Seat / Venue of Arbitration not a determinative factor in attracting jurisdiction of a Writ Court: Delhi High Court

The Delhi High Court in Durgapur Freight Terminal P. Ltd. v. Union of India has recently held that an arbitration clause providing for seat / venue would not be a determinate factor for conferring jurisdiction on a writ court, if the court otherwise does not have jurisdiction in the traditional sense. The bench analysed the provisions of Article 226 of the Constitution of India, 1950 and also the concept of forum convenience, to hold that the courts at Delhi would not have jurisdiction as no part of cause of action has arisen in Delhi. The relevant observations of the bench, as as under:

11. In the writ petition, the petitioners have claimed jurisdiction of this Court in the following terms:-

"59. The present petition is maintainable before this Hon'ble Court inasmuch as the concerned respondents viz. respondent nos. 1 to 4 who took the decisions impugned are located within the territorial jurisdiction of this Hon'ble Court. Moreover the essential part of cause of action viz. decisions leading to the acts and/or omission including non- consideration of the petitioner's representation dated December 28, 2022 have taken place within the territorial jurisdiction of this Hon'ble Court."

12. Before proceeding further, it is deemed apposite to advert to clauses (1) and (2) of Article 226 of the Constitution of India, which read as under:-

"226. Power of High Courts to issue certain writs.--(1) Notwithstanding anything in Article 32, every High Court shall have power, throughout the territories in relation to which it exercises jurisdiction, to issue to any person or authority, including in appropriate cases, any Government, within those territories directions, orders or writs, including writs in the nature of habeas corpus, mandamus, prohibition, quo warranto and certiorari, or any of them, for the enforcement of any of the rights conferred by Part III and for any other purpose. 

(2) The power conferred by clause (1) to issue directions, orders or writs to any Government, authority or person may also be exercised by any High Court exercising jurisdiction in relation to the territories within which the cause of action, wholly or in part, arises for the exercise of such power, notwithstanding that the seat of such Government or authority or the residence of such person is not within those territories."

13. A reading of Clauses (1) and (2) of Article 226 of the Constitution of India would show that a High Court has territorial jurisdiction to issue writs under two situations: one, where the person/authority to whom the writ is to be issued is situated within the territory over which the High Court exercises jurisdiction, and two, where the cause of action, wholly or in part, arises for issuance of a writ within such territory. For the sake of convenience, the first may be referred to as 'jurisdiction by virtue of situs' and the other as 'jurisdiction by virtue of cause of action'.

14. In the instant case, the petitioners have claimed jurisdiction of this Court under both clauses of Article 226 of the Constitution of India. The tests to determine whether this Court has jurisdiction under these Clauses are well-defined. While before exercising jurisdiction by virtue of situs, this Court is required to arrive at a positive finding that the authority/person to whom the writ has to be issued lies within the territory over which the Court exercises jurisdiction; in order to exercise jurisdiction by virtue of cause of action, the Court shall be of the opinion that cause of action, wholly or in part, has arisen within the jurisdiction over which it exercises jurisdiction.

15. The Supreme Court in Utpal Kumar Basu and Others (Supra) has observed that the question as to whether the High Court has territorial jurisdiction to entertain a writ petition has to be decided on the basis of facts pleaded in the petition, the truth or otherwise thereof being immaterial. Relevant excerpt from the decision is extracted hereunder:-

"6. ...Therefore, in determining the objection of lack of territorial jurisdiction the court must take all the facts pleaded in support of the cause of action into consideration albeit without embarking upon an enquiry as to the correctness or otherwise of the said facts. In other words the question whether a High Court has territorial jurisdiction to entertain a writ petition must be answered on the basis of the averments made in the petition, the truth or otherwise whereof being immaterial. To put it differently, the question of territorial jurisdiction must be decided on the facts pleaded in the petition. Therefore, the question whether in the instant case the Calcutta High Court had jurisdiction to entertain and decide the writ petition in question even on the facts alleged must depend upon whether the averments made in paragraphs 5, 7, 18, 22, 26 and 43 are sufficient in law to establish that a part of the cause of action had arisen within the jurisdiction of the Calcutta High Court."

16. The scope of Article 226(2) of the Constitution of India came to be analysed in depth in Kusum Ingots & Alloys Ltd. v. Union of India and Another reported as (2004) 6 SCC 254, where the Supreme Court observed thus:-

"9. Although in view of Section 141 of the Code of Civil Procedure the provisions thereof would not apply to writ proceedings, the phraseology used in Section 20(c) of the Code of Civil Procedure and clause (2) of Article 226, being in pari materia, the decisions of this Court rendered on interpretation of Section 20(c) CPC shall apply to the writ proceedings also. Before proceeding to discuss the matter further it may be pointed out that the entire bundle of facts pleaded need not constitute a cause of action as what is necessary to be proved before the petitioner can obtain a decree is the material facts. The expression material facts is also known as integral facts.

Jurisdiction Clause vis-a-vis Venue and Seat of Arbitration: Delhi High Court answers

Justice Yashwant Varma

The Delhi High Court in Inland Waterways Authority of India v. Reach Dredging Ltd. and Gayatri Projects P. Ltd. has examined the interplay between the jurisdiction clause in the arbitration agreement vis a vis the venue / seat prescribed under the agreement. The High Court held as under:

3. For the purposes of evaluating the correctness of the preliminary objection which stands raised, it would be apposite to extract the two competing clauses in the backdrop of which the question itself stands raised. Under the General Conditions of Contract2, Clause 22 while dealing with the laws governing the contract made the following provisions: -

―CLAUSE - 22: LAWS GOVERNING THE CONTRACT The Courts at Noida only shall have the jurisdiction for filing the award of the arbitration and for any other judicial proceedings. GCC 

4. The arbitration agreement stood comprised in Clause 47 titled ―Settlement of Disputes and Arbitration‖. Clause 47.11 which alone would have some bearing is extracted hereinbelow: -

―47.11 The parties to the agreement hereby undertake to have recourse only to arbitration proceedings under for Arbitration Act 1996 and the venue of the arbitration proceeding shall be Noida/ New Delhi and the parties will not have recourse to Civil Court to settle any of their disputes arising out of this agreement except through arbitration.‖

5. On facts it was admitted that the hearings in connection with the arbitral proceedings took place in Delhi. The award dated 28 July 2022 is stated to have been drawn and published at Noida, District Gautambudh Nagar falling in the State of Uttar Pradesh. It is also stated to have been duly stamped in that State.

6. Learned counsel appearing for the respondent contended that Clause 47.11 of the GCC merely designates the venue of arbitration to be either Noida or New Delhi. However, according to learned counsel, the venue restriction clause as comprised in Clause 22 would clearly establish that the seat of arbitration must be understood to be Noida only. Apart from the above, learned counsel would urge that since the award itself had been declared, published and dated at Noida, it is that place which must be recognised as being the seat of arbitration. Learned counsel also sought to draw sustenance from the fact that the respondent had invited tenders which were to be submitted at Noida. In view of the aforesaid and in light of Clause 22, it was urged that the present petitions are liable to be dismissed with the Court leaving it open to the petitioner to approach the competent court in District Gautambudh Nagar.

7. Countering the aforesaid submissions, learned counsel for the petitioner contended that Clause 47.11 is irrefutable evidence of both Noida or New Delhi constituting the seat where proceedings pertaining to the award could be initiated. It was further contended that the fact that all the proceedings of the Arbitral Tribunal were held at Delhi would further buttress the submission that it was that location which was ultimately chosen to be the seat of arbitration.

8. While learned counsel for the respondent contended that the issue that arises stands conclusively settled in light of the judgment rendered by the Supreme Court in BGS SGS SOMA JV v. NHPC3, learned counsel for the petitioner relied upon the judgment rendered by the Supreme Court in Inox Renewables Ltd. vs. Jayesh Electricals Ltd.4 to contend that the Section 34 petitions had been correctly filed and presented before this Court.

