Full Judgment Text
$~J-
* IN THE HIGH COURT OF DELHI AT NEW DELHI
Reserved on: 17.03.2021
% Pronounced on: 30.04.2021
+ CS(COMM) 327/2020
MACHINENFABRIK RIETER AG & ANR. ..... Plaintiffs
Through Ms.Shwetasree Majumder and
Ms.Vasundhara Majithia, Advs.
Versus
TEX TECH INDUSTRIES (INDIA)
PRIVATE LIMITED & ANR. ..... Defendants
Through Mr.Saikrishna Rajgopala,
Mr.Aniruddh Bhatia, Mr.Avijit Kumar, Mr.Kapil
Sankhla, Ms.Meghna Sankhla, Mr.Rishabh
Goswami and Mr.Wishwa Pratap, Advs. for D-1 &
D-2.
CORAM:
HON'BLE MR. JUSTICE JAYANT NATH
JAYANT NATH, J.
I.A. 9741/2020
1. This suit is filed by the plaintiff seeking a decree of permanent
injunction restraining the defendants from using the registered trade mark
RIETER or any similar mark amounting to infringement. Similar relief of
injunction is also sought regarding infringement of the plaintiff’s registered
Patent No. IN 324406. Other reliefs are also sought.
2. This is an application filed by defendant No.1 under Order 7 Rule 10
CPC praying to return the plaint to be filed in the court of appropriate
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territorial jurisdiction. It is pleaded in the application that the present suit has
been filed by the plaintiffs for alleged infringement of trademark, patent
infringement, passing off, rendition of accounts etc. Defendant No. 1, it is
stated, is a private limited company having its registered office in
Coimbatore, Tamil Nadu. Defendant No. 2 is a resident of Chandigarh. The
plaintiffs have their registered office in Maharashtra. It is stated that the
plaintiffs in an attempt to unduly harass the defendants have filed the present
case before this court having no territorial jurisdiction over the present
dispute. It is stated that under Section 20 CPC read with Section 134 of the
Trade Marks Act, the plaintiffs can institute a case at a place where either of
the parties are having their principal place of business i.e. head office or a
branch office. In the present case, neither of the parties have their head
office or branch office or even principal place of business within the
territorial jurisdiction of this court. None of the parties are residents of Delhi
or have offices or place of business within the territorial jurisdiction of
Delhi.
3. It is stated that even if the averments made in the plaint are taken on
their face value, the case set up by the plaintiffs is that their investigator
visited the premises of defendant No. 1 at Coimbatore and placed an order
for the impugned articles via email. Hence, the plaintiffs have orchestrated a
one-time trap purchase to harass and prejudice the defendants and have filed
the present case before this court which lacks territorial jurisdiction. The
plaintiffs sought to get the impugned articles delivered at the residence of
their constituted attorney-Mr.Vishal Vig which cannot be deemed to be an
accrual of a cause of action within the territorial limits of this court. Hence,
the present application.
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4. I have heard learned counsel for the parties.
5. Learned counsel for the defendants relies upon the judgment of the
Division Bench of this court in the case of Banyan Tree Holding (P) Ltd.
vs. A. Murali Krishna Reddy & Anr., 2009 SCC OnLine Del. 3780 and
judgment of a Coordinate Bench of this court in the case of Indovax Pvt.
Ltd. vs. Merck Animal Health and Ors., 2017 SCC OnLine Del. 9393 to
plead that a solitary trap transaction as done in the present case does not
confer territorial jurisdiction on this court.
6. Learned counsel for the plaintiffs, however, strongly urges that as per
the averments made in the plaint and the documents filed by the plaintiffs,
defendant No. 2 is an agent of defendant No. 1 for the northern territories of
the country including Delhi. Goods in question were purchased in Delhi.
Further, the goods were delivered in Delhi by the said defendant No. 2
acting as an agent of defendant No. 1. It is stated that Section 20 CPC is
clearly applicable to the facts of the present case. It is urged that the
judgment of the Division Bench of this court in the case of Banyan Tree
Holding (P) Ltd. vs. A. Murali Krishna Reddy & Anr.(supra) pertains to a
case of online transactions. It is stated that the present transaction is an off-
line transaction and the aforesaid judgment does not apply to the facts of this
case.
