Failure to Pay Costs Directed for Taking Written Statement on Record Warrants Summary Judgment under Order XIIIA

The Plaintiff, owner of trademarks like 'STEELBIRD' and 'ORB', entered into an agreement on 06.10.2015 with Defendants No. 1 and 2 (managed by Defendant No. 3) to manufacture and market skincare products

The Plaintiff remitted ₹2 Crores as an initial investment

Despite multiple extensions, the Defendants failed to launch the products as promised by the final deadline of 15.03.2016

The Plaintiff terminated the agreement via legal notice on 18.10.2016, seeking a refund of the investment, interest, and Annual Minimum Guaranteed (AMG) payments

During proceedings, the Defendants failed to pay costs imposed by the court and were proceeded against ex-parte on 14.12.2022

The Plaintiff subsequently filed an application for summary judgment under Order XIIIA of the Commercial Courts Act

1. Whether the written statement of the Defendants should be struck off the record due to non-payment of court-imposed costs

2. Whether the Plaintiff is entitled to a summary judgment under Order XIIIA of the Commercial Courts Act, 2015

3. Whether the Defendants are jointly and severally liable to refund the investment and pay the contractually agreed interest and AMG payments

Rule 4 of Chapter VII of the Delhi High Court (Original Side) Rules, 2018, which empowers the court to strike off pleadings if costs are not paid

Order XIIIA, Rules 3 and 6(1)(a) of the Commercial Courts Act, 2015 (as applied to the CPC), which permits summary judgment if the defendant has "no real prospect of successfully defending the claim" and there is no other compelling reason for a full trial

The court also applied the doctrine of personal guarantee regarding Defendant No. 3's liability for corporate defaults

The court first determined that because the Defendants failed to pay the balance of costs (₹5,000 and ₹25,000) imposed for delays and changes in counsel, their written statement must be taken off the record

Turning to the merits via the summary judgment application, the court noted that the Defendants had previously filed an affidavit of admission/denial admitting crucial documents, including the Agreement dated 06.10.2015 and the receipt of ₹2 Crores

Since the written statement was removed and no reply was filed to the Order XIIIA application, the court found no "real prospect" of defense

The court scrutinized the contract clauses (5.3 to 5.7), noting that AMG payments were mandatory regardless of business failure

While the contract stipulated 24% interest, the court exercised its discretion to reduce it to 18% per annum to ensure fairness in a commercial context

It held that the Defendants are jointly and severally liable to refund ₹2 Crores with 18% interest from 18.10.2016 until the suit's filing. Additionally, the court decreed ₹1,32,74,999 towards AMG payments for 2015–2017 with 18% interest

The Plaintiff was also granted pendente lite and future interest at 12% per annum until realization. The suit was decreed in favor of the Plaintiff with a permanent injunction against the Defendants' use of the Plaintiff's trademarks