Commercial Litigation

Commercial Litigation: a practical guide to your rights, the procedure and what to do first. Legals365 is the legal platform of Advocate B.K. Singh and associates, based in Delhi NCR.

In short. A commercial dispute worth ₹3 lakh or more, such as unpaid invoices, breach of a supply or distribution contract, or a construction claim, goes to a commercial court under the Commercial Courts Act 2015. Unless you need urgent interim relief, you must first try pre-institution mediation under section 12A. The written statement must be filed within 120 days at most, and appeals lie within 60 days.

Commercial litigation is the set of court cases that arise out of business dealings: a buyer who does not pay for goods, a contractor whose final bill is withheld, a franchisee who breaks the territory clause, a partner who walks off with the client list. Since 2015, most of these cases do not go to the ordinary civil court. They go to a commercial court, which runs under stricter rules on documents, deadlines and costs, and which is meant to finish a case far faster than a regular civil suit.

This page explains what counts as a commercial dispute, which court hears it, the mediation step you must take before filing, how a commercial suit actually moves from plaint to decree, what it costs in general terms, and the mistakes that sink otherwise good claims. The same rules apply in Delhi, Noida, Ghaziabad, Gurugram and in every other state, though the court that sits for your district and its pecuniary limits differ from place to place.

Law

Commercial Courts Act 2015 (amended 2018), with the Code of Civil Procedure 1908 as modified for commercial disputes

Forum

District-level commercial court, or the Commercial Division of a High Court that has original civil jurisdiction (in Delhi, suits above ₹2 crore)

Specified value

₹3 lakh and above, worked out under section 12 of the Act

Before filing

Pre-institution mediation under section 12A, unless the suit genuinely needs urgent interim relief

Time limit to sue

Usually 3 years under the Limitation Act 1963 for money and contract claims; the mediation period is excluded

Written statement

30 days from service, extendable up to 120 days at the outside; after that the right is lost

Appeal

Within 60 days under section 13, only against a decree or the orders the Act allows

Documents

Contract, invoices, ledger, correspondence, legal notice, mediation non-starter or failure report, statement of truth

What counts as a commercial dispute

A dispute is commercial if it falls within the list in section 2(1)(c) of the Commercial Courts Act 2015. The list is wide. It covers ordinary transactions of merchants, bankers, financiers and traders, including disputes over mercantile documents; export and import of goods or services; carriage of goods; construction and infrastructure contracts, including tenders; agreements for the sale of goods or provision of services; distribution, licensing and franchise agreements; management and consultancy agreements; joint ventures, shareholders' agreements and investment agreements; partnership agreements; technology development; insurance and reinsurance; and intellectual property rights such as trademarks, copyright, patents and designs.

Property disputes are commercial only in a narrow class. The Act includes agreements relating to immovable property used exclusively in trade or commerce. A lease of a running showroom or a warehouse in actual commercial use can qualify. A flat bought as an investment, a plot lying vacant, or a family partition does not, even if the money involved is large. Courts look at whether the property is actually used in trade or commerce, not at whether it is likely to be used that way later.

Who the parties are does not decide the question. A dispute between two individuals can be commercial if it arises from a business transaction, and a dispute between two companies can be an ordinary civil suit if it is about, say, a residential property bought for a director.

Specified value: the ₹3 lakh threshold and how it is counted

A commercial court hears only disputes of a specified value of ₹3 lakh or more. The threshold was ₹1 crore when the Act came in and was cut to ₹3 lakh by the 2018 amendment, which is why so many routine recovery suits now sit in commercial courts. Below ₹3 lakh, a business claim goes to the ordinary civil court, and the ordinary CPC applies.

Section 12 of the Act tells you how to count. For a money claim, you take the amount claimed including interest computed up to the date of filing. Where the relief concerns property or an intangible right such as a trademark, its market value counts. A counterclaim is valued on its own. Court fee is usually ad valorem, so the value also decides the fee.

