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CASE NO.: Appeal (civil)  1189-1190 of 2004

PETITIONER: Exphar SA & Anr.

RESPONDENT: Eupharma Laboratories Ltd. & Anr.

DATE OF JUDGMENT: 20/02/2004

BENCH: Ruma Pal & P. Venkatarama Reddi.

JUDGMENT: J U D G M E N T

(Arising out of SLP(C) No. 3551-3552 of 2003) RUMA PAL, J.

       Leave granted.

       The issue in these appeals is whether the High Court of  Delhi has the jurisdiction under Section 62(2) of the  Copyright Act, 1957 to entertain a suit filed by the  appellants and one other.         The suit was filed  by the appellants and M/s  Shreechem Laboratories against the two respondents, the  first of whom is the Director of the respondent No. 2.   According to the plaint, the appellant No. 1 manufactures a  medicine for the treatment of malaria.  The medicine is sold  under the trademark  ’Maloxine’ in  packaging having a  distinctive get up, lay-out and design.  The appellant No. 1  has claimed to be the owner of the copyright in the   trademark ’Maloxine’.  The plaint also contains a description  of the distinctive carton in which the medicine is sold.   According to the appellants, the appellant No. 1 had entered  into a contract with appellant No. 2 by which the appellant  No. 2 was authorised to manufacture tablets under the  appellants’ trade mark for sale in the rest of the world apart  from Nigeria.   As far as Nigeria is concerned, the appellant  No. 1 had entered into a contract with M/s Shreechem  Laboratories for manufacturing ’Maloxine’.  These  agreements have been described as agency/ manufacturing  agreements.    It is also averred in the plaint that the  appellant No. 1 had entered into an earlier agreement with  the second respondent but that agreement was terminated  for reasons which are unnecessary to be considered by us in  these proceedings.  What is of importance is that respondent  No. 2 wrote two letters to the second appellant and to  Shreechem Laboratories dated 5th November 1993 and 19th  May 1998, by which the respondents called upon the  appellant No.2  and Shreechem to  cease and desist from  manufacturing pharmaceutical preparations under the  trademark "Maloxine".         In the meanwhile, in 1996, the first appellant had  instituted a civil suit against one M/s Moore Associates  Limited before the Federal High Court of Nigeria in which it  was claimed that M/s Moore Associates Ltd. and the second  respondent were wrongly passing-off its products under the  first appellant’s trade mark ’Maloxine’. That suit is still  pending.   In the present suit, the appellants have claimed that

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the respondent No. 2, despite termination of the  manufacturing arrangement with the first appellant, had  continued to manufacture ’Maloxine’ tablets and was  exporting the same, inter-alia, to M/s Moore Associates Ltd.    It was also claimed that the respondents  were considering  launching the product ’Maloxine’ in the Indian market.  In  the circumstances, the prayers in the suit were, inter-alia,   for an injunction to restrain the respondents from passing-  off the trademark ’Maloxine’ or adopting the distinctive get  up of the ’Maloxine’ carton; restraining the infringement of  the copyright of the first appellant in the artistic work  comprised in the ’Maloxine’ carton; for delivery up of the  infringing goods and for accounts on account of the use of  the impugned mark.  The jurisdiction of the Delhi High Court  was sought to be attracted on the bases: (a) the copyright  of the plaintiffs (appellants) in the  ’Maloxine’ carton was  being infringed by the respondents; (b) the plaintiffs  (appellants) carry on business in Delhi and one of them has  a registered office in New Delhi.  It was also stated that the  defendants carry on business for profit in New Delhi within  the jurisdiction of the High Court.  On the interlocutory application filed by the appellants  in the suit, an ex-parte interim order was passed in favour of  the appellants on 26th October 1998 by a learned Single  Judge of the Delhi High Court.  The interim order was  confirmed on 28th September 1999.  It does not appear from  the judgment that the respondents had at all raised the  issue regarding lack of territorial jurisdiction before the  Single Judge. Although a prima facie view has been  expressed that there was no doubt about the territorial  jurisdiction of the Court but this was not with reference to  any argument raised by the respondents. The operative  portion of the order of the learned Single Judge is quoted: "In the circumstances mentioned above, and  in order to protect the interests of both the  parties, it is felt that the following  arrangement may be made in terms of Ciba  Geigy Ltd. v. Sun Pharmaceutical Industries,  1997 PTC (17) 364:

