IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE PIUS C.KURIAKOSE TUESDAY, THE 11TH MAY 2010 / 21ST VAISAKHA 1932 RFA.No. 371 of 2007() --------------------- OS.3/2005 of DISTRICT COURT, KOTTAYAM .................... (S): APPELLANTS/DEFENDANTS 1 TO 4: ------------------------------------------------- 1. NIRAPARA ROLLER FLOUR MILLS PVT. LTD., INDUSTRIAL NAGAR, CHANGANACHERRY,KOTTAYAM DISTRICT REPRESENTED BY ITS MANAGING DIRECTOR,XAVIER CHACKO 2. XAVIER CHACKO, S/O. CHACKO, MANAGING DIRECTOR, NIRAPARA ROLLER FLOUR MILLS PVT LTD., CHANGANACHERRY, KOTTAYAM DISTRICT. 3. ROSAMMA XAVIER, W/O. XAVIER CHACKO, ADDL.DIRECTOR,NIRAPARA FLOUR MILLS PVT LTD., CHANGANACHERRY, KOTTAYAM DISTRICT. 4. SUNITHA JOSE, W/O. P.F. JOSEPH, ADDL.DIRECTOR,NIRAPARA FLOUR MILLS PVT LTD., CHANGANACHERRY, KOTTAYAM DISTRICT. BY ADV. SRI.T.KRISHNANUNNI, SENIOR ADVOCATE SRI.VIZZY GEORGE KOKKAT SRI.ARAVINDA KUMAR BABU T.K. SRI.V.BOVAN CHERIAN VARKEY SMT.LINA ACCA MATHEW SRI.SURIN GEORGE IPE SRI.C.HARIKUMAR RESPONDENT(S): PLAINTIFF 1 TO 5: -------------------------------- 1. AMMINI KARNAN, PROPRIETRIX, K.K.R. MILLS, OKKAL, KALADY, ERNAKULAM. 2. BIJU KARNAN, PROPRIETOR, K.K.R. FLOUR MILLS, OKKAL, KALADY, ERNAKULAM. 3. K.K.R. AGRO MILLS PVT. LTD., HAVING ITS REGD. OFFICE AT OKKAL, KALADY, REPRESENTED BY ITS DIRECTOR, K.K. KARNAN. 4. K.K.R. FOOD PRODUCTS, A REGISTERED PARTNERSHIP FIRM, HAVING OFFICE AT KALADY, ERNAKULAM DISTRICT, REP. BY ITS MANAGING PARTNER, K.K. KARNAN. 5. S.N. FOOD PRODUCTS, A REGISTERED PARTNERSHIP FIRM, HAVING OFFICE AT KALADY, ERNAKULAM DISTRICT, REP. BY ITS MANAGING PARTNER, K.K.KARNAN. ADV. SMT.V.P.SEEMANDINI, SENIOR ADVOCATE FOR R1 TO 5 SRI.ALEX GEORGE FOR R1 TO 5 SRI.GEORGE ZACHARIAH ERUTHICKEL FOR R1 TO 5 SRI.KOSHY GEORGE FOR R1 TO 5 THIS REGULAR FIRST APPEAL HAVING BEEN FINALLY HEARD ON 29/01/09, THE COURT ON 11/05/2010 PASSED THE FOLLOWING: ORDER ON I.A.NO.2677/07, IN F.A.O.NO.371/2007 DISMISSED. 11.5.2010 SD/- PIUS C.KURIAKOSE, JUDGE. PIUS C. KURIAKOSE, J. ------------------------------------------ RFA. No. 371 of 2007 ------------------------------------------- Dated this the 11th day of May, 2010 J U D G M E N T The defendants in a passing off action aggrieved by the decree of the District Court, Kottayam restraining them from manufacturing, marketing, distributing or displaying any products by displaying the trade mark “Nirapara and Device” and trade name and brand name “Nirapara” or any other brand name identical, similar or deceptively similar to the trade mark of the respondent plaintiff have preferred this appeal. The parties will be referred to as they were before the District Court. 2. In brief, the case of the plaintiff as pleaded was that the first plaintiff Ammini Karnan who is the mother of the second plaintiff Biju Karnan is the proprietrix of K.K.R. Mills and the second plaintiff Biju Karnan is the proprietor of K.K.R. Flour Mills. The third plaintiff K.K.R. Agro Mills (P) RFA. 371 of 2007 - 2 - Ltd. is a company of which the Directors are K.K. Karnan, husband of the first plaintiff and father of the second plaintiff as well as plaintiffs 1 and 2. Plaintiffs 4 and 5 M/s, K.K.R, Food products and S.N.Food Products respectively are two registered partnership firms of which Sri.K.K.Karnan is the Managing Partner. The first defendant (the first appellant) Nirapara Roller Flour Mills (P) Ltd. was originally incorporated as a company under the Companies Act under the name South Kerala Food Processors (P) Ltd. It was later that the name was changed to the present name Nirapara Roller Flour Mills (P) Ltd. The second defendant Xavier Chacko is the Managing Director and the third defendant Rosamma Xavier and the 4th defendant Sunitha Jose are the Directors of the first defendant Company. The first plaintiff is the Proprietrix of the trade mark “Nirapara and Device” and plaintiffs 2 to 5 are using the said trade mark as assigned by the first plaintiff. The trade mark of RFA. 371 of 2007 - 3 - the plaintiffs “Nirapara” shows a para filled with paddy and inflorescence of coconut