AO/192/2008 1/27 JUDGMENT IN THE HIGH COURT OF GUJARAT AT AHMEDABAD APPEAL FROM ORDER No. 192 of 2008 with CIVIL APPLICATION No. 6576 of 2008 For Approval and Signature: HONOURABLE MR.JUSTICE K.M.THAKER ========================================================= 1 Whether Reporters of Local Papers may be allowed to see the judgment ? 2 To be referred to the Reporter or not ? 3 Whether their Lordships wish to see the fair copy of the judgment ? 4 Whether this case involves a substantial question of law as to the interpretation of the constitution of India, 1950 or any order made thereunder ? 5 Whether it is to be circulated to the civil judge ? ========================================================= MACLEODS PHARMACEUTICALS LTD. - Appellant(s) Versus ALEMBIC LIMITED - Respondent(s) ========================================================= Appearance : Mr.Mihir Thakore with MR ANIP A GANDHI for Appellant(s) : 1, Mr. KS NANAVATI with Mr. K.K. Nanavati for NANAVATI ASSOCIATES for Respondent(s) : 1, ========================================================= CORAM : HONOURABLE MR.JUSTICE K.M.THAKER Date : 13/06/2008 ORAL JUDGMENT 1. This Appeal from Order arises from an order dated 29.05.2008 passed below Ex. 5 in Civil Suit No. 18 of 2008 whereby the Additional District Judge, Vadodara has passed an ad-interim injunction against the present AO/192/2008 2/27 JUDGMENT appellant in terms of paras 38[a] and 38[b]of the injunction application (Ex. 5). The said paragraphs 38[a] and 38[b] read thus: “38. The plaintiff, therefore, prays that:- [a] Pending hearing and final disposal of the suit, the Hon'ble Court be pleased to restrain by an order of injunction the Defendant by themselves, their servants, agents, chemists, distributors, retailers and anybody claiming through the Defendant are not entitled to use trade mark GEMIMAC or any mark identical with or deceptively similar to the Plaintiff's reputed trade mark GERIMAC as their trade mark in respect of manufacturing, selling, exporting or distributing their goods or in any manner advertising their goods so as to pass off the goods of the Defendant as and for the Plaintiff; [b] Pending hearing and final disposal of the suit, the Hon'ble Court be pleased to restrain by an order of injunction the Defendant by themselves, their servants, agents, chemists, distributors, retailers and anybody claiming through the Defendant are not entitled to use trade mark GEMIMAC or any mark identical with or deceptively similar to the Plaintiff's reputed trade mark GERIMAC as their trade mark in respect of manufacturing, selling, exporting or distributing their goods or in any manner advertising their goods so as to cause confusion and/or deception;” 2. The appellant, being aggrieved by the said order has approached this Court by the captioned appeal. The appellant has, essentially raised serious grievance against the impugned order on the ground that there was no basis or justification for the learned court to grant exparte injunction without issuing notice before granting the injunction, and that too without recording reasons as contemplated by and required by the provision of Rule 3 of Order 39 of the Code of Civil Procedure, AO/192/2008 3/27 JUDGMENT 1908 (hereinafter referred to as 'the Code'). The appellant has prayed that the said order may be quashed and set aside. 3. The appellant has raised below mentioned question of law, which according to the appellant, arise from the impugned order. “(a) Whether irreparable or serious mischief will ensue to the plaintiff; (b) Whether the refusal of exparte injunction would involve greater injustice than the grant of it would involve; (c ) The court will also consider the time at which the plaintiff first had notice of the act complained so that the making of improper order against a party in his absence is prevented. (d) The court will consider whether the plaintiff had acquiesced for sometime and in such circumstances it will not grant exparte injunction; (e) The court would expect a party applying for exparte injunction to show utmost good faith in making the application; (f) Even if granted the exparte injunction would be for a limited period of time; (g) General principles like prima-facie case balance of convenience and irreparable loss would also be considered by the Court;” 4. In view of the issues arising in this appeal, appeal deserves consideration. Hence ADMIT. Considering the facts and request of the respective counsel and with their consent, the appeal is taken up and heard for final disposal. 5. The facts involved in and relevant for the present AO/192/2008 4/27 JUDGMENT purpose, as stated by the appellant, are briefly recapitulated below. 