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Delhi High Court Upholds Settlement Agreement at Reduced Interest Rate, Safeguarding Appellant’s Legal Rights

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Case Name: Anil Sharma & Ors v. Genesis Finance Co. Ltd. & Ors 

Case No.: RFA(OS)(COMM) 39/2019 

Dated: May 08, 2024 

Quorum: Justice Vibhu Bakhru and Justice Tara Vitasta Ganju 

 

FACTS OF THE CASE: 

In this intra-court appeal, the appellants have challenged a judgement and decree dated 27.03.2019 (referred to as the challenged order) issued by the learned Single Judge in CS(COMM) 307/2016, which is captioned Genesis Finance Company Ltd. v. Anil Sharma & Others. 

By the contested order, the learned single judge granted respondent no. 1’s application under Order XIIIA of the Code of Civil Procedure and issued a preliminary decree in accordance with Order XXXIV Rule 4 of the CPC, stating that the plaintiff was entitled to recover ₹2,03,00,000/-as a joint and several recovery from the appellants and respondent nos. 2 and 3 (defendants in the suit), together with interest at the rate of 18% annually from the date of the lawsuit’s institution until its realisation and 24% annually from the Settlement Deed dated 20.01.2014 until the date of the suit’s institution, or 31.03.2016.  

Furthermore, the educated Single Judge had also ordered costs to be measured at ₹2.5 lacs. The learned Single Judge gave the respondent nos. 2 and 3 and the appellants six months to pay the plaintiff’s debt; if they fail to do so, the plaintiff may seek a final decree for the sale of the mortgaged properties, or a portion of them, to recoup the outstanding amounts.  

The defendant had filed the aforementioned suit in order to recover ₹4,15,14,023.76/- (Rupees Four Crores Fifteen lakhs Fourteen thousand Twenty-Three and Seventy-Six paise only) as well as pendente lite and future interest at the rate of 36% per annum (reducing). The plaintiff also requested a decree for the sale of mortgaged properties as stated in Paragraph 4 of the complaint. 

The appellants have based their defence on the claim that they were misled into signing a Loan Agreement with the plaintiff on May 19, 2011 (henceforth referred to as the Loan Agreement) on the false impression that the loan came with a simple interest rate of 17.67% annually.  

On the other hand, the loan was structured with an interest rate of 17.67% (flat), which, when calculated using the decreasing balance approach, amounted to about 30.08%. This assumption was made when the documentation was created. 

The experienced single judge concluded that the appellants had no chance of winning their defence. Based on the appellants’ admission of the payment schedule that was a component of the loan agreement, the aforementioned conclusion was reached. Furthermore, there was no disagreement about the parties’ agreement to settle their differences over the outstanding liability and interest that was due on it when they signed the Settlement Agreement. 

 

LEGAL PROVISIONS: 

  • Section 138 of the Negotiable Instruments Act, 1881. Penalises the dishonouring of any cheque written for “any debt or other liability” that has been partially or fully paid. Furthermore, there is coextensive accountability between the major debtor and the guarantor. So, in accordance with section 138, N.I., the guarantor cannot avoid liability. 

 

CONTENTIONS OF THE APPELLANTS: 

According to the appellants’ learned counsel, they were under the false impression that the equivalent monthly installment for loan facility repayment was ₹11,68,735/-. Nevertheless, they had paid back ₹2,61,98,620/- against a loan of ₹2,75,00,000/-, or 22.4 equal monthly installments. The plaintiff argued that the EMIs were based on a 30.08% annual interest rate, but that the plaintiff had deceitfully convinced appellant nos. 1 through 3 to agree to pay interest at the rate of 17.67%. 

According to his submission, if the annual percentage rate for the EMIs was 17.67%, the corresponding monthly installment would be ₹9,89,644. He presented evidence that the appellants signed the Settlement Agreement at the time the mother of appellants nos. 1 and 3 was brought into the intensive care unit. The appellants acknowledged that ₹2,03,00,000 was still owed as of January 20, 2014, but they had signed the Settlement Agreement in error because they had put their trust in the plaintiff.  

Additionally, he argued that the plaintiff had taken advantage of the appellants’ pressing need for money to force them to sign on the dotted line. He argued that the Settlement Agreement was unenforceable because it was signed while the appellants were extremely agitated and not in a normal mental state due to the mother of appellants nos. 1 and 3 being critically ill and admitted to the intensive care unit due to multiple organ failure. 

