Mandatory Pre-Institution Mediation in Commercial Suits
Facts: This case centers on a dispute over a real estate development project in Mumbai involving multiple parties, including developers, individuals, and housing societies. The story begins with a development agreement signed on May 7, 1995, between the Gorai Road Ashtavinayak Nagar Co-op. Hsg. Societies Union Ltd., which is a federation of housing societies, and Sailee Developers Pvt. Ltd. The agreement was for redeveloping a property, where Sailee Developers was supposed to provide new flats to the existing members of the societies and use the remaining development potential for its own profit. On June 24, 1997, a few more societies joined the federation, meaning their members also became entitled to flats under the agreement. Years later, on June 29, 2006, Segment Developers Pvt. Ltd., along with Sailee Developers and some other people, formed a partnership firm called Image Developer to handle the development rights of this property. Then, on March 15, 2010, a deed of assignment was executed, transferring these development rights from Image Developer and Segment Developers to Kamla Landmarc Real Estate Holding Private Limited and four individuals: Jitendra Ramesh Jain, Jinendra Ramesh Jain, Dilipkumar Jain, and Vikaskumar C. Jain. The deal was for a total consideration of Rs. 44.87 crores, to be paid in installments, along with other obligations like allotting flats to the society members. Everything seemed fine until December 5, 2023, when Kamla Landmarc and the four individuals assigned their rights over the property to Moral Mercantile LLP, without fully meeting their obligations under the 2010 assignment, such as paying the full amount or allotting the flats. The plaintiffs, Image Developer and Segment Developers, say they first learned about this new assignment in January 2024 when they visited the site and saw Moral Mercantile's name displayed there. They then got a copy of the 2023 agreement from the sub-registrar's office. Claiming this was a breach, the plaintiffs sent a termination notice on January 19, 2024, to Kamla Landmarc and the individuals, ending the 2010 assignment due to non-payment and failure to allot flats. The recipients replied on March 1, 2024, disputing the termination. Worried that further steps might create third-party rights, the plaintiffs sent notices on October 21, 2024, under the Maharashtra Co-operative Societies Act and the Maharashtra Housing and Area Development Act to the federation and the Maharashtra Housing & Area Development Authority, asking them not to grant any permissions for development by the other parties. The plaintiffs claim the defendants owe them Rs. 7.21 crores plus interest, totaling over Rs. 28 crores as of October 2024. They say the 2023 assignment is illegal and void because it violated the terms of the 2010 deal, and Moral Mercantile knew about the breaches. The plaintiffs also argue that the defendants are trying to raise finance or assign rights further, which could complicate things more. On the other side, Kamla Landmarc and the two Jains who filed the application say the suit is invalid because the plaintiffs did not follow the required pre-suit mediation process and that it's also time-barred since the last payment was due in 2017. They argue there was no real urgency for skipping mediation, pointing to the long delays in acting.
Procedural Details: The main suit was filed on November 30, 2024, in the Bombay High Court's commercial division as a commercial suit because it involves a commercial dispute over development rights and agreements. Along with the suit, the plaintiffs filed an interim application seeking temporary relief to stop the defendants from dealing with the property or creating third-party rights. In response, on an unspecified date but before the hearing, Kamla Landmarc Real Estate Holding Private Limited, Jitendra Ramesh Jain, and Jinendra Ramesh Jain filed their own interim application asking the court to reject the entire plaint under the rules of civil procedure, claiming it violated the law on pre-suit mediation and was filed too late.
The plaintiffs' side argued there was urgency due to the risk of third-party rights being created. The defendants' side said there was no such urgency, given the timelines. The matter was heard through video conferencing, as is common. The judge reserved the order on September 16, 2025, after listening to everyone, and pronounced it on September 19, 2025. No full trial with evidence or witnesses happened yet; this was just deciding the preliminary application to reject the suit. The court did not decide on the merits of the main claims or the limitation issue, focusing only on the mediation requirement.
Dispute: The core fight here was not about the main claims of breach of contract or validity of the termination but about whether the suit could even proceed. The defendants argued that the plaint should be thrown out right away because the plaintiffs skipped a mandatory step: pre-institution mediation under the Commercial Courts Act. This law requires parties in commercial disputes to try mediation before filing a suit, unless there's a need for urgent temporary relief. The plaintiffs said their case fit the exception because they feared the defendants would create third-party rights, making it urgent to get a court order stopping that. The defendants countered that there was no real urgency, pointing to the 10-month delay from discovering the issue in January 2024 to filing in November 2024, and then not even pushing for immediate relief after filing. They said the plaintiffs' claims of urgency were just empty words without facts to back them up. In the background, there was also a claim that the suit was barred by time limits, but the court did not rule on that since it rejected the suit on the mediation ground.
