In a novel move, the Delhi High Court pauses a commercial dispute between PayU and Yes Bank to explore mediation under the Commercial Courts Act and involve RBI oversight, highlighting procedural shifts in financial litigation.
The Delhi High Court has taken an unusual procedural turn in a dispute between PayU and Yes Bank, choosing not to rule immediately on whether the suit can proceed. Instead, the court has used the case to test two overlapping frameworks: the mandatory pre-institution mediation regime under the Commercial Courts Act and the Reserve Bank of India’s oversight of payment systems. The approach reflects the court’s view that the matter raises issues best explored through a short, supervised mediation rather than a full adversarial hearing at this stage.
According to the court’s reasoning, commercial suits ordinarily require pre-litigation mediation under Section 12A of the Commercial Courts Act unless urgent interim relief is sought. The Supreme Court’s ruling in Patil Automation Pvt Ltd v Rakheja Engineers Pvt Ltd made clear that this requirement is mandatory and that non-compliant suits are liable to be rejected, while later case law has recognised that courts may still direct mediation after a suit is filed in appropriate circumstances. Against that backdrop, the Delhi High Court appears to have treated the dispute as one in which process matters as much as immediate merits, particularly because the parties operate in a regulated payments environment.
The court also placed weight on the fact that both the plaintiff and the card network are authorised by the RBI under the Payment and Settlement Systems Act. That point gave the judge reason to involve the central bank directly, but only in a limited role. Rather than asking the RBI to act as a statutory adjudicator under the payments law, the court asked it to send a senior officer to facilitate a settlement within 30 days. Legal commentary on Section 12A has repeatedly stressed that Parliament intended mediation to reduce unnecessary commercial litigation, and the court’s order fits that broader policy even though it adopts an institution-specific route.
While that mediation is under way, the court has sought to preserve the position of all sides. It ordered the parties to maintain the status quo over claims already raised through the card network, barred the network from issuing a final determination on the pending claims, and restrained acquiring banks from making further deductions or set-offs from the plaintiff’s settlements. The issuing bank was also told not to press new claims of the same kind during the interim period. At the same time, the court was careful to say that ordinary business between the parties may continue and that none of the broader contractual or legal rights in the dispute have been surrendered.
The practical effect is a pause rather than a resolution. If the RBI-facilitated process succeeds, it may spare the parties a longer commercial fight over the interaction between network-level dispute systems and statutory adjudication. If it fails, the underlying question of maintainability is likely to return, this time against the background of a court that has already signalled both the importance of statutory mediation and the regulatory character of the payments ecosystem. For now, the case stands as a reminder that in commercial disputes, especially those touching financial infrastructure, procedure can shape the outcome almost as much as substantive law.
Disclaimer: This article is intended to inform and educate, not to recommend or endorse any financial product, investment or strategy. Please consider your own financial circumstances and seek professional advice where appropriate before making financial decisions.
