The Hon’ble Delhi High Court, in the matter of Vishal Pipes Limited v. Bhavya Pipe Industry, was dealing with an appeal challenging the order dated 28th January 2022 passed by the ld. Additional District Judge (ld. ADJ), New Delhi in the suit wherein a permanent injunction was sought by Vishal Pipes Limited against Bhavya Pipe Industry for infringing its registered mark 'VPL INDIA' and copyright as well as seeking reliefs for passing off, delivery up, rendition of accounts, etc. The grievance of Vishal Pipes Limited was that the ld. ADJ had refused to grant an ex parte order of injunction and had also failed to appoint a Local Commissioner for the seizure of the alleged infringing products.
When the matter was listed, the Court noticed that in order to avail the remedies provided under the various IPR statutes, a plaintiff has to usually institute a suit before a District Judge (Commercial) valuing it at Rs. 3 lakhs or above, as well as pay the basic required Court fee to invoke the jurisdiction of the said Court. However, the present Order which was challenged was passed by the ld. ADJ who was not designated as a Commercial Court.
Upon enquiring the same, the Court was informed that the suit was valued below Rs.3 Lakh and therefore, in view of the pecuniary provisions in the Commercial Courts Act, 2015 ("CCA"), where the 'specified value' for 'commercial disputes' is Rs. 3 Lakh read with Section 134 the Trade Marks Act, 1999 where a suit relating to trademarks is to be filed and adjudicated only by a District Court (Commercial), was adjudicated by a District Judge, (Non Commercial)
The logical corollary of this is that the provisions of the CCA also are not made applicable to such a suit. The Court found this situation to be quite peculiar since the plea raised the following two questions:
i. Can IP suits be valued below Rs.3 lakhs and be listed before the District Judges who are not notified as Commercial Courts?
ii. Whether the provisions of CCA would be applicable to such disputes?
It was brought to the Court's attention that litigants and lawyers, in order to escape the clutches of the provisions of the Commercial Courts Act were valuing the suits below Rs.3 lakhs and placing a large number of IP matters before the ld. ADJ (non-commercial) in Delhi. The Court observed that if such valuation was permitted, it would defeat the very purpose of the enactment of special provisions for IPR statutes and the CCA. These statutes have to be construed harmoniously i.e., in a manner so as to further the purpose of the legislation and not defeat it. Hence, it is mandatory for IP suits to be ascribed a 'specified value', in absence of which, such a valuation would be arbitrary, whimsical, and wholly unreasonable.
The Court further observed that there exist three classes of adjudicating courts for IP matters depending upon their value:
1. Suits valued below Rs. 3 lakhs to be adjudicated by District Judges (Non-Commercial);
2. Suits ranging between Rs. 3 Lakh and Rs.2 Crore to be adjudicated by District Judges (Commercial);
3. Suits valued above Rs. 2 Crore to be adjudicated by the Commercial Division of the High Court (Original Jurisdiction).
In light of the above, considering that some value has to be given to the subject matter of the dispute the Court had to consider as to how should the concept of 'specified value' be analysed? Since there were no specific parameters for valuation, the Hon’ble Court, relied on past precedents and the appropriate provisions of law, summed up the legal position, and observed that, Courts would have to take into consideration the 'specified value' based not merely upon the value of the relief sought but also the market value of the intangible right which usually is trademarks, rights in copyrightable works, patents, designs involved in the said dispute. The Court made it clear that valuation of suits should be reasonable and that the plaintiff cannot deliberately undervalue the relief; if the valuation submitted by the plaintiff is arbitrary or unreasonable, Courts may reject the same; Plaintiffs ought to also provide justifiable reasons as to not providing the exact value of the relief.
The Court took a grim view regarding parties who deliberately undervalued the suits and addressed that, “the amount of Rs.3 lakhs was the estimation of the legislature as being the lowest threshold in any 'commercial dispute' in India which deserved to benefit from speedier adjudication, owing to the economic progress in the country. However, this intent of the Legislature in keeping a lower threshold in a 'commercial dispute' of Rs.3 lakhs cannot be rendered meaningless. It would only be in exceptional cases that valuation of IPR disputes below Rs.3 lakhs could be justified.”
In this backdrop, the Court held the following:
The Court made it clear that litigants, as well as lawyers, cannot escape the provisions of the CCA by valuing suits below Rs. 3 lakhs. All IPR suits which are to be instituted before District Courts, would, therefore, now first be instituted before the District Judge (Commercial).
1. In cases of IP suits valued below Rs. 3 lakhs, the specified value, and valuation of the same shall be examined by the Commercial Court in order to ensure it is not arbitrary, unreasonable, and/or undervalued.
2. Upon such an examination, the concerned Commercial Court may pass appropriate orders directing the plaintiff to amend the plaint in accordance with law and pay the requisite Court fee or issue directions to proceed with the adjudication of the suit as a non-commercial suit.
3. In cases wherein the suits which are valued below Rs.3 lakhs and continue as non-commercial suits, the same shall continue to be listed before the District Judge (Commercial) as well, however, may not be made subject to the provisions of the CCA in order to maintain consistency and clarity in adjudication.
4. All the pending IP suits filed before different District Judges (non- Commercial) in Delhi till now shall be placed before the concerned Commercial District Judges in Delhi in order to follow the foregoing procedure. However, the Court permitted the plaintiffs who wished to amend their Plaints in accordance with law. The Court also directed that copies of the judgment to be sent to the Registrar General in order to be sent to all District Courts for necessary action.