5.1 The case of the appellant is that it is a Public Limited Company incorporated and registered under the provisions of the Companies Act, 1956 having its registered office at Mumbai and is interalia engaged in the business activity of manufacturing and selling pharmaceutical products. The appellant has claimed that one of the several pharmaceutical products being manufactured and marketed by it, is a medicinal preparation for respiratory disorders, which is marketed in the name and style of GEMIMAC i.e. under the trademark “GEMIMAC”. 5.2 The appellant claims that it has started manufacturing and selling the said medicinal preparation since May 2007 and at present the turnover of the said product is about Rs. 20 crores per annum. The appellant further claims that it has independently and honestly conceived, coined and adopted the said trade mark GEMIMAC wherein the prefix GEMI stands for Gemifloxacin and that the suffix MAC stands for Macleods Pharmaceutical (which is the name of the appellant company). 5.3 The appellant has further stated that earlier it was served with a “cease and desist notice” by the opponent in the present case asking the appellant to desist from manufacturing/marketing and using, in relation to the medicinal and pharmaceutical preparation, the impugned mark GEMIMAC because it was deceptively and also confusingly similar to the respondent's reputed trade mark GERIMAC. AO/192/2008 5/27 JUDGMENT 5.4 The appellant has stated that by its communication dated 03.07.2007 it had responded to the said notice and informed the opponent that the trade mark GEMIMAC was an independently and honestly coined, invented and adopted by it and that therefore there was no cause or justification for the opponent to issue the said “cease and desist notice” and that the opponent, having faced with competition had come out with groundless threats and legal proceedings. It is further claimed by the appellant that for almost ten months the opponent did not take any steps in the matter and that therefore it was reasonably believed by the appellant that after the reply dated 03.07.2007, the opponent had appreciated and accepted the case and the issue was put to rest. 5.5 It is the case of the appellant that suddenly after a period of almost ten months it was served with the impugned exparte order restraining it from using its trade mark GEMIMAC or any mark identical with or deceptively similar to the present opponent's (i.e. original plaintiff's) trade mark GERIMAC and also restraining it from manufacturing, selling, exporting or distributing its goods in any manner using the trade mark GEMIMAC. 5.6 The appellant has stated that the said exparte order is not only unreasonable, unjustified and unwarranted in the facts of the case but is also in total disregard to the mandatory requirements of the provisions under Rule 3 of Order 39 and proviso of Rule 3 which requires that in all cases, except where the object of granting injunction is likely to be defeated by delay, notice must be issued before granting injunction inasmuch as the learned court failed to appreciate that the original plaintiff i.e. AO/192/2008 6/27 JUDGMENT present opponent had issued the “cease and desist notice” after almost one year since the appellant started manufacturing and marketing the medicinal product with the trade mark GEMIMAC and that the suit was filed after almost ten months since the said “cease and desist notice” was issued and that further there was no justification in granting the exparte mandatory injunction without issuing notice of a week or atleast three days so as to enable the appellant to place on record its reply and supporting material. 6. In the back drop of such facts and on the premise of such contentions, the appellant has preferred present appeal and challenged the said exparte order dated 29.05.2008. 7. The opponent i.e. the original plaintiff has appeared on caveat and on 11.06.2008 when the subject appeal was circulated for hearing, request for an adjournment for one day was made during which the opponent-plaintiff wanted to file its reply affidavit opposing the civil application for interim relief in the present appeal. In view of the consent of the appellant, the proceeding was adjourned to 12.06.2008. 8. Mr. Mihir Thakore, learned senior counsel appeared with Mr. Gandhi for the appellant and Mr. K.S Nanavati, learned senior counsel appeared with Mr. K.K Nanavati for the opponent-plaintiff. Mr. Thakore made his submissions on 12.06.2008 and Mr. Nanavati has replied the same on 13.06.2008 i.e. today. 9. Mr Mihir Thakore reiterated the factual aspects and in particular stressed the fact that the appellant's AO/192/2008 7/27 JUDGMENT product is extremely popular and within a span of one year it has a market of about Rs.20 crores per annum. He submitted that the “cease and desist notice” was issued on 20.06.2007 whereas the suit has been filed on 29.05.2008 i.e. after almost ten months since the date of notice and/or the date of the reply by the appellant to the opponent-plaintiff. 