The Commercial Courts Act: What Changes for You

If your dispute is commercial in character and worth Rs 3 lakh or more, it does not belong in an ordinary civil court. It belongs before a Commercial Court, and the Commercial Courts Act 2015 rewrites almost everything about how that case runs. You may have to attempt mediation before you are allowed to file. Your written statement dies at 120 days. Every document you hope to rely on has to be disclosed at the outset or you need the court’s leave to use it later.

That is the practical answer for most people searching for this. The rest of this piece sets out how the Act decides whether your case qualifies, what the pre-institution mediation step actually involves, which procedural rules have teeth, and where the appeal lies. The statute is short. Its Schedule, which amends the Code of Civil Procedure 1908 for these suits, is where the real change sits.

What counts as a commercial dispute

Section 2(1)(c) defines “commercial dispute” through a list of twenty two categories, and it is broader than most people assume. It covers ordinary transactions of merchants, bankers, financiers and traders, export and import of goods or services, carriage of goods, construction and infrastructure contracts including tenders, franchising, distribution and licensing agreements, joint venture, shareholders and partnership agreements, technology development agreements, agreements for sale of goods or provision of services, insurance and re-insurance, and contracts of agency relating to any of these.

Intellectual property is in the list too. Disputes over registered and unregistered trade marks, copyright, patents, designs, domain names, geographical indications and semiconductor integrated circuits are commercial disputes, which is why most infringement and passing off suits now run under this Act. That overlap matters for anyone with a portfolio to defend, and we deal with it on the trade mark and intellectual property side as well as in general commercial litigation.

Two clarifications in the Explanation to the definition close common escape routes. A dispute does not stop being commercial merely because it also asks for recovery of immovable property, or for money to be realised out of immovable property given as security. Nor does it stop being commercial because one of the parties is the State or a State instrumentality. So a bank enforcing a mortgage against a business borrower, or a contractor suing a government department on a works contract, is still in commercial territory.

One entry deserves care. Agreements relating to immovable property qualify only where the property is used exclusively in trade or commerce. Courts have read “exclusively” strictly and looked at actual use at the time the suit is filed, not at what the parties agreed the property would be used for. A plot bought for a future factory that is lying vacant is usually not enough.

The Specified Value, and how it is worked out

Section 12 fixes the money threshold, called the Specified Value. Since the 2018 amendment it is Rs 3 lakh, brought down from the original Rs 1 crore, which pulled a very large volume of ordinary business litigation into this regime.

Nature of relief	How Specified Value is computed
Recovery of money	The sum claimed, including interest computed up to the date of filing
Movable property or a right in it	Market value as on the date of filing the suit
Immovable property or a right in it	Market value as on the date of filing the suit
Intangible rights, including intellectual property	Market value as estimated by the plaintiff
Arbitration related applications	Aggregate value of the claim and the counter-claim

Two points get missed. Interest up to the date of filing counts towards the threshold, so a principal of Rs 2.6 lakh with two years of contractual interest can cross Rs 3 lakh. And a counter-claim is taken into account, which means a modest suit can become a commercial one because of what the defendant files back.

Section 12A: mediate before you sue

This is the provision that most often derails a filing. Section 12A says a suit which does not contemplate any urgent interim relief shall not be instituted unless the plaintiff has first exhausted pre-institution mediation.

The mediation is conducted by an authority notified under the Legal Services Authorities Act 1987, in practice the District Legal Services Authority, under the Commercial Courts (Pre-Institution Mediation and Settlement) Rules 2018. You apply in the prescribed form with the particulars of the dispute. The process is to be completed within three months from the date of the application, extendable by a further two months if both sides consent. That period is excluded when limitation is computed, so mediating does not eat into your time to sue.

If the opposite party simply does not turn up, the authority records a non-starter report and you take that report to court with your plaint. If a settlement is reached, it is reduced to writing and signed, and it carries the status of an arbitral award on agreed terms under Section 30(4) of the Arbitration and Conciliation Act 1996. The consequence is useful: it is enforced like a decree, without a fresh suit.

The Supreme Court has held Section 12A to be mandatory, not directory, and a plaint filed in breach of it is liable to be rejected. The usual attempt to get around it is to insert a prayer for urgent interim relief that nobody seriously intends to press. Courts look through that. If your interim application is never moved, or is withdrawn at the first hearing, expect the plaint itself to come under attack.

