Dispute Resolution & Arbitration Monthly Update | August 2024

Chemco Plastic Industries Pvt Ltd v. Chemco Plast

Supreme Court of India | 2024 SCC OnLine Bom 1607

Background facts

• Chemco Plastic Industries Pvt Ltd (Respondent) filed a Commercial Intellectual Property Suit, seeking an injunction to prevent Chemco Plast (Applicant) from infringing its registered trademark and misrepresenting its goods as that of Respondent (Suit). Additionally, the Respondent filed an Interim Application seeking an urgent interim relief. 
• In furtherance of the same, the Applicant filed an Interim Application under Order VII Rule 11 of the Code of Civil Procedure, 1908 (CPC) before the Bombay High Court (HC), seeking rejection of the plaint on the grounds of non-compliance of Section 12-A of the Commercial Courts Act, 2015 (Act) which mandates pre-suit mediation, on the part of the Respondent (Interim Application). 
• The Applicant contended that the Suit did not contemplate any urgent interim relief as the same was filed 8 years after the Respondent became aware of the cause of action and the Respondent ought to have first exhausted the remedy of pre-institution mediation as per section 12-A of the said Act, before instituting the Suit. On the other hand, the Respondent argued that the requirement of section 12-A of the said Act is mandatory in nature and hence, the Interim Application ought to be allowed, thereby rejecting the plaint.

Issue at hand?

• Whether the plaint ought to be dismissed for being barred due to non-compliance with Section 12-A of the Commercial Courts Act, 2015?

Decision of the Court

• At the outset, the HC examined Section 12-A of the Commercial Courts Act, 2015 and noted that the Supreme Court of India in the case of Patil Automation Private Limited and Ors v. Rakheja Engineers Private Limited¹ held that the purpose of inserting section 12-A in the said Act, by way of amendment in the year 2018, was to compulsorily require parties to explore settlement through mediation, even before instituting the suit in cases where urgent interim relief was not contemplated. The HC noted that the Supreme Court of India in the said judgment did not consider it necessary to interpret the word "contemplate" used in section 12-A of the said Act.
• The HC then analyzed various judgments passed by different High Courts, particularly Bolt Technology OU v. Ujoy Technology Pvt Ltd and Ors.², wherein in the context of alleged infringement of intellectual property rights, it was held that even though the plaintiff had not exhausted the remedy of pre-institution mediation, the plaint could not be rejected under section 12-A of the said Act. Further, the HC relied on the case of Yamini Manohar v. TKD Keerthi, wherein it was held that the limited exercise to be carried out by the commercial courts is to peruse the plaint, documents and the facts to examine as to whether the suit does "contemplate" urgent interim relief.
• The HC observed that the Respondent has detailed the manner in which the Applicant has refuted the rights of the Respondent despite registered trademark of "Chemco" in favour of the Respondent. In this context, the Respondent has contemplated urgent interim relief while filing the Suit and the same cannot be rejected as being barred by Section 12-A of the Commercial Courts Act.
• The HC further held that the question of delay and the related question of acquiescence on the part of the Respondent are matters concerning the merits for the grant or refusal of interim relief. Thus, the court is not expected to enter into the merits of the matter at this stage and in cases pertaining to IPR infringement, the cause of action arises on each occasion that the impugned mark is used by the defendant.
• In view of the above, the HC held that the Respondent has made out enough grounds to demonstrate that it does contemplate urgent interim reliefs, thereby showing that the plaint in the instant case cannot be rejected as being barred by section 12-A of the said Act and accordingly, dismissed the Interim Application.

Cobra Instalaciones Y Servicios & Ors v. Haryana Vidyut Prasaran Nigam Ltd.

Delhi High Court | MANU/DE/2796/2024

Background facts

• Cobra Instalaciones Y Servicios, S.A. & Shyam Indus Power Solution Pvt. Ltd. (JV) (Appellant) and Haryana Vidyut Prasaran Nigam Ltd. [HVPNL] (Respondent) had entered various contracts. Subsequently, a dispute arose in relation to a contract having project number G09.
• Due to a delay on part of the Appellant in executing the project, the Respondent stated that it would impose 80% as liquidated damages upon the Appellant without prejudice to the Respondents rights under the contract. The Appellant challenged the same stating that liquidated damages could not be imposed as the Respondent did not suffer any losses.
• The Appellant invoked arbitration in terms of Clause 46.5(b) of General Conditions of the Contract (GCC) and Clause 26 of Particular Condition (PC). As the parties were not able to appoint an arbitrator, an arbitrator was appointed by the Delhi High Court as per Section 11 of the Arbitration and Conciliation Act, 1996 (the Act).
• Upon hearing the parties, the arbitrator awarded a refund of 50% of the liquidated damages along with interest back to Appellant, stating that the appellant incurred loss as well, even though it could not precisely quantify the loss incurred. The award was calculated using a "rough and ready" method to award damages.
• Both parties filed cross-petitions under Section 34 of the Act. Both the petitions were disposed of by a Single Bench of the Delhi High Court. The Single judge set aside the award to the extent that it related to the award for liquidated damages and interest payable.
• Aggrieved by the judgment of the Single Bench, the Appellant filed an appeal under Section 37 of the Act.

Issues at hand?

• Whether an arbitrator can employ a "rough and ready method" to award liquidated damages when ascertaining the exact sum of damages.
• Whether the court has the power to refer issues back to an arbitral tribunal for reconsideration.

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