Power to Reject a Suit Is Drastic—Courts Must Resist Premature Dismissals Unless Clearly Barred by Law: Rajasthan High Court Refuses to Dismiss IPR Injunction Suit at Threshold

“A Suit May Involve Trademarks, But That Alone Won’t Make It a Commercial Dispute”, In a significant ruling delivered on May 15, 2025, the Rajasthan High Court dismissed a revision petition seeking rejection of a civil suit in an intellectual property dispute, reiterating that Order VII Rule 11 CPC is a “drastic power” that courts must exercise sparingly and only where the suit is ex facie barred.

Deciding in M/s Shyam Oils v. Abhinav Jain, Justice Anoop Kumar Dhand upheld the trial court’s refusal to reject a plaint filed by the plaintiff for an injunction against the use of the trademark “Shahi Sikka.” The Court categorically ruled:

“Rejection of the plaint under Order 7 Rule 11 of CPC is a drastic power conferred on the court to terminate a civil action at the threshold... it is the averments in the plaint that have to be read as a whole to find out whether it discloses a cause of action or whether the suit is barred under any law.”

The dispute originated when Abhinav Jain, proprietor of M/s Aagam Oils, filed a suit seeking a permanent injunction to restrain M/s Shyam Oils, run by Shyam Sundar Chugani, from using the trademark label “Shahi Sikka” in the sale of edible oils. The suit was filed before the Additional District Judge, Malpura.

The defendant filed an application under Order VII Rule 11 CPC, arguing that:

1. The suit was barred under Section 142(2) of the Trade Marks Act, 1999, as it pertained to a threat of infringement.

2. The dispute involved intellectual property rights, and therefore, per the Commercial Courts Act, 2015, it should lie exclusively before a Commercial Court.

3. The suit was undervalued, as the relief was allegedly worth more than the plaintiff's claimed value of below ₹3,00,000.

The trial court rejected the application, prompting the defendant to approach the High Court by way of a revision petition.

 “Every IP Dispute Is Not Automatically a Commercial Suit”

Justice Dhand decisively rejected the argument that every intellectual property dispute must be valued above ₹3 lakhs and brought before a Commercial Court. Citing with approval the Division Bench of the Delhi High Court in Pankaj Ravjibhai Patel v. SSS Pharmachem Pvt. Ltd. (305 (2023) DLT 462), the Court clarified:

“It would be wholly incorrect to proceed on the premise that the dispute forming the subject matter of IPR suits would necessarily and invariably be liable to be valued at ₹3 lakhs or above.”

He further noted: “Had this been the intention of the legislature, it would have been so indicated in the statute. In absence thereof, Courts cannot read into a provision a meaning which will render other sections or parts of the enactment otiose.”

The Court underscored that both conditions under the Commercial Courts Act must be satisfied—the dispute must qualify as a “commercial dispute” and must meet the minimum “specified value” of ₹3,00,000. Mere involvement of a trademark was not enough.

On Valuation: “Plaintiff’s Valuation Must Be Tentatively Accepted”

Addressing the allegation of undervaluation, the Court cited the Supreme Court's precedent in M/s. Commercial Aviation and Travel Company v. Vimla Pannalal, (1988) 3 SCC 423, and held:

“If the Court is itself unable to say what the correct valuation of the relief is, it cannot require the plaintiff to correct the valuation… the Court has no other alternative than to accept plaintiff's valuation tentatively.”

In the present case, the defendant had not provided any prima facie material to demonstrate that the plaintiff’s valuation was arbitrary or fraudulent. The Court found no reason to interfere with the jurisdiction of the District Court on this ground.

On Legal Bar: “There Was No Groundless Threat Alleged”

Rejecting the invocation of Section 142(2) of the Trade Marks Act, 1999, the Court held that this provision applies only to cases involving groundless threats of infringement, not to direct suits for injunction. Justice Dhand noted:

“The suit does not allege a threat of infringement action but seeks direct relief against trademark usage. Hence, Section 142(2) is not applicable.”

The Court added that Chancery Pavilion (Karnataka High Court) and similar cases cited by the petitioner were distinguishable and had no direct bearing on the facts at hand.

Order VII Rule 11: “Threshold Rejection Is an Extreme Measure”

In strong words reaffirming the limited scope of Order VII Rule 11 CPC, the Court emphasized:

“This power to terminate a civil action at the threshold is drastic… Only if the averments in the plaint ex facie do not disclose a cause of action or appear to be barred by law, can the plaint be rejected.”

Quoting the Supreme Court’s ruling in P.V. Guru Raj Reddy v. P. Neeradha Reddy, (2015) 8 SCC 331, the Court observed:

“The stand of the defendants in the written statement or in the application for rejection of the plaint is wholly immaterial… In all other situations, the claims will have to be adjudicated in the course of the trial.”

The High Court refused to entertain what it considered a premature and meritless attempt to scuttle the plaintiff’s case before trial. The revision petition was dismissed with the observation:

“This Court does not deem it fit to take recourse of the drastic powers conferred under Order VII Rule 11 CPC… Accordingly, the present revision petition is dismissed.”

This judgment serves as a pointed reminder that intellectual property disputes must meet both jurisdictional and valuation thresholds to qualify as commercial suits, and that a plaint cannot be struck down at the outset unless it clearly fails to disclose a cause of action or is barred by law on the face of it.

Date of Decision: 15 May 2025