HCs having no commercial division competent to consider cancellation of designs u/s22(4) designs act

‘High Courts having ordinary original civil jurisdiction, the suits which have been transferred to the High Court by virtue of sub-section (4) of Section 22 of the Designs Act are required to be dealt with by the Commercial Division of the High Court instead of a Bench of the High Court, in terms of the Rules appliable to each High Court. Thus, the suit pertaining to design under the Designs Act, 2000 would be transferred to the Commercial Division from the ordinary original civil jurisdiction, i.e., from one Bench to the other exclusive Court dealing with Commercial Disputes.’ (Para.10)

S.D. CONTAINERS INDORE Vs M/S. MOLD TEK PACKAGING LTD

CIVIL APPEAL NO.3695 OF 2020 (@ SLP (C) NO. 11488 OF 2020)

December 1, 2020.

Learned counsel for the appellant - Mr. Jai Sai Deepak

Learned counsel for the respondent - Mr. Assudani

The Hon’ble Supreme Court Justice L. NAGESWARA RAO, Justice HEMANT GUPTA and Justice AJAY RASTOGI held in this case that, the High Court erred in its judgment and the order of the Commercial Court at the District Level was in accordance with law. Thus, the same is set aside and the matter is remitted to the High Court of Madhya Pradesh, Indore Bench, who shall decide the suit. Hence, appeal stands disposed of.

An appeal has been filed to challenge an order passed by the Madhya Pradesh High Court to set aside an order, transferring the suit under Section 22(4) of the Design Act, 2001 to the Calcutta High Court. It is the said order which was set aside by the High Court which held that the Commercial Court, Indore is itself competent to decide the suit in terms of the Commercial Courts Act, 2015.

A suit for declaration and permanent injunction was filed by the plaintiff to restrain the appellants from copying, using or enabling others to use the plaintiff’s design of Container and Lid registered under Design Application Nos. 299039 and 299041 respectively. In that same suit, the defendant/appellant had filed a written statement before the Commercial Court seeking cancellation of the above said registered designs as the designs were not new or original and they could not be registered in Section 4(a) of the 2000 Act. The appellant also filed an application under Section 22(4) read with Section 19(2) of the 2000 Act to transfer the suit to the Madhya Pradesh High Court, Indore Bench. It is the said application which was allowed by the learned District Judge and the suit was thus transferred to the Calcutta High Court.

The order passed by Commercial Court was challenged by the plaintiff before the Madhya Pradesh High Court. The High Court, after examined the question as to whether the proceedings of the said suit was liable to be transferred to the High Court or if the Commercial Court at Indore was competent to decide the matter, held the Commercial Court competent. The High Court relied upon Godrej Sara Lee Ltd. vs Reckitt Benckiser Australia Pty. Ltd. and another to hold that,

‘The legislature intended that an application for cancellation of registration of design would lie to the Controller exclusively without the High Court having a parallel jurisdiction to entertain such matter because the appeals from the order of the Controller lie before the High Court. It was further held that the 2015 Act is a special enactment having an overriding effect, save as otherwise provided the provisions, by virtue of Section 21 of the said Act.’

The respondent relied upon the order of this Court in Godrej Sara Lee as well as Whirlpool of India v. Videocon Industries Ltd to support the order passed by the High Court. They stated that the definition of “Commercial Dispute” within the Section 2(c)(xvii) of the Act, 2015 includes the dispute pertaining to “intellectual property rights relating to registered and unregistered trademarks, copyright, patent, design, domain names, geographical indications and semiconductor integrated circuits.” Thus, disputes related to design are required to be instituted before a Commercial Court constituted under Section 3 of the said Act. Further they contended that in the ‘High Courts having ordinary original civil jurisdiction, the suits which have been transferred to the High Court by virtue of sub-section (4) of Section 22 of the Act are required to be dealt with by the Commercial Division of the High Court instead of a Bench of the High Court, in terms of the Rules appliable to each High Court. Thus, the suit pertaining to design under the 2000 Act would be transferred to the Commercial Division from the ordinary original civil jurisdiction, i.e., from one Bench to the other exclusive Court dealing with Commercial Disputes.’ (Para.10)

On the other hand, it was contented by the appellant that the High Court erred in law in transferring the suit to the Commercial Court (District Level) while setting aside the order passed by the Commercial Court to transfer the said suit to the High Court. It was also argued that the High Court erred in holding that since an appeal against the order of cancellation by the Controller lies to the High Court, the transfer would not be sustainable for the reason that the appellate jurisdiction is distinct from the original jurisdiction in a plea for cancellation of the design in a suit in terms of the provisions of 2000 Act. (Para.6)

According to Section 22(4) of the 2000 Act, the defendant has a right to seek cancellation of the design which necessarily mandates the Courts to transfer the suit. Thus, the transfer of suit becomes a ministerial act if there is a prayer for cancellation of the registration. The transfer of proceedings from one Bench to the Commercial Division supports the argument of the Appellant that,

If a suit is to be transferred to Commercial Division of the High Court having ordinary original civil jurisdiction, then the Civil Suit in which there is plea to revoke the registered design has to be transferred to the High Court where there is no ordinary original civil jurisdiction.(Para.11)

The appellant also added that the judgment in Godrej Sara Lee has been wrongly relied upon by the High Court assuming that the proceedings are before the Controller and that the plaintiff/respondent had filed a suit for infringement wherein a plea of revocation of registration was raised which was required to be transferred to the High Court in terms of Section 22(4) of the 2000 Act.

Their arguments were based on the judgments of,

M/s Astral Polytechnic Limited v. M/s Ashirwad Pipes Private Ltd., R. N. Gupta and Co. Ltd. Jasola New Delhi v. M/s Action Construction Equipments Ltd. Dudhohla and others., M/s. Escorts Construction Equipment Ltd. v. M/s Gautam Engineering Company and another, Salutri Remedies v. Unim Pharma Lab Pvt. Ltd and Standard Glass Beads Factory and another v. Shri Dhar and Ors.

In M/s. Escorts Construction Equipment, it is stated that,

‘Once a defence is taken for revocation of registration, then in terms of sub-section (4) of Section 22 of the 2000 Act, the Civil Court has no power to decide the revocation of the design and it is only the High Court which has to adjudicate upon the matter and decide as to whether the design is to be cancelled or not. It was held that the learned trial court committed a legal error in not transferring the case to the High Court.’(Para.18)

From the above observations, the Hon’ble Supreme Court held that the order of the Commercial Court at the District Level is in accordance with law. However, they did not agree with the Commercial Court to transfer such suit to Calcutta High Court. Since no part of cause of action has arisen within the jurisdiction of Kolkata, the suit is liable to be transferred to Madhya Pradesh High Court, Indore Bench.

Thus, they found the order of the High Court not sustainable. And ordered for the same to be set aside and the matter to be remitted to the High Court of Madhya Pradesh, Indore Bench, who shall decide the suit in accordance with law. And the appeal was disposed of in the above terms.

View/Download Judgment: S.D. CONTAINERS INDORE Vs M/S. MOLD TEK PACKAGING LTD

M.Nandhitha