The Commercial Courts Act, 2015 (CCA for brevity) was introduced with a view to expedite the commercial matters to attract Foreign Direct Investments (FDIs) in the country. The entire proceeding related to commercial matters is now eased and accelerated. Intellectual Property falls under the purview of CCA, as defined under section 2(c)(xvii):
"(xvii) intellectual property rights relating to registered and unregistered trademarks, copyright, patent, design, domain names, geographical indications and semiconductor integrated circuits;"
The threshold for institution of commercial cases was fixed at Rs. 1 Crore, only after the 2018 amendment, it was brought down to Rs. 3 Lakhs. In the very same amendment section 12A was inserted to mandate 'pre-litigation mediation'. The legislative intent behind such insertion was to make the country investment-friendly by increasing the ease of doing business. Alternate Dispute Resolution (ADR) mechanism is the future of litigation as has been quoted by eminent lawyers and judges globally.
This article will deal with the recent view taken by the Delhi High Court and the law as laid by the Hon'ble Apex Court with an analysis by the author.
DELHI HIGH COURT'S RECENT VIEW:
In a recent order delivered on 29.08.2022 by Delhi High Court, Bolt Technology OU vs. Ujoy Technology Private Limited & Anr (CS (Comm) 582/2022 & I.As.13529-32/2022) view on pre-litigation amicable solutions by parties was given by Hon'ble Justice Pratibha M. Singh.
Present suit was filed by the Plaintiff seeking permanent injunction restraining Defendant
a. Factual Background of the Case:
The suit was filed by the plaintiff to restrain the defendants from passing off of trademark, infringement of copyright, unfair competition, rendition of accounts, damages, and other reliefs.
Plaintiff being a foreign-based company dealing in transportation and mobility services, advertised and promoted its services through its website 'https://bolt.eu/'. The application was also available on Google Play store and Apple App Store for downloading under the mark 'BOLT' and the Defendant was using an identical mark for which an urgent interim relief was sought. Section 12A of the CCA was referred by the Defendant stating that pre-litigation mediation is must in IP/Commercial matters.
b. Contentions of Parties:
Plaintiff contended that this is a case of clear passing off and infringement and that Plaintiff has already tried to mediate with the Defendants. This was also clearly mentioned in the Legal Notice sent by them to the Defendants, but the Defendants stayed unresponsive.
The Defendants placed reliance on Patil Automation Private Limited & Ors. V. Rakheja Engineers Private Limited [Civil Appeal nos. 5333-34/2022], ECL Finance Ltd. v. Tashee Nirman Pvt. Ltd. and Ors. [I.A.11348/2021 in CS(Comm) 415/2021], Ganga Taro Vazirani v. Deepak Raheja [2021 SCC OnLine Bom 195], to argue that pre-litigation mediation under section 12A of CCA is mandatory.
To which the plaintiff submitted that Patil Automation clarifies that 'when an urgent interim relief is being sought, the suit can be filed without resorting to pre-litigation mediation. And that, Defendant's mobile application was available on a daily basis, hence, seeking urgent relief.
c. Court's Decision:
The Court considered all the objections raised by the parties, and while examining section 12A of CCA, it also looked into the object and legislative intent and of the 2018 Amendment in the Act. As per the Statement of Objects and Reasons, which led to the Amendment through which this section was inserted, it was observed that the motive behind such insertion was to increase the ease of doing business and attract Foreign Direct Investments (FDIs). Ergo, making the pre-mediation litigation in commercial compulsory, at the same time providing for an exception to it. As per this exception, section 12A does not come into play if the suit contemplates urgent relief.
The Hon'ble bench accordingly issued notice in the Interim Application filed by the Plaintiff seeking urgent relief. The matter was sent for mediation by the court by also imposing a cost of Rs. 10,000/- on the Defendant, which has been paid by the Defendant on the latest date of hearing.
It was iterated by the Hon'ble Bench that:
- "Firstly, the Plaintiff had attempted an amicable resolution which was clearly refuted, rejected and condemned by the Defendants;
- Secondly, the Plaintiff has also sought urgent interim relief before this Court and is entitled to maintain the present suit."
VARIOUS COURT'S STAND:
Hon'ble Apex Court has in Patil Automation (Supra) observed the legislative intent behind section 12A of CCA, wherein it has been very clearly stated that "this amendment is a unique experiment to push the pace of disposal of commercial disputes".
Bombay High Court in Deepak Raheja v. Ganga Taro Vazirani (2021 SCC Online Bom 3124) was of the view that "Section 12A does not come into play if the suit contemplates an urgent relief. If a commercial suit (of specified value) contemplates urgent relief, it can be instituted in the court straightaway."
In Laxmikant v. Patel v. Chetanbhai Shah & Anr. [(2002) 3 Supreme Court Cases 65], the court observed that "A refusal to grant an injunction in spite of the availability of facts, which are prima facie established by overwhelming evidence and material available on record justifying the grant thereof, occasion a failure of justice and such injury to the plaintiff as would not be capable of being undone at a latter stage. The discretion exercised by the Trial Court and the High Court against the plaintiff, is neither reasonable nor judicious. The grant of interlocutory injunction to the plaintiff could not have been refused,therefore, it becomes obligatory on the part of this Court to interfere."
It is necessary to observe that in commercial cases where urgent relief is sought by the Plaintiff, pre-litigation mediation as provided under the law can be surpassed provided an attempt has already been made by Plaintiff to solve the matter amicably. This is the only exception to section 12A of the CCA. Thus, it can be concluded that pre-litigation mediation is a necessary step in commercial litigation but just like other laws it also comes with an exception.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.