The Delhi High Court dismissed a commercial suit filed by Exclusive Capital Ltd., a Non-Banking Financial Company (NBFC), for non-compliance with the mandatory pre-institution mediation requirement under Section 12A(1) of the Commercial Courts Act, 2015.
The plaintiff sought declarations that an Inter-Corporate Loan Agreement (ICL) and an assignment deed between the defendants were forged and void. The suit also challenged the discharge of a corporate debt related to Asian Hotels (North) Ltd. and alleged fraudulent conduct involving forged documents and collusive actions. The NBFC argued that it was entitled to bypass mediation as it “contemplated urgent interim relief.”
However, the Court, led by Justice Purushaindra Kumar Kaurav, held that merely asserting urgency does not suffice to bypass the statutory mandate. Citing authoritative decisions including Patil Automation, Yamini Manohar, and Dhanbad Fuels, the Court emphasized that plaintiffs must demonstrate a bona fide and substantiated urgency from the perspective of the cause of action not just a formal prayer.
The Court also noted delays in filing the suit, curing defects, and absence of immediate steps after discovering the alleged fraud undermining the claim of urgency. It observed that allowing plaintiffs to sidestep mediation by simply appending interim relief prayers would defeat the legislative intent of promoting early, amicable dispute resolution in commercial cases.
Accordingly, the application under Section 12A seeking exemption was rejected, and the plaint was held to be not maintainable. The Court reiterates that commercial litigants cannot evade the mandatory pre-institution mediation process unless demonstrable urgency is evident from the pleadings and conduct.
Appearances:
Petitioner: Mr. Harish Malhotra and Mr. Dayan Krishnan, Sr. Advs. with Mr. Apoorv Agarwal, Mr. Manav Goyal, Ms. Ritika Gusain, Mr. Sukrit Seth, Ms. Amrita Sony and Ms. Aastha Arora, Advs.
Respondent: Mr. Rajiv Nayar, Sr. Adv. with Mr. Anirudh Sharma, Ms. Meghna Mishra, Mr. Tarun Sharma and Ms. Ujjwala Gupta, Advs. for D-1.
Mr. Rajiv Nayar, Sr. Adv. with Mr. Sanyam Khetarpal, Ms. Devika Mohan,
Ms. Sonal Gupta and Ms. Lisa Sankrit, Advs. for D-2.
Mr. Sidhant Kumar, Ms. Ekssha Kashyap and Ms. Shagun Chopra, Advs. for D-4.
Mr. Jayant Mehta, Sr. Adv. with Mr. Raghav Chadha, Mr. Mukund Rawat,
Mr. Nishant Upadhyay and Mr. Akash Mahwani, Advs. for the applicant in I.A. 14933/2025