The court determined that the parties in question in the debt Agreement, the defendants committed to repaying the debt over the course of 36 monthly installments. The fixed amount for the monthly installment was ₹11,68,735/-. Consequently, there could be no misinterpretation of the payable interest. 

 

COURT’S ANALYSIS AND JUDGMENT: 

According to the court’s ruling, interest is computed over the whole loan duration. Thus, in this instance, the appellant would be required to pay a total of 53.01% in interest over the course of three years, or 17.67% annual interest. The appellants would be required to return ₹4,20,74,460/-, with the aforementioned interest being payable on the whole ₹2,75,00,000/-loan principal. Because the repayment schedule was attached to the loan paperwork and stated that the total amount above was due, the appellants could not have been misled about the method used to calculate the interest.  

The court determined that the plaintiff had filed complaints under Section 138 of the NI Act, which were pending in the Dwarka courts, because the appellants’ checks had been returned unpaid. Therefore, there could not have been any doubt at that point regarding the appellants’ knowledge of the conditions of the Loan Agreement. The parties to mediation were referred to by the court, and as a result, the appellants entered into a Settlement Agreement that was included in the mediation proceedings. 

The appellants had complete knowledge of the plaintiff’s allegation, the court further noted. It is evidently an afterthought to argue that the appellants were not in a proper state of mind since their mother was in the intensive care unit (ICU) at the relevant period. The appellants did not make any such claim in their written declaration. Furthermore unsubstantial is the claim that the appellants were not given access to the whole Settlement Agreement. Moreover, the written declaration that the defendants filed makes no mention of this kind. As said earlier, there is no disagreement regarding the implementation of the Settlement Agreement.  

Additionally, take note of the fact that even though the Settlement Agreement is clear and stipulates that interest will be paid at a rate of 36% annually on a decreasing balance basis, the learned Single Judge had lowered the pre-suit interest rate to 24% annually. The plaintiff has agreed to the impugned order’s reduction in interest rates from 36% to 24% annually, even though it is not discussed in it. We see no need to investigate this further as a result. 

 

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Delhi High Court Rejects Frivolous Petition in Construction Dispute, Pointing to Availability of alternative Remedies

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Case Name:  UP State Bridge Corporation ltd. & Anr v. National Highways and Infrastructure 

Case No.: W.P.(C) 3256/2024 & CM APPL. 13420/2024 

Dated: May 08, 2024 

Quorum: Justice Subramonium Prasad 

 

FACTS OF THE CASE: 

The Petitioner has come before this court to contest the Respondent’s communication from February 9, 2024, which declared the Petitioner to be a “Non-Performer” and stated that the Petitioner would not be permitted to bid on any project with the Ministry of Road, Transport, and Highways or any of its executing agencies until their name was taken off the list of Non-Performers.  

Furthermore, the aforementioned communication makes it clear that the Petitioner will also include its joint venture partners and promoters whose qualifications were taken into account when they were approved for the project of “Building of Two Lanes with Paved Shoulders of New Greenfield Alignment from Chochenpheri at Km. 52.000 to Helipad Near Menla at Km. 82.000 of Rhenoc-Menla spur (NH-717 B) Package-III on EPC basis under SARDPNE Phase ‘A’ in the State of Sikkim.” 

The Respondent put out a bid for the project of “Construction of 2 laning with paved shoulder of new Greenfield alignment from Chochenpheri at Km. 52.000 to Helipad near Menla at Km. 82.000 of Rhenoc-Menla spur (NH-717 B) Package-III on EPC basis under SARDP-NE Phase ‘A’ in the State of Sikkim”. 

Having placed the highest bid, the petitioner was given the opportunity to complete the job. Petitioner submitted a bid of Rs. 532,52,00,000/-for the contract, which was accepted by Respondent on October 28, 2020, via letter. The petitioner provided the performance security of Rs. 26,62,60,000 and an extra performance security of Rs. 3,16,82,000 in accordance with clause 2.21 of the RFP, in accordance with the conditions of the bid document. The project was set to end on December 10, 2020, and work had to be finished within 36 months of that date. 

First to work was the petitioner. Whether or not the Petitioner was granted the Right of Way (ROW) to complete the construction has been the subject of several disagreements between the Petitioner and the Respondent. The Respondent is not happy with the Petitioner’s performance in numerous other areas as well. Records reveal that the Petitioner was given the opportunity to have personal hearings in order to provide an explanation for the reasons behind the contract’s delay in performance. Documentation in the file also reveals that the Petitioner received two cure notices, dated 24.11.2022 and 11.10. 2023. 

