Commercial, Arbitration and Recovery: Questions and Answers

It depends on your contract and your paperwork, not on which route sounds fastest. If the contract has an arbitration clause, the buyer can push you into arbitration anyway, so plan for it. Without one, a summary suit in the Commercial Division is often quicker than an ordinary suit when the invoices are admitted in writing. Insolvency under the IBC needs a default of Rs 1 crore or more and fails if the buyer shows a real dispute existed before your demand notice. When Advocate B.K. Singh opens a recovery file, he reads the dispute clause and the last written acknowledgement of the debt before anything else.

Look at the transaction, not at who the parties are. Section 2(1)(c) of the Commercial Courts Act 2015 lists the covered disputes, including ordinary transactions of merchants, bankers and traders, supply and service contracts, distribution and franchise agreements, construction contracts, partnership and shareholder agreements, insurance and intellectual property. If the dispute fits and its value is Rs 3 lakh or more, the stricter commercial procedure applies. Our guide on which cases go to the Commercial Division explains where the case is filed.

Possibly. For a money claim, Section 12 of the Commercial Courts Act counts the amount claimed along with interest worked out up to the date of filing as the specified value. If that total is above Rs 2 crore, the suit goes to the Commercial Division of the High Court; otherwise it goes to a district commercial court. A proposal to raise the High Court's pecuniary limit is pending, so check the current limit before filing. Inflating interest just to reach the High Court is risky, because the defendant will attack the valuation. See our guide on pecuniary jurisdiction.

Usually not. In Ambalal Sarabhai Enterprises v. KS Infraspace (2019), the Supreme Court held that an agreement about immovable property is a commercial dispute only if the property is actually used exclusively in trade or commerce. A flat bought to live in does not fit. Homebuyers generally go to the consumer commission, the RERA authority or an ordinary civil court. Filing in the Commercial Division by mistake wastes months, because the plaint is returned to be filed in the right forum.

You apply to the legal services authority, which sends notice to the other side and fixes a mediation session. The process is meant to finish within three months, which can be extended by two months if both sides agree. If the other side does not turn up, you get a non-starter report and can file your suit. The time spent in mediation is left out when counting limitation, so your claim does not lapse while you wait. A settlement reached there has the same force as an arbitral award on agreed terms.

Only if the urgency is real. In Yamini Manohar v. T.K.D. Keerthi (2023), the Supreme Court said the court must look at the plaint and documents to decide whether urgent interim relief was genuinely needed, and a prayer for injunction cannot be used as a device to avoid mediation. If the court finds the urgency is a pretext, the plaint can be rejected. A supplier who chased payment for a year and then suddenly asks for an injunction will struggle to explain why the matter could not wait three months.

Very likely. In Patil Automation v. Rakheja Engineers (2022), the Supreme Court held Section 12A mandatory and said suits filed without it, after 20 August 2022, are liable to be rejected under Order 7 Rule 11 of the CPC. The court cannot fix the defect by simply sending the parties to mediation midway. The practical fix is to withdraw, complete mediation and refile, but only if the claim is still within limitation, so check your dates before choosing that route.

From the date the summons, with the plaint and documents, is served on you, and service by email is a recognised mode in commercial suits. Under the Delhi High Court Original Side Rules 2018, the written statement is due within 30 days, and the court can extend this up to 120 days for good reason, usually with costs. After 120 days the right closes for good, as the Supreme Court held in SCG Contracts v. K.S. Chamankar (2019); the Delhi rules were upheld in Manhar Sabharwal (2024). Do not wait for the next hearing date to start counting.

Yes, and this catches many plaintiffs out. In a commercial suit, the plaintiff must file every document in its power, possession, control or custody with the plaint, along with a statement on oath that nothing else relevant is held. Documents produced later are allowed only with the court's leave, on showing reasonable cause for the delay. Emails, chats and ledger extracts count as documents, and electronic records need a certificate under Section 63 of the Bharatiya Sakshya Adhiniyam (old Section 65B of the Evidence Act). Gather everything before filing.

