1 NMS.1789/2010 acd IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION NOTICE OF MOTION NO. 1789 OF 2010 IN SUIT NO. 1746 OF 2010 Kamat Hotels (India) Limited …Plaintiff. Vs. Hyatt Resorts Private Limited …Defendant. ---- Mr. Virag Tulzapurkar, Senior Advocate with Dhiren Karania and S. Jani i/b G.S. Hegde & V.A. Bhagat, for the Plaintiff. Mr. Sanjay Kher along with Mr. Amit Shroff, for the Defendant. ---- CORAM: S.C. DHARMADHIKARI, J. DATE : 7 TH SEPTEMBER, 2010. P.C.: 1] The plaintiffs have filed the suit for a permanent injunction restraining the defendant by themselves, their Directors, servants, successors, transferee's, assignees and all those connected with them from any manner promoting, marketing and/or using in relation to the name of their goodwill, hotel business and their restaurant and food catering business, the mark “CABBANA ORCHID” with device of ‘ORCHID FLOWER’ or any trademark deceptively similar thereto. 2 NMS.1789/2010 2] The prayer clause (b) is for an injunction restraining passing off particularly in relation to the mark of the plaintiffs and tagline “FRIENDLY ECO-FRIENDLY”. 3] The prayer clauses (c) and (d) are permanent injunction in furtherance of prayer clauses (a) and (b). There is a prayer clause for damages. 4] The Notice of Motion has been moved for interim reliefs in terms of the final reliefs and in aid thereto. The notice of motion was filed on 8.4.2010 and is supported by affidavit of Shri Vikrant Kamat. 5] For the purpose of appreciating the rival contentions, it is necessary to note the allegations in the plaint in brief. 6] The plaintiff is a Company incorporated under the Companies Act, 1956 having its registered Office mentioned in the cause title. The plaintiff, inter alia, engages itself in running hotel, restaurant and food catering business offering and serving wide variety of food. The hotel and restaurant business has been carried on for last two decades. 7] The defendant is also a Company incorporated under the Companies Act, 1956 as Private Limited Company having registered 3 NMS.1789/2010 office at Jalander in the State of Punjab and the regional sales office at Mumbai. 8] The plaintiff also seeks to restrain the defendant from infringing the trademark and registered copyright in the original artistic label “THE ORCHID” with device of “Orchid Flower” by use of deceptively similar mark “CABBANA ORCHID”, and for passing of in relation to hotel and food catering business, their services as that of the plaintiff. 9] It is stated in the para 4 of the plaint that the plaintiff is owner and proprietor of the trademark “THE ORCHID” which is being used in relation to its Five Star hotel wherein it provides services such as lodging, boarding, food catering and hospitality. It is not necessary to refer to these aspects in further details to the contents of the documents at this prima facie stage because the plaintiff’s ownership in the copyright and the trademark is not in dispute. Further, the plaintiff’s label and its usage in relation to the hotel and catering business is also not in dispute. The plaintiff alleges that they have acquired valuable rights by virtue of continuous use and wide publicity since January 1997 4 NMS.1789/2010 and therefore, when the Trade Marks Act, 1999 was brought into force, it applied for registration, which application has been granted and in relation to some other article and goods their Registration process is going on. The documents such as Annexures (A) and (B) are copies registration certificates. It is contended that the hotel name and trademark “THE ORCHID” with device of “Orchid Flower” has been in continuous use and has become distinctive of plaintiff’s services. The customers and people in the Hospitality industry associate the mark and name with that of the plaintiff exclusively. They have done enormous business on the strength of this mark and details therefore are set out in para 8 of the plaint. Further, the plaint outlines the recognition of the services rendered in the form of several awards which have been received. It is therefore stated that the mark and hotel name has achieved tremendous reputation and goodwill in the market. It is to such extent that it is only the plaintiff with whom this mark has been associated. Several attempts were made in the past to copy these marks so also infringe them and pass off the services as that of the plaintiff and 5 NMS.1789/2010 such attempts have been dealt with by the plaintiff by instituting legal proceedings including in this Court. There are several orders which are passed so as to protect the plaintiff’s mark and in some of the proceedings the plaintiff have succeeded because of the concession that has been given by the opposing parties. 