Novartis Ag & Anr. v. Natco Pharma Limited

Case Number: CS(COMM) 229/2019 & I.A. 10756/2024 Bench: Hon’ble Ms. Justice Mini Pushkarna

BACKGROUND

The plaintiffs in the present matter are Novartis AG and another. The defendant is Natco Pharma Limited. The underlying suit, CS(COMM) 229/2019, was filed by the plaintiffs seeking a permanent injunction restraining infringement of Indian Patent No. 276026 (referred to as IN’026), along with rendition of accounts, damages, and delivery up.

Indian Patent No. IN’026 was granted in favour of the plaintiffs on 28th September 2016. The suit patent relates to compounds and compositions as protein kinase inhibitors, specifically covering the drug Ceritinib. The plaintiffs had also filed a Divisional Application bearing number IN 5338/DELNP/2014 (referred to as IN’5338) on 27th June 2014, to the Parent Application No. 3951/DELNP/2009, which had resulted in the grant of IN’026.

The procedural history of the matter is material. An interim injunction was granted in favour of the plaintiffs vide a judgment dated 9th January 2023 in the present suit. During the pendency of the suit, the defendant filed an application being I.A. 4636/2023 under Order XXXIX Rule 4 CPC seeking vacation of that interim injunction. The ground taken in the vacation application was that the plaintiffs had suppressed material facts pertaining to the Divisional Application, specifically its refusal by the Controller of Patents.

The facts concerning the Divisional Application are as follows. Various objections were raised by the Controller of Patents in respect of IN’5338. A hearing notice dated 11th November 2022 was issued by the Controller of Patents fixing the date of hearing on 12th December 2022. However, the plaintiffs filed a letter dated 9th December 2022 before the Controller of Patents stating that they did not wish to pursue the Divisional Application and would not be attending the hearing. Consequently, vide order dated 16th December 2022, the Divisional Application was refused under Section 15 of the Patents Act, 1970 by the Assistant Controller of Patents and Designs, Kumari Ragini, on the ground that the applicant had not complied with the objections and the attorney had not appeared for the hearing, and the applicant had stated it did not wish to pursue the application.

The defendant came to know of the refusal of the Divisional Application and, in addition to filing I.A. 4636/2023 seeking vacation of the interim injunction, also filed the present application being I.A. 10756/2024 under Order VIII Rule 9 CPC seeking leave to file an additional written statement in order to bring on record the pleadings and grounds related to the Divisional Application. The defendant contended that the plaintiffs had suppressed documents pertaining to the Divisional Application which had come to the knowledge of the defendant only recently.

The application for vacation of interim injunction, I.A. 4636/2023, was dismissed vide judgment dated 9th April 2024. The Court, in that judgment, found that the Divisional Application was not rejected on merits but because the applicants themselves chose not to pursue it; that a decision not to pursue a Divisional Application could not be regarded as an acknowledgement of the merit of the objections in the First Examination Report; that the prior arts cited by the Controller in the FER against the Divisional Application had all been considered by the Court in the judgment dated 9th January 2023 by which the interim injunction was granted; and that even if the facts relating to the Divisional Application had been disclosed, there was no possibility of the outcome of the interim injunction application having been any different. Furthermore, refusal of the Divisional Application was held not to extinguish the suit patent, the grant of which continued to remain valid. Appeals against both the orders dated 9th January 2023 and 9th April 2024 are currently pending before the Division Bench.

The present application, I.A. 10756/2024, thus came to be decided in the context described above, with the defendant seeking leave to file an additional written statement to incorporate the facts pertaining to the Divisional Application, and the plaintiffs resisting the same on multiple grounds.

ISSUES FOR DETERMINATION

Whether the defendant could seek leave to file an additional written statement under Order VIII Rule 9 CPC in a commercial suit after the expiry of the mandatory period of 120 days prescribed for filing a written statement under Order VIII Rule 1 CPC as amended by the Commercial Courts Act, 2015, or whether the 120-day outer limit applicable to written statements under the Commercial Courts Act would also govern applications for additional written statements.
Whether the facts pertaining to the Divisional Application No. IN’5338, including its refusal by the Controller of Patents, constituted a subsequent development warranting leave to file an additional written statement, or whether those facts were already in the public domain and thus not a fresh basis for such an application.
Whether the findings in the judgment dated 9th April 2024 dismissing the defendant’s application for vacation of interim injunction which had already considered the facts of the Divisional Application operated as a bar by way of issue estoppel or res judicata against the defendant raising the same matters again by way of additional written statement.
Whether the validity of the suit patent having been upheld by the Intellectual Property Appellate Board (“IPAB”) vide order dated 29th September 2020 in O.A. 20/2019 in post-grant opposition proceedings filed by the defendant, barred the defendant from re-agitating the issue of validity by way of an additional written statement in the present suit.