9.1 Mr. Thakore submitted that in view of such time lag and the delay, there was no justification for the learned court to not issue notice, for one week or atleast three days, and to proceed to grant an exparte mandatory injunction on the same day when the suit was presented. Mr. Thakore was quick to add that it is not his attempt to urge that the said delay of ten months would defeat the prayer for interim injunction but his attempt is to urge that the said delay of ten months atleast defeated or wiped out any justification, if at all there was any, of granting exparte mandatory ad interim injunction without issuing notice as required by Rule 3 of Order 39 of the Code. He submitted that the said requirement is mandatory and the order passed by the learned court without issuing notice is contrary to the legal decisions well settled by catena of judgements and also in total disregard to the requirement prescribed by the Code. 9.2 Mr. Thakore in support of his submissions relied upon the judgement of this Court (Coram : J.M Panchal, J., as his lordships then was) dated 29.01.1994 rendered in Appeal From Order No. 29/94. He has also relied upon the judgement of the Hon'ble Apex Court in the case of Laxmikant V. Patel vs. Chetanbhai Shah reported in 2002(3) SCC 65 as well as the order of this Court (Coram: D.N Patel, J.) dated 16.10.2007 passed in Appeal From AO/192/2008 8/27 JUDGMENT Order No.378 of 2007 and orders dated 18.07.2007 in Appeal From Order No. 261/07 and dated 30.08.2007 in Appeal From Order No. 306/07. 10. On the other hand, Mr K.S. Nanavati referred to the factual aspects mentioned by the opponent-plaintiff in the application for interim injunction and submitted that the opponent i.e. original plaintiff is a century old company which is highly reputed for its pharmaceutical and medicinal products. He also submitted that the plaintiff spends a significant amount for research and development work and has several patentable inventions to its credit. He also submitted that the plaintiff takes ample measures to protect its Intellectual Property Rights. Mr. Nanavati further submitted that the plaintiff has coined several trade marks with prefix GERI. He submitted that in case of the product in question, the prefix GERI is derived from the word GERIATRICS and to illustrate his submission he made reference to plaintiff's various products which are being marketed under the trade mark having prefix GERI eg. GERIPOD, GERICEFF, GERICARD, GERIGAT, GERIFLAM, GERIJOINT, GERIGRAD. Mr. Nanavati submitted that so far as the product in question i.e. GERIMAC is concerned, the plaintiff has secured sales of 40.23 lakhs, 58.86 lakhs and 60.29 lakhs during the financial years 2005-06, 2006- 07 and 2007-08 respectively. He supplemented the said submission by also referring to the amount spent by the plaintiff company towards promotion of the said product GERIMAC and submitted that amount of Rs. 6.03 lakhs, 8.83 lakhs and 9.04 lakhs have been spent by the plaintiff company for the promotion of the said product during the aforesaid period of three years. AO/192/2008 9/27 JUDGMENT 10.1 According to Mr. Nanavati, it is the case of the plaintiff that the present appellant, with the intention of exploiting the goodwill of the plaintiff company and reputation of the product GERIMAC, resorted to the trade mark GEMIMAC which is deceptively and confusingly similar to the plaintiff's trade mark GERIMAC. He also submitted that the product in question is a medicinal preparation which is used for upper respiratory disorders. In other words his submission amounts to contending that both the products have a similar purpose and that therefore the phonetic and/or visual similarity would result into confusion and thereby adversely affect the prospects of the plaintiff's product and the plaintiff's business. 10.2 Mr. Nanavati also made reference to the very common and off repeated contention based on almost illegible or difficult to decipher prescriptions and in light of that contention he submitted that there was a strong likelihood of confusion which would facilitate the passing off the appellant's products instead of the well reputed product of the plaintiff. Mr. Nanavati also submitted that the plaintiff has placed on record before the learned Court the material-literature of opponent's products which, even as per the appellant, has several side effects. Mr Nanavati on the basis of such material, which is said to be obtaining on the record of the learned court, submitted that there is, therefore, strong justification for injunction as prayed for by the plaintiff so that the passing off of the appellant's product instead of the opponent's product may be immediately arrested and hence the order is justified. 