Continuing Intellectual Property Infringement May Constitute Urgent Interim Relief, Exempting Commercial Suits From Mandatory Pre-Institution Mediation

Introduction

The Supreme Court has clarified the scope and application of mandatory pre-institution mediation under Section 12A of the Commercial Courts Act, 2015, holding that commercial suits alleging continuing infringement of intellectual property rights may legitimately be treated as contemplating urgent interim relief. The Court emphasised that in such cases, the mere passage of time between discovery of infringement and institution of proceedings does not, by itself, negate urgency.

Setting aside the rejection of the plaint by the Himachal Pradesh High Court, the Supreme Court held that courts must adopt a contextual and plaintiff-centric approach while assessing urgency under Section 12A. The decision reinforces that the inquiry at this stage is limited and does not permit a deeper examination of merits or likelihood of success. The ruling provides authoritative guidance on balancing the legislative objective of promoting mediation with the need to preserve effective judicial remedies in cases of ongoing harm.

Case Background

The appellant, Novenco Building and Industry A/S, is a company incorporated in Denmark and engaged in the design and manufacture of high-efficiency industrial fans. According to the appellant, its products are developed through substantial investment in research and development and are protected by patents and design registrations in India and other jurisdictions.

In 2017, Novenco entered into a commercial arrangement with the first respondent, Xero Energy Engineering Solutions Pvt. Ltd., appointing it as a dealer for marketing and sale of its products in India. The appellant alleged that during the subsistence of this relationship, the director of the first respondent incorporated a separate entity, the second respondent, Aeronaut Fans Industry Pvt. Ltd.

Novenco alleged that the respondents thereafter began manufacturing and marketing industrial fans that were identical or deceptively similar to Novenco’s products in terms of design, configuration, and overall appearance. According to the appellant, such acts amounted to infringement of its patent and design rights and were continuing in nature.

In June 2024, Novenco instituted a commercial suit before the Himachal Pradesh High Court seeking injunctive relief restraining the respondents from manufacturing and selling the allegedly infringing products. Along with the suit, the appellant sought exemption from mandatory pre-institution mediation under Section 12A of the Commercial Courts Act, asserting that the suit contemplated urgent interim relief due to ongoing infringement.

Decisions of the High Court

A learned Single Judge of the Himachal Pradesh High Court rejected the plaint under Order VII Rule 11 of the Code of Civil Procedure. The Court held that compliance with Section 12A of the Commercial Courts Act was mandatory and that the appellant had failed to establish the existence of urgency warranting exemption from pre-institution mediation.

The Single Judge placed emphasis on the timeline of events, including the period between discovery of the alleged infringement, inspection of the respondents’ products, and filing of the suit. On this basis, the Court concluded that the appellant could not claim urgency.

The Division Bench of the High Court affirmed the rejection of the plaint. It held that merely alleging continuing infringement or seeking interim relief does not automatically satisfy the urgency requirement under Section 12A. While noting that the appellant was at liberty to file a fresh suit after complying with the mediation requirement, the Division Bench upheld the rejection of the plaint.

Issues Before the Supreme Court

The Supreme Court was called upon to consider the following key issues:

• How courts should determine whether a commercial suit contemplates urgent interim relief under Section 12A;
• Whether continuing intellectual property infringement can inherently give rise to urgency;
• Whether delay alone can defeat a plea of urgency;
• The permissible scope of judicial scrutiny at the Section 12A stage.

The Supreme Court’s Reasoning

Legislative Purpose of Section 12A

The Supreme Court began by examining the object behind the introduction of Section 12A. The provision was enacted to encourage early resolution of commercial disputes through mediation and to reduce the burden on commercial courts. The requirement of pre-institution mediation is mandatory, subject to the limited exception where the suit contemplates urgent interim relief.

The Court emphasised that the exception is an integral part of the statutory scheme and must be given meaningful effect. A rigid or mechanical application of Section 12A would defeat its purpose by denying timely access to courts in cases where immediate judicial intervention is necessary.

Test for Determining Urgency

The Court clarified that the test under Section 12A is not whether interim relief is ultimately granted, but whether the pleadings and documents disclose a plausible and bona fide need for urgent interim protection at the time of institution of the suit.

The inquiry is necessarily limited. Courts are required to examine the plaint and annexures in a prima facie manner to assess whether urgency is asserted and supported. The exercise does not involve weighing evidence or adjudicating the merits of the dispute.

Continuing Infringement as a Source of Urgency

Applying these principles, the Supreme Court held that allegations of continuing infringement of intellectual property rights stand on a distinct footing. Each act of manufacture, sale, or offer for sale of an infringing product constitutes a fresh wrong and a recurring cause of action.

In such cases, urgency is not extinguished merely because the plaintiff did not rush to court immediately upon first discovering the infringement. Ongoing infringement results in continuing harm to proprietary rights, market position, and goodwill, which can legitimately necessitate urgent interim relief.

Error in the High Court’s Approach

The Supreme Court found that the High Court had erred in treating delay as determinative of absence of urgency. By focusing narrowly on timelines, the High Court failed to consider the continuing nature of the alleged infringement.

The Court further held that the High Court impermissibly ventured into an assessment of merits while deciding whether Section 12A applied. Such an approach conflates the threshold inquiry into urgency with final adjudication, which is not contemplated by the statute.

Statutory Interpretation

Interpreting Section 12A of the Commercial Courts Act, the Supreme Court reaffirmed that the provision establishes a general rule of mandatory pre-institution mediation, subject to a narrowly tailored exception for suits contemplating urgent interim relief.

The expression “contemplates any urgent interim relief” was held to require a purposive interpretation. It does not require the plaintiff to conclusively establish entitlement to such relief at the threshold. Rather, the focus is on whether the nature of the dispute and relief sought disclose a genuine need for immediate judicial consideration.

In intellectual property disputes involving allegations of continuing infringement, this threshold can be satisfied where the pleadings indicate ongoing harm and the necessity of timely intervention to prevent further injury.

Why This Judgment Matters

This decision has significant implications for commercial litigation, particularly in the field of intellectual property. It ensures that Section 12A does not become a procedural barrier that deprives rights holders of effective remedies in cases of ongoing infringement.

For litigants, the judgment underscores the importance of clearly pleading urgency and supporting it through material placed on record. For courts, it reinforces the need to apply Section 12A in a balanced and contextual manner, without transforming the threshold inquiry into a merits-based adjudication.

The ruling strikes a careful balance between promoting mediation as an alternative dispute resolution mechanism and preserving access to urgent judicial relief where delay would perpetuate harm.

Final Outcome

Allowing the appeal, the Supreme Court set aside the judgments of the Single Judge and the Division Bench of the Himachal Pradesh High Court. The rejection of the plaint was quashed, and the commercial suit was restored to the file of the High Court for adjudication on merits in accordance with law.

The Court clarified that, in the facts of the case, the appellant was not required to undergo pre-institution mediation under Section 12A of the Commercial Courts Act. The appeal was accordingly allowed.

Case Details

• Case Title: Novenco Building and Industry A/S v. Xero Energy Engineering Solutions Pvt. Ltd. & Anr.
• Citation: 2025 INSC 1256
• Court & Bench: Supreme Court of India (Sanjay Kumar and Alok Aradhe, JJ.)
• Date of Judgment: 27 October 2025