Filing and trying a commercial suit under the Commercial Courts Act

Section 2(1)(c) lists the disputes that count. The list covers ordinary transactions of merchants, bankers, financiers and traders, export and import, admiralty and maritime matters, carriage of goods, construction and infrastructure contracts including tenders, agreements relating to immovable property used exclusively in trade or commerce, franchising, distribution and licensing, joint venture and shareholders agreements, partnership agreements, intellectual property rights, agreements for sale of goods or provision of services, insurance and re-insurance, and contracts of agency relating to any of these. The Explanation keeps a dispute commercial even where it also seeks recovery of immovable property or realisation of money out of immovable property given as security, or where one party is the State or a private body carrying out public functions.

Value decides the forum. Section 12(1) fixes the Specified Value as the money claimed, inclusive of interest computed up to the date of filing, or the market value of the movable or immovable property on the date of filing, or, for any other intangible right, the market value the plaintiff estimates. Section 2(1)(i) sets the floor at three lakh rupees. Section 3(1A) lets the State Government, after consulting the High Court, notify a pecuniary value of not less than three lakh rupees for the whole or part of the State, and the second proviso to section 3(1) lets it fix the value for the territory over which the High Court has ordinary original civil jurisdiction, again at not less than three lakh rupees but not more than the pecuniary jurisdiction exercisable by the District Courts. Those figures sit in State notifications, so the current Tamil Nadu notification has to be read before the plaint is valued.

In Chennai the choice is between a Commercial Court at the District Judge level, which section 3 allows in a territory where the High Court has an original side, and the Commercial Division of the Madras High Court under section 7 for suits of Specified Value filed on that original side. Section 6 gives a Commercial Court jurisdiction over the entire territory of the State it is vested with, where the suit is instituted in accordance with sections 16 to 20 of the Code. Section 12(3) bars an appeal or a revision under section 115 of the Code from an order of a Commercial Court or Commercial Division finding that it has jurisdiction.

Section 12A(1) says a suit which does not contemplate any urgent interim relief shall not be instituted unless the plaintiff exhausts the remedy of pre-litigation mediation in the manner prescribed by the Central Government's rules. Section 12A(2) lets the Central Government notify, for the purpose, either an Authority constituted under the Legal Services Authorities Act, 1987 or a mediation service provider as defined in clause (m) of section 3 of the Mediation Act, 2023, and the list in section 40(1) of that Act covers bodies recognised by the Mediation Council of India along with Legal Services Authorities, court-annexed mediation centres and any other body the Central Government notifies. Section 12A(3) gives the authority or provider one hundred and twenty days from the date of the plaintiff's application to complete the mediation, extendable by sixty days with the consent of the parties, and the period the parties spent in pre-litigation mediation is not computed for limitation. Under section 12A(4) a settlement is reduced to writing and signed by the parties and the mediator, and section 12A(5) directs that the mediated settlement agreement be dealt with under sections 27 and 28 of the Mediation Act, 2023.

Section 27 of the Mediation Act makes a mediated settlement agreement signed by the parties and authenticated by the mediator final and binding on them and on persons claiming under them, and enforceable under the Code of Civil Procedure, 1908 in the same manner as a judgment or decree of a court, so that a party may rely on it by way of defence, set off or otherwise in any legal proceeding. Section 28 allows a challenge only before a court or tribunal of competent jurisdiction, only on the grounds of fraud, corruption, impersonation or a mediation conducted in a dispute or matter not fit for mediation under section 6, and only on an application made within ninety days of receiving the copy of the agreement under section 19(3), or within a further ninety days where the court is satisfied that the applicant was prevented by sufficient cause.

The Supreme Court held in Patil Automation Pvt. Ltd. v. Rakheja Engineers Pvt. Ltd. (2022) 10 SCC 1 that the requirement is mandatory and that a suit filed in breach of it, where no urgent interim relief is contemplated, is liable to have its plaint rejected under Order VII Rule 11. That declaration operates prospectively from 20 August 2022. In Dhanbad Fuels Pvt. Ltd. v. Union of India [2025] 6 S.C.R. 431 the Court upheld a High Court order that kept a suit in abeyance and sent the parties to the State Legal Services Authority for mediation, rather than rejecting the plaint, which is how the prospective limit is applied to older suits.

Yamini Manohar v. T.K.D. Keerthi, (2024) 5 SCC 815, delivered on 13 October 2023, shows how far that exception reaches. The Bench set out section 12A in its substituted form, with the one hundred and twenty day period and the reference to sections 27 and 28 of the Mediation Act, and repeated that the stage is mandatory unless the suit contemplates urgent interim relief. It then read the exception as conferring power on the court to be satisfied, which means the plaint, its documents and the facts must show and indicate the need for urgent relief. It approved the Bombay High Court's approach in Kaulchand H. Jogani v. Shree Vardhan Investment, 2022 SCC OnLine Bom 4752, that a court may find the suit does not in effect contemplate urgent relief where an application is presented without any justification simply to overcome the section 12A bar, and it recorded without approving the Delhi High Court's view in Chandra Kishore Chaurasia v. R.A. Perfumery Works, 2022 SCC OnLine Del 3529, that the plaintiff is the sole determinant. The petition before it failed because urgent interim relief had in fact been prayed for.

The Mediation Act, 2023 made that change and then left the route to the Commercial Courts Act. Its Ninth Schedule substituted Chapter IIIA, which is where the stage takes the name pre-litigation mediation, the one hundred and twenty day period and the mediation service provider option. Section 18 of the same Act sets the comparable clock for a mediation under it: one hundred and twenty days from the date fixed for the parties' first appearance, extendable by up to sixty days as the parties agree. The proviso to section 5(1) then says pre-litigation mediation in commercial disputes of Specified Value shall be undertaken in accordance with section 12A and the rules made under it. A plaint that skips the stage on grounds of urgency has to plead the urgent interim relief it seeks, since the exemption in section 12A(1) is tied to that relief.

