Counter-claims and Section 12A: A Critical Study of Vijay v. Havells India Ltd.

 

A counter-claim in a pending commercial suit is a "suit" for Section 12A of the Commercial Courts Act, 2015, and ordinarily needs its own pre-institution mediation. The requirement is treated as satisfied only where the counter-claimed disputes had already formed part of, or were capable of being meaningfully addressed in, an earlier Section 12A mediation between the parties (in a non-settlement case, ordinarily because the defendant had disclosed them there).

In Vijay v. Havells India Ltd. (FAO(COMM) 46/2025, decided 01.07.2026 — 2026:DHC:5196-DB), a Division Bench of the Delhi High Court dismissed an appeal against the rejection of a counter-claim under Order VII Rule 11 CPC. The plaintiff had itself skipped mediation by invoking the urgent-interim-relief exception. The defendant's counter-claim, filed without mediation, was nonetheless thrown out.

The Bench rejected both extremes argued before it:

•       Rejected: that a counter-claim is never a "suit" and so is outside Section 12A.

•       Rejected: that every counter-claim must always undergo a fresh mediation, whatever happened before.

•       Adopted: a purposive "meaningful opportunity" test. If the counter-claimed disputes had formed part of, or were capable of being meaningfully addressed in, an earlier Section 12A mediation, the mandate may be treated as fulfilled; for a non-settlement report, para 18 ties this to the defendant having disclosed its claims there. If not, independent compliance is ordinarily required.

The judgment matters for three reasons. It states, at Division Bench level in Delhi, a general approach to the differing decisions in Sanjana Agarwal, Anil Kumar Pitti and Aditya Birla Fashion. The Bench does not overrule Aditya Birla (para 25 calls it "distinct"), and Pitti was not itself a counter-claim case. The judgment also creates an asymmetry on its facts, where a plaintiff's urgency exemption does not shelter the defendant. And its test, while sensible in principle, invites satellite litigation about what was "disclosed" in a confidential mediation. This article examines each of these and assesses where the ruling will and will not apply.

Statutory and precedential backdrop

Section 12A, inserted by the 2018 amendment, bars institution of a commercial suit that "does not contemplate any urgent interim relief" unless the plaintiff first exhausts pre-institution mediation. The process runs three months, extendable by two, and that period is excluded in computing limitation under the Limitation Act, 1963. The text speaks only of a "suit" and a "plaintiff"; it says nothing about counter-claims.

The Supreme Court has since shaped the mandate in four decisions:

Decision	Proposition relevant here
Patil Automation (P) Ltd. v. Rakheja Engineers (P) Ltd., (2022) 10 SCC 1	Section 12A is mandatory; a non-compliant plaint must be rejected under Order VII Rule 11, even suo motu; effective from 20.08.2022.
Yamini Manohar v. T.K.D. Keerthi (2023)	A prayer for urgent interim relief must have real substance; it cannot be a device to avoid mediation.
Dhanbad Fuels Pvt. Ltd. v. Union of India, 2025 INSC 696 (15.05.2025)	Reaffirmed that the mandate is compulsory. Non-compliant suits filed before 20.08.2022 are kept in abeyance and referred to time-bound mediation rather than rejected; suits filed on or after that date must be rejected, on application or on the court's own motion.
Novenco Building & Industry A/S v. Xero Energy, 2025 INSC 1256 (27.10.2025)	Urgency is assessed from the plaint, from the plaintiff's standpoint and not on the merits; continuing infringement carries inherent urgency, and delay alone does not defeat it.

On the CPC side, Order VIII Rule 6A(2) gives a counter-claim the effect of a cross-suit, and Rule 6A(4) treats it as a plaint governed by the rules applicable to plaints. That is the doctrinal bridge by which Order VII Rule 11 — and, the courts now hold, Section 12A — reaches a counter-claim. Rule 6C lets the plaintiff seek exclusion of a counter-claim for independent trial.

A legislative change is pending in the background. The Mediation Act, 2023 (Section 64 read with the Ninth Schedule) substitutes Section 12A to allow mediation through mediation service providers, not only Legal Services Authorities; commentators reported in 2025 that this substitution had not yet been notified. The 2023 Act has been brought into force only in part, so practitioners should confirm the notification status of that substitution, as at the date they rely on it, before relying on either text.

