# M/s Dhanbad Fuels Private Limited v. Union of India & Anr

- **Citation:** 2025 INSC 696
- **Court:** Supreme Court of India
- **Decided:** 2025-05-15
- **Case number:** Civil Appeal No. 6846 of 2025
- **Bench:** J.B. Pardiwala, R. Mahadevan
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/m-s-dhanbad-fuels-private-limited-v-union-of-india-anr-38942
- **Pages:** 40

## Headnote

Issue arose whether, due to non-compliance with s.12A of the
Commercial Courts Act, 2015, a suit should be dismissed u/Ord.
VII r.11 CPC, or whether it should be kept in abeyance, directing
the parties to first explore the possibility of settlement by instituting
mediation; and whether the High Court erred in passing the
impugned order, keeping the suit in abeyance and sending the
parties to mediation as per the PIMS Rules and the 2020 SOP.
Headnotes†
Commercial Courts Act, 2015 - s.12A - Pre-institution mediation
and settlement - Pre-institution mediation, if mandatory -
Prospective effect to declaration in Patil Automation's case -
Money suit by respondent Union of India in commercial court
for recovery of certain sum from appellant - No urgent interim
relief prayed for - Preliminary objection by appellant as
regards maintainability of the suit without availing the remedy
of pre-institution mediation u/s.12A - Interim application by
appellant u/Ord.VII r.11 seeking rejection of plaint - Commercial
court declining to reject the plaint, directed post-institution
mediation - In revision application, the High Court directed
the suit be kept in abeyance and parties to attend mediation -
Correctness:
Held: Approach adopted by High Court in keeping the suit in
abeyance and referring the parties to mediation, strikes a perfect
balance between the mandatory nature of s.12A as well as the
prospective applicability of the consequence of non-compliance
with s.12A as held in Patil Automation's case - Decision of this
Court in Patil Automation's case lays down the correct position of
law as regards s.12A by holding it to be mandatory in nature, which
* Author
432
[2025] 6 S.C.R.
Supreme Court Reports
relates back to the date of the Amending Act; and that any suit which
is instituted under the 2015 Act without complying with s.12A is
liable to be rejected u/Ord.VII r.11, however, this declaration applies
prospectively to suits instituted on or after the date of the decision
in Patil Automation's case, i.e., 20.08.2022 - Suits instituted without
complying with s.12A of the 2015 Act prior to 20.08.2022 cannot
be rejected u/Ord.VII r.11 on the ground of non-compliance with
s.12A unless they fall within the exceptions stipulated in Patil
Automation's case - In suits instituted without complying with
s.12A prior to 20.08.2022 which are pending adjudication before
the trial court, the court shall keep the suit in abeyance and refer
the parties to time-bound mediation in accordance with s.12A if
an objection is raised by the defendant by filing an application
u/Ord.VII r.11, or where any of the parties expresses an intent
to resolve the dispute by mediation - Respondent does not fall
under any of the exceptions and it cannot be said that bar of s.12A
would continue to apply to the money suit filed by respondents
despite there being a prospective declaration in Patil Automation's
case - Money suit was filed by the respondents much prior to the
decision in Patil Automation's case and it is squarely protected
by the prospective ruling - Harmoniously construing observations
in Patil Automation's case, it is clear that while s.12A is held to
be mandatory from the date of inception of the provision itself,
the consequence of rejection for non-compliance is only made
applicable prospectively - Trial court and High Court did not commit
any error in refusing to reject the plaint - Mediation proceedings
to be completed within the time frame stipulated by s.12A and
the PIMS Rules - Pre-Institution Mediation and Settlement
Rules, 2018 - Code of Civil Procedure, 1908 - Ord.VII r.11.
[Paras 46, 47, 58, 59, 62, 64]
Commercial Courts Act, 2015 - s.12A - Expression "urgent
interim relief" - Construction of:
Held: Suit which contemplates an urgent interim relief may be filed
under the 2015 Act without first resorting to mediation - Unlike
s.80(2) CPC, leave of the court not required to be obtained before
filing a suit without complying with s.12A - Test for "urge

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[2025] 6 S.C.R. 431 : 2025 INSC 696
M/s Dhanbad Fuels Private Limited
v.
Union of India & Anr.
(Civil Appeal No. 6846 of 2025)
15 May 2025
[J.B. Pardiwala* and R. Mahadevan, JJ.]
Issue for Consideration
Issue arose whether, due to non-compliance with s.12A of the
Commercial Courts Act, 2015, a suit should be dismissed u/Ord.
VII r.11 CPC, or whether it should be kept in abeyance, directing
the parties to first explore the possibility of settlement by instituting
mediation; and whether the High Court erred in passing the
impugned order, keeping the suit in abeyance and sending the
parties to mediation as per the PIMS Rules and the 2020 SOP.
