Withdrawal of a suit after being unsuccessful in obtaining interim reliefs and thereafter choosing to institute the same in another court amounts to forum shopping and abuse of the process of the courts

In the matter of Black Diamond Track Parts Private Limited & Ors. Vs Black Diamond Motors Private Limited decided on 28.05.2021 in FAO (COMM) 41/2021 by the Delhi High Court

FACTS: The Appellant/ Defendant preferred the present appeal against the order dated 25.09.2020 passed by the Addl District Judge, allowing the application under Order XXXIX Rules 1&2 of the CPC of the respondent/plaintiff filed against the appellants/defendants restraining the use of trade mark Black Diamond.

During hearing, it was noticed by the Court that the respondent/plaintiff, had prayed for the same reliefs as claimed in the suit from which this present appeal arises before the courts at Bilaspur, Chattisgarh. The said interim relief was declined by the Bilaspur Court and an appeal against the same was dismissed by the High Court of Chattisgarh.

Thereafter, the respondent/plaintiff withdrew that suit filed at the courts of Bilaspur with liberty to file again. After about six months, from the withdrawal, a fresh suit was instituted at Delhi. The respondent/plaintiff in Delhi succeeded in getting the interim relief which was declined to it by the Court at Bilaspur as well by the High Court of Chhattisgarh. Hence, the present appeal.

ISSUE: The Hon’ble Division Bench of the Delhi High Court framed inter-alia the following issue for consideration regarding forum shopping and abuse of the process of court:

“Whether the respondent/plaintiff be disentitled from any interim relief, for the reason of having indulged in forum shopping, by withdrawing the suit with liberty to file afresh from the Courts at Bilaspur/Chhattisgarh, after being unsuccessful in obtaining interim relief?”

CONTENTIONS OF THE PARTIES: The Respondent/ Plaintiff relied on various rulings wherein it was held that when withdrawal of a suit with liberty to bring a fresh suit is permitted the effect is that in the eyes of law there is no such suit filed. Reliance was placed on Chhaganlal Pratapchand Vs. State of Gujarat (1969 SCC OnLine Guj 10) and Patel Chunibhai Dajibhai Vs. Narayanrao Khanderao Jambekar (AIR 1965 SC 1457).

The appellants/defendants in the context of forum shopping had made apposite reference to, (a) Union of India Vs. Cipla Ltd. [(2017) 5 SCC 262] wherein it was held that “A classic example of forum shopping is when a litigant approaches one Court for relief but does not get the desired relief and then approaches another Court for the same relief” (b) Allied Blenders and Distillers Pvt. Ltd. Vs. Amit Dahanukar (2019 SCC OnLine Del 8898) where the suit filed in Delhi, after the subsidiary of the plaintiff had failed to get the interim relief in a suit earlier filed at Bombay, was held to be by way of forum shopping and in abuse of the process of the Court.

HELD: The Hon’ble DB observed that withdrawal of the proceedings, even if with liberty to file afresh, does not obliterate the proceedings so filed, to make the same invisible even for drawing inference of forum shopping therefrom. It was further observed that none of the judgments as cited by the Respondent/ Plaintiff has held that that the pleadings in a suit which has been withdrawn, cannot be looked at for the purposes of admission, adverse inference etc. and also none of the rulings lays down that such a suit cannot be looked at to adjudicate the plea of re-litigation or abuse of the process of the Court.

It was further observed by the Court that there was merit in the contention of the Appellant/ Defendant that as Court at Bilaspur as well as the High Court of Chhattisgarh, on the same facts as before this Court, did not find the respondent/plaintiff to have made out a case for ad-interim injunction against the appellants/defendants, the ‘real reason’ for the respondent/plaintiff to withdraw the suit from the Court at Bilaspur was denial till the High Court of the interim relief.

Further, taking note that once the suit is permitted to be withdrawn with liberty to file afresh, no pleas on the basis thereof can be taken in the subsequent suit, of Order II Rule 2 of CPC or of res-judicata, the High Court held that nothing prevents the Court from, at least at the stage of grant/non-grant of interim relief, taking notice of the said facts to test the bona fides of the respondent/plaintiff.

Finally, the High Court while observing that respondent/ plaintiff in its keenness and anxiety inspite of having failed till the High Court in the first round, in the second round succeeded to get ex-parte injunction restraining the appellants/defendants held that if this practice as indulged in by the respondent/plaintiff were to be approved of and encouraged, then considering the multiple options of territorial jurisdiction available to a plaintiff in a suit for permanent injunction to restrain infringement of trade mark and/or passing off, a plaintiff after failing to get interim relief in one Court would successively approach other Courts, making litigation a game of chance and a mockery of. Hence, the present suit as filed by the Respondent/Plaintiff was held to be an abuse of the court and the appeals were allowed giving weightage to other contentions and arguments of the parties.