Law Web: Should the court assume the averments made in the plaint as correct while deciding the application for the return of the plaint?

The Division Bench of this Court in the case of Allied Blenders & Distillers Pvt. Ltd. v. Prag Distillery Pvt. Ltd.&Anr.: 2017 SCC OnLine Del 7225,held as under:

“10. If an application under Order VII Rule 10 of the

Code is to be decided on the assumption that the averments

made in the plaint are correct, then, it will have to be

assumed that there is a reasonable apprehension that the

defendants would sell their product in Delhi bearing the

impugned mark and label. There is no dispute with the

proposition that a quia timet action is based upon an

apprehended use and is preventive in nature intended to

prevent an apprehended wrong and an anticipated mischief.

If we were, for the time being, to ignore the fact that the

respondent No. 1/defendant No. 1 was already selling the

impugned product under the impugned mark and label in

Andhra Pradesh, then the mere fact that the plaint contained

an averment that there was credible and imminent

apprehension that the infringing product would be launched

by the defendants within the territorial jurisdiction of this

court, would by itself constitute a cause of action. If this be

the case, can it be said that just because the defendants were

already selling the product in Andhra Pradesh it would take

away part of the cause of action which was preventive of a

future conduct on the part of the defendants? We think not.

11. We are of the view that the learned single Judge fell

in error when he took the view that although the

appellant/plaintiff had averred that it had an apprehension

that the defendants would sell their product in Delhi, the

said apprehension was not substantiated by any material

which would indicate a reasonable ground for the plaintiff

to apprehend the same. We may point out that substantiation

of an averment in a plaint by other material would come

later. At the stage of filing of the plaint, it is only the

averment that has to be made with regard to a material fact.

Substantiation is a part of evidence.”

22. It was categorically held that the stage for substantiation of

an averment in the plaint by other material would come later and at the stage of filing of the plaint, it is only the averment that has to be made with regard to the material fact. Substantiation is part of evidence. In our opinion, the learned Commercial Court fell in error in returning the plaint by exercising power under Order VII Rule 10, CPC.

23. Clearly, if the averments in the plaint are accepted to be

true, the learned Commercial Court would definitely have the

territorial jurisdiction to entertain the suit. As held by the Apex

Court and reiterated by this Court in various judgments as

referred above, we have no hesitation to hold that the application

under Order VII Rule 10, CPC, is to be considered on demurrer;

that is, the averments made in the plaint are to be assumed as

correct.

IN THE HIGH COURT OF DELHI AT NEW DELHI

FAO (COMM) 139/2022 and CM APPL. 41704/2022

PUMA SE VS D.K. ARORA

CORAM

HON’BLE MR. JUSTICE VIBHU BAKHRU

HON’BLE MR. JUSTICE AMIT MAHAJAN

Author: AMIT MAHAJAN, J

Judgment delivered on : 29.11.2022

1. Aggrieved by the impugned order dated 12.07.2022, passed by

the learned Commercial Court, allowing the application filed by the

respondent/ defendant, under Order VII Rule 10, Code of Civil

Procedure, 1908 (‘CPC’) and returning the plaint; the appellant/

plaintiff has filed the present appeal under Section 13 of the

Commercial Courts Act, 2015.

2. The appellant, which is a company based in Germany, had filed

the suit alleging that the respondent is manufacturing and selling

counterfeit products under its well-known label, .

3. The appellant / plaintiff in the suit, sought various reliefs

including permanent injunction, restraining the respondent from

infringing its trade mark, “PUMA”. By an order dated 10.05.2019, the

learned Trial Court granted ex parte ad interim injunction, restraining

the respondent from using the impugned mark. Thereafter, during the

course of proceedings, the respondent filed an application under Order

VII Rule 11, seeking rejection of the plaint on the ground that no

cause of action had arisen so as to entitle the plaintiff to file the suit.

The respondent also raised an objection that the Courts in Delhi have

no territorial jurisdiction to try and entertain the suit.