10] In para 11 and 12 of the plaint this is what is alleged: 11] The plaintiff submits that in and around the year 2008, the plaintiff’s then associate company Concept Hospitality Limited had entered into a business relationship with the Defendant and accordingly a Management Agreement dated 8th April, 2008 was executed between the Defendant and the said Concept Hospitality Limited. Vide the said Management Agreement, Concept Hospitality Limited was permitted to operate the Defendant’s Hotel for an initial term of 10 years. As Concept Hospitality Limited was the then associate company of the Plaintiff and was instrumental in operating the Defendant’s hotel, the Plaintiff had verbally permitted the Defendant to use its trade mark THE ORCHID with Device of Orchid Flower as part of the name of its said hotel, which was then accordingly named as CABBANA ORCHID with Device of Orchid Flower. However, it was clearly understood that the Defendant was only given a right to use the mark THE ORCHID with Device of Orchid Flower of the Plaintiff. Hereto annexed 6 NMS.1789/2010 and marked as EXHIBIT K is a copy of the said Management Agreement executed between the Defendant and the Plaintiff’s then associate company, Concept Hospitality Limited Owing to restructuring of the Plaintiff from 14th March 2009, Concept Hospitality Limited ceased to be the associate of the Plaintiff and accordingly vide a mail dated 17th March 2009 addressed by Shri Param Kannampilly, then Chairman of Concept Hospitality Limited to the Defendant, the Defendant was notified of the restructuring of the Plaintiff. Thus as of 17th March 2009 the said Defendant was well aware that Concept Hospitality Ltd ceased to have any relations with the plaintiff. The Plaintiff craves leave to refer to and rely upon copy of the said mail dated 17.03.09 addressed by Shri Param Kannampilly of Concept Hospitality Ltd. to the Defendant. 12] Accordingly, vide its letter dated 9th July, 2009 the Plaintiff notified the Defendant to discontinue the use of its trademark ORCHID with Device Orchid Flower. Hereto annexed and marked as EXHIBIT L is a copy of the Plaintiff’s said letter dated 09.07.2009. Though the Plaintiff not receive any response from the Defendant on their said notice, the Defendant through Mr. Param Kannampilly of Concept Hospitality Limited tried to entice the Plaintiff into executing a franchise/licence agreement in some way or the other. On 5th September 2009 vide a mail addressed by the Executive Director of the Plaintiff unto Mr. Param 7 NMS.1789/2010 Kannampilly of Concept Hospitality, with a copy thereof having been marked into the Defendant’s Directors Mr. Anil Chodha and Mr. Manoj Chodha, the Plaintiff clearly asserted that they are not interested in offering any licence/franchise to the Defendant. Hereto annexed and marked as EXHIBIT M is a copy of the Plaintiff’s said mail dated 05.09.09. The Defendant however instead of discontinuing use of the Plaintiff’s mark THE ORCHID with Device of ORCHID Flower as part of its hotel name CABBNA ORCHID with Device of Orchid Flower kept pleading and insisting that necessary franchise or license agreement be forwarded to them for signatures. As no response came to be received from the Defendant, the Plaintiff through his Attorneys was constrained to address a cease and desist notice on 11.09.09 calling upon the Defendant to refrain from using the Plaintiff’s trademark in the impugned mark CABBANA ORCHID with Device of Orchid Flower. Hereto annexed and marked as EXHIBIT N is a cop of the said notice issued on behalf of the plaintiff.” 11] The plaintiff received a reply dated 15.11.2009 in which the defendant placed reliance upon the Management Agreement and asserted that they were given the right to use the trademark and 8 NMS.1789/2010 copyright of “THE ORCHID” by M/s Concept Hospitality Limited through an agreement which is still subsisting and was not revoked. They further stated that they have been assured by one Shri Param Kannampilly of M/s Concept Hospitality Limited that the plaintiff was ready and willing to offer a franchise agreement which they should sign with the plaintiff and therefore the right to use the mark “THE ORCHID” was protected. The plaintiff immediately clarified the matter by addressing a letter through their Advocate and reiterated that the trade mark was its exclusive proprietary right and that M/s Concept Hospitality Limited was no longer their subsidiary and permission to use the mark “THE ORCHID” was revoked. The defendant was once again called upon to cease and resist from making further use of the mark and artwork in the hotel name particularly “CABBANA ORCHID” with device of “ORCHID FLOWER”. There has been further correspondence and it is reiterated in the plaint that once the defendant was made aware that M/s Concept Hospitality Limited and Shri Param Kannampilly are not associated and have no relation of whatsoever nature with the plaintiff, then, the defendant’s act clearly amounts 9 NMS.1789/2010 to infringing the copyright and the trademark and therefore the suit has been instituted. 