What are the disputes covered under Commercial Courts?

What are the Disputes Covered under Commercial Courts in India? – A Detailed Explanation

The Commercial Courts Act, 2015, as amended by the Commercial Courts, Commercial Division and Commercial Appellate Division of High Courts (Amendment) Act, 2018, was enacted to streamline and fast-track the adjudication of high-value commercial disputes in India. The Act defines a wide and inclusive category of commercial disputes that are subject to adjudication under Commercial Courts, provided the dispute involves a “specified value” of ₹3,00,000 or more.

Let us now understand in detail the nature and categories of disputes covered under the jurisdiction of Commercial Courts in India.

Definition of Commercial Dispute (Section 2(1)(c) of the Act)

As per Section 2(1)(c) of the Commercial Courts Act, a commercial dispute means a dispute arising out of ordinary transactions of merchants, bankers, financiers, and traders, such as those relating to:

  1. Transactions relating to mercantile documents, including enforcement and interpretation of such documents.
  2. Contracts related to trade and commerce, including disputes arising from agreements involving supply of goods or services.
  3. Export and import of merchandise or services.
  4. Issues involving admiralty and maritime law.
  5. Transactions involving aircraft, aircraft engines, ships, vessels, etc.
  6. Carriage of goods and passengers.
  7. Construction and infrastructure contracts, including disputes between developers, sub-contractors, and purchasers.
  8. Insurance and re-insurance disputes.
  9. Securities and derivatives trading.
  10. Mercantile agency and mercantile usage.
  11. Franchising agreements.
  12. Partnership or joint venture agreements.
  13. Shareholders’ agreements, and other agreements relating to the management and operation of companies.
  14. Agency and distributorship agreements.
  15. Licensing and technology transfer agreements.
  16. Intellectual property rights, including disputes relating to:
    • Trademarks
    • Copyrights
    • Patents
    • Designs
    • Domain names
  17. Disputes concerning agreements for sale of goods and services to consumers, if they arise from a commercial transaction.
  18. Disputes between banks and customers, including debt recovery, loan default, and breach of banking contracts.
  19. Business-related tort claims, such as defamation in a commercial context, misrepresentation, negligence in professional services, etc.
  20. Disputes involving confidentiality agreements and non-compete clauses.

Examples of Common Disputes under Commercial Courts

Let’s take a closer look at the kind of disputes that are commonly filed before Commercial Courts:

Contractual Disputes

  • Breach of contract in business transactions
  • Disputes over supply of defective goods
  • Failure to make payment for services rendered
  • Non-performance of terms in a Memorandum of Understanding (MoU)

Corporate and Company-Related Disputes

  • Shareholder oppression and mismanagement (where commercial in nature)
  • Breach of joint venture agreements
  • Disputes between partners in commercial ventures

Banking and Financial Disputes

  • Recovery of dues by banks and NBFCs
  • Loan default litigation
  • Disputes arising out of bank guarantees or letters of credit

Franchise and Licensing Disputes

  • Termination of franchise agreements
  • Royalty disputes
  • Breach of licensing terms

Intellectual Property Disputes

  • Infringement of trademarks or patents in a commercial context
  • Copyright violations affecting business value
  • Passing off of goods and brand reputation

Infrastructure and Construction Contracts

  • Disputes over EPC (Engineering, Procurement and Construction) agreements
  • Payment delays in government tenders
  • Arbitration enforcement for construction contracts

Telecommunication and Information Technology

  • Licensing fee disputes with telecom companies
  • Breach of software licensing contracts
  • Data protection or data sharing disputes in commercial agreements

International Trade and Cross-Border Disputes

  • Disputes between Indian and foreign entities on international sale of goods
  • Breach of Incoterms-based export-import contracts
  • Enforcement of foreign arbitral awards

Importance of the Nature of Dispute and Specified Value

It is not sufficient that the dispute is commercial in nature. The court must also ensure that:

  1. The dispute falls within the categories mentioned in Section 2(1)(c) of the Act.
  2. The specified value of the subject matter is at least ₹3,00,000 or more (excluding interest).

Only if both these criteria are satisfied will a court treat the case as a “commercial dispute” for adjudication under the Commercial Courts Act.

Key Judgments on Commercial Disputes

  1. Ambalal Sarabhai Enterprises Ltd. v. KS Infraspace LLP Ltd. (2019) – Supreme Court held that all disputes arising out of a business relationship, including tortious claims, fall under commercial disputes.
  2. Gujarat Industrial Development Corporation v. Laxmi Engineering (2020) – Clarified that even disputes with government authorities could qualify as commercial if related to infrastructure or construction agreements.

Conclusion

Commercial Courts in India handle a wide spectrum of disputes that arise from commercial transactions, trade, business dealings, financial contracts, and intellectual property rights. The aim of the Commercial Courts framework is to provide a specialized, faster, and more efficient forum for resolving business-related litigation. This is essential for enhancing India’s business climate and ease of doing business.

The inclusion of pre-institution mediation, strict timelines, and specialized judicial forums ensures that such commercial disputes are not delayed like regular civil suits.

FAQs on Disputes Covered under Commercial Courts

Q1. Is a tenancy dispute a commercial dispute?
A: A tenancy dispute may fall under commercial courts if it arises out of a commercial lease or agreement relating to business use of the property.

Q2. Are defamation cases included?
A: Only commercial defamation, i.e., where the defamation affects the goodwill or reputation of a business or trade, may be included.

Q3. Do intellectual property disputes go to Commercial Courts?
A: Yes. Disputes related to IPR such as trademark, copyright, and patent infringement in a business context are covered.

Q4. Are disputes involving government contracts also covered?
A: Yes, if the dispute arises out of a commercial contract like construction, infrastructure, or services agreement.

Q5. Can disputes related to consumer goods be tried in commercial court?
A: Yes, if they arise from a business-to-business transaction, not typical consumer complaints which go to Consumer Forums.

Disclaimer: This information is intended for general guidance only and does not constitute legal advice. Please consult with a qualified lawyer for personalized advice specific to your situation.

Adcocate J.S. Rohilla (Civil & Criminal Lawyer in Indore)

Contact: 88271 22304

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