Bengaluru went into the match as the reigning champions, having won the inaugural edition of the tournament last year, but the defeat marked a premature end to their title defence.
Hero I-League 2018-19 champions Chennai City, meanwhile, progressed to the semifinals and will back themselves to clinch a double this season.
Nestor Jesus Gordillo put Chennai City in the lead on the 15th minute.
Chennai goalkeeper Mauro Boerchio made a brilliant save to deny Sunil Chhetri from the penalty spot in the 52nd minute.
Pedro Manzi scored a stunner on the 55th minute to double Chennai City’s lead.
Chhetri pulled a goal back for Bengaluru 10 minutes later but it wasn’t enough to avoid defeat.
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