India: Delhi High Court Clarifies Transfer Status of IPR Suits Vis-à-Vis
Commercial Courts Act, 2015
The
Delhi High Court, vide its judgment dated February 15, 2016, brought clarity to
a few key issues regarding the status of transfer of pending and filed Intellectual
Property Rights (IPR) cases vis-à-vis the Commercial Division and Commercial Appellate
Division of High Courts and Commercial Courts Act, 2015 (hereinafter referred
to as the “Commercial Courts Act”). Hon’ble Mr. Justice Valmiki J. Mehta came
to the conclusion by clubbing numerous suits, transfer petitions and amendment
applications before the Delhi High Court seeking enhancement of pecuniary
jurisdiction, interpreting the Act with respect to the expression ‘filed or
pending’ in the first proviso of Section 7. This expression came into
controversy while deciding whether it means that the High Court would entertain
all pending matters even if it does not have pecuniary jurisdiction to
entertain the matters or not.
The
Commercial Courts, Commercial Division and Commercial Appellate Division of High
Courts Ordinance was intended to ensure that the commercial cases are disposed
of expeditiously, fairly and at reasonable cost to the litigant. Along with
improving the international image of the Indian justice delivery system but the
same was in the middle of a controversy regarding the interpretation of certain
provisions.
The Ordinance
came into effect on October 23, 2015, and stated that the
State Governments, in consultation with the respective High Courts, will
constitute Commercial Courts at the District level, that is, where the District
Courts have original civil jurisdiction. No Commercial Court will be
constituted where the respective High Court has the original civil
jurisdiction. The Chief Justices of the High Courts will constitute Commercial
Divisions where the High Courts have original civil jurisdiction. The Chief
Justices of the concerned High Courts will constitute Commercial Appellate
Divisions where the High Courts have appellate jurisdiction. Thus, the High Courts
at Delhi, Calcutta, Bombay, Madras and Himachal Pradesh will have Commercial
Divisions and Commercial Appellate Divisions as they have original and
appellate jurisdictions. In all other states, the District Courts will have
Commercial Courts as they have original jurisdiction and the High Courts will
have Commercial Appellate Divisions as they have appellate jurisdiction.
It also laid down that all
commercial disputes, that is, disputes related to mercantile issues,
partnership agreements, intellectual property rights, insurance, etc. with a
specified value of INR 2 crores and above lie with the Commercial Division of
the respective High Court as the High Court has the original civil
jurisdiction. All commercial disputes with a specified value of INR 1-2 crores
lie with the Commercial Court of the respective District Court and all
commercial disputes with a specified value of INR 1 crore and below lie with
the District Court with original civil jurisdiction.
Section
7 and its proviso of the Ordinance was what created the confusion. It stated
that all suits relating to commercial disputes with a specified value filed in
the High Court having original jurisdiction shall be heard and disposed of by
the Commercial Division of the High Court provided that such suits are filed on
the original side of the High Court.
The words
‘and filed’ can be interpreted to mean that if a suit was originally filed in
the High Court, High Court through its Commercial Division will hear the suit,
even if specified value of the pending suit does not lie in the pecuniary
jurisdiction of the Court. Another interpretation of the word can be that if a
suit is filed in the High Court, High Court will hear the suit only if it
continues to have pecuniary jurisdiction of the suit. Justice Mehta
contemplated that something was left unsaid by the legislature in the expression.
To remove
the possibility of having different interpretations to the words ‘and filed’,
the Government of India and the Press Information Bureau issued a Press Note on
December 16, 2015, saying an amendment was required to the proviso to clear out
that the proviso will also apply to ‘pending cases’ so that ‘and filed’ could
be construed to include pending cases. Subsequently, an amendment was made in
the Act to change the said expression to ‘filed and pending’. The 78th
Report by the Department Related Parliamentary Standing Committee on Personnel,
Public Grievances, Law and Justice contained the reason for changing the
expression in the Act. It stated recommendations of the Standing Committee
saying that the transfer of all pending commercial disputes to Commercial
Courts and Divisions will overburden the Courts and defeat the purpose of
establishing them, that is, swift disposal of cases. The committee suggested
that instead of transferring pending cases to Commercial Courts, a sunset
clause should be inserted so that only fresh cases in the pecuniary
jurisdiction may be transferred.
Justice
Mehta reiterated that the Report said that there was to be a sunset clause
whereby only fresh cases with the pecuniary jurisdiction are to be filed in the
Commercial Divisions of the High Courts and the pending cases would not be
transferred and will be taken up by the Commercial Courts. Thus, the
legislature has widened the expression ‘and filed’ to mean ‘filed and pending’,
meaning thereby that any pending case will be continued to be tried by the
Commercial Divisions of the High Courts even if it is below the specified value
of INR 1 crore. This is the only interpretation possible.
Justice
Mehta felt that the language of the proviso would have been better if the
expression ‘irrespective of pecuniary jurisdiction’ was added even though the
meaning of the legislature can be understood by the existing words. He also
reiterated that Section 7 deals generally with IPR matters where such suits
cannot be entertained by courts below the level of a District Court, meaning
thereby that such suits can only be instituted in District Courts and High
Courts. When it comes to IPR related suits, whether trademarks, copyrights,
designs, patents or geographical indications, pending in the High Courts as on
the date of introducing the Act, such suits will be entertained by the
Commercial Divisions of the High Courts even if the specific value of the suits
is above INR 20 lacs but below INR1crore, that is, not falling in the pecuniary
jurisdiction. Justice Mehta has, thus, answered the issue regarding the first
proviso to Section 7 of the Act of 2015 and cleared all doubts regarding the
same.
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