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The Superon Case: Delhi High Court Reopens the Debate on Scope of Proviso to Section 13(1A) of the C

[Pinak Parikh is an Associate at Singhi & Co.]


In D&H India Limited v. Superon Schweisstechnik India Limited (Superon), the commercial appellate division of the Delhi High Court observed that Section 13(1A) of the Commercial Courts Act 2015 (Act) allows appeals to be preferred against all judgments and orders of the commercial division of the High Court to the commercial appellate division of the High Court. The proviso to the said sub-section merely clarifies that appeal shall lie against orders specified under Order XLIII of the Code of Civil Procedure 1908 (CPC). Concomitantly, the court observed that appeal under Section 13(1A) of the Act should lie against the order passed by the single judge under Rule 5 of Chapter II of the Delhi High Court Rules (Original Side), 2018 (Rules) allowing amendment of the plaint under Order VI Rule 17 of the CPC. The court, by way of the present decision, has resurrected the debate on whether an appeal would lie against every order or judgment of a commercial division of the High Court or only against those orders as specified under the proviso to Section 13(1A) of the Act. In this post, the author will critically analyze the judgment.

Background

A commercial suit was instituted by Superon Schweisstechnik India Limited (Respondent) against D&H India Limited (Appellant) seeking a permanent injunction against the Appellant from infringing the trademark 'SUPERON' owned by the Respondent. The Respondent was incorporated in 2004 and had been using the trademark 'SUPERON' since then. On the other hand, the Appellant contended that it was the prior user of the trademark 'SUPERCROME' since 1 April 2001. Further, it was contended that the Appellant was using other trademarks involving the prefix 'SUPER' since 1992.

As against this, the Respondent filed an interim application under Order VI Rule 17 of the CPC seeking to amend its plaint. The aforesaid interim application for amendment of the plaint was allowed by the joint registrar under Rule 3(2) of the Rules read with Order VI Rule 17 of the CPC vide order dated 25 April 2019. The Appellant appealed against the said order of the joint registrar before a single judge sitting in the commercial division of the court under Rule 5 of the Rules, which was subsequently dismissed vide order dated 3 July 2019, and the order of the joint registrar was upheld. Thereafter, the Appellant preferred an appeal under Section 13(1A) of the Act assailing the order of the single judge passed under Rule 5 of the Rules.

Issue

The issue relevant to the purpose of the present post is whether the appeal filed by the Appellant against the order of the single judge under Section 13 (1A) of the Act is maintainable given the proviso to the said provision.

Decision of the Delhi High Court

The court observed that order passed by the single judge under Rule 5 of the Rules stands on a different footing from an order passed under any provisions of the CPC. Further, the court held that the order allowing amendment of the plaint is not passed under Order VI Rule 17 of the CPC but under Rule 5 of the Rules and is, therefore, appealable under Section 13(1A) of the Act. The High Court's decision to allow the appeal under Section 13(1A) of the Act was premised on the following reasons:

The proviso to Section 13(1A) of the Act is an enabling rather than disabling provision, and it cannot be read as limiting the right of appeal conferred by Section 13(1A) of the Act. The proviso cannot be interpreted to mean that appeal will lie only against orders specifically enumerated under Order XLIII of the CPC and Section 37 of the Arbitration and Conciliation Act 1996 (A&C Act), and such interpretation would amount to rewriting the proviso. Thus, an appeal would lie against all judgments and orders of the High Court's commercial division. The restraint "appeal shall lie from such orders… that are specifically enumerated under Order XLIII of the CPC…" contained in the proviso to Section 13(1A) will apply to cases where the order has been passed under any provisions of the CPC. Further, the order passed by the joint registrar allowing amendment of the plaint cannot be considered as an order passed under Order VI Rule 17 of the CPC. Thus, the said proviso cannot be read as limiting the scope of appeal especially, when the order has not been passed under any provisions of the CPC but under Rule 5 of the Rules. The Rules have their own identity different from the CPC, and it will, therefore, not be appropriate to apply the restraints contained in section 104 of the CPC or Order XLIII of the CPC, so far as an appeal under Section 13(1A) is concerned, to the order passed under Rule 5 of the Rules.

Analysis

The Delhi High Court, in Superon, seems to have ignored and misinterpreted the precedent set by the Supreme Court on the aspect of the scope of the proviso. The Supreme Court in Kandla Export Corporation and Another v. OCI Corporation and Another (Kandla Export) categorically held that, in light of proviso to Section 13(1A) of the Act, the orders that are not explicitly mentioned in Order XLIII of the CPC would, therefore, be not appealable and, appeals would lie against such orders as are mentioned in Section 37 of the A&C Act and from no others. Thus, the Delhi High Court, in the present case, has completely ignored the decision of the Supreme Court in Kandla Export by holding that appeal under Section 13(1A) will lie against every judgment and order of the commercial division of the High Court, and the proviso to Section 13(1A) merely clarifies that appeal shall lie against orders enumerated under Order XLIII of the CPC.

While dealing with the aspect of the difference between orders passed under the Rules and any of the provisions of the CPC seeking the same relief, the court has misinterpreted the previous decision of the Delhi High Court in Samsung Leasing Limited & Ors v. Samsung Electronics Co. Ltd & Anr (Samsung). In Samsung, the court dealt with an appeal filed against an order of the single judge, allowing the application for amendment under Order VI Rule 17 of the CPC, as against the present case where an order allowing an application for amendment of the plaint was passed by the joint registrar under Rule 3(2) of the Rules (and thereafter upheld by the single judge under Rule 5 of the Rules). In Samsung, the court observed that the orders allowing amendment under Order VI Rule 17 of the CPC were not specifically enumerated under Order XLIII of the CPC and, therefore, not appealable in view of the proviso to Section 13(1A) of the Act. The court, by distinguishing Samsung, has created an artificial distinction between two orders seeking the same relief (i.e., amendment of the plaint) but distinguished by authority adjudicating the application. This has led to an ambiguous interpretation of Samsung, which has clearly observed that in view of the proviso to Section 13(1A) of the Act, appeals under Section 13(1A) shall not lie against orders passed under Order VI Rule 17 of the CPC, irrespective of the authority adjudicating the application.

In Superon, the court, by holding that order passed by the single judge under Rule 5 of the Rules is appealable under Section 13(1A) of the Act has led to an anomalous situation. On the one hand, if, like the present case, an application for amendment of the plaint under Order VI Rule 17 of the CPC is adjudicated by the joint registrar under Rule 3(2) of the Rules, either party can challenge the order of the joint registrar (first before a single judge under Rule 5 of the Rules and then before the commercial appellate division under Section 13(1A) of the Act). On the flip side, if an application for amendment of the plaint under Order VI Rule 17 of the CPC is adjudicated by the single judge, the party would be prevented from filing an appeal under Section 13(1A) of the Act in light of the decision in Samsung. Therefore, in Superon, the court has created an arbitrary distinction between two applications filed under the same provision for the same relief on the basis of whether it has been decided by a joint registrar or a single judge.

Conclusion

The decision of the court in the present case militates against the objectives sought to be achieved by the Act i.e., inter alia speedy disposal of the commercial disputes. In the present case, the arbitrary distinction created on the basis of whether the application is adjudicated by a joint registrar or a single judge has created an extra right of appeal in case of application adjudicated by the joint registrar, thereby frustrating the intent of the Act. In commercial disputes, the courts should try to minimize the number of appeals to dispose of proceedings expeditiously.

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