Delhi HC Issued Directions on the Jurisdiction of the District Court for Hearing IPR Cases

CASE: Vishal Pipes Ltd v. Bhavya Pipe Industry

COURT: Justice Prathiba Singh of the Delhi High Court (HC)

Recently, the Delhi HC issued directions on the jurisdiction of District Courts (commercial and non-commercial) to hear Intellectual Property Rights (IPR) suits. The Court made it clear that litigants and lawyers cannot escape the provisions of the Commercial Courts Act (CCA) for suits valued below ₹3 lakhs.

While examining whether IPR suits valued below ₹3 lakh ought to be listed before the District Judges (Commercial) as per the Commercial Courts Act, the Court issued the following directions:

IPR suits valuation is usually 3 lakhs or above. "All IPR suits should be instituted before District Courts, would, therefore, first be instituted before the District Judge (Commercial)."

1. Suits valued below Rs. 3 lakhs, shall be examined by the Commercial Court to ensure it is not arbitrary and undervalued
2. Upon such examination, the Commercial Court would either order the plaintiff to amend the plaint and pay the required Court fee or to proceed with the suit as a non-commercial suit.
3. Suits that are valued below Rs.3 lakhs and continue to be non-commercial suits may also be listed before the District Judge (Commercial), but may not be subject to the CCA.
4. Pending IPR suits before the different, the non-commercial District Judges in Delhi shall be placed before the Commercial District Judges.

The Court passed the above order after it came to the Court's attention that a large number of IPR matters valued below ₹3 lakh are placed before the Additional District Judge (non-commercial) in Delhi. The Court further noted that there are three classes of courts for IPR cases depending upon their value:

1. Suits valued below 3 lakhs: District Judges (Non-Commercial);
2. Suits valued between ₹3 lakh and ₹2 crores: District Judges (Commercial);
3. Suits valued above ₹2 crores: Commercial Division of the HC(Original Jurisdiction).

In light of the above, the Court was prompted to inquire as to how the concept of 'specified value' should be analyzed? Despite the fact that there were no specific factors for valuation, relying on precedents and provisions, the Court summed up the legal position thus:

1. The Court should examine the allegations in the plaint and the substantive relief sought. Whimsical valuation is not allowed;
2. The valuation of a suit should be reasonable. The plaintiff cannot deliberately undervalue the relief;
3. If the valuation given by the plaintiff is unreasonable, the Court may reject the same;
4. Plaintiffs must provide reasonable reasons for not providing the exact value of the relief.

In addition, the Court took a dim view of litigants who deliberately valued relief in suits below 3 lakhs in order to avoid the rigors of the CCA.