Commercial Court Basics: Questions and Answers

Section 2(1)(c) of the Commercial Courts Act, 2015 has the list. It's long. Ordinary dealings of merchants, bankers and traders are in it, and so are export and import, carriage of goods, construction and infrastructure contracts, partnership and shareholder agreements, franchising, distribution and licensing, IP, insurance, and leases of property used only for trade or business. There's more besides. Our note on what is a commercial dispute goes through each head.

Rs 3 lakh. That's been the floor since the 2018 amendment. If the 'specified value' of your commercial dispute is Rs 3 lakh or above, it goes to a commercial court. Anything less and you're in the ordinary civil court. We explain how the figure is worked out in the Rs 3 lakh rule.

Not by itself. The dispute has to fit one of the heads in Section 2(1)(c) of the Commercial Courts Act, 2015. Most business fights do fit: unpaid supplies, service contracts, distribution, franchise, construction, IP, insurance, partnership. But the court looks at the transaction, not at who's fighting. Two companies arguing over a flat bought so a director's family could live in it? That may well fall outside. Our guide on what counts as a commercial dispute takes you through the heads one by one.

Far more than people expect. Section 2(1)(c) takes in ordinary transactions of merchants, bankers, financiers and traders, export and import, carriage of goods, and construction and infrastructure contracts, tenders included. Leases of property used exclusively in trade are in. So are franchising, distribution and licensing, management and consultancy agreements, joint ventures, shareholder and partnership agreements, technology development, sale of goods and services, insurance, agency contracts, and IP like trade marks, copyright, patents and designs. The Central Government can add more by notification. If your contract sits under any of these and the value is Rs 3 lakh or more, you're under the commercial court rules.

Because it decides which rulebook you play by. Since the 2018 amendment, a commercial dispute with a specified value of Rs 3 lakh or more is heard by a Commercial Court. That brings compulsory pre-institution mediation, hard deadlines for the defence and full disclosure of documents. Drop below Rs 3 lakh and the very same dispute goes to an ordinary civil court, under the regular procedure. The value is worked out under Section 12 of the Act. For a money claim, it's the amount you're suing for, plus interest up to the date of filing. Our page on specified value has more on this.

It's tighter at every stage. Unless you need urgent relief, you have to try pre-institution mediation before filing. The plaintiff puts every document in its power on record with the plaint, backed by a statement of truth. The defendant gets 30 days for a written statement. The outer limit is 120 days. Miss that and the right's gone for good. Then comes a case management hearing, where the court fixes a calendar. It can give summary judgment without a trial, and the losing side usually pays costs. And there's no civil revision against interim orders, because Section 8 of the Act bars it.

Quite a few. If a bank or notified financial institution is claiming Rs 20 lakh or more from a borrower, that's the Debts Recovery Tribunal's job. Evicting a tenant protected by rent control law goes to the Rent Controller. A cheque bounce complaint under Section 138 of the Negotiable Instruments Act is criminal and goes before the magistrate. Consumer complaints usually end up at the consumer commissions. Immovable property that isn't actually used for trade, a vacant plot for instance, is usually outside the Act. And anything under Rs 3 lakh stays with the ordinary civil courts.

It can. The Act cares about the kind of transaction, not whether anyone signed a formal agreement. Say you supplied goods on WhatsApp orders, raised GST invoices, and the buyer won't pay. That's a commercial dispute, as long as it's worth Rs 3 lakh or more. Proof is where people struggle. Purchase orders, delivery challans, e-way bills, emails, a ledger confirmation and the chat history, read together, usually prove the deal. When you file electronic records, you'll need a certificate under Section 63 of the Bharatiya Sakshya Adhiniyam.

It doesn't. What counts is the transaction. A person who stood personal guarantor for a company's purchases can be a party to a commercial suit. So can a shopkeeper running a proprietorship, or a landlord who's let out a showroom. The Explanation to Section 2(1)(c) goes further and says the dispute stays commercial even when the State or a government body is on one side. What usually falls out is the purely personal deal. Think of a friendly loan between relatives, or a flat bought to live in.

Often it is, but who's suing decides the forum. Section 2(1)(c) lists transactions of bankers, financiers and traders, so a loan between two businesses, or from a private lender to a business, goes to the commercial court once it's above Rs 3 lakh. Banks are different. A bank or notified financial institution recovering Rs 20 lakh or more has to go to the Debts Recovery Tribunal under the Recovery of Debts and Bankruptcy Act, 1993. For loans between companies, see our page on business loan recovery.

