Yu Televentures Private Limited vs Telefonaktiebolaget Lm Ericsson ...
2015 Latest Caselaw 9229 Del

$~12&13.                             (Common Orders)
*    IN THE HIGH COURT OF DELHI AT NEW DELHI
+     LPA    888/2015     &      C.Ms.No.30187-88/2015,   30582/2015,
      Crl.M.A.18179/2015.

      YU TELEVENTURES PRIVATE LIMITED          ..... Appellant
                   Through: Mr.P.V.Kapoor, Sr.Adv. with Mr.Ajit
                   Warrier, Mr.Sandeep Grover, Mr.Aditya Nayyar,
                   Ms.Shreya, Advs.
              Versus

      TELEFONAKTIEBOLAGET
      LM ERICSSON (PUBL) AND ORS                  ..... Respondent
                    Through: Mr.Gopal Subramaniam, Sr.Adv. with
                    Mr.C.S.Vaidyanathan, Sr.Adv. along with
                    Ms.Saya Choudhary Kapur, Mr.Ashutosh Kumar,
                    Mr.Prateek Chadha, Advs. for R-1.
                    Mr.A.S.Chandhiok, Sr.Adv. with Mr.Saikrishna
                    Rajagopal, Mr.J.Sai Deepak, Mr.Sunil Dalal,
                    Ms.Rachel Mamatha, Ms.Gavni Dutt, Mr.Avijit
                    Sharma, Advs. for R-2/Micromax.
                    Mr.Rajiv Kr.Chaudhary, Adv. for Micromax Info.

+     LPA 889/2015 & C.Ms.No.30190 & 330193 of 2015, 30578/2015,
      Crl.M.A.18178/2015.

      RAHUL SHARMA AND ORS                  ..... Appellants
                   Through: Mr.Sandeep Sethi & Mr.Dayan
                   Krishnan, Sr.Advs. with Mr.Ajit Warrier,
                   Mr.Sandeep    Grover, Mr.Aditya       Nayyar,
                   Ms.Shreya, Advs.
              Versus

      TELEFONAKTIEBOLAGET
      LM ERICSSON (PUBL) AND ORS               ..... Respondents
                    Through: Mr.Neeraj Kishan Kaul, Sr.Adv. with
                    Ms.Pratibha M.Singh, Sr.Adv. along with
                    Mr.Chander M.Lall, Ms.Saya Choudhary Kapur,
                    Mr.Ashutosh Kumar, Mr.Robin Koolwal, Advs.
                    for R-1.


LPA 888/2015 & LPA No.889/2015                            Page 1 of 6
                             Mr.A.S.Chandhiok, Sr.Adv. with Mr.Saikrishna
                            Rajagopal, Mr.J.Sai Deepak, Mr.Sunil Dalal,
                            Ms.Rachel Mamatha, Ms.Gavni Dutt, Mr.Avijit
                            Sharma, Advs. for R-2/Micromax.
                            Mr.Rajiv Kr.Chaudhary, Adv. for Micromax Info.
       CORAM:
       HON'BLE THE CHIEF JUSTICE
       HON'BLE MR. JUSTICE RAJIV SAHAI ENDLAW
                                   ORDER

% 11.12.2015

1. The order dated 02.12.2015 passed by the learned Single Judge in CCP No.71/2015 in CS(OS) 442/2013 is assailed in these two appeals.

2. CS(OS) 442/2013 has been filed by Telefonaktiebolaget LM Ericsson (Publ) (arrayed as respondent No.1 in both the appeals) seeking permanent injunction against Mercury Electronics Limited and Micromax Informatics Limited (arrayed as respondent No.2 in the present appeals) restraining them from infringing the plaintiffs' registered patents specified therein. By order dated 12.11.2014 in IAs No.3825/2013 and 4694/2013, the learned Single Judge directed payment of the royalty to the plaintiff for sales made in India at the rates specified therein pending final trial in the suit.

3. In June, 2015, the plaintiff/respondent No.1 herein filed CCP No.71/2015 under Sections 11 and 12 of the Contempt of Courts Act, 1971 read with Order 39 Rule 2A of CPC alleging that Micromax Informatics Limited had deliberately and wilfully violated the order dated 12.11.2014 and praying to hold Micromax Informatics Limited guilty of contempt of court and initiate appropriate proceedings against Micromax Informatics Limited as well as its officers/directors including the respondents 3 to 5 therein. It was alleged in the contempt petition that the respondent No.2 therein/YU Televentures Ltd., which has been incorporated in 2014 is a

wholly owned subsidiary of Micromax Informatics Ltd. and that it had started using the suit patents without making any royalty payments to the plaintiff. The respondent Nos. 3 to 5 therein are stated to be the Directors of the respondent No.2 company and the allegation is that they are responsible of infringing the order dated 12.11.2014.