9. The answer to the question which stands posited would revolve upon the construction liable to be placed upon Clause 22 read with Clause 47.11. The Court notes that Clause 47.11 specifies Noida/New Delhi to be the venue of the arbitration proceedings. Clause 22, on the other hand, in categorical terms prescribes that the courts at Noida alone would be liable to be recognised for the purposes of filing of the award and for any other judicial proceedings. It is the perceived conflict between the aforenoted two clauses that has given rise to the controversy which stands raised.

10. On a plain reading of Clause 47.11, the Court notes that while (2020) 4 SCC 234 2021 SCC OnLine SC 448  stipulating Noida/New Delhi as the place for arbitration proceedings, parties appear to have essentially agreed to either of those two locations as being the acceptable venues for the holding of arbitral proceedings. Clause 47.11 thus appears to have granted the option to parties to convene arbitration proceedings either at Noida or New Delhi. Viewed in that light it would be manifest that Noida and New Delhi could have been interchangeably utilised as venues for the arbitration proceedings.

Grant of Pre-Publication Injunction : Principles Discussed

Justice Varma

Justice Yashwant Varma recently in Sushil Ansal v. Endemol India P. Ltd. & Ors. [2023/DHC/000205] had occasion to examine the law in relation to grant of pre-publication injunction in relation to a web series concerning the Uphaar tragedy. While considering various Indian and international precedents on the subject, Justice Varma rejected the plea of Sushil Ansal to injunct the publication of the web series. The operative part of the decision reads as under:

18. At the outset, it would be apposite to recall the fundamental precepts which govern the grant of ad interim injunctive relief. Apart from the often repeated trinity test of prima facie case, balance of convenience and irreparable injury, courts are also bound to weigh in consideration whether the issuance of the injunction would cause greater harm and perpetuate injustice, the time when the plaintiff first derived knowledge of the offending material, whether the plaintiff, if not having acquiesced, remained inert or failed to take proactive action for protection of its rights and whether it has approached the Court in good faith. These aspects assume greater significance when what is sought is a pre-publication or broadcast injunction.

19. A pre-publication or broadcast injunction would essentially be sought at a stage when the offending material is either unavailable to be comprehensively reviewed and assessed or where it is alleged that there is a grave, imminent and immediate possibility of violation of rights. In such a situation the following factors would clearly be entitled to be accorded primacy- the promptitude with which the plaintiff approaches the Court, its obligation to establish, at least prima facie, that the impending publication/broadcast is completely divorced from the truth, replete with falsehood, or evidences an imminent vilification of the individual.

20. If the Court finds that the plaintiff has either failed to initiate action with promptitude or approached the court at the first available opportunity, that would be a circumstance which would weigh heavily against the grant of an ad interim injunction. Further, if the court were to find that the material which is likely to be broadcast or published already exists in the public domain and has existed as such for a considerable period of time without an objection having been raised, that too would detract from the right of the plaintiff to seek ad interim injunctive relief.

21. On a more fundamental plane, the Court would also take into consideration the imperatives of striking a balance between the aspects of freedom of speech and expression, the dissemination of information amongst the public at large on the one hand and the injury likely to be caused to the individual. It is in the above context that courts have formulated the ―high pedestal‖ test when it comes to the grant of a pre-publication or broadcast injunction. Courts have deliberately formulated the high threshold test because the injunction would essentially be sought at a stage when the offending material is either not available to be evaluated and examined or where it is impracticable to arrive at even a prima facie conclusion whether the content is defamatory or libelous. Courts at that stage are essentially left to grapple at straws, called to base their decisions on unsubstantiated and unproven allegations and essentially asked to issue a restraint on the assumption that what would be published or broadcast would be defamatory, slanderous or amounting to libel. Such a tenuous approach cannot possibly be countenanced when a court of law is called upon to grant injunctive or equitable relief.

Non Est Filing and Condonation of Delay in challenge to Arbitral Awards : Delhi High Court answers

The Division Bench of the Delhi High Court in Oil and Natural Gas Corporation Ltd. v. Joint Venture of M/s Sai Rama Engineering Enterprises (SREE) & Megha Engineering & Infrastructure Ltd. (MEIL) has answered as to what would constitute a non est filing vis-a-vis a petition under S. 34 of the Arbitration & Conciliation Act, 1996 ("Act"). 

The Division Bench was called upon to examine the validity of a judgment rendered by a Single Judge, where the Petition filed under S. 34 of the Act was termed as a non est filing and the plea for condonation of delay in filing the Petition was rejected. While disagreeing with the view of the Single Judge, the Division Bench has held as under:

The Impugned Judgement

13. The learned Single Judge whilst analysing the matter, observed that the following three crucial issues arose for consideration.

"a) Whether the petition is filed within the statutory period of 3 months prescribed under section 34 (3) of the Act.

b) In the alternate; whether the petition was filed within the extended period of 30 days under the Proviso.

c) Whether the filing in the first or the second instance is a 'non est' filing."

14. The learned Single Judge relied on the decision in Union of India v Popular Construction Co.: 2001 (8) SCC 470, wherein the Supreme Court of India held that the legislative intent in providing a strict and non-flexible limitation period should not be defeated by condoning the delay, without "sufficient cause". The court noted that in Simplex Infrastructure Limited v. Union of India: 2019 (2) SCC 455, which cites Union of India v. Popular Construction Co. (supra), the Supreme Court had emphasized the importance of limitation in filing an application under Section 34 of the A&C Act.

15. The learned Single Judge found that the period of delay in filing the application to set aside the impugned award under Section 34 of the A&C Act was beyond the period of thirty days that could be condoned in terms of the proviso to Section 34(3) of the A&C Act. The Court, thus, held that it had no jurisdiction to condone the delay. The said conclusion of the learned Single Judge is premised on the finding that the application filed by the appellant prior to 25.02.2019, was not proper and did not qualify to be considered as an application under Section 34 of the A&C Act. According to the learned Single Judge, the filings done on 20.02.2019 or on 22.02.2019 could not be considered as valid and were required to be treated as non est. Reasons and Conclusion

16. The only questions that fall for consideration of this Court are whether the filings done by the appellant prior to 25.02.2019 are required to be considered as non est; and if not, whether the delay in filing the petition ought to be condoned.

17. At the outset, it is relevant to state that there is no cavil with the proposition that this Court does not have the jurisdiction to condone the delay in filing of the application to set aside an arbitral award beyond the period of thirty days, as specified under the proviso to Section 34(3) of the A&C Act. As noted above, the impugned judgement is premised on the basis that the appellant had failed to file any such application within the period of three months and a further thirty days, from the receipt of the impugned award.

18. The appellant states that it received the impugned award on 23.10.2018. Therefore, the period of three months available to the appellant to assail the impugned award expired on 23.01.2019. The further period of thirty days - being the period that could be condoned by the Court - expired on 22.02.2019. It was the appellant's case that it had filed the petition on 23.01.2019, within the specified period of limitation.

19. As a matter of fact, the appellant had uploaded certain documents on 23.01.2019 at 03:45 p.m. The Registry of this Court had acknowledged the said filing by an e-mail sent at 03:49 p.m. on 23.01.2019. The appellant claims that it was subsequently discovered that an incorrect file had been electronically uploaded on 23.01.2019. The file that was uploaded related to a case captioned "Reliance Infrastructure v. Aravali Power Co. Pvt. Ltd.". Thus, it is not in dispute that the said filing cannot be considered as filing of an application under Section 34 of the A&C Act, assailing the impugned award. Admittedly, no such application was filed on 23.01.2019.

20. The appellant, thereafter, uploaded another file at 3.10. p.m on 04.02.2019. The record indicates that this filing was also not an application under Section 34 of the A&C Act, seeking to set aside the impugned award. Admittedly, the application filed on 04.02.2019 was one under Section 14 of the A&C Act and related to another dispute, which had no bearing on the appellant's challenge to the impugned award. The said application under Section 14 of the A&C Act was defective. The defects were cured and that application under Section 14 of the A&C Act was registered as OMP(T)(COMM) 15/2019. The said application was, thereafter, disposed of by an order dated 14.02.2019. Thus, undisputedly, the appellant had not filed any application under Section 34 of the A&C Act to set aside the impugned award on 04.02.2019.

