Corporate Infotech Pvt. Ltd. Vs Ezetap Mobiles Solutions Pvt. Ltd.

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NC: 2025:KHC:42702 WP No. 31979 of 2025

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IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 27^TH DAY OF OCTOBER, 2025 BEFORE

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THE HON'BLE MR. JUSTICE PRADEEP SINGH YERUR WRIT PETITION NO.31979 OF 2025 (GM-CPC)

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BETWEEN:

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CORPORATE INFOTECH PVT.LTD. HAVING ITS REGISTERED OFFICE AT: E-81, SECTOR 6, NOIDA UTTAR PRADESH-201 301 ALSO AT: A-16, BASEMENT JANGPURA EXTENSION MASJID ROAD NEW DELHI-110 014

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REPRESENTED BY ITS AUTHORIZED REPRESENTATIVE MR.M.KRISHNA MURTHY RAO SHINDHE S/O.SRI MAHADEVA RAO SHINDHE AGED ABOUT 49 YEARS E-MAIL: [email protected].

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…PETITIONER

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Digitally signed by GAVRIBIDANUR SUBRAMANYA GUPTA SREENATH

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Location: HIGH COURT OF KARNATAKA

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(BY SRI G.L.VISHWANATH, SENIOR ADVOCATE A/W. SRI B.C.VENKATESH, ADVOCATE)

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AND:

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EZETAP MOBILES SOLUTIONS PVT.LTD. HAVING ITS REGISTERED OFFICE AT: FIRST FLOOR, SJR CYBER, 22 LASKAR HOSUR ROAD ADUGODI BENGALURU-560 030 ALSO AT: L- 374, 5^TH MAIN ROAD SECTOR 6, HSR LAYOUT

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BENGALURU-560 102 REPRESENTED BY ITS AUTHORIZED REPRESENTATIVE MR.PUNEETH UPADHYAYA E-MAIL: [email protected]

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RAJCOMP INFO SERVICES LIMITED HAVING ITS REGISTERED OFFICE AT: 1^ST FLOOR, 'C' BLOCK YOJANA BHAWAN TILAK MARG, C-SCHEME JAIPUR-302 005 REPRESENTED BY ITS AUTHORIZED REPRESENTATIVE E-MAIL: [email protected]

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…RESPONDENTS

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(BY SRI PRADEEP NAYAK A/W. MS.NANDINI PATIL, ADVOCATES FOR C/R-1)

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THIS WRIT PETITION IS FILED UNDER ARTICLE 227 OF

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THE CONSTITUTION OF INDIA PRAYING TO SET-ASIDE THE ORDER DATED 02.06.2025 PASSED ON IA.NO.1 AND ORDER DATED 26.09.2025 PASSED ON IA.NO.3 IN COM.O.S.NO.1726/2024 BY LXXXIX ADDITIONAL CITY CIVIL AND SESSIONS JUDGE (COMMERCIAL COURT), BENGALURU VIDE ANNEXURES-A AND B RESPECTIVELY.

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THIS PETITION, COMING ON FOR ORDERS, THIS DAY, ORDER WAS MADE THEREIN AS UNDER:

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NC: 2025:KHC:42702 WP No. 31979 of 2025

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CORAM: HON'BLE MR. JUSTICE PRADEEP SINGH YERUR

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ORAL ORDER

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This petition is filed by defendant No.1 seeking the

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following prayer:

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"a. Call for records in Com.O.S. No. 1726/2024 pending on the file of the before the LXXXIX Addl. City Civil and Sessions Judge (Commercial Court), Bengaluru (CCH - 90);

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b. Set aside the Order dated: 02/06/2025 passed on I.A.No. 1 in Com.O.S. No. 1726/2024 by the LXXXIX Addl. City Civil and Sessions Judge (Commercial Court), Bengaluru (CCH - 90) vide Annexure - A;

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c. Set aside the Order dated: 26/09/2025 passed on I.A. No. 3 in Com.O.S. No. 1726/2024 by the LXXXIX Addl. City Civil and Sessions Judge (Commercial Court), Bengaluru (CCH - 90) vide Annexure - B;

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d. Consequently, allow the application filed under Order XXXVII Rule 3 read with Section 151 of the Code of Civil Procedure, 1908 (I.A. No.1) vide Annexure - A and grant the Petitioner leave to defend the suit in Com.O.S. No. 1726/2024 by the LXXXIX Addl. City Civil and Sessions Judge (Commercial Court), Bengaluru (CCH - 90).

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e. To grant such other reliefs as this Hon'ble Court may deem fit to grant in the circumstances of the case in the interest of justice."

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The petitioner is defendant No.1, respondent No.1

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herein is the plaintiff and respondent No.2 is defendant No.2 in Com.O.S.No.1726/2024 on the file of LXXXIX Additional City Civil and Sessions Judge, Bengaluru (for short, 'the Commercial Court').