4. In response to the notice ordered in the CCP No.71/2015, appearance was entered on behalf of Micromax Informatics Ltd. and it was contended before the learned Single Judge that although YU Televentures Limited is the wholly owned subsidiary of Micromax Informatics Ltd. and the respondent Nos. 3 to 5 therein are the common Directors of the two companies, notice has to be issued to them individually. The learned Single Judge declined to issue further notice in view of the notice that had already been issued on 07.07.2015. On merits of the case, the learned Single Judge opined:

"....The parent company cannot use the plaintiff's patents without payment of royalty. It is also not in dispute that respondent No. 2 is wholly owned entity and is managed by common Directors i.e. respondent Nos. 3 to 5. Upon piercing of the corporate veil, it is evident that respondent Nos. 2 to 5 are in contempt of this Court's order. This Court is of the view that while in corporate entity may be a separate juristic person, it is nevertheless managed and run by human beings who give it direction and substance. Respondent Nos. 3 to 5, who are common Directors for the two corporations, were fully aware about this Court's order dated 12.11.2014, and they clearly and willingly tried to avoid paying royalty to the plaintiff in accordance with the order. Mr. Chandhiok would submit that the restraint order is confined to respondent No. 2 and to respondent Nos. 3 to 5 in their capacity as Directors. This argument is untenable and is rejected because the said Directors knew fully well about the import of this Court's order which was with respect to respondent No.1 whose

subsidiary has manifested in the form of respondent No.

2. In view of the above, respondent numbers 3,4 and 5 are guilty of contempt of this Court's order."

5. Accordingly, the learned Single Judge ordered:

"List on 15th December, 2015 for order on punishment, on which date respondent Nos. 3 to 5 shall be present in Court. Bailable warrants in the sum of Rs. 1,00,000/- each shall be issued against respondent Nos. 3 to 5 to ensure their presence on 15 th December, 2015."

6. Aggrieved by the same, the present appeals have been filed. YU Televentures Limited (respondent No.2 in CCP No.71/2015) is the appellant in LPA No.888/2015 whereas the Directors of YU Televentures Limited (respondent No.3 to 5 in CCP No.71/2015) are the appellants in LPA No.889/2015.

7. It is primarily contended on behalf of the appellants that no proceedings can be maintained against the appellants either under the Contempt of Courts Act or under Order 39 Rule 2A of CPC on the ground of the alleged violation of the order dated 12.11.2014 since they are not parties to the suit and there is no order of injunction operating against them.

8. Though a preliminary objection is sought to be raised by the respondents as to the maintainability of the appeals under Clause 10 of the Letters Patent, having regard to the settled legal position that the aggrieved person is not without remedy if this Court makes any direction relating to the merits of the disputes in a contempt proceeding and such an order is open to challenge in an intra-court appeal, we consider it appropriate to proceed further on merits of the case without entering into the issue whether an appeal lies under Section 19 of the Contempt of Courts Act, 1971 or under Clause 10 of the Letters Patent. With the consent of the learned

counsels appearing for both the parties, we have accordingly heard the matter on merits.

9. Admittedly, the appellants in LPA No.889/2015 (respondents No.3 to 5 in CCP No.71/2015) were not heard by the learned Single Judge before passing the order under appeal. The specific case of Micromax Informatics Limited (respondent No.2 herein) before the learned Single Judge was that there is need for placing evidence on record in order to treat both YU Televentures Pvt. Ltd. and Micromax Informatics Limited as one unity. However, they could not put in their response before the learned Single Judge and they were not heard before the order under appeal came to be passed. That being the case, we are of the view that the finding of the learned Single Judge in the order under appeal that they are guilty of contempt cannot be treated as conclusive. Sh. Gopal Subramaniam, the learned Senior Counsel appearing for the respondent No.1 in LPA No.888/2015 has fairly conceded that the said findings in the order under appeal can only be treated as a prima facie view expressed by the learned Single Judge. However, it is stated by the learned senior counsel that the Appellants shall subject themselves to the contempt proceedings and file their replies, if any, on 15.12.2015 for consideration by the learned Single Judge. The learned senior counsels appearing for the appellants agreed for the same. While undertaking that the appellants would be represented by their counsels on 15.12.2015 before the learned Single Judge, the learned counsels for the appellants requested to cancel the bailable warrants issued by the learned Single Judge.

10. In the facts and circumstances of the case, we consider it appropriate to dispose of both of these appeals making it clear that the findings recorded by the learned Single Judge in the order under appeal that the appellants

herein are guilty of contempt of court for violation of the order dated 12.11.2014 in CS(OS) No.442/2013 shall not be treated as conclusive.

11. The direction in the order under appeal for personal appearance of the appellants in LPA No.889/2015 (respondent Nos. 3 to 5 in CCP 71/2015) is set aside and the bailable warrants issued against them to ensure their presence on 15.12.2015 are hereby recalled. However, they shall subject themselves to the contempt proceedings and shall appear on 15.12.2015 through their respective counsels. We place on record the undertaking of the learned counsels appeared before us for the appellants in LPA No.889/2015 that the appellants would be represented by their counsels on 15.12.2015 before the learned Single Judge.

12. The appellants herein are permitted to put in their response in CCP No.71/2015 on 15.12.2015 and thereupon the contempt petition as well as all the pending applications therein, even if listed for some other date, will be heard and decided by the learned Single Judge in accordance with law without being influenced by any of the findings/observations in the order dated 02.12.2015.

13. Both the appeals are accordingly disposed of.

CHIEF JUSTICE

RAJIV SAHAI ENDLAW, J DECEMBER 11, 2015 Pk