Case Note & Summary
The defendant nos.1 to 3 filed interim application before Bombay High Court seeking rejection of plaint under Order 7 Rule 11 CPC for non-compliance with mandatory pre-litigation mediation under Section 12A of Commercial Courts Act, 2015. The underlying commercial suit was filed by National Stock Exchange of India Ltd. to recover Rs 339.57 crores as on 28 February 2023 along with interest, arising from 5393 investor claims submitted after Defendant No.1 was declared defaulter under NSEL bye-laws and expelled from membership. Defendant No.1, an incorporated entity, had been a trading member in Capital Market and Futures & Options segments since July 2000 and Currency Derivatives since October 2008, and Defendant Nos.2-5 were directors. Irregularities found in March 2018 led to show cause notice and disciplinary action, suspension, and SEBI ad-interim and confirmatory orders restraining defendants from market activities. Member Selection Committee expelled Defendant No.1 on 6 May 2019. Plaintiff issued public notice on 9 May 2019 inviting investor claims. Forensic audit confirmed misappropriation and falsification. SEBI final order on 30 June 2022 restrained Defendants 1-2 for 7 years and Defendant 3 for 5 years, imposed penalties, and froze holdings. SAT order set aside earlier interim and confirmatory orders on 7 January 2021. Court granted leave under Order 2 Rule 2 CPC on 31 March 2023 and Clause 12 Letters Patent; ad-interim injunction was granted on 8 February 2024. In the interim application, defendants argued Section 12A is mandatory and plaintiff failed to exhaust pre-litigation mediation, and the urgent interim relief exception was a camouflage. They cited Patil Automation, Yamini Manohar, Ekta Housing, Dhanbad Fuels, Exclusive Capital, Image Developer, IIFL Finance to show urgency must be genuine and not merely pleaded. The plaintiff opposed the application. The court reserved order on 11 August 2026 and pronounced on 21 August 2026; the extracted portion does not include the final ruling.
Headnote
A) Commercial Courts Act - Pre-Litigation Mediation - Mandatory Nature - Commercial Courts Act, 2015 Section 12A - Application sought rejection of plaint under Order 7 Rule 11 CPC for non-compliance with mandatory pre-litigation mediation. Applicant relied on Patil Automation (2022) 10 SCC 1 to contend Section 12A is mandatory with only urgent interim relief exception. The Court considered whether the suit fell within exception; final decision not included in extracted text (Paras 1-7).
B) Civil Procedure - Rejection of Plaint - Grounds - Code of Civil Procedure, 1908 Order 7 Rule 11 - Non-compliance with pre-litigation mediation alleged as ground for rejection. Court examined whether plaintiff's prayer for urgent interim relief was genuine or camouflage; relying on Yamini Manohar and Ekta Housing, urgency must be real and demonstrable (Paras 5-7).
C) Commercial Suits - Urgent Interim Relief - Exception Scrutiny - Commercial Courts Act, 2015 Section 12A - Exception for urgent interim relief requires elevated scrutiny; mere allowing of interim relief irrelevant as per Dhanbad Fuels. Plaintiff's institution without mediation must be justified by genuine urgency and delay explained, relying on IIFL Finance (Paras 6-7).
Issue of Consideration
Whether plaint is liable to be rejected under Order 7 Rule 11 CPC for non-compliance with mandatory pre-litigation mediation under Section 12A of Commercial Courts Act, 2015, and whether the suit involved any urgent interim relief exempting it from such requirement.
Law Points
- Section 12A of Commercial Courts Act
- 2015 mandates pre-litigation mediation with only urgent interim relief as exception
- mere prayer for urgent interim relief does not bypass mandatory mediation
- urgency must be genuine and imminent
- Order 7 Rule 11 CPC provides for rejection of plaint for non-compliance with mandatory pre-litigation mediation
Case Details
2026 LawText (BOM) (08) 99
Interim Application (L) No. 34845 of 2024 in Comm. Suit No. 64 of 2024, CNR No. HCBM020348552024
Mr. Kunal Vaishnav with Ms. Surbhi Soni for Defendant Nos.1-3/Applicants; Dr. Birendra Saraf, Senior Advocate with Mr. Ranjeev Carvalho, Mr. Rishab Murali, Mr. Sachin Chandarana, Mr. Jaiveer Dhakan, Mr. Ulrik Jehangir for Plaintiff
Guiness Securities Ltd., Kamal Kumar Kothari, Dharmendra Kothari
National Stock Exchange of India Ltd.
