NETSYSNETWORK PVT LTD & ORS. v. SHAWNTEL CONSULTANCY SERVICES
Section 12A of the Commercial Courts Act is mandatory, but a defendant who has himself refused to take part in the mediation the court directed cannot obtain rejection of the plaint on the ground that mediation was not exhausted; for pecuniary jurisdiction at the Order VII Rule 11 stage only the plaint's claim, including interest up to filing, is looked at, and the defence figure is irrelevant.
By CA Nikhil Gupta · Reviewed against the retained judgment 2026-10-11
Shawntel Consultancy sued Netsysnetwork and its directors for ₹2.29 crore for unpaid supply invoices. The Court did not grant exemption from mediation but referred the parties to mediation, which the defendants refused to attend. When they then sought rejection of the plaint, the Division Bench held the objection academic and upheld the Single Judge.
What happened
The plaintiff, a partnership firm supplying IT hardware and software, said it supplied goods to the defendants under purchase orders of 14 October 2023, 27 October 2023 and 13 March 2024, with invoices of ₹98,60,630, ₹1,88,80,000 and ₹44,84,000 carrying interest at 24% per annum on delay. It said the defendants admitted dues but paid only ₹2,10,00,000 between 5 November 2024 and 4 January 2025, leaving ₹1,79,08,100. A summary suit, CS(OS) 454/2025, was returned on 25 November 2025 for presentation before the Commercial Division. The plaintiff then filed CS(COMM) 94/2026 on 28 January 2026 for ₹2,29,30,180 with an application for exemption from pre-institution mediation. On 27 April 2026 the Single Judge referred the parties to the Delhi High Court Mediation and Conciliation Centre. The defendants' appeal against that order and the order of 19 May 2026 was withdrawn on 27 July 2026 after counsel said they were not agreeable to mediation, and a Non-Starter Report dated 24 July 2026 had been issued. Their application under Order VII Rule 11 was dismissed by the Single Judge on 10 August 2026, and they appealed, arguing that there was no urgency and that the balance due was ₹1,21,96,712, below the pecuniary jurisdiction of this Court.
Questions before the court
- Can defendants who refused the court-directed mediation seek rejection of the plaint for non-compliance with section 12A, and does a lower figure admitted in defence affect pecuniary jurisdiction?
Why the court ruled this way
The Bench first noted that the proviso to section 13(1A) restricts appeals against Commercial Division orders to those listed under Order XLIII and section 37 of the Arbitration Act, and an order dismissing an Order VII Rule 11 application is not among them, so maintainability was in serious doubt, but it still examined the merits (paragraph 16). It accepted that section 12A is mandatory under Patil Automation and Dhanbad Fuels (paragraph 17). The object of section 12A is to give parties a meaningful chance to mediate, not to arm a defendant who has spurned mediation with a technical plea (paragraph 18). Here the plaintiff did not ignore the section, as the Court itself referred the parties to mediation and the defendants declined, so the objection was academic, and a party cannot take advantage of its own wrong (paragraphs 19 and 20). Rejecting the plaint would also be futile since the plaintiff could file again at once (paragraph 21). On pecuniary jurisdiction, only the plaint and its documents count at this stage and, under section 12(1)(a), money claimed with interest to the date of filing forms the specified value; the claim of ₹2,29,30,180 exceeds ₹2,00,00,000, and the defendants' figure rests on their own defence, which a court should not take up as a mini trial (paragraphs 23 to 25).
Controlling point
There was no illegality or perversity in the Single Judge's refusal to reject the plaint.
Order and next steps
The appeal was dismissed along with pending applications. The Court clarified that nothing in the order is an opinion on the merits and the suit shall be decided on its own merits in accordance with law.
Practical implications
A commercial defendant who is directed to mediation should take part, since declining to attend can leave a later plea of non-compliance with section 12A with no force; a plaintiff may note that interest to the date of filing counts toward the specified value.
Limits of this ruling
- The Court did not hold that exemption from section 12A is easily available or that a suit filed without mediation can proceed in general; its ruling depends on the court having referred the parties to mediation and the defendants declining it.
Law and judgment source
- Commercial Courts Act, 2015, sections 12(1)(a), 12A and 13(1A)
- Code of Civil Procedure, 1908, Order VII Rule 11
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Source checked: 2026-10-11 · Judgment paragraphs: paragraphs 1–28 · Later case history: not verified. Verify appeals, stays and subsequent orders before reliance.
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