A civil suit that arises out of a commercial dispute, as defined under Section 2(1)(c) of the Commercial Courts Act, 2015, is termed to be a “commercial suit”.
BUT WHY A COMMERCIAL SUIT?
Disputes are a natural part of doing business, especially when contracts, money, or partnerships are involved. Such commercial disputes of high pecuniary value needed to be resolved quickly, and the Indian judicial system was beset by excessive delays. Recognizing that prolonged litigation could significantly harm business interests and economic efficiency, the need for a specialized mechanism became undeniable. In order to handle such disputes and guarantee the prompt resolution of such cases, the Law Commission strongly advised the establishment of Commercial Courts and Commercial Divisions in High Courts after reviewing the fast-track procedures and international practice of Commercial Courts, and thus, the Commercial Courts Act, 2015[1] was enacted on 31st December 2015.
Commercial suits are filed under Commercial Courts[2], which are defined in Section 2(b) of the Commercial Courts Act, 2015. It is a court that deals with commercial disputes, typically involving business contracts, trade, commerce, and financial transactions between companies or individuals engaged in commerce. Commercial suits include suit arising out of the ordinary transactions of merchants, bankers and traders; and amongst others those relating to the construction of mercantile documents, export or import of merchandise, affreightment, carriage of goods by land, sea or air insurance, banking and mercantile agency and mercantile usages.[3]
But a commercial dispute shall not cease to be a commercial dispute merely because—
(a) it also involves action for recovery of immovable property or for realisation of monies out of immovable property given as security or involves any other relief pertaining to immovable property;
(b) one of the contracting parties is the State or any of its agencies or instrumentalities, or a private body carrying out public function.
The provisions of Code of Civil Procedure, 1908[4], have been amended to incorporate and give legal recognition to the provisions of act.
WHAT IS THE PROCEDURE FOR INITIATING A COMMERCIAL SUIT?
The dispute must be a “commercial dispute” as per Section 2(1)(c) of the Commercial Courts Act, 2015 and the specified value of the suit must be ₹3,00,000 or more.[5]
The first step is Pre- Institution Mediation, where there is no need of urgent relief (if any, the step can be skipped).
Pre-institution mediation is required by Section 12A[6] of the Commercial Courts Act, 2015, unless the plaintiff has an urgent need for interim relief. The Statement of Objects and Reasons makes it abundantly evident that the purpose of the 2018 Amendment (the act of 2015 was once amended in the year 2018), which introduced this provision, was to make mediation mandatory, at least in non-urgent cases. In Patil Automation Pvt. Ltd. v. Rakheja Engineers Pvt. Ltd.[7], the Supreme Court upheld the requirement that a plaintiff submit an application to be exempted from Section 12A’s requirements in cases where an urgent remedy is sought. Similar to this, the Delhi High Court highlighted in Anil Gupta v. Baburam Singla[8]that the plaintiff must specifically request permission from the court through an application to avoid the pre-institution mediation process. This highlights the significance of pleading urgency both substantively and procedurally. This was further supported by the Delhi High Court’s clarification in Chandra Kishore Chaurasia v. R.A. Perfumery Works Pvt. Ltd. [9](2022) that the pleadings and the type of relief sought should be the only factors used to determine whether a suit calls for urgent interim relief. According to the court, the suit cannot be dismissed for violating Section 12A [10]if the plaint expressly requests urgent interim relief.
In the absence of such urgency, the plaintiff must apply to start the mediation process through the District Legal Services Authority (DLSA). In the event that the other party is unable to receive a notice or declines to participate even after being served, the DLSA will consider the mediation unsuccessful and notify both parties of this. Within three months of the plaintiff’s application date, the mediation must be completed; this time frame may be extended by two months with both parties’ consent. A failure report must be submitted by the mediator if mediation is held but no settlement is reached. However, in the event that a settlement is reached by both parties, the mediator will draft a written agreement that, in accordance with Section 30(4) of the Arbitration and Conciliation Act, 1996[11], will have the same legal standing as an arbitral award. Crucially, under the Limitation Act of 1963[12], the time spent in the mediation process is not included in the calculation of the statute of limitations for bringing a business lawsuit.
A Statement of Truth, along with the plaint, must be filed with the lawsuit if pre-institution mediation is omitted or is unsuccessful and immediate interim relief is needed.
The pleadings must contain the required information when interest is asserted. The defendant has 120 days after the summons is served to submit the written statement; if they don’t, they forfeit their right to do so. A denial alone is insufficient; it must be accompanied by an explanation. Undisputed facts are considered admitted unless they are addressed in accordance with Rule 3-A.[13] Both parties must file lists and photocopies of all pertinent documents that are in their control, custody, or possession as part of the disclosure process. Each party must provide a declaration under oath attesting that all pertinent documents have been disclosed and annexed and that no additional documents have been withheld, in addition to the plaint and written statement. This guarantees openness and speeds up the resolution of business disputes.