Which court hears a commercial suit

The court depends on two things: the value of the claim and whether the High Court of that state has ordinary original civil jurisdiction. Only a few High Courts have it, including Delhi, Bombay, Calcutta, Madras and Himachal Pradesh. In those places, a commercial suit above the High Court's pecuniary limit goes to the Commercial Division of the High Court, and a smaller one goes to a commercial court set up at the level of a District Judge. In Delhi, the Delhi High Court's Commercial Division takes suits above ₹2 crore, and the district commercial courts at Tis Hazari, Saket, Patiala House, Karkardooma, Rohini and Dwarka take the rest.

In states where the High Court has no original side, such as Uttar Pradesh, Haryana, Rajasthan and Madhya Pradesh, every commercial suit starts in a district-level commercial court whatever its value. So a commercial court lawyer in Jaipur or Indore files a large claim in the district commercial court, not in the High Court. Some states have designated commercial courts only in certain districts, with one court covering several districts, so check which court has been notified for the area where the suit must be filed.

Territorial jurisdiction follows section 20 of the CPC: you can sue where the defendant resides or carries on business, or where the cause of action arose wholly or in part. In a supply contract, the cause of action can arise where the contract was made, where goods were to be delivered or where payment was to be made. Many contracts have an exclusive jurisdiction clause choosing one city. Courts generally enforce such a clause if the chosen court otherwise had jurisdiction, so read it before deciding where to file.

Where your commercial claim will be filed

Pre-institution mediation under section 12A

Before you file a commercial suit, you must apply for pre-institution mediation under section 12A of the Act, unless the suit contemplates urgent interim relief. The Supreme Court held in Patil Automation v Rakheja Engineers (2022) that this step is mandatory, and that a plaint filed without it from 20 August 2022 onwards is liable to be rejected under Order 7 rule 11 of the CPC.

The mediation is run by the Authority constituted under the Legal Services Authorities Act 1987, which in practice means the District Legal Services Authority of your district, or the High Court Legal Services Committee for a suit going to the High Court. You file an application with the details of the dispute; the Authority issues notice to the other side. If the other side does not turn up, a non-starter report is issued and you can sue. If the parties sit down, the mediation is to be finished within three months, extendable by two months with the consent of both parties.

Two practical points. First, the time spent in mediation is excluded when computing limitation, so a claim close to the three-year deadline is not lost by going to mediation, but file the mediation application before the limitation runs out, not after. Second, a settlement reached in section 12A mediation has the same status and effect as an arbitral award on agreed terms, which means it can be enforced like a decree. Many disputes do settle here, particularly unpaid invoice cases where the buyer wants time rather than a fight.

The urgent interim relief exception is narrow. Courts look at whether the plaint, read as a whole, genuinely needs an immediate order, such as an injunction against the sale of disputed goods or the use of an infringing mark. Adding a token prayer for an injunction to a plain money claim, only to skip mediation, is treated as a device, and the plaint can still be rejected. The Mediation Act 2023 also affects this area; parts of it have been brought into force, so check the current notification on how pre-litigation mediation is to be conducted.

How a commercial suit moves from notice to decree

The CPC as amended for commercial disputes sets a tighter sequence than an ordinary civil suit. In outline:

1. Legal notice and document collection

   Send a clear legal notice demanding payment or performance, and collect every document that proves the contract, performance and default. In a commercial suit you cannot bring most documents later, so this stage decides the case more than people expect.

2. Section 12A mediation

   Apply to the Legal Services Authority for pre-institution mediation. Keep the non-starter or failure report, because it must be filed with the plaint.

3. Plaint with statement of truth

   The plaint is verified by a statement of truth in the form set out in the amended CPC, and it must be accompanied by a list of all documents in your power, possession, control or custody, whether they help you or not, with a declaration on oath.

4. Summons and written statement

   The defendant gets 30 days to file a written statement, which the court can extend up to 120 days from service for recorded reasons and on costs. After 120 days the defendant forfeits the right to file it, and the court cannot take it on record.

5. Disclosure, inspection and admission or denial

   Each side inspects the other's documents and files an affidavit admitting or denying each document, with reasons for any denial. Bare denials can be treated as admissions, and the court can award costs for unreasonable denial.