Headnotes†
Commercial Courts Act, 2015 - s.12A - Pre-institution mediation
and settlement - Pre-institution mediation, if mandatory -
Prospective effect to declaration in Patil Automation's case -
Money suit by respondent Union of India in commercial court
for recovery of certain sum from appellant - No urgent interim
relief prayed for - Preliminary objection by appellant as
regards maintainability of the suit without availing the remedy
of pre-institution mediation u/s.12A - Interim application by
appellant u/Ord.VII r.11 seeking rejection of plaint - Commercial
court declining to reject the plaint, directed post-institution
mediation - In revision application, the High Court directed
the suit be kept in abeyance and parties to attend mediation -
Correctness:
Held: Approach adopted by High Court in keeping the suit in
abeyance and referring the parties to mediation, strikes a perfect
balance between the mandatory nature of s.12A as well as the
prospective applicability of the consequence of non-compliance
with s.12A as held in Patil Automation's case - Decision of this
Court in Patil Automation's case lays down the correct position of
law as regards s.12A by holding it to be mandatory in nature, which
* Author
432
[2025] 6 S.C.R.
Supreme Court Reports
relates back to the date of the Amending Act; and that any suit which
is instituted under the 2015 Act without complying with s.12A is
liable to be rejected u/Ord.VII r.11, however, this declaration applies
prospectively to suits instituted on or after the date of the decision
in Patil Automation's case, i.e., 20.08.2022 - Suits instituted without
complying with s.12A of the 2015 Act prior to 20.08.2022 cannot
be rejected u/Ord.VII r.11 on the ground of non-compliance with
s.12A unless they fall within the exceptions stipulated in Patil
Automation's case - In suits instituted without complying with
s.12A prior to 20.08.2022 which are pending adjudication before
the trial court, the court shall keep the suit in abeyance and refer
the parties to time-bound mediation in accordance with s.12A if
an objection is raised by the defendant by filing an application
u/Ord.VII r.11, or where any of the parties expresses an intent
to resolve the dispute by mediation - Respondent does not fall
under any of the exceptions and it cannot be said that bar of s.12A
would continue to apply to the money suit filed by respondents
despite there being a prospective declaration in Patil Automation's
case - Money suit was filed by the respondents much prior to the
decision in Patil Automation's case and it is squarely protected
by the prospective ruling - Harmoniously construing observations
in Patil Automation's case, it is clear that while s.12A is held to
be mandatory from the date of inception of the provision itself,
the consequence of rejection for non-compliance is only made
applicable prospectively - Trial court and High Court did not commit
any error in refusing to reject the plaint - Mediation proceedings
to be completed within the time frame stipulated by s.12A and
the PIMS Rules - Pre-Institution Mediation and Settlement
Rules, 2018 - Code of Civil Procedure, 1908 - Ord.VII r.11.
[Paras 46, 47, 58, 59, 62, 64]
Commercial Courts Act, 2015 - s.12A - Expression "urgent
interim relief" - Construction of:
Held: Suit which contemplates an urgent interim relief may be filed
under the 2015 Act without first resorting to mediation - Unlike
s.80(2) CPC, leave of the court not required to be obtained before
filing a suit without complying with s.12A - Test for "urgent interim
relief" is if on an examination of the nature and the subject-matter of
the suit and the cause of action, the prayer of urgent interim relief
by the plaintiff could be said to be contemplable when the matter
is seen from the standpoint of the plaintiff - Courts must also be
wary of the fact that the urgent interim relief must not be merely
[2025] 6 S.C.R.
433
M/s Dhanbad Fuels Private Limited v. Union of India & Anr.
an unfounded excuse by the plaintiff to bypass the mandatory
requirement of s.12A. [Para 62]
Commercial Courts Act, 2015 - s.12A - Equitable maxim lex
non cogit ad impossibilia - Meaning:
Held: Law does not compel an impossible performance - After the
establishment of Commercial Court at relevant place, the statutory
framework and corresponding rules were progressively implemented
until December 2020 - Thus, during this intervening period, referring
the matter to pre-suit mediation u/s.12A was impossible due to a
persisting vacuum created by lack of appointment of necessary
authorities and delineation of the procedural framework - Awaiting
the establishment of the requisite infrastructure would unduly
impede the recovery process in a money suit involving public
funds, thereby defeating the very purpose and legislative intent
of the 2015 Act, which aims to ensure the expeditious resolution
of commercial disputes - Declaration of the mandatory nature
of s.12A was given prospective effect in Patil Automation's case
keeping in mind the fact that s. 12A, being in its stages of infancy,
had given rise to conflicting views by different High Courts and
consequently an overall lack of clarity on the nature of the provision.
