The Commercial Courts Act, 2015: Jurisdiction, Process, and Landmark Judgments Explained

Introduction — Why This Act Matters:

Before 2015, high-value commercial disputes in India were tried within the general civil court system, which struggled with overburdened dockets and procedural delays. This not only frustrated litigants but also impacted India’s Ease of Doing Business rankings and investor perception.

Recognising these challenges, the legislature enacted the Commercial Courts, Commercial Division and Commercial Appellate Division of High Courts Act, 2015 (commonly known as the Commercial Courts Act).

The Act:

• Establishes Commercial Courts at the district level for pecuniary cases below the original jurisdiction of High Courts.
• Creates Commercial Divisions within High Courts having original civil jurisdiction for high-value matters.
• Provides Commercial Appellate Divisions in High Courts for expedited appeals.
• Introduces special procedural rules under the CPC for commercial matters, including strict timelines and enhanced disclosure requirements.

The 2018 Amendment significantly broadened the Act’s reach by lowering the pecuniary threshold from ₹1 crore to ₹3 lakh, thus opening the door for more litigants to benefit from fast-track adjudication.

 

What Qualifies as a “Commercial Dispute”?

The definition under Section 2(1)(c) is deliberately broad, ensuring coverage of diverse business-related disputes. Key categories include:

• Trade and Commerce Transactions – Sale of goods, provision of services, supply contracts, distribution agreements.
• Corporate & Partnership Disputes – Disputes between shareholders, partners, and joint venture participants.
• Intellectual Property – Trademark, copyright, patent, and design infringement cases (including passing-off).
• Banking & Financial Transactions – Loan defaults, letters of credit, bank guarantees, insurance disputes.
• Infrastructure & Construction Contracts – EPC contracts, BOT/PPP projects, turnkey agreements.

By codifying this wide ambit, the legislature intended to ensure most business disputes, regardless of industry, fall under the commercial courts’ purview.

 

Jurisdiction — The Three Dimensions:

A. Pecuniary Jurisdiction

• Initially: ₹1 crore and above.
• After 2018 Amendment: ₹3 lakh and above.
• States retain the power to notify higher thresholds.

This lower threshold ensures even medium-sized enterprises can access the specialised court system.

 

B. Territorial Jurisdiction

Mirrors the territorial jurisdiction principles of civil courts — the suit must be filed where:

• The defendant resides, carries on business, or works for gain.
• The cause of action arose wholly or in part.

C. Subject-Matter Jurisdiction

Only disputes expressly categorised as “commercial disputes” under Section 2(1)(c) qualify. Disputes not connected to commerce — e.g., family property disputes — remain outside its scope, even if high in value.

 

Who Can File and When:

• Eligible Parties – Individuals, companies, LLPs, partnership firms, proprietors, and even government bodies engaged in commercial dealings.
• When to File – Once a cause of action arises and meets both the pecuniary and subject-matter thresholds.
• Against Whom – Any other entity or individual, including state agencies, provided the dispute is commercial in nature.

This inclusivity ensures that both private and public commercial actors can avail the forum.

 

Procedure for Filing a Commercial Suit:

Step 1: Drafting the Plaint

• Must comply with CPC provisions and the stricter requirements of Order XI (as amended).
• Requires full disclosure of all relevant documents at the outset — failure to do so can weaken the case.

Step 2: Mandatory Pre-Institution Mediation (Section 12A)

• Applies to all cases where urgent interim relief is not sought.
• Conducted under the Legal Services Authorities Act, 1987 framework.
• Objective: Resolve disputes amicably without litigation.

Step 3: Filing the Suit

• File in the appropriate Commercial Court along with court fees, affidavit of admission/denial of documents, and list of relied-upon documents.

Step 4: Case Management Hearings

• Conducted under Order XV-A, the court fixes timelines for:

1. 1. Filing of written statements.
   2. Completion of discovery.
   3. Admission/denial of documents.
   4. Framing of issues.
   5. Final hearing schedule.

Step 5: Expedited Judgment

• The Act mandates that judgment should be delivered within 90 days from the conclusion of arguments, promoting certainty for businesses.

Landmark Supreme Court Judgments — Guiding Interpretation

1. Patil Automation Pvt. Ltd. vs. Rakheja Engineers Pvt. Ltd. (2022)
   1. Held: Section 12A mediation is mandatory unless urgent interim relief is claimed.
   2. Rationale: Avoid unnecessary litigation, decongest courts.
2. Ambalal Sarabhai Enterprises Ltd. vs. K.S. Infraspace LLP (2020)
   1. Held: Jurisdiction is determined at the time of filing; later valuation changes don’t affect it.
   2. Impact: Prevents forum-shopping and ensures certainty.
3. SCG Contracts India Pvt. Ltd. vs. K.S. Chamankar Infrastructure Pvt. Ltd. (2019)
   1. Held: Timelines under the Act are strict; extensions are exceptional.
   2. Impact: Reduces adjournments and procedural delays.

Significance and Practical Impact:

 

Significance:

• Establishes a dedicated judicial framework for commercial disputes.
• Encourages faster dispute resolution — crucial for capital-intensive sectors.
• Enhances investor confidence in India’s dispute resolution mechanisms.

Practical Challenges:

• Capacity Gaps – Not all states have fully functional commercial courts.
• Specialised Knowledge Requirement – Judges must be well-versed in complex corporate and financial matters.
• Compliance Burden – Stricter documentation and timeline requirements demand greater preparedness from litigants.

Conclusion:

The Commercial Courts Act, 2015, represents a structural shift in how India handles high-value commercial litigation. By offering specialised forums, stringent timelines, and mandatory mediation, it aligns India’s dispute resolution framework with international best practices.

However, its success depends on robust implementation — adequate judicial training, proper infrastructure, and disciplined adherence to timelines by both the Bench and the Bar. For businesses, understanding its provisions is no longer optional; it’s essential to protect commercial interests in India’s competitive marketplace.

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.