Since the petitioner was designated as a “Non-Performer,” their name has been added to a list of non-performers, and they are not allowed to participate in any bids with the Ministry of Road, Transport, and Highways or any of its executing agencies until they are taken off the list. 

  

LEGAL PROVISION: 

  • Section 5 of the Arbitration and Conciliation Act- Extent of judicial intervention. Regardless of the provisions of any other currently enacted legislation, no judicial authority may get involved in topics covered by this Part unless specifically authorised by this Part. 
  • Section 34 of the Arbitration Act- The sole way to challenge an arbitral award in court is to file an application to have the award set aside in line with subsections (2) and (3). (ii) There is a disagreement between the arbitral ruling and Indian public policy. (iii) It goes against even rudimentary moral or just conceptions. 

 

CONTENTIONS OF THE PETITIONER: 

The learned counsel representing the petitioner argues that the contested communication, dated 09.02.2024, was approved based on a circular dated 06.10.2021, even though the letter of award was sent on October 28, 2020. As a result, the respondent was unable to punish the petitioner because the contract agreement was signed before the date the circular, dated 06.10.2021, was issued, and the petitioner is not covered by it.  

Furthermore, it is stated that the natural justice standards were not followed in the passing of the contested communication. The petitioner claims that in addition to being ordered to stick with the current contract, they have also been forbidden from placing any bids with the Ministry of Road, Transport, and Highways.  

It is also argued the respondent cannot be allowed to hold opposing views at the same time. It further states that the Petitioner cannot be required to fulfil its portion of the contract within a set amount of time as the Respondent has not fulfilled its share of the obligations and has failed to fulfil its share of the reciprocal obligations. 

 

CONTENTIONS OF THE RESPONDENTS: 

The respondent’s attorney brings up the maintainability of the writ petition, pointing out that the contract has an arbitration clause. Furthermore, under paragraph 7 of the Circular dated 06.10.2021, it is specified that the Impugned Communication may be appealed before the Appellate Authority, which is the Secretary, Road Transport and Highway Development. 

It is claimsed that this Court should not hear the current writ petition since the Petitioner has access to an other effective remedy. In addition to addressing the question of the writ petition’s sustainability, the learned attorney representing the respondent also called attention to a number of shortcomings on the part of the petitioner, including the fact that the design and drawings for 3.340 km of the 4.470 km of viaducts have not been provided.  

Furthermore, it is mentioned that project milestone II is not yet completed and that as of November 19, 2023, there has been just 24.04% financial development, although 30% should have been the result. The Petitioner is said to have had multiple opportunities, a personal hearing, and cure notices issued to them, but they have not taken any action. As a result, this Court should not use its discretion under Article 226 of the Indian Constitution because it has been declared that the decision-making process has been equitable. 

 

COURT’S ANALYSIS AND JUDGMENT: 

The court determined that extracting the arbitration clause was pertinent. The dispute resolution procedure is covered in Article 26 of the contract agreement.  

Article 26 states that, in the first instance, any disagreement, argument, or dispute between the Parties regarding any aspect of this Agreement (including its interpretation) shall be tried to be settled amicably through the conciliation process; if that fails, the matter will be referred to arbitration. 

The court, after a reading of the aforementioned paragraph reveals that the High Court may hear a writ petition even in cases where there is a viable alternative remedy, where the writ petition aims to enforce a fundamental right, where natural justice principles are violated, where the contested orders or proceedings are completely without jurisdiction, or where the validity of an Act is being contested. It is well established that when there is a different, effective remedy available and when the parties have mutually agreed to arbitrate their dispute, courts acting under Article 226 of the Indian Constitution generally do not intervene. 

The Court believed that there were contested factual issues in the current case. The only way to establish the contested facts is for both parties to present oral and written evidence; an affidavit cannot be used as the sole means of establishing the facts. 

It was of the view of this Court that the Petitioner has failed to establish a prima facie case supporting its position. In any case, it is improper for this Court to grant a stay on the operation of the contested communication when it is not inclined to entertain the writ petition based on the facts of the case. Section 9 of the Arbitration and Conciliation Act gives the Court of Competent Jurisdiction the authority to decide the matter based on the merits of the case.  

Due to the aforementioned, the Court was hesitant to grant the writ petition, citing the petitioner’s access to an alternative effective remedy. 

 

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Judgment reviewed by Riddhi S Bhora. 