Order XI Rule 1, as substituted for commercial suits, requires the plaintiff to file with the plaint a list of all documents and photocopies of all documents in its power, possession, control or custody pertaining to the suit. That includes documents relating to any matter in question, whether they support or hurt the plaintiff's case. The list must say whether each document is an original, an office copy or a photocopy, and give the parties to it, the mode of execution, issuance or receipt, and the line of custody. The plaint carries a declaration on oath, in the Statement of Truth set out in the Appendix, that everything has been disclosed.

Under Rule 1(5) the plaintiff is not allowed to rely on a document that was in its power, possession, control or custody and was not disclosed with the plaint, save by leave of the court, and that leave is granted only if the plaintiff shows reasonable cause for the non-disclosure. In an urgent filing, Rule 1(4) allows the plaintiff to seek leave to rely on additional documents and file them within thirty days of filing the suit, with a fresh declaration on oath.

Order VIII Rule 1 gives the defendant thirty days from service of summons to present the written statement. In a commercial suit, the proviso added by the Schedule lets the court allow it on a later day, for reasons recorded in writing and on payment of costs, but not later than one hundred twenty days from the date of service of summons. On the expiry of that period the defendant forfeits the right to file the written statement and the court shall not take it on record.

SCG Contracts India Pvt. Ltd. v. K.S. Chamankar Infrastructure Pvt. Ltd. (2019) 12 SCC 210 held that this limit is mandatory and directed a written statement filed out of time to be taken off the record. A defendant who intends to plead set-off or a counter-claim does so in the same written statement, so the same clock governs both. Section 15(4) of the Act lets the court prescribe a new period for the written statement in a suit transferred to the Commercial Court or Commercial Division, and the proviso to Order V Rule 1(1) does not apply to such a suit.

Order XV-A Rule 1 requires the court to hold the first Case Management Hearing not later than four weeks from the date on which all parties file their affidavits of admission or denial of documents. At that hearing, once the court finds issues of fact and law that need to be tried, Rule 2 lets it frame the issues under Order XIV, list the witnesses, fix the dates for filing evidence affidavits and for oral evidence, and fix the dates for written and oral arguments. Rule 2 also lets the court set time limits for the parties and their advocates to address oral arguments. Order XV, on disposal of the suit at the first hearing, is omitted by the Schedule for commercial suits.

Rule 3 sets the outer limit: in fixing dates, the court shall ensure that arguments are closed not later than six months from the date of the first Case Management Hearing. The witness affidavits and the written arguments therefore have to be ready by the dates fixed at the first hearing.

Order XIII-A lets the court give summary judgment against a plaintiff or a defendant on a claim if it considers that the plaintiff has no real prospect of succeeding or the defendant has no real prospect of successfully defending, and that there is no other compelling reason why the claim should not be disposed of before oral evidence is recorded. An application may be made at any time after summons has been served, and no application may be made after the court has framed the issues.

Summary judgment under Order XIII-A is available to either side in any commercial suit. A summary suit under Order XXXVII is narrower: it is a plaintiff's procedure for a debt or liquidated demand on a negotiable instrument or a written contract, in which the defendant must obtain leave to defend. Which one to use depends on the document the claim stands on, and the summary suit guide in this hub sets out the Order XXXVII route.

Section 13(1A) gives a person aggrieved by a judgment or order of a Commercial Court at the level of District Judge, or of a Commercial Division, an appeal to the Commercial Appellate Division of the High Court within sixty days from the date of the judgment or order. Section 13(1) sends an appeal from a Commercial Court below the District Judge level to the Commercial Appellate Court within the same sixty days. The proviso to section 13(1A) limits appeals from orders to those specifically enumerated in Order XLIII of the Code, as amended, and section 37 of the Arbitration and Conciliation Act, 1996. Section 13(2) then says no appeal lies from any order or decree of a Commercial Division or Commercial Court otherwise than under the Act, notwithstanding any other law or the Letters Patent of a High Court.

Kandla Export Corporation v. OCI Corporation (2018) 14 SCC 715 held that an appeal which section 50 of the Arbitration and Conciliation Act does not allow cannot be brought in through section 13(1) of the Commercial Courts Act. On the other side of the line, MITC Rolling Mills Pvt. Ltd. v. Renuka Realtors [2025] 11 S.C.R. 531 held that an order rejecting a plaint under Order VII Rule 11 is appealable under section 13(1A). A party aggrieved by an interlocutory order that is not in Order XLIII should read section 8, which bars a revision application or petition against an interlocutory order of a Commercial Court.

Section 35 of the Code, as substituted for commercial disputes, gives the court discretion over whether costs are payable, how much and when, and defines costs to include the fees and expenses of witnesses, legal fees and expenses, and other expenses of the proceedings. The general rule in section 35(2) is that the unsuccessful party pays the costs of the successful party, and a court that departs from it records its reasons. Section 35(3) tells the court to look at the conduct of the parties, partial success, a frivolous counter-claim that caused delay, and a reasonable offer to settle that the other side unreasonably refused.

Interest on a money decree runs under section 34 of the Code. The court may award interest from the date of the suit to the date of the decree, and further interest from the decree to payment at not more than six per cent per annum. Where the liability arose out of a commercial transaction, that further interest may exceed six per cent but may not exceed the contractual rate, or where there is none, the rate at which nationalised banks lend in commercial transactions. A decree that says nothing about further interest is deemed to have refused it, so the prayer should state the rate and the period. The costs and interest guide in this hub covers the arbitration side.