Commercial Courts Act- Section 12-A On Pre-Institution Mediation and Settlement Is Not A Mandatory Provision: Madras High Court

The Madras High Court held that Section 12-A of the Commercial Courts Act, isnot a mandatory provision. The Court delved into a thorough analysis of the provisions under Section 12-A on Pre-Institution Mediation and Settlement. It further analyzed the Rule 3(1) and 3(7) of the Commercial Courts Act, 2015 (Pre-Institution Mediation and Settlement) Rules, 2018. “Though, the word ‘shall’ in Section 12-A of the Act, sounds Prelitigation mediation is mandatory on the part of the plaintiff to explore Settlement before filing suit under Commercial Court Act, the Rule framed uses the word ‘Shall’ and makes it an optional,” the Bench held. “Also even if one party go for pre-litigation mediation the other party may conveniently abstain from participating in the mediation and make it a non-starter. Even otherwise, mediator can proceed only if the both the parties appear and give consent to participate in the mediation process”, it added. Thus, the Court found it to be very clear on a combined reading of the Commercial Courts Act and the Rules framed thereunder, that pre-litigation mediation was subject to urgency for any interim relief and the consent of the sparing parties. These observations were made by a Single Judge Bench of Justice Dr. G. Jayachandran while hearing a suit filed for recovery of money. The Court was hearing an application filed under Order XIV and Rule 8 of Original Side Rules read with Order VII Rule 11 of Civil Procedure Code seeking rejection of plaint at the threshold.