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NIA Chargesheeted Accused in IS Recruitment Conspiracy: Court Upholds Denial of Default Bail, Validates Sanction under UAPA

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Case Name:  Ammar Abdul Rahiman v. National Investigation Agency  

Case No.: CRL.A. 79/2024 & CRL.M.A. 2650/2024 

Dated: May 06, 2024 

Quorum: Justice Suresh Kumar Kait and Justice Manoj Jain 

 

FACTS OF THE CASE: 

The Islamic State of Iraq and Syria (ISIS) was known to be affiliated with a man named Mohammed Ameen Kathodi@ Abu Yahya (A-1), who was reportedly running multiple ISIS propaganda channels on several secure social media platforms. This information was deemed credible and reported to the Central Government. He had been indoctrinating naive and credulous Muslim adolescents and spreading the violent Jihadi doctrine of ISIS through these means.  

According to the investigative agency, he (A-1) and his friends intended to carry out a religious pilgrimage, or “Hijrah,” to areas under ISIS control and Jammu and Kashmir (J&K) in order to commit acts of terrorism. They had obtained virtual numbers and phoney SIM cards in order to create multiple identities on secure social media chat platforms. They then used these to communicate with other like-minded individuals in order to raise money for funding ISIS operations and to carry out anti-national crimes in India. 

On March 15, 2021, three individuals were taken into custody: Abdul Karim Anwar (A-2), Rahees Rasheed (A-3) and accused Mohammed Ameen Kathodi @ Abu Yahya (A-1). Their involvement was made clear by the evidence gathered for the investigation, which identified them as ISIS members—a terrorist group that is outlawed. On September 8, 2021, the National Investigating Agency (NIA) issued the first chargesheet against them, alleging a variety of violations covered by the Unlawful Activities (Prevention) Act, 1967 (better known as “UAPA”) and the Indian Penal Code.  

The appellant (A-10) in this case was taken into custody on August 4, 2021, and on January 28, 2022, a supplemental chargesheet about him and the other accused parties was submitted. 

 

LEGAL PROVISION: 

Section 120B of IPC- If there is no specific provision in this Code for the punishment of such a conspiracy, then anybody found to be a party to a criminal conspiracy to commit an offence that carries a sentence of death or imprisonment for a period of two years or more would be punished as though they had assisted in the commission of the offence. 

Section 121A of IPC- Anybody who, whether inside or outside of India, plans to carry out any of the offences listed in section 121 or plots to intimidate the Central Government or any State Government by using force or the threat of using force will be imprisoned for life or for ten years. 

Section 17 of UAPA- -Anyone who, whether directly or indirectly, raises, provides, or collects money for any person or people, whether from legal or illicit sources, or tries to provide to, raises, or collects money for any person or people knowing that the money is likely to be used, in whole or in part, by that person or people, or by a terrorist organisation, terrorist gang, or by an individual terrorist, to commit a terrorist act, whether or not the money was actually used for the commission of the act, shall be punished with a minimum sentence of five years, but it may be extended to life imprisonment. 

Section 38 of UAPA. Offence relating to membership of a terrorist organisation. An offence related to membership in a terrorist organisation is committed by someone who identifies or claims to be linked with one with the objective of advancing the operations of the organisation 

 

CONTENTIONS OF THE APPELLANT: 

The learned counsel for the appellants strongly contended that the appellant, who is about thirty years old, is a law-abiding individual with strong social ties and no criminal history. It is emphasised that the main accusations levelled against the accused are that his sister-in-law (A4) radicalised him to support ISIS, and that his phone contained multiple photos demonstrating that he had access to extreme sermons, ISIS-related videos, and accounts on Instagram that supported the group.  

The fact that he was seeing content that had been downloaded into his electronic devices would not be significant in and of itself because there is no proof that he has ever shared, acted upon, or taken any action related to the content. 

It is also asserted that, of the approximately 1000 pages that the involved Forensic Labs claim to have recovered from his two mobile phones, the prosecution appears to be relying on six pages of photographs and one page of browser history (D-140). He has never acknowledged being a member of, engaged in, or been connected to any terrorist group, despite the fact that pictures and online history have been recovered. 

It is further stated that the mere fact that charges had been filed would not prevent bail from being granted, even though it would be extremely difficult for any accused person to get bail in such a case.  

It is argued that the learned Trial Court should have conducted a surface analysis of the evidence’s probative value even though the charges had been established. If this had been done correctly, it would have become evident to the Trial Court that there was no admissible evidence, indicating a prima facie case against the accused.  

