Delhi High Court
Shogun Organics Ltd vs Gaur Hari Guchhait & Ors on 11 June, 2020
SINDHU KRISHNAKUMAR
11.06.2020 20:29
$~1(OS)
* IN THE HIGH COURT OF DELHI AT NEW DELHI
Date of decision:11th June, 2020
+ CS(COMM)NO. 201/2017
SHOGUN ORGANICS LTD .....Plaintiff
Through: Ms. Rajeshwari H. and Mr. Tahir
A.J., Advocates. (M:8826363206)
versus
GAUR HARI GUCHHAIT & ORS. ..... Defendants
Through: Mr. Sanjeev Kumar Tiwari, Mr.
Amrish Tiwari, Mr. B. Prashant
Kumar, Mr. Saurabh Anand and Ms.
Namrata Chadda, Advocates.
(M:9999661608)
CORAM:
JUSTICE PRATHIBA M. SINGH
Prathiba M. Singh, J.(Oral)
I.A. 4297/2020
1. This is an application seeking exemption from filing court fee and
notarised affidavits. Binding the deponent of the affidavit to the contents of
the application, the exemption is granted. Insofar as the court fee is
concerned, the deposit with the concerned authority would be made within
one week. The physical court fee stamp would be deposited within 72 hours
from the resumption of the regular functioning of the Court. Application is
disposed of.
I.As.3946/2020&4296/2020
2. The hearing was held through video conferencing.
3. I.A.3946/2020 is an application seeking permission to sell the
CS (COMM) 201/2017 Page 1 of 11
Signature Not Verified
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By:PRATHIBA M SINGH
Signing Date:11.06.2020 18:09
manufactured stock of D-TRANS ALLETHRIN, which was manufactured
prior to the passing of the final judgment dated 14th August, 2019. The
prayer in the application is as under:
"In view of the facts and circumstances mentioned
above, the Defendants most respectfully pray that
this Hon'ble Court may be pleased to:-
a) Permit Defendant No. 2 to sell d-trans Allethrin
manufactured by Defendant No. 2, prior to final
Judgment dated 14.08.2019 and as stipulated in
Annexure A;
b) Pass such order(s) as this Hon'ble Court may
deem fit and proper in the facts and circumstances
of the present case."
4. The present suit was filed seeking permanent injunction restraining
infringement of the Plaintiff's patent no.IN236630 which related to a
`Process for manufacturing D-TRANS ALLETHRIN'. This is an active
ingredient used, inter alia,in mosquito repellent and other mosquito control
products and other similar products. Vide judgment dated 14th August, 2019,
the suit was finally decreed in the following terms.
"47. Under these circumstances, it is held that the
Plaintiff is entitled to a permanent injunction
restraining the Defendants from manufacturing,
selling or offering for sale D-trans Allethrin which
infringes the suit patentIN-236630. The patent is
valid till 2027. The Defendants are further directed
to render account of sales of D-trans Allethrin
manufactured and sold by them. Upon such
accounts being rendered, the Defendants shall pay
5% of the sales as disclosed, as compensation/loss
of profits to the Plaintiff. Actual costs are awarded
to the Plaintiff. It is directed that the accounts
CS (COMM) 201/2017 Page 2 of 11
Signature Not Verified
Digitally Signed
By:PRATHIBA M SINGH
Signing Date:11.06.2020 18:09
shall be rendered within a period of 8 weeks from
today."
As per the above final judgement and decree, a permanent injunction was
granted in favour of the Plaintiff against the Defendants restraining it from
infringing the Plaintiff's patent. The Defendants were also directed to render
Accounts and pay 5% of the sales as compensation/loss of profits. Costs
were also awarded.
5. The above judgment was challenged by the Defendants before the ld.
Division Bench. The said appeal was dismissed vide the judgment dated
11th October, 2019. Some relevant observations of the Ld. Division Bench
are set out below:
"5. Reasons
.....
(ix) The aforesaid process is a patented process for
manufacturing d-trans Allethrin. Thus, out of
several methods of manufacturing of d-trans
allethrin, the one which has been invented by the
original plaintiff has been granted patent in their
favour and that process cannot be adopted by the
original defendants without permission of the
original plaintiff. This aspect of the matter, in our
view, has been properly appreciated by the learned
Single Judge.
