Introduction
Pre-institution mediation is an important feature of the commercial litigation framework in India. Section 12-A(1) of the Commercial Courts Act, 2015 (“said Act”) requires a plaintiff to exhaust pre-institution mediation before filing a commercial suit, unless the suit contemplates urgent interim relief.
In High Point Supply Company LLC vs. Agati Healthcare Private Limited (2026 SCC OnLine Bom 9115), the Bombay High Court has clarified the scope of this exception. The Court held that while pre-institution mediation is mandatory, the scope of examination envisaged under Section 12-A(1) of the said Act as to whether a suit genuinely contemplates urgent interim relief, is limited. At this stage, the Court is not required to look into factors which decide whether an interim relief on merits should be granted or not.
Facts
The Appellant, a US-based company, had entered into an Exclusive Distribution Agreement (“EDA”) with the Respondent under which it was appointed as the exclusive distributor of the Respondent’s product in North America until June 2026.
The Appellant alleged that the Respondent breached the EDA by supplying the product directly to another entity. The Respondent then issued a notice terminating the EDA. The Appellant filed a commercial suit seeking, inter alia, specific performance, a declaration challenging the termination, an injunction restraining further breaches of the exclusivity covenant and disclosure of sales allegedly made in breach of the EDA. The suit also included claims for damages.
The Respondent sought rejection of the plaint under Order VII Rule 11(d) of the Code of Civil Procedure, 1908 (“CPC”), contending that the Appellant had failed to comply with the provisions of Section 12-A(1) of the said Act. The Trial Court accepted this contention and rejected the plaint, holding that the Appellant had not demonstrated genuine urgency and that the dispute was substantially compensable in monetary terms.
Findings of the Bombay High Court
The Bombay High Court reaffirmed that Section 12-A(1) of the said Act is mandatory, except in cases where the suit genuinely contemplates urgent interim relief. This position was earlier recognised by the Supreme Court in Patil Automation Pvt. Ltd. vs. Rakheja Engineers Pvt. Ltd., (2022) 10 SCC 1.
The Court clarified that the enquiry under Section 12-A(1) is limited and jurisdictional in nature. The Court, at this stage, is not required to determine whether the plaintiff has established a case for grant of interim reliefs which involves consideration of existence of prima facie case, balance of convenience, irreparable damages and whether damages would be an adequate remedy. The question is whether, on a meaningful and holistic reading of the plaint, the documents annexed and the circumstances existing on the date of institution of the suit, there is a bona fide factual foundation for invoking the exception under Section 12-A(1).
In the present case, the alleged continuing breach of the exclusivity covenant and its continuing consequences provided a sufficient factual basis for the plea of urgency. The Court also held that the existence of monetary claims does not, by itself, negate urgency. A plaintiff may seek damages while simultaneously seeking specific performance or injunctive relief to protect contractual rights.
Similarly, delay in filing the suit is a relevant circumstance, but it is not conclusive. In the present case, the Appellant had explained the delay by referring to the requirement of obtaining an expert opinion on the applicable law of the State of Colorado and completing execution and notarization formalities in the United States. Accordingly, the Court held that the plaint disclosed a bona fide basis for urgent judicial intervention.
The Court set aside the order passed by the Trial Court rejecting the plaint, restored the suit and directed the Trial Court to consider the Interim Application independently on its merits.
Our Analysis
The judgment clarifies that the mandatory requirement of pre-institution mediation and the statutory exception for urgent interim relief must operate together. The exception cannot be invoked merely by including a routine prayer for injunction. The plaint, as a whole, must disclose specific facts demonstrating why immediate judicial intervention is required.
At the same time, the Court has drawn a clear distinction between two different enquiries (i) whether the factors for attracting the exception under Section 12-A(1) of the said Act exist, which is a jurisdictional question decided by looking at whether the plaint as a whole and the surrounding circumstances disclose a bona fide basis for urgent relief; and (ii) whether interim relief should actually be granted on merits. The latter is a separate enquiry involving existence of prima facie case, balance of convenience, irreparable injury and adequacy of damages. The Court cautioned that the first enquiry should not collapse in the second.
This decision is particularly relevant to commercial disputes involving exclusivity arrangements, continuing contractual breaches and other commercial rights where delay may prejudice the plaintiff’s position during the pendency of the proceedings. The decision is also significant where cross-border elements such as foreign law, execution of pleadings overseas, are involved.
This judgment thus reinforces that while pre-institution mediation remains the rule, genuine urgency must not be compromised by a procedural requirement where immediate judicial intervention is necessary to protect commercial rights.
Link to Judgment – Click here
