IMPORTANT POINT
The invocation of pre-litigation mediation under Section 12A is mandatory, but failure to reach a settlement does not invalidate the compliance with the provision.

JUDGMENT :

SAURABH BANERJEE, J.

1. The present appeal under Section 96 of the Civil Procedure Code, 1908 (CPC) seeks to assail the judgment and decree dated 31.08.2024 passed by the learned District Judge, Commercial Courts, Tis Hazari Courts, New Delhi in CS(COMM) 260/2019 and CS(COMM) 04/2020, the latter being the counter claim raised by the appellant.

2. Vide the impugned judgment, the suit preferred by the respondent/plaintiff (respondent) has been decreed for a sum of Rs.4,22,620/- alongwith pendente lite interest and future interest @ 8% per annum.

3. The sole submission of learned counsel for the appellant/ defendant (appellant) is that the suit ought to have been rejected at the very outset as the respondent had refused to participate in the pre-litigation mediation envisaged under Section 12A of the Commercial Courts Act, 2015 (hereinafter referred to as ‘the Act’).

4. By drawing our attention to the ‘Non-Starter Report’ dated 28.02.2019 issued by the Central District Legal Service Authority, Tis Hazari Courts, Delhi, (hereinafter referred to as ‘CDLSA’), learned counsel for the appellant submits that the mediation proceedings had failed as the sole proprietor of the respondent had refused to participate in the mediation proceedings at that stage. He, therefore, contends that once the respondent itself refused to participate in the mediation proceedings, the learned Trial Court ought to have drawn an adverse inference against him and ought to have come to a conclusion that the provisions of Section 12A of the Act, which are mandatory in nature, were not complied with in its letter and spirit. The learned Trial Court has, however, rejected this plea of the appellant by wrongly presuming that it is the appellant who had not participated in the mediation proceedings. He, therefore, contends that the impugned judgment and decree are liable to be set aside on this ground alone.

5. Learned counsel next submits that since the ‘Non Starter Report’ does not record that the appellant had refused to settle the matter, it ought to be presumed that the said appellant was willing to mediate and it was only the respondent who was not interested in participating in the pre-litigation mediation proceedings.

6. Having perused the impugned judgment and considered the aforesaid submissions of learned counsel for the appellant, we are of the view that since the entire case of the appellant is based on Section 12A of the Act, it would be apposite to begin by noting the said provision in its entirety. The same reads as under:

“12-A. Pre-litigation Mediation and Settlement:

(1) A suit, which does not contemplate any urgent interim relief under this Act, shall not be instituted unless the plaintiff exhausts the remedy of pre-litigation mediation in accordance with such manner and procedure as may be prescribed by rules made by the Central Government.

(2) For the purposes of pre-litigation mediation, the Central Government may, by notification, authorize:

(i) the Authority, constituted under the Legal Services Authorities Act, 1987 (39 of 1987).

(ii) a mediation, service provider as defined under clause (m) of section 3 of the Mediation Act, 2023.

(3) Notwithstanding anything contained in the Legal Services Authorities Act, 1987 (39 of 1987), the Authority or mediation service provider authorised by the Central Government under sub-section (2) shall complete the process of mediation within a period of one hundred and twenty days from the date of application made by the plaintiff under sub-section (1):

Provided further that, the period during which the parties spent for pre-litigation mediation shall not be computed for the purposes of limitation under the Limitation Act, 1963 (36 of 1963).

(4) If the parties to the commercial dispute arrive at a settlement, the same shall be reduced into writing and shall be signed by the parties and the mediator.

(5) The mediated settlement agreement arrived at under this section shall be dealt with in accordance with the pr