SC stays Madras HC order allowing Testbook's suit against Google billing

Supreme Court has put a pause on a Madras High Court order that allowed ed-tech firm Testbook to go ahead with its case against Google over billing policies on the Play Store

The Supreme Court (SC) on Monday stayed a Madras High Court order that had allowed a civil suit filed by ed-tech firm Testbook Edu Solutions against Google India to proceed, Bar and Bench reported.

 

The stay was granted by a Bench comprising Justices JB Pardiwala and R Mahadevan, while hearing an appeal filed by Google challenging the High Court’s earlier ruling dated June 11.

 

HC had rejected Google’s plea to dismiss suit

 

In its June order, the Madras High Court had dismissed Google’s plea under Order VII Rule 11 of the Civil Procedure Code, which allows a court to reject a plaint at the initial stage. Google had sought dismissal of the suit on the ground that it was barred under the Competition Act and the Payment and Settlement Systems (PSS) Act.

 

 

However, the high court ruled that the dispute involved contractual issues raised by Testbook, which fall under the jurisdiction of civil courts. It held that these matters could not be dismissed outright by invoking provisions of the Competition or PSS Acts, the news report said.     

 

Testbook's challenge to Google billing rules

 

Testbook, which operates over 700 mobile applications that provide government exam preparation services, filed the civil suit in July 2023. The company challenged Google's billing policies, including the Google Play Billing System (GPBS) and User Choice Billing (UCB), which impose service fees ranging from 15 per cent to 30 per cent.

 

Testbook argued that these billing models amounted to a "unilateral novation" of its agreement with Google. It claimed the policies violated public policy and exerted undue economic pressure on developers. The firm said it could face revenue losses of up to 26 per cent, and alleged that Google had built its market position by offering services for free in earlier years.

 

In its suit, Testbook also took objection to Clause 15.3 of Google’s Developer Distribution Agreement (DDA). This clause limits the legal remedies available to developers, stating that their only option in case of disagreement is to stop using the Play Store.

 

Testbook described the clause as "arbitrary" and claimed it violated the Indian Contract Act.

 

Google’s defence

 

Google had argued that the civil suit should be dismissed because the issues raised fell within the domain of the Competition Act and the PSS Act. It also pointed out that similar suits by other developers had previously been rejected by the high court. The tech company relied on past judgments and an exclusive jurisdiction clause in the DDA to make its case, the news report said.     

 

High court found Testbook’s case distinct

 

The Madras High Court, however, had found Testbook’s claims different from earlier cases. It held that the issues raised were specific to Testbook and involved personal contractual grievances, including waiver and tortious interference, rather than competition law violations. It also rejected Google’s arguments based on the PSS Act and the jurisdiction clause in the agreement.

 

With the SC now staying the high court’s order, proceedings in the civil suit have come to a temporary halt. The apex court will now examine whether contractual disputes of this nature can be heard in civil courts despite arguments of statutory bar under other laws.