The Commercial Courts Act, 2015 was amended in 2018 to insert Section 12A, and the change was aimed squarely at a familiar problem: commercial suits filed the moment a dispute arose, with no attempt made to settle before the court file was opened. Section 12A now requires that attempt to happen first.
The provision is short. Its consequences, for a claimant who ignores it, are not. A plaint filed in breach of Section 12A is vulnerable to outright rejection, and that risk has hardened into settled practice since it was first tested.
What Section 12A requires
Section 12A(1) provides that a suit which does not contemplate any urgent interim relief shall not be instituted unless the plaintiff has exhausted the remedy of pre-institution mediation. The mediation is conducted under the authorities constituted for that purpose — ordinarily the concerned Legal Services Authority, or an authorised mediation centre — in accordance with rules framed for the purpose.
The mediation is to be completed within a defined period, with a possible extension by consent of the parties, and where a settlement is reached it is reduced to writing and signed by the parties and the mediator. A settlement so recorded has the same status and effect as an arbitral award on agreed terms, and it is enforceable in the same way — without the parties having to file a fresh suit to enforce it.
Which suits are covered
The requirement applies to commercial disputes as defined under the Commercial Courts Act — broadly, disputes arising out of ordinary transactions of merchants, bankers, financiers and traders, construction and infrastructure contracts, intellectual property disputes, joint venture and shareholder disputes, and similar categories — where the claim value meets the specified pecuniary threshold for a commercial suit.
It does not apply to every civil suit. It applies specifically to suits that would otherwise be filed before a Commercial Court, Commercial Division or Commercial Appellate Division. A straightforward civil recovery suit that does not meet the commercial-dispute definition, or does not meet the specified value threshold, sits outside Section 12A altogether.
The carve-out for urgent interim relief
The exception is narrow by design. A plaintiff may bypass mediation only where the suit contemplates urgent interim relief — typically an injunction to prevent an imminent breach, dissipation of assets, or some other harm that mediation’s timeline cannot accommodate.
The Supreme Court has made clear that this is not a door a claimant can open simply by asking for interim relief in the prayer clause. The court examines whether the urgency pleaded is real, and whether interim relief is genuinely necessary on the facts, before accepting that the case falls outside Section 12A.
How pre-institution mediation works
In practice, the process begins with an application to the relevant authority, ordinarily made online through the mediation portal maintained for this purpose. The other side is issued a notice and, if willing, appears for a mediation session; the process is confidential and without prejudice, so nothing said in mediation can later be used against a party in the suit.
If the other side does not appear despite notice, or the mediation otherwise concludes without settlement, a non-starter report or a report recording failure of mediation is issued. That report is what allows the plaintiff to then file the suit in the ordinary way — it is the document a court will expect to see filed along with the plaint.
Why courts scrutinise claims of urgency
The reason courts look closely at urgency is straightforward: if a bare assertion of urgency were enough to escape Section 12A, the provision would be optional at the plaintiff’s discretion, and mediation would never happen in contested matters — precisely the cases it is meant to reach.
Plead urgency honestly, or expect to be sent back
Where a court forms the view that the claim of urgent interim relief was not genuine — made only to avoid mediation — it can decline interim relief, and in some circumstances the suit itself has been found not maintainable for want of pre-institution mediation. Do not use the exception as a drafting device.
What happens if you skip it
Where Section 12A applied and was not complied with, the plaint is liable to be rejected under Order VII Rule 11 of the Code of Civil Procedure, 1908, for disclosing no cause of action that can presently be entertained. This is now settled law, and it is treated as a mandatory requirement rather than a mere procedural formality that a court may excuse.
Rejection under Order VII Rule 11 does not on its own bar the claim forever. A fresh suit can generally be filed once mediation has actually been exhausted. But the cost is real: time lost, court fees paid and potentially forfeited, and in some cases limitation running close in the interim.
Practical steps before filing
- Check whether the dispute is a commercial dispute within the meaning of the Act, and whether it meets the specified value threshold. If it does, assume Section 12A applies unless a genuine urgency exists.
- Do not manufacture urgency. If the facts do not support an injunction or comparable interim relief, plead the case honestly and go through mediation.
- File the mediation application promptly once a dispute crystallises. The process itself is not lengthy, and a failed mediation report is obtained relatively quickly where the other side does not engage.
- Keep an eye on limitation while mediation is pending; the period spent in mediation is excluded in computing limitation for the suit, but the underlying facts and evidence still need to be preserved.
- Use mediation seriously, not as a formality. A genuine settlement recorded at this stage is enforceable immediately, without the years a contested suit can take.
This is general information, not advice on your case
The law summarised above is stated as at the date of publication and applies differently to different facts. Nothing here creates an advocate–client relationship. If the subject affects you, speak to a lawyer about your own position — request a consultation or call +91 83685 88897.