C&M E-ALERT: SUPREME COURT CLARIFIES TEST TO DETERMINE URGENCY TO EXEMPT PRE-LITIGATION MEDIATION IN COMMERCIAL SUITS
- Rahul Narayan
- Oct 30
- 4 min read
On 27 October 2025, the Supreme Court of India (“SC”) in Novenco Building & Industry A/S v. Xero Energy Engineering Solutions Pvt. Ltd. & Anr., 2025 INSC 1256, delivered a significant judgment on the scope and interpretation of Section 12A of the Commercial Courts Act, 2015, particularly in the context of intellectual property rights (“IPR”) disputes alleging continuing infringement.
Section 12A mandates pre-institution mediation, which can only be skipped in case the suit “contemplates any urgent relief.” The Court has clarified that this determination must be made from the point of view of the plaintiff and therefore taking into account issues such as the continuing nature of the infringement and the immediacy of the harm alleged.
Novenco Building & Industry A/S (“Appellant”) is a Danish manufacturer of highly efficient industrial fans marketed under the brand ‘Novenco ZerAx’. The Appellant alleged that Xero Energy Engineering Solutions Pvt. Ltd. and its associated company Aeronaut Fans Pvt. Ltd. (“Respondents”), who were previously associated with Novenco, were manufacturing and selling fans identical to the Appellant’s products that infringed its patents, registered designs, and trademarks.
Upon discovering the alleged infringement in December 2023, the Appellant gathered evidence, including an expert’s affidavit on the infringing products, and subsequently filed a commercial suit before the Delhi High Court (“DHC”) in June 2024, seeking urgent interim relief.
The DHC, however, rejected the plaint under Order VII Rule 11 of the Code of Civil Procedure, holding that the Appellant had not complied with Section 12A of the Commercial Courts Act as the plaint did not disclose any bona fide urgency to bypass pre-institution mediation. On an appeal the Division Bench of DHC affirmed this view, observing that the time gap between discovery and filing defeated the claim of urgency.
The Appellant, aggrieved by the judgement of the Division Bench of DHC approached the SC, contending that the infringement was continuing and that each day of unauthorised manufacture and sale caused fresh and irreparable harm to its intellectual property and market reputation.
Whether a suit alleging continuing infringement of intellectual property rights can be exempted from the requirement of pre-institution mediation under Section 12A of the Commercial Courts Act on the ground that it “contemplates urgent interim relief”.
The SC allowed the appeal and restored the suit before DHC holding that in cases involving allegations of continuing infringement of IPR, the question of whether a suit “contemplates urgent interim relief” must be assessed from the perspective of the plaintiff. The SC observed that the harm caused by ongoing infringement is continuous in nature and that each infringing act constitutes a fresh wrong causing irreparable injury to the rights and goodwill of the owner. Therefore, mere delay between the discovery of infringement and the filing of the suit cannot by itself negate the existence of urgency.
The SC further clarified that the assessment under Section 12A of the Commercial Courts Act is not intended to involve a detailed examination of the merits of the case. Instead, the inquiry is limited to whether, on a prima facie reading of the plaint and the accompanying documents, the plaintiff genuinely seeks immediate relief to prevent ongoing harm. The SC concluded that the High Court had erred in adopting a restrictive approach by treating the passage of time as fatal to the claim of urgency and thereby depriving the plaintiff of the opportunity to seek judicial intervention against continuing infringement.
Accordingly, the SC held that the DHC erred in rejecting the plaint and remanded the matter for consideration on merits.
The SC reiterated that Section 12A, while mandatory, must not be interpreted in a manner that denies access to justice in situations involving ongoing and irreparable harm. The legislative intent of pre-institution mediation is to reduce commercial litigation but not to shield continuous wrongful acts from judicial scrutiny.
The SC’s reasoning thus strikes a balance, preserving the integrity of pre-institution mediation while ensuring that plaintiffs are not left remediless when urgency is genuine and demonstrable.
The mandating of pre-institutional mediation in the Commercial Courts Act has been the subject of much debate. Considering the enormous case load of Indian courts, and the time taken to resolve disputes, mediation, when conducted impartially and in a professional manner with genuine give and take from both sides, offers an attractive solution. On the other hand, the requirement of mediation ought not to result in unconscionable delays where there is urgent need of injunctive or other relief.
The judgement in Novenco is a clear indication that Section 12A cannot be used as a shield against urgent interim action, particularly in cases involving continuing wrongs and where the relief needed is immediate. The Novenco principle will no doubt apply in cases involving breach of confidentiality, IP violations, and similar matters. In addition, this judgement provides valuable insight on how courts are to interpret section 12A and what pleadings or evidence is necessary for plaintiffs to make the case for urgent relief- the continuing nature of the infringement, irreparable harm likely to be suffered, and the immediacy of the relief sought. This decision gives teeth to the principle behind section 12A - while mediation remains the norm, genuine urgency rooted in continuing wrongs remains a clear statutory exception.
The judgment provides clarity on the interplay between Section 12A and IP disputes. It ensures that plaintiffs facing ongoing infringement are not procedurally barred from immediate judicial protection, provided their pleadings substantiate urgency with tangible evidence showing the continuing nature of the infringement, irreparable harm likely to be suffered, and the immediacy of the relief sought.
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