Usually it isn't. The Supreme Court dealt with this in Ambalal Sarabhai Enterprises v. KS Infraspace (2020). A dispute over immovable property is commercial only if the property is actually being used exclusively in trade or commerce. Your plot, with no factory on it yet, doesn't pass that test, so the suit goes to the ordinary civil court. Compare a warehouse that's already leased out and running. That one would qualify. Planned use doesn't count. Neither does future use, even if the land's zoned for industry.

An independent agent's commission claim usually is commercial, because the Act covers mercantile agency and agency contracts tied to the listed transactions. Unpaid salary is another story. Employment isn't one of the heads in Section 2(1)(c), so an employee's claim normally goes under labour law or as an ordinary civil suit. And courts look past labels. Someone called a 'consultant' who works fixed hours for a monthly salary may well be treated as an employee. A distributor who earns only commission is an independent trader.

The amended Code of Civil Procedure lays down a timetable. Your written statement is due within 30 days of service of summons, and that can stretch to 120 days, no further. Inspection of documents should be done within 30 days of the written statement. Affidavits admitting or denying documents come within 15 days of inspection. The case management hearing follows within four weeks after that. Arguments are meant to close within six months of the first such hearing, and judgment should come within 90 days of arguments ending. Real cases slip. Everyone knows that. But judges use costs to keep parties close to these dates. More in how long a commercial suit takes.

It's the hearing where the judge sets the trial calendar, under Order XV-A of the Code. The court frames the issues, decides which witnesses are needed, and fixes dates for evidence affidavits and cross-examination. It may cap the time for oral arguments. If some point needs no evidence, it can decide that point there and then. Your lawyer has to attend. You should be reachable on the phone, because the judge may ask about settlement or about a document. Ignore a case management order and you risk costs, or losing your right to lead evidence altogether.

They're stricter. Once the case management hearing fixes the calendar, the court is expected to hold to it, and Order XV-A lets the judge impose costs on a party that doesn't comply, or shut it out. In practice, a first adjournment for a genuine reason is usually granted, often with costs. A defendant who keeps asking just to buy time tends to get refused. Our advice is simple. Line up your witnesses and papers before the dates are fixed, not after.

Usually the side that loses. Section 35 of the Code, as substituted for commercial disputes, makes costs follow the result as a rule, though the court can depart from that if it records reasons. Conduct matters when costs are fixed: frivolous claims or defences, needless adjournments, and whether someone turned down a reasonable settlement offer. Costs can cover fees, witness expenses and court fee. Don't expect every rupee back, though. Treat costs as a partial recovery. It isn't a refund.

It can't. A proprietorship has no separate legal existence, so the suit goes in the proprietor's own name, something like 'Ramesh Gupta, sole proprietor of M/s Gupta Traders'. You can mention the trade name. It just can't be the plaintiff. Order XXX Rule 10 of the Code lets someone sue a proprietor in the trade name, but it doesn't work the other way round. Check that your invoices, GST registration and bank account all trace back to you personally. Otherwise the defendant will argue that the wrong person has sued, and you'll spend hearings answering that.

Not every partner. Under Order XXX of the Code, partners can sue in the firm's name, and one partner who knows the facts can sign and verify the plaint and the statement of truth. A short authority letter from the rest is a good idea. Before you file, though, check with the Registrar of Firms that the firm is registered and that the suing partners show in the register. Section 69 of the Partnership Act, 1932 stops an unregistered firm from suing outsiders on a contract. Fights between partners are a separate subject, covered on our partnership dispute page.

The suit doesn't fail. The company's the plaintiff, not the officer. Pass a fresh board resolution authorising someone new, put it on record, and let that person sign later affidavits and give evidence. If the original authority was defective, courts have generally let companies ratify the filing by a later resolution. The real headache is evidence. The officer who leaves is often the one person who knew the deal properly, so find another witness who handled the account. Whenever Advocate B.K. Singh picks up a company's file halfway through, the authority papers are the first thing he looks at.

It can, if the debt was properly assigned. Section 130 of the Transfer of Property Act, 1882 needs the assignment to be in writing and signed, and the debtor should be told about it. The assignee then sues in its own name. It steps into the supplier's shoes, subject to any defences the buyer had against the supplier. Keep the assignment deed ready for the plaint, along with the notice and proof that it was delivered. The buyer is almost certain to question the assignee's right to sue. Expect it.

It can. Export and import of goods and services are on the list of commercial disputes, and a foreign seller can sue where the buyer lives or carries on business, or where the cause of action arose. Plan for two extra steps. The defendant may ask the court under Order XXV of the Code to make a plaintiff living outside India give security for costs. And the power of attorney and other papers signed abroad must be properly notarised and apostilled. Section 12A mediation still applies unless you're seeking urgent relief. Our page on export and import disputes says more.

