Bombay high court restores commercial suit rejected over authority's failure to issue final

Bombay High Court Restores Commercial Suit Due to Authority's Delay, Highlighting Judicial Oversight.

Mediation Notice

Jivaraj Ravaji Gandhi v. Solapur Jilha Dudh Utpadak va Prakriya Sangh Maryadit Solapur and Ors., Commercial First Appeal No. 23 of 2025, decided on 7 August 2026 by the Bombay High Court (Madhav J. Jamdar and Pravin S. Patil, JJ.) Background

The Appellant, a supplier of grains, oiled cakes and cattle feed, had supplied goods to the Respondent dairy cooperatives against five purchase orders raised in 2020 and 2021. Payment for fortyeight invoices totalling Rs. 2,04,24,712 was not made. Before filing suit, the Appellant applied to the District Legal Services Authority on 29 April 2023 for pre institution mediation under Section 12A of the Commercial Courts Act, 2015, paying the prescribed fee of Rs. 1,000 as required by Rule 3(1) of the Commercial Courts (Pre Institution Mediation and Settlement) Rules, 2018.

The Authority issued a first notice returnable on 8 June 2023 and, upon no response, a second notice returnable on 30 October 2023. The Respondents did not appear on either occasion. The Authority then issued a Non Starter Report on 11 December 2023 under Rule 3(4) without first issuing the final notice contemplated by Rule 3(3). The Appellant thereafter instituted Commercial Suit No. 1 of 2024 before the District Judge, Malshiras on 6 January 2024.

Proceedings Before The Trial Court

The Respondents filed an application under Order VII Rule 11 of the Code of Civil Procedure, 1908, seeking rejection of the plaint on the ground that the mandatory final notice under Rule 3(3) had never been issued, so pre institution mediation had not been validly exhausted. By order dated 21 August 2025, the District Judge, Malshiras allowed the application and rejected the plaint, relying on the Supreme Court's ruling in Patil Automation Private Limited v. Rakheja Engineers Private Limited, (2022) 10 SCC 1, that Section 12A is mandatory and non compliance must result in rejection under Order VII Rule 11.

Contentions Of The Parties

The Appellant argued that Rule 3(1) casts only one duty on a party seeking mediation, namely filing Form 1 and paying the fee, which had been duly complied with. All subsequent steps, including issuance of notices and the final notice, are the exclusive responsibility of the Authority under Rule 3(2) to 3(4). Reliance was placed on Jang Singh v. Brij Lal, 1963 SCC OnLine SC 219, and Prem Aggarwal v. Mohan Singh, 2025 SCC OnLine SC 2189, for the maxim actus curiae neminem gravabit, meaning an act of the court shall prejudice no one, and on Kapil Goel v. Ram Dulare Yadav, 2022 SCC OnLine Del 3873, where the Delhi High Court held that a plaintiff's obligation is discharged once mediation is initiated in good faith.

The Respondents countered that Section 12A read with Rule 3 is mandatory in view of Patil Automation (supra) and Dhanbad Fuels (P) Ltd. v. Union of India, (2025) 9 SCC 424, and that non compliance by any person, whether the plaintiff or the Authority, must result in rejection of the plaint. Reliance was placed on Taylor v. Taylor, L.R. 1 Ch. D. 426, Chandra Kishore Jha v. Mahavir Prasad, (1999) 8 SCC 266, and J. Jayalalithaa v. State of Karnataka, (2014) 2 SCC 401, for the principle that a thing required by statute to be done in a particular manner must be done in that manner alone.

Findings Of The High Court

The Division Bench held that Section 12A of the Commercial Courts Act and Rule 3 of the 2018 Rules are indeed mandatory, following Patil Automation (supra) and Dhanbad Fuels (supra). However, on a plain reading of Rule 3, the Court found that only Rule 3(1) casts an obligation on the applicant party. Sub rules (2) to (4) place the entire responsibility for issuing notice, the final notice, and the non starter report on the Authority, in this case the Malshiras Taluka Legal Services Committee, chaired by the senior most judicial officer of that taluka.

Since the Appellant had filed Form 1 and paid the prescribed fee, his statutory obligation stood fully discharged. The failure to issue the final notice under Rule 3(3) was squarely an omission of the Authority, whose Chairman is a judicial officer, and therefore amounted to an act of the machinery of the court. Applying the maxim actus curiae neminem gravabit as explained in Jang Singh (supra) and Prem Aggarwal (supra), the Court held that a litigant cannot be made to suffer for an error committed by the court or its authorities.

The Court also endorsed the reasoning in Kapil Goel (supra) that a plaintiff's duty is limited to initiating pre institution mediation, and that where the defendant itself refuses to participate, the suit filed thereafter cannot be treated as barred by law. Since the Respondents, through counsel, categorically stated even at the appellate stage that they were unwilling to mediate, the Court found it unnecessary to remit the parties to mediation, as had been done in Deepak Raheja v. Ganga Taro Vazirani, 2021 SCC OnLine Bom 3124.

Decision

The Bombay High Court allowed the Commercial First Appeal, quashed and set aside the judgment and decree dated 21 August 2025, and rejected the Respondents' application under Order VII Rule 11. Commercial Suit No. 1 of 2024 was restored to the file of the District Judge, Malshiras, to proceed in accordance with law. The Court directed that there shall be no order as to costs.

Significance

The judgment clarifies the division of responsibility under Rule 3 of the Commercial Courts (Pre Institution Mediation and Settlement) Rules, 2018. While affirming that Section 12A remains mandatory, the Bombay High Court has made clear that a plaintiff's compliance is measured only against the duty actually assigned to him under Rule 3(1). Procedural lapses by the mediation Authority in issuing subsequent notices cannot be visited upon the plaintiff, and such lapses will not, by themselves, justify rejection of a plaint under Order VII Rule 11 of the Code of Civil Procedure, 1908.

Citation

Jivaraj Ravaji Gandhi v. Solapur Jilha Dudh Utpadak va Prakriya Sangh Maryadit Solapur and Ors., Commercial First Appeal No. 23 of 2025, Bombay High Court, decided 7 August 2026, (2026) ibclaw.in 4709 HC.