KEY HOLDINGS OF THE COURT

On the interplay between Order VIII Rule 1 CPC and Order VIII Rule 9 CPC in commercial suits, the Court held that the mandatory outer limit of 120 days prescribed under Order VIII Rule 1 CPC as amended by the Commercial Courts Act, 2015 for filing a written statement does not govern or restrict the Court’s power to grant leave to file an additional written statement under Order VIII Rule 9 CPC. The Court held that the two provisions are independent and distinct. Rule 1 of Order VIII CPC governs the filing of the original written statement and imposes a mandatory time limit. Rule 9 of Order VIII CPC, which provides that the Court may at any time require an additional written statement from any of the parties and fix a time of not more than thirty days for presenting the same, remains fully operative even in commercial suits after the expiry of the 120-day period. There is nothing in the Commercial Courts Act, 2015 to suggest that Rule 9 of Order VIII CPC shall not be applicable to commercial suits after the expiry of the 120-day period. Reading such a condition into Rule 9 would amount to adding words to a statute, which is not permissible. Reliance was placed on the Supreme Court’s decision in Ansal Properties and Industries Limited v. State of Haryana and Another, (2009) 3 SCC 553, for the proposition that if the language of an enactment is clear and unambiguous, courts cannot add words thereto or evolve legislative intent not found in the statute.
On the nature and scope of the power under Order VIII Rule 9 CPC, the Court held that filing of an additional written statement is not a matter of right but is based on the discretion of the Court. Leave to file an additional written statement will be granted where the Court is satisfied that the application is bona fide, that there are plausible grounds for bringing on record subsequent developments that could not have been raised at the time of filing the original written statement, and that allowing such an application will advance the cause of justice and decide the real controversy between the parties without causing prejudice to the other side that cannot be compensated in costs. The Court relied on the Supreme Court’s decision in Olympic Industries v. Mulla Hussainy Bhai Mulla Akberally and Others, (2009) 15 SCC 528, and the Madras High Court’s decision in P. Saraswathi v. C. Subramaniam, 2013 SCC OnLine Mad 3224, to the effect that courts should be more liberal in allowing amendments and additional pleadings by defendants than by plaintiffs, and that the rigid principle applicable to amendment of plaints under Order VI Rule 17 CPC does not apply to additional written statements under Order VIII Rule 9 CPC.
On the question of whether the Divisional Application and its refusal constituted a subsequent development, the Court held that the refusal of the Divisional Application vide order dated 16th December 2022 occurring after the filing of the present suit is indeed a subsequent development warranting consideration. The contention of the plaintiffs that since the Divisional Application was pending even before the institution of the suit it does not constitute a subsequent development was rejected. What matters is that the refusal of the application occurred after the completion of pleadings in the suit, making it a subsequent event. Furthermore, the Court noted that under Order XI Rule 1(12) CPC, both parties have a continuing obligation to disclose documents and facts which have come to their notice, and this duty continues till the disposal of the suit. The plaintiffs had not disclosed the facts pertaining to the Divisional Application before the Court.
On the question of whether the findings in the judgment dated 9th April 2024 in the vacation application operate as a bar by way of issue estoppel, the Court held that they do not. The findings in the judgment dated 9th April 2024 were prima facie in nature, being rendered in the context of an interlocutory application for vacation of stay. The Court held, relying on the Supreme Court’s decision in Martin Burn Ltd. v. R.N. Banerjee, 1957 SCC OnLine SC 51, that a prima facie case is not a case proved to the hilt but a case established if the evidence led in support is believed. Observations at the stage of interim injunction are not final or conclusive and cannot operate as issue estoppel. The purpose, standard, and outcomes of a vacation application under Order XXXIX Rule 4 CPC and an application under Order VIII Rule 9 CPC are materially different in fact and in law. The reliance of the plaintiffs on Hope Plantations Ltd. v. Taluk Land Board, Peermade and Another, (1999) 5 SCC 590 was held to be completely misplaced, as that judgment dealt with the consequence of issue estoppel in relation to final findings on a preliminary issue, whereas prima facie findings in interim applications are different from final findings on a preliminary issue.
on the question of whether the IPAB’s decision in post-grant opposition proceedings barred re-agitation of the validity of the suit patent, the Court held that this issue was a matter for final adjudication and not material for deciding the present application. As long as the application under Order VIII Rule 9 CPC was bona fide and prima facie of concern to the suit, its final relevance could be tested at the stage of final arguments and not at the stage of deciding the application for leave to file an additional written statement.
on the relief granted, the Court allowed I.A. 10756/2024 and granted the defendant leave to file an additional written statement to incorporate the facts pertaining to Divisional Application No. 5338/DELNP/2014 of the plaintiffs, as elucidated by the defendant in its application I.A. 4636/2023 under Order XXXIX Rule 4 CPC. The Court however specifically directed that the defendant shall not incorporate any fresh pleading in the additional written statement beyond what has already been stated in the vacation application, I.A. 4636/2023. The additional written statement was directed to be filed within a period of 30 days from the date of the order.