21. The appellant filed an application assailing the impugned award for the first time on 20.02.2019 at 11:39 a.m. The application and other documents uploaded on the said date, comprised of 6,313 pages. The said filing was acknowledged by the Registry of this Court by an e-mail sent at 11.40 a.m. on 20.02.2019.

22. The said application was defective and this was communicated by the Registry of this Court to the appellant on 21.02.2019. The soft copy of the application, as filed by the appellant on 20.02.2019, has been retrieved and placed on record by the Registry of this Court. The appellant had uploaded two files on 20.02.2019. The first comprised of an Index running into ten pages. The said Index was dated 19.02.2019 and was signed by the advocate of the appellant. The second file uploaded was a comprehensive file, which included an Index, an application under Section 34 of the A&C Act, statement of truth, affidavits supporting the application, other applications, impugned award, and documents. The file uploaded comprised of 6,313 pages. The Index was duly singed on behalf of the appellant by one Sudhir Kumar, DGM (Mech.) Onshore Engineering, ONGC, as well as the appellant's advocate. Both, the authorised representative of the appellant as well as the appellant's advocate had also signed other documents such as the urgent application and the memo of parties. The application under Section 34 of the A&C Act was signed on each page by the authorised representative of the appellant. The said petition clearly set out the grounds on which the impugned award is assailed. It is material to note that the said petition was also accompanied by an affidavit, which was signed by the deponent and also duly verified. However, the said affidavit was not attested. The authorised representative had also filed a duly signed statement of truth by way of an affidavit. However, the said affidavit was not attested. It was also accompanied by a vakalatnama, which was signed by the authorised representative of the appellant.

23. The aforesaid filing was found to be defective, inter alia, because the affidavits and the statement of truth by way of an affidavit were not attested and the vakalatnama was not stamped. In addition to the aforesaid defects, there were other minor defects, which were duly notified to the appellant.

24. The appellant re-filed the application on 22.02.2019. However, the filing done on that date is of no consequence. It comprised of only ten pages of Index.

25. The appellant again re-filed the application on 23.02.2019. Some of the defects were cured. The affidavits were attested and the date of 20.02.2019 was stamped on the affidavits. However, the body of the affidavits continued to reflect that they were affirmed on 19.02.2019. The vakalatnama was also stamped. However, this filing was also marked as defective as there were various other defects. The application was returned for re-filing.

26. The appellant cured all defects and re-filed the petition on 25.02.2019.

27. The learned Single Judge found that the period of delay in filing the application under Section 34 of the A&C Act was beyond the period of thirty days that could be condoned in terms of the proviso to Section 34(3) of the A&C Act. The Court, thus, held that it had no jurisdiction to condone the delay. The conclusion of the learned Single Judge is premised on the finding that prior to 25.02.2019, the appellant had not filed a proper application, which could qualify to be considered as an application under Section 34 of the A&C Act. The Court held that the filings done on 20.02.2019 or on 22.02.2019 were required to be treated as non est. 

28. At this stage, it is relevant to refer to the reasons that persuaded the learned Single Judge to hold that the applications filed on 20.02.2019 and on 23.02.2019, were non est. Paragraph 43, 44, 45 and 46 of the impugned judgement reads as under:-

"43. The common thread that runs in the aforesaid judgments is that 'non-est' filing cannot stop limitation and cannot be a ground to condone delay. Thus, for a petition, filed, under Section 34 of the Act to be termed as a 'properly' filed petition must fulfill certain basic parameters such as:

a) Each page of the Petition as well as the last page should be signed by the party and the Advocate;

b) Vakalatnama should be signed by the party and the Advocate and the signatures of the party must be identified by the Advocate;

c) Statement of Truth/Affidavit should be signed by the party and attested by the Oath Commissioner;

44. This in my view is the minimum threshold that should be crossed before the petition is filed and can be treated as a petition in the eyes of law. The rationale behind insisting on these fundamental compliances to be observed while filing a petition, is not far to seek. Vakalatnama is an authority which authorizes an Advocate to act on behalf of a party as a power of attorney and to carry out certain acts on his behalf.

Therefore, the vakalatnama is the first step and a precursor to the preparation of a petition. The Statement of Truth accompanying a petition or an application is sworn by the deponent who states on oath that the contents of the accompanying petition have been drafted under his instructions and are true and correct to his knowledge or belief. Surely, this affidavit must be signed after the petition is made and the attestation must also be done on the affidavit when the petition is filed. This is also a requirement under the Commercial Courts Act, 2015. The petition needs to be signed by the Advocate as well as the party before the same is filed as this would indicate that both have read the petition and there is authenticity attached to the pages filed in the Registry. If these basic documents are not annexed or the signatures as required are absent, one can only term the documents which are filed as a 'bunch of papers' and not a petition.

45. In several cases, of course, the defects may only be perfunctory and may not affect the filing of the petition, e.g. the documents may be illegible or the margins may not be as per the required standards etc. These defects are certainly curable and if the petition is filed with such like defects, it cannot be termed as a non-est petition.

46. Examined in the light of the above-mentioned judgments and the provisions of Section 34(3) of the Act, the filing of the petition on 20.02.2019 was a non-est filing and cannot stop limitation as clearly even the affidavits were not signed and not attested besides a few other objections."

29. We may, at this stage, point out a factual error, although it is not of much relevance. The applications under Section 34 of the A&C Act filed on 20.02.2019 and 23.02.2019 were accompanied by signed affidavits. However, the affidavits supporting the application filed on 20.02.2019 were not attested. Then the finding that the affidavits accompanying the application filed on 20.02.2019 was not signed is erroneous.

30. We concur with the learned Single Judge that certain defects are curable and do not render the application as non est. However, the nature of certain defects is such that it would not be apposite to consider the defective application as an application under Section 34 of the A&C Act, to set aside an arbitral award. Undisputedly, every improper filling is not non est.

31. We are unable to concur with the view that the minimum threshold requirement for an application to be considered as an application under Section 34 of the A&C Act is that, each page of the application should be signed by the party, as well as the advocate; the vakalatnama should be signed by the party and the advocate; and it must be accompanied by a statement of truth. And, in the absence of any of these requirements, the filing must be considered as non est. It is essential to understand that for an application to be considered as non est, the Court must come to the conclusion that it cannot be considered as an application for setting aside the arbitral award.

32. It is material to note that Section 34 of the A&C Act does not specify any particular procedure for filing an application to set aside the arbitral award. However, it does set out the grounds on which such an application can be made. Thus, the first and foremost requirement for an application under Section 34 of the A&C Act is that it should set out the grounds on which the applicant seeks setting aside of the arbitral award. It is also necessary that the application be accompanied by a copy of the award as without a copy of the award, which is challenged, it would be impossible to appreciate the grounds to set aside the award. In addition to the above, the application must state the name of the parties and the bare facts in the context of which the applicants seek setting aside of the arbitral award.

33. It is also necessary that the application be signed by the party or its authorised representative. The affixing of signatures signify that the applicant is making the application. In the absence of such signatures, it would be difficult to accept that the application is moved by the applicant.

34. In addition to the above, other material requirements are such as, the application is to be supported by an affidavit and a statement of truth by virtue of Order XI, Section 1 of the Commercial Courts Act, 2015. It is also necessary that the filing be accompanied by a duly executed vakalatnama. This would be necessary for an advocate to move the application before the court. Although these requirements are material and necessary, we are unable to accept that in absence of these requirements, the application is required to be treated as non est. The application to set aside an award does not cease to be an application merely because the applicant has not complied with certain procedural requirements.

35. It is well settled that filing an affidavit in support of an application is a procedural requirement. The statement of truth by way of an affidavit is also a procedural matter. As stated above, it would be necessary to comply with these procedural requirements. Failure to do so would render an application under Section 34 of the A&C Act to be defective but it would not render it non est. 

