Competition Commission Must Acknowledge Mediation Processes & Settlements Between Parties: Delhi High Court

The Court also observed that any attempt to hijack an IP dispute from the jurisdiction of a High Court or a commercial court to the Competition authority has to be viewed with caution and in a manner so as not to tread upon the forum seized of the IP dispute.

The Division Bench of Justice Pratibha Singh and Justice Amit Sharma held, “Mediation processes and settlements have to be recognised and acknowledged by all Courts/fora where disputes are pending. Regulatory authorities such as the CCI are no exception to the same. It is imperative that the CCI and similar bodies honour the outcomes of mediation and respect the settlements reached between parties. By doing so, they not only uphold the legitimacy and reliability of the mediation process but also foster a legal environment where parties are encouraged to resolve disputes amicably without fear of subsequent regulatory interference. Furthermore, when regulatory authorities like the CCI respect mediation settlements, it prevents the undermining of negotiated agreements and protects parties from the threat of ongoing inquiries. This recognition reinforces the concept that mediation is not merely a preliminary step but a conclusive process that provides binding and enforceable outcomes.”

Senior Advocate Sandeep Sethi for the Petitioners while DG/CCI Samar Bansal, Vedant Kapur, Amit Tayal, Dy. Dir. (Law) for CCI Devender Prasad and Advocate Anurag Ahluwalia appeared for the Respondents.

There was a dispute between Petitioner No.1-JCB India Limited and Petitioner No.2- JC Bamford Excavators Limited (‘JCB’) on one hand and Respondent No.2- M/S Bull Machines Private Ltd. (BMPL) on the other. Both companies are manufacturers of `backhoe loaders’ – the Petitioners’ loader being ‘3DX BHL’ and BMPL’s loader being ‘Bull Smart’. Respondent No.1 herein, was the Competition Commission of India (‘the CCI’).

A suit was filed by JCB against BMPL seeking an injunction restraining infringement of copyright, piracy of registered design, passing off etc and an ex-parte ad interim injunction was granted in favour of JCB in 2011. Considering that the suit was based on the registered designs of JCB, the Defendant therein i.e., BMPL chose to challenge the validity of the said designs. BMPL then filed cancellation petitions before the Controller of Designs. However, parallelly, an interim arrangement was arrived at between the parties. Some settlement negotiations ensued between the parties and BMPL agreed to change the design of some of its parts during negotiations.

While the said settlement talks were underway, BMPL filed an Information under Section 19(1)(a) of the Competition Act, 2002 (‘the Act’) before CCI. JCB sought intervention by way of an application and sought a hearing before the CCI, which was, however, rejected by the CCI. Thereafter, CCI passed the impugned order directing an inquiry under Section 26(1) of the Act. Aggrieved by the above order, the Petitioners’ filed the civil writ petition seeking quashing of the impugned order.

The counsel for the Petitioners submitted that the original suit litigation was between two private parties i.e., JCB and BMPL. It did not involve any issues such as the formation of cartels or the anti-competitive combinations or abuse of dominance. He submitted that there was no public impact which was raised in the Information given under Section 19(1) of the Act by BMPL. He further submitted that the jurisdiction of the CCI was triggered under Section 19(1) of the Act based on the design infringement suit which was filed at the Delhi High Court by JCB, terming it as ‘sham litigation’.

The Court considered the issue of whether the filing of a design infringement action could constitute an anti-competitive practice or vexatious/sham litigation, to lead to a conclusion that the Plaintiff in the infringement action in the original suit has engaged in abuse of dominance.

The CCI argued that despite the settlement, the inquiry before the CCI should continue in order for the CCI to explore if there is a chance of the settlement being anti-competitive. The Court said that if the CCI’s argument is accepted, it could mean that despite the settlement, the CCI can proceed with an inquiry under Section 26 of the Act, thereby prejudicing the settlement. This possibility undermines the core principles of mediation by creating uncertainty and instability for the parties involved, it added.

“While intellectual property rights recognise, grant and enforce monopoly rights, under certain circumstances, competition law does not encourage monopolies. The recognition of monopolies under IP laws is for the purpose of encouraging innovation and creativity. The same also has a statutory basis. Every IP dispute cannot be converted into a competition dispute as it would severely impinge upon statutory rights recognised under various statutes protecting intellectual property. Moreover, any attempt to hijack an IP dispute from the jurisdiction of a High Court or a commercial court to the Competition authority has to be viewed with caution and in a manner so as not to tread upon the forum seized of the IP dispute.”, the Court observed.

The Court also held that the examination of settlements is a power which may exist with the CCI, but under the existing scheme of the Act, unless a settlement is alleged as being an abuse of dominance, the same would not be liable to be examined under Section 4 of the Act. Further, it said that a theoretical power with CCI to examine settlements cannot lead to uncertainty for the parties, and their commercial behaviour as both the parties jointly seek disposal of the petitions and closure of the proceedings before CCI, in view of the settlement.

The Court also highlighted that the process of mediation aims to resolve disputes efficiently and amicably, bringing finality to the matter and allowing CCI to proceed with an inquiry post-settlement would undermine this fundamental purpose by reopening issues that the parties have already agreed upon and resolved. It added that it would also be a carte blanche to perpetuate the CCI inquiry and pressurize the opposing party. Moreover, the question of whether the suit was maintainable is not for the CCI to decide and the CCI also cannot decide whether the designs registrations are valid or not. The former is in the domain of the High Court. The latter is in the domain of the Patent and Design office, the Court held.

“Allegations of `sham litigation’ or predatory litigation as being an attempt to abuse dominance, especially when Courts are still seized of the IP dispute, ought to be discouraged. If a Court renders a finding that a litigation was a ‘sham litigation’ or an abuse of process, in such a situation, approaching the CCI may be justified. The foreign decisions cited by the CCI are under circumstances where there were allegations that a particular settlement was anti-competitive in nature or was contrary to public interest – such as preventing affordable medicines from coming into the market1. Such a situation does not arise in the present case.”

Accordingly, the Court allowed the writ petitions and the settlement was taken on record. The Court also terminated the proceedings before the CCI.

Cause Title: JCB India Limited and Anr. v. The Competition Commission of India and Anr. (Neutral Citation: 2024:DHC:6080-DB)

Appearances:

Petitioners: Senior Advocate Sandeep Sethi, Advocates Karan Singh Chandhiok, Deeksha Manchanda, Uday Bali, Jai Hindocha, Kanika Nayar, Nidhi Singh and Riya Kumar.

Respondents: DG/CCI Samar Bansal, Vedant Kapur, Amit Tayal, Dy. Dir. (Law) for CCI Devender Prasad, Advocates Anurag Ahluwalia, Abir Roy, Vivek Pandey, Aman Shankar, Sasthibrata Panda and Biyanka Bhatia.

Click here to read/download the Judgment