SC-Indian Performing Rights Society Ltd. Vs Sanjay Dalia

Indian Performing Rights Society Ltd. Vs Sanjay Dalia Case:  Territorial Jurisdiction Under Section 62 of Copyright Act and Section 134 of Trade Marks Act

Introduction

The question of where a plaintiff can sue for infringement of copyright or trademark has always carried immense practical significance for litigants across India. Parliament, recognising the hardship faced by authors and trademark owners who had to travel long distances to vindicate their rights, inserted special provisions in the Copyright Act and the Trade Marks Act allowing suits to be filed at the place where the plaintiff resides or carries on business. However, this beneficial provision came to be misused by large corporations who, despite having their principal place of business and the cause of action arising at one location, chose to file suits at distant places merely because they maintained a branch office there. This judgment of the Supreme Court addresses this precise mischief and lays down an important interpretative principle balancing the convenience of the plaintiff with the need to avoid undue hardship to the defendant.

Factual and Procedural Background

The case arose out of a batch of appeals dealing with a common question of law relating to the interpretation of Section 62 of the Copyright Act, 1957 and Section 134 of the Trade Marks Act, 1999, particularly with regard to the place where a suit for infringement can be instituted.

In the lead matter, the plaintiff had filed a suit seeking to restrain the defendant from infringing its rights without obtaining a licence. The defendant owned cinema halls in Maharashtra and Mumbai, and the entire cause of action, as pleaded, had arisen in Mumbai. Despite this, the suit was filed in the High Court of Delhi on the ground that the plaintiff had a branch office in Delhi and carried on business there. It was not disputed that the plaintiff's head office was situated in Mumbai. The defendant objected to the territorial jurisdiction of the Delhi court, and this objection was upheld both by the Single Judge and later by the Division Bench of the Delhi High Court, which held that the suit ought to have been filed at Mumbai. This order was challenged before the Supreme Court.

In a connected matter, a suit had been filed concerning infringement of a trademark relating to a well known magazine. The registered office of the concerned entity was in Mumbai, where the magazine was also processed and published. The plaintiff sought to invoke the jurisdiction of the Delhi court on the ground that it had a branch office in Delhi, and later sought amendment of the plaint to strengthen this plea. The amendment application was rejected by the Single Judge, but the Division Bench allowed the amendment, giving rise to a further appeal before the Supreme Court.

Given the recurring nature of this jurisdictional controversy and the divergent approaches taken by different High Courts over the years, the Supreme Court took up the appeals together to settle the correct interpretation of the relevant statutory provisions.

Dispute Before the Court

The core question before the Court was whether Section 62(2) of the Copyright Act and Section 134(2) of the Trade Marks Act, both of which permit a plaintiff to file a suit at the place where he resides or carries on business, could be read to allow a plaintiff to choose a distant forum such as a branch office location, even when the cause of action had wholly or partly arisen at the plaintiff's principal place of business or ordinary residence.

The appellants argued that these provisions, being non obstante clauses beginning with the words notwithstanding anything contained in the Code of Civil Procedure, created an unqualified additional right in favour of the plaintiff to sue at any place where it resided or carried on business, regardless of where the cause of action arose. According to this view, the restrictions found in Section 20 of the Civil Procedure Code, 1908 had no application once the special provisions of the Copyright Act and Trade Marks Act were invoked.

The respondents, on the other hand, contended that such an interpretation would open the door to abuse, particularly by large corporations and multinational entities having offices in multiple cities, who could drag defendants to inconvenient and unconnected places merely by citing a branch office, even though neither the cause of action nor the principal business had any connection with that place. They argued that the provisions were intended to remove hardship for the plaintiff, not to create a tool for harassing defendants.

In simple terms, the dispute was about whether a company having its head office and the entire cause of action in one city could nevertheless drag the defendant to litigate in a completely different city merely because it maintained a subordinate office there.

Reasoning and Analysis of the Court

The Court began by examining the scheme of Section 20 of the Civil Procedure Code, which ordinarily governs territorial jurisdiction. Under clauses (a) to (c) of Section 20, a suit can be filed where the defendant resides or carries on business, or where the cause of action wholly or in part arises. The Explanation to Section 20 clarifies that a corporation is deemed to carry on business at its principal office, or in respect of any cause of action arising at a place where it has a subordinate office, at such place as well. The Court explained that this Explanation was intended to prevent a corporation having a subordinate office at the place where the cause of action arises from escaping suit there, but it was never meant to allow a plaintiff to drag a defendant to a place having no connection with the cause of action.

The Court then traced the legislative history behind the insertion of Section 62(2) in the Copyright Act. Reference was made to the report of the Joint Committee of the Houses, which had noted that many authors were deterred from instituting infringement proceedings because the court having jurisdiction was often located far away from their ordinary residence. This impediment was sought to be removed by allowing suits to be filed at the place where the author or copyright owner ordinarily resided or carried on business. The Court also referred to relevant portions of the Parliamentary debates on the Copyright Act, where it was clarified that the purpose of the provision was to spare the injured party the burden of travelling to distant courts, and not to enable the plaintiff to drag the infringer to an inconvenient forum having no connection with the dispute.

