The top seeded pair of Sania and Strycova lost 4-6 4-6 to their unseeded opponents in a match that lasted an hour and 12 minutes.
Sania and Strycova's played for the first time together this year in this tournament, ahead of the Australian Open, starting January 16.
Sania had paired with America's Bethanie Mattek-Sands to win last week's Brisbane International tournament.
The opening set today was a closely-fought affair with just one point separating the winners and the losers. The Indo-Czech combination won 25 points as compared to 26 by Babos and Pavlyuchenkova.
The Hungarian-Russian pair broke serve twice before Sania and Strycova fought back to equal the score. However, they were broken a third time at a crucial stage of the match and then Babos and Pavlyuchenkova held their nerves to serve out the match.
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