Gujarat High Court
Sbs Polychem Pvt. Ltd vs M/S Chemical Compound Llc on 17 February, 2025
Author: Sunita Agarwal
Bench: Sunita Agarwal
NEUTRAL CITATION
C/FA/300/2025 ORDER DATED: 17/02/2025
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IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/FIRST APPEAL NO. 300 of 2025
With
CIVIL APPLICATION (FOR INJUCTION) NO. 1 of 2024
In R/FIRST APPEAL NO. 300 of 2025
With
CIVIL APPLICATION (FOR AMENDMENT) NO. 1 of 2025
In R/FIRST APPEAL NO. 300 of 2025
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SBS POLYCHEM PVT. LTD.
Versus
M/S CHEMICAL COMPOUND LLC & ORS.
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Appearance:
MR. VISHAL J. PATEL, ADVOCATE WITH NIMIT Y SHUKLA(8338) for the
Appellant(s) No. 1
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CORAM:HONOURABLE THE CHIEF JUSTICE MRS. JUSTICE SUNITA
AGARWAL
and
HONOURABLE MR. JUSTICE PRANAV TRIVEDI
Date : 17/02/2025
ORAL ORDER
(PER : HONOURABLE THE CHIEF JUSTICE MRS. JUSTICE SUNITA AGARWAL) [1] The amendments are formal in nature. The amendment application is allowed. Necessary incorporation be made within 24 hours.
[2] By means of the present petition, two orders dated 25.10.2024 passed by the Commercial Court rejecting the suit for non compliance of the requirement of Section 12A of the Commercial Page 1 of 17 Uploaded by DHARMENDRA KUMAR(HC01071) on Mon Mar 10 2025 Downloaded on : Fri Mar 14 21:51:29 IST 2025 NEUTRAL CITATION C/FA/300/2025 ORDER DATED: 17/02/2025 undefined Courts Act, 2015 (hereinafter referred to as "the Act, 2015") are subjected to challenge on the ground that the rejection of suit in exercise of suo moto power by the Commercial Court invoking the provisions of Order VII Rule 11 of the Code of Civil Procedure, 1908 (hereinafter referred to as "the CPC") is an illegal exercise of power. [3] The contention is that none of the clauses of Rule 11 of Order VII of the CPC would be attracted in the present case, inasmuch as, neither it can be said that the claim does not disclose a cause of action nor the suit can be said to be barred by any law as per clauses
(a) and (d) of Rule 11 of under Order VII of the CPC. Apart from these two clauses, no other clause contained in Rule 11 can be taken aid of, to reject the plaint. It is argued that Section 12A of the Act, 2015 only requires mandatory process of pre-institution mediation to be exhausted by the plaintiff in view of sub-section (1) of Section 12A before instituting a suit under the Act, 2015. The requirement is that the plaintiff filing the commercial suit shall first undergo the process of pre-institution mediation and only in case of failure thereof, the suit can be instituted. The period of 3 months for completion of the process of mediation has been provided in sub-section (3) of Section 12A of the Act, 2015.
Page 2 of 17 Uploaded by DHARMENDRA KUMAR(HC01071) on Mon Mar 10 2025 Downloaded on : Fri Mar 14 21:51:29 IST 2025 NEUTRAL CITATION C/FA/300/2025 ORDER DATED: 17/02/2025 undefined [4] It is further argued that even from a perusal of sub-section (1)
of Section 12A, it can be seen that the requirement to exhaust the remedy of pre-institution mediation in accordance with Section 12A can be dispensed with and the plaintiff may be exempted from taking recourse of the said remedy, in a suit which contemplates any urgent interim relief under the Act, 2015. The submission, thus, is that there is no absolute bar from institution of the suit without exhausting remedy of pre-institution mediation under Section 12A of the Act, 2015. The Commercial Court has, thus, erred in dismissing the suit by taking recourse to the provisions of Order VII Rule 11 of the CPC.