tree in its middle and two paddy shoots at both sides of the para. The general public, customers and consumers have accepted this trade mark as the trade mark of the plaintiffs' products. This is printed upon all packets, jute bags etc. of plaintiffs' products as well as their advertisements. The plaintiffs are manufacturers of rice, rice products, rice flours for various dishes like puttupodi, idiyappom podi, iddali podi, dosa podi, appom podi, palappam podi etc. Sri. K.K.Karnan started business in paddy, rice and rice products in the name and style K.K.Karnan and Company in 1977. His brother K.K.Padmanabhan joined as a partners in the business. Sri.Karnan was doing the business with trade mark “Nirapara” and Sri.Karnan honestly adopted the trade mark “Nirapara and Device” and dissolved the partnership with Sri.K.K.Padmanabhan and continued business with the same RFA. 371 of 2007 - 4 - trade mark “Nirapara and Device” under the new name S.N.Rice Mills Ltd. by inducting his wife Ammini Karnan as partner. The plaintiffs' products are popularly known with the name Nirapara and Device. Nirapara has become the trade name and brand name of plaintiffs' products. The plaintiffs' products are all of superior quality. They are sold in various parts of Kerala and all other States in India. They are marketed in foreign countries also. Because of their high quality and purity, plaintiffs' products popularly called as Nirapara products are purchased by customers. The trade mark itself is attracting customers for buying various products of the plaintiff. It was the plaintiff who first started to use the trade mark and trade name “Nirapara”. The word Nirapara has become the trade name and brand name of the plaintiffs' products. The plaintiffs are enjoying high reputation and goodwill in respect of their products which are being identified by the trade mark “Nirapara and RFA. 371 of 2007 - 5 - Device”. No one has the right to use the trade mark “Nirapara” without the knowledge and assignment from the first plaintiff. The plaintiffs have expended heavily for advertising their products through various media both in India and abroad. The volume of business of the plaintiffs is increasing every year. The plaintiffs have acquired right over trade mark “Nirapara and Device” and the trade name and brand name “Nirapara” belongs absolutely to the plaintiffs. 3. The plaint alleges that the first defendant has started business of rice, rice flours and the various dishes like dosappodi, puttupodi etc. in order to take advantage of the popularity, reputation and goodwill enjoyed by the plaintiffs and their products. Even the change of name was with this objective. The defendants are now using the trade mark and trade name identical, similar and deceptively similar to that of the plaintiffs' trade mark “Nirapara and RFA. 371 of 2007 - 6 - Device”. The defendants are creating confusion among the general public and customers. The public and customers are being deceived by the defendants' using of the name and trade mark which is deceptively similar to that of the plaintiffs. The plaintiffs' trade mark has got registration from the Government of Behrain and Dubai and process for registration is in progress in other countries also. The plaintiffs' application for registration of the trade mark is pending with the office of the Registrar of Trade Marks, Chennai. The plaintiffs' trade mark is distinctive and it distinguishes plaintiffs' products from similar products manufactured by others including the products of the defendants. The defendants intention is to pass off their products as that of the plaintiffs. For this the defendants are using the trade mark of a Para filled with flour and two cereal like shoots at both ends as their trade mark. The defendants are also using the name “Nirapara”. The trade RFA. 371 of 2007 - 7 - mark and name used by the defendants is identical to that of the plaintiffs. The intention of the defendants is mala fide. Even though the first defendant applied for registration under