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Brief facts of the case are as under:

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The plaintiff before the Commercial Court files a suit

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against the defendants seeking the following reliefs:

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"A. Payment of INR 2,88,29,115/- (Rupees Two Crore Eighty-Eight Lakh Twenty-Nine Thousand One Hundred and Fifteen only) by the Defendant No.1

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B. Payment of interest at the rate of 15% per annum from the due date of each invoice till the 10 December 2024, which is INR 2,46,55,254/(Rupees Two Crore Forty Six Lakhs Fifty Five Thousand Two Hundred and Fifty Four) by the Defendant No.1

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C. Payment of interest at the rate of 18% on the sum of reliefs sought at (a) and (b) above from the date of filing of this application till actual repayment by the Defendant No.1

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D. Payment towards the Plaintiff's legal costs incurred in this dispute by the Defendant No.1

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E. Any other order as this Hon'ble Court deems fit"

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3.1 The plaintiff filed a summary suit against the defendants for the reliefs as sought hereinabove. According to the plaintiff, the plaintiff was seeking recovery of debt due by defendant No.1 based on invoices and written contract raised from 16.11.2018 to 07.08.2019 amounting to total INR 2,88,29,115/- with contractual rate of interest @ 15% p.a. from the due date of each invoices till 10.12.2024, which is INR 2,46,55,254/- and interest @ 18% on the sum of reliefs sought above from the date of filing of the suit till actual payment.

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3.2 It is the case of petitioner-defendant No.1

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namely, Corporate Infotech Pvt. Ltd. that it is a Private Limited Company incorporated and registered under the Companies Act, 1956 and is involved inter alia in providing Digital Solutions and Software Services, Data Science and Analysis, Artificial Intelligence/Cloud Services, IT Infrastructure Consulting Services, Software Development

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etc. Defendant No.1 is registered in Delhi with the Registrar of Companies NCT of Delhi and Haryana in the year 2007-2008. It is also stated that defendant No.1, due to its outstanding services, has received many awards including from the best Company for the year 2022 as a Business Leader of the Year Award. It is also stated that defendant No.1 also received GeM Gold Certification on the basis of the Order Value and it also received the prestigious SME Channels Accelerator Award-Digital Transformation 2022 with as many as 26 awards and recognition since 2012-13. Defendant No.1 has strategic partnerships with big brands like Microsoft, NetApp, Dell, Cisco, IBM etc. and its customers including Indian Navy, IRCTC, ISRO, Rajasthan High Court, Indian Coast Guard etc.

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3.3 It is further stated that respondent No.1-plaintiff namely, Ezetap Mobile Solutions Pvt. Ltd. is inter alia in the business of providing payment solutions as well as

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developing and commercialising a mobile Point of Sale (PoS) solution for processing card payments.

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3.4 It is further stated that respondent No.2defendant No.2 namely, RajCOMP Info Services Limited, a Company wholly owned by the Government of Rajasthan having its Office at I Floor, C Block, Yojana Bhawan Tilak Marg, C-Scheme, Jaipur (Rajasthan) issued Request For Proposal (RFP) with reference No.F4.2(302)/RISL/Tech/ 2017-4811 dated 06.09.2017 for selection of system integrator for rate Contract for establishment of IT infrastructure for enabling Digital Payment.

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3.5 It is stated that as per clause 4.1(c) of the RFP, the selected bidder should have tie-up with the Banks in order to release Terminal ID (TID) to start the transaction. Further, if the selected bidder is not a financial service or a Payment Aggregator or an Original Equipment Manufacturer (OEM), a separate agreement shall be done between defendant No.2 and the Financial Service

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Provider/Payment Aggregator to meet the regulatory guidelines.

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3.6 It is stated that defendant No.1 applied for RFP as a channel partner of the plaintiff/Financial Services Provider/ Payment Aggregator. At the time of bid, defendant No.1 provided the undertaking and Manufacturer's Authorisation Form (MAF) to abide by the terms and conditions of the tender/RFP. The bidding was done by defendant No.1 for and on behalf of the plaintiff as per authority to defendant No.1 'to bid, negotiate and conclude' the contract. The authorisation provided by the plaintiff to defendant No.1 was submitted along with other documents and the authorisation issued by the plaintiff was part of the bidding document. Defendant No.1 is referred to as 'the Channel Partner' of the plaintiff. The Authorisation Letter was titled as MAF was issued by the plaintiff to defendant No.1 'to bid, negotiate and conclude' the contract.

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3.7 It is stated that defendant No.1 was declared as

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the successful bidder and awarded the tender and the first work order was issued by defendant No.2 in December, 2017.

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3.8. It is further stated that in terms of 4.1(c) of the RFP, there is no independent liability of defendant No.1 qua the plaintiff and in terms of the contract, defendant No.1 merely transfers to the plaintiff due payments received from defendant No.2 qua the services provided

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by the plaintiff to defendant No.2 subject to satisfactory completion of work. Therefore, it was treated as defendant No.1 was only a Channel Partner of the plaintiff and there is no direct or independent contractual liability of defendant No.1 to the plaintiff.

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3.9 It is further stated that as and when the payments were released by defendant No.2, defendant No.1 made proportional payments to the plaintiff as per the terms and conditions of the agreement. It is further stated that defendant No.1 was making payments in the

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nature of 'back-to-back' payments to the plaintiff as and

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when the payments are made by defendant No.2.

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3.10 It is further stated that defendant No.1 has raised numerous invoices on defendant No.2 as per RFP and even as on date, the invoices amounting to Rs.3,81,82,438/- remain unpaid by defendant No.2. If the invoices were cleared and released by defendant No.2, a sum of Rs.2,88,29,115/- was due and payable to the plaintiff from defendant No.1 and the balance was to be returned by defendant No.1.

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3.11 It is further stated that the entire transaction was a tripartite structure and it was structured to be completed in the same manner. There was no independent liability on defendant No.1.