[5] Taking note of the above submissions, we may record that the Hon'ble Apex Court in case of M/s Patil Automation Private Limited and Others versus Rakheja Engineers Private Limited reported in (2022) 10 SCC 1 as followed in case of Yamini Manohar versus T.K.D. Keerthi reported in (2024) 5 SCC 815 has discussed the scope of Section 12A of the Act, 2015 and it is held therein that the said provision is mandatory and any suit instituted violating the mandate of Section 12A must be visited with rejection of the plaint under Order VII Rule 11 of the CPC. The observations of the Hon'ble Apex Court in case of M/s Patil Page 3 of 17 Uploaded by DHARMENDRA KUMAR(HC01071) on Mon Mar 10 2025 Downloaded on : Fri Mar 14 21:51:29 IST 2025 NEUTRAL CITATION C/FA/300/2025 ORDER DATED: 17/02/2025 undefined Automation Private Limited and Others (supra) in paragraphs '113.1' to '113.3' are relevant to be extracted hereinbelow:-
"113.1 We declare that Section 12A of the Act is mandatory and hold that any suit instituted violating the mandate of Section 12A must be visited with rejection of the plaint under Order VII Rule 11. This power can be exercised even suo moto by the court as explained earlier in the judgment. We, however, make this declaration effective from 20.08.2022 so that concerned stakeholders become sufficiently informed.
113.2. Still further, we however direct that in case plaints have been already rejected and no steps have been taken within the period of limitation, the matter cannot be reopened on the basis of this declaration. Still further, if the order of rejection of the plaint has been acted upon by filing a fresh suit, the declaration of prospective effect will not avail the plaintiff.
113.3 Finally, if the plaint is filed violating Section 12A after the jurisdictional High Court has declared Section 12A mandatory also, the plaintiff will not be entitled to the relief.
[6] In the case of Yamini Manohar (supra), the challenge was to the rejection of the application under Order VII Rule 11 of the CPC filed by the petitioner / defendant therein. The Hon'ble Apex Court in case of Yamini Manohar (supra) taking note of the provisions of Section 12A of the Act, 2015 and the previous decision in the case of M/s Patil Automation Private Limited and Others (supra) has observed that Section 12A of the Act, 2015 does not contemplate Page 4 of 17 Uploaded by DHARMENDRA KUMAR(HC01071) on Mon Mar 10 2025 Downloaded on : Fri Mar 14 21:51:29 IST 2025 NEUTRAL CITATION C/FA/300/2025 ORDER DATED: 17/02/2025 undefined leave of the Court nor does the provision necessarily require an application seeking exemption. The pleadings on record and oral submissions would be sufficient. The words used in Section 12A of the Act, 2015 "a suit does not contemplate any urgent interim relief"
had been taken note of with the special emphasis on the word "contemplate", which connotes to deliberate and consider. The legal position stated therein, thus, is that the plaint can be rejected and not entertained reflects application of mind by the court viz. the requirement of 'urgent interim relief'. In the facts of the said case, it was noted in Yamini Manohar (supra) that an urgent interim relief has been prayed for and the condition that the plaint "contemplates an urgent interim relief" was satisfied and, therefore, there was no error in rejection of the application under Order VII Rule 11 of the CPC. Further, taking note of the decisions of the High Court of Bombay and Delhi in the case of Kaulchand H. Jogani v. M/s Shree Vardhan Investment & Ors. and in the case of Chandra Kishore Chaurasia versus R. A. Perfumery Works Private Limited, it was finally observed in paragraph '7' as under :-
"7. We are of the opinion that when a plaint is filed under the CC 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. The prayer for urgent interim relief should not be Page 5 of 17 Uploaded by DHARMENDRA KUMAR(HC01071) on Mon Mar 10 2025 Downloaded on : Fri Mar 14 21:51:29 IST 2025 NEUTRAL CITATION C/FA/300/2025 ORDER DATED: 17/02/2025 undefined a disguise or mask to wriggle out of and get over Section 12A of the CC Act. The facts and circumstances of the case have to be considered holistically from the standpoint of the plaintiff. Non- grant of interim relief at the ad-interim stage, when the plaint is taken up for registration/admission and examination, will not justify dismissal of the commercial suit under Order VII, Rule 11 of the Code; at times, interim relief is granted after issuance of notice. Nor can the suit be dismissed under Order VII, Rule 11 of the Code, because the interim relief, post the arguments, is denied on merits and on examination of the three principles, namely, (i) prima facie case, (ii) irreparable harm and injury, and (iii) balance of convenience. The fact that the court issued notice and/or granted interim stay may indicate that the court is inclined to entertain the plaint."
