Supreme Court halts Testbook’s suit against Google in Madras HC over billing policy

The Supreme Court on Monday stayed a Madras High Court order that had permitted a civil suit filed by ed-tech firm Testbook Edu Solutions against Google India to proceed for hearings on merits [Google India Digital Services Vs Testbook Edu Solutions]..A Bench of Justices JB Pardiwala and R Mahadevan passed the stay order in an appeal filed by Google against a June 11 High Court order. .In its June order, the High Court had rejected Google’s application under Order VII Rule 11 (rejection of plaint) of the Civil Procedure Code (CPC), seeking dismissal of the suit on the ground that it was barred under the Competition Act and the Payment and Settlement Systems Act (PSS Act).The High Court, however, had held that Testbook has raised contractual issues that fall within the jurisdiction of civil courts and cannot be shut out at the threshold under the Competition Act or PSS Act.However, the apex court has now halted the operation of that ruling, effectively pausing further High Court proceedings in the suit..Testbook, which operates over 700 mobile applications for government exam preparation, had filed the suit in July 2023, challenging Google's billing models—the Google Play Billing System (GPBS) and User Choice Billing (UCB)—which mandate service fees ranging from 15–30 per cent. Testbook contended that these policies amounted to a unilateral novation of its agreement with Google, and that they were contrary to public policy and imposed undue economic duress on app developers. It claimed potential revenue losses of up to 26 per cent and argued that Google had built its market power by offering services for free over several years..The suit also challenged Clause 15.3 of Google’s Developer Distribution Agreement (DDA), which limits a developer’s remedy to terminating use of the Play Store in case of any disagreement. Testbook argued this clause was arbitrary and violative of the Indian Contract Act.Google had argued that the suit was barred under the Competition Act and the Payment and Settlement Systems Act (PSS Act), and that similar suits by other developers had previously been dismissed by the High Court. It had relied on precedent and on the exclusive jurisdiction clause in the DDA to argue for dismissal..However, the Madras High Court had distinguished Testbook’s claims from prior suits, holding that they raised in personam, contractual issues, including waiver and tortious interference, rather than allegations of abuse of dominance under the Competition Act. It had also rejected Google’s arguments based on the PSS Act and the exclusive jurisdiction clause.With the Supreme Court staying this order, the question of whether such contractual challenges can proceed before civil courts remains open and will now be examined by the apex court. The case is likely to have significant implications for app developers and digital platforms navigating the legal boundaries between contract law, competition regulation, and payment system oversight..Google was represented by Senior Advocates Harish Salve and Sajan Poovayya..Testbook was represented by Advocate Abir Roy from Sarvada Legal and AoR Devashish Marwah from The Guild.