Section 12A Mediation: Questions and Answers

For most suits, yes. The exception is a suit that seeks urgent interim relief. Section 12A requires pre-institution mediation through the Legal Services Authority, and the Supreme Court has held it's mandatory. Read more on pre-litigation mediation.

Only those that genuinely contemplate urgent interim relief. Under Section 12A of the Commercial Courts Act, a commercial suit that doesn't seek urgent interim relief can't be filed until the plaintiff has tried pre-institution mediation. The Supreme Court made this mandatory in Patil Automation v. Rakheja Engineers (2022). A plaint filed without it is liable to be rejected, for suits filed from 20 August 2022. Claims below Rs 3 lakh fall outside Section 12A altogether. So do disputes that aren't commercial. And a plain money claim on unpaid invoices? That almost always needs mediation first. See our guide on why Section 12A is mandatory.

Urgency that's real and visible on the face of the plaint. In Yamini Manohar v. T.K.D. Keerthi (2023), the Supreme Court said the court will look at the plaint, the documents and the facts to see whether urgent relief is genuinely contemplated. A prayer tacked on only to dodge mediation won't work. Genuine examples include an ongoing trade mark infringement, a debtor shifting stock or selling property, and a termination that's about to take effect. If you sat on the dispute for months before suing, you'll struggle to show urgency. See our page on interim injunctions.

You do. A legal notice is a private demand. Section 12A wants mediation through the Legal Services Authority notified for this purpose, and the Delhi High Court has refused to accept a legal notice in its place. The notice isn't wasted, mind you. It fixes the amount, puts the buyer's stand on record and often nudges the buyer into turning up for mediation. Send it. Then file the mediation application without sitting on it for weeks. Our page on pre-institution mediation sets out the steps.

You apply in Form 1 under the Commercial Courts (Pre-Institution Mediation and Settlement) Rules, 2018. The form asks for both parties' names and addresses, a short account of the dispute and the amount you're claiming. Attach copies of the main documents, such as the contract or purchase orders, invoices, ledger and legal notice, plus proof that you've paid the Rs 1,000 application fee. Delhi's Authority also wants the other side's email and mobile number, with an affidavit that they were in use recently, since notices go out electronically. Wrong contact details cause a lot of delay. Double-check them.

Go to the Authority for the place where you could actually file the suit. Rule 3 of the 2018 Rules makes the Authority look at territorial and pecuniary jurisdiction before it issues notice. That means the mediation should be before the Authority attached to a court that could hear your case. If part of the cause of action arose in Delhi (payment was due here, say), a Delhi DLSA may be right. If not, it should be Mumbai. Pick the court first and the Authority second. A mismatch hands the defendant an objection later. Our page on which commercial court helps with that choice.

In Delhi, if the suit will be filed on the High Court's original side, mediation goes to the Delhi High Court Legal Services Committee, not a district authority. District-level claims go to the DLSA of the district where the suit would lie. Form 1 and the application fee are the same either way. The district court's pecuniary limit for commercial suits can change, so check the current figure before you choose. And say clearly in the application which court you mean to approach. See mediation at the Legal Services Authority.

You pay the Rs 1,000 application fee when you file. The mediation fee is separate. It's a one-time amount set by a schedule in the 2018 Rules according to the claim's value, and both sides share it equally. It's generally collected only once the mediation actually starts. If the other side never shows and the Authority issues a non-starter report, you'll usually be out of pocket only for the application fee. The schedule can be revised, so check the current one with the Authority.

The Authority sends a notice in Form 2 by post and email (in Delhi, by WhatsApp as well), asking the other party to appear and consent to mediation. Under the 2018 Rules, the date fixed can't be more than 10 days from the notice. If the other side wants more time, it can get a fresh date within a further 10 days. Silence usually brings a final notice before the Authority closes the matter. Expect the notice stage to take a few weeks. Not months.

It's the Authority's report in Form 3 recording that the mediation never got going. You'll get one if the notice can't be served, if the other party refuses to take part, or if it doesn't turn up on the fixed date. With that report, you've complied with Section 12A. File your suit and attach it. The Delhi High Court has held that when the defendant refuses, the plaintiff needs to show nothing more than an honest start to the process. Keep the report safe. The registry looks for it during e-filing.

