IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED : 20.12.2007 CORAM THE HONOURABLE MR. JUSTICE P.K. MISRA AND THE HONOURABLE MR. JUSTICE K.K. SASIDHARAN O.S.A.Nos.266 to 268 of 2007 New Hope Food Industries (P) Limited rep.by its Managing Director Mr.A.Raja Chinnasadayampalaym Moolapalayam (P.O.) Erode-638 002. ..Appellant (Plaintiff in O.A.No.708 to 710 of 2007 in CS.No.504/2007, High Court, Madras) Vs. 1.Pioneer Bakeries (P) Limited 52, Chettipalayam Cross Poondurai Road Erode-638 002. 2. Mr.K.Jayakrishnan ..Respondents (Defendants in O.A.No.708 to 710 of 2007 in CS.No.504/2007, High Court, Madras) For Appellant : Mr.Arvind P.Dattar, SC for M/s.A.A.Mohan For Respondents : Ms.P.S.Raman, SC Mr.P.H.Arvind Pandian https://hcservices.ecourts.gov.in/hcservices/ J U D G E M E N T K.K.SASIDHARAN, J These original side appeals are directed against the common order dated 7.9.2007 in O.A.Nos.708 to 710 of 2003 in C.S.No.504 of 2007 whereby the learned Single Judge rejected the prayer for injunction pending suit. 2. The appellant herein filed a suit in C.S.No.504 of 2007 against the respondents for the following reliefs. "(a) A permanent injunction restraining the defendants by themselves, their associate companies, heirs, legal representatives, successors in business, assigns, servants, agents, transporters, distributors, printers, stockists, wholesalers, dealers, retailers or any one claiming through or under them from committing acts of infringement of plaintiff's registered trade mark "MILKA WONDER CAKE" by use of trade mark "MILKA" or any other mark similar thereto in respect of cakes. (b) A permanent injunction restraining the defendants by themselves, their directors, heirs, legal representatives, successors in business, assigns, servants, agents, transporters, distributors, printers, stockists, wholesalers, dealers, retailers or any one claiming through or under them from committing acts of infringement of copyright of plaintiff's artistic work in the capsule shaped device and the trade mark "MILKA" depicted thereon by use of an almost identical and nearly similar capsule shaped device and the trademark "MILKA" depicted thereon amounting to substantial reproduction of the plaintiff's copyright or in any manner whatsoever. (c) A permanent injunction restraining the defendants by themselves, their directors, heirs, legal representatives, successors in successors in business, assigns, servants, agents, transporters, distributors, printers, stockists, wholesalers, dealers, retailers advertisers or nay one claiming through or under them from manufacturing, distributing, marketing, selling, offering for sale, advertising or in any manner dealing in cakes, chat items, snacks or items other than breads by using the name "MILKA" which is identical to the plaintiff's mark "MILKA" either as a trade mark or trade name or trading style amounting to passing off their products as and for the plaintiff's products or in any other manner whatsoever. https://hcservices.ecourts.gov.in/hcservices/ (d) The defendants be ordered to deliver up for destruction all the wrappers, pouches, cartons, labels, packaging materials, advertisement materials, seals, dies, blocks, screen prints, pamphlets, name boards, brouchers, trade literatures and such other materials bearing the trademark "MILKA" which is identical to the plaintiff's trade mark "MILKA". (e) The defendants be ordered to pay a sum of Rs.10,05,000/- being compensatory and punitive damage for committing acts of infringement of copyright and passing off in various manner as narrated in the plaint. (f) A preliminary decree be passed in favour of the plaintiff to render true and faithful accounts of profits earned by the defendants by sale of cakes and food items other than breads using the trademark "MILKA" and a final decree be passed in favour of the plaintiff for the amount of profits thus found to have been made by the defendants after the latter have rendered accounts." 3. In the said suit, the appellant filed O.A.Nos.708 to 710 of 2007 for interlocutory injunction. 4. The appellant preferred O.A.No.708 of 2007 for injunction restraining the respondents from committing acts of infringement in respect of their trade mark "MILKA WONDER CAKE" by using the trademark "MILKA" or any other mark similar thereto in respect of cakes. 5. In O.A.No.709 of 2007,the appellant prayed for injunction against the respondents pertaining to infringement of copyright in respect of their artistic work MILA WONDER CAKE wrapper/pouch and the trade mark "MILKA" depicted thereon. 6. In O.A.No.710 of 2007 the appellant prayed for injunction in respect of cakes, chat items, snacks or items other than bread by using the name "MILKA" by the respondents. 