IN THE HIGH COURT OF GUJARAT AT AHMEDABAD O.J.APPEALS NOS. 45, 46 AND 47 OF 1998 in RECTIFICATION APPLICATION NOS. 1, 2 AND 3 OF 1997 For Approval and Signature: Hon'ble MR.JUSTICE R.BALIA. and MR.JUSTICE A.R.DAVE ============================================================ 1. Whether Reporters of Local Papers may be allowed to see the judgements? 2. To be referred to the Reporter or not? 3. Whether Their Lordships wish to see the fair copy of the judgement? 4. Whether this case involves a substantial question of law as to the interpretation of the Constitution of India, 1950 of any Order made thereunder? 5. Whether it is to be circulated to the Civil Judge? -------------------------------------------------------------- PATEL FIELD MARSHAL AGENCIES Versus P.M.DIESELS LTD. -------------------------------------------------------------- Appearance: MR SHAILEN BHATIA, MR. DHEERAJ BHATIA AND MR YJ TRIVEDI for Petitioners MR SB VAKIL WITH MR. Y.J. JASANI AND I.M. CHAGLA, SR.ADVOCATE for Respondent No. 1 DS AFF.NOT FILED (N) for Respondent No. 2, 3 -------------------------------------------------------------- CORAM : MR.JUSTICE R.BALIA. and MR.JUSTICE A.R.DAVE Date of decision: 25/11/98 ORAL JUDGEMENT (Per R. Balia, J) 1. These three appeals are by same set of appellants, namely, Patel Field Marshal Agencies and Patel Field Marshal Industries against the same set of respondents, namely, P.M. Diesels Ltd. and two others, the Registrar of Trade Marks and Asst. Registrar of Trade Marks. The respondent P.M. Diesels Ltd., the registered proprietor of three trade marks, common feature of which is words FIELD MARSHAL and another trade mark using letters FM. The appellants had filed three separate applications in respect of each of trade marks for rectification, under Sections 46 and 56 of the Trade and Merchandise Marks Act, 1958 (Hereinafter called `the Act of 1958') in this court. The three applications have been refused to be entertained by this court by learned Single Judge, inter alia, on the ground that the applications are barred by time and also on the ground that the applicant in each case is not entitled to maintain the applications. The order of learned Single Judge dated 15.4.1998 by which the aforesaid three applications have been rejected is subject matter of appeal in all the three appeals. In the circumstances, we have heard the same together and propose to decide by a common order. 2. The facts necessary for the present purposes briefly stated are that respondent No.1 secured registration of its mark in question vide registration No. 224879, 252071 and 252070 dated 16.10.64, 4.10.68 and 4.10.68 respectively. The present appellants were served with a legal notice dated 23.7.1982, calling upon the appellants to desist from using the trade mark MARSHAL which is being used by them, and forms part of the word forming part of the registered trade mark of respondent FIELD MARSHAL, which was replied to by the appellants. A suit was filed by respondent No.1 being Regular Civil Suit No. 1612 of 1989 in the High Court of Delhi for infringement of respondent's trade mark. The applicants filed their written statement to the said suit. Though the petitioner has stated in para 22 of his rectification that the petitioners have filed a written statement, the petitioners seek leave to refer and rely on the averments made in the written statement so filed, in the present proceeding, whenever the same is required, a copy of the written statement is being filed in the proceedings, the same appears to have not been filed along with the rectification application which has now been made available by learned counsel for the respondent according to which the applicants raised dispute about validity of plaintiff's trade mark in that suit, and issues have been framed in the suit to which we shall refer later on. 3. Before the learned Single Judge, two questions posed for decision at that stage were whether present three rectification applications are barred by limitation and whether present proceedings are misuse of the process of law and not tenable in law. The applicant had contended that law of limitation is not applicable to proceedings under the Act of 1958. It is urged that Limitation Act by itself does not apply, and no period being prescribed for making rectification application, no period of limitation can be envisaged for holding the present rectification application as barred by time. On the other hand it has been contended by learned counsel for the respondent that no specific period having been prescribed under the Act of 1958, as the application has been made to High Court which is a civil court, Limitation Act would apply to all applications made to this court and in the absence of any specific provision, residuary Article 137 of the Limitation Act would govern the issue of limitation. 4. The applicants also contended that even if limitation Act were to apply, cause of action for filing rectification application is a continuing cause of action, and therefore period of limitation starts anew every day during the continuance of wrongful entry in the register of trade marks and therefore the rectification applications filed before this Court are within limitation. The learned Single Judge concluded that the applications are barred by law of limitation by holding that no recurring cause of action is arising in favour of petitioners-applicant's and also that on account of applicants' failure to raise a contention in their written statement about the invalidity of trade mark when they were served with the suit summons disentitles them to raise this plea now. At the outset, we may state that statement that the applicants-appellants had failed to raise a contention in the written statement about the invalidity of registration of mark in favour of respondent is an incorrect statement of fact. It appears that though the applicant has spoken