36. In Vidyawati Gupta & Ors. v. Bhakti Hari Nayak & Ors.: (2006) 2 SCC 777, the Supreme Court set aside the order of the Division Bench of the Calcutta High Court treating the suit instituted as non est for want of compliance with the requirements of Order 6 Rule 15(4) of the Code of Civil Procedure, 1908, which requires a person verifying the pleadings to furnish an affidavit in support of the pleadings. The Supreme Court after noting various decisions held as under :-

"49. In this regard we are inclined to agree with the consistent view of the three Chartered High Courts in the different decisions cited by Mr Mitra that the requirements of Order 6 and Order 7 of the Code, being procedural in nature, any omission in respect thereof will not render the plaint invalid and that such defect or omission will not only be curable but will also date back to the presentation of the plaint. We are also of the view that the reference to the provisions of the Code in Rule 1 of Chapter 7 of the Original Side Rules cannot be interpreted to limit the scope of such reference to only the provisions of the Code as were existing on the date of such incorporation. It was clearly the intention of the High Court when it framed the Original Side Rules that the plaint should be in conformity with the provisions of Order 6 and Order 7 of the Code. By necessary implication reference will also have to be made to Section 26 and Order 4 of the Code which, along with Order 6 and Order 7, concerns the institution of suits. We are ad idem with Mr Pradip Ghosh (sic) on this score. The provisions of sub-rule (3) of Rule 1 Order 4 of the Code, upon which the Division Bench of the Calcutta High Court had placed strong reliance, will also have to be read and understood in that context. The expression "duly"

used in sub-rule (3) of Rule 1 Order 4 of the Code implies that the plaint must be filed in accordance with law. In our view, as has been repeatedly expressed by this Court in various decisions, rules of procedure are made to further the cause of justice and not to prove a hindrance thereto. Both in Khayumsab [(2006) 1 SCC 46 : JT (2005) 10 SC 1] and Kailash [(2005) 4 SCC 480] although dealing with the amended provisions of Order 8 Rule 1 of the Code, this Court gave expression to the salubrious principle that procedural enactments ought not to be construed in a manner which would prevent the Court from meeting the ends of justice in different situations.

50. The intention of the legislature in bringing about the various amendments in the Code with effect from 1- 7-2002 were aimed at eliminating the procedural delays in the disposal of civil matters. The amendments effected to Section 26, Order 4 and Order 6 Rule 15, are also geared to achieve such object, but being procedural in nature, they are directory in nature and non-compliance therewith would not automatically render the plaint non est, as has been held by the Division Bench of the Calcutta High Court.

51. In our view, such a stand would be too pedantic and would be contrary to the accepted principles involving interpretation of statutes. Except for the objection taken that the plaint had not been accompanied by an affidavit in support of the pleadings, it is nobody's case that the plaint had not been otherwise verified in keeping with the unamended provisions of the Code and Rule 1 of Chapter 7 of the Original Side Rules. In fact, as has been submitted at the Bar, the plaint was accepted, after due scrutiny and duly registered and only during the hearing of the appeal was such an objection raised.

54. We have, therefore, no hesitation in holding that the Division Bench of the Calcutta High Court took a view which is neither supported by the provisions of the Original Side Rules or the Code nor by the various decisions of this Court on the subject. The views expressed by the Calcutta High Court, being contrary to the established legal position, must give way and are hereby set aside."

37. It is, thus, necessary to bear in mind the distinction between the procedural requirements that can be cured and those defects that are so fundamental that the application cannot be considered as an application under Section 34 of the A&C Act, at all.

38. In the facts of the present case, the application filed on 23.01.2019 was not an application assailing the impugned award. That filing was clearly non est. Similarly, as the application filed on 04.02.2019 also related to another matter, which could not be considered as an application assailing the impugned award. The filing on 22.02.2019 was only 10 pages of an Index. This too could not be construed as an application; however, the application filed on 20.02.2019 and 23.02.2019 cannot be construed to be non est.

39. The defects as noted by the Registry in the filing log relating to the application filed on 20.02.2019 reads as under: -

"TOTAL 6313 PAGES FILED. CAVEAT REPORT BE OBTAINED. COURT FEE BE PAID. AFFIDAVITS NOT ATTESTED NOT SIGNED. PLEASE CORRECT THE BOOKMARKING. VOLUMNS OF DOUCMENTS BE MADE. IN ADDITION TO THE E-FILING, IT IS MANDANTORY TO FILE HARD COPIES OF THE FRESH MATTERS FILED UNDER SECTION 9, 11 AND 34 OF THE ARB. ACT. 1996 WITH EFFECT FROM 22.10.2018. ORIENTATION OF DOCUMENTS BE CORRECT. PLEASE CORRECT THE BOOKMAKRING. ALL INDEXES BE PAGINATED."

40. It is relevant to note that the affidavits accompanying the application filed on 20.02.2019 were signed but not attested and to that extent, the defects as pointed out are not accurate. It is clear from the above, that none of the defects are fundamental as to render the application as non est in the eyes of law. All the defects, as pointed out, are curable defects. It is settled law that any defect in an affidavit supporting pleadings can be cured. It is seen from the record that the filing was also accompanied by an executed vakalatnama, however, the same was not stamped. It is also settled law that filing of a court fee is necessary, however, the defect in not filing the court fee along with the application can be cured. In view of above, we are unable to accept that the application, as filed on 20.02.2019 or thereafter on 23.02.2019, was non est.

41. We may also add that in given cases there may be a multitude of defects. Each of the defects considered separately may be insufficient to render the filing as non est. However, if these defects are considered cumulatively, it may lead to the conclusion that the filing is non est. In order to consider the question whether a filing is non est, the court must address the question whether the application, as filed, is intelligible, its filing has been authorised; it is accompanied by an award; and the contents set out the material particulars including the names of the parties and the grounds for impugning the award.

42. In the given facts, the first question - whether the application filed on 20.02.2019 and 23.02.2019 can be considered as non est - is answered in the negative.

Comparative Advertising & Disparagement : Delhi High Court

Justice Prathiba M. Singh, Delhi High Court

Justice Prathiba M. Singh of the Delhi High Court has recently in Zydus Wellness Products Ltd. v. Dabur India Ltd. (Neutral Citation: 2022/DHC/005793) has examined the law of disparagement in relation to comparative advertising. The Court has examined the leading authorities on the subject and has held that the intent and storyline of the advertisement has to be seen along with the intention to denigrate the product of a competitor. The relevant excerpts from the judgment are reproduced hereunder:

34. The term 'comparative advertising' has been defined in Article 2 of the Advertising Directive of the EEC as "any advertising which explicitly or by implication identifies a competitor or goods or services offered by a competitor". This definition has been affirmed and relied upon by a ld. Single Judge of this Court in Havells India Ltd. v. Amritanshu Khaitan MIPR 2015(1) 0295. In the case of Godrej Sara Lee Ltd. v. Reckitt Benckiser (I) Ltd. 2006 (36) PTC 307 (Del.) a ld. Single Judge of this Court has defined comparative advertising as an advertisement where a party advertises its goods or services by comparing them with the goods and services of another party. This is generally done by either projecting that the advertiser's product is of the same or superior quality to that of the compared product or by denigrating the quality of the compared product.

35. Thus, there has to be either express or implied reference to a competitor or its goods or a product category. A mere fleeting allusion to some unidentifiable product or product category cannot constitute `comparative advertising'. For an advertisement to be classified as comparative advertisement, there ought to be some attributes of a product which are depicted in the commercial such as the container, coloured packaging, mark, logo identifying the Plaintiff's product directly or indirectly. Even if such elements are absent, for the Plaintiff to claim generic disparagement, there ought to be some indicators of identification of the product category at least.

