"Judge Musheer Rao gave ex-parte decision against Wasim as he did not appear before the court despite being summoned through newspaper advertisement," a court official said.
The 37-year-old record breaking pacer was summoned in September following a private petition charging that he damaged Muslim sentiment by posing in a liquor advertisement.
The petition, filed by civilian Mohammad Fayyaz, demanded a public apology from Wasim and payment of damages amounting to 25,000 rupees (about 400 US dollars).
The judge accepted the plea and ordered Wasim to pay damages and apologize, court officials said. Wasim is one of eight international players who modelled for the Indian company Royal Stag.
Others included India's Harbhajan Singh, Australia's Glen McGrath, Jonty Rhodes of South Africa, Mervyn Dillon of the West Indies, Stephen Fleming of New Zealand, Marvan Atapattu of Sri Lanka and Andy Flower of Zimbabwe.
Wasim denied the accusations, saying he worked for an Indian company which also manufactures sports equipment.
Wasim's lawyer Chaudhry Fawwad said his client never received any summons and if he receives a court order he would fight the case which he described as baseless. "Such frivolous petitions are an act to seek publicity," Fawwad said.
Wasim retired from the game in May after achieving the unique feat of taking more than 400 wickets in both Tests and One-day matches. He has since become a television commentator, having recently done an assignment in Australia where India and Zimbabwe played in the season.