The Jammu and Kashmir High Court has clarified that under the Commercial Courts Act, a party cannot bypass the legally mandated pre-litigation mediation unless they provide valid, reasonable grounds for doing so. The court stressed that seeking interim relief without justifying its urgency is not an absolute right.

The court was dealing with a case where the plaintiff sought to skip the mediation process under Section 12-A of the Act. Their argument? The defendant allegedly misled them into signing a contract by concealing important facts, and there was an imminent risk of bank guarantee encashment.

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A bench led by Justice Moksha Khajuria Kazmi examined the plaintiff’s request and found that:

• The plaintiff failed to prove that their request for urgent interim relief was justified.
• The defendant had not taken any steps to encash the bank guarantee, which meant there was no immediate financial risk.
• Instead of trying to resolve the matter, the plaintiff seemed to be stalling the proceedings.

The court noted that the defendant was open to negotiation, whereas the plaintiff was actively trying to cancel the agreement without settling the dispute.

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The plaintiff claimed they were promised clear, dispute-free sites under the Concession Agreement. However:

• Several of these locations were tied up in legal disputes with previous occupants.
• The earlier licensee had not vacated the premises.
• Despite being offered alternative sites, the plaintiff refused them, suggesting they deliberately wanted to cancel the agreement rather than resolve the issue.

The Commercial Courts Act requires that before approaching the court, parties must attempt to resolve disputes through mediation. This ensures that only genuine disputes reach the courts, helping decongest the legal system.

The High Court relied on the Supreme Court ruling in Yamini Manohar v. T.K.D. Keerthi, which states:

“Pre-litigation mediation is mandatory unless the suit explicitly seeks an urgent interim relief.”

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The Supreme Court also interpreted the phrase "contemplate any urgent interim relief" to mean:

• The suit itself must clearly show the necessity for urgent intervention.
• It is not enough for a plaintiff to simply claim urgency; the documents and facts must support the claim.
• The request should not be a disguise to circumvent Section 12-A of the Act.

Thus, the High Court concluded that the plaintiff's request did not meet these legal standards.

Case Background

The plaintiff won the contract to operate food and beverage outlets at Srinagar International Airport, believing they would receive the sites without legal issues. However, things took a different turn:

1. The plaintiff signed the contract and paid a ₹9 crore bank guarantee.
2. After signing, they discovered that some sites were locked in ongoing litigation with the previous tenant, M/s Saptagiri Restaurant Pvt. Ltd. (SRPL).
3. The defendant did not disclose these disputes but continued pressuring the plaintiff to accept a partial handover.
4. Unexpected financial burdens were placed on the plaintiff, further complicating the situation.
5. The plaintiff argued that the contract was based on misrepresentation and should be declared void.

The plaintiff filed an application seeking urgent legal relief, claiming:

• Arbitration wouldn’t work because it cannot resolve third-party rights (like those of SRPL).
• The mediation process should be skipped due to the urgent financial risk of bank guarantee encashment.

However, the High Court rejected these arguments, stating that there was no immediate threat of financial loss.

The Jammu and Kashmir High Court dismissed the plaintiff’s request to bypass mediation, reaffirming that:

“Mandatory pre-litigation mediation is a crucial step under Section 12-A of the Commercial Courts Act and cannot be bypassed unless there is a clear, justifiable urgency.”

The ruling reinforces the importance of dispute resolution before litigation, ensuring that courts remain focused on cases genuinely requiring judicial intervention.

APPEARANCE:

Mr Anil Bhan, Sr. Advocate with Mr Danish Majid, Advocate FOR PLAINTIFF

Mr Vikas Malik, Advocate FOR DEFENDANT

Case-Title: M/s Devyani International Limited vs Airport Authority of India and others, 2025