What counts as a commercial dispute, mandatory pre-institution mediation, disclosure of documents, timetables and summary judgment under Order XIII-A.
A money claim arising from a commercial transaction of sufficient value is heard by a commercial court under the Commercial Courts Act, 2015. The Act changed the way such cases are managed: it requires mediation before filing in most cases, sets a timetable, tightens pleadings and allows summary judgment. A creditor who understands the structure can use it to reach a decision more quickly. This note explains it in outline. It is general information, not advice on a particular suit.
What is a commercial dispute
Section 2(1)(c) defines the term by a list of subjects. Those most relevant to recovery are disputes arising out of ordinary transactions of merchants, bankers, financiers and traders; the export or import of merchandise or services; agreements relating to immovable property used exclusively in trade or commerce; and franchising, distribution and supply arrangements. The dispute must also be of a specified value. Since the 2018 amendment, the specified value is three lakh rupees, though the figure is fixed by statute and a creditor should check the current provision. Where the value is lower, or the subject is outside the list, the ordinary civil court hears the case.
Pre-institution mediation
Section 12A, inserted in 2018, requires a plaintiff who does not contemplate any urgent interim relief to exhaust the remedy of pre-institution mediation before instituting a suit. In Patil Automation Pvt. Ltd. v. Rakheja Engineers Pvt. Ltd. (2022), the Supreme Court held the requirement to be mandatory, and that a suit filed without it is liable to be rejected under Order VII Rule 11. The period of mediation is excluded in computing limitation. Where the plaintiff does seek urgent interim relief, such as an attachment or an injunction, the suit may be filed at once, but the plaint should state the urgency and the reason for it, because the court will examine whether the claim for relief is genuine.
Pleadings and documents
- Statement of truth. The pleadings are verified by a statement of truth in the form the Act prescribes.
- Disclosure of documents. Order XI, as amended for commercial disputes, requires a party to file all documents in its power, possession or control that it relies upon, and a list of those it does not rely upon but which are relevant. The plaintiff files with the plaint, and the defendant with the written statement.
- Written statement. The defendant has thirty days from service of summons to file it, extendable to a maximum of one hundred and twenty days, after which the right to file is forfeited.
- Admission and denial. The defendant must admit or deny each document, and a document not denied is taken to be admitted.
Case management
Order XV-A requires a case management hearing, at which the court frames issues, fixes the timetable for evidence and arguments, and may limit the number of witnesses. The court has power to impose costs for failure to comply. The plaintiff's counsel should be ready for the hearing with a list of the documents and a proposal for the order of proof.
Summary judgment
Order XIII-A allows the court to give summary judgment on a claim where it considers that the claimant has no real prospect of succeeding or the defendant has no real prospect of successfully defending the claim, and there is no other compelling reason for a trial. The application can be made at any time after the summons has been served, and before issues are framed. It is useful in money claims where the documents show the debt and the defence is a general denial.
Costs and appeals
Section 35 gives the court wide discretion over costs, and states that the unsuccessful party will ordinarily be ordered to pay the successful party's costs. An appeal against an order of a commercial court lies to the Commercial Appellate Division or the Commercial Appellate Court, within sixty days under Section 13.
A plan for filing
- Confirm the claim is a commercial dispute and of the specified value.
- Decide whether urgent relief is needed. If not, begin mediation under Section 12A and keep the certificate of non-settlement.
- Assemble the documents, with copies and an index, and verify the plaint with a statement of truth.
- Consider a summary suit under Order XXXVII or an application for summary judgment, where the claim and the documents allow.
The Act rewards a claimant who files a complete case. A claim that is documented, verified and clearly pleaded moves through the commercial court with fewer interruptions than one that is not.
This note is general information on the law at the date of publication. It is not legal advice, and it should not be relied on without advice on the facts of a particular matter.
