Commercial Court Cannot Deny Liberty To Refile Suit Without Rejection Under The CPC: Delhi High Court

The Delhi High Court on 8 April 2026 held that a Commercial Court cannot deny a party the liberty to withdraw a suit with permission to institute a fresh suit unless the plaint is rejected under Order VII Rule 11 of the Code of Civil Procedure, 1908.

A Division Bench of Justices Vivek Chaudhary and Renu Bhatnagar set aside a Commercial Court order dated 15 December 2025 that permitted withdrawal of the suit without granting the appellant the liberty to file afresh. The Court held:

“In absence of an actual rejection of the plaint under Order VII Rule 11 CPC, the Commercial Court could not have indirectly non suited the Appellant by denying liberty under Order XXIII Rule 1(3) CPC. Accordingly, the impugned Order dated 15.12.2025 and also the observations therein on merits of the case are set aside. The appeal is allowed, and the Appellant is granted permission to withdraw the suit with liberty to institute a fresh suit in accordance with law.”

Krishan Chawla filed a commercial suit on 1 December 2025 seeking a declaration and injunction in relation to disputed cash receipts that Sanjeev Jain and others relied upon under an agreement dated 1 February 2022. He also sought interim relief and exemption from pre-institution mediation under Section 12A of the Commercial Courts Act.

On 3 December 2025, the Commercial Court refused interim relief, citing non-compliance with mandatory pre-institution mediation, deficiency in court fees, and lack of supporting material. The appellant then sought withdrawal of the suit with liberty to refile after curing defects.

However, on 15 December 2025, the Commercial Court allowed withdrawal simpliciter but refused liberty to institute a fresh suit. It also held that the suit lacked bona fides and a genuine cause of action.

The High Court held that the refusal attracted the bar under Order XXIII Rule 1(4) CPC and foreclosed the appellant's remedy despite the defects being curable. It observed:

“The refusal to grant liberty, in the facts of the present case, has the effect of attracting the bar under Order XXIII Rule 1(4) CPC, thereby foreclosing the Appellant's remedy despite the defects being curable, which is unduly harsh. Procedural law is intended to facilitate adjudication on merits and not to foreclose remedies at the threshold on curable defects.”

The Bench further held that the Commercial Court exceeded its limited inquiry by recording findings on bona fides and the existence of a cause of action at the pre-summoning stage. The judges observed:

“In the present case, the Commercial Court travelled beyond this limited inquiry by recording observations regarding lack of bona fides and absence of a genuine cause of action, which were not warranted at the pre-summoning stage.”

Accordingly, the High Court allowed the appeal.

For Appellant: Advocates Subhankar Sengupta, Narender Yadav

For Respondents: Advocates Vinod Kumar Mantoo, Hem Kumar, Niharika Mantoo, Anuj Agarwal, Mohd. Afaque