Delhi HC issues notice in challenge to mandatory pre-suit mediation under Commercial Courts Ordinance, 2018

The Delhi High Court has issued notice in a petition challenging the premature introduction of Section 12A of the Commercial Courts, Commercial Division and Commercial Appellate Division of High Courts (Amendment) Ordinance, 2018..This provision mandates that parties first go for pre-institution mediation before resorting to litigation, when their commercial suits do not require urgent relief..The Bench of Justices Ravindra Bhat and AK Chawla on Monday issued notice in the petition filed by Daramic Battery Separator India Pvt. Ltd, through Advocate Vipul D Sundriyal..The grievance highlighted by the petitioner is that there is currently no mechanism in place for mandatory pre-institution mediation, effectively leaving one section of aggrieved parties remediless..This is despite the introduction of the 2018 Rules by the Central Government to carry out the pre-institution mediation. Further, a notification dated July 3 authorised the state and district legal services authorities to implement pre-institution mediation..On July 7, Acting Chief Justice of the Delhi High Court Gita Mittal issued a notification directing that District/Additional District judges would serve as commercial courts as an interim measure, dealing with commercial disputes valued between Rs 3 lakh and 1 crore..It can be noted that the Commercial Courts Act provides that commercial courts would deal with commercial suits not less than the specified value. The Act provides that the specified value should not be less than Rs 1 crore..However, the petitioner points out that the above Delhi High Court notification effectively brought down the pecuniary limit from Rs 1 crore to Rs 3 lakh..A dispute between the petitioner and Gem Batteries was valued within this threshold. Therefore, on July 11, a suit brought by the petitioner against Gem Batteries was listed for summary trial by the Additional District Judge, Saket..After the petitioners submitted that their suit did not contemplate any urgent relief, they were directed to avail the pre-institution mediation as mandated by Section 12A of the amended Commercial Courts Act..However, on approaching the legal services authority, the petitioner was informed that no mechanism had been introduced till date to deal with such mediation. This meant that the petitioner, and others who do not require urgent relief in their commercial suits, were left remediless..“…no set-up or mechanism exists there for any Pre-Institution Mediation whatsoever. There is no mechanism even to accept an Application for Pre-institution mediation as prescribed under the Rules. Because of these reasons, the Petitioner is now left with no remedy whatsoever.”.The mandatory provision of Section 12A was thus challenged, given that.The Government’s introduction of a law prescribing that a specific class of suits to go for pre-institution mediation without even creating a mechanism for the same is wholly arbitrary and unreasonable to the extent that it renders the present Petitioner without any remedy whatsoever. Thus, the said action is liable to be quashed for violating Article 14 of the Constitution.Such arbitrary action violates the petitioner’s right to initiate civil action against a person for civil wrong.The petitioner’s claim would also become barred by the law of limitation in due course. It is noted that the proviso to Section 12A exempts the mediation period when computing the limitation period. However, the proviso does not save the petitioner since he cannot even file an application for pre-institution mediation before any authority..The petitioner has prayed that the Court set aside Section 12A of the Commercial Courts Ordinance dated May 3, 2018, along with Commercial Courts (Pre-Institution Mediation and Settlement) Rules, 2018.