Commercial Courts Act, 2015
Section 12A: Pre-Institution Mediation and Settlement
Updated: 14 September 2026
Meaning and scope of Section 12A
Section 12A appears in Chapter IIIA of the Commercial Courts Act, 2015. It applies to a suit concerning a commercial dispute of the specified value where the suit does not contemplate urgent interim relief.
A commercial dispute is defined in Section 2(1)(c) of the Act and covers the categories of commercial transactions listed there. Specified Value is defined in Section 2(1)(i), read with Section 12, and is not less than Rs. 3 lakh, subject to any higher value lawfully notified for the purpose.
The expression pre-institution mediation refers to mediation undertaken before institution of the commercial suit. The detailed procedure is governed by the Commercial Courts (Pre-Institution Mediation and Settlement) Rules, 2018.
Text of Section 12A of the Commercial Courts Act, 2015
(1) A suit, which does not contemplate any urgent interim relief under this Act, shall not be instituted unless the plaintiff exhausts the remedy of pre-institution mediation in accordance with such manner and procedure as may be prescribed by rules made by the Central Government.
(2) The Central Government may, by notification, authorise the Authorities constituted under the Legal Services Authorities Act, 1987 (39 of 1987), for the purposes of pre-institution mediation.
(3) Notwithstanding anything contained in the Legal Services Authorities Act, 1987 (39 of 1987), the Authority authorised by the Central Government under sub-section (2) shall complete the process of mediation within a period of three months from the date of application made by the plaintiff under sub-section (1):
Provided that the period of mediation may be extended for a further period of two months with the consent of the parties:
Provided further that, the period during which the parties remained occupied with the pre-institution mediation, such period shall not be computed for the purpose of limitation under the Limitation Act, 1963 (36 of 1963).
(4) If the parties to the commercial dispute arrive at a settlement, the same shall be reduced into writing and shall be signed by the parties to the dispute and the mediator.
(5) The settlement arrived at under this section shall have the same status and effect as if it is an arbitral award on agreed terms under sub-section (4) of section 30 of the Arbitration and Conciliation Act, 1996 (26 of 1996).
Legislative note: Section 12A was inserted by the Commercial Courts, Commercial Division and Commercial Appellate Division of High Courts (Amendment) Act, 2018 with effect from 3 May 2018.
Pre-Institution Mediation procedure under the 2018 Rules
The Commercial Courts (Pre-Institution Mediation and Settlement) Rules, 2018 prescribe the procedure for initiating and conducting mediation. The Rules provide for an application to the authorised Authority, notice to the opposite party, appointment of a mediator, conduct of mediation proceedings, settlement, non-settlement and prescribed fees.
| Stage | Key point |
|---|---|
| Application | The applicant approaches the authorised Authority in the prescribed form and manner under the 2018 Rules. |
| Notice | The Authority issues notice to the opposite party for participation in the mediation process. |
| Mediation | If the process proceeds, a mediator conducts the mediation in accordance with the Rules. |
| Time limit | Section 12A(3) provides three months from the application, extendable by a further two months with consent of the parties. |
| Settlement | A settlement must be reduced to writing and signed by the parties and the mediator. |
| No settlement | The mediation concludes without settlement and the plaintiff may proceed in accordance with law. |
Exception where urgent interim relief is contemplated
Section 12A(1) does not require pre-institution mediation where the suit genuinely contemplates urgent interim relief. The exception depends on the substance of the case and not merely on the drafting of an interim prayer.
The Supreme Court has clarified that a separate application seeking exemption or waiver is not, by itself, a statutory condition. The necessary basis for urgency may be shown through the plaint, documents and submissions. It has also clarified that the later refusal of interim relief does not automatically mean that the suit was wrongly instituted without pre-institution mediation, provided the urgency test was genuinely satisfied when the suit was brought.
Exclusion of mediation period for limitation
The second proviso to Section 12A(3) protects the plaintiff against loss of limitation time while the parties are engaged in pre-institution mediation. The period occupied by the mediation process is excluded when limitation is computed under the Limitation Act, 1963.
Legal effect of a settlement under Section 12A
If the parties settle the commercial dispute, Section 12A(4) requires the settlement to be put in writing and signed by the parties and the mediator. Under Section 12A(5), that settlement has the same status and effect as an arbitral award on agreed terms under Section 30(4) of the Arbitration and Conciliation Act, 1996.
Supreme Court position on mandatory pre-institution mediation
Patil Automation Pvt. Ltd. v. Rakheja Engineers Pvt. Ltd.
In Patil Automation Pvt. Ltd. v. Rakheja Engineers Pvt. Ltd., the Supreme Court held that Section 12A is mandatory where the suit does not contemplate urgent interim relief. For suits instituted on or after 20 August 2022, failure to comply with Section 12A can lead to rejection of the plaint under Order VII Rule 11 of the Code of Civil Procedure, 1908.
Yamini Manohar v. T.K.D. Keerthi
In Yamini Manohar v. T.K.D. Keerthi, the Supreme Court explained that the Commercial Court must examine whether urgent interim relief is genuinely contemplated. The urgent-relief prayer must not be a camouflage to avoid the statutory mediation requirement.
Dhanbad Fuels Pvt. Ltd. v. Union of India
In Dhanbad Fuels Pvt. Ltd. v. Union of India, decided on 15 May 2025, the Supreme Court reaffirmed the mandatory nature of Section 12A and clarified the treatment of suits instituted before and after 20 August 2022. It also clarified that a separate waiver application is not an independent statutory prerequisite where urgent interim relief is invoked.
For current litigation, the date of institution, the presence or absence of genuinely urgent interim relief, and compliance with the prescribed PIMS process should be examined before filing a commercial suit.
Relationship with the Mediation Act, 2023
The Mediation Act, 2023 provides a broader statutory framework for mediation. Its provision on pre-litigation mediation expressly preserves the special regime for commercial disputes of specified value: pre-litigation mediation in such commercial disputes is to be undertaken in accordance with Section 12A of the Commercial Courts Act, 2015 and the rules made under it.