Competent Court Can Examine Valuation Of IPR Suit Below ₹3 Lakhs, Transfer To Commercial Courts Not Necessary: Delhi High Court

The Delhi High Court on Thursday 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 IPR suit if it is pegged below Rs. 3 lakhs, adding that its undervaluation would have to be evaluated based on the facts of each case.

A division bench of Justice Yashwant Varma and Justice Dharmesh Sharma said that the exercise can be legally undertaken by the competent court itself and that such matters need not be transferred to commercial courts for the purpose of value evaluation.

The bench differed from a last year decision of a single judge in Vishal Pipes case which held that in a case where a plaintiff values an IPR suit below the threshold of Rs.3 lakhs, such suits would be listed before the District Judge (Commercial) first in order to determine as to whether the valuation is arbitrarily whimsical or deliberately undervalued.

The bench observed that all the IPR suits in which a valuation has been pegged at below Rs. 3 lakhs may be duly examined by the court before which those matters are presently laid.

“We find no justification for the withdrawal of those matters from the competent courts and their placement before a commercial court for the purposes of ascertaining the correctness of the valuation as declared,” the court said.

The single judge had also added that it would be mandatory for IPR suits to be ascribed a 'specified value', in the absence of which the valuation of the suit below Rs.3 lakhs would be arbitrary, whimsical and wholly unreasonable.

In its judgment running into 28 pages, the division bench said that it would be wholly incorrect to proceed on the premise that the dispute forming the subject matter of IPR suits would necessarily and invariably be liable to be valued at Rs. 3 lakhs or above.

“While we do not intend to convey a position of a deliberate undervaluation being accorded a judicial imprimatur, we are of the firm opinion that it would be wholly incorrect for courts to proceed on the presumption that an IPR suit when valued at below Rs. 3 lakhs is necessarily based on ulterior motives or a mala fide intent to avoid application of the CCA,” the bench ruled.

Ir added that the issue of whether a particular suit has been deliberately undervalued is one which can always be examined and scrutinized by a competent court.

“Ultimately the issue of a deliberate suppression of valuation would have to be considered and answered based on the facts obtaining in an individual case. All that we deem apposite to note and observe in this respect is that Vishal Pipes clearly 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 lakhs and above,” the court said.

Furthermore, the bench observed that it would be wholly inappropriate for it, by way of a judicial fiat, to direct the non- commercial suits to be tried by District Judges (Commercial) notwithstanding those suits not meeting the threshold criteria constructed in terms of the CCA.

It further added that unless the twin conditions of commercial dispute and specified value are satisfied, a suit cannot be tried by a commercial court.

“The directions formulated in Vishal Pipes 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 to be affirmed, they would operate so as to create and confer jurisdiction on commercial courts contrary to the qualifying criterion as laid in place by the CCA,” the court said.

The bench also found merit in the suggestion mooted by amicus curiae Advocate Swathi Sukumar regarding an additional declaration being made by plaintiffs in IPR suits where valuation is placed at below Rs. 3 lakhs.

Accordingly, the bench directed that in all such cases, the plaintiff in a suit would have to declare that it has not taken an inconsistent position with respect to specified value in any other litigation pending or instituted in the past.

“To avoid inconvenience to parties, 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 all such matters carrying details as indicated above, may also be uploaded on the web portals of the concerned District Courts,” the bench said.

Counsel for Petitioner: Mr. Vikas Khera and Mr. Ved Prakash, Adv.

Counsel for Respondent: Mr. Neeraj Gogia, Mr. Manu Prabhakar and Mr. Avinash Kumar, Advs. Mr. Sandeep Sethi, Sr. Adv. with Ms. Swathi Sukumar, Adv. (Amicus Curiae)

Title: PANKAJ RAVJIBHAI PATEL TRADING AS RAKESH PHARMACEUTICALS v. SSS PHARMACHEM PVT. LTD.

Citation: 2023 LiveLaw (Del) 1046

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