Isourse Technologies Pvt Ltd vs Jsr Netsol Pvt Ltd

Court
Delhi High Court

$~65
* IN THE HIGH COURT OF DELHI AT NEW DELHI
Date of decision: 12.10.2026
# CNR No. DLHC010494082026
+ RFA(COMM) 691/2026 & CM APPL. 71225/2026
ISOURSE TECHNOLOGIES PVT LTD .....Appellant
Through: Ms. Manisha Tyagi, Mr. Sachin
Dhamija, Advs.

versus

JSR NETSOL PVT LTD .....Respondent
Through: None.

CORAM:
HON'BLE MR. JUSTICE SUBRAMONIUM PRASAD
HON'BLE MS. JUSTICE RENU BHATNAGAR
JUDGMENT (ORAL)

CM APPL. 71226/2026 - Exemption
1. Allowed subject to all just exceptions.
2. Accordingly, the applications stand disposed of.
RFA(COMM) 691/2026
3. The present appeal has been filed under Section 96 of the Code
of Civil Procedure, 1908 (“CPC”), read with Section 13(1) of the
Commercial Courts Act, 2015, and Order XLI of the CPC,
challenging the judgment and decree dated 30.07.2026 (“Impugned
Order”) passed by the learned District Judge, Commercial Court-03,
Dwarka Courts, New Delhi (“Trial Court”) in CS (COMM.) No.
380/2025.
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4. By the Impugned Order, the learned Trial Court rejected the
application for leave to defend filed by the appellant herein and
consequently passed a decree for the amount claimed in the plaint.
5. Shorn of unnecessary details, the facts of the case reveal that the
respondent-plaintiff instituted a summary suit under Order XXXVII of
the CPC against the appellant-defendant. The relevant facts and
proceedings are as follows:
i. The respondent engaged in the business of providing IT
solutions, including procurement and supply of software
licenses, hardware, and related services across the country.
ii. It is the case of the respondent that a contract was entered
into between the respondent and the appellant herein for
renewal of existing VMware software licence.
iii. That the Purchase Order No. PO/2024-25/4449 dated
13.08.2024 was issued for “ VMware vSphere Standard 8.64
Core ” setting out the product and quantity.
iv. It is the case of the respondent that the purchase order does
not refer to any specific licence type such perpetual or SaaS
software.
v. It is the case of the respondent that the correspondence took
place between the respondent and the appellant, whereby,
the software licence was delivered, activated and
provisioned with effect from 02.08.2024 for the period of
one year i.e., from 02.08.2024 to 01.08.2025. Invoice, in this
regard, was raised by the respondent on 23.09.2024 for a
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sum of Rs. 3,02,080/- .
vi. It is the case of the respondent that they had procured a
licence from its distributor, Tech Data Advance Private
Limited, who in turn had raised its own invoice dated
20.09.2024 against PO ID 2408134 for which, the payment
was required to be made by the respondent.
vii. It is the case of the respondent that at no point of time during
the delivery, the acceptance, or at the time the invoice was
raised, that the appellant had raised any issue or had given
any communication regarding any grievance over the nature
or the form of the licence supplied.
viii. It is the case of the respondent that several reminders were
made for the due payments. A legal notice was also issued
which was not replied to.
ix. Subsequently, a pre-institution mediation, mandatory under
Section 12A of the Commercial Courts Act, 2015, was
initiated by the respondent. The appellant did not participate
in the said mediation, resulting in a “non-starter” report and
a suit under Order XXXVII of the CPC was filed by the
Respondent.
x. After receiving summons, the appellant filed the application
for leave to defend. The case of the appellant in the
application for leave to defend is that the Plaintiff had
supplied a different product and not the product which was
sought by the appellant. According to the appellant, the
invoice raised by the respondent bears HSN/SAC codes as
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998713, which establishes this fact . It was further stated by
the appellant that details of the mentioned HSN/SAC code
giving a technical description downloaded from the portal
shows a different number.
xi. The difference in the HSN/SAC number in as much as the
purchase Order dated 13.08.2024 issued by the appellant to
the respondent bears the number 85238020, however, the
invoice raised by the respondent contains 998713 as the
number and in view of the difference between the purchase
order raised by the appellant and invoice raised by the
respondent, it was argued that the product supplied is
different.
xii. It was also contended that the purchase order contains an
arbitration clause and, therefore, the suit cannot proceed.
However, the learned Trial court in this regard, held that the
appellant had not moved an application under Section 8 of
the Arbitration and Conciliation Act, 1996 (hereinafter “the
Arbitration Act”), before filing the application for leave to
defend and, therefore, the mandate of Section 8 of the Act
has not been carried out.
xiii. The learned Trial Court, in its impugned order, placed
reliance on the judgments of the Supreme Court in Booz
Allen & Hamilton Inc. v. SBI Home Finance Ltd., (2011) 5
SCC 532, Rashtriya Ispat Nigam Ltd. v. Verma Transport
Co., (2006) 7 SCC 275 and other judgments of this Court, to
hold that for attracting Section 8 of the Arbitration Act, an
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application under Section 8 is required to be filed, not later
than the date of submitting the first statement and that the
date of first statement is wider than a written statement.
Since the appellant had not filed an application under
Section 8 of the Arbitration Act before filing the leave to
defend, objecting to the maintainability of the suit on the
ground that the there is an arbitration clause and the suit is
not maintainable. The Trial Court was of the opinion that the
objection raised in the leave to defend is not sufficient and
therefore the contention that the suit was not maintainable in
the leave to defend was rejected.
xiv. The learned Trial Court further held that the respondent
delivered the software on 02.08.2024 which was accepted by
the appellant without any objection and, despite making
various demands, there has been no payment. The learned
Trial Court, therefore, was of the opinion that the appellant
herein had ample opportunities to examine the software at
the time of delivery which has not been rejected and,
consequently, the application seeking leave to defend was
dismissed, decreeing the suit for a sum of Rs. 3,02,080/-
along with interest @ 12% per annum from the date of
invoice.
6. The learned counsel for the appellant has tried to draw our
attention to certain email correspondence to point out a discrepancy.
She states that in view of fact that the product was different, a triable
issue arises. She further states since there is an arbitration clause, the
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learned Trial Court should have relegated the parties to arbitration.
Moreover, it is also argued that the rate of interest @ 12 % is
exorbitant and is thus, unsustainable.
7. Heard the learned counsel for the appellant.
8. The parameters of the law relating to leave to defend in a suit
under Order XXXVII of the CPC has been crystallised by the
Supreme Court in IDBI Trusteeship Services Limited v. Hubtown
Limited (2017) 1 SCC 568. The relevant paragraph of the said
judgment is reproduced as under:
“17. Accordingly, the principles stated in para 8 of
Mechelec case will now stand superseded, given the
amendment of Order 37 Rule 3 and the binding decision of
four Judges in Milkhiram cases, as follows:
17.1. If the defendant satisfies the court that he
has a substantial defence, that is, a defence that is
likely to succeed, the plaintiff is not entitled to
leave to sign judgment, and the defendant is
entitled to unconditional leave to defend the suit.
17.2. If the defendant raises triable issues
indicating that he has a fair or reasonable
defence, although not a positively good defence,
the plaintiff is not entitled to sign judgment, and
the defendant is ordinarily entitled to
unconditional leave to defend.
17.3. Even if the defendant raises triable issues, if
a doubt is left with the trial Judge about the
defendant's good faith, or the genuineness of the
triable issues, the trial Judge may impose
conditions both as to time or mode of trial, as well
as payment into court or furnishing security. Care
must be taken to see that the object of the
provisions to assist expeditious disposal of
commercial causes is not defeated. Care must
also be taken to see that such triable issues are
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not shut out by unduly severe orders as to deposit
or security.
17.4. If the defendant raises a defence which is
plausible but improbable, the trial Judge may
impose conditions as to time or mode of trial, as
well as payment into court, or furnishing security.
As such a defence does not raise triable issues,
conditions as to deposit or security or both can
extend to the entire principal sum together with
such interest as the court feels the justice of the
case requires.
17.5. If the defendant has no substantial defence
and/or raises no genuine triable issues, and the
court finds such defence to be frivolous or
vexatious, then leave to defend the suit shall be
refused, and the plaintiff is entitled to judgment
forthwith.
17.6. If any part of the amount claimed by the
plaintiff is admitted by the defendant to be due
from him, leave to defend the suit, (even if triable
issues or a substantial defence is raised), shall not
be granted unless the amount so admitted to be
due is deposited by the defendant in court.”
(emphasis supplied)