12] On being served with the notice of motion, affidavit and plaint, so also the anneuxres thereto, a reply/affidavit has been filed on behalf of the defendant. The deponent of this affidavit is the Director of the defendant. In the affidavit it is stated that the plaintiff does not have any cause of action to commence any such litigation since the defendant hold valid and subsisting ten (10) years non-terminable licence to use the plaintiff’s mark which has been granted to it by the plaintiff through their subsidiary Company M/s Concept Hospitality Limited. It is stated that the Management Agreement dated 8.4.2008 between the subsidiary of the plaintiff i.e. M/s Concept Hospitality Limited and the defendant is subsisting and the same is valid. In any case and without prejudice merely because M/s Concept Hospitality Limited has ceased to be the subsidiary, the plaintiff cannot agitate the grievance by filing the suit against the defendant without impleading M/s Concept Hospitality Limited as party to the suit. The suit claim is essentially collusive in as 10 NMS.1789/2010 much as the plaintiff and M/s Concept Hospitality Limited have colluded so as to deprive the defendant of its right to use the mark. It is in such circumstances, and by raising the plea of malafides that the defendant proceed to place their version on record. 13] The defendant has pointed out that the Directors of the Defendant company are well-known and respected businessmen having operations largely in the State of Punjab. They are investor and owners of immovable property which are ideally suited and located for the purpose of running hotel/hospitality business. They have been associated with several operators in the past and with the view to expand their activity, they decided to conduct a hotel business in their prime property along with the Phagwara Jalander Highway. Since the defendant have no experience of conducting hotel business, defendant was looking for an operator and were introduced to Concept Specialties Limited which was promoted by Shri Vithal Kamat, Chairman and Managing Director of the plaintiff, Shri Ramesh Shanbag, a associate of Vithal Kamat and Shri Param Kannampilly who is close associate of Shri Vithal Kamat. It was represented to the defendant that M/s Concept 11 NMS.1789/2010 Hospitality Limited has suitable experience, reputation and record of managing the hotels for promoters who desire to invest the property in the business. Therefore, M/s Concept forwarded to defendant copies of two Management Agreements being operated by them one for Quilon Hotels & Resorts Pvt. Ltd and another Uppal Properties Pvt. Ltd. Copies of these Management Agreements are annexed as annexures A and B to the affidavit in reply. Since the defendant was desirous of an early return on their investment and because of the fact that M/s Concept and the plaintiff in particular came forward with the co-branding ideas that they ultimately decided to execute the agreement on long term basis with M/s Concept. It is further stated in the affidavit in reply as to how the plaintiff and M/s Concept are closely associated in as much as the plaintiff has majority shareholding of 60% in M/s Concept, therefore, M/s Concept is subsidiary of the plaintiff. The plaintiff has complete control over M/s Concept Hospitality Limited. Further, Shri Vithal Kamat and Shri Kannampilly during the course of discussion pointed out their close association. Impressed by this, ultimately the agreement was 12 NMS.1789/2010 executed. In fact, had it not been for this agreement and the long term relationship defendant would not have invested about Ten to Fifteen crores of rupees, so as to make the hotel business and the property in tune with the standard laid down by the plaintiff and particularly their hotel business. In other words, the hotel business of the plaintiff being conducted in a particular style and brand, the defendant brought in moneys and made their hotel so as to make it as one of the group hotels of the plaintiff. It is on such understanding that the Management Agreement was executed. Therefore, the attempt now made is only to pressurise the defendant to fall in line. This is nothing but an attempt by Shri kamat, Shri Shanbhag and Shri Kannampilly in collusion, so that the defendant succumb to the commercial blackmail. Therefore, the plaint allegations must be seen in the backdrop of the representations made to the defendant, and particularly by Shri Kamat and Shri Kannampilly. It is urged that any order preventing the use of the mark “CABBANA ORCHID” by the defendant would have disastrous effect not only on their business but on their reputation also. It has also 13 NMS.1789/2010 consequences on their ability to maintain higher room tariff. There are numerous booking already made under the brand “CABBANA ORCHID”. When the defendant have brought up the business of their hotel to match the plaintiff’s standard what they have done is to appoint hospitality staff. They have been appointed on the basis that the plaintiff and the defendant get expertise and experience so as to market their brand “THE ORCHID”. In view of the massive investment, including paying substantial wages to the employees, the consequences would be complete standstill of the business as far as the defendant is concerned. 