[Paras 49, 51, 52, 53]
Case Law Cited
Patil Automation Private Limited and Others v. Rakheja Engineers
Private Limited [2022] 11 SCR 808 : (2022) 10 SCC 1 - relied on.
I.C. Golaknath and others v. State of Panjab and Others [1967]
SCR 762 : AIR 1967 SC 1643; Raj Kumar Dey v. Tarapada Dey
[1988] 1 SCR 118 : (1987) 4 SCC 398; Madanuri Sri Rama Chandra
Murthy v. Syed Jalal [2017] 5 SCR 294 : (2017) 13 SCC 174; Popat
and Kotecha Property v. State Bank of India Staff Assn. [2005]
Supp. 2 SCR 1030 : (2005) 7 SCC 510; Yamini Manohar v. T.K.D.
Keerthi (2024) 5 SCC 815; U.P. SRTC v. Imtiaz Hussain [2005]
Supp. 5 SCR 725 : (2006) 1 SCC 380 - referred to.
Spectrum Plus Ltd., In re: (2005) 3 WLR 58 - referred to.
List of Acts
Code of Civil Procedure, 1908; Commercial Courts Act, 2015;
Pre-Institution Mediation and Settlement Rules, 2018; Limitation Act,
434
[2025] 6 S.C.R.
Supreme Court Reports
1963; Commercial Courts, Commercial Division and Commercial
Appellate Division of High Courts (Amendment) Act, 2018;
Arbitration and Conciliation Act, 1996.
List of Keywords
Rejection of plaint; Pre-institution mediation; Post-institution
mediation; Money suit; Recovery process in a money suit; Prospective
applicability; Lex non cogit ad impossibilia; Urgent interim relief;
Harmonious construction; Persisting vacuum created by lack of
appointment of necessary authorities; Expeditious resolution of
commercial disputes; Suit kept in abeyance; Explore possibility of
settlement by instituting mediation; Sending the parties to mediation;
Pre-institution mediation and settlement; Pre-institution mediation,
if mandatory; Prospective effect to declaration in Patil Automation's
case; Remedy of pre-institution mediation; Time-bound mediation.
Case Arising From
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 6846 of 2025
From the Judgment and Order dated 22.02.2021 of the High Court
at Calcutta in CO No. 1678 of 2020
Appearances for Parties
Advs. for the Appellant:
Vikas Singh, Pradip K.tarafder, Sr. Adv., Ms. Deepeika Kalia,
Ms. V. Singh, Sudeep Chandra, Shambudha Dutta, Mrs. Anjani
Aiyagari.
Advs. for the Respondents:
Tushar Mehta, Solicitor General, Ms. Archana Pathak Dave, A.S.G.,
Ms. Harshita Choubey, Sudarshan Lamba, Aaditya Dixit, Ms. Mili
Baxi, Bhuvan Kapoor.
Judgment / Order of the Supreme Court
Judgment
J.B. Pardiwala, J.
For the convenience of exposition, this judgment is divided into the
following parts:
[2025] 6 S.C.R.
435
M/s Dhanbad Fuels Private Limited v. Union of India & Anr.
INDEX*
A. FACTUAL MATRIX ..............................................................
2
B. SUBMISSIONS ON BEHALF OF THE APPELLANT .........
9
C. SUBMISSIONS ON BEHALF OF THE UNION OF INDIA ... 13
D. ANALYSIS ............................................................................ 19
i.
Legislative intent behind the enactment of Section 12A
of the 2015 Act ............................................................. 20
ii.
Section 12A of the 2015 Act is mandatory in nature .... 26
iii.
How the expression "urgent interim relief" is to be
construed ....................................................................... 35
iv.
The effect of according prospectivity to the declaration
in Patil Automation (supra) on cases like the one at
hand ............................................................................... 39
v.
The equitable maxim lex non cogit ad impossibilia ......... 41
E.
CONCLUSION ...................................................................... 49
1.
Leave granted.
2.
This appeal arises from the judgment and order passed by the High
Court at Calcutta on its appellate side dated 22.02.2021 in C.O.
No. 1678 of 2020 by which the High Court disposed of the revision
application filed by the appellant herein by directing that the suit
instituted by the respondent herein, i.e., Union of India, on 09.08.2019,
shall be kept in abeyance for seven months from the date of the
order or until the receipt of the report of the mediator, whichever is
earlier. In other words, the High Court proceeded to pass an order
keeping in mind Section 12A of the Commercial Courts Act, 2015
(for short, "the 2015 Act"), as amended in 2018.
* Ed. Note: Pagination as per the original Judgment.
436
[2025] 6 S.C.R.
Supreme Court Reports
A.
FACTUAL MATRIX
3.
The facts giving rise to this appeal may be summarised as under:
a.
