FAO (OS) No.189/2010 & 190/2010 Page 1 of 38 $~ * IN THE HIGH COURT OF DELHI AT NEW DELHI + FAO(OS) 189/2010 % Reserved on: 6th April, 2010 Decided on: 28th May, 2010 1. SHRI JAYESH KANAIYA LAL SHUKLA Managing Director of Parth Parenteral P. Ltd. R/o 24, Royal Crescent Bangalow, Thaltej, Ahmedabad. 2. SHRI SHAILESHBHAI CHAUTURVEDI, S/o Sh. Ram Prasad Chaturvedi, Marketing Executive of Parth Prenteral P. Ltd. R/o 41, Swami Krupa Society, Pachwati, Kalol, Taluka Kalol, District Gandhinagar, Gujarat, 3. PARTH PARENTERAL P. LTD. GIDC Estate, State Highway, Kalol (North Gujarat)-382725 ..... Appellants Through: Mr. Dushyant Dave, Sr. Advocate with Mr. Suryakant Singla, Mr. Rakesh Gupta and Ms. Madhvi Dewan, Advocates. versus 1. RFCL LTD, A-3, Okhla Industrial Area, Phase –I, New delhi-110 020. 2. RANBAXY LABORATORIES LTD., 12th Floor, 6 Devika Towers, Nehru Place, New Delhi-110 019. ..... Respondents Through: Mr. Sudhir Chandra, Sr. Advocate with Mr. Hemant Singh, Ms. Mamta Jha, FAO (OS) No.189/2010 & 190/2010 Page 2 of 38 Mr. Aprajit Bhatayachara and Mr. Sumit Rajput, Advocates for R-1. Mr. Rajiv Nayar, Sr. Advocate with Mr. H.P. Singh and Mr. Navroop Singh, Advocates for R-2/Ranbaxy. AND + FAO(OS) 190/2010 1. SHRI JAYESH KANAIYA LAL SHUKLA Managing Director of Parth Parenteral P. Ltd. R/o 24, Royal Crescent Bangalow, Thaltej, Ahmedabad. 2. SHRI SHAILESHBHAI CHAUTURVEDI, S/o Sh. Ram Prasad Chaturvedi, Marketing Executive of Parth Prenteral P. Ltd. R/o 41, Swami Krupa Society, Pachwati, Kalol, Taluka Kalol, District Gandhinagar, Gujarat, 3. PARTH PARENTERAL P. LTD. GIDC Estate, State Highway, Kalol (North Gujarat)-382725 ..... Appellants Through: Mr. Dushyant Dave, Sr. Advocate with Mr. Suryakant Singla, Mr. Rakesh Gupta and Ms. Madhvi Dewan, Advocates. versus 1. RFCL LTD, A-3, Okhla Industrial Area, Phase –I, New delhi-110 020. 2. RANBAXY LABORATORIES LTD., 12th Floor, 6 Devika Towers, Nehru Place, New delhi-110 019. ..... Respondents FAO (OS) No.189/2010 & 190/2010 Page 3 of 38 Through: Mr. Sudhir Chandra, Sr. Advocate with Mr. Hemant Singh, Ms. Mamta Jha, Mr. Aprajit Bhatayachara and Mr. Sumit Rajput, Advocates for R-1. Mr. Rajiv Nayar, Sr. Advocate with Mr. H.P. Singh and Mr. Navroop Singh, Advocates for R-2/Ranbaxy. CORAM: HON‟BLE MR. JUSTICE MADAN B.LOKUR HON‟BLE MS. JUSTICE MUKTA GUPTA 1. Whether the Reporters of local papers may be allowed to see the judgment? Yes 2. To be referred to Reporter or not? Yes 3. Whether the judgment should be reported Yes in the Digest? MUKTA GUPTA, J. 1. The Respondent No. 1 herein had filed a civil suit being CS (OS) No. 40/2010 against the Appellants and the Respondent No. 2 herein inter alia seeking the following prayers: “i) a decree for declaration to the effect that the plaintiff was the rightful proprietor of trade mark CAPSOLA, CAPSOLA GOLD AND CAPSOLA PREMIUM in relation of animal feed supplement and the stock of CAPSOLA branded goods transferred to Vetnex Animal Health Ltd. by the plaintiff were legitimate goods, manufactured and marketed in accordance with law; FAO (OS) No.189/2010 & 190/2010 Page 4 of 38 ii) a decree for declaration that defendant nos. 1, 2 & 3, on expiry of agreement dated 20.11.2006, have no right to use or claim proprietary right in the trade mark CAPSOLA and any such use thereafter constitutes acts of passing off; iii) a decree of permanent injunction restraining defendant nos. 1, 2 & 3 from manufacturing, promoting, marketing, distributing, advertising, packaging, selling or offering for sale, directly or indirectly dealing in animal feed supplement, pharmaceutical preparations or any other related goods under the trade mark CAPSOLA or any other trade mark deceptively similar thereto as may lead to confusion or deception amount to passing off. iv) an order for rendition of accounts of profit illegally earned by the Defendant Nos. 1, 2, 3 and a decree for an amount so found due or in the alternative, a decree for Rupees One Crore (1,00,00,000/-) towards compensatory and penal damages may be passed in favour of the Plaintiff and against the Defendants nos. 1, 2, 3; v) award exemplary costs of the present proceedings in favour of the Plaintiff and against the Defendant nos. 1, 2, 3; and vi) any other order as this Hon‟ble Court deems fit and proper in the facts and circumstances of the present case.” 2. Along with the plaint an application under Order XXXIX Rule 1 and 2 being I.A. No. 3079/2010 was filed, seeking ex-parte injunction which was granted to the Respondent No. 1. Vide the ex-parte order dated 13th January, 2010 the Appellants have been restrained from using the trademark „CAPSOLA‟ in relation to animal feed supplements