For business and investment, to see India as global destination or to ease business the Law Commission of India suggested government of India to establish commercial courts for the quick disposal of disputes. Mediation is the simplest way to resolve dispute amicably without the intervention of courts. The concept of mediation is not new, it has been practiced in ancient time as well, third person was present to resolve dispute between two. However, the commercial relationships have become complex with the passing time and this system yielded to door of justice. The commercial court, appellate and divisions of high court Act, 2015 enacted with the aim of attaining speedy adjudication of commercial disputes. Moreover, the commercial courts (Pre institution Mediation and Settlement) rule, 2018 was also framed to enhance the work in speedy manner. A per the enactments which falls under the definition of “Commercial Dispute” under the section 2(1)(c) of the commercial court Act. Rupees three lakh or more shall not be instituted unless the plaintiff mandatorily exhausts the remedy of Pre-Institution Mediation, to be conducted by the legal services institutions.
COMMERCIAL COURTS RULES, 2018:
According to pre-mediation under rule 3(1), party make an application to the Legal Service Authority by online, post or by hand with fee of one thousand rupees. Under sub rule (2) the Legal services Authority keep check on territorial and pecuniary jurisdiction and the opposite party has to appear within ten days of the said notice, in case of no response a final notice will be issued. Notice issued under sub-rule (3) is not responded or not present in mediation then the authority treats it as non-starter (sub-rule 4), in case the opposite party seeks a time further then the authority under sub-rule 5 may provide parties with alternate date. After the sub-rule 5, still parties do not appear then under the sub rule 6 it is held as non-starter. If the both parties appear without any delay the sub-rule 7 fixes a date for appearance and assigns the mediator accordingly. Sub-rule 8 states that process must get completed within the three months, it can only be extended with the permission of applicant and opposite party.
A suit, which does not contemplate any urgent interim relief under the Act, shall not be instituted unless the plaintiff exhaust the remedy of pre-institution mediation in accordance with such manner and procedure as may be prescribed by rules made by the central government; the central government may, by notification, authorize the authorities under the Legal Services Authorities Act,1987; 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 section 30(4) of the Arbitration and Conciliation Act, 1996; parties to the commercial dispute arrive at a settlement, that shall be put into writing and signed by parties to the dispute and the mediator; Notwithstanding anything contained in the Legal Services Authorities Act, 1987 shall complete the process of mediation within the period of three months from the date of application made by the plaintiff under subsection (1), the period during which the parties remained occupied with pre-institution mediation, such period shall not be computed for the purpose of limitation under the Limitation Act, 1963.
Patil Automation v Rakheja Industries, plea in apex court that whether pre-institution mediation as provided under Commercial Court Act is directory or mandatory in nature? A bench of Justice KM Joseph and PS Narasimha was hearing an appeal the order which the HC of Punjab and Haryana held that the procedure of pre-institution mediation under the 2015 Act is not mandatory before institution of the suit.
MERITS AND DEMERITS:
Instituting pre-initiation mediation holds good in time management as well as cost friendly and could avoid lengthy litigation. Confidentiality is maintained, audio or video or stenographic records are prohibited. It is good choice to go without the threat of validity challenges. Rule also provides the intention to settle the matter in good faith. As far as demerits are concerned, section 12A says that, it is mandatory obligation to plaintiff to initiate the mediation. Nonetheless, opposing party have right to refuse to appear in mediation process.
Number of disputes resolved by mediation are minimal, according to report Delhi with comparison to Maharashtra had a huge number of non-starter cases. Data also showed that majority of cases are not getting resolved through mediation and going for trial. No doubt, mediation is simple way to go than the litigation and trials, can witness lack of knowledge and understanding between parties involved. To promote this among crowd out there, it is important to focus on improving and strengthening it. It is one of the most preferred methods in advanced states.