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Madras High Court Says the Civil Court has no jurisdiction over a company case as per Sections 242(2)(i) and Section 430 of the Companies Act, 2013.

TITLE:    K. Prabhu Vs.  G. Reghukumaran.

Decided On: September 11, 2023.

C.R.P.(MD)No.535 of 2014 and M.P.(MD)Nos.1 and 2 of 2014.

CORAM:  Hon’ble Mr. Justice R. Vijayakumar.

Facts:

The present Civil Revision Petition has been filed to strike off the plaint on the ground that the Civil Court has no jurisdiction to entertain a suit for recovery of money from a Managing Director on the allegation of misappropriation of funds. According to the O.S.No.32 of 2014 the plaintiff is a Public Limited Company incorporated under the provisions of the Companies Act, 2013. As per the allegations in the plaint, the first defendant, namely, K.Prabhu, had officiated as a Managing Director of the plaintiff Company between 20.09.2010 and 13.09.2011. The plaintiff has contended that the first defendant, while officiating as the Managing Director of the Company, has misappropriated the funds of the Company and helped the third defendant to get rid of the financial constraints under the guise of entertaining a fake transaction of running a mineral water plant.

Legal Analysis and Decision:

The plaintiff has contended that the Managing Director had caused a huge financial loss to the plaintiff Company, while he was dealing with the funds generated from the general public. The plaintiff Company had relied upon the auditor’s report relating to the misappropriation alleged to have been done by the first defendant. According to the plaintiff, the first defendant was actively assisted by other defendants in the misappropriation. A careful perusal of the plaint allegations would reveal that a sum of Rs.89,02,461/- is sought to be recovered only on the basis that the first defendant, while officiating as the Managing Director of the plaintiff Company, has misappropriated the Company’s funds, for which, the other defendants have assisted.

Section 242(2)(i) of the Companies Act, 2013 Company Law Tribunal has got jurisdiction to recover any undue gains made by any Managing Director during the period of appointment.

Section 430 of Companies Act, 2013 to impress upon the Court that the Civil Court shall not have any jurisdiction to entertain any matter which the Tribunal or the Appellate Tribunal is empowered to determine by or under this Act.

After a combined reading of Sections 242(2)(i) and Section 430 of the Companies Act, 2013 it clearly reveals that the present suit for recovery of money is solely based upon the allegations that the first defendant has misappropriated the funds of the plaintiff/Public Limited Company, while he was officiating as the Managing Director. Therefore, the Civil Court has no jurisdiction to entertain the said suit. In view of the said deliberations, the plaint in O.S.No.32 of 2014 on the file of the VI Additional District Court, Madurai, is hereby struck off. However, the plaintiff/Public Limited Company is at liberty to approach the appropriate forum for appropriate relief, if they are so advised. 

Conclusion:

The court concludes that after looking carefully into Sections 242(2)(i) and Section 430 of the Companies Act, 2013 says that the suit is solely related to recovery of money and the Civil Court has no jurisdiction over the issue and the company may approach the appropriate forum.

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JUDGEMENT REVIEWED BY JANGAM SHASHIDHAR.

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The Designs Act of 2000 does not extend protection beyond what is required to create a mandatory incentive for design activity: Delhi High Court

Title:  HERO MOTOCORP LIMITED Vs SHREE AMBA INDUSTRIES

Decided on:  16th August, 2023

+  CS(COMM) 1078/2018 & I.A. 11007/2018 (O-XXVI R-9 of CPC)

CORAM: HON’BLE MR. JUSTICE AMIT BANSAL

 

Introduction

The Delhi High Court recently addressed a case involving a trademark dispute between Mankind Pharma Limited and Novakind Bio Sciences Private Limited. The key contention revolved around the use of the common suffix “KIND” in their respective trademarks. The Court’s decision emphasized the significance of maintaining clear distinction between pharmaceutical products to prevent confusion among healthcare professionals and consumers.

