The Delhi High Court has set aside a summary judgment passed by a Commercial Court, ruling that the power to decide a claim without recording oral evidence under Order XIII-A of the Code of Civil Procedure (CPC) cannot be exercised when the defence raises substantial disputes regarding liability that require evidentiary determination.
A Division Bench comprising Justice Anil Kshetarpal and Justice Amit Mahajan allowed the appeal filed by Cottage Industries Exposition Ltd., holding that the Commercial Court exceeded its jurisdiction by decreeing the suit without trial despite the existence of triable issues regarding the termination of tenancy and the offer of possession.
Background of the Dispute
The appeal arose from a commercial suit filed by the Respondents (landlords) seeking recovery of ₹12,97,540 along with interest. The Appellant was a tenant at a commercial premises in the DCM Building, Barakhamba Road, New Delhi, under a registered lease deed dated June 29, 2011. Subsequently, a Supplementary Lease Deed and a separate Consultancy Agreement were executed on July 8, 2015, which were agreed to be co-terminus.
The term of these agreements expired on June 30, 2018, but the Appellant continued in possession. Following the outbreak of the COVID-19 pandemic, the Appellant sought a waiver of rent in April 2020, which was declined by the Respondents. On June 9, 2020, the Appellant expressed its intention to vacate the premises and offered to hand over possession. The Respondents, however, insisted on the restoration of the premises before acceptance. Physical possession was ultimately handed over on February 9, 2021.
The Respondents filed a suit for arrears of rent and consultancy charges. During the pendency of the suit, the Commercial Court allowed the Respondents’ application under Order XIII-A of the CPC and passed a summary judgment on October 23, 2024, decreeing the suit. The Commercial Court held that the material documents were admitted by the Appellant and no triable issues existed.
Arguments Raised
The Appellant challenged the decree, arguing that the suit involved seriously disputed questions of fact that could not be adjudicated without trial. Specifically, the Appellant contended that issues regarding the termination of contractual obligations, the bona fide offer and refusal of possession, the liability to pay rent for the period between the offer of possession (June 2020) and actual handover (February 2021), and the entitlement to consultancy fees required the recording of evidence.
The Appellant submitted that the Commercial Court erroneously assumed that the mere admission of documents amounted to an admission of the liability flowing from them.
The Respondents supported the impugned judgment, asserting that the contractual documents stood admitted and established the liability, leaving no real prospect for the Appellant to defend the claim.
Court’s Observations and Analysis
The High Court examined Order XIII-A Rule 3 of the CPC, which empowers a Court to give a summary judgment if it considers that the defendant has “no real prospect of successfully defending the claim” and there is “no compelling reason” for the claim not to be disposed of before recording oral evidence.
The Bench observed that the Appellant’s Written Statement was “neither evasive nor a bare denial.” The Court noted that the Appellant had specifically pleaded that the agreements expired by efflux of time and that it had unequivocally offered to vacate the premises on June 9, 2020.
Distinction from Ramanand v. Dr. Girish Soni
The Commercial Court had relied on the Delhi High Court’s decision in Ramanand and Ors. v. Dr. Girish Soni and Anr. (2020) to reject the Appellant’s defence. The Division Bench, however, held that this reliance was misplaced.
The Court clarified that Ramanand dealt with cases where tenants sought suspension of rent while retaining possession. In contrast, the Appellant in the present case had elected to vacate and offered possession.
The Court observed:
“The Commercial Court, in placing reliance on Ramanand (Supra), failed to notice this material shift in the Defendant’s position and proceeded to address the plea of force majeure divorced from the defence pressed. Whether rent or other charges could be fastened for the period after offer and before acceptance of possession raised mixed questions of fact and law, which could not have been summarily determined and required adjudication after recording evidence.”
Scope of Summary Judgment
Addressing the reliance on SU-KAM Power Systems Ltd. v. Kunwer Sachdev, the Bench reiterated that summary judgment is permissible only when the material on record enables the Court to “confidently find the necessary facts.”
The Court stated:
“The mere fact that contractual documents exist does not, by itself, justify a summary decree when the liability flowing therefrom is seriously contested.”
The Bench held that disputes regarding the cessation of rent liability upon the offer of vacation, and whether consultancy services were actually availed or payable under a separate agreement, went to the root of the parties’ obligations.
Furthermore, the Court noted that the Commercial Court’s award of interest on the entire amount claimed, including pre-suit interest, raised legal questions regarding the “principal sum adjudged” under Section 34 of the CPC, which itself constituted a compelling reason for trial.
Decision
The High Court concluded that the Commercial Court “exceeded the permissible limits of jurisdiction under Order XIII-A of the CPC.”
The Bench set aside the judgment and decree dated October 23, 2024, and restored the suit to its original number. The parties have been directed to appear before the Commercial Court on February 17, 2026, for the framing of issues and leading of evidence.
Case Details:
Case Title: Cottage Industries Exposition Ltd. v. Dinesh Dayal & Ors.
Case Number: RFA(COMM) 56/2025
Coram: Justice Anil Kshetarpal and Justice Amit Mahajan