unequivocally of having filed written statement and made a statement of filing the written statement along with his application has not filed a copy of written statement along with his application and this finding has been recorded by drawing adverse inference about non raising of the plea, without calling upon the applicant to produce the copy of written statement, filed in the suit before Delhi High Court. By making direct reference to the written statement submitted in Suit No.1612 of 1989 in High Court of Delhi and relying on averments made therein, the applicant has sought to incorporate the averments made in his written statement by reference. When he himself was offered to file the proceedings, the written statement filed in those proceedings in order to find out for the purposes of considering the questions raised at the stage of entertaining or rejecting the application in limine on the ground whether it is barred by some provision of law, the court ought to have asked the applicant to produce written statement, which has been made part of pleading before drawing any adverse inference on that ground and holding it against him at that stage, to enable the court full reading of the pleadings. 6. Be that as it may, we notice on perusal of the notice and written statement, both of which have been made available to court that the applicant did raise plea about invalidity of registration of plaintiff's mark in the suit, in para 10 of written statement. In para 10, it has been unequivocally stated that `the plaintiff's trade mark is invalid and is liable to be rectified.' Obviously, to the extent learned Single Judge says that applicant is not entitled to maintain his petition because he has failed to raise the contention in his written statement in response to summons of suit' is not right. However, the question shall have to be examined on the basis what is the effect of raising of such plea in the written statement by the defendant in a suit filed by the registered proprietor of trade mark for infringement. 7. The relevant provisions of the Trade and Merchandise Marks Act, 1958 (hereinafter called the Act) are that Section 56(1) empowers the High Court or the Registrar to vary registration and to rectify the registration on the ground of any contravention or failure to observe a condition entered in register in relation thereto on an application being made in that regard. Subsection (2) enables a person aggrieved by the absence or omission from the register of any entry or by any entry made in the register without sufficient cause, or by any entry wrongly remaining on the register, to apply in the prescribed manner to a High Court or to the Registrar. On such application being made the forum before whom such application has been made may make an order for making, expunging or varying the entry or as he may think fit. Subsection (3) clarifies that the High Court or the Registrar in any proceedings under Section 56 decide any question that is necessary or expedient to decide in connection with rectification of register that is to say all incidentals and ancillary questions fall within the scope of proceedings under Section 56. Subsection (4) of Section 56 empowers the High Court as well as the Registrar to exercise such power Suo Motu after giving notice to the affected parties in the prescribed manner. So far as Section 56, by itself is concerned, it confers concurrent jurisdiction on High Court as well as on Registrar of Trade Marks in the matter of rectifying entries made in the register, whether by way of cancellation or variation under subsection (1) or making, expunging or varying such entry under subsection (2). Section 107 of the Act provides that where in a suit for infringement for its registered trade mark, the validity of registration of the plaintiff's trade mark is questioned by the defendant or where in any such suit the defendant raises a defence under clause (d) of subsection (1) of Section 30 and the plaintiff questions the validity of the registration of the defendant's trade mark, the issue as to the validity of the registration of the trade mark concerned shall be determined only on an application for the rectification of the register, and notwithstanding anything contained in Section 46, subsection (4) of Section 47 or section 56, such application shall be made to the High Court and not to the Registrar. The effect of this provision is that once a suit is instituted for infringement of a registered trade mark and plea as to invalidity of registered trade mark is raised, the Registrar is divested of his authority to entertain any application to that effect thereafter, inasmuch as issue as to the validity of registration raised in the suit is then required to be determined by High Court notwithstanding anything contained in Section 46(4) read with Section 47 or Section 56. Thus once a suit has been filed and plea of invalidity has been raised, the forum for making rectification application and its dealing is governed by Section 107 and not by Section 56. Section 108 provides the procedure to be followed by the High Court, on an application for rectification. Inter alia, it provides that such application is to be heard by a Single Judge of High Court. The order passed by learned Single Judge is made amenable to appeal as a matter of right before a Division Bench in the same High Court, and subject to the provisions of the Act and Rules made thereunder, the provisions of Civil Procedure Code are applicable to proceedings before the High Court in the matter of rectification application. The Registrar is ordained to act in accordance with directions contained in the decision of the High Court whether initially or finally that may be issued on appeal by Division Bench of the High Court or by the Supreme Court as the case may be. Section 111 which deals with the raising of issue as to invalidity in the