Madras High Court dismisses Google plea to reject Testbook suit over Play Store billing terms

The Madras High Court recently dismissed an application filed by Google India seeking rejection of a civil suit by ed-tech firm Testbook Edu Solutions challenging Google’s billing terms and service fees under the Google Play Billing System (GPBS) and User Choice Billing (UCB) model..The Court held that the suit raises contractual issues that fall within the jurisdiction of civil courts and cannot be shut out at the threshold under the Competition Act or Payment and Settlement Systems Act (PSS Act)..Justice Senthilkumar Ramamoorthy refused to apply the bar under Section 61 of the Competition Act, stating: “Such in personam disputes cannot be adjudicated by the CCI, which is statutorily empowered to examine whether an enterprise has abused its dominant position in the relevant market and not whether one party to a contract is in a dominant position vis-a-vis the counter party.”.Testbook, which operates over 700 mobile applications for government exam preparation, filed the suit in July 2023. It alleged that Google’s unilateral imposition of service fees between 15–30% through the GPBS and UCB models amounted to novation of existing contracts, was against public policy and constituted undue influence and economic duress. The company claimed over ₹33 crore had been spent on advertising through Google and that the new policies could result in a 26% revenue cut, pushing the loss-making startup into distress.The plaint also challenged Clause 15.3 of the developer distribution agreement (DDA), which provides that an app developer’s sole remedy in case of disagreement with revised terms is to terminate use of the Play Store. Testbook submitted that this “take-it-or-leave-it” clause was arbitrary and violated Sections 16, 27 and 62 of the Indian Contract Act, 1872. The company further pleaded that Google had waived its right to charge such fees by not doing so for several years and by building its network effect through free services..Appearing for Google, Senior Advocates PS Raman and Sajan Poovayya submitted that the suit was barred by law and should be rejected under Order VII Rule 11 of the Code of Civil Procedure (CPC). They argued that similar suits by other app developers had been rejected by a coordinate bench of the High Court, with the judgment upheld by a Division Bench in January 2024. They described the present plaint as a “cosmetic reworking” of the earlier suits, merely replacing the term “abuse of dominance” with “superior bargaining power”..Testbook, represented by Advocate Abir Roy, contended that its plaint was distinct in that it pleaded waiver, novation and tortious interference in greater detail. The company argued that while the Competition Commission of India (CCI) may examine market-wide anti-competitive conduct, a civil court remains competent to examine individual contractual grievances and the legality of contractual clauses under the Contract Act..The Court agreed, noting that although the Division Bench had rejected earlier suits that alleged abuse of dominance, the present plaint focused on bilateral contractual issues. It also held that Google’s non-enforcement of service fees for years gave rise to a “prima facie debatable and contentious” plea of waiver, which could not be shut out at the threshold.Google’s reliance on the exclusive jurisdiction clause in the DDA was rejected, with the Court observing that such clauses “do not qualify as law” for the purposes of Order VII Rule 11(d). It further clarified that the PSS Act did not provide a complete civil dispute resolution mechanism and therefore did not impliedly bar the suit. On the plea of non-disclosure of cause of action, the Court held: “It certainly cannot be concluded that no cause of action is disclosed in the plaint.”Accordingly, the application to reject the plaint was dismissed..Earlier in January, a Division Bench of the Madras High Court restored the suit filed by education technology company Testbook against Google over the latter's billing policy.Advocates G Balasubramanian and S Anand appeared for Google alongside the Senior Advocates.Advocates Devashish Marwah, Aman Shankar, Sastribata Panda, Ridhhima Sharma from Sarvada Legal and The Guild appeared for Testbook. .[Read Order]