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3.12 When such being the case, due to certain differences between the plaintiff and defendant No.1, the plaintiff filed a suit in Com.O.S.No.1726/2024 against the defendants in the nature of a summary suit. In the

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summary suit, defendant No.2 was placed ex parte and defendant No.1 appeared and filed an application in IA.No.1 under Order XXXVII Rule 3 read with Section 151 of CPC seeking to grant leave to defend the suit, to which the plaintiff filed statement of objections by way of counter affidavit to the said application. The said application came to be dismissed vide order dated 02.06.2025. Aggrieved by which, defendant No.1 is before this Court in this writ petition.

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It is the vehement contention of

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Sri G.L.Vishwanath, learned Senior Counsel along with Sri B.C.Venkatesh for petitioner-defendant No.1 that the impugned order passed by the Commercial Court is opposed to law and facts. It is an erroneous and illegal order and is liable to be set-aside as the same is without application of mind and the order has been passed mechanically without providing any opportunity to defendant No.1 to contest the case. It is further contended by learned Senior Counsel that the suit filed by the plaintiff

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itself is barred by law, so also, the Court does not have jurisdiction in view of the reference to Clause 12 of the Merchant Establishment Agreement and further as per the said agreement, 'Governing Law/Jurisdiction' reference to

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the procedure to be contemplated by way of Arbitration and Conciliation Act, 1996 and the place of arbitration, so also, the jurisdiction of the Court is at Jaipur.

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4.1 Learned Senior Counsel further contends that the suit is barred by law of limitation, so also, there is no cause of action for filing of the suit on the ground that no statutory notice has been issued under Section 80 of CPC to defendant No.2 before filing the suit. It is further contended that the plaintiff has concealed certain material facts with mala fide intention to file a summary suit for recovery by way of clever drafting. It is also further contended by learned Senior Counsel that the Commercial Court has committed a serious error and injustice by rejecting the leave to defend, thereby closing the entire case of defendant No.1 and failed to provide an

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opportunity to put-forth his case or defend the suit. The

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said impugned order is illegal, perverse and contrary to the facts and circumstances of the case, it is also in contravention of law and the agreement entered into between the parties, thereby denying the right of defendant No.1 to defend the case is erroneous and the same requires to be set-aside.

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4.2 It is further contention of learned Senior Counsel

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that the Commercial Court has committed an error in holding that defendant No.1 has failed to raise a substantial defence or triable issue to permit the leave to defend, which according to learned Senior Counsel is travesty of justice as the Commercial Court has failed to take into consideration several documents and the statement made in the affidavit with regard to the agreement between the plaintiff and defendant No.1 and with that of defendant No.2, so also, it is vehemently

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contended by learned Senior Counsel that considering the whole gamut of materials placed along with application for

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leave to defend and in the backdrop of the relationship

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with the plaintiff and defendant Nos.1 and 2, the Commercial Court ought to have taken holistic view on the document and tripartite relationship and agreement entered into between the parties. However, the Commercial Court has failed to consider the essence of contract between the parties and has come to erroneous conclusion that there is no substantial defence or triable issue.

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4.3 It is further contention of learned Senior Counsel

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that the Commercial Court has not appreciated and taken note of several clauses of the agreement between the plaintiff and the defendants and the limitation of the liability of defendant No.1 to make payment after receipt of the same from defendant No.2, so also, several contentions are raised by learned counsel for defendant No.1 with regard to non appreciation of the contentions and the grounds taken up by defendant No.1 in the application. However, the Commercial Court has

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mechanically dismissed the application without adverting

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to any of these factual aspects.

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4.4 Learned Senior Counsel further contends that no doubt, defendant No.1 had preferred a Commercial Appeal challenging the very same order passed by the Commercial Court and since Registry had raised issue of maintainability of the appeal, defendant No.1 sought leave of the Court to withdraw this petition in the event the appeal is held to be maintainable. During the course of arguments, learned Senior Counsel contends that he has withdrawn the appeal challenging the very same order.

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4.5 It is further contended by learned Senior Counsel that the Commercial Court has grossly erred in appreciating the facts and the documents by rejecting the application and pursuant to the rejection of the application, another application came to be filed seeking review of the order passed by the Commercial Court in not granting leave to defend, which also came to be

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dismissed, is again erroneous. Learned Senior Counsel

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during the course of arguments submits that since there is a back-to-back contract with the plaintiff as well as defendant No.2, it was the liability of the defendants to make good the payment to the plaintiff on the receipt of the amount from defendant No.2. Therefore, it was backto-back payment that was to be made by defendant No.1 to the plaintiff. It is also contended that the liability of payment by defendant No.1 to the plaintiff is only limited to the amount so received from defendant No.2 which also would be after set-off of penalty of any other amount due for payment to the plaintiff from the payment to be made

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by defendant No.2 to defendant No.1. Therefore, he contends that when defendant No.2 has not made the payment to defendant No.1, the question of defendant No.1 making the payment to the plaintiff does not arise.

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The Commercial Court has conveniently ignored all these aspects, which are borne in the agreement entered into between the parties while considering the application filed

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by defendant No.1. However, the Commercial Court has dismissed the said application in a mechanical manner without appreciating these relevant necessary facts and legal aspects and the contractual obligations.

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4.6 It is further contended that defendant No.1 has produced several documents to substantiate his claim to show that he has made out a valid and tenable ground to show that there is a substantial defence and that he is most likely to succeed in the case and so also, he has made out several triable issues. However, the Commercial Court, by ignoring all these aspects, dismissed the application in mechanical manner by holding that no ground is made out by defendant No.1 to show any substantial defence and any triable issue for consideration, which is liable to be set-aside.