or from using any other FAO (OS) No.189/2010 & 190/2010 Page 5 of 38 trademark deceptively similar thereto as may amount to passing off goods and business of the Respondent No. 1 herein. This order dated 13th January, 2010 was served on the Appellants on 20th January, 2010. The Appellant filed an application for vacation of the interim order under Order XXXIX Rule 4 CPC being I.A. No.1903/10 and simultaneously filed a reply to the application under Order XXXIX Rule 1 and 2 on 15th February, 2010. According to the Appellant, the Respondent concealed vital facts at the time of seeking ex parte ad interim order dated 13th January, 2010. The matter came up for hearing on 17th February, 2010 when due to non-availability of the learned Single Judge the matter could not be heard and was adjourned to 15th March, 2010, the date already fixed. 3. On 15th March, 2010 the learned Single Judge of this Court issued notice in the application under Order XXXIX Rule 4 and fixed the matter for 25th May, 2010. Aggrieved by the orders dated 13th January, 2010 and 15th March, 2010, the Appellants have preferred the present appeals, when an objection with regard to maintainability of the appeals was raised by the learned counsel for the Respondent No. 1. Thus, the issue of maintainability of the present appeals is being dealt in the first instance. FAO (OS) No.189/2010 & 190/2010 Page 6 of 38 MAINTAINABILITY 4. Learned counsel for the Respondent No. 1 contends that the present appeals are not maintainable as the impugned orders are not appealable orders under Section 104 or Order 43 Rule 1 CPC and in this regard relies on a decision rendered by this Court in the case of Allied Nippon Ltd. & another v. M/s Allied Motors, 1999 (80) DLT 38. He also relies on the provisions of Order XXXIX Rule 3A contending that since the application for vacation was filed after a long time of service of ex parte interim order, the same could not have been disposed of within thirty days and thus the Appellants cannot complain of the delay. 5. In response learned counsel for the Appellants contends that as per Order XXXIX Rule 3A where the Court grants an injunction without giving notice to the opposite party, the Court shall make an endeavour to finally dispose of the application within thirty days from the injunction granted and if the same is not disposed of in thirty days the Court has to record reasons for such inability. It is further contended not only was the application under Order XXXIX Rule 1 and 2 not decided in thirty days, the notice itself was beyond thirty days. It is further contended that on an application for vacation of stay moved under Order XXXIX Rule 4 when a party has made false and FAO (OS) No.189/2010 & 190/2010 Page 7 of 38 misleading statements, the Court has to vacate the injunction unless, for reasons to be recorded it considers that it is not necessary to do in the interest of justice. Order XXXIX Rule 3A and 4 CPC reads as under: - “3-A. Court to dispose of application for injunction within thirty days.- Where an injunction has been granted without giving notice to the opposite party, the Court shall make an endeavour to finally dispose of the application within thirty days from the date on which the injunction was granted; and where it is unable so to do, it shall record its reasons for such inability. 4. Order for injunction may be discharged, varied or set aside.- Any order for an injunction may be discharged, or varied, or set aside by the Court, on application made thereto by any party dissatisfied with such order: Provided that if in an application for temporary injunction or in any affidavit supporting such application, a party has knowingly made a false or misleading statement in relation to a material particular and the injunction was granted without giving notice to the opposite party, the Court shall vacate the injunction unless, for reasons to be recorded, it considers that it is not necessary so to do in the interest of justice; Provided further that where an order for injunction has been passed after giving to a party an opportunity of being heard, the order shall not be discharged, varied or set aside on the application of that party except where such discharge, variation or setting aside has been necessitated by a change in the circumstances, or unless the Court is satisfied that the order has caused undue hardship to that party.” FAO (OS) No.189/2010 & 190/2010 Page 8 of 38 6. It is the contention of the learned counsel for the Appellants relying on the decision rendered in A. Venkatasubbiah Naidu v. S. Challappan and others, 2000 (7) SCC 695 that in case the learned Single Judge