Party Choosing Pre-Suit Mediation Must End It Before Invoking Arbitration: Madras High Court

The Madras High Court on 28 September held that a party cannot invoke the Arbitration and Conciliation Act, 1996 while pre-institution mediation proceedings it had voluntarily initiated under Section 12A of the Commercial Courts Act, 2015 remain pending.

Justice K. Kumaresh Babu dismissed Grand Blue Projects Pvt Ltd's application under Section 9 of the Arbitration Act, seeking to restrain True Value Home India Pvt Ltd and TVH Estates Chennai Pvt Ltd from dealing with the disputed property. The Bench observed:

“This Court is of the view that the applicant, who had come before this Court cannot be allowed to invoke the provisions of the Arbitration Act without putting an end to the proceedings initiated under the Commercial Courts Act.”

The dispute arose from rights claimed by Grand Blue Projects under a memorandum of understanding concerning the Schedule B property.

Grand Blue alleged that True Value Home India and TVH Estates Chennai were unilaterally dealing with the property by selling it and creating third-party rights. It therefore approached the High Court seeking an interim injunction restraining the two companies from transferring, selling, encumbering or otherwise dealing with the property.

However, before approaching the High Court under the Arbitration Act, Grand Blue had initiated pre-institution mediation under Section 12A of the Commercial Courts Act.

On 28 August 2026, it approached the legal services authorities at Chengalpattu for pre-institution mediation. The District Mediation and Conciliation Centre subsequently issued notices on 18 September 2026, requiring the parties to appear on 22 September 2026, with a further date fixed for 5 October 2026.

While the mediation proceedings remained pending, Grand Blue moved the High Court under Section 9 of the Arbitration Act. It e-filed the application on 21 September 2026 and physically presented it on 22 September, the date fixed for the mediation proceedings.

True Value Home India and TVH Estates Chennai opposed the application, arguing that Grand Blue could not pursue relief under the Arbitration Act while the proceedings it had voluntarily initiated under the Commercial Courts Act remained pending.

Grand Blue submitted that the non-disclosure was an oversight caused by the urgency of protecting the property. It maintained that arbitration was the remedy contemplated under the parties' arrangement and submitted that it would be advised to withdraw the proceedings before the Legal Services Authority. It also stressed that immediate protection was necessary in view of the alleged attempt to sell the property and create third-party rights.

Respondents, on the other hand, submitted that they had no objection to Grand Blue continuing with the proceedings it had already initiated under the Commercial Courts Act.

The Court held that Grand Blue could not shift to the arbitration route while the earlier proceedings remained pending. It noted that Grand Blue had voluntarily initiated the Commercial Courts Act process and, in those circumstances, could be deemed to have given up its right to initiate arbitration at that stage. Further, the Bench found that Grand Blue's affidavit failed to disclose the initiation of the pre-institution mediation proceedings. It observed:

“The applicant had also come to this Court with unclean hands by suppressing the initiation of the proceedings under the Commercial Courts Act”

Accordingly, the High Court dismissed the application for interim relief, holding that Grand Blue was not entitled to relief under the Arbitration Act at that stage. However, it clarified that the dismissal would not permanently bar Grand Blue from pursuing arbitration and granted liberty to approach it again after withdrawing the proceedings pending under the Commercial Courts Act.

No costs were imposed.

Appearances for Grand Blue Projects Pvt Ltd: Senior Advocate Abdul Hameed, instructed by Advocate Anbarasi Rajendran.

Appearances for True Value Home India Pvt Ltd and TVH Estates Chennai Pvt Ltd: Senior Advocate Sathish Parasaran, instructed by Advocate V.G. Suresh Kumar. Grand Blue v. True Home