Delhi High Court: Competent Court To Examine IPR Valuation Suit Below Rs. 3 Lakh

Delhi High Court: Competent Court To Examine IPR Valuation Suit Below Rs. 3 Lakh

Stresses that transfer to commercial court is not essential

The Delhi High Court has ruled that it would be open for the competent court to examine the ‘declared specified value’ and the value ascribed to the reliefs claimed in an intellectual property rights (IPR) case if it was below Rs.3 lakh.

A division bench of Justice Yashwant Varma and Justice Dharmesh Sharma added that its undervaluation would have to be evaluated based on the facts of each case. Also, the competent court could undertake the exercise itself, as such matters need not be transferred to commercial courts for the purpose of value evaluation.

Significantly, the judges differed from the decision taken last year by a single-judge bench in the Vishal Pipes case. Therein, it was held that if a plaintiff valued an IPR suit below Rs.3 lakhs, it would first be listed before the district judge (commercial) to determine whether the valuation was whimsical or deliberately undervalued.

Thus, the court held that all IPR suits valued below Rs.3 lakhs would be examined by the court before which the matters were presented.

It added, “We find no justification for the withdrawal of those matters from the competent courts and their placement before a commercial court for the purpose of ascertaining the correctness of the valuation.”

Meanwhile, even the single-judge bench had stated that mandatorily IPR suits would be ascribed a 'specified value' in the absence of which the valuation of the suit below Rs.3 lakhs would be arbitrary, whimsical, and unreasonable.

In the 28-page judgment, the division bench ruled, “While we do not intend to convey a position of deliberate undervaluation being accorded a judicial imprimatur, it would be incorrect for the courts to proceed on the presumption that an IPR suit when valued below Rs.3 lakhs is necessarily based on ulterior motives or had a malafide intent to avoid application of the CCA.”

On the issue of whether a suit was deliberately undervalued, the court stated, “The deliberate suppression of valuation would be considered and answered based on the facts in an individual case. All that we deem apposite to note and observe in this respect is that the Vishal Pipes case appears to have been incorrectly decided when it formulated a direction mandating that normally in all IPR cases, the valuation ought to be Rs.3 lakh and above.”

Therefore, it would be inappropriate to direct the non-commercial suits to be tried by the district judges, notwithstanding the suits not meeting the threshold criteria constructed in the CCA terms. Unless the two conditions of commercial dispute and specified value were satisfied, a suit could not be tried by a commercial court.

Justice Varma and Justice Sharma further clarified, “The directions formulated in the Vishal Pipes case and embodied in Para 66 (iv) and (v) thus clearly distort the distribution of matters between commercial and non-commercial courts as statutorily ordained. In fact, if those directions were affirmed, they would create and confer jurisdiction on commercial courts contrary to the qualifying criterion as laid in place by the CCA.”

The bench found merit in the suggestion mooted by amicus curiae advocate Swathi Sukumar on an additional declaration being made by plaintiffs in IPR suits where valuation was placed below Rs.3 lakh. It directed that in all such cases, the plaintiff would have to declare that in the past, it had not taken an inconsistent position on specified value in any other pending or instituted litigation.

To simplify matters, the court remarked, “We request the concerned district judges to display a list of all such matters indicating the courts to which they would revert and the dates on which they would be called before the appropriate courts. A list of such matters carrying details may also be uploaded on the web portals of the concerned district courts.”