Is pre-institution mediation mandatory before filing a commercial dispute in India?

Question

I want to sue a business partner for a commercial dispute worth several lakhs and have been told I must attempt mediation first. I want to know if this is legally required. I have been reading conflicting things online and I would like to understand what Indian law actually says about this, which Act and Section applies, what the realistic timelines and costs are, and what I should be doing right now to protect my position. If the matter can be resolved without litigation I would prefer that route, but I want to know what my rights are before I agree to anything or sign any document.

MyVakeel Legal Desk · Accepted Answer

Is pre-institution mediation mandatory before filing a commercial dispute in India? is governed in India primarily by Commercial Courts Act 2015, Section 12A, Commercial Courts Act 2015, Section 2(1)(c) and Commercial Courts Act 2015, Section 12. The short answer is set out below, followed by the practical steps most people in this situation need to take. Read it alongside the specific provisions named, because the exact relief available to you turns on the facts you can prove on paper.

Section 12A of the Commercial Courts Act 2015 makes pre-institution mediation compulsory for any commercial dispute that does not contemplate urgent interim relief, before a suit can be instituted before a commercial court.

Section 2(1)(c) defines a commercial dispute broadly to include disputes arising from ordinary transactions of merchants, franchise agreements, distribution agreements, technology development contracts and similar business dealings above the specified value threshold.

Section 12 designates specific pecuniary thresholds and courts as commercial courts or commercial divisions of High Courts to handle these disputes on an expedited timeline with strict case management.

A suit filed without attempting the mandatory mediation, where interim relief is not genuinely urgent, is liable to be rejected at the threshold as not maintainable, as held by the Supreme Court in Patil Automation v Rakheja Engineers.

The mediation process under the Act is conducted by authorities notified under the Legal Services Authorities Act and must ordinarily be completed within three months, extendable by two months with party consent.

What to do next: 1) Check whether your dispute qualifies as a 'commercial dispute' above the specified value under the Act; 2) Apply for pre-institution mediation before the designated authority unless you genuinely need urgent interim relief; 3) Attend the mediation sessions in good faith to avoid the suit being challenged as premature later; 4) File the commercial suit promptly if mediation fails, attaching the non-settlement report.

If the other side has already issued a notice, filed a case or set a deadline, treat the matter as time-sensitive — most remedies under Commercial Courts Act 2015, Section 12A carry limitation periods, and a delay you cannot explain weakens an otherwise strong case. You can post the details on the MyVakeel forum for a practising advocate to review, or book a paid consultation with a Bar Council verified lawyer in this practice area.