The Commercial Courts Act, 2015

What it does

The full title is the Commercial Courts, Commercial Division and Commercial Appellate Division of High Courts Act, 2015. It sets up special courts and divisions to decide commercial disputes faster than the ordinary civil courts do. At district level there are Commercial Courts, in the High Courts that exercise original jurisdiction there are Commercial Divisions, and appeals go to a Commercial Appellate Division or Commercial Appellate Court.

A dispute is commercial if it falls in the list of heads in section 2(1)(c), which runs from the ordinary transactions of merchants, bankers and traders to agreements relating to immovable property used exclusively in trade or commerce, intellectual property rights, and partnership and shareholders agreements, among others. It must also meet the specified value.

The Act changes how the trial runs, and that is the reason it matters. It amends the Code of Civil Procedure, 1908 as it applies to commercial suits, tightening the timelines for pleadings, requiring a statement of truth, putting heavy emphasis on early disclosure of documents, and adding summary judgment and case management. The court is expected to fix a schedule and hold the parties to it.

Who it binds

Parties to a commercial dispute of the required value, and the courts that hear it. A suit that meets the definition must be filed in the Commercial Court or Division. A party cannot choose the ordinary civil court because it is slower or more familiar.

What has changed, and when

The Act (Act 4 of 2016) is deemed to have come into force on 23 October 2015. The amending Act of 2018 (Act 28 of 2018) reduced the specified value from one crore rupees to three lakh rupees, which brought a far larger number of disputes into the commercial stream, and inserted the provision for pre-institution mediation in section 12A. The Supreme Court held in Patil Automation Private Limited v. Rakheja Engineers Private Limited, decided in 2022, that the pre-institution mediation step is mandatory for a suit that does not contemplate urgent interim relief, and that a plaint filed without it is liable to be rejected under Order VII Rule 11 of the Code of Civil Procedure, 1908. The Court made this effective from 20 August 2022.

What turns on it in practice

The practice area on this site for civil disputes covers representation in commercial suits, shareholder disputes and civil litigation before trial, commercial and appellate courts. A large part of the work under this Act is in the early steps. Whether the suit is commercial at all, whether the pre-institution mediation requirement applies or is excused by a claim to urgent relief, and whether the plaint and its documents are complete enough to survive the disclosure and statement of truth rules, all decide how the case begins.

The second place the Act bites is the procedure for documents. The special rules for commercial suits treat the first filing as the occasion on which a party must put forward the documents it relies on, and a party that holds back material risks being refused permission to rely on it later. Counsel preparing a commercial claim therefore gathers the record before filing, not after.

The Act also works with the remedies in other statutes. The Specific Relief Act, 1963, as amended in 2018, made specific performance the rule, and the firm's note on corporate and commercial law observes that the Commercial Courts' expedited procedure strengthens enforceability of commercial contracts in India.