Sunday, 9 July 2017

SUMMARY JUDGEMENT IN COMMERCIAL CASES


It is not unheard of that a case when instituted in India seeking recovery of money may take several years before the party suing for recovery is actually able to receive the money claimed. Such scenario inevitably deters several companies from approaching the court, thus leading to settlements at far lesser amounts for which the company would have otherwise pursued.

Owing to growing concern for cost effective and faster resolution of commercial disputes, the Commercial Courts, Commercial Division and Commercial Appellate Division of High Courts Act, 2015 (“Act”) was introduced.

Post promulgation of the Act, the trade and commerce sector of the country has become very hopeful. This is because the Act has now put into place much needed processes to ensure that cases are decided in a time bound manner. The procedure for conducting a suit filed before a civil court is governed by the Code of Civil Procedure, 1908 (‘CPC’). To ensure that in commercial disputes where time is of essence, be it either for recovery of money basis a contract or for that matter intellectual property right cases for infringement of trademarks/copyright/patents, the CPC has been suitably amended to incorporate provisions which are likely to make delay and latches a thing of the past. 

One of the crucial amendments which have been brought into the CPC by the Act is the insertion of Order 13A for summary judgment. Order 13A of the amended CPC provides that disputes which are of commercial nature and as such recognized as commercial dispute under the Act, shall be disposed off by the commercial court established under the Act without a full-fledged trial. The provision entitles the plaintiff or the defendant in a suit, to show as to why the claim of the defense as the case may be, is not likely to succeed. Upon filing an application under this Order, the plaintiff shall have to establish that there are no triable issues and that the Defendant has no real prospect in successfully defending the claim. To such an application, the defendant then shall be afforded an opportunity to show to the court that there are triable issues which are required to be inquired into and for which evidence is necessary. Upon hearing the arguments of both the parties, if the court is of the opinion that the defendant is not likely to succeed in defending the claim of the plaintiff, the court shall pass a judgment in favour of the Plaintiff.

While Order 13 A introduces a new perspective for deciding commercial disputes, however, provisions such as Order 13 A existed much prior, in the CPC in the form of Order 37. A suit filed under Order 37 of CPC provides that if a suit for recovery is filed on the basis of admitted debt, the same shall be tried summarily. Similarly, in a suit under Order 37 of CPC, the defendant is given an opportunity to plead existence of triable issues and plead the leave to defend the suit. The only difference between Order 13A and Order 37 is such that an Order 37 suit is applicable only to debts which are admitted, while on the other hand Order 13A can be invoked and is available to all kinds of suit, subject to the fact that the dispute should be a commercial dispute recognized by the Act.
Provisions like Order 13 A is likely to be a game changer in suits filed for infringement of intellectual property rights. This is because, in a suit for enforcement of intellectual property rights, the plaintiff who usually claims to be the proprietor or owner of the intellectual property rights is more concerned with enforcement of its rights and restrain upon availability of spurious/counterfeit or infringing product/services. The newly inserted provision is likely to save the intellectual property rights owner from going through the entire ordeal of the trial and secure protection of its rights without delay.

Recently, the Delhi High Court in the case of ‘Ahuja Radios vs. A Karim bearing CS(COMM) 35/2017” passed a summary judgment upon an application filed in a suit alleging infringement of trademark. It is however interesting to note that in the said case, the plaintiff did not press for damages. A necessary understanding for releasing the claim for damages would be that in the event the plaintiff would have pleaded for damages, then it would have had to lead evidence to show the extent of loss which it suffered, thus negating the entire reasoning behind filing of such an application. While the judgment is worth appreciating and has been analyzed by many, the said cardinal aspect of release of damages was left out. Therefore, in a suit for infringement of intellectual property rights, claim for damages may have to be released when an application under Order 13A of CPC is filed, unless of-course the plaintiff has documentary evidence to prima facie establish the quantum of damages.

To conclude, the amendments brought about by the Act is a welcome move and abreast with the changing commercial scenario, which is likely to have far reaching benefits for trade and commerce of the country.

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