6. Case management hearing

   The court holds a case management hearing under Order XV-A, frames issues, fixes dates for evidence and arguments and can set time limits for oral evidence and submissions. Adjournments are harder to get and usually come with costs.

7. Evidence and arguments

   Evidence in chief is given by affidavit, followed by cross-examination, often before a court-appointed commissioner. Written arguments are filed before oral arguments, and the court is expected to pronounce judgment within 90 days of the end of arguments.

8. Decree, costs and execution

   The decree usually carries costs on the principle that the losing party pays. If the defendant does not pay, you file for execution of the decree in the same court.

Documents: the rule that catches people out

In a commercial suit, a document you do not file with the plaint is usually lost to you. Order XI of the CPC, as it applies to commercial disputes, requires the plaintiff to file all documents in its power, possession, control or custody that relate to the suit, including documents that hurt its case. Later documents are allowed only with the leave of the court and on showing reasonable cause for not filing them earlier, and courts are strict about it.

This changes how a case has to be prepared. Before the plaint is drafted, the whole file needs to be put together: the contract and every amendment, purchase orders, delivery challans, e-way bills, GST invoices, ledger extracts, emails and WhatsApp messages with the other side, minutes of meetings, the legal notice and reply, and bank statements showing part payments. Electronic records need a certificate under section 63 of the Bharatiya Sakshya Adhiniyam 2023, which replaced section 65B of the Evidence Act.

When Advocate B.K. Singh reviews a commercial recovery file before filing, the first thing he looks for is the document that proves the other side accepted the goods or work, such as a signed delivery challan, a goods received note, a running account bill certified by their engineer, or an email acknowledging the invoice. A claim built on invoices alone, with no acceptance on record, is the one the defendant attacks first.

The 120-day limit for the written statement

A defendant in a commercial suit has 30 days from service of summons to file a written statement. The court can extend this, but not beyond 120 days from service, and only on recorded reasons and payment of costs. The Supreme Court has held that the 120-day limit is mandatory in commercial suits: once it passes, the right to file the written statement is gone and the court has no power to accept it.

For a defendant, this means the first week after summons arrive matters. Collect the documents, instruct a lawyer, and check whether there is an arbitration clause, a jurisdiction objection or a limitation point, because these must be raised in the first response. If the contract has an arbitration clause, an application under section 8 of the Arbitration and Conciliation Act 1996 must be made not later than the date of submitting the first statement on the substance of the dispute.

Summary judgment and Order 37 summary suits

Order XIII-A gives commercial courts the power to decide a claim without recording oral evidence, if it considers that the plaintiff has no real prospect of succeeding or the defendant has no real prospect of defending, and there is no other compelling reason for a trial. Either side can apply after summons have been served and before issues are framed. It suits cases where the debt is admitted in writing, such as a ledger confirmation or a signed balance confirmation, and the defence is an afterthought.

An older route is the summary suit under Order 37 of the CPC, available for claims based on written contracts, bills of exchange, promissory notes, cheques and similar debts. A defendant in an Order 37 suit must seek leave to defend, and if leave is refused, a decree follows. Order 37 suits are filed in commercial courts too when the value is ₹3 lakh or more, but summary judgment under Order XIII-A is not available in a suit originally filed under Order 37. Choose one route deliberately at the drafting stage.

Interim relief: injunctions, attachment and deposit

A commercial court has the same interim powers as any civil court. Under Order 39 rules 1 and 2 of the CPC it can grant a temporary injunction, for instance to stop a former distributor from selling under your brand or to restrain the encashment of a bank guarantee in the rare cases where fraud or irretrievable injustice is shown. Under Order 38 it can order attachment before judgment if the defendant is about to dispose of its property or leave the jurisdiction with intent to defeat a decree. Under Order 40 it can appoint a receiver.

Attachment before judgment is the relief clients most often ask for and least often get. Courts treat it as drastic. You have to show specific facts, such as the defendant selling its plant, closing its office or moving stock out, not just a general fear that it will not pay. A better tool in many recovery suits is an application asking the court to direct the defendant to deposit the admitted amount, or to furnish security, while the suit is pending.

