Commercial Suits: 3 Procedural Rules That Decide Cases

Commercial suits in India are governed by a procedure that is deliberately stricter than the one that applies to ordinary civil suits. A supplier chasing unpaid invoices, a contractor claiming final bills, a company enforcing a share purchase agreement or a franchisor recovering royalties will usually find that the dispute is a commercial dispute under the Commercial Courts Act, 2015. Once it is, three procedural rules tend to decide outcomes long before evidence is led: pre-institution mediation under Section 12A, the outer limit of 120 days for the written statement, and summary judgment under Order XIII-A of the Code of Civil Procedure, 1908 (CPC). Each has been settled by the Supreme Court, and each punishes the party that treats a commercial suit like an ordinary one.

When is a suit a commercial suit?

Two conditions must be met.

• The dispute must be a commercial dispute. Section 2(1)(c) of the Act lists the categories, which include ordinary transactions of merchants, bankers and traders, export and import, construction and infrastructure contracts, agreements relating to immovable property used exclusively in trade or commerce, franchising and distribution, partnership and shareholders’ agreements, intellectual property and insurance, among others.
• The value must meet the specified value. When the Act was enacted in 2015, the specified value was not less than one crore rupees. The Commercial Courts, Commercial Division and Commercial Appellate Division of High Courts (Amendment) Act, 2018, deemed to have come into force on 3 May 2018, reduced it to not less than three lakh rupees, or such higher value as may be notified by the Central Government. The same amendment renamed the statute as the Commercial Courts Act, 2015.

The 2018 amendment also brought in Section 12A, which is where most procedural trouble now begins. Section 64 of the Mediation Act, 2023 provides for amendments to Section 12A when it is brought into force, so the current notification status of that provision should be checked before relying on the timelines described below.

Rule one: mediate before you sue (Section 12A)

Section 12A(1) provides that a suit which does not contemplate any urgent interim relief under the Act shall not be instituted unless the plaintiff exhausts the remedy of pre-institution mediation, in the manner and procedure prescribed by rules made by the Central Government.

The mediation is time-bound. Under Section 12A(3), it must be completed within three months from the date of the plaintiff’s application, extendable by a further two months with the consent of the parties, and the period spent in mediation is excluded when computing limitation. A settlement reached is reduced into writing, signed by the parties and the mediator, and under Section 12A(5) has the same status and effect as an arbitral award on agreed terms under Section 30(4) of the Arbitration and Conciliation Act, 1996.

Patil Automation (2022): Section 12A is mandatory

In M/s Patil Automation Private Limited v. Rakheja Engineers Private Limited, decided on 17 August 2022 by Justices K.M. Joseph and Hrishikesh Roy, the Supreme Court held that Section 12A is mandatory. A suit instituted in violation of it, which does not contemplate urgent interim relief, is liable to be rejected under Order VII Rule 11 CPC, and the court may do so on its own. There is no room for substantial compliance. The Court gave its declaration effect from 20 August 2022.

Dhanbad Fuels (2025): what happens to older suits

The position of suits filed before 20 August 2022 without mediation was clarified in M/s Dhanbad Fuels Private Limited v. Union of India, 2025 INSC 696, decided on 15 May 2025 by Justices J.B. Pardiwala and R. Mahadevan. Such a plaint is not to be rejected on this ground. Instead, where the defendant objects or a party wishes to mediate, the court may keep the suit in abeyance and refer the parties to time-bound mediation in accordance with Section 12A, subject to the exceptions the Court identified. For suits filed on or after 20 August 2022 without compliance, rejection under Order VII Rule 11 remains the consequence.

Yamini Manohar (2023): the urgency exception is tested

The only way around Section 12A is a suit that contemplates urgent interim relief. In Yamini Manohar v. T.K.D. Keerthi, decided on 13 October 2023 by Justices Sanjiv Khanna and S.V.N. Bhatti, the Supreme Court held that the plaintiff does not have an absolute and unfettered right to bypass mediation simply by including a prayer for interim relief. The commercial court must examine the nature and subject matter of the suit, the cause of action and the prayer for interim relief, and should not allow a prayer for urgent interim relief to be used as a disguise or mask to avoid the statutory mandate.

Practical takeaways on Section 12A

• If no genuine urgency exists, file for pre-institution mediation first and keep the non-starter report or settlement on record.
• If you do seek urgent interim relief, plead why the relief is urgent with facts, not adjectives.
• As a defendant, check at the outset whether the plaint discloses compliance; a plaint filed on or after 20 August 2022 without mediation and without genuine urgency is exposed to rejection.

Rule two: 120 days means 120 days

For ordinary civil suits, courts have treated the time limit for filing a written statement with some flexibility. For commercial suits the Act removed that flexibility. The Act amended the proviso to Order VIII Rule 1 CPC, as it applies to commercial disputes, so that a defendant who fails to file the written statement within thirty days may be allowed to file it later, for reasons recorded in writing and on payment of costs, but not later than one hundred and twenty days from the date of service of summons. On expiry of that period the defendant forfeits the right to file the written statement and the court shall not allow it to be taken on record. A corresponding amendment was made to the proviso to Order V Rule 1(1), and Order VIII Rule 10 was amended to bar any order extending this time.

