IP Suits and Mediation Mandate: Lessons from ITC v. SMM Tobacco

 

A plaintiff who, on first learning of infringement, chooses the criminal route and keeps its civil remedy in abeyance cannot later invoke the "continuing infringement" logic of Novenco to bypass mandatory pre-institution mediation. That is the core holding of the Calcutta High Court (IP Rights Division, Original Side) in ITC Limited v. SMM Tobacco Private Limited & Ors., IP (COM) No. 10 of 2026, decided by Justice Arindam Mukherjee on 8 September 2026 (neutral citation 2026:CHC-OS:388).

The ruling matters because, since Novenco, many IP plaintiffs have treated Section 12A of the Commercial Courts Act, 2015 as almost automatically dispensable. The Court pushes back: Novenco does not mean every IP suit is urgent by default, and reading it that way would render Section 12A otiose for IP disputes.

Background facts

ITC learned of the counterfeiting in July 2026, went to the police, and filed a civil suit only after the raid. The plaint was lodged in the Central Filing Department, allotted a suit number, and listed under "Presentation of Plaint" for admission.

As recorded from the plaint:

1.     Intelligence (para 27 of the plaint). Around the third week of July 2026, ITC's field investigators reported counterfeiting operations in parts of Muzaffarpur, Bihar. The information pointed to defendant no. 1, allegedly running mechanised cigarette-making and packing machinery.

2.     Identification. Through discreet inquiries and monitoring, ITC identified defendant no. 1, a cigarette and tobacco manufacturer with a facility in Muzaffarpur, as the operator of the illicit manufacture and distribution.

3.     FIR and raid (para 28). ITC lodged an FIR. Search and seizure followed on 22 July 2026, and the plaint sets out the goods and articles recovered.

4.     Urgency pleaded (paras 78, 79 and 85). ITC asserted a continuing wrong to its IP rights by the defendants, chiefly defendant no. 1, and sought exemption from Section 12A on the strength of Novenco.

The Court noted that the gap between discovery and filing was not more than a month.

The legal framework

Section 12A is mandatory, but a court may dispense with it when the plaint shows the plaintiff contemplates urgent interim relief. The Court anchored its analysis in three Supreme Court decisions.

Authority	Proposition relied on
Patil Automation Pvt. Ltd. v. Rakheja Engineers Pvt. Ltd., (2022) 10 SCC 1	Pre-institution mediation under Section 12A is mandatory.
Yamini Manohar v. T.K.D. Keerthi, (2024) 5 SCC 815 (as cited in the judgment)	Defines the limited scrutiny a court applies to the plaint at presentation when urgency is claimed.
Novenco Building & Industry A/S v. Xero Energy Engg. Solutions (P) Ltd., 2026 (4) SCC 815 : AIR 2026 SC 5158 (as cited)	Explains how urgency is to be assessed in continuing IP infringement.

What Novenco held

The issue in Novenco (para 20) was whether a suit alleging continuing infringement of patent and design rights, with a prayer for interim injunction, contemplates urgent relief despite some delay in filing. The Supreme Court reasoned that:

•        Each infringing act is a fresh wrong (para 21). Every manufacture, sale or offer for sale gives a recurring cause of action, and delay alone does not legalise infringement.

•        Urgency lies in the persistence of the peril (para 22), not the age of the cause. Public interest in preventing consumer confusion adds to the immediacy.

•        Courts must assess urgency from the plaintiff's standpoint (para 24), on the plaint and documents, not on the merits. Treating lapse of time between discovery and filing as negating urgency was held to be an error.

The plaintiff's case

ITC argued that its suit fell squarely within Novenco. Counterfeiting of its marks was a continuing wrong; each day of infringement compounded the injury; and the delay of under a month was immaterial.

The Court characterised this submission as projecting a broad proposition: that because delay is not fatal in IP matters, IP suits always require urgent interim relief, so the court must exercise discretion to dispense with Section 12A.

The Court's analysis and ratio decidendi

The Court refused dispensation because ITC, having two independent remedies open in July 2026, deliberately chose the criminal one and held the civil one in abeyance. Novenco was distinguished on facts, not doubted.

1. Each case turns on its own facts

The Court began by stressing that Novenco was decided on its own facts. It accepted that ITC's delay was under a month and that the cause of action arose from IP infringement and passing off. The "striking dissimilarity" lay elsewhere: ITC went to the police immediately on learning of the counterfeiting.