36. In the case at hand, the glass which is shown in the hand of the mother giving the generic orange drink is not identifiable in any manner with the Plaintiff or even with an orange energy drink. It could even be an orange soft drink, orange crush, orange squash, orange mocktail, orange juice, etc., Even on careful repeated watching of the impugned TVC by the Court, it is not clear as to what is the drink being stirred in the glass. It seems to be an orange-coloured drink which is put into a transparent glass and nothing more. However, in the conversation between the mothers after the race finishes, the category of the generic product being depicted has some reference when one of the mothers asks "Both of them drank the same orange glucose then how did your daughter win so easily?" Thus, the impugned TVC identifies 'orange glucose' as the product category towards which the advertisement in question is directed. Therefore, the impugned TVC can be classified as 'comparative advertising' to the broad orange glucose product category.

37. In view of this finding, the next question that needs to be probed by the Court is whether the impugned advertisement is disparaging in nature. For the purpose of examining disparagement, comparative advertising can be categorised in the following categories:

i. Where there is a direct comparison with a competitor's product. ii. Where there is a comparison with a specific product which can be deciphered due to some references such as a similar mark, a similar logo, similar packaging, similar container, etc. iii. Comparison with a product of related category with no direct reference.

iv. Where there is a general comparison without an identified product category as a whole.

38. Numerous decisions relating to comparative advertising and disparagement have been cited by the parties. Broad principles have been laid down repeatedly in these decisions. Principles of comparative advertising laid down in these decisions would have to be applied depending upon the category of comparative advertising in which a particular case would fall.

39. Disparagement is an act of belittling someone's goods or services with a remark that is misleading. The law relating to disparaging advertisements is now well settled. It is open for a person to exaggerate and highlight the qualities and features of his own goods, but it is not open for a person to belittle and disparage the goods of another. There is a plethora of judgments which have been cited before this Court by ld. Sr. Counsels for both the parties. In the case of Pepsi Co. v. Hindustan Coca Cola 2003 (27) PTC 305 (Del.) a ld. Division Bench of this Court held that the following factors are required to be considered while deciding the question of disparagement: i. Intent of the commercial; ii. Manner of the commercial; iii. Story line of the commercial and the message sought to be conveyed by the commercial.

40. In Dabur India v. Colortek Meghalaya (2010)167 DLT 278 (DB) the said principles were amplified/ restated by another ld. Division Bench of this Court in the following terms:

i. The intent of the advertisement - this can be understood from its story line and the message sought to be conveyed. ii. The overall effect of the advertisement - does it promote the advertiser's product or does it disparage or denigrate a rival product?

In this context it must be kept in mind that while promoting its product, the advertiser may, while comparing it with a rival or a competing product, make an unfavourable comparison but that might not necessarily affect the story line and message of the advertised product or have that as its overall effect. iii. The manner of advertising - is the comparison by and large truthful or does it falsely denigrate or disparage a rival product? While truthful disparagement is permissible, untruthful disparagement is not permissible.

41. It is on the basis of the above principles that this Court needs to ascertain whether the impugned TVC is disparaging or not. Generic disparagement is recognised as disparagement under the law, however, in almost all cases where generic disparagement has been held to be objectionable there has been some reference or some usage or depiction which has clearly led to the conclusion that it is the aggrieved party's product or the entire product category is being referred to. For example:

• In one of the earliest decisions recognising generic disparagement, Karamchand Appliances Pvt. Ltd. v. Sh. Adhikari Brothers and Ors. 2005 (31) PTC 1 (Del) in the impugned advertisement, the 'All Out Pluggy' device was clearly identifiable. • In Dabur India v. Colgate Palmolive India Ltd. MANU/DE/0657/2004 the advertisement in question explicitly identified the product category 'Lal Dant Manjan' powder. • In Dabur India Limited v. Emami Limited 2004 (75) DRJ 356, the impugned advertisement identified the product 'Chayawanprash' and asks the viewers to "FORGET Chayawanprash IN SUMMERS, EAT Amritprash INSTEAD".

• In Godrej Consumer Products Limited v. Initiative Media Advertising 2012 Vol. 114(4) Bom. LR 2652 in the advertisement, the label / device was clearly recognisable and identifiable as belonging to the Plaintiff therein.

• In Hindustan Unilever Limited v. Gujarat Co-operative Milk Marketing Federation Ltd. MANU/MH/1197/2017 the product, 'Frozen Dessert' was identified in the advertisement. • In Dabur India v. Emami Ltd. 2004 (75) DRJ 356 the entire class of Chayawanprash was identified in the advertisement.

42. It is usual for advertisers and companies marketing and selling products to portray their products as being superior. In the process of depicting superiority, a generic comparison ought to be permitted and creativity cannot be stifled. A television commercial is not to be analysed in a hyper critical manner. A commercial would have to be viewed as a whole from the view of an ordinary consumer or viewer. The message being portrayed in the commercial would have to be seen and if the message is not derogatory, no objection can be raised.

43. In the opinion of the Court, cases where there is a direct comparison and denigration of the competitor's product would fall in a completely different category as against those cases where there are allusions or indirect references. Allegations of disparagement in cases where comparison is alleged with an unrelated category as a whole is also objectionable. However, in the case of generic comparison with a product of related / same category without any direct reference to any competitor, the freedom for advertisers would be greater than those cases falling in other categories. This is because in order to portray a particular product as being superior or better than existing products, a generic comparison highlighting the strength of its own product without launching a negative campaign against its competitors ought to be permissible failing which the strength of the advertisement could itself be considerably diluted. The purpose of advertising any product is for marketing the attributes of that product. Such attributes could be unilateral or relative in a generic manner. It cannot be said that every generic comparison would be referencing to the market leader which would, in the opinion of the Court, be curtailing freedom of advertising to a considerable extent. Mere allusions, in the absence of a decipherable comparison would not be sufficient to make out a case of generic disparagement. An advertiser ought to have the freedom to make advertisements with generic comparison highlighting the features of its own product and if the same is done without an allusion to any market leader, objection cannot be raised unless representation being made is absolutely false or misleading.

44. Viewed from this perspective, the following decisions of the ld. Division Benches of this Court are relevant in the present factual matrix: I. In Dabur India Ltd. v. Colortek Meghalaya Pvt. Ltd. and Ors. (supra), the products concerned were 'GOOD KNIGHT NATURALS' and 'ODOMOS'. There was no overt or direct reference to 'ODOMOS' in the entire commercial. The content of the commercial showed that the competing product was causing rashes, allergy and was sticky, which was a serious depiction. However, the ld. Division Bench held that there was nothing in the advertisement to suggest that the commercial denigrated the products of the Appellant therein. The observation of the ld. Division Bench are as under:

"5. The submission of the Appellant is that its product Odomos is an extremely popular mosquito repellant cream and it enjoys over 80% of the market share all over the country and in some parts of the country it enjoys a 100% market share. The sales of the Appellant's product run into crores of rupees and the advertisement and promotion expenses also run into crores of rupees.

6. It is averred that the commercial of the Respondents' product was telecast on a news channel on 8th October, 2009. We are told that it has appeared on several occasions thereafter. According to the Appellant, the commercial disparages its product and, therefore, the Respondent should be injuncted from further telecasting it. It is submitted that even though there is no direct or overt reference to the Appellant's product, since the Appellant's product enjoys a huge market share, the commercial is obviously targeting it. Serious objection was taken to the suggestion in the commercial that the Appellant's product causes rashes, allergy and is sticky.

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18. On balance, and by way of a conclusion, we feel that notwithstanding the impact that a telecast may have, since commercial speech is protected and an advertisement is commercial speech, an advertiser must be given enough room to play around in (the grey areas) in the advertisement brought out by it. A plaintiff (such as the Appellant before us) ought not to be hyper- sensitive as brought out in Dabur India. This is because market forces, the economic climate, the nature and quality of a product would ultimately be the deciding factors for a consumer to make a choice. It is possible that aggressive or catchy advertising may cause a partial or temporary damage to the plaintiff, but ultimately the consumer would be the final adjudicator to decide what is best for him or her.

