Trial Is No Longer The Default Procedure

The Commercial Courts Act, 2015 was enacted with the intent to improve efficiency and reduce delay in deciding commercial cases. To achieve the said objective, the Commercial Courts Act amended certain provisions of the Code of Civil Procedure (CPC) and incorporated Order XIIIA titled “Summary Judgment”, as applicable to commercial disputes. This provision enables the Court to decide a claim or part thereof without recording oral evidence. Though at first instance it can be argued that the enabling provision of Order XIIIA to pronounce summary judgment is pari materia to Order XII Rule 6 which empowers the Court to pronounce judgment based on admission of the party but there is a myriad of judgments pronounced by various Courts differentiating between both of the provisions. One of the fundamental differences being that under Order XII Rule 6, Court is empowered to act suo moto as well as on the basis of application filed by a party and hence enjoys wider discretion, whereas, for rendering summary judgment under Order XIIIA filing of a formal application by the party is mandatory, as gained from literal interpretation of Rule 1 of Order XIIIA and duly held so by the Delhi High Courts in its various judgments. The procedure to be followed in civil suits are supposed to be strictly in compliance with the provisions of the CPC, where the civil courts have limited power to finally decide or dispose of a case which has more or less a clear outcome based on merits and the general rule of applicability is first recording of “evidence”, which comprises of lengthy procedures of Plaintiff’s evidence, the Defendant’s evidence and then concluding arguments which leads to final disposal. The entire process increases not only life of the case but causes inordinate delay as well as increases the stress of litigants. Albeit, Order XIIIA delineates the procedure and a Court can, in a commercial suit, on an application of party, decide a claim without recording oral evidence. The process introduced to streamline and expedite the disposal of disputes in litigation is admittedly a landmark move, where in present, the pendency of number of cases continue to be biggest challenge before judiciary.

Under Order XIIIA, the claim in an application for summary judgment shall include (a) part of a claim, (b) a particular question on which the whole or part of the claim depends, and (c) counter-claim. The Order, which is one proper code in itself, palpably provides the stage as to when an application can be made, i.e. after service of summons upon Defendant and in order to prevent its misuse to delay the trial procedure by parties, bars the filing of application after the Court has framed the issues in the Suit. Rule 3 empowers the Court to grant a summary judgment against the Plaintiff or Defendant, if it considers that the Plaintiff has no real prospect of succeeding on the claim or the Defendant has no real prospect of successfully defending the claim and there is no compelling reason why the claim should not be disposed of before recording of oral evidence. Therefore, the new rule applicable to the commercial disputes, demonstrates that trial is no longer the default procedure or norm.

The ground for summary judgment is well stated in the rule 3 under Order XIIIA CPC, however, what is challenging is adjudication with respect to a particular case that as to whether there is no real prospect of the Plaintiff in succeeding on claim or of the Defendant successfully defending the claim, as the case may be, along with further challenge to determine that there is no compelling reason why the claim should not be disposed of before recording of oral evidence. More so, when the other party i.e. Respondent will leave no stone unturned to confuse the mind of the Court with sole aim to throw the case into trial. To deal with such situations and in order to ascertain whether there is “real” prospect of succeeding or defending the case, rule 4 mandates the filing of documentary evidence along with Application which Court can consider while deciding the application. Like most other legislations, the Rule 3 is also borrowed and identical to Rule 24.2 of the Civil Procedure Rules in England. Therefore, the cases decided by Courts in England have acted as torch bearer for courts in India.

