Jurisdictional Conflict in Design Act Cases: Supreme Court Clarifies Transfer of Suits
The case at hand revolves around a jurisdictional conflict under the Design Act, 2000, and the Commercial Courts Act, 2015. The legal dispute was initiated by S.D. Containers Indore, the appellant, against M/S. Mold Tek Packaging Ltd., the respondent. The matter primarily concerns whether a commercial dispute involving design registration and its cancellation should be adjudicated by the High Court or a Commercial Court at the district level.
The appellant contested the Madhya Pradesh High Court’s order, which set aside the transfer of a suit to the Calcutta High Court. The High Court ruled that the Commercial Court at Indore was competent to handle the case. The Supreme Court’s decision in this matter has clarified the legal position regarding the transfer of suits concerning design registration disputes.
Background of the Case
The respondent filed a suit seeking a declaration and permanent injunction against the appellant to prevent the latter from copying or using the registered design of a container and lid, registered under Design Application Nos. 299039 and 299041. The respondent contended that the appellant was infringing upon its exclusive rights over these registered designs.
On the other hand, the appellant, as part of its defense, countered that these designs were not new or original, making them ineligible for registration under Section 4(a) of the Design Act, 2000. The appellant further sought the cancellation of these registrations and filed an application under Section 22(4) read with Section 19(2) of the Design Act, requesting that the suit be transferred to the Madhya Pradesh High Court, Indore Bench.
Key Issues in the Case
1. Jurisdiction of the High Court vs. Commercial Court
The primary issue was whether the suit should be transferred to the High Court under Section 22(4) of the Design Act, 2000, or whether the Commercial Court at Indore could retain jurisdiction.
2. The Interpretation of the Law
The Madhya Pradesh High Court examined the applicability of Section 22(4) of the Design Act, which mandates that suits where a counterclaim for design cancellation is raised must be transferred to the High Court. However, the High Court relied on Godrej Sara Lee Ltd. vs Reckitt Benckiser Australia Pty. Ltd. and held that an application for cancellation of a registered design should be filed before the Controller of Designs, not directly before the High Court.
It further observed that since appeals from the Controller’s decision lie with the High Court, the trial court’s order transferring the suit to the Calcutta High Court was incorrect. The High Court ruled that the Commercial Court at Indore was competent to hear the case under the provisions of the Commercial Courts Act, 2015.
3. The Supreme Court’s Analysis
The Supreme Court noted that the Design Act, 2000, specifically provides two routes for the cancellation of a registered design:
- Under Section 19, an application for cancellation may be made directly to the Controller of Designs.
- Under Section 22(4), if a defendant in a design infringement suit raises a counterclaim for revocation, the suit must be transferred to the High Court.
The Supreme Court ruled that the Madhya Pradesh High Court erred in holding that the Commercial Court had the jurisdiction to hear the suit, despite the counterclaim for cancellation of design registration.
Supreme Court’s Verdict
The Supreme Court overruled the Madhya Pradesh High Court’s decision, holding:
“In terms of Section 22(4) of the Design Act, the defendant has a right to seek cancellation of the design, which necessarily mandates the Court to transfer the suit.”
The Court clarified that when a cancellation plea is raised as a defense, the matter must be transferred to the High Court as per the law. However, the Court also found that the Commercial Court’s decision to transfer the suit to the Calcutta High Court was incorrect, as no part of the cause of action arose in Kolkata.
Legal Precedents and Supporting Judgments
The Supreme Court referred to various judgments supporting its decision, including:
- Standard Glass Beads Factory v. Shri Dhar & Ors.: This case reinforced the principle that once a counterclaim for cancellation is made, the suit must be transferred to the High Court.
- R.N. Gupta & Co. Ltd. v. Action Construction Equipment Ltd.: This ruling emphasized that District Courts lack jurisdiction to decide design cancellation disputes.
- M/s Astral Polytechnic v. M/s Ashirwad Pipes Pvt. Ltd.: The judgment clarified that lower courts cannot entertain matters requiring cancellation of registered designs.
Final Outcome
The Supreme Court set aside the Madhya Pradesh High Court’s order and directed that the suit be transferred to the Madhya Pradesh High Court, Indore Bench. The case was remitted to the Indore Bench for adjudication.
Conclusion
This judgment is significant as it reaffirms the principle that any counterclaim for design cancellation in a suit must lead to the transfer of the case to the High Court. The Supreme Court has thus provided much-needed clarity on jurisdictional conflicts in design infringement cases. By strictly adhering to Section 22(4) of the Design Act, 2000, the Court has reinforced the legislative intent and ensured uniform application of the law across similar disputes.
Petitioner Name: S.D. Containers Indore.Respondent Name: M/S. Mold Tek Packaging Ltd..Judgment By: Justice L. Nageswara Rao, Justice Hemant Gupta, Justice Ajay Rastogi.Place Of Incident: Indore, Madhya Pradesh.Judgment Date: 01-12-2020.
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