Facts

Mankind Pharma Limited, a prominent participant in the Indian pharmaceutical industry, adopted the trademark “MANKIND” as part of its trading style in 1986. The company incorporated the suffix “KIND” in the names of several pharmaceutical preparations it manufactured and sold. Mankind Pharma expressed concerns regarding Novakind Bio Sciences Private Limited’s utilization of the mark “NOVAKIND” for its pharmaceutical products. Mankind Pharma contended that the inclusion of “KIND” in Novakind’s mark infringed upon its registered trademark. Mankind Pharma issued a cease-and-desist notice to Novakind, urging it to desist from using the contested mark.

Analysis and Held

In the matter, a Single Judge Bench presided over by Justice C. Hari Shankar handled the case. The Court acknowledged that while physicians and chemists might prefer Mankind Pharma’s products due to their efficacy, the shared “KIND” suffix could lead to confusion. The Court stressed that even the slightest possibility of confusion is unacceptable when it comes to medicines, especially prescription drugs.

The Court pointed out that the use of the “KIND” suffix is not exclusive to pharmaceutical preparations. Consequently, individuals with average intelligence and imperfect memory could associate Novakind’s “NOVAKIND” product with the KIND family of marks owned by Mankind Pharma. This likelihood of association satisfied the legal requirement for infringement under Section 29(2)(b)10 of the Trade Marks Act. Both marks were found to be deceptively similar and used for identical goods, supporting the finding of trademark infringement.

The Court further emphasized that individuals with limited means, who rely on less expensive medical services, might be particularly prone to associating medicines with their manufacturers. Due to the varying effectiveness of the same drug produced by different companies, the Court highlighted the need for distinct trademarks to prevent confusion and potential health risks.

In conclusion, the Delhi High Court upheld that the trademarks of Mankind Pharma and Novakind Bio Sciences were deceptively similar. The Court endorsed Mankind Pharma’s concerns regarding potential confusion among healthcare professionals and consumers, leading to its decision against Novakind’s use of the contested mark.

“PRIME LEGAL is a full-service law firm that has won a National Award and has more than 20 years of experience in an array of sectors and practice areas. Prime legal fall into a category of best law firm, best lawyer, best family lawyer, best divorce lawyer, best divorce law firm, best criminal lawyer, best criminal law firm, best consumer lawyer, best civil lawyer.”

Written by- Ankit Kaushik

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Delhi High Court’s Jurisdictional Ruling: Venue vs Seat of Arbitration and Time Extension for Arbitral Proceedings

Title:  Reliance Infrastructure Limited v. Madhyanchal Vidyut Vitran Nigam Limited

Decided on:  14th August, 2023

+  O.M.P.(MISC.)(COMM.) 161/2020 and IA No. 9377/2020

CORAM: HON’BLE MR. JUSTICE SACHIN DATTA

Introduction

The Delhi High Court recently rendered a significant decision regarding the distinction between the ‘venue’ and ‘seat’ of arbitration, as well as the extension of time for completing arbitral proceedings. The case involved a petition seeking an extension of time for issuing an arbitral award under Section 29A(4) and (5) of the Arbitration and Conciliation Act, 1996.

Facts

The petitioner, a participant in Rural Electrification works in Uttar Pradesh, initiated arbitration proceedings due to disputes arising from contracts. The General Conditions of Contract (GCC) mentioned that disputes would be resolved through arbitration, with Delhi having exclusive jurisdiction. Subsequently, the petitioner sought an extension for the Sole Arbitrator to issue the arbitral award.

Analysis

The central issue before the Court was the distinction between the ‘venue’ and ‘seat’ of arbitration and the significance of an exclusive jurisdiction clause. The Court underscored that when an arbitration clause designates a specific ‘venue,’ it essentially anchors the arbitral proceedings to that location, making it the ‘seat’ of arbitration. Thus, the Court exercising supervisory jurisdiction over the designated ‘venue’ becomes the supervisory authority for the arbitral process, even if a general exclusive jurisdiction clause exists for a different court. The Court examined various judgments and legal precedents to establish this principle.

