[Commercial Courts Act] Himachal Pradesh High Court Nixes Patent Infringement Lawsuit As No Urgency Shown To Not Follow "Pre Litigation Mediation"

The Himachal Pradesh High Court rejected a patents and design infringement lawsuit after observing that it did not contemplate any "urgent relief" and the interim relief plea was filed by the plaintiff just to "wriggle out" of the pre-litigation mediation mandate under Section 12A of Commercial Courts Act. 

For context, Section 12A states that a suit which does not contemplate any urgent relief under the Commercial Courts Act shall not be instituted unless the plaintiff exhausts the remedy of Pre-Institution Mediation in accordance with such manner and procedure as may be prescribed by rules made by the Central Government.

Taking note of the facts and material on record in the matter a single judge bench of Justice Ajay Mohan Goel in its order said said that no material was submitted to the court which could indicate that there was an urgency in the matter so that the mandate of Section 12A can be done away with. 

It said, "There is no material placed on record whatsoever from which any inference can be drawn by the Court qua the urgency involved in the case so as to do away with the provision of Section 12-A of the Commercial Courts Act, in the nature of the actual sales being carried out of the fans in issue in the State of Himachal Pradesh, more so, in the close vicinity of the filing of the Civil Suit, so as to enable this Court to come to the conclusion that there indeed was an urgency involved in the case and the Civil Suit does contemplate an urgent interim relief, de hors Section 12-A of the Commercial Courts Act". 

Background:

The order was passed in an application moved by the respondent–Xero Energy Engineering Solutions Private Ltd. seeking rejection of a lawsuit moved by Novenco Building & Industry A/S who had claimed infringement of its patent and design rights in "axial fans", by the former.

The defendant applicants pointed to the plaintiff's plaint to argue that as per the averments therein the cause of action arose in July/August 2022 when it claimed to have received information about alleged infringement of its patents and design rights. The cause of action thereafter arose in October 2022 when plaintiff terminated the distributor agreement and informed the defendant about its subsisting patent rights.The cause of action was renewed when the plaintiff issued a cease and dessist notice to the defendant in December 2022.

It thereafter again arose in December 2023 when a technical expert after conducting visual inspection, evaluation and analysis, confirmed that the impugned fans infringes the plaintiff's patents and design. The defendants said that as per the plaintiff, the cause of action was continuing and it arose each time, the defendants make, use, offer for sell the impugned fans, through online presence, both direct and via e-commerce website and cause of action was continuing as defendants were regularly carrying on business and soliciting business and derive revenue from goods and services provided to individuals within the territorial jurisdiction of the State. 

The defendants argued that suit was however filed only in June 2024. Referring to Section 12- A (1) of the Commercial Courts Act, the defendants said that as the plaintiff has not exhausted the Pre-Institution Mediation and Settlement remedy and has directly filed the Civil Suit, which does not contemplate any urgent relief, the plaint is liable to be rejected on said count. 

Meanwhile the plaintiff's argued that the suit cannot be rejected as it contemplates urgent relief which is evident from the application filed under Order XXXIX, Rules 1 and 2 of the Civil Procedure Code, therefore, the defendants application must be dismissed. It was argued that defendant No.1 was omnipresent in the State of Himachal Pradesh online on e-portal and any day anyone could have purchased the product of defendant No.1 which was infringing the patents and design of the plaintiff and it was this urgency which necessitated the filing of the suit without going for Pre-Institution Mediation and Settlement.The plaintiff referred to the 'Techno Economic Offer' which it said has been made by defendant No.1 to Dr. Reddy's at Baddi and submitted that in light of the commercial activities of defendant No.1 in the State and the suit contemplated urgent relief and so the plaintiff was within its right to approach this Court, praying for interim relief as actually has been done.

Findings:

On the issue of pre-institution mandate under Section 12A of the Act the high court referred to the Supreme Court's decision in Patil Automation Private Limited and Others vs. Rakheja Engineers Private Limited (2022) where the top court had held that the Section 12-A of the Act is "mandatory" and a lawsuit which violates the mandate of Section 12A i.e. exhausting remedy of pre litigation mediation must be rejected. 

The court further referred to the Supreme Court's decision in Yamini Manohar vs. T.K.D. Keerthi, (2024) where it was reiterated that the prayer for urgent relief should not be a "disguise or mask to wriggle out of" and get over Section 12A of the Commercial Courts Act.

Referring to the principals enunciated by the Supreme Court, the high court said, "There is no iota of doubt that as per the pronouncement made by Hon'ble Supreme Court of India, Section 12-A of the Commercial Courts Act is mandatory. Hon'ble Supreme Court has also made it manifestly clear that the power can be exercised suo motu by a Court while dealing with the Commercial Civil Suit and when a plaint is filed under the Commercial Courts Act with a prayer for an urgent interim relief, the Commercial Court should examine the nature and the subject matter of the suit, the cause of action and the prayer for interim relief and the prayer for urgent interim relief should not be a disguise or mask to wriggle out of and get over section 12-A of the Commercial Courts Act". 

The court said that after carefully perusing through the interim relief plea of the plaintiff it found that "there is no whisper in the entire application of any urgency" to do away with the mandatory provision of Section 12-A of the Commercial Courts Act.

Referring to the averments in the plaint, the high court said that the suit was filed in June 2024 and there was no mention in the plaint as to why if the plaintiff waited from December, 2023 upto June, 2024 for the purpose of filing of the suit, it could not have resorted to the Pre-Institution Mediation and Settlement as emphasized in Section 12A of the Act and what urgency necessitated doing away with the said mandatory statutory provision.

The high court went on to reject the plaintiff's suit by holding that the suit did not contemplate any urgent interim relief and the filing of the interim relief application was "just an act to wriggle out of and get over" Section 12-A of the Commercial Courts Act. 

Case Title: Novenco Building & Industry A/S v/s Xero Energy Engineering Solutions Private Ltd. & Another

Citation: 2024 LiveLaw (JKL) 53

Counsel for plaintiff: Senior Adv Neeraj Gupta, advocates Shradha Karol, Vineet Rohilla, Rohit Rongi, Vaibhav Singh and Aastha Kohli

Counsel for defendant applicants: M/s Shadan Farasat, Kush Sharma, Aman Naqvi and Pranav Dhawan, Advocates. 

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