Commercial Courts Act 2015: How Fast-Track Commercial Litigation Works

  Articles, Commercial Litigation

India’s commercial litigation landscape was transformed by the Commercial Courts, Commercial Division and Commercial Appellate Division of High Courts Act, 2015 (the “Commercial Courts Act 2015”), and further refined by the Commercial Courts, Commercial Division and Commercial Appellate Division of High Courts (Amendment) Act, 2018. The objective was direct: create dedicated courts and procedures for commercial disputes to reduce pendency, impose timeline discipline, and improve India’s ranking on the World Bank’s Ease of Doing Business index. Understanding how fast-track commercial litigation works under the Commercial Courts Act 2015 is essential for any business involved in commercial disputes in India.

What Is a “Commercial Dispute”?

Section 2(1)(c) of the Commercial Courts Act 2015 defines “commercial dispute” broadly. A commercial dispute includes disputes arising from:

• Ordinary transactions of merchants, bankers, financiers, and traders
• Export or import of merchandise or services
• Admiralty and maritime law
• Transactions relating to aircrafts and ships
• Carriage of goods
• Construction and infrastructure contracts
• Agreements relating to immovable property used exclusively in trade or commerce
• Franchising agreements
• Distribution and licensing agreements
• Management and consultancy agreements
• Joint venture agreements
• Shareholders’ and partnership agreements
• Intellectual property rights (including trademarks, copyright, patents, and designs)
• Insurance and re-insurance
• Mercantile agency and mercantile usage
• Questions of private international law

Important distinction: Immovable property disputes are included in the definition only when the property is used exclusively in trade or commerce. A purely residential property dispute-such as a homebuyer’s RERA complaint or a tenancy dispute over a residential flat-does not qualify as a “commercial dispute” under the Act.

Pecuniary Jurisdiction: Which Court Has Jurisdiction?

The Commercial Courts Act 2015 (as amended in 2018) establishes the following pecuniary hierarchy:

Specified Value: The value of the commercial dispute determines the court. The 2018 Amendment reduced the minimum specified value from INR 1 crore to INR 3 lakh. However, individual state governments have the discretion to notify a higher minimum (up to the pecuniary limit of the district courts).

Courts established under the Act:

• Commercial Court at District Level: For specified values above INR 3 lakh (or the higher value notified by the state) and below the High Court’s original jurisdiction threshold. These courts are established in all states where the High Court does not have ordinary original civil jurisdiction.
• Commercial Division of the High Court: In High Courts with ordinary original civil jurisdiction (Delhi, Bombay, Calcutta, Madras, and Himachal Pradesh High Courts), the Commercial Division exercises jurisdiction over commercial disputes with the specified value falling within the High Court’s original jurisdiction (above INR 2 crore for Delhi High Court). District-level Commercial Courts in Delhi were established separately for lower-value commercial disputes.
• Commercial Appellate Division: Hears appeals from orders of Commercial Courts and Commercial Divisions.

How the specified value is determined: Section 12 of the Act specifies how the value is computed-for claims for money, the principal amount (excluding interest and costs); for claims relating to immovable property, the market value; for IP rights, the value is determined by the prescribed formula.

Pre-Institution Mediation and Settlement: Section 12A (Mandatory)

Section 12A of the Commercial Courts Act 2015 (inserted by the 2018 Amendment) requires that before filing a commercial suit that does not seek urgent relief, the plaintiff must exhaust the remedy of pre-institution mediation before an authority established by the Central or State Government.

Mandatory nature confirmed by the Supreme Court: In *M/S Patil Automation Private Limited and Others v. Rakheja Engineers Private Limited (decided 17 August 2022), the Supreme Court of India unequivocally held that Section 12A imposes a mandatory* pre-condition for filing a commercial suit (where no urgent relief is sought). The Court held that a suit filed without compliance with Section 12A is liable to be rejected under Order VII Rule 11(d) CPC (where the suit is barred by any law). The word “shall” in Section 12A reflects a mandatory obligation, not a directory one.

