Commercial Court’s Summary Decree Under Order XIII-A Is Set Aside; Suit Restored for Trial

A Division Bench of Justice Anil Khetarpal and Justice Amit Mahajan heard the appeal against a Commercial Court decree which had granted summary judgment under Order XIII‑A of the Code of Civil Procedure for recovery of Rs.12,97,540. The challenge arose from a suit by landlords for rent and consultancy charges against a tenant-company, and the principal question was whether the Commercial Court rightly concluded that the defendant had "no real prospect" of successfully defending the claim, thereby warranting disposal without recording oral evidence.

The High Court allowed the appeal, set aside the impugned summary judgment and restored the suit for trial, holding that the exercise of jurisdiction under Order XIII‑A was exceptional and had been improvidently invoked. The Court emphasised that summary adjudication could not follow merely from admission of documents and observed that the Commercial Court had not satisfied the statutory test whether the defence was such that the defendant stood “completely shut out” from defending the claim. The Court, in its reasoning, observed: “The jurisdiction under Order XIII‑A of the CPC is exceptional in nature and must be exercised with circumspection. The provision does not contemplate dispensation of trial merely because documents are admitted; rather, it requires the Court to examine whether, even on the defence pleaded, the Defendant stands completely shut out from defending the claim. Where the defence raises disputes which go to the root of liability and require adjudication upon evidence, the matter would plainly fall outside the scope of the permissible ambit of summary judgment under Order XIII‑A of the CPC.” The Bench further recorded that the Commercial Court “exceeded the permissible limits of jurisdiction under Order XIII‑A of the CPC.”

Background The dispute arose from a registered lease deed dated 29.06.2011 for commercial premises and a Supplementary Lease Deed and Consultancy Agreement both dated 08.07.2015, which the parties agreed would be co‑terminus. The agreements expired on 30.06.2018, but the landlords alleged that the tenant continued in possession and remained liable for rent and consultancy fees; the tenant disputed subsistence of the agreements and admitted payments up to March/February 2020. Following the COVID‑19 outbreak, the tenant sought waiver of rent by letter dated 23.04.2020; the request was refused and the tenant thereafter offered to vacate by letter dated 09.06.2020. Possession was handed over on 09.02.2021 and a possession letter recorded an adjustment of security deposit while preserving disputes.

The landlords sued for Rs.12,97,540 and moved under Order XIII‑A for summary judgment, relying on admitted contractual documents and communications. The Commercial Court allowed that application and decreed the suit with interest at 12% p.a. The tenant appealed, contending that its written statement and reply disclosed substantive, bona fide and triable disputes — including whether the agreements subsisted, whether liability continued after offer of possession which was not immediately accepted, and whether consultancy services were rendered — and that these matters required evidence.

On appeal the High Court analysed the statutory test in Rule 3 of Order XIII‑A and concluded that the Written Statement was neither evasive nor a bare denial and raised issues going to the root of liability. The Bench found that the Commercial Court had relied unduly on the admitted existence of documents and certain precedents (Ramanand; SU‑KAM; Best Choice) without applying the necessary inquiry into whether the defence had any real prospect of success. The High Court distinguished earlier authorities relied upon by the Commercial Court, held that mixed questions of fact and law (including post‑offer liability and the scope of consultancy charges) required trial, and noted that legal questions about the award of interest further militated against summary disposal. The appeal was allowed, the impugned judgment and decree were set aside, and the suit was restored to its original number with directions to proceed to trial; the Court left all rights and contentions open. The parties were directed to appear before the Commercial Court on 17.02.2026.

Case No.: RFA(COMM) 56/2025 Case Title: Cottage Industries Exposition Ltd. v. Dinesh Dayal & Ors. Appearances: For the Petitioner(s): Mr. Anunaya Mehta, Mr. Inder S. Adhikari and Mr. Vidhan Malik, Advocates. For the Respondent(s): Mr. Sunil Mittal, Senior Advocate with Ms. Seema Seth, Advocate.