* IN THE HIGH COURT OF DELHI AT NEW DELHI + FAO(OS) 395/2002 ATLAS CYCLES (HARYANA) LTD. ..... Appellant through Mr. Sudhir Chandra, Sr. Adv., Mr. Rajeev Nayyar, Sr. Adv. with Mr. Sudhir Makkar & Ms. Meenakshi Singh, Advs. versus ATLAS PRODUCTS PVT. LTD. ..... Respondent through Mr. C.A. Sundaram, Sr. Adv. with Ms. Ekta Kapil & Mr. Sandeep Mahapatra, Advs. WITH + FAO(OS) 280/2003 ATLAS CYCLES (HARYANA) LTD. ..... Appellant through Mr. Sudhir Chandra, Sr. Adv., Mr. Rajeev Nayyar, Sr. Adv. with Mr. Sudhir Makkar & Ms. Meenakshi Singh, Advs. versus ATLAS PRODUCTS PVT. LTD. ..... Respondent through Mr. C.A. Sundaram, Sr. Adv. with Ms. Ekta Kapil & Mr. Sandeep Mahapatra, Advs. Date of Hearing: August 02, 2007 Date of Decision: August 08, 2007 CORAM: HON'BLE MR. JUSTICE VIKRAMAJIT SEN HON'BLE MR. JUSTICE S.L.BHAYANA 1. Whether Reporters of local papers may be allowed to see the Judgment. Yes FAO395/2002 Page 1 of 44 2. To be referred to the Reporter or not? Yes 3. Whether the judgment should be reported Yes in the Digest? : VIKRAMAJIT SEN, J 1. These two Appeals have been heard together as per the request of learned counsel for the parties. The Appellant is the Plaintiff; the Respondents in the Appeals are the Defendants in the Suit. FAO (OS) 395/2002 is directed against the decision of the Learned Single Judge in IA No. 4197/2002 in Suit No. 882/2002, passed on September 27, 2002. The operative part of the Order reads as follows:- “Consequently, I restrain the defendants from using the trade mark 'House of Atlas' or any other mark which may be deceptively similar to the plaintiff's trade mark 'Atlas', in respect of bicycles and bicycle parts till the disposal of the suit. However, there will be no injunction in respect of its user as the corporate name of the first defendant.” 2. FAO(OS) 280/2003 assails the Orders dated May 30, 2003 passed by the learned Single Judge in IA No. 9431/2002 in Suit No. 882/2002, of which the operative part reads as follows:- “11. The public notices issued by the respondent do not in any way give an impression to the public at large or their dealers that Court has permitted them to use FAO395/2002 Page 2 of 44 the word Atlas as their trade mark but it is a notice to the public that henceforth they will sell their goods under the trade mark Premier Gold manufactured by Atlas Products Pvt.Ltd, it being their corporate name. The public notice though do not carry that part of the order which was against the respondents, but it does not in any manner have any prejudicial effect on the plaintiff. 12. As the defendants have been permitted to use it as their corporate name and they are using the same as their corporate name only and not as a trade name no fresh orders are to the contrary required to be passed on this application, defendants being already under injunction from using the trade mark “Atlas” of course with the explicit permission to use it as their corporate name. The application is disposed of accordingly.” FACTS AND CONTENTIONS 3. Mr. Sudhir Chandra, learned Senior counsel appearing for the Plaintiffs has submitted that the trade mark “Atlas” has been registered in favour of the Plaintiff since 1952. The Plaintiff asserts that it has over a quarter of the market share in the sale of cycles in India. It is not in dispute that Defendant No.1, namely, Atlas Products Pvt. Ltd. was incorporated under the FAO395/2002 Page 3 of 44 Companies Act in 1995. It is also not in dispute that Defendant No.1 had commenced the manufacture of cycles in February 2002. According to the Plaintiffs, immediately upon learning of this event, they filed Suit No. 882/2002 praying for a permanent injunction restraining infringement of trade mark, infringement of copyright, rendition of accounts of profit, delivery-up etc. Mr. Chandra submits that it is the Plaintiff's case that prior to 2002 the Defendant No.1 was not engaged in any cycle-related business and that being so, the Plaintiffs found no reason or cause to object to the use of the word “Atlas” in the corporate or trade name. It is only when the manufacture of cycles by the Defendant, under the trade mark “House of Atlas” commenced and was learnt of by the Plaintiffs in early 2002 that the compulsion to file the subject Suit had arisen. Mr.Chandra has further submitted that the learned Single Judge had erred in coming to the conclusion that the Plaintiff had acquiesced in the Defendant's inclusion of “Atlas” in its corporate name. Even if some agreement had been reached between the three branches of the family, it could not be foisted on the Plaintiff which is a separate and distinct legal entity. He argues that the relevant date for reckoning whether there was any acquiescence and knowledge on the part of the Plaintiff