STATUTORY PROVISIONS INVOLVED

Order VIII Rule 9 of the Code of Civil Procedure, 1908 provides that no pleading subsequent to the written statement of a defendant, other than by way of defence to a set-off or counter-claim, shall be presented except by the leave of the Court and upon such terms as the Court thinks fit; but the Court may at any time require a written statement or additional written statement from any of the parties and fix a time of not more than thirty days for presenting the same. The Court held this provision to be the governing provision for the present application and construed it as conferring wide discretion on courts to allow subsequent pleadings where justice so demands, without being fettered by the outer time limit applicable under Order VIII Rule 1 CPC as amended by the Commercial Courts Act, 2015. The Court also noted that Rule 9 of Order VIII CPC was earlier omitted by the Code of Civil Procedure (Amendment) Act, 1999 (Act 46 of 1999) and was subsequently restored by the Code of Civil Procedure (Amendment) Act, 2002 (Act 22 of 2002), with the consequence that subsequent pleadings continue to be governed by the Court’s discretion with a maximum time limit of thirty days for filing.

Order VIII Rule 1 of the Code of Civil Procedure, 1908 as amended by the Commercial Courts Act, 2015 prescribes a mandatory outer limit of 120 days for filing a written statement in commercial suits. The Court held that this provision is independent and distinct from Rule 9 of Order VIII CPC, and that the 120-day limit cannot be read into Rule 9 so as to restrict the Court’s power to grant leave to file an additional written statement after that period has expired.

Order XXXIX Rule 4 of the Code of Civil Procedure, 1908 provides for the discharge, variation, or setting aside of an order for injunction. The defendant had previously filed I.A. 4636/2023 under this provision seeking vacation of the interim injunction granted on 9th January 2023. That application was dismissed on 9th April 2024. The Court in the present judgment held that the findings in the judgment disposing of that application were prima facie in nature and not final, and could not operate as issue estoppel against the defendant filing an additional written statement.

Order XI Rule 1(12) of the Code of Civil Procedure, 1908 as applicable to commercial suits provides that the duty to disclose documents which have come to the notice of a party shall continue till the disposal of the suit. The Court applied this provision to hold that the plaintiffs had a continuing obligation to disclose the facts pertaining to the Divisional Application and its refusal, and that their failure to do so was a relevant consideration in allowing the defendant to bring on record those facts by way of an additional written statement.

Section 15 of the Patents Act, 1970 provides that where the Controller is not satisfied that the application for a patent complies with the requirements of the Act, he may refuse the application. The Divisional Application of the plaintiffs was refused under this provision vide order dated 16th December 2022 by the Assistant Controller of Patents and Designs. The Court in the earlier judgment dated 9th April 2024, reproduced in the present judgment, held that the reference to Section 15 in the order of refusal does not convert the decision into an adjudication on the merits of the claims in the Divisional Application, since the application was refused not because it was found meritless but because the plaintiffs chose not to pursue it.

REASONING OF THE COURT

The Court’s reasoning proceeded along three principal lines.