 

CONTENTIONS OF THE RESPONDENTS: 

The argument is that the chargesheet was presented to the appropriate court regarding the appellant on January 28, 2022, and the learned trial court determined the charges against him on October 31, 2022, specifically noting that there was a prima facie case for offences under Section 120B read with Sections 38 and 39 of UAPA read with Section 2(o) and Section 13 of UAPA.  

It was also argued that A-1 Mohammed Ameen Kathodi@ Abu Yahya had already passed away, according to the information provided regarding the accusations made against the appellant and his co-accused. A-2 Mus’Hab Anwar and A-3 Rahees Rasheed were freed on default bail, and A-8 Obaid Hamid was released on bond because he had not been charged with any offences covered by Chapter IV or Chapter VI of the UAPA. 

It is asserted that the thorough investigation unequivocally reveals the existence of a criminal conspiracy involving all of the accused, and that the Investigating Agency has successfully deciphered this conspiracy with the aid of several pivotal events. 

Four of the appellant’s mobile devices are allegedly found during the alleged search of their residential property on August 4, 2021, in accordance with Search and Seizure Memo (D-76). For digital data extraction, these were forwarded to CERT-In. When the report and data from these digital devices were carefully examined, it was discovered to contain a number of incriminating materials, including images of different Muslim extremist preachers and movies from ISIS.  

In 2015, it was argued that ISIS was declared a terrorist organisation and that, despite this, there was sufficient evidence in the record to support the appellant’s continued affiliation with and support of the organisation. ISIS is listed as a banned terrorist organisation under the First Schedule of the United Antiterrorism Provisions Act (UAPA), with serial number 38. The claim also makes reference to social media material that was acquired from the accounts of A-10 and his sister-in-law/co-accused, Deepthi Marla (A-4). It was established that A-4 and A-6 had talked about their intentions for the Hijrah, and that A-10 was a part of this plot.  

 

COURT’S ANALYSIS AND JUDGMENT: 

According to the court, they were also aware of Section 43-D(5) of the UAPA, which establishes a kind of restriction and limitation on the granting of bail in the event that the accused has committed offences covered by Chapter IV and/or Chapter VI of the UAPA and the prosecution’s case against them is presumed to be valid.  

This Court can still very well contemplate granting bail under the aforementioned circumstances, even though the allegations have been established and the order in question has not been contested. We might also refer to Chandeep Singh (above), where it was noted that the trial court has a duty to consider the role of the accused by carefully reading the complaint and taking into account the limitations imposed by Section 43-D(5) of UAPA, adding that bail cannot be denied simply because the charges have been filed.  

As a result, it was clear that the court in a UAPA case might take bail into consideration even after the charges were established. The right to request bail is unalienable and may be used at any time. It never goes out of style. 

He never had access to the texts that were sent between him and his co-accused, so he cannot be held accountable for them. To claim that someone was operating in support of a prohibited terrorist group would be impossible if all they did was follow news reports on the Middle East and Israel-Palestine conflict or listen to hate speeches from radical Muslim preachers.  

In light of this, it appears incorrect and inappropriate to use Sections 38 and 39 of the UAPA. The court ruled that the statutory bar under Section 43-D (5) would only apply in cases where the accused person’s offence is covered by either Chapter IV or Chapter VI of the UAPA. The appellant has not been accused of committing any crimes under Chapter IV, and in light of what we have already discussed, we believe that the evidence in the record does not point to the appellant having committed any crimes under UAPA Sections 38 or 39, which are under Chapter VI.  

The appellant was ordered to be released on bail under any terms and restrictions that the concerned learned Special Court deemed appropriate and fitting after the court granted the current appeal. The prosecution may request the cancellation of bail without bringing this case before this court if there is any violation of any condition set forth by the learned Trial Court, or if the appellant makes any direct or indirect threats or attempts to influence any witness, or if the appellant tries to delay the trial.  

The court further stated that the aforementioned remarks were only intended to be used in determining the bond amount and were tentative in nature.  

The statements above, which were clearly not a conclusive statement regarding the merits of the case, will not persuade the Learned Trial Court. The trial court would have the freedom to reach any decision following a thorough review of the material, as the court has limited its proceedings to the mere claims thus far.  