(x) The golden thread running throughout the
plaint and the oral and documentary evidence
produced by the original plaintiff is that there is an
infringement of the process patent by the original
defendants, thereby meaning that the innovated
method of manufacturing of d-trans Allethrin, for
which the patent has been granted to the original
plaintiff, has been followed by the original
defendants without permission of the original
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By:PRATHIBA M SINGH
Signing Date:11.06.2020 18:09
plaintiff. This would clearly tantamount to
infringement of process patent of the original
plaintiff. Time and again, orders had been passed
by the learned Single Judge but "the adamant
original defendants" had not disclosed the
manufacturing process of d-trans Allethrin
followed by them................
(xii) Despite these orders passed by the learned
Single Judge in CS(COMM) No.201/2017, the
original defendants have not disclosed their
manufacturing process of d-trans Allethrin. Thus,
under Section 114 of the Indian Evidence Act,
1872, especially under illustration (g), a negative
inference can be drawn to the effect that "had this
manufacturing process been presented by the
original defendants, the case would have gone
against the original defendants". Thus, it appears
that the original defendants have deliberately
avoided complying with the orders passed by the
learned Single Judge in CS (COMM) No.201/2017
directing them to disclose their (defendants)
manufacturing process of d-trans Allethrin.
(xiii) In fact, the original defendants have neither
examined any witness, nor have they disclosed
their manufacturing process of d-trans Allethrin
before the Court in CS(COMM) No.201/2017,
while positive evidence in this regard had duly
been given by the original plaintiff, both oral as
well as documentary, clearly narrating the
infringement of the process patent by the original
defendants. A conjoint reading of the evidences
given by the plaintiff, especially given by PW1 and
the documents presented by the original plaintiff
which are Ex.PW1/1 to PW1/27, reveals that there
is an infringement of the process patent granted in
favour of the original plaintiff by the original
defendants. The learned Single Judge has in detail
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By:PRATHIBA M SINGH
Signing Date:11.06.2020 18:09
made an analysis of the evidence given by PW1 in
paragraph Nos.20, 21, 22, 23, 24 and 25 of the
impugned judgment.
(xiv) Counsel appearing for the appellants
(original defendants) have submitted that their
appeal is pending before IPAB against the order
passed by Patent Office dated 16th February,
2016. The pendency of this appeal is of no help to
these appellants mainly for the reason that as on
today there is a valid and subsisting "process
patent" in favour of the original plaintiff. Pre-
grant Opposition, under Section 25(1) of the 1970,
Act as well as post grant oppositions, under
Section 25(2) of the 1970, Act have already been
dismissed. An earlier order of the IPAB dated 18th
August,2014 is also in favour of the original
plaintiff. Moreover, as stated hereinabove, the
registration of the product under the 1968, Act is
entirely different to the grant of patent for the
process of manufacturing of the product. The
infringement of the patent has been proved by the
plaintiff with the help of oral as well as
documentary evidence in favour of the defendants
in the cross examination of PW1. Looking to the
cross-examination, it appears that the defendants
have done a confused examination. The said
confusion is about the registration of the product
and not in respect of the patent for the innovative
methodology of manufacturing the product. Thus,
while d-trans Allethrin can be manufactured by
hundreds of manufacturers, they cannot follow the
innovative method of manufacturing for which
patent has been granted to the original plaintiff.
This aspect of the matter has been properly
appreciated while deciding CS (COMM)
No.201/2017 vide judgment and decree dated 14th
August, 2019. We are in full agreement with the
reasons given by the learned Single Judge.
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Digitally Signed
By:PRATHIBA M SINGH
Signing Date:11.06.2020 18:09
...............
(xvi) In view of the aforesaid decision also, there is
no substance in the contention of the original
defendants that the process for manufacturing d-
trans Allethrin was known to the public at large
because of its registration under Sections 9(3)
and/or 9(4) of 1968, Act. In fact, there is nothing
under the 1968, Act which requires the applicant
to disclose the manufacturing process in detail,
like the requirement under the 1970, Act. We have
perused Form-1 under the First Schedule of the
Insecticides Rules, 1971 enacted under the 1968,
Act which does not require the disclosure of the
process of manufacturing of the product.
