Carlsberg Breweries A/S v. Som Distilleries and Breweries Ltd.

2019 (77) PTC 1 (Del)

Brief Facts

The present suit sought for the reliefs of infringement of design and a decree for injunction against passing off.

By an order dated 02.05.2017, the Learned Single Judge referred the following  question to a Five judge bench of the Hon’ble High Court of Delhi:

“whether the decision in Mohan Lal v. Sona Paint (hereinafter “Mohan Lal”) on the aspect of maintainability of a composite suit in relation to infringement of a registered design and for passing off where the parties to the proceedings are the same needs reconsideration by a larger bench in the light of Order II Rule 3 CPC, which permits joinder of causes of action.”

Although the parties settled the dispute out of court during the pendency of this reference, the court heard and decided the  issue on account of importance of subject matter. A sumamry of the decision in the Mohan Lal can be accessed here.

Judgement in Mohan Lal [1]:

In the said case, a Three Judge Bench held that as the cause of action for a suit for infringement of a registered design is different from the cause of action on which a claim of passing off is premised two separate suits have to be filed and the same cannot be combined in one suit.

Issues before the Five Judge Bench

1. Is the court compelled by anything in law to reject a plaint for misjoinder, if two causes of action cannot be clubbed?
2. Are the two causes of action, i.e., a claim for design infringement and for passing off, so disparate or dissimilar that the court cannot try them together in one suit?

Plaintiff’s Contentions

• In Mohan Lal, it was observed that different causes of action cannot be combined in one suit. In Dabur India Ltd. v. K.R. Industries[2] (hereafter “Dabur”), holds the contrary. In this regard, the Supreme Court ruled that two causes of action may not be joined in the same suit if the same Court does not have the territorial jurisdiction to deal with both of them.
• Order II Rule 3[3] CPC deals with joinder of causes of action. The rule applies not only to cases involving only one Plaintiff, one Defendant and several causes of action, but also to the cases where there are two or more Plaintiffs, two or more Defendants and several causes of action. Order II Rule 3 should be read with Order I Rule 1[4] and 3[5]. Two fundamental principles underlying these include:
  • Needless multiplicity of suits should be avoided; and
  • The trial of suits should not be embarrassed by simultaneous investigation of totally independent and unconnected controversies.
• If the court feels, in a case that the trial of multiple causes of action in a common suit is inexpedient, inconvenient or likely to embarrass it, recourse to its power to order separate trials is always available, under Order II Rule 6[6]. The sight of this was lost in the judgement in Mohan Lal, which proceeded merely on a textual interpretation of Order II Rule 2.
• Order II Rule 6 does not contemplate that the Plaintiff should be asked to file separate suits and that failure to do so does not empower the court to reject the plaint partially. Convenience merely dictates that cause of action can at the most be ordered to be tried separately, but within the framework of the same suit.
• When two causes of action with respect of the same party or parties arise out of the same subject matter, they should be clubbed together for disposal on merits and in accordance with law to avoid any conflicting decisions.
• The joinder of allegations of design infringement and of passing off, based on the same transactions and allegations against the same Defendant, was not a case of misjoinder of causes of action it proposed to join.
• Order VII Rule 10 is limited and confined in its operation to returning the plaint to where the court does not possess jurisdiction.
• The power of the court to reject the plaint under Order VII Rule 11 is only in instances where the plaint does not disclose the cause of action, or where the relief is undervalued, or where the relief claimed is properly valued but the plaint is written upon insufficiently stamped paper, and where the suit appears to be barred by law.
• The ground of misjoinder of cause of action cannot be a ground for rejection of the plaint in terms of the CPC.

