Pre-Litigation Mediation Mandate Cannot Be Used To 'Cold-Storage' Urgent Commercial Suits: Telangana High Court

The Telangana High Court has recently observed that mandatory pre-litigation mediation cannot be used to stall urgent commercial suits.

Section 12A of the Commercial Courts Act, it said, cannot “cold-storage urgent claims.” Nor can it be used for “arm-twisting” a plaintiff seeking interim protection.

A Division Bench of Justice Moushumi Bhattacharya and Justice Gadi Praveen Kumar dismissed a revision plea, upholding an order of the Commercial Court which exempted Ras Al Khaimah Investment Authority (RAKIA) from the requirement of pre-litigation mediation.

“Section 12A of the CCA cannot be used to cold-storage urgent claims,” the Bench observed.

The revision petition arose from an order dated January 28, 2026, by which the Commercial Court allowed RAKIA's application seeking exemption from mediation under Section 12A.

The dispute traces back to a joint venture governed by a Shareholders' Agreement dated April 6, 2007 between RAKIA and the Penna Group. On March 13, 2025, members of the Penna Group executed a Shareholders' Agreement and Share Purchase Agreement with Al Plus, a subsidiary of United Company RUSAL, for transfer of up to 50% of the company's shares in stages. RAKIA was not a party to these agreements and alleged that they were in breach of the 2007 Shareholders' Agreement.

RAKIA became aware of the RUSAL transaction on March 14, 2025 through a public announcement. It sought copies of the agreements. Copies were not furnished. It was allowed a limited inspection on July 5, 2025 for two hours. On July 7, 2025, the company adopted restated Articles of Association incorporating the RUSAL Shareholders' Agreement. RAKIA voted against the resolution.

On September 5, 2025, Al Plus became a 26% shareholder. RAKIA sought undertakings that no further steps would be taken in relation to the transaction. The requests were refused. On January 5, 2026, the defendants expressly declined to provide the undertaking.

RAKIA filed Commercial Suit No. 6 of 2026 on January 19, 2026 seeking declaration and injunction. It also sought exemption from pre-litigation mediation on the ground of urgency. The Commercial Court granted the exemption. That order was challenged before the High Court.

The Bench noted that the last trigger for filing the suit was the refusal to provide an undertaking against proceeding with further stages of the RUSAL transaction.

“We find that the plaintiff required urgent interim protection in view of the petitioners and the defendants closing ranks for keeping the plaintiff in the dark from March 2025 to January 2026,” the Court held.

The Court examined the scope of Section 12A. It reiterated that mediation is mandatory only where the suit does not contemplate urgent interim relief. The Court must assess urgency at the time of institution of the suit.

“Hence, a decision as to whether a plaintiff is entitled to exemption from pre-litigation mediation must be made at the stage where the plaintiff shows that the suit would be rendered infructuous if the plaintiff is made to wait for 120 + 60 days to exhaust the remedy of mediation,” the Bench observed.

The Court held that the Commercial Court had applied the correct test. It had not examined the merits of the injunction. It had only assessed whether urgent interim protection was required. The High Court found no error in that approach.

Rejecting the argument that the plaintiff had delayed since March 2025, the Bench held that the facts did not show “somnolence or lack of diligence.” The plaintiff had been kept “in limbo” and information had been disclosed “in driblets.”

“Section 12A does not contemplate arm-twisting by a defendant to shove the plaintiff's need for interim protection to the backburner,” the Bench said.

Finding no legal or factual flaw in the impugned order, the Court dismissed the revision petition.

For Petitioners: Senior Advocate Avinash Desai and Advocate Kopal Sharraf

For Respondents: Senior Advocate S. Ravi and Advocate G. Vamshi Krishna