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Be careful what you pray for, you might just get it – CTR v Sergi contempt case


The Bombay High Court (Justice G. S. Patel) in CTR Manufacturing Industries Limited (“CTR”) v. Sergi Transformer Explosion Prevention Technologies Private Limited (“Sergi/defendant”), recently dismissed four contempt applications filed by CTR against Sergi in relation to its patent infringement suit. The Court, following the test laid down by the Supreme Court in Food Corporation of India v. Sukh Deo Prasad (2009) 5 SCC 665), held that the power exercised by the Court under Order 39 Rule 2-A (consequences of disobedience or breach of injunction) is punitive in nature and that disobedience of an order must be shown beyond any doubt. Further, the Court is required to read the relief granted in the order strictly and must not construe anything into the order based on inferences or suspicions.

Given that the consequences of contempt can lead to striking out of the defence of a defendant, civil imprisonment and attachment of property, alleged contempt of a Court’s order must be proved beyond reasonable doubt. Consequently, reliefs sought, and prayers made, whether interim or final, must be all encompassing. In the present case, the prayer that was made by CTR was very narrowly worded and relief was granted by the Court in terms of the narrow prayer alone. (and so the biblical saying goes “Be careful what you pray for, you might just get it!”.) Therefore, the defendant’s acts, as explained below, did not strictly fall within the scope of the order and even if they may have, the fact that the matter could not be proved beyond doubt was enough to dismiss the contempt applications. This case stands in contrast to the case of Indresh Shamsunder Advani & Anr. v Karishma Suresh Mahtani & Ors.  (2005 (1) Bom. C. R. 918) (discussed in this case as well) where the prayer was widely worded which resulted in a wider relief and therefore contempt was easier to prove.

Prashant has written about the patent infringement suit between the parties here. and here.

Background

In the present case, CTR, the plaintiff, filed four notices of motion under Order 39 Rule 2A and 11 of the CPC against Sergi, the defendant, alleging that Sergi was in repeated and continuous breach of the restraint orders passed in the patent infringement suit.  In these application, CTR broadly sought the following reliefs –

  1. An order detaining Sergi’s directors and committing them to civil imprisonment.
  2. An order attaching Sergi’s properties;
  3. An order ‘striking out the defence’ placed by Sergi.

The first two reliefs flow from Order 39 Rule 2A of the CPC which specifically grants the Court the discretion to order attachment of property of the person guilty of breach and also order detention in civil prison. The third relief, the one which was pressed for the most in the present case, flows from Order 39 Rule 11 (Bombay amendment), which allows the court to strike out defences of the party contravening orders of the court.

The first and second contempt motions pertain to the defendant’s alleged violation of the District Court’s ex parte interim injunction dated February 15, 2015. The defendant’s submission of bids to Delhi Transco Ltd (“DTL”) and the subsequent contract entered into between the defendant and DTL despite the operation of the ex parte interim order are acts that are challenges as violating the interim order. The third contempt motion challenged the operation of the defendant’s website even after the interim injunction dated February 25, 2011. And in the fourth contempt motion CTR again alleges breach of the interim order dated February 25, 2011 and specifically seeks an order of restraint against Sergi from participating in a tender floated by the Rajasthan Rajya Vidyut Prasaran Nigam Ltd.

A brief timeline of the various orders passed in relation to the patent infringement suit is set out in para 23 of the judgement, reproduced below –

(a) 15th February 2010 to 25th February 2011: Thane District Court’s ad-interim order on purshis Ex. 9 (explained below) operates;

(b) 25th February 2011 to 17th March 2011: Thane District Court’s interim order on Ex.5 (explained below), CTR’s application for interim relief, operates. Ad-interim order merges into the interim order.

(c) 17th March 2011 to 23rd August 2011: Sergi appeals to the Supreme Court and the Supreme Court stayed the operation of the interim order i.e. February 25, 2011. 

(d) 23rd August 2011 to 15th November 2011: Thane District Court interim order revives, and in operation.

(e) 15th November 2011 to 17th January 2012: Thane District Court interim order possibly in operation;

perhaps debatable.

(f) 17th January 2012 to 16th March 2012: Thane District Court orders held not to be operative.

(g) 16th March 2012 to 25th May 2012: Thane District Court orders (both) revived as ad-interim orders, but the order of revival itself is stayed and this is done specifically to enable Sergi to complete the DTL tender or contract.

