INTRODUCTION:
With the introduction of the Liberalization Privatization Globalization Policy, in 1991 India entered into the international economy and trade. It was a major step taken by the Indian Government toward accelerating the growth of the economy. With these various contracts and transactions were made giving rise to ‘Commercial Law’.
COMMERCIAL LAW:
Commercial Law was introduced to deal with any dispute that arises out of any commercial transaction and contract. This ultimately leads to the emergence of ‘The Commercial Courts Act, of 2015’. However, the act came into force in October 2015 but, was assented to by the president only in December 2015. Until then it came into force as an ordinance. Earlier the jurisdiction to deal with such matters lies with High Court as Original Jurisdiction such as Delhi, Kolkata, and Mumbai. The act allowed the establishment of Commercial Courts at District Level value for not less than One Crore Rupees. Later via an amendment of 2018, the value of the suit was reduced to Three Lakhs Rupees.
Under the Commercial Courts Act 2015 the dispute arising out of—
- Ordinary transactions made by Merchants, Bankers, Financiers, and Traders that related to mercantile documents, and their interpretation.
- Exporting or Importing any merchandise or services.
- Related to admiralty or maritime law.
- Services including those of financial and outsourcing.
- Agreements of—
- Joint Ventures
- Shareholders
- Franchising Agreements
- Partnership Agreements
The ‘adjudication’ of Commercial Disputes is a lengthy process that frustrates the litigants. As they may be kept on waiting for the relief claimed. Though the act provides for the institution of commercial courts to deal with such matters. But it still made mandatory for the parties to attempt to resolve their dispute via mediation before proceedings.
PRE – INSTITUTION OF MEDIATION:
The concept of mediation was first introduced via the Industrial Disputes Act, of 1947, and laid down detailed provisions for mediation and conciliation proceedings. It further allows the suit to be settled by an Alternative Dispute Resolution Mechanism rather than going through a litigation process. It acts as a major procedural form that helps in resolution of dispute without going through long litigation process. The procedure shall be followed as prescribed by Commercial Courts (Pre – Institution Mediation & Settlement) Rules 2018.
Mediation is considered to be the most efficient and effective mechanism for the redressal of grievances. It is a method of resolving disputes amicably by the assistance of a third party i.e., a Mediator. Chapter IIIA has introduced those deals with the provision of Pre-Institution of Mediation under Section 12 A. It makes it mandatory for the plaintiff to exhaust the remedy of mediation before the filing of a commercial suit. In the cases where urgent interim relief has been claimed the remedy of mediation stands already exhausted.
Section 12A of the Commercial Courts Act, 2015 gives each party a chance to resolve disputes amicably with the Mediator’s help. It must be done before the actual initiation of commercial proceedings. Under Pre – Institution of Mediation Rules, the parties shall make an application to Legal Services Authority by post or hand. The requisite fees shall be paid of Rs. 1000 by Demand Draft or by online mode. Later notice shall be issued by authority on basis of territorial or pecuniary jurisdiction to appear within ten days. If one party does not appear it shall be treated as a non-starter. A report shall be endorsed to the other party and applicant. If parties appear the same shall be assigned to commercial dispute and affix date. Such mediation shall complete within 3 months with an extension of 2 months with the consent of the parties. It saves time and cost for both parties.
ROLE OF MEDIATOR:
The mediator shall facilitate the parties in reaching a solution amicably. The mediator shall fix the appointment for mediation with the consent of both parties and explains about shall hold meetings joint or separately. The parties may share their terms of the settlement. The decision made here shall be mutually agreed upon by both parties. The decision made in such a process shall be binding on both parties. This results in final certainty about the award granted. It must be ensured by the mediator to trust and the matter shall be kept confidential throughout the mediation. It is also expected by parties and counsels to keep the matter confidential. Mediators shall be educated and trained enough to provide them with the best and most effective solutions.
CONTRADICTING OPINIONS:
Bombay High Court in Deepak Raheja v. Ganga Taro Vazirani dealt with a commercial dispute. It was held that any commercial dispute that does not contain any urgent interim relief must go through Mediation. No proceedings shall be instituted not being urgent interim application unless Pre-Institution Mediation has been exhausted. However, Madras High Court opined that when a person approaches a court to access justice the same cannot be denied. Denying such proceedings merely on the ground that the plaintiff does not go through mediation is the denial of a constitutional right. It was held that Section 12A under Commercial Courts Act was not a mandatory provision. Supreme Court addressed the question in M/S Patil Foundation Pvt. Ltd. v. Rakheja Engineers Pvt. Ltd. and other connected matters. The question that arose was Section 12 A of the Commercial Courts Act is mandatory or not. Section 12 A is considered to be mandatory. Any such suit shall be liable to be rejected under Order VII Rule 11.
CONCLUSION:
Provision for Pre – Institution of Mediation under the Commercial Courts Act helps in easy and early justice. There is no point in going for a litigation process that may go on for years. With the provision, Indian Legislatures are providing the companies to resolve the dispute between them amicably. The mediation Process helps party put their own views in front of each other without any restriction. The parties freely discuss issues among themselves and provide for the settlement. The mediator helps them guide through solutions.
Also, read – https://corporate.cyrilamarchandblogs.com/2022/10/compulsory-pre-litigation-mediation-for-commercial-suits-a-boon-or-a-bane/