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4.7 Learned Senior Counsel has relied upon the judgment of Honb'el Apex Court in the case of B.L.Kashyap & Sons Ltd. v. JMS Steels & Power

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Corpn. reported in (2022)3 SCC 294 . Hence, on the

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basis of these submissions, he seeks to allow this petition

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and set-aside the impugned order and allow the application by granting leave to defend to defendant No.1.

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Per contra , Sri Pradeep Nayak, learned counsel along with Ms.Nandini Patil, learned counsel for respondent No.1-plaintiff vehemently contends that there is absolutely no illegality or perversity in the order passed

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by the Commercial Court. It is contended that defendant No.1 has neither disputed the written acknowledgement of

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debt nor receipt of goods and provision of services. Therefore, defendant No.1 has failed to raise any substantial or reasonable defence and once defendant No.1 has admitted to the amount being due and payable to the plaintiff, then in a summary suit, there would not be substantial or reasonable defence for defendant No.1 or

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any triabale issue in view of the claim having been admitted by defendant No.1. It is also contended that the plaintiff has got issued Bank guarantee, hence, by

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defendant No.1's own conduct, he is liable to pay plaintiff

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for the supply of goods and provision of services.

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5.1 It is also contended by learned counsel that the plaintiff had attempted meeting at the insistence of defendant No1 with defendant No.2 to assist defendant No.1 in securing the payment, at which point, defendant No.2 had indicated that it has no contract agreement with the plaintiff and it can only be discussed with defendant No.1 and that the payment is due only from defendant No.1 to the plaintiff under the invoices raised by the plaintiff directly to defendant No.1.

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5.2 It is further contended by learned counsel for plaintiff that defendant No.1 has not made out any good ground or a valid reason to show any substantial defence or triable issue for the trial Court or this Court to grant to leave to defend as whatever stated may only be plausible, however, it looks improbable. On these grounds, he seeks dismissal of the petition.

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Having heard learned Senior Counsel for petitioner-defendant No.1 and learned counsel for respondent-plaintiff, the point that would arise for consideration before this Court is -

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"Whether the application filed by defendant No.1 for leave to defend deserves to be allowed?"

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It would be relevant to extract Sub-Rules (5) and provisions therein, (6) and (7) of Rule 3 of Order XXXVII of CPC as under:

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"3.Procedure for the appearance of defendant.xxxxxxxxxxxxxxxxxxxx

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(5) The defendant may, at any time within ten

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days from the service of such summons for judgment, by affidavit or otherwise disclosing such facts as may be deemed sufficient to entitle him to defend, apply on such summons for leave to defend such suit, and leave to defend may be granted to him unconditionally or upon such terms as may appear to the Court or Judge to be just:

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Provided that leave to defend shall not be refused unless the Court is satisfied that the facts disclosed by the defendant do not indicate that he has a substantial defence to raise or that the defence

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intended to be put up by the defendant is frivolous or vexatious:

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Provided further that, where a part of the amount claimed by the plaintiff is admitted by the defendant to be due from him, leave to defend the suit shall not be granted unless the amount so admitted to be due is deposited by the defendant in Court.

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(6) At the hearing of such summons for

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judgment,—

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(a) if the defendant has not applied for leave to defend, or if such application has been made and is refused, the plaintiff shall be entitled to judgment forthwith; or

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(b) if the defendant is permitted to defend as to the whole or any part of the claim, the Court or Judge may direct him to give such security and within such time as may be fixed by the Court or Judge and that, on failure to give such security within the time specified by the Court or Judge or to carry out such other directions as may have been given by the Court or Judge, the plaintiff shall be entitled to judgment forthwith.

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(7) The Court or Judge may, for sufficient

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cause shown by the defendant, excuse the delay of

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the defendant in entering an appearance or in applying for leave to defend the suit."

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At this stage, it would also be relevant to extract

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some of the principles laid down by the Hon'ble Apex Court in the case of B.L.Kashyap as stated supra , wherein paras-27 to 31 and 33 to 38 read as under:

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"Analysis

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27. For what has been noticed hereinbefore, two principal points call for determination in this appeal : one, as to whether the plaintiff was entitled to maintain a summary suit under Order 37 CPC for the claim in question; and second, as to whether the appellant-Defendant 2 has rightly been declined the leave to defend?

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28. The question concerning maintainability of the suit filed by the plaintiff as a summary suit under Order 37 CPC need not detain us much longer. This is for the simple reason that as per the plaint averment, the matter is based on written contract arising out of written purchase orders issued by the appellant on the instructions and on behalf of Defendant 1; and the plaintiff had raised the invoices against such supplies under the purchase orders. The plaintiff has further pointed out that two cheques were issued by Defendant 1 towards part-payment

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against the invoices, being Cheques No. 037274 dated 4-5-2015 in the sum of Rs 14,72,269 and No. 037272 dated 9-5-2015 in the sum of Rs 13,34,319.

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29. The assertion of the plaintiff had been of joint and several liability of the defendants. The question as to whether the appellant was acting only as an agent of Defendant 1 in relation to the supplies in question and had no monetary liability, as sought to be raised by the appellant, could be a matter of his defence. This aspect, relating to the nature of defence shall be examined in the next question but, such a proposition of defence by the appellant cannot take away the entitlement of Respondent 1-plaintiff to maintain the summary suit in terms of Order 37 CPC. This is apart from the fact that while asserting joint and several liability of the defendants, the plaintiff has also relied upon the cheques said to have been issued by Defendant 1, which were allegedly not presented as per the request of the said Defendant 1.

