Lifestyle Equities C.V. & Anr. v. Amazon Technologies INC.

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only be directory or as a guiding factor. Mere reference to CPC in the said Section 36 cannot be construed in such manner that it takes away the power conferred in the main statute (i.e. the Arbitration Act) itself. It is to be taken as a general guideline, which will not make the main provision of the Arbitration Act inapplicable. The provi- sions of CPC are to be followed as guidance, whereas the provisions of the Arbitration Act are essentially to be first applied. Since, the Arbitration Act is a self-contained Act, the provisions of CPC will apply only insofar as the same are not inconsistent with the spirit and provisions of the Arbitration Act.” (Emphasis supplied)

117. On the strength of the above reasoning, this Court held that the exemption from furnishing security could not be applied to the arbitration proceedings. The Court clarified that while courts must have due regard to the CPC, they are not rigidly bound by its provisions. The CPC serves as a guiding framework rather than a strict mandate because the Arbitration Act being a self-contained Act is to be first applied by the court.

118. Although not explicitly stated by the Court as a reason for its decision, yet this Court did note the consequence of accepting the contention that Order XXVII Rule 8A was applicable. The result would be that wherever the government was the judgment-debtor in the arbitration proceedings, it would be entitled to an unconditional stay on the mere filing of an application under Section 36(2).

119. While Pam Developments (supra) relied on the phrase “due regard” appearing in the first Proviso to decline the rigid application of an exemption from furnishing security provided under the CPC it could also be argued that insisting on a conditional stay in all cases of a money award would be a rigid application of Order XLI Rule 5. This is because Rule 5 mandates the furnishing of security or deposit as a condition for granting stay. Relying on Pam Developments (supra), it could possibly be argued that “due regard” to the provisions of CPC, especially Order XLI Rule 5, would not mean a mandatory grant of conditional stay in all cases. This is because the provisions of the Act, especially Section 36,

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would have to be first applied wherein a discretionary power is vested in the court.

120. If the first Proviso has to be interpreted as done in Pam Developments (supra) and merits of the award have to be considered on a prima facie level as done in Sepco Electric (supra), it is difficult to rule out the existence of an unconditional stay in cases outside the second Proviso. A closer analysis of the decision in Sepco Electric (supra) and this Court’s interpretation of the first proviso in Pam Developments (supra) suggests that unconditional stays can be granted even in cases outside the second Proviso.

121. At this stage, we must look into one decision of the Bombay High Court in the case of ITD Cementation India Ltd. v. Urmi Trenchless Technology Pvt. Ltd., reported in 2020 SCC OnLine Bom 10611, wherein the High Court after referring to and relying upon Pam Developers (supra) observed as under: “11. The provision of Section 36(3) are clear, that one must have regard to the provisions of the Code of Civil Procedure 1908 (“CPC”) and specifically the provisions of Order 41 Rule 5 while addressing the question of stay. The words ‘have due regard’ have received judicial interpretation. Certainly there is no blanket prohibition barring a Court from unconditionally staying either a money award or a money decree. The three-fold requirement of Order 41 Rule 5(3) will have to be kept in mind. But, as the Supreme Court held in Pam Developers Private Limited v. State of West Bengal (2019) 8 SCC 112 the provisions of Order 41 Rule 5 are for guidance. They do not indicate that a Section 36 Court lacks all discretion to grant an unconditional stay. That said, it is equally well settled that a strong and exceptional case must be made for unconditional stay of a money decree or a money award. The three matters to consider under Order 41 Rule 5(3) are (a) whether the Applicant will be put to a substantial loss if stay is refused; (b) whether there is a delay in making the application and (c) whether the Applicant has furnish sufficient security to satisfy any ultimate decree. There is a delay, though slight. I do not

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see how the question of substantial loss arises. The fact that it has suffered an Award is neither here or there. The third requirement is that the party applying for stay must show sufficient security. There is no such attempt made.” (Emphasis supplied)

122. In such circumstances referred to above, we find it difficult to subscribe to the submission of Mr. Gaurav Pachnanda, that even for the purpose of grant of benefit of unconditional stay of money decree under Order XLI Rule 5 of the CPC, the judgment-debtor has to make out more than a prima facie case of fraud or corruption and not solely on the basis of an extreme or egregious view on the merits of the adjudication.

123. We once again clarify that the analogy of Section 36 of the Arbitration Act sought to be applied is inappropriate. The decision of this Court in Pam Developments (supra) should also be understood and confined only to matters relating to arbitration, more particularly, Section 36 of the Arbitration Act.

