Employment Disputes Not Commercial Disputes Under Commercial Courts Act: Delhi High Court

The Delhi High Court on 7 August 2026 clarified that disputes arising from employment contracts, including claims for salary arrears and increments, do not qualify as “commercial disputes” under Section 2(c) of the Commercial Courts Act, 2015, but held that a Commercial Court must return such a plaint instead of dismissing the suit.

A Division Bench comprising Justices Prathiba M Singh and Vikas Mahajan upheld the finding that the dispute between Ram Lakhan Shukla and his employer was not a commercial dispute, while modifying the order to direct the return of the plaint. It held:

“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 court cannot stretch the said definition to include disputes as have arisen in the present suit. Thus, the trial court's order is affirmed on this legal issue.”

Shukla was appointed as Senior Manager at Hintek Electronics Pvt. Ltd. on 1 August 2016 at a monthly salary of Rs. 50,000, with subsequent communications providing for increments. He later raised claims under his employment contract for salary and increments allegedly due to him, amounting to Rs. 14,33,073, and filed a recovery suit before the Commercial Court, Saket.

The Commercial Court issued summons, but the defendants failed to file a written statement despite repeated opportunities. The suit proceeded ex parte on 13 March 2024. On 12 September 2024, however, the Commercial Court dismissed the suit after holding that disputes between employers and employees do not constitute commercial disputes under the Act.

Challenging the dismissal, Shukla argued that if the Commercial Court found that the suit did not involve a commercial dispute, it ought to have returned the plaint for presentation before the appropriate Court instead of dismissing the suit.

The High Court agreed with this submission and observed:

“A perusal of the plaint filed before the ld. Trial Court would show that the suit would not be a commercial dispute, as it is a dispute between employer and employee arising out of the terms of employment and certain increments and salary that are alleged to be due to be paid to the Appellant.”

Referring to various precedents, the Bench held that disputes arising from employment agreements between employers and employees do not fall within the ambit of “commercial dispute” under the Commercial Courts Act.

However, it held that the Commercial Court erred in dismissing the suit outright. It held that the proper course was to return the plaint for presentation before the appropriate Court, as dismissal would unfairly burden the litigant with fresh costs and court fees.

Accordingly, the High Court modified the impugned order and directed that the plaint be listed before the Commercial Court on 24 August 2026 for its return.

For Appellants: Advocate Ayush Singh