What Counts as a Commercial Dispute Under the Commercial Courts Act?

Many business owners discover only after filing that their case is a commercial suit, with its own court, its own timelines and its own costs rules. The Commercial Courts Act, 2015 was passed to speed up high-value business disputes, and it works by creating a separate track. Whether your matter falls on that track depends on two tests: the nature of the dispute, and its value.

How Does the Act Define a Commercial Dispute?

Section 2(1)(c) of the Act lists the kinds of disputes that count as commercial. The definition is broad, and it is interpreted purposively. It covers disputes arising out of:

• Ordinary transactions of merchants, bankers, financiers and traders
• Export or import of merchandise or services
• Transport and carriage of goods, including charter parties
• Construction and infrastructure contracts, including tenders
• Management, consultancy and mercantile agency agreements
• Franchising, distribution, merchandising, marketing and licensing agreements
• Joint ventures, partnership agreements and shareholders' agreements
• Subscription and investment agreements in the services industry
• Intellectual property agreements and technology development agreements
• Insurance and re-insurance
• Agreements relating to immovable property used exclusively in trade or commerce

The list is not closed. The Central Government can notify further categories, and courts have said the definition should be read broadly, in line with the Act's purpose. A dispute between two private individuals over a personal loan is not commercial, but a dispute between two businesses over unpaid supplies, a distributorship or a shareholders' agreement generally is.

What About Property Disputes?

The property category is narrower than many assume. It covers agreements relating to immovable property used exclusively in trade or commerce, as distinguished from residential property. The Supreme Court in Ambalal Sarabhai Enterprises v. K.S. Infraspace (2020) held that the word used in this clause refers to the actual use of the property, not merely the intended use, and that the clause should be read in light of the object of the Act. A dispute over a factory, warehouse, shop or commercial office lease may therefore be commercial, while a dispute over a family house is not.

What Is the Specified Value?

A dispute must also meet a minimum value to be tried as a commercial suit. The Specified Value is currently ₹3 lakh. It is the value of the subject matter of the suit as on the date of filing, and for money claims it includes the principal and interest claimed up to that date. Below that value, the dispute goes to the ordinary civil court even if it is commercial in nature. In a suit for an injunction or declaration, the value of the subject matter is assessed accordingly.

Which Court Hears a Commercial Suit?

Commercial suits are heard by Commercial Courts at the district level, or by the Commercial Division of a High Court that has original civil jurisdiction. In Chennai, that means the Commercial Division of the Madras High Court on the original side, and the commercial courts in the district courts, depending on the value of the suit and the territorial jurisdiction. Appeals are heard by Commercial Appellate Courts or the Commercial Appellate Division, and an appeal against certain interlocutory orders must be filed within 60 days.

What Changes in a Commercial Suit?

The commercial track is designed to move faster and to penalise delay. Its main features are:

• Mandatory pre-institution mediation, unless urgent interim relief is genuinely needed
• Strict time limits for the defendant's written statement, with a hard outer limit of 120 days
• A statement of truth supporting the pleadings
• Early and mandatory disclosure and inspection of documents
• Case management hearings to fix a timetable for the case
• Summary judgment, available where the other side has no real prospect of success
• Costs that generally follow the result

These features reward the party who is prepared. A plaintiff who files a complete plaint with all documents attached, and a defendant who files a full written statement within time, both do better than a party who plans to fill the gaps later. Our guide to pre-institution mediation under Section 12A explains the first step, and our note on summons in a commercial suit explains the defendant's timeline.

What Happens If a Commercial Suit Is Filed in the Wrong Court?

A suit that is commercial in nature but is filed in a non-commercial court, or the reverse, can be returned or transferred, and the delay can be costly, especially if limitation is close. Where the pleaded value falls just below or above the Specified Value, courts examine whether the valuation was genuine. Plaintiffs should therefore state the claim clearly and avoid artificial valuation.

What About Arbitration and Statutory Claims?

An arbitration clause does not remove a dispute from the Act. If the contract has one, the court may refer the parties to arbitration, and commercial courts also hear petitions relating to arbitration in the manner provided by the Act. Claims governed by special statutes, such as the insolvency law or the MSME payment provisions, follow their own forums. For help choosing among them, see our overview of recovering dues from a company that is not paying.

Whether your dispute is commercial usually changes how you must prepare. Our Commercial Disputes practice can review the contract and the claim and tell you which track it falls on, and you can request a consultation.