2. Two parallel remedies, one deliberate choice

The Court noted that IP law gives a rights-holder criminal remedies in addition to civil action. It referred to Sections 103 and 104 of the Trade Marks Act, 1999 (offences relating to false trade marks and trade descriptions) and Section 63 of the Copyright Act, 1957.

From this the Court reasoned:

•        ITC was specifically aware of defendant no. 1's wrongful acts in July 2026.

•        At that point it could have filed a police complaint, sued in a civil court, or pursued both simultaneously, since the remedies are independent.

•        ITC chose the FIR route, leading to search and seizure, and of its own volition did not approach the civil court, although the right to sue first accrued in July 2026.

3. Continuing cause of action is not perpetual urgency

The central doctrinal move is a distinction between a continuing cause of action and urgency. A continuing cause of action, as recognised in Novenco, revives the cause and keeps it alive. But, said the Court, where urgency is claimed, the suit must be filed when the right to sue first accrues.

Put simply: a continuing wrong keeps the door to the court open, but it does not keep the door to Section 12A exemption open indefinitely.

4. A blanket reading would make Section 12A otiose

The Court rejected ITC's reading as too narrow an interpretation of a mandatory provision. If accepted, any IP suit could bypass Section 12A whenever filed, regardless of when the right to sue first arose. That would render Section 12A otiose for IP disputes, contrary to legislative intent, since Parliament expressly brought IP suits within the 2015 Act.

5. High Courts have explained Novenco

The Court observed that most High Courts considering Novenco have explained its ratio rather than applying it without qualification. It singled out two Division Bench rulings:

•        Goodfaith Holding (P) Ltd. v. Supreme Wood Products (P) Ltd., 2026 SCC OnLine Cal 12021 (Calcutta High Court)

•        High Point Supply Co. LLC v. Agati Healthcare (P) Ltd., 2026 SCC OnLine Bom 9115 (Bombay High Court)

The ratio in one line

Where a plaintiff, when the right to sue first accrues, consciously elects one of two simultaneously available remedies for the same cause and keeps the civil remedy in abeyance, Novenco does not apply, and dispensation from mandatory pre-institution mediation under Section 12A cannot be granted.

The final order

The plaint was returned, not rejected. Because it had only been filed in the Central Filing Section and allotted a number, the Court held it had not entered the Court's records, which happens only on presentation and admission. The directions were:

•        Return of plaint for refiling after completion of pre-suit mediation.

•        Court fees preserved: leave to use the same court fees for a suit on the same cause, if needed after mediation, subject to applicable law.

•        De-registration: the department, after returning the plaint, is to de-register the allotted suit number so the matter does not show as pending.

This is a pragmatic outcome. ITC loses time, not its claim or its fees.

Critical commentary

The judgment guards Section 12A against erosion, but its "election of remedies" reasoning sits in some tension with Novenco and may be tested on appeal. What follows is the author's analysis, not the Court's.

Where the judgment is persuasive

• Legislative purpose. Parliament placed IP suits inside the Commercial Courts Act knowing they often involve continuing wrongs. A reading under which IP suits are never subject to Section 12A would effectively write IP out of the provision.
• Urgency as conduct, not category. The Court treats urgency as something a plaintiff demonstrates through how it acts, not something a subject matter confers automatically. That aligns with the limited, plaint-based scrutiny contemplated in Yamini Manohar.
• Proportionate remedy. Returning the plaint with court fees preserved avoids prejudice while enforcing the statute.

Where it is open to debate

• Plaintiff's standpoint. Novenco (para 24) faulted courts for treating lapse of time between discovery and filing as negating urgency. Here the gap was under a month. A critic may say that reframing the gap as an "election" achieves the same result Novenco disapproved.
• Complementary, not alternative, remedies. The Court itself recognised that criminal and civil remedies are independent and may run together. It is arguable that pursuing a raid first, to secure evidence and stop production, is consistent with urgency rather than a waiver of it.
• Ongoing risk after the raid. A seizure may halt one facility, but counterfeit stock already in circulation, and the possibility of resumed production, are the kind of persisting peril Novenco emphasised.
• Scope of the ratio. The holding is expressly tied to facts where a plaintiff "absolutely" chose one avenue. Its reach to cases where a raid was a short prelude to civil filing will need clarification.