The first and most significant line of reasoning was textual and concerned the relationship between Order VIII Rule 1 and Order VIII Rule 9 CPC. The Court began by affirming the settled position that the right to file a written statement within the stipulated time is a statutory right, but the filing of an additional written statement rests on the discretion of the Court. The Court then examined the text of Order VIII Rule 9 CPC and found it to be clear and unambiguous in conferring power on the Court to require additional written statements “at any time.” There was no qualification or restriction in Rule 9 tying this power to the 120-day period in Rule 1. Since the Commercial Courts Act, 2015 contains nothing to suggest that Rule 9 shall not apply in commercial suits after expiry of the 120-day period, reading such a restriction into Rule 9 would amount to legislating from the bench an impermissible exercise under settled principles of statutory interpretation as affirmed by the Supreme Court in Ansal Properties. The Court therefore firmly held the two provisions to be independent and distinct, governing different stages and aspects of the pleading process.
The second line of reasoning concerned the merits of allowing the application in the facts of the present case. The Court identified two key circumstances that made the application bona fide and of prima facie concern to the suit. First, the refusal of the Divisional Application on 16th December 2022 was a subsequent event it occurred after the filing of the present suit and after completion of pleadings and therefore represented a development that the defendant could not have pleaded in its original written statement. Second, the Court noted the continuing disclosure obligation under Order XI Rule 1(12) CPC, observing that the plaintiffs themselves had a duty to bring the fate of the Divisional Application to the Court’s notice and had not done so. This consideration added weight to the defendant’s request to do so through its own pleadings. The Court was satisfied that allowing the application would not cause any prejudice to the plaintiffs. Guided by the liberal approach to additional written statements endorsed by the Supreme Court in Olympic Industries and by the Madras High Court in P. Saraswathi, the Court granted leave.
The third line of reasoning concerned the rejection of the plaintiffs’ defences. On the issue estoppel argument, the Court carefully distinguished between prima facie findings at the interlocutory stage and final findings on preliminary issues a distinction with direct support in Martin Burn Ltd. and held that the findings in the judgment dated 9th April 2024 were not conclusive enough to bar the defendant from pleading the same facts in the additional written statement, particularly because the context, purpose, and legal standard applicable to a vacation application under Order XXXIX Rule 4 CPC and to a written statement are materially different. On the res judicata argument based on the IPAB proceedings, the Court declined to decide that question at this stage, holding that the final relevance of the additional written statement’s contents could only be tested at the stage of final arguments.

Throughout, the Court was careful to confine the relief it granted: the defendant was permitted to file an additional written statement incorporating only those facts already stated in I.A. 4636/2023, without the latitude to introduce any fresh pleadings. This condition appropriately balanced the defendant’s right to place a subsequent development on record against the risk of prejudice to the plaintiffs.

DOCTRINAL SIGNIFICANCE

This judgment makes a focused but practically significant contribution to procedural law in commercial intellectual property litigation in India, particularly on the question of when a defendant in a commercial suit may file an additional written statement after the expiry of the mandatory 120-day period under the Commercial Courts Act, 2015.

The most important doctrinal contribution of the judgment is its clear and reasoned holding that Order VIII Rule 9 CPC and Order VIII Rule 1 CPC as amended by the Commercial Courts Act, 2015 operate in independent domains. The 120-day limit is a constraint on the right to file the original written statement and cannot be read by implication into the Court’s discretionary power to permit additional written statements under Rule 9. This clarification is particularly valuable in commercial patent litigation, where subsequent developments such as decisions of the Patent Office on related applications, orders of the IPAB, or results of parallel proceedings in foreign jurisdictions frequently arise during the pendency of long-running suits and may have a bearing on the validity or infringement of the suit patent.

The judgment also reinforces the continuing disclosure obligation under Order XI Rule 1(12) CPC as a two-way street: if a patentee is obliged to disclose material subsequent developments (such as the fate of a Divisional Application), a defendant who learns of such suppression must have a procedural avenue to bring those facts on record, and the Court should not close that avenue through an overly rigid reading of the time limits applicable to original pleadings.

The judgment’s refusal to treat the prima facie findings in interlocutory orders whether granting or refusing an interim injunction or dismissing a vacation application as creating issue estoppel for the purposes of pleadings is an important restatement of a well-settled principle. In complex patent suits that often generate multiple interlocutory orders before trial, this clarity guards against the premature closure of defences on the basis of procedural findings that are explicitly provisional.

The judgment must however be read for what it is: a procedural ruling on an interlocutory application governing the scope of pleadings. It does not decide the validity of Indian Patent No. IN’026, the merits of the Divisional Application or its refusal, the effect of the IPAB’s order in post-grant opposition, or whether the defendant’s pleadings in the additional written statement will ultimately succeed. All substantive questions remain open for final adjudication.

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