1 IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION NOTICE OF MOTION NO.2602 OF 2009 IN SUIT NO.1840 OF 2009 J.D.Bytco Cosmetics Pvt.Ltd. .. Plaintiff Versus Mona Cosmetics Pvt.Ltd. & Ors. .. Defendants Mr.Virag Tulzapurkar, Senior Advocate with Mr.Puranik i/b. Puranik & Co. for plaintiff Mr.Ramchand C. Makhija for defendant No.1 Mr.Sanjay Kher for defendant Nos. 2, to 4. CORAM : S.C.DHARMADHIKARI, J. DATE : 27th August 2009. P.C.: 1] Heard Mr.Tulzapurkar, learned Senior Counsel for plaintiffs and Mr.Makhija for defendant No.1 (contesting defendant). Perused the affidavit filed on behalf of first defendant. Mr.Tulzapurkar states that at this ad-interim stage he would proceed on the basis of denials. 2] First preliminary objection of defendant No.1 is that there is an Arbitration Agreement between parties and, therefore, the suit is not maintainable. An affidavit is filed by the first defendant in which reliance is placed on clause 27 of the Agreement dated 15th August 1997 (Exh.D-1). 2 3] From a reading of this agreement and the affidavits, it is apparent that the same is between the plaintiffs and the first defendant. However, the suit is filed not only against defendant No.1 but other defendants. The plaint averments are that the first defendant is, without consent of plaintiffs, unauthorisedly and illegally manufacturing and selling the product (tooth powder) under plaintiffs’ Registered Trade Mark. Defendant Nos. 2 to 4 are distributors, dealers and marketeers. Thus, the conditions of section 8 of the Arbitration and Conciliation Act, 1996, vizl., not only the parties but the whole subject matter should be capable of being resolved by Arbitration are not satisfied. This subject matter of the suit read in the backdrop of the Arbitration Agreement and considering the parties to the same cannot be said to be capable of being resolved by the Arbitration. The first objection of defendant No.1 is thus over-ruled. 4] The second objection is with regard to territorial jurisdiction of this Court. However, from a reading of the plaint averments, it is apparent that they satisfy the section 154 and more particularly sub-section 2 of the Trademarks Act, 1999. There is no substance in that objection as well. 5] Mr.Tulzapurkar has taken me through the plaint and the annexures and more particularly the agreement, a copy of which is annexed as Exh.D-1 to the plaint. The Agreement itself describes the plaintiffs as Proprietors. The parties state that it would be possible for them to have effective control over the quality of tooth powder bearing the trade mark 3 to be manufactured and sold by the users as Directors of the proprietors’ company are closely related to the Directors of the Users Company. It is on these terms that a licence has been granted under this Agreement for a period of 40 years as per clause 13, subject to it being terminated. 6] Clause 3 reads as under:- “3. For the aforesaid purposes the users shall, as and when the proprietors may require, permit Shri Natwarlal Hiralal Chauhan and the Proprietor’s directors, servants or agents to inspect the method of manufacturing the said goods, quality and specification of materials used in the manufacture of the said goods and the finished products, test the samples thereof and to ascertain whether the standards prescribed by the Proprietors are complied with or not and report the same to the said director and his report shall be final and binding upon both the parties.” 7] It was pointed out by the plaintiffs specifically that one Natwarlal Hiralal Chauhan who was associated with the plaintiffs as also the first defendant, in his capacity as Director has ceased to be so associated. It is, therefore, not possible for plaintiffs to exercise effective control. In these circumstances, the plaintiffs desire to put an end to the agreement. They terminated it on 24th July 2008. 4 8] The first defendant by a reply dated 16th October 2008 and prior thereto by letter dated 8th August 2008 asserted that there is a distinction between the ownership of the trademark and association of Mr.Natwarlal Chauhan. His association or dis-association has no relationship with the user under the Agreement and, therefore, they insisted that the agreement subsists and they would continue with the same by manufacturing and selling the products. In fact, while not disputing dis-association of Mr.Natwarlal Chauhan, what the first defendant have contended is that they would have no objection if any other Directors or duly authorised agents or servants of the plaintiffs inspect the factory as also exercise control, contemplated under the Agreement. The entire reply that has been filed is based upon the contents of these letters, a copies of which are annexed as Exh.F and G to the plaint. A perusal of the entire correspondence would, therefore, reveal that the plaintiffs’ rights in the trademark are prima facie undisputed. Secondly, what the first defendants are manufacturing is an identical product and by using the same trademark. The labels which are annexed to the plaint and more particularly at page 112 would reflect this position. 9] Considering the abovementioned undisputed facts so also the plaint averments pointing towards infringement of the trademark, after termination of the licence, in my view, ad-interim reliefs need to be granted. More so, when on the last occasion I had indicated to Mr.Makhija appearing for first defendant that the Court may give time to 5 first defendant to dispose of the stock of finished goods so that their apprehension that they will be immediately out of the market can be taken care of. Mr.Makhija states that there is a stock of finished goods but what is more relevant is the raw material and that raw material, according to him, is only capable of being utilised to manufacture Bytco black tooth powder as per the specifications supplied by the plaintiffs. That entire stock would be wasted. Mr.Tulzapurkar, learned Senior Counsel appearing for plaintiffs, on instructions makes a statement that the first defendant can have reasonable time to dispose of the existing stocks which are meagre and worth only Rs.2.5 lakhs and the raw material can be utilised by them for manufacturing tooth powder. The condition is that, they should not use the mark of the plaintiffs but trade in some other name or by using some other mark. However, this arrangement is not acceptable to first defendant. 10] Having found that a strong prima facie case is made out and balance of convenience is also in favour of plaintiffs as in the absence of effective and proper control, products that are being manufactured and sold by the first defendant would have adverse effect on the reputation of plaintiffs so also the element of irreparable harm and injury being made out, there will be an ad-interim order in terms of prayer clause (a) of the motion. Defendants waive service. 11] At this stage Mr.Makhija after taking instructions from the first defendant, requests that the operation of the order passed today be stayed 6 for a period of two months to enable first defendant to dispose of the existing stock of finished goods. These stocks are lying at the factory premises of first defendant at Indore, State of Madhya Pradesh. Considering the peculiar facts, since the statement is being made by the first defendant before this Court that he would dispose of the stock of finished goods within this period, it is directed that the order passed today shall remain suspended for a period of eight weeks, only to the extent of enabling the first defendant to dispose off the stocks of finished goods lying in the factory premises of first defendant at Indore, M.P. This will be on the condition that the first defendant shall not manufacture the products in question by utilising or using the trade marks of the plaintiffs. (S.C.DHARMADHIKARI, J)