Section 12A | Commercial Court Need Not Order Mediation Again | Substantial Compliance Achieved If Civil Court Referred Parties To Mediation Before Returning Suit: Karnataka High Court
Safiya Malik
The High Court of Karnataka Single Bench of Justice M. Nagaprasanna held that once mediation efforts had been initiated and failed in the civil court prior to transfer of the suit to a commercial court, the requirement of pre-institution mediation under Section 12A of the Commercial Courts Act, 2015 stood substantially complied with. The Court upheld the rejection of an application under Order VII Rule 11 of the Code of Civil Procedure, 1908 seeking dismissal of the commercial suit on grounds of non-compliance with Section 12A. The writ petition challenging the said order was accordingly dismissed.
The petitioners, who were defendants in a commercial dispute, filed the present writ petition challenging the order dated 28 February 2025 passed by the IV Additional District and Commercial Court, Mangaluru in Commercial O.S. No. 302 of 2024. The impugned order had dismissed their application under Order VII Rule 11 of the CPC seeking rejection of the plaint for alleged non-compliance with the mandatory requirement of pre-institution mediation under Section 12A of the Commercial Courts Act.
The dispute originated as a suit for delivery of vacant possession and arrears of rent, filed in O.S. No. 245 of 2023 by the respondent (plaintiff) before the civil court. The petitioners were tenants in the suit property. During the pendency of that suit, the matter was repeatedly adjourned over a period of four months from January to April 2024 on account of ongoing settlement discussions between the parties. The record showed that the proceedings were actively deferred to allow time for settlement, with the matter posted on multiple dates for the same purpose.
Eventually, the plaintiff sought time to lead evidence, and on 22 April 2024 the court recorded that no settlement had been reached. Subsequently, on 17 September 2024, the civil court passed an order on I.A. Nos. III and V, returning the plaint to be presented before the competent commercial court on the ground that the dispute fell within the meaning of a commercial dispute as defined under Section 2(1)(c)(vii) of the Commercial Courts Act. The plaint was returned and presented before the commercial court, where it was registered as Commercial O.S. No. 302 of 2024.
Before the commercial court, the petitioners filed an application under Order VII Rule 11 of the CPC, contending that the plaint was liable to be rejected for failure to comply with Section 12A of the Commercial Courts Act, which mandates pre-institution mediation in all commercial suits that do not seek urgent interim relief.
The commercial court dismissed the application. In its order, the court referred to precedents including the Supreme Court’s decision in Patil Automation Pvt. Ltd. v. Rakheja Engineers Pvt. Ltd., 2022 LiveLaw (SC) 678, which held that pre-institution mediation is mandatory and non-compliance must be visited with rejection of the plaint. However, the court also considered exceptions and evolving jurisprudence from other High Courts and Supreme Court rulings that recognized substantial compliance over formal compliance when mediation had in fact occurred before the case was converted to a commercial suit.
Citing decisions such as Yamini Manohar v. T.K.D. Keerthi, 2023 LiveLaw (SC) 906 and Sabita Jha v. Aaone Developers Pvt. Ltd., SLP (C) No. 7470 of 2025, the commercial court concluded that it would be unjust to compel the plaintiff to undertake mediation again, especially when prior mediation had taken place and failed.
The defendants then approached the High Court under Article 227 of the Constitution of India, seeking to quash the dismissal of their application under Order VII Rule 11.
The judgment recorded that Section 12A imposes a mandatory requirement of pre-institution mediation and settlement. It specifies that any suit not seeking urgent interim relief must not be instituted unless the plaintiff has first exhausted the remedy of such mediation.
The Court stated that the fundamental purpose of this provision is to prevent multiplicity of litigation and that if the parties are unable to settle before initiating the suit, they must be afforded a fair opportunity to attempt settlement.
Upon examining the statutory provision alongside the interpretations rendered by the Delhi High Court and the Supreme Court, the Court found that when a commercial original suit is instituted for the first time, the requirement under Section 12A becomes mandatory.
It was held that in the absence of compliance with pre-institution mediation and settlement, the commercial suit cannot be entertained.
However, where a suit is initially filed before a competent civil court and that court has already made efforts to mediate the dispute, and such efforts have failed, the commercial court is not required to recommence mediation proceedings under Section 12A when the plaint is subsequently filed before it.
The Court noted that in the present case, this sequence had occurred, and accordingly, it found no error in the order passed by the commercial court in rejecting the application under Order VII Rule 11 of the CPC.
It was further stated that there was no irregularity or miscarriage of justice in the order under challenge to warrant interference by the High Court under Article 227 of the Constitution of India.
The High Court concluded its judgment with the following final directive:
“The petition lacking in merit stands rejected.”
Advocates Representing the Parties
For the Petitioners: Sri Vigneshwar S. Shastri, Senior Advocate with Sri Dinesh Kumar Rao K., Advocate
For the Respondents: Sri Dhananjay V. Joshi, Senior Advocate with Sri Ajay Prabhu M., Advocate
Case Title: P. Vasudeva Kamath & Another v. Jayashri R. Kamath
Case Number: Writ Petition No. 9697 of 2025 (GM - CPC)
Bench: Justice M. Nagaprasanna