7. The case of the appellant as highlighted in the affidavit filed in support of the injunction are as follows:- 8. The appellant company was incorporated in the year 1996 with the main object of dealing in cakes, biscuits and other confectionary items and bakery products and they are in the business of manufacturing and marketing cakes since the year 1997 under the trade names "MILKA" and "MILKA WONDER CAKE". They have been using the trade mark continuously since then in respect of cakes. The appellant is the owner of the copy right in the artistic work Milka and Milka Wonder Cake wrapper/pouch having distinctive colour scheme, get up, lay out and artistic features https://hcservices.ecourts.gov.in/hcservices/ and the same was registered with the Registrar of Copyrights under No.54521/97 dated 30.12.1997 and as such all the rights, title and interest in the said artistic work vested exclusively with the appellant. The appellant is also the registered proprietor of trade mark "MILKA WONDER CAKE" under No.1242328 dated 9th October, 2003 in class No.30 in respect of cake and the trade mark "MILKA WONDER CAKE" is also registered under No.732507 dated 30th December, 1996 in class 30 in respect of cakes, biscuits and other confectionary items. It is the further case of the appellant that they have made extensive sale of cakes bearing the trade marks "MILKA" and "MILKA WONDER CAKE" in distinctive wrapper/pouch all over the country since the year 1997. The cakes sold by the appellant under the said trade mark have captured huge market resulted in acquiring immense reputation and goodwill. The appellant has also shown their sales turn over for cakes under the trade marks "MILKA" and "MILKA WONDER CAKE" from 1996-97 onwards till 2004-2005. The appellant also claims that they have spent substantial amount towards sales promotion, advertisement and publicity for marketing cakes under the trade mark "MILKA" and "MILKA WONDER CAKE" in distinctive wrapper/pouch and by virtue of the long, continuous, extensive use and wide publicity, the appellant has acquired exclusive right to use the trade marks "MILKA" and "MILKA WONDER CAKE". The appellant contended that the use of any such similar trade mark and artistic work for cakes is bound to cause confusion and deception and amounts to misuse. According to the appellant the trade mark "MILKA" is exclusively identified by the trade and public with the cakes marketed by them. 9. The appellant further submitted that one Mr.V.M.Joseph, Mr.A. Arumugham and the second respondent were the founder promoters of the first respondent company, which was incorporated in the year 1989 and Mr.V.M.Joseph was the Managing Director of the said company and the first respondent company has all along being engaged in the business of manufacturing and marketing breads only. In the year 1997 the said V.M.Joseph in his individual capacity had applied for registration of the trade mark "MILKA" as per application NO.759880 and "WONDER" as per application No.759879, both dated 8.7.1997 in respect of cakes included in class 30. Mr.V.M.Joseph had also applied for registration of the trade mark MILKA WONDER CAKE label as per application No732507 dated 30.12.1996 in class 30 in respect of cakes, biscuits and confectionary items, cooked dishes for human consumption etc., falling in class 30. The said registration has been assigned to the appellant as per agreement dated 30.11.2000 and in the said document the second respondent was an attesting witness. The appellant thus became the proprietor of the aforesaid trade marks "MILKA", "WONDER" and "MILKA WONDER CAKE" in respect of cakes. 10. The appellant contended that until the year 2003 all the promoters were together and Mr.V.M.Joseph was the Managing Director of the group companies and there was no dispute at all. Subsequently Mr.V.M.Joseph fell ill and there was re-organisation of management. Accordingly a Memorandum of Understanding was prepared on 19.6.2003 in and by which it was agreed that the appellant is entitled to use the trade https://hcservices.ecourts.gov.in/hcservices/ mark "MILKA" for cakes and another company by name Milka Nutriments Private Limited is entitled to use the trade mark "MILKA" for biscuits and the respondents to manufacture breads using the trade mark "MILKA". The said Memorandum of Understanding was handed over to respondent No.2 for his signature but he did not sign the same and retained with him. Difference of opinion aggravated between the parties which resulted in filing C.S.No.361 of 2004 by the appellant herein and C.S.No.790 of 2004 by the respondents herein against each other and the said suits are still pending. It is the further case of the appellant that the respondents started manufacturing cakes in the year 2007 which resulted in filing the present suit in as much as the respondent committed acts of infringement of appellant's registered trade mark "MILKA WONDER CAKE" by using the trade mark "MILKA." 11. Along with the suit the appellant also filed O.A.Nos.708 to 710 of 2007 for interim injunction pending disposal of the suit and in the affidavit filed in support of the injunction application the appellant has narrated the course of events which resulted in filing the suit as well as the interlocutory applications. 