M/s Dhanbad Fuels Private Limited vs. Union of India & Anr. (CIVIL APPEAL) – Supreme Court of India Judgment

I. Case Identification & Vitals

1. Court
Supreme Court of India

2. Case Title
M/s Dhanbad Fuels Private Limited vs. Union of India & Anr.

3. Document Type and Date of Judgment
Judgment, May 15, 2025

4. Case Number
CIVIL APPEAL/6846/2025 (Arising out of Special Leave Petition (C)/4980/2021)

5. SCR Citation
NA

6. Neutral Citation
2025 INSC 696

7. Disposal Nature
Appeal Dismissed

8. Case Type
CIVIL APPEAL

9. Law Applicable
Commercial Law, Civil Procedure, Mediation Law

10. Issue for Consideration
The central issue is whether a commercial suit filed after the enactment of Section 12A of the Commercial Courts Act, 2015, but before the Supreme Court’s declaration of its mandatory nature in Patil Automation, should be rejected for non-compliance with the pre-institution mediation requirement, or if it can be kept in abeyance to allow the parties to undergo mediation.

11. Headnote
The Supreme Court clarified the application of its previous judgment in Patil Automation, which had declared Section 12A of the Commercial Courts Act, 2015 (mandating pre-institution mediation) to be mandatory. The Court held that the consequence of rejecting a plaint for non-compliance with Section 12A applies prospectively only to suits filed on or after August 20, 2022. For suits filed before this date without exhausting the remedy of mediation, the courts should not reject the plaint but instead keep the suit in abeyance and refer the parties to a time-bound mediation process. This approach, the Court reasoned, harmonizes the mandatory nature of the provision with the practical difficulties that existed before the law was settled, thereby preventing unnecessary delays and forfeiture of court fees. The appeal seeking rejection of the plaint was accordingly dismissed.

12. Short Summary in Normal Language
The Supreme Court ruled on how to handle commercial lawsuits filed without first trying mediation, as required by law. For suits filed before August 20, 2022, the Court decided they should not be dismissed. Instead, these cases will be put on hold (kept in abeyance), and the parties will be directed to attempt mediation. This decision balances the mandatory nature of pre-suit mediation with fairness, preventing old cases from being thrown out due to previous legal uncertainty.

13. Bench

1. Hon’ble Justice J.B. Pardiwala
2. Hon’ble Justice R. Mahadevan

14. Judgment Authored by
Hon’ble Justice J.B. Pardiwala*

II. Procedural & Factual Background

15. Case Start Date
NA

16. Case Arising From
The appeal challenges a judgment and order of the High Court at Calcutta, dated February 22, 2021. The High Court had disposed of a revision application filed by the appellant (the defendant in the original suit). The High Court, instead of rejecting the plaint for non-compliance with the mandatory pre-institution mediation under Section 12A of the Commercial Courts Act, 2015, directed that the suit be kept in abeyance for seven months to allow the parties to undergo mediation. The appellant challenged this order, arguing that the plaint should have been rejected outright under Order VII Rule 11 of the CPC.

17. Background and Facts
The respondent, the Union of India, filed a money suit against the appellant company on August 9, 2019, in the Commercial Court at Alipore for the recovery of over ₹8.73 crores. The suit did not seek any urgent interim relief. The appellant, in its written statement, raised a preliminary objection that the suit was not maintainable because the plaintiff had not exhausted the mandatory remedy of pre-institution mediation as required by Section 12A of the Commercial Courts Act, 2015.

The appellant later filed an application under Order VII Rule 11(d) of the CPC, seeking the rejection of the plaint on this ground. The Commercial Court dismissed this application, noting that the necessary infrastructure for commercial mediation was not fully in place at the time the suit was filed. However, it referred the parties to mediation. The appellant challenged this order in the High Court, which upheld the trial court’s approach of keeping the suit in abeyance and directing the parties to mediation, rather than rejecting the plaint.

18. Timeline

• July 3, 2018: Section 12A of the Commercial Courts Act, 2015, and the PIMS Rules came into force.
• August 9, 2019: The Union of India filed the money suit against the appellant.
• December 20, 2019: The appellant filed its written statement, raising the issue of non-compliance with Section 12A.
• December 21, 2020: The Commercial Court rejected the appellant’s application under Order VII Rule 11 CPC but referred the parties to mediation.
• February 22, 2021: The High Court disposed of the appellant’s revision petition, upholding the trial court’s order to keep the suit in abeyance for mediation.
• August 20, 2022: The date from which the Supreme Court’s declaration in Patil Automation regarding the mandatory rejection of plaints for non-compliance with Section 12A became effective.
• May 15, 2025: The Supreme Court dismissed the present appeal.

