Section 12A of the Commercial Courts Act, 2015 mandates that a suit which does not contemplate any urgent interim relief shall not be instituted unless the plaintiff exhausts the remedy of pre-institution mediation. The Supreme Court in Patil Automation Private Limited v. Rakheja Engineers Private Limited (2022) held that this statutory requirement is mandatory in character, and non-compliance results in rejection of the plaint under Order VII Rule 11 of the CPC.
Key Strategic Considerations for Litigants
1. Establishing Genuine Urgency: Where immediate interim relief is necessitated—such as freezing bank guarantees, restraining alienation of commercial assets, or preventing copyright infringement—the plaint must articulate precise factual grounds justifying the dispensation of mediation under Section 12A.
2. Mediation as a Commercial Opportunity: Rather than viewing pre-institution mediation merely as a procedural hurdle, commercial enterprises can leverage the forum under the auspices of State or District Legal Services Authorities to achieve cost-effective dispute resolution without public disclosure.
3. Limitation Period Impact: The period spent in pre-institution mediation (up to three months, extendable by two months with mutual consent) is excluded from the computation of the limitation period under the Limitation Act, 1963.