12. The second respondent as the Managing Director of the first respondent company filed a common counter affidavit in the interlocutory applications and opposed the prayer. According to the respondents, the appellant was granted the limited licence to use the artistic work "MILKA" under the agreement dated 1.11.1996 so as to enable them to manufacture breads and the said agreement did not permit the appellant to use the trade mark "MILKA" for the purpose of manufacturing and selling cakes and other bakery products. It is the case of the respondents that the first respondent is manufacturing cakes since the year 2004 and they continued to manufacture, market and sell the cakes in the name and style "MILKA TALENT CAKE" and they are the prior user of trade mark "MILKA" and the artistic work contained therein. The respondents also alleged collusion between the appellant and Mr.V.M.Joseph and as according to the respondents in the earlier suit there was no interim order in favour of the appellant and both the learned Single Judge as well as the Division Bench negatived the prayer made for injunction at the instance of the appellant. Therefore the respondents prayed for dismissing the applications as well as the main suit. 13. The appellant has filed a reply affidavit in answer to the common counter affidavit filed by the respondents wherein he contended that the appellant is a user and registered proprietor of the trade mark "MILKA" in respect of cakes. 14. The learned Single Judge having found that there is no prima facie case in favour of the appellant dismissed the applications, against which the unsuccessful petitioners in O.A.Nos.708 to 710 of 2007 have preferred these appeals. https://hcservices.ecourts.gov.in/hcservices/ 15. In the above factual matrix, we have heard Mr.Aravind P.Datrar, learned Senior Counsel for the appellant and Mr.P.S.Raman, learned Senior Counsel for the respondents. 16. The learned Senior Counsel for the appellant took us through the entire pleadings and contended that the finding of the learned Single Judge in the applications for interim injunction is perse erroneous and as such it is necessarily to be set aside in these appeals. The learned Senior Counsel further contended that in the face of the trade mark registration obtained by the appellants in class No.30 under No.732507 dated 30.12.1996 and trade mark number 1242328 dated 9.10.2003 both in respect of cakes under class 30, the learned Single Judge should have considered the prima facie case in favour of the appellant. It is the further contention of the learned Senior Counsel that the agreement dated 1.11.1996 relied on by the learned Single Judge to reject the prayer for injunction is in fact relates to bread only and it has nothing to do with cakes and the learned Single Judge failed to consider the factum of production of cakes by the appellant right from 1997. Ultimately the learned Senior Counsel sought interference in the order impugned in these appeals and according to the learned Senior Counsel the finding of the learned Judge is perverse and capricious. 17. The learned Senior Counsel for the respondents supported the order of the learned Single Judge and contended that temporary injunction being purely an equitable relief to be granted keeping in view the balance of convenience, existence of prima facie case and irreparable injury and as the appellant failed to prove these fundamental factors, the learned single Judge was perfectly correct in rejecting the prayer for injunction. By placing reliance on the certificate dated 2.9.1997 issued by the Assistant Registrar of Trade Marks, Mumbai, the learned Senior Counsel contended that the appellant played fraud on the authorities as in the copy right application they have given intimation that New Hope Industries and Pioneer Bakeries Limited are one and the same and accordingly got the copy right registered. With respect to the trade mark obtained by the appellant for cakes in class 30, learned Senior Counsel submitted that the respondents have already initiated proceedings for rectification and the same is now pending before the Intellectual Property Appellate Tribunal, Chennai. The learned Senior Counsel also took us through the earlier order of this court dated 16.7.2004 rejecting the similar prayer sought by the appellant in O.A.Nos.360 and 361 of 2004 in C.S.No.361 of 2004, which was confirmed in appeal as per judgment dated 1.12.2004 in O.S.A.Nos.267 to 270 of 2004. 18. The action for infringement is a remedy provided by the statute on a registered holder of the trade mark in case of any violation of his right to use his trade mark exclusively for his goods. Therefore when the plaintiff comes to the court with a complaint of infringement by the defendant and if it is found that the defendant is using the plaintiff's trade mark, an injunction will be issued in favour of the plaintiff https://hcservices.ecourts.gov.in/hcservices/ restraining the defendant from using the trade mark. However Section 34 is an exception to this, inasmuch as registration of trade mark cannot be used against a trader taking shelter under the concept of prior user. Of course prior user must be continuous or not intermittent or seasonal. Therefore prior user assumes significance in an action for infringement. 