Suit Contemplating Urgent Interim Relief Exempt from Mandatory Pre-Institution Mediation Under S.12A Commercial Courts Act: Punjab & Haryana High Court

Urgent Interim Relief Exempts Suit from Mandatory Pre-Institution Mediation under Commercial Courts Act: Punjab & Haryana High Court

Chandigarh: The High Court of Punjab and Haryana, in a recent judgment, has clarified that a commercial suit contemplating urgent interim relief is not barred from institution if pre-institution mediation under Section 12A of the Commercial Courts Act, 2015, has not been exhausted. Justice Neeraj dismissed a revision petition challenging a trial court's order that had refused to reject a plaint on these grounds.

Case Background

The revision petition, CR 1126/2023, titled Mintex India and Anr. vs Kanta Dahiya and Ors. , arose from a commercial suit filed by Kanta Dahiya (plaintiff/respondent) against Mintex India (defendant/petitioner) for specific performance of an agreement to sell. Alongside the main suit, the plaintiff had also sought and was granted a temporary injunction by the Commercial Court, alleging that the defendants were planning to alienate the suit property.

The defendants, upon appearance, filed an application under Order VII Rule 11 of the Code of Civil Procedure, 1908, seeking rejection of the plaint. Their primary contention was the plaintiff's failure to resort to pre-institution mediation, a purportedly mandatory requirement under Section 12A of the Commercial Courts Act, 2015. The Commercial Court, by its order dated May 8, 2023, dismissed this application, leading to the present revision petition before the High Court.

Arguments Presented

The petitioners ( Mintex India ) argued before the High Court that Section 12A of the Commercial Courts Act is a mandatory provision, and non-compliance should lead to the rejection of the plaint. They relied on the Supreme Court's judgment in M/s Patil Automation Private Limited and Ors. vs. M/s KGR Enterprises and Ors. (SLP (C) No. 14697 of 2021), which underscored the obligatory nature of pre-institution mediation.

Conversely, the respondents ( Kanta Dahiya ) submitted that Section 12A was not applicable to their suit because they had filed an application for urgent interim relief (the temporary injunction), which was granted by the trial court. They also mentioned that post-institution mediation efforts had subsequently failed.

High Court's Analysis and Reasoning

Justice Neeraj , after considering the submissions, meticulously examined Section 12A(1) of the Commercial Courts Act, 2015. The provision reads:

"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-institution mediation in accordance with such manner and procedure as may be prescribed by rules made by the Central Government."

The High Court observed that the language of the statute itself carves out an exception. The judgment highlighted:

> "A plain reading of Section 12A(1) of the 2015 Act, it is evident that a suit which contemplates any urgent interim relief is not governed by this provision."

The Court noted that the plaintiff had indeed filed for urgent interim relief in the form of a temporary injunction to prevent the alienation of the property, and this relief had been granted by the trial court. Therefore, the suit fell within the exception provided by Section 12A(1). The trial court had correctly held that Section 12A would not apply where urgent interim relief is contemplated.

While acknowledging the Supreme Court's stance in Patil Automation (supra) regarding the mandatory nature of Section 12A, the High Court implicitly found that the present case was distinguishable due to the specific contemplation and grant of urgent interim relief, an exception acknowledged within the statutory provision itself.

Decision and Implications

Finding no grounds to interfere with the Commercial Court's order, the High Court dismissed the revision petition. The Court affirmed that the requirement for pre-institution mediation under Section 12A of the Commercial Courts Act is not an absolute bar to instituting a suit if the plaintiff genuinely contemplates and seeks urgent interim relief.

This decision reinforces the understanding that while pre-institution mediation is a crucial step encouraged by the Commercial Courts Act to promote settlement, it does not impede a party's access to court for urgent protection of their rights. The judgment provides clarity for litigants and legal practitioners on the interplay between mandatory mediation and the need for urgent judicial intervention in commercial disputes.