Allahabad High Court Clarifies: Pre-Litigation Mediation Essential, Urgent Relief No Exception

Allahabad High Court Clarifies: Pre-Litigation Mediation Essential, Urgent Relief No Exception

The Allahabad High Court ruled that invoking urgent relief cannot bypass the pre-litigation mediation requirement mandated by Section 12A of the Commercial Courts Act, 2015.

Section 12A of the Commercial Courts Act, 2015 mandates that parties must first attempt pre-litigation mediation to resolve their disputes before filing a lawsuit unless the lawsuit seeks immediate and critical relief.

Relying on precedents from the Supreme Court and various High Courts, Justice Shekhar B. Saraf ruled that invoking urgent relief should not be a pretext to circumvent Section 12A of the Act. A thorough evaluation of each case's factual context and intricacies from the plaintiff's perspective is crucial. The Supreme Court's wisdom underlines that any attempt to disguise the true intent behind seeking such relief to avoid mandatory pre-litigation mediation warrants scrutiny, especially when clear evidence of duplicity exists.

The Court deemed Section 12A's pre-litigation mechanism a "gatekeeper," diverting disputes from overburdened court dockets to quicker resolution processes. This not only eases the strain on the judiciary but also ensures timely justice for the parties involved, ultimately enhancing the legal system's overall efficiency.

The appellant filed an original suit without seeking urgent relief. Though dismissed with permission to file afresh, their subsequent suit was rejected because they had not sought urgent relief in the first instance, rendering their later request "imaginary." The Court highlighted the mandatory nature of pre-litigation mediation under Section 12A of the Commercial Courts Act, 2015, asserting that both parties should have participated in this process.

The appellant's counsel argued that inherent urgency exists in all trademark suits, rendering compliance with Section 12A's pre-litigation mediation mandate unnecessary.

In contrast, the respondent's counsel stressed the distinct factual contexts between the judgments cited by the appellant and the present case, highlighting the absence of demonstrated urgency in this instance.

The Allahabad High Court noted that Section 12A serves a dual purpose: it relieves the strain on overburdened judicial systems through pre-litigation mediation, while still respecting party autonomy. This cost-effective and efficient method of dispute resolution is now mandatory, further easing the burden on courts.

In its ruling, the Court highlighted Section 12A of the Act as a cornerstone provision within the Indian commercial legal landscape. This section establishes a framework for pre-litigation mediation and settlement of commercial disputes, prioritizing mediation as the preferred method to resolve such disputes before they escalate into lengthy legal battles.

Citing the precedent set in Patil Automation Pvt. Ltd. and Others v. Rakheja Engineers Pvt. Ltd, the Court emphasised that Section 12A of the Act mandates pre-litigation mediation for commercial disputes. Failure to comply with this requirement, as highlighted in the Supreme Court ruling, results in the rejection of the plaint under Order VII Rule 11 of the Code of Civil Procedure, 1908.

The Court further reinforced its stance by citing the Calcutta High Court's decision in M/s Odisha Slurry Pipeline Infrastructure Ltd. and Another v. IDBI Bank Ltd. and Others. This case clarified that simply requesting urgent relief doesn't absolve parties from mandatory pre-litigation mediation under Section 12A of the Commercial Courts Act. Importantly, even if the court rejects the request for urgent relief, it can still dismiss the entire lawsuit for non-compliance with Section 12A.

The Court noted that the appellant initially filed a lawsuit without seeking urgent relief. Only in a subsequent suit did they request ex-parte urgent relief. Recognising non-compliance with Section 12A of the Commercial Courts Act, the Court overturned the lower court's dismissal of the complaint. Instead, it directed the appellant to approach the mediation centre within seven days.