TaxTMI 
TaxTMI 
A DISPUTE BETWEEN AN EMPLOYER AND THE EMPLOYEE IS NOT A COMMERCIAL DISPUTE
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.... DISPUTE BETWEEN AN EMPLOYER AND THE EMPLOYEE IS NOT A COMMERCIAL DISPUTE<br>By: - DR.MARIAPPAN GOVINDARAJAN<br>Other Topics<br>Dated:- 24-9-2026<br>Commercial dispute Section 2(c) of the Commercial Courts Act, 2015 ('Act' for short) defines the expression 'commercial dispute' as arising out of- • ordinary transactions of merchants, bankers, financiers and traders such as those relating to mercantile documents, including enforcement and interpretation of such documents; • export or import of merchandise or services; • issues relating to admiralty and maritime law; • transactions relating to aircraft, aircraft engines, aircraft equipment and helicopters, including sales, leasing and fina....
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....ncing of the same; • carriage of goods; • construction and infrastructure contracts, including tenders; • agreements relating to immovable property used exclusively in trade or commerce; • franchising agreements; • distribution and licensing agreements; • management and consultancy agreements; • joint venture agreements; • shareholders agreements; • subscription and investment agreements pertaining to the services industry including outsourcing services and financial services; • mercantile agency and mercantile usage; • partnership agreements; • technology development agreements; ....
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.... • intellectual property rights relating to registered and unregistered trademarks, copyright, patent, design, domain names, geographical indications and semiconductor integrated circuits; • agreements for sale of goods or provision of services; • exploitation of oil and gas reserves or other natural resources including electromagnetic spectrum; • insurance and re-insurance; • contracts of agency relating to any of the above; and • such other commercial disputes as may be notified by the Central Government. A commercial dispute shall not cease to be a commercial dispute merely because- • it also involves action for recovery of immovable p....
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....roperty or for realisation of monies out of immovable property given as security or involves any other relief pertaining to immovable property; • one of the contracting parties is the State or any of its agencies or instrumentalities, or a private body carrying out public functions. Commercial Courts Section 3 of the Act provides that the State Government, may after consultation with the concerned High Court, by notification, constitute such number of Commercial Courts at District level, as it may deem necessary for the purpose of exercising the jurisdiction and powers conferred on those Courts under this Act. No Commercial Court shall be constituted for the territory over which the High Court has ordinary original civil ....
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....jurisdiction. The State Government shall, after consultation with the concerned High Court specify, by notification, the local limits of the area to which the jurisdiction of a Commercial Court shall extend and may, from time to time, increase, reduce or alter such limits. The State Government shall, with the concurrence of the Chief Justice of the High Court appoint one or more persons having experience in dealing with commercial disputes to be the Judge or Judges, of a Commercial Court, from amongst the cadre of Higher Judicial Service in the State. Issue The issue to be discussed in this article is as to whether the dispute between the employer and employee is a commercial dispute and the same can be entertained by the Commer....
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....cial Court, with reference to the decided case laws. Case laws In 'Ekanek Networks Private Limited v. Aditya Mertia' - [2024 (5) TMI 1642 - DELHI HIGH COURT] the High Court held that merely because a contract of personal service or employment may have some attributes of being high value or have high stakes therein, as in the instant case, that by itself would not be sufficient so as to bring any dispute arising out of such contract within the scope and ambit of a commercial dispute. Merely because a contract of service also involves payment, remuneration and several other service perks or peculiar benefits, that alone would not be a decisive factor in holding it to be a commercial dispute. Unhesitatingly, this Court finds that a contr....
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....act of service that requires rendering of personal services by one of the parties to another, is purely and simply a service dispute governed by the Service Law jurisprudence and the Common Law, for which remedy lies elsewhere. In 'Atmastco Ltd. v. Mandeep Kalra' - [2024 (7) TMI 1818 - DELHI HIGH COURT], the High Court held that if the provisions of the Act are given a liberal interpretation, the object behind the constitution of the Commercial Division of Courts to fast-track the resolution of commercial disputes would be defeated. Thus, every other suit, which may or may not be filed before a Commercial Court, need not be levelled as a 'commercial dispute' and recourse has to be found in accordance with the purport and object o....
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....f the statute besides the substratum of the matter. In 'ARM Digital Media Private Limited v. Ritesh Singh' - [2025 (12) TMI 827 - DELHI HIGH COURT], the High Court held that disputes arising from employment agreements do not constitute commercial disputes under the Act, even when such agreements contain ancillary business-related clauses such as confidentiality, non-compete obligations, or intellectual property assignments. the Court underscored that the Commercial Courts Act is intended to streamline adjudication of genuine mercantile and commercial disputes, and that importing ordinary employer-employee disputes into this framework would subvert the very objective of the statute. In Ram Lakhan Shukla Versus Hintek Electronics Privat....
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....e Limited And Anr. - 2026 (9) TMI 1496 - DELHI HIGH COURT, the appellant in the present appeal, was appointed as General Manager in the respondent company on 01.08.2016. He was offered the following by the company- • Salary: Rs. 50,000 with appraisal of Rs. 5,000 after three months, i.e. w.e.f. 1.11.2026, on a consolidated salary of Rs. 6,60,000 p.a. with effect from 1.11.2026; • 5-6% basic standard annual increment; • Actual out of pocket expenses including mobile bill, LTA and other expenses. • Incentive sale @ 2% on L/C sales and 1.5% on VAT sales. The Appellant had subsequently raised certain claims based on his employment contract which were not paid. and hence, the suit for r....
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....ecovery was filed before the Commercial Court, Saket District Court Complex. Since the same was not paid the appellant had filed a suit before the Trial Court seeking recovery of a sum of Rs. 14,33,073/- against Hintek Electronics Private Limited and other Respondents. On the file of the suit, the summons was issued to the respondents. Since the written statement was not filed by the respondent the case was decided as ex-parte on 13.03.2024. On 05.06.2024, a query was put to the Appellant to satisfy as to how a dispute between employer and employee for recovery of certain amounts due under various heads would be a commercial dispute. The Trial Court dismissed the suit on 12.09.2014 on the ground that the suit is not maintainable since th....
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....e dispute is not a commercial dispute under Section 2(c) of the Commercial Courts Act, 2015. The Trial Court held that a dispute for recovery of dues towards arrears of salary between an employee and an employer could not be termed as a commercial suit by any stretch of imagination. Being aggrieved against the order of trial court, the appellant filed the present appeal before the Delhi High Court. The High Court observed that although the plaintiff here had claimed his entitlement for commission on sales however his own appointment letter as well as confirmation letter do not provide for any such commission to be payable to him upon sales. The High Court, relied on various judgments of High Courts as discussed above, was of the opini....
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....on that the disputes arising from employment agreements entered into between an employer and an employee would not fall within the ambit of "commercial dispute", as provided under the Act. The High Court observed that the inclusion of employer-employee disputes under the definition of `commercial disputes' would be contrary to the legislative mandate under the Commercial Courts Act, 2015 which sets out a clear definition as to what kind of disputes constitute `commercial disputes. The High Court observed that if the dispute is not a commercial dispute, the suit need not have been dismissed but the plaint ought to have been returned for being presented before the appropriate Court. Whenever a litigant approaches a wrong forum, the Cou....
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....rt may reject relief but permit presenting of the case before the appropriate forum, as dismissal would entail fresh expenses to the litigant such as court fees, legal costs etc. The High Court modified the impugned order to this extent and permitted the suit to be presented in the appropriate court. =============<br> Scholarly articles for knowledge sharing by authors, experts, professionals ....