19. Having said this, we are of the opinion after having gone through the commercial not only in its text (as reproduced above) but also having watched it on a DVD that there is absolutely nothing to suggest that the product of the Appellant is targeted either overtly or covertly. There is also nothing to suggest that the commercial denigrates or disparages the Appellant's product either overtly or covertly. There is also no hint whatsoever of any malice involved in the commercial in respect of the Appellant's product - indeed, there is no requirement of showing malice.

20. Learned Counsel for the Appellant submitted before us that since his client has over 80% of the market share in the country and a 100% market share in some States, the obvious target of the commercial is the product of the Appellant. In our opinion, this argument cannot be accepted.

The sub-text of this argument is an intention to create a monopoly in the market or to entrench a monopoly that the Appellant claims it already has. If this argument were to be accepted, then no other mosquito repellant cream manufacturer would be able to advertise its product, because in doing so, it would necessarily mean that the Appellant's product is being targeted. All that we are required to ascertain is whether the commercial denigrates the Appellant's product or not. There is nothing in the commercial to suggest a negative content or that there is a disparagement of the Appellant's product. The commercial merely gives the virtues of the product of the Respondents, namely, that it has certain ingredients which perhaps no other mosquito repellant cream has, such as tulsi, lavender and milk protein. While comparing its product with any other product, any advertiser would naturally highlight its positive points but this cannot be negatively construed to mean that there is a disparagement of a rival product. That being so, whether the Appellant's product is targeted or not becomes irrelevant.

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23. Finally, we may mention that Reckitt and Colman of India Ltd. v. M.P. Ramchandran and Anr. 1999 (19) PTC 741 was referred to for the following propositions relating to comparative advertising:

(a) A tradesman is entitled to declare his goods to be best in the world, even though the declaration is untrue.

(b) He can also say that his goods are better than his competitors', even though such statement is untrue.

(c) For the purpose of saying that his goods are the best in the world or his goods are better than his competitors' he can even compare the advantages of his goods over the goods of others.

(d) He however, cannot, while saying that his goods are better than his competitors', say that his competitors' goods are bad. If he says so, he really slanders the goods of his competitors. In other words, he defames his competitors and their goods, which is not permissible.

(e) If there is no defamation to the goods or to the manufacturer of such goods no action lies, but if there is such defamation an action lies and if an action lies for recovery of damages for defamation, then the Court is also competent to grant an order of injunction restraining repetition of such defamation.

These propositions have been accepted by learned Single Judges of this Court in several cases, but in view of the law laid down by the Supreme Court in Tata Press that false, misleading, unfair or deceptive advertising is not protected commercial speech, we are of the opinion that propositions (a) and (b) above and the first part of proposition (c) are not good law. While hyped-up advertising may be permissible, it cannot transgress the grey areas of permissible assertion, and if does so, the advertiser must have some reasonable factual basis for the assertion made. It is not possible, therefore, for anybody to make an off-the-cuff or unsubstantiated claim that his goods are the best in the world or falsely state that his goods are better than that of a rival."

II. In Colgate Palmolive Company and Ors. v. Hindustan Unilever Ltd.

(supra) the competing products were 'COLGATE' & 'PEPSODENT'. In this case, the commercial clearly depicted 'COLGATE' and made a direct comparison with 'PEPSODENT'. Customer's imagination was not needed to see as to in what manner the comparison was being made with what product in the said case. 'PEPSODENT' claimed to have 130% germ attack power in comparison with 'COLGATE'. This was held to be not merely hyperbole and relying upon Lakhanpal National v. M.R.T.P Commission (1989) 3 SCC 251 it was held that the same was an unfair trade practice. The observation of the ld. Division Bench is as under:

"58. In our view, even if, we assume that the representation that Pepsodent is more effective in combating germs, 4 hours after brushing, in comparison with Colgate ST, is correct even then, prima facie, the advertisement would be disparaging as it also conveys the message that Colgate is ineffective and lacks the requisite quality to maintain oral hygiene and combat tooth decay and its usage, as depicted by the Colgate child, would result in the user ending up with a tooth related ailment. As explained in Dabur India Ltd. v. Colortek Meghalaya Pvt. Ltd. & Anr.

(supra) a trader cannot, while saying that his goods are better than his competitors', say that his competitors' goods are bad. If he says so, he really slanders the goods of his competitors. In other words, he defames his competitors and their goods, which is not permissible. In our view, this is precisely what the impugned print advertisement conveys by its advertisement theme and the visual story."

III. The most recent decision of the ld. Division Bench of this Court in Reckitt Benckiser (India) Pvt. Ltd. v. Hindustan Unilever Limited (supra) dealt with a case where toilet cleaners 'HARPIC' and 'DOMEX' were being compared in an advertisement. A perusal of the storyboard in the said case would show that there was a direct reference to 'HARPIC' product and it was suggested that 'HARPIC' does not address the problem of bad odour. The actual 'HARPIC' product was also shown in the said commercial. The commercial also depicted a child who is expressing displeasure by asking "Toilet se badbu nahi aayengi?" to enquire about the bad odour which would emanate if 'HARPIC' is used. In the said decision, the ld. Division Bench has held as under:

"33. On a plain viewing, it is clear that the message sent by the advertiser is that Harpic does not address the problem of bad odour. The astonished expression of the child and his gesture of holding his nose while asking the question whether the toilet will not stink and the mother of the child getting concerned and worried, sends out a clear message that if you use Harpic, the toilet will continue to stink because the mother, who is otherwise regularly using Harpic, has not been able to address the problem of foul odour persisting in their toilet. The latter part of the impugned TVC-1 then shows a toilet bowl with discolouration possibly reflecting bad odour and the voice over saying "Kyoki toilet ki badbu se ladne ke lie DOMEX me hai fresh guard technology". The remaining part of the impugned TVC-1 is about the product Domex and its quality to combat bad odour for a longer period of time.

34. The impugned TVC-1 not only projects a message that Domex fights odour for a longer period of time, it also sends a clear message that Harpic does not address the problem of foul smell that emanates from toilets. The manner in which the impugned TVC-1 is structured, first, sends a message that Harpic only cleans without addressing the problem of bad odour and thereafter, sends the message that whoever chooses Harpic would have to live with their toilets smelling foul. This is a message that disparages Reckitt's product and, in our view, cannot be permitted.

35. The finding of the learned Single Judge that the impugned TVC-1 does not denigrate Reckitt's product is erroneous and cannot be sustained. The latitude available in advertising is wide but does not extend to denigrating the product of one's competitor.

36. By an order dated 01.12.2021 passed by this Court, HUL was restrained from airing the impugned TVC-1. We make the said order absolute. The same shall continue till disposal of the suit."

The facts in Reckitt Benckiser (India) Pvt. Ltd. v. Hindustan Unilever Limited (supra) are clearly distinguishable from the facts the present case as there is no direct comparison with the Plaintiff's product in the case at hand. No image of the Plaintiff's product has been used and the qualities being attributed to 'HARPIC' are also completely derogatory in the said case. Moreover, nowhere in the impugned TVC the Plaintiff's or for that reason any product is being adversely commented upon as was the scenario before the ld. Division Bench. In the impugned TVC, only the features of the Defendant's product are highlighted. Even the ld. Division Bench in Reckitt Benckiser (India) Pvt. Ltd. v. Hindustan Unilever Limited (supra) has highlighted the difference between embellishing one's own product and calling the competitor's products as bad or inferior. The relevant portion of the said judgment reads as under:

24. In a comparative advertisement, it is open for an advertiser to embellish the qualities of its products and its claims but it is not open for him to claim that the goods of his competitors are bad, undesirable or inferior. As an illustration, in a comparative advertisement, it is open for an advertiser to say his goods are of a good quality but it is not open for an advertiser to send a message that the quality of the goods of his competitor is bad. As observed by the Chancery Division in the case of De Beers Abrasive Products Ltd. and Others v. International General Electric Co. of New York Ltd. and Another, it is open for a person to claim that he is the best seller in the world or a best seller in the street but it is not open for him to denigrate the services of another. Thus, it is not open for an advertiser to say "my goods are better than X's, because X's are absolutely rubbish". Puffery and Hyperbole to some extent have an element of untruthfulness. If a tailoring shop claims that he provides the best tailored suits in the city, the same may be untruthful. However, it is apparent to anyone who reads or hears this statement that it is puffery. Such statements or taglines are neither held out nor understood as a representation of unimpeachable fact.