124. We are of the view that if fraud or corruption or something analogous to the same is only to be seen for the purpose of granting benefit of unconditional stay of execution of money decree then in such circumstances, the decree holder may argue that although there may not be a valid service of summons to the defendant/judgment- debtor yet, the same by itself would not be sufficient to grant the benefit of unconditional stay of execution of money decree. This would lead to nothing but serious miscarriage of justice.

vi. Relevant aspects which the High Court looked into for the purpose of granting unconditional stay

125. The first thing that the Division Bench of the High Court looked into was that the suit had proceeded in the absence of the respondent herein. In the aforesaid context, the findings recorded by the Division Bench may be looked into: “168. We also find prima facie substance in the contentions of Mr. Nigam and Mr. Kaul that the manner in which, after excluding all defendants from the proceedings, the entire trial of the suit, arguments and rendition of judgment took

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place solely in the presence of the plaintiff Lifestyle, may not sustain legal scrutiny.

169. The learned Single Judge has repeatedly observed, in the impugned judgment, that Amazon Tech was deliberately staying away from the proceedings despite being aware of their pendency, and has relied, for the said purpose, on the order dated 5 September 2022 passed in the suit. A reading of the order discloses that the appearance of Counsels are noted only for Defendant 2 Cloudtail and Defendant 3 ASSPL. The mere fact that learned Senior Counsel appearing for Cloudtail advanced a submission, on behalf of his client as well as on behalf of Amazon Tech, that they were willing to suffer reasonable damages, cannot be seen as proof of Amazon Tech being aware of the proceedings or deliberately refraining from participating therein. Even prior to this date, Amazon Tech had been proceeded ex parte on 20 April 2022. As a matter of fact, therefore, Amazon Tech was never present before the learned Single Judge on any date of hearing.

170. When one peruses the orders passed in the suit, vis-à-vis the notings of the Registry, it becomes apparent that, in fact, no summons in the suit were ever served on Amazon Tech. This, to our mind, is a serious infirmity, which may plague all other proceedings. Amazon Tech was proceeded ex parte, by the learned Single Judge, on 20 April 2022. In the order passed by the learned Joint Registrar on 7 July 2021, which was the immediately preceding effective date, it was specifically noted that there was no report regarding service of the suit on Amazon Tech. In the circumstances, Lifestyle was directed to file an affidavit of service. No affidavit of service was filed by Lifestyle, between 7 July 2021 and 20 April 2022. The only affidavit of service which was filed by Lifestyle was of 25 March 2021. That affidavit enclosed, by it, an email dated 8 March 2021. No email, after 8 March 2021, was sent by Lifestyle to Amazon Tech. There is no question of the summons having been served by the email dated 8 March 2021, as the delay in filing process

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fee was condoned only on 16 April 2021. After 16 April 2021, the summons have never been sent to Amazon Tech, by any means of communication including email. It was for this reason that the order dated 7 July 2021 of the learned Joint Registrar required Lifestyle to file an affidavit of service. This was never done. As such, it is apparent that the learned Single Judge was in error in proceeding ex parte against Amazon Tech by order dated 20 April 2022.

171. In fact, even before us, Mr. Pachnanda, with characteristic candour and forthrightness, did not seek to contend that formal service of summons on Amazon Tech, as directed by the Court while issuing summons on 12 October 2020, ever took place. His submission is, however, that, prior to issuance of summons by the Court on 12 October 2020, as well as by way of attachment to the email dated 8 March 2021, all the documents relating to the suit, as well as applications filed therewith, were forwarded to Amazon Tech. Besides, due compliance with the requirements of the proviso to Order XXXIX Rule 13 of the CPC was also ensured. In these circumstances, Mr. Pachnanda’s submission is that the learned Single Judge was correct in holding that Amazon Tech deliberately absented itself from the proceedings and cannot, now, therefore, seek to raise a grievance that it was proceeded ex parte.

172. We cannot, in law, accept the submission.

173. The law does not require a defendant to enter appearance in a suit, unless summons in the suit are served on it. The Commercial Courts Act, 2015 contains strict provisions in that regard. No amount of service, on the defendant, of the papers relating to the suit, by the plaintiff, absent actual summons issued by the suit, can compel a defendant, in law, to enter appearance. The law does not permit a defendant to be proceeded ex parte, even before summons in the suit are served on it. This is plain, and elementary. The learned Single Judge could not, therefore, have proceeded against Amazon Tech ex

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parte on 20 April 2022, even before formal summons in the suit had been served on it. In doing so, it appears that the learned Single Judge was not made aware of the order passed by the learned Joint Registrar on the immediately preceding date, i.e. 7 July 2021, in which it was specifically noted that there was no report regarding service of the suit on Amazon Tech. In holding that Amazon Tech had not appeared despite service and, therefore, proceeding against Amazon Tech ex parte, therefore, we are of the opinion that the learned Single Judge materially erred in law and on facts.

