Sap Aktiengesellschaft & Anr. vs M/S. Varehouse Infotech
2009 Latest Caselaw 4705 Del

*      IN THE HIGH COURT OF DELHI AT NEW DELHI

+      I.A. No.11153/2009 in CS(OS) No. 623/2009

                                           Decided on: 19th November, 2009

       SAP AKTIENGESELLSCHAFT & ANR.            ..... Plaintiffs
                       Through Mr. Kunal Verma with Mr. K.
                               Krishna, Advs.
                versus

       M/S VAREHOUSE INFOTECH                    ..... Defendant
                   Through   Ms. Jyoti Taneja, Adv.

Coram:

HON'BLE MR. JUSTICE MANMOHAN SINGH

1. Whether the Reporters of local papers may
   be allowed to see the judgment?

2. To be referred to Reporter or not?                 Yes

3. Whether the judgment should be reported
   in the Digest?

MANMOHAN SINGH, J.

1. By this order, I shall dispose of an application being I.A.

No.11153/2009 under Order VII Rule 10 of the Code of Civil Procedure ,

1908 (hereinafter referred to as CPC) filed by the defendant praying

return of plaint to the plaintiffs on account of lack of territorial

jurisdiction pertaining to present suit.

2. The brief facts are that the plaintiffs filed the suit for permanent

injunction restraining infringement of copyright, damages, delivery up,

rendition of account of profits etc. The suit has been filed by M/s. SAP

Aktiengesellschaft, Germany, the plaintiff No.1 and M/s. SAP India Pvt.

Ltd., Salarpuria Soft Zone, 2nd floor, Wing A, Sarjapur, Outer Ring Road,

Bellundur Post, Bangalore-560 103, also at 2nd floor, Gesco Centre, 70, CS(OS) No.623/2009 1 of 11 Nehru Place, New Delhi-110019. The plaintiffs have invoked the

territorial jurisdiction of this court in terms of para 26 of the plaint which

reads as under:-

"This Hon‟ble Court has jurisdiction to entertain and try the present suit by virtue of Section 62(2) of the Copyright Act of 1957 as the plaintiff No.2 carries on business within the jurisdiction of this Hon‟ble Court, through its Branch Office situated at 2nd Floor, Gesco Centre, 70, Nehru Place, New Delhi-110019. Further the training services in SAP software is being offered by its Authorized Partner Siemens Information Systems Limited in New Delhi at 1st Floor, VIPPS Centre 2, Local Commercial Complex, Masjid Moth Greater Kailash-2 New Delhi- 110048. Further the defendants are voluntarily residing and carrying on business within the territorial jurisdiction of this Hon‟ble Court."

3. The defendant has filed the written statement and in para No.26

thereof the defendant has denied the territorial jurisdiction of this court.

Para 26 of the written statement reads as under:-

"That the contents of paragraph 26 of the plaint are denied as being wrong and false. It is submitted that the plaintiffs‟ reliance on Section 62(2) Copyright Act, 1957 is wrong and ill-founded. It is submitted that this Hon‟ble Court does not have jurisdiction in light of the decisions of the Apex Court in Dhodha House & Patel Field Marshal Industries vs. S.K. Mainigi & PM Diesels Ltd. [2006 (32) PTC 1 (SC)] and the decision of this Hon‟ble Court in Sanjay Dalia (supra) and Shaw Wallace (supra), whereby the respective courts have made it amply clear that jurisdiction of a particular court can only be invoked if that jurisdiction has some nexus with the cause of action and not otherwise. Accordingly, mere presence of a branch office or an authorized partner cannot vest a court with jurisdiction to adjudicate a suit under Section 62(2) Copyright Act, 1957 unless some cause of action has arisen within the said jurisdiction. Accordingly, the present suit may be dismissed on this ground alone that this Hon‟ble Court does not enjoy jurisdiction to adjudicate this present suit.

