Mobilepe E-Commerce Private Limited And 5 Others v. M/S.Phonepe Private Limited And 4 Others

and A.Nos.4238, 4239 & 4240 of 2022 and O.A.Nos.621, 624, 650, 651 & 652 of 2022 in C.S.(Comm.Div.)No.205 of 2022 C.SARAVANAN, J.

The plaintiff has secured an ad-interim injunction in O.A.No.651 of 2022 on 19.10.2022. No counter has been filed by the defendants so far. On the other hand, the contesting defendants, namely, the first to sixth defendants have now filed A.No.235 of 2023 to revoke the leave granted by this Court on 16.09.2022 in A.No.4095 of 2022.

2. The defendants have also filed their Written Statement. It is the case of the contesting defendants who have filed A.No.235 of 2023 for revoking leave that they are residing outside the jurisdiction of this Court. It is submitted that the present suit based on a solitary trap sale effected at Chennai cannot confer jurisdiction on this Court. 1/23

3. That apart, it is submitted that all the contesting defendants, viz., first to sixth defendants are residing out side the jurisdiction of this Court and therefore, in the light of the decision of the Hon'ble Larger Bench of this Court in Duro Flex Private Limited Vs Duroflex Sittings System 150, reported in LAWS (MAD)-2014-12-225, leave granted by this Court to the applicant/plaintiff has to be revoked.

4. That apart, it is submitted that the Hon'ble Delhi High Court in Banyan Tree Holdings Limited Vs M.Murali Krishna Reddy, reported in LAWS (DLH)-2008-8-245 has laid down the test regarding interactive software and has held that mere the fact that a website is accessible in a particular place may not itself be sufficient for the Courts to exercise jurisdiction over the owners of the website. It is further submitted that the threshold is much higher for granting leave.

5. It is submitted that the Court has held that even where a website is interactive, the level of interactivity would be relevant and limited interactivity may also not be sufficient for a Court to assume jurisdiction. It 2/23

is further submitted that the pleadings are bereft. In absence of a proper pleading, the leave granted is liable to be revoked. A reference was made to Paragraphs 28 & 31 from the said Judgment, which reads as under:- "28. In view of the above discussion, and the absence of any legislative action conferring such "long arm" jurisdiction upon courts, (of the kind noticed and relied on in Zippo and in other judgments by the US Courts) the question which has to be settled authoritatively is whether mere web presence, with or without any manifest intention to CS (OS) 894/2006 Page 25 purposefully direct commercial presence in the court's jurisdiction, entitles a court to entertain it, where the defendant lives outside the territorial jurisdiction of the court, and carries on its activities for gain.

The question is of some significance, because Parliament intended that "normal" rules of jurisdiction in civil matters should be somewhat different in cases of copyright infringement, and trademark infringement (See Section 134, Trademark Act, 1999 and Section 62(2) Copyright Act, 1957: in these provisions, the plaintiff can sue the defendant through action for infringement, wherever the plaintiff resides or works for gain).

Absence of any technology specific amendment, in the opinion of this court, is a relevant criteria for considering whether internet related activity - even if some degree of interactivity of the website were to enable a court, nevertheless to exercise jurisdiction, where the essential ingredients of Sections 62(2) of the Copyright Act, and Section 134 of the Trademark Act, 1999 are absent, and where otherwise the defendant resides and works for gain outside jurisdiction of this court.

30. ........

31. Cyberworld is a virtual world; it has an existence independent of material reality. The hosting of a web 3/23

portal or website, is, in a sense, akin to opening a showroom or a shop. Though difficulties may be experienced by trademark owners at tackling with infringement and passing off of their marks, in such cases nevertheless, a one- dimensional approach to territorial jurisdiction, based on universal accessibility of a particular web site cannot, in the opinion of the court, be justified to assume jurisdiction, as is suggested in Casio. The ruling in India TV Independent News marks a shift from Casio; nevertheless it lacks in explanation as to why a particular approach commended itself to the court, sans any legislative activity, or long arm statutes of the kind prevalent elsewhere. The resultant position is unsatisfactory, as CS (OS) 894/2006 Page 29 both judgments were by single judges, and do not spel out clear standards which are to guide subsequent case. This leaves later benches of co-ordinate strength to prefer either the casio ordained wider rule, or prefer a narrower route, suggested in India TV Independent News."

