- Case title: Kapil Goel v. Ram Dulare Yadav, RFA(COMM) 14 of 2022
- The Chief Justice Satish Chandra Sharma and Justice Subramonium Prasad bench ruled that the defendant's refusal to engage in the proceedings renders the plaintiff's consent to the pre-suit mediation useless.
- The Court ruled that the plaintiff's only obligation is to start the mediation, and the Non-Starter Report that follows with the remark that neither party is interested in continuing the mediation would not entail that the Section 12-A requirement is not satisfied.
- The Respondents bought fabric on credit from the Appellant but failed to pay the remaining amount of Rs. 17,98,319/-.
- As a result, the appellant addressed the Delhi Legal Services Authority (DLSA) before filing a lawsuit in accordance with Rule 3(1) of the Commercial Courts (Pre-Mediation and Settlement) Rules, 2018 to begin the pre-suit mediation as stipulated in Section 12-A of the Commercial Courts Act, 2015.
- With the observation that neither party is interested in continuing the mediation, DLSA provided a non-starter report for the mediation.
- The appellant then filed a civil lawsuit to reclaim the debt together with interest.
- The District Judge dismissed the case because Section 12A was not followed. The lower court ruled that the appellant had only initiated the mediation as a formality and that because of its lack of sincere motivation in doing so, it had failed to meet the criterion.
- The appellant petitioned the High Court after becoming upset with the contested order.
- The following grounds were used by the appellant to contest the lower court's contested order:
- In accordance with the applicable requirements, the appellant had contacted the proper body to start the mediation procedure.
- The respondent's non-participation, not the appellant's lack of interest in continuing with the mediation, led the authority to prepare a non-starter report in accordance with Rule 3(6).
- The following complaints were made by the respondent:
- As the appellant was not interested in pursuing the mediation but had only gone through the formalities of seeking the proper authority and having the notice issued, the lower court correctly rejected the complaint for failing to comply with Section 12-A.
- The court noted that the appellant had contacted the proper authority, as required by the 2018 Rules.
- The Commercial Courts (Pre-Institution Mediation and Settlement) Rules, 2018's Rule 3 was cited by the court as evidence that when the mediation process is started, the authority must notify the other party so that they can appear and consent to participate in the mediation process on such days, but not more than 10 days after the date of issuance of the said notice.
- The Court ruled that even if it was noted in the Non-starter report that neither party is interested in moving on with the mediation, all the plaintiff needs to do is begin the mediation process. Once this is done, the claim will not be legally prohibited.
- The Commercial Courts Act of 2015's Section 12-A was found to be satisfied by the defendant's refusal to take part in the Pre-Institution Mediation, according to the court's ruling.
- The Court decided that if the defendant declines to participate in the proceedings, the plaintiff's permission to institute the pre-suit mediation would be immaterial.
- As a result, the Court overturned the lower court's decision and gave the case its original number.
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