Introduction: The present case involves a complex intellectual property dispute revolving around the infringement of industrial designs, trademarks, and patents in the textile machinery sector. Rieter AG and its group company filed a commercial civil suit before the Delhi High Court against the defendant, a Coimbatore-based supplier, alleging that the defendant infringed their proprietary rights by selling deceptively similar spare parts. The legal issue before the Court primarily focused on the question of territorial jurisdiction and whether the Delhi High Court could entertain the suit when the defendant was operating from Tamil Nadu and the alleged infringing activity was centered outside Delhi.
Factual Background: Rieter AG and Rieter India Private Limited, subsidiaries of Rieter Holding AG, instituted the suit on the basis of their intellectual property rights, including registered Indian design numbers 264773, 264774, 264775, 294194, 271521 and a registered patent bearing no. 339930. The trademark ‘SUESSEN’ was also claimed to be owned by plaintiff no. 2. The plaintiffs alleged that the defendant had displayed infringing products at India ITME (India International Textile Machinery Exhibition) held at Greater Noida in December 2022. Thereafter, the plaintiffs engaged an investigator who, acting through a company named Ukandin International Private Limited, initiated a purchase transaction with the defendant in April and May 2023. The products were ultimately delivered in Delhi on the basis of an invoice dated 17th May 2023, which the plaintiffs claimed established part of the cause of action within the jurisdiction of the Delhi High Court.
Procedural Background: The defendant filed an application under Order VII Rule 10 of the Code of Civil Procedure, 1908, seeking return of the plaint for lack of territorial jurisdiction. The primary argument was that the defendant’s business was based entirely in Coimbatore, Tamil Nadu, and he did not carry out any business or have any place of business in Delhi. The defendant asserted that the transaction in question was a “trap” purchase fabricated by the plaintiffs’ investigator solely to confer jurisdiction upon the Delhi High Court. The plaintiffs opposed the application, relying upon the factual matrix and judicial precedent to assert that part of the cause of action arose in Delhi due to delivery of infringing goods, and that the suit was maintainable under Section 20(c) of the CPC.
Issues Involved in the Case: The principal issue before the Court was whether the Delhi High Court had territorial jurisdiction to entertain the suit under Section 20(c) of the CPC, considering that the defendant was located in Tamil Nadu and that the transaction culminating in delivery of goods in Delhi was allegedly a one-time trap purchase?Another pertinent issue was whether a trap transaction could constitute a valid part of the cause of action sufficient to confer jurisdiction upon the Delhi High Court in an intellectual property infringement suit?
Submissions of the Parties:The defendant submitted that the entire transaction was orchestrated by the plaintiffs with the sole motive of conferring jurisdiction on the Delhi High Court. He contended that the goods were supplied only after the plaintiffs’ investigator physically visited the defendant’s premises in Coimbatore and that the sale was conducted in Coimbatore. The subsequent delivery in Delhi was requested by the investigator and should be treated as a non-commercial, contrived transaction. He relied on the decisions in Banyan Tree Holding (P) Limited v. A. Murali Krishna Reddy, 2009 SCC OnLine Del 3780, and Indovax Pvt. Ltd. v. Merck Animal Health, 2017 SCC OnLine Del 9393, to assert that trap purchases without commercial intent cannot create jurisdiction.
The plaintiffs argued that the defendant, by participating in the India ITME exhibition in Greater Noida and later delivering goods to Delhi under an invoice, had invoked the jurisdiction of the Delhi High Court under Section 20(c). She pointed out that Ukandin International Private Limited, acting as the buyer, was registered in Delhi at the time of the transaction, and the delivery address and invoice were both located in Delhi. She further relied on Machinefabrik Rieter AG v. Tex Tech Industries (P) Ltd., 2021 SCC OnLine Del 1825, a case involving the same plaintiff and similar factual background, where the Court had upheld jurisdiction on the basis of delivery of goods in Delhi.
