Section 12A Pre-Institution Mediation: When You Must Mediate Before Suing, and When You Need Not

Since 2018, section 12A of the Commercial Courts Act, 2015 has said that a commercial suit “which does not contemplate any urgent interim relief” cannot be filed until the plaintiff has tried pre-institution mediation. For four years many litigants, and some courts, treated that as a formality. The Supreme Court has since made clear that it is not.

How pre-institution mediation works

• The plaintiff applies to the authority constituted under the Legal Services Authorities Act, 1987 (usually the District or State Legal Services Authority), which issues notice to the other side.
• If the other side does not appear or refuses to take part, the authority issues a non-starter report and the plaintiff can sue.
• Otherwise, mediation must be completed within three months, extendable by two months with the parties’ consent.
• A settlement is signed by the parties and the mediator, and has the same status and effect as an arbitral award on agreed terms.
• The period spent in mediation is excluded when computing limitation.

Mandatory, and with consequences

In Patil Automation v. Rakheja Engineers (17 August 2022), the Supreme Court held that section 12A is mandatory. A suit filed in breach of it, without seeking urgent interim relief, is liable to be rejected under Order VII, Rule 11 of the Code of Civil Procedure, and courts can do so on their own. The Court made its declaration effective from 20 August 2022, to protect suits already filed.

In Dhanbad Fuels v. Union of India (15 May 2025), the Supreme Court confirmed this position and explained what happens to older suits. A suit filed on or after 20 August 2022 without pre-institution mediation must be rejected. A suit filed before that date is not rejected for that reason; the court may instead keep it in abeyance and send the parties to time-bound mediation. And if the test for urgent interim relief is met, the suit can proceed without mediation even if the interim relief is eventually refused.

The urgent-relief exception

The exception is the plaintiff’s to invoke, but it is not a password. In Yamini Manohar v. T.K.D. Keerthi (2023), the Supreme Court held that a commercial court may examine the nature and subject matter of the suit, the cause of action and the prayer for interim relief to decide whether urgent relief is genuinely contemplated. A prayer for urgent relief cannot be a disguise or camouflage to avoid section 12A. At the same time, the test is not whether the plaintiff will ultimately win the interim application.

The Delhi High Court applied a similar approach in IP cases in Chandra Kishore Chaurasia v. R.A. Perfumery Works (2022), recognising that a continuing infringement of a trade mark can itself justify urgent interim relief, assessed from the plaintiff’s standpoint.

What this means in practice

1. Decide early whether you really need interim relief. If you do, the plaint and the interim application must show why, with evidence of the harm and of the urgency. A plaintiff who waited months before suing will find urgency harder to argue.
2. If you do not, use mediation properly. Three months of structured negotiation with a neutral mediator can settle a payment or supply dispute faster and more cheaply than a suit, and a settlement is enforceable like an award.
3. Do not let limitation run. Mediation time is excluded, but only once the application is made.
4. For IP owners, infringement suits usually do seek urgent injunctions, and courts accept that. Recovery claims under licence agreements usually do not.

Our commercial litigation and IP enforcement teams advise on which route fits the dispute.

This article is for general information and states the law as at 12 October 2026. It is not legal advice. For advice on your situation, contact the firm. Published by BRB Legal.