SC stays Madras HC order in Testbook suit against Google Play Store billing

The Supreme Court on Monday stayed the Madras High Court's order that allowed continuation of the proceedings on the Testbook Edu Solutions’ petition against Google India Digital Services' updated payment policies relating to its proprietary Google Play Store.

A bench comprising Justices JB Pardiwala and R Mahadevan stayed the HC’s June 11 order that dismissed Google’s petition filed under Order VII Rule 11 of the Civil Procedure Code, which allows a court to reject a plaint at the initial stage.

The HC had dismissed Google's contention that Testbook's suit was barred under the Competition Act, 2002, and the Payment and Settlement Systems Act, 2007. The HC had held that Testbook's suit contained contractual issues that fell within its jurisdiction and could not be dismissed on the threshold.


Testbook, which operates over 700 mobile applications for government exam preparation, had challenged the search engine giant's Google Play Billing System and User Choice Billing, which mandate service fees ranging from 15% to 30% from application developers. Google's policies amounted to a unilateral novation of its agreement with application developers, and they were contrary to public policy and imposed undue economic duress on the developers, Testbook alleged.

Google told the SC that the Testbook's suit was barred under the Competition Act, which expressly ousts civil jurisdiction in respect of matters within the domain of the Competition Commission of India (CCI) and the National Company Law Appellate Tribunal (NCLAT). Further, the allegations concerning the Payment and Settlement Systems Act are solely within the purview of the Reserve Bank of India (RBI), as the sectoral regulator, it argued.

Senior counsel Harish Salve, appearing for Google, said that the single judge of the HC held that the plaint filed by Testbook is maintainable despite the Division Bench of the same HC conclusively ruling that identical claims by other similarly placed parties were barred under Section 61 of the Competition Act, 2002, and the Payment and Settlement Systems Act, 2007.

“The impugned judgment is therefore an outlier decision, rendered contrary to binding precedent, which should be corrected by the SC. It also implicates important issues of principle, including the exclusive scope of the powers of two specialist regulators: the Competition Commission of India and the Reserve Bank of India, conferred by statute. Not only are these exclusive powers important as a matter of regulatory coherence and principle, they also exist to avoid fragmented or inconsistent outcomes and floods of individual suits concerning the same contract: one which the CCI is in fact already examining in a pending investigation,” Google stated in its appeal.

Google objected to the maintainability of the connected suits under Order Vll Rule 11 of the Code of Civil Procedure, saying the Division Bench had upheld the rejection of the connected suits filed by similarly placed mobile app developers, explicitly holding that claims stemming from allegations of abuse of dominant market position fall exclusively within the jurisdiction of the CCI and not that of the civil courts on account of Section 61 of the Competition Act.

“The Testbook plaint is materially identical in its allegations, reliefs, and cause of action to these previously rejected connected suits, particularly the plaint filed by another app developer, Nasadiya Technologies,” the tech giant stated.