LI Network
Published on: November 08, 2023 at 12:50 IST
The Delhi High Court has recently overturned a previous judgment that mandated a specific valuation threshold for Intellectual Property Rights (IPR) suits in order to be considered for listing before commercial courts.
The Division Bench, consisting of Justices Yashwant Varma and Dharmesh Sharma, ruled that it would be incorrect to presume that all IPR suits valued below ₹3 lakh are driven by ulterior motives to evade the application of the Commercial Courts Act, 2015 (CCA).
In the case of Pankaj Ravjibhai Patel trading as Rakesh Pharmaceuticals v. SSS Pharmachem Pvt Ltd, the Division Bench challenged the single-judge’s judgment in Vishal Pipes Limited v. Bhavya Pipe Industry, which had set the precedent for IPR suit valuation.
The Vishal Pipes judgment asserted that unscrupulous plaintiffs were undervaluing IPR suits deliberately to control the court listing and avoid CCA provisions.
The Division Bench held that it is inappropriate for the court to automatically classify IPR suits below ₹3 lakh as having nefarious intent. It emphasized that the CCA applies to commercial disputes when the specified value exceeds ₹3 lakhs, but suits with lower valuations should not be assumed to be manipulating the system.
The Division Bench’s ruling emphasized that the issue of undervaluation should be addressed on a case-by-case basis by a competent court.
It was noted that, in instances of deliberate suppression of valuation, courts have the authority to amend the claims and demand additional court fees, but only when such discrepancies are established.
The Division Bench also supported the suggestion of the amicus curiae, Swathi Sukumar, which requires plaintiffs in IPR suits with valuations below ₹3 lakh to make an additional declaration that they have not taken an inconsistent position regarding specified value in any other past or pending litigation.
In conclusion, the Division Bench overruled the directions issued in Vishal Pipes and emphasized that matters previously transferred to designated commercial courts based on these directions should be returned to the appropriate courts for trial according to the new guidelines.
The Court requested the Registrar General to disseminate this judgment to all Principal District Judges for compliance. These judges were instructed to display a list of such cases on their court websites, indicating the courts to which the cases would revert and the scheduled dates for hearings.
This landmark decision by the Delhi High Court provides more flexibility in determining the value of IPR suits and prevents blanket assumptions of ulterior motives based on valuation alone.
