The pre-institution mediation under Section 12A of The Commercial Courts Act, 2015 (“the Act”)[1] has emerged as a significant pre-requisite in commercial disputes. Since implementation of this provision, the judiciary has invested considerable time to interpret and clarify the mandatory nature of this provision. It is unequivocal that mediation proceedings ought to be conducted in the appropriate jurisdiction.

The present article draws attention to the legal framework laying down the jurisdictional requirement for conducting mediation. It also specifies the practical implications of selecting the appropriate jurisdiction for initiating pre-institution mediation which are significant as it affects enforceability, legal strategy and also convenience of parties involved. This often-overlooked jurisdictional requirement can have serious consequences on the validity and continuity of subsequent legal proceedings.

Law as settled on the mandatory nature of compliance to Section 12A.

Section 12A (1) of the Act states that a suit shall not be instituted unless the remedy of pre-institution mediation has been exhausted, the only exception, being where the plaintiff seeks an urgent relief. The usage of the words “shall not” clearly indicates that compliance with Section 12A of the Act is mandatory in nature.

The Hon’ble Supreme Court of India, in Patil Automation Pvt. Ltd. v. Rakheja Engineers Private Limited, (2022) 10 SCC 1, reinforced the mandatory nature of compliance to Section 12A of the Act with finality. It held that a failure to comply with this statutory requirement shall result in the rejection of the plaint under Order VII, Rule 11 of the Code of Civil Procedure, 1908.[2] This judgment is binding law, having settled the position of law with the objective of reducing judicial backlog and strengthening alternative dispute resolution mechanisms in India.[3]

However, vide order dated 07.02.2025, a coordinate bench of the Hon’ble Supreme Court of India in Novenco Building and Industry A/S v. Xero Energy Engineering Solutions Pvt. Ltd. & Anr., SLP (C) 2753/2025 formulated the question for consideration that whether a suit shall be dismissed under Order VII, Rule 11 of the Code of Civil Procedure, 1908 due to non-compliance of Section 12A of the Act, or whether the parties should be directed to explore the possibility of settlement through mediation. However, the order passed in the Novenco case is an interim order applicable only to the facts of that particular case and for the parties involved, with limited precedential value. Thus, unless overruled by a larger bench, the decision in Patil Automation lays down the settled position of law.

Statutory exception to mandatory compliance to Section 12A of the Act.

In cases wherein a plaintiff is seeking an urgent relief, the compliance to Section 12A of the Act may be done away with as per Section 12A (1) of the Act. This position was recently affirmed by the High Court at Calcutta, in Haldibari Tea Manufacturers LLP & Anr. v. Mahindra Tubes Limited & Ors., in case no. CO 204 of 2024, wherein it was held that a commercial suit may bypass the mandatory requirement of pre-institution mediation under Section 12A of the Act, if the plaint, at the time of institution, genuinely contemplates urgent interim relief.

Amendment to Section 12A by the Mediation Act, 2023.

It is worth mentioning that Section 12A of the Act was recently amended by Section 64 read with the Ninth Schedule of the Mediation Act, 2023,[4] broadening the framework by allowing mediation to be conducted not only by Legal Services Authorities but also under the Mediation Act, 2023. It also extends the mediation period to 120 days, with a further 60-day extension, and brings mediated settlements under the enforcement mechanism prescribed by Sections 27 and 28 of the Mediation Act.

However, since the amended provision has not yet been notified, the original, unamended Section 12A continues to apply as on date.

Legal framework prescribing territorial jurisdiction for pre-institution mediation proceedings under the Act and the Mediation Act, 2023.

To determine the appropriate territorial jurisdiction for conducting pre-institution mediation, the relevant legal framework includes the Act, the Commercial Courts (Pre-Institution Mediation and Settlement) Rules, 2018 and the Mediation Act, 2023. These may be read in conjunction with Sections 16 to 20 of the Code of Civil Procedure, 1908, which lay down the principles of territorial jurisdiction. As such, Section 16 of the Act specifically provides that the Code of Civil Procedure, 1908, as amended by the Act, shall apply to commercial disputes.[5]

Firstly, Rule 3(2) of the Commercial Courts (Pre-Institution Mediation and Settlement) Rules, 2018, states that

“The Authority shall, having regard to the territorial and pecuniary jurisdiction and the nature of commercial dispute, issue a notice, as per Form-2 specified in Schedule-I…”

(emphasis supplied)

Secondly, Section 13 of the Mediation Act, 2023 may be referred:[6]

“13. Every mediation under this Act shall be undertaken within the territorial jurisdiction of the court or tribunal of competent jurisdiction to decide the subject matter of dispute:

Provided that on the mutual consent of the parties, mediation may be conducted at any place outside the territorial jurisdiction of the court or tribunal, or by way of online mediation.