You aren't legally bound to attend. Staying away rarely helps, though. If you don't go, the Authority issues a non-starter report and the supplier can file its suit straight away. If you do go, you see the claim early, you can raise your own complaints (defective goods, late delivery, whatever they are) and you protect any counterclaim you may want to bring. Courts can also weigh a refusal of a reasonable settlement offer when they award costs. Advocate B.K. Singh's team can look at the notice for you. Reach us through the contact page.

Only up to a point. Section 12A(3) says mediation must finish within three months from your application. It can be extended by two months more, but only if both parties consent, so the other side can't stretch it past three months without your agreement. If you think the sessions are just a way to buy time, tell the mediator you won't consent to an extension, and ask for the failure report when the period ends. Then file.

When mediation happens but nobody settles, the mediator sends a failure report in Form 5 to the Authority, with copies to the parties. It records that mediation took place and didn't work. That report is your Section 12A compliance, and you can file the suit. Annex it. Put the mediation dates in the plaint too, because that period is excluded from limitation, and the court may need to see it before accepting that you're within time.

Send someone who can actually say yes. The 2018 Rules let a party appear in person or through an authorised representative or counsel. For a company, that means an officer who knows the account, carrying a board resolution or authority letter that expressly allows settlement, ideally up to a stated figure. Plenty of mediations stall because the person in the room has to phone management about every offer. Your lawyer can sit with the officer and handle the legal points, including how any settlement is worded.

Often it can. The Rules allow the application to be made online, and Delhi's legal services authorities have run pre-institution mediation by video conference when both sides agree. That's handy when the other party is in another city or abroad. Practice differs from one authority to another and changes over time. Ask when you apply whether sessions will be online, in person or a mix. Even on a video call, keep the authorised officer and the documents right there, so offers get answered on the spot.

Much the same way, except notice goes out electronically. The Authority can serve the foreign party by email, and sessions can be held by video if both agree. Give every email address and phone number used in your dealings, with proof the party actually used them. Foreign companies often don't respond at all. Then you get a non-starter report and can file. If you need urgent relief, for instance to stop goods being shipped out, you can go straight to court instead.

A trained person empanelled by the Legal Services Authority. Often that's a practising lawyer, sometimes a judicial officer. The mediator doesn't decide the dispute and won't give a binding view on who's right. The job is to get both sides talking, test their positions and find terms each can live with. Nothing binds you until both parties sign a settlement. If you think the mediator has a conflict, perhaps because they once acted for the other side, raise it with the Authority immediately.

It shouldn't. The 2018 Rules make mediation confidential for the mediator, the parties and their representatives, and sessions can't be recorded by audio, video or stenographer. That gives both sides room to make offers without having them treated as admissions. Be careful outside the sessions, though. Emails you send straight to the other party are a different matter. Route offers through the mediator, and mark any written proposal as made only for settlement.

Not for Section 12A, as the law stands. Today the section wants the mediation done by an Authority set up under the Legal Services Authorities Act, 1987. In practice that's the DLSA, the SLSA or the High Court Legal Services Committee. A private mediation can still get you a settlement. But if it fails, it won't satisfy Section 12A. The Mediation Act, 2023 amends Section 12A to allow mediation service providers too. When we last checked, that change hadn't been brought into force, so confirm the current position before you rely on it.

Not necessarily. The question is whether the plaint genuinely contemplated urgent relief when it was filed. Whether you finally got the injunction is a different matter. A court can turn down interim relief on the merits and still keep the suit alive. But if the judge decides the urgency was dressed up to get around mediation, the plaint can be rejected under Order VII Rule 11 of the Code. Set out the urgency facts precisely in the plaint, with dates. Make the reason for coming straight to court obvious on paper.

You can. The settlement in Form 4 can cover only what you agree on, the undisputed invoices for example, and leave the disputed debit notes open. The settled part binds both sides. For the rest, you can file a suit once mediation closes. Draft carefully. The settlement should say plainly which claims are settled and which are reserved, or the other side may later argue the whole account was closed. That's why Advocate B.K. Singh insists on a clear claims-reserved clause in every partial settlement.

It doesn't. Once the parties and the mediator sign, Section 12A(5) treats the settlement like an arbitral award on agreed terms under Section 30(4) of the Arbitration and Conciliation Act, 1996, with the same status and effect. No compromise decree, no court order. It's binding as it stands. If the other side doesn't honour it, you go straight to execution. Compare that with a private settlement made outside the process, where a breach usually means filing a fresh suit.