Nonetheless, even if the original defendants had
disclosed the manufacturing process, it does not
tantamount to the manufacturing process being
disclosed to the whole world. In the light of Section
30 of the Patents Act, as also Section 26 of Patents
and Designs Act, 1911, neither the original
plaintiff nor the original defendants were required
to disclose the method of manufacturing for the
registration of their product under the 1968, Act.
This aspect of the matter has been properly
appreciated by the learned Single Judge while
deciding the CS(COMM) No.201/2017 vide
judgment and decree dated 14thAugust, 2019
especially in paragraph No.26 of the judgment.
(xvii) Thus, there is no substance in this Regular
First Appeal and the same is hereby dismissed."
6. After dismissal of the appeal, in view of the order passed for rendition
of accounts, a Ld. Single Judge directed the Defendants were directed to file
an affidavit disclosing their accounts. On 29 th January, 2020 the ld. Single
Judge Court determined the compensation payable and costs in the
following terms:
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By:PRATHIBA M SINGH
Signing Date:11.06.2020 18:09
"4. In these circumstances, the decree granted by
the order of this Court dated 14.08.2019 [and
affirmed by Division Bench vide judgment dated
11.10.2019 in RFA(OS)(COMM) 41/2019], in
addition to the decree for permanent injunction,
will be a decree for 5% of the sum disclosed in the
affidavit of defendant no.2, i.e. ₹6,77,91,143.95/-.
5. By the said judgment, the plaintiff was also
granted actual costs of the suit. The plaintiff has
filed an affidavit dated 16.12.2019 under diary no.
53577/2020. Although the said affidavit has been
returned under objections, a copy has been
produced. Learned counsel for the plaintiff is
directed to have the same placed on record within
one week. In the said affidavit, a statement of costs
has been annexed, which discloses expenditure of
₹15,70,000/- towards legal expenses and costs in
the suit.
This is supported by a certificate of the plaintiff's
chartered accountant. However, learned counsel
for the defendant points out that two of the
amounts claimed, amounting in sum to ₹3,42,000/-
,in fact relate to the expenses in the appeal, for
which the Division Bench did not pass any order of
costs. Learned counsel for the plaintiff accepts this
position and submits that the costs be confined to
₹12,28,000/-.
6. Decree sheet be prepared in terms of paragraph
47 of the judgment dated 14.08.2019. As far as the
compensation is concerned, the decree will be in
the amount of ₹6,77,91,143.95/-, being 5% of
₹135,58,22,789/-. As far as costs are concerned,
the decree will be in the amount of₹12,28,000/-."
Signature Not Verified
Digitally Signed
By:PRATHIBA M SINGH
Signing Date:11.06.2020 18:09
Thus the compensation was fixed by the ld. Single Judge on the basis of the
disclosure of sales made by the Defendants vide an affidavit dated 16th
December, 2019.
7. Thereafter, the present application has been moved seeking
permission to dispose of further stock which stood manufactured prior to
passing of the judgement in August, 2019. The said application was
considered by the Roster Bench on 21st May, 2020 but was placed before
this Bench, subject to orders of the Hon'ble Chief Justice.
8. The case of the Defendants is that the initial inventory of stock
showed the total sale value of Rs.135,58,22,879/-. However, some of the
stocks were reflected as unsold stock to the tune of 4520 kg. According to
the Defendants, this stock was manufactured prior to August, 2019 and there
was no manufacturing in September, 2019. An affidavit of a chartered
accountant has been filed to show that the stock of 4520 kg has been carried
forward from the month of August and currently lies with the Defendant
No.2. It is also said that the stock statement is duly confirmed by the yearly
report, which has been submitted by the Defendants to the Joint Director
Agriculture, Kolkata. Mr. Tiwari, ld. counsel appearing for the Defendants
submits that since the stock was manufactured prior to the judgement
passed, the same is of huge monetary value and if not allowed to sell, the
same would be wasted. According to the Defendants, the said product is
capable of being used even in sanitisers etc. which are being manufactured
during the COVID-19 lock down period.