9. In B.L. Kashyap an Sons Limited v. JMS Steels and Power
Corporation (2022) 3 SCC 294, the Supreme Court placed reliance in
IDBI Trusteeship Services Limited (Supra) and observed as under:
“33. It is at once clear that even though in IDBI
Trusteeship, this Court has d observed that the principles
stated in para 8 of Mechelec Engineers case³ 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 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
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practically no defence and is unable to give out even a
semblance of triable issues before the court.
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 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.
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
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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.
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 d 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.”

10. Applying the aforesaid judicial dicta in the facts of the present
case, undoubtedly, grant of leave to defend is ordinary rule and denial
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of leave to defend is an exception. However, the defendant has to
satisfy the Court that he has a defence which is likely to succeed.
Some triable issue has to be raised. Undoubtedly, Courts do not ask
for proof of the facts stated in the application for leave to defend while
deciding the same. The facts have to be taken on the face value.
11. In the facts of the present case, it is not denied that a contract
was entered to supply for a software. The said software was duly
supplied on 02.08.2024. Admittedly, the software was not returned.
We have perused the relevant material on record. The communication
between the parties, as alleged by the learned counsel for the
appellant, does not, in any way, indicates that the appellant has raised
any objections that the software that was sought for, was different
from the software which was delivered to them.
12. The records further disclose that the payments were being
constantly raised by the respondent for the software which was
supplied. In fact, the correspondence indicates that the appellant had
written a mail dated 25.10.2024, asking for cancelling the invoice on
the basis of the fact that they had better commercials in hand. This
conduct shows that they were not inclined to pay the said amount of
money. The communication was replied to by the respondent by
stating that after activating the software, it was not open for the
appellant to go back.
13. In view of the fact that there is nothing on record to show that
the software demanded in the purchase order and the software
supplied by the invoice were entirely different and since there is no
communication to this effect from the appellant to the respondent, it
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cannot be said that any issue, much less any triable issue, would arise
for consideration.
14. The conditions of Order XXXVII CPC stands satisfied. The
learned Trial Court was therefore, justified in coming to the
conclusion that no triable issue arises.
15. This Court has gone through the material on record to satisfy
itself as to whether there is any material or any correspondence to
show that the appellant has, at any point of time, made any statement
that the software which was supplied is not the same. Rather the
material shows that they had better commercials in hand and that after
receiving the software, sought to wriggle out of their contractual
obligations.
16. In view of the foregoing discussion on law and facts, this Court
is not inclined to interfere with the order passed by the learned Trial
Court.
17. Accordingly, the present appeal, along with pending
applications, stands dismissed.

SUBRAMONIUM PRASAD, J

RENU BHATNAGAR, J
OCTOBER 12, 2026 /bs/sm
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