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A is a reputed retail tyre dealer in Jaipur, Rajasthan; B is a Car Manufacturer in Indore, Madhya Pradesh; A and B being the retailer and manufacturer respectfully, have a very healthy business relationship acquired over 3 decades with a turnover of several lakhs.

During the internal audit in September 2019, A noticed that particular invoice of January 2019, valued at over Rs.21. lakhs, has not been paid by B, personal tele call, correspondences, E-mails have had no effect in recovery of the outstanding. A from other sources learnt that the goods supplied remained not consumed as being partly defective and B had reported the rejection to A’s marketing manager ‘X’ with a request that the defective material be replaced, further that B  has stored the rejected tyres in a yard, paying heavy rent. For reasons not known to A, ‘X’ has neither communicated the rejection of the goods by B nor issued instructions for replacement prior to his termination from employment as A’s Marketing Manager. 

The sum of Rs.21.00 lakhs represents a substantial part of the business which A cannot afford to write off or risk its commercial relationship with B for any reason; furthermore, B’s Managing Director is very influential and currently the President of Traders Association in Madhya Pradesh; ‘X’s conduct had resulted in strain in business relationship between A and B;  but, B is in no mood to settle with A. A’s attempt to reduce his exposure to the impending loss by presenting an undated cheque issued by B has further soured the relationship, with B issuing instruction to the banker to stop payment of the cheque. A’s effort to have personal meeting at B’s place was futile, as B being upset, walked out of it. 

Now, there being a demand for payment from A and refusal to pay by B, differences has cropped up between them; there is no platform except to approach the Court of Law where A and B may not resolve their differences, amicably; A cannot afford to go legal against B, as it effects future business prospects of A in the State of Madhya Pradesh; but for A, time is running out. 

As in all disputes, perceptions of disputants and the cause of the conflict is varied, the Law Courts adjudicate on the rights of the parties resulting in a win-loose situation; where as Commercial Courts Act, has come as a boon in resolving commercial disputes which are valued not less than Rs.3.00 lakhs, through a forum of Pre- Institution Mediation, by mandating that all commercial disputes prior to institution of a suit  before a Court of  law, an attempt shall be made to resolve the dispute with the assistance of a neutral third party, namely Mediator designated by a recognized institution (Service Provider). The service provider presently recognized under the Commercial Courts Act is the Legal Services Authority. 

While one may question the objective of such a forum, commercial establishments  are well aware that the outcome of litigation is often unpredictable and not to mention time duration caused due to procedural wrangles, uncertainties and appeals, the law now provides the disputants with an option to resolve the dispute prior to it crystallizing into a conflict. 

In the present situation both the disputants are acutely aware of their interdependence in business built over several years; they would be reluctant to rush to a Court of law directly; the very essence of mediation is to identify the commercial interests of the disputants and build a consensus around it in order to resolve the dispute rather than leave it to the Court of law to adjudicate upon it. There is also a  possibility that disputants may partly agree and partly disagree, thereby narrow down the scope of  their differences. 

The dispute related to non-payment of an outstanding invoice, instituting a legal proceedings directly would commence with depositing Court fee and other expenses; where as by approaching PIM, the expenses of litigation is avoided or in the worst alternative, postponed till after the conclusion of mediation. Mediation affords the disputants to introspect their respective stands vis-a-vis the contentions and  contemplate on the possible outcomes in an  adversarial system; provides sufficient time for the parties to dwell on the issues as well as their respective stands/decision; the process affords disputants to understand each other’s views and provides a platform to communicate with each other without prejudice and approach as a facilitative process. In short, for trade bodies filing a dispute in Court is not a first measure and PIM is the appropriate option. 

Exploring Mediation by resorting to PIM is totally different as compared to approaching Court directly by filing a case against B; PIM is a neutral venue, where parties having differences or mis-understandings have the opportunity to participate with an open mind and flexibility, use platform of facilitation, express their views and interests while protecting confidentiality; negotiate freely with the liberty to withdraw from Mediation at any time; PIM has time duration of five months being the maximum, by the end of which A would have certainty of a result, after which  the  parties  are free to either bury their differences or reserve it to  the Commercial Court, if A desires to approach later. 

A has choice of two places, where it can prefer PIM i.e., either in Jaipur or Indore; B having been non responsive during the personal meeting held earlier, PIM is the  appropriate forum, where it can attempt for a dialogue with B. 

As participation in  the process is voluntary, a disputant reserves his/her/it’s to right to withdraw from mediation at any time, without offering reasons and allows the parties to keep all their options confidential right up to resolution. 

Mediation focuses on interests of the parties rather than on apportioning the blame for the dispute; generates options based on concessions and accommodations and creative solutions, in terms of which could help resolve the differences. The law, in order to give a final quittance also provides that a dispute resolved during the course of PIM  has the effect of an award enforceable as a decree of a Court. 

To conclude, Pre- Institution Mediation for Commercial Disputes  operates  as a primary mechanism, making Court as a future alternative option. Commercial establishments can achieve  ease of doing business hassle free.