Arbitration clauses and the commercial court

If your contract has an arbitration clause, the dispute generally goes to arbitration, not to a commercial court. If one side files a suit anyway, the other can apply under section 8 of the Arbitration and Conciliation Act 1996, and the court must refer the parties to arbitration unless it finds, on a first look, that no valid arbitration agreement exists. The commercial court still has a role: section 9 interim measures before or during arbitration, section 34 challenges to the award, and section 36 enforcement of an award as if it were a decree.

Under section 10 of the Commercial Courts Act, these arbitration applications in a commercial matter go to the commercial court or the Commercial Division, depending on where the original suit would have gone. For a full picture of appointment of arbitrators, interim relief and award challenges, see our page on arbitration and challenges to arbitral awards.

Choosing between the two is part of contract drafting, not litigation. A well-drafted commercial contract states the seat of arbitration, the number of arbitrators and the method of appointment, or deliberately leaves disputes to the courts of a named city. Unilateral appointment clauses, where one party alone picks a sole arbitrator, have been disapproved by the Supreme Court, and a clause of that kind invites a challenge at the very start.

Limitation and interest in commercial claims

Most commercial money claims must be filed within three years under the Limitation Act 1963. The starting point varies: for the price of goods sold and delivered with no fixed credit period, three years from delivery (Article 14); where a credit period is fixed, three years from its expiry; for a mutual, open and current account, three years from the close of the year in which the last item is entered (Article 1); for breach of contract, three years from the breach (Article 55). Where no specific article applies, the residuary Article 113 gives three years from when the right to sue accrues.

Limitation can be extended. A written and signed acknowledgment of the debt before the period expires starts a fresh period under section 18, and a part payment made and recorded in writing does the same under section 19. Balance confirmation letters, emails accepting the outstanding figure and signed ledger confirmations often save claims that look time-barred, so search the file for them before giving up.

Interest is usually claimed at the contractual rate up to filing, and the court can award pendente lite and future interest under section 34 of the CPC; in commercial transactions the court is not bound by the 6% ceiling that applies to other cases. If the supplier is a micro or small enterprise registered under the MSMED Act 2006, the buyer owes compound interest at three times the bank rate notified by the RBI on payments delayed beyond the agreed period or 45 days. The supplier can also choose the Facilitation Council route instead of a suit; see our page on MSME delayed payment claims.

Documents for a commercial suit

Appeals: section 13 and the bar on revisions

An appeal against a commercial court's judgment or order lies within 60 days under section 13 of the Act. Where the commercial court sits at the level of a District Judge, or where the Commercial Division of a High Court decided the case, the appeal goes to the Commercial Appellate Division of the High Court. Where a commercial court below the District Judge level decided it, the appeal goes to the Commercial Appellate Court at the district level.

Not every order can be appealed. Section 13 allows appeals only against the orders listed in Order 43 of the CPC, as amended, and those under section 37 of the Arbitration and Conciliation Act 1996. Section 8 of the Act bars civil revision petitions against interlocutory orders, including orders on jurisdiction; such points are raised in the appeal against the final decree. Lawyers sometimes try a petition under Article 227 of the Constitution against an interlocutory order, but High Courts entertain these sparingly in commercial matters.

A further appeal from the High Court lies to the Supreme Court by special leave under Article 136 within 90 days. Deadlines in commercial appeals are watched closely, and delay is condoned less readily than in ordinary civil appeals, so count the 60 days from the date of the judgment and apply for the certified copy at once. For practice before the Delhi High Court generally, see our page on cases in the Delhi High Court.

Execution: turning a decree into money

A decree is only paper until it is executed. If the judgment debtor does not pay, you file an execution petition under Order 21 of the CPC in the court that passed the decree, or in the court where the debtor's assets are. The court can attach bank accounts, receivables and movable property, attach and sell immovable property, and, in limited cases, order arrest and detention in civil prison. It can also direct the judgment debtor to file an affidavit of its assets.