6. It is further submitted that the decision was also followed by the Hon'ble Delhi High Court in Hydac Fluidtechnik Gmbh Vs Flutec Industries, LAWS (DLH)-2013-8-337 and another decision of the Hon'ble Delhi High Court in M/s.A.V.R. Engineers Vs Sharma Moulding Works and others, (2008) 38 PTC 243.

7. The learned Senior Counsel for the contesting defendants/first to sixth defendants, who have filed this application for revoking the leave 4/23

granted in Clause XII has also placed reliance on the decision of the Hon'ble Supreme Court in "Indian Performing Rights Society Limited Vs Sanjay Dalia and another", 2015 (10) SCC 161. Specifically, a reference is made to Paragraphs 18, 19, 20, 21 & 24 therein, it was held as below:- "18. In our opinion, in a case where cause of action has arisen at a place where the plaintiff is residing or where there are more than one such persons, any of them actually or voluntarily resides or carries on business or personally works for gain would oust the jurisdiction of other place where the cause of action has not arisen though at such a place, by virtue of having subordinate office, the plaintiff instituting a suit or other proceedings might be carrying on business or personally works for gain.

19. At the same time, the provisions of section 62 of the Copyright Act and section 134 of the Trade Marks Act have removed the embargo of suing at place of accrual of cause of action wholly or in part, with regard to a place where the plaintiff or any of them ordinarily resides, carries on business or personally works for gain. We agree to the aforesaid extent the impediment imposed under section 20 of the CPC to a plaintiff to institute a suit in a court where the defendant resides or carries on business or where the cause of action wholly or in part arises, has been removed. But the right is subject to the rider in case plaintiff resides or has its principal place of business/carries on business or personally works for gain at a place where cause of action has also arisen, suit should be filed at that place not at other places where plaintiff is having branch offices etc.

20. There is no doubt about it that the words used in section 62 of the Copyright Act and section 134 of the 5/23

Trade Marks Act, 'notwithstanding anything contained in CPC or any other law for the time being in force', emphasise that the requirement of section 20 of the CPC would not have to be complied with by the plaintiff if he resides or carries on business in the local limits of the court where he has filed the suit but, in our view, at the same time, as the provision providing for an additional forum, cannot be interpreted in the manner that it has authorised the plaintiff to institute a suit at a different place other than the place where he is ordinarily residing or having principal office and incidentally where the cause of action wholly or in part has also arisen. The impugned judgments, in our considered view, do not take away the additional forum and fundamental basis of conferring the right and advantage to the authors of the Copyright Act and the Trade Marks Act provided under the aforesaid provisions.

21. The provisions of section 62(2) of the Copyright Act and section 134 of the Trade Marks Act are pari materia. Section 134(2) of the Trade Marks Act is applicable to clauses (a) and (b) of section 134(1) of the Trade Marks Act. Thus, a procedure to institute suit with respect to section 134(1)(c) in respect of "passing off" continues to be governed by section 20 of CPC.

22. .....

23. .....

24. The avoidance of counter mischief to the defendant is also necessary while giving the remedy to the plaintiff under the provisions in question. It was never visualised by the law makers that both the parties would be made to travel to a distant place in spite of the fact that the plaintiff has a remedy of suing at the place where the cause of action has arisen where he is having head office/carrying on business etc. The provisions of the Copyright Act and the Trade Marks Act provide for the 6/23

authors/trade marks holders to sue at their ordinary residence or where they carry on their business. The said provisions of law never intended to be oppressive to the defendant. The Parliamentary Debate quoted above has to be understood in the manner that suit can be filed where the plaintiff ordinarily resides or carries on business or personally works for gain. Discussion was to provide remedy to plaintiff at convenient place; he is not to travel away. Debate was not to enable plaintiff to take defendant to farther place, leaving behind his place of residence/business etc. The right to remedy given is not unbriddled and is subject to the prevention of abuse of the aforesaid provisions, as discussed above.