[7] It was, thus, held by the Hon'ble Apex Court that the Commercial Court should examine the nature and subject matter of the suit, the cause of action, and the prayer for interim relief to consider holistically from the standpoint of the plaintiff, the requirement of Section 12A of the Act, 2015 can be dispensed with. It was clarified that the prayer for urgent interim relief should not be a disguise or mask to wriggle out of and get over Section 12A of the Act, 2015. It was further clarified that non-grant of interim relief at the ad-interim stage, will not justify dismissal of the commercial suit under Order VII, Rule 11 of the CPC, inasmuch as, at times, the interim relief is granted after issuance of notice. It was also clarified that the suit cannot be dismissed under Order VII, Rule 11 of the Page 6 of 17 Uploaded by DHARMENDRA KUMAR(HC01071) on Mon Mar 10 2025 Downloaded on : Fri Mar 14 21:51:29 IST 2025 NEUTRAL CITATION C/FA/300/2025 ORDER DATED: 17/02/2025 undefined CPC, because the interim relief, post the arguments, has been denied on merits on examination of the three principles, namely, (i) prima facie case, (ii) irreparable loss and injury, and (iii) balance of convenience.
[8] Having said that, it was further observed by the Hon'ble Apex Court that the commercial court does have a role, albeit a limited one, to check that the mandatory requirement of pre-litigation mediation may not be bypassed by creating a camouflage and guise and such situation should be checked when deception and falsity is apparent or established. The plaintiff alone cannot have an 'absolute and unfettered right', inasmuch as, such an approach is not justified as the pre-institution mediation under Section 12A of the Act, 2015 is mandatory.
[9] It was held by the Hon'ble Apex Court in case of Yamini Manohar (supra) that the words 'contemplate any urgent interim relief' in Section 12A of the Act, 2015, with reference to the suit, should be read as conferring power on the court to be satisfied. Meaning thereby, from the plaint, documents and facts on record, the Court should be satisfied that the suit must "contemplate" an urgent interim relief so as to exempt the requirement to exhaust the Page 7 of 17 Uploaded by DHARMENDRA KUMAR(HC01071) on Mon Mar 10 2025 Downloaded on : Fri Mar 14 21:51:29 IST 2025 NEUTRAL CITATION C/FA/300/2025 ORDER DATED: 17/02/2025 undefined remedy of pre-institution mediation under Section 12A of the Act. It is observed that this is a precise and limited exercise of power conferred upon the commercial court in order to keep a check and balance to ensure that the legislative object / intent behind the enactment of Section 12A of the Act, 2015 is not defeated. [10] Taking note of the above decisions of the Hon'ble Apex Court, we may also take note of the judgment of this Court relied by the learned counsel for the petitioner in Special Civil Application No.13 of 2025, wherein after reading the above noted two decisions of the Hon'ble Apex Court, it was observed in paragraphs '17 to 21' as under:-
"17. From an exhaustive reading of the law laid down by the Apex Court in Patil Automation Private Limited (supra) and Yamini Manohar (supra), it is pertinent to note that when the plaint is presented before the Commercial Court under the C.C.Act' 2015 without adhering to the provisions of Section 12A of the C.C.Act' 2015, it is required to :-
(i) examine in exercise of its suo motu powers as to whether the suit itself contemplated "any urgent interim relief" and then decide as to whether the mandatory requirement of Section 12A of the C.C.Act, 2015 can be relaxed,
(ii) the Commercial Court should examine the nature and subject matter of the suit, the cause of action and the prayer for Page 8 of 17 Uploaded by DHARMENDRA KUMAR(HC01071) on Mon Mar 10 2025 Downloaded on : Fri Mar 14 21:51:29 IST 2025 NEUTRAL CITATION C/FA/300/2025 ORDER DATED: 17/02/2025 undefined interim relief to ascertain as to whether the prayer for urgent interim relief is a disguise or mask to wriggle out of and get over Section 12A of the C.C.Act, 2015,
(iii) the facts and circumstances of the case have to be considered holistically from the stand point of the plaintiff, (iv) non-grant of interim relief at the ad-interim stage, i.e. at the time of registration/admission and examination of the plaint, will not justify dismissal by the Commercial Court under Order VII Rule 11, CPC, inasmuch as, interim relief may be granted after issuance of notice,
(iv) the suit cannot be dismissed under Order VII Rule 11, CPC on the ground of non-compliance of Section 12A of the C.C.Act' 2015, because the interim relief has been denied on merits.