It is also noteworthy that the plaintiffs have deliberately made false and misguiding averments in the plaint to try and confer jurisdiction to this Hon‟ble Court, that the defendant is voluntarily residing and carrying on business within the territorial jurisdiction of this court. It is submitted that the defendant is neither residing nor carrying CS(OS) No.623/2009 2 of 11 on any form of business within the territorial jurisdiction of this Hon‟ble Court and any contrary averment on the part of the plaintiffs‟ is merely nonsensical. It is also significant to note that the plaintiffs‟ have not provided any cogent evidence to show that the defendants are within the territorial jurisdiction of this Hon‟ble Court but have in their own Memo of Parties themselves clearly provided two Chennai addresses of the defendant and have not shown any place of resident or business of the defendant which is within the territorial jurisdiction of this Hon‟ble Court. This clearly underline that the averments of the plaintiffs are not only mutually destructive but are also frivolous and malafide in nature. Furthermore the plaintiffs are trying to invoke the jurisdiction of this Hon‟ble Court on the ground that the plaintiff is imparting training services in its software through its authorized partners who is situated within the territorial jurisdiction of this Hon‟ble Court. However, a bare perusal of Clause 8, „Relationship of Parties‟ of the „Partner Cooperation Agreement: SAP Education Program‟ as appended by the plaintiff along with the plaint, clearly highlight that the relationship between the plaintiffs and an authorized Education Partners is that of an independent contractor and not of an agent, distributor, legal partnership or joint venture."

4. In the present application filed by the defendant under Order VII

Rule 10 CPC the defendant has mainly reiterated the defence stated in

para 26 of the written statement. It is contended that the defendant is

neither residing nor carrying on business within the jurisdiction of this

court and the plaintiffs have deliberately and intentionally misled this

court by making a statement to the contrary.

5. It is further contended in the application that although the plaintiffs

have invoked the jurisdiction of this court under Section 62(2) of the

Copyright Act, 1957 on the ground that the defendant No.2 carries on

business within the jurisdiction of this court at Nehru Place, New Delhi,

no documents in this regard have been produced by the plaintiffs and it is

well settled that merely having a branch office in Delhi does not mean

that the plaintiff carries on business in Delhi. In support of this

CS(OS) No.623/2009 3 of 11 contention, the defendant has referred various judgments in para 6 and 7

of the application.

6. It is argued that the plaintiffs have miserably failed to satisfy the

pre-requisite of Section 62(2) of the Copyright Act, 1957, therefore, the

plaintiffs cannot invoke the jurisdiction of this court on the basis of the

bald assertion that they are carrying on business within the territory of

this court.

7. Learned counsel for the defendants has also referred the order

dated 11th February, 2009 passed in CS(OS) No.29/2009 titled as SAP

Aktiengescellschaft & Anr. Vs. M/s. Parginsys & Anr. wherein the plaint

has been returned by the court to present the same before the appropriate

court.

8. It is well settled that territorial jurisdiction of a court can be

invoked by a party in a suit as the same is governed by Section 20 CPC

except in relation to immovable property. Section 20 CPC provides that

every suit shall be instituted in the court within the local limits of which

the plaintiff actually and voluntarily resides and carries on business or

personally works for gain or where the cause of action wholly or in part

arises. As already mentioned, the plaintiffs have invoked the jurisdiction

of this court on two counts; first that the plaintiff No.2 is carrying on

business within the territory of this court and second that the defendant is

also carrying on business within the jurisdiction of this court. The

specific statement in this regard is mentioned in para 26 of the plaint.

9. In order to prove the statement made in para 26 of the plaint, the

plaintiffs have filed the copy of the Lease Deed of the premises from

where the plaintiff No.2 is carrying on its business, executed between

CS(OS) No.623/2009 4 of 11 plaintiff No.2 and M/s. Puneet International.

10. Learned counsel for the plaintiffs has argued that the training

services of the infringing SAP Software are being offered by the

defendant in a clandestine manner within the jurisdiction of this court,

therefore, this court has the territorial jurisdiction to entertain and try the

present suit. He has also argued that at this stage, this court has to take a

prima facie view of the matter as the scope of Order VII Rule 10 is

limited and only averments made in the plaint have to be looked into and

unless these are untrue on the face of it, they have to be taken as correct.