Explanation.— For the removal of doubts, it is clarified that where the parties agree to conduct the mediation at any place outside the territorial jurisdiction or online, for the purpose of enforcement, challenge and registration of the mediated settlement agreement, the same shall be deemed to have been undertaken within the territorial jurisdiction of the court or tribunal of competent jurisdiction.”

The above provision indicates that even if the parties choose to conduct mediation outside the territorial jurisdiction—whether in another location or online—the registration, enforcement and challenge to the mediated settlement agreement shall be deemed to have been undertaken before the court or tribunal that has proper territorial jurisdiction, reinforcing the need for conducting proceedings in appropriate jurisdiction.

Thirdly, proviso to Section 20 of the Mediation Act, 2023[7] reinforces the jurisdictional requirement by stating that a mediated settlement may be registered within the territorial jurisdiction of the court or tribunal competent to decide the subject matter of dispute. [8] This implies that mediation itself must be conducted within the appropriate forum, ensuring enforceability and consistency with established principles of jurisdiction.

Hence, from the abovementioned provisions, it is clear that mediation ought to be conducted within the appropriate territorial jurisdiction with respect to the dispute. The proviso to Section 13 of the Mediation Act, 2023 empowers the parties to conduct mediation beyond the territorial jurisdiction based on their mutual consent. Thus, without seeking consent of parties, no proceedings for mediation can be conducted in an alternate jurisdiction.

Significance of territorial jurisdiction for pre-institution mediation proceedings.

While the conduct of pre-institution mediation is mandatory in nature, it is significant that such proceedings are conducted within the appropriate territorial jurisdiction.

The Hon’ble Supreme Court, in Kanwar Singh Saini v. High Court of Delhi (2012) 4 SCC 307, held that any order or decree passed by a court lacking jurisdiction is a nullity.

A settlement arrived at through pre-institution mediation under Section 12A of the Act carries the same force as a civil court decree. Section 12A (5) of the Act explicitly states that a settlement shall have the same status and effect as an arbitral award on agreed terms under Section 30(4) of the Arbitration and Conciliation Act, 1996 (“Arbitration Act”). In turn, Section 30(4) provides that an arbitral award on agreed terms shall have the status and effect of any other arbitral award on the substance of the dispute.[9] Furthermore, Section 35 of the Arbitration Act states that an award is final and binding on the parties.[10] Section 36(1) of the Arbitration Act clarifies that once the period for setting aside the award under Section 34 has lapsed, the award becomes enforceable as a decree under the Code of Civil Procedure, 1908.[11] Therefore, a mediated settlement under Section 12A is legally enforceable as a civil court decree.

Thus, by extension, any mediation settlement arrived at in an incompetent forum would be rendered void and without legal effect.

Furthermore, the Hon’ble Supreme Court, in Harshad Chimanilal Modi (II) v. DLF Universal Limited (2006) 1 SCC 364, held that when proceedings are conducted in an improper jurisdiction, parties must commence fresh proceedings in the appropriate jurisdiction rather than continuing from the previous stage. Thus, any mediation conducted in a forum lacking jurisdiction shall be commenced afresh by the forum having jurisdiction.

The next relevant question that arises is the stage at which an objection to territorial jurisdiction may be taken. The following provisions clarify that such an objection may be taken at the earliest possible opportunity in the court of first instance, and in any case, before or at the stage when issues are framed.

Section 21 of the Code of Civil Procedure, 1908, states that jurisdictional objections shall not be entertained unless such objection was taken in the Court of first instance at the earliest possible opportunity.[12] Furthermore, Section 21A of the Code of Civil Procedure, 1908 bars challenge to the validity of a decree merely on the ground of territorial jurisdiction.[13] In P. Ranga Rao v. K.V. Venkatesham (2015) 13 SCC 514, the Hon’ble Supreme Court of India has held that an objection to territorial jurisdiction can be entertained in an appeal only if it was raised at the earliest stage, in the trial court, and there is a proven failure of justice. All three conditions must coexist for the objection to be valid.

