Commercial dispute test excludes fraud-based recovery claims lacking ordinary commercial flavour under the Commercial Courts Act.

A dispute must satisfy the statutory definition of a commercial dispute under the Commercial Courts Act, 2015 before it can be treated as a commercial suit; mere filing of a recovery action or the involvement of bank accounts is insufficient. A claim based on alleged embezzlement, forgery, falsification of accounts, and fraudulent diversion of funds by an employee and others was held to be fraud-based recovery litigation, not an ordinary commercial transaction carrying the necessary commercial flavour or connected with mercantile documents. The request to review the earlier order and convert the civil suit into a commercial suit was therefore rejected.

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Issues: Whether the review petition seeking conversion of the civil suit into a commercial suit was maintainable and whether the underlying recovery action, founded on alleged embezzlement and fraudulent withdrawals by an employee and others, fell within the definition of a commercial dispute under the Commercial Courts Act, 2015.

Analysis: The statutory scheme of the Commercial Courts Act, 2015 requires a strict and careful examination of whether the dispute answers the definition of a commercial dispute. Mere pendency of a suit and specified valuation are insufficient unless the dispute itself has the necessary commercial character. The governing test is whether the claim arises from ordinary commercial transactions, particularly those associated with mercantile documents, and whether the transaction has a genuine commercial flavour. A claim for recovery based on alleged embezzlement, forgery, falsification of accounts, and fraudulent diversion of funds by an employee does not become a commercial dispute merely because bank accounts were involved or because withdrawals were facilitated through banks. Such allegations describe a fraud-based recovery claim, not a business transaction carried on in the ordinary course of commerce.

Conclusion: The suit did not qualify as a commercial suit, and the request to review the earlier order and convert the matter into a commercial suit was rejected.

Ratio Decidendi: A recovery claim founded on embezzlement, forgery, and fraudulent withdrawal of funds from a company's bank accounts is not, by itself, a commercial dispute unless it arises from a transaction bearing the necessary commercial flavour and connected with mercantile documents or ordinary commercial dealings.

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