Can State Notifications Let Civil Judges Decide Trademark Cases? Supreme Court Refers To Larger Bench

The Supreme Court on Monday referred to a larger bench the question of whether State notifications notifying Civil Judges (Senior Division) as Commercial Courts can override the Trade Marks Act requirement that infringement suits be instituted before a District Court.

The issue arises from Section 134 of the Trade Marks Act, 1999. It bars a suit seeking relief for trademark infringement from being filed before a court below the District Court having jurisdiction to try it.

The question is whether this requirement can give way when a State, under the Commercial Courts Act, 2015, notifies a Civil Judge (Senior Division) as a Commercial Court.

A bench of Justice J.B. Pardiwala and Justice K. Vinod Chandran was hearing an appeal by I.S.D.S. Private Limited against Khemka Food Products Pvt. Ltd. The case concerns a Commercial Court notification in Jharkhand, where Civil Judges (Senior Division) have been notified as Commercial Courts.

The appellants argued that Section 134 was specifically intended to ensure that trademark infringement disputes are dealt with by a District Court. In Jharkhand, however, a suit covered by Section 134 would have to be filed before the Civil Judge (Senior Division), with an appeal from that court going to the District Court.

The appellants also pointed out that there is no remedy of appeal to the High Court. Its jurisdiction would instead be confined to revision or a challenge under Article 227 of the Constitution. The appellants argued that this is restrictive because the High Court cannot re-appreciate evidence in such proceedings.

An intervener supporting the appellants took a similar position. The submission was that the reference in Section 134 to a court “having jurisdiction to try the suit” concerns territorial jurisdiction and does not alter the specific requirement that the suit be heard by a District Court.

The respondents took the opposite view. They relied on Section 2(1)(c)(xvii) of the Commercial Courts Act, which expressly includes intellectual property disputes involving registered and unregistered trademarks within the definition of a “commercial dispute”.

They also relied on Section 21 of that Act. It gives the Commercial Courts Act overriding effect where there is anything inconsistent in another law in force. Since the Commercial Courts Act came after the Trade Marks Act, the respondents argued that its provisions should prevail where the two laws conflict.

The bench then examined earlier decisions dealing with the interaction between the Commercial Courts Act and other special laws.

In Kandla Export Corporation v. OCI Corporation (2018), the Supreme Court held that the Arbitration and Conciliation Act, 1996 operated as a self-contained code in matters concerning arbitration. It therefore held that Section 13(1) of the Commercial Courts Act did not apply to cases covered by Section 50 of the Arbitration Act.

The bench also referred to the Gujarat High Court's decision in Fun N. Fud v. GLK Associates, authored by Justice J.B. Pardiwala when he was a judge of that court.

The case concerned 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 held that such an application could be entertained only by the District Court having principal civil jurisdiction.

The Supreme Court also considered Jaycee Housing Private Limited v. Registrar (General), Orissa High Court. In that case, the challenge was to a notification constituting Civil Judges (Senior Division) as Commercial Courts for exercising jurisdiction under the Commercial Courts Act.

The reasoning recorded in that decision was that the Commercial Courts Act was enacted later and specifically dealt with commercial disputes, including arbitration matters. Section 21 also gives it overriding effect over inconsistent provisions in other laws.

The bench noted that the two decisions took different approaches to the relationship between the Commercial Courts Act and a special enactment.

In Jaycee Housing, the arbitration provisions were held to concede jurisdiction to the Commercial Courts Act. Kandla Export, on the other hand, treated the Arbitration Act as a special and self-contained code in relation to the Commercial Courts Act.

The bench observed that the Commercial Courts Act deals with the broader category, or “genus”, of commercial disputes. Intellectual property disputes, including trademark disputes, are one category, or “species”, within that broader group under Section 2(1)(c)(xvii).

The bench noted that Section 3 empowers High Courts to notify the constitution of Commercial Courts at the district level, which includes District Courts.

Section 21 gives the Commercial Courts Act overriding effect only where there is something inconsistent in another law. The bench reasoned that where the Trade Marks Act requires certain suits to be instituted before a District Court, that requirement is not inconsistent with the Commercial Courts Act if the Commercial Court is itself a District Court.

“The problem occurs only when the notification, constitutes Civil Judges as Commercial Courts,” the bench observed.

It therefore held that “the apparent conflict in the two decisions, according to us, needs to be looked into by a larger bench.”

The bench also examined the pecuniary jurisdiction prescribed under the Commercial Courts Act.

Section 3 provides that the specified value determining pecuniary jurisdiction should not be less than Rs 3 lakh. In Jharkhand, the Civil Judge (Senior Division) notified as a Commercial Court has jurisdiction over disputes valued between Rs 3 lakh and Rs 1 crore.

A trademark suit valued below Rs 3 lakh would nevertheless have to be instituted before the District Court because of Section 134 of the Trade Marks Act. Suits of higher value would have to be filed before the Civil Judge (Senior Division).

The bench also referred to Kerala. There, the Civil Judge (Senior Division) was initially notified as a Commercial Court for suits valued above Rs 3 lakh. The pecuniary threshold was later raised to Rs 10 lakh.

A subsequent notification designated all District Courts and Additional District Courts as Commercial Courts at the District Judge level.

The notification covered commercial disputes arising under, among other laws, the Arbitration Act, Copyright Act, Trade Marks Act, and Patents Act.

The bench held that the matter should be referred to a larger bench to resolve the conflict and settle the law uniformly across States. It also said that jurisdiction should not be left to different notifications issued by various States.

The bench observed that “the legislative imprimatur cannot be diluted by the notifications issued by the High Courts.”

The matter shall be placed before the Chief Justice of India for appropriate orders.

The bench also ordered that the suit pending before the Civil Judge (Senior Division)-I, Jamshedpur, shall stand stayed.