Supreme Court clarifies appealability of interlocutory orders in trademark disputes: Shyam Sel and Power Limited vs. Shyam Steel Industries Limited (2022) INSC 192 (14 March 2022)

Date of the Judgment: 14 March 2022
Citation: (2022) INSC 192
Judges: L. Nageswara Rao, J., B.R. Gavai, J.
Can every order passed by a single judge of a High Court be challenged in an intra-court appeal? The Supreme Court of India addressed this question in a trademark infringement case, clarifying the scope of appealable orders under the Letters Patent. This judgment provides crucial guidance on when an interlocutory order can be considered a ‘judgment’ for the purposes of appeal.

Case Background

The respondent, Shyam Steel Industries Limited, filed a suit against the appellants, Shyam Sel and Power Limited, for trademark infringement and passing off. The respondent claimed to have trademark registration for the word ‘SHYAM’ and various label marks featuring it prominently. Both parties manufacture and sell TMT bars. In 2015, the respondent alleged that the appellants started using the mark ‘SHYAM’ on their products. The respondent objected, and the appellants initially agreed to stop using the mark. However, the respondent contended that towards the end of 2018, the appellants began using ‘SHYAM METALICS’ on their packaging, intending to pass off their products as those of the respondent. This led to the respondent filing a civil suit in the High Court of Calcutta.

Timeline

Course of Proceedings

The respondent also filed an application for a temporary injunction. On 2nd April 2019, the Single Judge of the High Court, while noting that ‘SHYAM’ was part of the appellants’ business name, granted them time to file an affidavit in opposition and directed them to maintain weekly accounts of sales under the mark ‘SHYAM’. The Single Judge clarified that his observations were prima facie and for the ad-interim stage only. Aggrieved, the respondent appealed to the Division Bench of the High Court, which, on 24th December 2019, modified the Single Judge’s order and granted an injunction against the appellants. The appellants then appealed to the Supreme Court, which stayed the High Court’s order on 16th June 2020, and decided to hear the main appeal on merits.

Legal Framework

The core legal issue revolves around Clause 15 of the Letters Patent, which governs intra-court appeals in the High Court. The Supreme Court examined the meaning of the term ‘judgment’ within this clause, referring to previous interpretations and the need to balance the right to appeal with the efficient administration of justice. The Court noted that the term ‘judgment’ in the Letters Patent has a wider meaning than the term as defined in Section 2(9) of the Code of Civil Procedure, 1908 (CPC). It also noted that not every order of the trial judge is a ‘judgment’ and that it must have the traits and trappings of finality to be construed as such.

Arguments

Appellants’ Arguments:

• The appellants argued that the order of the Single Judge was not a ‘judgment’ under Clause 15 of the Letters Patent, as it merely granted time to file a reply and did not grant or refuse an interim injunction.
• They contended that the Single Judge’s order was not perverse, and the Division Bench of the High Court had usurped the jurisdiction of the Single Judge by deciding the injunction application itself.
• They relied on Shah Babulal Khimji v. Jayaben D. Kania and Another [1981] 4 SCC 8, and Wander Ltd. and Another v. Antox India P. Ltd 1990 Supp SCC 727, to support their claims.

Respondent’s Arguments:

• The respondent argued that the Division Bench rightly interfered with the Single Judge’s order, as an injunction should be issued when trademark infringement is established.
• They submitted that the Single Judge’s non-grant of an ad-interim order infringed on their valuable right, making the appeal maintainable.
• They relied on Renaissance Hotel Holdings Inc. v. B. Vijaya Sai and Others 2022 SCC OnLine SC 61, to support their claim that an injunction should be granted when a registered trademark is infringed.

Issues Framed by the Supreme Court

The Supreme Court framed the following issues:

1. Whether the appeal against the order of the learned Single Judge was tenable.
2. Whether the approach of the Division Bench of the High Court was correct.

Treatment of the Issue by the Court

Authorities

Judgment

How each authority was viewed by the Court?

• Shah Babulal Khimji v. Jayaben D. Kania and Another [1981] 4 SCC 8:* The Supreme Court relied on this case to clarify that the term ‘judgment’ in the Letters Patent has a broader meaning than in the CPC but does not include every order. It must have the traits of finality. The court used this case to determine that the order of the Single Judge was not a ‘judgment’ because it did not have the necessary finality.
• Wander Ltd. and Another v. Antox India P. Ltd 1990 Supp SCC 727:* The Supreme Court used this case to emphasize that an appellate court should not substitute its discretion for that of the trial court unless the trial court’s discretion was arbitrary, capricious, or perverse. The court found that the Division Bench had failed to adhere to this principle.
• Renaissance Hotel Holdings Inc. v. B. Vijaya Sai and Others 2022 SCC OnLine SC 61:* The Supreme Court acknowledged that the respondent relied upon this case to support their argument that an injunction should be issued when trademark infringement is established. However, the court did not apply this to the facts of the case, as the issue was on the maintainability of appeal.

What weighed in the mind of the Court?