Defendant’s Contentions

• The decision in Mohan Lal has to be understood in the context of the Full Bench’s ruling that subsequently, the two disparate causes of action were incapable of unification in one suit. Therefore, the court emphasised that, though the underlying facts may be common, the nature of reliefs were mutually exclusive, thus rendering a common trial inherently inconvenient.
• Order II Rule 6 contemplates that if and when the court felt at any stage, including at the threshold stage, that common trial or proceeding were inconvenient, it could direct separate trials, or even that the plaint be amended. In the absence of such order, the courts could reject the plaint.
• Order 1 Rule 9[7] provides specifically that no suit shall be defeated for the reason of misjoinder or non-joinder of parties. No such parallel provision exists under Order II with respect to causes of action. Thus, in case of misjoinder of cases of action, the suit can be defeated.
• The basis for design infringement is design of the article for sale, whereas passing off is based on misrepresentation. A design infringement suit alleges that the design is novel, not based on any previous publication in India, whereas the passing off suit has to establish that the shape or mark has developed substantial goodwill and reputation. The defences in the two cases are entirely different.
• Under the Designs Act, 2000 if the validity of a registered design is impugned, the court has to cede the suit, which then has to be considered per force by the High Court. On the other hand, no such compulsion exists in respect of a passing off suit. Thus, in a joint suit for design infringement suit and passing off claim, if the design is challenged, a part of the suit only can be transferred. This exposes the weakness in the Plaintiff’s argument with respect to incorrectness of Mohan Lal.
• The purpose of a composite suit is to avoid needless multiplicity of suits and trial of suits should not be embarrassed by simultaneous investigations of totally independent and unconnected controversies. Under a design infringement and passing off suit, there would be a parallel enquiry that the court would have to undertake throughout the suit. Parties could also be faced with contradictory situations.
• Part X of the CPC pertains to “Rules” and Section 129 therein empowers the High Court of Delhi to make such rules to regulate its own procedure in the exercise of its original civil jurisdiction.
• The language in Order II Rule 3, read with other provisions of the CPC, makes it clear that a Plaintiff does not have an absolute right to file a composite suit. Since it is not a mandatory provision, it implies that unless otherwise prohibited, which, in the absence of additional words limiting its scope and ambit, should mean and include ‘as otherwise provided for by judicial decisions of the High Court’.

Contentions of the counsel assisting the court

1. A composite suit cannot be used as a ploy to confer jurisdiction of a court which has jurisdiction to try only the suit in respect of one cause of action.
2. A design infringement suit, akin to a passing off action, has to be instituted in a jurisdiction where the Defendant is located.
3. A composite suit in relation to these two should be maintainable as on the same cause of action, against the same Defendants, and territorial jurisdiction made by the Plaintiff on one cause of action, would be sufficient for the other.

Observations of Four Judges out of Five Judges

• Order I Rule 4[8], read with Order I Rule 1, states that a judgement may be given without any amendment (a) for such one or more Plaintiffs as may be found to be entitled to relief, for such relief as he or they may be entitled to; or (b) against such one or more Defendants as may be found to be liable, according to their respective liabilities.
• Misjoinders are classifiable into three: (i) misjoinder of Plaintiff; (ii) misjoinder of Defendants and (iii) misjoinder of causes of action.
• Another instance where a composite suit may be denied is where, even though the court has jurisdiction, the joinder is disparate.
• Order II Rule 3 entitles the court to entertain a composite suit, the caveat only was that if jurisdiction in respect of one is lacking, the composite suit cannot be taken on record.
• The expression “or make such other order as may be expedient in the interests of justice” in Order II Rule 6 may include, not only directing the court or registry to separate the trial by registering the separate causes of action, but also direct the sequencing of trial of the disparate issues, in the manner convenient. It may also extend to any other steps to facilitate the task of the court. However, this cannot extend to the power to reject the plaint.
• The ratio in Mohan Lal that two causes of action, one for relief in respect of passing off and other in respect of design infringement, cannot be joined ignores the material provisions of Order II Rules 3 to 6 and is erroneous. The current court thereby overruled the conclusions in Mohan Lal.
• With regard to both causes of action (which are relevant in the present case), suits claims are: (i) against the same Defendant or set of Defendants and (ii) in respect of the same set of acts and transactions. The only difference is that the relief claimed is different.
• The overlap in the two suits is that in the design suit, novelty and aesthetic presentation has to be established and in a passing off action, it is the distinctiveness of the mark. In the former case, it has to be established that the Defendant has fraudulently imitated the article and, in the later case, the Defendant’s misrepresentation to the public with regard to origin of goods irrespective of intent. The resultant harm to the Plaintiff’s reputation is an actionable claim.
• The complaint of passing off as well as that of design infringement emanate from the same fact: sale or offer for sale, by the Defendant of the rival product.
• Basic facts which impel a Plaintiff to approach a court, complaining of design infringement are the same as in the case of passing off. In such circumstances, it is inconceivable that a cause of action can be “split” in some manner and presented in different suits. In this context, this court notes that whereas Order II Rule 3 enables Plaintiffs to join disparate causes of action, Order II Rule 2 compels the whole claim to be clubbed together.
• A composite suit has the advantage of a bird’s eye view by the court, with respect to a common set of facts: if for some reason, the claim for design infringement is prima facie weak a Plaintiff does not have to face uncertainty of another action before another court; the same court can review the same facts and evidence, and conclude pendente lite, if prima facie passing off is made out. 