19. Parties Involved

• Appellant/Defendant: M/s Dhanbad Fuels Private Limited
• Respondents/Plaintiffs: Union of India & Anr.

20. Procedural History

• Lower Court/Tribunal Decisions: The Commercial Court, Alipore, rejected the appellant’s application to dismiss the suit under Order VII Rule 11 CPC. It held that since the infrastructure for pre-institution mediation was not fully established when the suit was filed, it would be unjust to reject the plaint. Instead, it referred the parties to post-institution mediation.
• Appeals: The appellant filed a civil revision application before the High Court at Calcutta. The High Court upheld the trial court’s approach, ruling that keeping the suit in abeyance for mediation was a more appropriate course of action than outright rejection. The appellant then filed the present appeal in the Supreme Court.

III. Legal Analysis & Arguments

21. Issues Framed
Not explicitly framed, but the two main questions analyzed were:

1. Whether the High Court erred in keeping the suit in abeyance for mediation instead of rejecting the plaint for non-compliance with Section 12A of the Commercial Courts Act.
2. What is the correct procedure for suits filed before the Supreme Court’s decision in Patil Automation (i.e., before August 20, 2022) that did not comply with the mandatory pre-institution mediation requirement?

22. Areas of Debate

1. The interpretation of the mandatory nature of Section 12A of the Commercial Courts Act, 2015.
2. The effect of the prospective application of the Supreme Court’s ruling in Patil Automation.
3. The applicability of the legal maxim lex non cogit ad impossibilia (the law does not compel the impossible) in situations where the infrastructure for mediation was not yet in place.
4. The scope of a court’s power under Order VII Rule 11 CPC in the context of non-compliance with a mandatory pre-litigation requirement.

23. Cases Cited by Petitioner/Appellant

• Patil Automation Private Limited and Others v. Rakheja Engineers Private Limited ((2022) 10 SCC 1): The primary case relied upon to argue that Section 12A is mandatory and non-compliance must lead to the rejection of the plaint.
• I.C. Golaknath and others v. State of Panjab and others (AIR 1967 SC 1643): Cited on the doctrine of prospective overruling.

24. Cases Cited by Respondent/Defendant

• Raj Kumar Dey v. Tarapada Dey ((1987) 4 SCC 398): Cited to support the argument that the law does not compel an impossible performance (lex non cogit ad impossibilia), as the infrastructure for mediation was not available when the suit was filed.

25. Acts/Rules/Orders Referred

1. Commercial Courts Act, 2015
   • Section 12A: This is the central provision of the case. It mandates that a suit (which does not seek urgent interim relief) shall not be instituted unless the plaintiff has exhausted the remedy of pre-institution mediation. The Court analyzed its mandatory nature and the consequences of non-compliance.
2. Code of Civil Procedure, 1908 (CPC)
   • Order VII Rule 11(d): This rule provides for the rejection of a plaint if the suit appears from the statement in the plaint to be barred by any law. The appellant sought rejection of the plaint under this provision.
3. Pre-Institution Mediation and Settlement Rules, 2018 (PIMS Rules): These rules lay down the procedure for conducting the pre-institution mediation mandated by Section 12A.

26. Acts/Rules/Orders Governing the Case

1. Commercial Courts Act, 2015
2. Code of Civil Procedure, 1908

27. Literature Citation
NA

28. Appearances for Parties

• Advocates:
  • For the Appellant: Mr. Vikas Singh, Senior Counsel
  • For the Union of India: Ms. Archana Pathak Dave, Additional Solicitor General
• Witnesses: NA
• Other Persons: NA

29. Prayer
The appellant prayed for the appeal to be allowed and for the plaint filed by the Union of India to be rejected for non-compliance with Section 12A of the Commercial Courts Act, 2015.

30. Evidence & Findings
NA

31. Petitioner/Appellant Arguments

1. Section 12A of the Commercial Courts Act is mandatory, as held in Patil Automation.
2. Since the suit was filed without exhausting the remedy of pre-institution mediation, the plaint must be rejected under Order VII Rule 11 CPC.
3. The High Court erred in keeping the suit in abeyance instead of rejecting it.
4. The prospective application of the Patil Automation ruling should not save the present suit, as it is still at a nascent stage.