7. Order 7 Rule 10 CPC reads as follows:-
“10. Return of plaint.— (1) Subject to the
provisions of Rule 10-A, the plaint shall at any stage of the suit
be returned to be presented to the Court in which the suit
should have been instituted.
Explanation .— For the removal of doubts, it is hereby
declared that a court of appeal or revision may direct, after
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setting aside the decree passed in a suit,
the return of the plaint under this sub-rule.
(2) Procedure on returning plaint.— On returning a plaint the
Judge shall endorse thereon the date of its presentation
and return, the name of the party presenting it, and a brief
statement of the reasons for returning it.”
8. The settled legal position is that while considering an application
under Order 7 Rule 10 CPC, only averments made in the plaint and the
documents filed along with the plaint need to be seen. In this context
reference may be made to the judgment of the Division Bench of this court
in the case of M/s. RSPL Ltd. vs. Mukesh Sharma & Anr., (2016) 232 DLT
161 where the court held as follows:-
“11. It must be stated that it is a settled proposition of law that
the objection to territorial jurisdiction in an application under
Order 7 Rule 10 CPC is by way of a demurrer. This means that
the objection to territorial jurisdiction has to be construed after
taking all the averments in the plaint to be correct. In Exphar
SA v. Eupharma Laboratories Limited : (2004) 3 SCC 688, the
Supreme Court observed that when an objection to jurisdiction
is raised by way of demurrer and not at the trial, the objection
must proceed on the basis that the facts, as pleaded by the
initiator of the impugned procedure, are true. The Supreme
Court further observed that the objection as to jurisdiction in
order to succeed must demonstrate that granted those facts, the
Court does not have jurisdiction as a matter of law. It is also a
settled proposition of law that while considering a plaint from
the standpoint of Order 7 Rule 10 CPC, it is only the plaint and
the documents filed along with it, that need to be seen. The
written statement is not to be looked into at all.”
9. Reference may also be had to a judgment of a Coordinate Bench of
this court in the case of Boston Scientific International B.V. vs. Metro
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Hospital, (2007)136 DLT 278 where the court held as follows:-
“6. Having obtained unconditional leave to defend the suit, the
defendant has filed the present application under Order 7 Rule
10 for return of the plaint on the ground of lack of territorial
jurisdiction. Now, on the one hand we have an order of this
Court granting unconditional leave to defend on the ground that
a ‘triable issue’ arises qua the plea of territorial jurisdiction and,
on the other, we have the present application wherein the
defendant seeks return of plaint without the issue being tried.
This, to me, seems a somewhat incongruous situation. A ‘triable
issue’ means that the same requires to be decided after leading
of evidence. Whereas, the parameters of disposing of an
application under Order 7 Rule 10, CPC, at the initial stage
without going into evidence, requires the Court to only look at
the averments contained in the plaint.”
10. Hence, this court has only to look at the averments made in the plaint
and the accompanying documents to adjudicate the present application filed
under Order 7 Rule 10 CPC. A perusal of the plaint shows that it is averred
that the plaintiffs instructed their investigator to ascertain the scope and
extent of defendant No.1’s activities. Pursuant to initial investigation, the
plaintiffs’ investigator placed an order with defendant No. 1 via an email
dated 26.12.2019. A performa invoice was issued on 27.12.2019. Thereafter,
an email was received from a representative of defendant No. 2 who
informed the investigator that defendant No. 2 is a supplier of spare parts
manufactured by defendant No. 1. The plaintiffs made the payment and
samples were despatched by defendant No. 1 on 29.01.2020 and the same
were received by the plaintiff’s investigator on 31.01.2020 in Delhi. Two
such separate orders were also received by the plaintiffs’ investigator. It is
also stated that the Business Development Manager of defendant No. 1
informed the investigator that one Mr.Arora of defendant No.2 was their
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selling agent in North India. It is stated that the products so received from
defendant No. 1 infringe the plaintiffs’ patent. The plaintiffs have also filed
documents including invoices showing delivery of goods in Delhi.
11. The question would come: Whether these facts, at this stage, warrant
rejection of the plaint on the ground of lack of territorial jurisdiction of this
court? Reference in this context may be had to the judgment relied upon by
the learned counsel for the defendants in the case of Banyan Tree Holding
(P) Ltd. vs. A. Murali Krishna Reddy & Anr.(supra) . That was a case in
which the plaintiff stated that the defendants have advertised their products
on their website. According to the plaintiff therein, the defendants solicit
their business through use of the impugned mark “BANYAN TREE
RETREAT” and the "Banyan" device mark in Delhi. It was alleged in that
case that the defendants had presence in Delhi through their website which
was accessible in Delhi. It was further stated that the website was not a
passive website. It not only provided contact information but also sought
feedback and inputs from its customers through an interactive web-page.