is February 2002, the FAO395/2002 Page 4 of 44 month in which manufacture of cycles was started by the Defendants and, therefore, inasmuch as the present Suit was filed in April 2002 it cannot possibly be held that there was any delay or acquiescence on the part of the Plaintiff. It is primarily on similar lines that Mr.Chandra has also contended that the learned Single Judge fell into an error, which has far-reaching consequences to the Plaintiffs, in concluding that the Defendant's conduct was not dishonest in adopting “Atlas” in the corporate name or trade mark. He has vehemently argued that if February 2002 is taken as the appropriate date for the purposes of the present litigation then there is no scope for holding that there was open and concurrent user such as would disentitle the Plaintiff from seeking an injunction against the Defendants even in respect of its corporate name. Mr.Rajiv Nayyar, learned Senior counsel, who also appears on behalf of the Plaintiffs has reiterated this factual matrix. 4. Mr. Chetpat Aryama Sundaram, learned Senior Counsel appearing on behalf of the Defendants/Respondents, has emphasized upon the fact that the Defendants have not filed any Appeal against the Order of the learned Single Judge and that they are not violating those Orders. He has underscored that FAO395/2002 Page 5 of 44 the Defendant has adopted the corporate name Atlas Products Pvt. Ltd. since August, 1995 without any demur or remonstration from the Plaintiff. According to him, a perusal of the prayer contained in the Plaint would amplify that no challenge had been laid to the Defendant's corporate name, so long as it was not employed in respect of bicycle and bicycle parts or in any other manner which would result in infringing the Plaintiff's trade mark. He has relied on the Memorandum of Understanding dated 8th January, 1999, executed between the three groups of the corporate family. Our attention has been drawn to the second recital thereof which speaks of “growth of family during the subsistence of complete amity between all members of the family”. After taking note of the growth of the family, it records that “it is considered prudent to split the ownership management and/or control of the companies and the assets in three equal shares and to allot each share to the three units of the family”. He has relied on Clause 2 of the MoU which contemplates the division of the assets in three equal lots in such a manner that one cycle unit falls to the share of each of the three groups, each cycle unit being more or less equal. In response to an Objection taken on behalf of the Plaintiffs, he has further relied on the Minutes of the Meeting of the Board of FAO395/2002 Page 6 of 44 Directors of the Plaintiff held in the family home of the Kapurs on 30.8.2000 whereat the Board took note of the MoU entered into between the three families; and Order passed by the Arbitrator on 28-8-2000. Mr.Sundaram contends that a reading of the Minutes leaves no scope for arguing that the MoU had been entered into between the three branches of the Kapoor family, the terms of which are not binding on the Plaintiff, which is a duly incorporated company and thus an independent and distinct legal entity. He has also read the Replication filed in the Suit which according to him makes portions of it abundantly clear that the Plaintiff had full knowledge of the arbitration between the three families. Furthermore, he has argued that there are other family companies which have also used the word name “Atlas” in their corporate names, without any demur or objection from the Plaintiffs. The Memorandum of Association of Atlas Exim Private Limited, incorporated in May 1994, is available on the records and in its Objects III (C) 5 and 38 'cycle and cycle parts' is mentioned. Reference has also been made to Atlas Global Private Limited of which business of “bicycles and accessories” is one of the main objects. Mr. Sundaram further contends that once it is found that the Plaintiffs have not objected to the Defendant's corporate name, then the normal incidence of FAO395/2002 Page 7 of 44 such a name must be freely allowed. Reliance has also been placed on Standards of Weights and Measures Act, 1976 which requires the name of the manufacturer to be clearly mentioned on each product. It would, therefore, be inequitable and unfair to prohibit the Defendant from functioning in their corporate name after several years of its existence. Reliance has also been placed on Section 22 of the Companies Act, 1956 which was introduced by Act 47 of 1999, setting down a limitation of five years within which any interested party can launch an attack on the use of any particular corporate name keeping the Trade Marks Act, 1999 in the