M/S. Kapoor Saws Manufacturing ... vs M/S Crown Saw Blades Mfg. Co. & Anr.
2012 Latest Caselaw 3426 Del

*              IN THE HIGH COURT OF DELHI AT NEW DELHI

+                           RFA No.17/2005

%                                                         22nd May, 2012



M/S. KAPOOR SAWS MANUFACTURING COMPANY & ANR.
                                              ...... Appellants
                  Through: Mr. Shailen Bhatia and Ms. Zeba
                           Tarannum, Advocates.

                            VERSUS


M/S CROWN SAW BLADES MFG. CO. & ANR. ...... Respondents

Through: Mr. Rakesh Kumar, Advocate for R-2.

CORAM:

HON'BLE MR. JUSTICE VALMIKI J.MEHTA

To be referred to the Reporter or not?

VALMIKI J. MEHTA, J (ORAL)

1. The challenge by means of this Regular First Appeal filed under Section

96 of the Code of Civil Procedure, 1908 (CPC), is to the impugned judgment of

the trial Court dated 12.10.2004 rejecting the plaint under Order 7 Rule 11

CPC on the ground that the appellants/plaintiffs have made bare and bald

assertions in the pleadings which are not sufficient to confer territorial

jurisdiction to the civil Courts at Delhi.

2. Counsel for the appellants has drawn my attention to para 23 of the

plaint which reads as under:-

"23. This Hon'ble Court has territorial jurisdiction to entertain and try the present suit as the goods of the Plaintiff and the Defendants are also sold in Delhi. The Hon'ble Court has jurisdiction under Section 62(2) of the Copyright Act, 1957 as the Plaintiff has a branch office at New Delhi and its goods are extensively sold in Delhi."

3. Learned counsel for the appellants argues that at the stage of deciding an

application under Order 7 Rule 11 CPC, the contents of the plaint have to be

deemed to be correct and it cannot be argued that the plaint contains incorrect

facts. It is argued that the scope of application filed under Order 7 Rule 11

CPC is not to pronounce on disputed question of facts and which can be done

only after trial, and this issue is now well settled by various judgments of the

Supreme Court including a Division Bench judgment of this Court reported as

Pfizer Enterprises Sarl Vs. Cipla Ltd. 2009 (39) PTC 358 (Del.) (DB). The

relevant observations of the Division Bench in the aforesaid case are contained

in paras 12 to 15 and which read as under:-

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 -vs- K.R. Industries, 2008 (37) PTC 332(SC) 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 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.

13. We approve the approach adopted in Pfizer Products Inc. - vs- Rajesh Chopra, 2006 (32) PTC 301 and in Boston Scientific International B.V. -vs- Metro Hospital, 2007 (136) DLT 278.

14. We are unable to appreciate the argument of learned Counsel for the Defendant which found favour before the learned Single Judge that Liverpool & London S.P. & I Association Ltd. -vs- M.V. Sea Success I, (2004) 9 SCC 512 supports the Defendant‟s case. Their Lordships had succinctly and perspicuously covered the conundrum before us in these words:-

Rejection of plaint

139. Whether a plaint discloses a cause of action or not is essentially a question of fact. But whether it does or does not must be found out from reading the plaint itself. For the said purpose the averments made in the plaint in their entirety must be held to be correct. The test is as to whether if the averments made in the plaint are taken to be correct in their entirety, a decree would be passed. Dealing with the merits of the case their Lordships noted that so far as the existence of a cause of action was concerned the documents filed along with the pleadings should be looked into. This was in addition to the pleadings, in order to explain or support them. Their Lordships did not enunciate that documents are necessary even if facts stand admitted. This is an altogether different situation from the "return" of the Plaint, which is onerous only to the extent that the same Plaint has to be filed in the Court which is competent to entertain it. So far as the rejection of a Plaint is concerned, it is tantamount to a dismissal of the Plaint and, therefore, the CPC justifiably enumerates the circumstances in which such an order can be passed. It is trite that if a cause of action has not

arisen, a suit has to be dismissed. Secondly, if the proper Court Fee has not been paid, and despite the opportunity the Plaintiff remains recalcitrant in making up the deficiency, there is every justification for dismissing the suit. Furthermore, if on a plain reading of the Plaint itself its entertainment appears to be barred by any law, it would be reasonable for it to be dismissed. Because of these implications, there is every reason that a Judge must be fully satisfied before passing an order which would have serious repercussions; therefore, it would be in the fitness of things for the Court to also look at documents which are available on the records before passing an order which virtually dismisses the suit, the only saving being that a fresh suit is not barred.

