The mandatory nature of pre-institution mediation under Section 12A of the Commercial Courts Act requires genuine urgency to bypass mediation.

JUDGMENT :

PURUSHAINDRA KUMAR KAURAV, J.

I.A. 10952/2025 (filed on behalf of the plaintiff seeking exemption from pre-institution mediation and settlement)

The instant application is preferred by the plaintiff under Section 12A (1) of the Commercial Courts Act, 2015 (hereinafter referred to as “the Act”), seeking exemption from pre-institution mediation.

Factual Matrix

2. The present commercial suit has been instituted by Exclusive Capital Ltd., a Non-Banking Financial Company (NBFC), against Clover Media Pvt. Ltd. i.e., defendant No. 1, VSJ Investments Pvt. Ltd. i.e., defendant No. 2, Mr. Harvinder Singh, i.e., defendant No. 3, and defendant No. 4, i.e., Asian Hotels (North) Ltd (AHNL) seeking declaratory and injunctive reliefs.

3. The Plaintiff prays for a decree declaring the Inter-Corporate Loan Agreement dated 14.12.2022 (hereinafter referred to as “ICL Agreement”) executed between the plaintiff and defendant No. 1, and the Assignment Deed dated 01.02.2024 (hereinafter referred to as “VSJ Assignment Agreement”) executed between defendant No. 1 and defendant No. 2, to be illegal, non-est, and void ab initio.

4. The genesis of the dispute can be traced back to a structured financial arrangement whereby, pursuant to an Inter-Corporate Deposit Agreement (hereinafter referred to as „ICD Agreement‟) dated 14.12.2022, the plaintiff received a sum of INR 60 crores from defendant No. 1 towards the acquisition of a corporate loan owed by AHNL, to IndusInd Bank. The ICD Agreement had a repayment tenure of 12 months and was extendable by mutual consent. As a consequence to this transaction, the plaintiff entered into an Assignment Deed dated 28.12.2022 with IndusInd Bank for a consideration of INR 98 crores, whereby, the loan account of AHNL was duly assigned in favour of the plaintiff, creating a charge over AHNL's assets.

5. As per the case set up by the plaintiff, in February 2024, defendant No. 1 unlawfully assigned the AHNL loan to Defendant No. 2 based on an allegedly forged and fabricated ICL Agreement dated 14.12.2022, which is the same date as the ICD agreement. The plaintiff avers that the ICL Agreement was signed by defendant No. 3, Mr. Harvinder Singh, acting without authority and contrary to the company's internal resolutions and legal mandate.

6. Upon discovery of the fabricated documents and after realizing the collusive and fraudulent conduct of the defendants, the plaintiff lodged a complaint with the Economic Offences Wing (EOW), Mandir Marg Branch, New Delhi, for the commission of offences punishable under Sections 379, 420, 465, 468 and 471 of the Indian Penal Code, 1860.

7. In the plaint, it is alleged by the plaintiff that the defendants, while acting in collusion, orchestrated a fraudulent scheme to usurp its legitimate and secured rights in the AHNL debt through the creation and execution of false and unauthorised documents. The present suit, therefore, seeks the annulment of the impugned ICL Agreement and the VSJ Assignment Deed, along with damages for the injury caused by the fraudulent and unlawful acts of the defendants.

8. The instant matter was earlier called out on 01.07.2025, when an objection was raised by Mr. Rajiv Nayar, learned senior counsel appearing on advance notice for defendant Nos. 1 and 2, regarding the maintainability of the instant civil suit on the ground of non-adherence to the mandate of Section 12A of the Act. The matter was, thereafter, adjourned to enable the learned senior counsel for the plaintiff to satisfy this Court regarding the maintainability of the instant civil suit.

Submissions advanced by the parties

9. Mr. Harish Malhotra and Mr. Dayan Krishnan, learned senior counsel appearing on behalf of the plaintiff, broadly made the following submissions for the consideration of this Court:

i. Section 12A of the Act contemplates only the existence of an urgent interim relief. According to learned senior