The time to think about execution is before you sue, not after. Find out what the defendant owns: its bank, the location of its factory or godown, any property in its name, its major customers who owe it money. A decree against a company with no assets is worth little, and for a large unpaid debt against a company that is insolvent, an insolvency petition under the IBC (minimum default ₹1 crore against a corporate debtor) can be a stronger lever. See our page on insolvency petitions and claims under the IBC.

How the case changes with the parties involved

Small businesses and MSMEs. A registered micro or small supplier chasing a buyer has the choice of the MSME Facilitation Council under section 18 of the MSMED Act or a commercial suit. The Council route is cheaper and the award carries the statutory interest, but a buyer challenging the award must deposit 75% of the amount. The suit route suits claims where the supplier needs an injunction or where the buyer is outside the reach of the Council.

Companies and LLPs. A company sues through an authorised person, and the board resolution or power of attorney must be in place on the date the plaint is signed. A defective authorisation can be cured, but it hands the defendant an early objection. Where the dispute is between shareholders or directors about the running of the company, the National Company Law Tribunal, not a commercial court, often has jurisdiction for oppression and mismanagement claims.

Partnership firms. An unregistered firm cannot sue a third party to enforce a contract, because of section 69 of the Indian Partnership Act 1932. Check the Registrar of Firms certificate, and the names of the partners on it, before filing. Banks and financial institutions recovering ₹20 lakh or more go to the Debts Recovery Tribunal, so a bank's recovery claim does not ordinarily belong in a commercial court.

Foreign parties and NRIs. A foreign supplier suing an Indian buyer can use a commercial court, but the contract's jurisdiction and arbitration clauses usually decide the forum, and enforcing a foreign judgment in India depends on whether the country is a reciprocating territory under section 44A of the CPC. Government buyers often have arbitration clauses in their contracts, and some require a notice under section 80 of the CPC two months before a suit against the government is filed.

Commercial courts in Delhi NCR and other cities

Uttar Pradesh has notified commercial courts in a number of districts, and the courts that sit for Gautam Buddh Nagar (Noida and Greater Noida) and Ghaziabad should be confirmed from the current notification before filing. Haryana has commercial courts including at Gurugram and Faridabad. Appeals from these courts go to the Commercial Appellate Division of the Allahabad High Court and the Punjab and Haryana High Court respectively.

Outside NCR the structure is the same, with local differences. A commercial suit in Chennai above the Madras High Court's limit goes to its Commercial Division on the original side; smaller ones go to the city's commercial courts. In Jaipur and Indore, where the High Courts have no original side, all commercial suits start in the district commercial courts. The district court practice in Delhi NCR page explains how the district complexes in Delhi divide their work.

Mistakes that weaken commercial suits

• Skipping section 12A mediation. A plaint without the mediation report, and without a genuine need for urgent relief, can be rejected at the first hearing.
• Filing an incomplete set of documents. Documents left out of the plaint are hard to bring in later. Put the whole file together before drafting.
• Letting limitation run. People wait for promised payments for years. Check the date of the last written acknowledgment or part payment and act before three years pass.
• Choosing the wrong forum. An arbitration clause, an exclusive jurisdiction clause or a bank as plaintiff changes where the case belongs. Read the contract first.
• Ignoring execution until the end. Find out what the defendant owns before you sue, and ask for deposit or security where facts justify it.

Costs, time and when not to sue

A commercial suit costs court fee, which is usually a percentage of the claim under the state's court fees law, plus lawyers' fees, and the cost of certified copies, commissions for recording evidence and execution. Under section 35 of the CPC as substituted for commercial disputes, the losing party generally pays the winner's costs, and the court looks at conduct, including unreasonable refusal to settle and frivolous denials. This cuts both ways: a weak claim can end with you paying the other side.

How long a case takes depends on the court and on how hard the defendant fights. Commercial courts move faster than ordinary civil courts, and cases decided by summary judgment or settled at mediation can finish within a year, but contested trials still take longer. Nobody can honestly promise a date for the decree.

Sometimes a suit is not the right step. If the amount is small, the defendant has no assets, or your own documents are thin, a well-drafted legal notice followed by negotiation or mediation or Lok Adalat may recover more at lower cost. Where the buyer paid by cheque and it bounced, a complaint under section 138 of the Negotiable Instruments Act runs alongside the civil claim; see our page on cheque bounce complaints.

