Section 12A of the Commercial Courts Act, 2015 requires a plaintiff to attempt pre-institution mediation before filing a commercial suit, except where the suit contemplates urgent interim relief. The Supreme Court had already held, in its earlier decision in Patil Automation Pvt. Ltd. v. Rakheja Engineers Pvt. Ltd., that this requirement is mandatory, and that a commercial suit instituted without first attempting such mediation is liable to be rejected under Order VII Rule 11 of the Code of Civil Procedure. What had remained less settled was how that rejection rule should apply to suits that had already been filed, without pre-institution mediation, before Patil Automation was decided.
In Dhanbad Fuels, the Supreme Court reconciled its earlier decisions and clarified that the rejection consequence recognised in Patil Automation operates prospectively rather than retrospectively. Specifically, the Court held that non-compliance with Section 12A will result in rejection of the plaint only for commercial suits instituted on or after 20 August 2022, the date by which the Court considered the mediation infrastructure and standard operating procedures to have become sufficiently operational across the country. For suits filed before that date without pre-institution mediation, the Court held that the appropriate course is not outright rejection, but for the court to keep the suit in abeyance and direct the parties to undertake mediation at that stage instead.
The Court's rationale rested on the practical unfairness of penalising litigants, with outright rejection of an otherwise validly pleaded suit, for failing to use a mediation mechanism that was not yet meaningfully functional at the time they filed. At the same time, the judgment reaffirmed, without qualification, that Section 12A itself remains mandatory going forward, and that the urgent-interim-relief exception continues to be construed narrowly rather than as a routine escape route from the mediation requirement.