No Absolute Right To Bypass Mandatory Pre-Litigation Mediation By Seeking Urgent Interim Relief Without Reasonable Grounds: J&K High Court

The Jammu and Kashmir High Court has held that under the Commercial Courts Act, a party does not have an absolute choice to bypass the statutorily mandated pre-litigation mediation by praying for interim relief without justifying the same with reasonable grounds. The court was dealing with the application seeking the dispensation of the mediation process under 12-A of the act on the ground that defendants had fraudulently induced the plaintiff into executing the contract by concealing material facts, and there was an imminent risk of encashment of bank guarantee deposited by the plaintiff by the defendants. A bench of Justice Moksha Khajuria Kazmi held that the plaintiff had failed to convince the court that his prayer for interim relief is genuine and justified by reasonable grounds. The court noted that the defendant to date, has not raised the issue of encashment of the bank guarantee but has tried to reach the settlement of the dispute, and it was the plaintiff who was trying to stall the proceedings. The plaintiff averred that he was conveyed that sites under the Concession Agreement would be handed over free of encumbrances, including any legal disputes, and that the earlier licensee would vacate the existing premises. However, not only was there a pending litigation by the earlier licensee, but also, the sites were not handed over. The court, however noted that the plaintiff was offered most of the locations for takeover, which he chose to refuse, reflecting his deliberate intention to get the agreement cancelled without getting the dispute resolved. The court said that section 12 A mandated that before the matter is agitated before the commercial court, the parties should seek the alternate dispute resolution mechanism in order to settle the dispute amicably so that genuine cases come before the court and the courts are also decongested. The court relied on Yamini Manohar v. T.K.D. Keerthi, wherein it was held that pre-litigation mediation is mandatory unless the suit contemplates an urgent interim relief. The Apex Court had observed that the words “contemplate any urgent interim relief” in the Act, with reference to the suit, should be read as conferring power on the court to be satisfied. They suggest that the suit must “contemplate”, which means that the plaint, documents and facts should show and indicate the need for an urgent interim relief. The court said that Apex Court has also ruled that the prayer for urgent interim relief should not be a disguise or mask to wriggle out of and get over Section 12 of the Commercial Court Act. BACKGROUND Plaintiff qualified as a successful bidder for the contract to run food and beverage outlets at Srinagar International Airport, believing they would get the promised spaces without any legal complications. However, after signing the agreement and paying a bank guarantee of nearly ₹9 crore, they discovered that several locations were tied up in ongoing legal disputes. The previous tenant, M/s Saptagiri Restaurant Pvt. Ltd. (SRPL), still had rights over some areas due to court orders, making it impossible for the Plaintiff to fully take over. Despite knowing about these legal issues, the defendant didn't disclose them and continued pressuring the plaintiff to accept partial handover while also adding unexpected financial burdens. Now, the plaintiff is arguing that the contract was based on misrepresentation and should not be enforced. They also claim that arbitration isn't an option because it can't resolve third-party rights like those of SRPL. The plaintiff filed an application seeking dispensation of the mediation seeking urgent legal relief. APPEARANCE: Mr Anil Bhan, Sr. Advocate with Mr Danish Majid, Advocate FOR PLAINTIFF Mr Vikas Malik, Advocate FOR DEFENDANT Case-Title: M/s Devyani International Limited vs Airport Authority of India and othersCitation: 2025 LiveLaw (JKL) 127Click Here To Read/Download The Order

No Absolute Right To Bypass Mandatory Pre-Litigation Mediation By Seeking Urgent Interim Relief Without Reasonable Grounds: J&K High Court

Aleem Syeed

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