174. This, by itself, is a lapse serious enough to vitiate all proceedings in the suit after 20 April 2022, at least insofar as the appellant Amazon Tech is concerned. It also, therefore, suffices, even by itself and independent of all other considerations, as enough to justify entertainment of the present appeal without requiring any deposit of the decretal amount to be made by Amazon Tech.

175. We also find considerable substance in the submission of learned Senior Counsel for the appellant Amazon Tech that, in any event, all these developments took place at a time when the damage claimed by Lifestyle were only to the tune of ₹ 2,00,05,000/-. Enhancement of these damages are necessarily to be proceeded by an amendment of the plaint, of which Amazon Tech had to be put on due notice. This was never done. In fact, the written submissions filed by Lifestyle, which enhanced the damages, earlier computed at ₹ 20,005,000/– to ₹ 3780 crores, were also not served on the Appellant Amazon Tech. In accepting the enhancement of the claim for damages, therefore, we agree with learned Senior Counsel for the appellant Amazon Tech that the learned Single Judge has not acted strictly in accordance with the law.

176. In some circumstances, we are also of the opinion that lifestyle cannot seek sanctuary behind Order VII Rule 2 or Order VII rule 7 of the CPC, or even Rule 120 of the IPD Rules. Order VII Rule 2, in fact requires a

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plaint, seeking recovery of money, to state the precise claimed amount. The proviso to Order VII Rule 2 applies only in cases of suits for mesne profits, or for an amount which would be found on rendition of accounts between the Plaintiff and the Defendant, or for movables in the possession of the defendant or debts of which the value cannot be reasonably estimated at that stage. The present suit does not fall within any of these categories. The suit does not claim mesne profits, or value of movables in the possession of the defendants, or any debt of which the value was not ascertainable. Moreover, para 86 of the impugned judgment records the submission of Lifestyle that it was not pressing for its prayer for rendition of accounts. In that view of the matter, the proviso to Order VII Rule 2 of the CPC would not apply, and the main provision, which requires the precise claim to be quantified in the suit, would apply with all force. The precise amount quantified in the suit was only ₹ 2,00,05,000/–. There is, therefore, substance in the contention of learned Senior Counsel for Amazon Tech that, without an amendment of the plaint, the damages could not have been enhanced, much less to ₹ 3780 crores.

177. Order VII Rule 7, plainly, does not apply, as it exempts a plaintiff from requiring to claim “general or other relief”, apart from the specific relief sought in the plaint.

178. In any event, what lies at stake, here, is something far more empirical. The question that is required to be addressed is whether (i) a claim for damages, assessed in the plaint at ₹ 2,00,05,000/–, could be inflated to ₹ 3780 crores merely in written submissions filed by the plaintiff after conclusion of arguments, without amending the plaint and without even serving a copy of the written submissions on a defendant against whom the enhanced damages were claimed and (ii) the Court would, in such circumstances, have awarded damages in excess of ₹ 336 crores, without any prior opportunity to the concerned defendant to contest the proposed judgment.”

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126. The second relevant aspect that the Division Bench looked into was the fact that there were no pleadings of infringement against the respondent herein worth the name. In this regard, the following observations are relevant: “156. Mr. Sai Deepak, appearing on behalf of Lifestyle and supplementing the submissions advanced by Mr. Pachnanda, sought earnestly to convince us that the requisite factual basis or alleging involvement of Amazon Tech in the infringement of Lifestyle’s registered trademark, is forthcoming in the plaint. We are unable to agree.

157. We have already set out, from para 29 of the present judgment on words, the relevant averments contained in the plaint. We do not find, therein, any prima facie sustainable allegation of involvement, by Amazon Tech, in any infringement of Lifestyle’s registered trademark.

158. Para 41 of the plaint alleges that Amazon Tech is, under its brand ‘SYMBOL’, “manufacturing, offering for sale and/or selling products which bear the infringing logo mark. These allegations are completely defeated by the assertions in the replication filed by Lifestyle, to the written statement of Cloudtail – also reproduced supra – that it was Cloudtail manufacturing and selling the apparel bearing the mark, and, thereby, infringing Lifestyle’s registered trademark.

