Name: Abhinav Bhalla (Legal Associate to Sr. Adv. Mr. Chander M. Lall)

Introduction

The question of whether a civil suit for trademark infringement should be stayed pending the outcome of rectification proceedings remains a central issue in trademark law. Section 124 of the Trade Marks Act, 1999 provides a detailed framework for such situations, offering courts guidance on when to stay civil suits involving trademark infringement. This article will delve into judicial interpretations of Section 124, focusing on landmark decisions such as Patel Field Marshal Agencies v. P.M. Diesels Ltd, Sana Herbals v. Mohsin Dehlvi, and Amrish Aggarwal v. Venus Home Appliances Pvt. Ltd (DB), particularly in the post-IPAB jurisprudence context.

Legal Framework of Section 124

Section 124 of the Trade Marks Act, 1999 governs the stay of civil suits for trademark infringement in cases where the validity of the registered trademark is challenged. The section is divided into two key scenarios:

1. Section 124(1)(i): If rectification proceedings are already pending when the civil suit is initiated, the suit must be stayed until the resolution of those proceedings.
2. Section 124(1)(ii): If no rectification proceedings have been initiated at the time the civil suit is filed, the court must frame an issue on the validity and stay the suit for three months to allow time for filing the rectification petition. The suit is stayed until the rectification process is completed, provided the petition is filed within the stipulated period.

Judicial Interpretation: Patel Field Marshal Case

The Patel Field Marshal judgment from the Supreme Court is a landmark in understanding the interplay between trademark rectification and infringement proceedings. The Court clarified that once a rectification petition is filed, the infringement suit must be stayed to avoid contradictory rulings. The principle is rooted in the need to ensure that the validity of a trademark is resolved before a decision on infringement is made, as both proceedings deal with interrelated issues.

The Apex Court emphasized that if the Civil Court deems the invalidity plea tenable, it must allow the defendant to file for rectification and stay the suit. This ruling has influenced subsequent decisions on the mandatory stay of suits under Section 124, stressing the importance of harmonizing rectification and infringement proceedings.

Post-IPAB Jurisprudence and the Sana Herbals Controversy

The abolition of the IPAB under the Tribunals Reforms Act, 2021 transferred the jurisdiction over rectification petitions to the High Courts. This shift led to differing interpretations, notably in Sana Herbals v. Mohsin Dehlvi. In this case, the Single Judge held that since both the rectification and infringement suits would now be heard by the High Court, there was no need to stay the suit. This interpretation was based on the rationale that consolidating both proceedings before one authority (the High Court) would prevent contradictory rulings.

However, this view was later criticized by a coordinate bench of the Delhi High Court in Amrish Aggarwal v. M/S Venus Homes Appliances (SJ). The Sana Herbals ruling, while pragmatic, was perceived as overlooking the statutory mandate of Section 124(2), which explicitly requires a stay of the civil suit once rectification proceedings are initiated. The decision arguably conflicted with the principles laid down in Patel Field Marshal, which prioritized avoiding multiple proceedings on the same issue​.

The Amrish Aggarwal Judgment: Reaffirming the Mandatory Stay

The Division Bench of the Delhi High Court in Amrish Aggarwal (DB) directly addressed the Sana Herbals interpretation and rejected its conclusions. The Court clarified that the legislative intent of Section 124 remains intact, even after the abolition of the IPAB. The stay of suits is a statutory requirement, and the abolition of the IPAB does not alter this mandate. The Court emphasized that legislative amendments did not modify Section 124(2), which continues to require that a suit be stayed once rectification proceedings are initiated​​.

Analysis of the Stay Requirement

In Amrish Aggarwal (DB), the court reaffirmed the mandatory nature of the stay under Section 124, concluding that:

1. Plain Language of the Statute: The Court emphasized that Section 124(2) provides a clear and unambiguous directive. It mandates a stay of the infringement suit once a rectification petition is filed, leaving no room for judicial discretion.
2. Legislative Silence on Amendments: The Court further noted that while the Tribunal Reforms Act, 2021, abolished the IPAB, it did not amend Section 124(2). This lack of amendment signals that the legislature intended for the stay requirement to continue operating as before.

The Amrish Aggarwal (DB) decision significantly advanced the jurisprudence on the stay of civil suits under Section 124 of the Trade Marks Act, 1999, particularly in light of the abolition of the IPAB and the transfer of jurisdiction to the High Courts. The Division Bench of the Delhi High Court in Amrish Aggarwal (DB) provided a detailed critique of the Sana Herbals interpretation, which had argued against the necessity of staying civil suits following the Tribunal Reforms Act, 2021.

The Division Bench pointed out that while rectification petitions are now filed before the High Court, infringement suits may still be filed in District Courts under the Commercial Courts Act, depending on the claim’s value. This distinction means that rectification petitions and infringement suits could be heard by different Courts. Therefore, the potential for conflicting decisions persists, unless the suit is mandatorily stayed under Section 124.

Moreover, the court emphasized that consolidation of the two proceedings, as suggested in Sana Herbals, is not always feasible. If an infringement suit is filed in a District Court and the rectification petition is before a High Court, practical and procedural difficulties arise, making it impossible to consolidate these matters into a single proceeding. In such cases, the statutory stay under Section 124(2) remains the only mechanism to ensure that the decisions in both proceedings are consistent and non-contradictory.

The Division Bench in Amrish Aggarwal (DB) also made it clear that the mandatory nature of the stay under Section 124(2) persists, even after the abolition of the IPAB. The legislative framework of Section 124 was deliberately left unchanged despite the transfer of jurisdiction from the IPAB to the High Court. The court reasoned that if the legislature had intended to modify or relax the stay requirement in light of the Tribunal Reforms Act, 2021, it would have amended or repealed Section 124(2). Since no such amendment was made, the mandatory stay remains an integral part of the statutory scheme governing trademark infringement and rectification proceedings. This reinforces the necessity for the stay, to avoid conflicting decisions between courts handling rectification and those dealing with infringement suits.

The Amrish Aggarwal (DB) decision aligns closely with the earlier Supreme Court ruling in Patel Field Marshal, which established the requirement for courts to stay suits pending the resolution of rectification proceedings. The Court in Amrish Aggarwal (DB) reiterated that the statutory mandate under Section 124 cannot be ignored or diluted by judicial interpretation.

Conclusion

The jurisprudence surrounding Section 124 of the Trade Marks Act, 1999 has been shaped by competing interpretations, especially following the abolition of the IPAB. While Sana Herbals suggested a more flexible approach to staying suits, the Amrish Aggarwal (DB) decision reaffirmed the mandatory nature of the stay under Section 124. The legislative intent remains clear: to prevent conflicting decisions between Courts handling infringement and rectification proceedings. Thus, the mandatory stay of civil suits pending rectification remains a crucial aspect of trademark litigation in India, as reaffirmed by Amrish Aggarwal (DB) and rooted in the reasoning of Patel Field Marshal.

The Amrish Aggarwal (DB) ruling reinforces the view that the statutory mandate of Section 124 cannot be diluted, and the suit must be stayed pending rectification proceedings to avoid conflicting decisions and ensure the integrity of trademark law.