Commercial Suits under the Commercial Courts Act, 2015

 

A Procedural Ready-Reckoner

I. Introduction

The Commercial Courts Act, 2015 (“the Act”) was enacted with the object of speedy, efficient, and structured adjudication of high-value commercial disputes, by introducing specialised courts, strict timelines, front-loaded pleadings, active case management, and cost consequences. While the Act substantially amends the Code of Civil Procedure, 1908 (“CPC”) for commercial disputes, these procedural changes are often not readily apparent to those unfamiliar with trial-court practice.

This article is not a commentary on the entire Act. Instead, it serves as a procedural guide and ready-reckoner, mapping the key stages involved in filing and prosecuting a commercial suit, from inception to appeal.

 

II. Stage One: Commercial Dispute

1. Ascertain Whether the Dispute is a “Commercial Dispute”

The first and foundational step is to determine whether the dispute qualifies as a “commercial dispute” under Section 2(1)(c) of the Act.

A commercial dispute includes, inter alia:

• Ordinary transactions of merchants, bankers, financiers, and traders
• Agreements relating to trade and commerce
• Partnership and shareholder disputes
• Intellectual property rights (trademarks, copyright, patents, etc.)
• Construction and infrastructure contracts
• Joint venture and shareholder agreements
• Franchise, distribution, and licensing agreements

Additionally, the dispute must satisfy the specified value requirement under Section 2(1)(i) (currently not less than ₹3,00,000).

Judicial guidance: Courts have repeatedly emphasised that the substance of the transaction, and not merely the relief claimed, determines whether a dispute is commercial.

III. Stage Two: Pre-Institution Mediation

2. Mandatory Pre-Institution Mediation (Section 12A)

2.1 Cases Involving Urgent Interim Relief

If the plaintiff requires urgent interim relief, pre-institution mediation may be skipped, and the suit may be instituted directly.

2.2 Cases Without Urgent Interim Relief

Where no urgent interim relief is sought, pre-institution mediation is mandatory. The plaintiff must file an application before the District Legal Services Authority (DLSA).

Nature of the provision:
The Supreme Court has clarified that Section 12A is mandatory and not directory, and a suit filed without exhausting pre-institution mediation (in the absence of urgency) is liable to be rejected under Order VII Rule 11 CPC.

2.3 Non-Starter Mediation

If:

• The opposite party cannot be served, or
• Despite service, refuses to participate

The DLSA shall declare the mediation a non-starter and issue a report accordingly.

2.4 Time Limit

• Mediation must be completed within three months
• Extendable by two months with consent of parties

2.5 Failure Report

Where mediation fails despite participation, the mediator submits a failure report.

2.6 Successful Settlement

Where settlement is achieved, the terms are reduced to writing.

2.7 Legal Status of Settlement

Such settlement has the same status as an arbitral award on agreed terms under Section 30(4) of the Arbitration and Conciliation Act, 1996.

2.8 Limitation Protection

The time spent in pre-institution mediation is excluded for computing limitation under the Limitation Act, 1963.

 

IV. Stage Three: Filing of the Commercial Suit

3. Governing Procedure

Commercial suits are governed by the CPC as amended by the Commercial Courts Act.

3.1 Statement of Truth

Every commercial suit must be accompanied by a Statement of Truth, verifying pleadings on oath.

Failure to file a Statement of Truth is not a curable defect and can result in rejection of pleadings.

3.2 Pleadings on Interest

If interest is claimed, pleadings must disclose:

• Basis of entitlement
• Rate of interest
• Period for which interest is claimed

 

V. Stage Four: Filing of Written Statement

4.1 Strict Timeline

The written statement must be filed within 120 days from the date of service of summons.

Consequence of default:
Upon expiry of 120 days, the defendant forfeits the right to file the written statement, and the court has no discretion to extend time.

4.2 Specific Denials Mandatory

• Mere denials are impermissible
• Reasons must be furnished for each denial

4.3 Deemed Admissions

Any fact not denied in the manner prescribed under Order VIII Rule 3A CPC is deemed to be admitted.

VI. Stage Five: Disclosure, Discovery, and Inspection of Documents

A. Disclosure

5.1 Plaintiff’s Disclosure

Along with the plaint, the plaintiff must file:

• A list of all documents in its power, possession, control, or custody
• Copies of such documents

5.2 Declaration on Oath (Plaintiff)

The plaint must contain a declaration affirming full disclosure.

5.3 Defendant’s Disclosure

The defendant must file similar disclosure with the written statement.

5.4 Declaration on Oath (Defendant)

A declaration confirming complete disclosure is mandatory.

 

B. Discovery (Interrogatories)

5.5 Interrogatories

• Either party may seek leave to deliver interrogatories
• Court must decide such application within seven days
• Governed by Order XI Rule 2 CPC

 

C. Inspection

5.6 Timeline for Inspection

• Inspection must be completed within 30 days of filing the written statement
• Extendable by a further 30 days

Failure to permit inspection may invite court directions, adverse inference, and cost consequences.

A party cannot rely on an undisclosed document except with leave of the court.

D. Admission and Denial

5.7 Admission/Denial of Documents

Within 15 days of completion of inspection, parties must file statements admitting or denying documents.

E. Production of Documents

5.8 Notice to Produce

• Parties may issue notice to produce omitted documents
• The other party must respond within 15 days
• Unjustified refusal may lead to adverse inference

VII. Stage Six: Case Management Hearing

6.1 First Case Management Hearing

Within four weeks of completion of admission/denial, the court must conduct a case management hearing and pass orders on:

• Framing of issues
• List of witnesses
• Timelines for affidavits of evidence
• Recording and cross-examination of evidence
• Filing of written submissions
• Oral arguments

The court must ensure that:

• Evidence is recorded day-to-day, as far as possible
• Final arguments conclude within six months

Courts have wide powers to impose timelines, limit witnesses, and regulate proceedings.

 

VIII. Stage Seven: Judgment

7.1 Time for Pronouncement

The court must pronounce judgment within 90 days of conclusion of arguments.

 

IX. Costs in Commercial Suits

8.1 General Rule on Costs

Unlike ordinary civil suits, costs in commercial litigation are the norm, not the exception.

The court may award:

• Legal fees
• Witness expenses
• Miscellaneous litigation costs

Costs may be imposed at any stage to discourage dilatory tactics.

 

X. Summary Judgment

8.2 Summary Suits

Commercial suits may be instituted under Order XXXVII CPC where applicable.

8.3 Summary Judgment in Regular Suits

Even in regular commercial suits:

• Either party may seek summary judgment
• Application must be filed after service of summons but before framing of issues

8.4 Nature of Orders

The court may:

• Allow or dismiss the application
• Partly allow the claim
• Pass conditional orders (deposit/security)

The test applied is whether the claim or defence has “no real prospect of success.”

 

XI. Appeals and Bar on Revisions

8.5 No Revision

No civil revision petition lies against interlocutory orders of a commercial court.

8.6 Appeals

An appeal lies against judgments or specified orders:

• Within 60 days
• Before the Commercial Appellate Court or Commercial Appellate Division of the High Court

 

XII. Conclusion

The Commercial Courts Act, 2015 marks a paradigm shift from traditional civil litigation by introducing:

• Mandatory pre-institution mediation
• Front-loaded pleadings and disclosures
• Strict, non-extendable timelines
• Active judicial case management
• Cost-centric adjudication