Commercial Courts Act, 2015 (hereinafter referred to as the “Act”) came into effect on October 23, 2015 with the intention of setting up commercial courts for adjudicating commercial disputes of specified value. Commercial disputes are defined in Section 2(c) of the Act and disputes relating to IPRs, such as trademarks, designs, copyrights, patents, domain names, geographic indications and semiconductor integrated circuits, were included in said definition through Section 2(c)(xvii) of the Act. Further, the specified value for aforesaid commercial dispute ought to be at least Rupees three lakhs to be falling within the scope of the Act. Needless to say, one of the motivations behind bringing in this piece of legislation was to fast-track resolution of commercial disputes. A need was felt to further fine-tune the Act and an amendment was brought therein in the year 2018 through The Commercial Courts, Commercial Division and Commercial Appellate Division of High Courts (Amendment) Act, 2018 – by way of which Chapter IIIA regarding Pre-Institution Mediation was inserted and Section 12A came into being.

Section 12A was included in the Act with the intention of nipping in the bud many of the commercial disputes which get stuck in an endless queue of resolution, by providing an opportunity to the parties to the lis to negotiate their disputes and differences in a formal setting, and to arrive at a settlement in a time-bound procedure lasting up to a maximum period of 5 months and the settlement being equivalent to an arbitral award, thereby being executable. Section 12A of the Act is reproduced hereunder:

“(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."

From the language of Section 12A(1) of the Act, it appears that the legislature intends all commercial disputes to mandatorily go through the process of pre-institution mediation as provided in the Act, except those disputes which contemplate urgent interim relief. Thus, if a plaintiff does not want to engage in pre-institution mediation for any reason, he/she is required to satisfy the court that there is requirement of urgent interim relief, and the court shall entertain the suit only upon being satisfied.

In IPR suits, it has been generally observed that the Plaintiff is keen on approaching the court without resorting to the mandatory mediation prior to institution of suit. This approach may be due to various reasons such as catching the infringing defendants unaware so that they are unable to conceal the infringing products, get urgent orders from the court to seize the infringing products or to restrain the manufacture, sale, etc., of the infringing products, apart from other reasons that may be specific to the facts of the case. It is relevant to note that, in cases involving infringement of Intellectual Property rights, where the infringement is continuous and subsisting and for each passing day when that infringement goes unchecked, the plaintiff is compelled to suffer irreparable harm and injury, and as such the requirement to seek urgent interim relief is created compelling the plaintiff to approach the court straightaway without complying with the mandatory provision of Section 12A of the Act.

Having said that, the Defendants in IPR suits have been recently opposing the apparently casual grant of exemption from compliance of Section 12A of the Act by the courts of the land, so much so that reasonable jurisprudence has been developed on what will amount to ‘urgent interim relief’ so as to warrant said exemption. Here we discuss some of the recent case laws on the aspect of exemption from Section 12A of the Act in IPR suits.

In the case of Yamini Manohar vs. T K D Keerthi[1], the Hon’ble Supreme Court of India held that a commercial court should examine the plaint, documents and facts to arrive at the conclusion that the suit contemplates urgent interim relief. It was laid down by the Hon’ble Supreme Court in Yamini Manohar that in a lis concerning IPR, if an application seeking interim injunction was made containing pleading to the effect that urgent interim relief was indeed contemplated, then exemption can be availed from compliance of Section 12A of the Act, however, the Court added a note of caution that the concerned courts shall have to apply their mind to ascertain that the facts of the case genuinely warranted such an exemption or the plaintiff was using the interim injunction application as a smoke screen to avoid partaking the proceedings of pre-institution mediation.

In another matter, the Division Bench of the Hon’ble High Court of Telangana in the case of M/s. M K Food Products v M/s. S H Food Products[2] held that in a suit for injunction against infringement of a copyright, urgent reliefs will be invariably contemplated, and as such urgency shall have to be presumed by the Commercial Court so as to allow exemption to a plaintiff from complying with the provisions of Section 12A of the CCA.

In yet another matter, the Hon’ble Delhi High Court, in the case of Reddys Laboratories Limited v Smart Laboratories Pvt. Ltd.[3], held that, in view of the principles laid down by the Hon’ble Supreme Court in the case of Yamini Manohar qua Intellectual Property rights suits, in a suit for injunction against infringement, it was not essential for the plaintiff to comply with the provisions of Section 12A of the CCA. It is relevant to mention here that no notice was served upon the Defendant prior to institution of the aforesaid suit by the Plaintiff. It is also pertinent to mention herein that the aforesaid suit pertained to infringement of trademark.

The Hon’ble High Court of Bombay in the case of Chemco Plastic Industries Pvt. Ltd. v Chemco Plast[4], dismissed an application moved by the Defendant under Order VII Rule 11 of the CPC seeking rejection of plaint on the ground of non-compliance of Section 12A of the CCA, on the part of the Plaintiff. In the aforesaid case, the lis pertained to infringement of trademark. It is important to mention herein that there was a gap of 8 years between the issuance of cease-and-desist notice by the Plaintiff to the Defendant and the filing of the suit. The Hon’ble High Court of Bombay held that despite the aforesaid gap of 8 years in a cause of action being arisen and filing of the suit, the contemplation of urgent interim reliefs by the Plaintiff in the suit cannot be negatived.

In view of the foregoing discussion centered around various judgements, it is clear that though Section 12A is a mandatory provision, however, it is mandatory in only those commercial suits where urgent interim relief is not contemplated. Further, it can be deduced from the above discussion that in commercial suits where urgent interim relief is contemplated, exemption from complying with Section 12A is permitted, however, in order to ascertain what constitutes urgent interim relief, the Court must look into the pleadings as laid down in the plaint and take a holistic view. Finally, it can be concluded that in IPR related matters, there is a presumption in favour of granting exemption from complying Section 12A, particularly when an application under Order XXXIX Rules 1 and 2 of the CPC has been filed along with the plaint and that delay, if any, in filing the suit after occurrence of the cause of action does not ipso facto negative the right of the plaintiff to seek remedy by way of instituting a suit for injunction without first complying with the provisions of Section 12A.

Having discussed a few cases which are inclined towards granting exemption from compliance of Section 12A of the Act, let us now look at a recent judgment of the Hon’ble High Court of Himachal Pradesh which held a suit seeking injunction from patent infringement non-maintainable on account of non-compliance of Section 12A.

In the case of Novenco Building & Industry A/S vs. Xero Energy Engineering Solutions Pvt. Ltd.[5], the Hon’ble High Court of Himachal Pradesh, hearing an application under Order VII Rule 11 of the CPC seeking dismissal of suit, observed that there was unexplained delay of almost 6 months from the date of last cause of action being arisen until the date of filing of suit, and as such there was no reasonable ground for making out a case of ‘urgent interim relief’. Accordingly, the Court agreed with the contentions of the defendant and dismissed the suit being non-maintainable for non-compliance of Section 12A of the Act.

Interestingly the decision of the Ld. Single Judge of Himachal Pradesh High Court was challenged before the Division Bench in appeal, which also ruled in favour of the Defendant-Respondent and dismissed the appeal.

In view of the foregoing discussion, it may be trite to assert that though there is a presumption in favour of the plaintiff towards granting of exemption from compliance of Section 12A of the Act in IPR matters, however, the facts of each case shall ultimately dictate whether said exemption may be granted or not.