The respondent Union of India instituted Money Suit No. 28 of
2019 on 09.08.2019 in the Commercial Court, Alipore against the
appellant herein for the recovery of a sum of Rs. 8,73,36,976/-
(Rupees Eight Crore, Seventy-Three Lakh, Thirty-Six Thousand,
Nine Hundred and Seventy-Six only) towards differential freight
and penalty. Indisputably, no urgent interim relief was prayed
for in the said suit.
b.
No sooner the suit referred to above came to be instituted
than the appellant herein, as defendant, raised a preliminary
objection in its written statement dated 20.12.2019 as regards
the maintainability of the suit without availing the remedy of
pre-institution mediation under Section 12A of the 2015 Act
read with Pre-Institution Mediation and Settlement Rules, 2018
(in short, "the PIMS Rules") which came into force with effect
from 03.07.2018.
c.
On 30.09.2020, the appellant herein preferred Interim Application
No. 190 of 2020 under Order VII Rule 11(d) of the Civil Procedure
Code, 1908 (for shot, the "CPC") read with Section 12A of the
2015 Act seeking rejection of the plaint, inter alia, on the ground
that the Money Suit No. 28 of 2019 suffered from institutional
defects and was violative of the mandatory provisions of preinstitution mediation.
d.
The Order VII Rule 11(d) application, referred to above, came
to be rejected by the Commercial Court vide order dated
21.12.2020. While rejecting the I.A. No. 190 of 2020 the
Commercial Court observed thus:
"13. Since the case has been filed on 09.08.2019 and
the present application has been filed at a belated
stage, I find there is no requirement to reject the suit
even for noncompliance of the mandatory provision
of Section 12A of the Commercial Courts Act, 2015,
otherwise, instead of aid in justice, the justice will
be more delayed.
14. Once the plaint has been accepted by this Court,
it would be presumed that the Court has no reason
[2025] 6 S.C.R.
437
M/s Dhanbad Fuels Private Limited v. Union of India & Anr.
whatsoever to reject the plaint and obviously, the
Defendant can raise this issue even at the time of
filing W/S but admittedly, the Defendant no. 1 filed
W/S even without taking the plea as now he has taken
and in that case, it would be presumed that they are
not also interested in the mediation proceedings.
15. This Court has been established on 05.07.2019
and within a month or more, the instant suit has been
filed and at this stage, there is no proper infrastructure
for conducting pre-litigation mediation and standard
operating procedure has also not been framed by
the Hon'ble High Court at Calcutta.
16. In the above circumstances, the plea as taken by
the Defendant no. 1/Petitioner is liable to be rejected
as filed at a belated stage.
17. It appears from the instant application that the
Defendant no. 1 is interested to proceed with the
mediation proceedings and accordingly, let the dispute
be referred to mediation and in such case also, the
interest of the Defendant no.1/Petitioner will not be
prejudiced.
18. Let the dispute be referred for mediation and
Mr. Jayanta Mukherjee, Ld. Member of the Bar is
appointed as the Mediator.
19. Both sides are directed to attend the mediation
proceedings on 04.01.2021 at 2 p.m., and thereafter,
the Ld. Mediator will fix further dates of proceedings
and for doing so, the Ld. Mediator can obtain
proposals for settlement from both sides.
20. The Ld. Mediator is further directed to complete
his proceedings within 11.01.2021 and to submit the
report alongwith the proposal if any, as submitted
by both parties in a separate sealed envelope for
consideration of this Court while awarding cost under
Section 35A of the CPC.
21. Accordingly, the instant I.A. is disposed of as
being rejected on contest."
438
[2025] 6 S.C.R.
Supreme Court Reports
e.
Thus, the Commercial Court while declining to reject the plaint
directed post-institution mediation by asking the parties to name
and appoint an advocate as a mediator.
f.
The appellant herein, being dissatisfied with the order passed
by the Commercial Court rejecting the application filed under
Order VII Rule 11(d) of the CPC, challenged the same before
the High Court by filing a civil revision application.
g.
The High Court disposed of the revision application, inter alia,
holding as under:
"15. In this case, the defendant filed the application
under Order VII Rule 11(d) of the Code of Civil
Procedure for rejection of the plaint as being barred by
law, the plaintiff having failed to initiate the process of
mediation under Section 12A of the said Act. However,
assuming that the plaint is rejected on this ground,
Order VII rule 13 would allow the plaintiff to file another
suit on the self same cause of action. Thus, in my
opinion, rejecting the plaint at this stage, would not
be in consonance with the objectives of the said Act
and Rules. The plaintiffs may face a non-starter or
a non-settlement and would have to come back and
file a suit once again. This will cause unnecessary
delay and shall not be cost effective even for the
defendant. Thus, considering the ultimate object
of the provision of law, this Court is of the opinion
that the suit which is at its early stage, be kept in
abeyance and the plaintiff be directed to comply with
the provisions of Section 12A. This order is further
passed keeping in mind the time and the situation
when the plaint was filed, that is, within a month after
the commercial division at Alipore had been made
operative. It is also true that until December, 2020, the
SOP and the meditation rules to be followed by the
Legal Services Authority Act, 1987 in West Bengal,
for conducting commercial mediations had not been
notified. The panel of trained mediators for commercial
suit was also prepared and published thereafter. Thus
the plaintiffs had sufficient reasons not to go for an
effective mediation as envisaged under the said Rules
[2025] 6 S.C.R.