Execute the settlement as you would a decree. Because it has the status of an arbitral award, Section 36 of the Arbitration Act lets you enforce it through an execution petition in the court with jurisdiction. That's where tools like attachment of bank accounts and property come in. Don't delay filing, and keep a signed copy of the settlement handy. Drafting matters here too. A clause making the whole balance payable with interest the moment one instalment is missed saves a lot of argument. See our page on execution of a decree.

Only on narrow grounds. The settlement counts as an arbitral award, so a challenge has to come as a petition under Section 34 of the Arbitration Act, within three months of receiving it, with up to 30 more days for sufficient cause. The grounds include a party's incapacity, fraud or corruption, and conflict with public policy. Regretting the deal isn't one of them. Nobody gets to reopen the merits just because the terms now look poor. Check each signatory's identity and authority at the table. 'The signer had no authority' is a favourite line of attack.

File the mediation application today, and keep proof of when you did. Under Section 12A(3), whatever time the pre-institution mediation takes is left out when limitation is counted. The clock stops while your application is with the Authority. Skipping mediation and going to court works only where you really need urgent interim relief, and an approaching deadline isn't that by itself. Send the application by email or courier the same day. Save the acknowledgment. Our guide on limitation for recovery of money explains how the period is counted.

Section 12A doesn't set a separate deadline. The normal limitation period keeps running once mediation ends, because only the days spent in mediation are excluded. Say your claim had two months of limitation left when you applied. You then have roughly two months from the end of mediation to file. Work out the exact date the day the report reaches you. Don't leave it to the last week. Drafting and e-filing a commercial suit properly takes time.

It can't. Section 12A(3) pauses the clock only for a claim that was still alive on the day you applied. Once the three years had gone before you applied, mediation won't bring the claim back. Any suit you file later stays barred. Old claims are sometimes saved by a written acknowledgment of the debt, or a part payment, given while limitation was still running. That's Sections 18 and 19 of the Limitation Act. Still, if the debtor agrees to pay in mediation anyway, the signed settlement is enforceable.

It does. A dispute doesn't stop being commercial because the government is on one side, and Section 12A carves out no exemption for public bodies. If you're suing the government or a public officer, you'll also need a two-month notice under Section 80 of the Code. That notice isn't needed for a government company. The notice and the mediation application can run side by side. Government departments often don't appear, which ends in a non-starter report. The Delhi High Court has even upheld costs against a municipal body that filed its own commercial suit without mediation.

It can, but only through an officer who has sanction from the competent authority. Departments and PSUs usually need internal approval before agreeing to pay. Sometimes it's a committee. Sometimes it's the finance wing. Find out early in the mediation who approves and how long that takes, and agree to extend the mediation period by consent if you need to. A settlement signed by an officer without proper sanction invites a challenge later. Keep the sanction letter with the settlement.

It doesn't. Section 12A covers only the institution of commercial suits. Appeals are outside it. So is execution of a decree, and so are petitions under the Arbitration and Conciliation Act like Section 9 or Section 34, and arbitration itself. A decree holder can file for execution without mediation. A party with an arbitration clause goes to the arbitrator directly. And applications inside a suit that's already pending, attachment before judgment for instance, don't need fresh mediation either.

Small changes are fine. New claims are risky. Interest that keeps running up to the filing date will naturally push the suit amount higher, and that's expected. A completely new head of claim that was never put to the other side in mediation is a different story. It can draw the objection that Section 12A wasn't followed for that claim. The Delhi High Court has used this reasoning for counterclaims. Put every claim you might make, interest, damages and costs included, in the mediation application itself.

Include everyone you plan to sue. If the suit will name the company, its personal guarantor and a sister concern that took the goods, each of them should get notice of the mediation. Leave one out and that party has an argument that Section 12A wasn't followed against it. Bringing them all in sometimes gets the person who actually controls the money to the table. When Advocate B.K. Singh prepares a mediation application, the final list of defendants is the first thing he settles.

Rejection is unlikely. In Patil Automation, the Supreme Court applied the rule that plaints without Section 12A mediation must be rejected only from 20 August 2022, so earlier suits aren't thrown out on that ground. Courts have, however, sometimes sent older suits to mediation while keeping them pending. If yours is old and going nowhere, proposing mediation now may be worth it. A settlement reached there can be recorded by the court.