Determination of Specified Value and Pre-Institution Mediation of Commercial Disputes

Determination of Specified Value and Pre-Institution Mediation of Commercial Disputes


Specified Value
Section 2(i) of Act [1] explains the word ‘specified value’ with relation to commercial dispute as to the value of the subject-matter of a suit as determined in accordance with Section 12 of the said Act.
The amount for the subject matter of the suit must be equal to or more than Rs. 1 crore or any higher value which is notified by the Central Government.
The transactional disputes which qualify as a commercial dispute, are mentioned in the Act itself. [2] If the valuation of the subject matter in these commercial disputes is not less than Rs. 1 crore, this Court as the Commercial Division of the High Court would have jurisdiction. [3] Once a plaintiff seeks to bring a suit, which otherwise is below the minimum pecuniary jurisdiction of this Court for original civil disputes, he must establish that the suit arose out of a commercial dispute. [4]

Determination of Specified Value
According to Section 12 of the act, the Specified Value concerning the commercial dispute will be established in the following manner: [5]
i. When the relief prayed is for recovery of any money, the money which is sought to be recovered inclusive of any underlying interest shall be calculated up to the date of filing of such suit or application;
ii. When the relief prayed narrates to movable property or any right accruing therein, the market value of such movable property as on the date of filing.; [6]
iii. When the relief prayed is related to immovable property or any right accruing therein, the market value of the immovable property, as on the date of filing; [7]
iv. When the relief prayed relates to any intangible right [8], the market value of the rights that will be assessed by the plaintiff;
v. When the counterclaim is preferred, the total value of the subject-matter of the dispute in such a counterclaim as specified on the date of the counterclaim.

Introduction of Mandatory Pre-institution Mediation
(a) Scope and Extent
The Act [9] provides that the remedy of pre-institution mediation has to be exhausted before a plaintiff files a suit that does not contemplate any urgent interim relief. 
The authority constituted under the Legal Services Authorities Act, 1987 will conduct the pre-institution mediation. This process of pre-institution mediation will be regulated with the rules that are notified by the Central Government. [10] This pre-institution mediation has to be conducted within 3 months from the date of filing of the application by the plaintiff, although this period can be extended with the mutual consent by parties. [11]
Plaintiff is not required to mandatorily go through pre-institution mediation where a suit contemplates an urgent interim relief. Such cases can arise if mediation would result in an irreparable loss; irreparable loss being one of the essential elements for the grant of an injunction. [12]
If a court is sufficiently convinced that the relief sought by a plaintiff is not of urgent nature and the plaintiff must go for pre-institution mediation, it can refuse to issue summons and also reject the plaint as being barred under Order VII Rule 11(d) of Civil Procedure Code, 1908.

(b) Confidentiality  
The mediator, parties, or their authorized representatives or counsel shall maintain confidentiality about mediation and the mediator shall not allow stenographic or audio or video recording of mediation sittings. [13] This is in the nature of external confidentiality. The mediator shall also maintain the internal confidentiality of discussions made in separate sittings with each party and only such facts which a party permits can be shared with the other party. [14] There exists a duty upon the mediator to uphold the principles of trust and confidentiality. [15]  

References
[1] Section 2(i). The Commercial Courts Act, 2015.
[2] Section 2(1)(c) in Clauses (i) to (xxii)
[3] Section 7 read with Section 2(1) of the Commercial Courts Act.
[4] Shriram EPC v. Rioglass Solar SA, 2018 SCC Online SC 1471.
[5] Section 12, The Commercial Courts Act, 2015.
[6] M. V. Durga Prasad, Commentary on The Commercial Courts Act, 2015 44 (Asia Law House, Hyderabad, 1st edn. 2018).
[7] Mukesh Kumar Gupta v. Rajneesh Gupta, 2016 SCC Online Del 3148.
[8] Microsec Capital Limited v. Ankit Bimal Deorah, 2016 SCC Online Bom 4795.
[9] Section 12A, inserted by The Commercial Courts, Commercial Division and Commercial Appellate Division Of High Courts (Amendment) Act, 2018
[10] Section 21A, The Commercial Courts Act, 2015.
[11] Rules under Commercial Courts (Pre-institution Mediation and Settlement) Rules, 2018 [Section 21A read with Section 12A, The Commercial Courts Act, 2015.]
[12] M/s M.K. Food Products v. M/s S.H. Food Products, Civil (Revision) Petition No. 3690/2018; GSD Constructions Pvt. Ltd v Balaji Febtech Engineering, MANU/MP/0451/2019.
[13] Rule 9, Commercial Courts (Pre-institution Mediation and Settlement) Rules, 2018
[14] Rule 7(1)(vi), Commercial Courts (Pre-institution Mediation and Settlement) Rules, 2018
[15] Rule 12, Commercial Courts (Pre-institution Mediation and Settlement) Rules, 2018