Case BriefsHigh Courts

Delhi High Court: Asha Menon, J., emphasized the law on territorial jurisdiction while addressing the present matter.

Present petition was filed impugning the order of Additional District Judge.

Petitioner was the defendant before the Trial Court. Respondent had filed a suit against the petitioner/defendant for the recovery of a sum of Rs 28, 43, 209.68/.

The claim of the respondent was that it was a well-known manufacturer providing a portfolio of solutions for packaged power, diversified generation, electrical control and safety and energy optimization.

Petitioner/defendant was the regional stockists and distributors, who were appointed to procure/buy goods being traded by the respondent/plaintiff and supply them to wholesalers and retailers of the respondent/plaintiff in the market, who, in turn, would sell the same to the consumers.

Further the respondent/plaintiff claimed that a running current account was maintained with the petitioner/defendant against which a statement of account/ledger was regularly maintained by it in the normal course of business.

A sum of Rs 28,43, 209.68 was due and payable by the petitioner/defendant. Hence the present suit was filed.

Petitioner/Defendant’s counsel, Deepika Mishra submitted that Trial Court had fallen into error in determining its jurisdiction as it relied on English case law that the ‘debtor must seek the creditor’, whereas it was bound to follow Section 20 of the Civil Procedure Code, 1908.

Section 20 clearly provides that a Court within whose local limits the cause of action, “wholly or in part”, arises, would have territorial jurisdiction to try the suit.

The registered office of the petitioner/defendant was in West Bengal.

Petitioner/Defendant’s counsel submitted that the invoice itself recorded a Kolkata address. The warehouse was also stated to be located in West Bengal and therefore, the goods were neither dispatched from Delhi nor the invoices were raised at Delhi. counsel for the respondent/plaintiff pointed to the “subject to jurisdiction of court of Delhi only” clause in the invoices. There does not appear to have been any demurrer by the petitioner/defendant against this clause.

Hence, in light of Section 20 of CPC, the Court found some strength in the contention of respondent/plaintiff that on the basis of the ‘place of work’ of the petitioner/defendant, as well as the part cause of action of supply of goods, both reflected jurisdiction of the West Bengal courts.

However, the respondent/plaintiff has also claimed that payments were to be received in Delhi and therefore, part cause of action has arisen in Delhi and as such, the clause in the invoices referred to hereinabove did not confer jurisdiction at a place which had no jurisdiction.

In Court’s opinion, the suit could be filed at Delhi and Trial Court had not committed any error in answering the preliminary issue.

Bench stated that, when the part cause of action had arisen on account of the payments made by the petitioner/defendant directly into the bank account of respondent/plaintiff, even if these were not on regular basis, and there is nothing to show that the place of payment had been fixed, even without following the principle that the ‘debtor must seek out the creditor’, it was clear that the Delhi Courts have jurisdiction to try the suit and the invoice does not vest jurisdiction in a court which had no jurisdiction at all.

In view of the foregoing discussion, the High Court found no merit in the petition. [Auto Movers v. Luminous Power Technologies (P) Ltd.,  2021 SCC OnLine Del 4387, 16-09-2021]


Advocates before the Court:

For the petitioner: Deepika Mishra, Advocate

For the respondent: Pallav Saxena, Deepak Chawla, Aruj Dhingra and Neeraj Malik, Advocates

Op EdsOP. ED.

The advent of the internet has enabled individuals to copy and distribute protected marks and materials with ease, while its accessibility across territories has complicated the issue of determining jurisdiction for legal action. The issue of jurisdiction has been raised before courts time and again, and the volume of adjudication upon it is extensive. This article summarises takeaways from said adjudication, and sets out the principles currently guiding the choice of forum in a suit involving online infringement of trademarks or copyrights.

I. Legislative Backdrop

The general provision governing territorial jurisdiction in respect of intellectual property disputes is contained under Section 20 of the Civil Procedure Code, 1908 (hereinafter “CPC”), which provides that a suit may be instituted at the court within whose jurisdiction:

  1. the defendant resides, carries on business, or personally works for gain; or
  2. where a part of or the entire cause of action arises.

According to the accompanying explanation, a defendant corporation is deemed to carry on business at its sole/principal office, or at a subordinate office if the cause of action arose at the place where such subordinate office is located.

More specifically, the issue of territorial jurisdiction is governed by Section 62 of the Copyright Act, 1957 (hereinafter “the CR Act”) and by  Section 134 of the Trade Marks Act, 1999 (hereinafter “the TM Act”),  both of which are pari materia. According to the same, suits are to be instituted at a “district court having jurisdiction”, which includes courts within whose territorial limits the plaintiff resides, carries on business, or personally works for gain. These provisions may be availed only in cases of infringement, and not in cases of passing off i.e. only a registered right-holder may sue at the place of its residence or business.