For commercial litigation to be transparent and equitable, document discovery and inspection are essential. Under Order XI Rule 2 of the CPC, 1908, either party may submit interrogatories to the other party with the consent of the court; the court has seven days to make a decision on such applications. Within thirty days of filing the written statement, the disclosed documents must be inspected; this deadline may be extended by another thirty days with the consent of the court. The other party may request a court order if one party refuses to allow the inspection, and the inspection must be provided within five days of the order. Without permission from the court, a party cannot rely on documents that have not been disclosed or examined. Each disclosed document must have a statement of admission or denial filed by the parties within fifteen days of the inspection. Additionally, the other party may serve a notice asking for the production of any documents that the other party has overlooked. Within fifteen days, the recipient must provide them or provide an explanation for their refusal. The court may make an adverse inference against the non-complying party if it determines that the refusal was unwarranted. These clauses are intended to maintain procedural efficiency in business disputes and expedite pre-trial procedures.
The court must hold the first Case Management Hearing within four weeks of all parties in a commercial suit filing affidavits admitting or denying documents. The court frames the issues, schedules witness examinations, establishes due dates for submitting affidavits of evidence, records evidence, permits cross-examination, and sets up both written and oral arguments during this hearing. The court has the authority to impose stringent deadlines in order to guarantee that the proceedings are expedited and that the arguments are resolved within six months of the initial hearing. In order to avoid excessive delay, it must also guarantee that the recording of evidence, including the cross-examination of every witness occurs on a day-to-day basis.
Once arguments conclude, the court is obligated to pronounce its judgment within ninety days, reinforcing the goal of expeditious resolution in commercial disputes.
CONCLUSION
The 2015 Commercial Courts Act, which was created especially to meet the changing demands of business litigants, marks a paradigm shift in India’s civil adjudicatory system. Its introduction shows a growing understanding of the close relationship between judicial efficiency and economic growth. The Act aims to decrease pendency and increase procedural discipline and predictability in commercial litigation by establishing a unique procedural code for commercial disputes, complete with time-bound case management, mandatory pre-institution mediation, and stringent disclosure requirements.
From an academic and personal perspective, the Act’s focus on expedited timelines and institutional accountability is a praiseworthy legislative response to the lengthy delays that have historically hampered civil litigation in India. The pre-institution mediation process is especially noteworthy because it promotes a culture of compromise and amicable conflict resolution, which is, in my view, long overdue in a system overrun by preventable hostile conflicts. Though the legislative intent is clear and encouraging, its practical implementation still depends on judicial interpretation that is consistent, sufficient infrastructure, and a developed legal culture that prioritizes efficiency without compromising justice.
Furthermore, the Act’s strong procedural framework represents a significant effort to bring India’s dispute resolution procedures into compliance with international norms as of countries like US & UK. However, one must exercise caution. If contextual discretion is not balanced with procedural rigidity, it may inadvertently burden litigants, particularly those who are unfamiliar with the commercial litigation process. Accordingly, even though the Act undoubtedly lays the groundwork for a more business-friendly and litigation-efficient India, it is still crucial that it be further improved through both judicial rulings and administrative changes.
This Blog has been authored by Ms. Aradhya Mahajan, Intern (July 2025)
[1] The Commercial Courts, Commercial Division and Commercial Appellate Division of High Courts Act, 2015, No. 4, Acts of Parliament, 2015(India).
[2] The State Government, may after consultation with the concerned High Court, by notification, constitute such number of Commercial Courts at District level, as it may deem necessary for the purpose of exercising the jurisdiction and powers conferred on those Courts under this Act.
[3] Delhi High Court, Chapter XVI, Commercial Suits, at 1, https://delhihighcourt.nic.in/files/2024-04/courtrulefile_lp517545.pdf (Apr. 5, 2024).
[4] Code of Civil Procedure, 1908, No. 5, Acts of Parliament, 1908(India),
[5] The Commercial Courts Act, 2015, No. 4, § 2(1)(i), as amended by Act No. 28 of 2018 (India).
[6] The Commercial Courts Act, 2015, No. 4, § 12(A), as amended by Act No. 28 of 2018 (India).
[7] Patil Automation Pvt. Ltd. v. Rakheja Engineers Pvt. Ltd., (2022) SCC OnLine SC 1028 (India).
[8] Anil Gupta v. Babu Ram Singla, (2020) CS(OS) 201/2020(India).
[9] Chandra Kishore Chaurasia v. R.A. Perfumery Works Pvt. Ltd., (2022) FAO (COMM) 128/2021, CM Nos. 28066/2021, 28067/2021 & 40033/2021(India)
[10] Supra note 6
[11] The Arbitration and Conciliation Act, 1996, No. 26, § 30(4), Acts of Parliament, 1996 (India).
[12] The Limitation Act, 1963, No. 36, Acts of Parliament, 1963 (India).
[13] Rule 3A referred to in the context of commercial suits is part of Order VIII of the Civil Procedure Code (CPC), 1908, as amended by the Commercial Courts Act, 2015.