439
M/s Dhanbad Fuels Private Limited v. Union of India & Anr.
in the absence of proper infrastructure. The situation
would have been otherwise, had there been proper
infrastructure in place.
16. The decision of the Calcutta High Court will not
apply as the decision was on the point of leave to file
the suit without exhausting the mediation process.
This Court is not dispensing with the requirement of
Section 12A but directing the plaintiff to comply with
the provision of law by keeping the suit in abeyance.
17. Mediation in India is still in its nascent stage and
requires more awareness. Prior to the publication
of the panel of trained mediators for settlement
of commercial disputes, there was no complete
machinery which could be availed. Settlement of
commercial disputes require special technical and
commercial knowledge.
18. Mandatory training for mediation of commercial
disputes is the minimum requirement for any mediator
to be appointed in terms of the said Rules. Commercial
disputes are very often technical in nature and may
involve knowledge in commercial law and business.
If such was not the case, a separate panel of such
mediators would not have been prepared. The Act
and the Rules have been framed with an object of
improving the "ease of doing business".
19. Section 12A of the Pre-Institution Mediation, is a
mere tool for reduction of pendency of commercial
litigation in India. However, the purpose of the said
Section 12A and the Rules cannot not be to nonsuit a
party but only to encourage the party seeking to file a
suit to first explore the possibility of settlement of the
dispute through mediation. Section 12A provides the
parties with an alternative mechanism to resolve their
disputes by negotiation in the presence of a mediator.
Such mediation has been made time bound and the
parties also have the liberty to move the commercial
court for adjudication of the dispute, if a mediation
results in a non-starter or the talks of settlement fail.
440
[2025] 6 S.C.R.
Supreme Court Reports
20. Thus the plaint should not be rejected at this stage
on the ground of non-compliance with Section 12A
of the said Act when the plaintiff can still be directed
to comply with the provisions of law by keeping the
suit in abeyance.
21. The instant case is a suit for recovery of money
filed by the Union of India for an amount over Rs.8
Crores. The alleged claim is for recovery of public
money. The allegation is illegal claim of concessional
rate of freight under Rate Circular No.24/2008,
30/2008 and 36/2009. The suit was filed, summons
were issued, the written statement was filed, case
management hearing was held. The defendant did
not show any inclination towards settlement of the
dispute by way of mediation. An application under
Order VII Rule 11 (a) of the Code of Civil Procedure
was filed by the defendant for rejection of the plaint
against the defendant No. 2 to 4. Noncompliance
with Section 12A was not raised by the defendant
in the said application. Thereafter, once the earlier
application was rejected, a subsequent application
under Order VII Rule 11(d) for rejection of the plaint
on the ground of noncompliance with Section 12A of
the said Act was again filed. The application was filed
on September 30, 2020, that is, more than a year
since the institution of the suit. Thus, the learned court
held that the suit should not fail for non-compliance
of Section 12A of the said Act. Rejection of the plaint
would result in delay in dispensation of justice, instead
of the court acting in aid of justice. In my opinion, this
was a correct approach, keeping in mind the objects
and reasons for establishing Commercial Courts, that
is, quick and easy resolution of disputes either by
settlement or in court. Yet, the obligation under the
law must be complied with. The learned court below
rightly directed the suit to be kept in abeyance. In my
opinion, the defendants will not suffer any prejudice.
The suit has not progressed beyond filing of the written
statement. Thereafter two consecutive applications
were filed by the defendant for rejection of the plaint.
[2025] 6 S.C.R.
441
M/s Dhanbad Fuels Private Limited v. Union of India & Anr.
It is also not the case of the defendant that they are
interested in settlement through mediation.
22. The decisions cited by Mr. Mitra are not applicable
in the facts of this case. The court can make an order
adjusting equities for satisfying the ends of justice as
it may deem fit while interpreting a procedural law
even if the same is couched with a negative covenant.
23. However, the learned court below erred in naming
the mediator himself, instead of directing the plaintiffs
to approach the State Legal Services Authority, West
Bengal, in terms of the 2018 Rules and the SOP
notified by the State of West Bengal in this regard.
