Provision For Urgent Relief Not A Tool To Circumvent Pre-Institution Mediation U/S 12A Commercial Courts Act: Allahabad High Court

The Allahabad High Court has held that a prayer of urgent relief should not be used as a tool to circumvent the requirement of pre-litigation mediation contemplated under Section 12A of the Commercial Courts Act, 2015.

Section 12A of the Commercial Courts Act, 2015 provides that where urgent relief is not contemplated in a suit, the plaintiff must exhaust the remedy of pre-mediation litigation before instituting a suit.

Relying on various decisions of the Supreme Court and other High Courts, Justice Shekhar B. Saraf held,

“the invocation of urgent relief should not serve as a pretext to circumvent or evade Section 12A of the Act. It is imperative that the factual matrix and contextual intricacies of each case are comprehensively assessed from the plaintiff's perspective. The Supreme Court, in its wisdom, has expounded that any attempt to cloak or disguise the true intent behind seeking such relief, with the intention of sidestepping the statutory obligation of pre-litigation mediation, warrants scrutiny, particularly in instances where duplicity and falsehood are manifest or substantiated.”

The Court observed that “By mandating pre- litigation mechanism, Section 12A of the Act acts as a gatekeeper, diverting disputes away from the already congested court dockets and towards a more expeditious resolution process. This not only relieves pressure on the judiciary but also ensures timely redressal for the parties involved, thereby enhancing the overall efficiency of the legal system.”

Factual Background

Appellant filed an original suit without an application for urgent relief which was dismissed with liberty to file fresh suit. The subsequent suit filed by the appellant was rejected on grounds that no prayer for urgent relief was made in the first suit, thus, the such prayer made in the subsequent suit was “imaginary”. It was held that the parties ought to have entered into pre-litigation mediation is mandatory under Section 12A of the Commercial Courts Act, 2015.

Counsel for appellant argued there is always an urgency in a trademark suit, therefore, application under Section 12A of the Act is not needed to be complied with.

Per contra, counsel for respondent stressed on the difference in factual matrix between the judgments relied on by the appellant and the present case as no urgency was demonstrated in this case.

High Court Verdict

The Court observed that Section 12A enables decongestion of over burned judicial along with maintaining party autonomy. It also provides a cost and time effective method of dispute resolution which has been made mandatory to ease the burden on judicial systems.

“In the landscape of the Indian commercial laws, Section 12A of the Act stands as a pivotal provision, delineating a framework for pre-institution mediation and settlement of commercial disputes. This provisions places emphasis on mediation as a preferred method to resolve commercial disputes before they escalate into protracted legal battles.”

The Court relied on Patil Automation Pvt. Ltd. and Others v. Rakheja Engineers Pvt. Ltd wherein the Supreme Court held that Section 12A of the Act is mandatory in nature and non-observance of the same shall lead to rejection of plaint under Order VII Rule 11 of the Code of Civil Procedure, 1908.

Further, reliance was placed on the decision of Calcutta High Court in M/s Odisha Slurry Pipeline Infrastructure Ltd. and Another v. IDBI Bank Ltd. and Others wherein it was held that mere filing of an application for urgent relief does not waive the mandatory requirement under Section 12A of the Commercial Courts Act. A plaint can be rejected if the Court decides to reject the prayer for urgent relief.

The Court held that application for urgent relief cannot be used as a tool to circumvent the mandatory provision, Section 12A of the Commercial Courts Act.

The Court held that the appellant had filed the first original suit without application for urgent relief, and it was only in the subsequent suit that an application for urgent relief was filed seeking ex-parte urgent relief. The Court modified the order of the order of the Court below in rejecting the plaint for non-compliance of Section 12A of the Commercial Courts Act and directed the appellant to approach the mediation centre within a period of seven days.

Case Title: Pankaj Rastogi vs. Mohd. Sazid And Another 2024 LiveLaw (AB) 64 [ First Appeal No. 30 of 2024]

Case citation: 2024 LiveLaw (AB) 64

Counsel for Appellant: Ashish Kumar Srivastava

Counsel for Respondent: Mohd. Arif

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