background. SCOPE OF APPELLATE INTERFERENCE IN INTERLOCUTORY ORDERS 5. We would be committing a grievous and unpardonable error if we fail to keep in mind that it is an interim Order which is under challenge before us. Interim Orders are always subject to change or modification at the final stage of the suits. The ambit of interference by appellate Courts has been succinctly demarcated in the following passage from U.P. Coop. Federation Ltd. -vs- Sunder Bros., AIR 1967 SC 249: “8. It is well established that where the discretion vested in the court under Section 34 of the Indian FAO395/2002 Page 8 of 44 Arbitration Act has been exercised by the lower court the appellate court should be slow to interfere with the exercise of that discretion. In dealing with the matter raised before it at the appellate stage the appellate court would normally not be justified in interfering with the exercise of the discretion under appeal solely on the ground that it had considered the matter at the trial stage it may have come to a contrary conclusion. If the discretion has been exercised by the trial court reasonably and in a judicial manner the fact that the appellate court would have taken a different view may not justify interference with the trial court's exercise of discretion. As is often said, it is ordinarily not open to the appellate court to substitute its own exercise of discretion for that of the trial Judge; but if it appears to the appellate court that in exercising its discretion the trial court has acted unreasonably or capriciously or has ignored relevant facts then it would certainly be open to the appellate court to interfere with the trial court's exercise of discretion. This principle is well established; but, as has been observed by Viscount Simon, L.C., in Charles Osenton & Co. v. Johnston, AC at p. 138: 'The law as to the reversal by a court of appeal of an order made by a Judge below in the exercise of his discretion is well established, and any difficulty that arises is due only to the application of well-settled principles in an individual case'.” This passage has been reiterated in Manjunath Anandappa URF Shivappa Hanasi, (2003) 10 SCC 390. FAO395/2002 Page 9 of 44 6. In Wander Ltd. -vs- Antox India P. Ltd., 1990 (Supp) Supreme Court Cases 727 their Lordships had analysed the powers of the Appellate Court in such matters as follows - “The appellate court will not interfere with the exercise of discretion of the court of first instance and substitute its own discretion except where the discretion has been shown to have been exercised arbitrarily, or capriciously or perversely or where the court had ignored the settled principles of law regulating grant or refusal of interlocutory injunctions. An appeal against exercise of discretion is said to be an appeal on principle. Appellate court will not reassess the material and seek to reach a conclusion different from the one reached by the court below if the one reached by that court was reasonably possible on the material. The appellate court would normally not be justified in interfering with the exercise of discretion under appeal solely on the ground that if it had considered the matter at the trial stage it would have come to a contrary conclusion. If the discretion has been exercised by the trial court reasonably and in a judicial manner the fact that the appellate court would have taken a different view may not justify interference with the trial court's exercise of discretion”. This decision has been followed very recently in Seema Arshad Zaheer -vs- Municipal Corpn. of Greater Mumbai, (2006) 5 SCC FAO395/2002 Page 10 of 44 282. The City Civil Court had granted a temporary injunction against the Corporation which was challenged before the Bombay High Court. Speaking for the Bench His Lordship R.V. Raveendran made the following pithy observations:- 32. Where the lower court acts arbitrarily, capriciously or perversely in the exercise of its discretion, the appellate court will interfere. Exercise of discretion by granting a temporary injunction when there is “no material”, or refusing to grant a temporary injunction by ignoring the relevant documents produced, are instances of action which are termed as arbitrary, capricious or perverse. When we refer to acting on “no material” (similar to “no evidence”), we refer not only to cases where there is total dearth of material, but also to cases where there is no relevant material or where the material, taken as a whole, it is not reasonably capable of supporting the exercise of discretion. In this case, there was “no material” to make out a prima facie case and therefore, the High Court in its appellate jurisdiction, was justified in interfering in the matter and vacating the temporary injunction granted by the trial court. 