Pre-institution mediation under the Commercial Courts Act is required at the stage of suit initiation; however, if no mechanism exists, a suit cannot be invalidated for failure to comply.

JUDGMENT (Oral)

1. This petition under Article 227 of the Constitution of India assails orders dated 16th August 2021 and 2nd February 2022, passed by the learned District Judge (Commercial Courts) ("the learned Commercial Court") in CS DJ 1070/2018 (Jotun India Pvt. Ltd. v. Extreme Coatings Pvt. Ltd.).

2. CS DJ 1070/2018 was preferred by the respondent against the petitioner. The dispute between parties being admittedly commercial, the suit was filed as a commercial suit under the provisions of the Code of Civil Procedure, 1908 (CPC), as amended by the Commercial Courts Act, 2015.

3. The petitioner, as the defendant in the suit, moved an application under Order VII Rule 11 of the CPC, seeking rejection of the suit on the ground that it had been filed in violation of Section 12-A¹ of the Commercial Courts Act, which requires the plaintiff to resort to pre-institution mediation before approaching the Court. The respondent having not travelled the said route, the petitioner, as defendant in the suit, prayed that the suit be rejected under Order VII Rule 11 of the CPC.

4. The learned Commercial Court, addressing the objection of the petitioner, noted that the suit had been filed by the respondent on 20th September 2018. On that date, the learned Commercial Court noted that, though the Delhi Legal Services Authority (DLSA) had been notified under Section 12-A(2) of the Commercial Courts Act as the agency for pre-institution mediation under Section 12-A of the Commercial Courts Act, vide notification dated 3rd July 2018, no mechanism, for such pre-institution mediation, had been put in place. The learned Commercial Court observed that implementation of the protocol prescribed by Section 12-A of the Commercial Courts Act involves three stages. The first stage was the coming into force of the provision itself. This stage had stood crossed on 3rd May 2018 when Section 12-A was introduced in the Commercial Courts Act. Thereafter, notes the learned Commercial Court, Section 12-A(2) required the Central Government to notify authorities constituted under the Legal Services Authorities Act, 1987, for the purposes of pre-institution mediation under Section 12-A(1). This stage also stood crossed on 3rd July 2018, when a notification was issued by the Central Government notifying the DLSA as the authority for pre-institution mediation under Section 12-A(1). Once the authority for the purposes of Section 12-A(1) stood thus notified, the learned Commercial Court notes that, in order to comply with the remaining sub-sections of Section 12-A, a mechanism for pre-institution mediation by the authority so notified was required to be put in place. This, as he prefers to term it, was the "third stage" of the protocol envisaged by Section 12-A. This stage, notes the learned ADJ, was crossed only on 27th November 2018, when, vide Letter No. 18/DLSA/LAW/pre-institution mediation/2018/12817, a Standard Operating Procedure (SOP) was enforced for pre-institution mediation by the DLSA. It was only thereafter, therefore, that a plaintiff, instituting a suit, could, prior thereto, exhaust the pre-institution mediation protocol envisaged by Section 12-A of the Commercial Courts Act.

5. In view thereof, the learned ADJ, observing that it was impossible for the respondent to have exhausted the protocol envisaged by Section 12-A of the Commercial Courts Act before filing CS DJ 1070/2018, rejected the petitioner's objection to the maintainability of the suit and, accordingly, dismissed the petitioner's application under Order VII Rule 11 of the CPC.

6. The petitioner, quixotically, sought re