Exception U/S 12A Commercial Courts Act Involves Only A Limited Jurisdictional Enquiry, Not Merits Adjudication: Bombay High Court
The Bench restored the US Firm’s suit against Agati Healthcare, and noted that monetary claims don’t negate urgent relief.
Justice R.I. Chagla, Justice Farhan P. Dubash, Bombay High Court
The Bombay High Court has set aside a Trial Court order that rejected a commercial suit filed by a US-based entity for non-compliance with pre-institution mediation under Section 12-A of the Commercial Courts Act, 2015. The Bench held that when determining whether a suit "contemplates urgent interim relief" to qualify for exemption under the amended Section 12-A(1), courts must conduct a limited jurisdictional inquiry rather than evaluating the probability of granting interim relief or testing the merits of the case.
The Bench observed that reasonable time taken for cross-border consultations, obtaining foreign law opinions (Colorado law), US notarization, and international transit of documents does not, by itself, destroy the urgency of seeking protection against continuing contractual breaches.
A Division Bench comprising Justice R.I. Chagla and Justice Farhan P. Dubash observed, “The enquiry under Section 12-A(1) is a limited threshold jurisdictional examination / enquiry and not an adjudication on merits. The Court is not required to determine whether the plaintiff is ultimately entitled to interim relief or whether the application for interim relief deserves to be allowed. The enquiry is confined to determining whether the suit genuinely contemplated urgent interim relief when it was instituted”.
Simil Purohit, Senior Counsel appeared for the appellant and Advocate Shanay Shah appeared for the respondent.
The Appellant, High Point Supply Company LLC (a US-based delivery and distribution firm), entered into an Exclusive Distribution Agreement (EDA) in June 2023 with Respondent Agati Healthcare Pvt. Ltd. to act as the exclusive distributor of Agati’s bovine colostrum products in North America. The contract contained negative covenants restricting direct sales to third parties, subject to a limited exception for an existing client, PanTheryx.
Following the acquisition of PanTheryx by Glanbia Nutritionals, Agati continued direct sales, which High Point alleged breached the exclusivity arrangement. Agati subsequently issued a termination notice in October 2024.
High Point instituted a commercial suit seeking specific performance, quashing of the termination notice, permanent injunctions, disclosure of accounts, and monetary damages. Alongside the plaint, High Point filed an interim application seeking urgent ad-interim injunctive relief to restrain ongoing breach of the exclusivity clause.
The Trial Court allowed Agati's application under Order VII Rule 11(d) CPC and rejected the plaint, holding that:
-Pre-institution mediation under Section 12-A of the Commercial Courts Act was mandatory.
-The suit did not contemplate "genuine urgency" because the plaintiff sought quantifiable monetary damages.
-Delay in filing after the termination notice indicated a lack of urgency.
The Court clarified that assessing whether a suit contemplates urgent interim relief requires looking at the plaint holistically from the plaintiff's viewpoint at the time of filing. Courts should not conflate this inquiry with the triple-test for granting interim injunctions (prima facie case, balance of convenience, and irreparable loss).
Further, that the inclusion of prayers for damages or compensation does not automatically negate a genuine need for urgent interim protection, particularly in disputes involving negative covenants and exclusive market rights.
The Court, accordingly, allowed Commercial First Appeal, set aside the Trial Court's order, and restored the commercial suit alongside the pending interim applications to be heard on their merits.
Cause Title: High Point Supply Company LLC v. Agati Healthcare Private Limited (COMFA/15/2026)
Appearances:
Appellant: Simil Purohit, Senior Counsel, Ameya Gokhale, Kriti Kalyani, Chintan Gandhi, Abhishek Mookherjee i/b Shardul Amarchand Mangaldas & Co, Advocates.
Respondent: Shanay Shah, Vivek Sharma, A. A. Kapadia i/b Sujit Lahoti and Associates, Advocates.