IMPORTANT POINT
Mandatory compliance with Section 12A of the Commercial Courts Act for Pre-Institution Mediation is required for the maintainability of commercial suits.

JUDGMENT

Mini Pushkarna, J. (Oral)

1. The present appeal has been filed against the judgment dated 25th July, 2023 passed by the District Judge (Commercial - 03), Patiala House, New Delhi in CS (COMM) No. 200/2023. By way of the impugned judgment, the suit for recovery filed on behalf of appellant herein was rejected under provisions of Order VII Rule 11 of Code of Civil Procedure, 1908 ("CPC") for violating the mandate of Section 12A of The Commercial Courts Act, 2015 as amended by Amendment Act, 2018 ("Commercial Courts Act").

2. As per the facts canvassed before this Court, the appellant had business dealings with the respondents being engaged in the business of manufacturing, trading, export and import of wide range of LED lights, lamps, compact fluorescent lamps, etc. During the course of business, the appellant started facing rejections and replacements from major clients, due to sub-standard quality of LED chips supplied by respondent no.2 and suffered a loss to the tune of Rs. 1,87,00,499/-. Thus, a suit for recovery, being CS (COMM) No. 200/2023 was filed on behalf of the appellant. The said suit was rejected by the impugned judgment dated 25th July, 2023 passed by the District Judge (Commercial - 03), Patiala House, New Delhi since the appellant had instituted the said suit without exhausting the remedy of Pre-Institution Mediation, thereby violating the mandate of Section 12A of the Commercial Courts Act. Hence, the present appeal has been filed before this Court.

3. At the outset, this Court finds that notice was issued by this Court in the present appeal on account of the submission on behalf of the appellant that it was willing to resolve the disputes amicably through the process of mediation. However, today learned counsel appearing for respondents submit that they are not willing for any mediation. It is submitted that the appellant is liable to pay more than Rs. 9 crores to the respondents for the goods supplied by the respondents to the appellant. The suit for recovery for alleged losses incurred by appellant was filed despite the fact that large sums are due and payable by the appellant to the respondents.

4. Having heard learned counsel for the parties and having perused the record, it transpires that the appellant had filed the suit without filing Pre- Institution Mediation as provided under Section 12A of the Commercial Courts Act. An application seeking exemption from institution of Pre- Institution Mediation was filed by the appellant along with the said suit. The only ground taken by the appellant in the said application was that the respondent no.2 herein had earlier approached the Delhi High Court Legal Services Committee ("DHCLSC") to mediate the disputes between the appellant and the respondents herein. However, after few dates the said mediation proceedings eventually culminated into a Non-Starter Report. It is on the basis of this Non-Starter order dated 10th April, 2019 passed by DHCLSC that the appellant intended the same to be substituted as compliance of Section 12A of the Commercial Courts Act in the suit proceedings.

5. Non-Starter mediation proceedings initiated by the respondents for their own claims against the appellant herein, cannot be treated as compliance of the requirement of Pre-Institution Mediation proceedings in terms of Section 12A of the Commercial Courts Act in the suit filed on behalf of the appellant. The appellant has clearly violated the mandate of the aforesaid provisions of the Commercial Courts Act. This Court notes that the appellant had filed suit for recovery of Rs. 1,87,00,499/- on account of inferior quality of goods supplied by the respondents. This particular dispute was never referred to the mediation proceedings initiated on behalf of respondents, as the same pertained to the claim of the respondents against the appellant for supply of goods to the appellant. Besides, it is to be noted that the appellant herein never participated in the earlier mediation proceedin