course of a suit for infringement reads as under: "111. Stay of proceedings where the validity of registration of the trade mark is questioned, etc. - 91) Where in any suit for the infringement of a trade mark - (a) the defendant pleads that the registration of the plaintiff's trade mark is invalid; or (b) the defendant raises a defence under clause (d) of subsection (1) of Section 30 and the plaintiff pleads the invalidity of the registration of the defendant's trade mark; the court trying the suit (hereinafter referred to as the Court), shall, - (i) if any proceedings for rectification of the register in relation to the plaintiff's or defendant's trade mark are pending before the Registrar or the High Court, stay the suit pending the final disposal of such proceedings; (ii) if no such proceedings are pending and the court is satisfied that the plea regarding the invalidity of the registration of the plaintiff's or defendant's trade mark is Prima facie tenable, raise an issue regarding the same and adjourn the case for a period of three months from the date of the framing of the issue in order to enable the party concerned to apply to the High Court for rectification of the register. (2) If the party concerned proves to be Court that he has made any such application as is referred to in clause (b)(ii) of subsection (1) within the time specified therein or within such extended time as the Court may for sufficient cause allow, the trial of the suit shall stand stayed until the final disposal of the rectification proceedings. (3) If no such application as aforesaid has been made within the time so specified or within such extended time as the Court may allow, the issue as to the validity of the registration of the trade mark concerned shall be deemed to have been abandoned and the Court shall proceed with the suit in regard to the other issues in the case. (4) The final order made in any rectification proceedings referred to in subsection 91) or subsection (2) shall be binding upon the parties and the Court shall dispose of the suit conformably to such order in so far as it relates to the issue as to the validity of the registration of the trade mark. (5) The stay of a suit for the infringement of a trade mark under this section shall not preclude the Court making any interlocutory order (including any order granting an injunction, directing accounts to be kept, appointing a receiver or attaching any property), during the period of the stay of the suit." 8. A close look at the provision unfolds the scheme envisaged under the Act for deciding issue as to the validity of a Registered Trade Mark, where a suit for its infringement has been filed, by the forum prescribed for rectification of the entry in the Register of Trade Marks, before the trial of suit can proceeds further and not by the court trying the suit. As we notice, under Section 107, it has been provided that on such plea being raised, the plea can be decided only in appropriate rectification proceedings. In conformity with that provision, Section 111 envisages that if proceedings for rectification of the register in relation to plaintiff or defendant's trade mark, as the case may be, are pending before Registrar or the High Court, further proceedings in the suit shall be stayed, until final disposal of rectification proceedings. If proceedings are not pending, and the plea regarding invalidity of registration of the concerned mark is raised, the court trying the suit is to be prima facie satisfied about tenability of issue, if it is so satisfied, it shall frame an issue to that effect and adjourn the case for three months, from the date of framing of the issue, in order to enable the party concerned to apply to the High Court for rectification of register. The consequence of the raising of issue are two fold. In case, the party concerned, makes an application for rectification within the time allowed, under subclause (ii) of subclause (b) of subsection (1), whether originally specified or extended later on, the civil court trying the suit has to stay the further proceedings of the suit until disposal of the rectification proceedings. At the same time, if no such application is made within the time allowed, the party, who has raised the plea of invalidity, of the opponents registered mark, is deemed to have abandoned the issue. This provision permitting raising of an issue only on prima facie satisfaction of the court, with further requirement that the party, at whose instance an issue has been framed, is to apply for rectification before the High Court concerned, and failure to make such application within time allowed results in deemed abandonment of plea, leads us to conclude that once a suit has been filed, the rectification proceedings at the instance of either party to the suit against the other, must take the course envisaged under section 111, that is to say, if proceedings for rectification are already pending before raising the plea of an invalidity, that is to say, the attention of an appropriate forum having already been invited to that issue, those proceedings must first be continued, decision thereon to be obtained and then civil suit for infringement can proceed in the light of that decision. In case, no such proceedings for rectification are pending at the time of raising the plea of invalidity, the prosecution of such plea by the person raising it depends on prima facie satisfaction of the court, about the tenability of this plea. If the plea has been found to be prima facie tenable and issue is raised to that effect then the matter is to be adjourned for three months atleast to enable the person raising such plea to approach the High Court concerned, with a rectification application. In case, the rectification proceedings are not already pending, and the court is not even prima facie satisfied about the tenability of the plea raised before it, the matter rests there. In case, no issue is framed, the remedy of the aggrieved party is to agitate against non framing of the issue for that reason either before the court itself, or by taking recourse to remedial forums, by which the suit is governed. One cannot envisage that a person who satisfies the court prima facie about the tenability of its plea, would be required to file an application for rectification within a specified time, else will lose his plea by abandonment, but, in case, a man facing infringement suit, after raising the plea about invalidity of registration of mark fails even prima facie to satisfy the court about tenability of its plea, is left free to agitate the issue de hors the suit as independent cause of action at any time thereafter, as in the present case, it would make the provision of Section 111, wholly irrelevant, and nugatory. 