Further the plaintiff stated that the services of the defendants were being
offered to the customers in Delhi because of the ubiquity, universality and
utility of the features of the internet and the World Wide Web and hence, the
cause of action had arisen within the jurisdiction of this court. Hence, in the
referral order, the learned Single Judge referred the following questions to
the Division Bench:-
“1. Whether this court can entertain the present suit, having
regard to the averments and documents, in the context of special
provisions in to the Trademark and Copyrights Act, which do not
provide for exercise of jurisdiction based on internet or web-
presence of such alleged infringers, even while making explicit
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departure from the general law as to territorial jurisdiction;
2. Whether the court can entertain the present suit, in the absence
of a long arm statute, having regard to the existing state of law,
particularly Section 20, CPC, and the impact, if, any of the
Information Technology Act, 2009 on it;
3. Applicable standards for entertaining a suit, based on use of a
trademark by a Defendant, on its website, or infringement or
passing off of the plaintiff’s trademark, in such website and the
relevant criteria to entertain such suits;
4. Applicable standards and criteria where the plaintiff relies
exclusively on “trap orders” or transactions, in relation to passing
off, or trademark infringement cases, as constituting “use” or
cause of action, as the case may be.”
12. The Division Bench held as follows:-
“38. Having surveyed the law as it has developed in different
jurisdictions, this Court is of the view that the essential principles
developed as part of the common law can be adopted without
difficulty by our courts in determining whether the forum court
has jurisdiction where the alleged breach is related to an activity
on the internet. At the outset, this court does not subscribe to the
view that the mere accessibility of the Defendants' website in
Delhi would enable this Court to exercise jurisdiction. A passive
website, with no intention to specifically target audiences outside
the State where the host of the website is located, cannot vest the
forum court with jurisdiction. This court is therefore unable to
agree with the proposition laid down in Casio . The said decision
cannot be held to be good law and to that extent is overruled.
xxx
Question (iii) Is it permissible for the Plaintiff to establish such
prima facie case through “trap orders” or “trap transactions”?
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46. It may be recalled that the Plaintiff has to show that a part
of the cause of action in a suit for passing off or infringement has
arisen within the jurisdiction of the forum court. Relevant to this,
it would have to be shown by the Plaintiff that the Defendant
“availed” of the jurisdiction of the forum court by commercially
transacting with a viewer located in the forum state through the
internet. The question is whether this transaction can be a trap
transaction ‟ that is engineered by the Plaintiff itself, particularly
when it is not otherwise shown that the Defendant intended to
specifically target customers in the forum state.
xxx
57. Reverting to the present case, the position that emerges
from the above judicial decisions is that while in trade mark and
infringement cases, trap orders or trap transactions may be used
as evidence, the fairness of such transactions is a relevant factor
to be considered. Other relevant factors would be the nature of
goods or services offered for purchase on the internet. If they
require the customer to further physically verify their quality then
the mere purchase of such goods through a trap transaction may
not be treated as being sufficient evidence of infringement. The
facts of each case will determine whether the trap transaction is a
fair one and has resulted in a purchase on the internet of goods or
services. A lone trap transaction will not be sufficient evidence of
infringement or passing off. For the purposes of establishing that
a part of the cause of action arose within the jurisdiction of the
court, the Plaintiff would have to show that the Defendant has
purposefully availed of the jurisdiction of the forum court by
entering into a commercial transaction with an internet user
located within the jurisdiction of the forum court. This cannot
possibly be a solitary trap transaction since that would not be an
instance of “purposeful” availment by the Defendant. It would
have to be a real commercial transaction that the Defendant has
with someone not set up by the Plaintiff itself. If the only
evidence is in the form of a series of trap transactions, they have
to be shown to be obtained using fair means. The Plaintiff
seeking to establish jurisdiction on the basis of such trap
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transactions would have to aver unambiguously in the plaint, and
also place along with it supporting material, to prima facie show
that the trap transactions relied upon satisfy the above test.