159. Para 41 goes on to state that ASSPL was selling products of Amazon Tech on its platform under the trademark ‘SYMBOL’, bearing the infringing mark. This allegation, again, is incorrect. The products sold by ASSPL were not of Amazon Tech, but of Cloudtail. The only connection of Amazon Tech, with the said products, was the ‘SYMBOL’ mark, which Cloudtail affixed on the said apparel under license from Amazon Tech. This does not, in any way, connect Amazon Tech with the infringing mark.

160. In fact, after making such bald and unsubstantiated allegations, Lifestyle, in the same para 41 of the plaint,

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acknowledges that it was not certain about the actual relation between Amazon Tech, Cloudtail and ASSPL. Obviously, the allegations against Amazon Tech, regarding its complicity in the affixation of the mark on the apparel sold by Cloudtail on the ASSPL platform, were merely shots in the dark, without any knowledge of the actual state of affairs. In fact, para 46 of the plaint acknowledges the fact that the invoice, raised by ASSPL, with respect to the apparel purchased by Lifestyle, only contained the name and details of Cloudtail. Despite this, para 48 of the plaint alleges that it was an “admitted case of Defendant No 3 (ASSPL) that orders for the infringing product of the Defendant No 1 (Amazon Tech) are being fulfilled by Defendant No 2 (Cloudtail)”, without any such “admitted case” being available on record. The plaint does not disclose where this “admission” is to be found.

161. At this juncture, we may also refer to the affidavits dated 21 July 2022 and 1 September 2022 of ASSPL, on which Mr. Pachnanda sought to place reliance as supporting the finding of the learned Single Judge, in the impugned judgment, that Amazon Tech, Cloudtail and ASSPL constitute a “cohesive commercial entity”. We find no such inference being forthcoming from the affidavits. In any case, we are not concerned, here, with the interlink, as commercial entities, between Amazon Tech, Cloudtail and ASSPL. They are, admittedly, independent commercial entities, as was, in fact, noted by the learned Single Judge in the order dated 12 October 2020, reproduced in para 19 of the impugned judgement. What is to be seen is whether there was any material to indicate involvement of Amazon Tech in the allegedly infringing activities of Cloudtail. There is, in fact, none.

162. Apart from this, the plaint only refers, repeatedly, to the infringing mark as belonging to Amazon Tech and has having been adopted by it. No factual basis for these allegations is forthcoming.

163. We have already explained, in para 18 to 26 supra, why it cannot be said that any substantial allegation of

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involvement, by Amazon Tech, in the allegedly infringing activities of Cloudtail, by affixation of the mark on the apparel sold by it, can be said to exist.

164. This, therefore, is not merely a case in which damages have been awarded against Amazon Tech without any finding, by the learned Single Judge, of involvement, in the alleged infringing activities, but is, in fact, a case where no such pleadings exist.”

127. The third aspect which the Division Bench looked into was one relating to no pleadings for the purpose of claiming Rs. 3,36,02,87,000/- towards damages. In this regard, the findings recorded are: “136. Leave alone the fact that there were no pleadings, claiming ₹ 336,02,87,000/-, there were also no pleadings on the basis of which is claim could be supported or sustained. The learned Single Judge has herself ventured into an exercise of computing the awardable damages as ₹ 336,02,87,000/-, without the said exercise being supported by any pleadings of Lifestyle. The position that has resulted is, therefore, that (i) the pleadings of Lifestyle only justified damages of ₹ 2,00,05,000/–, (ii) without amending its pleadings, Lifestyle, in its written submissions before the learned Single Judge, worked out the damages to which it was allegedly entitled as approximately ₹ 3780 crores, and (iii) the impugned judgment decrees in favour of Lifestyle and against Amazon Tech, ₹ 336,02,87,000/-, again on the basis of a computation solely devised by the learned Single Judge, not pleaded by the parties and unsupported by any pleading on record.

137. Mr. Pachnanda sought to submit that the damages to which the Plaintiff is entitled need not be specifically computed and claimed in the pleadings. The submission, in our view, begs the issue. This is not merely a case where there are no pleadings, supporting the damages of ₹ 3780 crores, claimed by Lifestyle in its written submissions, or the damages of ₹ 336,02,87,000/-which

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ultimately came to be awarded by the learned Single Judge. Even the basis for the claim of ₹ 3780 crores, all for the amount of ₹ 336,02,87,000/-which was ultimately awarded, is not to be found anywhere in the pleadings of Lifestyle.

