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I.A.12825/2021 (for Directions) in CS(COMM) 117/2020
1. This application has been filed on behalf of the applicants/defendants seeking the following directions:
“a. Release the Defendant from all its undertakings in the present Suit;
b. Release Defendant from the obligation to renew the bank guarantee from time to time;
c. Dismiss IA 3701/2020 under Order XXXIX rules 1 & 2 filed by the Plaintiffs.”
2. Notice in this application was issued on 30th September, 2021 and pursuant thereto, reply has been filed on behalf of the non-applicants/plaintiffs.
3. Before dealing with the application, it may be relevant to refer to the previous proceedings in the present suit.
4. Reference may be made to the order dated 6th May, 2020 passed by this Court in I.A.3701/2020, which was filed by the plaintiffs in the main suit under order XXXIX Rules 1 and 2 of the Code of Civil Procedure, 1908 (CPC). The relevant paragraphs of the said order are extracted below:
“2. Learned senior counsel appearing for the defendant on instructions states that as the matter will take time to argue, without prejudice to his rights and contentions the defendant is ready and willing to stop production or dealing with the impugned drug ‘DAPNAT’ or any other drug which is in violation of the patent IN 205147 and IN 235625 till first October, 2020. He submits that this submission is being made in view of the fact that the genus patent IN 205147 expires on 02.10.2020. He further submits that products worth about Rs. 20 crores have been sold in the market by the defendant on principal to principal basis. He submits that it is not possible to recall the above products. He further submits that without prejudice to the validity or invalidity of the patent which would be decided subsequently that the defendant is willing to give a bank guarantee for a sum of Rs. 3 crores which would be encashable in case this court records a finding against the defendant/ on the issue of damages and mesne profits.
3. The defendant shall remain bound by the said submission. The bank guarantee will be furnished within two weeks in favour of the Registrar General of the Delhi High Court. The validity of the bank guarantee will be up to 01.10.2020 or till further orders that this court may pass.”
5. Thereafter, arguments were heard on the said application as well as I.A.3915/2020, filed by the defendant in the present suit under Order XXXIX Rules 1 and 2 of the CPC, and the undertaking given on behalf of the defendant on 6th May, 2020 was extended.
6. Applications in the two suits, being I.A.12009/2020 and I.A.12006/2020, were filed on behalf of the plaintiffs seeking stay of the proceedings in the suits in view of the appeals filed by the plaintiffs against non-grant of injunction in favour of the plaintiffs in applications for interim injunctions filed in connected suits. Accordingly, vide the order dated 14th December, 2020, proceedings in the applications under Order XXXIX Rules 1 and 2 of the CPC and under Order XXXIX Rule 4 of the CPC were stayed till the decision in the above said appeals and it was recorded that the undertaking given on behalf of the defendant in CS(COMM) 117/2020 and the interim order passed in CS(COMM) 129/2020 shall continue till the decision in the said appeals.
7. After the Division Bench (of which I was a part) pronounced its judgment on 29th July, 2021, upholding the decisions of the two Coordinate Benches of this Court dated 2nd November, 2020 and 18th November, 2020 and dismissing the appeals filed on behalf of the plaintiffs, the present application was filed on behalf of the defendant. Thereafter, on the basis of the statement given on behalf of the counsel for the plaintiffs, that he does not oppose the sale of the impugned products by the defendant, on 8th October, 2021, the defendant was relieved of its undertaking. As regards the issue of release of bank guarantee, the hearing was adjourned to the next date. Therefore, now, the issue to be decided is whether or not the defendant should be released from extending the bank guarantee of Rs.3,00,00,000/- (prayer “b.” of the present application).
8. Counsel for the applicant/defendant contended that:
(i) In terms of the judgment dated 20th July, 2021 passed by the Division Bench, there is no injunction in favour of the plaintiffs. Even in the Special Leave Petition filed on behalf of the plaintiffs before the Supreme Court, no interim order has been passed.
(ii) In view of the fact that there is no injunction order against the defendants prevailing in both the suits, there is no need to keep the bank guarantee alive.
(iii) The only remedy now available with the plaintiffs is to claim damages.
(iv) Continuation of the bank guarantee given by the defendant would be akin to an order being passed under Order XXXVIII Rule 5 of the CPC i.e., attachment before judgment and parameters as envisaged under Order XXXVIII Rule 5 of the CPC are not satisfied in the present case.