32. Respondent/Defendant Arguments

1. The suit should not be dismissed for non-compliance because the necessary infrastructure for pre-institution mediation (such as a panel of trained mediators and a Standard Operating Procedure) was not in place when the suit was filed in 2019.
2. The legal maxim lex non cogit ad impossibilia applies, as it was impossible for the Union of India to comply with Section 12A at that time.
3. The Supreme Court’s decision in Patil Automation explicitly made the consequence of rejection of the plaint prospective, effective from August 20, 2022. Since the present suit was filed before that date, it is protected by this prospective ruling.
4. The High Court’s approach of keeping the suit in abeyance and referring the parties to mediation strikes a perfect balance and serves the interests of justice.

V. Judgment & Conclusion

33. Ratio Decidendi

1. The requirement of pre-institution mediation under Section 12A of the Commercial Courts Act, 2015, is mandatory for any suit that does not contemplate urgent interim relief.
2. The consequence of non-compliance with Section 12A, which is the rejection of the plaint under Order VII Rule 11 CPC, applies prospectively only to suits instituted on or after August 20, 2022, as declared in Patil Automation (supra).
3. For commercial suits filed before August 20, 2022, without complying with Section 12A, the correct approach for the court is not to reject the plaint but to keep it in abeyance and refer the parties to a time-bound mediation process. This harmonizes the mandatory nature of the provision with the practical realities and legal uncertainty that existed before the law was settled.
4. The equitable maxim lex non cogit ad impossibilia (the law does not compel the impossible) can be considered in situations where compliance with a statutory mandate was not feasible due to a lack of necessary infrastructure.

34. Final Decision
The appeal is dismissed. The Supreme Court found no error in the High Court’s order, which had kept the suit in abeyance and referred the parties to mediation instead of rejecting the plaint.

35. Legal Jargons and Maxims

1. Pre-institution Mediation: A mandatory process of mediation that must be attempted before a commercial suit can be filed in court, as required by Section 12A of the Commercial Courts Act.
2. Order VII Rule 11 CPC: A provision in the Code of Civil Procedure that allows a court to reject a plaint at the preliminary stage on specific grounds.
3. Prospective Overruling/Application: A judicial doctrine where a new interpretation or declaration of law is made applicable only to future cases, not to past ones, to avoid unsettling previously decided matters.
4. Lex non cogit ad impossibilia: A Latin maxim meaning “the law does not compel the impossible.” It is an equitable principle used to excuse non-compliance with a legal requirement when performance was impossible.

36. Exhibits
NA

37. Key Learnings for Law Students and Legal Professionals
This judgment provides several important lessons for students and professionals, particularly in commercial and procedural law:

1. The Evolution of a Mandatory Provision: The most important finding is the Court’s nuanced clarification of how a mandatory statutory provision (Section 12A) should be applied in practice, especially during its “nascent stage.” It teaches that while a provision may be mandatory from its inception, the consequences of its breach can be applied prospectively to ensure fairness and avoid chaos.
2. Harmonious Construction of Precedents: This case is an excellent example of how to harmoniously interpret a landmark judgment like Patil Automation. The Court carefully balanced the declaration that Section 12A is mandatory with the direction that the consequence of rejection is prospective. This demonstrates the importance of reading a judgment in its entirety and not relying on isolated paragraphs.
3. The Role of Practicality in Justice: The judgment underscores the principle that law and procedure must serve the ultimate goal of justice. The Court’s decision to favour post-institution mediation for older cases, rather than outright rejection, was driven by practical considerations like preventing the forfeiture of court fees and avoiding further delays. This is a key lesson in the application of equitable principles.
4. The Maxim Lex Non Cogit Ad Impossibilia: The case provides a modern application of this ancient equitable maxim. The Court acknowledged that the lack of mediation infrastructure made compliance with Section 12A impossible when the suit was filed. This shows that courts can and will consider practical impossibilities when assessing non-compliance with a statutory mandate.
5. The Purpose of Pre-institution Mediation: The judgment reinforces the legislative intent behind Section 12A—to decongest courts and encourage settlement. By directing the parties to mediation even in a pending suit, the Court ensured that this legislative object was not defeated, even while protecting the suit from dismissal on a technicality.

Keyword related to this judgment

Section 12A Commercial Courts Act, Mandatory Pre-Institution Mediation, Patil Automation Judgment Explained, Prospective Overruling by Supreme Court, Order VII Rule 11 CPC, Rejection of Plaint, Lex Non Cogit Ad Impossibilia, Dhanbad Fuels vs Union of India, Commercial Suit Mediation, Urgent Interim Relief in Commercial Courts.