Facts, procedural history and the question framed

The plaintiffs (Havells India Ltd. and others) sued the appellant in a commercial suit without pre-institution mediation, relying on the urgent-interim-relief exception. On 27.05.2024 the court appointed a Local Commissioner, and inspections took place on 01.06.2024 and 17.06.2024.

The appellant then filed a counter-claim. It was founded on those inspections and on the commercial relationship between the parties, alleging that the plaintiffs' actions went beyond the order of 27.05.2024. The appellant did not initiate Section 12A mediation first; this was undisputed.

On the plaintiffs' Order VII Rule 11 application, the District Judge (Commercial Court) rejected the counter-claim by order dated 25.01.2025, relying principally on Aditya Birla Fashion. The appeal, FAO(COMM) 46/2025, was reserved on 04.05.2026 and dismissed on 01.07.2026.

The Bench framed one question (para 3): whether a defendant filing a counter-claim in a pending commercial suit must independently comply with Section 12A, and if not, when the requirement may be regarded as satisfied.

Two features of the facts deserve emphasis because they drive the critique below. First, no pre-institution mediation of any kind had been undertaken (paras 6, 31, 34). Second, the counter-claim was not a free-standing grievance. Para 5 records that it was founded on the inspections carried out under the order dated 27.05.2024 and on the commercial relationship between the parties, alleging that the plaintiffs' actions were contrary to, and beyond the scope of, that order.

Rival submissions

Issue	Appellant (counter-claimant)	Respondents (plaintiffs)	Court's answer
Is a counter-claim a "suit" under Section 12A?	No; Parliament amended much of the CPC through the CC Act but left Order VIII Rules 6A–6C untouched.	Yes; it is a cross-action with the essentials of a suit.	Yes (para 27).
Effect of not seeking exclusion under Rule 6C	The counter-claim stays part of one proceeding (Satyender v. Saroj, (2022) 17 SCC 154; Jag Mohan Chawla, (1996) 4 SCC 699).	Not addressed separately.	Implicitly irrelevant.
Timelines	Five months of mediation can outrun the 120-day outer limit for the written statement, defeating the counter-claim.	—	Rejected: Rule 6A does not tie the counter-claim to the written statement, and limitation is excluded during mediation (paras 29–30).
Prior precedent	Aditya Birla misreads the scheme; Sanjana Agarwal and Pitti are distinguishable.	Aditya Birla governs.	A middle path; Aditya Birla "distinct" (para 25).
Mootness	—	The issue forming the subject matter of the counter-claim already stood framed and was pending adjudication in CS(COMM) 294/2024, so the appeal was substantially academic (para 12(i)).	Not expressly decided.
Fairness of a fresh mediation	—	Mediation here would be the first chance to mediate the rival claims, since the suit itself bypassed it.	Accepted (paras 31, 34).

The respondents' third point is closest to the Bench's reasoning (paras 31, 34). On that reading, the plaintiff's urgency exemption is not a reason to excuse the defendant; it is the reason the rival claims have never yet been exposed to mediation. The Bench does not itself discuss the exemption in those terms.

The ratio decidendi: a "meaningful opportunity" test

The ratio is that Section 12A applies to counter-claims in principle, but is treated as fulfilled where the counter-claimed disputes had already formed part of, or were capable of being meaningfully addressed in, an earlier Section 12A mediation, so that the parties had a genuine opportunity to attempt settlement of them (paras 16–18, 27, 33).

The Bench built it in four moves:

1.     Classification. A counter-claim is a cross-suit with "many of the incidents of an independent suit", so it falls within "suit" in Section 12A (para 27).

2.     Purpose over form. Section 12A is not a box-ticking participation rule; it exists to give parties a real opportunity to settle identified disputes before adversarial litigation, as Patil Automation stressed (paras 16, 19).

3.     The test. The material question is whether the counter-claimed disputes "had formed part of, or were capable of being meaningfully addressed during" the earlier mediation (para 17).

4.     Outcome matrix. Where mediation ends in settlement, the question of a later counter-claim "ordinarily would not arise", save where claims were expressly reserved. Where it ends in a non-settlement report and the defendant had disclosed its claims, a further round "may not be necessary". Where the defendant had not disclosed its proposed claims, or no mediation was undertaken, compliance "would continue to be required" (para 18).

On the facts, no mediation had ever occurred, so the counter-claimed disputes had never been exposed to the process. The rejection was upheld "albeit for reasons partly differing" from the trial court's (para 36).

