Introduction

In the case of Pankaj Ravjibhai Patel Trading as Rakesh Pharmaceuticals v. SSS Pharmachem Pvt. Ltd., FAO (COMM) 98/2023, decided by the Hon’ble High Court of Delhi, an appeal was filed concerning the decision made on February 21, 2023, by the District Judge (Commercial). The judge vacated an ex parte injunction that had been granted to the appellant and requested additional documentation to support a Chartered Accountant's certificate related to the value of the suit. However, on April 25, 2023, the Division Bench of the High Court restored the ex parte injunction, putting the earlier order on hold, and raised questions about the correctness of a previous ruling in a related case, Vishal Pipes Ltd. v. Bhavya Pipe Industry. The matter at hand revolves around whether intellectual property rights (IPR) suits valued below Rs. 3 lakhs should be treated as commercial suits in front of District Judges or if they can continue as regular civil suits. Additionally, the case addresses the interaction between several laws, including the Commercial Courts Act, 2015, the Court Fees Act, 1870, and the Suits Valuation Act, particularly regarding how IPR disputes are valued and the jurisdiction they fall under. Lastly, the validity of the procedural guidelines from the Vishal Pipes case, mandating all IPR suits to be valued at Rs. 3 lakhs or above is also being examined.

In the recent appeal, the appellant raised several important points regarding the District Judge's decision to vacate the injunction based solely on uncertainties surrounding the CA certificate. They argued that the valuation of the suit, set at Rs. 10 lakhs, was consistent with the reliefs claimed and aligned with the principle of dominus litis, as supported by precedents like Sheila Devi v. Kishan Lal Kalra and the Supreme Court's ruling in Tara Devi v. Thakur Radha Krishna Maharaj. Additionally, the appellant contended that the provisions of the CCA do not override the discretion provided under the Court Fees Act or the Suits Valuation Act, suggesting that the principles outlined in Soni Dave v. Trans Asian Industries Expositions Pvt. Ltd. support a harmonious interpretation of these acts.

On the other hand, Ms. Swathi Sukumar, acting as Amicus Curiae for the respondent, highlighted that for a suit to be tried in a commercial court under the CCA, it must satisfy both the criteria of being a “commercial dispute” and meeting the threshold value of Rs. 3 lakhs. She pointed out that the valuation for the CCA, which focuses on the market value of the intangible right, is conceptually different from how valuation for court fees is determined based on the reliefs claimed. Furthermore, she noted that not all IPR suits need to be valued at the Rs. 3 lakhs threshold; any potential undervaluation should be assessed case-by-case rather than presumed. Lastly, she expressed that the directions from Vishal Pipes, which mandate placing all IPR matters before the District Judge (Commercial), are not only disruptive but also unwarranted and contrary to the existing statutes. 

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Legal context

A few key laws and precedents were referred. The Commercial Courts Act of 2015 is instrumental, particularly Sections 2(1)(c), 2(1)(i), and 12(1)(d), which outline the functioning of commercial courts. Additionally, the Court Fees Act of 1870, specifically Section 7(iv), provides important guidance on court fees. The Suits Valuation Act of 1977 also plays a crucial role, especially Sections 8 and 9 along with the relevant rules that follow. In terms of case law, there are several important judgments to consider. For instance, the Full Bench decision in Sheila Devi v. Kishan Lal Kalra, 1974 SCC OnLine Del 136, is quite significant, as is the ruling from the Supreme Court in Tara Devi v. Thakur Radha Krishna Maharaj, (1987) 4 SCC 69. Moreover, the Delhi High Court's case of Soni Dave v. Trans Asian Industries Expositions Pvt. Ltd., 2016 SCC OnLine Del 4282, sheds light on relevant issues, and we should also note the Karnataka High Court's ruling in Kirloskar Aaf Ltd. v. American Air Filters Company Inc., RFA No. 1 of 2015, 25 September, 2018. Lastly, the Delhi High Court's decision in Vishal Pipes Ltd. v. Bhavya Pipe Industry, 2022 SCC OnLine Del 1730, adds further context to these legal concepts. These laws and cases together create a solid foundation for understanding the complexities of commercial litigation.

Decision of the court

The Division Bench overruled the directions in Vishal Pipes (specifically Para 66(iv) and (v)), holding:

• There is no blanket rule requiring all IPR suits in Delhi to be valued at Rs. 3 lakhs or above.
• Only suits meeting both the “commercial dispute” and “specified value” criteria under the CCA are to be tried by commercial courts.
• Suits valued below Rs. 3 lakhs, unless found to be mala fide, need not be listed before commercial courts or be forced to amend valuation absent a factual basis for such suspicion.
• Authority to examine possible undervaluation lies with the court where the suit is filed; suits need not be transferred to commercial courts merely for such an assessment.
• Plaintiffs in IPR suits valued below Rs. 3 lakhs must file a declaration that they have not taken inconsistent positions concerning specified value in any past or pending litigation.

The High Court set aside the District Judge’s order vacating the injunction and remanded the matter for fresh consideration based on these clarifications. The ex parte injunction would continue to operate, but the respondent could apply for its vacation.

Principles Established

• Distinction between 'specified value' under the CCA and valuation for court fee purposes remains intact; the CCA does not override the Court Fees or Suits Valuation Acts.
• Court's scrutiny of suit valuation is case-specific; generalizations about mala fide undervaluation cannot substitute for fact-based inquiry.
• Jurisdiction of commercial courts is strictly governed by the twin conditions set by statute: subject-matter and pecuniary threshold.
• Procedural expediency and compliance with statutory structure must guide allocation of cases between forums.

Conclusion

This judgment reaffirmed statutory boundaries and judicial discretion in allocation of IPR litigation between commercial and non-commercial courts in Delhi. By curbing blanket directions from earlier precedent, it preserved litigants’ statutory rights on valuation and clarified forum allocation under the Commercial Courts Act, thus influencing future IPR and commercial litigation practice in Delhi courts.