Applying this legislative purpose, the Court held that the words notwithstanding anything contained in the Code of Civil Procedure did not oust the applicability of Section 20 CPC altogether. Rather, these provisions provided an additional forum to the plaintiff, over and above what was already available under Section 20 CPC. Where the cause of action, wholly or in part, arises at the place where the plaintiff resides or carries on business, the suit has to be filed at that place. The plaintiff cannot ignore the fact that the cause of action has arisen at its principal place of business and instead choose to file the suit at a subordinate or branch office located elsewhere, merely because such a branch office exists.

The Court extensively invoked the mischief rule laid down in Heydon's case, (1584) 3 Co Rep 7a, which requires courts to consider four aspects while interpreting a statute, namely, what was the law before the enactment, what was the defect or mischief for which the previous law did not provide, what remedy the legislature has resolved to cure the defect, and the true reason for the remedy. Applying this framework, the Court held that the mischief which Section 62 of the Copyright Act and Section 134 of the Trade Marks Act sought to remedy was the hardship caused to authors and trademark owners who had to travel to distant places to file suits despite residing or carrying on business elsewhere. The remedy provided was to allow them to sue at their own place of residence or business. However, if this remedy were interpreted so widely as to permit the plaintiff to choose any place where it merely had a branch office, even when unconnected with the cause of action, it would create a fresh mischief of its own, namely enabling harassment of defendants by dragging them to inconvenient and unconnected forums. The Court therefore emphasised the need to avoid such counter mischief while interpreting these provisions purposively.

Several precedents were considered in detail. In Patel Roadways Ltd. v. Prasad Trading Co., (1991) 4 SCC 270, the Court had earlier interpreted the Explanation to Section 20 CPC and held that where a corporation has a subordinate office at the place where the cause of action arises, it cannot escape being sued there merely because its principal office is located elsewhere, and further clarified that the sole or principal office continues to be the relevant place for filing suit unless a cause of action arises at the place of a subordinate office. This decision was relied upon to explain the true scope of the term corporation and principal place of business. Similarly, in New Moga Transport Co. v. United India Insurance Co. Ltd., (2004) 4 SCC 677, the Court reiterated that the Explanation to Section 20 CPC applies to prevent a corporation from claiming that it cannot be sued where its subordinate office is located, if the cause of action arose there.

The Court also examined its earlier decision in Exphar Sa v. Eupharma Laboratories Ltd., (2004) 3 SCC 688, where it had been held that the word include in Section 62 of the Copyright Act shows that the jurisdiction under this provision is wider than that prescribed under the Code of Civil Procedure. The present judgment clarified that this earlier decision did not oust the applicability of Section 20 CPC, but merely recognised that Section 62 provided an additional ground for jurisdiction, and that the decision in Exphar Sa in fact supported rather than contradicted the interpretation now being adopted.

Reference was made to Dhodha House v. S.K. Maingi, (2006) 9 SCC 41, where the Court had considered the maintainability of a composite suit combining causes of action under the Copyright Act and the erstwhile Trade and Merchandise Marks Act, 1958, and had held that the additional forum under Section 62(2) was intended to enable an author to file a suit at a place where he might not otherwise be in a position to sue. The Court in the present case clarified that the specific question involved in the present appeals had not arisen for consideration in Dhodha House, and that a decision is not to be construed like a statute; it cannot be assumed that a previous decision has also decided a question which was never raised before it. The Court also referred to its decision in Dabur India Ltd. v. K.R. Industries, (2008) 10 SCC 595, which had held that a composite suit combining different causes of action cannot confer jurisdiction on a court which does not otherwise possess territorial jurisdiction in respect of one of the causes of action.

The Court further discussed various High Court decisions cited by the parties, including Smithkline Beecham Plc. v. Sunil Singh, Caterpillar Inc. v. Kailash Nichani, Intas Pharmaceuticals Ltd. v. Allergan Inc., Ford Motor Co. v. C.R. Borman, Sap Aktiengesellschaft v. Varehouse Infotech, Wipro Ltd. v. Oushadha Chandrika Ayurvedic India (P) Ltd., Hindustan Unilever Ltd. v. Ashique Chemicals, and Ultra Tech Cement Ltd. v. Shree Balaji Cement Industries, and explained that the facts and precise questions involved in the present appeals had not arisen for determination in any of these decisions, and that observations in these cases, to the extent inconsistent with the present ruling, could not be treated as binding.

On the question of Section 134 of the Trade Marks Act, the Court clarified that sub-section (2) of Section 134 applies only to clauses (a) and (b) of Section 134(1), which deal with infringement of a registered trademark and any right relating thereto. It does not extend to clause (c), which deals with actions for passing off. Consequently, the procedure for instituting a suit in respect of passing off continues to be governed exclusively by Section 20 of the Civil Procedure Code, and the additional forum under Section 134(2) is not available for such actions. The Court also held that the provisions of Section 62(2) of the Copyright Act and Section 134(2) of the Trade Marks Act are in pari materia with each other, meaning they deal with the same subject matter and are to be interpreted consistently.