What to do this week

• Find the contract and read the clauses on jurisdiction, arbitration, interest and notice.
• Work out the outstanding amount and the dates of the last delivery, invoice, part payment and written acknowledgment.
• Collect delivery proof showing the other side accepted the goods or work.
• Export emails and WhatsApp chats with the other side and keep the phone or device safe for the section 63 certificate.
• If you are a defendant, note the date summons were served and count 30 and 120 days from it.
• List what you know about the other side's assets: bank, premises, property, customers.
• Get a lawyer to send or reply to the legal notice before anything else is filed.

Getting the file reviewed

In commercial suits that reach Advocate B.K. Singh's office, the decisive work is usually done before filing: getting the forum right, completing mediation properly and assembling a full documentary record. Mistakes at that stage are expensive to fix later and some cannot be fixed at all.

If you want the papers checked before you act, the team of Advocate B.K. Singh at Legals365 can review them and tell you the next step; you can talk to a lawyer here.

Frequently asked questions

What is the minimum amount for a case in commercial court?

The specified value must be ₹3 lakh or more. It includes interest calculated up to the date of filing. Below ₹3 lakh, a business claim goes to the ordinary civil court.

Is mediation compulsory before filing a commercial suit?

Yes, pre-institution mediation under section 12A is compulsory unless the suit genuinely needs urgent interim relief. The Supreme Court held in 2022 that a plaint filed without it is liable to be rejected. The mediation period is excluded from limitation.

How long does a defendant get to file a written statement in a commercial suit?

Thirty days from service of summons, which the court can extend up to 120 days for recorded reasons and on costs. After 120 days the right to file is lost. The court cannot accept a late written statement in a commercial suit.

Can I file a money recovery suit in commercial court?

Yes, if the debt arises from a commercial transaction such as sale of goods or services and the claim is ₹3 lakh or more. You can file an ordinary commercial suit or an Order 37 summary suit. If the claimant is a bank recovering ₹20 lakh or more, the DRT is the forum.

Where do I file a commercial suit in Delhi?

Claims above ₹2 crore go to the Commercial Division of the Delhi High Court. Smaller claims go to the district commercial court that has territorial jurisdiction, at Tis Hazari, Saket, Patiala House, Karkardooma, Rohini or Dwarka. The contract's jurisdiction clause can also affect where you file.

What is summary judgment in a commercial court?

Summary judgment under Order XIII-A lets the court decide a claim without oral evidence if one side has no real prospect of success. It is used where the debt is admitted on paper and the defence is weak. It is not available in a suit filed under Order 37.

Can I appeal an interim order of a commercial court?

Only if the order is one of those listed in Order 43 of the CPC or section 37 of the Arbitration Act. Civil revision against interlocutory orders is barred by section 8 of the Act. Other points are raised in the appeal against the final decree.

What is the time limit to appeal a commercial court decree?

Sixty days from the date of the judgment or order under section 13 of the Commercial Courts Act. The appeal goes to the Commercial Appellate Division of the High Court or the Commercial Appellate Court. Delay is not condoned easily.

Does a commercial court hear property disputes?

Only disputes about agreements relating to immovable property used exclusively in trade or commerce, such as the lease of a functioning shop or warehouse. Residential property, vacant land and family property disputes go to the ordinary civil court.

Can I file a commercial suit if my contract has an arbitration clause?

You can file, but the defendant can ask the court under section 8 of the Arbitration Act to refer the dispute to arbitration, and the court usually will. The commercial court still hears section 9, 34 and 36 applications in commercial arbitrations.

What documents can I add after filing a commercial suit?

Only with the court's leave and on showing reasonable cause for not filing them earlier. The plaintiff must file all relevant documents in its power, possession, control or custody with the plaint. Plan for this before drafting.

Who pays the costs in a commercial suit?

The general rule under section 35 of the CPC, as it applies to commercial disputes, is that the losing party pays the winner's costs. The court considers the parties' conduct, including unreasonable refusal to settle or frivolous denials. Costs can also be imposed for adjournments.