 

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Establishing Equilibrium: Delhi High Court Upholds Appellant’s Right to Present Additional Evidence Despite Prolonged Proceedings 

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Case Name: Remy Israni v. R.B. Sethi Jessa Ram Hospital and Bros 

Case No.: LPA 314/2024 

Dated: April 23, 2024 

Quorum: Justice Rekha Palli and Justice Saurabh Banerjee 

 

FACTS OF THE CASE: 

The case’s circumstances are such that an application that the appellant made in an attempt to add more papers to the record. The goal of this appeal, which is being filed under Clause X of the Letters Patent, is to challenge the ruling made by the learned Single Judge in W.P.(C) 5005/2024 on April 5, 2024.  

According to the contested ruling, the learned Single Judge has stayed the implementation of the aforementioned order dated 14.02.2024 while providing notice in the respondents’ writ suit contesting the order dated 14.02.2024 issued by the learned Industrial Tribunal (Tribunal). 

Due to the specifics of the case, the appellant’s attempt to add new papers to the record was made through an application. This appeal is being brought in accordance with Clause X of the Letters Patent with the intention of contesting the decision rendered by the learned Single Judge in an earlier matter.  

The challenged ruling states that the learned Single Judge has given notice in the respondents’ writ petition opposing the order issued by the learned Industrial Tribunal, and has stopped the implementation of the aforementioned order dated February 14. 

 

CONTENTIONS OF THE APPELLANTS: 

The learned counsel for the appellant argues that the learned Single Judge has stayed the contested order notwithstanding the fact that the respondents did not request any temporary relief before the Court. The appellant will thus be unable to introduce into evidence any further papers that were filed with her affidavit.  

The appellant, who has been pursuing her claim before the learned Tribunal for over ten years, will suffer grave prejudice due to the order made by the learned Single Judge. As a result, the pending proceedings before the learned Tribunal will essentially finish. 

The appellant’s counsel further contends that the learned single judge stayed the disputed decision despite the fact that the respondents did not seek temporary relief from the court. As a result, the appellant will be unable to present any additional documents filed with her affidavit as evidence. 

The appellant, who has been litigating her claim before the learned Tribunal for more than ten years, will suffer significant prejudice as a result of the learned Single Judge’s order. As a result, the pending processes before the learned Tribunal will be practically completed. 

CONTENTIONS OF THE RESPONDENTS: 

The learned counsel representing the respondents acknowledges receipt of the notification and argues that the learned Tribunal erred significantly in imposing costs on the respondents for legitimately objecting to the appellant’s early filing of papers. She urges the appeal to be rejected on the grounds that the learned Single Judge was right to stay the learned Tribunal’s order. 

The respondents contend that it was improper for the learned Tribunal to charge them fees for their legitimate concerns regarding the appellant’s delayed filing of papers. The stay order would effectively put an end to the ongoing proceedings before the learned Tribunal. 

 

COURT’S ANALYSIS AND JUDGMENT: 

We may start by noting the pertinent excerpts of the order issued by the learned Tribunal on February 14, 2024, which order was challenged before the learned Single Judge, after taking into account the submissions of learned counsel for the parties and reviewing the record. 

The court further stated that after reviewing the aforementioned order, it is clear that the learned Tribunal assessed a cost of Rs. 10,000/-to the respondents in response to their rejection of the appellant’s request for additional documents to be filed with her affidavit of evidence. This appears to have forced the respondents to file a writ petition in order to challenge the original order. 

The court stated that although they were inclined to concur with her that this was not a matter that should be subject to costs, they believed the learned Tribunal was right when it concluded that the appellant was entitled to submit more papers along with her affidavit as evidence. We believe that the learned tribunal correctly held that the appellant had no obstacle to filing these additional documents because the Industrial Disputes Act, 1947 was a helpful piece of legislation that did not apply the strict timeliness requirements under the Commercial Courts Act or the CPC.  

The court declared that, given the previously mentioned instructions, they believed the writ petition to be infructuous in and of itself. As a result, they allow either party to freely file a suitable application with the learned Single Judge to request that it be handled in accordance with this order. 

In the end, it was decided that the appeal and the pending application were handled in the manner mentioned above, with a request made to the knowledgeable Industrial Tribunal to continue deciding the appellant’s outstanding claim in accordance with the law. 

 

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Pfizer’s Landmark Victory: Delhi High Court Upholds Patent Rights, Affirms Innovation Protection in Pharmaceutical Industry

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Case Name: Pfizer Products INC v. Renovision Exports Pvt. Ltd. And Anr. 