7. Very recently in Ramdev Food Products (P) Ltd. -vs- Arvindbhai Rambhai Patel, (2006) 8 SCC 726 : AIR 2006 SC 3304 : 2006(2) CTMR 1(SC) the Supreme Court has taken into consideration both Wander Ltd. and Seema Arshad Zaheer. FAO395/2002 Page 11 of 44 His Lordship, S.B. Sinha, J., has perspicuously dealt with this issue in these words: The grant of an interlocutory injunction is in exercise of discretionary power and hence, the appellate courts will usually not interfere with it. However, the appellate courts will substitute their discretion if they find that discretion has been exercised arbitrarily, capriciously, perversely, or where the court has ignored the settled principles of law regulating the grant or refusal of interlocutory injunctions. This principle has been stated by this Court time and time again. [See for example Wander Ltd. v. Antox India P. Ltd., 1990 (Supp) Supreme Court Cases 727, Laxmikant V. Patel v. Chetanbhai Shah, (2002) 3 SCC 65 and Seema Arshad Zaheer -vs- Municipal Corpn. of Greater Mumbai, (2006) 5 SCC 282]. The appellate court may not reassess the material and seek to reach a conclusion different from the one reached by the court below if the one reached by that court was reasonably possible on the material. The appellate court would normally not be justified in interfering with the exercise of discretion under appeal solely on the ground that if it had considered the matter at the trial stage it would have come to a contrary conclusion. However, in this case the courts below proceeded on a prima facie misconstruction of documents. They adopted and applied wrong standards. We, therefore, are FAO395/2002 Page 12 of 44 of the opinion that a case for interference has been made out. 8. The operative part of the impugned Order dated 27.9.2002 has been reproduced above. The Defendants have not challenged the Order and it, therefore, attains ad interim finality till such time as it is altered. FAO(OS) No.395/2002 challenges the refusal to pass an injunction in respect of the corporate name of Defendant No.1. We have to satisfy ourselves that, keeping in perspective the material available before the learned Single Judge, he had exercised his discretion to grant an ad interim injunction in a manner which cannot be labelled as arbitrary or capricious or perverse, or in ignorance of or contrary to the settled principles of law regulating the grant or refusal of interlocutory injunctions. In this regard, the learned Single Judge had compared the two trade marks as a whole and found a deceptive resemblance between the Plaintiff's mark “Atlas” and the Defendant's mark “House of Atlas” and accordingly concluded that the Defendant should be restrained from using the offending trade mark “House of Atlas”. The Trial Court had also returned the finding that so far as the offending mark was concerned the plea of acquiescence had not been made out. This FAO395/2002 Page 13 of 44 portion of the verdict has not been challenged by the Defendant, but we are adverting to it in order to highlight the clear segregation of the two aspects, namely, trade mark on the one hand and trade name and corporate name on the other, was ever present in the mind of the Trial Court. The violation to the trade name was found to have arisen in 2002 [and this is not in debate at all]. However, dealing with the trade or corporate name the learned Single Judge took note of the incorporation of Defendant No.1 on 21.8.1995. On the basis of the material before him the learned Single Judge came to the prima facie conclusion that the Kapoor family, under whose umbrella the Plaintiff No.1 falls, had knowledge of the incorporation of Defendant No.1. LEGAL REGIME FOR COMPETING USER OF TRADE MARKS AND TRADE NAMES 9. We shall first analyse what the law is on the subject of corporate name or trade name. This has been recently expounded by the Supreme Court in Ramdev which is the Restatement of the law on this complex nodus. A partnership, presumably of a patriarch and his three sons, was transacting business in the name and style of Ramdev FAO395/2002 Page 14 of 44 Masala Stores and was the owner of the trade mark Ramdev masala. The partnership later on reconstituted and incorporated itself into Ramdev Food Products Pvt. Ltd. to which the trade mark together with the goodwill was eventually assigned. The firm was dissolved in November, 1991, but the three brothers continued to partake in the spice/masala business through firms named Ramdev Exports and Ramdev Masala which transacted retail sale including trading through seven outlets/stores. A 'User agreement' was executed permitting the said firm to use the trade mark, subject to certain conditions, till 