9. Ms. Rajeshwari, ld. counsel appearing for the Plaintiff submits that
the stock statement is not to be believed, inasmuch as the Defendants ought
to prove that this stock was not manufactured after the passing of the
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By:PRATHIBA M SINGH
Signing Date:11.06.2020 18:09
judgment. She, accordingly, seeks disclosure of various documents filed
with the Insecticides Authority and the Joint Director, Agriculture, Kolkata.
It is further submitted by Ms. Rajeshwari that the Court having already
passed the final judgment/decree, no further order can be passed as the
judgment has merged with the judgment of the Appellate Court. Ld.
Counsel also seeks details of Form 13 andForm-15 filed before the Joint
Director, Agriculture, Kolkata. Batch numbers have also been sought in this
application.
10. This Court has considered the rival contentions of both the parties. D-
TRANS ALLETHRIN is a product which was continuously being
manufactured by the Defendants during the pendency of the present suit.
The suit itself was filed in December, 2014 and there was no injunction
operating for a period of about 5 years until the permanent injunction was
granted last year. The judgement dated 14th August, 2019 had compensated
the Plaintiff for past sales by directing 5% to be paid as compensation/loss
of profits. The Defendants were to render the accounts and also furnish the
stock statement. The stock statement was produced by the Defendants and
the orders were passed by the ld. Single Judge in respect of the amount to be
paid on 29th January, 2020. The present application only seeks permission to
sell some unsold stock which was manufactured prior to August, 2019 i.e.,
prior to the passing of the judgement. The documents annexed with the
application, clearly, show that this stock is still lying with the Defendants.
No useful purpose would be served in directing the destruction of useful
products of this nature. The Plaintiff can be adequately compensated in the
same manner as was done for the stock only which was disclosed by the
Defendants. In such a case, the Court is not to go into a long-winded
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By:PRATHIBA M SINGH
Signing Date:11.06.2020 18:09
enquiry especially because the Defendant No.2 has filed documents to show
that it has reported the said quantity as `unsold stock'. Directing discovery
would continue to delay the adjudication of this application, when the
Defendants can be put to the same terms, as were imposed in respect of
other past sales.
11. The question of merger does not arise in the present case as there is no
modification of the judgment/decree being carried out. At best, the present
application shall be in addition to the stock statement also discussed and
dealt with in order dated 29th January, 2020. In view of these facts and the
fact that the products in question can be put to use for manufacture of
sanitising products during the lockdown and even otherwise, the products
cannot be directed to be destroyed, it is directed that insofar the present
stock of 4520 kg is concerned, the Defendants shall pay 5% of the sale value
i.e.5% of Rs.1,95,71,600/- by 30th September, 2020 to the Plaintiff. The
entire stock shall be exhausted by 30th September, 2020. Before
commencing sale of the said unsold stock, the Defendants shall disclose to
the Plaintiff the exact batch numbers of the unsold stock of 4520 kg. The
Defendants shall also maintain the complete list of customers to whom the
unsold stock is made so as to ensure that only the current unsold stock is
sold and no further sale of the product is made by the Defendants. The batch
numbers be supplied in one week to the Plaintiff.
12. In addition to the above payment of 5%, since there was a duty upon
the Defendants to have properly disclosed the details of the unsold stock in
the first place itself, the Defendants are directed to deposit a sum of Rs.5
lakhs as costs with the Prime Minister's Citizen Assistance and Relief in
Emergency Situations Fund (PM Cares Fund) on or before 31st July, 2020.
Signature Not Verified
Digitally Signed
By:PRATHIBA M SINGH
Signing Date:11.06.2020 18:09
I.A.3946/2020 is disposed of, accordingly, with these terms.
13. In view of the orders passed above in the application filed by the
Defendants, further applications for discovery of documents filed by the
Plaintiff are infructuous. The said applications for discovery have been filed
just before the hearing in I.A.3946/2020, i.e., on 6th June, 2020. In view of
the affidavit dated 2nd June, 2020 filed by the Defendants, no further
disclosure is needed. All the other pending applications are disposed of in
these terms.
PRATHIBA M. SINGH
JUDGE
JUNE11, 2020/dk/R
Signature Not Verified
Digitally Signed
By:PRATHIBA M SINGH
Signing Date:11.06.2020 18:09
