A loan between merchants to discharge business liabilities qualifies as a commercial dispute under Section 2(1)(c)(i).

The plaintiff, which imports raw cashew nuts, sued the defendant, a cashew processor and supplier, for recovery of money and creation of a charge over immovable property.

The plaint alleged that the parties operated in the same field of business and that the plaintiff had lent money to enable the defendant to satisfy a claim made by another merchant, M/s. Cool Nuts.

The defendant sought rejection of the plaint under Order VII Rule 11 CPC, arguing that the advance was an isolated loan and not a commercial dispute, and that the plaintiff had not complied with pre-institution mediation under Section 12A of the Commercial Courts Act, 2015.

The Commercial Court dismissed the application, noting that it had separately granted leave to dispense with mediation. The defendant challenged that order in revision.

Whether the alleged loan between the parties constituted a commercial dispute under Section 2(1)(c) of the Commercial Courts Act, 2015, such that the plaint was not liable to rejection under Order VII Rule 11 CPC.

Whether the plaint was liable to rejection for non-compliance with Section 12A where the Commercial Court had granted leave to dispense with pre-institution mediation.

Order VII Rule 11 CPC permits rejection of a plaint on legally recognised grounds, including where the pleaded claim does not disclose a basis for the court’s jurisdiction.

Under Section 2(1)(c)(i) of the Commercial Courts Act, 2015, a dispute arising from ordinary transactions of merchants in the course of business is a commercial dispute.

Section 12A requires pre-institution mediation in commercial suits not contemplating urgent interim relief, but where leave to dispense with that process has been granted and remains unchallenged, non-compliance cannot be relied upon to seek rejection of the plaint.

The Court considered Ambalal Sarabhai Enterprises Ltd. v. K.S. Infraspace, (2020) 15 SCC 585, which addressed whether a dispute concerning property fell within the statutory definition of a commercial dispute where commercial use of the property was not established.

On the first issue, the Court assessed the plaint’s averments: the parties were merchants in the same trade, and the plaintiff allegedly advanced the money to help the defendant clear another merchant’s business claim.

The Court treated the transaction as arising in the course of the parties’ business, rather than as a friendly loan unconnected with commercial activity, and therefore held that it fell within Section 2(1)(c)(i).

It distinguished Ambalal Sarabhai, which concerned whether property was actually used for trade or commerce, whereas the present dispute concerned a transaction between merchants in the ordinary course of business.

On the second issue, the Court found that the Commercial Court had specifically granted leave to dispense with pre-institution mediation and that the order had not been challenged; the Section 12A objection therefore did not justify rejection of the plaint.

It sustained the Commercial Court’s order, dismissed the civil revision petition without costs, and closed the connected miscellaneous petition.