It can. Order XI Rule 4 of the CPC, as applied to commercial suits, requires each side to admit or deny the other's documents with reasons, and a bare denial is not enough. A document not properly denied can be treated as admitted, and a party that unreasonably denies a document can be ordered to pay costs. In practice, a blanket denial of invoices that the defendant's own GST returns reflect often hurts the defendant more than the plaintiff, because the court reads it as a weak defence.

It is the hearing where the court fixes the full timetable of the suit under Order XV-A of the CPC. The judge frames issues and sets dates for evidence affidavits, cross-examination and written arguments, with the aim that arguments close within six months of the first case management hearing. Missing a date fixed here can lead to costs or to the court closing your right to take that step. Treat the schedule as binding. The dates also show in the cause list on the Delhi High Court's own website, which is the official source.

Yes, through summary judgment under Order XIII-A of the CPC. Either side can apply after the summons is served and before issues are framed. The court can decide the claim, or part of it, if the other side has no real prospect of succeeding and there is no compelling reason to record oral evidence. This is separate from an Order 37 summary suit, and summary judgment cannot be sought in a suit filed under Order 37. Our page on summary suits explains the other route.

The losing side, as a general rule. Section 35 of the CPC, as amended for commercial disputes, says the unsuccessful party is generally ordered to pay the costs of the successful party, and the court must give reasons if it departs from this. Costs can cover court fees, lawyers' fees, witness expenses and other reasonable expenses. The court also looks at conduct, such as frivolous claims, needless delay or refusing a reasonable offer to settle. Keep every fee receipt and bill, because you may need to file a bill of costs.

Often yes. Section 16 of the Court Fees Act lets the court certify a refund of the court fee when a case is settled through a method recognised under Section 89 of the CPC, such as mediation. The Supreme Court read this broadly in 2021, in High Court of Judicature at Madras v. M.C. Subramaniam, to cover private settlements reached outside the court's own centres too. Ask for the refund in the same application that records the settlement, and check the current practice. Our guide on Samadhan mediation explains the court's mediation centre.

Yes, if part of the cause of action arose in Delhi, for example the contract was made here, goods were dispatched from here or payment was due here. Section 20 of the CPC allows the suit where any part of the cause of action arose. The harder questions are service abroad and enforcement. India and the UAE have a treaty on civil and commercial matters, but enforcing an Indian decree in Dubai follows UAE procedure, so check the current position with counsel there before relying on it. Read the contract's jurisdiction and dispute clauses first, because they may decide the forum.

Yes. Under Section 128 of the Indian Contract Act, a guarantor's liability is co-extensive with that of the principal debtor, unless the guarantee says otherwise, so you can sue the company and the guarantor together, or the guarantor alone. Read the guarantee deed closely: its cap, its duration and whether it covers the transaction in question. Directors are not personally liable for company debts without a guarantee or proof of fraud. When Advocate B.K. Singh drafts a recovery suit against a company, he checks the guarantee and its stamping before deciding whom to implead.

Generally three years from the date the credit period ends. Article 15 of the Limitation Act covers goods sold and delivered with a fixed period of credit and starts time when that period expires; without a fixed credit period, Article 14 starts time from the date of delivery. A running account, written acknowledgements and part payments can change the count. Do not calculate this from memory. Make a date-wise table of invoices, payments and acknowledgements before deciding whether the claim is still alive.

Get the arrangement in writing, with the debt clearly acknowledged and signed by an authorised person. A written acknowledgement made before limitation expires gives you a fresh three-year period under Section 18 of the Limitation Act, and a part payment made within time does the same under Section 19. For a large sum, record the settlement through Section 12A mediation or as a consent decree in a filed suit, because either can be enforced straight away if the instalments stop. A casual promise on a phone call is of little use.

