Pre-institution mediation is mandatory before filing a commercial suit, and failure to demonstrate urgency can lead to rejection of the plaint under Order VII Rule 11.

R.I. CHAGLA J.

1. By the Interim Applications, the Applicant / Defendant No.1 and Applicant / Defendant No.8 are seeking rejection of the Plaint under Order VII Rule 11 of the Code of Civil Procedure, 1908 for non-compliance of the requirement of pre-institution mediation under Section 12A of the COMMERCIAL COURTS ACT , 2015 (“the 2015 Act”).

2. The Commercial Suit has been filed by the Plaintiff inter alia seeking a declaration that the Indenture of Mortgage dated 31^st March, 2022 and the Assignment Agreement dated 29th June, 2024 are null and void ab initio.

3. The Applicants by the present Interim Applications have` submitted that there is no urgency in the matter warranting exemption from non-compliance with Section 12A of the 2015 Act. In view thereof the Suit is liable to be dismissed. Certain relevant facts are necessary to be referred to and are as under:-

(i) On 1st February, 2006, the Development Agreement was executed whereunder the Defendant No.2 granted the Plaintiff development rights in respect of portion of land admeasuring 18,007.56 sq. mts. Situated at D.N. Nagar, Taluka Andheri (Land) i.e. Sub Plot ‘C’, admeasuring 8088.81 Sq. mts. (“Suit property”). It is pertinent to note that under the Development Agreement, the Plaintiff was required to construct on the Suit property a building by utilizing FSI of 19,600 sq. mts and was entitled to 48% of the total FSI available for construction of the said building.

(ii) An Indenture of Mortgage was executed on 31st March, 2022 between Defendant Nos.1 to 7 to secure the obligations of Defendant No.2 under a loan agreement dated 1st January, 2022, whereby Defendant No.1 had agreed to advance loan facilities aggregating to INR 215 Crores to Defendant No.2 (“Loan Agreement”). Under the Indenture of Mortgage, the entire land (including the Suit property) is mortgaged along with various other properties.

It is pertinent to note that the said Indenture of Mortgage specifically excludes the interest of the Plaintiff from the perview of the mortgage over the land.

(iii) The Term Sheet was executed on 20th September, 2023 between the Plaintiff and Defendant No.2 to revise and supplement the understanding of the parties under the Development Agreement. It is pertinent to note that the Plaintiff has categorically admitted that the Plaintiff was aware of the Indenture of Mortgage at the time of execution of the Term Sheet, i.e. since September, 2023. The Term Sheet allows the creation of encumbrance / mortgage in favour of third parties in terms of Clause 12(g) of the Term Sheet and acknowledges the existence of the Loan Agreement. Further, the Term Sheet accepts the rights of the Defendant No.1 under the Indenture of Mortgage by providing in Clause 6(II) that the said Term Sheet is valid subject to NOC from Defendant No.1.

(iv) A Writ Petition was filed on 18th April, 2024 by the Plaintiff herein being No.2338 of 2024 challenging a letter dated 14th March, 2024 issued by the State of Maharashtra directing the Slum Rehabilitation Authority to appoint Defendant No.1 and its sister concern IIFL Facilities Services Ltd., as Developer and Co- Developers under an Amnesty Scheme replacing Defendant No.2 as the Developer.

It is pertinent to note that by an Order dated 22nd April, 2024, this Court granted ad-interim relief staying the effect / operation of the said impugned letter, which is operative till date. In paragraph 37 of the Writ Petition, the Plaintiff has referred to the Indenture of Mortgage and categorically stated that the rights of the Plaintiff are protected in the Indenture of Mortgage.

(v) Defendant No.1 ad