India's Civil Courts Run on a 1908 Code of Civil Procedure, and a Suit for Compensation for a Broken Contract Has Three Years From the Breach

Indian civil law is the body of rules for disputes between private parties over money, contracts and property, and it rests on five main Acts: the Indian Contract Act of 1872, the Transfer of Property Act of 1882, the Code of Civil Procedure of 1908, and the Limitation Act and Specific Relief Act of 1963. A person with a claim presents a plaint, the written statement of the claim, to a civil court. The court sends the other side a summons, its formal notice to appear, and the defendant then has 30 days from service to file a written reply.

Contracts, property and procedure are shared subjects

The Seventh Schedule of the Constitution puts all three on the Concurrent List, where Parliament and the state legislatures can both make law. Entry 6 covers transfer of property other than agricultural land and the registration of deeds and documents. Entry 7 covers contracts, including partnership, agency and contracts of carriage, but not contracts relating to agricultural land. Entry 13 covers civil procedure, limitation and arbitration. The schedules article explains how the three lists work.

Under Article 254, Parliament’s law prevails over a conflicting state law on a concurrent subject, unless the state law was reserved for the President and received assent, in which case it prevails in that state. The India Code text of the Code of Civil Procedure prints such state amendments, for example from Maharashtra and Odisha.

Article 300A says “No person shall be deprived of his property save by authority of law.” It came in with the Forty-fourth Amendment on 20 June 1979, which moved property out of the fundamental rights, as the article on Articles 12 to 35 describes.

What a contract is and how the Act prices a breach

Section 10 of the Contract Act, in force since 1 September 1872, says all agreements are contracts if the parties are competent, consent freely, give lawful consideration and have a lawful object, and the law has not declared the agreement void. It leaves intact any law that requires writing or registration.

Section 73 says the party who suffers a breach is entitled to compensation for loss that arose naturally in the usual course of things, or that both sides knew was likely when they made the contract. It excludes remote and indirect loss. The Act’s own illustration has a buyer of cloth, meant for caps for one season, receiving the difference between contract and market price on delivery day, but not the profit he hoped to make from the caps.

Section 74 covers contracts that name a sum payable on breach. The injured party gets reasonable compensation up to that sum, whether or not actual loss is proved. In Kailash Nath Associates v Delhi Development Authority, decided on 9 January 2015, a bidder had paid Rs 78 lakh as earnest money on a Rs 3.12 crore bid for a plot in New Delhi. The Authority cancelled the allotment, kept the money, and re-auctioned the plot on 23 February 1994 for Rs 11.78 crore. A two-judge bench held that Section 74 covers forfeiture of earnest money, and wrote: “If damage or loss is not suffered, the law does not provide for a windfall.”

Money is not the only remedy. Under the Specific Relief Act, a court can order a party to carry out the contract. Act 18 of 2018, in force from 1 October 2018, replaced Section 10 so that specific performance “shall be enforced by the court”, subject to sections 11(2), 14 and 16. The same amendment added Section 20, which lets the injured party have the work done by a third party after a written notice of at least 30 days and recover the cost, and Section 20C, which requires a court to decide such suits within 12 months of service of summons, extendable by six months.

Land changes hands by registered document

Section 54 of the Transfer of Property Act, in force since 1 July 1882, defines a sale as a transfer of ownership for a price paid or promised. For tangible immovable property worth Rs 100 or more, the transfer can be made only by a registered instrument, and a contract for sale does not by itself create any interest in the property. Section 107 requires a registered instrument for a lease from year to year, for a term over one year, or reserving a yearly rent.

The Registration Act, in force from 1 January 1909, lists in section 17 the documents that must be registered, including gifts of immovable property. Under section 49 an unregistered document that needed registration does not affect the property and cannot be received as evidence of the transaction, though a proviso lets it serve as evidence of a contract in a specific performance suit.

A person pushed off land without consent and without due process has a quick remedy in Section 6 of the Specific Relief Act. The suit must be filed within six months of dispossession, the court does not look at the defendant’s title, and the decree is not open to appeal or review.

A civil suit runs from plaint to decree in fixed steps

Section 9 of the Code of Civil Procedure gives courts jurisdiction over all suits of a civil nature unless a law bars them. Section 15 sends a suit to the lowest competent court, section 16 puts land suits where the land lies, and section 20 allows other suits where the defendant lives or works or the cause of action arose. The court-system article maps the courts themselves.

Order VII requires the plaint to give the parties, the facts behind the claim and when they arose, the facts showing the court’s jurisdiction, the relief sought and the value of the claim. Section 26 requires the facts to be proved by affidavit. A court must reject a plaint that discloses no cause of action or is barred by law, though rejection does not stop a fresh plaint. A suit against the government needs two months’ written notice first under section 80.

Order VIII, rule 1 gives the defendant 30 days from service of the summons to file a written statement. The court may allow a later day for reasons recorded in writing, but not beyond 90 days. The 30 and 90 day limits in Order VIII date from amendments in force from 1 July 2002. For commercial disputes the outer limit is 120 days, after which the defendant forfeits the right to file.

