Commercial dispute
Also called: Specified Value, Commercial suit
A dispute arising out of any of the transactions listed in Section 2(1)(c) of the Commercial Courts Act, 2015, such as mercantile documents, construction contracts, IP rights and sale of goods.
Explained
Section 2(1)(c) of the Commercial Courts Act, 2015 defines a commercial dispute by listing the transactions from which it may arise. The list includes ordinary transactions of merchants, bankers, financiers and traders such as those relating to mercantile documents; export or import of merchandise or services; admiralty and maritime law; carriage of goods; construction and infrastructure contracts including tenders; agreements relating to immovable property used exclusively in trade or commerce; franchising, distribution, licensing, joint venture, shareholders and partnership agreements; intellectual property rights in registered and unregistered trademarks, copyright, patents, designs, domain names and geographical indications; agreements for sale of goods or provision of services; insurance and re-insurance; and such other disputes as the Central Government may notify. Section 3(a) of the Mediation Act, 2023 adopts the same definition.
The Explanation keeps a dispute commercial even though it also involves recovery of immovable property or realisation of money out of immovable property given as security, or though a party is the State, its agency or instrumentality, or a private body carrying out public functions. For property disputes, the Supreme Court in Ambalal Sarabhai Enterprises Ltd. v. K.S. Infraspace LLP (2019) read "used exclusively in trade or commerce" as requiring actual use at the relevant time, not merely a likely or intended future use.
A dispute is heard by a Commercial Court or Commercial Division only if it is of the Specified Value. Under Section 2(1)(i), after the 2018 amendment, the Specified Value is not less than three lakh rupees or such higher value as the Central Government notifies, and Section 12 lays down how the value is computed, for example including interest up to the date of filing in a money claim. Commercial suits follow the CPC as modified by the Act, including strict timelines for the written statement and summary judgment.
Section 12A requires a plaintiff who does not seek urgent interim relief to exhaust pre-institution mediation before filing the suit, and the Supreme Court held this requirement mandatory in Patil Automation Pvt. Ltd. v. Rakheja Engineers Pvt. Ltd. (2022). Examiners test the categories, the Explanation, the three lakh threshold and Section 12A.
What the law says
Section 2, Commercial Courts Act
(c) “commercial dispute” means a dispute arising out of––
(i) ordinary transactions of merchants, bankers, financiers and traders such as those relating to mercantile documents, including enforcement and interpretation of such documents;
(ii) export or import of merchandise or services;
(iii) issues relating to admiralty and maritime law;
(iv) transactions relating to aircraft, aircraft engines, aircraft equipment and helicopters, including sales, leasing and financing of the same;
(v) carriage of goods;
Section 2(1)(c) and (i): commercial dispute and Specified Value
Section 12, Commercial Courts Act
(1) The Specified Value of the subject-matter of the commercial dispute in a suit, appeal or application shall be determined in the following manner:––
(a) where the relief sought in a suit or application is for recovery of money, the money sought to be recovered in the suit or application inclusive of interest, if any, computed up to the date of filing of the suit or application, as the case may be, shall be taken into account for determining such Specified Value;
(b) where the relief sought in a suit, appeal or application relates to movable property or to a right therein, the market value of the movable property as on the date of filing of the suit, appeal or application, as the case may be, shall be taken into account for determining such Specified Value;
Determination of Specified Value
Section 12A, Commercial Courts Act
(4) If the parties to the commercial dispute arrive at a settlement, the same shall be reduced into writing and shall be signed by the parties to the dispute and the mediator.
(5) The settlement arrived at under this section shall have the same status and effect as if it is an arbitral award on agreed terms under sub-section (4) of section 30 of the Arbitration and Conciliation Act, 1996 (26 of 1996).]
Pre-institution mediation and settlement
(a) “commercial dispute” means a dispute defined in clause (c) of sub-section (1) of section 2 of the Commercial Courts Act, 2015 (4 of 2016);
Section 3(a): adopts the Commercial Courts Act definition
Example
For example, a suit by a supplier for twelve lakh rupees due under a contract for supply of machine parts is a commercial dispute of Specified Value arising out of an agreement for sale of goods.
For the exam
- Definition: Section 2(1)(c) of the Commercial Courts Act, 2015; adopted by Section 3(a) of the Mediation Act.
- Specified Value: not less than three lakh rupees after the 2018 amendment (Section 2(1)(i)).
- Immovable property disputes qualify only if the property is actually used exclusively in trade or commerce.
- A dispute stays commercial even if the State is a party (Explanation (b)).
- Pre-institution mediation under Section 12A is mandatory unless urgent interim relief is sought.
198 questions in the Law Maker question bank use this term. Practise Civil Procedure Code questions
Related terms
- Arbitration agreementAn agreement by the parties to submit to arbitration all or certain disputes, present or future, arising out of a defined legal relationship (Section 7 of the Arbitration and Conciliation Act, 1996).
- International commercial arbitrationAn arbitration of a dispute arising from a legal relationship considered commercial under Indian law, where at least one party is foreign in nationality, residence, incorporation or control. Section 2(1)(f) of the Arbitration Act.
- DecreeThe formal expression of an adjudication that conclusively determines the rights of the parties on all or any matter in controversy in a suit, as defined in Section 2(2) of the CPC.
- PleadingUnder Order VI Rule 1 of the CPC, pleading means a plaint or a written statement.
- Lok AdalatA forum organised by a legal services authority under Chapter VI of the Legal Services Authorities Act, 1987 to settle pending or pre-litigation disputes by compromise. Its award is deemed a decree and is final.
Further reading
Checked 6 November 2026. Statutory text is quoted from the Bare Acts library, taken from India Code. See the full glossary.