Delhi HC Orders Korean Firm Ace To Deposit Rs 290 Crores | Says No Safeguards Would Defeat Patent Decree | Upholds Plaintiff’s Right Under Section 151 CPC
Sanchayita Lahkar
The High Court of Delhi Single Bench of Justice Saurabh Banerjee directed the defendant, a foreign entity, to furnish a bank guarantee or fixed deposit equivalent to Rs. 290 crores. The directive followed the plaintiff’s application under Section 151 of the Code of Civil Procedure, citing apprehensions regarding enforceability of a potential decree due to the defendant’s foreign origin and depreciating financial status. The court held that to secure the plaintiff’s interests, a safeguard was essential given the circumstances. The court found a prima facie case in favour of the plaintiff and stated that an interim measure was warranted to prevent potential frustration of the decree. This direction was passed despite prior deposits of approximately Rs. 70 crores by the defendant under earlier orders. The court stated that "unless adequate safeguards are put in place, at this stage, the very purpose/interest of justice shall be rendered otiose."
The plaintiff instituted a suit seeking a permanent injunction to restrain the defendants from infringing on its Indian Patent No. 240893. The plaintiff is a Canadian company that supplies cellular base station products. The defendants include a South Korean parent company, a Hong Kong-based entity, and two Indian subsidiaries.
An earlier application for ad interim injunction (I.A. 1522/2018) under Order XXXIX Rules 1 and 2 CPC was disposed of via order dated 12.07.2019. The court then held that due to the defendants having no assets in India and a prima facie finding of infringement, a bank guarantee of Rs. 40 crores for pre-suit sales and Rs. 14.5 crores for sales during the suit was required. Total export sales were approximately Rs. 437.95 crores (pre-suit) and Rs. 148.47 crores (pendente lite).
The defendants filed an appeal against this order before a Division Bench (FAO(OS)(COMM) 186/2019), also seeking stay through CM APPL. 35213/2019. The Division Bench did not interfere with the original order and observed the importance of protecting the plaintiff’s interests as the defendants’ lacked assets in India.
Subsequently, the Supreme Court also upheld the decision, observing that "there was absolutely no necessity" for the Division Bench to interfere with the well-reasoned Single Judge's order, given the foreign jurisdiction of the defendants.
Further, by order dated 10.04.2023, the Division Bench allowed the defendants to seek expert examination of the antenna model before the Trial Court. It also permitted submission of a bank guarantee instead of a cash deposit.
The suit is currently at the stage of evidence recording before the Joint Registrar.
The plaintiff later filed I.A. 36658/2024 under Section 151 CPC, seeking direction to the defendants to deposit a further bank guarantee, contending that Defendant No. 1 had lost over 64.90% of its share value and lacked assets in India. The plaintiff stated that the damages were estimated at Rs. 1160 crores (approximately USD 140 million), and the defendants’ affidavit (dated 12.11.2024) disclosed limited Indian assets: cash of Rs. 5.68 crores, machinery worth Rs. 4–5 crores, and land worth Rs. 18 crores.
The plaintiff also referred to a prior decree for Rs. 217 crores in a similar suit (Communication Components Antenna Inc. v. Mobi Antenna Technologies), where enforcement failed due to the defendant being a China-based entity. It was argued that since South Korea has no reciprocal enforcement arrangement with India under Section 44A CPC, any Indian decree might be unenforceable there.
The plaintiff invoked Article 217 of the Korean Civil Procedure Act, which sets conditions for recognition of foreign judgments, and argued that in absence of reciprocity, the decree may have no effect.
The plaintiff argued that relief under Order XXXVIII Rule 5 CPC was inapplicable as no attachable assets existed in India. Instead, Section 151 CPC had to be invoked.
The defendants opposed, stating South Korean law permits recognition of foreign judgments, and that they had deposited Rs. 70 crores already. They argued no technical infringement had been proven and referred to their willingness to cooperate in expert analysis. They maintained a healthy financial condition and contended that claims of Rs. 1160 crores had not yet been adjudicated.
The defendants cited Deoraj v. State of Maharashtra to argue that final relief in the guise of interim orders is only permitted in rare cases. The defendant also stated that operations had stopped due to lack of orders, not evasion.
The court observed that under Section 151 CPC, it is empowered to make orders necessary for the ends of justice. It stated "the whole issue is revolving around the factum of depositing 25% of the damages by the defendants, as claimed by the plaintiff, to meet the ends of justice under Section 151 of the CPC."
"Though, Section 151 of the CPC gives sufficient and wide discretionary powers to the Court to exercise, however, there is no qualm that a general provision of law like Section 151 of the CPC is to be exercised sparingly by the Court, with caution and circumspection."
The court noted that "exercising such powers is/ are dependent upon the situation when/ where it is felt appropriate and when/ where the situation so demands, especially, to meet the ends of justice and where it is pricking the conscience of the Court."
Citing Deoraj, the court held: "In such cases the availability of a very strong prima facie case of a standard much higher than just prima facie case, the considerations of balance of convenience and irreparable injury forcefully tilting the balance... may persuade the Court to grant an interim relief."
The court also cited the Supreme Court’s decision in Rahul S. Shah v. Jinendra Kumar Gandhi, stating: "The Court may further, at any stage, in appropriate cases during the pendency of suit, using powers Under Section 151 Code of Civil Procedure, demand security to ensure satisfaction of any decree."
The court considered the defendants’ foreign origin, declining financial position, and the absence of Indian assets as critical. It referred to Nokia Technologies v. Oppo Mobile, stating: "In any event, this Court is of the view that in exercise of its inherent power under Section 151 CPC as an interim measure, it can pass a pro-tem order for balancing the equities with a view to aid a party."
It also cited Rxprism Health Systems v. Canva Pty Ltd., where deposit of Rs. 50 lakhs was directed in a similar scenario involving a foreign defendant.
The court found that "Order XXXVIII Rule 5 CPC... cannot come to the aid of the plaintiff" since attachable property was absent.
On Article 217 of the Korean Civil Procedure Act, the court noted that in absence of reciprocity, a foreign decree would lack enforceability in South Korea. "There would, thus, be no sanctity to a decree passed by a Court of Law in India..."
"As such, this Court is of the view that a prima facie case has been made out in favour of the plaintiff and against the defendants with the balance of convenience in its favour..."
The court directed as follows: "The defendant no.1 is hereby directed to furnish and deposit an amount equivalent to 25% of the damages of Rs.1160 Crores (approximately USD 140 Million) as claimed by the plaintiff i.e. Rs.290 Crores, in addition to all the monies already deposited by the defendant no.1 in pursuance to previous order(s) of the Court(s) from time to time, either by way of a Bank Guarantee issued by a scheduled commercial bank or in the form of a Fixed Deposit Receipt in the name of the Registrar General of this Court within a period of four weeks from today."
"Accordingly, the present application is allowed and disposed of."
Advocates Representing the Parties:
For the Plaintiff: Mr. J. Sai Deepak, Senior Advocate with Mr. Mohit Goel, Mr. Sidhant Goel, Mr. Deepankar Mishra, Mr. Aditya Goel, and Mr. Avinash K. Sharma, Advocates
For the Defendants: Mr. Suraj Kumar Singh, Mr. Bharat Sing, and Mr. Abhay Singh, Advocates
Case Title: Communication Components Antenna Inc. v. Ace Technologies Corp. & Ors.
Neutral Citation: 2025: DHC:5107
Case Number: CS(COMM) 1222/2018; I.A. 36658/2024
Bench: Justice Saurabh Banerjee