(v) As per the order dated 6th May, 2020, the bank guarantee was not to be continued till the pendency of the suit. It had to only continue till further orders. Defendants in the present suits cannot be any worse off than the defendants in the other suits who also challenged the validity of Indian Patent No.205147 (hereinafter ‘IN 147’)/genus patent.
9. Per contra, the counsel for the plaintiffs submitted that:
(i) Order dated 6th May, 2020 records the statement on behalf of the defendant that the defendant had sold products worth around Rs.20,00,00,000/- till 6th May, 2020 and that it was not possible to recall the said products and therefore, the defendant was willing to furnish a bank guarantee of Rs.3,00,00,000/-.
(ii) Defendants have not raised any credible challenge to the validity of the IN 147. Therefore, the sale of Dapagliflozin by the defendants before 2nd October, 2020, the date on which the said patent expired, amounted to infringement of, at the very least, IN 147.
(iii) In the decisions of the Coordinate Benches dated 2nd November, 2020 and 18th November, 2020 as well as the decision of the Division Bench dated 20th July, 2021, no doubts were expressed with regard to the validity of IN 147. The only issue considered in the said judgment of the Division Bench was with regard to the validity of the Indian Patent No.235625 (hereinafter ‘IN 625’)/species patent.
(iv) Defendants in the present suits are not similarly situated as the defendants in other suits as the defendants in the present suits had commenced sale of their products from 1st April, 2020, whereas the defendants in other suits did not sell this product till the expiry of IN 147 on 2nd October, 2020.
(v) Bank guarantee was given by the defendant in view of the fact that it had sold infringing products worth over Rs.20,00,00,000/- and therefore, it should be continued till the disposal of the suit. Bank guarantee is in respect of actions done prior to 2nd October, 2020 and not thereafter.
10. I have considered the submissions of the parties.
11. A reading of the order dated 6th May, 2020 makes it abundantly clear that the defendant itself had offered to give a bank guarantee of Rs.3,00,00,000/- which would be encashable in the event of this Court recording a finding against the defendant on the issue of damages and mesne profits. Such a finding can be given by the court only after the trial in the suit and upon a final adjudication of the suit. Hence, it was clear that the aforesaid bank guarantee would be continued till the adjudication of the suit.
12. The defendants had offered to give the aforesaid bank guarantee on account of the fact that the products worth Rs.20,00,00,000/- had already been sold in the market by the defendants and it was not possible to recall the said products. The fact that the defendants expressed their readiness and willingness to stop production or dealing with the impugned drug “DAPNAT” or any other drug which was in violation of patent IN 147 and IN 625 till 1st October, 2020, amounted to an implied acceptance of the fact that the drugs were sold in violation of IN 147. Further, the offer of furnishing a bank guarantee was made, in effect, to avoid an order of injunction against the defendant.
13. There is merit in the submission made on behalf of the plaintiffs that neither of the two judgments of the Coordinate Benches of this Court nor the judgment of the Division Bench cast any doubt in respect of the IN 147/genus patent. The only observations made in the judgment of the Division Bench were with regard to the IN 625/species patent, against which a Special Leave Petition is pending before the Supreme Court.
14. It was contended on behalf of the plaintiffs that the defendants in the present suits were not similarly placed as the defendants in the other suits inasmuch as the defendants in the present suits commenced sale of their products on 1st April, 2020, whereas the other defendants did not sell the said products before 2nd October, 2020. Along with the written submissions, plaintiffs have given details of the date of the launch of products containing Dapagliflozin by the defendants in the other suits and all the said launches were after 2nd October, 2020. Nothing has been placed on record on behalf of the defendants in support of their contention that the defendants in the present suits are placed similarly as the defendants in the other suits. The decision of the Division Bench is applicable only for actions done post 2nd Oc
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tober, 2020 and has no relevance on the issue of bank guarantee furnished by the defendants, which was in respect of acts done prior to 2nd October, 2020, during the subsistence of IN 147. It has specifically been noted in paragraph 11 of the judgment of the Division Bench that the defendants therein had respected IN 147. 15. In view of the above, the prayer “b.” made in the aforesaid application is declined and it is directed that the bank guarantee of Rs.3,00,00,000/- given by the defendants would continue till the final adjudication of the suit. 16. Needless to state that any observations made herein are only for the purpose of deciding the present application and shall not have any bearing on the adjudication of the merits of the case. I.A.12998/2021 in CS(COMM) 129/2020 17. Since the stock of the goods in CS(COMM) 129/2020 was received prior to 2nd October, 2020 and is covered by the bank guarantee given by the defendant in CS(COMM) 117/2020, the said bank guarantee shall also continue till the adjudication of the present suit.