With our I3 series- Interrogating Interim Injunctions – we’ve been trying to highlight the defunct nature of the interim injunction remedy – and the ease with which it lends itself to forced settlements in otherwise contentious disputes. Trial strategy is a complex procedure, and my point is not to endorse litigiousness in the face of other methods of resolving a dispute. However, out of court processes are dangerous when both parties are not on even footing – and when the stilts enabling unfair bargaining are provided by the court itself we need to ask some serious questions about the fairness of the system.
In this post, I’ll be examining the case of Pest Control v. K Sudhakar. Filed in late 2007, this suit was for the alleged infringement of Patent No. 205411 (277/Mum/2003) pertaining to a method of pest control. An ex parte interim injunction order was passed in the first hearing on “the averments contained in the main suit, injunction application, documents annexed with the plaint and also the submissions made by the learned counsel”. The order contains no mention of the nature of the patent or any analysis or evaluation of the arguments in favour of infringement. Needless to say, there is no mention or application of the four step test for interim injunctions.
In my previous post I’ve argued based on Shamnad’s paper that the ‘relative assessment standard’ is more appropriate to the Indian context as opposed to standard that prescribes a blind deference to the Patent Office decisions. The former standard recognises that the grant of a patent is not proof of its validity [Section 13(4)] and responds to serious questions of integrity and institutional capacity that have been raised against the Patent Office. The ‘relative assessment standard’ test provides that courts must not attempt to resolve difficult issues of fact or law on an application for interlocutory relief but must only grant the same if the court can come to a view on the strength of a party’s case based on credible evidence. This is a high standard that requires actual sifting through evidence and more importantly, an opportunity for the defendant to raise questions on the credibility of the said evidence and make her own case on the issues. The grant of an ex parte interim injunction thus bears the even more onerous standard of demonstrating sufficient gravity and urgency of harm to warrant the sidelining of the first principle of natural justice – audi alteram partem. None of these requirements are addressed in the order.
Even if it is argued that Indian law adheres to the lower standard of ‘triable issue’ laid down by the House of Lord in American Cynamid v. Ethicon, this case also provides that a determination that irreparable harm would accrue to the plaintiff if status quo were allowed to continue and that the balance of convenience lies in favour of the plaintiff are necessary elements for the grant of an interim injunction. The order is glaring in its failure to evaluate any of these parameters.
This unsubstantiated grant of an injunction is only the first of many problematic yet systemic trends. I’ve reproduced the order sheet here as a case study of a typical patent infringement suit:
|1||20/12/2007||Ex parte granted|
|2||11/03/2008||Parties directed to file documents (reply, rejoinder, etc)|
|3||18/03/2008||Notice for IA pleading vacation of interim injunction accepted by Plaintiff, directed to file reply|
|4||07/08/2008||Board heavy, matter not heard.|
|5||17/08/2008||Application for postponement made and granted|
|6||19/11/2008||Typographical error in an affidavit needed to be corrected, postponed till deponent can be present in court for the same.|
|9||14/12/2009||Adjourned for parties to submit the record in electronic format|
|10||03/03/2010||Next date of hearing ‘for directions’ fixed|
|11||08/03/2010||Next date of hearing ‘for arguments’ fixed|
|13||28/07/2010||Next date of hearing fixed|
|14||24/09/2010||Next date of hearing fixed|
|15||18/10/2010||Arguments on behalf of the defendants heard, next date of hearing fixed|
|16||08/11/2010||Next date of hearing fixed|
|17||26/11/2010||Next date of hearing fixed|
|18||16/12/2010||Next date of hearing fixed as a part heard matter|
|20||11/02/2011||Arguments on behalf of plaintiff heard|
|21||18/02/2011||Next date of hearing fixed|
|22||04/03/2011||Next date of hearing fixed|
|23||11/03/2011||Next date of hearing fixed|
|24||08/042011||Judge’s roster changed. Matter not retained as part heard since arguments are not concluded. Transferred to a regular bench for hearing.|
|27||10/07/2012||Settlement talks ongoing, adjourned|
|29||27/08/2012||Settlement recorded, suit decreed in terms of the settlement|
*The parts in bold correspond to the possible period of hearings.
An application for vacation of the ex parte injunction seems to have been filed sometime in March 2008 and was heard by the court on 18.03.2008. Order 39 Rule 3A explicitly provides that a petition for vacation of an ex-parte order shall be heard within 30 days and where the court fails to do so, it must record reasons in writing for the same. Following this hearing, there were over 20 hearings on the same over a period of three years till 08.04.2011. On this date, the transfer of the presiding judge (already the second judge to hear the matter) to another roster meant the reassignment of the case to a new judge for fresh hearings. This would start the entire saga again. The process of rotating rosters is meant to ensure both impartiality and independence of the judges, as well as ensure that judges are given a wide variety of cases that speak to their prior expertise along with building their knowledge of new areas. However, the process can also mean that a case that has already seen 10 substantive hearings under one judge must begin the entire cycle again before a new judge with no prior knowledge of the case. This is an institutional feature that can easily add a year or two to a litigation.
Even after the matter was transferred to a regular bench, it continued to be adjourned till July, 2012. Note that there are 11 explicit adjournments. There seems to be at least 10 hearings conducted for arguments by both parties – a number that we wouldn’t expect even for a full trial on merits [It is pertinent to point out the Supreme Court of the US allows only a single half hour presentation of arguments by each party even for complex constitutional matters].
In the meanwhile, in July, 2011, our Supreme Court delivered a biting indictment on ex parte interim injunctions in the case of Rameshwari Devi vs Nirmala Devi, where it was held:
“If in a given case, ex parte injunction is granted, then the said application for grant of injunction should be disposed of on merits, after hearing both sides as expeditiously as may be possible on a priority basis and undue adjournments should be avoided.”
and further noted that:
“48. It is also a matter of common experience that once an ad interim injunction is granted, the plaintiff or the petitioner would make all efforts to ensure that injunction continues indefinitely. The other appropriate order can be to limit the life of the ex-parte injunction or stay order for a week or so because in such cases the usual tendency of unnecessarily prolonging the matters by the plaintiffs or the petitioners after obtaining ex-parte injunction orders or stay orders may not find encouragement.”
However, despite these observations, the trial continued for another year, albeit with no substantial hearings and only adjournments. Finally, four years at the receiving end of an ex parte injunction preventing any sale or disbursement of the defendant’s product, there was a sudden shift with the parties indicating their desire to settle the matter.
Whether the defendants had a strong case and were simply drawn into a settlement is a matter of conjecture. However, what this case study reveals is the ease with which such extortion would be possible. Despite the contemporaneous delivery of a Supreme Court judgement that hearings on ex parte injunctions be expedited, the court failed to apply sufficient pressure on the parties to complete the hearings in a timely manner. Adjournments were repeatedly requested and granted over these four years. A brief glance through this record reveals that half the orders here are simply delays, extentions and adjournments. Even if the parties, including the defendant suffering the injunction, are happy to allow the case to drag on, this is an immense waste of the court’s valuable time and resources. The elimination of the interim injunction would destroy any incentives to drag on the case needlessly as also economise on the court’s time spent on such cases.