Delhi High Court directs on jurisdiction of district courts on IPR suits

Delhi High Court directs on jurisdiction of district courts on IPR suits

It cited the conflicting decisions of Delhi, Kerala, and Karnataka high courts

The Delhi High Court has directed the jurisdiction of district courts to hear Intellectual Property Rights (IPR) suits. It made clear that litigants and lawyers cannot escape the provisions of the Commercial Courts Act (CCA) by valuing suits below Rs.3 lakhs.

It ruled that in case the plaintiff values the IP price below Rs.3 lakhs, the suit would mandatorily have to be listed before the District Judge (Commercial) first, instead of the District Judge (Non-Commercial). This would determine whether the valuation was arbitrary, whimsical, or was undervalued deliberately.

The issue arose after the court noticed a large number of IPR matters in Delhi valued below Rs.3 lakh, were placed before the Additional District Judge (non-commercial) for adjudication.

Justice Pratibha Singh noted that all IPR suits were commercial disputes. Based on the 'specified value' of the suits, those were subject to different substantive and procedural laws before different courts.

Justice Singh stated:

(i) Usually, in all IPR cases, the valuation ought to be Rs.3 lakhs and above and a proper court fee would have to be paid accordingly. All IPR suits to be instituted before District Courts, would, therefore, first be instituted before the District Judge (Commercial).

(ii) In case of any IPR suits valued below Rs.3 lakhs, the Commercial Court shall examine the specified value and suit valuation to ensure it is not arbitrary or unreasonable and the suit is not undervalued.

(iii) (iii) Upon such examination, the concerned Commercial Court would pass appropriate orders in accordance with the law, either directing the plaintiff to amend the plaint and pay the requisite court fee or to proceed with the suit as a non-commercial suit.

(iv) In order to maintain consistency and clarity in adjudication, even suits valued below Rs.3 lakhs that continue as non-commercial suits, shall also continue to be listed before the District Judge (Commercial), but may not be subjected to the provisions of the CCA.

(v) All pending IPR suits before the different District Judges (non-Commercial) in Delhi shall be placed before the concerned District Judges (Commercial) for following the procedure specified above. plaintiffs who wish to amend the plaint would be permitted to do so in accordance with the law.

The court noted that in Delhi IPR cases were listed depending on valuation:

(i) District Judges/ADJs (Non-Commercial) - For suits valued below Rs.3 lakh.

(ii) District Judges/ADJs (Commercial) - For suits valued between Rs.3 lakh and Rs.2 crores.

(iii) Commercial Division of the High Court (Original Jurisdiction) - For suits valued above Rs.2 crores.

Subsequent to hearing the submissions by the amicus curiae appointed to assist it, the court discussed the conflicting High Court decisions. It noted that while the high courts of Delhi and Kerala held that the valuation of the suit for the purpose of court fee could not be different from the 'specified value', the Karnataka High Court held that the value could be different.

Justice Singh also highlighted a decision taken on the administrative side by the Delhi High Court's State Courts Management System Committee in 2020. The Committee had decided that the question as to whether a suit under the Trademarks Act, 1999 could be permitted to be valued at less than Rs.3 lakh may be left to the discretion of the District Judge (Commercial Court) to whom such matter was transferred.

The court stated, "However, this decision may not have been uniformly implemented in the District Courts. Thus, even to date, several IPR suits are being instituted and adjudicated by the District Judges (non-Commercial). Therefore, the examination of 'specified value' and valuation, is imperative to determine the relevant forum."

The court summed up the legal position, relying on precedents and various statutory provisions, even as no specific factors were described for valuation:

- The court should look into the allegations in the plaint and examine the substantive reliefs. Whimsical valuation is not permitted;

- Valuation of a suit has to be adequate and reasonable. The plaintiff cannot deliberately/arbitrarily undervalue the relief. There must be a genuine effort by the plaintiff to estimate the relief;

- If the valuation given by the plaintiff is arbitrarily unreasonable, the court may reject the same and permit the plaintiff to correct the valuation or have the plaint rejected;

- The plaintiff cannot whimsically choose a ridiculous figure for filing the suit in an arbitrary manner where there are positive materials or objective standards of valuation of the relief;

- The plaintiff has to give definite reasons for not ascertaining the exact value of the relief. If the exact valuation is not done, on the basis of certain basic requirements, the plaintiff's discretion would become arbitrary;

- The plaintiff can choose its forum. However, this prerogative cannot eclipse the requirement of justice. The right to choose the forum is not an absolute one and can be taken away;

The court discussed the litigants deliberately valuing the relief in suits below Rs.3 lakhs in order to escape the rigors of the CCA or indulge in forum shopping or bench hunting.

It ruled, "While all IPR disputes irrespective of their 'specified value' may not invoke the provisions of the CCA, there ought to be a preliminary exercise required to confirm that the valuation of such suits has not been done arbitrarily. This may be done on the judicial side, as per the State Court Management Systems. Such examination by the Commercial Court is essential so as to obviate any attempts of forum shopping."

The court further stated, "In view of the above analysis and legal position, since IPR suits have to be instituted in the District Courts 'having jurisdiction' for the territory of Delhi, it is held that the District Judges notified as Commercial Courts which have subject matter jurisdiction under the CCA, would be the District Courts 'having jurisdiction.'"

Senior Advocate Akhil Sibal and advocates Nikhil Chawla and Asavari Jain assisted the court. They were joined by advocates Rajeshwari H, Sugandh Shahi, Dushyant Mahant, Devesh Vashishtha, and Sidharth Chopra.

Advocates SK Bansal, Rishi Bansal, Ajay Amitabh Suman, and Pankaj Kumar appeared for the petitioners.

Advocate Swathi Sukumar appeared as amicus curiae along with advocates Naveen Nagarjuna, and Tarini Sahai.