Recovery of Money in Commercial Disputes: How Commercial Courts in Karnataka Can Help

Introduction

Unpaid invoices, unsettled accounts, and defaulted payments are some of the most common issues faced by businesses. For companies, vendors, and service providers, delayed recovery of money can severely impact cash flow and growth. The law provides remedies to recover such dues, and with the creation of Commercial Courts under the Commercial Courts Act, 2015, high-value commercial recovery suits in Karnataka are dealt with more efficiently. Understanding how recovery of money works in a commercial context helps businesses protect their financial interests and act swiftly when disputes arise.

What Constitutes a Commercial Recovery Dispute

A recovery dispute is considered commercial when it arises out of a business-to-business transaction or trade-related contract. This includes unpaid invoices for goods supplied, dues under service contracts, dishonoured cheques, default in franchise or distribution agreements, advances given for projects, or breach of financial commitments. The Commercial Courts Act covers disputes of a commercial nature where the value involved is ₹3 lakh or more. This monetary threshold ensures that business-related financial claims are heard in a specialised forum.

Jurisdiction of Commercial Courts

In Karnataka, recovery suits of a commercial nature are filed before the Commercial Courts if the claim value meets the specified threshold. For Bengaluru and other major districts, dedicated Commercial Courts have been set up to handle such matters exclusively. If urgent relief is required—such as freezing bank accounts or restraining disposal of assets—applications for interim measures can also be filed along with the main suit. Appeals from Commercial Court orders lie to the Commercial Appellate Division of the High Court of Karnataka.

Filing a Recovery Suit

The process of filing a recovery suit in Commercial Courts begins with a plaint, which must contain details of the transaction, the amount due, relevant contracts, invoices, and supporting correspondence. The Commercial Courts Act mandates strict compliance with pleadings, filing of documents, and case management schedules. In many cases, pre-institution mediation is required before filing the suit, unless urgent relief is sought. If settlement is not achieved, the case proceeds to trial, where evidence and arguments are considered before judgment.

Timelines and Efficiency

One of the main advantages of approaching Commercial Courts is the time-bound process. Written statements by the defendant must be filed within a limited period, with penalties for delay. Courts actively manage cases by setting deadlines for discovery, framing of issues, and trial. This reduces unnecessary adjournments and ensures that businesses receive clarity within a reasonable time frame. For money recovery, this structure is particularly beneficial, as delayed litigation often means reduced chances of recovery.

Practical Considerations for Businesses

To strengthen recovery claims, businesses should maintain comprehensive documentation, including signed contracts, invoices, delivery challans, purchase orders, and proof of communication. Sending a well-drafted demand notice before filing suit often encourages settlement or narrows the scope of dispute. Where possible, including arbitration or jurisdiction clauses in contracts helps streamline dispute resolution. For debtors facing genuine difficulties, negotiating repayment schedules during mediation may be preferable to protracted litigation.

Conclusion

Commercial recovery of money disputes are common but need not paralyse business operations. The Commercial Courts in Karnataka provide a dedicated and efficient forum to resolve such claims, backed by strict timelines and specialised procedures. For businesses, acting promptly, preserving evidence, and seeking professional legal support are critical steps in ensuring that dues are recovered effectively. At LNN Legal, we represent clients in commercial money recovery suits before Commercial Courts in Bengaluru and across Karnataka, delivering strategic solutions to safeguard financial interests and achieve timely outcomes.