The court can order service at the foreign address by post or courier. In suitable cases, courts have also accepted email and messaging apps. India is a party to the Hague Service Convention, so formal service can go through the Ministry of Law and Justice. That route is slow. Often months. Give the court every address and email ID the defendant used with you. Service on an agent or branch office the defendant has in India may also be possible, and it's much faster.

That depends on the country. Section 44A of the Code lets a money decree from a superior court of a reciprocating territory notified by the Central Government (the UK, Singapore and the UAE are examples) be executed directly in an Indian district court. Judgments from countries that aren't notified, the United States being one, can't be executed that way. You'll have to file a fresh suit in India on the judgment, within three years of it. In both cases the Indian court checks the grounds in Section 13 of the Code, such as fraud or the lack of a fair hearing.

Usually, yes. Get a power of attorney or affidavit signed abroad notarised there and then apostilled, since India is a party to the Hague Apostille Convention. If the country isn't part of the Convention, attestation by the Indian embassy or consulate is used instead. Anything in a foreign language needs a verified English translation. Invoices and emails from abroad can go in as they are. Electronic records, though, still need the Section 63 certificate under the Bharatiya Sakshya Adhiniyam. Foreign plaintiffs often lose their early dates over exactly these slips.

In Delhi, generally yes. The Delhi High Court has held that a counterclaim in a commercial suit is itself covered by Section 12A, so it can be rejected if nobody tried mediation. The same Court has said fresh mediation isn't needed where those claims were actually raised and discussed in an earlier mediation started by the plaintiff. The law here is still settling, so check the current position. If you're the defendant and a mediation notice arrives, put your own claims on the table then and there. It's a small step. It can save your counterclaim.

It doesn't. Order VIII Rule 6D of the Code says a counterclaim can go on even if the plaintiff's suit is stayed, discontinued or dismissed. It's treated like a separate plaint and decided on its own merits. This matters more than people think. A plaintiff files a weak suit, sees your counterclaim, and then tries to walk away. Your claim survives. The court carries on with it, and the original plaintiff now stands where a defendant would.

Yes, it can. A suit to stop a distributor using your brand, or to restrain a partner from leaking your pricing, is a commercial suit if the dispute falls under Section 2(1)(c). Section 12 lets the plaintiff estimate the market value of such rights, and for the commercial court that value must be at least Rs 3 lakh. These suits usually ask for urgent relief, so they're often filed without pre-institution mediation. Be honest about the valuation, though. A puffed-up or token figure invites an objection. See interim injunctions.

Quite possibly it already has been. Section 15 of the Commercial Courts Act told courts to transfer pending suits on commercial disputes of specified value to the commercial court once one was set up, unless judgment had been reserved. After transfer, the commercial court can hold a case management hearing and set fresh timelines, a new period for the written statement included. If yours is still before a regular civil judge, check the suit's value and the notifications for your district. A party can also ask the Commercial Appellate Division to transfer a case that slipped through.

They can, and many do, usually right at the start. If the commercial court agrees with them, it returns the plaint under Order VII Rule 10 of the Code so you can file in the proper civil court. You lose time. You don't lose the claim. If instead the court holds that it has jurisdiction, Section 12(3) of the Act bars any appeal or revision against that finding, and the case carries on. Advocate B.K. Singh makes a point of saying plainly in the plaint which clause of Section 2(1)(c) the deal falls under. See which commercial court.

Not while the moratorium lasts. Once the NCLT admits a corporate insolvency case, Section 14 of the Insolvency and Bankruptcy Code bars new suits against the company and stops pending ones, so your commercial suit goes on hold. What you do instead is file your claim with the resolution professional within the time set in the public notice. Suits against a personal guarantor or other co-defendants may carry on, depending on where they stand. Keep proof of the debt ready, in the same shape you'd use in court.

Usually you can't. Order II Rule 2 of the Code makes you put the whole claim from one cause of action into one suit. Leave part of it out without the court's leave and that portion is gone for good. A supplier owed on twelve invoices under one running account should claim all twelve, with interest, in a single plaint. Some people split claims to keep each one under a value limit. That draws the same objection. It also looks like forum shopping, which judges don't like.

Start with the paperwork. Pull together the contract or purchase orders, invoices, delivery proof, the ledger, the last written acknowledgment or part payment, and the important emails or chats. Work out the amount with interest up to today. Note where you and the other side carry on business, and where payment was due. With that in hand, a lawyer can usually tell you in one meeting whether it's commercial, which court it goes to and whether mediation comes first. You can send the papers to Advocate B.K. Singh's team through the contact page.