Question (iii) is answered accordingly.
Summary
58. We summarise our findings on the questions referred for our
opinion as under:
xxx
Question (iii): Is it permissible for the Plaintiff to establish such
prima facie case through “trap orders” or “trap transactions”?
Answer: The commercial transaction entered into by the
Defendant with an internet user located within the jurisdiction of
the forum court cannot possibly be a solitary trap transaction
since that would not be an instance of “purposeful” availment by
the Defendant. It would have to be a real commercial transaction
that the Defendant has with someone not set up by the Plaintiff
itself. If the only evidence is in the form of a series of trap
transactions, they have to be shown as having been obtained
using fair means. The Plaintiff seeking to establish jurisdiction
on the basis of such trap transactions would have to aver
unambiguously in the plaint, and also place along with it
supporting material, to prima facie show that the trap transactions
relied upon satisfy the above test.”
13. In my opinion the above judgment of the Division Bench does not
have application to the facts of this case. That was a case in which territorial
jurisdiction was claimed by the plaintiff based on the defendants alleged
presence in Delhi through their website which was accessible in Delhi. It
was contended that the website is not a passive website since inputs from
customers through interactive web-page were being taken. The court was
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dealing with the issue of territorial jurisdiction of this court on account of
the defendants hosting a website which was accessible in Delhi. It was in
those facts that the Division Bench had come to the aforenoted conclusions.
The present case is a case of offline transaction.
14. Reference may also be had to the judgment of the Coordinate Bench
of this court in the case of Indovax Pvt. Ltd. vs. Merck Animal Health and
Ors.,(supra) where the court held as follows:-
“23.The averment shows that the jurisdiction of the Court is
claimed on the ground that the medicine of the defendants is
available for purchase in Delhi. In case of Glen Raven Mills
(supra) relied upon by the plaintiff, this Court, in para 10, held
that the cause of action in case of passing off has arisen only
when it is proved that the defendant is selling its goods under the
impugned trademark within its jurisdiction. The relevant
paragraphs are reproduced hereunder:—
“10. ………In a suit for passing off or injunction Or
account of infringement of trade mark, the cause of action
partly or wholly can arise in a given jurisdiction only if it is
the defendant who is proved to have directly made sale of
goods under the impugned trade mark, within that
jurisdiction, not loan individual customer but to a
distributor, wholesaler or retailer and that such a sale is on a
commercial scale
. In the instance case there was no
evidence to show any transaction of sale of goods under the
impugned trade mark, made by the defendant at the place
where the suit for passing off and in-junction was instituted
and so the court at that place had no jurisdiction to entertain
the suit.
11. ……........ In order that the Court at a particular place
should have jurisdiction to try a passing off action, it is
necessary to show that the
defendants were responsible for
sending out to that district, goods which were liable to
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deceive intending purchasers into believing that they were
goods manufactured by the plaintiffs. It would, of course,
not be sufficient if such goods were supplied by the
defendants to individual purchaser for use, as in such a case,
the probability of any members of the public being deceived
would be slight. It is necessary to show that the supply has
been on a commercial scale to persons who are likely to
offer the goods in question for sale.
(emphasis supplied)
xxx
25. So even if the plaintiff relies on a trap transaction it is
required to show that the defendants are indulging into
commercial sale of its product. The question what constitute a
commercial transaction or sale is dealt with by Madras High
Court in Smithkline French Laboratories Limited v. Indoco
Remedies Ltd., 2001 (21) PTC 672 (Mad), wherein it held:—
“6. Per contra, learned counsel for the respondent stated that
only if the goods have been sold through a stockist or
distributor or dealer of the respondent, then alone it can be
construed as a commercial sale on the part of the
respondent, so as to give jurisdiction to the court. Nowhere
in the plaint it is stated that such a commercial sale is
carried on in the City of Madras by the respondent.
Perusal
of the cause of action paragraph also indicates that no such
averment is there to show that the respondent had authorised
the stockist or distributor or dealer in the City of Chennai.
Hence, it is stated that the sale of the product by any other
unauthorised person would not confer any jurisdiction in
this court. I am of the view that there is some force in the
contention raised by the learned counsel for the respondent.”
