Case Name: Dhanbad Fuels Private Limited v. Union of India & Anr.
Case Number: Civil Appeal No. 6846 of 2025
Date of Judgment: 13 May 2025
Quorum: Justice J.B. Pardiwala
FACTUAL BACKGROUND
Union of India filed a suit in 2019 to recover over Rs. 8 crores from Dhanbad Fuels for unpaid freight and penalties. But they did not go for pre-institution mediation before filing the case. Dhanbad Fuels objected, saying the case should be rejected as per Section 12A of the Commercial Courts Act, which makes pre-mediation compulsory unless urgent relief is needed.
The Commercial Court refused to reject the case but sent it for mediation anyway. Then Dhanbad Fuels appealed to the High Court. The High Court also did not reject the case but paused the proceedings and ordered mediation to be done properly via the State Legal Services Authority. Dissatisfied, Dhanbad Fuels came to the Supreme Court.
ISSUES FOR DETERMINATION
- Should the suit be dismissed for not following Section 12A of the Commercial Courts Act?
- Is Section 12A mandatory for all cases without urgent interim relief?
- Can the court pause the case instead of rejecting it if mediation was not done?
- What happens if proper mediation infrastructure was not available when the case was filed?
LEGAL PROVISIONS
- Section 12A, Commercial Courts Act, 2015 – Pre-institution mediation is compulsory if no urgent relief is asked.
- Order VII Rule 11(d), CPC – A suit can be rejected if barred by law.
- Order VII Rule 13, CPC – If a suit is rejected, it can be refiled.
APPELLANT’S CONTENTIONS (Dhanbad Fuels)
- Section 12A is mandatory – since mediation was not done before filing, the plaint must be rejected.
- Supreme Court in Patil Automation v. Rakheja Engineers clearly said non-compliance leads to rejection.
- The case was still at an early stage – only written statements filed – so no excuse to skip Section 12A.
- Even if the plaintiff re-files the suit, there will be no limitation problem because Union of India has 30 years to sue.
RESPONDENT’S CONTENTIONS (Union of India)
- Agreed that Section 12A is mandatory, but when this suit was filed, proper mediation infrastructure didn’t exist in West Bengal.
- SOPs and trained mediators were not available until December 2020, but suit was filed in August 2019.
- Law cannot force someone to do something impossible – mediation was practically not possible then.
- Even if the case is dismissed, they’ll just have to file again, wasting time and court fees.
ANALYSIS
The Supreme Court looked at two main things: (1) Is Section 12A mandatory? (2) Should the suit be rejected or paused?
- Yes, Section 12A is mandatory as per Patil Automation, but that ruling was made prospective – it applies only to suits filed after 20 August 2022.
- This suit was filed in 2019, so the strict rule of rejection doesn’t apply here.
- Also, when this suit was filed, proper mediation process was not in place – so the court agreed with the High Court’s view that mediation wasn’t possible then.
- Courts cannot ask someone to do something that was impossible.
- High Court correctly paused the case and directed mediation now, instead of rejecting the suit altogether.
JUDGMENT
- Supreme Court upheld the High Court’s decision.
- Said suit should not be rejected just because mediation wasn’t done earlier.
- Mediation should now be done properly through Legal Services Authority.
- Appeal dismissed.
CONCLUSION
This case clarifies:
- Section 12A is mandatory but only for cases filed after 20 August 2022.
- Courts can pause cases and allow mediation later if there was no infrastructure at the time of filing.
- Law cannot ask people to do the impossible.
- Courts must balance procedure and justice – rigid application can delay justice.
- Suit for public money (like Union of India’s here) should not fail on technicalities.
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WRITTEN BY PRIYANKA DESHIKAN.