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30. In the overall facts and circumstances of the case, the contention against maintainability of the summary suit in terms of Order 37 CPC cannot be accepted and to that extent, we find no reason to consider any interference in the decision of the High Court. However, the question still remains as to

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whether the appellant is not entitled to leave to defend?

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31. In regard to the question of leave to defend, as noticed, the High Court has observed that the appellant would not be entitled to such leave because no triable issues were arising out of the defence sought to be taken by the appellant. The High Court has also observed that the defences were frivolous and vexatious; and were raised only in order to deny the just dues of seller of the goods i.e. the plaintiff. According to the High Court, while applying the principles for grant of leave to defend, as delineated in IDBI Trusteeship [IDBI Trusteeship Services Ltd. v. Hubtown Ltd., (2017) 1 SCC 568 : (2017) 1 SCC (Civ) 386], the appellant was not entitled to the leave to defend.

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32. xxxxxxxxxxx

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33. It is at once clear that even though in IDBI Trusteeship [IDBI Trusteeship Services Ltd. v. Hubtown Ltd., (2017) 1 SCC 568 : (2017) 1 SCC (Civ) 386], this Court has observed that the principles stated in para 8 of Mechelec Engineers case [Mechelec Engineers & Manufacturers v. Basic Equipment Corpn., (1976) 4 SCC 687] shall stand superseded in the wake of amendment of Rule 3 of Order 37 but, on the core theme, the principles remain the same that grant of leave to defend (with

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or without conditions) is the ordinary rule; and denial of leave to defend is an exception. Putting it in other words, generally, the prayer for leave to defend is to be denied in such cases where the defendant has practically no defence and is unable to give out even a semblance of triable issues before the court.

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33.1. As noticed, if the defendant satisfies the Court that he has substantial defence i.e. a defence which is likely to succeed, he is entitled to unconditional leave to defend. In the second eventuality, where the defendant raises triable issues indicating a fair or bona fide or reasonable defence, albeit not a positively good defence, he would be ordinarily entitled to unconditional leave to defend. In the third eventuality, where the defendant raises triable issues, but it remains doubtful if the defendant is raising the same in good faith or about genuineness of the issues, the trial court is expected to balance the requirements of expeditious disposal of commercial causes on one hand and of not shutting out triable issues by unduly severe orders on the other. Therefore, the trial court may impose conditions both as to time or mode of trial as well as payment into the court or furnishing security. In the fourth eventuality, where the proposed defence appears to be plausible but improbable, heightened conditions may be imposed as to the time or mode of

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trial as also of payment into the court or furnishing security or both, which may extend to the entire principal sum together with just and requisite interest.

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33.2. Thus, it could be seen that in the case of substantial defence, the defendant is entitled to unconditional leave; and even in the case of a triable issue on a fair and reasonable defence, the defendant is ordinarily entitled to unconditional leave to defend. In case of doubts about the intent of the defendant or genuineness of the triable issues as also the probability of defence, the leave could yet be granted but while imposing conditions as to the time or mode of trial or payment or furnishing security. Thus, even in such cases of doubts or reservations, denial of leave to defend is not the rule; but appropriate conditions may be imposed while granting the leave. It is only in the case where the defendant is found to be having no substantial defence and/or raising no genuine triable issues coupled with the court's view that the defence is frivolous or vexatious that the leave to defend is to be refused and the plaintiff is entitled to judgment forthwith. Of course, in the case where any part of the amount claimed by the plaintiff is admitted by the defendant, leave to defend is not to be granted unless the amount so admitted is deposited by the defendant in the court.

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33.3. Therefore, while dealing with an application seeking leave to defend, it would not be a correct approach to proceed as if denying the leave is the rule or that the leave to defend is to be granted only in exceptional cases or only in cases where the defence would appear to be a meritorious one. Even in the case of raising of triable issues, with the defendant indicating his having a fair or reasonable defence, he is ordinarily entitled to unconditional leave to defend unless there be any strong reason to deny the leave. It gets perforce reiterated that even if there remains a reasonable doubt about the probability of defence, sterner or higher conditions as stated above could be imposed while granting leave but, denying the leave would be ordinarily countenanced only in such cases where the defendant fails to show any genuine triable issue and the court finds the defence to be frivolous or vexatious.

¶203

34. When we apply the principles aforesaid to the facts of the present case and to the impugned orders [B.L. Kashyap & Sons Ltd. v. JMS Steel & Power Corpn., 2018 SCC OnLine Del 9047], it is at once clear that after finding the suit to be maintainable under Order 37 CPC because of assertion of the plaintiff about joint and several liability of the defendants, the High Court concluded

¶204

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NC: 2025:KHC:42702 WP No. 31979 of 2025

¶206

HC-KAR

¶207

that the defences were frivolous and vexatious. The trial court had observed that the defendants failed to raise any triable issues. It appears that while recording such conclusions, the trial court as also the High Court totally omitted to consider that the appellant-Defendant 2 has been contesting its liability with the assertion that it had only been the contractor executing the work of Defendant 1. Even as per the plaint averments and the plaintiff's assertions, Defendant 1 had made various payments from time to time against the supplies of the building material. The cheques, allegedly towards partpayment against the supplies made by the plaintiff, had been issued by Defendant 1. In the given set of circumstances, the conclusion of the High Court that the defence raised by the appellant was frivolous or vexatious could only be treated as an assumptive one and lacking in requisite foundation.

