S.12A Commercial Courts Act | Pre-Litigation Mediation Not Necessary In Cases Of Continuing IPR Infringement: Supreme Court

The Supreme Court has held that the requirement of pre-institution mediation under Section 12A of the Commercial Courts Act cannot be mechanically applied in cases involving continuing infringement of intellectual property rights, such as trademark violations. The Court observed that insisting on mediation before filing a suit in such situations would effectively leave the plaintiff without a remedy, allowing the infringer to continue profiting under the cover of procedural formalities. The provision, the Court said, was never intended to produce such an “anomalous result.”

"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. Section 12A of the Commercial Courts Ac Act was not intended to achieve such kind of anomalous result,"observed the Court.

Clarifying the scope of “urgency” under Section 12A, the Court held that when a case involves ongoing infringement, the element of urgency must be assessed in light of the continuing injury and the public interest in preventing deception. It added that mere delay in filing a suit does not by itself negate the urgency of relief, so long as the infringement is ongoing

“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.”, the court held.

A bench of Justices Sanjay Kumar and Alok Aradhe heard the case where an appeal stemmed from a dispute between Appellant- Novenco Building and Industry A/S and its former Indian distributor, Respondent-Xero Energy Engineering Solutions Pvt. Ltd., whose director allegedly founded Aeronaut Fans Industry Pvt. Ltd. to manufacture and sell identical industrial fans, infringing Novenco's patents and designs.

After discovering the infringement in 2022 and confirming it through an expert inspection in December 2023, Novenco filed a commercial suit in June 2024 seeking an immediate injunction. However, the Himachal Pradesh High Court rejected the plaint, holding that the six-month delay showed a lack of urgency and that Novenco was therefore obliged to undergo pre-litigation mediation under Section 12A of the Commercial Courts Act.

Aggrieved by the High Court's decision, Novenco approached the Supreme Court.

Section 12A of the Commercial Courts Act mandates that a commercial suit cannot be filed unless the plaintiff first exhausts the remedy of pre-institution mediation. However, this requirement is not applicable if the suit "contemplates any urgent interim relief."

The core legal dispute before the Court was the interpretation of this phrase, especifically, whether a delay between discovering an infringement and filing a suit negates the element of "urgency."

Setting aside the High Court's decision, the judgment authored by Justice Aradhe each act of manufacturing or selling an infringing product constitutes a fresh cause of action 

"From the standpoint of the appellant, each day of continuing infringement aggravates injury to its intellectual property and erodes its market standing. The urgency, therefore, 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.", the Court observed.

“The subject matter of the present action is continuing infringement of intellectual property. Each act of manufacture, sale, or offer for sale of the infringing product constitutes a fresh wrong and recurring cause of action. It is well settled in law 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.”, the Court added.

"The learned Single Judge as well as the Division Bench of the High Court erred in construing the test for urgent relief enumerated in Section 12A of the Act, in as much as the courts have proceeded to examine the entitlement of the appellant to urgent relief based on the merits of the case rather than looking at the urgency as is evident from the plaint and the documents annexed thereto from the standpoint of the plaintiff. The High Court has proceeded on the premise that lapse of time between the appellant's discovery of infringement and filing of suit negated the element of urgency. Such an approach, in our considered view, is contrary to the principles laid down by the decisions of this Court. The High Court has also failed to take into account that the present action is one of the continuous infringement of intellectual property.", the Court said.

The Court said that every suit seeking urgent interim relief against IP infringement should not be characterized as a mere camouflage to evade mediation. Rather, the Court shall evaluate the substance from the standpoint of the plaintiff, otherwise the mandate of pre-institution mediation would allow the infringer to continue to profit from the continuing infringement and impact the public interest.

"The court cannot be unmindful of the fact that intellectual property disputes are not confined to the private realm. When imitation masquerades as innovation, it sows confusion among consumers, taints the market place and diminishes faith in the sanctity of the trade. The public interest, therefore, becomes the moral axis upon which the urgency turns. Therefore, 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 added.

Test Laid Down For Adjudication Of Interim Relief

“The legal test distilled from the aforesaid decisions for the purposes of rejection of the plaint and for adjudication of interim relief can be culled out as follows:

(i) Section 12A mandatorily requires pre-institution mediation for commercial suits, non-compliance of which would ordinarily render the plaint institutionally defective.

(ii) A plaintiff can be exempted from the requirement of Section 12A only when the plaint and the documents attached with it clearly show a real need for urgent interim intervention. A wholesome reading of the plaint and the material annexed to the plaint ought to disclose the need for urgent relief.

(iii) The court must look at the plaint, pleadings and supporting documents to decide whether urgent interim relief is 14 genuinely contemplated. The court may also look for immediacy of the peril, irreparable harm, risk of losing rights/assets, statutory timelines, perishable subject-matter, or where delay would render eventual relief ineffective.

(iv) A proforma or anticipatory prayer for urgent relief used as a device to skip mediation will be ignored and the court can require the parties to comply with Section 12A of the Act.

(v) The court is not concerned with the merits of the urgent relief, but if the relief sought seems to be plausibly urgent from the standpoint of the plaintiff the court can dispense with the requirement under Section 12A of the Act.”

Accordingly, the appeal was allowed and the commercial suit was restored to the files of the High Court.

Cause Title: NOVENCO BUILDING AND INDUSTRY A/S VERSUS XERO ENERGY ENGINEERING SOLUTIONS PRIVATE LTD. & ANR.

Citation : 2025 LiveLaw (SC) 1027

Click here to read/download the judgment

Appearance:

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.