138. The basis for the claim for damages are, at all costs, to be contained in the pleadings of the Plaintiff. It cannot be reserved for evidence. It is a legal truism that evidence cannot traverse the pleadings.”

128. The fourth aspect that the Division Bench looked into was the fact that the learned Single Judge had recorded no findings as regards the role of the respondent herein in the alleged infringement. The relevant observations are as under: “142. With greatest respect, it appears to us that the impugned judgement is more concerned with the fact that e-infringement is a new phenomenon, and that it is very difficult to identify the actual players in the act. Paras 42 to 44 of the impugned judgment deal with the menace of e-infringement, and the difficulty in localising liability in such cases. Para 44, in fact, refers to intermediary liability, which is of no particular relevance, as Amazon Tech does not claim itself to be an intermediary. We may note, even at this juncture, that the learned Single Judge has, in para 99 of the impugned judgment, observed that Amazon Tech was identifying itself as an intermediary. This is a prima facie erroneous finding. At no point of time has Amazon Tech claimed to be an intermediary. In fact, in earlier orders passed in the suit, particularly in the orders dated 2 March 2023 and 7 August 2023 – which the latter was passed by the learned Single Judge herself – it has been correctly noted that Defendant 3 ASSPL was claiming to be an intermediary and was, in fact, one. In the impugned judgment, therefore, the learned Single Judge has proceeded on an apparently mistaken assumption that Amazon Tech was also claiming to be an intermediary.

143. Returning to the findings in the impugned judgment, following the adverse observations regarding the

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menace of e-infringement is a new species of trademark infringement, which poses significant challenges in localising of liability, the learned Single Judge proceeds, in para 45, to characterise the present case as a case of e-infringement – with which there can be no serious cavil. Following this, however, the learned Single Judge was on to note that the brand ‘Symbol’, being used by Cloudtail, was owned by Amazon Tech. This is also; however, is difficult to understand how the ownership, by Amazon Tech, of the brand ‘Symbol’ is of any relevance. The mark ‘Symbol’ is, quite clearly, not infringing in nature.

144. In fact, even the plaint in the suit does not so assert. The case that Lifestyle has sought to build up, in the plaint, is that, as the infringing mark figured on the same apparel, which bore the ‘SYMBOL’ mark of Amazon Tech, Amazon Tech could not escape liability from the tort of infringement by use of the mark. In our considered view, the said plea, which has apparently found favour with the learned Single Judge in the impugned judgment, has no basis in law.

145. The learned Single Judge proceeds to lay considerable stress on order dated 5 September 2022, passed in the suit, particularly on the opening sentence of the order, which reads: “The learned senior counsel for the defendant no. 2/applicant herein submits that the said defendant, including for and on behalf of the defendant no. 1 is willing to suffer a decree of injunction and also for paying reasonable damages to the plaintiff.” The learned Single Judge has treated this sentence, from the order dated 5 September 2022, as recording some kind of a concession, on behalf of Amazon Tech, admitting its liability for infringement and agreeing to pay damages. Significantly, prior to the passing of this order, Amazon Tech had already been proceeded ex parte on 20 April

2022. Even if it were to be assumed that Amazon Tech

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had agreed, through learned Counsel who appeared on behalf of Cloudtail, to suffer reasonable damages, that statement, if at all, was made at the stage when the damages claimed by Lifestyle were of ₹ 2,00,05,000/–. In the face of this claim, it would be preposterous to hold that the order dated 5 September 2022 amounts to an admission, by Amazon Tech, to suffer damages of ₹ 336,02,87,000/-. Before awarding such damages, therefore, it was incumbent on the learned Single Judge to render specific findings of infringement, or at least of complicity in the infringing activities, by Amazon Tech. With greatest respect, we do not find this to have been done.

146. Para 47 of the impugned judgment observed that Amazon Tech, Cloudtail and ASSPL were “closely related to or interlinked with each other”. Para 48 records that “it is a matter of public knowledge that the www.amazon. in platform is closely linked with Defendant No. 1”, i.e. the present appellant Amazon Tech. To a large extent, it is clear that the impugned judgement proceeds on the premise that Amazon Tech, Cloudtail and ASSPL, i.e., all the defendants, were acting in concert and were one commercial entity.

