The Calcutta High Court upheld the mandatory nature of pre-litigation mediation under Section 12A of the Commercial Courts Act, revoking leave previously granted under Clause 12 of the Letters Patent where the plaintiff failed to demonstrate genuine urgent interim relief. The decision reinforces the court's discretion to balance convenience and to prevent abuse of forum-selection provisions.
Background & Facts
The Dispute
J K Engineering Private Limited (plaintiff) and ANE Industries Private Limited (defendant) are parties to a memorandum of understanding (MoU) dated 26 March 2013 for works to be carried out in Assam. The plaintiff’s registered office is in Gangtok, Sikkim; the defendant’s registered office is in Chandigarh Road, Punjab. The dispute concerns payment for the works and alleged breach of the MoU.
Key Facts
- 26 March 2013: MoU executed between the parties at the plaintiff’s corporate office on Gopalbandhu Sarani, Kolkata.
- 18 August 2016: Plaintiff filed the first suit (CS No.163 of 2016) in the non-commercial division.
- 19 August 2016: Plaintiff withdrew the first suit.
- Subsequent date 2016: Plaintiff filed the second suit (CS No.213 of 2016) on the same cause of action.
- December 2024: Division Bench order dated 03 December 2024 allowed plaintiff to withdraw the second suit and to institute a fresh suit within four weeks, granting benefit of Section 14 of the Limitation Act.
- 24 December 2024: Fresh suit filed before the Commercial Division.
- 6 January 2025: Coordinate Bench granted leave under Clause 12 of the Letters Patent and dispensation from pre-litigation mediation under Section 12A of the C.C. Act.
- 11 August 2025: Defendant filed the present application seeking revocation of the leave.
- 16 February 2026: Defendant’s senior counsel learned that the limitation ground should not be pressed at this stage.
- 25 February 2026: Defendant concluded submissions supporting revocation of the dispensation.
- 8 May 2026: Court reserved judgment.
- 28 July 2026: Judgment delivered.
Procedural History
- 18 August 2016: Original suit (CS No.163 of 2016) filed.
- 19 August 2016: First suit withdrawn.
- Date 2016: Second suit (CS No.213 of 2016) filed.
- 03 December 2024: Division Bench order permitting fresh suit within four weeks and stating that Section 14 of the Limitation Act would apply.
- 24 December 2024: Fresh suit instituted.
- 06 January 2025: Coordinate Bench granted leave under Clause 12 and dispensation from pre-litigation mediation.
- 11 August 2025: Defendant filed IA No.GA-COM/3/2025 seeking revocation of the leave.
- 16 February 2026: Defendant’s counsel noted limitation ground not to be pressed.
- 25 February 2026: Defendant’s final submissions filed.
- 08 May 2026: Judgment reserved.
- 28 July 2026: Judgment delivered.
Parties' Positions
- Defendant (applicant): Argues that Section 12A is mandatory, plaintiff has not shown genuine urgent interim relief, the leave was obtained to bypass statutory mediation, and that forum convenience favours Punjab.
- Plaintiff (respondent): Claims urgency due to prior judgment on admission (7 February 2019) and fear of asset alienation, relies on the Division Bench’s direction, and contends that the dispensation was properly exercised.
Relief Sought
- Defendant: Revocation of leave granted under Clause 12 of the Letters Patent; revocation of dispensation under Section 12A; dismissal of the suit as barred by limitation; stay of the suit pending the application; costs.
- Plaintiff: Confirmation that the leave and dispensation should stand; dismissal of the revocation application; costs.
The Legal Issue
Whether the leave granted under Clause 12 of the Letters Patent and the dispensation from pre-litigation mediation under Section 12A of the Commercial Courts Act should be revoked when the plaintiff’s pleadings do not demonstrate a genuine urgent interim relief, and how the court must balance forum convenience and the mandatory nature of Section 12A.
Arguments Presented
For the Defendant
- Section 12A is a mandatory statutory bar; non-compliance warrants rejection of the plaint.
- The plaintiff’s pleadings contain no specific statement of urgent interim relief; the claim of urgency is a pretext to avoid mediation.
- Balance of convenience lies with the defendant as the suit would be more conveniently tried in Punjab where the defendant’s business is located.
- Citing Supreme Court decisions (Patil Automation, Yamini Manohar, Dhanbad Fuels) that urgent relief must be evident from the plaint and cannot be a mere device.
- The practice direction 2021 requires a brief statement of reasons for not exhausting mediation; the plaint fails to comply.
For the Plaintiff
- The Division Bench’s order expressly granted liberty to institute the suit within four weeks, indicating urgency.
