Court clarifies that valuation of intangible rights must comply with Section 12(1)(d) of Commercial Courts Act; sets aside order returning plaint for lack of pecuniary jurisdiction and warns against forum shopping
In a significant decision impacting commercial litigation and intellectual property disputes, the Karnataka High Court, in Writ Petition No. 30565 of 2025, dated June 4, 2026, reaffirmed the High Court’s constitutional supervisory jurisdiction under Article 227 over interlocutory orders passed by Commercial Courts, despite statutory bars under the Commercial Courts Act, 2015 (CC Act). The judgment was delivered by Justice Tara Vitasta Ganju.
The case arose from a trademark infringement suit filed by M/s. Sarathi International Inc. against Kanpur Flowercycling Private Limited concerning the trademark "TULASI." The Commercial Court had returned the plaint for presentation before the Civil Court, holding that the suit’s specified value fell below the pecuniary jurisdiction threshold of Rs. 3,00,000 prescribed for Commercial Courts. The Commercial Court relied on an order in a related suit involving the same plaintiff but a different defendant, which had held the valuation below Rs. 3 lakhs. This prompted the petitioner to challenge the order before the High Court.
The High Court undertook a detailed analysis of the scope and limits of the supervisory jurisdiction under Article 227 of the Constitution. Citing landmark Supreme Court judgments including L. Chandra Kumar v. Union of India (1997) and Surya Dev Rai v. Ram Chander Rai (2003), the Court underscored that Article 227 jurisdiction is a constitutional power forming part of the basic structure and cannot be ousted by legislation like the CC Act. However, this power is to be exercised sparingly—only in cases of patent jurisdictional error or manifest injustice, and not for correcting mere errors of law or fact or substituting the view of the subordinate court.
The Court clarified that the bar on civil revision applications or petitions under Section 8 of the CC Act does not extend to writ petitions under Article 227. The High Court is empowered to intervene when a subordinate court acts without or in excess of jurisdiction, or in a manner causing grave injustice.
On the issue of pecuniary jurisdiction and valuation of intangible rights such as trademarks, the Court examined Section 12(1)(d) of the CC Act, which mandates that the specified value of suits involving intangible rights must be determined based on the market value as estimated by the plaintiff. The plaintiff’s valuation is generally determinative unless shown to be arbitrary or mala fide. The Court observed that inconsistent valuations by the plaintiff in related suits warrant judicial scrutiny to prevent forum shopping or abuse of process.
In this case, the plaintiff initially estimated the suit value to be above Rs. 3 lakhs, leading to the suit’s transfer to the Commercial Court. Subsequently, however, the plaintiff sought to return the plaint to the Civil Court on the ground that the valuation was below Rs. 3 lakhs, relying on an order in another suit. The High Court found this to be contradictory and indicative of forum shopping. It held that the Commercial Court erred in relying on the valuation made in another suit without conducting an independent examination and in misapplying Section 12(1)(c) instead of Section 12(1)(d) in valuing intangible rights.
The High Court set aside the impugned order returning the plaint and remanded the matter to the Commercial Court for a fresh determination of the specified value in accordance with the statutory provisions. The Court emphasized the importance of the Commercial Court conducting a bona fide and thorough inquiry into the valuation, including considering allegations of mala fide undervaluation.
While reaffirming the plaintiff’s status as dominus litis entitled to estimate valuation, the Court stressed that such estimation must be supported by material and not be a mere statement. The Court also noted the importance of procedural discipline and suggested that the Registry consider creating a separate roster or procedural mechanisms to ensure that Article 227 petitions in commercial matters are handled efficiently without defeating the objective of speedy justice.
The High Court’s decision thus provides clarity on the jurisdictional contours of Commercial Courts in intellectual property disputes and the role of High Courts in supervisory jurisdiction, balancing the need for speedy commercial justice with protection against misuse of forum.
Bottom line:-
High Court's supervisory jurisdiction under Article 227 of the Constitution over interlocutory orders of Commercial Courts is maintainable but to be exercised sparingly, only in cases of patent jurisdictional error or manifest injustice; valuation of intangible rights under Commercial Courts Act, 2015 must be determined in accordance with Section 12(1)(d), and inconsistent valuation by plaintiff warrants examination by the Commercial Court.
Statutory provision(s):
Article 227 of the Constitution of India, Section 8 and Section 12(1)(d) of the Commercial Courts Act, 2015, Order VII Rule 10 and Rule 10A of the Code of Civil Procedure, 1908, Section 13 of the Commercial Courts Act, 2015
