The Supreme Court has referred to a Larger Bench an important question concerning the jurisdiction of courts in trademark infringement proceedings, particularly the interplay between Section 134 of the Trade Marks Act, 1999 and notifications issued under the Commercial Courts Act, 2015 constituting Civil Judges (Senior Division) as Commercial Courts.
The Bench of Justice J. B. Pardiwala and Justice K. Vinod Chandran observed that the apparent conflict between the two statutory regimes requires authoritative resolution so that the law is applied uniformly across different States. The Court also stayed the commercial suit pending before the Civil Judge (Senior Division)-I, Jamshedpur, until the issue is resolved.
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The appeal raised a specific question: whether the restriction under Section 134 of the Trade Marks Act, 1999, which prohibits institution of certain trademark suits before a court inferior to a District Court having jurisdiction to try the suit, becomes ineffective or is overridden when a State or High Court notifies a Civil Judge (Senior Division) as a Commercial Court under the Commercial Courts Act, 2015.
The issue arose in the context of the State of Jharkhand, where Civil Judges (Senior Division) have been notified as Commercial Courts.
Section 134 of the Trade Marks Act provides a special jurisdictional framework for suits relating to infringement and other specified reliefs. The appellants argued that the legislative intent was to ensure that such disputes are dealt with by a District Court and that this statutory mandate cannot be diluted merely because a Civil Judge (Senior Division) has subsequently been designated as a Commercial Court.
The appellants contended that allowing a Civil Judge (Senior Division) to entertain a suit under Section 134 would defeat the legislative purpose of the Trade Marks Act.
According to the submissions recorded by the Supreme Court, in Jharkhand, a suit instituted before the Civil Judge (Senior Division) would be subject to an appeal to the District Court under the Commercial Courts Act. The appellants argued that this could prejudice litigants because there would be no statutory appeal to the High Court in the same manner, leaving the High Court’s jurisdiction largely confined to revision or proceedings under Article 227 of the Constitution.
The appellants further submitted that such jurisdictional proceedings would have significant consequences because the High Court, while exercising such restricted jurisdiction, would not ordinarily undertake a re-appreciation of evidence.
The intervener supporting the appellants also argued that the expression “having jurisdiction to try the suit” in Section 134(1) of the Trade Marks Act relates to territorial jurisdiction and does not dilute the requirement that the competent court must be a District Court.
The submission was that the Trade Marks Act is a special legislation dealing specifically with trademark disputes, whereas the Commercial Courts Act is a broader enactment dealing with commercial disputes generally.
The respondents took a different position, relying upon Section 2(1)(c)(xvii) of the Commercial Courts Act, which expressly includes intellectual property rights disputes, including disputes involving registered and unregistered trademarks.
It was argued that the Commercial Courts Act is a later enactment and is itself a special legislation intended to provide for speedy adjudication of commercial disputes.
The respondents also relied upon Section 21 of the Commercial Courts Act, which contains a non-obstante clause giving the Act overriding effect where there is inconsistency with another law. According to the respondents, the subsequent legislation should therefore prevail over any inconsistent provision contained in the earlier Trade Marks Act.
The Supreme Court considered earlier decisions dealing with conflicts between special statutes and the Commercial Courts Act.
The Court referred to Kandla Export Corporation v. OCI Corporation, where it had considered the interaction between the Arbitration and Conciliation Act, 1996 and the Commercial Courts Act. In that case, the Court had held that the Arbitration Act operated as a self-contained code in relation to the specific issue before it and prevailed over the general provisions of the Commercial Courts Act concerning appeals.
The Bench also considered the Gujarat High Court decision in Fun N. Fud v. GLK Associates, concerning whether an application under Section 9 of the Arbitration Act should be filed before a Civil Judge (Senior Division) notified as a Commercial Court or before the Principal District Court.
The Division Bench had held that the definition of “Court” under the Arbitration Act narrowed the competent forum and that the application under Section 9 had to be entertained by the District Court having principal civil jurisdiction.
The Bench also examined the Supreme Court’s decision in Jaycee Housing Private Limited v. Registrar (General), Orissa High Court, which concerned the constitution of Civil Judge (Senior Division) courts as Commercial Courts.
The Court noted that the decision emphasised the objective of the Commercial Courts Act to provide speedy disposal of commercial disputes, including arbitration proceedings.
It was also held in that case that the Commercial Courts Act, being a later enactment, had to be considered in light of the legislature’s presumed awareness of the earlier statutory provisions. The Court further noted the overriding effect provided under Section 21 of the Commercial Courts Act.
The Supreme Court observed that the decisions in Jaycee Housing and Kandla Export Corporation required consideration in the context of the present trademark jurisdiction issue.
According to the Bench, the Commercial Courts Act deals with the larger genus of commercial disputes, while arbitration and intellectual property rights are particular species governed by their respective statutory regimes.
The Court observed that intellectual property rights, including trademarks, fall within Section 2(1)(c)(xvii) of the Commercial Courts Act. However, this does not automatically mean that every specific jurisdictional requirement under the Trade Marks Act is displaced.
The Bench particularly distinguished between a notification constituting a District Judge as a Commercial Court and one constituting a Civil Judge (Senior Division) as a Commercial Court.
The Court observed that Section 134 of the Trade Marks Act prohibits institution of specified suits before a court inferior to that of a District Judge. A notification constituting a District Judge as a Commercial Court would therefore not create the same conflict.
The difficulty arises where a Civil Judge (Senior Division) is notified as a Commercial Court because such a notification may place the Civil Judge in a position to entertain proceedings that Section 134 appears to reserve for a District Court.
The Court highlighted a practical anomaly in Jharkhand.
Under the Commercial Courts Act, the specified value determining pecuniary jurisdiction is at least ₹3 lakh. In Jharkhand, the Civil Judge (Senior Division) has been notified as a Commercial Court with pecuniary jurisdiction between ₹3 lakh and ₹1 crore.
This creates a situation where a trademark suit valued at less than ₹3 lakh would, because of Section 134 of the Trade Marks Act, have to be instituted before the District Court, while a suit having a higher value could be instituted before the Civil Judge (Senior Division) acting as a Commercial Court.
The Supreme Court noted that such a position raises questions concerning the interaction between statutory jurisdiction and State-specific notifications.
The Bench referred to the position in Kerala, where Civil Judges (Senior Division), described as Subordinate Judges’ Courts, were initially notified as Commercial Courts for suits above ₹3 lakh.
The pecuniary threshold was subsequently enhanced to ₹10 lakh. The Court noted that, apparently recognising the anomaly arising from the interaction between the two enactments, a later notification designated District Courts and Additional District Courts as Commercial Courts at the District Judge level for disputes arising under various special statutes.
These included the Arbitration and Conciliation Act, Copyright Act, Trade Marks Act and Patents Act, among others, where the Principal Civil Court of original jurisdiction in a district was required to adjudicate the dispute at first instance.
After considering the statutory provisions and competing judicial precedents, the Supreme Court concluded that the matter required consideration by a Larger Bench.
The Court specifically stated that the reference was necessary to resolve the apparent conflict between the decisions and to settle the law uniformly across States.
The Bench observed that jurisdiction in such matters should not be left to vary depending upon notifications issued in different States. It further stated that the legislative scheme cannot be diluted through notifications issued by High Courts.
Accordingly, the matter has been directed to be placed before the Chief Justice of India for appropriate orders regarding constitution of the Larger Bench.
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