SKECHERS U.S.A. INC. & Ors. v. PURE PLAY SPORTS & Ors.

1. This judgment will dispose of two applications, one being I.A.12718/2022 filed under Chapter XXIII Rule 13 of Delhi High Court (OriginalSide) Rules,2018 (hereinafter referredto 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 theapplication for review. Both applications have been filed by Mr. Anil Chopra, oneof the Partners of Defendant No.1/PurePlay Sports,a Partnership Firm.

2. Brief background necessary for deciding the present applications is that a suit was filed by the Plaintiffs against the Defendants for permanent injunction restraining them from passing off, dilution etc. as well as claiming damages/rendition of accounts, delivery up amongst other reliefs. Defendants No.2 to 4 were proceeded ex parte and vide judgment dated 15.05.2018, the suit was decreed against the Defendants permanently restraining them from manufacturing,selling, etc.theirgoods with a similar trade dress or in any other manneramounting 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 subsequent application being I.A. 8826/2018, Plaintiffs sought liberty to file details of additional costswhich had been earlier overlooked.By order dated 19.07.2018,Court directedthe applications to be listed before the learned Joint Registrar since the costs were to be determined by the Taxing Officer in terms of DHC Rules, 2018. By order dated 20.08.2018,cost of thesuit was taxed at Rs. 86,98,173.05/- and on that basis decree was drawn up.

3. Plaintiffs thereafter filed Execution Petition No. 81 of 2018 seeking execution of the decree. On 12.09.2019,the Executing Court 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 PartnersMr. Satya Pal Maini,Mr. Anil Chopra and Smt.Meena Soni, whose names were disclosed by thecounsel for the Judgment Debtors. The Applicant herein Mr. Anil Chopra filed his affidavit of assets and he along with other Partnerswas directed to be present in Court on 09.01.2020,by an order dated 19.12.2019.

4. As per the case of the Review applicant, upon learning that arrest warrantswere issued by the Executing Court, he contacted 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 businessacumen or the experience to run the business of the Partnership Firm and being a Sleeping Partner was provided with nil or very littleinformation of the business activitiesor any litigation associated with it.The Applicant thus had no knowledge of the suit proceedings and it was only in September, 2019 that he learnt of the proceedingsupon receipt of summons from theExecuting Court.On beingserved with the summons,Applicant approached the other two Managing Partners,who informed him of thepassing of the decree, whereupon the Applicant engaged a counsel to handle the matter.By order dated 18.11.2019,Court directed the Applicant to 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 costs in the 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 costs was not 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.

5. Assailing the order dated20.08.2018,learned counsel for the Applicant contendedthat: (a). Court whilepassing the judgment dated 15.05.2018, had clearly held that Plaintiffs were not entitled to damages and yet an exorbitant amount hasbeen assessedtowards costs.The 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 which do not 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 thecosts. Taxing Officer has also to bear in mind the conduct of the parties, particularly,where Plaintiff delays the adjudication 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 explainedthe manner and methodology of how the costs have to be assessed in Indian Courts and the 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 the judgment 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 timeof pronouncement of the judgment for filing an application under Order XIII-A CPC. (c). The assessment/taxation is contestedon the ground that the amountsought towardsappearanceof the Advocatesis not only exorbitant but also uncalled for, as major part of the amount is towards internal meetings amongst the associates,partners etc. and drafting of replies and other documents. The bill also includestravelling,lodging expenses of the Advocates which cannot be claimedfrom theDefendants.The‘costs’ as defined in Section 35(1) of the CPC means a reasonablecost where the test of reasonableness includes an activity or action which 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 incurred for appearing before the Court and cannot relate to internal meetings or preparing of drafts in theoffices of the Advocates. Expenses can mean thoseincurred on typing, photocopying, process fee and not hotel/food/car bills etc. (d). Delay in filing the review application is owing to the 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 that the Taxing Officer did not correctly assess the taxing of the costs and immediatelyaction was taken to file the present application. Some delay had occurredon account of the summer vacations of the Court in the meantime as well as the Pandemic COVID-19 and consequenthealth complications of his wife and himself.

6. The application was strenuously contested by the non- Applicants/Plaintiffs andit was argued that: (a). Review application is an abuse of process of law, hopelessly timebarred, barred by res judicata and contrary to the DHC Rules, 2018. It was argued that despite multiple opportunities to come clean before the Court, Applicant has continued to makefalse statements that hebecame aware of the proceedings only in September, 2019,despite the fact that he was the signatoryin the two caveat petitions preferred before the District Court, Rohini and before this Court in 2016 itself. It has been repeatedly heldby 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 seekingto agitatethe same issues after nearly 4 years, in the garb of being a partner and thus a separate legal entity, entitledto challenge the Taxing Order in his own right,which ought not to be permitted.Even assuming that the review is maintainable, Applicant cannot escape his legal liability to share thecost imposed on Defendant No.1, as he is admittedly a Partner of Defendant No. 1 Firm albeit to the extent of his shareholding. It is settled law that all Partners 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 partyshall pay costs to the successful partyas 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 position that in commercial matters, actual cost ought to be awarded keeping in mind the bill of costs, which certainly includes the Counsel’s fee, as held in the judgments in Reckitt BenckiserIndia 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 computedand taxed by a Taxing Officer have been modified or reducedby the Court on any ground,as this is purely theprerogative of the Taxing Officer.

