Madras High Court: Party Must Comply with Mandatory Requirement of Pre-Institution Mediation U/S 12A of Commercial Courts Act

Madras High Court: Party Must Comply with Mandatory Requirement of Pre-Institution Mediation U/S 12A of Commercial Courts Act

The Madras High Court while rejecting a plea for leave held, that mere existence of a penal consequence cannot be a ground for a party to not comply with the mandatory requirement of pre-institution mediation under Section 12A of the Commercial Courts Act, 2015 (hereinafter referred to as CCA).

The plaintiffs Aachi Spices and Foods claimed reliefs against the alleged infringement of plaintiffs' registered trademarks; those three trademarks, namely 'AACHI' 'AACHI CHETTINAD RESTAURANT' and 'AACHI KITCHEN' constitute the nucleus of this list and sought an injunction restraining the respondents- Karaikudi Achi Mess from using trademark name or similar sounding expression in any media, websites, and other platforms,

The petitioner Aachi Spices and Foods contended that trademark infringement was not just a civil wrong but had penal consequences also. Thus, there was a need for an urgent interim relief.

The single judge Justice M. Sundar found nothing demonstrated that prompt action was required and promptitude required was of such nature that exhausting the remedy of pre-suit mediation without any intervention in the meantime can lead to an irreversible situation. There was no material to show that public at large have suffered owing to alleged inferior food served by the alleged infringers.

"Absent prima facie material, there is nothing to justify the plaintiff coming to this Court directly circumnavigating / bypassing Section 12A which has been held to be mandatory by Hon'ble Supreme Court," the High Court opined.

As far as the penal consequences provided under Copyright Act, 1957 and the Trademarks Act, 1999 and the alleged infringement not being just civil wrongs, put forth by the plaintiff, the Court opined that this argument again is a non-starter qua Section 12A of CCA. "If there is a penal consequence and if there is a provision for proceeding for alleged criminal offence, nothing prevents the plaintiffs from resorting to the same. That by itself cannot justify non-compliance with Section 12A which has been held to be mandatory by Hon'ble Supreme Court," the High Court observed.

The Court also rejected the contention of the plaintiff to direct post-filing of suit mediation by stating that pre-institution mediation was a pre-suit legal drill and cannot be a post suit exercise. Section 12A is in the nature of a jurisdictional fact and a jurisdictional fact has to precede the suit and it cannot be post suit, stated the Court.

The court noted that the plaintiff had failed to fulfil the necessary criteria for urgent interim relief. Despite knowing the infringement, the plaintiff had filed the suit after an expiry of a period of one and half month which shows that there was no urgency. The plaintiffs had also failed to show legal injury.

The High Court placed reliance on the case passed by the Hon'ble Supreme Court in Patil Automation which held in categorical terms that Section 12A is mandatory and non-compliance with the same will call for rejection of plaint. Considering such rigor of the mandatory legal character of Section 12A of CCA. The Court was of the view that while doing so, Hon'ble Supreme Court had made it clear that such a course is being adopted, i.e., prospective operation doctrine being resorted to is with the intention of a caution/caveat to all stake holders but the plaintiffs have thrown caution to the winds.

The High Court highlighted that, "merely because plaintiffs choose to file an interlocutory application along with suits, i.e., along with institution of suits does not by itself become a license to bypass Section 12A by saying that the suits fall under the category of suits where 'urgent interim relief' is 'contemplated' as such a view would not just dilute or neutralize Section 12A of CCA, it will go as far as having the effect of effacing Section 12A of CCA from the statute book."

"The reason is, all that the plaintiffs have to do is to file an interlocutory application at the time of institution of suits to give a goby to / circumnavigate Section 12A of CCA. It is neither the spirit and objective behind Section 12A of CCA nor the spirit of ratio in Patil Automation which elucidates and explains the scope, purport and consequence of non-compliance qua section 12A of CCA besides recognizing categories of suits i.e., those which 'contemplate' 'urgent interim relief' and those which do not," the Court further added.

Thus, the Court rejected the plaint with liberty to the parties to approach the court again if the exercise of pre-institution mediation does not bring in any results.