He argued that the plaint cannot be returned if, prima facie, evidence as

regards the carrying on of business is available on record under Section

62(2) of Copyright Act.

11. As regards the jurisdiction invoked by the plaintiff under Section

62(2) of the Copyright Act pertaining to infringement of Copyright, the

said Section reads as under:-

Section 62. Jurisdiction of court over matters arising under this Chapter--

(1) Every suit or other civil proceeding arising under this Chapter in respect of the infringement of copyright in any work or the infringement of any other right conferred by this Act shall be instituted in the district court having jurisdiction.

(2) For the purpose of sub-section (1), a "district court having jurisdiction" shall, notwithstanding anything contained in the Code of Civil Procedure, 1908 (5 of 1908), or any other law for the time being in force, include a district court within the local limits of whose jurisdiction, at the time of the institution of the suit or other proceeding, the person instituting the suit or other proceeding or, where there are more than one such persons, any of them actually and voluntarily resides or carries on business or personally works for gain.

12. This provision of Copyright Act shows that the court‟s jurisdiction

for the purpose of Section 62 is an additional ground for invoking the

jurisdiction as prescribed under Section 20 of the Code of Civil

Procedure, 1908. In Exphar S.A. vs. Eupharma Laboratories 2004 SC

251 at Paras 13 & 14 it was observed as under:-

CS(OS) No.623/2009 5 of 11 "13. Even if the jurisdiction of the Court were restricted in the manner construed by the Division Bench, it is evident not only from the cause title but also from the body of the plaint that the appellant No.2 carries on business within the jurisdiction of the Delhi High Court. The appellant No.2 is certainly "a person instituting the suit". The Division Bench went beyond the express words of the statute and negatived the jurisdiction of the Court because it found that the appellant No.2 had not claimed ownership of the copyright of the trademark infringement of which was claimed in the suit. The appellant No.2 may not be entitled to the relief claimed in the suit but that is no reason for holding that it was not a person who had instituted the suit within the meaning of Section 62(2) of the Act."

14. Furthermore, the appellants' plaint said that the 'cease and desist' notice was sent to the appellant No.2 at its office in New Delhi and in that notice it was alleged that the appellant No.2 had infringed the copyright of the respondent No.2 to the trademark 'Maloxine'. Now a cease and desist notice means that the recipient is alleged to have infringed the rights of the sender of the notice to the copyright and as a result of such alleged infringement the recipient is liable to institution of civil and/or criminal proceedings. It is a threat. The plaint says that this threat was received within the jurisdiction of the High Court a fact which was sufficient to invoke the jurisdiction of that Court."

13. In the case of Pfizer Enterprises Sarl Vs. Cipla Ltd. and P.M.

Diesels Ltd. Vs. Patel Field Marshal Industries; 2009 (39) PTC 358

(Del) decided by the Division Bench of this court it was held that:-

"11. The exposition of law to be found in Exphar SA v.

Eupharma Laboratories Ltd. MANU/SC/0148/2004: 2004 (28) PTC 251 (SC) is apposite. Even if a deemed admission is not drawn against the Defendant, the averments made in the Plaint must, in interlocutory proceedings, be treated as true. The Supreme Court has observed that when an objection to jurisdiction is raised by way of demurrer and not at the trial, the objection must proceed on the basis that the facts as pleaded by the initiator of the impugned CS(OS) No.623/2009 6 of 11 proceedings are true. The submission in order to succeed must show that granted those facts the Court does not have jurisdiction as a matter of law. Unlike the case in hand, the Defendant before the Supreme Court had denied the assertion that the Plaintiffs goods were not sold in Delhi. A fortiori, when relevant pleadings are not denied, the Court would be falling in error in not accepting as correct the factual version expressed in the Plaint. A similar enunciation of the law is to be found in Laxman Prasad v. Prodigy Electronics Ltd. MANU/SC/4571/2007:2008 (37) PTC 209 (SC). A reading of Laxman Prasad will unquestionably disclose that the Intas opinion now has the imprimatur of the Supreme Court. Learned Counsel for the Appellants has elaborately quoted from Dhodha House but in our view this case does not help the resolution of the conundrum before us.

