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Exemption Under Section 12 A of Commercial Court Act 2015

Section 12 A of Commercial Court Act 2015 has been a subject of debate, specifically regarding the mandatory requirement for pre-institution mediation. The Hon'ble Supreme Court of India, in its judgment in the case of Patil Automation Private Limited and Ors. Vs Rakheja Engineers Private Limited (2022 SCC OnLine SC 1028), played a pivotal role in interpreting the applicability and necessity of pre-institution mediation under this section. This Judgement further clarification the Scope of Section 12 A of Coonercial Court Act 2025 in the case at hand.

Background of the case:
In the case at hand, the defendants/petitioners filed application under O 7 Rule 11 seeking rejection of suit C.S. (Comm.) No. 205/2022 on the ground that there was no application seeking exemption under Section 12A of Commercial Court Act 2015 . However, the Trial Court rejected this application under Order VII, Rule 11 of the Code of Civil Procedure, 1908. This led to the matter being brought before the Hon'ble Supreme Court for consideration.

Mandatory Pre-Institution Mediation:
In its earlier judgment in Patil Automation Private Limited and Ors. Vs Rakheja Engineers Private Limited, the Supreme Court held that Section 12 A of the Commercial Court Act 2015 mandates pre-litigation mediation. This mandate stands unless the suit contemplates urgent interim relief. This interpretation laid down a significant precedent regarding the requirement for mediation in commercial disputes.

No Requirement for Exemption Application:
One of the key aspects of the Supreme Court's interpretation was the clarification that Section 12 A does not contemplate seeking leave of the court, nor does it necessarily require an application seeking exemption from pre-institution mediation. The Court highlighted that the language and wording of the section do not impose such conditions. Instead, the provision primarily requires that pre-litigation mediation should be sought unless the suit specifically involves urgent interim relief.

The Court's View on Exemption Application:
The Supreme Court made it clear that while an application seeking a waiver based on grounds and reasons related to urgent interim relief can be beneficial and assist the court in making an informed decision, it is not a statutory mandate under Section 12 A of the Commercial Court Act. According to the Court's interpretation, the existence of such an application is not a precondition.

Application to the Present Case:
In the case in question, the Plaintiff sought urgent interim relief, meeting the condition that the plaint "contemplates" such relief. This fact satisfied the requirement of Section 12 A of the Commercial Court Act. Consequently, the Hon'ble Supreme Court upheld the impugned judgment/order of the Delhi High Court, which had, in turn, confirmed the order of the District Judge (Commercial Court)-01, South District at Saket, New Delhi. The Supreme Court's decision to dismiss the appeal reinforced the interpretation that Section 12 A of the Act does not mandate a formal exemption application and that the existence of urgent interim relief is the determining factor.

The Concluding Note:
The Supreme Court's interpretation in Patil Automation Private Limited and Ors. Vs Rakheja Engineers Private Limited has provided valuable clarity on the applicability of Section 12 A of the Commercial Court Act 2015. The judgment emphasizes that pre-institution mediation is mandatory unless the suit specifically contemplates urgent interim relief. Moreover, it clarifies that an application seeking exemption is not a statutory requirement.

The Case Law Discussed:
Case Title: Yamini Manohar Vs T.K.D.Keerthi
Date of Judgement/Order:13/10/2023
Case No. Special Leave Petition (Civil) Diary No(s). 32275/2023
Neutral Citation No: N.A.
Name of Hon'ble Court: Supreme Court of India
Name of Hon'ble Judge: Sanjeev Khanna and S.V.N.Bhatti, H.J.

Information and discussion contained herein is being shared in the public Interest. The same should not be treated as substitute for expert advice as it is subject to my subjectivity and may contain human errors in perception, interpretation and presentation of the fact and issue involved herein.

Written By: Advocate Ajay Amitabh Suman, IP Adjutor - Patent and Trademark Attorney
Email: [email protected], Ph no: 9990389539

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