The Commercial Courts Act, 2015 and Speedy Resolution of Commercial Disputes in India: A Critical Analysis

Introduction

India’s legal system underwent a significant transformation with the enactment of the Commercial Courts, Commercial Division and Commercial Appellate Division of High Courts Act, 2015 (“Commercial Courts Act”). Traditionally, commercial disputes were adjudicated by ordinary civil courts, which were already burdened with a wide array of civil, criminal, and constitutional matters. This structural limitation resulted in prolonged delays, procedural inefficiencies, and uncertainty in commercial dispute resolution. To address these systemic challenges, the Commercial Courts Act was enacted with the objective of creating a specialized adjudicatory framework to ensure the expeditious disposal of commercial disputes through dedicated commercial courts and divisions within High Courts.[1]

Subsequent legislative amendments, particularly the Commercial Courts (Amendment) Act, 2018, expanded the scope of the Act by reducing the pecuniary jurisdiction threshold. This reform enhanced accessibility to commercial courts for a broader spectrum of litigants, including small and medium-sized enterprises (SMEs).[2] The present article critically examines the impact of the Commercial Courts Act on the speedy resolution of commercial disputes in India, drawing upon statutory provisions, empirical data, and significant judicial pronouncements.[3] The analysis highlights both the successes of the Act and the challenges encountered in its implementation.

Objectives of the Commercial Courts Act, 2015

The principal objective of the Commercial Courts Act, 2015 was to establish a specialized legal framework aimed at improving the efficiency and effectiveness of commercial dispute resolution. The Act sought to overcome the longstanding problems of delay and inefficiency inherent in the ordinary civil court system, which routinely handled a diverse range of disputes unrelated to commercial law.

By creating exclusive commercial courts and divisions, the Act aimed to promote ease of doing business and foster a more predictable and investor-friendly commercial environment.[4] The term “commercial dispute” has been broadly defined under Section 2(1)(c) of the Act to include disputes arising out of transactions between merchants, traders, bankers, financiers, and other commercial entities.[5] This expansive definition ensures comprehensive coverage of commercial activity and facilitates specialized adjudication of disputes central to economic growth.

Further, the Act mandates that disputes meeting the specified pecuniary threshold be adjudicated by commercial courts, ensuring focused judicial attention by judges trained in commercial law.[6] This specialization is intended to promote informed decision-making, reduce procedural delays, and enhance certainty in commercial transactions.

Key Features of the Commercial Courts Act

1. Jurisdiction and Pecuniary Threshold

Initially, the Act applied only to disputes of a specified value of ₹1 crore. However, the 2018 amendment to Section 2(i) reduced this threshold to ₹3 lakhs, significantly expanding the Act’s applicability. This reduction enabled a wider range of commercial entities, particularly SMEs, to access specialized commercial courts. The lowered threshold reflects a conscious legislative effort to democratize access to efficient and time-bound commercial justice.[7]

2. Time-Bound Resolution

Section 16 of the Act mandates that commercial disputes be resolved within six months from the conclusion of the first case management hearing. This provision represents a marked departure from traditional civil litigation, which is often characterized by prolonged delays. The emphasis on strict timelines seeks to minimize procedural inefficiencies and enhance legal certainty for commercial actors.[8]

3. Procedural Streamlining

The Act introduces several procedural innovations to expedite adjudication. Section 12A mandates pre-institution mediation, requiring parties to attempt amicable settlement before initiating litigation, except where urgent interim relief is sought. This provision aims to reduce the burden on courts and promote alternative dispute resolution.

Additionally, the Act prescribes strict timelines for filing written statements, restricts adjournments, and incorporates robust case management procedures. Collectively, these reforms contribute to a streamlined procedural framework designed to enhance judicial efficiency.[9]

Impact on Speedy Resolution of Commercial Disputes

Since the enactment of the Commercial Courts Act in 2015, India has witnessed notable improvements in the resolution of commercial disputes. According to data published by the Ministry of Law and Justice, metropolitan cities such as Delhi and Mumbai have recorded an approximate 30% increase in the disposal rate of commercial cases by specialized courts. The Delhi High Court’s Commercial Division achieved a reduction of over 50% in the pendency of commercial cases between 2015 and 2020.[10]

Beyond judicial efficiency, the Act has had significant economic implications. India’s improved performance in the World Bank’s Ease of Doing Business Index is partly attributable to the reforms introduced by the Act. In 2020, India ranked 63rd globally, reflecting substantial improvements in the “Enforcing Contracts” category. The average time required to resolve a commercial dispute declined from 1,445 days in 2017 to approximately 1,071 days in 2020.[11] This improvement underscores the Act’s role in strengthening contract enforcement and fostering economic growth.[12]

Case Study: Tata Sons Limited v. Siva Industries and Holdings Ltd.