It is to be noted that any explanation for the aspect of “carrying on business” similar to the one for a defendant corporation under Section 20 CPC is absent from the text under both the CR Act and the TM Act (hereinafter collectively “the IP Acts”). Despite that, the explanation has been read into the IP Acts by virtue of the decisions in Indian Performing Rights Society Ltd. v. Sanjay Dalia[1] (hereinafter “Sanjay Dalia”) and Ultra Home Construction (P) Ltd. v. Purushottam Kumar Chaubey[2] (hereinafter “Ultra Home”). This acts as a restriction on forum shopping by plaintiffs and is discussed later in the article.

Ordinarily, the doctrines of lex specialis and lex posterior would apply, and the provision under CPC would be restricted. However, in light of the language used in the IP Acts, the Supreme Court has held that the jurisdiction under CPC is not ousted[3]; rather the IP Acts merely provide an additional forum where suits may be filed. The purpose behind this additional route is to expose an infringer with inconvenience rather than compelling the sufferer to chase after the former.

Since content, products and services on a website or mobile application are available throughout territories wherever the reach of the internet extends, there are two pertinent questions that need answering:

  1. In respect of an entity having an online presence, where exactly can a plaintiff or a defendant be said to “carry on business”?
  2. In respect of infringing goods/services offered or sold over the internet, where exactly does the “cause of action” arise?

Answers to these can assist us in addressing the conundrum of jurisdiction around internet-based intellectual property disputes, and pinpoint the appropriate forum for institution of a suit.

II. “Carrying on Business”

In Dhodha House v. S.K. Maingi[4] (hereinafter “Dhodha House”), it was observed that the presence of any man was not necessary for the purpose of “carrying on business”, and the Supreme Court set out three fundamental conditions that had to be satisfied for establishing that an entity carries on business within a court’s jurisdiction:

  1. Presence of an agent who carries on business exclusively for and in the name of the principal;
  2. Agency in the strict sense of the term; and
  3. An “essential part” of the business must take place in that place.

However, in World Wrestling Entertainment Inc. v. Reshma Collection[5] (hereinafter “WWE”), the Division Bench clarified that in case of web-based business models, the first two conditions set out in Dhodha House[6] will not apply, since they specifically relate to agents. What warrants consideration is whether in transactions over the internet  the third condition stipulating performance of the essential part of the business is satisfied, and if yes, where?

It was noted that display of goods on a website amounts to an invitation to offer against which an offer is made by a customer at the place where he or she is located. If accepted, the money is paid from the customer’s location, and the goods are delivered to the same location. Owing to the nature of the internet, the offer and acceptance are instantaneous. Keeping these factors in mind, it was held that the availability of transactions through a website at a particular place is virtually the same as a seller having a shop at that place in the physical world, and therefore, such seller would be regarded as carrying on business at that place.

The principle expounded in WWE[7] has been upheld and applied in subsequent cases. In Millennium & Copthorne International Ltd. v. Aryans Plaza Services (P) Ltd.[8] (hereinafter “Millennium & Copthorne”), it was clarified that service providers would also attract jurisdiction at places where customers can make a mere reservation (even through third-party websites), whether the reservation concludes into a transaction or not. For example, if there is a hotel located at A, and through a tourism website, customers at B and C can book a room at the hotel, the hotel would be carrying on business at B and C, and would attract jurisdiction on this ground at both of those places in addition to A.

III. Cause of Action

The determination of the cause of action, and thereby, jurisdiction under Section20 CPC in an online context has been examined extensively in Banyan Tree Holding (P) Ltd. v. A. Murali Krishna Reddy[9] (hereinafter “Banyan Tree”); a case where interestingly, neither the plaintiff nor the defendant was located within the territorial limits of the court. Here, the Division Bench of the Delhi High Court decided that mere accessibility or interactivity of a website in a particular place would not confer jurisdiction to courts in that place. Rather, the plaintiff must establish that the defendant “purposefully availed” itself of the jurisdiction at the place of suing. After noting common law developments in UK and USA, the following elements were held necessary to show that the cause of action partly arose in a particular place through the use of internet:

  1. Specific targeting of customers in that place;
  2. Conclusion of commercial transactions with such customers; and
  3. Injury to plaintiff’s business, goodwill or reputation in that place.

Thus, a rigorous standard to determine cause of action and jurisdiction in cases of online transactions was set up. Over the years, however, adjudication has diluted this standard. In Sholay Media and Entertainment (P) Ltd.  v. Yogesh Patel[10], the Court considering that mere display of a trade mark at an exhibition confers jurisdiction[11] observed that an act of advertising counterfeit products or soliciting customers therefor in a place would constitute a part of the cause of action, and courts in such place would accordingly have jurisdiction.

Similar views have been held in Burger King Corpn. v. Techchand Shewakramani[12] and in Exxon Mobil Corpn. v. Exoncorp (P) Ltd.[13] (hereinafter “Exxon Mobil”).  According to these decisions, the cause of action arises in each and every place where infringement/passing off occurs. Since, in addition to actual sales, advertisements and promotions too constitute infringement according to the IP Acts, the cause of action partly arises in all places where such advertisements and promotions are made. The courts exercising jurisdiction in all those places would thus be appropriate fora for institution of proceedings.

