A defence should not be struck off for curable cost default absent irreparable prejudice.

The respondent instituted a commercial suit for recovery of ₹14,33,873 with interest on 27 July 2024.

The petitioner was served on 20 August 2024 and filed his written statement on 6 November 2024, within the outer period of 120 days, but with procedural defects concerning signatures and the Statement of Truth.

The corrected written statement was filed on 20 December 2024, and on 28 February 2025 the Trial Court took it on record, noting that it had been filed within the prescribed outer limit, subject to further costs of ₹2,000.

By order dated 30 May 2025, the Trial Court struck off the petitioner’s defence and directed that the written statement be taken off the record, rejecting the explanation of “server error”.

His review application under Order XLVII Rule 1 read with Section 151 CPC was dismissed on 6 April 2026 on the grounds that it disclosed no error apparent, lacked a prayer clause, was delayed, and appeared dilatory.

Before the High Court, the petitioner produced evidence that he had transferred amounts to his erstwhile counsel towards the costs and had subsequently paid ₹5,000 directly to the respondent.

Whether the petitioner’s defence ought to have been struck off solely on account of non-payment of costs where the written statement had been filed within the prescribed 120-day period and the petitioner claimed to have made payments towards the costs through his erstwhile counsel?

Whether, notwithstanding the absence of an apparent error in the review order and the advanced stage of the proceedings, the High Court could grant supervisory relief to prevent a disproportionate denial of an opportunity to contest the suit on merits?

The Court applied the principles governing payment of costs and closure of a party’s right under Sections 35A and 35B CPC.

Section 35A concerns compensatory costs for false or vexatious claims or defences, whereas Section 35B permits withholding of further proceedings by a defaulting party until payment of costs, but does not invariably require irreversible forfeiture of the defence where the default is subsequently cured and no irreparable prejudice is caused.

The Court also considered Order XLVII Rule 1 CPC, which limits review to, inter alia, discovery of new matter, mistake or error apparent on the face of the record, or other sufficient reason.

It relied on Rafiq v. Munshilal, 1981 SCC (2) 788, and Dwarika Prasad (Deceased) through LRs v. Prithvi Raj Singh, 2024 INSC 1030, for the principle that a litigant should not ordinarily suffer for the bona fide negligence or default of counsel and that adjudication on merits is preferable to shutting out a defence on technical grounds.

The High Court distinguished the petitioner’s default from a failure to file the written statement within the statutory period.

The Trial Court had already found that the written statement was filed within 120 days and had accepted it subject to costs; therefore, the subsequent default concerned only compliance with a monetary condition and was capable of being cured.

The petitioner’s transfers of ₹2,000, ₹3,000 and ₹2,500 to his erstwhile counsel, although not paid directly to the respondent, demonstrated that he had arranged and transmitted substantial amounts towards compliance.

His later direct payment of ₹5,000 to the respondent further supported the contention that the default was not intended to evade payment or delay the proceedings.

The Court also found that Section 35A had been incorrectly invoked because there was no finding that the petitioner’s defence was false or vexatious; the costs were, in substance, costs for delay or non-compliance falling within Section 35B.

While Section 35B permits withholding further proceedings until costs are paid, the Court held that it does not mandate the permanent extinction of a defence where the default is curable and compensatory terms can protect the opposite party.

Striking off the defence would cause disproportionate prejudice by preventing the petitioner from contesting a substantial recovery claim on merits, whereas the respondent could be compensated through additional costs and procedural safeguards.

It directed that the petitioner’s written statement be taken on record.

The ₹5,000 paid directly to the respondent was directed to be adjusted towards the costs imposed by the Trial Court, subject to the petitioner paying an additional ₹10,000 to the respondent within one week.

The petitioner was also permitted to seek recall of PW-1 for cross-examination, which the Trial Court was directed to allow as the petitioner’s last and final opportunity.

The Trial Court was directed to dispose of the suit expeditiously, preferably within six months.

The Court clarified that its observations would not affect the merits of the suit.