This is Part II of the two-part series post where I look at a recent judgement delivered by Justice Purushaindra Kumar Kaurav of the Delhi High Court, returning a batch of 17 plaints back to the plaintiffs for lacking territorial jurisdiction in Delhi, and examining various issues related to forum shopping. Here, I will discuss how the dynamic effect principle and doctrines of forum non conveniens and demurrer affect the question of jurisdiction. In Part I, I discussed the issues involving establishing clear jurisdiction in composite suits, the term “carry on business”, cause of action in 4 different situations, and the role of the investigator (read here).
Dynamic Effect Principle
The Court discussed the principle of dynamic effect and concluded that jurisdiction cannot be established based on it. This principle has evolved via judicial interpretation. Girdhari Lal Gupta v K. Gian Chand Jain (1977) coined the dynamic effect in Indian IP jurisdiction. The Court established that an IP registration carries a nationwide “dynamic effect” that causes commercial injury wherever a competitor operates, and so they can file a cancellation petition in their local High Court instead of the jurisdiction of the court that covers the registry. Therefore, we see the principle applies to cancellation/rectification proceedings (the main issue, in Girdhari Lal Gupta, revolved around territorial jurisdiction regarding where a petition for the cancellation of a registered design can be filed under the Designs Act, 1911). However, for infringement suits, the rules of territorial jurisdiction were never unclear and are governed by Section 20 of the CPC and special provisions like S. 134 of the Trade Marks Act or S. 62 of the Copyright Act.
The Court reasoned that if the dynamic effect of an infringement were enough to establish jurisdiction, it would entirely undermine the legislative intent behind Section 62(2) of the Copyright Act and Section 134(2) of the Trade Marks Act that were specifically enacted to allow a plaintiff to sue where they reside, carry on business, or work for gain.
The Court rightly rejected the use of this principle for infringement suits. Plaintiffs cannot simply argue for filing suit anywhere they want because their registration of a trademark has a nationwide impact. If that were the case, then forum shopping would have been the norm rather than a malpractice.
Forum Non Conveniens Rebranded
Here, the High Court rebrands the doctrine of forum non conveniens as an important tool of institutional discipline, stating that in the context of Section 20(c) of CPC, the doctrine can assist the Court in determining if “part” cause of action includes merely an incidental, minuscule, or slender part of the cause of action, or is essential and integral to it.
Forum Non Conveniens means inconvenient forum. As per the doctrine, even when a court has proper jurisdiction to hear the dispute, the civil lawsuit can still be stayed/dismissed if a more appropriate forum is available for that particular lis. The doctrine of Forum Non Conveniens is not a new concept. It was adopted from English Common Law. However, it is also not widely/frequently used.
In the digital age, it is often seen that plaintiffs drag defendants from various towns and cities to Delhi. There is nothing wrong with this except when Delhi is not the natural/appropriate forum. Plaintiffs do this because Delhi promises quick hearings. They are able to do so by exploiting loopholes, hiring investigators, etc. This doctrine, if used regularly, prevents this manufacturing of jurisdiction. So defendants will be saved from an inconvenient forum.
However, the implications of using this doctrine will depend on the judge. A court too strict with dismissing/returning a suit can send a plaintiff in a procedural loop. Further, e-commerce disputes can include multiple states. So which forum from those states would be more responsible? Some metrics should be in place to answer that.
Revisiting Doctrine of Demurrer
The doctrine of demurrer requires every averment in the plaint, whatever it may be, to be taken as true at the pre-trial stage of a litigation. The Doctrine of Demurrer has its root in the English common law. The Supreme Court recognized the doctrine in Exphar SA v Eupharma Laboratories (2004). Quoting the case excerpt: “When an objection to jurisdiction is raised by way of demurrer and not at the trial, the objection must proceed on the basis that the facts as pleaded by the initiator of the impugned proceedings are true.”
This doctrine makes sense as it ensures that at a pre-trial level, the defendant cannot cut off a genuine claim by simply denying the facts before trial, and the plaintiff gets a chance to stand in court if their pleadings in the plaint could establish a valid legal claim. At this stage, evidence is yet to be produced, and witnesses are yet to be cross- examined. Before all that, the doctrine would prevent plaintiffs with a genuine grievance from being turned away from the justice delivery system because the defendant aggressively denied allegations.
However, in today’s era, where there are dangers of clever drafting via advanced tools and risk of hallucinations as involvement of AI is on the increase, a balance has to be made between the Demurrer Doctrine and the Court reading the plaint meaningfully. So, the Court suggests that this doctrine be diluted and empower Courts to pierce through unfounded claims. The Courts should ignore such claims not backed by any documents.
Last Ink
I think the High Court’s decision on territorial jurisdiction was much needed to ensure that courts remain accessible to those whose lis truly belongs at the given jurisdiction. The Court placed institutional discipline at the heart of the contention, closing doors for forum shopping.
The decision has already marked a course correction in Delhi’s IP landscape. In the latest orders relating to cases (still pending before the DHC), Torrent Pharmaceuticals v I-Next Pharmaceutical, Himalaya Wellness v Karamjit Singh, Justice Kaurav has already started to call out plaintiffs to justify the territorial jurisdiction. In ITC Limited v Gold Step Tobacco (also pending before the DHC), he noted that lacking the ABD standards and plaintiffs practicing shortcuts like confining their claims just to get Delhi jurisdiction amounts to dodging core issues or relinquishment of rights elsewhere. These developments indicate that the elaborate decision has turned into an active precedent, shedding DHC’s reputation of being an easy forum of convenience for manufactured claims.
Parallel to this, the DHC’s Single Bench of Justice A.J. Bhambhani in HUL v Kwick Living has referred the broader question of internet-based territorial jurisdiction to a larger bench. The defendant argued that both the plaintiff and defendant have their registered offices in Mumbai and the impugned advertising campaign has its roots there, and so the DHC lacks jurisdiction. It will be interesting to look at how the Larger Bench responds to the question of jurisdiction in a lis involving digital campaigns in the post-ABD Maestro era.