Case No.: CS(COMM) 378/2018 

Dated: May 1, 2024 

Quorum: Justice Sanjeev Narula 

 

FACTS OF THE CASE: 

The facts of the case are so that by requesting a permanent injunction and other ancillary reliefs, Pfizer Products Inc., the Plaintiff, hopes to protect its trademark rights in the well-known allopathic drug “VIAGRA,” which is used to treat erectile dysfunction. The defendants are trying to stop Pfizer Products Inc. from marketing their homoeopathic medicine under the confusingly similar trademark “VIGOURA,” which is purportedly used to treat sexual disorders.  

Pfizer’s primary goal in filing the lawsuit was to defend their common law rights to the aforementioned mark. But later, the scope of reliefs was expanded, and Pfizer also claimed passing off in addition to trademark infringement, after securing statutory rights through the trademark registration of “VIAGRA.” As a result, the case calls into question the cross-border reputation and trademark protection of medications with names that are similar but are used for different purposes—one is a conventional allopathic drug, while the other is a traditional homoeopathic medicine.  

By answering these queries, the Court will decide whether or not the Defendants’ use of “VIGOURA” constitutes a passing of trademark infringement on Pfizer’s “VIAGRA” brand.  

 

CONTENTIONS OF THE PETITIONER: 

The petitioners adamantly maintain that Pfizer is a preeminent international pharmaceutical corporation that is largely involved in the development, production, and distribution of medications for use in human and veterinary medicine. Pfizer was named the “No. 1 Company” by Fortune Magazine in 1998, and their goods are widely available in more than 150 countries.  

Pfizer registered the trademark “VIAGRA” in 1995 for their ground-breaking erectile dysfunction medication, sildenafil citrate. The medication “VIAGRA” was released into the US market in 1998 after the Food and Drug Administration of the United States Department of Health and Human Services approved it on March 27, 1998, stating that it was a significant advance in the treatment of erectile dysfunction.  

It was found by Pfizer that Defendant No. 1, operating under the name Renovision Exports Pvt. Ltd., was using the trademark VIGOURA to sell goods marketed as “Nervine Tonic for Men” and “Homoeopathic Medicine Invented in Germany.”  

Later research uncovered “VIGOURA” product variations, including “VIGOURA 2000,” “VIGOURA 5000,” and “VIGOURA 1000.” Defendant No. 2 is said to be the producer of these items. The defendants received a cease-and-desist letter from Pfizer’s lawyers on February 3, 2005, as soon as they responded to the matter. The first day of March, 2005, a reminder letter was sent.  

On March 11, 2005, Defendants received a response to the aforementioned letters in which they refuted Pfizer’s allegations and reaffirmed their ownership of the “VIGOURA” trademark. Applications for the registration of the marks “VIGOURA 2000” and “VIGOURA 5000” were submitted by Defendant No. 1. 

The petitioners added that. The “VIGOURA” mark of the defendants is confusingly similar to Pfizer’s well-known “VIAGRA” trademark. The defendants’ deliberate endeavour to profit from the goodwill and reputation attached to “VIAGRA” is evidenced by this resemblance. Both marks are similar in that they have three syllables, start with the letter “Vi,” and end with the letter “Ra,” making them phonetically similar. Furthermore, there is a greater chance of confusion regarding the source and association of the products because they both cater to the same market segment—those looking for solutions for medical ailments. 

 

CONTENTIONS OF THE RESPONDENTS: 

The defendants contended that the defendants are well-known experts in the field of homoeopathy. Defendant No. 1 is a licenced oil company that has a solid track record of producing homoeopathic remedies, such as “VIGOURA 1000,” “VIGOURA 2000,” and “VIGOURA 5000.”  

The products in dispute are specific medications designed to treat various medical conditions. “VIGOURA 1000” is different from the Plaintiff’s product, which treats male erectile dysfunction, in that it concentrates on women’s vitality and menstrual regulation. The product “VIGOURA 1000” is no longer relevant to the current controversy because of this differentiation.  

The homoeopathic remedies “VIGOURA 2000” and “VIGOURA 5000” are made to act as non-steroid aphrodisiacs by promoting metabolic processes. Homoeopathic remedies function according to distinct principles from traditional allopathic medications, such as Pfizer’s “VIAGRA.” While “VIAGRA” is used to provide immediate relief, the defendants’ “VIGOURA” has effects that take two to three months to manifest. Customers are less likely to become confused because of the two medications’ different types and compositions as well as the fact that they are both prescribed medications.  

