Withdrawal of an appeal after merits are heard cannot be used to evade an adverse decree.

The respondents, Kamlesh and Ved Prakash, filed a commercial suit for recovery against Kamal Goel, Ritu Goel and Sanchit Goel, alleging that substantial amounts had been paid towards the proposed purchase of commercial property at D-12/158, Sector-7, Rohini, Delhi.

The transaction subsequently failed after the property was found to be mortgaged and possession was taken by the financial institution under SARFAESI proceedings.

The defendants issued four post-dated cheques aggregating to ₹1.22 crore, which were dishonoured.

Although the plaintiffs initially claimed ₹1,55,67,200, they later restricted their claim to ₹1.22 crore, representing the value of the four cheques.

The defendants were proceeded ex parte after failing to appear and did not file a written statement or cross-examine the plaintiffs’ witness.

The Trial Court decreed ₹1.22 crore with interest at 12% per annum from the date of filing until recovery, along with costs and ₹1 lakh as counsel’s fee.

Ritu Goel and Sanchit Goel appealed under Section 13 of the Commercial Courts Act, contending principally that they had not been duly served.

Ritu Goel additionally sought withdrawal of the appeal under Order XXIII Rule 1 CPC, with liberty to pursue an application under Order IX Rule 13 CPC.

Whether Ritu Goel and Sanchit Goel were duly served in the recovery suit and whether the ex parte decree could be challenged on the ground of non-service?

Whether the appellants were liable for the amount represented by the dishonoured post-dated cheques, notwithstanding the plaintiffs’ allegation that payments had been made in cash?

Whether the appeal should be interfered with when the plaintiffs’ evidence and documents remained unrebutted before the Trial Court?

Whether Ritu Goel could withdraw the appeal at the stage when arguments had concluded and judgment had been reserved, with or without liberty to pursue proceedings under Order IX Rule 13 CPC?

The Court applied Section 13 of the Commercial Courts Act, 2015 governing appeals from commercial court judgments, and the principles concerning service, ex parte proceedings and appreciation of unrebutted evidence under the CPC.

It considered Order IX Rule 13 CPC, under which an ex parte decree may be set aside upon proof of non-service or sufficient cause for non-appearance, and Order XXIII Rule 1 CPC, under which withdrawal of proceedings at the appellate stage is subject to judicial scrutiny, particularly where withdrawal may nullify an adjudication or prejudice a vested right.

Relying on Arthanareswarar Temple v. R. Sathyamoorthy, (1999) 3 SCC 115, and K.S. Bhoopathy v. Kokila, (2000) 5 SCC 458, the Court held that withdrawal with liberty to institute fresh proceedings is discretionary and must be allowed cautiously, especially after adjudication on merits.

The Court also referred to the Supreme Court’s decision in The Correspondence RBANMS Educational Institution v. B. Gunashekar & Anr., 2025 INSC 490, in relation to possible violations of Section 269ST of the Income Tax Act, 1961, holding that any tax violation would not by itself defeat the plaintiffs’ civil claim.

The Court rejected the appellants’ plea of non-service because both Ritu Goel and Sanchit Goel had executed vakalatnamas in the Trial Court, and the record showed that a complete paper book had been supplied to counsel on 10 May 2024.

The documents further demonstrated the appellants’ involvement in the transaction: Ritu Goel had signed receipts acknowledging payment, she was connected with the mortgaged property and associated business concerns, and the post-dated cheques were issued and signed by Kamal Goel and Ritu Goel.

The plaintiffs’ documentary evidence, including the receipts, agreements, SARFAESI documents and dishonoured cheques, remained entirely unrebutted because the defendants neither filed a written statement nor cross-examined the plaintiffs’ witness.

The dishonoured cheques constituted a clear acknowledgment of liability.

The Court held that the alleged cash nature of the payments, even if capable of attracting tax consequences under Section 269ST, did not extinguish the civil liability acknowledged through the cheques.

As to withdrawal, the Court held that the appeal had already been argued on merits and reserved for judgment.

Ritu Goel had also failed to disclose during the hearing that she had already filed an Order IX Rule 13 application.

The Court found the plea of non-service to be false, particularly since the same counsel continued to represent her in subsequent proceedings.

Permitting withdrawal at that stage would undermine the adjudication, waste judicial resources and prejudice the respondents.

Since Kamal Goel had not appealed, the decree against him stood confirmed.

The Court also directed that a copy of the judgment be sent to the Income Tax Department for appropriate action concerning the alleged cash transactions.

Ritu Goel’s application under Order XXIII Rule 1 CPC for withdrawal of the appeal was dismissed, and she was directed to pay ₹10,000 as costs to Respondents Nos. 1 and 2 within two weeks.