The refund of the court fees acts as an ancillary economic incentive for settlement of disputes without court intervention: High Court of Delhi

 IN THE HIGH COURT OF DELHI AT NEW DELHI Decided on: 2nd March 2022 CS(COMM) 535 2021 SUN PHARMA LABORATORIES LTD Plaintiff Represented by: Mr Sachin Gupta Ms Jasleen Kaur Mr Pratyush Rao Mr Snehal Singh and Ms Swati Meenu Advocates. VHM& ORS. ..... Defendants Represented by: Mr Arun Kumar Advocate. HON BLE MS. JUSTICE MUKTA GUPTA MUKTA GUPTA J.IA No.3370 2022By this application under Order XXIII Rule 3 CPC the plaintiff and the defendants namely VHM Krypton Pharmaceuticals and MBS Formulation impleaded as defendant nos.1 2 and 3 seek decree of the suit in terms of the settlement arrived at between the Taking on record the settlement application is disposed of. parties. CS(COMM.) 535 2021 Plaintiff and defendant nos.1 2 and 3 have entered into a settlement on the following terms and conditions as noted in para 2 of the IA No.3370 2022 are as under: The Defendants above named hereby recognizes the Plaintiff to be the proprietor of the trade mark PANTOCID having the exclusive right to the use of the aforementioned CS(COMM.) 535 2021 trade mark in respect of medicinal and pharmaceutical products in business The Defendants undertake to refrain themselves their its assignees proprietors partners distributors dealers stockists retailers chemists servants and agents from manufacturing selling offering for sale advertising directly or indirectly dealing in medicinal preparations under the impugned mark PANTOCIDE or any other trade mark as may be deceptively similar to the trade mark PANTOCID amounting infringement of registered trade mark under no.791979 The Defendants state that there are no existing stocks of finished products under the impugned mark PANTOCIDE available with them The Defendants state that they have destroyed all the stationery packaging promotional and publicity material and labels under the impugned mark The Defendant No.2 & 3 confirm that they shall destroy the packaging material which was seized by the Ld. Local Commissioner during commission on 30.10.2021 in the presence of the Plaintiff’s representative over video conferencing the execution of vi. All batch details of the impugned product under the its variants are impugned mark PANTOCIDE and disclosed as under: PANTOCIDE L 02 04 02 04 Mfg. date CS(COMM.) 535 2021 19 I 05 19 I 23 05 04 06 01 21 F 07 06 01 05 04 03 12 03 12 08 11 vii. The Defendants confirm that they shall not file any application for registration of any trade mark which is trade mark PANTOCID and will not challenge the rights of the trade mark labels either directly or indirectly the Plaintiff’s viii. The Defendants have computed the profits made by them from the sales of medicine under the impugned mark which comes to INR 4.59 lakhs. The Defendant has deposited the said amount as token costs by way of a demand draft under no.000758 dated 05.01.2022 with the CS(COMM.) 535 2021 Plaintiff The Defendants hereby agree that the Plaintiff shall not be liable in any manner whatsoever whether legal or otherwise arising from Defendants under the impugned mark and the Defendants shall indemnify and hold harmless the Plaintiff from any cost or claim of damages arising from it the goods provided by The abovementioned undertakings have been tendered by Sh. Manoj Kumar Sah Authorized Signatory of all the Defendants and the same shall be binding on the Defendants in business franchisees licensees distributors dealers and agents for all times to their assignees The settlement agreement is duly signed by the constituted attorney of the plaintiff as also the authorized signatory of the defendants Mr Manoj Kumar Sah. The constituted attorney of the plaintiff has also filed the plaint on behalf of the plaintiff and his affidavits and necessary authorization are already on record. Authorization letters in favour of Mr Manoj Kumar Sah on behalf of the defendant nos.1 2 and 3 have been placed on record along the vakalatnama of learned counsel for the defendant. Consequently the suit is decreed in terms of the settlement arrived at between the parties as also the prayer clausesandof the plaint. Learned counsel for the plaintiff submits that since the settlement in the suit was arrived at the initial stage itself as summons in the suit were issued on 27th October 2021 and on the next date before this Court the parties stated that they have settled the matter and sought some time to place on record the terms of settlement full court fee be returned to the plaintiff in terms of the decision of the Hon’ble Supreme Court reported as 3 CS(COMM.) 535 2021 SCC 560 High Court of Judicature at Madras Vs. M. C. Subramaniam & The Hob’ble Supreme Court in the above noted decision held that though in strict terms when settlement is arrived at between the parties by not adopting a mode prescribed under Section 89 CPC the party may not be entitled to full court fee however Section 89 CPC has to be given a liberal interpretation and thus in cases where settlement is arrived at out of court the full court fee be refunded. It was held: “23. We find ourselves in agreement with the approach taken by the High Courts in the decisions stated supra. The purpose of Section 69 A is to reward parties who have chosen to withdraw their litigations in favour of more conciliatory dispute settlement mechanisms thus saving the time and resources of the Court by enabling them to claim refund of the court fees deposited by them. Such refund of court fee though it may not be connected to the