10.3 Mr. Nanavati also submitted that the learned court has recorded sufficient reasons to justify the order AO/192/2008 10/27 JUDGMENT granting injunction without issuing notice and the said order cannot be treated as an order devoid of any reasons. In his submission, it cannot be said on reading of the order, that the court has gone wrong in taking decision to grant exparte injunction and it also cannot be said that the reasons recorded by the court are so perverse or arbitrary and palpably wrong that it would warrant its setting aside. Mr Nanavati submitted that may be by some standard the said order probably may not be meeting with the normal standards of a well reasoned order, but only on that ground the same ought not be set aside. Mr. Nanavati in support of his submissions relied upon the judgements reported in the following: (i)1988(8) PTC 85 (ii)AIR 1994 J & K 25 (iii)AIR 2003 Calcutta 64 (iv)(2001) 5 SCC 73 (v)2007(1) GLR 686 (vi)1997(2) GLH 1002. 11. I have extensively heard Mr. Thakore and Mr. Nanavati for contesting parties and I have also gone through the record of the present appeal. 12. In the present case which arises from a passing off action initiated by the present opponent (original plaintiff) against the present appellant (original opponent) on the ground that by manufacturing and marketing its medicinal preparation under the trade mark GEMIMAC, the appellant herein is indulging into passing off of its product by using phonetically/visually similar trade mark, the learned court has, on 29.05.2008 granted exparte injunction and the injunction order is not AO/192/2008 11/27 JUDGMENT limited till the returnable date but is until further orders. 13. This Court, at this stage of the proceedings, does not intend to go into the merits of the rival claims, lest it should affect the proceedings before the learned Civil Court where the suit as well as notice of motion are still pending. It is clarified that the narration of factual aspects and observations in the present order are only for the purpose of deciding this appeal against the exparte injunction order and are not made on merits of the subject matter of the Civil Suit and/or by examining the merits of the case and that therefore they are not to be treated as observations or findings on the merits of the subject matter or in favour of or against any party. 14. The factual aspects which are relevant for the present appeal, are not in dispute inasmuch as it is an undisputed fact-situation that the original plaintiff i.e. opponent herein has started manufacture and sale of the medicinal preparation under the trade mark GERIMAC since September 2005. Accordingly, the plaintiff i.e. the opponent herein is a prior user of the trade mark GERIMAC. 15. It appears that the plaintiff was granted drug license in July 2005 for the said product GERIMAC and it had applied for registration of the trade mark in Class 5 on 06.10.2005. An advertisement with reference to the plaintiff's application came to be published in the trade mark journal on 16.04.2006 and it appears that thereafter some objection by a company named Mac Remedies Pvt. Ltd was raised and it is registered. It is, however, not in dispute that even after the said advertisement, way back AO/192/2008 12/27 JUDGMENT in April 2006, present appellant did not raise any objection and has not done so until now. It is also not in dispute that the plaintiff has been marketing the said medicinal product with trade mark GERIMAC since September 2005 whereas the appellant herein has started marketing its product with trade mark GEMIMAC after more than almost 15 months, in May 2007. 15.1 It is pertinent that after the appellant started marketing the product in May 2007, in June 2007 the plaintiff issued the “cease and desist notice”. This fact also is not in dispute. True it is, that the appellant replied the said “cease and desist notice” on 03.07.2007 and the suit came to be filed on 29.05.2008 i.e. after almost ten months from the date of the appellant's reply. It is also not in dispute that the purpose or use of both the products is similar and that the said medicinal preparations are Schedule H drugs, as a result of which it would be available or sold only on prescription. 16. In the passing off action against the appellant filed by the present opponent, the learned Civil Court, as it appears from the perusal of the order, upon taking into account the contents of the suit and interim relief application and after hearing the plaintiff's advocate considered it appropriate to pass exparte injunction, and did not issue notice as required by Order 39 Rule 3. 