does not decide the application under Order XXXIX Rule 4 and the application of the Respondent under Order XXXIX Rule 1 and 2 in terms of Order XXXIX Rule 3 A and 4 within thirty days and does not record reasons, the party against whom the injunction is granted gets a right to file an appeal. The relevant portions of the judgment are: “19. The aforesaid Rule casts a three-pronged protection to the party against whom the ex parte injunction order was passed. First is the legal obligation that the Court shall make an endeavour to finally dispose of the application of injunction within the period of thirty days. Second is, the legal obligation that if for any valid reasons the Court could not finally dispose of the application within the aforesaid time the Court has to record the reasons thereof in writing. 20. What would happen if a Court does not do either of the courses? We have to bear in mind that in such a case the Court would have by-passed the three protective humps which the legislature has provided for the safety of the person against whom the order was passed without affording him an opportunity to have a say in the matter. First is that the Court is obliged to give him notice before passing the order. It is only by way of a very exceptional contingency that the Court is empowered to by-pass the said protective measure. Second is the statutory obligation cast on the Court to pass final orders on the application within the period of thirty days. Here also it is only in very exceptional cases that the Court can by-pass such a rule in which cases the legislature mandates on the FAO (OS) No.189/2010 & 190/2010 Page 9 of 38 Court to have adequate reasons for such bypassing and to record those reasons in writing. If that hump is also bypassed by the Court it is difficult to hold that the party affected by the order should necessarily be the sole sufferer. 21. It is the acknowledged position of the law that no party can be forced to suffer for the inaction of the Court or its omissions to act according to the procedure established by law. Under the normal circumstances the aggrieved party can prefer an appeal only against an order passed under Rules 1, 2, 2A, 4 or 10 of Order 39 of the Code in terms of Order 43 Rule 1 of the Code. He cannot approach the appellate or revisional Court during the pendency of the application for grant or vacation of temporary injunction. In such circumstances the party who does not get justice due to the inaction of the Court in following the mandate of law must have a remedy. So we are of the view that in a case where the mandate of Order 39 Rule 3A of the Code is flouted, the aggrieved party, shall be entitled to the right of appeal notwithstanding the pendency of the application for grant or vacation of a temporary injunction, against the order remaining in force. In such appeal, if preferred, the appellate Court shall be obliged to entertain the appeal and further to take note of the omission of the subordinate Court in complying with the provisions of Rule 3A. In appropriate cases, the appellate Court, apart from granting or vacating or modifying the order of such injunction, may suggest suitable action against the erring judicial officer, including recommendation to take steps for making adverse entry in his ACRs. Failure to decide the application or vacate the ex-parte temporary injunction shall, for the purposes of the appeal, be deemed to be the final order passed on the application for temporary injunction, on the date of expiry of thirty days mentioned in the Rule.” Reliance is also placed on a decision of the Hon‟ble Supreme Court in Shiv Kumar Chadha and others v. Municipal Corporation of Delhi and others, 1993 (3) SCC 161, relevant paras 34, 35 and 36 whereof are: FAO (OS) No.189/2010 & 190/2010 Page 10 of 38 “34. The imperative nature of the proviso has to be judged in the context of Rule 3 of Order 39 the Code. Before the proviso aforesaid was introduced, Rule 3 said "the Court shall in all cases, except where it appears that the object of granting the injunction would be defeated by the delay, before granting an injunction, direct notice of the application for the same to be given to the opposite party". The proviso was introduced to provide a condition, where Court proposes to grant an injunction without giving notice of the application to the opposite party, being of the opinion that the object of granting injunction itself shall be defeated by delay. The condition so introduced is that the Court "shall record the reasons" why an ex parte order of injunction was being passed in the facts and circumstances of a particular case. In this