31.3.1998. On the inevitable outbreak of disputes between the three brothers differences were attempted to be resolved between them on terms reduced into a Memorandum of Understanding. These terms principally were that the Respondents were permitted to sell products of the Plaintiff through their retail outlets. The rapprochement proved to be stillborn as evidenced by the filing of a civil suit by the Company against the others, which was substantially decreed. The Trial Court held that the Plaintiff Company was the owner of the trade mark; the Defendants could not be permitted to start manufacturing and marketing spices/masalas via a deceptively similar trade FAO395/2002 Page 15 of 44 mark as it would create confusion in the minds of the consumers. However, the Defendants were granted liberty to manufacture spices/masalas in their factory and sell them in the seven outlets under the trade mark 'Ramdev Masala'. However, the Defendants were not permitted to employ the words “Ramdev Masala” on the packaging of their goods marketed under the mark 'Swad', as the packaging would become deceptively similar and hence infringe the Plaintiff's trade mark 'Ramdev Masala'. It was the last finding of the Trial Court that was reversed by the High Court. This was so held also for the reason that statutory requirements had to be complied with, but it was clarified that the principal display panel would state “Swad”, and “Ramdev Masala” could only be written on the bottom of the reverse side. 10. The Supreme Court affirmed the finding that the Memorandum of Understanding did not bestow any manufacturing rights on Arvindbhai (Defendant) and the trade mark belonged exclusively to the Company. After analysing the characteristics of trade marks and acquiescence, and the principles of interpretation of documents in the context of the Memorandum of Understanding, their FAO395/2002 Page 16 of 44 Lordships directed that - ORIGINAL 134. We, in view of our findings aforementioned, direct: (i) The respondents be restrained from using the trade mark including the trade name 'Ramdev Masala' in any of their products. (ii) They may, however, carry on their business in any other name insofar as manufacturing of spices is concerned. (iii) The appellant shall, as and when demands are made, supply spices produced by it for retail sale thereof to several outlets belonging to respondents on usual terms, and in respect of such articles on the labels/pouches, on the reverse thereof, the following shall be mentioned in the minimum permissible size in terms of the provisions of Weights and Measures Act and Prevention of Food Adulteration Act: “This product is manufactured and marketed by M/s. Ramdev Masala (Arvindbhai Group) (Or M/s. Ramdev Exports Arvindbhai Group) having no relationship whatsoever with Ramdev Food Products Pvt. Ltd.” (iv) The appellant shall deposit a sum of Rs. 50 lakhs before the Trial Court or furnish a bank guarantee for the said sum by way of security. (v) Despite pending applications for rectification before the Registrar of Trade Marks, the final hearing of Civil Suit No.828 of 2000 shall be expedited and the learned Trial Judge is hereby directed to complete the hearing as expeditiously as possible preferably within a period of six months from the date of communication of this order. AFTER REVIEW 132. We, in view of our findings aforementioned, direct: (i) The respondents be restrained from using the trade mark including the trade name “Ramdev Masala” in any of their products. (ii) They may, however, carry on their business in any other name insofar as manufacturing of spices is concerned and in respect of such articles on the labels/pouches on the reverse thereof, the following shall be mentioned in the minimum permissible size in terms of the provisions of the Standards of Weights and Measures Act and the Prevention of Food Adulteration Act: 'This product is manufactured and marketed by M/s. Ramdev Masala (Arvindbhai Group) having no relationship whatsoever with Ramdev Food Products Pvt. Ltd.' (iii) The appellant shall, as and when demands are made, supply spices produced by it for retail sale thereof from the seven outlets belonging to Respondent 7 on usual terms. (iv) The appellant shall deposit a sum of Rs. 50 lakhs before the Trial Court or furnish a bank guarantee for the said sum by way of security. (v) Despite pending applications for rectification before the Registrar of Trade Marks, the final hearing of Civil Suit No.828 of 2000 shall be expedited and the learned Trial Judge is hereby directed to complete the hearing as expeditiously as possible preferably within a period of six months from the date of communication of this order. FAO395/2002 Page 17 of 44 11. Their Lordships expounded