S.D. Containers Indore v. M/s Mold Tek Packaging- Supreme Court Hears Transfer Case

The Hon’ble Supreme Court, recently in the case of S.D. Containers Indore v. M/s Mold Tek Packaging, [i] clarified the ambit of certain important provisions of the Design Act, 2000, and the Commercial Courts Act, 2015.

Brief Facts of the case:

The Plaintiff/Respondent had initially filed a suit for declaration, and to obtain a permanent injunction in order to restrain the Defendants/Appellants, represented by Abhijeet Dekhmukh and Meenakshi Ogra, Advocates at Khurana and Khurana,  from using the design of their containers and lids, which had been duly registered under the Design Act. However, on the other hand, the Defendants/Appellants, contended that the said registered designs could not have been registered ab initio under section 4(2) of the Design Act, as they were not novel or original, and therefore, should be cancelled in accordance to the provisions of section 19 of the Design Act. Further, the appellants also filed an application under section 22(4) read with section 19(2) of the Design Act to transfer these proceedings to the MP High Court, Indore Bench. However, the Ld. District Judge transferred this dispute to the Calcutta High Court, and aggrieved by this decision, the Plaintiffs/Respondents appealed to the MP High Court, whereby, the MP High Court set aside the order dated 23.03.2020, to transfer the suit under section 22(4) of the Design Act, 2000 to the Calcutta High Court, and declared that the commercial court at Indore had the jurisdiction to hear this dispute. Thereafter, the Defendants/Appellants filed the present appeal against the order passed by the MP High Court.

Analysis:

The Hon’ble Supreme Court, extensively interpreted and analysed the inter-relationship of various provisions of the Commercial Courts Act, as well as the Design Act. Preliminarily, the Court, while referring to the case of Whirlpool of India v. Videocon Industries Ltd.,[ii]distinguished the two options under the Design Act for seeking revocation of the registration of a design. Firstly, the party has the right to approach the controller under section 19 of the Design Act, whereby, the party also has the option to file an appeal against the decision given by the controller. Secondly, the party also has the option of getting the proceedings transferred under section 22(4) of the Design Act to the High Court, which is separate option, and gives rise to a completely different cause of action, as compared to section 19 of the Act. In the present case, section 22(4) of the Design Act was applicable, and the defendants/appellants had the right to transfer these proceedings to the High Court in consonance with the provisions of the Act.

Another important question that the Hon’ble Court had to resolve in the present dispute was the interpretation of section 21 of the Commercial Courts Act. Section 21 states that the Commercial Courts Act shall have an over-riding effect in cases where there is any conflict with any existing law/statute in force during that time period. However, the Court was quick to clarify that the literary interpretation of this provision clearly stipulates that the Act “gives an overriding effect, only if the provisions of the Act have anything inconsistent with any other law for the time being in force.” In furtherance of this, the Court opined that since there is no provision under the Commercial Courts Act to restrain the transfer of proceedings to the High Court, as provided under the Design Act,[iii] there is no inconsistency between the two statutes, and the Commercial Courts Act would not have an over-riding effect in this case.

Reliance on the existing Jurisprudence:

In the case of M/s. Escorts Construction Equipment Ltd. v. M/s Gautam Engineering Company &Anr.[iv], the Jammu and Kashmir High Court held that once a defence is taken for revocation of registration, then in terms of Section 22 (4) of the Design Act, the Civil Court will have no to adjudicate on the revocation of the design, and it is only left to the High Court to adjudicate upon the matter and decide as to whether the design is to be cancelled or not.Further, in the case of M/s Astral Polytechnic Limited v. M/s Ashirwad Pipes Private Ltd.[v],the Karnataka High Court held that the decision of the trial court to restrain the transfer of the suit to the High Court, when the defendant took the defence under section 19 of the Act contending that the design which is registered in favour of the plaintiff was not registerable at all, was in contravention to the provisions of the statute and thus, liable to be quashed. Similar stance was adopted by the Allahabad High Court in the case of R. N. Gupta and Co. Ltd. Jasola New Delhi v. M/s Action Construction Equipments Ltd. Dudhohla &ors. [vi] Relying on various judgments by a number of High Courts, and the extensive existing jurisprudence on this issue, the Hon’ble Supreme Court finally came to a conclusion that the order of the Commercial Court to transfer this dispute to the High Court was in accordance with the law, except for the part where it transferred the dispute to the Calcutta High Court. The Court opined that the High Court where the cause of action actually arises shall be vested with the jurisdiction to hear the dispute, and since no cause of action arose in Kolkata, the Calcutta High Court did not have the jurisdiction over the matter, but the MP High Court, Indore Bench had the rightful jurisdiction. Thus, the order by the MP High Court stating that the Commercial court had the jurisdiction over the present matter was not in accordance to the provisions of the Design Act.

Practical Significance:

The decision given by the Court in the present dispute has greatly aided in the interpretation of the complex provisions such as section 19, 22 of the Design Act, and section 21 of the Commercial Courts Act. Further, this decision has also provided some much-needed clarity regarding the inter-relationship between the provisions of the two statutes, and clarified that the over-riding effect of the Commercial Courts Act, shall not be applicable on section 22(4) of the Design Act.

Author:  Suvangana Agarwal, Litigation Associate and Talin Bharadwaj (intern) a student of Rajiv Gandhi National University of Law at Khurana & Khurana, Advocates and IP Attorneys.  In case of any queries please contact/write back to us at aishani@khuranaandkhurana.com.

References:

[i] CIVIL APPEAL NO.3695 OF 2020 (SLP (C) NO. 11488 OF 2020).

[ii]2014 SCC OnLine Bom 565.

[iii]Design Act, 2000, Section 22 (4).

[iv]A.I.R. 2010 J&K 13.

[v]I.L.R. 2008 Kar. 2533.

[vi] 2016 S.C.C. OnLine All 975.

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