clause 30 before the Trade Mark Registry, Chennai the application was opposed by the plaintiffs and the registering authority dismissed the application by their order dated 7-3-2005. The defendants have absolutely no authority to use the trade mark and trade name of the plaintiffs. The defendants' act is illegal. The plaintiffs are suffering heavy loss because of the defendants' activities. Unless this illegal activities are prevented, the loss to the plaintiffs will be heavier. Hence the suit. 4. It was a joint written statement which was filed by the defendants. It was contended that the suit is not maintainable. In view of the allegation that K.K.Karnan executed an assignment deed selling the entire right of the unregistered trade mark “Nirapara and Device” along with RFA. 371 of 2007 - 8 - the goodwill to Smt.Ammini Karnan for an amount of Rs.1000/- Sri.Karnan has no locus standi to institute the suit against the defendants. The South Kerala Food Processors Pvt. Ltd. was registered as a private limited company on 12- 4-1988. In the year 1995 the Directors of that company passed a resolution in terms of Section 21 of the Companies Act changing the name of the company as Nirapara Roller Flour Mills Pvt. Ltd. From the year 1988 onwards the first defendant company is carrying on the business of operating flour mills for wheat, rice or other grains and deal in such products of grains. One of the main object of the company is to manufacture, produce, process, purchase, store, import and also deal in food products out of wheat, paddy, rice, barley etc. Ever since the incorporation of the company they have honestly adopted the trade mark “Nirapara” since 1990 for its business. To the defendants' knowledge no one is using a similar trade mark in respect of RFA. 371 of 2007 - 9 - wheat products such as maida, sooji and aatta. The defendants have been using the trade mark continuously, extensively and with bonafides ever since 25-3-1990 in respect of the above products. Because of this continuous and extensive use, the defendants have obtained a very high reputation. The defendants' trade mark has become exclusively associated with the products of the defendants' company since 1991. The first defendant company filed an application before the Registrar of Trade Marks in the name of South Kerala Food Processors for registration of the word “Nirapara” brand with a device of corn and container full of flour in respect of wheat products such as maida, sooji, aatta, bran and bran flakes. The above application was numbered as 543880 under clause 30. The application was accepted by amending the goods such as maida, sooji and aatta with disclaimer of word bran device of corn and device of container full of flour. The application submitted by the RFA. 371 of 2007 - 10 - defendants was advertised as accepted in the Trade Mark Journal dated 1-7-1996. Though the opposition filed by the first plaintiff was upheld by the registering authority, the defendants have preferred appeal before the Intellectual Property Appellate Board and the matter has not become final. The defendants have also filed an application for registration of its trade mark Nirapara brand under clause 31 for registering its products with respect to the production and marketing of bran, bran flakes, cattle and poultry feeds. The Registrar of Trade Mark issued a certificate of registration of trade mark for the trade name and device Nirapara brand. The defendant company is the owner of trade mark Nirapara brand and the company is enjoying the rights conferred by registration as per the the provisions of the Trade Mark Act. The registered owner of the trade mark has the exclusive right to use the trade mark in relation to the goods in respect of which the trade mark is registered. RFA. 371 of 2007 - 11 - Because of the continuous use of the trade mark Nirapara since 1990 it has attained very high reputation and has become exclusively associated with the aforesaid goods of the company. Because of the superior quality of the goods and