Patil Automation Private Limited v Rakheja Engineers Private Limited

Facts

• Patil Automation filed a commercial suit against Rakheja Engineers for recovery of money
• The suit did not involve any urgent interim relief
• Patil Automation did not attempt pre-institution mediation before filing
• Rakheja Engineers raised a preliminary objection that S.12A mandates mediation before filing
• The question was whether S.12A is mandatory or merely directory

Issue

1. Whether S.12A of the Commercial Courts Act, 2015 (requiring pre-institution mediation before filing a commercial suit) is mandatory or directory in nature.

Held

• Mandatory: S.12A is mandatory. The word "shall not be instituted unless" is imperative and leaves no discretion.
• Not maintainable: A commercial suit filed without exhausting pre-institution mediation (where no urgent interim relief is sought) is not maintainable.
• Pragmatic approach: However, courts should not mechanically reject the plaint. They may grant the plaintiff an opportunity to comply with S.12A (undertake mediation) and then resume the suit.
• Policy rationale: The object of S.12A is to decongest courts by ensuring mediation is attempted first. Treating it as directory would defeat this legislative purpose.

Ratio Decidendi

S.12A of the Commercial Courts Act is mandatory. Pre-institution mediation is a precondition to filing a commercial suit (unless urgent interim relief is needed). Non-compliance renders the suit not maintainable, but courts should grant opportunity to comply rather than rejecting outright.