Adjudicating an application of summary application and utilizing the provisions for expeditious disposal which is also an inexpensive means to achieve a fair and just result, the learned Single Judge of Delhi High Court in Su-Kam Power Systems Ltd. vs. Mr. Kunwer Sachdev and another, summarily decreed the suit for declaration, permanent injunction and damages filed by the Plaintiff against the Defendants. It was the case of the Plaintiff that Plaintiff is owner of trademark Su-Kam in class 9 of the Trade Marks Act, which fact was represented by the Defendant itself before various entities including in one case filed by the Plaintiff in the year 2015 when Defendant was managing director of the Plaintiff, and it has been continuously and extensively using the mark since 1998. It was contented by the Plaintiff that the Defendant, though asserted himself to be owner of the trademark Su-Kam, yet states that he was assigned with the mark vide a Deed of Assignment dated 16.03.2006 for which a recordal request was filed with the trademarks registry on 18.07.2018 i.e. after more than 12 years. It was also the case of the Plaintiff that the Deed of Assignment dated 16.03.2006 executed between the Plaintiff and the Defendant was invalid and was executed by the Defendant for his own behalf as well as on behalf of Plaintiff company, when he was director and majority shareholder in company which was further contented and held to be in violation of fiduciary relation of the Defendant with Plaintiff company. With said contentions the Plaintiff was appropriately seeking summary relief to declare the Deed of Assignment to be invalid and consequential relief, inter-alia, of permanent injunction restraining the Defendant from holding himself to be the owner of the Su-Kam trademarks.

The application for summary judgment was objected by the Defendant with its sham defence primarily asserting the requirement of oral evidence stating that since the plaint questioned the validity of documents therefore, oral evidence is required to be led. The Defendant further contended himself to be owner, creator and original adapter of the trademark ‘Su-Kam’ in the year 1986 and alleged that the license to use the trademark was transferred to the Plaintiff company by the Defendant in consideration to pay royalty from year to year basis (though no such royalty was ever paid to Defendant by the Plaintiff). It was contended by explaining that Defendant had applied for registration of trademark Su-Kam in class 9 in the year 2008 which by mistake got registered on the name of the Plaintiff Company and the mistake was rectified by execution of an Assignment deed.

The defence of the Defendant was rejected and claim of the Plaintiff was summarily decreed by the Court. Guided by the various judgments rendered by the foreign courts in different facts and circumstances while adjudicating suit summarily, the High Court after going through the entire record available before the learned Single Judge, the noted that on the records of the trademarks registry the Plaintiff is exclusive registered proprietor of the trademark and the defence of the Defendant is baseless and inconsequential on the face of admission of the Defendant in one earlier Suit for infringement on the basis of which the Defendant was estopped to contend otherwise. While adjudicating the claim of the Plaintiff with respect to the validity of document i.e. Assignment Deed, the Court observed that the Assignment Deed was void being executed by the Defendant in violation to his fiduciary relationship with the Plaintiff company. One of the main defences of the Defendant which also stood summarily adjudicated pertained to limitation, where the Defendant raised the issue of limitation stating that the deed was executed in the year 2006 and the Suit is filed in the year 2018. The defence, which did seem to be attractive and agreeable, was rejected by the learned Single Judge while placing reliance on and explaining Article 58 of the Limitation Act and fairly held that right to sue accrues when the Defendant clearly and unequivocally threatens the Plaintiff’s right. Under present circumstances the right to sue accrued in favour of the Plaintiff when the Defendant submitted the Deed of Assignment to Resolution professional thereby asserting that the Defendant is owner of the trademark Su-Kam. Rejecting all the defences of the Defendant and adjudicating the claim summarily, the Court decreed the Suit for declaration and permanently restrained the Defendant from asserting ownership of the disputed trademark.

Conclusion

The provision enables the Court to reach a fair and just determination on the basis of merits by making necessary finding of fact, application of the law to the facts which is obviously more expeditious and less expensive as well as saves party from the rigor of the by-default procedure to undergo trial and submit evidence, which in cases of documentary evidence, includes nothing but reiteration of the facts stated in plaint and marking of documents already produced along with plaint. The procedure which empowers Court to look into and find the necessary facts and resolve the disputes, also mandates the parties to put on record all the documentary evidence, by which the Court adjudicates the real prospect of a successful defence or a real prospect of successful claim. Departing from ages old established practice to throw a case into trial by default, no doubt the procedure saves expenses, it achieves expedition, and avoids the Court’s resources being exhausted on cases where trial serves no purpose. Thus, if a Claimant has a case which is bound to fail or has a case which is bound to succeed, a Claimant should know this as soon as possible. The rule achieves the said objective. Therefore, the power should be kept at its proper role.


Article by Nisha Sharma

Article was 1st published on Mondaq

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