes in an expeditious, cost effective and timely manner. It also reduces case congestion in courts by diverting some matters to mediation.

In cases that need to be heard urgently, the process mandated under Section 12 A need not be followed. There is, however, no prescribed penalty for not following the pre-mediation process and it is left to the discretion of the court to pass such orders that it deems fit. Generally, the registry itself does not list the matter before the court if the process is not followed.

There has been a lot of controversy about what constitutes “urgent interim relief” to enable the plaintiff to bypass the procedure under Section 12 A. Whether a mere plea of “urgent interim relief” made in the plaint is sufficient to bypass the provision or is something more required?

The Bombay High Court and also the Supreme Court have considered this and held that Section 12A is mandatory and any violation can result in rejection of the plaint. The courts have held that the proper course is to assess the elements which prima facie indicate that the suit may contemplate an urgent interim relief irrespective of the fact as to whether the Plaintiff actually succeeds in obtaining such relief. In cases where an application for urgent interim relief is made without there being any justification for the same, merely to overcome the bar under Section 12 A, the court may record a finding that the suit in effect does not contemplate urgent interim relief and can dismiss the suit. The prayer should not be a disguise or mask to wriggle out of Section 12 A.  The suit will not be dismissed if interim relief is denied on merits. The Supreme Court has held that there is no absolute right to paralyze Section 12A by making a prayer for urgent interim relief. Camouflage and guise to bypass the statutory mandate of pre-mediation must be checked when deception and falsity is apparent or established.

It is important to note that disguising the averments in the plaint to try to establish grounds for urgent interim relief, when none exist, to avoid pre-mediation, is dangerous and can result in dismissal of the suit. It is advisable to follow the procedure laid down for pre-mediation to avoid such consequences.

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