Mischief Managed(?): Bombay High Court upholds Plaintiff’s privilege to sue in its place of registered office sans cause of action

The Bombay High Court has decided in a recent judgment that the Supreme Court’s landmark decision on jurisdiction in IPRS v. Sanjay Dalia cannot be read in such a way as to curtail the plaintiff’s privilege to pursue a suit in the area where the plaintiff has its registered office. Justice Gautam Patel has observed that this rule is applicable even when the plaintiff has a subordinate office in the place where the defendant is carrying on business and where the cause of action has also arisen.

(Long post ahead!)

The Jurisdictional Dance in DaIia

Let’s first revisit Dalia since it forms the crux of this discussion. There, the SC clubbed two disputes with similar jurisdictional claims. In one,IPRS (Appellant) brought a copyright infringement suit in Delhi against Mr. Dalia (Respondent) who owned theaters in Maharashtra. This was despite the fact that IPRS had its head office in Mumbai and that the cause of action also arose there.  Similarly, the plaintiff in the other had its registered office in Mumbai but moved the Delhi HC for TM infringement without clarifying in its pleadings as to why the cause of action arose in Delhi. The Single Judge denied plaintiff’s prayer to accordingly amend its pleading. However, this finding was reversed by the DB and the matter came in appeal before the SC. Thomas J. Vallianeth has extensively covered this judgment here and here.

The Supreme Court in Dalia determined that the Parliament intended Section 62 of the Copyright Act and Section 134 of the Trademark Act to provide an additional forum to the plaintiff to bring a suit before a Court in whose jurisdiction the plaintiff ”carries on business” OR where the cause of action has arisen. The SC had clarified in para 14 that the place where a corporate plaintiff principal place of business, i.e. where the place where it “carries on business”, is the location of its registered office since the controlling power exists there. More importantly, these provisions allow the plaintiff to bring a suit in the area of its registered office even when the cause of action has not arisen there. This was intended[1]by Parliament to enable an aggrieved author/copyright owner to bypass the Section 20 of the Civil Procedure Code; thereby saving the injured party from the hassle of traveling to the infringer’s place of business.

However, the Supreme Court also held that the legislature certainly did not intend to allow a plaintiff to indulge into the mischief of bringing suits in far-flung places where the plaintiff has subordinate offices but where no cause of action has arisen. This is essentially where the Supreme Court drew the line for a plaintiff’s privilege to elect a forum.

Justice Patel’s Interpretation

The Bombay HC dealt with two similar disputes. The plaintiff in one suit has its registered office in Mumbai and also has a branch office in Delhi, where the defendant carries on its business and where, according to the defendant, the cause of action has arisen. Similarly the plaintiff in the other suit has a registered office in Mumbai and a subordinate office in Kolhapur, where the defendants are based in. The defendants relied upon the Supreme Court’s decision in Dalia to argue that the plaintiff is legally obligated to pursue action before appropriate courts in Delhi and Kolhapur, respectively, which rightfully enjoy jurisdiction over the suits. They claimed that any other interpretation will cause undue hardship to the defendant.

Unconvinced, Justice Patel opined that this was not the mischief the Supreme Court was dealing with in Dalia. Instead, (as we can see above) the SC intended to deter unscrupulous plaintiffs who brought suits in areas where they had satellite offices but where the defendant and the cause of action had no presence. In particular, the judgment concludes with the following paragraph:

Para 47:

In our opinion, the provisions of section 62 of the Copyright Act and section 134 of the Trade Marks Act have to be interpreted in the purposive manner. No doubt about it that a suit can be filed by the plaintiff at a place where he is residing or carrying on business or personally works for gain. He need not travel to file a suit to a place where defendant is residing or cause of action wholly or in part arises.However, if the plaintiff is residing or carrying on business etc. at a place where cause of action, wholly or in part, has also arisen, he has to file a suit at that place, as discussed above.” (emphasis supplied)

The defendants argued that in light of this para, the plaintiff must be compelled to sue at Delhi, since the Plaintiff “carries on business” from its subordinate office and because the cause of action also arose there. Justice Patel did not accept this contention. He stated that the defendant cannot be said to be “carrying on business “ (under the meaning of Ss. 62 and 134) from its subordinate offices and is restricted to the registered office of a company. In this regard, the SC reasoned  in Dalia that the term “carries on business” can only be associated with the a corporate plaintiff’s principal place of its business is the location of its registered office (in accordance with the Companies Act, 1956) that is where the controlling power of the corporation lies.

