Before you can file most commercial suits in India, you must first try to mediate. Section 12A of the Commercial Courts Act makes pre-institution mediation mandatory — with one exception, one Supreme Court ruling that settled the debate, and several practical drawbacks.
Why Section 12A exists
Inserted by amendment in 2018, Section 12A aims to ensure that before a commercial dispute reaches court, the parties attempt an alternative resolution — so that only genuine cases needing the court’s urgent attention are litigated.
What Section 12A requires
- A suit that does not contemplate urgent interim relief cannot be filed unless the plaintiff first exhausts pre-institution mediation.
- Mediation is run by the State Legal Services Authorities.
- It must be completed within three months, extendable by two months with consent.
- That period is excluded from limitation.
- A settlement is reduced to writing, signed by the parties and mediator, and has the status of an arbitral award on agreed terms.
The process (Pre-Institution Mediation Rules, 2018)
- Apply to the Authority on Form-1, online / by post / by hand, with a fee of ₹1,000.
- The Authority issues notice to the other party to appear and consent within ten days. Three outcomes:
- No response → a final notice issues.
- Refusal / no acknowledgement → treated as a non-starter, reported on Form-3.
- Request for time → an alternate date (within ten days); failing appearance, a non-starter.
- If both parties consent, the Authority assigns a mediator and fixes a date.
- The process is completed within three months (extendable by two with consent).
- A one-time mediation fee, shared equally, is payable based on the claim value.
Mandatory — Patil Automation
In Patil Automation Pvt. Ltd. v. Rakheja Engineers Pvt. Ltd. (2022), the Supreme Court held Section 12A mandatory: a suit filed in breach “must be visited with rejection of the plaint under Order 7 Rule 11” CPC.
The IP carve-out
The Delhi High Court has recognised that in IP cases affecting consumers and public interest, a plaintiff seeking urgent interim relief can be exempted. In Upgrad Education v. Intellipaat (2022), the court held that where an interim injunction is sought before the IP Division, leave to file directly is presumed from the language of Section 12A — though the court may still refer the matter to mediation. (See our related insight on pre-litigation mediation in IP matters.)
The drawbacks
- One-sided obligation. Only the plaintiff must initiate; the defendant can simply not participate, reducing mediation to a technical step.
- No choice of mediator. Parties cannot pick a mediator with subject-matter expertise, undermining trust in the process.
- A subjective escape hatch. “Urgent interim relief” is undefined and left to judicial discretion — so parties sometimes plead urgency mainly to bypass mediation.
Frequently asked questions
Is pre-litigation mediation mandatory in India? Yes, under Section 12A, for commercial suits that do not contemplate urgent interim relief — the Supreme Court confirmed this in Patil Automation.
How do I start the process? Apply to the State Legal Services Authority on Form-1 with a ₹1,000 fee; the Authority notices the other party and, on consent, assigns a mediator.
How long can it take? Three months, extendable by two with consent, excluded from limitation.
Can IP cases skip it? Where genuine urgent interim relief is sought, IP suits can be exempted — though a court may still refer the matter to mediation.
Legislation referred to
- Commercial Courts Act, 2015