Indian Explosives Pvt. Ltd. v. Ideal Detonators Pvt. Ltd. And Others

Ravi Krishan Kapur, J.:— This is an application by the defendant no. 1 inter alia seeking revocation of dispensation granted under section 12A of the Commercial Courts Act, 2015 (the Act).

2. At the outset, it is clarified that though pleaded, the prayer for revocation of leave under Clause 12 of the Letters Patent Act, 1865 was not pressed at the time of hearing of the application. The only question which arises for consideration is whether the requirement with the compliance of section 12A of the Act ought to have been dispensed with or not.

3. Briefly, the suit is for infringement of copyright. It is alleged that the defendant no. 2, was an employee of the plaintiff company since 2011 and had ultimately left the services of the plaintiff company in or around 2022. It is also alleged that in or about 2016, the defendant no. 2 had unauthorizedly taken copies of the drawings and documents relating to the manufacturing process of shock tubes and had divulged and sold the same to third parties including the defendant no. 1. It is further alleged that after having discovered the unlawful and illegal acts of the defendant no. 2, the plaintiff had in 2022 filed a complaint with the concerned Police Authorities at Bokaro, Jharkhand.

4. On behalf of the defendant no. 2, it is contended that on a plain reading of the plaint, there is no scope for urgent interim reliefs in view of the fact that the plaintiff has been silent for a considerable period of time since the defendant no. 2 had left the services of the plaintiff company. It is also alleged that the defendant no. 2 had shared unauthorised copies of the impugned drawings as far back as on 2016. The alleged urgency has arisen only after the filing of the criminal case in 2022. This also demonstrates that the plaintiff has remained silent for more than one year after the filing of the criminal complaint. In support of their contentions, reliance is placed on the decisions in Patil Automation Private Limited v. Rakheja Engineers Private Limited, (2022) 10 SCC 1, Odisha Slurry Pipeline Infrastructure Ltd. v. IDBI Bank Ltd., 2022 SCC OnLine Cal 3951 and an unreported judgment of this Court dated 16 February, 2023 in Sanjay Kumar Mishra v. Godavari Commodities Ltd., G.A. No. 2 of 2023 in C.S. No. 267 of 2022.

5. On behalf of the plaintiff it is contended that, the suit is for protection of intellectual property rights and the plaintiff has categorically averred that the suit contemplates urgent interim reliefs. Thus, there is no scope for mediation and hence no requirement to comply with section 12 A of the Act. In any event, in an application of this nature the averments in the plaint are taken to be true and correct. In support of their contentions, the plaintiff relies on the decisions in Bolt Technology Ou v. Ujoy Technology (P) Ltd., (2022) 5 HCC (Del) 347 : 2022 SCC OnLine Del 2639, Chandra Kishore Chaurasia v. R A Perfumery Works Private Limited, 2022 SCC OnLine Del 3529, Odisha Slurry Pipeline Infrastructure v. IDBI Bank Ltd., 2022 SCC OnLine Cal 3951 and SLP (Civil) No. 8481/2023.

6. Section 12A of the Act reads as follows:

“12A. Pre-Institution Mediation and Settlement-

(1) A suit, which does not contemplate any urgent interim relief under this Act, shall not be instituted unless the plaintiff exhausts the remedy of pre-institution mediation in accordance with such manner and procedure as may be prescribed by rules made by the Central Government.

(2) The Central Government may, by notification, authorise the Authorities constituted under the Legal Services Authorities Act, 1987 (39 of 1987), for the purposes of pre-institution mediation.

(3) Notwithstanding anything contained in the Legal Services Authorities Act, 1987, the Authority authorised by the Central Government under sub-section (2) shall complete the process of mediation within a period of three months from the date of application made by the plaintiff under sub-section (1) : Provided that the period of mediation may be extended for a further period of two months with the consent of the parties : Provided further that, the period during which the parties remained occupied with the pre-institution mediation, such period shall not be computed for the purpose of limitation under the Limitation Act, 1963 (36 of 1963).

(4) If the parties to the commercial dispute arrive at a settlement, the same shall be reduced into writing and shall be signed by the parties to the dispute and the mediator.

(5) The settlement arrived at under this section shall have the same status and effect as if it is an arbitral award on agreed terms under sub-section (4) of section 30 of the Arbitration and Conciliation Act, 1996 (26 of 1996).]”

7. In Laxmi Polyfab Pvt. Ltd. v. Eden Realty Ventures Pvt. Ltd., 2021 SCC OnLine Cal 1457 it has been held as follows:

“51. Section 12A of the Act of 2015 although being procedural in nature has a public purpose. The public purpose is to have commercial disputes within the meaning of the Act of 2015 disposed of expeditiously through mediation at the pre-institution stage. A mandatory pre-institution mediation will not only expedite the resolution of a commercial dispute within the meaning of the Act of 2015 on an amicable platform but will also facilitate and face up the time of a congested Commercial Division or a Commercial Court to devote time and energy to the disposal of the pending suits. Section 12A of the Act of 2015 if construed as mandatory achieves twin objects of expeditious disposal and freeing up time and space for the Court.”