¶208

35. At this juncture, we may also refer to a significant feature of the case that Defendant 1- Respondent 2 herein had questioned the same judgment and decree of the trial court dated 18-9-2017 by way of a separate appeal, being RFA No. 743 of 2018, that was considered and dismissed by the High Court by the judgment and order dated 5-9-2018 [MIST Avenue (P) Ltd. v. JMS Steel & Power Corpn., 2018 SCC OnLine Del 11067].

¶209

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NC: 2025:KHC:42702 WP No. 31979 of 2025

¶211

HC-KAR

¶212

Interestingly, the High Court dismissed the said appeal with the finding that the defence raised by Defendant 1 was frivolous or vexatious and, in support of this finding, the High Court specifically gave the reason in the form of a query that if at all there was no liability of Defendant 1, where was the question of making payments regularly by Defendant 1 to the plaintiff?

¶213

36. It is at once noticeable that in contradistinction to the reasons stated qua Defendant 1 in the judgment and order dated 5-9-2018 [MIST Avenue (P) Ltd. v. JMS Steel & Power Corpn., 2018 SCC OnLine Del 11067], the High Court has merely observed in the impugned judgment and order dated 11-5-2018 [B.L. Kashyap & Sons Ltd. v. JMS Steel & Power Corpn., 2018 SCC OnLine Del 9047] concerning the present appellant i.e. Defendant 2, that the defences were frivolous or vexatious and were raised only to deny the just dues of the seller of goods. No reason has been assigned as to why and how the defence of the present appellant-Defendant 2 was treated as frivolous or vexatious. The effect and impact of an admitted position of the plaintiff, that payments were indeed made from time to time by Defendant 1, seems not to have gone into consideration of the trial court and the High Court while denying leave to the appellant.

¶214

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NC: 2025:KHC:42702 WP No. 31979 of 2025

¶216

HC-KAR

¶217

The same considerations, which weighed with the courts to deny the leave to defend to Defendant 1, could not have been applied ipso facto to the case of the appellant; rather those considerations, in our view, make out a case of triable issues qua the appellant.

¶218

37. In the totality of the circumstances of this case, we are clearly of the view that the appellant has indeed raised triable issues, particularly concerning its liability and the defence of the appellant cannot be said to be frivolous or vexatious altogether.

¶219

38. In the aforesaid view of the matter, we are inclined to hold that the appellant-Defendant 2 ought to have been granted the leave to defend the claim made in the suit concerning its liability; and to this extent, the impugned decree deserves to be set aside."

¶220

In the present case on hand, defendant No.1 has placed several materials before the Court to show the contractual obligation, agreements with the plaintiff as well as defendant No.2 and that defendant No.1 would be entitled to make payment to the plaintiff on receipt of the payment from defendant No.2. Now this will have to be

¶221

31 - NC: 2025:KHC:42702 WP No. 31979 of 2025

¶222

HC-KAR

¶223

gone into in the trial as several questions have been raised which appear to be substantial defence of defendant No.1 and in view of the same, they appear to be reasonable, genuine and triable issue before the Court. However, if the leave to defend is rejected, the petitioner-defendant No.1 would not be able to substantiate his case. All these aspects have been totally ignored by the Commercial Court and has dismissed the application mechanically in hurry and haste. Therefore, this Court is of the opinion that the Commercial Court ought to have considered the case of defendant No.1 for grant of leave to defend the case and considered all these contentions put-forth by defendant No.1 in the course of trial and dealt with the same in accordance with law on the basis of the factual documents produced and the law being applicable. The Commercial Court, having not done so, I am of the opinion

¶224

that the impugned order passed by the Commercial Court is liable to be set-aside and consequently, the application filed by defendant No.1 in IA.No.1 under Order XXXVII

¶225

32 - NC: 2025:KHC:42702 WP No. 31979 of 2025

¶226

HC-KAR

¶227

Rule 3 of CPC requires to be allowed granting leave to defendant No.1 to defend the matter.

¶228

During the course of arguments, learned Senior Counsel for defendant No.1 categorically submitted that he is only liable to pay Rs.1,50,00,000/- along with GST directly to the account of respondent No.1-plaintiff which he would do so within 10 days. However, with regard to amount he disputes, he would contest the matter.

¶229

This being the state of affairs, after hearing learned counsels for parties, when this Court were to pass the above said order and in the course of learned Senior Counsel for defendant No.1 agreeing to pay a sum of Rs.1,50,00,000/- along with GST to the respondentplaintiff and the plaintiff to accept the same, learned Senior Counsel receives an information from his colleague that the learned Judge of the Commercial Court has proceeded to decree the suit with costs without waiting for the outcome of this petition.

¶230

33 - NC: 2025:KHC:42702 WP No. 31979 of 2025

¶231

HC-KAR

¶232

It is relevant to mention at this stage that though this matter was listed continuously for two days, the matter could not be taken up as the Court time was over. However, at the request of learned Senior Counsel for petitioner-defendant No.1 expressing urgency that the Commercial Court has posted the matter for judgment by rejecting the application for grant of leave and to take up the matter on priority as the petition would itself become infructuous, if the judgment is passed by the Commercial Court. Therefore, this Court vide order dated 25.10.2025

¶233

pass the following order:

¶234

"Heard Sri G.L.Vishwanath, learned Senior Counsel appearing on behalf of Sri B.C.Venkatesh for petitioner and Ms.Anupama Hebbar, learned counsel for caveator-respondent No.1.