A significant illustration of the Act’s impact is the decision in Tata Sons Limited v. Siva Industries and Holdings Ltd., adjudicated by the Commercial Division of the Bombay High Court.[13] The dispute involved complex commercial issues and substantial monetary claims.

The Commercial Division demonstrated notable efficiency through strict adherence to case management principles and expedited hearings. As a result, the dispute was resolved within eight months—substantially faster than proceedings in ordinary civil courts. This case exemplifies the effectiveness of the Act’s procedural reforms and underscores its role in ensuring timely resolution of high-stakes commercial litigation.[14] The decision reinforces the Act’s contribution to legal certainty and investor confidence.[15]

Judicial Interpretation and Recent Supreme Court Jurisprudence

The Supreme Court of India has played a crucial role in shaping the implementation of the Commercial Courts Act by clarifying procedural ambiguities and reinforcing statutory objectives.

In Patil Automation Pvt. Ltd. v. Rakheja Engineers Pvt. Ltd. (2022), the Court held that pre-institution mediation under Section 12A is mandatory, except where urgent interim relief is sought. The Court ruled that suits instituted without exhausting mediation are liable to rejection under Order VII Rule 11 CPC. This decision has significantly reduced frivolous litigation and strengthened the Act’s objective of speedy dispute resolution.[19]

In Ambalal Sarabhai Enterprises Ltd. v. K.S. Infraspace LLP (2019), the Court clarified that the specified value of a commercial dispute must be determined at the time of institution, thereby ensuring jurisdictional certainty.[20]

Further, in SCG Contracts (India) Pvt. Ltd. v. K.S. Chamankar Infrastructure Pvt. Ltd. (2019), the Supreme Court held that the time limit of 120 days for filing written statements is mandatory, and courts have no discretion to extend it. This ruling curtailed dilatory tactics and reinforced procedural discipline.[21]

More recently, in MITC Rolling Mills Pvt. Ltd. v. Renuka Realtors Pvt. Ltd. (2025), the Supreme Court clarified that an order rejecting a plaint under Order VII Rule 11 CPC constitutes a “deemed decree” and is appealable under Section 13(1A) of the Act. This judgment resolved conflicting High Court views and strengthened appellate certainty.[23]

The Court has also nuanced the application of Section 12A by holding that pre-institution mediation may be dispensed with in cases involving continuous harm, such as ongoing intellectual property infringement, where mandatory mediation could result in irreparable injury.[24]

Additionally, the Supreme Court has emphasized the need for institutional capacity building. In State of Maharashtra v. Commercial Bar Association (2024), the Court stressed the importance of specialized training for judges presiding over commercial courts to ensure effective adjudication of complex commercial disputes.[25]

Challenges and Areas for Improvement

Despite its successes, the Commercial Courts Act faces several implementation challenges. One major concern is the uneven establishment of commercial courts across states. While metropolitan regions have effectively operationalized commercial courts, progress in less developed states such as Bihar and Jharkhand has been slow, leading to disparities in access to commercial justice.[16]

Furthermore, the Act does not fully address the broader issue of judicial backlog in ordinary courts. Persistent pendency indirectly affects the efficiency of commercial courts and undermines the Act’s objectives.[17]

Another significant challenge is the lack of uniform training and capacity building for judges and court staff. Given the technical nature of commercial disputes, structured and continuous judicial training is essential for effective implementation.[18]

Conclusion

The Commercial Courts Act, 2015 represents a landmark reform in India’s commercial justice system. By introducing specialization, strict timelines, and procedural discipline, the Act has significantly enhanced the speed and efficiency of commercial dispute resolution. Judicial interpretation by the Supreme Court has further strengthened the framework by ensuring consistency, clarity, and balance between efficiency and substantive justice.

However, for the Act to achieve its full potential, uniform establishment of commercial courts, reduction of systemic backlogs, and sustained investment in judicial capacity building are imperative. With these measures, the Commercial Courts Act can serve as a robust instrument for promoting commercial certainty, economic growth, and investor confidence in India.