At the first hearing the court asks each side to admit or deny the other’s allegations (Order X), and then frames the issues, the points on which the parties disagree (Order XIV). Order X rule 1A then directs the parties to choose a settlement route under section 89, covered below. Order XVII allows a party no more than three adjournments during the hearing, and Order XX asks for judgment within 30 days of the hearing’s end, or in exceptional cases ordinarily within 60.

Two routes move faster. Order XXXIX lets a court issue a temporary injunction where property in dispute is in danger of being wasted, damaged or sold. Order XXXVII sets a summary procedure for suits on bills of exchange, promissory notes and fixed money debts under a written contract, where the defendant has ten days from the summons for judgment to seek leave to defend.

Section 11 stops the same dispute being tried twice. A court cannot try a suit or issue that was directly and substantially in issue in an earlier suit between the same parties and finally decided.

The clock starts at the breach, and appeals have clocks of their own

The Limitation Act, in force from 1 January 1964, says in section 3 that any suit, appeal or application filed after the prescribed period “shall be dismissed”, even if the defendant never raised limitation. Its Schedule sets the periods. A suit for compensation for breach of contract has three years from the breach (Article 55). A suit for specific performance has three years from the date fixed for performance, or from when the plaintiff learns performance is refused (Article 54). A suit for possession based on title gets 12 years from when the defendant’s possession becomes adverse to the plaintiff (Article 65), and section 27 extinguishes the right to the property when that period ends.

Appeals and applications, though not suits, can be admitted late for sufficient cause under section 5. An appeal from a decree goes to the court authorised to hear appeals (section 96), within 90 days if to a High Court and 30 days if to any other court (Article 116). A second appeal to the High Court lies only where the case involves a substantial question of law (section 100). A High Court can also call for a lower court’s record under section 115 for a jurisdictional error or a material irregularity. After a High Court, the Supreme Court article describes the routes.

A decree is enforced under section 51 by delivery of the property, attachment and sale, arrest and detention in prison within limits, or a receiver, and Article 136 allows 12 years to apply. The Supreme Court has also stopped the clock for everyone at once. In In Re: Cognizance for Extension of Limitation, its order of 10 January 2022 excluded 15 March 2020 to 28 February 2022 from limitation and gave anyone whose period would have run out in that window 90 days from 1 March 2022, or the longer balance if there was one.

Arbitration, commercial courts and mediation offer routes around a full trial

Section 89 of the Code, added by an Act of 1999 and in force from 1 July 2002, lets a court that sees elements of a settlement refer the dispute to arbitration, conciliation, judicial settlement including a Lok Adalat, or mediation. The Lok Adalat article covers the Lok Adalat route.

The Arbitration and Conciliation Act, in force from 22 August 1996, needs an arbitration agreement in writing. A court before which a suit is filed must refer the parties to arbitration if a party applies no later than its first statement on the substance of the dispute, unless there is prima facie no valid agreement (section 8). Since the 2019 amendment, section 29A asks for the award within 12 months of the end of pleadings, which the parties can extend by six months, after which only a court can extend. An award is enforced like a court decree (section 36). A challenge must be filed within three months, with up to 30 more for sufficient cause (section 34(3)). Filing a challenge does not by itself stop enforcement, though a 2021 proviso requires a stay where a prima facie case of fraud or corruption is made out.

The Commercial Courts Act, deemed in force from 23 October 2015, creates courts for commercial disputes such as export and import, construction contracts and shareholder agreements. Since 3 May 2018 the minimum value is Rs 3 lakh, down from Rs 1 crore. The same amendment added section 12A, which bars a suit that does not seek urgent interim relief until the plaintiff has tried pre-institution mediation, with three months allowed and two more by consent. On 17 August 2022 the Supreme Court held in Patil Automation v Rakheja Engineers that this is mandatory, effective from 20 August 2022, and that a plaint filed without it must be rejected.

The Mediation Act, 2023 received assent on 14 September 2023. PRS Legislative Research summarised the 2021 Bill as one that required people to attempt mediation before approaching a court or tribunal. As passed, section 5 says parties “may voluntarily and with mutual consent” try pre-litigation mediation. Mediation must end within 120 days of the first appearance before the mediator, extendable by up to 60. A settlement signed by the parties and authenticated by the mediator is enforceable as a decree (section 27), and it can be challenged only for fraud, corruption, impersonation or a dispute unfit for mediation, within 90 days plus up to 90 more (section 28).

The Centre notified a first group of sections, including those on the Mediation Council, on 9 October 2023 (S.O. 4384(E)). The India Code text, current to 6 October 2025, lists that as the only commencement notification, and sections 5, 18, 27 and 28 are not on it, so the Gazette is the place to check which sections now apply. On 27 August 2026 the Centre established the Mediation Council of India, with its head office in Delhi (S.O. 4781(E)).

What the National Judicial Data Grid shows for civil cases

The district courts’ side of the National Judicial Data Grid, read in October 2026, showed 1,12,20,972 civil cases pending. In the latest month the grid reports, 3,62,402 civil cases were filed and 4,70,739 were disposed of, so civil disposals ran ahead of new filings. Of the pending civil cases, 46,49,019 were under a year old and 8,12,030 were more than ten years old.