The division bench of the Supreme Court has held that Section 12A of the Commercial Courts Act, which mandates pre- institution mediation, is mandatory and suits which are filed violating this mandate are liable to be rejected.
The respondent filed a commercial suit under Order XXXVII of the CPC praying for the recovery of Rs. 1,00,40,291/- along with 12% interest on a certain sum against the appellant, M/S. Patil Automation Private Limited and Ors. The appellant filed an application under Order VII Rules 10 and 11 read with Sections 9 and 20 of the CPC, inter alia contending that the suit was filed without adhering to Section 12A of the Act. The trial Court had directed that the civil suit be kept in abeyance and the parties were to appear before the Secretary of the District Legal Services Authority for the purpose of mediation.
The appellant filed a Civil Revision Petition before the High Court of Punjab and Haryana; however, it confirmed the findings of the trial court. Hence the appellant filed an appeal before the Supreme Court. Before the Supreme Court, the appellants had sought the rejection of the plaint under Order VII Rule 11 CPC on the ground that the suit was filed by the respondents without exhausting the remedy of pre-litigation mediation.
The Coram of Mr. Justice K.M. Joseph and Mr. Justice Hrishikesh Roy observed that Section 12A cannot be described as a mere procedural law the amended in 2018, by which Section 12A was inserted, would make it clear that Parliament intended to give it a mandatory flavour.
The division bench has held that “we declare that Section 12A of the Act is mandatory and hold that any suit instituted violating the mandate of Section 12A must be visited with rejection of the plaint under Order VII Rule 11. This power can be exercised even suo moto by the court as explained earlier in the judgment”.
Adv. Mr. Sanjeev appeared for the appellant and Adv. Mr. Saket Sikri appeared for the respondent.
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