Skechers U.S.A. Inc. & Ors. vs Pure Play Sports & Ors.

Jyoti Singh, J.

This judgment will dispose of two applications, one being I.A.12718/2022 filed under Chapter XXIII Rule 13 of Delhi High Court (Original Side) Rules, 2018 (hereinafter referred to as the ‘DHC Rules, 2018’), seeking review of the order passed by the Taxing Officer and the other being I.A. 12719/2022 for condonation of delay of 1054 days in filing the application for review. Both applications have been filed by Mr. Anil Chopra, one of the Partners of Defen dant No.1/Pure Play Sports, a Partnership Firm.

Brief background necessary for deciding the present applications is that a suit was filed by the Plaintiffs against the Defendants for permanent injunction restraining t hem from passing off, dilution etc. as well as claiming damages/rendition of accou nts, delivery up amongst other reliefs. Defendants No.2 to 4 were proceeded ex parte and vide judgment dated 15.05.2018, the su it was decreed against the Defendants permanently rest raining t hem from manufacturing, selling, etc. their goods with a similar trade dress or in any other manner amounting to passing off. Decree was passed jointly and severally against the four Defendants out of which Defendant No. 1 is the Partnership Firm. Plaintiffs filed an application being I.A. 8409/2018 for costs along with bill of costs and by a su bsequ ent application being I.A. 8826/2018, Plaintiffs sought liberty to file details of additional costs which had been earlier overlooked. By order dated 19.07.2018, Court directed the applications to be list ed before the learned Joint Registrar since the costs were t o be det ermined by the Taxing Officer in terms of DHC Rules, 2018. By order dated 20.08.2018, cost of the suit was taxed at Rs. 86,98,173.05/- an d on that basis decree was drawn up.

Plaintiffs thereafter filed Execution Petition No. 81 of 2018 seeking execution of the decree. On 12.09.2019, the Executing Cou rt directed Judgment Debtor No. 1/Shri Vishnu Bhagat to file affidavit disclosing movable and immovable assets along with details of accounts and investments. Notices were issued to the other three Partners Mr. Satya Pal Maini, Mr. Anil Chopra and Smt. Meena Son i, whose names were disclosed by the counsel for the Judgment Debtors. The Applicant herein Mr. Anil Chopra filed his affidavit of assets an d he along with other Partners was directed t o be present in Cou rt on 09.01.2020, by an order dated 19.12.2019.

As per the case of the Review applicant, upon learning that arrest warrants were issued by the Executing Court, h e con tacted a counsel and filed the present application for recall of order dated 20.08.2018, passed by the Taxing Officer, along with application seeking condonation of delay. It is the case of the Applicant that Defendant No. 1/Pure Play Sports is a Partnership Firm with four Partners and Applicant is only a 2% shareholder and a Sleeping Partner. He does not possess business acumen or the experience to run the business of the Partnership Firm and being a Sleeping Partner was provided with nil or very little information of the business activities or any litigation associated with it. The Applicant thus had no knowledge of the suit proceedings and it was on ly in September, 2019 t h at h e learnt of the proceedings upon receipt of summons from the Executing Court. On being served with the summons, Applicant approached t he other two Managing Partners, who informed him of the passing of t h e decree, whereupon the Applicant engaged a counsel to handle the matter. By order dated 18.11.2019, Court directed t he Applicant t o appear in person on 19.11.2019, which he did. Further, in compliance of the order dated 19.12.2019, Applicant filed an affidavit declaring the assets and income and also disclosed other information, sought by the Court. Subsequently, the Applicant obtained copy of the application filed by the Decree Holders along with bill of cost s in t h e third week of July, 2022 and the order dated 20.08.2018, passed by the Taxing Officer. After examining the order and the bill of costs, according to the Applicant, since the assessment of cost s was n ot as per the DHC Rules, 2018 and the Commercial Courts Act, 2015, on advice of the counsel, the present application was filed seeking a review/recall of the said order.