IV. Restriction on Forum Shopping

Guided by the motive of aiding convenience, the IP Acts provide for an additional forum where a registered right-holder could sue for infringement. However, the motive was never to enable a plaintiff to indulge in forum shopping, and the legislature did not attend to require either party to travel to distant places. Therefore in Sanjay Dalia[14], the Supreme Court interpreted Section 62 of the CR Act and Section 134 of the TM Act in a manner that allowed the availment of the additional route to plaintiffs while restricting harassment of defendants through filing of suits at far-flung places.

It was noted that generally, a plaintiff under the IP Acts ought to file a suit at the place of ordinary residence or where the principal office is situated. However, if a right-holder is residing or carrying on business at a place where the cause of action has also arisen, the suit must be filed at that place itself – the IP Acts thus do not allow the right-holder to travel to a far-off place where it carries on business for the purposes of instituting proceedings. For example, if a company has its registered office at A and branch offices at B and C, with the cause of action arising at B, the appropriate forum for filing a suit under the IP Acts would be the court exercising jurisdiction over B.

This position has been adopted and further clarified in Ultra Home[15], where specific scenarios contemplating the plaintiff as a corporation were set out as follows:

Sl. No. Place of principal or registered office Place of subordinate or branch office Place where cause of action arose Place where plaintiff may sue under IP Acts
1. A C A
2. A B A A
3. A B B B
4. A B C A

It is important to remember that this stance is not in derogation of Dhodha House[16].  While the Court in that case elucidated upon the meaning of the phrase “carrying on business”, in Sanjay Dalia[17], the Court defined the geographic limits for institution of a suit under the IP Acts. The above table is applicable in scenarios where one seeks to sue under Section 62 of the CR Act or under Section 134 of the TM Act, and is in addition to the fora available to a plaintiff under Section 20 CPC.

V. Conclusion: Synopsis

Section 62 of the CR Act and Section134 of the TM Act provide a forum additional to those under Section 20 CPC where a plaintiff may institute proceedings. However, the jurisdiction under IP Acts may only be utilised in respect of a registered copyright/trade mark; in cases of passing off, only the jurisdiction under CPC may be availed.

In a case involving infringement of a copyright/trade mark, jurisdiction may be invoked either under the IP Acts or under CPC. Both are individually sufficient for determining the appropriate forum of dispute.

By virtue of Sanjay Dalia[18], the plaintiff’s right to sue under the IP Acts has been restricted to those places of residence or business where there is an overlap with the cause of action. Alternatively, the cause of action ipso facto confers jurisdiction under CPC to courts in the place where it has arisen, regardless of whether that place has an office/residence of the plaintiff/defendant or not.

In context of disputes over the internet, the scope of “carrying on business” has been elucidated in WWE[19] while the scope of “cause of action” has been expounded in Banyan Tree[20]. The ratios of these decisions have been applied and clarified in the subsequent decisions of Millennium & Copthorne[21] and Exxon Mobil[22] to hold that jurisdiction is conferred even in places where a website advertises infringing goods and services or facilitates the mere making of bookings or reservations.

These decisions have greatly expanded the ambit of jurisdiction in cases of online intellectual property violations, so far so that they were recently applied in HT Media v. Brainlink International[23] towards the exercise of extra-territorial jurisdiction to injunct the infringing activities of a defendant located in New York.

Clearly, Section 20 CPC has a wider scope than jurisdiction under the IP Acts, and in context of intellectual property violations over the internet, right-holders would be able to invoke jurisdiction on the basis of “cause of action” under CPC with greater ease than on the ground of “carrying on business”. To demonstrate the same, the table provided by the Court in Ultra Home[24] is reproduced below, with an additional column setting out the choice of forum under CPC as well.

Sl. No. Place of principal or registered office Place of subordinate or branch office Place where cause of action arose Place where plaintiff may sue under IP Acts Place where plaintiff may sue under CPC
1. A C A A, C
2. A B A A A
3. A B B B B
4. A B C A A, C

*Practising Lawyer, New Delhi. Author can be reached at aggarlaw@gmail.com.

[1] (2015) 10 SCC 161

[2] 2016 SCC OnLine Del 376

[3] Exphar SA v. Eupharma Laboratories Ltd., (2004) 3 SCC 688

[4] (2006) 9 SCC 41

[5] 2014 SCC OnLine Del 2031 : (2014) 60 PTC 452 

[6] Supra Note 4.

[7] Supra Note 5.

[8] 2018 SCC OnLine Del 8260

[9] 2009 SCC OnLine Del 3780

[10]2014 SCC OnLine Del 7704

[11] Laxman Prasad v. Prodigy Electronics Ltd., (2008) 1 SCC 618

[12] 2018 SCC OnLine Del 10881

[13] 2019 SCC OnLine Del 9193

[14] Supra Note 1.

[15] Supra Note 2.

[16] Supra Note 4.

[17] Supra Note 1.

[18] Ibid.

[19] Supra Note 5.

[20] Supra Note 9.

[21] Supra Note 8.

[22] Supra Note 13.

[23] 2020 SCC OnLine Del 1703

[24] Supra Note 2.