24. The order impugned is set aside to the extent
of appointment of Mr. Jayanta Mukharjee learned
member of the bar as a mediator, and the direction
upon the parties to attend the mediation on the date
fixed by the learned court below and also further
directing the learned mediator to complete the
proceeding within January 11, 2021 and submit a
report before the learned court.
25. Hence, it is ordered that the suit be kept in
abeyance for seven months from date or until receipt
of the report of the learned mediator, whichever is
earlier. The plaintiffs are directed to approach the
District Legal Services Authority, West Bengal in
accordance with the Standard Operating Procedure
(SOP) dated December 11, 2020, mandatorily, within
two weeks from date. In case of default, the learned
court below shall be at liberty to pass such orders
in the suit for non-compliance of the order of court.
The Authority shall act in accordance with the said
Rules of 2018 and the SOP. The process is to be
completed within the period as prescribed by the Rule
3(8) of the Rules of 2018. The Mediator shall file the
report in such Form and manner as prescribed by
the Rules, before the learned court below within the
aforesaid period. The remuneration/fees etc. of the
learned Mediator will be fixed as per the SOP.
442
[2025] 6 S.C.R.
Supreme Court Reports
26. Upon receipt of the report from the Mediator, the
learned Commercial court will proceed according to
law. This revisional application is disposed of and
there shall be no order as to costs."
4.
In such circumstances referred to above, the appellant-original
defendant has come up before us with the present appeal.
B.
SUBMISSIONS ON BEHALF OF THE APPELLANT
5.
Mr. Vikas Singh, the learned Senior Counsel appearing for the
appellant, vehemently submitted that the High Court committed an
egregious error in declining to reject the plaint having regard to the
mandatory provision of Section 12A of the 2015 Act. According to
the learned counsel, the issue is squarely covered by the decision
of this Court in Patil Automation Private Limited and Others v.
Rakheja Engineers Private Limited reported in (2022) 10 SCC 1,
wherein this Court has said in so many words that Section 12A
of the 2015 Act is mandatory and any suit instituted violating the
mandate of Section 12A must be visited with rejection of the plaint
under Order VII Rule 11.
6.
The learned counsel laid much emphasis on the observations made
by this Court in Patil Automation (supra) as contained in paragraphs
103 and 114 of the judgment respectively. He would argue that in
Patil Automation (supra) this Court while holding on one hand that
it is crystal clear that the procedure provided under Section 12A of
the 2015 Act is mandatory, said on the other hand that in view of the
facts of Patil Automation (supra), where the trial had progressed
substantially, directed the parties to appear before the Secretary
District Legal Services Authority, Faridabad for mediation keeping
the suit alive and in abeyance. Taking a clue from the observations
made by this Court in paragraphs 103 and 114 of Patil Automation
(supra) respectively, the learned counsel submitted that the suit
in question is still at the initial stage and the same has been kept
in abeyance and has not progressed beyond filing of the written
statement. This, according to the learned counsel, would take the
suit in question out of the purview of the category where there has
been substantial progress in the suit. In other words, according to
the learned counsel, since there has been no progress worth the
name in the suit in question, the mandate of Section 12A will apply
with all force and the plaint ought to meet with the fate of rejection.
[2025] 6 S.C.R.
443
M/s Dhanbad Fuels Private Limited v. Union of India & Anr.
7.
The learned counsel submitted that this Court in Patil Automation
(supra) applied the principle of prospective overruling more particularly
for the purpose of issuing directions as contained in paragraph 113
and sub-paragraphs respectively thereof. Relying on the decision
of the Constitution Bench in I.C. Golaknath and others v. State of
Panjab and others reported in AIR 1967 SC 1643, more particularly
the observations made in paragraph 45 therein, the learned counsel
would submit that even while applying the doctrine of prospective
overruling the law laid down could be said to have been always the
same. If a subsequent decision changes the earlier one, the later
decision would not change the law but would only discover and lay
down the correct principle of law. According to the learned counsel,
if the suit is allowed to proceed further the same would amount to a
fresh litigation as it has not progressed beyond the initial stage and
has been under subsisting orders of stay since 2021.
8.
In such circumstances referred to above, according to the learned
counsel there remains no material distinction between a fresh suit if
filed today and the present suit sought to be revived from the state
of inception.
9.
The learned counsel laid much stress on his submission that the
suit in question would be governed by the declaration made by this
Court in Patil Automation (supra).
10. The learned counsel further submitted that while applying the
doctrine of prospective overruling, the House of Lords in the case
of Spectrum Plus Ltd., In re: reported in (2005) 3 WLR 58, has
held that prospective overruling takes several different forms. In
its simplest form prospective overruling involves a court giving a
ruling of the character sought by the bank in that case. Overruling
of this simple or "pure" type has the effect that the court's ruling
has an exclusively prospective effect. The ruling applies only to
transactions or happenings occurring after the date of court's decision.