15. We have already noted the provisions of the CPC which enable documents to be filed at different stages of an adjudication of the plaint. Let us take the case of a plaint which merely asseverates certain facts and does not substantiate it by filing documents which may be available. In case the Plaintiff is desirous of obtaining interim relief, it would be reasonable for the Court not to act only on the pleadings. When the Court is called upon to decide an application under Order XXXIX documents become relevant and, therefore, they are required to be served on the opposite party for fear that on failure the interim order would stand recalled. However, if an ex parte order is not passed and a statement made in the plaint is admitted in the Written Statement, documents or oral evidence would become superfluous. At no point had their Lordships indicated that if documents have not been filed substantiating the averments made in a Plaint, the suit is liable to be dismissed. Myriad problems will arise if documents are to be looked at for the purposes of rejection of a plaint. At what stage of the proceedings must this exercise be carried out? Certainly, it is not possible to rely or take note of documents which are yet to be proved. Therefore, apart from very unlikely event where a document stands admitted by the Defendant at the earliest stages of the litigation, it would be of little or no use to act upon

them. However, if the Court is of the view that the suit is vexatious or has palpably been filed in a Court which does not possess jurisdiction, it is fully empowered to proceed under Order X of the CPC. Rule 1 thereof enables the Court to ascertain from the either parties before it whether it admits allegations of fact made in the Plaint or the Written Statement. Rule 2 thereof also postulates the Court examining any party to the lis with a view to elucidating matters in controversy in the suit or in answer to any material question relating to the suit. Obviously, this course could also be adopted by Courts to decide an issue which requires evidence to be adduced. Of course, the Court will take recourse to this provision only if it has, of its own, come to the conclusion that the litigation is an abuse of the process of Court. Otherwise, the provisions of Order XIV Rule 2 enjoin that Issues both of law and of fact would be decided at the end of suit. The said Rule envisages that if an Issue relating to the jurisdiction of the Court is an Issue of law only, in contradistinction to an Issue both of law and of fact, it may try such an Issue first. Seen from all perspectives, therefore, it would be in very rare cases (such as an admission of fact by the adversary) that a plaint can be returned or rejected, as the case may be. Otherwise, as applies to both the Plaint and the Written Statement, the pleadings at the initial stages must be approached as if they are correct either for rejecting the plaint or decreeing the suit. This is what Liverpool holds as it reiterates the established position that pleadings at the initial stages must be taken as a true and correct narration of events." (emphasis added)

4. The aforesaid paragraphs of the Division Bench judgment of this Court

therefore leave no manner of doubt that it is only the averment in the plaint and

taking them as correct which has to be considered at the stage of deciding an

application under Order 7 Rule 11 CPC. Thus qua passing off issue in the

subject suit the Court has jurisdiction in view of the averments in para 23 of the

plaint reproduced above and the Courts at Delhi have territorial jurisdiction

inasmuch as the appellants/plaintiffs allege that defendants/respondents are

selling the impugned goods in Delhi. So far as the violation of copyright is

concerned, it could not be disputed that under Section 62(2) of the Copyright

Act, 1957, it is where the plaintiff resides/or carries on business, such Court

would have territorial jurisdiction. The appellants/plaintiffs carry on business

in Delhi as per the case of the appellants in the plaint and therefore, even qua

the cause of action of infringement of copyright, the civil Courts at Delhi have

territorial jurisdiction.

5. In view of the above, the appeal is allowed and the impugned judgment

dated 12.10.2004 is set aside. It is held that the civil Courts at Delhi would

have territorial jurisdiction at this stage of pleadings i.e. nothing contained in

this judgment is a final expression of opinion on merits of the issue of

territorial jurisdiction and the said issue will be decided after evidence is led by

both the parties i.e. at the stage of final arguments. The appeal is allowed and

disposed of in terms of the aforesaid observations leaving the parties to bear

their own costs. Trial Court record be sent back.

6. Parties to appear before the District and Sessions Judge, Tis Hazari

Courts, Delhi on 31st July, 2012 and on which date, the District and Sessions

Judge will mark the suit to a competent Court for disposal, in accordance with

law.

VALMIKI J. MEHTA, J MAY 22, 2012 ib