marketing skills, the defendant company became very popular and the trade name with its device Nirapara became distinctive of its goods. The plaintiffs never obtained a registration for the trade mark Nirapara either under clause 30 or clause 31. From the affidavit filed before the Registrar of Trade Marks it is clear that the plaintiffs have no right over the trade mark. The trade mark “Nirapara” was not adopted by the plaintiffs as alleged in the plaint. The agreement dated 27-6-1977 alleged to have been executed between K.K.Karnan and K.K.Padmanabhan reveals the fact that the firm name for marketing their rice products was K.K.Karnan and Company. The plaintiffs have no case of adoption of the disputed trade mark with respect to the RFA. 371 of 2007 - 12 - defendants' products viz., maida, aatta and sooji. They are also not making any claim over any of the goods mentioned in clause 31 of the Trade Mark Rules pertaining to bran, bran flakes, cattle and poultry feeds. Even as per the allegations in the plaint adoption of the disputed trade mark by their establishment has reached a stage of fragmentation. The plaintiffs have no right over the trade mark “Nirapara”. They have not established that the disputed trade name Nirapara was being used with respect to the goods mentioned therein. The trade mark Nirapara has become distinctive and distinguished with the defendants' products. The defendants have never taken advantage of the popularity and reputation or goodwill enjoyed by the plaintiffs. Even though the trade mark and trade name used by the plaintiffs may be identical and similar to that of the defendants, they have no mala fide intention to pass off their products as that of the plaintiffs RFA. 371 of 2007 - 13 - by deceiving and confusing the general public and customers. In 1996 itself plaintiffs were aware of the use of the trade name Nirapara by the defendants. Even though a lawyer notice was issued to the defendants regarding this no action was taken in pursuance of that notice. The plaintiffs are therefore guilty of acquiescence and they are not entitled for a discretionary relief of injunction. At this stage the plaintiffs are not entitled to initiate any action. No explanation is given by the plaintiffs for the inordinate delay of 9 years in filing the suit, especially when the defendants have been, in the market for more than 15 years and the defendants sales have gone up to crores of rupees. The first defendant's company's name was changed with the approval of the registrar of companies. The plaintiffs who were aware of this change of name did not take any action under section 20 of the Companies Act. The first defendant company is having an independent entity and reputation in RFA. 371 of 2007 - 14 - the market with large number of customers. The suit is liable to be dismissed. 5. On the basis of the above pleadings the learned District Judge raised the following issues for trial. 1. Whether the suit is maintainable? 2. Whether the plaintiffs are the prior users of an unregistered trade mark “Nirapara”? 3. Whether the plaintiffs are entitled to the injunction? 6. At trial the evidence on the side of the plaintiffs consisted of the oral testimonies of PW-1 to PW-8 and documents Exts.A1 to A49 apart from X-1 and X-2. On the side of the defendants the solitary witness was DW-1 and documents B-1 to B-35(A) were marked. The learned District Judge considered issue No.1 first. It was noticed that though it is contended in the written statement that the suit is not maintainable, the defendants have not shown or explained as to how the suit is not maintainable. The District Judge assumed that the contention regarding maintainability RFA. 371 of 2007 - 15 - is raised on the premise that K.K.Karnan, Managing Partner of plaintiffs 4 and 5 having already assigned the trade name/trade mark to the first plaintiff has no locus standi to file the suit. Making a survey of the documents the learned District Judge found that the claim in the plaint is that the first plaintiff has become