Despite valid service, an ex parte decree may be conditionally set aside where an arbitration clause requires merits consideration.

Johnson Controls India Pvt. Ltd. instituted a recovery suit for ₹58,35,390 along with interest against Multitex Filtration Engineers Ltd. before the Commercial Court.

Summons were directed to be served through multiple modes, including process server, email, WhatsApp, registered post/speed post and approved courier.

The process server served the summons on 10 May 2024 at the appellant’s registered office, where a person present at the reception accepted the summons after speaking to the company’s owner and affixed an endorsement and stamp.

On 25 July 2024, the Commercial Court held that service had been effected, forfeited the appellant’s right to file its written statement, and proceeded ex parte.

After recording the respondent’s evidence, the suit was decreed on 8 August 2025 for ₹58,35,390 with simple interest at 8% per annum from the date of filing until realization, besides costs.

The appellant thereafter filed an application under Order IX Rule 13 CPC, contending that the summons had been served only at its registered office, where its officials did not sit, and that its corporate office had shifted to Noida in 2023. It also relied on arbitration clauses contained in the purchase order.

The Commercial Court dismissed the Order IX Rule 13 application.

Whether service of summons at the appellant’s registered office through the process server constituted valid service, notwithstanding that the appellant’s officials allegedly operated from a different corporate office?

Whether the appellant should be permitted to defend the suit and file its written statement despite valid service and its failure to appear, particularly when it had participated in pre-litigation mediation and raised an arbitration objection?

Whether the ex parte judgment and decree should be set aside under Order IX Rule 13 CPC on conditional terms?

The appeal was filed under Order XLIII Rule 1(d) CPC, which permits an appeal against an order rejecting an application under Order IX Rule 13 CPC.

Order IX Rule 13 CPC empowers the court to set aside an ex parte decree where the defendant establishes sufficient cause for non-appearance or demonstrates that summons were not duly served; the Court nevertheless found that service had been duly effected in the present case.

The Court applied the principle that service at a company’s registered office is not invalid merely because its operational or corporate office is situated elsewhere.

It also recognised that, even where service is valid, the appellate court may, in the overall circumstances, grant a conditional opportunity to defend on merits, particularly where a potentially material defence—such as an arbitration clause—was not considered by the trial court.

The Court further relied on the procedural direction requiring service through multiple modes as a safeguard against miscommunication and human error, while clarifying that such direction did not negate the process-server’s completed service in this case.

The Court held that the process server’s report clearly established service at the appellant’s registered office: the summons were accepted by a person present at the reception after communication with the company’s owner, and the endorsement was duly made.

Accordingly, the appellant could not contend that service was invalid merely because its officials allegedly worked from the Noida office.

Its failure to file a written statement or monitor the proceedings justified the Commercial Court’s decision to proceed ex parte.

However, the Court considered that the appellant had participated in pre-litigation mediation and had raised a potentially significant arbitration objection based on clauses 19 and 20 of the purchase order.

Since the appellant had not been given an effective opportunity to place that defence before the trial court, the Court exercised its discretion to permit a defence on merits, subject to a substantial deposit and payment of costs.

The High Court set aside the Commercial Court’s order dated 3 July 2026 and the ex parte judgment and decree dated 8 August 2025.

The appellant was directed to deposit ₹25,00,000 before the Commercial Court within four weeks, to be maintained in an automatically renewable fixed deposit and subject to the final decision in the suit.

It was permitted to file its written statement within 30 days, and the Commercial Court was directed to proceed in accordance with law.

The appellant was also directed to pay ₹1,00,000 as costs to the respondent within four weeks.

All pending applications were disposed of.