147. We also find, prima facie, that the learned Single Judge has, in para 52 of the impugned judgment, completely misread the Licensing Agreement dated 23 December 2015 as fastening liability on Amazon Tech for infringement whereas, in fact, it does nothing of the kind. The learned Single Judge observes that the License Agreement dated 23 December 2015, between Amazon Tech and Cloudtail indicated “that Amazon retains significant control over Cloudtail’s branding and distribution activities”. Following this, the learned Single Judge returns an opinion that “the clauses in the Agreement clearly diminish Amazon’s liability to distance itself from the alleged infringement committed by Cloudtail”, that “the contractual restrictions on unauthorised trademark use, coupled with indemnification obligations, provide strong legal grounds for (Lifestyle) to argue Amazon’s direct involvement in trademark infringement”, “the agreement

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being a license agreement, Defendant No. 1 being a licensor an Defendant No. 2 being a licensee, any infringement or unlawful use by the licensee would also affix liability about the licensor”, “while licensing the word mark SYMBOL” Amazon would be unable to distance itself from the use of the accompanying horse logo device mark” and that “thus, the consequences of infringement squarely fall upon Defendant No. 1”.

148. We are, prima facie, unaware of any law which supports these observations and findings. The Licensing Agreement dated 23 December 2015 was restricted to the ‘SYMBOL’ mark, owned by Amazon Tech. Amazon Tech had, by the agreement, licensed, to Cloudtail, the right to use the mark ‘SYMBOL’. The agreement does nothing beyond this. By no stretch of imagination could be Licensing Agreement be read as authorising Cloudtail to affix, on the apparel sold by it, the allegedly infringing mark. In fact, the Licensing Agreement makes no reference to the said mark at all, obviously because Amazon Tech had no concern with the said mark. If, therefore, Cloudtail did affix the mark on the apparel sold by it, it certainly did not do so by virtue of any authorisation or permission granted by the Licensing Agreement dated 23 December 2015. In fact, the Licensing Agreement contained a specific clause proscribing any infringement, by Cloudtail, of the trademark of any third party, and indemnified Amazon Tech in that regard.

149. The observations contained in para 52 of the impugned judgment, extracted by us earlier in paragraph 139, are unsupported by law. In a Licensing Agreement, whereby and whereunder Amazon Tech had only licensed, to Cloudtail, the right to use the ‘SYMBOL’ mark, we are unable to understand how Amazon Tech could be fastened with liability for use, by Cloudtail, of the mark, with which the Licensing Agreement – and, indeed, Amazon Tech itself – had no concern.

150. Needless to say, a licence by one party to another, to do a particular act, cannot render the first party liable for every infringing or illegal act committed by the

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second, in the absence of any material to indicate that the commission of the illegal infringing act was also authorised by the license. The findings in para 52 of the impugned judgment, in our prima facie view, are contrary to this principle which, according to us, is practically fossilized in the law. They, therefore, suffer from patent illegality.

151. In para 98, the learned Single Judge observes that the judgment would proceed to examine, inter alia, “the degree of culpability of the Defendants”. Paras 98 to 99 proceed, apparently, to record certain observations regarding Amazon Tech which, in our view, are not incriminating in any manner. Before, however, adverting thereto, the learned Single Judge observes, in para 98 and in the opening part of para 99 of the impugned judgment, that the mark ‘SYMBOL’, of which the right to use had been licensed by Amazon Tech to Cloudtail, was used “along with” the infringing mark, on the apparel sold by Cloudtail. Even if it was, we are unable to understand how any liability or responsibility for infringement, on the ground, be fastened on Amazon Tech. Amazon Tech was not the manufacturer of the apparel on which the infringing mark was used. It had never licensed, to Cloudtail, the right to use the infringing mark, with which, in fact, it had no concern. In fact, Cloudtail itself conceded, before this Court on 2 March 2023, that the decision to use the infringing mark on the apparel sold by was not of Amazon, but of Cloudtail itself. Unfortunately, the learned Single Judge has entirely overlooked this concession, regarding which no objection or reservation was ever expressed by Lifestyle, either before this Court on 2 March 2023 or at any point thereafter. In view thereof, it is plainly obvious that the affixation, on the apparel sold by Cloudtail, of the infringing logo, could not incriminate Amazon Tech in any manner, merely because the same apparel also happened to carry the ‘SYMBOL’ mark, the use of which had been licensed by Amazon Tech to Cloudtail.