16.1 The appellant has mainly two fold objections against the impugned order. The first one being that there was no justification for granting exparte injunction without issuing notice for a period of one week or atleast three days, more particularly when the suit was filed after AO/192/2008 13/27 JUDGMENT almost ten months since the date of “cease and desist notice” and the said time gap or difference demonstrated that delay of a week or three days would not have defeated the object of granting the injunction, and second being that the learned court has failed to record reasons, which in appellant's submission is mandatory, disclosing as to how and why the court believed that delay of a week or three days would defeat the object of granting injunction. 17. For appreciating the appellant's grievance and objections against the impugned order it is appropriate to refer to the provisions under Rule 3 of Order 39 and its proviso and the relevant portion of the impugned order. The provision under Rule 3 of Order 39 reads thus: “3. Before granting injunction, Court to direct notice to opposite party.- 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: [Provided that, where it is proposed to grant an injunction without giving notice of the application to the opposite party, the Court shall record the reasons for its opinion that the object of granting the injunction would be defeated by delay, and require the applicant- (a) to deliver to the opposite party, or to send to him by registered post immediately after the order granting the injunction has been made, a copy of the application for injunction together with- (i)a copy of the affidavit filed in support of the application; (ii)a copy of the plaint; and (iii)copies of documents on which the applicant relies, and (b) to file, on the day on which such injunction is granted or on the day immediately following that day, an affidavit stating that the copies AO/192/2008 14/27 JUDGMENT aforesaid have been so delivered or sent.] 18. The relevant portion of the impugned order reads thus: “... I have a reason to believe that the defendant has issued reply to the notice given by the plaintiff and has claimed to be bonafide in such manufacturing drugs. It is claimed that there are number of drugs suffixing with Mac manufactured by the defendant. However, it is pertinent to not that not a single drug except the drug in dispute has such resemblance as “GERIMAC”. The size and color of the tablets is also resembling. Both the companies are engaged in manufacturing Antibiotic drugs and there is a reason for me to believe that if the injunction at this stage is not issued ex-parte, the defendant will be able to enjoy the benefit of the goodwill earned by the plaintiff company under the pretext of deceptively similar name of the drug...” 19. The question which arises is as to whether the said order is in disregard to or in violation of the provision under Rule 3 of Order 39. While considering the provision under Rule 3 of Order 39, the Hon'ble Apex Court has, in the judgement in the case of Shiv kumar Chadha vs. Municipal Corporation of Delhi and Others reported in 1993(2) GLH 778 held as under: “32. Power to grant injunction is an extraordinary power vested in the Court to be exercised taking into consideration the facts and circumstances of a particular case. The Courts have to be more cautious when the said power is being exercised without notice or hearing the party who is to be affected by the order so passed. That is why Rule 3 of Order XXXIX of the Code requires that in all cases the Court shall, before grant of an injunction, direct notice of the application to be given to AO/192/2008 15/27 JUDGMENT the opposite party, except where it appears that object of granting injunction itself would be defeated by delay. By the Civil Procedure Code (Amendment) Act,1976, a proviso has been added to the said rule saying that “where it is proposed to grant an injunction without giving notice of the application to the opposite party, the Court shall record the reasons for its opinion that the object of granting the injunction would be defeated by delay...” (Emphasis supplied) 20. When the learned court grants an order of injunction without prior notice, then the other side not only has a reasonable expectation but also has a right to know which are the facts and aspects or factors of the subject matter which appealed to or weighed with the learned court. The other side expects to know the reasons which convinced the learned court to grant exparte injunction so that it can while responding to and opposing the notice of motion, effectively address and deal with the same. Further, when appeal against the order is provided under the Code, then the appellate court also expects to know the reasoning of the Court which convinced it to pass the order of injunction without prior