4. The said application was disposed of by the order dated

28.10.2021, and it was noted by the learned Commercial Court as

under:

“During the course of arguments, Ld. Counsel for defendant very

fairly submitted that he has no objection, if an issue on the basis of his

application under Order VII Rule 11CPC is ultimately framed during

the course of trial and the said aspect can be thereafter decided after

both the parties gets an opportunity to lead their respective evidence.

Ld. Counsel for defendant undertakes to file written statement within

next fifteen days. Let the same be filed with direction to supply

advance copy to Ld. Counsel for plaintiff who, may thereafter file

replication, if any, within fifteen days.

Accordingly, matter be put up for completion of pleadings as above

and filing of replication, if any, on01.12.2021.”

5. Thereafter, it appears that applications were moved by the

respondent under Order VII Rule 10 CPC, application under Order VII

Rule 11 and under Section 114, read with Section 151 of the CPC,

seeking review of the order dated 28.10.2021 and also seeking return

of the plaint on the ground of lack of territorial jurisdiction. The

arguments in respect of the said applications were heard by the learned

Commercial Court on 28.05.2022. The learned Judge on the said date,

allowed the application for review and considered the application

under Order VII Rule 11, CPC and application under Order VII Rule

10, CPC and reserved the matters for orders.

6. Vide impugned judgement dated 12.07.2022, the learned

Commercial Court dismissed the application under Order VII Rule 11

but allowed the application under Order VII Rule 10, CPC which led

to filing of the present appeal.

7. The learned Commercial Court considered the provisions of

Section 134 of the Trade Marks Act, 1999 (hereafter ‘the TM Act’),

and Section 20 (2) of the CPC, and examined the law in relation to

institution of suits for infringement of trade marks. It relied upon the

judgment passed in Ultra Home Construction Pvt. Ltd Vs.

Purushottam Kumar Chaubey & Ors.: 2016 SSC Online Del 376, to

consider whether the Court has the territorial jurisdiction under the

Trade Marks Act, to entertain the suit.

8. The learned Commercial Court, however, examined the facts

pleaded in the plaint to hold that no part of cause of action had arisen

in Delhi to entitle the plaintiff to file the suit within the territorial

jurisdiction of the concerned Commercial Court.

Arguments

9. Learned Counsel appearing for the appellant has challenged the

order, essentially on two grounds. First of all, he contended that the

order dated 28.10.2021, whereby the Court had decided that the

arguments raised in the earlier application filed by the respondent

under Order VII Rule 11 CPC, would be considered after the parties

had led their respective evidence, could not have been reviewed. Thus,

a fresh application under Order VII Rule 11, CPC as well as Order VII

Rule 10, CPC on the same grounds was not maintainable. Learned

Counsel vehemently argued that only because the respondent had

engaged a new Counsel, could not be a reason for seeking review of

the order passed by the learned Commercial Court, which was passed

with consent of the parties. Secondly, he contends that an application

under Order VII Rule 10, CPC, had to be decided on the basis of the

averments made in the plaint. He contended that the examination, for

the purpose of the application under Order VII Rule 10 CPC, is

limited and a detailed examination as sought to be done by the learned

Commercial Judge, is impermissible.

10. Learned Counsel appearing for the respondent, on the other

hand, contended that the plaint has to be considered in a meaningful

manner and the documents filed along with the plaint do not support

the case of the plaintiff so as to enable the plaintiff to file a suit within the territorial jurisdiction of Delhi. He contends that neither the appellant nor the respondent have their principle place of business in

Delhi nor has any cause of action arisen within the territorial

jurisdiction of Delhi. He further stated that the respondent is not

selling any products in Delhi and the fact that respondent has

advertised its business through websites, www.justdial.com and

www.tradeindia.com, will not give rise to a cause of action within the

territorial jurisdiction of Delhi. He further states that a website like

justdial only provide an address of the business entity so as to enable

the customers to approach the company by ascertaining its

whereabouts. He further submitted that the websites are not

interactive websites through which a person can purchase goods of the

respondent and hence, mere registering with the said services will not

create any territorial jurisdiction in Delhi.

11. The law in relation to the rejection of the plaint under Order VII

Rule 10, CPC, is no longer res integra. This Court in M/s. RSPL

Limited v. Mukesh Sharma &Anr.: 2016 SCC OnLine Del 4285,

which was followed in various judgments thereafter, has held that the

application under Order VII Rule 10 of the CPC is to be decided on a

demurrer by accepting all statements made in the plaint to be true.

