Delhi High Court Enforces Mediation Rule Against MCD

The Delhi High Court has upheld a Rs 1 lakh penalty imposed on the Municipal Corporation of Delhi (MCD) for not participating in mandatory pre-litigation mediation for commercial disputes. Justices Navin Chawla and Renu Bhatnagar emphasized the responsibility of public authorities, such as the MCD, to adhere to the Commercial Courts Act, designed to reduce court burdens and expedite dispute resolutions.

The court noted that the MCD's failure to engage in pre-litigation mediation defeated the Act's purpose and did not align with its public duties. This ruling arose from a commercial suit filed by an MCD contractor, who had initially sought mediation through the District Legal Services Authority. Despite notice, MCD officials abstained from the process, prompting the contractor to file a lawsuit.

The court underscored that Section 12-A of the Act mandates pre-institution mediation unless urgent interim relief is necessary. The bench criticized the MCD's non-compliance, stating disputes should be settled early to avoid unnecessary litigation. The High Court stayed the contractor's Rs 35 lakh suit pending further orders, while the MCD was required to deposit the penalty within two weeks.

(With inputs from agencies.)