The launch of TVS Flame sparked controversy when Bajaj, on September 1 and 3, 2007, publicly alleged through media channels that TVS had infringed its patent by copying the DTSi technology. Bajaj’s representatives claimed that TVS Flame’s engine construction was a near-identical replication and threatened legal action to halt its production. These statements, widely broadcasted, were perceived by TVS as groundless threats designed to undermine the Flame’s market entry and tarnish TVS’s brand reputation. TVS responded on September 2, 2007, demanding that Bajaj retract the statements or face legal consequences, asserting that their product did not infringe Bajaj’s patent.
The public spat had significant commercial implications, as TVS Flame’s launch overshadowed Bajaj’s planned unveiling, denting the latter’s market hype. TVS alleged that Bajaj’s threats were a strategic move to gain an unfair advantage in the competitive 125 CC motorcycle segment, especially as TVS announced its entry into the three-wheeler market, a domain dominated by Bajaj. This set the stage for a legal showdown, with TVS seeking to protect its reputation and product, while Bajaj aimed to safeguard its patented technology.
Bajaj filed a written statement in December 2007, denying the issuance of threats and asserting that its statements were merely to protect its statutory patent rights. Bajaj contended that TVS’s suit was procedurally flawed, as it failed to comply with Section 105 of the Patents Act, 1970, which requires a plaintiff to seek written acknowledgment of non-infringement from the patentee before filing a suit for declaration. Bajaj also argued that the suit was barred under Order II Rule 2 of the CPC, as TVS had already filed a defamation suit (No. 3132/2007) in the Bombay High Court based on the same cause of action, without obtaining leave to pursue additional reliefs.
On December 16, 2007, Bajaj filed a counter-suit, C.S. No. 1111/2007, seeking a permanent injunction to restrain TVS from infringing patent no. 195904, a preliminary decree for rendering accounts of profits from TVS Flame sales, damages of Rs. 10.5 lakh, and delivery of infringing articles for destruction. Bajaj claimed that preliminary tests, including one by TUV Rheinland, confirmed that TVS Flame’s engine infringed its patent, particularly as the third valve in TVS’s design was allegedly non-functional under Indian Driving Cycle conditions.
TVS responded with a written statement in September 2009, reiterating non-infringement and challenging the validity of Bajaj’s patent, citing prior art such as the Honda patent (US4534322) and Indian patent applications (678/MUM/2001 and 82/MUM/2001). The suits proceeded to the trial stage, and on November 24, 2009, the learned Single Judge framed issues for both cases, covering jurisdiction, the existence and nature of Bajaj’s threats, infringement, patent validity, and entitlement to reliefs.
When the suits were ripe for trial, a preliminary issue arose: who should lead evidence first? The Single Judge, after hearing arguments, issued an order on March 10, 2010, directing Bajaj (the defendant in C.S. No. 979/2007 and plaintiff in C.S. No. 1111/2007) to begin presenting evidence, reasoning that infringement was the central theme in both suits. Aggrieved, Bajaj filed two original side appeals (O.S.A. Nos. 132 and 133 of 2010) under Clause 15 of the Letters Patent, challenging the Single Judge’s order.
- Is the "right to begin" under Order XVIII Rule 1 a discretionary privilege or a legal obligation for the plaintiff to prove their case first?
- Did the interconnected nature of the two suits justify a departure from the normal rule that the plaintiff leads evidence first?
- Was the Single Judge’s order maintainable as a “judgment” under Clause 15 of the Letters Patent, rendering the appeals admissible?
- Did the burden of proof in a suit for declaration of non-infringement and groundless threats under Sections 105 and 106 of the Patents Act, 1970, shift to the defendant when a counter-suit for infringement was filed?
- Did the Single Judge’s order prejudice Bajaj by compelling it to disclose its evidence prematurely, potentially allowing TVS to tailor its case?
These questions required the court to balance procedural fairness with the unique dynamics of patent litigation.
- In C.S. No. 979/2007, TVS, as the plaintiff, bore the burden of proving the issuance of groundless threats and non-infringement, especially since Bajaj denied making threats. Directing Bajaj to lead evidence first was contrary to Order XVIII Rule 1, which places the initial burden on the plaintiff unless the defendant admits the plaintiff’s facts.
- TVS’s suit for declaration required it to adduce evidence first, as Bajaj contested both the threats and the non-infringement claim. The Patents Act does not shift the burden to the defendant in such cases.
- The Single Judge’s direction violated civil jurisprudence, as the plaintiff must succeed or fail based on its own case, not the defendant’s weaknesses. Forcing Bajaj to lead evidence risked allowing TVS to adjust its strategy, causing prejudice.
- The issues framed, particularly those on jurisdiction and the bar under Order II Rule 2 CPC, placed a heavy burden on TVS to justify the suit’s maintainability, reinforcing that TVS should lead evidence.
- TVS’s explicit undertaking in the plaint to prove non-infringement and groundless threats obligated it to present evidence first.
- The order was appealable under Clause 15 of the Letters Patent, as it affected Bajaj’s valuable right to procedural fairness and caused irreparable prejudice, which could not be corrected later.
TVS, represented by Senior Counsel Mr. A.L. Somayaji and Mr. P.S. Raman, countered with the following arguments:
- The Single Judge’s order was not a “judgment” under Clause 15 of the Letters Patent, as it was a procedural direction, not a final determination of rights, rendering the appeals non-maintainable.
