1. Appeal against ex-parte decree in a commercial suit for recovery of money paid under various property-related transactions. (Para 1 , 2 , 3 )
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2026 Supreme(Online)(Del) 20078
IN THE HIGH COURT OF DELHI AT NEW DELHI
Prathiba M. Singh, Vikas Mahajan, JJ
Ritu Goel – Appellant
Versus
Kamlesh – Respondent
RFA(COMM) 248/2026 | CM APPL. NO. 58346/2026
Advocates:
For the Appellants/Petitioners: Vasu Bhushan, Gautam Sharma, Parmeet Gupta, Manasi Bhushan
For the Respondents: Keshav Sehgal, Mayank Maini, Shivam Verma, Nidhi Tyagi
For the Appellants/Petitioners: Vasu Bhushan, Gautam Sharma, Parmeet Gupta, Manasi Bhushan
For the Respondents: Keshav Sehgal, Mayank Maini, Shivam Verma, Nidhi Tyagi
Execution of a vakalatnama proves service of summons, and a party cannot withdraw an appeal after it has been heard on merits to avoid a decree or pursue parallel remedies based on false claims of non-service.
Headnote:(A) Civil Procedure - Service of Summons - Execution of Vakalatnama - The execution of a vakalatnama by a defendant in a suit constitutes sufficient evidence of service, rendering a subsequent plea of non-service in an appeal unsustainable. (Para 34, 35, 37)
(B) Recovery Suit - Cash Transactions - Liability - Acknowledgment of debt through the issuance of post-dated cheques establishes a liability to discharge; potential violations of the Income Tax Act regarding cash transactions may lead to separate administrative action but do not entitle the debtor to the rejection of a recovery claim. (Para 47, 48)
(C) Civil Procedure - Withdrawal of Appeal - Order XXIII Rule 1 CPC - An application for withdrawal of an appeal after the matter has been heard on merits and reserved for judgment, especially when intended to avoid a decree or pursue a parallel remedy under Order IX Rule 13 CPC based on false grounds, is malafide and liable to be rejected. (Para 66, 71, 73)
Issues: Whether the ex-parte decree was sustainable given the plea of non-service and whether the appeal could be withdrawn after hearing on merits.
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Table of Contents
2. Appellants argued they were not served; alternative remedy of Order IX Rule 13 was available. (Para 28 , 34 , 46 )
3. Both appellants executed vakalatnamas; stand of non-service was false. The evidence went unrebutted. (Para 35 , 36 , 37 , 49 )
4. Issuance of post-dated cheques reaffirms liability even if underlying payment was in cash. Decree upheld. (Para 48 , 49 )
5. Appeal dismissed; application for withdrawal of appeal dismissed with costs. (Para 54 , 75 )
6. Can an ex-parte decree be challenged by appeal when the defendant was duly served?
No. The court held that when a defendant has executed a vakalatnama and was served, the appeal on ground of non-service is false and cannot be sustained. (Para 37 )
7. Does payment in cash in violation of the Income Tax Act bar recovery of the amount under a civil suit?
No. The receipt of money is acknowledged and reaffirmed by the issuance of post-dated cheques, so recovery is not barred even if there is a cash transaction violation. (Para 48 , 49 )
8. Can a plaintiff withdraw an appeal at the stage of judgment after full hearing?
Not as a matter of right. The court has discretion and must consider if such withdrawal nullifies findings in favour of the defendant or wastes judicial resources. (Para 68 , 74 )
JUDGEMENT
Prathiba M. Singh, J.
1. The present appeal has been filed by the Appellants under Section 13 of the Commercial Courts Act, 2015, inter alia, challenging the impugned judgment and decree dated 3rd February, 2026 (hereinafter, ‘the impugned judgment) passed by the Id. District Judge (Commercial Court)-02, North-West District, Rohini Courts in CS(Comm) 195/2024.
2. Vide the impugned judgement, a decree has been passed against the Appellants for a sum of Rs. 1,22,00,000/- along with interest at the rate of 12% per annum, in the following terms:
“26. (i) In view of the above, since the plaintiffs have confined their claim to the amount of Rs.1,22,00,000/-, a decree in the aforesaid sum along with interest @ 12% per annum from the date of filing of the suit till recovery till recovery is passed in favour of plaintiffs and against the defendants.
(ii) Plaintiffs are entitled to costs of the suit. Plaintiffs are further entitled to counsel’s fee which is quantified as Rs.1,00,000/-.”
FACTUAL BACKGROUND:
3. The background of the case is that the Plaintiffs before the ld. Trial Court – Mrs. Kamlesh and Mr. Ved Prakash instituted a commercial suit for recovery of a sum of Rs.1,55,67,200/- along with interest, against the following Defendants:
Mr. Kamal Goel
Ms. Ritu Goel (Wife of Mr. Kamal Goel)
Mr. Sanchit Goel (Nephew of Mr. Kamal Goel)
4. The Plaintiffs, who are husband and wife, were jointly running a shop by the name Arya Tailoring Material at D-12/178, Ground Floor, Sector-7, Rohini, Delhi-110085. Defendant No.1 was running a shop by the name ‘Pick and Play’ in the same vicinity at D-12/158, Ground Floor, Sector-7, Rohini, Delhi-110085.
5. Defendant Nos. 2 and 3, being the wife and nephew of Defendant No.1 were also involved in the day-to-day business at the Defendants’ shop. According to the plaint, Defendants No. 1 & 2 had represented themselves to be the absolute owners of D-12/158, Ground Floor, Sector-7, Rohini, Delhi-110085.
6. During this time, it is alleged that the Defendants had managed to win the trust of the Plaintiffs and they had developed a close knit relationship, due to which the Plaintiffs shared with the Defendants, the information about owning another property in the same vicinity, i.e. D-12/1, Sector-7, Rohini, Delhi-110085.
7. It is the case of the Plaintiffs that from time to time, different proposals were received by them from the Defendants. Initially, the proposals were for conduct of some overseas business in Dubai or investing in property in Dubai and thereafter, for being partners in the Defendants’ business. On the basis of prime location of their shop, i.e. D-12/158, Ground Floor, Sector-7, Rohini, Delhi-110085, the Defendants also proposed to sell the said property to the Plaintiffs.
8. During these discussions, the Plaintiffs are stated to have initially paid to the Defendants an amount of Rs.2,50,000/- in March, 2022 and thereafter, a security agreement was entered into, dated 1st April, 2022, for a tenure of 2 years, with respect to the property being D-12/158, Ground Floor, Sector-7, Rohini, Delhi-110085.
9. Thereafter, the proposal was for selling a property belonging to the Plaintiffs, namely, D-12/1, Sector-7, Rohini, Delhi-110085 and upon this deal being agreed to, various amounts are stated to have been paid by the Plaintiffs to the Defendants towards such transaction.
10. After receiving an initial amount of Rs.40 lakhs, this transaction which was meant for D-12/1, Sector-7, Rohini, Delhi-110085 was thereafter re-negotiated for sale of the Defendants’ shop being D-12/158, Ground Floor, Sector-7, Rohini, Delhi-110085 itself. In view of the close proximity of the Defendants’ shop and the Plaintiffs’ shop, the Plaintiffs are stated to have decided to pay further amounts to the Defendants to purchase the Defendants’ shop.
11. Accordingly, till May, 2022, the Plaintiffs had paid a sum of Rs.69,75,000/- to the Defendants. Despite the said amounts being paid, according to the