File an application under Section 8 of the Arbitration and Conciliation Act asking the court to refer the parties to arbitration, with the original agreement or a certified copy. Timing matters. The application must be made no later than your first statement on the substance of the dispute, which in practice means before or with your written statement. If you file a full defence on the merits first, you may be taken to have given up the arbitration clause. Keep the written statement deadline running in your diary while the application is pending.

Yes, if you agree to it in writing after the dispute has arisen. Section 7 recognises an arbitration agreement in a separate document, in an exchange of letters or emails, or where one side's statement of claim alleges an agreement and the other does not deny it. Without consent, neither side can force arbitration. Think before signing. Arbitration means paying the arbitrator's fees, and a clean money claim backed by admitted invoices may move better as a summary suit.

If you need protection now, file now. Section 9 allows the court to grant interim measures before arbitration, during it, or after the award until it is enforced. If the court grants relief before arbitration has begun, Section 9(2) requires you to start arbitration within 90 days, or within the time the court fixes. Starting means serving a notice invoking arbitration under Section 21, so prepare that notice alongside the petition. Our guide on urgent relief under Section 9 explains what the court looks for.

If the other side does not respond within 30 days of your notice, you can file a petition under Section 11 for appointment. In Arif Azim Co. v. Aptech (2024), the Supreme Court held that the Limitation Act applies, so the petition must be filed within three years from when the right to apply arises, which is usually the failure or refusal to appoint after your notice. Your underlying claim must also be within time. Our guide on appointment of an arbitrator under Section 11 covers the process.

Yes. A seven-judge bench of the Supreme Court held in December 2023 that an unstamped or insufficiently stamped agreement is not void, and its arbitration clause can be acted upon at the appointment stage. The court hearing a Section 11 petition only checks whether an arbitration agreement prima facie exists. Stamp duty objections go to the arbitral tribunal, where you may have to pay the deficit duty and penalty before the agreement is admitted in evidence. Budget for that cost early.

Possibly. In Cox and Kings v. SAP India (2023), a Constitution Bench of the Supreme Court accepted the group of companies doctrine, so a company that did not sign can be bound if the facts show that all sides intended it, for example through its role in negotiating, performing or ending the contract. Common ownership alone is not enough. Collect emails, purchase orders, payment records and minutes of meetings showing the parent's direct involvement. At the Section 11 stage the court takes only a prima facie view and usually leaves the final call to the tribunal.

Usually yes, unless the clause points somewhere else. In BGS SGS Soma JV v. NHPC (2019), the Supreme Court held that where a clause names a venue for the arbitral proceedings and nothing in the agreement shows a contrary intention, that venue is treated as the seat. The courts of the seat have exclusive jurisdiction over Section 34 challenges and related petitions. A clause naming a different seat, or a separate exclusive jurisdiction clause, can change the answer, so read the whole agreement before choosing a court.

You can go straight to the Delhi International Arbitration Centre if your agreement provides for arbitration under it, or if both sides agree after the dispute. DIAC functions under the Delhi High Court and runs the case under its own rules, with a published schedule of arbitrators' fees and administrative costs linked to the claim amount. If there is no such agreement and the other side will not cooperate, you file a Section 11 petition, and the High Court often appoints an arbitrator and directs that the arbitration be held under DIAC. Check DIAC's current fee schedule before you start.

Not on his own. In ONGC v. Afcons Gunanusa (2022), the Supreme Court held that arbitrators cannot unilaterally decide their fees. Fees should be agreed with the parties at the start, and where there is no agreement, the tribunal should settle the terms at preliminary meetings. The Fourth Schedule to the Act gives a model fee scale that courts often apply in ad hoc arbitrations. If the High Court appointed the arbitrator, its order may already fix the fee basis, so read it before you argue about the demand.

