URGENT INTERIM RELIEF UNDER SECTION 12A OF COMMERCIAL COURT ACT, 2015

In NOVENCO BUILDING AND INDUSTRY A/S Versus XERO ENERGY ENGINEERING SOLUTIONS PRIVATE LTD. & ANR. - 2025 (12) TMI 1380 - Supreme Court, the appellant is a Danish company incorporated under the laws of Denmark.  The appellant is engaged in manufacture of highly efficient industrial fans, marketed under the Brand ‘Novenco ZerAx’, which was developed by investing 3.66 million euros.  The appellant secured several patents and design registrations to secure its innovation in India and abroad.

The appellant executed a dealership agreement with the respondent No.1 on 01.09.2017.  The appellant alleged that the respondent No. 1 contravened the provisions of the agreement.  The respondent No. 1 incorporated the respondent No.2, Aeronaut Fans Industry Private Limited for manufacture and sale of identical fans under deceptively similar name and appearance.  The appellant discovered that the respondent No.1 started marketing competing products during 2022.  The appellant sent notices to the respondent No. 1 on various dates.  No communication has been received in this regard from the respondent No.1.  Therefore, the appellant terminated the dealership with the respondent No. 1 on 23.10.2022.

The appellant issued cease and desist notice to respondent No. 2 on 23.12.2022.  The second respondent filed replies to the appellant on 01.02.2023 and 03.03.2023.  The respondent filed a caveat petition before the High Court under Section 148A Civil Procedure Code (‘CPC’ for short).  The technical experts of the appellant inspected the fans installed by the respondent No.2 and Hero Motor Corporation, Uttarakhand.  The appellant filed its affidavit before the Court confirming the infringement by the respondent No.2.  The appellant during March 2024, obtained patent and designs certificates. 

The appellant filed a commercial suit on 04.06.2024, under the Commercial Courts Act, 2015 (‘Act’ for short) before the High Court alleging infringement of its patent and designs by the respondent.  The appellant also filed an application before the High Court seeking ad interim injunction.  The appellant also filed an application before the High Court under Section 151 of CPC seeking exemption from pre institution of mediation under Section 12A of the Act. 

The respondent filed an application before the High Court for rejection of the plaint on the ground that there was no urgency in this case.  The respondent further alleged that non-compliance of Section 12A of the Act would be fatal to the suit.  The respondent also filed reply to the application for interim injunction. The Single Judge of the High Court passed the following orders-

• there was a delay of six months between the inspection of fans installed by Aeronaut Fans, in December 2023 and the filing of the suit in June, 2024;
• the plea of the appellant about urgency was not substantiated as the appellant had issued cease-and-desist notice as early as December 2022 and had adequate time to approach for mediation;
• pre-institution mediation under Section 12A of the Act is mandatory, unless urgent interim relief is sought bona fide;
• in the absence of genuine urgency, the plaint was liable to be rejected.

The appellant filed an appeal before the Division Bench against the above said order of Single Bench.  The Division Bench dismissed the appeal holding the following-

• The delay between inspection of fans and filing of the commercial suit exhibits patent lack of urgency and exemption from requirement of compliance of the mandate contained in Section 12A of the Act cannot be claimed merely because interim reliefs were sought.
• Mere continuous infringement of intellectual property rights could not override the statutory mediation requirements.
• The order of rejection of the plaint would not bar the appellant in case it chooses to comply with Section 12A of the Act and subject to the outcome of the mediation proceeding and if the cause of action still survives, it may institute a suit.

Being aggrieved against the order of Division Bench of the High Court, the appellant filed the present appeal before the Supreme Court.  The appellant submitted the following before the Supreme Court-

• The Single Judge and the Division Bench of the High Court erred in not applying the correct test in deciding whether the appellant would be entitled to an interim injunction based on urgency involved in the facts of the case.
• It ought to have been appreciated that the urgent interim relief was not sought to bypass the statutory mandate of pre- litigation mediation.
• The plaint along with the documents have to be read together to find out whether any urgent interim relief is correctly sought.
• The plaint along with the documents have to be read together to find out whether any urgent interim relief is correctly sought.
• Mere delay in filing the suit for infringement and injunction against continuing violation of intellectual property rights by itself is not a ground to decline the injunction against an infringer.

The respondent submitted the following before the Supreme Court-

• In the plaint there is not a single word on the urgency.  Therefore, the Single Judge and Division Bench have rightly found that the plaint does not make out any need for urgent relief.
• The appellant had issued a cease-and-desist notice on 23.12.2022 and thereafter had filed the suit after a delay of one and half years, in June, 2024.
• The suit was filed after four months of the submission of expert opinion. Therefore, there was no urgency to deviate from the mandatory statutory requirement under Section 12A of the Act.

The Supreme Court heard the submissions of the parties to the appeal.  The Supreme Court analysed the provisions of Section 12A of the Act.  The Supreme Court observed that the aim and object of Section 12A is to ensure that, before a commercial dispute is filed before the court, the alternative means of resolution of the dispute are adopted, so that only the most trying cases come before the courts.  Section 12A of the Act makes pre-institution mediation mandatory for commercial disputes, except where the suit ‘contemplates any urgent interim reliefs.  A plaintiff can be exempted from the requirement of Section 12A only when the plaint and the documents attached with it clearly show a real need for urgent interim intervention. A wholesome reading of the plaint and the material annexed to the plaint ought to disclose the need for urgent relief.

The Supreme Court considered the question to be answered in the present appeal is as to whether a suit alleging continuing infringement of patent and design rights, accompanied by a prayer for interim injunction, can be said to contemplate urgent relief within the meaning of Section 12A of the Act, notwithstanding certain delay in its institution.   The urgency, therefore, is inherent in the nature of the wrong and does not lie in the age of the cause but in the persistence of the peril.  the public interest element, need to prevent confusion in the market and to protect consumers from deception further imparts a colour of immediacy to the reliefs sought.

The Supreme Court observed that the appellant’s prayer for injunction cannot be characterised as mere camouflage to evade mediation. It is a real grievance founded on the continuing nature of infringement and irreparable prejudice likely to be caused by the delay. It must be looked beyond time lag and evaluate the substance of the plea for interim protection. The insistence of pre-institution mediation in such a situation of ongoing infringement would render the plaintiff remediless allowing the infringer to continue to profit under the protection of procedural formality. 

The Supreme Court held that the Single Judge and Division Bench erred in construing the test for urgent relief enumerated in Section 12A of the Act.   The courts ought to have proceeded to examine the entitlement of the appellant to urgent relief based on the merits of the case rather than looking at the urgency as is evident from the plaint and the documents annexed thereto from the standpoint of the plaintiff. The High Court has also failed to take into account that the present action is one of the continuous infringements of intellectual property.

The Supreme Court held that-

• In actions alleging continuing infringement of intellectual property rights, urgency must be assessed in the context of the ongoing injury and the public interest in preventing deception
• Mere delay in institution of a suit by itself, does not negate urgency when the infringement is continuing

The Supreme Court set aside the orders of Single Judge and Division Bench and restored the Commercial Suit to the file of the High Court to be proceeded with on merits in accordance with law.