Bombay High Court Refers ₹18.58 Crore Construction Dues Dispute Against Piramal Sunteck Realty To Mediation

The Bombay High Court has referred a ₹18.58 crore construction dues dispute between Oram Realty Pvt Ltd and Piramal Sunteck Realty Pvt Ltd arising out of civil works executed at the Signia Waterfront project in Airoli, Navi Mumbai, to mediation.

The court held that the plaintiff failed to establish urgency for bypassing the mandatory pre-institution mediation requirement under Section 12A of the Commercial Courts Act.

Justice Milind N. Jadhav directed the parties to explore mediation while keeping the suit and all pending interim applications in abeyance. The Court further directed that the mediation process be completed within three months, extendable by a further two months with the consent of the parties.

Observing that the dispute should be referred to mediation rather than the suit being rejected under Order VII Rule 11 of the Code of Civil Procedure, Justice Jadhav ruled,

“However, considering the timeline in the present case, I am of the opinion that it would be appropriate if the present suit proceeding is kept in abeyance with a direction to the parties to explore mediation rather than dismissing the Suit under Order VII Rule 11 since the Plaintiff has admittedly carried out the works under the Works Contract but there are disputed questions."

"Further direction is given that the mediation proceedings between the parties hereto must be completed within a fixed time frame as stipulated by Section 12-A i.e. within a period of three (3) months and it is made extendable by further two (2) months with the consent of parties, if the need so arises.” the court added.

The dispute arose from a work order dated February 1, 2016 under which Oram Realty was engaged as a civil contractor for the “Signia Waterfront” residential project at Airoli, Navi Mumbai, developed by Piramal Sunteck Realty, a joint venture between the Piramal and Sunteck groups.

Oram Realty filed a commercial suit seeking recovery of ₹18.58 crore, including an alleged outstanding amount of ₹12.74 crore and compensation of ₹5.83 crore. The company also challenged a No Claim Certificate executed in February 2021, alleging that it had been obtained under duress and coercion.

Piramal Sunteck sought rejection of the suit under Order VII Rule 11 of the Code of Civil Procedure, contending that Oram Realty had instituted the proceedings without first exhausting the mandatory remedy of pre-institution mediation under Section 12A of the Commercial Courts Act.

The court observed that the chronology of events did not disclose any genuine urgency warranting exemption from the statutory mediation requirement. It noted that the work order dated back to 2016, the No Claim Certificate was executed in 2021, a legal notice was issued in July 2023 and the suit was filed in July 2024.

The Court also noted that even after filing the suit, the plaintiff did not press its interim application for urgent reliefs. Holding that the plaintiff had no right to bypass Section 12A by pleading grave urgency, Justice Jadhav observed:

“The above timeline from 2016 to 2026 and more specifically from 2023 to 2026, prima facie, shows that even after filing of the Suit on 23.07.2024 Plaintiff had enough time to go through preinstitutional mediation which could have been in accordance with law. Instead, Plaintiff has unilaterally considered mediation to be a futile exercise and has invoked urgency for exempting the same. In the above facts, I am of the opinion that Plaintiff has abused the due process of law and he has no right to bypass the statutory provision under Section 12-A of said Act by pleading grave urgency.”

The court further held that the plaintiff could not unilaterally treat mediation as futile and bypass the statutory mandate. Referring to the Supreme Court's decision in 'Patil Automation Pvt. Ltd. v. Rakheja Engineers Pvt. Ltd.',

It reiterated that Section 12A is mandatory and that the Supreme Court has held that suits instituted in violation of the provision are liable to rejection under Order VII Rule 11.

However, instead of rejecting the suit, the Court considered it appropriate to keep the proceedings in abeyance and direct the parties to undergo mediation.

Noting that Oram Realty had admittedly carried out work under the contract and that disputed questions remained, Justice Jadhav held that keeping the suit in abeyance while directing mediation would be the appropriate course.

Accordingly, the court directed that mediation be completed within three months, extendable by a further two months with the consent of the parties.