¶235

Learned counsel for petitioner submits that the Commercial Court listed the commercial suit from today i.e. 25.10.2025 to 27.10.2025.

¶236

Re-list this matter on 27.10.2025 on top of the

¶237

list.

¶238

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NC: 2025:KHC:42702 WP No. 31979 of 2025

¶240

HC-KAR

¶241

Parties are at liberty to mention before the Commercial Court on 27.10.2025 that the matter is seized before this Court."

¶242

Thereafter, this matter was taken up on 27.10.2025 on top of the list in view of urgency expressed by learned Senior Counsel for petitioner and on 27.10.2025, after coming to know about the order passed by the Commercial Court decreeing the suit of the plaintiff, this Court passed the following order:

¶243

"Heard Sri.G.L.Vishwanath, learned counsel for the petitioner and Sri.Pradeep Nayak, learned counsel for respondents.

¶244

On the previous date of hearing, this Court passed the following order:

¶245

"Heard Sri.G.L.Vishwanath, learned

¶246

Senior counsel appearing on behalf of Sri.B.C.Venkatesh for petitioner and Ms.Anupama Hebbar, learned counsel for caveator-respondent No.1.

¶247

Learned counsel for petitioner submits

¶248

that the Commercial Court listed the commercial suit from today i.e., 25.10.2025 to 27.10.2025.

¶249

35 - NC: 2025:KHC:42702 WP No. 31979 of 2025

¶250

HC-KAR

¶251

Re-list this matter on 27.10.2025 on top of the list.

¶252

Parties are at liberty to mention before the Commercial Court on 27.10.2025 that the matter is seized before this Court."

¶253

In the last portion of the order, this Court on the urgency expressed by the learned counsel for the petitioner ordered that the parties are at liberty to mention before the Commercial Court on 27.10.2025 i.e., today that the matter is seized before this Court.

¶254

Learned counsel for the respondents was also present when this order was passed in the open Court at 6.30 p.m. on Saturday i.e., on 25.10.2025. Hence, this Court listed the matter on top of the list to consider the urgency so expressed and has taken up the matter on priority at Sl.No.1.

¶255

When the matter is being argued from 10.30 a.m. in the fag end of arguments at 11.48 a.m., when this Court was about to pass the order, on the information received by learned counsel for the petitioner through his colleague, he submitted that the trial Court has proceeded to pass the judgment decreeing the suit with costs and the same is also informed by the learned counsel for the respondents.

¶256

Since the matter is seized before this Court, the trial Court could not have proceeded further,

¶257

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NC: 2025:KHC:42702 WP No. 31979 of 2025

¶259

HC-KAR

¶260

moreso when the same was ordered to be mentioned before the Commercial Court.

¶261

Under the circumstances, having heard the learned counsel for the petitioner and learned counsel for the respondents, this Court takes cognizance of the fact that the trial Court has decreed the suit with costs when the matter is seized before this Court, I pass the following:

¶262

ORDER

¶263

a) There shall be stay of the further proceedings in Commercial O.S.No.1726/2024 on the file of the LXXXIX Additional City Civil and Sessions Judge (Commercial Court), Bengaluru (CCH-90). The Commercial Court shall not proceed with release of the judgment thereof .

¶264

b) The Registrar (Judicial) of this Court shall secure the file in Commercial O.S.No.1726/2024 on the file of the LXXXIX Additional City Civil and Sessions Judge (Commercial Court), Bengaluru (CCH-90) and place it before this Court by 4.30 p.m. today i.e., 27.10.2025.

¶265

Thereafter, further orders would be passed by this Court.

¶266

Call the matter at 4.30 p.m. today."

¶267

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NC: 2025:KHC:42702 WP No. 31979 of 2025

¶269

HC-KAR

¶270

Upon summoning of the records of the

¶271

Commercial Court by the Registrar (Judicial) through a special messenger and on a perusal of the order sheet of the Commercial Court, on 25.10.2025, there is a note made by learned Judge in the order sheet that - 'Advocate for defendant No.1 filed a memo along with cause-list of the High Court'. The order sheet dated 25.10.2025 reads as under:

¶272

"Both counsels present.

¶273

Judgment not ready.

¶274

Call on for judgment by 27.10.2025."

¶275

On the next date of hearing i.e. on 27.10.2025,

¶276

there is note in the order sheet that - 'Advocate for defendant filed a memo stating that defendant No.1 filed WP.No.31979/2025 before the Hon'ble High Court'. The order sheet dated 27.10.2025 reads as under:

¶277

"'Plf counsel is present.

¶278

Representative of D1 present.

¶279

(Judgment pronounced in open Court vide separate sheets)

¶280

38 - NC: 2025:KHC:42702 WP No. 31979 of 2025

¶281

HC-KAR

¶282

ORDERS

¶283

The suit filed by plaintiff is hereby decreed

¶284

with costs.

¶285

The defendant No.1 alone is liable to pay to the plaintiff a sum of `. 2,88,29,115/- (Rupees Two Crores Eighty Eight Lakhs Twenty Nine Thousand One Hundred and Fifteen Only) together with future interest @ 18% p.a. from the date of suit till its realization.

¶286

Draw decree accordingly.

¶287

The office is hereby directed to send a copy of the judgment to the plaintiff through e-mail as per Order XX Rule 1 of CPC as amended by Section 167 of the Commercial Courts Act, 2015."