In SCG Contracts India Private Limited v. K.S. Chamankar Infrastructure Private Limited, decided on 12 February 2019, the Supreme Court held that these provisions are mandatory and that the court has no power to allow a written statement after 120 days in a commercial suit. The Court treated the forfeiture as the deliberate consequence of the amended provisions, and rejected the use of inherent powers to get around them.

What this means in practice

• Diary the date of service, not the first hearing. The 120 days run from service of summons.
• Prepare the defence early. Under Order VIII Rule 3A, as inserted for commercial suits, the defendant must state which allegations are denied, which are admitted and which must be proved, and must give reasons and his own version for each denial of fact. That is not a document to be assembled in the final week.
• Plaintiffs should note the date too. Where the defence is lost, the plaintiff’s case proceeds without a pleaded defence, which can shorten the trial considerably.

Rule three: ask for summary judgment (Order XIII-A)

The Act inserted Order XIII-A into the CPC for commercial disputes. It allows a court to decide a claim without recording oral evidence. A claim includes part of a claim, any particular question on which the claim depends, or a counterclaim.

The test and the timing

Under Rule 3, the court may give summary judgment against a plaintiff or defendant if it considers that the plaintiff has no real prospect of succeeding on the claim, or the defendant has no real prospect of successfully defending it, and that there is no other compelling reason why the claim should not be disposed of before recording of oral evidence.

Under Rule 2, an application may be made at any time after summons has been served on the defendant, but not after the court has framed issues. Rule 1(3) excludes a commercial suit originally filed as a summary suit under Order XXXVII. Rule 4 sets out what the application must contain, including a statement of the material facts, the documents relied on and the reasons why there is no real prospect of success or defence. Rule 6 allows the court to give judgment, make a conditional order, dismiss the application, strike out pleadings or give case management directions.

Reliance Eminent Trading v. DDA (2026)

In Reliance Eminent Trading and Commercial Private Limited v. Delhi Development Authority, 2026 INSC 436, decided on 29 April 2026 by Justices J.K. Maheshwari and Atul S. Chandurkar, the Supreme Court laid down guidelines for applications under Order XIII-A. In summary, the Court said that the procedural requirements of the Order must be strictly followed; that the court must ask whether there is a real, as opposed to fanciful, prospect of success or defence; that it should neither accept everything at face value nor conduct a mini-trial; that short points of law or construction should be decided where the material permits; that the court may consider the evidence that can reasonably be expected at trial; and that the power is to be used where oral evidence is not necessary to resolve the claim.

The Court then applied the test itself. The appellant had bought a commercial plot from the DDA at auction for ₹164.91 crore; the acquisition of the land later lapsed. Setting aside the Delhi High Court’s refusal of summary judgment, the Supreme Court decreed refund of ₹164.91 crore with interest at 7.5% per annum from 12 July 2007.

When to consider Order XIII-A

• Recovery claims built on admitted invoices, acknowledgements or ledger confirmations.
• Disputes that turn on the construction of a contract clause rather than on contested facts.
• Defences that rest on a bare denial without documents.

How the three rules fit together

Frequently Asked Questions

What is the minimum value for a commercial suit?

The specified value is not less than three lakh rupees, or such higher value as the Central Government may notify. This threshold was introduced by the 2018 amendment, which reduced it from one crore rupees.

Can I skip pre-institution mediation by asking for an interim injunction?

Only if urgent interim relief is genuinely contemplated. In Yamini Manohar v. T.K.D. Keerthi (2023), the Supreme Court held that the court must examine the nature of the suit, the cause of action and the interim prayer, and that the prayer cannot be used as a mask to avoid Section 12A.

My commercial suit was filed in 2021 without mediation. Will the plaint be rejected?

According to Dhanbad Fuels v. Union of India (2025), suits filed before 20 August 2022 are generally not to be rejected for this reason. Where the objection is raised or a party wishes to mediate, the court may keep the suit in abeyance and refer the parties to time-bound mediation under Section 12A.

Can a court accept a written statement on the 125th day in a commercial suit?

No. In SCG Contracts India v. K.S. Chamankar Infrastructure (2019), the Supreme Court held that the 120-day limit from service of summons is mandatory in commercial suits and that the court has no power to take a later written statement on record.

When can I apply for summary judgment under Order XIII-A?

At any time after summons has been served on the defendant and before the court frames issues. The application is not available in a commercial suit originally filed as a summary suit under Order XXXVII.

This article is for general information and is not legal advice.

This article is for general information only and is not legal advice or an invitation to engage the firm. Laws and judgments change; please obtain specific legal advice before acting.