14] It is also asserted that the defendant was verbally informed by Shri Kannampilly that although there has been restructuring of M/s Concept, interest of all licencees as regards brand “THE ORCHID” has been protected vide MOU between M/s Concept and M/s Kamat Hotel (India) Limited. Shri Param Kannampilly further assured the defendant that M/s Concept would be taking cut in their operating fees receivable from the defendant and that an amount equivalent to the said cut in Concept’s fees would have been paid to the plaintiff by the defendant as 14 NMS.1789/2010 and by way of royalty fees for continuous use of the mark “THE ORCHID”. Reference is made to an email by Shri Kannampilly, wherein instructions are inserted to the defendant to pay a fee at 1% to the plaintiff. It is stated that to enable the party to formally finalise this deal, shri Kannampilly forwarded licence user agreement. It was stated that this would be received by the defendant from the plaintiff. 15] It is contrary to such assurances of Shri Kannampilly that letters of Mr. Vikram Kamat and the legal notices of the plaintiff were received and therefore it is alleged that the plaintiff has backed out of the arrangement which was arrived at despite restructuring of M/s Concept. Apart from this, the agreement dated 8.4.2008 create a vested right in the defendant and bearing in mind the clauses therein the plaintiff cannot claim any relief much less a permanent injunction in terms of the prayers in the plaint. Once they are not entitled to the final reliefs, then, they would not be entitled to any interim relief as well. 16] The plaintiff has controverted these allegations and statements by filing an affidavit in rejoinder of Shri Ramesh Shanbhag 15 NMS.1789/2010 who has while repeating and reiterating the plaint averments has urged that there is no privity of contract between plaintiff and defendant. The trademark was exclusive intellectual property of the plaintiff. M/s Concept Hospitality Limited has no right in the said intellectual property and if the defendant has to carry on the business under the name and style “CABBANA ORCHID” then they must obtain necessary and specific permission in that behalf. Once there is no such agreement and any of the stipulations in the agreement M/s Concept and the defendant not binding the plaintiff, then, the defendant cannot continue the user and therefore the interim relief as claimed deserved to be granted. 17] It is on this material that the notice of motion was placed before me for hearing and final disposal. Shri Tulzapurkar, learned Senior Counsel appearing on behalf of the plaintiff invited my attention to pages 32 to 36 of the plaint, and particularly page 37 and urged that as far as the exclusive use and ownership of the mark with the distinctive style, the plaintiff is entitled to all rights in relation to the said label mark. He has also invited my attention to the other annexures 16 NMS.1789/2010 to the plaint which evidenced that the copyright and the mark “THE ORCHID” with its “FLOWER depiction” vests in the plaintiff. Inviting my attention to page 50 of the plaint paper-book, Shri Tulzapurkar submits that the investment till date and the use of the mark has enabled the plaintiff to make a turnover of nearly 544 crores. The turnover has gone up continuously since the user from 1997. Shri Tulzapurkar has invited my attention to the further annexures to the plaint and has contended that the reputation and the popularity of the plaintiff has resulted in they being conferred several awards. The awards are also conferred for the hotel being eco-friendly. He has invited my attention to the proceedings initiated against two opponents and submits that the instances that are cited in the affidavit in reply are that of Quilon Hotels & Resorts Pvt. Ltd. and Uppal Properties Pvt. Ltd. Against both these entities legal proceedings have been initiated and there are favourable orders. Therefore, till date the plaintiff has resisted all attempts of infringement and passing of in relation to the label mark and the copyright. They have been successful all throughout. In one of the cases, 17 NMS.1789/2010 recognizing the plaintiff’s rights and exclusivity, one of the parties M/s Park Central executed consent terms admitting this fact. It is in these circumstances, that the plaintiff has made out a prima facie case of their reputation, being built on continuous use since 1997 and the ownership and proprietorship in the mark as well as their copyright. 