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Nature of Litigation
Interim application seeking rejection of plaint in a commercial suit for recovery of investor claims, on ground of non-compliance with mandatory pre-litigation mediation under Section 12A of the Commercial Courts Act, 2015.
Remedy Sought
Defendants Nos.1 to 3 sought rejection of plaint under Order 7 Rule 11 CPC for failure to comply with pre-litigation mediation.
Filing Reason
Plaintiff sued to recover Rs 339.57 crores on behalf of investors after Defendant No.1 was declared defaulter and expelled from membership of NSE.
Previous Decisions
Court granted leave under Order 2 Rule 2 CPC on 31 March 2023 and leave under Clause 12 of Letters Patent; on 8 February 2024, ad-interim injunction granted in terms of prayer clauses (a), (b) and (f). SEBI and SAT passed various orders including expulsion, ad-interim and final orders.
Issues
Whether the suit was liable to be rejected under Order 7 Rule 11 CPC for non-compliance with mandatory pre-litigation mediation under Section 12A of the Commercial Courts Act, 2015.
Whether the plaintiff's suit involved genuine urgent interim relief exempting it from pre-litigation mediation, or whether the urgency was a camouflage.
Submissions/Arguments
Applicant/Defendants 1-3: Section 12A is mandatory, not procedural; only urgent interim relief exception, and such urgency must be genuine, imminent and real; mere prayer for urgent interim relief cannot bypass statutory mandate; delay must be explained.
Applicant relied on Patil Automation, Yamini Manohar, Ekta Housing, Dhanbad Fuels, Exclusive Capital, Image Developer, and IIFL Finance to show that court must scrutinize urgency and allow rejection of plaint if mediation not done.
Plaintiff (National Stock Exchange of India Ltd.) opposed the application; no detailed arguments in extracted text but plaintiff filed affidavit-in-reply opposing the interim application.
Judgment Excerpts
Defendant Nos.1 to 3 have filed the present application seeking rejection of the plaint under Order 7 Rule 11 of the Code of Civil Procedure, 1908 (the Code) for non-compliance with the mandatory pre-litigation mediation as provided under Section 12A of the Commercial Courts Act, 2015 (CC Act).
Plaintiff-National Stock Exchange of India Ltd. (NSEL) has filed the present suit inter-alia for recovery of sum of Rs.339.57 crores as on 28 February 2023 alongwith interest arising out of 5393 claims submitted by the investors in pursuance of declaration of Defendant No.1 being a defaulter in terms of Bye-law No.1(a) of Chapter-12 of Bye-laws of NSEL and consequent upon expulsion of Defendant No.1 under Rules 1 and 2 of Chapter-IV of the Rules of NSEL.
He submits that Section 12A is not a mere procedural provision and the same is intended to be mandatory.
Procedural History
On 31 March 2023, court granted leave under Order 2 Rule 2 CPC; thereafter leave under Clause 12 of Letters Patent was granted. On 8 February 2024, ad-interim order granted relief in terms of prayer clauses (a), (b) and (f) of Interim Application for temporary injunction. Defendants Nos.1 to 3 filed present application seeking rejection of plaint under Order 7 Rule 11 CPC for failure to comply with Section 12A of Commercial Courts Act. Plaintiff filed affidavit-in-reply; defendants filed rejoinder. Court reserved order on 11 August 2026 and pronounced on 21 August 2026.
Acts & Sections
- Code of Civil Procedure, 1908 (CPC): Order 7 Rule 11, Order 2 Rule 2
- Commercial Courts Act, 2015 (CC Act): Section 12A
