“No Whisper of Urgency”: HP HC Dismisses Infringement Suit for Not Complying with the Mandate on Pre-Institution Mediation 

Recently, the Himachal Pradesh High Court underlined the importance of pre-institution mediation under the Commercial Court Act (CCA) by refusing to hear a patents and designs infringement suit due to plaintiff’s non compliance with the above mandatory requirement. Discussing this order and its wider significance, we are pleased to bring to you this post by SpicyIP Intern Samridhi Chugh. Samridhi is a final-year student at the Campus Law Centre, Faculty of Law, University of Delhi, and a graduate in Journalism from Lady Shri Ram College for Women. With a passion for the dynamic intersection of law, media and technology, she is particularly interested in exploring intellectual property and tech policy. Her previous posts can be accessed here.

“No Whisper of Urgency”: HP HC Dismisses Infringement Suit for Not Complying with the Mandate on Pre-Institution Mediation 

By Samridhi Chugh

In a noteworthy order last week, a Single Judge Bench of the High Court of Himachal Pradesh, in Novenco Building & Industry A/S v. Xero Energy Engineering Solutions Private Ltd. & Another, dismissed a patents and designs infringement suit for failing to comply with the mandatory pre-institution mediation requirement under Section 12A of the Commercial Courts Act, 2015. Based on its holistic examination of the plaint and the submitted documents, the Court observed that the material circumstances in the suit did not contemplate any urgent relief. With this being the sole ground of exemption under the mandatory provision, which was inserted in 2018, it was held that the suit was liable to be rejected. 

From a jurisprudential perspective, the order provides a succinct overview of the recently concretised law, drawing heavily from the most frequently cited Supreme Court (SC) precedents on the subject. At the same time, it also highlights the need for the courts to develop a precise yardstick to determine what constitutes an “urgency” sufficient to justify an exemption under the above provision.

Factual Background

The plaintiff in the suit had alleged that the defendant infringed its patent and design rights vested in “axial fans.” It claimed that the cause of action arose multiple times, beginning in July-August 2022 when it first became aware of the alleged infringement. Later that year, the plaintiff had terminated its distributor agreement, informed the defendant of its extant rights and also issued a cease-and-desist notice. A technical expert had also confirmed the alleged infringement in December 2023. 

It was contended that the cause of action persisted as the defendant continued to sell the infringing fans via various channels, including e-commerce platforms, justifying the grant of urgent relief under Order XXXIX, Rules 1 and 2 of the Civil Procedure Code (CPC). As a consequence of this suit, the defendants filed the present application under Order VII, Rule 11(c) of the CPC, praying for the rejection of the plaint on the ground that it was barred by law.

Court’s Observations – No Evidence to Show Urgency

The Court in its 17-page order first examined the substance of Section 12A(1). As per this provision, a suit shall not be instituted without the plaintiff first exhausting the remedy of pre-institution mediation according to the procedure outlined by the Central Government, unless the facts and circumstances warrant an urgent interim relief. 

Throwing light on the imperative language of Section 12A, the Court followed the landmark decision in Patil Automation Private Limited and Others v. Rakheja Engineers Private Limited (2022), in which the SC had held that the use of the word “shall” in the phrasing implied its mandatory nature. The SC had also observed that this was in line with the legislative intent to expedite the resolution of commercial disputes and alleviate the burden on the judiciary by encouraging mediation. 

The Court further noted the findings of the SC in Yamini Manohar v. T.K.D. Keerthi (2024), in which it had stressed on the judicial duty of the Court to thoroughly examine the nature and the subject matter of the suit, the cause of action and the prayer for interim relief ensuring that it is not used as a “disguise or mask” to evade the pre-institution mediation requirement under Section 12A. 

This being the law, the Court in the instant matter accused the plaintiff of attempting to “wriggle out” of the legal mandate without sufficiently demonstrating the need for urgent relief. While the Court did acknowledge the contentions of the plaintiff in favour of the continuity in the cause of action, it highlighted that there was no evidence to support the nature of the actual sales of the impugned fans by the defendant.

It further observed that the plaintiff waited until June 2024 to file the suit without explaining the delay or the reason for not pursuing pre-institution mediation, despite having ample time since December 2023 when the expert testimony was deposed. Holding that the averments in the suit showed “no whisper of urgency,” and that the present suit was merely an act of circumventing the mandatory stipulation under Section 12A, the Court rejected the plaint. 

From the above, it is considerable that the Court has reiterated that plaintiffs must take expeditious steps to nip infringing actions in the bud and adduce sufficient evidence in furtherance of their claim for urgent relief. What, however, remains worth pondering is whether the Court, despite the absence of the specific evidence as to the nature of the sales, should have also considered the continued presence of the defendant on online platforms while ascertaining the insisted urgency. 

On the Larger Significance of the Order

The Court’s dismissal of the suit by way of the present order  has once again brought focus on the burgeoning emphasis on commercial mediation and other forms of alternative dispute resolution in India. A development that we had highlighted in, as early as, 2018, it continues to gain prominence.

Crucially, the order crystallises the Supreme Court’s (SC’s overarching stance on the implications of non-compliance with Section 12A. Before the landmark SC verdict in Patil Automation, there used to exist some legal dilemma regarding the nature of the requisite under Section 12A. For instance, the Madras High Court in Shahi Exports Pvt. Ltd v. Gold Star Line Limited (2021) had contrarily observed Section 12A to be merely optional which could not be allowed to defeat access to justice. The SC in Patil Automation rendered such decisions obsolete, holding that the requirement was not only mandatory but also came with vitiating consequences for suits filed without first resorting to mediation. The present order by the Himachal Pradesh High Court joins a series of recent decisions, including the Delhi High Court order in M/s Sabsons Agencies Private Limited v. M/s Harihar Polymers & Anr. (2024) in following Patil, emphasising the inescapable nature of the condition to pursue pre-institution mediation in commercial suits. 

However, as discussed above, and also pointed here, the meaning and the decisive standard of the “urgency” so contemplated will have to be clarified, especially in the context of bypassing pre-institution mediations. This will not only guide the courts better in pronouncing clearly reasoned verdicts accepting or dismissing the applications for relief, but will also disable the parties from relying upon any and every cause as ‘urgent’ in an attempt to avoid the initial mediative stage. Moreover, whether the conduct of the defendant refusing to settle the dispute through mediation, as noted in Bolt Technology, OU v. Ujoy Technology Private Limited and Another (2022), bears any impact is also an issue that requires judicial clarity. Resolving these ambiguities will further bolster the mandate under Section 12A and help achieve the legislative objective of amicable, efficient and expeditious dispute resolution, significantly reducing the litigative burden on the courts.

[Note: A few language edits have been made in the previously published version of the post for clarity.]