Case Summary: M/S Dhanbad Fuels Private Limited v. Union of India & Anr. (2025) | Section 12A of the Commercial Courts Act, 2015

The judgment delivered by the Supreme Court in M/S Dhanbad Fuels Pvt. Ltd. v. Union of India & Anr. addresses a significant procedural issue concerning the mandatory nature of Section 12A of the Commercial Courts Act, 2015 (“the Act”). This provision mandates pre-institution mediation for commercial suits that do not contemplate urgent interim relief.

The case involves the interpretation, scope, and consequences of non-compliance with Section 12A, particularly in light of the Court’s earlier decision in Patil Automation Pvt. Ltd. v. Rakheja Engineers Pvt. Ltd. (2022) 10 SCC 1.

Case Title: M/S Dhanbad Fuels Private Limited v. Union of India & Anr.

Court: Supreme Court of India

Citation: Civil Appeal No. 6846 of 2025 

Bench: Hon’ble Mr. Justice J.B. Pardiwala

Date of Judgment: 15 May 2025

Factual Matrix

• The Union of India filed Money Suit No. 28 of 2019 in the Commercial Court at Alipore seeking recovery of ₹8.73 crores from Dhanbad Fuels Pvt. Ltd. for differential freight and penalty. Notably, the suit did not seek any urgent interim relief.
• The defendant (appellant) filed a written statement in December 2019 and later filed an application under Order VII Rule 11(d) CPC seeking rejection of the plaint for non-compliance with Section 12A of the Commercial Courts Act and the PIMS Rules, 2018.
• The Commercial Court dismissed the application on 21.12.2020, citing infrastructural deficiencies and delay in raising objections. It instead referred the matter for post-institution mediation.
• A revision petition was filed before the Calcutta High Court, which disposed of it by keeping the suit in abeyance for 7 months and directed the Union to comply with Section 12A via the District Legal Services Authority (DLSA).
• Dissatisfied with the High Court’s order, Dhanbad Fuels appealed before the Supreme Court.

Issues Before the Court

• Whether non-compliance with Section 12A of the Commercial Courts Act mandate rejection of the plaint under Order VII Rule 11(d) CPC?
• Whether suits instituted before the decision in Patil Automation are saved due to the prospective nature of the judgment?
• Whether lack of infrastructure at the time of filing the suit constitutes a valid ground for bypassing Section 12A?

Submissions of the Parties

A. Appellant (Dhanbad Fuels Pvt. Ltd.)

1. Senior Advocate Vikas Singh argued that Section 12A is mandatory and that the plaint should have been rejected for failure to comply.
2. Cited Patil Automation where the Supreme Court explicitly held that non-compliance with Section 12A attracts rejection under Order VII Rule 11.
3. Argued that the suit, being in a nascent stage, was distinguishable from the cases where substantial trial had occurred, and thus should be rejected.
4. Claimed that allowing the suit to continue would defeat the purpose of Section 12A, and filing a fresh suit would not cause limitation issues since the Union of India enjoys a 30-year limitation period under Article 112 of the Limitation Act.

B. Respondent (Union of India)

1. ASG Archana Pathak Dave defended the High Court’s approach, highlighting that infrastructural gaps made compliance impossible at the time the suit was filed.
2. Argued that the Patil Automation judgment applies prospectively from 20.08.2022, protecting suits like the one at hand.
3. Asserted that the goal of Section 12A is to reduce litigation, not penalise litigants, and suits involving public money should not be frustrated due to administrative delays.
4. Emphasised the maxim lex non cogit ad impossibilia — the law does not compel the impossible — as the mediation mechanism was not fully operational in West Bengal in August 2019.

Court’s Analysis

A. Legislative Intent of Section 12A

The Court underscored that Section 12A, introduced via the 2018 Amendment, aimed to decongest courts and encourage alternative dispute resolution.

The provision mandates pre-institution mediation for all commercial suits not involving urgent interim relief, and prescribes a detailed framework through the Pre-Institution Mediation and Settlement Rules, 2018.

B. Is Section 12A Mandatory?

• Reaffirming Patil Automation, the Court held that Section 12A is indeed mandatory, and any suit instituted in contravention must be rejected under Order VII Rule 11(d).
• The Court cited para 99 of Patil Automation to show the compelling legislative intent behind enforcing pre-litigation mediation.
• However, it reiterated the key point: Patil Automation applies prospectively from 20 August 2022.

C. What Constitutes “Urgent Interim Relief”?

• The Court referred to Yamini Manohar v. T.K.D. Keerthi (2024) 5 SCC 815 to explain that merely claiming urgent relief is insufficient — courts must apply their mind to the nature of the claim.
• In this case, no interim relief was sought by the Union of India, so the exception in Section 12A(1) was inapplicable.

D. Effect of Prospective Application of Patil Automation

Since the Union’s suit was filed in August 2019, well before the cut-off date of 20.08.2022, it was protected from automatic rejection under the Patil Automation ruling.

The Court emphasised that prospective overruling was employed to protect bona fide litigants during a period of infrastructural uncertainty and varied High Court interpretations.

E. Lex Non Cogit Ad Impossibilia

The Court accepted that the Union could not have complied with Section 12A in 2019 due to absence of:

• Trained mediators (panel formed only in January 2020)
• SOPs for pre-institution mediation (notified only in December 2020)

Thus, the law could not expect compliance with a framework that did not yet exist.

Conclusion and Decision

• The Court upheld the Calcutta High Court’s approach of keeping the suit in abeyance and directing the parties to undergo mediation via DLSA.
• Rejected the appellant’s plea for rejection of plaint, holding that:

Section 12A is mandatory, but

Its mandatory rejection consequence was not applicable to suits filed prior to 20.08.2022, such as the present one.

Infrastructural delay in implementing mediation rules and SOPs further excused non-compliance.

• The appeal was dismissed with no order as to costs.

Key Takeaways

1. Section 12A of the Commercial Courts Act, 2015 is mandatory, but its non-compliance does not result in automatic rejection for suits filed before 20.08.2022 (Patil Automation).
2. Urgent interim relief must be real and substantiated. It cannot be a cloak to bypass mediation.
3. Courts may adopt an equitable approach where institutional shortcomings exist — law does not expect performance of the impossible.
4. The Court can suo motu reject a plaint for violation of Section 12A in post-Patil cases, even in absence of a defendant’s plea.
5. Pre-institution mediation is a critical legislative tool to foster “ease of doing business” and streamline commercial dispute resolution.

Click Here to Read the Official Judgment