Parliament never intended that the subject provisions to be abused by the plaintiff by instituting suit in wholly unconnected jurisdiction. In the instant cases, as the principal place of business is at Mumbai the cause of action is also at Mumbai but still the place for suing has been chosen at Delhi. There may be a case where plaintiff is carrying on the business at Mumbai and cause of action has arisen in Mumbai. Plaintiff is having branch offices at Kanyakumari and also at Port Blair, if interpretation suggested by appellants is acceptable, mischief may be caused by such plaintiff to drag a defendant to Port Blair or Kanyakumari. The provisions cannot be interpreted in the said manner devoid of the object of the Act."

It is submitted that the plaintiff has contrived the jurisdiction of this Court as the plaintiff failed to secure a similar order from the Hon'ble Delhi High Court in Phonepe Private Limited Vs EZY services, 2021 SCC Online Del 2635.

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8. It is submitted that even if a part of cause of action has arisen, the Courts are bound to consider forum conveniens. In this connection, a reference is made to a decision of the Hon'ble Larger Bench of this Court in Duro Flex Private Limited case (referred to supra).

9. The application for revoking the leave is contested by the plaintiff. It is submitted that the application is liable to be dismissed.

10. The learned Counsel for the first respondent/plaintiff has relied on the following decisions:-

(1) World Wrestling Entertainment Inc Vs M/s.Reshma Collection & Others, 2014 SCC Online Del 2031.

(2) Captain Tractors Private Limited Vs Ashok Leyland Limited, 2018 SCC Online Mad 13669.

(3) Sulphur Mills Limited Vs Dayal Fertilizers Private Limited and others, OSA.Nos.38, 40 & 42 of 2020.

(4) V Guard Industries Limited Vs Sukan Raj Jain and others, C.S.No.25 of 2021.

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(5) Saisons Trade and Industry Private Limited Vs Maithri Aquatech Private Limited and others, CS(Comm.Div.)No.214 of 2021.

(6) PEPS Industries Private Limited Vs Kurlon Limited, 2022 SCC Online Del 3275.

11. As far as the trap order is concerned, a reference is made to Paragraph 51 of the decision of the Hon'ble Division Bench of this Court in Sulphur Mills Limited case (referred to supra), wherein, it was held as under:- "51. The evidence in the form of lone trap order ipso facto is sufficient to maintain a suit. A plaintiff is not required to furnish reams of evidence of sale of the defendant's product within the Court's Jurisdiction which is allegedly in violation of the appellant's/plaintiff's patent. The respondents/defendants can throw light as to whether their products are sold or not sold within the jurisdiction of this Court only after filing their written statement at the time of the trial. Mere allegation that the pesticide is a restricted commodity and that the 4th respondent/4th defendant has colluded with the appellant/plaintiff, is not sufficient to conclude that the Court has no or has negligible jurisdiction to non-suit the appellant/plaintiff." 9/23

12. That apart, it is submitted that the decision of the Hon'ble Delhi High Court which against the first respondent/plaintiff in Phonepe Private Limited Vs EZY services, 2021 SCC Online Del 2635, has been diluted.

13. In this connection, a reference was made to Paragraph 34 of the decision of the Hon'ble Division Bench of the Delhi High Court in PEPS Industries Private Limited case (referred to supra), wherein, it was held as under:- "34. In PhonePe (supra) it is held that Court, adjudicating the claim of infringement, cannot ignore either Section 9(1)(b) (which prohibits registration of descriptive trade marks) of 30(2)(a) (which postulates that there can be no infringement of a descriptive trade mark), which are in the nature of statutory interdictions. We are unable to concur with the said view. Section 9(1) of the Trade Marks Act, 1999 sets out the grounds on which the Registrar may refuse registration of a trademark. In the event the Registrar is of the prima facie view that the mark cannot be registered, the applicant is required to be afforded an opportunity to be heard and the Registrar is thereafter, required to take an informed view. By virtue of Section 31 of the Trade Marks Act, 1999 the original registration of the trademark is prima facie evidence of the validity thereof."

10/23

14. That apart, it is submitted that the decision of the Hon'ble Delhi High Court in Banyan Tree Holdings Limited case (referred to supra) relied by the applicants/contesting defendants/first to sixth defendants has also been diluted by the Hon'ble Division Bench of the Delhi High Court in World Wrestling Entertainment Inc case (referred to supra).