It is sincere, real, and legitimate that Defendants have adopted the contested mark “VIGOURA.” The whimsical symbol is a play on the word “vigour” in English. Additionally, “VIGOURA 2000,” which was initially produced and sold by the Defendants in 1999, has a long history in the market for the products under dispute. In addition, on January 21, 2003, Defendant No. 1 requested trademark registration for “VIGOURA 2000” and on December 30, 2003, for “VIGOURA 5000” in class 05. Furthermore, on April 27, 2005, Defendant No. 1 accomplished the registration of a copyright for the creative work contained in the “VIGOURA 2000” package. Therefore, a considerable amount of time passed before Pfizer registered its trademark for the products made by the defendants.  

Long before Pfizer, a number of other organisations obtained registration rights in trademarks that used the same name as “VIAGRA” for pharmaceutical or Ayurvedic medical products classified as class 05. 

The defendants maintained that Pfizer Inc., the trademark’s owner, had not granted the plaintiff an assignment of the mark “VIAGRA.” The Plaintiff is therefore unable to assert proprietorship over the aforementioned mark. 

 

LEGAL PROVISIONS: 

  • Section 38 of the Trademarks Act- Assignability and transmissibility of registered trade marks. Notwithstanding anything in any other law to the contrary, a registered trade mark shall, subject to the provisions of this Chapter, be assignable and transmissible, whether with or without the goodwill of the business concerned and in respect either of all the goods or services in respect of which the trade mark is registered or of some only of those goods or services. 
  • Section 18(1) of the Trademarks Act- Anyone claiming to be the owner of a trademark that they have used or intend to use and who wants to register it must submit an application in writing, following the prescribed process, to the Registrar. 

 

ISSUES: 

  • Whether the Defendants are infringing the registered trade mark of the Plaintiff “Viagra”? 
  • Whether the Plaintiff is the proprietor of the trademark “VIAGRA”? 
  • Whether the Plaintiff is entitled to any damages? If so, the extent thereof? 
  • Whether other trademarks resembling and similar to the trademark of the Plaintiff have been registered, as alleged by the Defendants? If so, to what effect? 
  • Whether the use of the mark “VIGOURA” by the Defendants amounts to passing off the goods as that of the Plaintiff? 

 

COURT’S ANALYSIS AND JUDGMENT: 

The meaning and concept of a “proprietor” are crucial to this issue, the court noted brand. A “registered proprietor” is described as under the Trademarks Act as the individual named in the Trademarks Register as the owner of the brand. Consequently, the legitimate owner is acknowledged as being the registered proprietor of the brand, with the sole authority to use the brand in relationship with particular products or services.  

The court also decided that a “proprietor” means anyone who has exclusive possession of a property, not only the registered owner. rights to use the trademark in connection with particular goods or services. This possession can be proven by using the trademark in commercial actions in the market, giving rise to common law rights. Furthermore, these rights could be obtained by officially registering with the Trademarks Register. So, proprietorship can be thought of as a spectrum- from its first application in the market to its official acknowledgement by signing up. 

Legal principles and factual analysis are combined in the evaluation of trademark infringement and passing off. The degree of resemblance between the contested trademarks and the events leading up to the adoption of the challenged mark are the main areas of overlap in the appraisal of each claim, even if each one calls for different legal considerations. Despite the fact that the infringement claim surfaced after the initial lawsuit filing, it is appropriate for the Court to address it first given this overlap.  

The court held that misrepresentation can take many different forms, such as using identical trademarks, packaging, or marketing techniques that lead to confusion among consumers regarding the source of the products or services. The Plaintiff’s final burden of proof is to demonstrate that the Defendants’ deception caused them harm or that they will likely cause them harm. Possible manifestations of this harm include a decrease in sales, a dilution of goodwill, or damage to the Plaintiff’s trademark’s reputation. 

The Defendants’ argument failed to persuade the Court. A well-established rule in trademark law states that a plaintiff may still obtain an injunction against a particular defendant in a trademark infringement case even if they choose not to file a lawsuit against other parties who might own marks that are similar to their own.  

The court held that the defendants or any representatives working on their behalf are irrevocably prohibited from producing, offering for sale, or marketing, promotion, or in any other context where the trademark “VIGOURA” or any mark that is misleadingly similar to the plaintiff’s “VIAGRA” trademark in respect to any of their products as would constitute violating or passing off the Plaintiff’s registered trademark “VIAGRA.”  

 

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Judgment reviewed by Riddhi S Bhora. 

 

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