(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, for the purposes of pre-institution mediation.
(3) The mediation process shall be completed within a period of three months from the date of application made by the plaintiff: Provided that the period of mediation may be extended for a further period of two months with the consent of the parties.
(4) If a settlement of the commercial dispute is arrived at, it shall be reduced into writing and 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.
Legal Commentary & Landmark Judgments: Section 12A
Section 12A of the Commercial Courts Act, 2015 mandates Pre-Institution Mediation and Settlement (PIMS) as a compulsory statutory prerequisite before instituting a commercial suit that does not contemplate urgent interim relief.
Under sub-section (3), the period spent in mediation is excluded from limitation under the Limitation Act, 1963.
Sub-section (4) provides that any settlement arrived at through PIMS shall have the status and effect of an arbitral award under Section 30(4) of the Arbitration and Conciliation Act, 1996, rendering it directly enforceable as an executable decree of court without requiring a separate declaratory civil suit.
Section 12A is a transformative procedural mandate. Plaintiffs cannot bypass mediation merely by inserting a perfunctory interim prayer. The commercial court exercises judicial scrutiny to ascertain if real, imminent harm exists; if the urgency is simulated, the plaint will be rejected under Order VII Rule 11. Conversely, if a settlement is achieved, it possesses finality and immediate enforceability as an arbitral award.