The Commercial Courts Act, 2015, was enacted to provide for the speedy adjudication of commercial disputes, enhance the ease of doing business, and streamline judicial processes. The Act, in conjunction with amendments to the Code of Civil Procedure, 1908 (CPC), introduces specific provisions for filing and processing commercial suits. The Act applies to commercial disputes of a specified value and ensures timely resolution of business conflicts through specialized courts.
Step-by-Step Process of Institution and Trial of a Commercial Suit:
| STEPS | DESCRIPTION |
| 1. Determination of Commercial Dispute |
As per Section 2(1)(c) of the Commercial Courts Act, a commercial dispute includes disputes arising out of agreements relating to trade, commerce, banking, intellectual property, franchising, joint ventures, construction contracts, and more. |
| 2. Territorial and Pecuniary Jurisdiction |
The suit must be filed in a Commercial Court of appropriate jurisdiction. As per Section 6, District Commercial Courts handle disputes valued at Rs. 3 Lakhs or more, while High Court Commercial Divisions handle disputes where the High Court has original jurisdiction. |
| 3. Pre-Institution Mediation |
Section 12A mandates that unless urgent interim relief is sought, pre-institution mediation must be conducted before the suit is filed. This is facilitated through the State Legal Services Authority. The mediation process must be completed within three (3) months, extendable by two months. |
| 4. Drafting and Filing of the Plaint |
The suit is filed along with: (1) A properly drafted plaint complying with Order VI Rule 15A CPC (verification and statement of truth). (2) Documents relied upon as per Order XI, Rule 1 CPC. (3) Statutory Fees & Court Fees as per valuation under Section 12. (4) A concise list of dates and events to facilitate case management. |
| 5. Issuance of Summons & Written Statement |
The Court issues summons as per Order V CPC. The defendant must file a written statement within 30 days, extendable up to 120 days (Order VIII Rule 1 CPC). Beyond this period, no written statement is accepted. Failure to file within this time results in closure of the right to file written statement. |
| 6. Case Management Hearing |
As per Order XV-A CPC, a case management hearing is held to frame issues, fix timelines, and streamline proceedings. The court sets strict deadlines to ensure a speedy trial. The hearing focuses on scheduling evidence submission, witness examination, and final arguments. |
| 7. Discovery and Disclosure |
As per Order XI Rules 1–5 CPC, the parties must disclose and produce all relevant documents at the outset. Electronic evidence, including emails and digital records, is also admissible. Failure to disclose material documents may lead to adverse inferences by the court. |
| 8. Summary Judgment
(If Applicable) |
If a case does not require a full-fledged trial, Order XIII-A CPC allows the court to dispose of the suit via summary judgment based on affidavit evidence. The court may grant relief if it finds no triable issue exists, reducing litigation costs and time. |
| 9. Trial and Evidence |
The trial proceeds with examination-in-chief, cross-examination, and re-examination of witnesses (Order XVIII CPC). The court ensures adherence to strict timelines. Parties must file affidavits of evidence before trial, and expert witness testimony may be required in technical disputes. |
| 10. Judgment & Decree |
The court pronounces its judgment as per Order XX CPC and issues a decree for execution. The judgment must be reasoned and delivered within 90 days from the conclusion of arguments. The decree is enforceable under civil law. |
| 11. Execution of Decree |
The decree-holder may file for execution under Order XXI CPC. The execution court can attach assets, issue garnishee orders, or appoint receivers to enforce the judgment. Appeals against the judgment lie before the Commercial Appellate Division of the High Court within 60 days. |
Understand Commercial Suits Through a Hypothetical Commercial Dispute:
Imagine XYZ Enterprises, a manufacturer of industrial machinery, entered into a contract with ABC Industries for the supply of specialised equipment worth Rs. 1.50 crore. As per the agreement, ABC Industries was required to make an advance payment of 30%, with the remaining balance due upon delivery. However, after receiving the machinery, ABC Industries failed to clear the outstanding amount despite multiple reminders.
Dispute & Pre-Institution Mediation:
XYZ Enterprises initiated pre-institution mediation under Section 12A of the Commercial Courts Act through the State Legal Services Authority. However, ABC Industries did not participate in the mediation proceedings, leading to its failure.
Filing of Commercial Suit:
As per Order VI Rule 15A CPC, XYZ Enterprises filed a commercial suit before the appropriate Commercial Court, providing:
- A plaint detailing the breach of contract,
- Supporting documents (contract agreement, invoices, and correspondence), and
- Payment proof for the statutory court fees under Section 12.
Proceedings:
- Summons Issued: ABC Industries received summons under Order V CPC and was required to file a written statement within 30 days.
- Failure to File Written Statement: ABC Industries delayed filing, but after 90 days, the court refused to accept it as per Order VIII Rule 1 CPC.
- Case Management Hearing: The court scheduled a case management hearing under Order XV-A CPC to frame issues and streamline the case timeline.
- Discovery & Disclosure: Both parties exchanged documents under Order XI CPC.
- Trial & Evidence: Witnesses were examined under Order XVIII CPC.
- Summary Judgment: XYZ Enterprises applied for summary judgment under Order XIII-A CPC, citing undisputed liability.
- Judgment & Decree: The court ruled in favour of XYZ Enterprises, ordering ABC Industries to pay 1.05 crore with interest.
- Execution of Decree: XYZ Enterprises initiated execution proceedings under Order XXI CPC, leading to the attachment of ABC Industries’ bank accounts.
Key Features of Commercial Suit Proceedings:
- Strict Timelines: The CPC amendments ensure the speedy disposal of cases within six months from the date of the first case management hearing.
- E-Filing and Digital Proceedings: Many commercial courts now allow e-filing of pleadings and virtual hearings, improving efficiency.
- Mandatory Disclosure of Documents: Parties must file complete and truthful disclosures upfront to prevent delays. Non-compliance can lead to striking off of pleadings.
- Cost Sanctions: Unjustified delays attract cost sanctions to deter frivolous litigation. Courts may impose exemplary costs on parties engaging in delay tactics.
- Interim Reliefs: Parties can seek interim reliefs such as injunctions, appointment of receivers, and security for costs to prevent irreparable harm before final adjudication.
- Appeal Process: Appeals are allowed only on substantial questions of law, reducing the scope for prolonged litigation.
Conclusion:
The Commercial Courts Act, 2015, has revolutionized commercial dispute resolution in India by ensuring efficiency, transparency, and expedited adjudication. Compliance with its procedural framework is essential for litigants and legal practitioners to secure speedy relief and enforcement of commercial rights. The streamlined mechanism helps businesses protect their commercial interests effectively, fostering a robust legal ecosystem for commerce and trade.
Disclaimer: This article is for informational purposes only and does not constitute legal advice. The content may not reflect the most current legal developments and is not guaranteed to be accurate, complete, or up-to-date. Readers should consult a qualified legal professional before taking any action based on the information provided. The authors and publishers disclaim any liability for any loss or damage incurred as a result of reliance on this article. This article does not create an attorney-client relationship.