8. In Patil Automation Private Limited v. Rakheja Engineers Private Limited, (2022) 10 SCC 1 it has been held that:

“99.3. The language used in Section 12-A of the 2015 Act, which includes the word “shall”, certainly, goes a long way to assist the Court to hold that the provision is mandatory.

99.4. Mediation must be perceived as a new mechanism of access to justice. Any reluctance on the part of the Court to give Section 12-A of the 2015 Act, a mandatory interpretation, would result in defeating the object and intention of Parliament. The fact that the mediation can become a non-starter, cannot be a reason to hold the provision not mandatory. Apparently, the value judgment of the lawgiver is to give the provision, a modicum of voluntariness for the defendant, whereas, the plaintiff, who approaches the court, must, necessarily, resort to it. Section 12-A of the 2015 Act elevates the settlement under the Act and the Rules to an award within the meaning of section 30(4) of the Arbitration Act, 1996 giving it meaningful enforceability. The period spent in mediation is excluded for the purpose of limitation. The Act confers power to order costs based on conduct of the parties.

9. Section 9 of the Civil Procedure Code, 1908 gives the Courts an inherent right to try all suits of a civil nature subject to jurisdiction with the exception of suits which are expressly or impliedly barred. The Act had been introduced for speedy disposal of high value commercial disputes. By introducing section 12A of the Act, the Act has carved out two different categories of suits i.e. where no urgent relief is contemplated and those where urgent relief is contemplated.

10. Mediation is now perceived as a new mechanism of access to justice and a potent alternate dispute resolution device in the justice delivery system. This is the clear legislative intent of the Act. However, an exception is to be found in section 12 A of the Act where a class of suits i.e. suits which contemplate urgent interim reliefs have been exempted from the requirement of mediation. The section quite obviously saves immediate access to justice as contemplated ordinarily through Courts in cases of urgent interim reliefs.

11. There may be urgency in any of the specified transactions enumerated in section 2(c) of the Act which defines “commercial dispute”. Urgency would vary from case to case. There can be no strait jacket formulae in such cases. Each case must be decided on its own facts. There must be pleadings to support the case of urgent interim reliefs. The Court at the time of presentation of the plaint has to be satisfied that there are averments which justify a case for urgent interim reliefs and for dispensation with the requirement of section 12A of the Act in the overall facts and circumstances. Ordinarily, at the stage of admission of the plaint, the defendant is not represented. However, a defendant has a right to question whether dispensation has been appropriately granted or not. This exercise may require the Court to re-examine the grant of dispensation. The entire exercise of seeking dispensation under section 12A of the Act must be subject to judicial scrutiny.

12. The decision in Chandra Kishore Chaurasia v. R A Perfumery Works Private Limited, 2022 SCC OnLine Del 3529 cited on behalf of the plaintiff is distinguishable and inapposite. In the said decision, the Court in a suit inter alia for infringement and passing off found the same to be maintainable in the light of averments in the plaint. It is true that the plaintiff is dominus litis. However, the exercise of seeking dispensation cannot be made solely plaintiff-centric. This exercise must withstand judicial discretion. Otherwise, it would lead to every plaintiff having the formal averments in the plaint that the suit contemplates urgent interim reliefs simply to overcome the mediation process. This would render nugatory the entire purpose of mediation. The ultimate grant or refusal of the interim relief on merits is not the determining factor. The only question is whether on the basis of the averments made out in the plaint and the cause of action pleaded, there is a case for urgent interim reliefs.

13. In the facts of this case, on a combined reading of paragraphs 9, 10, 11, 21 and 32 of the plaint, it appears that the defendant no. 2 had purportedly misappropriated the infringing materials in 2016 and ultimately left the services of the plaintiff as far back as in 2022. Thereafter, a criminal complaint was filed in 2022, whereupon the plaintiff came to allegedly learn of the existence of plants which had been constructed based on the infringing materials and also the incorporation of a new company in February, 2022. The suit was filed on 17 March, 2023. The plaintiff has waited for a period of more than five years since the alleged act of misappropriation of the infringing materials as well as a year since the filing of the criminal complaint. In the meantime, even on the averments in the plaint, rival plants have been set up in April 2019 on the basis of the alleged infringing materials. In such a situation, it cannot by any stretch of imagination be contended that there is any need to seek immediate urgent reliefs and the plaintiff cannot await the process of mediation.

14. For the foregoing reasons, there are no grounds seeking dispensation with the requirement of section 12A of the Act. The averments made in the plaint do not warrant dispensation under section 12A of the Act. The provision of Pre-Institution Mediation must be complied with.

15. In view of the above, the plaint filed in CS 48 of 2023 stands rejected. However, there shall be no order as to costs. To this extent, GA 2 of 2022 stands allowed.