Assailing the order dated 20.08.2018, learned counsel for t he Applicant contended that:

(a). Court while passing the judgment dat ed 15.05.2018, h ad clearly held that Plaintiffs were not entitled to damages an d yet an exorbitant amount has been assessed towards costs. Th e bill of costs has four components which includes Court Fees, Process Fees, Senior Advocate’s fee and Advocate’s fee. Taxing Officer has failed to segregate the Advocate’s fee towards Court appearances from other expenses wh ich do n ot relate to the appearances, overlooking the definition of ‘Advocate’ under Chapter I of DHC Rules, 2018. The Taxing Officer as per law is required to compute costs which are reasonable and realistic and not just any exorbitant amount, mathematically claimed by the Plaintiffs in arriving at the costs. Taxing Officer has also to bear in mind the conduct of the parties, particularly, where Plaintiff delays the adju dication of the suit for one reason or the other. In Sanjeev Kumar Jain v. Raghubir Saran Charitable Trust and Ors., (2012) 1 SCC 455, the Supreme Court has explained the manner and methodology of how the costs have to be assessed in In dian Cou rts an d t he idea is not to give unfair advantage to the losing party albeit at the same time it is also not meant to give profits to the successful party. Reliance was also placed on t h e ju dgment of the Supreme Court in Salem Advocate Bar Association, T.N. v. Union of India, (2005) 6 SCC 344, for the same proposition.

(b). Conduct of the Plaintiffs has been such that they are undeserving of such exorbitant costs. Plaintiffs have prolonged the matter for three years only to gain damages and did not settle the matter before the Mediation Centre. Adjournment was sought even at the time of pronouncement of the ju dgment for filing an application under Order XIII-A CPC.

(c). The assessment/taxation is contested on the ground that t he amount sought towards appearance of the Advocates is not only exorbitant but also uncalled for, as major part of t h e am ount is towards internal meetings amongst the associates, partners et c. and drafting of replies and other documents. The bill also includes travelling, lodging expenses of the Advocates wh ich cannot be claimed from the Defendants. The ‘costs’ as defin ed in Section 35(1) of the CPC means a reasonable cost where t he test of reasonableness includes an activity or action wh ich was required and was not unnecessarily undertaken in the context of the Indian judicial system. Legal fees and expenses incurred in connection with the proceedings, as stated in Schedule to Amended Section 35 of CPC, means Advocates’ fee in curred for appearing before the Court and cannot relate to internal meetings or preparing of drafts in the offices of the Advocates. Expenses can mean those incurred on t yping, ph otocopying, process fee and not hotel/food/car bills etc.

(d). Delay in filing the review application is owin g t o t he fact that the Applicant was unaware of the pendency of the suit proceedings and it was only when summons were received in September, 2019 in the execution proceedings that the Applicant learnt of the judgment and decree passed by the Court. In July, 2022, the Applicant received documents from his previous counsel from which it was revealed t hat t he Taxin g Officer did not correctly assess the taxing of the costs and immediately action was taken to file t h e present application. Some delay had occurred on account of the summer vacat ions of the Court in the meantime as well as the Pandemic COVID-19 and consequent health complications of his wife and himself.

The application was strenuously contested by the non-Applicants/Plaintiffs and it was argued that:

(a). Review application is an abuse of process of law, hopelessly time barred, barred by res judicata an d con trary t o the DHC Rules, 2018. It was argued that despite multiple opportunities to come clean before the Court, Applicant has continued to make false statements that he became aware of t h e proceedings only in September, 2019, despit e t he fact t hat h e was the signatory in the two caveat petitions preferred before the District Court, Rohini and before this Court in 2016 itself. It has been repeatedly held by the Courts that litigants who do not come to the Court with clean hands are not entitled to any relief and in this context, reliance was placed on S.P. Chengalvaraya Naidu (Dead) By LRs v. Jagannath (Dead) By LRs and Others, (1994) 1 SCC 1 and Oswal Fats and Oils Limited v. Additional Commissioner (Administration) Bareilly Division, Bareilly and Others, (2010) 4 SCC 728.

(b). Defendant No. 1, the Partnership Firm, of which the Applicant is one of the Partners had already preferred an appeal being O.A. No.121 of 2018 before this Court and when the Court was not inclined to grant relief, the appeal was withdrawn. Applicant is seeking to agitate the same issues aft er nearly 4 years, in the garb of being a partner and thus a separate legal entity, entitled to challenge the Taxing Order in h is own right, which ought not to be permitted. Even assuming t hat t he review is maintainable, Applicant cannot escape his legal liability to share the cost imposed on Defendant No.1, as h e is admittedly a Partner of Defendant No. 1 Firm albeit to the extent of his shareholding. It is settled law that all Part ners are jointly and severally liable for all liabilities and debts of a Partnership Firm.

