Arbitration, Mediation and Conciliation · Various Modes and Scope of Mediation including Role of Mediation in other ADR Domains

Pre-Institution Mediation under Section 12A Commercial Courts Act

Updated 11 October 2026 · Fact-checked

Section 12A of the Commercial Courts Act, 2015 bars a commercial suit that does not contemplate urgent interim relief unless the plaintiff first exhausts pre-institution mediation under the prescribed rules. Mediation runs three months, extendable by two months with consent. A signed settlement is treated like an arbitral award on agreed terms.

Understand Pre-Institution Mediation under Section 12A Commercial Courts Act

A commercial suit is a suit on a commercial dispute under the Commercial Courts Act, 2015. Parliament wanted such disputes settled faster. So Section 12A, inserted in 2018, makes mediation a step you must take before you file, in most cases.

The rule is: a suit which does not contemplate any urgent interim relief under the Act shall not be instituted unless the plaintiff exhausts the remedy of pre-institution mediation. The manner and procedure are set by rules made by the Central Government. Section 21A gives the Central Government the power to make those rules.

The mediation is run by an Authority constituted under the Legal Services Authorities Act, 1987, authorised by the Central Government by notification. The plaintiff applies to that Authority. The Authority must finish the process within three months of the application. The period can be extended by two more months, but only with the consent of the parties.

Two consequences follow. First, time spent in the mediation is not counted for limitation under the Limitation Act, 1963. Second, if the parties settle, the settlement is written, signed by the parties and the mediator, and has the same status and effect as an arbitral award on agreed terms under Section 30(4) of the Arbitration and Conciliation Act, 1996. So it can be enforced like an award.

The Mediation Act, 2023 links to this. Its Section 5 allows voluntary pre-litigation mediation in civil and commercial matters. But its proviso says that for commercial disputes of Specified Value, pre-litigation mediation is done under Section 12A and the rules made under it. So for such disputes, Section 12A governs. Do not mix the two regimes in your answer.

Key rules to remember

Bar on institution: Commercial suit without urgent interim relief → cannot be instituted until pre-institution mediation is exhausted; Section 12A(1). The test is whether the suit contemplates urgent interim relief.
Time limit: 3 months from the date of the plaintiff's application + 2 months more with consent of parties; Section 12A(3) and first proviso. Extension needs consent; it is not automatic.
Limitation: Period occupied in pre-institution mediation is excluded for the Limitation Act, 1963; Second proviso to Section 12A(3).
Settlement formality: Settlement in writing + signed by the parties and the mediator; Section 12A(4).
Status of settlement: Same status and effect as an arbitral award on agreed terms under Section 30(4), Arbitration and Conciliation Act, 1996; Section 12A(5).
Who conducts: Authority under the Legal Services Authorities Act, 1987, authorised by Central Government notification; Section 12A(2).
Link to Mediation Act, 2023: Section 5 proviso: pre-litigation mediation of commercial disputes of Specified Value follows Section 12A and its rules; Section 5(1) of the Mediation Act otherwise makes pre-litigation mediation voluntary and by mutual consent.

How to solve Pre-Institution Mediation under Section 12A Commercial Courts Act questions

Use this order for any case-based question on Section 12A. It follows the exam pattern: provision, analysis of facts, conclusion.

1Check whether the dispute is a commercial dispute under the Commercial Courts Act, 2015. If it is not, Section 12A does not apply.
2Check the relief sought. Does the suit contemplate urgent interim relief? If yes, Section 12A(1) does not bar the suit.
3If no urgent interim relief is contemplated, state the bar: the suit cannot be instituted until pre-institution mediation is exhausted under the prescribed rules.
4Describe the procedure: application by the plaintiff to the authorised Legal Services Authority, completion within three months, extension of two months only with consent.
5Apply the time rule to the dates in the facts. Count three months from the application date, not from the date of the dispute.
6Deal with limitation: the mediation period is excluded under the Limitation Act, 1963.
7State the outcome: if a settlement is signed by the parties and the mediator, it has the effect of an arbitral award on agreed terms.
8Conclude clearly with advice: file the application, or file the suit with the interim relief claim, as the facts require.

Quickest way: Three-question check for Section 12A

When to use it: Use when a short case asks whether a commercial suit can be filed now or what happens after mediation.

Q1: Is it a commercial dispute? If not, stop.
Q2: Is urgent interim relief contemplated? If yes, the suit can be filed without mediation. If no, mediation first.
Q3: Check time and effect: 3 months (+2 with consent), limitation excluded, settlement equals arbitral award on agreed terms.
Write the section number 12A with the sub-section for each point to earn marks.