19. However disposal of suit for injunction often takes time, given the pendency of cases in courts and as such the suit for permanent injunction in respect of infringement of trade mark invariably accompanied by an application for temporary injunction pending disposal of the main suit. The grant of injunction being an equitable remedy provided under the Specific Relief Act is governed by the principles of prima facie case, balance of convenience and irreparable injury. 20. In the case of SEEMA ARSHAD ZAHEER & ORS v. MUNICIPAL CORPORATION OF GREATER MUMBARI & ORS. (2006(5) Scale 263) the Apex Court laid down the salient principles governing the grant of injunction thus:- "The discretion of the court is exercised to grant a temporary injunction only when the following requirements are made out by the plaintiff: (i) existence of a prima facie case as pleaded, necessitating protection of plaintiff's rights by issue of a temporary injunction; (ii) when the need for protection of plaintiff's right is compared with or weighed against the need for protection of defendant's right or likely infringement of defendant's rights, the balance of convenience tilting in favour of plaintiff; and (iii) clear possibility of irreparable injury being caused to plaintiff if the temporary injunction is not granted. In addition, temporary injunction being an equitable relief, the discretion to grant such relief will be exercised only when the plaintiff's conduct is free from blame and he approaches the court with clean hands." 21. In the case of RAMDEV FOOD PRODUCTS PVT. LTD. v. ARVINDBHAI RAMBHAI PATEL & OTHERS (2006(8) Scale 631), the Apex Court considered the question of prima facie case and balance of convenience and held as follows:- "116. Registration of a trade mark and user thereof per se may lead to the conclusion that the plaintiff has a prima facie case, however, existence thereof would also depend upon the determination of the defences raised on behalf of the respondents. The appellant has raised a triable issue. The same by itself although may not be sufficient to establish a prima facie case but https://hcservices.ecourts.gov.in/hcservices/ in view of our findings aforementioned, we are satisfied that the appellant has been able to establish existence of a legal right in itself and violation of the registered trade mark on the part of the respondents. We have also considered the comparable strength of the cases of the parties and are of the opinion that the case of the plaintiff-appellant stands on a better footing than the defendants-respondents. 117. A question as regards the matter relating to grant of injunction has been dealt in S.M.Dvechem Ltd.v. Cadbury (India) Ltd. 2000(5) SCC 573) wherein upon noticing a large number of decisions including Colgate Palmolive (India) Ltd. v. Hindustan Lever Limited ((1999) 7 S.C.C. 1) as also the subsequent distinction made in respect of the decision of the House of Lords in American Cyanamid v. Ethicon Ltd. ((1975 1 ALL ER 853), it was stated: "....Therefore, in trademark matters, it is now necessary to go into the question of "comparable strength" of the cases of either party, apart from balance of convenience. 118. In M/s Transmission Corporation of A.P.Ltd., v. M/s. Lanco Kondapalli Power Pvt.Ltd. (JT 2005(10) SC 542), it was held: "The interim direction ordinarily would precede finding of a prima facie case. When existence of a prima facie case is established, the Court shall consider the other relevant factors, namely, balance of convenience and irreparable injuries. The High Court in its impugned judgment although not directly but indirectly has considered this aspect of the matter when on merit it noticed that the Appellant has raised a dispute as regard payment of an excess amount of Rs.35 crores although according to the Respondent a sum of Rs.132 crores is due to it from the Appellant and the Appellant had been paying the amount for the last two years as per the contract. Conduct of the parties is also a relevant factor. If the parties had been acting in a particular manner for a long time upon interpreting the terms and conditions of the contract, if pending determination of the lis, an order is passed that the parties would continue to do so, the same https://hcservices.ecourts.gov.in/hcservices/ would not render the decision as an arbitrary one, as was contended by Mr.Rao. Even the Appellant had prayed for adjudication at the hands of the Commission in the same manner. Thus, it itself thought that the final relief would be granted only by the Arbitrator." 