Two steps that shape a commercial dispute
A business that is owed money or has been sued over a contract meets the same two features of the Commercial Courts Act, 2015 early on: a compulsory attempt at mediation before a suit is filed, and a fast route to a decision when one side has nothing real to argue. Understanding both before a notice is sent helps a company choose its forum and its timing.
If you are choosing a firm for a company dispute, see our page on the corporate law firm in Delhi and on commercial dispute lawyers in Delhi.
Which disputes are “commercial”
The Act applies to commercial disputes of a specified value, which is three lakh rupees, arising from the kinds of transaction listed in Section 2(1)(c): mercantile documents, joint ventures, supply and distribution of goods, service and construction agreements, franchising, intellectual property licences and similar. Below the specified value, or outside those categories, the ordinary civil court hears the case. In Delhi, suits above two crore rupees go to the Commercial Division of the Delhi High Court and the rest to the commercial courts at the district complexes.
Pre-institution mediation under Section 12A
Section 12A says that a suit which does not contemplate urgent interim relief must not be instituted until the claimant has exhausted pre-institution mediation. The Supreme Court held in Patil Automation v. Rakheja Engineers (2022) that this is mandatory for suits filed from 20 August 2022.
In practice:
- Apply to the mediation authority. In Delhi, the application goes to the Delhi State Legal Services Authority or the relevant district authority, with the notice and the key documents.
- Both sides are called. The authority issues notice to the other party and fixes a date.
- Mediation runs for up to three months, extendable by two months with consent. The period is excluded from limitation.
- Outcome. A settlement is recorded and can be enforced as if it were an arbitral award. If there is no settlement, a non-starter or failure report is issued and attached to the plaint.
Urgent interim relief is the exception: if a business genuinely needs an injunction at once, for example to stop a breach that cannot be undone, it can file first. The court looks at whether the urgency is real, not merely pleaded.
Summary judgment under Order XIII-A
The 2015 Act added Order XIII-A to the Code of Civil Procedure for commercial suits. The court may decide a claim, or a defence, without a trial where it considers there is no real prospect of succeeding on it and there is no other compelling reason for a trial. The application is made after the summons is served and before issues are framed.
It works best when the documents speak for themselves: an admitted invoice, a signed acknowledgment of debt, a contract term that plainly answers the defence. It is not suited to disputes that turn on contested facts and oral evidence. Whether to apply, and how to answer one, is a tactical decision that depends on the file.
Where this fits in a recovery strategy
For an unpaid invoice, a company may combine a legal notice, mediation, a commercial suit and, where it qualifies, a summary application or an insolvency route. Which sequence fits depends on the contract, the paper trail and the limitation period, so read the documents before choosing.
Talk to us
Call or WhatsApp 99115 44811, or write to manujalawyers@gmail.com, with the contract and the notices exchanged. We will tell you the route, the likely timeline as a range and whether the dispute suits mediation or a contested suit. This article is general information, not advice on a particular matter, and promises no outcome.