152. Para 99 of the impugned judgment proceeds to observe that Amazon Tech was “one of the most dominant players in the ecommerce space”, that it “possesses

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ways and means to utilise its dominant presence in the e-commerce space to promote its own products as also products which it might otherwise wish to promote”, and that it had “the leverage through its own platforms to dilute Plaintiff’s brand/logo by indulging in deep-discounting of its own products which compete with the Plaintiff by using a similar mark/logo”. These findings are, prima facie, entirely in the realm of presumption and conjecture. They reflect an impression, by the learned Single Judge, that Amazon Tech was in a position to indulge in infringing activities by means such as deep discounting – with respect to which there is not even a whisper of an allegation against Amazon Tech in the entire plaint of Lifestyle – and that, therefore, it must have done so. On the face of it, we are of the view that these findings suffer from perversity in law, and cannot, therefore, sustain.

153. Para 99 goes on further to observe that “it is well known reality that all 3 Defendants belong to the Amazon Group of Companies and operate as a cohesive commercial entity”. This finding has nothing forthcoming, available on the record, to support it. There is certainly no pleading to that effect. The plaint, filed by Lifestyle, does not allege, even indirectly, that Amazon Tech, Cloudtail and ASSPL constituted a “cohesive commercial entity”. A finding that 3 companies, which are independent corporate ventures, constitute a cohesive commercial entity, cannot be returned without any pleading to that effect. We are constrained to observe that the learned Single Judge has, in so holding, made out a case in favour of Lifestyle which it itself did not plead.

154. There are no other findings, in the impugned judgment, against Amazon Tech. Of course, the learned Single Judge has adversely commented on what she perceives as Amazon Tech’s deliberate absence from the proceedings in the suit. Even if it were to be presumed, merely for the sake of argument, that Amazon Tech took a conscious decision not to participate in the suit proceedings, that cannot justify mulcting it with damages of ₹ 336,02,87,000/-.

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155. The case, therefore, is one of awarding, against Amazon Tech and in favour of Lifestyle, of damages of ₹ 336,02,87,000/-, without any sustainable finding of infringement, or of complicity in infringement, against Amazon Tech.”

129. If the Division Bench after looking into all the relevant aspects referred to above thought fit to grant benefit of unconditional stay of execution of money decree then, applying the principles of law discussed by us, it cannot be said that the Division Bench committed any error much less an error of law in passing the impugned judgment and order.

130. It goes without saying that whatever has been observed by the Division Bench in its impugned judgment and order is not an expression of any final opinion but are prima face observations for the purpose of granting the relief as prayed for by the respondents.

131. It is necessary for us to observe that the Court’s jurisdiction over a respondent is founded on a valid service of summons. Without a valid service, the Court cannot acquire jurisdiction over the respondent, unless the defendant voluntarily submits to it. The original defendant-respondent must be properly be apprised of a pending action against him and assured of the opportunity to present his defenses to the suit. Proper service of summons is used to protect one’s right to due process.

132. In an action strictly in personam, personal service on the defendant is the preferred mode of service, i.e., by handing a copy of the summons to the defendant in person. If defendant, for excusable reasons, cannot be served with the summons within a reasonable period, then substituted service can be resorted to. While substituted service of summons is permitted, “it is extraordinary in character and in derogation of the usual method of service.”

133. In the case in hand, what is important for us to note is the Order passed by the Joint Registrar (Judicial) of the High Court of Delhi dated 01.03.2021 which reads thus: “CS(COMM)443/2020 “1. Written statement filed by the defendant No. 2 & 3 with affidavit of admission/denial.

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2. Replication to the written statement of the defendant no.3 with affidavit of admission/denial of the documents has been filed by the plaintiff.

3. It is submitted by counsel for the plaintiff that replication and affidavit of admission/denial of the documents qua the defendant no.2 has also been filed but the same is lying under scrutiny. Let necessary steps be taken to ensure that replication and affidavit of admission/denial of the documents are placed on record.

4. Affidavit of service filed by the plaintiff reflects that entire paper book was delivered to the defendant no.1 through speed post and courier. However, from the report of the Registry it appears that PF was not filed for service of the defendant no.1 and summons of the suit through e-mail and Whatsapp were not issued to the defendant no.1 as per orders of the Hon’ble Court which is dated 12/10/2020. Let the order be complied with, and process be Issued, returnable for the next date.

5. Re-notify the matter for completion of service, completion of pleadings and admission/denial of the documents on 22”’’ April, 2021.” (Emphasis supplied)

F. CONCLUSION

134. We summarize our final conclusion on the grant of benefit of stay of execution of a decree by an appellate court in term of Order XLI as under: - (I) Order XLI Rule 5 contains the provision for the grant or refusal of stay of execution of the decree by the appellate court under the CPC. It categorically stipulates that mere filing of an appeal against an order of execution, shall not ipso facto operate as stay of proceedings. Any execution proceeding or an order therein, shall be stayed only if a specific, reasoned order granting such stay is passed by the appellate court, after proper application of mind.

