Vishal Pipes Limited V. Bhavya Pipe Industry
There are two main concerns:
1. Whether the IPR suits that are valued below Rs.3 lakhs can be listed before the District Judges who are not notified as Commercial Courts?
2. If yes, will the provisions of CCA would be applicable to such disputes?
1. Jurisdiction of the Commercial Court is discussed in detail in the case of Daimler Financial Services India Pvt. Ltd. V. Vikash Kumar and Ors. 2020.
In this case:
A. The petitioner is a non-banking financial company from which the respondents obtained a loan and later failed to repay the same.
B. As per the agreement of the parties the matter was referred to the sole arbitrator, judgement was passed.
C. But the petitioners were not satisfied with it, so they filed a petition at the Commercial Court Dhanbad.
D. The presiding officer dismissed the petition and concluded that the pecuniary jurisdiction of the said court is 1 crore and above and there is no such notification from the state government about any amendment.
E. The petitioner filed a petition at the High Court of Jharkhand in Ranchi under Article 227 of the Constitution of India.
F. The Hon’ble High Court thus held that:
The Section 2(1) (i) of the Commercial Courts Act, 2015 post Amendment Act 28 of 2018, the specified value given in section 3(1) of the Commercial Courts Act,
2015 to be determined by Section 12 is “not less than 3 lakhs.” Section 2(1) (i) of the Commercial Courts Act, 2015 after 2018 amendment reads as:
2(1)(i) “Specified Worth” refers to the amount of the subject matter in a suit as determined under section 12 [which must not be less than three lakh rupees] or such higher value as the Central Government may notify regarding a commercial dispute.
Section 3(1-A) of the Commercial Courts Act, 2015 as amended by the Amendment Act of 28 of 2018, which became retrospectively effective from 3rd May 2018 reads as:
“3(1-A) Notwithstanding anything in this Act, the State Government may, by notification, specify such pecuniary value which shall not be less than three lakh rupees
or such higher value, for the whole or part of the State, as it may consider necessary, after consultation with the concerned High Court.”
ii. The order, passed by the presiding officer of the Commercial Court in Dhanbad, dismisses the petition because the Commercial Courts and Dhanbad had no pecuniary jurisdiction and was said to be non-sustainable by the Hon’ble High court of Ranchi. Based on the abovementioned amendments the Ld. counsel for the petitioner submitted that the impugned order passed by the Presiding Officer of the Commercial Court of Dhanbad, should be quashed and set aside.
G. The Hon’ble High Court made it very clear that the Commercial Court Dhanbad is free to pass its independent order without being prejudiced.
2. For the Commercial Court to exercise jurisdiction, the twin test of pecuniary and subject-matter jurisdiction must be satisfied.
This position has been upheld by various decisions such as:
a. Neelkanth Healthcare Pvt. Ltd. v. Neelkanth Healthchem, AIR 2018 Raj 67, AIR 2018 Raj 67; and
b. Ambala Sarabhai Enterprises Limited v. K S Infraspace LLP and Anr., 2020 (15) SCC 585.
Reliance is placed upon Section 134 of the Trademarks Act and provisions of the Commercial Courts Act, to submit that the provisions of the two statutes ought to be harmoniously construed to arrive at the forum which will have jurisdiction in such matters. Thus, the definition of specified value cannot be ignored.
The Court said that the plaintiff can choose its forum. However, this prerogative cannot eclipse the requirement of justice. The right to choose the forum is not an absolute one and can be taken away.
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 on behalf of the plaintiff is observed to be whimsical or arbitrary that, then the Court ought to intervene.
The Ld. Amicus Curiae made a written submission of arguments supporting the twin test of pecuniary and subject-matter jurisdiction that must be satisfied in selecting the Jurisdiction of Commercial Courts.
It is made clear that, w.r.t to the Commercial Courts Act, the pecuniary jurisdiction of the District Judge (Commercial Courts) is above 3 Lakhs, hence the Suits that have a specified value, post valuation, of 3 Lakh and above shall only be tried before a District Judge in a Commercial Court.
As for the setting up the threshold of Rs. 3 Lakhs, for ‘Specified Value’ in Commercial Suits, the Hon’ble Court is of the opinion that – “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.” With respect to which, the Hon’ble Court has also issued following instructions:
• The Court should investigate the allegations in the plaint and examine the substantive reliefs. Whimsical valuation is not permitted.
• Valuation of a suit must be adequate and reasonable. The plaintiff cannot deliberately/arbitrarily undervalue the relief. There must be a genuine effort by the plaintiff to estimate the relief.
• If the valuation given by the plaintiff is arbitrary unreasonable, the Court may reject the same and permit the plaintiff to correct the valuation or have the plaint rejected.
• The plaintiff cannot whimsically choose a ridiculous figure for filing the suit in an arbitrary manner where there are positive materials or objective standards of valuation of the relief.
• The plaintiff must give definite reasons for not ascertaining the exact value of the relief. If the exact valuation is not done, based on certain basic requirements, the plaintiff’s discretion would become arbitrary.
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.
However, for the suits that are valued below the threshold of 3 Lakh rupees, the plaintiff is to be given an option to either amend their plaint OR to proceed further with a Noncommercial Suit. If otherwise, the valuation of the Suit verified by the District Judge (Commercial Court) as per the provisions of the Commercial Courts Act, 2015 results in below 3 Lakh Rupees, then in such case, the Suit may be proceeded under a District Judge (Non-commercial) in a Civil Court. The Hon’ble Court further held that, the suits that do not meet the threshold of the Specified Value can still be tried under the District Judge (Commercial Court). However, the provisions of the Commercial Courts Act, 2015 would not be applicable for such suit.