Copyright Trademark

Where do I Carry on Business?: The Jurisdictional Conundrum post IPRS v. Sanjay Dalia (Part I)


In a previous post, I covered the Bombay HC’s decision on jurisdiction in copyright and trademark litigation in India. As we saw there, the crux of the discussion comprised an analysis of where a person can be said to be “carrying on business” and especially if that place can be a corporate plaintiff’s subordinate office as opposed to its head office. In Manugraph India Limited V. Simarq Technologies Pvt. Ltd. & Ors, the Bombay HC answers in the negative and upholds the Plaintiff’s unfettered privilege under Section 62(2) of the Copyright Act to sue at the place of its principal place of business. We have received an insightful comment on this point from a reader:

Dr. D. T. Mohan Krishna

“Ritvik, Delhi High Court in World Wrestling Entertainment, … vs M/S Reshma Collection in 2014 held that place of business includes the place where the customers place orders, make payment and receive the goods from the trader through e-commerce. Delhi High court applied instantaneous mode of communication rule for formation of online contracts. Do analyse the Dalia ratio in the context of Reshma ratio and examine whether the place (other than the place where the principal office is located) where plaintiff has considerable number of e- commerce customers and where the cause of action has arisen either under the Trademark Law or Copyright Law can be treated as subordinate office within the meaning of explanation to Section 20 of C.P.C.”

The abovementioned judgment, i.e. WWE v. Reshma Collections, has previously been covered by Devika on SpicyIP here. The Delhi HC held that the expression “carries on business” is not confined to the head office, but can also include a branch office. In arriving at its decision, the Division Bench of the Delhi HC relied upon the SC’s decision in Dhoda House v. S K Maingi and Madras HC’s decision in Wipro v. Oushadha Chandrika. The Plaintiff, in that case, successfully argued the position fortified in Wipro that “the plain meaning of the expression ―carries on business only conveys that wherever there is a business activity – be it the principal place or branch or branches – the party concerned is said to carry on business at such places”. Furthermore, the Court held in the context of e-commerce websites in today’s world that it is possible to have a virtual presence in a place which is located at a distance from the place where it has a physical presence.

Other Decisions on this Issue

In addition to the Delhi HC, the high court of Madras and Bombay have also adjudicated on the issue. A Division Bench of the Madras High Court particularly observed in Wipro vs Oushadha Chandrika that:

If the contrast as between two expressions namely, “actually and voluntarily resides” and “carries on business” is correctly perceived, it would reveal that while there is limitation, regarding residence, there is no such restriction with reference to “carrying on business”. This is a clear indication that the term “carries on business” is not confined to only principal place of business. If the Legislature intended to mean the principal place only, it would have suitably qualified the expression “carries on business”. The plain meaning of the above expression will only convey that wherever there is a business activity be it the principal place or branch or branches the party is said to carry on business in all such places.” (emphasis supplied)

In fact, the Bombay HC has echoed this concern quite clearly in Ultratech Cement v. Dalmia Cement 

In this case, the Defendant questioned the plaintiff’s locus as it only had a subordinate office in Mumbai. In particular, the Defendant argued that the plaintiff cannot be said to be carrying on business within the HC’s jurisdiction since its principal place of business is situated outside the HC’s local limits. This argument was based on a reading of the explanation to S. 20 CPC: which states that a corporate defendant is said to be ‘carrying on business’ either at its principal place of business or at its subordinate office [only] when the cause of action arises there. In thrashing out this attempted import, the Court stated that there is no principle of general application contained in either corporate law or otherwise to equate the ordinary or actual place of business of a corporation only with its principal place of business.

The Mischief in Dalia

The SC dealt with a very specific kind of jurisdictional mischief: When the cause of action arose at the place of their principal/head office, corporate plaintiffs were bringing infringement suits in the place where they had subordinate offices but where the cause of action was absent. The SC said that the legislature did not intend to allow such use of S. 62(2) and 134(2) because it was causing undue hardship to defendants. Therefore, the SC sought to remedy this mischief by stating that in such circumstances the plaintiff will be deemed to be carrying on business only at the place of its principal/head office. The SC summed up in the following way:

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 arisenhe has to file a suit at that place, as discussed above.” (emphasis supplied)

IPRS v. Sanjay Dalia

The Counter-mischief in Manugraph

The SC applied Heydon’s rule in interpreting Section 62 of the Copyright Act and eliminated the corporate plaintiff’s mischief because it caused undue hardship to the defendant. While applying the mischief rule of statutory interpretation (Heydon’s rule) in Dalia, the SC also cautioned against creating counter-mischief. The Court said that “clearly it would be absurd to propose that Parliament intended to abolish one mischief only at the expense of establishing another which is just as bad, or even worse’. Similarly, the SC also emphasized that courts are duty-bound to avoid hardship to any party. On these lines, let’s try to apply this rule of statutory interpretation in our reading of Dalia itself.

Accordingly, this Dalia ratio should not be interpreted in any way as to establish yet another mischief of a similar nature, e.g. where:

Despite having a subordinate office in the place where the cause of action has arisen, the plaintiff brings a suit for infringement at the place of its principal/head office even when the cause of action has not arisen there. It is more than apparent that this situation is only a reversed form of the circumstances arising in the Dalia mischief. This situation, I believe, surfaced in Manugraph.

The Dalia ratio, insofar as it rules that the plaintiff only carries on business at its principal/head office, is confined in its application only to those cases where the particular mischief in Dalia has arisen there as well. Therefore, the above range of judgments can be relied upon to say that a plaintiff can be said to be ‘carrying on business’ even at the place of its subordinate office. Furthermore at para 34 of Dalia, the SC discusses Sonic Surgical v. National Insurance Co. Ltd  to investigate into the meaning of the term ‘branch office’ which appears without qualification in the Consumer Protection Act. The Court eventually resolved that:

‘‘branch office’ as used in the amended section 17(2)(b) has to be interpreted to mean only that branch office where the cause of action has arisen. Thus, the court departed from the plain and literal meaning of the words of section 17(2)(b) of the Consumer Protection Act in order to avoid absurdity.

Even though this decision relates to a different statute, the SC cited it because it wanted to connect the cause of action to the place where the plaintiff can file a suit for copyright/trademark infringement.

In the next part, I will analyze the Delhi HC’s interpretation of Dalia in Ultrahome Constructions v. Purushottam Kumar Chaubey. Lastly, I will conclude with a comment on this matter.  

 

Ritvik M Kulkarni

Ritvik Kulkarni is a final year student at ILS Law College, Pune. He is the Student Coordinator of the ILS Intellectual Property Rights Cell and Student Editor at the ILS Abhivyakti Law Journal since 2014-15. Ritvik first learnt of IP while preparing for his first moot; and has been regularly taking his weekly IP fix ever since. Additionally, he takes interest in learning the law and practice of domestic and international dispute settlement. Speaking of disputes, he's an ardent follower and jabra fan of Game of Thrones. You can get in touch with him at [email protected]; and dont worry he loves F.R.I.E.N.D.S too.

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