All transactions entered into, or events occurring, before that date
continue to be governed by the law as it was conceived to be before
the court gave its ruling.
11. It was also argued that even otherwise since the suit has not
progressed beyond the initial stage the declaration made by this
Court in paragraph 104 of Patil Automation (supra) would apply
with all force. In paragraph 104 the Court observed, "They would
have to bring a fresh suit, no doubt after complying with Section 12A,
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as permitted under Order VII Rule 13. Moreover, the declaration of
law by this Court would relate back to the date of the Amending Act
of 2018". The same would be applicable in the present facts and
circumstances of the case.
12. In the last, the learned counsel submitted that if the suit is withdrawn
today and filed afresh after exploring the avenue of pre-institution
mediation, it would not, in any manner, give rise to the question of
limitation having been exhausted, since the plaintiff is the Central
Government, and the limitation to file the suit by Central Government
is 30 years under Article 112 of the schedule of the Limitation Act,
1963 (for short, "the Limitation Act").
13. In such circumstances referred to above, the learned counsel prayed
that there being merit in his appeal the same may be allowed and
the plaint be ordered to be rejected.
C.
SUBMISSIONS ON BEHALF OF THE UNION OF INDIA
14. Ms. Archana Pathak Dave, the learned Additional Solicitor General,
submitted that no error, not to speak of any error of law, could be
said to have been committed by the High Court in passing the
impugned order.
15. The learned ASG laid much emphasis on the fact that the suit instituted
by the Union of India for recovery of money from the appellant herein
should not fail in view of the purported non-compliance with Section
12A of the 2015 Act, more particularly, when the infrastructural
requirement for the mediation process was not completed and the
Standard Operating Procedure (SOP) came to be framed only on
11.02.2020.
16. The learned ASG submitted that there need not be any debate on the
point that Section 12A of the 2015 Act is mandatory. In other words,
Section 12A stipulates compulsory pre-suit mediation. She would
submit that the issue is no longer res integra in view of the decision
of this Court in Patil Automation (supra). However, according to the
learned ASG the law laid down by this Court in Patil Automation
(supra) should be applied prospectively with effect from 20.08.2022
as made clear in the decision itself.
17. The learned ASG provided us with a table to give a bird's eye view
of the timelines for insertion of Section 12A of the 2015 Act followed
[2025] 6 S.C.R.
445
M/s Dhanbad Fuels Private Limited v. Union of India & Anr.
by creation of the necessary infrastructure for implementation of the
provisions and the filing of the money suit by Union of India.
18. According to the learned ASG, the table would reveal that after the
establishment of the first Commercial Court in Alipore, the statutory
framework and corresponding rules were progressively implemented
till December 2020. According to her, the money suit instituted in
2019 could not have been referred to pre-suit mediation under
Section 12A due to persisting infrastructural vacuum created by lack
of appointment of necessary authorities/mediators and delineation
of the procedural framework for the same. The table provided by
the learned ASG reads thus:
Date
Insertion and subsequent
implementation of S.12A
Money Suit
03.05.2018
S. 12A was introduced by
way of amendment to the
2015 Act mandating pre-suit
mediation.
03.07.2018
Central Government notified
the PIMS Rules. Rule 3
requires a party to make an
application to the Authority
for initiation of mediation
process. The Central
Govt. further authorised
the State Authority and
District Authority constituted
under the Legal Services
Authorities Act, 1987 for the
purposes of pre-institution
mediation and settlement.
12.09.2018
The Central Govt. further
authorised the authorities
constituted under the Legal
Services Authorities Act,
1987 such as the National
and District Legal Services
Authorities for the purposes
of pre-institution mediation
and settlement.
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09.08.2019
Money Suit No. 28 of 2019
filed before the Commercial
Court by the respondents
seeking recovery of a sum of
INR 8,73,36,976 against the
appellant.
20.12.2019
The appellant filed its written
statement in the suit.
27.01.2020
A panel of trained mediators
for conducting pre-litigation
mediation in commercial
disputes was sent to the State
Legal Services Authority,
West Bengal.
30.09.2020
Appellant filed an application
under Order 7 Rule 11 of
the CPC seeking rejection
of the plaint after more than
one year of filing of the suit,
evincing that the same was
merely an afterthought with
the purpose of negating the
suit.
14.10.2020
The SOP was prepared by
the State Legal Services
Authority.
11.12.2020
The SOP was approved
19. The learned ASG submitted that although the first commercial
court was established at Alipore on 05.07.2019, yet the institutional
infrastructure for pre-suit mediation was not in place until much later.
This is because the panel of trained mediators was prepared only on
27.01.2020 followed by approval of the SOP on 21.12.2020. As such,
when the Union of India instituted the Money Suit on 09.08.2019, the
requisite infrastructure for conducting pre-suit mediation was not yet
established thereby making compliance with Section 12A impossible.