It may have, but it can be revived. In a domestic arbitration, Section 29A requires the award within 12 months of the completion of pleadings, and the parties can extend this by six months by consent. After that, only the court can extend the mandate, on an application by either party. In Rohan Builders v. Berger Paints (2024), the Supreme Court held that such an application can be filed even after the period has expired. The mandate continues while the application is pending, and the court can cut the arbitrator's fees if the delay was the tribunal's fault.

Time starts when a signed copy of the award is delivered to the party itself. In Benarsi Krishna Committee v. Karmyogi Shelters (2012), the Supreme Court held that delivery to a party's lawyer or agent does not start the period under Section 34(3). The limit is three months from receipt, plus up to 30 more days only on sufficient cause, and not a day beyond. Do not build your case on this point. Count from the earliest date anyone could argue your company received the award. Our guide on challenging an award under Section 34 explains the grounds.

Fewer than most people expect. The court does not re-hear the case or re-weigh evidence. It can set aside an award for incapacity of a party, an invalid arbitration agreement, lack of proper notice, decisions beyond the scope of the reference, an improperly composed tribunal, conflict with the public policy of India (such as fraud, corruption or breach of basic notions of justice), and, for domestic awards, patent illegality on the face of the award. A reading of the contract that is a possible view will stand even if the judge would have read it differently.

In the court where the assets are, and you do not need to transfer the award first. In Sundaram Finance v. Abdul Samad (2018), the Supreme Court held that an award can be enforced anywhere in India where the assets are located, without first getting it transferred from the court that had jurisdiction over the arbitration. Under Section 36, once the challenge period is over, or a challenge fails or no stay is granted, the award is enforced like a decree. If the bank accounts are in Delhi and the value is above the pecuniary limit, file in the Delhi High Court. See our guide on enforcing an arbitral award in Delhi.

In the High Court. Section 47 of the Arbitration Act sends enforcement of a foreign award to the High Court, so in Delhi the petition goes to the Commercial Division of the Delhi High Court, whatever the amount. You file the original award or a certified copy, the arbitration agreement and proof that it is a foreign award under the New York Convention; Singapore is a notified country. The court refuses enforcement only on the limited grounds in Section 48, and once satisfied, the award is enforced as a decree. When Advocate B.K. Singh takes up a foreign award, he first traces the company's Indian assets and bank accounts.

Yes. In Gujarat State Civil Supplies Corporation v. Mahakali Foods (2022), the Supreme Court held that Chapter V of the MSME Development Act 2006 overrides an ordinary arbitration agreement, so a supplier can refer a payment dispute to the Facilitation Council under Section 18. The benefit generally applies to supplies made after the supplier's registration, so check the date on your Udyam certificate. The Act also allows compound interest at three times the RBI bank rate on payments delayed beyond the agreed period, which cannot exceed 45 days.

No. Under Section 19 of the MSME Development Act 2006, a buyer challenging an award or decree in favour of a supplier must first deposit 75 per cent of the awarded amount with the court. The court can release part of that deposit to the supplier while the challenge is pending. The Supreme Court has treated the deposit as mandatory, though it has allowed it in instalments in a suitable case. For a supplier, this deposit is often the main reason to choose the Council route over private arbitration.

Not while the moratorium lasts. Once the NCLT admits a company into the corporate insolvency resolution process, Section 14 of the IBC bars starting or continuing suits and executing decrees and awards against it. Your remedy is to file a claim with the resolution professional within the time given in the public announcement, attaching your decree or award. The moratorium on the company does not automatically protect a personal guarantor, so execution or other action against the guarantor needs separate advice. Our page on the NCLT in New Delhi explains that forum.

Yes. Debts owed to the judgment debtor can be attached under Order 21 Rule 46 of the CPC, and under Rule 46A the court can issue a notice to the customer, called the garnishee, to pay the money into court or explain why it should not. Once the customer is served with the prohibitory order, any payment it makes to the company instead is at its own risk. The company's GST filings, e-way bills and financial statements filed with the ROC often show who its regular buyers are. Our page on execution in the Delhi High Court covers other modes of attachment.