High Courts Having No Commercial Division Competent To Consider Cancellation Of Design Under Section 22(4) Of Designs Act : Supreme Court

The judgment delivered by the Supreme Court on December 1 in the case S D Containers, Indore v M/s Mold Tek Packaging Ltd discusses the interplay between the Designs Act 2000 and the Commercial Courts Act 2015.

A bench comprising Justices L Nageswara Rao, Hemant Gupta and Ajay Rastogi held that it is not necessary that a suit involving the issue of cancellation of design under Section 22(4) of the Designs Act should be heard by a High Court having a Commercial Division. It held that a High Court without original civil jurisdiction and a commercial division is competent to consider such a case.

As per Section 22 of the Designs Act, a defendant in a suit for infringement of design is entitled to raise a defence that the registration of design is liable to be cancelled. Section 22(4) states that if such a defence is raised, the Court in which the suit is pending shall transfer it to the High Court.

In the instant case, S D Containers instituted a case in the District Court, Indore, for infringement of design of its container lids against the defendant. The defendant raised a counter-claim seeking cancellation of the design. In this backdrop, the District Court chose to exercise the power under Section 22(4). However, the District Court ordered the transfer of the suit to the Calcutta High Court on the reasoning that the Madhya Pradesh High Court has no commercial division(since it has no original civil jurisdiction). The Court noted that after the enactment of Commercial Courts Act, 2015, cases under the Designs Act over the specified pecuniary limit had to be dealt with by Commercial Courts. The design was registered by the Controller General of Patents & Trademarks, Kolkata.

Aggrieved by the transfer of the case to Calcutta High Court, the plaintiff approached the Madhya Pradesh High Court(Indore Bench).

The High Court held that since the Commercial Courts Act 2015 has an overriding effect, the suit has to be considered by a Commercial Court and not the High Court as envisaged by the Designs Act.

The Court ordered the District Court at Indore(which has been notified as a Commercial Court) to decide the suit.

A single bench of Justice Vivek Rusia of the HC observed :

"The Commercial Courts Act is a special enactment having an overriding effect over other enactments by virtue of section 21. The Parliament was conscious enough to provide a provision of transfer of commercial dispute to the High Court only having the ordinary original civil jurisdiction but all other High Courts do not enjoy the original jurisdiction and where the provision has been made for constitution of Commercial Courts and all the suits and applications relating to the commercial disputes are liable to be transferred to the Commercial Courts as per the territorial jurisdiction. Despite the word 'High Court' used in section22 (4) but after enactment of the Commercial Courts Act2000, such a suit is liable to be transferred to the Commercial Court and not to the High Court in a State where the High Court has no ordinary original civil jurisdiction".

The Supreme Court disapproved this reasoning of the High Court.

While deciding the appeal filed by the plaintiff, the SC noted that Section 7 of the Commercial Courts Act, which talks about creation of Commercial Divisions in High Courts, is applicable only to High Courts having original civil jurisdiction.

The apex court further noted that there is no provision in the 2015 Act either prohibiting or permitting the transfer of the proceedings under the 2000 Act to the High Courts which do not have ordinary original civil jurisdiction.

The overriding effect of the 2015 Act as per its Section 21 will come into play only in the event of any inconsistency with any other law.

"Since the 2015 Act has no provision either prohibiting or permitting the transfer of proceedings under the 2000 Act, Section 21 of the 2015 Act cannot be said to be inconsistent with the provisions of the 2000 Act", observed a bench .

The Supreme Court observed that the transfer to High Court under Section 22(4)  "is a ministerial act if there is a prayer for cancellation of the registration".

Another reasoning given by the High Court was that since the appellate power over the cancellation of design registration by the Controller under Section 19 of the Designs Act was conferred on the High Court, it would be anomalous to transfer the suit to the High Court itself.

This reasoning was also found to be flawed by the judgment authored Justice Hemant Gupta.

The SC observed that the power of controller to cancel registration under Section 19 and the right of a defendant to seek revocation of the same in a suit under Section 22 are "independent provisions giving rise to different and distinct causes of action".

The top court approved the decision of the District Court to transfer the case to the High Court but held that it erred while ordering its transfer to the Calcutta High Court.

"Since no part of cause of action has arisen within the jurisdiction of Kolkata, the suit is liable to be transferred to Madhya Pradesh High Court, Indore Bench. In fact, the Plaintiff has filed suit at Indore, Madhya Pradesh only", the SC observed.

The Supreme Court directed that the suit should be decided by Madhya Pradesh High Court, Indore Bench.

Case Details

Title :S D Containers, Indore v M/s Mold Tek Packaging Ltd(Civil Appeal No. 3695/2020)

Bench : Justices L Nageswara Rao, Hemant Gupta and Ajay Rastogi.

Appearances : Advocate Jai Sai Deepak for the appellant; Assudani for the respondent.

Click here to read/download the Supreme Court judgment

Click here to read/download the High Court judgment