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India: Online Disputes And Forum Jurisdiction

12 January 2018
by
Khurana And Khurana
(Uttar Pradesh)
Khurana and Khurana

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The Delhi high court on 3rd January, 2018 in

Impresario Entertainment & Hospitality Pvt. Ltd. vs
S&D Hospitality[1],
took a
different view with respect to the Internet
jurisdiction[2].

In the above case, plaintiff sought permanent injunction against

the defendants who was running a restaurant
at Hyderabad,
under  the impugned trademarks 'SOCIAL' and 'STONE
WATER' and its services were available
through Zomato. The
court held that the plaintiff would have to produce material
prima facie to show that
some commercial transaction using
the website was entered into by the Defendant through the app-
ZOMATO, within the forum state and that the specific
targeting of the forum state by the Defendant resulted
in
an injury or harm to the plaintiff within the forum state.

Defendants contended that this Court has no territorial

jurisdiction to entertain the present suit  as the
defendant
neither has his registered office within the jurisdiction of the
said Court nor carries on any business
within the jurisdiction of
this Court. Mere existence of a website without proof of
'the effect' does not clothe
this Court with
territorial jurisdiction to entertain the present suit. Returning
the plaint, the court held that a
mere hosting of a website that is
 accessible by anyone within the jurisdiction of the court is
not sufficient for
this purpose[3].

Convinced with the Defendant's contention, the Court Further

relied on Banyan Tree Holding (P) Limited v. A.
Murali Reddy and
Anr[4] which held that a passive website, with no
intention to specifically target audiences
outside the State where
the host of the website is located, cannot vest the forum court
with jurisdiction. The
Hon'ble Court also observed that for the
purposes of a passing off or an infringement action (where the
plaintiff is not located within the jurisdiction of the court), the
injury on the plaintiffs business, goodwill or
reputation within
the forum state as a result of the Defendant's website being
accessed in the forum state
would have to be shown.

Earlier, the stance of the court was a bit different  in

the case of World Wrestling Entertainment v. M/S Reshma
Collection & Ors[5]– The Delhi
High court had held that the mere website of the party referring to
various
goods  is not an offer but an invitation to an offer,
just as a menu in a restaurant. The invitation, only if
accepted by
a customer in Delhi, becomes an offer made by the customer in Delhi
for purchasing the goods
"advertised" on the website of
the appellant/plaintiff. Further, it held that mere accessibility
of website in a
forum state which 'solicits' its business,
through which Defendant's goods and services are sold, is
enough to
raise cause of action and in determining the personal
jurisdiction in Delhi.

Legal Provisions in Regard to Jurisdiction

The Code of Civil Procedure, 1908 contains the
provisions under section 20 with respect to institution of the
suits
where defendant resides or cause of action arises . It reads
as : Subject to the limitations aforesaid, every suit
shall be
instituted in a Court within the local limits of whose jurisdiction
–

The defendant, or each of the defendants where there are

more than one, at the time of the commencement of the
Suit,
actually and voluntarily resides, or carries on business, or
personally works for gain; or

any of the defendants, where there are more than one, at

the time of the commencement of the suit, actually and
voluntarily
resides, or carries on business, or personally works for gain,
provided that in such case either the leave
of the Court is given,
or the defendants who do not reside, or carry on business, or
personally work for gain, as
aforesaid, acquiesce in such
institution; or 

the cause of action wholly or in part arises "

 the cause of action, wholly or in part,
arises.

[Explanation]: A corporation shall be deemed to carry on

business at its sole or principal office in India or, in
respect of
any cause of action arising at any place where it has also a
subordinate office, at such place.