Judgments Cited and Their Context: In Machinefabrik Rieter AG v. Tex Tech Industries (P) Ltd., 2021 SCC OnLine Del 1825, the Delhi High Court rejected a jurisdictional objection where the defendant, also based in Coimbatore, had delivered allegedly infringing goods to Delhi. The Court in that case held that the delivery of goods to Delhi constituted a valid part of the cause of action and distinguished Banyan Tree, which involved an online transaction.
In Banyan Tree Holding (P) Ltd. v. A. Murali Krishna Reddy, 2009 SCC OnLine Del 3780, the Division Bench of the Delhi High Court dealt with the question of jurisdiction in the context of online presence. The Court held that mere accessibility of a website is not sufficient; there must be an intentional targeting of customers in the forum state.
In Indovax v. Merck Animal Health, 2017 SCC OnLine Del 9393, the Court held that trap transactions, especially where purchases are made solely to create jurisdiction, cannot form the basis of territorial jurisdiction unless commercial activity is established.
The Court in the present case relied on Machinefabrik Rieter and distinguished Banyan Tree and Indovax on the ground that the current case involved an offline transaction resulting in a delivery of 91 commercial units of the allegedly infringing product to Delhi. The quantity and invoicing supported the inference of commercial intent.
Reasoning and Analysis of the Judge: Court observed that in determining an application under Order VII Rule 10 CPC, the Court must accept the plaint and accompanying documents as true at the preliminary stage. The plaintiffs’ case, based on delivery of goods to Delhi under an invoice, was sufficient to confer jurisdiction under Section 20(c) of CPC.
He noted that the defendant’s participation in a major trade exhibition in Greater Noida, bordering Delhi, further weakened the claim that his business was confined to Tamil Nadu. The assertion of being the “world’s largest manufacturer of Lattice Apron for Compact Systems” suggested an intent to market and supply goods nationwide, including in Delhi.
The judge emphasized that delivery of goods to Delhi, supported by documentary evidence, distinguished the case from Banyan Tree, which was confined to digital interaction and from Indovax, where the transaction lacked commercial scale. Here, the supply of 91 units and provision of product samples indicated commercial intent and possible anticipation of future transactions.
He held that minor factual distinctions in agency structure or the buyer’s nature could not override the fact that goods were physically delivered to Delhi under a commercial invoice, which sufficed to establish part of the cause of action in Delhi.
Final Decision: The Court dismissed the application under Order VII Rule 10 CPC filed by the defendant, holding that the Delhi High Court did have territorial jurisdiction under Section 20(c) of the Code of Civil Procedure. It found that the transaction leading to the delivery of goods in Delhi was not merely a trap but constituted a commercial transaction. The Court further clarified that questions of jurisdiction could be revisited during trial after evidence is led.The defendant’s related application under Order VII Rule 11 CPC was withdrawn, and the suit was scheduled for consideration of interim injunction on a subsequent date.
Law Settled in this Case: This case reinforces the legal position that delivery of infringing goods under a commercial invoice to a location within the territorial jurisdiction of a court constitutes sufficient cause of action under Section 20(c) of the CPC. It clarifies that “trap transactions” will not defeat jurisdiction when the transaction is commercial in nature and supported by documentation. The judgment also affirms that participation in national trade exhibitions may reflect a defendant’s business outreach to broader territories, thereby undermining territorial objections based on place of business alone.Furthermore, the case distinguishes online and offline transactions in the context of jurisdiction, aligning with the reasoning in Machinefabrik Rieter, and limiting the applicability of Banyan Tree to digital commerce.
Disclaimer: The information shared here is intended to serve the public interest by offering insights and perspectives. However, readers are advised to exercise their own discretion when interpreting and applying this information. The content herein is subjective and may contain errors in perception, interpretation, and presentation.
Written By: Advocate Ajay Amitabh Suman, IP Adjutor [Patent and Trademark Attorney], High Court of Delhi
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