Court’s Decision
The Supreme Court held that in cases involving continuing infringement of intellectual property rights, the element of urgency must be evaluated based on the ongoing injury, not on the time gap between discovery of infringement and institution of the suit. The Court ruled that the High Court erred in rejecting the plaint for want of pre-institution mediation under Section 12A of the Commercial Courts Act.
Reaffirming that “urgency lies in the persistence of the peril”, the Court clarified that delay does not negate urgency when infringement continues daily, causing fresh harm to goodwill, reputation, and market standing. Consequently, the order rejecting the plaint was quashed, and the commercial suit was restored for adjudication on merits.
Facts
The appellant, a foreign manufacturer of high-efficiency industrial fans marketed under a brand developed over several years at significant cost, had secured multiple patents and design registrations in India and abroad. It had appointed an Indian distributor through a dealership agreement. The dispute began when the distributor’s director allegedly incorporated a competing company, manufacturing identical fans using deceptively similar designs and branding.
Despite multiple communications and termination of dealership, the appellant discovered through inspections in late 2023 that the competing company was manufacturing and selling infringing fans at various industrial sites. Expert affidavits were obtained confirming infringement.
Armed with patent and design certificates, the appellant filed a commercial suit along with an interim injunction application. It also sought exemption from mandatory pre-institution mediation under Section 12A of the Commercial Courts Act. The respondents challenged maintainability, asserting absence of urgency and delay of more than a year.
The High Court rejected the plaint for non-compliance with Section 12A. The Division Bench upheld this view, holding that delay negated urgency.
Issues
- Whether a commercial suit alleging continuing patent/design infringement can be said to “contemplate any urgent interim relief” under Section 12A of the Commercial Courts Act.
- Whether the delay between discovery of infringement and filing of suit defeats the claim of urgency.
- Whether the High Court correctly applied the legal test for rejecting a plaint for non-compliance with Section 12A.
Petitioner’s Arguments
The petitioner argued that the High Court failed to apply the correct test while determining urgency under Section 12A. It contended that ongoing infringement causes daily and irreparable harm, and urgent interim protection was necessary to prevent erosion of goodwill, confusion in the market, and violation of proprietary rights. It was submitted that delay in filing the suit does not legalise infringement, and the plaint along with annexures clearly established immediacy of harm. The petitioner relied on authoritative precedents, including Midas Hygiene Industries Pvt. Ltd. v. Sudhir Bhatia and Yamini Manohar v. T.K.D. Keerthi, to show that delay cannot defeat an injunction in cases of continuous infringement.
Respondent’s Arguments
The respondents argued that the suit did not disclose any urgency whatsoever, as the appellant had issued a cease-and-desist notice almost two years earlier and waited several months after expert inspection to file the suit. They contended that the requirement of pre-institution mediation is mandatory unless genuine urgency is evident, and mere filing of an injunction application cannot be used as a device to bypass statutory mediation. It was asserted that the plaint lacked even a single averment demonstrating urgency, and therefore rejection under Order VII Rule 11 CPC was justified.
Analysis of the Law
The Supreme Court revisited Section 12A of the Commercial Courts Act, which mandates pre-institution mediation unless the suit “contemplates any urgent interim relief”. The purpose of Section 12A is to ensure that only cases requiring immediate judicial intervention bypass mediation.
The Court emphasised that urgency must be assessed from the standpoint of the plaintiff, based on the plaint and annexed documents alone, not based on judicial evaluation of merits. Importantly, the Court reiterated that in intellectual property disputes, each act of infringement is a fresh cause of action, and ongoing infringement gives rise to inherent urgency.
The Court introduced an important dimension: in cases involving deception in the market and imitation of proprietary technology, public interest also reinforces urgency because such infringement affects consumer trust and market integrity.
Precedent Analysis
The Court relied on three landmark precedents:
1. Patil Automation Pvt. Ltd. v. Rakheja Engineers Pvt. Ltd.
Held that Section 12A is mandatory; suits filed without mediation must ordinarily be rejected. The Court clarified that this rule applies unless urgent interim relief is contemplated.
2. Yamini Manohar v. T.K.D. Keerthi
This judgment laid down the criteria for determining urgency. It stressed holistic assessment of the plaint, subject matter, and cause of action. Urgency must not be a camouflage but must arise from the circumstances disclosed.
3. Dhanbad Fuels Pvt. Ltd. v. Union of India
Clarified that courts must focus not on whether interim relief will ultimately be granted, but whether it is plausibly urgent from the plaintiff’s perspective. Interim relief cannot be a mere excuse, but courts must avoid over-scrutinising merits at the Section 12A stage.
In the present case, these precedents were used to establish that continuing infringement itself constitutes plausible urgency, and the High Court erred in applying the wrong test by emphasising delay rather than ongoing harm.
Court’s Reasoning
The Supreme Court held that the High Court adopted a flawed approach by treating delay as fatal to urgency. The core reasoning was:
- Infringement was continuing, causing fresh injury on each occasion.
- Delay does not neutralise urgency where harm persists.
- The High Court incorrectly examined the entitlement to injunction rather than the existence of plausible urgency.
- The plaint and documents clearly showed immediate harm to goodwill, reputation and proprietary rights.
- Insisting on mediation in such cases would allow the infringer to continue profiting, which defeats the purpose of interim protection.
- Public interest in preventing deception strengthens the case for urgency.
The Supreme Court famously observed:
“Urgency does not lie in the age of the cause but in the persistence of the peril.”
Conclusion
The Supreme Court concluded that:
- Urgency must be assessed in light of ongoing injury in cases of continuing IP infringement.
- Delay in institution of suit does not negate urgency when infringement continues.
- The High Court’s orders rejecting the plaint were contrary to the principles governing Section 12A.
- The suit is restored to the High Court for adjudication on merits.
The appeal was allowed.
Implications
- This judgment strengthens IP enforcement in India by recognising that continuing infringement inherently attracts urgency.
- It prevents misuse of Section 12A mediation as a shield by infringers to continue illegal activities.
- Commercial suits seeking injunctions in IP matters will now more easily qualify for exemption from mediation.
- The decision reinforces the principle that procedural technicalities must not render proprietary rights ineffective.