substance of the dispute between the parties is certainly an ancillary economic incentive for pushing them towards exploring alternative methods of dispute settlement. As the Karnataka High Court has rightly observed in Kamalamma the parties who have agreed to settle their disputes without requiring judicial intervention Under Section 89 CPC are even more deserving of this benefit. This is because by choosing to resolve their claims themselves they have saved the State of the logistical hassle of arranging for a third party institution to settle the dispute. Though arbitration and mediation are certainly salutary dispute resolution mechanisms we also find that the importance of private amicable negotiation between the parties cannot be understated. In our view there is no justifiable reason why Section 69 A should only incentivise the methods of out of court settlement stated in Section 89 CPC and afford step brotherly treatment to other methods availed of by the 24. Admittedly there may be situations wherein the parties have after the course of a long drawn trial or multiple frivolous CS(COMM.) 535 2021 litigations approached the Court seeking refund of court fees in the guise of having settled their disputes. In such cases the Court may having regard to the previous conduct of the parties and the principles of equity refuse to grant relief under the relevant rules pertaining to court fees. However we do not find the present case as being of such nature. 25. Thus even though a strict construction of the terms of Section 89 CPC and Section 69 A of the 1955 Act may not encompass such private negotiations and settlements between the parties we emphasize that the participants in such settlements will be entitled to the same benefits as those who have been referred to explore alternate dispute settlement methods Under Section 89 CPC. Indeed we find it puzzling that the petitioner should be so vehemently opposed Registry State Government will be losing a one time court fee in the short term they will be saved the expense and opportunity cost of managing an endless cycle of litigation in the long term. It is therefore in their own interest to allow the Respondent No. 1’s claim.” to granting such benefit. Though Consequently the suit is decreed in terms of the settlement noted above. Decree sheet be prepared in terms of the settlement arrived at between the parties. Registry is directed to issue a certificate releasing full court fee to the authorized attorney of the plaintiff. IA No.13961 2021 Application is disposed of as infructuous. Order be uploaded on the website of this Court. JUDGE MARCH 02 2022 MK MUKTA GUPTA) CS(COMM.) 535 2021 

Summary: There is no justifiable reason why Section 69-A should only incentivise the methods of out-of-court settlement stated in Section 89 CPC and afford step-brotherly treatment to other methods availed of by the parties. Even though a strict construction of the terms of Section 89 CPC and Section 69-A of the 1955 Act may not encompass such private negotiations and settlements between the parties, the participants in such settlements is entitled to the same benefits as those who have been referred to explore alternate dispute settlement methods Under Section 89 CPC and the same was upheld by High Court of Delhi through the learned bench led by JUSTICE MUKTA GUPTA in the case of SUN PHARMA LABORATORIES LTD. vs. VHM (VARSHA HEALTH MEDICINE) &amp; ORS. [CS(COMM) 535/2021] on 02.03.2022. The facts of the case are that the Defendants recognizes the Plaintiff to be the proprietor of the trade mark PANTOCID having the exclusive right to the use of the aforementioned trade mark in respect of medicinal and pharmaceutical products. The Defendants undertake to refrain themselves from directly or indirectly dealing in medicinal preparations under the impugned mark PANTOCIDE or any other trade mark as may be deceptively similar to the Plaintiff’s trade mark PANTOCID amounting to infringement of registered trade mark. The Defendants state that there are no existing stocks of finished products under the impugned mark PANTOCIDE available with them and that they have destroyed all the stationery, packaging, promotional and publicity material and labels under the impugned mark. The plaintiff’s counsel submitted that since the settlement in the suit was arrived at the initial stage itself, full court fee be returned to the plaintiff. It was stated that the parties have settled the matter and sought some time to place on record the terms of settlement. The Court held that in strict terms when settlement is arrived at between the parties by not adopting a mode prescribed under Section 89 CPC, the party may not be entitled to full court fee, however, Section 89 CPC has to be given a liberal interpretation and thus in cases where settlement is arrived at out of court, the full court fee be refunded. Therefore, registry was directed to issue a certificate releasing full court fee to the authorized attorney of the plaintiff. The Court observed that, “there is no justifiable reason why Section 69-A should only incentivise the methods of out-of-court settlement stated in Section 89 CPC and afford step-brotherly treatment to other methods availed of by the parties. Even though a strict construction of the terms of Section 89 CPC and Section 69-A of the 1955 Act may not encompass such private negotiations and settlements between the parties, the participants in such settlements is entitled to the same benefits as those who have been referred to explore alternate dispute settlement methods Under Section 89 CPC.”