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Pre Suit Institution Mediation Proceeding Under Section 12-A Of Commercial Court Act 2015: Directory Or Mandatory?

Section 12-A of the Commercial Court Act 2015 provides for pre-institution mediation proceedings. This provision was inserted in the Commercial Court Act 2015 with a view to putting more emphasis on pre-suit institution mediation proceedings. But the effect of Section 12-A of the Commercial Court Act 2015 was yet to be tested.

The question of whether the pre institution suit mediation proceeding as mentioned in Section 12-A of the Commercial Court Act 2015 is required to be mandatorily followed or not, has yet to be interpreted.

This issue also becomes more important in view of the recent judgement passed by the Hon'ble Supreme Court of India in the matter of Patil Automation Private Limited and Others v. Rakheja Engineers Private Limited, 2022 SCC OnLine SC 1028.

The Hon'ble Supreme Court of India, in its judgement reported as Patil Automation Private Limited and Others v. Rakheja Engineers Private Limited, 2022 SCC OnLine SC 1028, held that the provision of Section 12-A of the Commercial Court Act 2015 is mandatorily required to be followed in case urgent interim relief is not sought by the plaintiff.

However, this was not a case involving intellectual property rights. Hence, the interpretation of urgent relief in relation to intellectual property rights in the context of Section 12-A of the Commercial Court Act 2015 is yet to be decided.

The Hon'ble High Court of Delhi, in its recent judgement dated August 31, 2022, passed in Suit bearing CS (COMM) 601 of 2022, titled as Retail Royalty Company Vs. Nirbhay Marg News Broadcast, was having an occasion to address this issue.

In order to appreciate this issue, let us see what Section 12 A of the Commercial Court Act 2015 provides for:

In order to appreciate this issue, let us see what Section 12 A of commercial Court Act 2015 provides for:

Section 12A: Pre-Institution Mediation and Settlement.
  1. [12A. (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, 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.
       
  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.]
     
Thus it is apparent that Section 12 A of commercial Court Act 2015 makes pre Suit institution mediation proceeding mandatory in case urgent interim relief is not asked for by the Plaintiff.

Now let us see how the Hon'ble High Court of Delhi interpreted the term urgent interim relief as used in Section 12 A of commercial Court Act 2015, in the context of suits pertaining to intellectual property right.

In this case, the Plaintiff was engaged in the business of designing, marketing and selling readymade clothing, footwear, fashion accessories and related goods, around the world, including India.

Plaintiff asserted right in its Trademark Device of Eagle in relation to said goods and business. The Plaintiff also asserted world wide prior Trademark registrations and user including in India.

The subject matter Suit was filed by the Plaintiff against adoption and use of identical device of Eagle in relation to its business of broadcasting services, transmitting streamed sound and audio-visual recordings via the Internet, transmitting advertising programs and media advertising communications via digital communications and related services.

The Plaintiff became aware of defendant's adoption and use when the came across Trademark application filed by the Defendant. Not only the Plaintiff filed notice of opposition thereto, but also issued legal notice to the defendant, which the defendant did no reply.

In such a situation, the Plaintiff filed the subject matter suit along with application under Order 39 Ruke 1 and 2 CPC seeking relief of interim injunction aginst use of device of Eagle by defendant in relation to its impugned business of broadcasting services, transmitting streamed sound and audio-visual recordings via the Internet, transmitting advertising programs and media advertising communications via digital communications and related services.

The Plaintiff also sought ad interim injunction against the Defendant. Question was this , whether the relief sought in the nature of ad interim injunction, qualify for urgent relief as contemplated under the provision of Section 12 A of the Commercial Court Act 2015?

The Hob'ble High Court of Delhi was pleased to grant ex parte injunction after refering to one recent Judgment pronounced by Hob'ble High Court of Delhi in Bolt Technology OU v. Ujoy Technology Private Limited & Anr., CS(COMM) 582/2022. The Observation of Hon'ble High Court of Delhi in Bolt Judgement was as under:

17. As per the experience seen in intellectual property cases, the relief of interim injunction, including at the ex-parte stage and ad-interim stage, is extremely important. Such matters do not merely involve the interest of the Plaintiff and the Defendants, which are the contesting parties before the Court, but also involve the interest of the customers/consumers of the products and services in question.

Basing reliance on the said BOLT Judgment, the Hon'ble High Court of Delhi was pleased to grant an ex parte injunction as , according to the High Court of Delhi, the Defendant was not interested in any mediation as the same did not respond to legal notice from the Plaintiff.

Hence from bare perusal of BOLT Judgment and present Judgment at hand, pronounced by Hob'ble High Court of Delhi , it is apparent that bar of provision of Section 12 A of commercial Court Act 2015 would not apply in relation to matters pertaining to Intellectual property right where the Plaintiff seeks interim relief of injunction.

Case Law Discussed:
Retail Royalty Company Vs Nirbhay Marg News Broadcast Private Limited
Judgement Date:31.08.2022
Case No. CS (COMM) 601 of 2022
Hon'ble High Court of Delhi
Jyoti Singh, H.J

Written By: Ajay Amitabh Suman, IPR Advocate, Hon'ble High Court of Delhi.
Email: [email protected], 9990389539

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