(c). Commercial Courts Act, 2015 and DHC Rules, 2018 were formulated with the purpose that an unsuccessful party shall pay costs to the successful party as provided in Section 35 (2) of the Commercial Courts Act, 2015 and Rules 1 and 2 of Chapter XXIII of DHC Rules, 2018. It is a settled legal posit ion t hat in commercial matters, actual cost ought to be awarded keeping in mind the bill of costs, which certainly includes t he Cou nsel’s fee, as held in the judgments in Reckitt Benckiser India Private Limited v. Sharad Jagat Pal Shrivastav, 2022 SCC OnLine Del 970 and National Insurance and Indemnity Corporation and Another v. Virat Travels and Another, 2022 SCC OnLine Del 1004.

(d). Applicant has been unable to show any judgment or order where the costs computed and taxed by a Taxin g Officer h ave been modified or reduced by the Court on any ground, as this is purely the prerogative of the Taxing Officer.

I have heard the learned counsels for the parties an d examined their contentions.

The undisputed facts are that a judgment and decree was passed against Defendant No.1, of which Applicant is a partner. Decree was not challenged by the Applicant and has attained finality. Pursuant t o the judgment dated 15.05.2018, whereby the Court h as permanently restrained the Defendants from passing off t h e goods as t h at of t h e Plaintiffs, the Court had listed the matter before the Taxing Officer for assessment of the costs. The Taxing Officer has, by order dated 20.08.2018, assessed the costs at Rs.86,98,173.05/-. Defendant No. 1 the Partnership Firm had preferred a Chamber Appeal being O.A. No. 121 of 2018 against the order dated 20.08.2018 and as a matter of record, the same was dismissed as withdrawn on 16.01.2019, t hough liberty was granted to take recourse to appropriate remedies. From 20.08.2018 or even 16.01.2019, till the filing of the present application, no steps were taken by the Applicant either t o assail t he decree or seek a review of the order dated 20.08.2018. It is on ly n ow i.e. on 01.08.2022 that the present application has been preferred for review of the order along with an application seeking condonation of delay of 1054 days.

Insofar as the condonation of delay application is concerned, the grounds that emerge from a plain reading of the application are: (a) Applicant was unaware of the pendency of the suit proceedings or the passing of the judgment and decree as he was a Sleepin g Part ner with 2% share in the Partnership and had no active involvement in the business activities; (b) from February 2020, the country su ffered t he Pandemic and all issues other than the concern for health of his family and himself, had taken a back seat for the Applicant, as bot h h e an d his wife suffered health complications on being infected with COVID-19; (c) it was in July, 2022, that Applicant received documents from his previous counsel and it was for the first time revealed that the Taxing Officer had incorrectly taxed t he cost s; and (d) on 21.04.2022, when the Court issued notice in the execution for arrest of the Partners of Judgment Debtor No. 1, the Applicant engaged the present counsel to take necessary st eps as t h ere was n o response from the previous counsel.

I have examined the grounds set out in the application seeking condonation of delay. The Applicant has admitted that when the caveat was filed in this Court on 31.03.2016, he was the one wh o h ad signed on the caveat and the vakalatnama as well as the affidavit supporting the caveat. There is no averment in t he application as t o why the Applicant did not diligently pursue the matter further, to ascertain and enquire whether any proceedings were filed again st t he Partnership Firm or against him in his personal capacity, con sidering that he was so vigilant and cautious in filing a caveat t o prevent an y adverse ex parte order against him or the Firm. A vague and bald averment is made in the application t hat t he Applicant is a Part n er with only 2% stake in the Firm and did not understand t he bu siness activities and had little knowledge of it. The fact t hat t he Applicant signed the caveat shows his involvement in the affairs of the Firm an d in any case being aware that some legal proceedings were likely t o be filed by the Plaintiffs, Applicant ought to have been vigilant and his non-involvement in the day-to-day functioning in t he bu siness, even if true, is irrelevant and merely an afterthought. To t h is Court, it does not appeal to reason that a person who has a foresight of filing a caveat as a precautionary measure, would be ignorant and oblivious of the suit proceedings, passing of the judgment and the order of costs.