Common mistakes in Pre-Institution Mediation under Section 12A Commercial Courts Act

Saying pre-institution mediation is voluntary for all commercial suits.
Students confuse Section 5 of the Mediation Act, 2023, which is voluntary, with Section 12A.
Fix: Remember that Section 12A bars the suit unless mediation is exhausted, except where urgent interim relief is contemplated. The Mediation Act proviso sends commercial disputes of Specified Value to Section 12A.
Treating the three-month period as extendable by the court or the mediator on their own.
Students remember the extension but forget the condition.
Fix: The two-month extension needs the consent of the parties.
Counting the three months from the date the dispute arose.
Loose reading of the sub-section.
Fix: Time runs from the date of the plaintiff's application under Section 12A(1).
Forgetting the effect on limitation.
Students focus only on the bar on filing.
Fix: Add that the mediation period is not computed for limitation under the Limitation Act, 1963.
Saying the settlement needs only the parties' signatures or is just a contract.
Students assume it is an ordinary private agreement.
Fix: It must be in writing, signed by the parties and the mediator, and has the status of an arbitral award on agreed terms under Section 30(4) of the 1996 Act.
Stating that any suit with an interim relief prayer is exempt.
Students stop at the words 'interim relief'.
Fix: The text says the suit must contemplate urgent interim relief. Test the urgency from the facts, and say so in your analysis.

Worked examples

Example 1

Sharma Textiles Pvt. Ltd., Surat, wants to sue Kapoor Dyes Ltd. for ₹40,00,000 unpaid under a supply contract. It seeks only recovery of money and no urgent relief. Can it file the commercial suit directly? Advise.

Show the solution

Provision: Section 12A(1) of the Commercial Courts Act, 2015 says a suit not contemplating urgent interim relief shall not be instituted unless the plaintiff exhausts pre-institution mediation under the prescribed rules.
Facts: the claim is a commercial dispute over a supply contract. Only recovery is sought. No urgent interim relief is contemplated.
Application: so Section 12A applies and the bar operates.
Procedure: Sharma Textiles should apply to the authorised Legal Services Authority. The mediation must be completed within three months of the application, extendable by two months with the parties' consent.
Limitation: the time spent in mediation is excluded under the Limitation Act, 1963.

Answer: No. Sharma Textiles cannot file the suit directly. It must first exhaust pre-institution mediation under Section 12A. The mediation period is excluded for limitation.

Example 2

Mehta Pharma Ltd. applied for pre-institution mediation against Rao Logistics Ltd. on 1 March. No settlement was reached in three months. Mehta Pharma wants to continue for two more months, but Rao Logistics refuses. If a settlement had been reached, what would its effect be? Answer both parts.

Show the solution

Provision: Section 12A(3) requires the Authority to complete mediation within three months of the plaintiff's application. The first proviso allows a further two months with the consent of the parties.
Facts: the period ran from the application on 1 March. Three months end on 1 June. Rao Logistics does not consent.
Application: without consent from both parties there can be no extension, so the mediation ends at the three-month mark.
Next step: with mediation exhausted and no settlement, Mehta Pharma can institute the suit. The period spent in mediation is excluded for limitation.
Settlement effect: had a settlement been reached, it must be in writing and signed by the parties and the mediator under Section 12A(4). Under Section 12A(5) it would have the same status and effect as an arbitral award on agreed terms under Section 30(4) of the Arbitration and Conciliation Act, 1996.

Answer: No extension is possible without Rao Logistics' consent, so mediation ends after three months and Mehta Pharma may sue, with the mediation period excluded for limitation. A signed settlement would have the effect of an arbitral award on agreed terms.

Exam tips

Quote the exact trigger: a suit that does not contemplate any urgent interim relief. Examiners look for this condition.
Always give the numbers: three months, plus two months with consent. Say where the clock starts.
Close every answer with the limitation point and the arbitral-award status of the settlement.
When the facts mention both the Mediation Act and the Commercial Courts Act, explain that the proviso to Section 5(1) routes commercial disputes of Specified Value to Section 12A.
Write the section and sub-section for each point. Do not cite case names unless you are certain of the name and holding.

Practice questions from Various Modes and Scope of Mediation including Role of Mediation in other ADR Domains

Pre-Institution Mediation under Section 12A Commercial Courts Act: frequently asked questions

Is pre-institution mediation mandatory for commercial suits?

Yes, for a commercial suit that does not contemplate urgent interim relief. Section 12A(1) says such a suit shall not be instituted unless the plaintiff exhausts pre-institution mediation under the prescribed rules.

How long does pre-institution mediation under Section 12A take?

The Authority must complete it within three months from the date of the plaintiff's application. The period can be extended by two months with the consent of the parties.

Does the mediation period count towards limitation?

No. The second proviso to Section 12A(3) says the period during which the parties were occupied with pre-institution mediation is not computed for limitation under the Limitation Act, 1963.

What is the legal effect of a Section 12A settlement?

It must be in writing and signed by the parties and the mediator. It then has the same status and effect as an arbitral award on agreed terms under Section 30(4) of the Arbitration and Conciliation Act, 1996.

How does the Mediation Act, 2023 relate to Section 12A?

Section 5 of the Mediation Act allows voluntary pre-litigation mediation. Its proviso says pre-litigation mediation of commercial disputes of Specified Value is done under Section 12A of the Commercial Courts Act and the rules made under it.