Section 3 explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
Section 3 is the provision under which a State sets up Commercial Courts at the District level, fixes the area each court serves and appoints its Judges. It also lets the State fix a pecuniary value for the courts, with a floor of three lakh rupees as printed. This article reads the section as amended up to 3 May 2018, as per the text consulted, and is useful for any business that needs to know which court its commercial suit filing will reach.
The State Government, after consultation with the High Court, may by notification constitute Commercial Courts at District level and specify their local limits. For a territory where the High Court has ordinary original civil jurisdiction, a pecuniary value may be set that is not less than three lakh rupees and not more than the pecuniary jurisdiction of the District Courts. Sub-section (1A) lets the State specify a pecuniary value of not less than three lakh rupees or a higher value for the whole or part of the State. Judges are appointed with the concurrence of the Chief Justice of the High Court.
Sub-section (1): the power to constitute
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 exercising the jurisdiction and powers given by the Act. Three features stand out.
- The power belongs to the State Government, not the Central Government.
- It is exercised by notification and only after consultation with the concerned High Court.
- The number of courts is left to the State: "such number ... as it may deem necessary".
The text does not list any State's courts. Which courts have been constituted in a given district is a fact to be taken from the State's notifications, which are not in the text consulted.
First proviso: High Courts with ordinary original civil jurisdiction
For High Courts that have ordinary original civil jurisdiction, the State Government may, after consultation with the High Court, by notification, constitute Commercial Courts "at the District Judge level".
Second proviso: pecuniary value in the original-side territory
For a territory over which High Courts have ordinary original civil jurisdiction, the State Government may by notification specify a pecuniary value. That value "shall not be less than three lakh rupees and not more than the pecuniary jurisdiction exercisable by the District Courts". The text consulted prints "specific such pecuniary value", which reads as a slip for "specify". The amount of three lakh rupees is quoted as printed; no State's limit appears in the source and none is given here.
The effect, in plain words, is a band: floor of three lakh rupees at one end, the ordinary pecuniary jurisdiction of the District Courts at the other, with the State's notified value sitting inside it.
Sub-section (1A): a value for the whole State or a part
Sub-section (1A) opens with "Notwithstanding anything contained in this Act" and allows the State Government, after consultation with the concerned High Court, by notification, to specify a pecuniary value that "shall not be less than three lakh rupees or such higher value, for whole or part of the State, as it may consider necessary". The text prints the sub-section number as "(lA)" and the printed passage carries slips such as "levcl" and "Govenment"; these do not change the meaning.
Two things to note. The floor is again three lakh rupees as printed. And the value may be set for "whole or part of the State", so different parts of one State can be treated differently if the State so notifies.
Sub-section (2): local limits
The State Government shall, after consultation with the concerned High Court, specify by notification the local limits of the area to which a Commercial Court's jurisdiction extends. It "may, from time to time, increase, reduce or alter such limits". This is why the practical question in any district is territorial: the court you reach depends on the notified limits, read with the rules in sections 6 and 7 on where a commercial dispute arises. See our article on sections 6 and 7.
Sub-section (3): who may be a Judge
The State Government may, 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, "either at the level of District Judge or a court below the level of a District Judge". A stray quotation mark appears before "Commercial Court" in the copy consulted; it is a printing artefact.
The lower-level appointment is the reason the Act speaks of a Commercial Court "below the level of a District Judge" in the appeal provisions. Our article on section 13 appeals shows how appeals differ by level.
Summary table
| Provision | Who acts | What is done | Condition |
|---|---|---|---|
| 3(1) | State Government | Constitutes Commercial Courts at District level | After consultation with the High Court; by notification |
| 3(1) first proviso | State Government | Constitutes Commercial Courts at District Judge level for High Courts with ordinary original civil jurisdiction | After consultation; by notification |
| 3(1) second proviso | State Government | Specifies a pecuniary value for the original-side territory | Not less than three lakh rupees; not more than the District Courts' pecuniary jurisdiction |
| 3(1A) | State Government | Specifies a pecuniary value for the whole or part of the State | Not less than three lakh rupees or a higher value; after consultation; by notification |
| 3(2) | State Government | Specifies local limits | After consultation; may increase, reduce or alter |
| 3(3) | State Government | Appoints Judges | With concurrence of the Chief Justice; experience in commercial disputes |
How it works in practice
Example. Greenfield Agro Ltd is owed a large sum by a distributor in another district. Before filing, its advisers check three things: whether the State has notified a Commercial Court for the distributor's district, what local limits the notification gives that court, and whether the claim is of the Specified Value that applies there. Section 3 supplies the framework; the notification supplies the facts. The advisers also read the general principle in our guide to jurisdiction of civil courts, which describes the general rule, not the commercial-suit version.
Points to check in the text
- The two provisos and sub-section (1A) are printed within quotation marks with character slips; the meaning is clear.
- "specific" in the second proviso reads as "specify".
- The text is silent on any State's actual pecuniary limits and on any notification; check the State's official notifications.
- The text consulted is amended up to 3 May 2018; check later amendments to the section.
Need help with where to file a commercial claim?
If you are unsure which court has jurisdiction over a particular commercial claim, our team can map the facts to the court structure before a plaint is drafted. Our commercial suit filing page explains how we help.
Key takeaways
- The State Government constitutes Commercial Courts at District level, by notification after consultation with the High Court.
- A pecuniary value may be set with a floor of three lakh rupees as printed.
- Local limits are specified by notification and can be altered from time to time.
- Judges are appointed with the concurrence of the Chief Justice and should have experience in commercial disputes.
Read next
- Section 3A: designation of Commercial Appellate Courts
- Sections 6 and 7: jurisdiction of Commercial Courts and Commercial Divisions
- Section 12: determination of Specified Value
- Jurisdiction of civil courts: pecuniary, territorial and subject matter
Disclaimer: Based on a text of the Commercial Courts Act, 2015 as amended up to 3 May 2018 and on the Ninth Schedule to the Mediation Act, 2023 as enacted, as consulted on 2 October 2026. Later amendments, the current Specified Value, the pre-institution mediation rules and High Court rules should be checked. This article is general information, not legal advice; check the official text before acting.