The Vijay test as a decision path · 4 questions, 5 outcomes

Read as a decision path, the test puts the decisive weight on the fourth question: whether the defendant disclosed the counter-claimed disputes in the earlier mediation. That is also where the judgment is most open to criticism. Para 17 also speaks of disputes "capable of being meaningfully addressed", and the Bench does not say which formulation controls where a defendant never appeared (see below).

Critical analysis

The judgment is right on classification and right to reject a mechanical rule. It is less convincing on fairness, remedy and administrability, and on these points it leaves questions the Supreme Court may eventually have to answer.

What the Bench gets right

Classification is sound. Order VIII Rule 6A(2) and (4) make a counter-claim a cross-suit governed by the rules for plaints. Once Patil Automation tied Section 12A to Order VII Rule 11, it was hard to argue that a cross-suit escapes the same gate. Parliament's silence on Rules 6A–6C proves little; Section 12A did not need to amend them to bite.

Purpose over ritual. Refusing to demand a second mediation of disputes already mediated avoids pure duplication. That is faithful to the CC Act's speed objective and to Sanjana Agarwal.

The timeline argument was met on Rule 6A, not on limitation. Rule 6A fixes the cut-off for the cause of action, not a requirement that the counter-claim travel with the written statement (para 29). The Bench adds (para 30) that mediation time is excluded for limitation, but that point is imprecise. Section 12A(4) excludes mediation time in computing limitation under the Limitation Act, 1963, whereas the 120-day outer limit for a written statement is a procedural timeline under Order VIII Rule 1, not a limitation period. The answer in para 29 therefore carries the weight. Practitioners should note, though, that Ashok Kumar Kalra v. Wing Cdr. Surendra Agnihotri, (2020) 2 SCC 394, ordinarily closes the door to counter-claims after issues are framed. The practical window is therefore narrower than para 29 suggests.

Where the reasoning is vulnerable

1. The asymmetry problem. The Bench records that the parties have "not undergone" a process of pre-institution mediation (para 26) and that the plaintiff sued under the urgency exemption (para 31). The plaintiff obtained its inspection order and Local Commissioner without mediating; the defendant, whose counter-claim is founded on those inspections and on the parties' commercial relationship (para 5), must mediate first. The Bench does not address whether this is fair. It is arguable that it is not, because the burden of the plaintiff's exemption falls on the defendant. The counter-argument, which the Bench in substance accepts (paras 31, 34), is that the counter-claim is the first occasion on which the rival claims could be mediated.

2. "Pre-institution" mediation in the middle of litigation. Section 12A's purpose is to keep a dispute out of court. Once the main suit is pending on the same relationship, that purpose cannot be served; the parties are already adversaries before the same judge. The purposive reasoning in paras 16–19 arguably points to court-referred mediation under Section 89 and Order X Rule 1A CPC, not to rejection.

3. Rejection is a blunt remedy for a counter-claim. A rejected plaint can be re-presented under Order VII Rule 13. A rejected counter-claim may be harder to re-present, because a counter-claim is ordinarily to be filed before issues are framed (Ashok Kumar Kalra) and issues may have been framed by the time mediation concludes (the respondents here said the relevant issue was already framed in the suit, para 12(i), but the Bench did not decide the point). The defendant is pushed into a separate suit — the multiplicity that counter-claims exist to prevent. Dhanbad Fuels adopts an abeyance-and-refer model, but only for suits filed before 20.08.2022; for later filings, such as this counter-claim, it confirms that rejection under Order VII Rule 11 is the rule. The case for abeyance here is therefore one of principle and analogy, not binding authority, and the Bench did not consider it.

4. The urgency exception was never examined for the counter-claim itself. A counter-claim alleging overreach in the execution of an interim order may well seek urgent relief, such as restoration of seized goods. After Yamini Manohar and Novenco, urgency is assessed on the substance of the pleading, from the claimant's standpoint. If such urgency had been genuinely pleaded, Section 12A would not have applied. The judgment records no such plea, so the point remains open.

5. A forum question was left unasked. To the extent the counter-claim complains of how the Local Commissioner's inspections were carried out, such grievances may be incidental to the suit itself. Order XXVI Rule 10 objections to the Commissioner's report, Section 95 CPC compensation for an injunction obtained on insufficient grounds, and costs under Sections 35 and 35A CPC are remedies within the same suit, without any Section 12A question. To that extent the choice of a counter-claim invited the objection. The judgment, however, does not record that the counter-claim was confined to such grievances.