(h) 25th May 2012: Order of the Supreme Court stating – Till the Notice of Motion (Exhibit 5) and other applications are not disposed of by learned single Judge, the appellant (defendant in the suit) will continue manufacture and sale of its products as per its patent but without infringing the patent of respondent No.1 – Plaintiff of the Suit, in accordance with the undertaking already given by it before learned Single Judge on 15th November 2011. 

Alleged acts of contempt

1. Submission of bid and contract between DTL and defendant dated December 02, 2010:

CTR’s first and second contempt applications are in relation to the defendant’s alleged violation of the ex parte ad-interim order dated February 15, 2010.

To contextualise these application – on January 20, 2010, DTL floated a tender for the purchase of 64 fire systems. Thereafter, on February 12, 2010, CTR filed the patent infringement suit and also filed a widely worded interim application for restraining Sergi from “making, using, offering for sale or selling” its allegedly infringing product. Then, on February 15, 2010, CTR filed a hand-written application  (purshis) seeking urgent ex parte ad-interim reliefs stating “for the purpose of the ad-interim ex parte relief only, the plaintiffs restrict their case and relief to restrain the defendants from selling the product to “Delhi Transco Limited” in Tender Notice No. T/SP/11/2009/44 and dated 20/1/2010. Hence this purshis”. An ex parte ad interim order dated February 15, 2010 was granted in terms of the relief sought in this written application.

Thereafter, both CTR and Sergi submitted their bids to DTL which lead CTR to file its first contempt application alleging violation of the ex parte interim injunction dated February 15, 2010. To this Sergi filed an undertaking not to “sell” its products until the restraint was lifted.

Thereafter, Sergi was however declared the lowest bidder and on December 02, 2010, DTL placed a purchase order on Sergi. This lead CTR to file its second contempt application on December 09, 2010 to restrain Sergi from acting on the purchase order. Though the Court passed a restraining order, after a couple of rounds of refusals and appeals, Sergi was granted permission to submit its drawings to DTL under the purchase order.

Given the above factual matrix, deciding whether or not Sergi’s acts amounted to contempt revolved around interpreting the scope of the written interim application and the order passed on February 15, 2010.

The first contempt motion was filed after Sergi submitted its bid i.e. made an offer for sale to DTL. However, the ad interim injunction which was granted restricted only “sale” to DTL. CTR argued that the purshis must be read broadly as it was not the intention of CTR to make a distinction between “sale” and “offering for sale”. However, the court observed that the purshis clearly narrowed down the relief that was claimed in the first interim application i.e. making, using, offering for sale or selling, and nothing stopped CTR from incorporating the whole relief but it chose not. Above everything, the court held that the purshis introduced ambiguity and that contempt was not proved beyond reasonable doubt.

With respect to the second contempt motion, which was filed after DTL placed the purchase order on Sergi, CTR argued that the purchase order amounted to a “sale” and everything that followed was only supply. However, Sergi argued that placing of the purchase order did not result in a sale. It was argued that sale concluded only on the transfer of property rights in the goods to DTL. Sale was actually completed on May 9 and 10, 2011 on delivery of the goods (this was when the Supreme Court stayed the operation of the interim order dated February 25, 2011).

However, the court did not decide whether the purchase order amounted to a sale but held that the matter was not free from doubt and that was enough to dispose the contempt applications.

2. Operation of website:

CTR’s third contempt application dated March 21, 2011 was with respect to Sergi’s continued use of its website to display its products amounting to an ‘offer to sell’ thereby breaching the interim order dated February 25, 2011. The court held that this application was far too trivial for something as serious as contempt. It was argued that these web pages are like newspaper or magazine advertisements and amount only to an invitation to an offer and do not amount to an ‘offer to sell’. This motion was not pressed by CTR and was disposed.

3. Participating in a tender floated by the Rajasthan Rajya Vidyut Prasaran Nigam Ltd:

The Plaintiff does not appear to have pressed this motion. The court disposed off this motion by referring to certain submissions, not reproduced in the judgement and stating that these submissions “make it clear beyond any doubt that the primary, and possibly sole, reason behind these Motions is to wipe out the competition. No case is made out in contempt even in this Motion

Aparajita Lath

Aparajita graduated from the WB National University of Juridical Sciences, Kolkata. She was formerly an editor of the NUJS Law Review. She is a lawyer based in Bangalore. All views expressed by her on the blog are her personal views.

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