Case title: 

Bajaj Auto Ltd v. T.V.S. Motor Company Ltd

Date of Order: 

4th October 2010

Bench: 

Hon’ble Mr. Justice Elipe Dharma Rao

Hon’ble Mr. Justice K.K. Sasidharan 

Parties: 

Appellant (/Defendant): Bajaj Auto Ltd

Respondent (/Plaintiff): T.V.S. Motor Company

SUBJECT:

The instant case dealt by the Hon’ble High Court of Madras (hereinafter referred to as ‘the High Court’ or ‘the Court’) involves suits filed by Bajaj Auto Limited and TVS Motor Company. The issue at hand is whether the right given to the plaintiff to present evidence first, as outlined in Rule 1 and 2 of Order 2 of the Civil Procedure Code, is genuine or more like a legal obligation. The appeal is against a court order from March 10, 2010, where the judge instructed the appellant to begin presenting evidence in a specific lawsuit. The judgment delves into the complexities of patent validity, challenging the presumption, and emphasizes a cautious approach in granting injunctions, particularly in cases with controversies over prior art and invention existence.

IMPORTANT PROVISIONS:

The Patents Act, 1970 (Patents Act):

• Section 106
• Section 105
• Section 101
• Section 103
• Section 12
• Section 13

The Code of Civil Procedure, 1908 (CPC):

• Order 2 Rule 2
• Order 1 Rule 18

The Negotiable Instruments Act, 1881 (NI Act):

• Section 18

The Evidence Act 1872 (IEA):

• Section 101
• Section 102

OVERVIEW:

• The plaintiff is a prominent member of the well-known TVS Group, engaged in manufacturing automobile products and holding numerous patents for their developed products. They introduced a 125 CC motorbike named "TVS Flame."
• The plaintiff sought a declaration that the threats made by the defendant, claiming that the plaintiff was infringing the defendant's patent and that the defendant intended to take legal action, were unjustified.
• The plaintiff requested a declaration stating that their product, TVS Flame, which utilizes two spark plugs with a screw-fitted sleeve and three valves, does not infringe the defendant's patent.
• The plaintiff asked for a permanent injunction to prevent the defendant, their agents, servants, licensees, employees, distributors, and anyone associated from continuing to issue threats regarding patent infringement or any similar threats. This injunction would extend to various means, including circulars, advertisements, oral or written communications, and interference with the launch and sale of TVS Flame.
• The plaintiff sought a direction for the defendant to compensate them with a sum of Rs.1 crore, or another amount determined by the court after reviewing the records, for the damages incurred due to the unjustified threats made by the defendant.
• The plaintiff requested an order for the costs of the suit to be awarded in their favor.
• The plaintiff left room for any additional relief that the Hon'ble Court might find appropriate based on the facts and circumstances of the case.
• In the second lawsuit, the appellant (Bajaj Auto Ltd) filed a suit against the respondent (TVS).
• The appellant sought a permanent injunction restraining the plaintiff from infringing the appellant's patent. This includes preventing the respondent claiming through or under it, from using the technology or invention described in the said patent.
• The injunction also aims to stop the plaintiff from manufacturing, marketing, selling, offering for sale, or exporting 2/3 wheelers, including the proposed 125 cc Flame motorcycle or any other product that infringes the defendant's patent.
• The defendant asked the court to order the plaintiff to pay a sum of Rs.10,50,000 as damages for the infringement of the patent.
• The defendant also sought an order and decree directing the defendant to deliver up to the plaintiff, for destruction, all infringing copies, and articles, including vehicles containing engines that infringe the plaintiff's patent.
• When the suits were ready for trial, the learned Single Judge addressed a preliminary issue concerning who should present evidence first. Both parties argued their positions on this matter. The learned Single Judge, considering that infringement is the central theme in both suits and even though the first suit involves the validity of the patent, determined that the appellant should start by presenting evidence.
• The appellant has appealed this decision, expressing dissatisfaction with the judge's ruling. The appeals refer to the challenges raised by the defendant against the decision on which party should initiate the presentation of evidence.

ISSUES RAISED:

• Whether this Court has got territorial jurisdiction to try this suit?
• Whether the plaintiff has got any cause of action as prayed for by the plaintiff and whether part cause of action has arisen within the jurisdiction of this Court?
• Whether the suit is barred by Order 2 Rule 2 CPC due to an earlier suit in Bombay High Court?
• Whether the plaintiff is entitled to seek an injunction against the defendant’s threat after filing the 2^nd suit?
• Whether the suit has become infructuous as claimed by the defendant?
• Whether the plaintiff's product TVS Flame not infringe the defendant's patent?
• Whether the plaintiff is entitled to damages as prayed for or otherwise?
• Whether the plaintiff is entitled to any of the relief prayed for in the above suit?

ARGUMENTS ADVANCED BY THE APPELLANT:

• The technology in question was considered prior art, having been utilized in a US Honda Patent, suggesting that the initial patent should not have been approved.
• The applicant asserts a claim for a design featuring two spark plugs and two valves, while the respondent's design incorporates two spark plugs and three valves, for which they possess a license.
• In a suit regarding a groundless threat, the plaintiff should have led evidence first, unless the defendant admitted issuing the threat. Since the defendant denied making any threat, the plaintiff should be the one to present evidence initially.
• As the plaintiff sought a declaration of non-infringement, the evidence should have been presented by the plaintiff first in a suit for declaration.
• The burden of proving the validity of the patent lies with the party alleging its invalidity. Therefore, the plaintiff was obligated to provide evidence at the outset.
• The issues framed by the learned Single Judge indicated that the plaintiff was to present evidence first.
• The order of the learned Single Judge directing the defendant to present evidence first was deemed against the law and the scheme of the Civil Procedure Code. It was argued that this order caused significant prejudice to the defendant, justifying the appeal under Clause 15 of the Letters Patent.