9. We are not impressed with the contention of the learned counsel for the appellant that Section 111 operates only if a party raises plea of invalidity of the mark and seeks stay of the proceedings and not otherwise. Plea that unless the defendant raising the plea of invalidity wants the stay of proceedings, the provision has no application does not commend itself on the plain reading of the section itself. Two-fold consequence has been provided on raising of an issue about the validity. Firstly, the stay of the proceedings of the trial, in case, the opportunity is availed to get the issue decided through rectification application. If such issue is already subject matter of a pending rectification proceedings, the court cannot proceed until such issue is determined. If such proceedings are not pending the trial court has to raise an issue in the suit on being prima facie satisfied about its tenability, and give an opportunity to the objector to have resort to rectification application for which minimum of three months time is to be granted. That is to say trial is held up atleast upto that time. On filing such rectification application within time allowed, entails further stay of proceedings in the suit until rectification application is decided. Secondly failure to avail the opportunity results in abandonment of the issue. If the provision has been confined only to stay, proceedings of the suit at the request of the party concerned, subsection (3) of Section 111 sounds totally out of context. The stay of the proceedings in case rectification applications are already instituted or instituted thereafter as a result of framing of issue is not in the discretion of the court. The proceedings of the trial court must be stayed. It cannot proceed further in the very scheme of things. Where the issue as to invalidity has been raised, as per Section 107 it can only be decided by the High Court having jurisdiction to decide rectification application. Subsection (4) of Section 111 makes the finding of rectification proceedings binding on the court trying the suit for infringement. Without deciding the issue about invalidity, it is well nigh impossible to proceed with the trial of the suit in which plea as to invalidity has been raised, without deciding the fate of it. Either the issue is or is deemed to have been abandoned either by nor pressing the framing of issue or on failure to initiate rectification proceedings within time allowed if the issue is framed. Therefore, it is not possible to accept the contention of learned counsel that Section 111 comes into operation only in case a person raising plea of invalidity of others' trade mark is desirous of seeking stay of suit and it is in the discretion of the court, to stay the proceedings. The question of determination of issue and abandonment of it through non prosecution are interwoven in the scheme and therefore once the suit for infringement has been instituted by proprietor of registered trade mark, and a plea of invalidity has been raised by the defendant, the parties must adhere to follow the rectification proceedings as envisaged under Section 111 and not otherwise. It also does not commend that though for the purpose of suit a person raising the plea is deemed to abandon the plea, but independent of the suit, during the pendency of that very suit he is free to move rectification application and again plead for a judgment in the light of decision obtained outside the provisions of Section 111. In case a plea is deemed to have been abandoned, the only remedy of the party concerned may be to approach that very court, to extricate himself from the consequence of abandonment, or higher forum. Else, so far as the parties to the suit are concerned, they must be left to contest the suit as it stands without independent recourse to rectification application once right to have recourse to rectification proceedings has accrued in their favour and they abandoned it by dint of their own act. 10. It was also contended by learned counsel for the appellant in this regard that in case no plea is raised, in written statement, may be because by that time there may be no cause of action existing in favour of the defendant to raise such plea or for any reason, he raises this plea later on, the right of defendant to raise such plea later on shall be defeated, if the view as discussed above is accepted. We are not impressed by this contention either. If plea has not been raised at the earlier stage and has been raised at the later stage obviously it will be for the trial court at that time to entertain the plea on the basis of any amendment sought in the pleadings or by way of any other method. Once the suit for infringement of trade mark is filed scheme that is entwined between Section 107 and 111 becomes operative. Firstly, in that event jurisdiction of registrar to entertain such application is barred and application only lies to High Court. That is the effect of filing of suit simpliciter. If right to move rectification thereafter could be