12. The Preliminary Question which arose in Dhodha House was whether the existence of jurisdiction under Copyright Act, 1957 would also enable the clubbing of the dispute arising from the Trade and Merchandise Act, 1958. The Supreme Court explained that existence of territorial jurisdiction by virtue of one Act would not clothe that very Court with a determination of a dispute under another Act only because of the provisions of Order II of the CPC (The parties in the P.M. Diesel were also one of the Appellants in the Dhodha House matter). Secondly, it had been observed that this Court had not adverted to the third contention that had arisen in the matter, viz. whether the Defendant had been selling its products on a commercial scale in Delhi. We think it necessary to at once clarify that in P.M. Diesel averments made in the Plaint have not been admitted in the Written Statement as is the case in the Pfizer Appeal. Our attention has also been drawn to the observations made by their Lordships in Dabur India v. K.R. Industries MANU/SC/2244/2008: MIPR2008(2)215 where it was reiterated that since the primary ground upon which jurisdiction of the Delhi High Court had been invoked was violation of the Trade and Merchandise Marks Act, 1958 the provisions of Section 62(2) of the Copyright Act, 1957 could not be invoked. This was also the ratio of Dhodha House. It was also observed that the Plaintiff in Dhodha House was not a resident of Delhi; that he had not been able to establish that it carried on any business at Delhi; for this purpose the question as to whether the Defendant had been selling its produce in Delhi or not was wholly irrelevant. The last of the three observations clarifies the position pertaining to the place where the Plaintiff transacts business. Section 134(2) of the Trade Marks Act, 1999 enables the Plaintiff to institute any suit or proceedings in the District Court having jurisdiction over the territories where it "actually and voluntarily resides or carries business or personally works CS(OS) No.623/2009 7 of 11 for gain". This is also what is postulated by Section 62(2) of the Copyright Act, 1957. It was for this reason that their Lordships clarified that it was wholly irrelevant whether the Defendant was selling its products in the place where the suit had been filed. However, if the territorial jurisdiction is invoked by the Plaintiff on the ground of the cause of action having arisen in the form of sale of offending goods within the territories of that Court, the question of Defendant‟s activity would become relevant and the Plaintiffs activity would become irrelevant. If the Plaint discloses that the Defendant has violated the Plaintiff‟s Trademark or Copyright in a particular place, the cause of action would arise therein and the observations in Laxman Prasad would clothe that Court with jurisdiction."

14. The case of Shaw Wallace & Co. Ltd. V. MP Beer Products

Pvt. Ltd. 149 (2008) DLT 391 referred to by the learned counsel for the

plaintiffs is not applicable to the facts of the present case as in the order

itself it is mentioned that the plaintiffs have nowhere stated in the plaint

that they have any office or branch in Delhi or that they were carrying on

their business in Delhi through any Branch office, however, in the

present case in para 26 a specific statement has been made by the

plaintiffs to the following effect:-

"the plaintiff No.2 carries on business within the jurisdiction of this Hon‟ble Court, through its Branch office situated at 2nd floor, Gesco Centre, 70, Nehru Place, New Delhi- 110019. Further the training services in SAP software is being offered by its Authorized Partner Siemens Information Systems Limited in New Delhi."

15. The learned counsel has referred the order of Single Bench and

Division Bench in the case of Indian Performing Rights Society Ltd. Vs.

Sanjay Dalia & Anr. wherein this court has held that if the cause of

action has arisen at a particular place where the plaintiff has its principal

office or subordinate office and it is restricted to filing a case in that place

alone, the defendant would not be put to any unfair disadvantage. The

said matter has been taken to the Supreme Court where it is pending for

CS(OS) No.623/2009 8 of 11 consideration. The operation of this judgment has been stayed in SLP

No.980-981/2009 on 27th January, 2009.