15. A specific reference is made to Paragraphs 21 & 22 of the World Wrestling Entertainment Inc case, wherein, it was observed as under:- "21. But, we are not concerned with the question of cause of action between the appellant/plaintiff and its customers in Delhi because the defendants are not such customers and they are, in any event, all residents of Mumbai. What we are examining is whether the third condition specified in Dhodha House (supra) is satisfied or not. In other words, if the contracts and/or transactions entered into between the appellant/plaintiff on the one hand and its customers are being concluded in Delhi, can it not be said that the essential part of the business of the appellant/plaintiff, insofar as its transactions with customers in Delhi are concerned, takes place in Delhi?

The offers are made by customers at Delhi. The offers are subject to confirmation/acceptance of the appellant/plaintiff through its website. The money would emanate or be paid from Delhi. Can it not then be considered that the appellant/plaintiff is, to a certain extent, carrying on business at Delhi? In our view, it would be so.

the internet, it is possible for an entity to have a virtual presence in a place which is located at a distance from the place where it has a physical presence. The availability of transactions through the website at a particular place is virtually the same thing as a seller having shops in that place in the physical world. Let us assume for the sake of argument that the appellant/ plaintiff had a shop in Delhi from where it sold its various goods and services. In that case, it could not be denied that the plaintiff carried on business in Delhi. This is apart from the fact that the appellant/plaintiff may also have been regarded as having voluntarily resided in Delhi. When the shop in the physical sense' is replaced by the virtual' shop because of the advancement of technology, in our view, it cannot be said that the appellant/plaintiff would not carry on business in Delhi.

22. Therefore, in our view, although the learned Single Judge had made a correct reference to the decision of the Supreme Court in the case of Bhagwan Goverdhandas Kedia (supra), the full ramifications of that decision were not perceived by him. When the two decisions of the Supreme Court in Bhagwan Goverdhandas Kedia (supra) and Dhodha House (supra) are considered in the manner indicated above, it would appear that, on the averments made by the appellant/plaintiff in the plaint, the Delhi High court would, on a demurrer, have jurisdiction to entertain the suit inasmuch as the appellant/plaintiff would be regarded as carrying on business in Delhi within the meaning of the expression under Section 134(2) of the Trademarks Act, 1999 and Section 62(2) of the Copyright Act, 1957.

Consequently, the learned Single Judge ought not to have returned the plaint under Order 7 Rule 10 CPC. As a result, the impugned order is set aside and the suit is restored to its original number and the same be placed before the Roster Bench for further steps therein on 28.10.2014, in the first instance.

jurisdiction on facts which, if raised, could be considered by the court based on the evidence and upon the law explained above. The appeal is allowed, as above."

16. By way of rejoinder, the learned Senior Counsel for the applicants/contesting defendants/first to sixth defendants would submit that the decision of the Division Bench of the Hon'ble Delhi High Court in PEPS Industries Private Limited case (referred to supra) was rendered after the order was passed by this Court and therefore, reliance cannot be placed by the first respondent/plaintiff in defence of the application filed to revoke the leave to sue the applicants, granted in A.No.4095 of 2022 vide its order dated 16.09.2022.

17. I have considered the arguments advanced by the learned Senior Counsel for the applicants and the learned Counsel for the respondents.

18. As per Section 120 of CPC, provision of Sections 16, 17 and 20 do not apply to High Court where the High Court exercises Original Civil Jurisdiction.

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19. The High Court of Madras exercises Original Jurisdiction over civil dispute within its territorial and pecuniary limit under Clause 12 of the Amended Letters Patent.

20. There is a subtle but a marked difference between Section 20 of CPC and Clause 12 of the Amended Letters Patent as far as jurisdiction of the Courts over civil disputes.

21. In the case of a civil dispute other than immovable property, if a part of the cause of action arises outside the jurisdiction of the Court, a leave will have to be first obtained under Clause 12 of the Amended Letters Patent. However, there are other criteria that is required to be satisfied.

22. If such a civil dispute involves a "Commercial Dispute" within the meaning of Commercial Courts Act, 2015, such a dispute can be both filed and tried before this Commercial Division as a "Commercial Dispute" provided the value of the relief/claim in the plaint/proceeding are within the territorial and pecuniary jurisdiction of this Commercial Division of this High Court.