The procedural rules that actually bite

The Schedule to the Commercial Courts Act amends the CPC for commercial suits. These are the changes that decide cases.

• Written statement within 30 days, hard stop at 120. The defendant has 30 days from service of summons, which the court may extend, but the right to file is forfeited on the expiry of 120 days from service and the court is directed not to take the written statement on record. This has been held to be mandatory. There is no discretion left to salvage a late filing.
• Disclosure at the outset. Order XI as substituted requires the plaintiff to file a list of all documents and photocopies of documents in his power, possession, control or custody, whether or not they help his case, along with a declaration on oath. The defendant does the same with the written statement. A document not disclosed cannot be relied on at trial without the court’s leave, and leave requires a reasonable cause for non-disclosure.
• Statement of truth. Order VI Rule 15A requires pleadings to be verified by a statement of truth signed by the party. A knowingly false statement exposes the deponent to perjury proceedings, which is a real change from the loose verifications people were used to.
• Case management hearing. Order XV-A requires the court to hold a case management hearing after the parties complete admission and denial of documents, fix a written schedule for evidence and arguments, and record evidence on a day to day basis. The court is directed to close oral arguments within six months of the first case management hearing.
• Judgment within 90 days. Order XX Rule 1, as amended for these suits, requires judgment to be pronounced within 90 days of the conclusion of arguments.
• Costs follow the event. Section 35 CPC as amended for commercial disputes makes actual costs the default, with the court looking at the conduct of the parties, whether a reasonable offer to settle was refused, and how far each side succeeded.

Summary judgment without a trial

Order XIII-A is the sharpest tool in the Act and it is under-used. A party may apply for summary judgment after summons has been served and before issues are framed. The court may decide the claim without recording oral evidence if it holds that the claim or the defence has no real prospect of succeeding and there is no other compelling reason for a trial.

It is designed for cases where the documents are unanswerable, such as an admitted invoice with no plausible dispute on delivery, or a guarantee with no dispute on execution. It is not available in a suit that was originally instituted as a summary suit under Order XXXVII. Filing it well means putting the whole documentary case on affidavit early, which sits naturally with the Order XI disclosure obligation.

Appeals: 60 days, and only from listed orders

Section 13 of the Commercial Courts Act provides the appeal. From a Commercial Court at the district level, the appeal lies to the Commercial Appellate Division of the High Court, and it must be filed within 60 days from the date of the judgment or order. That is shorter than the 90 days a first appeal to a High Court ordinarily carries, and the difference has caught out more than one appellant. If you are also weighing an ordinary civil appeal, the timelines in our note on limitation periods every litigant should know are worth reading beside this.

Section 13 also narrows what is appealable. No appeal lies from an order of a Commercial Court except as provided in the Act, and the appealable orders are those enumerated under Order XLIII of the CPC and Section 37 of the Arbitration and Conciliation Act 1996. Interlocutory orders outside that list are not separately appealable, which is deliberate: the design is to stop cases stalling on satellite appeals. Section 14 asks the Commercial Appellate Division to endeavour to dispose of an appeal within six months.

Arbitration matters land here as well

Section 10 routes arbitration applications by value and character. Where the arbitration arises out of a domestic commercial dispute of Specified Value, applications under the 1996 Act, including Section 9 for interim measures, Section 34 to set aside an award and Section 36 for enforcement, are filed before the Commercial Court. For an international commercial arbitration the 1996 Act sends applications to the High Court, and where that court has a Commercial Division they are heard there.

This matters at the drafting stage rather than the fighting stage, and our comparison of mediation and arbitration as routes covers that choice.

Where these cases are filed in Madhya Pradesh

The Madhya Pradesh High Court does not exercise ordinary original civil jurisdiction, so there is no Commercial Division sitting at first instance. Commercial Courts have instead been constituted at the district level by the State Government under Section 3, and appeals from them go to the Commercial Appellate Division of the High Court, whose principal seat is at Jabalpur, with benches at Indore and Gwalior. Which of the three hears your appeal depends on the district in which the trial court sits.

We act in commercial suits and arbitration related applications before these courts, and the pattern we see most often is a case lost on the calendar rather than on the facts: a written statement filed on day 130, or a plaint returned because pre-institution mediation was skipped. If you are considering a claim, the first work is documentary, not argumentative.

This piece is general information on the commercial courts act and the procedure under it, not legal advice on any particular matter. Our commercial and corporate disputes practice and our litigation and arbitration practice describe the work, and you can reach us through the contact page.