Commercial Suit

The Commercial Courts Act of 2015 aims to expedite the hearing and resolution of commercial lawsuits. But to the students and the practitioners, who are not familiar with the trial court’s work, the procedural changes brought about by the Act may not be all that apparent, and to whom this ready-reckoner may be useful.  This ready reckoner outlines the necessary steps for bringing and prosecuting commercial lawsuits. This is not intended to be a commentary on the entire Act and is only to serve as a guide to the procedures and stages to be followed in the filing and conduct of commercial suits….

Types of Commercial Suit

Commercial suits are legal cases that come up in the world of business.  These cases are significant because they aid in conflict resolution, safeguard business interests, and guarantee fair practices. Knowing the different types of commercial suits can help businesses, lawyers, and anyone involved in commerce understand what to expect and how to handle these situations.  Here’s a straightforward look at the main types of commercial suits.

1. Partnership Disputes:

    • Disagreements among business partners, such as disagreements regarding profit sharing, responsibilities, or the partnership’s dissolution..

2.  Disputes Related to Sale of Goods:

    • Issues with the sale and purchase of goods, such as nonpayment, late delivery, or disagreements over quality.

3. Intellectual Property (IP) Disputes:

    • Cases involving the violation of intellectual property rights like copyrights, patents, and trademarks.

4.  Debt Recovery:

    • Claims brought by creditors in an effort to get back money that people or businesses owe in arrears.

5.  Breach of Trade Agreements:

    • Disputes arising from violations of trade agreements, such as supply contracts, joint ventures, distribution agreements, or franchise agreements.

6. Real Estate and Property Disputes:

    • Disputes regarding the lease, sale, or ownership of commercial real estate are examples of issues involving commercial property transactions.

7.  Arbitration Clauses:

    • Disputes resulting from commercial agreements with arbitration clauses for conflict resolution outside of the courts.

           

8. Unpaid Bills or Services:

    • Claims for not being paid for services provided, like contracts for construction or consulting services.. 

key features of Commercial Suits

  1. Jurisdiction:
    • Commercial suits are typically filed in specialized Commercial Courts or Commercial Divisions of High Courts, depending on the value and nature of the dispute.
    • For claims exceeding a certain amount (typically 1 crore or more), the case may be heard by the High Court’s Commercial Division, whereas lower-value disputes are handled by district-level Commercial Courts.

2. E-filing and Technology:

    • E-filing and other technological solutions are frequently utilized in commercial courts to speed up case processing in line with recent advancements.                                                                         

3. Interim Relief:

    • The plaintiff may apply for interim reliefs such as a temporary injunction, attachment of property, or an order of specific performance to prevent harm or enforce compliance before the final judgment is delivered.

4. Alternate Dispute Resolution (ADR):

    • Alternative dispute resolution methods like mediation, arbitration, or conciliation may be used in commercial lawsuits. To encourage an out-of-court settlement, the court may, in certain circumstances, refer the dispute to arbitration or mediation..

5. Expert Evidence:

    • In some commercial suits, especially those involving technical or financial matters, expert evidence may be required. Expert witnesses may be called to give opinions on complex commercial issues.

Procedure for Filing a Commercial Suit

  1. Drafting the Plaint:                                                                                                                                                                                                                           

    • The plaintiff must file a plaint (the initial legal document) in the appropriate commercial court.  The complaint ought to contain:
      • The specifics of who was involved.
      • The nature of the dispute and the claim’s legal foundation.
      • The evidence that backs up the claim, such as any correspondence, relevant contracts, and receipts.
      • The plaintiff’s requested relief, such as the return of property, contract enforcement, or payment of dues.                                                          

  2. Filing the Suit:                                                                                                                                                                                                                

    • The commercial court with jurisdiction over the matter receives the plaint. The court with jurisdiction is typically the one where the commercial agreement was signed or where the defendant resides or does business.                                                                                                                                 

  3. Issuance of Summons:                                                                                                                                                                                                 

    • The court will notify the defendant of the legal proceedings by issuing a summons to them following the filing of the suit. The defendant is given a set time (usually 30 days) to file a written statement (their defense) to the allegations.                                                                                           

  4. Preliminary Hearing:                                                                                                                                                                                                     

    • A preliminary hearing will be held by the court, at which both sides can present their initial arguments. The court might also talk about sending the case to mediation or arbitration.                                                                                                                                                                            

  5. Examination of Evidence:                                                                                                                                                                                             

    • The opportunity to present evidence to back up their claims will be given to both parties. Documents, emails, invoices, contracts, and testimony from witnesses are examples of this.
    • If necessary, the court may also accept expert testimony.                                                                                                                                          

  6. Final Hearing:                                                                                                                                                                                                                 

    • After examining the evidence and hearing the arguments, the court will schedule a final hearing.  The court will make a decision after hearing closing arguments from both parties.                                                                                                                                                                          

  7. Execution of the Judgment:                                                                                                                                                                                         

    • The court may issue a decree for specific performance, compensation, or other relief if the plaintiff prevails. The plaintiff may also seek execution of the decree if the defendant fails to comply with the judgment.

 

Defenses in a Commercial Suit

  1. Non-Existence of Agreement:                                                                                                                                                                                      

    • The defendant may argue that the parties did not have a valid agreement or contract, or that the contract was invalid or unenforceable because of fraud, false representation, or lack of consent.                                                                                                                                        

  2. Breach by Plaintiff:                                                                                                                                                                                                        

    • The defendant could argue that the plaintiff failed to perform their obligations under the contract, which justifies their non-performance or non-payment                                                                                                                                                                                                                      

  3. Time Barred Claims:                                                                                                                                                                                                                              

    • The defendant may argue that the claim is barred by the statute of limitations, which specifies the maximum period within which a lawsuit can be filed.                                                                                                                                                                                                                       

  4. Failure to Fulfill Terms:                                                                                                                                                                                                 

    • Due to the plaintiff’s failure to fulfill their own obligations, such as timely delivery or providing agreed-upon specifications, the defendant may assert that they did not breach the contract.                                                                                                                                                               

  5. Force Majeure or Other Excuses:                                                                                                                                                                                

    • The defendant may use force majeure clauses to argue that they were unable to fulfill their obligations due to unforeseen circumstances like natural disasters or other external factors.                                                                                                                                                                                                                      

  6. Lack of Jurisdiction:                                                                                                                                                                                                     

    • The defendant may argue that the commercial court does not have jurisdiction to hear the case on the grounds of the dispute’s location or the parties involved.

Importance of Commercial Suits

  1. Fast Resolution of Business Disputes:                                                                                                                                                                                                     

    • Businesses can get back to business without having to fight long-term legal battles thanks to commercial suits’ quick resolution of disputes.       

  2. Specialized Courts and Expertise:                                                                                                                                                                               

    • Commercial courts provide expertise in trade, commerce, and industry issues and handle cases involving intricate business transactions.          

  3. Encourages Trade and Investment:                                                                                                                                                                             

    • By assuring businesses that their legal issues will be addressed efficiently, a streamlined legal procedure for resolving commercial disputes encourages trade and investment.                                                                                                                                                                              

  4. Protection of Commercial Interests:                                                                                                                                                                            

    • Commercial suits protect businesses’ commercial interests by ensuring that their rights under contracts, trade laws, and intellectual property laws are respected. 
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