It is obvious that the person availing services from the tailoring shop, as mentioned above, cannot maintain an action of misrepresentation. However, when it comes to statements made by an advertiser in respect of the goods of his competitors and other persons, the latitude available to an advertiser is restricted. Whilst it is open for the tailoring shop to state that it provides the best tailored suit in the city; it is not open for it to advertise that the other tailoring shops in the street lack the necessary skill and their suits are ill tailored.

25. A comparative advertisement would always involve the statement that the goods of the advertiser are better in some aspects than that of the competitor. But there is line that an advertiser cannot cross. He cannot disparage or defame the goods of his competitor.

26. There may be cases where certain features of an advertiser's product may be demonstrably better than the features of his competitor. In such cases, it is permissible for an advertiser to advertise and highlight these features. The message must clearly be to highlight the superior features of his product while ensuring that the product of his competitor is not disparaged or defamed.

45. An analysis of the above three Division Bench judgments of this Court shows that in the case of a commercial which has no direct or overt reference to a competitor's product, there cannot be a presumption that the product of the Plaintiff is being targeted. The ld. Division Bench observes in Dabur India Ltd. v Colortek (supra) that where there is no overt or covert reference, merely on the basis of market share it cannot be presumed that the advertisement is directed towards the market leader. In the opinion of this Court, the reasoning and rationale in Dabur India Ltd. v. Colortek (Supra) fully applies to the facts of the present case. In fact, in Dabur India Ltd. v. Colortek (Supra) the allegation of qualities being attributed to the competitor's product of causing rashes, allergy and stickiness were far more derogatory than the portrayal in the impugned TVC.

46. Applying the ratio of the judgments discussed above, this Court is of the view that the impugned TVC merely highlights the qualities of the Defendant's product and it does not disparage any orange glucose powder drink. Disparagement cannot be a far-fetched inference. In the impugned commercial, the mother asks a probing question as to how when her daughter drank the same orange glucose, the other lady's daughter won the race. This is being interpreted by the Plaintiff as a comparison as it leads to an inference that 'DABUR GLUCOPLUS-C ORANGE' is more effective, hence, superior and the other products including the Plaintiff's product are ineffective, hence, inferior - thus disparaging. The Plaintiff's case is that the gestures of disappointment and frustration on the face of the mother whose daughter lost the race is sufficient to infer disparagement. This, in the opinion of the Court, is far-fetched. It would not be proper for the Court to flip the coin to conclude - 'mine is better' as 'yours is bad'. The comparison being made in the impugned TVC might be unfavourable to the Plaintiff, but it cannot be held to be disparaging. The intent and the overall effect of the advertisement in question seems to be to promote the Defendant's product and not to denigrate the Plaintiff's or any other manufacturer's product.

47. The next argument of the Plaintiff that there is a serious misrepresentation of fact also does not hold ground. The admitted position is that the Defendant's product does have 25% more glucose than the  Plaintiff's product. The impugned advertisement is by and large truthful and there is no falsity involved. Therefore, there is no serious misrepresentation of fact on part of the Defendant in the impugned TVC. The argument of the Plaintiff that more glucose does not translate into higher energy also does not hold ground for two reasons. First, the storyboard of the advertisement merely shows "25% more glucose in every sip". This is not misrepresentative considering the contents of the Defendant's drink. Second, as far as the claims of 'instant energy' is concerned, the Plaintiff's own product packaging, and its advertisements which have been placed on record, show that the Plaintiff's own stand is that glucose gives instant energy. The Plaintiff cannot take a different stand for its own product and Defendant's product. Moreover, the storyboard shows that in the impugned TVC it has been said "this has 25% more glucose than your glucose powder, which gives more instant energy + 2 times micronutrients", however, it was brought to the attention of the Court that the impugned TVC, which is Bengali, does not use the phrase 'gives more instant energy' and merely claims that it 'gives instant energy'. Thus, the overall message sought to be conveyed by the Defendant vide the impugned TVC is that its product has 25% more glucose which gives instant energy.

48. In the absence of any disparaging uttering, still or image in the impugned TVC, this Court is unable to arrive at a conclusion merely on the basis of the market share of the Plaintiff that the Plaintiff's product is being disparaged or there is any generic disparagement. The impugned TVC when viewed from the perspective of an ordinary viewer does not give the impression of denigration or disparagement but one where the Defendant's product is being self-promoted. Moreover, the intelligence of an ordinary viewer also ought not to be ignored while judging such commercials. The ld. Division Bench in Dabur India v. Colortek (supra) has pointed out that market forces, nature and quality of the products would ultimately be the deciding factors for a consumer to make a choice. It cannot be ignored that the consumers are cognizant of the fact that advertisements are one sided commentary put out by the manufacturers and sellers for the promotion of their own products and are inherently biased in nature. While deciding a disparagement suit, the overall impact of the commercial has to be considered and in the absence of any derogatory remarks, mere use of some expressions cannot lead to an injunction.

Judgment / Award Debtor not entitled to deduct TDS on Awarded Amount : Delhi High Court Rules

Justice Vibhu Bakhru
Judge, Delhi High Court

The Delhi High Court recently in Voith Hydro Ltd. & Ors. v. NTPC Ltd. [OMP (ENF.) (COMM.) 64/2018] decided an interesting question as to whether a judgment / award debtor is entitled to deduct TDS on the amount awarded by an arbitral tribunal, and whether the deposit of such amounts with the Income Tax Authorities constituted a discharge of their debts under the award. While holding that no tax is to be deducted on the awarded amounts, the Court held as under:

"24. As is apparent from the above, the following three principal questions fall for consideration before this Court:

(i) Whether there is any binding agreement between the parties whereby they have agreed that the amounts awarded in foreign currency would be computed at the exchange rate as prevalent on 15.09.2017? If not, the exchange rate to be applied for discharge of the amounts awarded in foreign currency.

(ii) Whether it was open for NTPC to deduct TDS on the awarded amounts and whether the deduction of the said amount and deposit of the same with the Income Tax Authorities constitutes a discharge of the amounts awarded to the aforesaid extent?

(iii) Whether Voith is entitled to charges for extending the Bank Guarantees, as claimed?

120 day Statutory Period for filing Written Statement 'Mandatory' under the Commercial Courts Act: Supreme Court Holds

(Justice Nariman (Left) and Justice Saran (Right)
Hon'ble Judges, Supreme Court of India

A bench of Justice Nariman and Justice Saran of the Hon'ble Supreme Court has held in SCG Contracts India P. Ltd. v. K.S. Chamankar Infrastructure P. Ltd. that the provisions of Commercial Courts, Commercial Division and Commercial Appellate Division of High Courts Act, 2015 with regard to filing of written statements within 120 days from date of service of summons is mandatory and any delay beyond 120 days cannot be condoned by the Court. While holding so, the bench observed as under:

8) The Commercial Courts, Commercial Division and Commercial Appellate Division of High Courts Act, 2015 came into force on 23.10.2015 bringing in their wake certain amendments to the Code of Civil Procedure. In Order V, Rule 1, sub-rule (1), for the second proviso, the following proviso was substituted:

“Provided further that where the defendant fails to file the written statement within the said period of thirty days, he shall be allowed to file the written statement on such other days, as may be specified by the Court, for reasons to be recorded in writing and on payment of such costs as the court deems fit, but which shall not be later than one hundred twenty days from the date of service of summons and on expiry of one hundred and twenty days from the date of service of summons, the defendant shall forfeit the right to file the written statement and the court shall not allow the written statement to be taken on record.” Equally, in Order VIII Rule 1, a new proviso was substituted as follows:

“Provided that where the defendant fails to file the written statement within the said period of thirty days, he shall be allowed to file the written statement on such other day, as may be specified by the court, for reasons to be recorded in writing and on payment of such costs as the Court deems fit, but which shall not be later than one hundred and twenty days from the date of service of summons and on expiry of one hundred and twenty days from the date of service of summons, the defendant shall forfeit the right to file the written statement and the court shall not allow the written statement to be taken on record.” This was re-emphasized by re-inserting yet another proviso in Order VIII Rule 10 CPC, which reads as under:-

“Procedure when party fails to present written statement called for by Court.- Where any party from whom a written statement is required under Rule 1 or Rule 9 fails to present the same within the time permitted or fixed by the Court, as the case may be, the Court shall pronounce judgment against him, or make such order in relation to the suit as it thinks fit and on pronouncement of such judgment a decree shall be drawn up.