- While TVS undertook to prove non-infringement and groundless threats in C.S. No. 979/2007, Bajaj’s subsequent suit (C.S. No. 1111/2007) for infringement shifted the burden, as infringement became the central issue. The Single Judge correctly directed Bajaj, as the plaintiff in the infringement suit, to lead evidence first.
- The interconnected issues in both suits, particularly infringement, justified a pragmatic approach, allowing the court to take evidence in the infringement suit first to streamline the trial.
- The order did not prejudice Bajaj, as evidence in C.S. No. 1111/2007 would naturally precede that in C.S. No. 979/2007, given the overlapping issues.
- Anil Rishi v. Gurbaksh Singh, (2006) 5 SCC 558: Cited by the court to emphasize that the burden of proof rests on the party asserting the affirmative of an issue, per Section 101 of the Evidence Act, 1872. The Supreme Court clarified that the right to begin follows the onus probandi, and the plaintiff must lead evidence first unless the defendant admits the plaintiff’s facts. In this case, the court applied this principle to hold that TVS, as the plaintiff in C.S. No. 979/2007, bore the initial burden to prove non-infringement and groundless threats, especially since Bajaj denied the allegations.
- A. Raghavamma v. A. Chenchamma, 1964 (2) SCR 933: Referenced to distinguish between the burden of proof and the onus of proof. The Supreme Court noted that the burden of proof remains with the party asserting a fact and never shifts, while the onus may shift during evidence evaluation. The court used this to argue that TVS’s burden to prove non-infringement and groundless threats persisted, regardless of Bajaj’s counter-suit.
- State Bank of India v. Ranjan Chemicals Ltd., (2007) 1 SCC 97: Cited to support the possibility of a joint trial when suits involve common issues or arise from the same transaction. The Supreme Court held that a joint trial is justified to avoid overlapping evidence and ensure efficiency. The court noted that, while a joint trial was not explicitly ordered, the Single Judge’s direction to Bajaj implied a preference for starting with the infringement suit, which was permissible but required justification.
- Shah Babulal Khimji v. Jayaben D. Kania, (1981) 4 SCC 8: Invoked to address the maintainability of the appeals. The Supreme Court held that an interlocutory order qualifies as a “judgment” under Clause 15 of the Letters Patent if it affects vital rights or causes serious injustice that cannot be corrected later. The court applied this to find that the Single Judge’s order prejudiced Bajaj by altering the normal course of evidence, justifying the appeals.
These precedents shaped the court’s interpretation of procedural rules and patent law, emphasizing the plaintiff’s primary burden and the need for procedural fairness.
The court examined the Patents Act, 1970, particularly Sections 105 and 106, which govern suits for non-infringement and groundless threats, respectively. Section 105 requires the plaintiff to seek acknowledgment of non-infringement from the patentee, a step TVS did not explicitly follow, but the court focused on Section 106, which permits relief for groundless threats. The court found no provision in the Act shifting the burden to the defendant in a non-infringement suit, reinforcing that TVS bore the initial burden to prove its claims.
The interconnected nature of the suits was acknowledged, as both centered on infringement of patent no. 195904. The court cited State Bank of India to note that a joint trial could be ordered for efficiency, but the Single Judge’s order lacked clarity on whether a joint trial was intended. The absence of a specific finding on joint trial or special circumstances justifying a departure from the normal rule (plaintiff leads first) was a critical flaw. The court emphasized that TVS’s suit was prior in time and sought declarations, placing a heavy burden on TVS to prove non-infringement and groundless threats, as admitted in its plaint.
The court also addressed the issue framed on Order II Rule 2 CPC, noting that TVS’s earlier Bombay suit raised a preliminary objection about the maintainability of C.S. No. 979/2007. This issue required TVS to prove that the causes of action were distinct, further burdening TVS to lead evidence first. The Single Judge’s direction to Bajaj to begin was deemed a reversal of this burden, compelling Bajaj to prove the negative (infringement) prematurely, which prejudiced its defense strategy.
On the maintainability of the appeals, the court relied on Shah Babulal Khimji, holding that the Single Judge’s order was a “judgment” under Clause 15, as it affected Bajaj’s right to procedural fairness and caused prejudice that could not be rectified later without re-recording evidence. The court rejected TVS’s argument that the order was merely procedural, emphasizing the significant impact on Bajaj’s trial strategy.
- The “right to begin” under Order XVIII Rule 1 CPC is a legal obligation for the plaintiff to lead evidence first, unless the defendant admits the plaintiff’s facts and raises a defense, as per Section 101 of the Evidence Act.
- In suits for declaration of non-infringement and groundless threats under Sections 105 and 106 of the Patents Act, the plaintiff bears the initial burden to prove its claims, absent statutory provisions shifting the burden to the defendant.
- A trial court may order a joint trial for interconnected suits, but any departure from the normal rule of plaintiff leading evidence first requires clear justification.
- An interlocutory order affecting a party’s valuable rights or causing irreparable prejudice qualifies as a “judgment” under Clause 15 of the Letters Patent, making it appealable.
- The burden of proof remains with the party asserting the affirmative, and procedural fairness must ensure that a defendant is not compelled to disclose evidence prematurely.
