Kiran Raj

The Supreme Court Division Bench of Justice Sanjay Kumar and Justice Alok Aradhe set aside the Himachal Pradesh High Court’s rejection of a commercial suit for non-compliance with Section 12A of the Commercial Courts Act, 2015, holding that the requirement of pre-institution mediation cannot be applied mechanically in cases of continuing infringement of intellectual property rights. The Court observed that compelling mediation in such situations, including trademark or patent violations, would effectively deny the plaintiff timely relief and permit the infringer to continue profiting under procedural formality. It clarified that Section 12A was never intended to produce such an anomalous result and restored the suit for adjudication on merits.

The appeal arose from a dispute concerning alleged infringement of patent and design rights over industrial fans marketed under the brand “Novenco ZerAx.” The appellant, a Danish company engaged in manufacturing high-efficiency fans, had entered into a dealership agreement on 1 September 2017 with the first respondent, an Indian engineering company, for distribution across India. The appellant alleged that the first respondent’s director subsequently established another company, the second respondent, to manufacture and sell identical fans under a deceptively similar name and design, in violation of the agreement. After discovering these activities in July 2022, the appellant issued communications seeking clarification and later terminated the dealership in October 2022. Cease-and-desist notices were sent in December 2022, to which the respondents replied in early 2023.

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A technical expert engaged by the appellant inspected installations in December 2023 and submitted an affidavit in February 2024 confirming infringement. Following the receipt of patent and design certificates between March and May 2024, the appellant instituted a commercial suit in June 2024 before the Himachal Pradesh High Court seeking injunction and damages. It also filed an application seeking exemption from pre-institution mediation under Section 12A of the Commercial Courts Act, 2015, citing urgency. The respondents applied for rejection of the plaint under Order VII Rule 11 of the Code of Civil Procedure, contending that no urgency existed and that the suit was barred for non-compliance with Section 12A.

The Single Judge rejected the plaint, holding that there was no genuine urgency. The Division Bench upheld this view, stating that delay in filing the suit negated urgency and that the plaintiff could refile after following mediation. The appellant approached the Supreme Court challenging these findings and the mechanical application of Section 12A to an alleged continuing infringement.

The Court observed that “the question whether a suit ‘contemplates any urgent interim relief’ needs to be examined on the touchstone of the aforementioned criteria.” It noted that the case involved “continuing infringement of intellectual property” and that “each act of manufacture, sale, or offer for sale of the infringing product constitutes a fresh wrong and recurring cause of action.” The Bench recorded that “mere delay in bringing an action does not legalise an infringement and the same cannot defeat the right of the proprietor to seek injunctive relief against the dishonest user.”

Justice Alok Aradhe further observed that “from the standpoint of the appellant, each day of continuing infringement aggravates injury to its intellectual property and erodes its market standing.” The Court stated that “urgency is inherent in the nature of the wrong and does not lie in the age of the cause but in the persistence of the peril.” It noted that “the public interest element, need to prevent confusion in the market and to protect consumers from deception further imparts a colour of immediacy to the reliefs sought.”

The Court recorded that “the appellant’s prayer for injunction cannot be characterised as mere camouflage to evade mediation” and that “the insistence of pre-institution mediation in a situation of ongoing infringement, in effect, would render the plaintiff remediless allowing the infringer to continue to profit under the protection of procedural formality.” It observed that “Section 12A of the Act was not intended to achieve such kind of anomalous result.”

In conclusion, the Bench stated that “the learned Single Judge as well as the Division Bench of the High Court erred in construing the test for urgent relief… the High Court has proceeded on the premise that lapse of time negated urgency, which is contrary to the principles laid down by this Court.”

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The Bench concluded: “For the reasons stated above, we hold that (i) In actions alleging continuing infringement of intellectual property rights, urgency must be assessed in the context of the ongoing injury and the public interest in preventing deception, (ii) Mere delay in institution of a suit by itself, does not negate urgency when the infringement is continuing.”

“For the aforementioned reasons, the impugned judgment dated 28.08.2024 of the learned Single Judge in Commercial Suit No. 13 of 2024 and the judgment dated 13.11.2024 of the Division Bench of the High Court in Commercial Appeal No.1 of 2024 are quashed and set aside. The Commercial Suit No. 13 of 2024 is restored to the file of the High Court to be proceeded with on merits in accordance with law.”

“The appeal is allowed.”

Advocates Representing the Parties

For Petitioner(s): Mr. Gaurav Pachnanda, Sr. Adv. Mr. Pankaj Soni, Adv. Mr. Vineet Rohilla, Adv. Ms. Shradha Karol, Adv. Mr. Rohit Rangi, Adv. Mr. Debashish Banerjee, Adv. Mr. Ankush Verma, Adv. Mr. Tanveer Malhotra, Adv. Ms. Vaishali Joshi, Adv. Ms. Gurneet Kaur, Adv. Mr. Udbhau Gady, ADv. Mr. Rohit Lochav, Adv. Mr. Vikrant Narayan Vasudeva, AOR

For Respondent(s): Mr. Shadan Farasat, Sr. Adv. Mr. Abhishek Babbar, Adv. Mr. Harshit Anand, Adv. Mr. Yash S. Vijay, AOR Mr. Shikhar Aggarwal, Adv.

Case Title: Novenco Building and Industry A/S v. Xero Energy Engineering Solutions Pvt. Ltd. & Anr.
Neutral Citation: 2025 INSC 1256
Case Number: Civil Appeal (out of SLP (C) No. 2753 of 2025)
Bench: Justice Sanjay Kumar, Justice Alok Aradhe