14/23

23. "Commercial Disputes" which were earlier filed as Civil Suit before this Court before the constitution and notification of Commercial Division are to be transferred to the Commercial Division of the High Court and tried as Commercial Dispute.

24. Ordinarily, a trade mark, copyright, design or patent and other dispute arising out violation of such intellectual property rights are "Commercial Disputes" within the meaning of Section 2(1)(c) of the Commercial Disputes Act, 2015.

25. In the present case, the dispute relates to the alleged infringement of the registered trade mark of the respondent/plaintiff. Therefore, the "Lis" in the present case is a "Commercial Disputes" within the meaning of Section 2(1)(c) of the Commercial Disputes Act, 2015.

26. The jurisdiction of these genre for the "Commercial Disputes" are not restricted by the pecuniary territorial jurisdiction of the Court/Commercial Division under Clause 12 of the Letter Patent. 15/23

27. The jurisdiction of the Courts are governed by the provisions under the respective enactments. As far as the present case is concerned, it is Section 134 of the Trade Marks Act, 1999 which is pari materia with Section 62 of the Copyrights Act, 1957 is relevant.

28. These provisions contain a special dispensation as far as the jurisdiction of the Courts are concerned. The jurisdiction of the Courts in proceedings under Section 134 of the Trade Marks Act, 1999/or are neither circumscribed by Section 20 of the CPC or by Clause 12 of the Amended Letters Patent.

29. The jurisdiction of the Court under Section 134 of the Trade Marks Act, 1999 and Section 62 of the Copyrights Act, 1957 are in addition to the jurisdiction of the Court under Clause 12 of the Amended Letters Patent.

30. Clause 12 of the Letters Patent and Section 134 of Trade Marks Act, 1999 reads as under:- 16/23

Clause 12 of the Amended Letters Patent "And We do further ordain that the said High Court of Judicature at Madras, in exercise of its ordinary original civil jurisdiction, shall be empowered to receive, try, and determine suits of every description, if, in the case of suits for land or other immovable property such land or property shall be situated, or in all other cases if the cause of action shall have arisen, either wholly, or in case the leave of the Court shall have been first obtained, in part, within the local limits of the ordinary original jurisdiction of the said High Court or if the defendant at the time of the commencement of the suit shall dwell or carry on business, or personally work for gain, within such limits; except that the said High Court shall not have such original jurisdiction in cases falling within the jurisdiction in cases falling within the jurisdiction of the Small Cause Court at Madras, in which the debt or damage , or value of the property sued for does not exceed one hundred rupees.

Section 134 of the Trade Marks Act, 1999

134. Suit for infringement, etc., to be instituted before District Court .-

(1) No suit - (a) for the infringement of a registered trade mark; or (b) relating to any right in a registered trade mark; or (c) for passing off arising out of the use by the defendant of any trade mark which is identical with or deceptively similar to the plaintiff's trade mark, whether registered or unregistered, shall be instituted in any court inferior to a District Court having jurisdiction to try the suit.

(2) For the purpose of clauses (a) and (b) of sub-section (1), a "District Court having jurisdiction" shall, notwithstanding anything contained in the Code of Civil Procedure, 1908 (5 of 1908) or any other law for the time being in force, include a District Court within the local limits of whose jurisdiction, at the time of the institution of the suit or other proceeding, the person instituting the suit or proceeding, or, where there are more than one such persons any of them, actually and voluntarily resides or carries on business or personally works for gain. Explanation. - For the purposes of sub-section (2) " person" includes the registered proprietor and the registered user 17/23

31. A reading of the above Section 134(1) (a) and (b) read with Section 134(2) of the Trade mark indicates that a plaintiff can also file a suit under Section 134 of the Trade Marks Act, 1999 within the local limits of a District Court within whose jurisdiction, at the time of the institution of the suit or other proceeding, i. the plaintiff; or ii. the person instituting the suit or proceeding, or, iii. where there more than one such person any of them, actually and voluntarily resides or carries on business or personally works for gain.