18. In its precise and limited exercise of powers, the Commercial Court will be required to examine from the reading of the plaint as a whole and the prayers made therein that the suit must contemplate an urgent interim relief, if filed without complying with the provisions of Section 12A of the C.C.Act' 2015. The word "contemplate" as explained by the Apex Court should be read as conferring powers on the Court to be satisfied about the requirement of an urgent interim relief and the plaint documents and facts should show and indicate the need for an interim relief.
19. However, while making such an inquiry, the Commercial Court in its limited exercise of powers with the idea to keep check that the legislative intent behind the enactment of Section 12A of the C.C.Act' 2015 is not defeated, can not enter into the merits of the relief sought by the plaintiff to examine as to whether the plaintiff is entitled to any relief either in the nature of interim relief or final relief. The plaint cannot be rejected or returned in the manner as has been done in the Page 9 of 17 Uploaded by DHARMENDRA KUMAR(HC01071) on Mon Mar 10 2025 Downloaded on : Fri Mar 14 21:51:29 IST 2025 NEUTRAL CITATION C/FA/300/2025 ORDER DATED: 17/02/2025 undefined present case where the Commercial Court having gone through the plaint averments and the documents on record, has even gone to the extent of holding that there does not exist any binding contract between the parties and has proceeded to observe that no contract took place between the plaintiff and the defendants, and consequently the Court is not inclined to grant any urgent interim relief to the plaintiff. The line which was required to be drawn by the Commercial Court at the time of making inquiry as to whether the mandatory requirement of Section 12A can be exempted at the time of registration of the plaint, has been crossed by it. The inquiry made by the Commercial Court at the pre-institution stage by making observations on the merits of the claim of the plaintiff, in fact, resulted into denial of any relief to the plaintiff, at the preinstitution stage itself.
20. At the pre-institution stage, as per the law laid down by the Apex Court in Yamini Manohar (supra), the Commercial Court could not have gone into the merits of the claim for grant of urgent interim relief. The only issue required to be examined at the preinstitution stage by the Commercial Court, was as to whether the plaintiff requires an urgent relief by consideration of the facts and circumstances of the case from the stand point of the plaintiff. What could go against the plaintiff at the time of consideration of the prayer for interim relief was not required to be examined while analyising the plaint averments, documents on record and the prayer made in the suit. The Commercial Court was required to only ascertain as to whether the prayer for interim relief is a camouflage or disguise to wriggle out of or bypass the statutory mandate of pre-litigation mediation under Section 12A of the C.C.Act' 2015. Though the plaintiff has no absolute and unfettered right to approach the Commercial Court without adhering to the pre-institution mediation under Section 12A of the C.C.Act' 2015 which is held mandatory by Page 10 of 17 Uploaded by DHARMENDRA KUMAR(HC01071) on Mon Mar 10 2025 Downloaded on : Fri Mar 14 21:51:29 IST 2025 NEUTRAL CITATION C/FA/300/2025 ORDER DATED: 17/02/2025 undefined the Apex Court in Patil Automation Private Limited (supra), but where the plaintiff seeks exemption, the Commercial Court has no jurisdiction to enter into the merits of the prayer for interim relief. Non-grant of interim relief at the adinterim stage or even after issuance of notice is not relevant for the purposes of the limited inquiry to be made by the Commercial Court under Section 12 of the C.C.Act' 2015 to keep a check that the legislative mandate is followed in its true letter and spirit.