background, the requirement for recording the reasons for grant of ex parte injunction, cannot be held to be a mere formality. This requirement is consistent with the principle, that a party to a suit, who is being restrained from exercising a right which such party claims to exercise either under a statute or under the common law, must be informed why instead of following the requirement of Rule 3, the procedure prescribed under the proviso has been followed. The party who invokes the jurisdiction of the Court for grant of an order of restraint against a party, without affording an opportunity to him of being heard, must satisfy the Court about the gravity of the situation and Court has to consider briefly these factors in the ex parte order. We are quite conscious of the fact that there are other statutes which contain similar provisions requiring the Court or the authority concerned to record reasons before exercising power vested in them. In respect of some of such provisions it has been held that they are required to be complied with but non-compliance thereof will not vitiate the order so passed. But same cannot be said in respect of the proviso to Rule 3 of Order 39. The Parliament has prescribed a particular procedure for passing of an order of injunction without notice to the other side, under exceptional circumstances. Such ex parte orders have far reaching effect, as such a condition has been imposed that Court must record reasons before passing such order. If it is held that the FAO (OS) No.189/2010 & 190/2010 Page 11 of 38 compliance of the proviso aforesaid is optional and not obligatory, then the introduction of the proviso by the Parliament shall be a futile exercise and part of Rule 3 will be a surplusage for all practical purpose. Proviso to Rule 3 of Order 39 of the Code, attracts the principle, that if a statute requires a thing to be done in a particular manner, it should be done in that manner or not all. This principle was approved and accepted in well-known cases of Taylor v. Taylor and Nazir Ahmed v. Emperor. This Court has also expressed the same view in respect of procedural requirement of the Bombay Tenancy and Agricultural Lands Act in the case of Ramchandra Keshav Adke v. Govind Joti Chavare. 35. As such whenever a Court considers it necessary in the facts and circumstances of a particular case to pass an order of injunction without notice to other side, it must record the reasons for doing so and should take into consideration, while passing an order of injunction, all relevant factors, including as to how the object of granting injunction itself shall be defeated if an ex parte order is not passed. But any such ex parte order should be in force up to particular date before which the plaintiff should be required to serve the notice on the defendant concerned. In the Supreme Court Practice 1993, Vol.1, at page 514, reference has been made to the views of the English Courts saying: Ex parte injunctions are for cases of real urgency where there has been a true impossibility of giving notice of motion.... An ex parte injunction should generally be until a certain day, usually the next motion day.... 36. Accordingly we direct that the application for interim injunction should be considered and disposed of in the following manner: (i) The Court should first direct the plaintiff to serve a copy of the application with a copy of the plaint along with relevant documents on the counsel for the Corporation or FAO (OS) No.189/2010 & 190/2010 Page 12 of 38 any competent authority of the Corporation and the order should he passed only after hearing the parties. (ii) If the circumstances of a case so warrant and where the Court is of the opinion, that the object of granting the injunction would be defeated by delay, the Court should record reasons for its opinion as required by proviso to Rule 3 of Order 39 of the Code, before passing an order for injunction. The Court must direct that such order shall operate only for a period of two weeks, during which notice along with copy of the application, plaint and relevant documents should be served on the competent authority or the counsel for the Corporation. Affidavit of service of notice should be filed as provided by proviso to Rule 3 of Order 39 aforesaid. If the Corporation has entered appearance, any such ex parte order of injunction should be extended only after hearing the counsel for the Corporation. (iii) While passing an ex parte order of injunction the Court shall direct the plaintiff to give an undertaking that he will not make any further construction upon the premises till the application for injunction is finally heard and disposed of.” Reliance is also placed on the decision of this Court in the case of Ratna Commercial Enterprises Ltd. and another v. Vasutech Ltd., AIR 2008 Delhi 99 (DB). 