32. On the other hand, under Clause 12 of the Amended Letters Patent, a suit can also be instituted with the leave of the High Court, where a part of the cause of action arises within the jurisdiction of the High Court if the defendant at the time of the commencement of the suit dwells or carry on business, or personally work for gain, within such limits of the High Court.

33. Therefore, in a trade mark dispute arising out alleged infringement of trademark, the plaintiff is not required to obtain leave under Clause 12 of the Amended Letters Patent, if the plaintiff is able to establish 18/23

the above criteria in Section 134 is satisfied. Same reasoning will apply in the case of a copyrights dispute which are filed under Section 62 of the Copyrights Act, 1957.

34. The plaintiff has to however satisfy the test laid down in India Performing Rights Society Limited vs. Sanjay Dalia and another, 2015(10) SCC 161, wherein it was held as under:-

21. At the same time, the provisions of Section 62 of the Copyright Act and Section 134 of the Trade Marks Act have removed the embargo of suing at place of accrual of cause of action wholly or in part, with regard to a place where the plaintiff or any of them ordinarily resides, carries on business or personally works for gain. We agree to the aforesaid extent that the impediment imposed under Section 20 CPC to a plaintiff to institute a suit in a court where the defendant resides or carries on business or where the cause of action wholly or in part arises, has been removed. But the right is subject to the rider in case the plaintiff resides or has its principal place of business/carries on business or personally works for gain at a place where cause of action has also arisen, suit should be filed at that place not at other places where the plaintiff is having branch offices, etc.

22. There is no doubt about it that the words used in Section 62 of the Copyright Act and Section 134 of the Trade Marks Act, "notwithstanding anything contained in CPC or any other law for the time 19/23

being in force", emphasise that the requirement of Section 20 CPC would not have to be complied with by the plaintiff if he resides or carries on business in the local limits of the court where he has filed the suit but, in our view, at the same time, as the provision providing for an additional forum, cannot be interpreted in the manner that it has authorised the plaintiff to institute a suit at a different place other than the place where he is ordinarily residing or having principal office and incidentally where the cause of action wholly or in part has also arisen. The impugned judgments, in our considered view, do not take away the additional forum and fundamental basis of conferring the right and advantage to the authors of the Copyright Act and the Trade Marks Act provided under the aforesaid provisions.

23. The provisions of Section 62(2) of the Copyright Act and Section 134 of the Trade Marks Act are in pari materia. Section 134(2) of the Trade Marks Act is applicable to clauses (a) and (b) of Section 134(1) of the Trade Marks Act. Thus, a procedure to institute suit with respect to Section 134(1)(c) in respect of "passing off" continues to be governed by Section 20 CPC.

35. A leave under Clause 12 of the Amended Letters Patent need not be obtained, if at the time of institution of the suit or other proceeding, the plaintiff actually and voluntarily resides or carries on business or personally works for gain, the plaintiff within the jurisdiction of the Court in view of 20/23

Section 134 of the Act.

36. The plaintiff is required to obtain leave only if the requirement of Section 134 of the Act is not satisfied. Leave to sue is required under Clause 12 of the Amended Letters Patent, if a part of cause of action arises within the jurisdiction or if the defendant at the time of the commencement of the suit dwells or carry on business, or personally work for gain, within such limits of the High Court.

37. In the present case, the application filed for leave to sue was unwarranted the respondent has prima facie established cause of action has arisen within the jurisdiction of the Court. Therefore, the present application for revoking the leave is also not unnecessary.

38. The only option that was available the applicants herein/contesting defendants/first to sixth defendants was to file an application under Order VII Rule 11(a) and (d) of C.P.C. for rejecting the plaint as clauses (b) and (c) to Rule 11 of Order VII of C.P.C are not applicable to the High Court in terms of XLIX Rule (3) of C.P.C. It has not 21/23

been filed.

39. Therefore, the present application filed for revoking the leave granted to the respondent to sue the applicant, is liable to be dismissed. It is accordingly, dismissed. No costs.

23.02.2023 arb 22/23

C.SARAVANAN, J.

arb and A.Nos.4238, 4239 & 4240 of 2022 and O.A.Nos.621, 624, 650, 651 & 652 of 2022 in C.S.(Comm.Div.)No.205 of 2022 23.02.2023 23/23