Even if for the sake of arguments, one was to believe t hat t he Applicant learnt of the proceedings only in September, 2019, t here is no averment in the application which would point t o an y st ep t aken from then till the filing of the present application for setting aside t he decree or the order of the Taxing Officer. It is also not the case of t h e Applicant that the relationships between the Partners were strained or they had no interaction because of which the Applicant remained in dark about the proceedings. The only plea that is discern ible from a reading of the application to cover the period from 2019 to 2022 is of Pandemic COVID-19, which too, in my view, is misplaced and cannot come to the aid of the Applicant. In September, 2019, when the Applicant, admittedly learnt of the decree and the order of costs, there was no Pandemic. The application is wholly bereft of dates and details of any action taken between September, 2019 t o March, 2020, when there was onset of Pandemic. In fact, in the entire application, there are three reasons to make out a cause for delay viz: September, 2019, when allegedly Applicant learnt of the proceedings, COVID-19 in 2020 and date of 21.04.2022, on which date it is stated that notice was issued by the Executing Court for arrest of the Partners of Judgment Debtor No. 1. Thereafter, Applicant avers that in July, 2022 he got to know about the incorrect assessment by the Taxing Officer. Applying the principles for condonation of delay, the Applicant has clearly failed in making out a ‘sufficient cause’ for condonation of long delay of 1054 days in filing the review application and the application deserves to be dismissed. It is well settled that law supports those who are awake and not those who sleep over their rights, as the maxim goes ‘vigilantibus non dormientibus subvenit lex’.

Since there is no merit in the application seeking condonation of delay, the accompanying application for recall cannot be en tertained on this score alone. Even otherwise, there is no merit in the application for the reason that Applicant is a 2% shareholder in Partnership Firm i.e. Defendant No. 1 in the suit. A Chamber Appeal was filed by Defendant No. 1 assailing the order dated 20.08.2018 passed by the Taxing Officer on 04.09.2018. The appeal was heard by the Court on 16.01.2019 and the same was dism issed as wit h drawn with liberty to the Appellant to take appropriate steps, if perm itted in law. No steps were taken thereafter either by Defendant No. 1 or t h e Applicant herein for assailing the order dated 20.08.2018, except t he present application filed in August, 2022 i.e. 4 years lat er. From t he appeal, it can be seen that the supporting affidavit was filed by Mr. Vishnu Bhagat, one of the Partners of the Firm and it is difficu lt to comprehend that when the appeal was filed, one Partner wou ld n ot have informed the other of the filing of the appeal, whatever may have been the extent of shareholding of th e Applicant. Moreover, u nder Order 30 CPC, a decree in law passed against a firm would be a decree against its Partners. By merely stating that Applicant is a sleeping partner, he cannot absolve himself of the liabilities in curred under the decree, particularly, when the same had not been even challenged over the years.

For the aforesaid reasons, while this Court does not need to detain itself with the issue of the costs being allegedly exorbitant, suffice would it be to state that the Supreme Court in Salem Advocate Bar Association, T.N. (supra), the judgement cited by the Applicant, has held that award of costs of the suit is in the discretion of the Cou rt albeit the costs have to be actual reasonable costs. It was also held that the cost would include cost of time spent by the successful party, transportation and lodging, if any or any other incidental cost incurred in relation to litigation, besides Court fee, lawyer’s fee, typing etc. An important observation in the said judgment is that judicial n otice can be taken of the fact that many unscrupulous parties take advantage of the fact that either costs are not awarded or nominal costs are awarded against unsuccessful parties and such a practice encourages filin g of frivolous suits as also taking up frivolous defences. The Taxing Officer has assessed the costs on the basis of the bill of costs submitted by the Plaintiffs which as is evident includes Court fee, Process fee, Senior Advocate’s fee and Advocate’s fee and this Cou rt finds no reason to interfere with the impugned order and that too at the behest of a party who has chosen to sleep over h is righ ts for over 4 years.

For all the afore-stated reasons, both the Applications are dismissed, being devoid of merits.