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SUMMARY JUDGEMENT IN COMMERCIAL CASES

By July 10, 2017 December 20th, 2019 One Comment

It
is not unheard of that a case when instituted in India seeking recovery of
money may take several years before the party suing for recovery is actually
able to receive the money claimed. Such scenario inevitably deters several
companies from approaching the court, thus leading to settlements at far lesser
amounts for which the company would have otherwise pursued.

Owing
to growing concern for cost effective and faster resolution of commercial disputes,
the Commercial Courts, Commercial Division and Commercial Appellate Division of
High Courts Act, 2015 (“Act”) was
introduced.

Post
promulgation of the Act, the trade and commerce sector of the country has
become very hopeful. This is because the Act has now put into place much needed
processes to ensure that cases are decided in a time bound manner. The
procedure for conducting a suit filed before a civil court is governed by the
Code of Civil Procedure, 1908 (‘CPC’).
To ensure that in commercial disputes where time is of essence, be it either
for recovery of money basis a contract or for that matter intellectual property
right cases for infringement of trademarks/copyright/patents, the CPC has been
suitably amended to incorporate provisions which are likely to make delay and
latches a thing of the past. 

One
of the crucial amendments which have been brought into the CPC by the Act is
the insertion of Order 13A for summary judgment. Order 13A of the amended CPC
provides that disputes which are of commercial nature and as such recognized as
commercial dispute under the Act, shall be disposed off by the commercial court
established under the Act without a full-fledged trial. The provision entitles
the plaintiff or the defendant in a suit, to show as to why the claim of the
defense as the case may be, is not likely to succeed. Upon filing an application
under this Order, the plaintiff shall have to establish that there are no
triable issues and that the Defendant has no real prospect in successfully
defending the claim. To such an application, the defendant then shall be
afforded an opportunity to show to the court that there are triable issues
which are required to be inquired into and for which evidence is necessary. Upon
hearing the arguments of both the parties, if the court is of the opinion that
the defendant is not likely to succeed in defending the claim of the plaintiff,
the court shall pass a judgment in favour of the Plaintiff.

While
Order 13 A introduces a new perspective for deciding commercial disputes,
however, provisions such as Order 13 A existed much prior, in the CPC in the
form of Order 37. A suit filed under Order 37 of CPC provides that if a suit
for recovery is filed on the basis of admitted debt, the same shall be tried
summarily. Similarly, in a suit under Order 37 of CPC, the defendant is given
an opportunity to plead existence of triable issues and plead the leave to
defend the suit. The only difference between Order 13A and Order 37 is such
that an Order 37 suit is applicable only to debts which are admitted, while on
the other hand Order 13A can be invoked and is available to all kinds of suit,
subject to the fact that the dispute should be a commercial dispute recognized
by the Act.
Provisions
like Order 13 A is likely to be a game changer in suits filed for infringement
of intellectual property rights. This is because, in a suit for enforcement of
intellectual property rights, the plaintiff who usually claims to be the
proprietor or owner of the intellectual property rights is more concerned with
enforcement of its rights and restrain upon availability of
spurious/counterfeit or infringing product/services. The newly inserted
provision is likely to save the intellectual property rights owner from going
through the entire ordeal of the trial and secure protection of its rights
without delay.

Recently,
the Delhi High Court in the case of ‘Ahuja Radios vs. A Karim bearing CS(COMM)
35/2017” passed a summary judgment upon an application filed in a suit alleging
infringement of trademark. It is however interesting to note that in the said
case, the plaintiff did not press for damages. A necessary understanding for
releasing the claim for damages would be that in the event the plaintiff would
have pleaded for damages, then it would have had to lead evidence to show the
extent of loss which it suffered, thus negating the entire reasoning behind
filing of such an application. While the judgment is worth appreciating and has
been analyzed by many, the said cardinal aspect of release of damages was left
out. Therefore, in a suit for infringement of intellectual property rights,
claim for damages may have to be released when an application under Order 13A
of CPC is filed, unless of-course the plaintiff has documentary evidence to
prima facie establish the quantum of damages.

To
conclude, the amendments brought about by the Act is a welcome move and abreast
with the changing commercial scenario, which is likely to have far reaching
benefits for trade and commerce of the country.

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