The Court also addressed and rejected the argument that since litigation relating to intellectual property is predominantly filed in Delhi, and lawyers practising there have developed particular expertise in such matters, this convenience should be a relevant factor while deciding territorial jurisdiction. The Court held firmly that the convenience or expertise of lawyers at a particular place is wholly irrelevant for determining territorial jurisdiction, and jurisdiction cannot be founded on such considerations.

Throughout its reasoning, the Court relied upon well established principles of statutory interpretation, including the need to avoid constructions leading to hardship, inconvenience, injustice, absurdity or anomaly, drawing upon the writings of Justice G.P. Singh in Interpretation of Statutes and Bennion on Statutory Interpretation, as well as a long line of English and Indian precedents dealing with purposive construction, including Bengal Immunity Co. Ltd. v. State of Bihar, AIR 1955 SC 661, and Sonic Surgical v. National Insurance Co. Ltd., (2010) 1 SCC 135, the latter having interpreted a similarly worded provision in the Consumer Protection Act, 1986 to restrict the meaning of branch office to the branch office where the cause of action actually arose, in order to avoid absurd consequences.

Final Decision of the Court

Having examined the language, legislative history, and object of the provisions in question, the Court concluded that where the cause of action has wholly or partly arisen at the place where the plaintiff resides or carries on business or personally works for gain, and where the plaintiff also has its principal office at that very place, the suit has to be instituted at that place alone, and not at any other place merely because the plaintiff happens to have a subordinate or branch office there. The plaintiff cannot invoke the additional forum created by these special provisions to bypass the place where its principal business and the cause of action are both located, in favour of a distant subordinate office.

Applying this principle to the facts before it, the Court found that the principal place of business of the appellant was admittedly in Mumbai, and the cause of action had also arisen in Mumbai. The provisions of Section 62 of the Copyright Act and Section 134 of the Trade Marks Act could not, therefore, be interpreted so as to confer jurisdiction on the Delhi court merely because the appellant maintained a branch office there. The Delhi court accordingly had no territorial jurisdiction to entertain the suit.

The Court declined the request to transfer the suit to Delhi, holding that no such transfer could be ordered in the present proceedings, and that if the parties so desired, they were free to file an appropriate application, but the suit would first have to be presented before the court of competent jurisdiction. The submission that the matter should be referred to a larger Bench, on the ground that the earlier decision in Dhodha House held the field, was also rejected, since the Court found that the specific question involved in the present appeals had not been considered in that earlier decision. Ultimately, all the appeals were dismissed, and the orders passed by the High Court were upheld, with no order as to costs.

Point of Law Settled

This judgment settles the important principle that the additional forum created under Section 62(2) of the Copyright Act and Section 134(2) of the Trade Marks Act is not an unqualified or absolute right allowing a plaintiff to sue anywhere it maintains an office. Where the plaintiff's principal place of business or ordinary residence coincides with the place where the cause of action has wholly or partly arisen, the suit must be filed at that place, and the plaintiff cannot invoke a distant subordinate or branch office to confer jurisdiction elsewhere. The provisions are meant to spare the plaintiff the hardship of travelling to a distant forum, not to create a tool for dragging the defendant to an inconvenient and unconnected place. This ruling has significantly shaped subsequent trademark and copyright litigation strategy across India, particularly curbing the earlier practice of large corporations routinely filing infringement suits in Delhi merely on the strength of a branch office, regardless of where their principal business and the actual cause of action were located.

Title of the Case: Indian Performing Rights Society Ltd. v. Sanjay Dalia and Another

Date of Judgment: July 1, 2015

Case Number: Civil Appeals Nos. 10643-44 of 2010 with Civil Appeal arising out of SLP (C) No. 8253 of 2013 (with Civil Appeal No. 4912 of 2015)

Neutral Citation: (2015) 10 Supreme Court Cases 161

Name of Court: Supreme Court of India

Name of Hon'ble Judge: Jagdish Singh Khehar and Arun Mishra, JJ.

Written By: Advocate Ajay Amitabh Suman, IP Adjutor [Patent and Trademark Attorney], High Court of Delhi

Disclaimer: Readers are advised not to treat this as a substitute for legal advice as it may contain errors in perception, interpretation, and presentation.

Headnote of the Judgment

In Indian Performing Rights Society Ltd. v. Sanjay Dalia, (2015) 10 SCC 161, the Supreme Court examined the territorial jurisdiction for suits under Section 62 of the Copyright Act, 1957 and Section 134 of the Trade Marks Act, 1999. The plaintiff's principal office and the cause of action were both in Mumbai, yet suits were filed in Delhi citing a branch office there. Dismissing the appeals, the Court held that where the plaintiff's principal place of business and the cause of action coincide at one place, the suit must be filed there, and cannot be shifted to a distant subordinate office. The additional forum under these provisions supplements, but does not oust, Section 20 CPC, and must be construed purposively to prevent counter mischief to defendants.

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