The appellant for the purpose of territorial jurisdiction has pleaded as

under:

“41. That this Hon'ble Court has the jurisdiction to entertain and

try the present suit as the Plaintiff is carrying on business within the

jurisdiction of this Hon'ble Court and also through its various stores

in Delhi including its stores at 117,A22,WEA, Ajmal Khan Road,

Karol Bagh, New Delhi 110005 & UB-5, Bungalow Road,

Kamlanagar, New Delhi 110007. Also, the Plaintiff sells/ offers their

wide range of products through online stores/e-commerce websites

such as www.snapdeal.com, www.flipkart.com and

www.amazon.in.The Hon'ble court also has jurisdiction since the

Plaintiff's websitewww.puma.com is an interactive website and

accessible to the consumers at Delhi and the Plaintiff's products can

be viewed and purchased by the consumers in Delhi. This is a settled

position that the possibility to conclude transactions through a website

at a particular place is virtually identical to a seller having a shop in

that place in the real world. Therefore, this Hon'ble Court has the

territorial jurisdiction to try and entertain the present suit in view of

section 134(2) of the Trade Marks Act, 1999. The Plaintiff further

submits that the Defendants are carrying on its business within the

jurisdiction of this Hon'ble Court. The Plaintiff further submits that

the Defendant is carrying its business through

www.justdial.com,www.tradeindia.com and other websites which are

interactive websites and targets the consumers/customers residing

within the jurisdiction of this Hon'ble Court and the same gives

Jurisdiction to the Hon'ble Court to entertain the present suit. The

plaintiff is under the imminent and credible threat or apprehension

that the defendant would launch and start manufacturing the product

in Delhi. The Plaintiff submits that the Hon'ble Court also has

jurisdiction under section 20 of CPC as the Defendant is

supplying/selling the counterfeit products at Delhi. Hence the cause of

action has also arisen within the territorial jurisdiction of this Hon'ble

Court. The products of the Defendant being made available and

purchased by the general public residing within the jurisdiction of this

Hon'ble Court.”

12. It is evident from the perusal of the plaint as referred above

that the plaintiff has claimed the territorial jurisdiction for the

following reasons:

a. The plaintiff is carrying on business within the territorial

jurisdiction of this Court.

b. The plaintiff is carrying on business through its various

stores in Delhi including stores at 117, A22, WEA, Ajmal

Khan Road, Karol Bagh, New Delhi 110005 & UB-5,

Bungalow Road, Kamlanagar, New Delhi 110007.

c. The plaintiff sells/ offers for sale, their wide range of

products through online stores/e-commerce websites such

as www.snapdeal.com, www.flipkart.com and

www.amazon.in.

d. The plaintiff’s website, www.puma.com, is an interactive

website and is accessible to the consumers at Delhi.

e. The defendants are carrying on its business within the

territorial jurisdiction of this Court.

f. Defendant is carrying on its business through

www.justdial.com, www.tradeindia.com, which are

interactive websites and targets the consumers residing

within the jurisdiction of this Court.

g. Imminent and credible threat or apprehension that the

defendant would launch and start manufacturing the

product in Delhi.

h. Defendant is supplying/ selling the counterfeit products at

Delhi.

13. The learned Commercial Court dealt with some of the

aspects of cause of action as mentioned above. It negated the

argument that the plaintiff is carrying its business through the

stores mentioned in the plaint. According to learned Commercial

Court, these stores could not be considered as principal offices or

subordinate offices from where the plaintiff is running its

business. The learned Commercial Court also rejected the

argument that carrying on business through websites such as

www.flipkart.com and www.puma.com, would amount to

carrying out business in Delhi by relying upon the judgment in

World Wrestling Entertainment, Inc. v. Reshma Collection:

2014 SCC OnLine Del 2031.

14. The learned Commercial Court also observed that even

though the plaint mentions that defendant is selling its goods in

Delhi, however, the plaintiff has failed to furnish any address.

