Pre-mediation process mandatory in commercial cases, says Supreme Court

The Supreme Court on Wednesday held that the pre-mediation process in commercial cases is mandatory and suits not complying with this provision would be rejected.

A Bench of Justices KM Joseph and Hrishikesh Roy, in Patil Automation Pvt Ltd vs Rakhija Engineers, held that not complying with the mediation stage would defeat the purpose of the Commercial Courts Act 2015.

“We hold that any suit instituted violating the mandate of Section 12A (pre-mediation) must be visited with the rejection of the plaint. We, however, make this declaration effective from August 20 so that concerned stakeholders become sufficiently informed,” the court said in the order.

The apex court said the power to reject the plaint can be exercised even suo motu by the court.

The court also clarified that in cases where plaints have been rejected and no steps taken in the period of limitation, the matter cannot be reopened based on this declaration.

Lastly, the court said if the plaint is filed violating Section 12A after the jurisdictional high court has declared Section 12A mandatory also, the plaintiff will not be entitled to relief.

Anshul Gupta, managing partner, ANG Partners, Advocates & Solicitors, said pre-mediation is mandatory according to the Act.

“It is a prerequisite to have pre-mediation before the state legal services authority for matters above Rs 3 lakh. Without that, the district courts do not accept the case,” he said.