When Section 12A does not apply:

• Suits seeking urgent interim relief (such as an emergency injunction)
• Arbitration-related petitions (applications under the Arbitration and Conciliation Act, 1996)

The mediation process: Pre-institution mediation is conducted by the District Legal Services Authority (DLSA) or such other bodies as notified. The process must be completed within three months (extendable by one more month with consent of both parties). If mediation fails or if the other party does not participate within 30 days of notice, a settlement failure report is issued, and the plaintiff may then file the suit.

Case Management Hearings: Section 15 and Order XV-A CPC

The Commercial Courts Act 2015 introduced a structured case management hearing system through Order XV-A of the Code of Civil Procedure, 1908 (inserted by the Act). The case management hearing:

• Is scheduled after the filing of the written statement (or upon its deemed forfeiture under the 120-day limit)
• Requires both parties to appear and explain the status of pleadings, proposed witnesses, documentary evidence, and expected trial duration
• Results in a Case Management Order fixing a timetable for disclosure of documents, examination of witnesses, and final arguments
• Enables the court to impose costs for unnecessary adjournments or non-compliance with the timetable

This is a significant departure from ordinary civil procedure, where hearings often proceed without any fixed timeline.

The 120-Day Hard Limit for Written Statement: A Critical Rule

Under the Commercial Courts Act 2015, the amended Order VIII Rule 1 CPC creates a hard outer limit of 120 days from the date of service of summons for the defendant to file a written statement (the pleading in response to the plaint).

The Supreme Court in *M/S SCG Contracts (India) Private Limited v. K.S. Chamankar Infrastructure Private Limited (Civil Appeal No. 1638 of 2019, decided 12 February 2019) confirmed that this 120-day limit is mandatory and non-extendable* in commercial suits. The Court held that:

1. Order VIII Rule 1 and Rule 10 CPC, as amended for commercial suits, make the filing of a written statement beyond 120 days from service of summons impermissible.
2. Courts cannot use inherent powers under Section 151 CPC to extend this limit.
3. Any court order that purports to accept a written statement beyond 120 days in a commercial suit is itself contrary to law.

This ruling significantly strengthens the position of plaintiffs in commercial suits, as a defendant who fails to file a written statement within 120 days forfeits that right and the court proceeds ex parte or on the basis of the plaintiff’s pleadings.

Summary Judgment: Order XIII-A CPC

Commercial Courts introduced the concept of summary judgment in Indian civil procedure through Order XIII-A CPC (inserted by the Act). Either party may apply for a summary judgment at any time before the trial begins if:

• The applicant believes the other party has no real prospect of succeeding on its claim or defence
• There is no compelling reason for the matter to proceed to full trial

This provision is modelled on Part 24 of the UK Civil Procedure Rules. If granted, a summary judgment disposes of the suit without a full trial-potentially reducing litigation time from years to months.

Costs and Sanctions for Delay

The Commercial Courts Act 2015 amended Section 35 CPC to strengthen the court’s power to award costs that genuinely reflect the resources spent:

• Departure from “costs follow the event” is now the exception, not the rule in commercial courts
• Courts may award actual costs including advocate fees and expenses if a party delays proceedings or makes unmeritorious applications
• Non-compliance with case management orders invites cost sanctions

Ordinary Civil Procedure vs Commercial Court Procedure: Key Differences

Key Takeaways

• A commercial dispute above INR 3 lakh (or the higher threshold notified by the state) may be filed in a Commercial Court, which applies stricter timelines and case management than ordinary civil courts.
• Pre-institution mediation under Section 12A of the Commercial Courts Act 2015 is mandatory before filing any commercial suit not seeking urgent relief, as confirmed by the Supreme Court in Patil Automation (2022).
• The written statement must be filed within 120 days of service of summons in commercial suits-this deadline is non-extendable as held by the Supreme Court in SCG Contracts (2019), making timely response critical for defendants.

This article is for informational purposes only and does not constitute legal advice. Readers should seek appropriate professional counsel for their specific circumstances.

META TITLE: Commercial Courts Act 2015 India: Fast-Track Disputes Guide

META DESCRIPTION: How India’s Commercial Courts Act 2015 works-commercial dispute definition, pecuniary jurisdiction, mandatory pre-institution mediation, 120-day rule, and case management explained.