Provided further that no Court shall make an order to extend the time provided under Rule 1 of this Order for filing of the written statement.” A perusal of these provisions would show that ordinarily a written statement is to be filed within a period of 30 days.

However, grace period of a further 90 days is granted which the Court may employ for reasons to be recorded in writing and payment of such costs as it deems fit to allow such written statement to come on record. What is of great importance is the fact that beyond 120 days from the date of service of summons, the defendant shall forfeit the right to file the written statement and the Court shall not allow the written statement to be taken on record. This is further buttressed by the proviso in Order VIII Rule 10 also adding that the Court has no further power to extend the time beyond this period of 120 days.

9) In Bihar Rajya Bhumi Vikas Bank Samiti (supra), a question was raised as to whether Section 34(5)of the Arbitration and Conciliation Act, 1996, inserted by Amending Act 3 of 2016 is mandatory or directory. In para 11 of the said judgment, this Court referred to Kailash vs. Nanhku, (2005) 4 SCC 480 referring to the text of Order 8 Rule 1 as it stood pre the amendment made by the Commercial Courts Act. It also referred to the Salem Advocate Bar Association vs. Union of India, (2005) 6 SCC 344, which, like the Kailash judgment, held that the mere expression “shall” in Order 8 Rule 1 would not make the provision mandatory. This Court then went on to discuss in para 17 State vs. N.S. Gnaneswaran, (2013) 3 SCC 594 in which Section 154(2) of the Code of Criminal Procedure was held to be directory inasmuch as no consequence was provided if the Section was breached. In para 22 by way of contrast to Section 34, Section 29-A of the Arbitration Act was set out. This Court then noted in para 23 as under:

“23. It will be seen from this provision that, unlike Sections 34(5) and (6), if an award is made beyond the stipulated or extended period contained in the section, the consequence of the mandate of the arbitrator being terminated is expressly provided. This provision is in stark contrast to Sections 34(5) and (6) where, as has been stated hereinabove, if the period for deciding the application under Section 34 has elapsed, no consequence is provided. This is one more indicator that the same Amendment Act, when it provided time periods in different situations, did so intending different consequences.”

10) Several High Court judgments on the amended Order VIII Rule 1 have now held that given the consequence of non-filing of written statement, the amended provisions of the CPC will have to be held to be mandatory. [See Oku Tech Private Limited vs. Sangeet Agarwal & Ors. by a learned Single Judge of the Delhi High Court dated 11.08.2016 in CS (OS) No. 3390/2015 as followed by several other judgments including a judgment of the Delhi High Court in Maja Cosmetics vs. Oasis Commercial Pvt. Ltd. 2018 SCC Online Del 6698.

11) We are of the view that the view taken by the Delhi High Court in these judgments is correct in view of the fact that the consequence of forfeiting a right to file the written statement; non-extension of any further time; and the fact that the Court shall not allow the written statement to be taken on record all points to the fact that the earlier law on Order VIII Rule 1 on the filing of written statement underOrder VIII Rule 1 has now been set at naught.

12) However, learned counsel appearing for the respondents relied strongly upon the judgment in Bhanu Kumar Jain (supra) and Shaikh Salim Haji Abdul Khayumsab (supra) and, in particular, paras 22 and 27 of the first judgment and paras 4 & 19 of the second judgment.

13) We are of the view that since both these judgments dealt with the pre-amendment position, they would not be of any direct reliance insofar as the facts of the present case is concerned.

14) Learned counsel appearing for the respondents also relied upon R.K. Roja vs. U.S. Rayudu and Another (supra) for the proposition that the defendant is entitled to file an application for rejection of plaint under Order VII Rule 11 before filing his written statement. We are of the view that this judgment cannot be read in the manner sought for by the learned counsel appearing on behalf of the respondents. Order VII Rule 11 proceedings are independent of the filing of a written statement once a suit has been filed. In fact, para 6 of that judgment records “However, we may hasten to add that the liberty to file an application for rejection under Order 7 Rule 11 CPC cannot be made as a ruse for retrieving the lost opportunity to file the written statement”.

15) Learned counsel appearing for the respondents then argued that it cannot be assumed that the learned Single Judge did not know about these amendments when he passed the first impugned order dated 05.12.2017. We do not wish to enter upon this speculative arena. He then argued that since this judgment permitted him to file the written statement beyond 120 days, it was an act of the Court which should prejudice no man. This doctrine cannot be used when the res is not yet judicata. The 05.12.2017 order is res sub judice inasmuch as its correctness has been challenged before us.

16) Learned counsel for the respondents then strongly relied upon the inherent powers of the Court to state that, in any case, a procedural provision such as contained in the amendment, which may lead to unjust consequences can always, in the facts of a given case, be ignored where such unjust consequences follow, as in the facts of the present case. We are again of the view that this argument has also no legs to stand on, given the judgment of this Court in Manohar Lal Chopra vs. Rai Bahadur Rao Raja Seth Hiralal, [1962] Suppl 1 SCR 450. In this judgment, the Court held:

“The suit at Indore which had been instituted later, could be stayed in view of s.10 of the Code. The provisions of that section are clear, definite and mandatory. A Court in which a subsequent suit has been filed is prohibited from proceeding with the trial of that suit in certain specified circumstances.

When there is a special provision in the Code of Civil Procedure for dealing with the contingencies of two such suits being instituted, recourse to the inherent powers under s.151 is not justified...” (at page 470) Clearly, the clear, definite and mandatory provisions of Order V read with Order VIII Rule 1 and 10 cannot be circumvented by recourse to the inherent power under Section 151 to do the opposite of what is stated therein.

17) Clearly, therefore, the 05.12.2017 order which applies in the face of the amendments made to the Civil Procedure Code cannot be sustained. When we come to the second order dated 24.09.2019, the only reason for this order is that 05.12.2017 has attained finality.

18) Factually speaking, this is not correct as a Special Leave Petition from the said order has been filed. Even otherwise, this Court in Canara Bank vs. N.G. Subbaraya Setty and Anr. (supra) has held (page 3414):

“(ii) An issue of law which arises between the same parties in a subsequent suit or proceeding is not res judicata if, by an erroneous decision given on a statutory prohibition in the former suit or proceeding, the statutory prohibition is not given effect to. This is despite the fact that the matter in issue between the parties may be the same as that directly and substantially in issue in the previous suit or proceeding. This is for the reason that in such cases, the rights of the parties are not the only matter for consideration (as is the case of an erroneous interpretation of a statute inter parties), as the public policy contained in the statutory prohibition cannot be set at naught.

This is for the same reason as that contained in matters which pertain to issues of law that raise jurisdictional questions. We have seen how, in Natraj Studios (AIR 1981 SC 537) (supra), it is the public policy of the statutory prohibition contained in Section 28 of the Bombay Rent Act that has to be given effect to. Likewise, the public policy contained in other statutory prohibitions, which need not necessarily go to jurisdiction of a Court, must equally be given effect to, as otherwise special principles of law are fastened upon parties when special considerations relating to public policy mandate that this cannot be done.” The aforesaid para applies on all fours to the facts of the present case, as even assuming that the 05.12.2017 order is final, res judicata cannot stand in the way of an erroneous interpretation of a statutory prohibition. The present is one such case. Therefore, the second order must also be set aside.