6. The test collides with mediation confidentiality. Asking whether a defendant "disclosed" its claims in mediation requires a court to look inside a confidential process. Mediation communications are protected by the Commercial Courts (Pre-Institution Mediation and Settlement) Rules, 2018 and by general mediation confidentiality; the Mediation Act, 2023 will add statutory protection only once its relevant provisions are in force, since the Act has been commenced only in part. Courts will need to confine the inquiry to the record — the application, notices, the reference note (as in Pitti) and the mediator's report. A defendant who raised its claims only orally may be unable to prove it.

7. The threshold of "disclosure" is undefined. Pitti holds that, where the other side had invoked mediation on its own claim and its reference note described the claimant's competing claim only as "unmerited", that did not amount to the claimant's exhaustion of Section 12A for its own claim (as extracted at para 23 of Vijay). Vijay asks whether the defendant "disclosed its own claims". Neither says how particular the disclosure must be — a heading, a quantified figure, or documents.

Reconciling Sanjana Agarwal, Anil Kumar Pitti and Aditya Birla Fashion

The reconciliation is only partly successful: Pitti (itself not a counter-claim case) is consistent with the new test, but Sanjana Agarwal and Aditya Birla arose on materially similar facts and reached opposite conclusions, and Vijay does not say why.

Case	Prior mediation	What happened in it	Holding	Fit with Vijay
Aditya Birla Fashion v. Saroj Tandon, CM(M) 459/2023 (Manoj Jain, J., 02.09.2024)	Initiated by plaintiff	Non-starter; defendant did not appear	Counter-claims need their own mediation; but counter-claim filed 21.02.2022, before the Patil cut-off, so not rejected	Its invariable rule is rejected (para 15) yet called "distinct" (para 25)
Sanjana Agarwal v. Namoshivai Apparels, RFA(COMM) 212/2023 (DB)	Initiated by plaintiff	Non-starter; defendant did not appear	No second round where both claims arise from the same transactions; plaintiff had also conceded the point	Endorsed (paras 20–22)
Anil Kumar Pitti v. Comsol Energy, RFA(COMM) 479/2025 (DB)	Invoked by the defendant on its own claim; the claimant then sued without mediating	Reference note mentioned the claimant's competing claim only as "unmerited"	Not exhaustion for the claimant's own Rs 3.8 crore claim (not a counter-claim case)	Endorsed (paras 23–24)
Vijay v. Havells (DB, 01.07.2026)	None; urgency exemption	—	Independent compliance required	—

Three observations follow.

The Sanjana/Aditya Birla contradiction is unresolved. In both, the plaintiff mediated and the defendant stayed away. Sanjana excused the counter-claim; Aditya Birla would have required fresh mediation. Vijay endorses the first and describes the second as arising in a "distinct factual context" (para 25) without identifying the distinguishing fact. The better reading is that Aditya Birla's categorical proposition no longer represents Delhi law, though the Bench stops short of saying so, its actual outcome having turned on prospectivity. An express statement to that effect would have spared trial courts the uncertainty.

The disclosure criterion does not explain Sanjana. A defendant who never appeared disclosed nothing. Sanjana survives only on the alternative limb — disputes "capable of being meaningfully addressed" because they arose from the same five invoices. Which limb controls is therefore critical. Para 17 speaks of disputes that "had formed part of, or were capable of being meaningfully addressed", while para 18 asks whether the defendant "disclosed" its claims; the Bench does not reconcile the two formulations.

This produces a perverse incentive. On the Sanjana reading, a defendant who ignores the plaintiff's mediation notice may later counter-claim without mediating. A defendant like Vijay, who was never offered mediation, may not. Rewarding the party who boycotted the statutory process sits uneasily with the purposive rationale the Bench invokes.

Applicability: where the ruling will and will not bite

The ruling binds Delhi's commercial courts and single judges, and is persuasive elsewhere; it bites hardest in suits filed under the urgency exemption, which are common in IP and interim-injunction practice.