(1)     The defendants may use the term  MALOXINE but in a colour combination  different from the colour combination  approved by plaintiff No. 1 in 1991,  subject to the condition that they will  boldly mention the name of defendant  No. 2 along with address on all the  packaging and promotional material.

(2)     The defendants are hereby restrained  from using the deceptively similar  colour combination on their cartons,  packages and promotional material.

(3)     Defendants shall file an undertaking to  the following effects: (a) that they shall  keep proper accounts, file quarterly  statements of manufacture, sale and  stock of the goods in their factory in  court every quarter, and (b) that in  case the plaintiff succeeds, they shall  pay without demur 10% of the sale  proceeds by way of estimated loss of  profit to the plaintiff, as damages  within three months from the date of

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decision by this court."          

       Both the respondents and the appellants preferred  appeals from this decision. The respondents did not question  the territorial jurisdiction of the High Court in its  Memorandum of Appeal.  Nevertheless, the Division Bench  not only allowed the respondents’ appeal but also directed  the appellants’ plaint to be returned to the appellants for  presentation before the appropriate Court solely on the  ground that the Delhi High Court had no territorial  jurisdiction to entertain the suit. Consequently the  appellants’ appeal was also dismissed.  These orders are  now impugned before us. We find that there was neither an application for  rejection of the plaint nor for return of the plaint under  Order VII Rules 11 and 10 of the Code of Civil Procedure,  1908, filed by the respondents and the order of the Division  Bench directing return of the plaint was wholly outside the  scope of the pending appeals. In fact, the issue relating to  territorial jurisdiction of the High Court to entertain the  appellants’ suit was not even raised  in the Memorandum of  Appeal.          Besides when an objection to jurisdiction is raised by  way of demurrer and not at the trial, the objection must  proceed on the basis that the facts as pleaded by the  initiator of the impugned proceedings are true.  The  submission in order to succeed must show that granted  those facts the Court does not have jurisdiction as a matter  of law.  In rejecting a plaint on the ground of jurisdiction,  the Division Bench should have taken the allegations  contained in the plaint to be correct.  However, the Division  Bench examined the written statement filed by the  respondents in which it was claimed that the goods were not  at all sold within the territorial jurisdiction of the Delhi High  Court and also that the respondent No. 2 did not carry on  business within the jurisdiction of the Delhi High Court.   Having recorded the appellants’ objections to these factual  statements by the respondents, surprisingly the Division  Bench said:  "Admittedly the goods are being traded  outside India and not being traded in  India and as such there is no question of  infringement of trademark within the  territorial limits of any Court in India  what to of Delhi".   

       Apart from the ex-facie contradiction of this statement  in the judgment itself, the Division Bench erred in going  beyond the statements contained in the plaint.  The Division Bench has also erred in its construction of  Section 62 of the Copyright Act, 1957.  Section 62 reads: "62. Jurisdiction of court over matters  arising under this Chapter. \026 (1)  Every  suit or other civil proceeding arising under  this Chapter in respect of the infringement of  copyright in any work or the infringement of  any other right conferred by this Act shall be  instituted in the district court having  jurisdiction.

(2)     For the purpose of sub-section (1), a  "district court having jurisdiction" shall

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notwithstanding anything contained in the  Code of Civil Procedure, 1908 (5 of 1908), or  any other law for the time being in force,  include a district court within the local limits  of whose jurisdiction, at the time of the  institution of the suit or other proceeding, the  person instituting the suit or other  proceeding or, where there are more than  one such persons, any of them actually and  voluntarily resides or carries on business or  personal works for gain."   

