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. Specifically, I want to know how Commercial Courts Act 2015, Section 12A applies to a situation like mine and what the corporate law position in India actually is. If there is a deadline I should be aware of, I need to know that now.

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. Outcomes in commercial courts act mediation disputes depend heavily on documentation, so check what you can actually evidence as you read.

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 you are unsure whether your facts fall inside Commercial Courts Act 2015, Section 12A, that is worth checking with an advocate before you commit to a route, because switching later costs time. 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 corporate law.