121. Relief by way of interlocutory injunction would be material in a suit for infringement of trade mark. Balance of convenience, however would have a vital role to play. 123. Kerly's Law of Trade Marks and Trade Names, Thirteenth Edition states as under about the general test for grant of an interim injunction. "In trade-mark infringement causes irreparable damage, in this sense, is relatively easily shown, since infringement may easily destroy the value of a mark or at least nullify expensive advertising in a way that is hard to quantify for the purposes of an inquiry into damages. This has more recently come to be referred to, in cases where the defendant's conduct is not directly damaging but merely reduces the distinctive character of the claimant's mark, as "dilution".... .....In particular, although it is usually neither necessary nor appropriate to assess the degree of probability of success which the claimant's action has (provided that it is arguable, and subject to the principle of American Cyanamid that the merits may be resorted to as a 'tie-breaker' if the balance of convenience is very even) in trade mark and passing off cases, it is very hard to avoid doing so, since the better the claimant's case on the likelihood of deception (frequently the major issue) the greater the harm which he is likely to suffer. Accordingly, in appropriate cases, where the state of the evidence permits it, the court may seek to weigh up the merits in deciding whether to grant interim relief." 124. Thus, when a prima facie case is made out and balance of convenience is in favour of the appellant, it may not be necessary to show more than loss of goodwill and reputation to fulfil the condition of irreparable injury. In fact, if the https://hcservices.ecourts.gov.in/hcservices/ first two pre-requisites are fulfilled, in trade mark actions irreparable loss can be presumed to have taken place. 125. The expression "irreparable injury" is that sense would have established injury which the plaintiff is likely to suffer." 22. Keeping in view the principles laid down by the Supreme Court in the matter of temporary injunction by exercise of discretion we have perused the order of the learned Single Judge impugned in these appeals. 23. The learned single Judge negatived the prayer for injunction mainly on the following reasons:- "(a) As per agreement dated 1.11.1996 the appellant was granted permission only to manufacture breads. Therefore the appellant is not right in their contention that they are manufacturing cakes also from the year 1997. (b) The registration now obtained by the appellant does not enable the appellant to get over the inhibition that were pointed out in the earlier orders of this court in C.S.No.361 of 2004 and O.S.A.Nos.267 to 270 of 2004. (c) In the copy right registration application there is an indication that both the companies namely, appellant and first respondent are one and the same and as such the very registration is tainted with malafides. (d) When the sale deed of unregistered trade mark executed by Mr.V.M.Joseph in favour of the appellant on 30.11.2000 is considered in the face of the agreement dated 1.11.1996 between the appellant and the first respondent, serious doubt exist about the agreement dated 30.11.2000. 24. In view of the rival submissions at the Bar, the only question that falls for our consideration is whether the learned single Judge exercised the discretion properly and in accordance with the principles governing the grant of interlocutory injunction. 25. It is an admitted case of the parties that in the year 1989 Mr.V.M.Joseph established the company by name "Pioneer Bakeries Private Limited" in association with the second respondent, Mr.A.Arumugam and two others. In the year 1996, the appellant company was formed by Mr.V.M.Joseph along with Mr.Raja, the Managing Director of the Appellant Company and three others. Similarly in the year 1997 "Milka Nutriments Private Limited was also established. https://hcservices.ecourts.gov.in/hcservices/ 26. The first respondent herein applied for the trademark "MILKA" under No.513603B in respect of bread in class 30 and obtained the same under the provisions of the Trade and Merchandise Marks Act, 1958. Similarly the first respondent also obtained the registration of copy rights in the artistic work in the wrapper as per NO.5212 of 1992 in accordance with the provisions of the Copy Rights Act,1957. While so the first respondent found that M/s.New Star Food Products, Kerala were manufacturing and selling bakery products under the trade mark "MILKA". Therefore they filed C.S.No.891 of 1998 before this court against M/s.New Star Food Products for injunction. In the plaint in C.S.No.891 of 1998, the first respondent has stated that they are manufacturing breads under the trade mark "MILKA" and registered the trade mark "MILKA" in respect of bread in class 30. No where it is stated in the plaint that the registration of trade mark "MILKA" as per class 30 for bread covers cakes or other bakery products evident thereby that the first respondent has been manufacturing only breads and their registration was only in respect of breads. 27. The appellant also filed a suit against M/s New Star Food Products in C.S.No.896 of 1998 before this court