On this basis, Justice Patel concluded that, in accordance with the jurisdictional structure of all three statutes, a plaintiff can always file a suit in a court within the local jurisdiction of which it is a registered office is located; the location of the defendants and that of the accrual of cause of action is inconsequential. This, in his opinion, is a pure IP statute invocation of jurisdiction and that this route is untouched and cannot be ousted by any other option available.

Call for Reform

In the course of discussion over this judgment, Prof. Shamnad offered a very succinct and presice analysis of the jurisdictional position in copyright cases:

“Section 62 provides an exception. What Dalia does is to create an exception to that exception via judicial fiat. Stating that plaintiffs place of business will effectively only be registered office when cause of action or defendant happen To be there. That second exception has to be read narrowly. It cannot be widened to include a case where the plaintiff is prevented from even brining suit in its own registered office jurisdiction. That would hit at the core of section 62 exception.”

This sums up the SC’s stand in Dalia. Justice Patel has applied exactly this legal position within the bounds of the SC’s decision and has produced a well reasoned order to support his findings.

That said, there still remains an anomaly which emanates beyond the contours of both judgments. From a plain reading of the Copyright Committee debates, it is clear that the legislative intent behind the Section 62 exception/privilege was to empower the individual author/copyright owner by making it more conevenient for such a plaintiff to bring copyright infringement actions. And even though the SC and Justice Patel are completely right in their interpretations of the existing law, the law in its present form itself has paved way for a mischief.

SC in Dalia states that Ss. 62 and 134 must be interpreted in a purposive manner. Let’s take a look at the legislative intent in providing an additional forum to the Plaintiff under Section 62 (thereby carving out an exception to the section 20 CPC route). The SC has reproduced the debates of the Copyright Committee. On a plain reading of these debates, I have come to the following conclusions:

1. The legislature wanted tip the scales of convenience in favour of the injured party. But while thinking of “injured party”, the debates refer specifically to an individual author and not the corporate plaintiff (who has a larger territorial presence).
2. In keeping with the above point, the legislature also intended that the individual Plaintiff should not be required to follow the defendant around the country to take action against copyright infringement.

In the same vein, the SC (in para 19) also states that “the intendment of  the aforesaid provisions inserted in the copyright and trademark acts is to provide a forum to the Plaintiff where he is residing, carrying on business or personally works for gain. The object is to ensure that the Plaintiff is not deterred from instituting infringement proceedings “because the court in which proceedings are to be instituted is at a considerable distance from the place of their ordinary residence. “ The SC then states that this is the impediment, caused by 20 CPC, which the legislature intended to remove.

In keeping with the true legislative intent behind the jurisdictional privilege, I have concluded that::

1. It remains convenient for a corporate plaintiff to initiate proceedings from the location a subordinate office (where the cause of action and defendant have presence). I say this because before the SC addressed the “IPRS Mischief”, corporate plaintiffs found it convenient enough (at the cost defendant’s inconvenience) to file suits in the location of their satellite offices. For this reason, I opine that the legislature created an additional forum to provide the plaintiff with convenience; not luxury.
2. It is very clear that such a plaintiff will not obligated by the law to run behind the defendant all across the country for the purpose of filing the suit.
3. Similarly, such a  plaintiff will not be deterred from initiating infringement suits on account of distance from the court of jurisdiction since it happens to have a satellite office right in the midst of the territorial jurisdiction of the concerned court.
4. Lastly, this creates a jurisdictional win-win scenario wherein no party is required to suffer undue harassment at the hands of the other.

Since we have now entered into the policy landscape, any change addressing this inequitable treatment of the defendant only through parliamentary amendment. In fact, this issue was raised a few years ago by Prof. Shamnad and Prashant in their submissions to the Standing Committee on the HRD in relation to the copyright amendment bill. They made the following recommendation:

“It is recommended that this Honourable Committee seeks to balance Section 62 with Section 20 in order to ensure that defendants are not harassed while plaintiffs are enforcing their rights. The Honourable Committee may do so by recommending the following proviso to Section 62”

To address this issue, they recommnended that:

“Provided that sub-section (2) can be availed only when the plaintiff does not have any office or residence in the place where the defendant resides/does business.”

In keeping with these observations, would it then not be appropriate for such a corporate plaintiff to be obligated to sue at the location of its subordinate/satellite office?

[1] Para 11 of Dalia.