       We would like to emphasise the word "include".  This  shows that the jurisdiction for the purposes of Section 62 is  wider than that of the Court as prescribed under the Code of  Civil Procedure, 1908.  The relevant extract of the report  of the Joint Committee published in the Gazette of India  dated 23-11-1956 which preceded and laid the foundation  for Section 62(2) said: "In the opinion of the Committee many  authors are deterred from instituting  infringement proceedings because the  court in which such proceedings are to  be instituted is situated at a considerable  distance from the place of their ordinary  residence.  The Committee feels that this  impediment should be removed and the  new sub-clause (2) accordingly provides  that infringement proceedings may be  instituted in the district court within the  local limits of whose jurisdiction the  person instituting the proceedings  ordinarily resides, carries on business  etc."

       It is, therefore, clear that the object and reason for the  introduction of sub-section (2) of Section 62 was not to  restrict the owners of the copyright to exercise their rights  but to remove any impediment from their doing so.  Section  62(2) cannot be read as limiting the jurisdiction of the  District Court only to cases where the person instituting the  suit or other proceeding, or where there are more than one  such persons, any of them actually and voluntarily resides or  carries on business or presently works for gain.  It   prescribes an additional ground for attracting the jurisdiction  of a Court over and above the ’normal’ grounds as laid down  in Section 20 of the Code.                         Even if the jurisdiction of the Court were restricted in  the manner construed by the Division Bench, it is evident  not only from the cause title but also from the body of the  plaint that the appellant No. 2 carries on business within the  jurisdiction of the Delhi High Court.  The appellant No. 2 is  certainly "a person instituting the suit".  The Division Bench  went beyond the express words of the statute  and  negatived the jurisdiction of the Court because it found that  the appellant No. 2 had not claimed ownership of the  copyright of the trademark infringement of which was  claimed in the suit.  The appellant No. 2 may not be entitled  to the relief claimed in the suit but that is no reason for  holding that it was not a person who had instituted the suit  within the meaning of Section 62(2) of the Act.  Furthermore, the appellants’ plaint said that the ’cease  and desist’ notice  was sent to the appellant No. 2 at its  office in New Delhi and in that notice it was alleged that the

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appellant No. 2 had infringed the copyright of the  respondent No. 2 to the trademark  ’Maloxine’.  Now a cease  and desist notice means that the recipient is alleged to have  infringed the rights of the sender of the notice to the  copyright and as a result of such alleged infringement the  recipient is liable to institution of civil and/or criminal  proceedings.  It is a threat.  The plaint says that this threat  was received within the jurisdiction of the High Court a fact  which was sufficient to invoke the jurisdiction of that Court.    The respondents’ reliance on the decision of this Court in Oil  and Natural Gas Commission V. Utpal Kumar Basu and  Ors. 1994 (1) Supp SCR 252 and Union of India and  Others V. Advani Exports Ltd. and Another 2002 (1)  SCC 567     is inapposite.   Those decisions held that the  service of a mere notice may not be sufficient to found  jurisdiction unless such notice formed an integral part of the  cause of action. But a ’cease and desist’ notice in a copyright  action cannot, particularly in view of Section 60 of the Act,  be termed to be a ’mere’ notice.  Such a threat may give  rise to the right to institute a suit to counter such threat and  to ask for relief on the ground that the alleged infringement   to which the threat related was not in fact an infringement  of any legal right of the person making such threat.         As we have seen, the Division Bench disposed of the  appeals solely on the issue of jurisdiction. Its conclusion on  the issue is insupportable.  The impugned decision is  accordingly set aside and the matter is remanded back to  the Division Bench for disposal of the appeals filed by the  respondents  and appellants on merits.  Pending the decision  of the Division Bench, the order passed by the learned  Single Judge which we have quoted earlier will continue.   The appeals are accordingly allowed with costs.