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(II) For the grant of stay of execution of a decree in terms of Order XLI, a prayer to such effect has to be specifically made to the appellate court and the appellate court has the discretion to grant an order of stay or to refuse the same. (III) Order XLI Rule 5(3) of the CPC provides for satisfaction regarding sufficient cause as a pre-condition for granting benefit of stay of execution of decree, and it casts an obligation upon the appellate court to record its satisfaction for stay of execution such decree. (IV) The power of the Appellate Court to order stay of execution of the decree is circumscribed and made subject to the existence of a “sufficient cause” in favour of the appellant being shown. In order to ascertain whether a “sufficient cause” exists for the grant of stay of execution of a decree under Order XLI of the CPC, the appellate court as per sub-rule (3) of Rule 5 is required to examine:- (i) Whether there will be substantial loss to the party applying for stay; (ii) Whether the application has been made without unreasonable delay; and (iii) Whether security has been given by the applicant for due performance of the decree. (V) For the grant of stay of execution of the decree, the appellate court is required, after perusing the materials on record, to assign reasons for its satisfaction regarding the existence of a “sufficient cause”. Such reasons should be cogent and adequate. The reasons assigned must indicate the necessity for the status quo prevailing on the date of the decree and/or the date of making of the application for stay, to continue by granting stay, and not merely the reasons why stay should be granted. (VI) Although, Order XLI Rule 5 of the CPC, uses the word “shall”, yet a combined reading of the sum and substance of Rule(s) 1(3) and 5(5) would reveal, that for the grant of stay of execution, it is not mandatory for the appellate court to impose a condition for deposit of the amount in dispute.

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The aforesaid provisions make it abundantly clear that the appellate court, for the grant of stay of execution, has a discretion to impose a condition of deposit of the amount depending on the facts and circumstances of each case. (VII) A deposit is not a condition precedent for an order of stay of execution of the decree by the appellate court. The only guiding factor and statutory mandate, for the grant of such stay of execution as indicated in Rule 5, is the existence of “sufficient cause” in favour of the appellant, on the availability of which the appellate court would be inclined to pass an order of stay. (VIII) For the grant of benefit of an unconditional stay of execution of a decree, an exceptional case has to be made out before the appellate court. This discretion of the appellate court to grant an unconditional stay of execution of decree must not be exercised arbitrarily. It must be exercised sparingly and only if an exceptional case is made out for such stay in view of the peculiar facts and attending circumstances of the case before it. (IX) A lodestar for bringing a case within the purview of “exceptional case” for the purpose of granting benefit of unconditional stay of the execution of money decree by the appellate court would be, if the money decree in question: - (i) is egregiously perverse; (ii) is riddled with patent illegalities; (iii) is facially untenable; and/or (iv) such other exceptional causes similar in nature. (X) For the purpose of the grant or refusal of stay of execution of the decree under Rule 5 of Order XLI, it is immaterial whether the decree is a money decree or any other decree. The language couched in the said provision is very clear. Order XLI, Rule 5 of the makes no distinction between a money decree and other decrees, and the said provision applies with full rigour in both instances. Yet as a rule of prudence and established practice evolved over a period of time, no stay of execution of a money decree should be granted, except

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on the condition that the decretal amount be deposited in the court. However, such condition for deposit cannot be said to be mandatory and non-prescription thereof does not operate as a bar to staying the execution of a money decree. (XI) There is no provision under Order XLI Rule 5 of the CPC imposing a mandate to deposit cash security as the only mode of security for execution of the decree. Security, for the purpose of the said provision, can be in the shape of property, bond and or in the form of an appropriate undertaking from the appellant to abide by the decree, seeking stay of execution.

135. In view of the aforesaid, we have reached the conclusion that we should not disturb the impugned judgment and order passed by the Division Bench of the High Court.

136. It is needless to clarify that the main appeal shall be decided on its own merits and without being influenced in any manner by any of the observations made in the impugned judgment and order passed by the High Court including our judgment.

137. It shall be open for the parties to put forward all contentions available to them in law at the time of the final hearing of the Regular First Appeal.

138. Registry shall forward one copy each of this judgment to all the High Courts.

Result of the case: Matter disposed of.