21. The only limited scope of examination in the exercise of powers conferred under Section 12A of the C.C.Act' 2015 is that the Court should be satisfied that the prayer for interim relief has not been made simply to overcome the bar under Section 12A of the C.C.Act' 2015 and the interim relief application is not presented without any justification whatsoever. The inquiry is not contingent whether the Court accedes the plaintiff's request.
[11] Considering the above, we may record that in the present case, the trial court has made a suo motu inquiry on the presentation of the suit as to whether the requirement to exhaust remedy of pre- institution mediation can be dispensed with in the present case. We may record that having gone through the plaint, injunction application and the documents appended thereto, the trial court has recorded that from a perusal of the whole plaint, it transpires that the suit has been filed with regard to infringement of plaintiff's trademark. Though the plaintiff has prayed relief in the nature of injunction against defendants No. 1, 2 and 3 as well, apart from Page 11 of 17 Uploaded by DHARMENDRA KUMAR(HC01071) on Mon Mar 10 2025 Downloaded on : Fri Mar 14 21:51:29 IST 2025 NEUTRAL CITATION C/FA/300/2025 ORDER DATED: 17/02/2025 undefined defendant Nos. 3 and 4 against whom relief of infringement of the plaintiff's trademark had been prayed for. It is also noted by the trial court that the basis of bringing infringements suit by the plaintiff is the screenshots of the computer screen vide mark 4/5 to show that the plaintiff's registered trademark RHEOL is being infringed by the defendants No. 3 and 4.
[12] Besides the above, the trial court has further recorded that the plaintiff has raised a demand notice on 15.05.2024 towards unpaid invoices dated 01.12.2021 and 14.12.2021 against defendants No. 1 and 2. However, there is no relief against defendant Nos.1 and 2 directly for infringement of the trademark. In so far as, the allegations against defendant No.3 and 4 about infringement of the plaintiff's trademark, it is further recorded by the trial court that the plaintiff had produced board resolution of the plaintiff - company resolving to file a commercial trademark suit which is dated 01.08.2024. However, the plaintiff had filed the suit on 19.10.2024, after a period of 2 months 19 days, which fact further indicates that there is no urgency for passing of an interim injunction order. As far as the cause of action disclosed in the suit, as per own case of the plaintiff, the cause of action to file the suit arose in June, 2024.
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[13] The trial court has, thus, recorded that when the plaintiff came to know about infringement of its trademark in June, 2024, when it has waited for 4 months to bring its own action, it shows that the plaintiff has no urgency. With these findings, the trial court came to the conclusion that the plaintiff has failed to show and establish that it is in need of urgent interim relief and, therefore, cannot be permitted to dispense with the requirement to pre-institution mediation under the provisions of Section 12A of the Act, 2015, which is mandatory as per the law laid down by the Hon'ble Apex Court in the case of M/s Patil Automation Private Limited and Others (supra).
[14] Placing these observations made by the trial court, it was vehemently argued by the learned counsel for the petitioner that the trial court could not have gone into the merits of the interim injunction application and, moreover, in an infringement suit, the delay cannot be said to be fatal. Reliance is placed on the decision of the Hon'ble Apex Court in the case of M/s Patil Automation Private Limited and Others (supra) to submit that in an infringement action, if the Court is satisfied about prima facie existence of the case of infringement, an interim injunction order needs to be passed.
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[15] Placing the observation made by this Court in the aforesaid decision in the case of Jindal Flexiflims Limited versus MHM Holding GMBH & Ors, it was further argued that this Court has outlined the limitations on the exercise of power of the commercial court under Section 12A of the Act, 2015 by reading of judgments in M/s Patil Automation Private Limited and Others (supra) and Yamini Manohar (supra) and has clarified that the suit cannot be dismissed under Order VII Rule 11 of the CPC on the ground of non- compliance of Section 12A of the Act, 2015, because the interim relief has been denied on merits.