ARGUMENTS ADVANCED BY THE RESPONDENT:

• The order being challenged in this appeal is not considered a judgment within the meaning of Clause 15 of the Letters Patent. Consequently, it is argued that the appeal itself is not maintainable.
• While acknowledging that the plaintiff undertook the responsibility of proving the groundless threat and non-infringement in the plaint of the 1^st suit, it is asserted that this does not absolve the defendant of the burden to prove their case, especially considering the subsequent suit filed by the defendant in the 2^nd suit.
• It is emphasized that the learned Judge did not direct the defendant in the 1^st suit to present evidence first. The specific direction was to the plaintiff in the 2^nd suit to open their case. Therefore, it is argued that it cannot be asserted that the defendant in the suit was made to produce their evidence without instructing the plaintiff to begin.

JUDGEMENT ANALYSIS:

• Section 105 of the Patents Act, 1970, empowers the court to issue a declaration as to non-infringement. Before making such a declaration, the court must be satisfied that the plaintiff has complied with the requirements outlined in Section 105(a) and (b).
• Section 106 of the Patents Act permits the court to provide relief in the case of a groundless threat or infringement. This provision also indicates that the court has the authority to grant a declaration that threats are unjustifiable, along with a consequential injunction and the possibility of awarding damages.
• Order 18, Rule 1 CPC addresses the right to begin a case, encompassing both the presentation of evidence and oral arguments. However, Rule 2 of Order 18 specifically deals with opening the case and producing evidence. When read together, Rules 1 and 2 of Order 18 indicate that the party granted the right to begin must lead evidence first.
• In a suit on promissory notes where the defendant admits execution, the burden shifts to them to prove discharge. Section 18 of the Negotiable Instruments Act establishes a presumption that every negotiable instrument was made or drawn as shown in the document, placing the burden on the opposite party to prove otherwise.
• In terms of Section 101 of the Evidence Act, the burden of proving a fact lies with the party substantially asserting the affirmative issues, not with the party denying them.
• In the case mentioned, the trial court and the High Court operated on the understanding that the defendant was in a dominating position, and a fiduciary relationship existed between the parties. However, the defendant in their written statement disputed these assertions.
• Pleadings are not evidence but form the basis for raising issues. Since the defendant did not admit or acknowledge the fiduciary relationship, it becomes an issue that needs to be proven.
• In the case of A. Raghavamma vs. A. Chenchamma, the Supreme Court highlighted the distinction between "burden of proof" and "onus of proof."
• There is no indication in the Patents Act suggesting that in a suit for a declaration of non-infringement, the burden shifts to the defendant to prove infringement. Primarily, the responsibility lies with the plaintiff to present evidence in support of their case.
• When two suits are interlinked, the trial court may order a joint trial and exercise discretion on which suit's evidence should be taken first. The normal practice is for the plaintiff to open the case.
• The issues framed by the trial court provide insight into the burden of proof. Issues 1 and 3 in the 2^nd suit are to be proved by the plaintiff, and the defendant raised a preliminary objection regarding the filing of a similar suit in the Bombay High Court.
•  The plaintiff, having initiated the suit for a declaration of non-infringement and other reliefs, carries the initial burden of proving their case.
• The High Court may exercise discretion in joint trials, and the issues framed indicate that the plaintiff is expected to establish crucial aspects of their claims.
• The court needs to ensure a fair and just distribution of the burden of proof. If there is a valid concern about a shift in this burden, it is crucial to address it to maintain the integrity of the legal process.
• The legal analysis argues that the primary burden of proof was on the plaintiff, emphasizing the nature of their suit, which included a comprehensive set of reliefs, such as a declaration, a decree of non-infringement, and damages. The fact that the defendant subsequently filed a suit seeking a decree of injunction based on their patent does not relieve the plaintiff of their obligation to prove their averments.
• The plaintiff's suit was not solely for an injunction but included a declaration, a decree of non-infringement, and damages.
• The plaintiff had the primary burden to prove their case, especially considering their substantial contention that their product had nothing to do with the defendant's patent.
• The concern is specifically about who should begin first, and it asserts that, in the absence of an order for a joint trial, the plaintiff should have been directed to lead evidence first.
• The direction given to the defendant to begin was deemed contrary to the scheme of civil jurisprudence, leading to the decision to set aside the order passed by the learned Single Judge.
• This legal analysis provides a foundation for the decision to set aside the order, highlighting the importance of the nature of the plaintiff's suit and the corresponding burden of proof.

CONCLUSION:

The appeals have been allowed, by the High Court overturning the prior order dated March 10, 2010, in both suits. The Court directed the plaintiff to produce evidence at the initial stage, emphasizing that the judgment's observations were confined to the specific issue of determining the party to commence the case. No costs were awarded, and the learned Judge was urged to decide the suit on its merits without influence from the observations made in this judgment regarding the order of presenting evidence.