18] Shri Tulzapurkar submits that a perusal of the Management Agreement between the defendant and M/s Concept Hospitality Limited would demonstrate that the same is between the defendant as owner and M/s Concept Hospitality Limited as operator . In the recitals there are definitions wherein it is clarified that the ‘Hotel’ means the hotel of the defendant located at Jalander and the ‘Property’ means the hotel property wherein the business will be conducted. The operatoring term will be the initial term and extension and renewal and all such stipulations must be seen as between the defendant and M/s Concept Hospitality Limited. It is the defendant who has appointed M/s Concept Hospitality Limited as an operator and the operating term vide Article (IV) very clearly support the plaintiff’s stand that it is something 18 NMS.1789/2010 between the defendant and M/s Concept Hospitality Limited which will be continued for 10 years and it is that arrangement, in consonance of the clauses of the said Management Agreement, which will be operative. The clause of termination must be seen and Shri Tulzapurkar then invites my attention to the sections 6.5 and 6.6 of Article VI of this Agreement. Shri Tulzapurkar submits that in the preliminary covenants by the operator M/s Concept Hospitality Limited agreed with the defendant that the name of the hotel will be CABBNA ORCHID. Shri Tulzapurkar submits that clause and the statement therein that the right to use the trademark/copyright ‘THE ORCHID’ and/or any mark/copyright owned or belonging to the operator shall cease immediately after termination, must be seen in the backdrop of section 6.6 which clarifies that M/s Concept Hospitality Limited will make available the name “THE ORCHID” owned by M/s Kamat Hotels (India) Limited to the defendant as per the understanding between M/s Hyatt Resorts (P) Ltd. (the defendant) and M/s Kamat Hotels (India) Ltd. However, there is no such understanding pleaded as between the defendant and the plaintiff save and except the assertion in the affidavit 19 NMS.1789/2010 in reply on the basis of mutual discussion. All that has been urged is that on the basis of the stipulations and particularly section 6.5 and 6.6. of Article VI that the defendant claims right in the usage and adoption. This agreement may be in force for 10 years but once the plaintiff has to put an end to all arrangements with M/s Concept Hospitality Limited and upon restructuring, there is no question of the defendant having any permission or licence to use the subject trademark. Shri Tulzapurkar has in that behalf emphasized that M/s Concept Hospitality Limited is an independent Company and though at one point of time it was a subsidiary of the plaintiff that the restructuring of the same and all arrangements post the same now being known to the defendant, they can no longer proceed on the basis of the stipulations in the agreement dated 8.4.2008. Shri Tulzapurkar has then contended that the letter dated 9.7.2009 copy of which is at page 276 warns the defendant from using the trademark “CABBANA ORCHID” without the prior permission of the plaintiff. That fact is also known to the defendant because Shri Param Kannampilly has informed them that they will have to enter into 20 NMS.1789/2010 an agreement with the Plaintiff if they want to continue using the word “ORCHID”. Shri Tulzapurkar invited my attention to Exhibits L and M’ in this behalf. He has also invited my attention to the letter dated 15.11.2009 copy of which is annexure ‘O’ to the Plaint (page 286) wherein the defendant has admitted that Shri Param Kannampilly had informed them that M/s Concept Hospitality Limited has separated from M/s Kamt Hotels (India) Ltd. but pleaded that there was MOU whereunder 1% of turnover was to be offered as royalty fee to the plaintiff for use of their name “ORCHID”. The very fact that the defendant addressed such letter and pleads such understanding with Shri Kannampillay means that they are aware of the requirement of a separate and Independent agreement/licence/permission from the plaintiff. Shri Tulzapurkar has also invited my attention to the email dated 17.3.2009, wherein it has been pointed out that M/s Kamat Hotels (India) Ltd holding of 60% share in M/s Concept Hospitality Limited has been sold and therefore M/s Concept Hospitality Limited will no longer be a subsidiary of M/s Kamat Hotels (India) Ltd. w.e.f. 14.3.2009. 21 NMS.1789/2010 Once the defendant is made aware of this fact by none other than Shri Kannampilly of M/s Concept Hospitality Limited, then all the more the right of the defendant to claim anything under M/s Concept Hospitality Limited comes to