The Court highlighted the fact that the LOA’s ‘exclusive jurisdiction’ clause was general and did not specifically pertain to arbitration, while the GCC Clause 48.1.2 designating Delhi as the ‘venue’ of arbitration took precedence. This reinforced Delhi as the ‘seat’ of arbitration. The Court clarified that the Arbitration Act empowers courts to extend the Arbitrator’s mandate even after the award’s deadline, upon sufficient cause shown.

Held

The Court declared its territorial jurisdiction over the arbitration proceedings and the petition’s maintainability. It granted the petition, allowing an extension of one year from the date of the judgment for completing the arbitration proceedings and issuing the arbitral award. The Court emphasized that the Sole Arbitrator had not shown any lack of expedition in the proceedings.

Conclusion

The Delhi High Court’s ruling highlights the significance of accurately designating the ‘seat’ of arbitration based on the specified ‘venue’ and clarifies that exclusive jurisdiction clauses do not undermine the seat’s authority. The Court’s decision also underscores the flexibility of the Arbitration Act to grant extensions for arbitral proceedings.

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Written by- Ankit Kaushik

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In a trademark infringement suit, the Delhi High Court awarded Sun Pharma a five-lakh-rupee penalty for its 2001 “Oxiplat” trademark.

Title:  Sun Parma Laboratories Ltd. v. Mylan Laboratories Limited & Anr.
Decided on:  2nd August, 2023

+  CS(COMM) 1098/2016 & I.A.1395/2023

CORAM: JUSTICE PRATHIBA M. SINGH 

Introduction

The Delhi High Court, presided over by Justice Pratibha M Singh, has awarded costs of Rs. 5 lakhs in a trademark infringement suit to Sun Pharmaceutical Industries Limited. The case was brought forth by Sun Pharmaceuticals against two pharmaceutical companies over their registered mark “Soxplat”, which was alleged to infringe upon Sun Pharmaceuticals’ registered mark “Oxiplat”. The court’s decision was based on the substantial sales and investments made by Sun Pharmaceuticals in promoting and using the “Oxiplat” mark.

Facts

Sun Pharmaceutical Industries Limited filed a trademark infringement suit in 2016 against two pharmaceutical companies that had registered the mark “Soxplat” in 2014. Sun Pharmaceuticals had coined the mark “Oxiplat” back in 2001, which was used for medicinal preparations containing Oxaliplatin. The company sought a permanent injunction against the use of the “Soxplat” mark.

The Court noted that Sun Pharmaceuticals’ sales of medicinal formulations under the “Oxiplat” mark were substantial, with a sales turnover of approximately Rs. 26.5 crore at the time of filing the suit. The company had also invested significantly in advertising and promoting the mark.

During the course of the proceedings, the defendants’ trademark “Soxplat” was canceled, rendering them no longer registered for the mark.

Analysis

The Court took note of the substantial sales and investments made by Sun Pharmaceuticals in relation to the “Oxiplat” mark. It observed that the defendants had canceled their trademark “Soxplat” during the proceedings, indicating that there was no longer any dispute between the parties concerning the use of the mark. The Court refrained from expressing an opinion on the similarity of the two marks “Oxiplat” and “Soxplat,” as the defendants had abandoned the latter mark.

Held

The Delhi High Court awarded costs of Rs. 5 lakhs to Sun Pharmaceutical Industries Limited in the trademark infringement suit. The Court’s decision was influenced by the substantial sales and investments made by the plaintiff in relation to the “Oxiplat” mark and the subsequent cancellation of the defendants’ “Soxplat” mark. The defendants’ decision to abandon the mark led the Court to conclude that there was no longer any dispute regarding the marks’ similarity.

“PRIME LEGAL is a full-service law firm that has won a National Award and has more than 20 years of experience in an array of sectors and practice areas. Prime legal fall into a category of best law firm, best lawyer, best family lawyer, best divorce lawyer, best divorce law firm, best criminal lawyer, best criminal law firm, best consumer lawyer, best civil lawyer.”

Written by- Ankit Kaushik

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