Section 62 [6] provides that

every suit or other civil proceeding in respect of the infringement
of copyright in any work or
the infringement of any other right
conferred by this Act shall be instituted in the district court
having jurisdiction.
Learned author Mulla in the Code of Civil Procedure, 18th Edn.,
has observed that under clauses (a) to (c) of
section 20, plaintiff
has a choice of forum to institute a suit. The intention behind
Explanation to section 20 of
the Code of Civil Procedure is that
once the corporation has a subordinate office in the place where
the cause
of action arises wholly or in part, it cannot be heard to
say that it cannot be sued there because it did not
carry on
business at that place. The linking of the place with the cause of
12 action in the Explanation where
subordinate office of the
corporation is situated is reflective of the intention of the
Legislature and such a
place has to be the place of the filing of
the suit and not the principal place of business. Ordinarily the
suit has
to be filed at the place where there is principal place of
business of the corporation.

The Indian Courts have always followed the parent legislation

– Civil Procedure Code, 1908 and have 
constantly tried
to harmonize the technological advancement with the statute.
Therefore, in the following
caselaws, the courts have explained
Section 20 of the CPC with reference to IPR and internet
jurisdiction.

Indian Performing Rights Society Ltd. v. Sanjay

Dalia & Anr. – The Supreme
Court of India interpreted section 62
of the Copyright Act, 1957
and section 134(2) of the Trade Marks Act, 1999 with regard to the
place where the
plaintiff can institute a suit. Wherein it observed
that "The very intendment of the insertion of provision in
the
Copyright Act and Trade Marks Act is the convenience of the
plaintiff. The rule of convenience of the parties has been given
a
statutory expression in section 20 of the CPC as well. The
interpretation of provisions has to be such which prevents the
mischief of causing inconvenience to parties."

Banyan Tree Holding (P) Limited vs A. Murali Krishna

Reddy & Anr. on 23 November,
2009– The division bench of
the Delhi High Court
held that "Under clauses (a) to (c) of section 20 CPC, a
plaintiff has a choice of forum and cannot
be compelled to go to a
place of business or residence of the defendant and can file a suit
where the cause of action
arises."

In Icon Health And Fitness, Inc vs Sheriff Usman And

Anr. – the Delhi High Court assumed
jurisdiction under
Clauses (a) and (b), stating that the defendants
'carried on business' in Delhi. The entirety of the
Court's
reasoning for the above is contained in two sentences
– "Though the defendants are not residing in Delhi,
however, the defendants are offering their fitness apps and brands
through App Store, Google Play Store and
e-commerce portals like www.amazon.in which can be
accessed and operated from all over the country,
including from
Delhi. Thus, it can be said that the defendants are carrying on
business or working for gain at
Delhi and this Court has
territorial jurisdiction to try and decide the present suit as per
section 20 of the CPC,
1908

Conclusion
At the outset, the Court does not subscribe to the view that
mere accessibility of the Defendants website in
Delhi would enable
this Court to exercise jurisdiction. However, a passive website,
with no intention to
specifically target audiences in the forum
State where the host of the website is located, cannot vest the
forum court with jurisdiction.[7] The Court in
Impresario Entertainment & Hospitality Pvt. Ltd. vs S &
D Hospitality,
took a very balanced stand and logically
differentiated the concept of 'mere presence of website'
and
'targeting the forum state'. Thus, it is appreciated
that the Court is not rigid and is flexible in providing a
reasonable and tenable judgments by considering different facts and
circumstances. Hence, it can be seen
that the Indian Judiciary is
swiftly moving towards a new jurisprudence on internet
jurisdiction, in accordance
to section 20 of CPC.

Footnotes
[1] Decided on: 3rd January, 2018 ; CS(COMM)
111/2017

[2] The Code of Civil Procedure, 1908, S-20 (c) –

Other suits to be instituted where defendants reside or cause of
action arises.

[3] Cybersell, Inc. v. Cybersell, Inc., 130 F.3d

414

[4] CS (OS) No. 894/2008

[5] https://indiankanoon.org/doc/71641182/

[6] The Copyright Act, 1957, Section-62-Jurisdiction of

court over matters arising under this chapter.

[7] Banyan Tree Holding (P) Ltd

The content of this article is intended to provide a general

guide to the subject matter. Specialist advice should be sought
about your specific circumstances.

AUTHOR(S)

Khurana And
Khurana
Khurana and
Khurana and
Khurana

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