[16] It is, thus, argued that within the limited scope of exercise of power under Section 12A of the Act, 2015, it was not permissible for the trial court to reject the plaint by invoking the provisions of Order VII Rule 11 of the CPC. Attention of the Court is invited to an order dated 07.02.2024 passed by the Hon'ble Apex Court in Special Leave to Appeal (c) No.2753/ 2025 to submit that the question whether, due to non-compliance with Section 12A of the Act, 2015, suit should be dismissed under Order VII Rule 11 of the CPC or whether it should be kept in abeyance, directing the parties to first explore the possibility of settlement by instituting mediation, has been posed by the Court to itself which is pending consideration.
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[17] Taking note of all these arguments made by learned counsel for the petitioner, suffice it to note that as per the settled position of law as on date, as stated in M/s Patil Automation Private Limited and Others (supra), a suit instituted violating the mandate of Section 12A must be visited with rejection of the plaint under Order VII Rule 11 of the CPC and the said power can be exercised even suo moto by the commercial court. The position of law that Section 12A of the Act, 2015 is mandatory also stands as on date. [18] In view of the current settled law by the Hon'ble Apex Court in two decisions, namely M/s Patil Automation Private Limited and Others (supra) and Yamini Manohar (supra), it is not possible for us to make any inquiry as to whether the suit violating the mandate of Section 12A must be visited with the rejection of the plaint under Order VII Rule 11 of the CPC. The said question, as placed before us, is subject matter of consideration before the Hon'ble Apex Court. [19] Coming to the merits of the order passed by the commercial court, suffice it to note that on a holistic consideration of the plaint, injunction application and the documents produced by the plaintiff and the inaction on the part of the plaintiff, the trial court came to Page 15 of 17 Uploaded by DHARMENDRA KUMAR(HC01071) on Mon Mar 10 2025 Downloaded on : Fri Mar 14 21:51:29 IST 2025 NEUTRAL CITATION C/FA/300/2025 ORDER DATED: 17/02/2025 undefined the conclusion that it is not a case worth granting exemption of the mandatory requirement of Section 12A of the Act, 2015. This finding returned by the trial court in its limited scope of inquiry under Section 12A of the Act, 2015, cannot be said to suffer any error of law. The observations made in the order impugned cannot be said to be the observations on the merits of the interim injunction application, rather it was in order to explore from the facts of the case as to whether the mandatory requirement of Section 12A of the Act, 2015 can be dispensed in the facts and circumstances of the present case.
[20] For the above, we do not find any error in the decision of the trial court, both the orders of rejection of the application seeking exemption from the provisions of Section 12A of the Act, 2015 and the resultant dismissal of the suit under Order VII Rule 11 of the CPC for violating Section 12A of the Act, 2015. No interference is called for. The present petition stands dismissed, accordingly. [21] However, it goes without saying that the plaintiff / petitioner herein is at liberty to institute a fresh suit after complying with the requirement of Section 12A of the Act, 2015 by undertaking the proper procedure for the purpose. The dismissal of the present suit Page 16 of 17 Uploaded by DHARMENDRA KUMAR(HC01071) on Mon Mar 10 2025 Downloaded on : Fri Mar 14 21:51:29 IST 2025 NEUTRAL CITATION C/FA/300/2025 ORDER DATED: 17/02/2025 undefined by the trial court by the orders impugned or the dismissal of the present petition by this order, will not come in the way of the petitioner. It is further clarified that none of the observations made by the trial court in the orders impugned or in this order hereinabove will come in the way of the plaintiff in any of the subsequent proceedings.
[22] Connected Civil Applications stand disposed of.
(SUNITA AGARWAL, C.J.) (PRANAV TRIVEDI, J.) DHARMENDRA KUMAR Page 17 of 17 Uploaded by DHARMENDRA KUMAR(HC01071) on Mon Mar 10 2025 Downloaded on : Fri Mar 14 21:51:29 IST 2025