Scenario	Likely result under Vijay	Confidence
Suit filed under urgency exemption; counter-claim seeks no urgent relief	Fresh Section 12A mediation required; rejection under Order VII Rule 11 if skipped	High — the facts of Vijay
Same, but the counter-claim genuinely seeks urgent interim relief	Section 12A should not apply, by its own text read with Yamini Manohar and Novenco	Moderate — not decided
Plaintiff mediated; defendant appeared and set out its claims; non-settlement report	Second mediation may not be necessary	Moderate to high — para 18 ("may not be necessary")
Plaintiff mediated; defendant did not appear (non-starter); claims arise from the same transactions	Probably excused, following Sanjana; but the disclosure limb cuts the other way	Low — contested
Plaintiff mediated; counter-claim raises a different transaction or relief	Fresh mediation required	High — Pitti, para 33
Plaintiff mediated; the reference only described the defendant's claim as unmerited	Not exhaustion	High — Pitti
Mediation settled; defendant later counter-claims	Question ordinarily does not arise, unless the claim was expressly reserved	Moderate — para 18, obiter
Counter-claim adds new parties who never mediated	Fresh mediation likely required as to them	Moderate — follows from the test
Plea of set-off used only as a defence	Not addressed; a pure defence is not an instituted claim	Open
Counter-claim instituted before 20.08.2022	Not to be rejected; Patil is prospective, as Aditya Birla itself held	High

Beyond Delhi. Other High Courts are free to prefer either Aditya Birla's categorical rule or Vijay's purposive one. Absent a Supreme Court ruling squarely on counter-claims, divergence across jurisdictions is likely.

Statutory change. If the Mediation Act, 2023 substitution of Section 12A is notified, mediation through registered service providers will widen the routes to compliance. The core question in Vijay — whether a counter-claim must independently comply — would remain unchanged.

Possible further review. The judgment raises a substantial question of law on Section 12A's reach, with differing approaches in the Delhi High Court's decisions. It is a plausible candidate for a special leave petition, which would let the Supreme Court settle both the counter-claim question and the remedy (rejection or abeyance).

Practice guidance

The safest course for any defendant is to treat Section 12A as applying to its counter-claim unless the record already proves that the same disputes were mediated.

For defendants and counter-claimants

1.     On receiving a mediation notice, appear and put your own claims in writing, quantified and with key documents. Silence or a boycott now carries risk.

2.     If the suit was filed under the urgency exemption, start your own Section 12A mediation as soon as the counter-claim is in view. Limitation is excluded during the process.

3.     File the counter-claim before issues are framed; Ashok Kumar Kalra makes later filing discretionary and difficult.

4.     Where the counter-claim genuinely needs urgent relief, plead it with substance and seek exemption, applying Yamini Manohar and Novenco.

5.     To the extent the grievance is really about execution of the plaintiff's interim order, consider remedies within the suit — objections to the Commissioner's report, Section 95 CPC compensation, costs — before framing a separate counter-claim.

6.     If an Order VII Rule 11 application is filed, ask in the alternative for the counter-claim to be kept in abeyance pending mediation, arguing by analogy from Dhanbad Fuels, whose abeyance model is confined to suits filed before 20.08.2022. Expect rejection to be the default for later filings.

For plaintiffs

1.     Draft the mediation application to cover the whole relationship, not just your claim. That strengthens the case that any counter-claim was "capable of being addressed".

2.     Remember that a Section 12A objection to a counter-claim is a sword with costs: rejection may simply produce a separate suit.

For courts

1.     Confine the disclosure inquiry to the documentary record — application, notices, reference note, non-starter or failure report — and do not probe confidential mediation communications.

2.     Where rejection would push the defendant into a separate suit, weigh court-referred mediation with the counter-claim held in abeyance.

Conclusion

Vijay v. Havells is a principled middle path that gets the doctrine right and the consequences only half right. It correctly holds that a counter-claim is a "suit" within Section 12A, and correctly refuses to demand ritual repetition of mediation already undergone.

Its weaknesses lie in application. It lets a plaintiff's urgency exemption become the defendant's burden. It prefers rejection where abeyance and court-referred mediation would serve the statute's purpose better. And it leaves the Sanjana/Aditya Birla conflict and the meaning of "disclosure" unsettled.

Until the Supreme Court speaks to counter-claims directly, the prudent rule for practitioners is simple: mediate the counter-claim, or be ready to prove from the record that its disputes were already on the mediation table.

 

Disclaimer This article is intended for general informational purposes only and does not constitute legal advice. Readers should not rely on it as a substitute for professional counsel. Specific cases may involve facts or circumstances that materially alter the legal position. Proprietors and practitioners are advised to consult qualified legal professionals before acting on any of the issues discussed.