Karnataka High Court Remands Trademark Suit, Sets Aside Return Of Plaint For Non-Examination Of Specified Value

The Karnataka High Court has recently set aside an order returning a trademark infringement suit to a civil court. It held that the Commercial Court had failed to examine the value of the plaintiff's claimed trademark rights before concluding that it lacked pecuniary jurisdiction.

Justice Tara Vitasta Ganju observed that the Commercial Court had not independently assessed the value of the rights asserted by Sarathi International Inc. The court noted that Sarathi International had taken contradictory positions regarding the valuation of those rights.

"The record reflects, that the respondent/plaintiff has asserted contradictory valuation for its intangible rights. However, no material in this behalf was placed before the learned Commercial Court. Thus, the learned Commercial Court has not undertaken any kind of examination of the specified value," Justice Ganju observed.

"Given the fact that the petitioner/defendant has undertaken a specific plea of malafides on the part of the respondent/plaintiff, the learned Commercial Court ought to have undertaken an examination of this aspect.", the court added.

The case arose from a trademark infringement suit filed by Bengaluru-based Sarathi International Inc. concerning its mark "TULASI". The suit was initially instituted before a civil court.

After Sarathi International stated that the value of the suit exceeded the pecuniary threshold applicable to Commercial Courts, the plaint was transferred and registered before the Commercial Court.

Sarathi International later sought return of the plaint to the civil court. It contended that the value of the suit was below the threshold. To support its plea, it relied on an order passed in another suit involving the same trademark in which a Commercial Court had found the value to be below the threshold.

Accepting the contention, the Commercial Court returned the plaint for presentation before the civil court.

Kanpur Flowercycling Private Limited challenged the order before the High Court. It argued that Sarathi International had adopted contradictory stands on valuation. It further contended that the Commercial Court had failed to independently determine the value of the rights claimed in the suit.

Sarathi International opposed the petition. It contended that it was entitled to estimate the value of its rights. It also argued that the Commercial Court had rightly relied on the earlier order concerning the same trademark.

Examining the record, the High Court noted that the Commercial Court's decision was founded on an earlier order passed in another trademark dispute involving Sarathi International. The High Court further observed that the earlier order had proceeded on a provision dealing with immovable property rather than the provision applicable to intangible rights.

The Court held that the Commercial Court was required to undertake its own examination of the value of the rights asserted in the suit before declining jurisdiction.

The High Court also noted that Kanpur Flowercycling had specifically alleged mala fides on the part of Sarathi International in changing its valuation of the trademark rights. The Court held that this contention required consideration.

The Court also examined the maintainability of the challenge. It held that because the procedure under Order VII Rule 10A of the Code of Civil Procedure had been followed while returning the plaint, the challenge could be examined under Article 227 of the Constitution.

Allowing the petition, the High Court set aside the Commercial Court's order. It directed the Commercial Court to examine the value claimed by Sarathi International afresh and pass a fresh order in accordance with law. The Court kept all rights and contentions of both parties open.

"In view of the aforegoing discussions, the petition is allowed. The Impugned Order is set aside, with directions to the learned Commercial Court to undertake an examination on the 'specified value' as has been claimed by the respondent/plaintiff and pass an order in accordance with the law. The rights and contentions of both parties are kept open in this regard," Justice Ganju held.

The court also directed that the matter be placed before the Chief Justice for consideration of appropriate administrative directions.