Detailed Reasoning: The judge started by explaining the purpose of Section 12A of the Commercial Courts Act, 2015. This section says that in commercial suits, you cannot file unless you first try mediation, but there's an exception if the suit involves urgent interim relief. The mediation must be done within three months, extendable by two more with agreement, and this time does not count for limitation periods. The idea is to settle disputes quickly without court time, especially in business matters where keeping relationships intact matters. The judge said compliance is mandatory, and the exception for urgency must be genuine. To check if the exception applies, the court looks at the plaintiffs' belief in needing urgent relief, but it must be based on solid facts, not just words. The judge looked at the plaint's paragraphs where the plaintiffs tried to justify skipping mediation. In paragraph 36, they talked about discovering the issue in January 2024 and said the suit was within time limits, but the judge said this was about limitation, not urgency for mediation. In paragraphs 39 and 40, they said defendants might create third-party rights, so urgent relief was needed, but the judge called these bald statements without details or proof. Plus, the termination notice already mentioned the 2023 assignment, so they knew earlier. The judge pointed out the 10-month delay from January to filing in November 2024, and then not moving the court urgently until January 2025, showing no real rush. Even after filing, they did not seek ex-parte relief. The judge said this conduct shows the urgency claim was not bona fide. On the plaintiffs' alternative argument that it's a continuous breach like an unpaid seller's charge under Section 55 of the Transfer of Property Act, 1882, the judge said that's for merits or limitation, not for skipping mediation. Such continuous cause arguments work in intellectual property cases, but not here. The judge discussed several judgments to support this. In Patil Automation Private Limited vs. Rakheja Engineers Private Limited, (2022) 10 SCC 1, the Supreme Court said Section 12A is mandatory, and suits without mediation must be rejected unless urgency is shown. The court stressed looking at the plaint to see if urgency is contemplated. In Yamini Manohar vs. T.K.D. Keerthi, (2024) 5 SCC 815, the Supreme Court explained that urgency means the relief cannot wait for mediation without causing irreparable harm. It's the plaintiff's view, but the court checks if it's genuine based on facts, cause of action, and conduct. Mere words are not enough. In Exclusive Capital Limited vs. Clover Media Private Limited & Ors., 2025 SCC OnLine Del 5221, the Delhi High Court gave a detailed analysis, saying "contemplates urgent interim relief" means the plaintiff must show real exigency through specific facts. The court must scrutinize to prevent abuse, like adding fake urgency to skip mediation. Urgency is not just any interim relief but something immediate and irreparable. The judge quoted long parts from this case, agreeing that courts act as gatekeepers to check if the urgency ticket is valid. Other cases like Ekta Housing Private Limited vs. Shraddha Shelters Private Limited, 2024 SCC OnLine Bom 3538, and Future Corporate Resources Private Limited vs. Edelweiss Special Opportunities Fund, 2022 SCC OnLine Bom 3744, were cited for similar points on strict compliance. The judge said these apply here, as the plaintiffs' pleadings lack foundation for urgency. The plaintiffs' reliance on Exclusive Capital actually supports the defendants, as it stresses scrutiny. The judge did not need to decide limitation since the suit was rejected on mediation grounds.
Decision: The court allowed the defendants' application and rejected the plaint under Order VII Rule 11(d) of the Code of Civil Procedure, 1908, because the plaintiffs did not comply with the mandatory pre-institution mediation under Section 12A of the Commercial Courts Act, 2015, and failed to show genuine urgency for the exception. As a result, the main suit and the plaintiffs' interim application were disposed of without deciding on the merits or the limitation issue. The plaintiffs can file a fresh suit after mediation, where other arguments can be raised.
Case Title: Image Developer and Another Vs. Kamla Landmarc Real Estate Holding Private Limited and Others
Order date: September 19, 2025
Case Number: Commercial Suit (L) No.39332 of 2024
Neutral Citation: 2025:BHC-OS:15574
Name of Court: High Court of Judicature at Bombay Name of Hon'ble Judge: Jitendra Jain, J.
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Written By: Advocate Ajay Amitabh Suman, IP Adjutor [Patent and Trademark Attorney], High Court of Delhi