20. The learned ASG tried to fortify her submission by relying on the
equitable maxim lex non cogit ad impossibilia, i.e., law does not
compel an impossible performance. In this regard, the learned ASG
placed reliance on the decision of this Court in the case of Raj
[2025] 6 S.C.R.
447
M/s Dhanbad Fuels Private Limited v. Union of India & Anr.
Kumar Dey v. Tarapada Dey reported in (1987) 4 SCC 398, more
particularly, the observations made in paragraph 6 therein.
21. The learned ASG submitted that taking advantage of this administrative
vacuum, the appellant should not be allowed to defeat the money
suit under the garb of non-compliance. Section 12A, at its nascent
stage was not a feasible course. If settlement through mediation is
truly the real objective and intention of the petitioner, the same may
be fully achieved by the impugned order.
22. It was further submitted that had Union of India awaited the
establishment of the requisite infrastructure, the same would have
unduly impeded the recovery process in a money suit involving
public funds, thereby defeating the very purpose and legislative
intent of the 2015 Act, which aims to ensure expeditious resolution
of commercial disputes.
23. In the last the learned ASG submitted that if the money suit instituted
by the Union of India is dismissed on the ground of Section 12A of
the 2015 Act, the Union of India would still have the opportunity to
file another suit on the same cause of action under Order VII Rule
13 of the CPC and the process would have to start afresh. The
court fees would also have to be deposited for the fresh suit. Such
delay and protraction of the suit proceedings would be contrary to
the very objective of the 2015 Act and the same may lead the public
exchequer to suffer.
24. In such circumstances referred to above, the learned ASG prayed
that there being no merit in this appeal, the same may be dismissed.
D.
ANALYSIS
25. Having heard the learned counsel appearing for the parties and
having gone through the materials on record, two questions fall for
our consideration:
a.
Whether the High Court committed any error in passing the
impugned order; and
b.
Whether, due to non-compliance with Section 12A of the
Commercial Courts Act, 2015, a suit should be dismissed under
Order VII Rule 11 of the Code of Civil Procedure, 1908, or
whether it should be kept in abeyance, directing the parties to
first explore the possibility of settlement by instituting mediation?
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i.
Legislative intent behind the enactment of Section 12A of
the 2015 Act
26. Before adverting to the rival submissions canvassed on either side,
we must look into few relevant provisions of law.
27. Section 12A of the 2015 Act reads as follows:
"12-A. Pre-institution mediation and settlement.-(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)."
[2025] 6 S.C.R.
449
M/s Dhanbad Fuels Private Limited v. Union of India & Anr.
28. At the time of enactment of the 2015 Act, the monetary limit for a suit
liable to be tried by the Commercial Court was fixed at Rs 1 crore.
29. In the course of three years, noticing certain features, the legislature
decided to amend the 2015 Act. Therefore, in the year 2018,
the 2015 Act came to be amended by the Commercial Courts,
Commercial Division and Commercial Appellate Division of High
Courts (Amendment) Act, 2018 (Act 28 of 2018) (hereinafter referred
to as "the Amending Act").
30. It is apposite that we notice the Statement of Objects and Reasons
of the Amending Act:
"Statement of Objects and Reasons.-The Commercial
Courts, Commercial Division and Commercial Appellate
Division of High Courts Act, 2015 was enacted for the
constitution of Commercial Courts, Commercial Division
and Commercial Appellate Division in the High Courts for
adjudicating commercial disputes of specified value and
for matters connected therewith or incidental thereto.
2. The global economic environment has since become
increasingly competitive and to attract business at
international level, India needs to further improve its ranking
in the World Bank "Doing Business Report" which, inter alia,
considers the dispute resolution environment in the country
as one of the parameters for doing business. Further,
the tremendous economic development has ushered in
enormous commercial activities in the country including
foreign direct investments, public private partnership,
etc. which has prompted initiating legislative measures
for speedy settlement of commercial disputes, widen the
scope of the courts to deal with commercial disputes and
facilitate ease of doing business. Needless to say that
early resolution of commercial disputes of even lesser
value creates a positive image amongst the investors
about the strong and responsive Indian legal system. It
is, therefore, proposed to amend the Commercial Courts,
Commercial Division and Commercial Appellate Division
of High Courts Act, 2015.
3. As Parliament was not in session and immediate action
was required to be taken to make necessary amendments
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in the Commercial Courts, Commercial Division and
Commercial Appellate Division of High Courts Act, 2015,
to further improve India's ranking in the "Doing Business
Report", the President promulgated the Commercial Courts,
Commercial Division and Commercial Appellate Division of
High Courts (Amendment) Ordinance, 2018 on 3-5-2018.
4.