the absolute owner of the disputed trade mark “Nirapara”. It was noticed that K.K.Karnan whose locus standi is disputed is not a party to the suit, but his name figures in the plaint as the Managing Partner of plaintiffs 4 and 5 which are partnership firms in which the first plaintiff is also a partner. The learned District Judge referred to Section 39 and held that assignment of an unregistered trade mark is valid. In this context, the learned District Judge relies on the judgment of the Supreme Court in Dariwal Industries Ltd. v. M.S.S. Food Products, 2005 SAR (civil) 244. Mainly on the reason that Karnan is not a party to the suit in his personal capacity and RFA. 371 of 2007 - 16 - on the reason that no further arguments were raised to show that the suit is not maintainable, the learned District Judge would answer issue No.1 and hold that the suit is maintainable. Considering issue No.2 the learned District Judge would notice that Ext.A40 is the pouches containing the trade name and trade mark of the plaintiffs while Ext.A41 is the pouches containing the trade name and trade mark of the defendants. According to the learned District Judge there cannot be any doubt that the trade mark and trade name shown in Exts.A40 and A41 are similar and an ordinary customer will be confused by the similarity of these two. Ext.B28 is partnership agreement dated 27-6-1977 executed between K.K.Karnan and his brother K.K.Padmanabhan. Ext.A4 is the partnership deed dated 18-6-1991 executed between Karnan and his wife Ammini Karnan in the name S.N. Rice Mills. Ext.A7 is certificate of incorporation dated 19-6-2001 in respect of K.K.R. Agro RFA. 371 of 2007 - 17 - Mills Pvt. Ltd. Ext.A6 is an assignment deed dated 12-11-01 by which unregistered trade mark “Nirapara” along with goodwill etc. is assigned by Karnan to Ammini Karnan and the allegations in the plaint are all noticed by the learned District Judge to understand that the plaintiffs' case is that from 1975 onwards the plaintiffs were using the disputed trade mark of “Nirapara”. Ext.A10 certificate of registration from sales tax department in respect of K.K.R.Mills, Ext.A11 assessment order dated 13-6-1989 in respect of K.K.Karnan and Company for the assessment year 1987-88, Ext.A12 the inspection report dated 10-8-1998 prepared by the Sales Tax Officer in respect of the business place of K.K.Karnan and Company, Ext.A20 sales tax registration dated 24-8-2000 in respect of K.K.R. Flour Mills, A21 sales tax registration in respect of K.K.R. Agro Mills Pvt. Ltd. dated 9-11-2001 onwards, A22 dated 29-3-2003 in respect of K.K.R. Food Products, A23 dated 3-3-1990 showing that RFA. 371 of 2007 - 18 - K.K.Karnan got registration under Sales Tax as dealer of rice and paddy, A24 inspection report dated 13-3-1990 prepared in respect of K.K.Karnan's business place, A26 stock register of K.K.Karnan for the year 1989-90 are all relied on by the learned District Judge to conclude that the plaintiffs establishments were functioning as pleaded by the plaintiffs. Oral evidence of PW-2, partner of M/s. J.V. & Sons, suppliers of jute bags is relied on by the court below to accept the plaintiffs' case that M/s. J.V. & Sons used to supply jute bags with trade mark “Nirapara” printed on the same to the plaintiff. Oral evidence of PW-3, administrator of Okkal Sree Krishna Temple is relied on by the court below to accept the plaintiffs' case that from 1984 onwards advertisement banners of Nirapara rice were being displayed during the temple festival at the instance of K.K.Karnan. Testimony of PW-4, merchant of rice and rice products based at Kollam is relied on to believe the version of the RFA. 371 of 2007 - 19 - plaintiffs that from 1994 onwards they used to purchase Nirapara brand rice from Karnan. The oral testimony of PW- 5 Addl. Sales Tax Officer, Perumbavoor during the period July 1989 to January 1991 and Ext.A24 inspection report and A25 and A26 stock registers of Karnan are relied on to accept the case that Sri.Karnan was popularly called Nirapara Karnan