(emphasis supplied)
26. In Himachal Pradesh Horticulture Produce Marketing and
Processing Corporation Ltd. v. Mohan Meakin Breweries
Limited, 1981 (1) PTC 74 (P&H), the Court while dealing with
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the question of jurisdiction in cases of passing off has held as
under:—
“9. In a case of present nature, the cause of action partly or
wholly can arise in a given jurisdiction only if it is the
defendant who is proved to have directly made sale of the
goods under the impugned trade mark (within the
jurisdiction of a given Court) not to an individual consumer
but to a distributor or a wholesaler or a retailer and that such
a sale should be at a commercial scale. If this much is not
insisted upon, then the defendant can be dragged into
litigation in any part of the country by only adducing flimsy
kind of evidence that has been adduced in the present case
by a company which has its head office of Solan in
Himachal Pradesh where the defendant too have their head
office and where it was convenient to the plaintiff to
prosecute the suit and to the defendant to defend the suit. A
big firm like Mohan Meakin Breweries Limited has its
ramification all over the country and it is easy for it to have
dragged this public corporation into litigation
even at a far
off pace like Kanya Kumari if the only evidence necessary
to give jurisdiction to that Court was of purchasing of a few
bottles by any agent of Mohan Meakin Limited from
someone locally there.
(emphasis supplied)”
15. Hence, the court was of the view that cause of action partly arises in a
given jurisdiction only if it is proved that the defendant has directly made
sale of goods under the impugned trademark not to an individual consumer
but to a distributor or to a wholesaler or to a retailer and such sale should be
at a commercial scale. In the case of a trap transaction, the plaintiff is
required to show that the defendant is indulging in commercial sales to
persons.
16. The facts of the present case are different. In this case, the order was
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placed on the defendants in Coimbatore from Delhi. The goods were
delivered in Delhi. As is evident from the documents filed with the plaint,
the defendant sent a quotation on 23.03.2020 to Delhi; it delivered the goods
in Delhi as seen by the invoice/delivery note dated 05.08.2020.
17. The Supreme court in the case of A.B.C. Laminart Pvt. Ltd. & Anr.
Vs. A.p. Agencies, Salem, (1989) 2 SCC 163 on Section 20 CPC held as
follows:-
“12. A cause of action means every fact, which if traversed, it
would be necessary for the plaintiff to prove in order to support
his right to a judgment of the court. In other words, it is a bundle
of facts which taken with the law applicable to them gives the
plaintiff a right to relief against the defendant. It must include
some act done by the defendant since in the absence of such an
act no cause of action can possibly accrue. It is not limited to the
actual infringement of the right sued on but includes all the
material facts on which it is founded. It does not comprise
evidence necessary to prove such facts, but every fact necessary
for the plaintiff to prove to enable him to obtain a decree.
Everything which if not proved would give the defendant a right
to immediate judgment must be part of the cause of action. But it
has no relation whatever to the defence which may be set up by
the defendant nor does it depend upon the character of the relief
prayed for by the plaintiff.
13. Under Section 20( c ) of the Code of Civil Procedure subject to
the limitation stated theretofore, every suit shall be instituted in a
court within the local limits of whose jurisdiction the cause of
action, wholly or in part arises. It may be remembered that earlier
Section 7 of Act 7 of 1888 added Explanation III as under:
Explanation III.— In suits arising out of contract the cause of
action arises within the meaning of this section at any of the
following places, namely:
(1) the place where the contract was made;
(2) the place where the contract was to be performed or
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performance thereof completed;
(3) the place where in performance of the contract any
money to which the suit relates was expressly or impliedly
payable.”
18. In the present case, the goods were delivered in Delhi. As per the
plaint, the contract was completed in Delhi as the defendant supplied the
goods in Delhi and also raised an invoice/delivery note at Delhi. Further, the
transactions relied upon by the plaintiffs as elaborated in the plaint and the
accompanying documents do show that sale of goods are taking place in
Delhi As to whether these transactions are bona fide transactions or not etc.,
are issues that can be decided only after parties lead their evidence.
19. At this stage, only the plaint and accompanying documents are to be
seen. It is not possible to reach at a conclusion that no cause of action has
arisen within the territorial jurisdiction of this court on a mere reading of the
plaint and the accompanying documents. As noted it is only after the parties
have led their evidence that any final conclusion can be made.
20. There is clearly no merit in the present application and the same is
dismissed.
JAYANT NATH, J.
APRIL 30, 2021/rb
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