¶288

This Court summoned and secured the records of

¶289

the Commercial Court, it is noticed by this Court upon perusal of the same that the judgment has not been delivered except the operative portion of the order as stated hereinabove. In effect, there is no judgment in the file. This is a very serious disturbing trend as there is no judgment in the file and an order has been passed between 11.00 a.m. and 11.48 a.m. in the morning by the learned Judge of the Commercial Court.

¶290

39 - NC: 2025:KHC:42702 WP No. 31979 of 2025

¶291

HC-KAR

¶292

On a query posed to learned Senior Counsel for petitioner-defendant No.1 as to whether it was informed to the Commercial Court with regard to the matter being seized before this Court, he answers that as it was the first matter listed before this Court from 10.30 onwards, he and his colleague were before this Court and started arguing the matter, therefore, he could not go to the Commercial Court. However, defendant No.1 party was present before the Commercial Court and he had made the submission to that effect and so also, learned counsel for plaintiff was very much present before the Commercial Court, who was physically present before this Court when this Court made an order to inform the Commercial Court with regard to the matter being seized before this Court, so that, learned Judge of the Commercial Court does not proceed further till this matter is disposed of.

¶293

This Court is unable to understand as to what was the tearing hurry for the learned Judge of the

¶294

40 - NC: 2025:KHC:42702 WP No. 31979 of 2025

¶295

HC-KAR

¶296

Commercial Court to have decreed the suit in the morning session itself, when he was very much aware of the fact that aggrieved by the order passed by him, defendant No.1-petitioner had preferred a writ petition which was seized before this Court and an order specific to that extent is made by this Court vide its order dated 25.10.2025.

¶297

It is not a healthy thing for the Commercial Court to proceed further and to decree the suit with cost, when this Court has specifically made an order of the matter being seized before this Court. It is the trust in the judiciary, which is fading and if these kind of orders are passed despite the matter being seized before this Court, it certainly sends a bad message, which is not healthy but rather diminishes the image of judiciary as a whole. It also tarnishes the trust reposed by the litigants and Advocates on the Courts.

¶298

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¶299

NC: 2025:KHC:42702 WP No. 31979 of 2025

¶300

HC-KAR

¶301

Learned Judge of the Commercial Court in the

¶302

case on hand is hereby warned not to proceed with any

¶303

such manner without abiding and adhering to the orders passed by this Court.

¶304

Coming back to the present case on hand, in view of the events that have unfolded in the present case, including the conduct of the learned Judge of the Commercial Court in not adhering to the orders of this Court namely, to await the orders when specifically this Court stated that the "matter is seized before this Court", the proprietary demands the Commercial Court to have not proceeded to decree the suit with costs in the 1^st hour of the morning session itself.

¶305

It is appalling to see such conduct of the Presiding Officer of the Commercial Court. Further in view

¶306

of such conduct in the case on hand, it would not be appropriate to continue the matter in the very same Court as it may effect the parties.

¶307

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¶308

NC: 2025:KHC:42702 WP No. 31979 of 2025

¶309

HC-KAR

¶310

For the aforesaid reasons, this Court deems it appropriate to transfer this matter to another Court to be tried and decided in accordance to law from the stage as directed.

¶311

This Court also deems it necessary to direct the Registrar (Judicial), High Court of Karnataka, to place a copy of this order to the concerned Administrative Judge to take necessary action on the administrative side, if it so warrants.

¶312

In view of the discussions made herein above, I pass the following:

¶313

ORDER

¶314

i) This writ petition is allowed;

¶315

ii) The order dated 02.06.2025 passed on IA.No.1 filed under Order XXXVII Rule 3 of CPC read with Section 151 of CPC and the order dated 26.09.2025 passed on IA.No.3 filed under Order XLVII Rule 1 read with Section 114 of CPC passed in Com.OS.No.1726/2024 by LXXXIX Additional

¶316

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¶317

NC: 2025:KHC:42702 WP No. 31979 of 2025

¶318

HC-KAR

¶319

City Civil and Sessions Judge, Bengaluru, are hereby set-aside. However, the application in IA.No.1 filed by defendant No.1 before the Commercial Court seeking to grant leave to defend the suit in Com.O.S.No.1727/2024 is hereby allowed subject to following conditions:

¶320

a) The petitioner-defendant No.1 shall pay a sum of Rs.1,50,00,000/- (Rupees One Crore Fifty Lakhs Only) along with GST directly to the account of respondent No.1-plaintiff within a period of 10 (ten days) from today;

¶321

b) The details of the account shall be furnished by learned counsel for respondent No.1-plaintiff to learned counsel for petitioner-defendant No.1 during the course of the day or in couple of days;

¶322

iii) In view of the fact that the Commercial Court pronounced an order of decreeing the suit, the same will not be operational;

¶323

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NC: 2025:KHC:42702 WP No. 31979 of 2025

¶325

HC-KAR

¶326

iv) In view of the orders passed herein today, the Commercial Court shall proceed further in the matter by accepting the application filed by defendant No.1 for leave to defend;

¶327

v) Learned Principal City Civil and Sessions Judge, Bengaluru shall assign the matter in Com.OS.No.1726/2024 on the file of LXXXIX Additional City Civil and Sessions Judge, Bengaluru, to any other Commercial Court and both parties shall appear before the assigned Court on 20.11.2025 and the same shall be communicated to learned counsels for parties telephonically;

¶328

vi) The consequence of allowing the said application filed by defendant No.1 before the Commercial Court permitting him to leave to defend the suit, defendant No.1 would be at liberty to file written statement within a period of 30 days from the

¶329