Delhi High Court’s Interpretation of Dalia
In Ultrahome Constructions v. Purushottam Kumar Chaubey, a Division Bench of the Delhi HC had an opportunity to interpret IPRS v. Sanjay Dalia. The Plaintiff was the owner and used the mark “AMRAPALI” inter alia in relation to hotels. It had its registered office in Delhi. The Defendant was using the impugned mark “AMBAPALI GREEN” in Deogarh (Jharkhand), where the Plaintiff also operating a hotel under its AMRAPALI trademark. The Plaintiff brought a suit for trademark infringement before the Delhi HC.
The Delhi HC observed that the expression “carries on business” in the context of a defendant under the Explanation to section 20 of the CPC was also employed by in the context of a plaintiff under sections 134(2) and 62(2). While discussing the intent behind the construction of Section 20 of the CPC, the Delhi HC relied upon the findings of the SC in Patel Roadways Ltd. v. Prasad Trading Co., where the SC observed that:
“The clear intendment of the Explanation, however, is that, where the corporation has a subordinate office in the place where the cause of action arises, it cannot be heard to say that it cannot be sued there because it does not carry on business at that place. It would be a great hardship if, in spite of the corporation having a subordinate office at the place where the cause of action arises… such plaintiff is to be compelled to travel to the place where the corporation has its principal place. That place should be convenient to the plaintiff; and since the corporation has an office at such place, it will also be under no disadvantage. Thus the Explanation provides an alternative locus for the corporation’s place of business, not an additional one.” (emphasis supplied)
Lastly, the Delhi HC observed that where the plaintiff has a principal office at one place and the cause of action has arisen at the place where its subordinate office is located, the plaintiff would be deemed to be carrying on business at the place of his subordinate office and not at the place of the principal office. On this basis the Delhi HC held that it did not possess territorial jurisdiction since the plaintiff for the purpose of this case was deemed to be carrying on business at Deogarh (Jharkhand); where the cause of action had also arisen.
This jurisdictional table from Ultrahome clarifies the Delhi HC’s interpretation of Dalia:
|Sr. No.||Place of Plaintiff’s Principal Office
(Sole Office in Sr. No. 1)
|Plaintiff’s subordinate/branch office||Place where cause of action arose||Where the Plaintiff can sue under Sections 62(2)/134(2)|
The SC in Dalia recognized and respected a plaintiff’s right to choose between under S. 62(2) of the copyright act under S. 20 of the CPC. To that extent, the SC also acknowledged that the copyright act provides for an additional forum to the plaintiff (i.e. in addition to the one available to the plaintiff under S. 20 CPC). However, the SC has also explicitly noted at Para 20 that this right to choose the additional forum under S. 62(2) is restricted in certain circumstances; such as when the plaintiff has several subordinate offices across India but has its principal/head office where the cause of action has arisen. In such a case, the Plaintiff cannot ignore the place where the cause of action has arisen and drag the defendant to a place where the plaintiff has a subordinate office but where the cause of action is entirely absent.
In particular, the SC has ‘read into’ the IP statute to restrict this right in the following way:
“However, this right to institute suit at such a place has to be read subject to certain restrictions, such as in case plaintiff is residing or carrying on business at a particular place/having its head office and at such place cause of action has also arisen wholly or in part, plaintiff cannot ignore such a place under the guise that he is carrying on business at other far flung places also. The very intendment of the insertion of provision in the Copyright Act and Trade Marks Act is the convenience of the plaintiff. The rule of convenience of the parties has been given a statutory expression in section 20 of the CPC as well. The interpretation of provisions has to be such which prevents the mischief of causing inconvenience to parties.” (emphasis added)
The Bombay HC observed in Manugraph that the Plaintiff has an unbridled right to sue at its place of registered office and that the cause of action is completely inconsequential. This is where I think the Bombay HC has faltered. I think the SC’s intention in Dalia was to give more importance to the situs of the cause of action.
It is true that the SC in Dalia held that the plaintiff will be deemed to be carrying on business only at the place of its principal/head office. However, the essence behind this ruling is the importation of the cause of action to restrict the right of the plaintiff in order to prevent the Dalia mischief. Therefore, the SC’s ratio vis-a-vis the place where of carrying on business is confined in its application to only those situations where the Dalia mischief exists. In any other case, Courts must affix the place where plaintiff carries on business on the basis of where the cause of action has arisen. If the plaintiff has more than one office, he should be allowed to sue only at such place where the cause of action is also present; regardless of whether such place has the plaintiff’s principal office or subordinate office.
At this point, I want to point out an observation made by J. Sai Deepak; a brilliant IP attorney who has previously blogged for SpicyIP. While interpreting the IPRS v Sanjay Dalia in his post, he observes that:
“Simply put, the convenience of defendants has not been entirely done away with by Sections 62/134 since balance is struck by using cause of action as the parameter to determine jurisdiction in so far as the branch office of the plaintiff is concerned.”
Lastly, he jots down the possible jurisdictional scenarios in IP litigation and the impact of Dalia on each of them. He points out that:
“If the principal place of business of the plaintiff is at X, and the cause of action has arisen at Y where there is a branch office, Plaintiff may sue only at Y (emphasis supplied), not X, if the suit relates to the said cause of action.”
Therefore, I believe that the Bombay High Court could have employed the Ultrahome Constructions approach in Manugraph to avoid the absurdity of an interpretation which will cause undue hardship to a defendant; because in both these cases the defendant was being dragged from the place of plaintiff’s subordinate office (which had the cause of action) to the place of plaintiff’s registered office. Such an interpretation would also be in line the SC’s ratio that if the plaintiff has to file suit at the place where she is carrying on business and where cause of action has also arisen wholly or in part.
Therefore, as per my understanding, the Dalia ratio is as follows:
“Notwithstanding the additional right of the plaintiff under Sections 62(2) and 134(2) to choose between places where she carries on business, a corporate plaintiff cannot ignore any such place where it has a principal place of business OR otherwise carries on business [through a subordinate office] when the cause of action does arise in one of these places.”