The contention that the defendants are selling through websites,

www.justdial.com, www.tradeindia.com, which gives access to

consumers to purchase the defendants products in Delhi was not

accepted. The learned Court held that the said websites only

contain the defendant’s name, telephone number and are not

interactive websites for the purpose of purchase of goods.

15. It is material to note that the learned commercial court did

not expressly comment on several other reasons for asserting that

Courts in Delhi had the jurisdiction to entertain the suit.

16. As mentioned above, the law in relation to rejection of

plaint at the initial stage while considering application under

Order VII Rule 10 is no longer res integra. The Supreme Court in

the case of Exphar Sa v. Eupharma Laboratories Ltd.: (2004) 3

SCC 688 observed as under:

9. Besides, when an objection to jurisdiction is raised by way of

demurrer and not at the trial, the objection must proceed on the basis

that the facts as pleaded by the initiator of the impugned proceedings

are true. The submission in order to succeed must show that granted

those facts the court does not have jurisdiction as a matter of law. In

rejecting a plaint on the ground of jurisdiction, the Division Bench

should have taken the allegations contained in the plaint to be correct.

However, the Division Bench examined the written statement filed by

the respondents in which it was claimed that the goods were not at all

sold within the territorial jurisdiction of the Delhi High Court and

also that Respondent 2 did not carryon business within the jurisdiction

of the Delhi High Court. Having recorded the appellants' objections to

these factual statements by the respondents, surprisingly the Division

Bench said:

“Admittedly, the goods are being traded outside India and not being

traded in India and as such there is no question of infringement of

trade mark within the territorial limits of any court in India what to

say of Delhi.”

17. The principle laid down was, thereafter, followed by this

Court in RSPL Limited (supra), and, thereafter, followed

consistently by this Court in Allied Blenders & Distillers Pvt.

Ltd. v. Prag Distillery Pvt. Ltd.&Anr.: 2017 SCC OnLine Del

7225, and various other judgments such as M/s Maan

Pharmaceuticals Ltd. v. M/s Mindwave Healthcare Pvt. Ltd.:

FAO(COMM) 78/2022, Devarapan Foods Private Limited v.

Sukhwant Singh &Ors.: FAO(COMM) 116/2022, Chandra

Kishore Chaurasia v. R A Perfumery Works Private Ltd.:

FAO(COMM) 128/2021and Dassault Systems S.E. &Anr. v.

Automobile Corporation of Goa Limited and Ors.:

FAO(COMM) 66/2022..

18. It is clear that the averments made in the plaint have to be

considered bearing the aforesaid principle in mind, laid down by

the Apex Court and followed consistently by this Court.

19. As stated above, the plaintiff claimed territorial jurisdiction

of the concerned Commercial Court, on not one, but many

grounds. The plaintiff has categorically asserted that it is

carrying on business within the territorial jurisdiction of this

Court and through its various stores including stores at 117, A22,

WEA, Ajmal Khan Road, Karol Bagh, New Delhi 110005 & UB-

5, Bungalow Road, Kamlanagar, New Delhi 110007.

20. Clearly, if the said statement is accepted to be correct, the

learned Commercial Court would have the jurisdiction to

entertain the suit. As laid down by this Court in the judgments

referred above, it is not permissible for the Court to qualitatively

examine the merits of the statement made in the plaint. It is

possible that the plaintiff may not be able to substantiate the

averments and the suit may be rejected for want of jurisdiction,

however, at the initial stage, for the purpose of jurisdiction, the

only question to be considered is whether the plaint has disclosed

the cause of action within the territorial jurisdiction of the

Commercial Court.

21. There is another aspect, i.e., the apprehension of the

plaintiff that the defendant would launch and start manufacturing

the product in Delhi, that needs to be considered. The suits on the

basis of cause of action on a fear and apprehension is commonly

known as quiatimet suit which are latin words. In legal

terminology, it is defined as action to obtain injunction and

restrain a threatened act, which, if done, would cause a

substantial damage to the plaintiff. The Division Bench of this

Court in the case of Allied Blenders & Distillers Pvt. Ltd. v. Prag

Distillery Pvt. Ltd.&Anr.: 2017 SCC OnLine Del 7225,held as

under: