Karnataka High Court in a Manipal Group Trademark Infringement Case: Issues guidelines on imprisonment in for Willful Disobedience of Judicial Orders

Karnataka High Court in a Manipal Group Trademark Infringement Case: Issues guidelines on imprisonment in for Willful Disobedience of Judicial Orders

The Karnataka High Court has issued comprehensive guidelines concerning civil imprisonment in civil cases, particularly when there is willful disobedience of Court orders.

The division judge’s bench of Justices Alok Radhe and Anant Ramanth Hegde observed that under Order XXXIX, Rule 2A of the Code of Civil Procedure, 1908 (CPC), Civil Courts have the discretion to attach a defendant’s property or order civil imprisonment or order both simultaneously when there is willful disobedience of Court orders.

The bench observed, “the discretion lies with the Court to impose either of the two punishments as well. However, the discretion is not absolute or unfettered. Every wide power conferred on the Courts has inherent limitations and inbuilt checks and balance mechanisms. Likewise, the discretion under Order XXXIX Rule 2A has its inherent limitations as the power to order civil imprisonment under Order XXXIX Rule 2A curtails an individual's fundamental right, albeit through a process of law.”

The case in question, involved a trademark infringement dispute between two entities. In 2019 a civil suit was filed by the Manipal Academy of Higher Education (MAHE Trust) and the Manipal Academy of Higher Education (a deemed university) for trademark infringement.

A Commercial Court granted an interim injunction order in favor of the MAHE Trust and the Manipal Academy in 2019, which was later confirmed in 2022 by an Additional District and Sessions Court in Bengaluru. This Court convicted the parties using the names Manipal Academy of Health and Science (also using the acronym MAHE) and the Manipal International School for willful disobedience of the injunction orders.

As a result, the school’s chairman, T Sudhakar Pai, was originally sentenced to three months’ imprisonment, and the school’s CEO and president were ordered to serve one month in jail. Further, the commercial Court also slapped a fine on these parties.

This order was challenged before the High Court, which upheld the conviction for wilful disobedience. The appeal was filed by T Sudhakar Pai, Mohammed Samiulla and Dr. Ritu Chauhan.

However, the Karnataka High Court reduced Pai’s imprisonment to fifteen days and set aside the one-month sentences for the other parties.

The Court pointed out that Order XXXIX Rule 2A of the CPC does not empower the Court to award compensation by attachment and sale of the property, immediately after pronouncing the verdict of guilty.

The Court affirmed that in order to sell the property attached, the Court has to wait till the expiry of the period of attachment, specified in the order which can be one year, at the maximum. The property attached can be sold if the disobedience or the breach complained of continues at the end of the period of attachment.

The bench clarified that even if the breach continues, the Court is not bound to sell the property, but at its discretion may order the sale of the property attached and pay compensation to the injured.

The Court opined that the provision enabled the Court to provide an opportunity to the contemnor to mend his acts and omissions. Despite the completion of tenure of the attachment order, if the contemnor persists in disobedience, the Court may sell the attached property and pay compensation to compensate the wrongdoer. Before selling the property attached, there has to be a finding recorded that disobedience or breach continued even after the issuance of an order of attachment. This can be done only after hearing the contemnor.

Averting to the present case, the Court noted that the payment of compensation was ordered on the day of pronouncing the verdict of guilty, which is impermissible under Order XXXIX Rule 2A of the Code, opined the bench.

It was remarked by the bench that the opportunity for the contemnors to make amends for their acts and omissions stood denied.

Instead of ordering attachment to secure possible order for payment of compensation, in the event of disobedience or breach continuing at the end of the tenure of the order of attachment, the Court straight away ordered payment of compensation and permitted the plaintiffs to apply for attaching the property of the contemnors if payment is not made.

The Court criticized the Commercial Court’s ruling by stating that, “By doing so, the Commercial Court put the cart before the horse which is impermissible. Hence the order for payment of compensation has to be set aside as the same is in ultra vires the provision of Order XXXIX Rule 2A of the Code.”

In so holding, the Court discerned that the underlying philosophy of the provision is curative and to enforce the compliance of the Court order rather than to punish the wrongdoer.

Pertinently, the bench pointed out that under Article 21 of the Constitution of India, liberty is a cherished fundamental right. While ordering civil imprisonment, the court should bear in mind the fundamental right guaranteed in Article 21 of the Constitution of India. However, that does not mean that the punishment by way of civil imprisonment is ruled out and can be ordered only after exhausting the option of attachment and sale of the property, stated the bench.

The Court after considering the object of the provision, held that an order directing civil imprisonment should not be passed as a matter of course. To pass an order for civil imprisonment, the Court has to take into account one or more factors or circumstances namely;

(a) the nature/gravity of the disobedience or breach, and the manner in which order is violated;

(b) the loss caused to the party on account of disobedience or breach;

(c) whether the damage caused can be restored in some way or the other or is something irreversible;

(d) circumstances under which the breach or disobedience is committed;

(e) whether the breach or disobedience complained is an isolated act or it is a continuous act;

(f) previous history, if any, where the contemnor is held guilty of breach or disobedience of the Court order;

(g) whether the case calls for a situation where the message is to be sent, by passing an order of civil imprisonment, that willful breach or disobedience of the Court order will be viewed seriously;

(h) and more importantly, the Court has to consider whether civil imprisonment is an effective way to prevent a further breach;

(i) the timing of the apology if any, tendered by the contemnor, the tenor and tone of the language used in the affidavit tendering the apology;

(j) the compliance if any, made to undo the disobedience or breach complained;

(k) to an extent, the educational qualifications/ positions of the contemnor and whether the acts committed by the contemnor make mockery of the Court order.

The Court made it clear that above-mentioned list is not exhaustive but is illustrative and that all the criteria need not be satisfied before ordering attachment of the property or civil imprisonment of the contemnor.

Moreover, the High Court found an error in the commercial Court’s immediate imposition of fines without allowing some time to elapse after property attachment to give the parties an opportunity to comply.

Accordingly, the Court ordered the attachment of the appellants’ properties for six months, and in case, disobedience continues beyond this period, the properties may be sold to compensate the Manipal group. The chairman of the school would be required to pay Rs. 1 lakh, and the other parties Rs. 50,000 each, as compensation.