Delhi HC Decrees Commercial Suit After Defendants Fail to Launch Products or Refund Investments

In a decisive ruling, the Delhi High Court has decreed a commercial suit in favor of the plaintiff after the defendants failed to launch products or refund investments as per a formal licensing agreement. M/S. Steelbird Hi-Tech India Ltd. V. M/S. Global Fragrances Pvt. Ltd. & Others was adjudicated by Justice Tushar Rao Gedela, who observed that the defendants had no real prospect of defending the claim after their written statement was struck off for non-payment of costs.

Court Rationale on Summary Judgment and Commercial Defaults

A bench of Justice Tushar Rao Gedela heard the application filed by the plaintiff seeking a summary judgment under Order XIIIA of the Commercial Courts Act, 2015. The Court noted that the defendants had admitted crucial documents, including the licensing agreement, yet failed to fulfill their contractual obligations. The bench highlighted the persistent non-appearance and lack of representation by the defendants, which eventually led them to be proceeded ex-parte.

Regarding the legal threshold for summary disposal, the Court, in its reasoning, observed: "...Rule 3 of Order XIIIA CPC provides for grounds which are required for passing a summary judgment by a Court. Clause(a) of Rule 3 therein provides that a summary judgment may be passed in case a Court considers that 'the defendant has no real prospect of successfully defending the claim' and Clause (b) provides 'there is no other compelling reason why the claim should not be disposed of before recording of oral evidence'."

Specific Directions Issued by the Court

The Court has the following directions:

"36. The interest stipulated at the rate of 24% appears to be excessive and it would be just and fair to grant interest of 18% per annum. Therefore, the plaintiff is found entitled to refund of a sum of Rs.2 Crores with interest at the rate of 18% per annum from 18.10.2016 till the date of filing of the suit, payable jointly and severally by the defendants. The plaintiff is also entitled to a sum of Rs.1,32,74,999/- towards AMG for the period commencing from October 2015 till October 2017 and interest at the rate of 18% per annum from the dates due, up to the date of filing of the suit, payable jointly and severally by the defendants.

37. The plaintiff shall also be entitled to interest pendente lite and future interest at the rate of 12% per annum till the date of realisation on the decretal amount, payable jointly and severally by the defendants."

Background:

The dispute arose from an agreement executed on 06.10.2015 between the plaintiff and the defendants for manufacturing and marketing skincare products under the trademarks 'ORB' and 'STEELBIRD'. The plaintiff remitted a total of Rs. 2 Crores as an initial investment. However, despite multiple extensions and assurances, the defendants failed to launch the products.

The plaintiff terminated the agreement via legal notice in October 2016, seeking a refund and Annual Minimum Guaranteed (AMG) payments as stipulated in the contract. The defendants' written statement was taken off the record due to non-compliance with costs imposed under Rule 4 of Chapter VII of the Delhi High Court (Original Side) Rules, 2018. Furthermore, the Court noted that under Section 151 of the Code of Civil Procedure, 1908, the application for summary judgment was maintainable. Given the admission of the agreement and the lack of a valid defense, the Court allowed the application, awarding a decree for the principal amount, AMG, and interest.

Case Details:
Case No.: CS(COMM) 493/2018 & I.A. 2150/2018
Case Title: M/S. STEELBIRD HI-TECH INDIA LTD. v. M/S. GLOBAL FRAGRANCES PVT. LTD. & OTHERS
Appearances:
For the Petitioner(s): Mr. Kamal Bansal and Ms. Bhumani Tyagi, Advocates.
For the Respondent(s): None

Source: 2026 CaseBase(DEL) 425