High Court of Karnataka Allows Appeal Against Ex Parte Decree in Commercial Suit — Appellant Granted Leave to Contest on Merits Subject to Deposit of 25% of Decretal Amount. Setting Aside of Ex Parte Decree Conditioned on Payment of Costs and Deposit to Secure Plaintiff's Interest Under Order IX Rule 13 CPC.

High Court: Karnataka High Court Bench: BENGALURU In Favour of Accused

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2026-05-18 17:14:00

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Case Note & Summary

The appellant, M/s Sugam Packing Industries, was the defendant in a commercial suit (Com.O.S.No.15/2024) filed by the respondent, M/s Tiwnkle Impex, seeking recovery of Rs.22,24,624/- with interest at 24% p.a. from the date of invoices and 1% per day from legal notice till realization. The suit was decreed ex parte on 29.06.2024. The appellant filed an application (Com.Misc.No.66/2024) under Order IX Rule 13 CPC to set aside the ex parte decree, contending that the suit was filed in a different court (LXXXII Additional City Civil and Sessions Judge, Commercial Court, Bengaluru) whereas the appellant had previously appeared in a different court (LXXXI Additional City Civil and Sessions Judge) in a related matter, and the appellant was under a bona fide belief that the matter was being pursued in the earlier court. The Commercial Court dismissed the application on 27.10.2025, holding that the appellant failed to appear despite service. The appellant appealed under Section 13(1-A) of the Commercial Court Act, 2015 read with Section 37(1)(c) of the Arbitration and Conciliation Act, 1996. The High Court of Karnataka allowed the appeal, set aside the order of the Commercial Court, and allowed the application to set aside the ex parte decree subject to the appellant depositing 25% of the decretal amount (Rs.5,56,156/-) within four weeks and paying costs of Rs.5,000/- to the respondent. The Court directed the Commercial Court to restore the suit to its original number and dispose it of expeditiously, preferably within six months. The Court held that the appellant had shown sufficient cause for non-appearance and that the interests of justice required giving the appellant an opportunity to contest the suit on merits.

Headnote

A) Civil Procedure - Setting Aside Ex Parte Decree - Order IX Rule 13 CPC - Sufficient Cause - The appellant-defendant sought to set aside an ex parte decree passed in a commercial suit for recovery of money. The Commercial Court dismissed the application on the ground that the appellant failed to appear despite service. The High Court held that the appellant had shown sufficient cause for non-appearance as the suit was filed in a different court than where the appellant had previously appeared, and the appellant was under a bona fide belief that the matter was being pursued in the earlier court. The Court set aside the order and allowed the application subject to deposit of 25% of the decretal amount and payment of costs. (Paras 1-10)

B) Commercial Law - Recovery Suit - Interest Rate - The plaintiff claimed interest at 24% p.a. from invoice date and 1% per day from legal notice till realization. The High Court did not adjudicate on the merits of the claim but noted the high rate of interest as a factor in imposing a condition for deposit. (Paras 3-4)

C) Arbitration and Conciliation Act 1996 - Appeal under Section 37(1)(c) - Maintainability - The appeal was filed under Section 13(1-A) of the Commercial Court Act, 2015 read with Section 37(1)(c) of the Arbitration and Conciliation Act, 1996, challenging the order dismissing the application to set aside ex parte decree. The High Court entertained the appeal and allowed it. (Para 1)

Issue of Consideration

Whether the Commercial Court erred in dismissing the application under Order IX Rule 13 CPC for setting aside the ex parte decree without considering the appellant's explanation for non-appearance and whether the appellant should be permitted to contest the suit on merits.

Final Decision

Appeal allowed. Order dated 27.10.2025 passed by the Commercial Court in Com.Misc.No.66/2024 is set aside. The application under Order IX Rule 13 CPC is allowed subject to the appellant depositing 25% of the decretal amount (Rs.5,56,156/-) within four weeks and paying costs of Rs.5,000/- to the respondent. The Commercial Court is directed to restore the suit to its original number and dispose it of expeditiously, preferably within six months.

Law Points

Setting aside ex parte decree
Order IX Rule 13 CPC
Commercial Court Act 2015
Section 13(1-A) Commercial Court Act
Section 37(1)(c) Arbitration and Conciliation Act 1996
Sufficient cause for non-appearance
Conditional order
Deposit of decretal amount

Case Details

2025 LawText (KAR) (11) 17

COMAP No. 593 of 2025

2025-11-07

Vibhu Bakhru, Chief Justice, C.M. Poonacha

Sri Sagar B B (for appellant), Sri Anish P Bhojani (for respondent)

M/s Sugam Packing Industries

M/s Tiwnkle Impex

Nature of Litigation

Commercial appeal against order dismissing application to set aside ex parte decree in a recovery suit.

Remedy Sought

Appellant sought setting aside of ex parte decree dated 29.06.2024 and permission to contest the suit on merits.

Filing Reason

Appellant failed to appear in the suit due to bona fide belief that the matter was pending in a different court, leading to ex parte decree.

Previous Decisions

Commercial Court dismissed the application (Com.Misc.No.66/2024) on 27.10.2025.

Issues

Whether the appellant had sufficient cause for non-appearance to set aside the ex parte decree under Order IX Rule 13 CPC. Whether the Commercial Court erred in dismissing the application without considering the appellant's explanation.

Submissions/Arguments

Appellant argued that the suit was filed in a different court than where the appellant had previously appeared, and the appellant was under a bona fide belief that the matter was being pursued in the earlier court. Respondent opposed the application, contending that the appellant was duly served and failed to appear without sufficient cause.

Ratio Decidendi

An ex parte decree can be set aside if the defendant shows sufficient cause for non-appearance. In this case, the appellant's bona fide belief that the suit was pending in a different court constituted sufficient cause. However, to balance the interests of the plaintiff, the court may impose conditions such as deposit of a portion of the decretal amount and payment of costs.

Judgment Excerpts

The appellant has filed the present appeal impugning an order dated 27.10.2025 passed by the learned Commercial Court in Com.Misc.No.66/2024. It is material to note that the aforementioned suit being Com.O.S.No.15/2024, was instituted by the respondent [plaintiff], inter alia, seeking a decree for a sum of Rs.22,24,624/-... The appellant had shown sufficient cause for non-appearance and that the interests of justice required giving the appellant an opportunity to contest the suit on merits.

Procedural History

The respondent filed a commercial suit (Com.O.S.No.15/2024) for recovery of money. The suit was decreed ex parte on 29.06.2024. The appellant filed an application (Com.Misc.No.66/2024) under Order IX Rule 13 CPC to set aside the ex parte decree, which was dismissed by the Commercial Court on 27.10.2025. The appellant then filed the present commercial appeal under Section 13(1-A) of the Commercial Court Act, 2015 read with Section 37(1)(c) of the Arbitration and Conciliation Act, 1996.