The preparation gap: diligence, not election

The interval between the FIR in July, filing in August and the hearing in September is better seen as the time a commercial IP plaint takes to prepare than as a choice to abandon civil relief. The record supports this sequence:

Date	Event
September 8, 2026	Dispensation refused
August 31, 2026	Plaint presented
August 27, 2026	Plaint filed in Central Filing Department
July 22, 2026	Search and seizure on the FIR
Third week of July 2026	Intelligence received from field investigators

 

The Court itself found the delay to be not more than a month. Several arguments follow from that.

1. The law demands a complete plaint. Under Order XI CPC as amended for commercial suits, a plaintiff must file all documents in its power, possession or control with the plaint, verified by a statement of truth. Documents omitted then can be relied on later only with leave. Time spent assembling them is compliance, not inertia.
2. The raid produces the evidence the suit needs. Seizure memos, inventories of machinery and counterfeit stock, photographs, and any test reports on seized cigarettes typically come out of the criminal process. Obtaining copies and analysing them precedes a well-pleaded plaint. The raid may also reveal the distribution network and further defendants, here sued as "& Ors."
3. The remedies are cumulative, not alternative. Election of remedies ordinarily applies where remedies are inconsistent. The Court accepted that criminal and civil actions are independent and may run together. Pursuing one first, then the other within weeks, is sequencing, not election.
4. Criminal action cannot give civil relief. A seizure halts one site temporarily; goods may be released and production resumed. Only a civil court can grant an injunction, delivery up, accounts and damages. The need for those remedies survives the raid and, if anything, is sharpened by what the raid uncovers.
5. The gap is short by any measure. Novenco (para 24) held that lapse of time between discovery and filing should not by itself negate urgency, in a case involving a far longer interval. A gap measured in weeks sits comfortably within that principle.
6. The ruling creates a perverse incentive. If an FIR followed by a carefully prepared suit forfeits urgency, rights-holders are pushed either to file thin, hurried plaints or to forgo police action. Neither serves the public interest in curbing counterfeit tobacco that Novenco stressed.
7. Mediation with a counterfeiter is of doubtful value. Section 12A aims at settling genuine commercial disputes. Where the defendant is alleged to run a clandestine counterfeiting unit already raided by police, the prospect of meaningful mediation is slight. This does not make Section 12A optional, but it bears on how urgency is weighed.

The counterpoint. Urgency is judged on the plaint as filed, under Yamini Manohar. If the plaint did not explain why the weeks after the raid were needed, a court may reasonably decline to infer it. The lesson for practitioners is to plead the preparation timeline expressly, not leave it to argument.

On balance, the decision is best read narrowly: it does not hold that an FIR bars Section 12A dispensation. It holds that the plaint must itself show why civil relief was urgent, and that urgency cannot be presumed simply because the wrong is a continuing IP infringement.

Practical takeaways for IP practitioners

At least before the Calcutta High Court, Novenco is no longer a passport past Section 12A; the plaint must earn the exemption.

1. Do not rely on "continuing infringement" alone. Plead specific, present facts showing why civil interim relief is needed now: stock in the market, ongoing sales channels, risk of resumed manufacture, harm to consumers.
2. If you go criminal, consider going civil in parallel. Where urgency is the case, file the suit at or near the time the right to sue first accrues, alongside any FIR, rather than sequentially.
3. Explain any sequencing. If a raid must come first (for example, to avoid tipping off the infringer), say so in the plaint and explain why civil relief remained urgent afterwards.
4. Track the accrual date. The Court measures urgency from when the right to sue first accrued. Record clearly when and how knowledge was acquired.
5. Budget for mediation. Where urgency is weak, initiating pre-institution mediation promptly may be faster than litigating dispensation and having the plaint returned.
6. Watch the Division Bench line. Goodfaith Holding (Calcutta) and High Point Supply (Bombay) are now the reference points for how Novenco is being explained.

Conclusion

ITC v. SMM Tobacco reasserts that Section 12A is the rule and dispensation the exception, even in IP disputes. A continuing infringement keeps a cause of action alive, but urgency must be shown when the right to sue first accrues, and a plaintiff who consciously parks its civil remedy cannot later claim the exemption.

Whether appellate courts endorse this "election" approach or read it as inconsistent with Novenco's plaintiff-centric test remains to be seen. Until then, rights-holders should treat the decision as a clear signal: plead urgency through facts and conduct, not through the label of continuing infringement.

Disclaimer This article is intended for general informational purposes only and does not constitute legal advice. Readers should not rely on it as a substitute for professional counsel. Specific cases may involve facts or circumstances that materially alter the legal position. Proprietors and practitioners are advised to consult qualified legal professionals before acting on any of the issues discussed.