IPR Suits Below Rs. 3 Lakhs Threshold To Be Listed First Before District Judge (Commercial) To Determine Whether Valuation Is Deliberately Undervalued: Delhi HC

The Delhi High Court has held that in a case where a plaintiff values an IPR suit in the city district courts 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.

Justice Pratibha M Singh 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.

"This Court is cognizant of the fact that the valuation of intellectual property is by itself a very complex process. It is clarified that the Commercial Court is not expected to value the specific IP on the basis of any mathematical formulae but to broadly take into consideration whether the said IP would be worth more than Rs. 3 lakhs, which is the threshold for the Commercial Court to exercise jurisdiction," the Court said.

In this backdrop, the Court issued the following directions:

- Usually, in all IPR cases, the valuation ought to be Rs.3 lakhs and above and proper Court fee would have to be paid accordingly. All IPR suits to be instituted before District Courts, would therefore, first be instituted before the District Judge (Commercial).

- In case of any IPR suits valued below Rs. 3 lakhs, the Commercial Court shall examine the specified value and suit valuation to ensure it is not arbitrary or unreasonable and the suit is not undervalued.

- Upon such examination, the concerned Commercial Court would pass appropriate orders in accordance with law either directing the plaintiff to amend the plaint and pay the requisite Court fee or to proceed with the suit as a non-commercial suit.

- In order to however maintain consistency and clarity in adjudication, even such suits which may be valued below Rs.3 lakhs and continue as non-commercial suits, shall also continue to be listed before the District Judge (Commercial), but may not be subjected to the provisions of the CCA.

- All pending IPR suits before the different District Judges (non- Commercial) in Delhi shall be placed before the concerned District Judges (Commercial) for following the procedure specified above. plaintiffs who wish to amend the Plaint would be permitted to do so in accordance with law.

The Court was dealing with a plea raising the following two questions: first, can IPR suits be valued below Rs.3 lakhs and be listed before the District Judges who are not notified as Commercial Courts?; and second, whether the provisions of CCA would be applicable to such disputes?

The Court was of the view that in Delhi, in order to avail of its remedies provided under the various IPR statutes, a plaintiff ought to usually institute the suit before the District Judge (Commercial) by valuing it at Rs. 3 lakhs or above, and pay the basic required Court fee to invoke the jurisdiction of the said Court.

"However, acknowledging the plaintiff's reasonable discretion in valuing its suit, it is held that in case 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," it added.

The Court observed that litigants and lawyers cannot escape the rigors of the provisions of the Commercial Courts Act by valuing the suits below Rs.3 lakhs.

"If such valuation is permitted, despite some objective criteria being available for valuing IPR - in the CCA - it would defeat the very purpose of the enactment of special provisions for IPR statutes and the CCA. These statutes would have to be harmoniously construed i.e., in a manner so as to further the purpose of the legislation and not to defeat it. Thus, 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," the Court observed.

Further observing that some value would have to be given to the subject matter of the dispute, it said that the Court would have to take into consideration the 'specified value' based upon not merely the value of the relief sought but also the market value of the intangible right involved in the said dispute.

"The subject matter of IPR disputes is usually trademarks, rights in copyrightable works, patents, designs and such other intangible property. The said amount of Rs.3 lakhs is the estimation of the legislature as being the lowest threshold in any 'commercial dispute' in India which deserves to benefit from speedier adjudication, owing to the economic progress in the country. The intention 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," the Court said.

It added "In view of the above analysis and legal position, since IPR suits have to be instituted in the District Courts "having jurisdiction", for the territory of Delhi, it is held that the District Judges notified as Commercial Courts which have subject matter jurisdiction under the CCA, would be the District Courts "having jurisdiction"."

The Court this directed that a copy of the judgment be sent to the Registrar General to be sent to all District Courts for necessary action.

Advocates S.K. Bansal, Rishi Bansal, Ajay Amitabh Suman and Pankaj Kumar appeared for petitioner. Senior Advocate Akhil Sibal appeared for respondent. 

Title: VISHAL PIPES LIMITED v. BHAVYA PIPE INDUSTRY

Citation: 2022 LiveLaw (Del) 543

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