7. Bound as we are by the decision of the Hon‟ble Supreme Court in the case of A. Venkatasubbiah Naidu v. S. Challappan(Supra), in view of the fact that even on 15th March, 2010 the case was simply adjourned to a date beyond thirty days without recording reasons, the objection of the learned FAO (OS) No.189/2010 & 190/2010 Page 13 of 38 counsel for the Respondent qua maintainability of the present appeal is rejected. We are in agreement with the views expressed by the division bench of this Court in the case of Ratna Commercial Enterprises Ltd. and another v. Vasutech Ltd., AIR 2008 Delhi 99 (DB). The relevant portions of the said decision are as under: “19. The upshot of the above delineation of the law by the Hon'ble Supreme Court is as under: (i) In the exceptional circumstances where a Court is unable to dispose of the application Under Order 39 Rule 4 within 30 days 'It shall record its reasons for such inability'; (ii) If the court does not dispose of the application then notwithstanding the fact that the order is not appealable in terms of Order 43 Rule 1, the aggrieved party shall be entitled to the right of appeal; and (iii) When such an appeal is filed 'the appellate court shall be obliged to entertain the appeal and further to take note of the omission of the court in complying with the provisions of Rule 3A.” ON MERITS 8. Learned counsel for the Appellants contends that the Respondent No. 1 clearly misstated facts in the plaint by asserting that it was the undisputed proprietor of the trade mark „CAPSOLA‟ for animal feed supplement, plasting materials and bandages on account of: FAO (OS) No.189/2010 & 190/2010 Page 14 of 38 a) Being successor in title and business of animal feed supplement business of Ranbaxy which was the prior user of the trade mark CAPSOLA; b) Proprietorship acknowledgement of the plaintiff by defendant no. 3 as recorded in agreement dated 1.11.2005 and 26.11.2006 which included CAPSOLA; c) Registered trade mark CAPSOLA recorded in the name of plaintiff.” 9. According to the learned counsel for the Appellants the assertion that the “Registered trademark CAPSOLA is recorded in the name of plaintiff” is clearly misleading and misstating facts as the Respondent No. 1/plaintiff is the registered trademark holder of „CAPSOLA‟ for bandages and plasters in class 5 and not animal feed supplements or veterinary animal feed supplement medicines. 10. Learned counsel for Appellants contends that in fact both the Respondents were admittedly aware of the fact that Appellant No. 3 was the undisputed registered owner and proprietor of the trade mark „CAPSOLA‟ for animal feed supplement in class 31 and veterinary animal feed supplement medicines in class 5. It is further contended that all material facts and documents in this regard were concealed from the learned Single Judge resulting in passing of the ex-parte ad-interim order dated 13th January, 2010. FAO (OS) No.189/2010 & 190/2010 Page 15 of 38 11. Learned counsel for the Appellants also contends that the claim of the Respondent for „CAPSOLA‟ brand for animal feed supplements from 2000 is only on the basis of its manufacturing being got done from the Appellants and the same is evident from para 6 of the plaint where there is a clear admission that it was the Appellant No.3 who was manufacturing and supplying to Ranbaxy Laboratory Ltd. (in short Ranbaxy)/Respondent No.2 herein, which it was marketing since 2000. It is contended that admittedly the Appellants are not only prior user of „CAPSOLA‟ brand for animal feed supplements but also the registered proprietor. That vide agreement dated 1st January, 2004 Ranbaxy admitted the ownership of Parth Parental Pvt. Ltd. (in short PPPL)/Appellant No.3 herein, for the trademark as by that time PPPL had got the trademark „CAPSOLA‟ brand in class 31 and 5 for animal feed supplements and veterinary animal feed supplements medicine, assigned to it from Pearl Pvt. Ltd. (in short Pearl) by an assignment deed dated 17th February, 2003 and thus Ranbaxy Fine Chemical Ltd. (in short RFCL) could not have got any better title then what Ranbaxy had as on 30th September, 2005, that is, the date of agreement between Ranbaxy and RFCL. 12. It is contended that the claim of Respondent No.1 qua CAPSOLA brand for animal feed supplements in view of the agreements dated 1st November, 2005 and 20th November, 2006 between RFCL Ltd. and the Appellants is also FAO (OS) No.189/2010 & 190/2010 Page 16 of 38 untenable as the Annexure