In conclusion, it pertinent to conduct pre-institution mediation in a forum having appropriate jurisdiction to avoid rendering the mediation settlement null and void.

[1] “12A. 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, 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).”

[2] Patil Automation Pvt. Ltd. v. Rakheja Engineers Private Limited, (2022) 10 SCC 1, at para 113.

[3] Article 141 of the Constitution of India.

[4] Section 12A, Commercial Courts Act, 2015 as amended by Section 64 read with the Ninth Schedule of the Mediation Act, 2023.

“12A. Pre-litigation 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-litigation mediation in accordance with such manner and procedure as may be prescribed by rules made by the Central Government.

(2) For the purposes of pre-litigation mediation, the Central Government may, by notification, authorise—

(i) the Authority, constituted under the Legal Services Authorities Act, 1987 (39 of 1987); or

(ii) a mediation service provider as defined under clause (m) of section 3 of the Mediation Act, 2023.

(3) Notwithstanding anything contained in the Legal Services Authorities Act, 1987 (39 of 1987), the Authority or mediation service provider authorised by the Central Government under sub-section (2) shall complete the process of mediation within a period of one hundred and twenty days 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 sixty days with the consent of the parties:

Provided further that, the period during which the parties spent for pre-litigation mediation shall not be computed for the purposes 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 and the mediator.

(5) The mediated settlement agreement arrived at under this section shall be dealt with in accordance with the provisions of sections 27 and 28 of the Mediation Act, 2023.”;

[5] “16. Amendments to the Code of Civil Procedure, 1908 in its application to commercial disputes.—(1) The provisions of the Code of Civil Procedure, 1908 (5 of 1908) shall, in their application to any suit in respect of a commercial dispute of a Specified Value, stand amended in the manner as specified in the Schedule.

(2) The Commercial Division and Commercial Court shall follow the provisions of the Code of Civil Procedure, 1908 (5 of 1908), as amended by this Act, in the trial of a suit in respect of a commercial dispute of a Specified Value.

(3) Where any provision of any Rule of the jurisdictional High Court or any amendment to the Code of Civil Procedure, 1908 (5 of 1908), by the State Government is in conflict with the provisions of the Code of Civil Procedure, 1908 (5 of 1908), as amended by this Act, the provisions of the Code of Civil Procedure as amended by this Act shall prevail.”

[6] Section 13 of the Mediation Act, 2023 has not been notified as on date 07.04.2025. 

[7] “20. Registration of mediated settlement agreement.—… Provided that the mediated settlement agreement under this section may be registered with such Authority or the body situated within the territorial jurisdiction of the court or tribunal of competent jurisdiction to decide the subject matter of dispute.

Explanation.—For the removal of doubts, it is clarified that nothing contained in this sub-section shall affect the rights of parties to enforce the mediated settlement agreement under section 27 or challenge the same under section 28….”

[8] Section 20 of the Mediation Act, 2023 has not been notified as on date 07.04.2025. 

[9] “30. Settlement – … (4) An arbitral award on agreed terms shall have the same status and effect as any other arbitral award on the substance of the dispute.”

[10] “35. Finality of arbitral awards.—Subject to this Part an arbitral award shall be final and binding on the parties and persons claiming under them respectively.”

[11] “36. Enforcement.—(1) Where the time for making an application to set aside the arbitral award under Section 34 has expired, then, subject to the provisions of sub-section (2), such award shall be enforced in accordance with the provisions of the Code of Civil Procedure, 1908 (5 of 1908), in the same manner as if it were a decree of the court…”

[12] “21. Objections to jurisdiction. — (1) No objection as to the place of suing shall be allowed by any Appellate or Revisional Court unless such objection was taken in the Court of first instance at the earliest possible opportunity and in all cases where issues are settled at or before such settlement, and unless there has been a consequent failure of justice…”

[13] “21A. Bar on suit to set aside decree on objection as to place of suing.— No suit shall lie challenging the validity of a decree passed in a former suit between the same parties, or between the parties under whom they or any of them claim, litigating under the same title, on any ground based on an objection as to the place of suing.

Explanation.—The expression “former suit” means a suit which has been decided prior to the decision in the suit in which the validity of the decree is questioned, whether or not the previously decided suit was instituted prior to the suit in which the validity of such decree is questioned.”

Disclaimer: The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

Authored By:

Kabir Dixit, Counsel, Dentons Link Legal

Sanya Dua, Senior Associate, Dentons Link Legal

Vasudha Banka, Associate, Dentons Link Legal