Observations of Fifth Judge out of Five Judges

• The issue before the Supreme Court in the case of Dabur was not with respect to joinder of causes of action with respect to a composite suit having two causes of action of infringement of a registered design and passing off and thus the observations in the said case really could not have been relied upon by the majority opinion in the case of Mohan Lal to hold that in one composite suit filed in a civil court there cannot be joinder of two causes of action of infringement of a registered design and passing off.
• The majority opinion in the case of Mohan Lal held that there would arise no common questions of law and fact between the two causes of action of infringement of a registered design and passing off, and once there would arise no common questions of law and fact, therefore it was held that there cannot be a composite suit joining the two causes of action of infringement of registered design and passing off.
• Thus, the issue to be decided is as to whether there would arise common questions of facts and law in the two causes of action of infringement of registered design and passing off so that these two causes of action can be joined under Order II Rule 3 CPC.
• As per Prem Lala Nahata and Anr. v. Chandi Prasad Sikaria[9], if the evidence is for the most part different of the two causes of action, then there cannot be joinder of causes of action.
• Therefore, since the crux of the matter for joinder of causes of action under Order II Rule 3 CPC is to see if common questions of law and facts arise in two separate causes of action and whereupon there can be joinder of causes of action, we will analyse whether there would exist common questions of law and fact in the two causes of action of infringement of registered design and passing off.
• The transaction of sale by the Defendant gives rise to the question of law in both the causes of action, which is whether or not the article being sold by the Defendant of a particular design is fraudulent or obvious imitation (identical or deceptively similar) to the article of the Plaintiff.
• A substantial part of the bundle of facts of the two actions will be the same. Therefore, there will clearly exist common set of facts. Thereby resulting in a common question of law and fact in the two actions.
• On account of existence of common question of law and fact, the evidence in the two causes of action will be common to a considerable extent.

Answer to the Reference

A composite suit that joins two causes of action – one for infringement of a registered design and the other for passing off of the Plaintiff’s goods – is maintainable.

Comments

Certain aspect with respect to the above case which are notable:

• Joinders can be of three kinds: Joinder of Plaintiff, joinder of Defendants and joinder of cause of action. In this case, joinder of cause of action is relevant.
• If there is more than one cause of action arising from one transaction or a series of transactions, they can be joined into one composite suit. There are essentially two circumstances under which it can be concluded that there has been a misjoinder. One is in the case where while the court, where the composite suit is filed, has the jurisdiction, territorial or otherwise, to hear one suit, but it does not have the jurisdiction to here another. In such a case, the Court can separate the suits as provided under Order II Rule 6 of the CPC. The second is a case where, although the cause of action is the same, the question of law is different.
• In the current case, there is one Plaintiff, one Defendant and one cause of action but two questions of law. However, the ruling provides that such a joinder is maintainable. In this case, it has been been deemed to be possible because of their proximity to one another.

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[1] 2013 (55) PTC 61 (Del) (FB) – The question was required to be heard by the 5 judge bench as Mohan Lal was a 3 judge bench decision.

[2] AIR 2008 SC 3123

[3] Order II Rule 3. Joinder of causes of action – (1)  Save as otherwise provided, a Plaintiff may unite in the same suit several causes of action against the same Defendant, or the same Defendants jointly; and any Plaintiff’s having causes of action in which they are jointly interested against the same Defendant or the same Defendants jointly may unite such causes of action in the same suit.

(2) Where causes of action are united, the jurisdiction of the Court as regards the suit shall depend on the amount or value of the aggregate subject-matters at the date of instituting the suit.

[4] Order I Rule 1. Who may be joined as Plaintiffs – All persons may be joined in one suit as Plaintiffs where—

any right to relief in respect of, or arising out of, the same act or transaction or series of acts or transactions is alleged to exist in such persons, whether jointly, severally or in the alternative; and

if such persons brought separate suits, any common question of law or fact would arise.

[5] Order I Rule 3. Who may be joined as Defendants – All persons may be joined in one suit as Defendants where—

any right to relief in respect of, or arising out of, the same act or transaction or series of acts or transactions is alleged to exist against such persons, whether jointly, severally or in the alternative; and

if separate suits were brought against such persons, any common question of law or fact would arise.

[6] Order 2 Rule 6. Power of court to order separate trials – Where it appears to the court that the joinder of causes of action in one suit may embarrass or delay the trial or is otherwise inconvenient, the court may order separate trials or make such other order as may be expedient in the interests of justice.

[7] Order I Rule 9. Misjoinder and nonjoinder – No suit shall be defeated by reason of the misjoinder or nonjoinder of parties, and the Court may in every suit deal with the matter in controversy so far as regards the rights and interests of the parties actually before it:

[Provided that nothing in this rule shall apply to nonjoinder of a necessary party.]

[8] Order I Rule 4. Court may give judgment for or against one or more of joint parties.- Judgment may be given without any amendment —

(a) for such one or more of the Plaintiffs as may be found to be entitled to relief, for such relief as he or they may be entitled to;

(b) against such one or more of the Defendants as may be found to be liable, according to their respective liabilities.

[9] (2007) 2 SCC 551

Summary by: Ms. Nidhe Sushrutha, M.S. Ramaiah College of Law, Bangaluru