16. In Tata Iron & Steel Co. Ltd. V. Mahavir Steels & Ors.;

47(1992) DLT 412 it was observed in para 11 as under :

"11. The question regarding jurisdiction can only be gone into after the evidence of the parties is recorded in the case. Even in the Punjab case the suit was not thrown out at the threshold under Order 7 Rule 11 CPC but only after the parties were given an opportunity to lead evidence. The plaint in the present suit categorically states that the defendant no.1 was selling the channels of defendant no.2 under the offending trade mark which is deceptively similar to that of the plaintiff. On these averments the Court must assume jurisdiction and proceed with the suit to determine the question relating to the confirmation/vacation of the stay order at this stage."

17. As regards the second averment made by the plaintiffs in para 26

of the plaint that the defendant is carrying on business within the

jurisdiction of this court, this fact has been denied by the defendant in the

written statement. The fact remains that the plaintiffs have made a

specific averment in the plaint which is a mixed question of facts and law

and the same cannot be decided at this stage. In the case of Tata Iron and

Steel Company Private Limited (supra), it was held that the question

regarding jurisdiction can only be looked into only after the evidence of

the parties has been recorded.

18. This aspect has been decided by Justice Badar Durrez Ahmed in Pfizer Products Inc. Vs Rajesh Chopra & Ors, 2006(32) PTC 301(Delhi) wherein it was observed as under :-

"12. The other aspect of the matter is that a threat of selling the offending goods in Delhi would in itself confer jurisdiction in the courts in Delhi to entertain a suit claiming an injunction in respect thereof. Whether the threat perception is justified or not is another matter which has to be considered and decided upon in the application filed by CS(OS) No.623/2009 9 of 11 the plaintiff under Order 39 Rules 1 and 2 or on merits when the suit is taken up for disposal. Insofar as Order 7 Rule 10 is concerned, assuming that whatever is stated in the plaint is correct, one would have to also assume that the threat or the intention of the defendants to sell and offer for sale the offending goods in Delhi is also correct. Therefore, if the threat exists then this court would certainly have jurisdiction to entertain the present suit."

19. In LG Corporation & Anr. Vs Intermarket Electroplasters(P)

Ltd. and Anr.; 2006 (32) PTC 429, the following observations were

made in para 7 :-

"7. ......The question as to whether the Court has territorial jurisdiction to entertain a suit or not has to be arrived at on the basis of averments made in the plaint, that truth or otherwise thereof being immaterial as it cannot be gone into at this stage....."

20. In view of the above mentioned well settled law it is not in dispute

that the plaintiff No.2 is carrying on business in Delhi on an extensive

scale in a commercial manner, therefore, this court cannot ignore the

statutory provisions of Section 62(2) of the Copyright Act as well as the

mandate of the Supreme Court in the case of Exphar S.A. (supra).

21. As regards the order referred by the learned counsel for defendant

passed in Suit No.29/2009, with great respect, this court is unable to

agree with the finding of the said order in view of the settled law by the

Apex Court in Exphar S.A. (supra) which has not been considered in the

said order and this court is bound by the judgment passed by the Supreme

Court as the observations made in the order are contrary to the decision

made by the Apex Court in Suit No.29/2009.

22. Having considered the rival submissions of the parties and the

judgments referred by the learned counsel for the parties it cannot be held

that the suit filed by the plaintiffs has no cause of action nor that this

CS(OS) No.623/2009 10 of 11 court lacks territorial jurisdiction to try the same. At this stage only a

prima facie view has to be taken on the basis of the averment made in the

plaint and evidence produced, which in my opinion is that the plaintiffs

are carrying on business within the territory of this court. The judgment

Exphar S.A. (supra) is directly applicable to the present case and this

court has territorial jurisdiction under Section 62 (2) of the Copyright

Act.

23. There is no doubt that the plaintiffs, during the course of trial, have

to prove the statement made in para 26 of the plaint but at this stage it

cannot be decided that this court lacks inherent jurisdiction to entertain

and try the present suit. The application of the defendant is not

maintainable and the same is dismissed. No order as to costs.

24. List the matter before the Joint Registrar on 14th December, 2009

i.e. the date already fixed for admission/denial of documents.

MANMOHAN SINGH, J.

NOVEMBER 19, 2009
nn




CS(OS) No.623/2009                                                    11 of 11