No Absolute Right to Bypass Section 12-A by Citing Urgent Interim Relief Without Justifying Any Reasonable Ground: J&K High Court
Safiya Malik
The High Court of Jammu & Kashmir and Ladakh, Single Bench of Justice Moksha Khajuria Kazmi, dismissed a commercial suit filed under the Commercial Courts Act, 2015, on the ground that it failed to comply with the mandatory pre-institution mediation requirement prescribed under Section 12-A. The plaintiff sought urgent interim relief, including an injunction against encashment of a bank guarantee worth ₹8.94 crore, cancellation of tender and contract documents, and damages. The Court held that the plaintiff failed to establish any genuine or immediate cause for bypassing the mediation requirement. The plaint was rejected under Order VII Rule 11 of the Code of Civil Procedure.
The plaintiff, a corporate entity, approached the Commercial Division under Section 6 of the Commercial Courts Act, 2015, seeking, among other reliefs, cancellation of Tender No. 2023 AAI-172342_1 dated 28.10.2023, the Letter of Intent of Award dated 05.01.2024, and the Concession Agreement dated 05.02.2024, executed between the parties for operating food and beverage outlets at Srinagar International Airport. The plaintiff alleged that the contract had been vitiated by misrepresentation and fraud committed by the defendants, primarily the Airport Authority of India.
The plaintiff also prayed for a perpetual injunction restraining the defendants from initiating any coercive action, including invocation of a bank guarantee amounting to ₹8,94,89,000, and sought damages of ₹10,00,00,000 along with interest at 15% per annum.
According to the plaintiff, it had been assured that all concessionaire-managed locations would be handed over free from any encumbrance or litigation. Relying on such representations, the plaintiff submitted its bid, was declared successful, and executed the concession agreement. However, upon subsequent legal due diligence, the plaintiff discovered that several of the sites were still under the possession of the previous licensee, M/s Saptagiri Restaurant Pvt. Ltd. (SRPL), which was protected by judicial orders. Additionally, some of the designated spaces were reportedly overlapping with other areas under separate litigation or were otherwise encumbered.
The plaintiff claimed that instead of 17 locations promised under the Request for Proposal (RFP), the defendants had unilaterally created 22 sites, at least five of which were still with SRPL and not handed over. The plaintiff argued that it had been induced into executing an unenforceable contract based on fraudulent assurances, and that continued enforcement of such an agreement would lead to substantial financial losses.
The plaintiff asserted that the dispute was not arbitrable, as it concerned the validity of the underlying contract and the rights of third parties, such as SRPL. The arbitration clause also imposed a condition requiring the plaintiff to deposit 50% of the disputed amount before invoking arbitration. The plaintiff further submitted that pre-institution mediation would serve no useful purpose, particularly in light of the imminent risk of bank guarantee encashment and ongoing financial coercion by the defendants.
The application for dispensation of pre-institution mediation was filed under Section 12-A of the Commercial Courts Act, 2015, read with Section 151 of the Code of Civil Procedure, 1908. The plaintiff argued that the suit contemplated urgent interim relief and therefore fell within the statutory exception to the mediation requirement.
Justice Moksha Khajuria Kazmi examined whether the suit genuinely contemplated urgent interim relief within the meaning of Section 12-A of the Commercial Courts Act, 2015. The Court recorded that under Section 12-A(1), “a suit which does not contemplate any urgent interim relief under this Act shall not be instituted unless the plaintiff exhausts the remedy of pre-institution mediation.”
The Court noted that while the Act mandates mediation in all cases that do not involve urgent interim relief, plaintiffs often attempt to bypass this requirement by inserting interim relief prayers without substantive justification. It was recorded 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.”
The Court observed that the statutory language requires a commercial court to examine whether the nature of the suit, the cause of action, and the reliefs claimed actually involve urgency. It further noted that as per the Oxford Dictionary, the word “contemplate” means “to think carefully about something or the possibility of doing something,” and that “urgent” means “needing immediate attention.” The Court concluded that urgency must be evaluated from the standpoint of the plaintiff, but must be supported by facts.
The Court recorded the plaintiff’s main grounds for urgent relief, including the imminent risk of bank guarantee encashment, coercion to accept partial handover, and unjustified financial demands. However, it found these claims unsubstantiated. It stated that “the plaintiff herein has failed to convince this Commercial Division that his prayer for urgent interim relief is genuine.”
Referring to a copy of the communication dated 13.03.2025, the Court noted that a show-cause notice had been issued to the plaintiff for non-compliance with Article 10 of the concession agreement, but this notice was served after the suit was instituted on 11.03.2025. It recorded, “The plaintiff prima facie appears to have rushed to this Commercial Division in anticipation of the show cause notice dated 13.03.2025.”
The Court referred to the judgment of the Supreme Court in Patil Automation Pvt. Ltd. v. Rakheja Engineers Pvt. Ltd., 2022 Vol. 10 SCC 1, which held that Section 12-A is mandatory and pre-institution mediation is necessary unless the suit genuinely contemplates urgent interim relief. It quoted paragraph 100 of the said judgment, stating that the purpose of the provision is to prevent parties from “contending that the plaintiff is contemplating urgent interim relief, which in reality, it is found to be without any basis.”
Further, the Court cited Yamini Manohar v. T.K.D. Keerthi, wherein the Supreme Court held that the expression “contemplate any urgent interim relief” must be understood to mean that “the plaint, documents and facts should show and indicate the need for an urgent interim relief.” The Court observed that such a need was not evident in the present case.
The Court concluded that the commercial suit was barred by Section 12-A of the Commercial Courts Act, 2015, and liable to be rejected under Order VII Rule 11 of the Code of Civil Procedure. It recorded:
“In view of above discussion and reasoning in the plaint, suit stands rejected, and application is closed. There shall be no order as to costs.”
The Court preserved the plaintiff’s right to approach the Commercial Division with a similar suit in the future, provided that the plaintiff complies with the statutory requirement of pre-institution mediation. It stated:
“Before concluding, this Commercial Division thinks it appropriate to preserve the rights of the plaintiff to come before this Commercial Division with the similar or same suit, if the need arises after exhausting, pre-institution mediation as per the Act of 2015.”
The Court clarified that its findings would not affect any other proceedings that may be initiated against the plaintiff:
“It is made clear that this judgment will have no impact on other proceedings being initiated against the plaintiff, if any.”
Advocates Representing the Parties
For the Plaintiff: Mr. Anil Bhan, Senior Advocate, Mr. Danish Majid, Advocate
For the Defendants: Mr. Vikas Malik, Advocate
Case Title: M/s Devyani International Limited v. Airport Authority of India and others
Case Number: CS (OS) No. 01/2025
Bench: Justice Moksha Khajuria Kazmi
[Read/Download order]