and his products were popularly called by the name Nirapara. The evidence of Pw-6 a whole sale merchant in rice and provisions at Palai is believed by the court below to prove Exts.A15 andA16 carbon copies of bill books kept by K.K.Karnan and Company in respect of transactions on 22-12-1988 and 5-1-1989. Ext.A17 day book kept by K.K.Karnan and Company reflecting Exts.A15 and A16 is also taken into account by the court below to conclude that atleast during the period of 1988-89 K.K.Karnan was marketing goods under Nirapara brand. Ext. X-1 notification in Malayala Manorama daily proved by RFA. 371 of 2007 - 20 - PW-7, an employee of Malayala Manorama daily dealing with an advertisement in respect of the installation of the first automatic rice mill by S.N.Rice Mills is very much relied on by the court below. According to the court below, Ext. X-1 shows that the rice mill started business from 1975 onwards and its genuineness cannot be doubted since the same was released long before the litigation commenced. Ext.X2 notification dated 9-6-1996 in Desabhimani daily in respect of “Niradeepam Rice” manufactured by first defendant company is referred to by the court below to find that the trade mark of the first defendant company is identical to the disputed trade mark of the plaintiff. The learned District Judge would make a survey of the defence evidence particularly the oral testimony of DW-1 and documents Ext.B2 certificate of incorporation dated 12-4-1988 in respect of South Kerala Food Processors Pvt. Ltd. , Ext.B3 dated 23-2-1995 showing the change of the name of Sough RFA. 371 of 2007 - 21 - Kerala Food Processors as Nirapara Roller Flour Mills Pvt. Ltd. Exts.B6 and B7 sales tax assessment orders of South Kerala Food Processors Pvt. Ltd for 1991-92 and 1993-94, Ext.B8 assessment order for 1995-96 of the first defendant company, Ext.B9 stock statement of the first defendant company in respect of 1996-97, B10 to B13 assessment orders for the years upto 2003-04, B14 certificate of sales tax registration changing the name of South Kerala Food Processors, B19 registration certificate obtained by the defendant company from the Industries Department, B16 sanction order dated 7-12-1988 issued to the South Kerala Food Processors Pvt. Ltd from Vazhappally Panchayat for installation of a motor in its business place, B17 licence issued under Kerala Food Grains dealers licensing order to South Kerala Food Processors Pvt. Ltd. B20 Panchayat licence dated 10-3-2004, B21 receipt for payment of licence fee, B18 licence obtained under the Factories and Boilers RFA. 371 of 2007 - 22 - Act, B33 bill book of South Kerala Food Processors Pvt. Ltd. from 31-10-1990 dealing with sales of wheat and wheat products, B34 stock register of South Kerala Food Processors for 1991, B35 purchase register and conclude that there is no documentary evidence to show that before 1995 the defendants have used trade mark Nirapara for sale of their products. According to the court, though the defendants have obtained a registration for class 31 of the Act under the trade mark Nirapara for cattle and poultry feeds as per B5 there is nothing to show that before changing their name the first defendant company had passed off their goods with the trade mark or trade name Nirapara. The statement in B31 issued on behalf of the plaintiffs that the trade mark Nirapara has been used by the plaintiffs from 1991 onwards highlighted by the defendants in their arguments against the plaintiffs is considered by the District Judge. According to the District Judge, the RFA. 371 of 2007 - 23 - explanation offered by PW-1 that the above statement is a mistake committed by the Advocate while sending the notice was a reasonable one and there was evidence oral and documentary to show that even before 1991 the plaintiffs were using the trade mark Nirapara. Thus on an analysis of the evidence the court below concluded that plaintiffs are the prior users of the trade mark Nirapara. Further, in this context the court below referred to Ext.A42 copy