7. I have heard the learned counsels for theparties and examined their contentions.

8. The undisputedfacts are that a judgment anddecree was passed against Defendant No.1,of which Applicant is a partner. Decree was not challenged by the Applicant and has attained finality.Pursuant to the judgment dated 15.05.2018, wherebythe Court has permanently restrained the Defendants from passing off the goods as that of the Plaintiffs, theCourt had listedthe 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 theorder dated 20.08.2018 and as a matter of record, the same was dismissed as withdrawn on 16.01.2019, though 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 stepswere taken by the Applicant either to assail the decree or seek a review of the order dated20.08.2018.It is only now i.e. on 01.08.2022that the present application hasbeen preferred for review of the order along with an application seeking condonation of delay of 1054 days.

9. 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 passingof the judgmentand decree as he was a Sleeping Partner with 2% share in the Partnership and had no active involvement in the businessactivities; (b) from February2020, the country suffered the Pandemic and all issues other than theconcern for health of his family and himself, had taken a back seat for the Applicant, as both he and 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 Officerhad incorrectlytaxed the costs; and

(d) on 21.04.2022, when the Court issued noticein the execution for arrest of the Partners of Judgment Debtor No. 1, the Applicant engaged the present counsel to takenecessary steps as there was no response from theprevious counsel.

10. I have examined thegrounds set out in theapplication 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 who had signed on the caveat and the vakalatnama as well as the affidavit supporting the caveat.There is no averment in the application as to why the Applicant did not diligently pursue the matter further, to ascertain and enquire whetherany proceedings were filed against the Partnership Firm or against him in hispersonal capacity,considering that he was so vigilant and cautious in filing a caveat to prevent any adverse ex parte order against him or the Firm. A vague and bald averment is made in the application that the Applicant is a Partner with only 2% stake in theFirm anddid not understand the business activities and hadlittle knowledge of it. The fact that the Applicant signed thecaveat shows hisinvolvement in the affairs of the Firm and in any case being aware that some legal proceedingswere likely to be filed by the Plaintiffs, Applicant ought to have been vigilant and his non-involvement in theday-to-day functioning in the business, even if true, is irrelevant and merely an afterthought. To this 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.

11. Even if for the sake of arguments,one was to believe that the Applicant learnt of the proceedings onlyin September,2019, there is no averment in the application which would point to any step taken from then till the filingof the present application for setting aside the decree or the order of the TaxingOfficer. It is also not the case of the Applicant that therelationships between the Partnerswere strained or they had no interaction because of which theApplicant remained in dark about the proceedings.The onlyplea that is discernible from a reading of the application to cover theperiod from 2019 to 2022 is of Pandemic COVID-19, which too, in myview, is misplaced andcannot 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 to 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 whoare awake and not those whosleep over their rights,as the maxim goes ‘vigilantibus non dormientibus subvenit lex’.

12. Since there is no merit in the application seeking condonation of delay, the accompanyingapplication for recall cannot be entertained 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 andthe samewas dismissed as withdrawn with liberty to the Appellant to take appropriate steps, if permitted in law. No steps were taken thereafter either by Defendant No. 1 or the Applicant herein for assailing the order dated 20.08.2018, except the present application filed in August,2022 i.e. 4 years later. From the appeal, it can be seen that the supporting affidavit was filed by Mr. Vishnu Bhagat,one of thePartners of the Firm and it is difficult to comprehendthat when the appeal was filed, one Partner would not have informed theother of thefiling of theappeal, whatever may have been the extent of shareholding of the Applicant. Moreover, under 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 absolvehimself of the liabilities incurred under the decree, particularly, when the same had not been even challenged over the years.

13. 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 theApplicant, has held that award of costs of the suit is in the discretion of the Court albeit the costs haveto be actualreasonable 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, typingetc. An important observation in the said judgment is that judicial notice can be taken of thefact that many unscrupulous parties take advantage of the fact that either costs are not awardedor nominal costsare awarded against unsuccessfulpartiesand such a practice encourages filing 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 Court finds no reason to interfere with the impugned order and that tooat the behest of a party who has chosen to sleep over his rights for over 4 years.

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