The Supreme Court emphasized the importance of maintaining the hierarchy of courts and ensuring that appellate courts do not usurp the jurisdiction of trial courts. The Court stressed that not every order passed by a Single Judge can be appealed under the Letters Patent, and only those orders that have the traits and trappings of finality, affecting vital and valuable rights, should be considered as ‘judgments’. The Court also noted the need to discourage frivolous appeals that waste judicial time. The court also took into consideration that the Division Bench of the High Court did not consider the tests of prima facie case, balance of convenience and irreparable injury while granting the injunction.

Logical Reasoning:

The Supreme Court held that the Single Judge’s order was not a ‘judgment’ under Clause 15 of the Letters Patent because it did not conclusively determine the rights of the parties. It merely granted time to file a reply and postponed the decision on the interim injunction. The Court emphasized that not every interlocutory order can be appealed; it must have the traits and trappings of finality. The Court also criticized the Division Bench for usurping the jurisdiction of the Single Judge by deciding the injunction application itself, instead of directing the Single Judge to do so. The Supreme Court also noted that the Division Bench did not consider the tests of prima facie case, balance of convenience and irreparable injury. The Court set aside the Division Bench’s order and directed the Single Judge to decide the injunction application expeditiously.

“The learned Single Judge therefore postponed the issue with regard to consideration of the prayer of the respondent­plaintiff for grant of ad­interim injunction by a period of mere three weeks and that too only in order to afford an opportunity to the appellants­defendants to file their affidavit­in­opposition.”

“It is thus clear that there was no adjudication with regard to the rights of the respondent­plaintiff to get an ad­interim injunction during the pendency of the suit.”

“We are therefore of the considered view that the order dated 2nd April 2019 cannot be construed to be a ‘judgment’ within the meaning of Clause 15 of Letters Patent and as such, the appeal to the Division Bench of the High Court was not tenable.”

Key Takeaways

• Not every order passed by a Single Judge of a High Court is appealable under Clause 15 of the Letters Patent.
• An order must have the traits and trappings of finality to be considered a ‘judgment’ for appeal purposes.
• Appellate courts should not usurp the jurisdiction of trial courts by deciding matters that should be decided by the trial court in the first instance.
• Appellate courts should not substitute their discretion for that of the trial court unless the trial court’s discretion was arbitrary, capricious, or perverse.
• Courts should discourage frivolous appeals that waste judicial time.

Directions

The Supreme Court directed the Single Judge to decide the application for injunction filed by the respondent as expeditiously as possible, within a period of six weeks from the date of the judgment. The order passed by the Single Judge dated 2nd April 2019 would continue to operate until further orders are passed by the Single Judge.

Development of Law

The ratio decidendi of this case is that not every order of a Single Judge is appealable under Clause 15 of the Letters Patent. The order must have the traits and trappings of finality to be considered a ‘judgment’. This clarifies the scope of appealable orders and reiterates the principles of judicial hierarchy, thereby reinforcing the position of law as laid down in Shah Babulal Khimji v. Jayaben D. Kania and Another [1981] 4 SCC 8 and Wander Ltd. and Another v. Antox India P. Ltd 1990 Supp SCC 727.

Conclusion

The Supreme Court’s judgment in Shyam Sel and Power Limited vs. Shyam Steel Industries Limited clarifies the scope of appealable orders under Clause 15 of the Letters Patent. It emphasizes that not every interlocutory order is a ‘judgment’ and that appellate courts should not usurp the jurisdiction of trial courts. This ruling provides crucial guidance for High Courts in handling intra-court appeals and reinforces the importance of judicial efficiency and hierarchy.

Category

Parent Category: Trademark Law
Child Categories:

• Trademark Infringement
• Interlocutory Orders
• Intra-Court Appeals
• Letters Patent
• Clause 15, Letters Patent
• Order XXXIX Rules 1 and 2, Code of Civil Procedure, 1908

FAQ

Q: What is an interlocutory order?
A: An interlocutory order is a temporary order made during the course of a legal proceeding. It does not finally decide the case but addresses procedural or interim matters.

Q: What is the Letters Patent?
A: The Letters Patent is a document that establishes the jurisdiction and powers of a High Court. Clause 15 of the Letters Patent governs intra-court appeals within the High Court.

Q: What does the Supreme Court mean by “traits and trappings of finality”?
A: It means that the order should have an element of conclusiveness and should affect the rights of the parties in a significant way. It should not be a routine order that can be reviewed in the final appeal.

Q: Why did the Supreme Court criticize the Division Bench of the High Court?
A: The Supreme Court criticized the Division Bench for deciding the injunction application itself instead of directing the Single Judge to do so. The Court also found that the Division Bench did not properly consider the tests of prima facie case, balance of convenience, and irreparable injury.

Q: What is the practical implication of this judgment?
A: This judgment clarifies that parties cannot appeal every order passed by a Single Judge of the High Court. It emphasizes that only orders that have the characteristics of a ‘judgment’ can be appealed, thus preventing unnecessary delays and frivolous appeals.