- Prior judgment on admission (7 February 2019) created a risk of asset dissipation, justifying urgent interim relief.
- The Coordinate Bench had already exercised discretion and granted leave on 6 January 2025 after considering urgency.
- The plaintiff argues that the revocation would defeat the purpose of the earlier judicial direction and cause injustice.
The Court's Analysis
The Court began by interpreting Section 12A of the Commercial Courts Act. It held that the provision imposes a clear, mandatory requirement that a commercial suit must first undergo pre-institution mediation unless the plaintiff can demonstrate a genuine urgent interim relief. The Court stressed that the statute does not define “urgent”, leaving the determination to judicial discretion, guided by precedent.
"Section 12A of C.C. Act provides that a suit, which does not contemplate any urgent interim relief under the Act, shall not be instituted unless the plaintiff exhausts the remedy of pre-institution mediation in the manner and mode prescribed under the proc edure."
The Court then examined the Supreme Court’s three-step test articulated in Patil Automation, Yamini Manohar and Dhanbad Fuels: (i) the plaint and annexures must show a real need for urgent relief; (ii) the urgency must be assessed holistically from the plaintiff’s standpoint; (iii) a mere anticipatory prayer cannot be used to sidestep mediation. Applying this test, the Court found that the plaintiff’s pleadings merely asserted urgency without furnishing concrete facts - no specific interim relief, no demonstration of imminent peril, and no supporting documentary evidence.
Next, the Court reconciled Section 12A with Rule 8 of the Practice Directions 2021, which authorises the court to dispense with mediation only upon leave when urgent relief is convincingly shown. The Court held that the Coordinate Bench’s earlier leave was valid only because, at that time, the plaintiff’s claim of urgency was accepted. However, the present application required a fresh assessment, and the plaintiff had failed to meet the stringent test.
The Court turned to Clause 12 of the Letters Patent, noting that it empowers the High Court to grant or revoke leave based on convenience and the extent of the cause of action within its territorial limits. Citing Madanlal Jalan and Ultra Engineering, the Court reiterated that balance of convenience is a material consideration, especially where the defendant would face substantial hardship defending the suit in Kolkata.
Considering the factual matrix - work performed in Assam, defendant’s business situated in Punjab, plaintiff’s registered office in Sikkim, and the existence of a parallel suit pending in Punjab - the Court concluded that the balance of convenience decidedly favoured the defendant. Moreover, the plaintiff’s failure to comply with the mandatory mediation requirement could not be cured by a mere assertion of urgency.
Consequently, the Court held that the leave granted on 6 January 2025 must be revoked, the dispensation under Section 12A set aside, and the plaint returned to the plaintiff with a direction to re-file in the appropriate commercial court in Punjab as an undefended suit.
The Verdict
The Court revoked the leave granted under Clause 12 of the Letters Patent and the dispensation from pre-litigation mediation under Section 12A of the Commercial Courts Act. The plaint was ordered to be returned to the plaintiff with court fees, and the plaintiff was directed to file the suit in the commercial court at Punjab as an undefended suit. The connected applications IA No.GA-COM/4/2025 and IA No.GA-COM/5/2026 were also disposed of.
What This Means For Similar Cases
Mandatory Pre-Litigation Mediation
- Practitioners must ensure that any commercial suit complies with Section 12A before filing, unless the plaint clearly demonstrates urgent interim relief.
- A generic claim of urgency without factual support will not satisfy the statutory test.
Assessing Urgent Interim Relief
- Courts will adopt the three-step test from Patil Automation, Yamini Manohar and Dhanbad Fuels: concrete need, holistic plaintiff-centred assessment, and avoidance of a device to bypass mediation.
- Oral submissions and annexed documents must collectively establish the urgency.
Forum Convenience and Clause 12
- When a part of the cause of action lies outside the High Court’s territorial limits, balance of convenience becomes decisive.
- Defendants can successfully seek revocation of leave if they demonstrate substantial hardship defending the suit in the High Court.
- Practitioners should be prepared to argue forum conveniens and may need to file in the jurisdiction where the majority of the cause of action and witnesses reside.
Practical Checklist for Lawyers
- Verify that the plaint contains a specific statement of urgent interim relief, supported by facts and documents.
- Ensure compliance with the Mediation Rules 2018 and the Practice Directions 2021 (Rule 8) before filing.
- Anticipate forum-convenience challenges; be ready to show why the chosen forum is appropriate.
- If leave under Clause 12 is granted, preserve a record of the court’s reasoning to defend against later revocation applications.
