FAO(OS) 131/2009, 157/2009 & 183/2009 Page 1 * IN THE HIGH COURT OF DELHI AT NEW DELHI + FAO(OS) 131/2009, 157/2009 & 183/2009 Reserved on: July 8, 2009. % Pronounced on: August 13, 2009. 1. FAO(OS) 131/2009 & CM 8410/2009 # JAININDER JAIN & ORS. ..... Appellant ! Through : Mr Dushyant Dave, Sr. Advocate with Mr.Ramesh Singh and Mr Navin Chawla, Advocates versus $ ARIHANT JAIN & ORS. ..... Respondent ^ Through : Mr Sandeep Sethi, Sr.Advocate with Mr Amarjit Singh, Mr Mahendra Rana and Mr Dhruva Bhagat, Advocates. 2. FAO(OS) 157/2009 & CM 5965/2009 # JAININDER JAIN & ORS. ..... Appellant ! Through Mr Dushyant Dave, Sr. Advocate with Mr Ramesh Singh and Mr Navin Chawla, Advocates versus $ ARIHANT JAIN & ORS. ..... Respondent ^ Through Mr Sandeep Sethi, Sr.Advocate with Mr Amarjit Singh, Mr Mahendra Rana and Mr Dhruva Bhagat, Advocates. FAO(OS) 131/2009, 157/2009 & 183/2009 Page 2 3. FAO(OS) 183/2009 & CM 6743/2009 # KIRAN JAIN ..... Appellant ! Through Mr Dushyant Dave, Sr. Advocate with Mr Ramesh Singh and Mr Navin Chawla, Advocates versus $ ARIHANT JAIN & ORS. ..... Respondent ^ Through Mr Sandeep Sethi, Sr.Advocate with Mr.Amarjit Singh, Mr Mahendra Rana and Mr Dhruva Bhagat, Advocates. CORAM: THE HON’BLE MR. JUSTICE VIKRAMAJIT SEN THE HON’BLE MR. JUSTICE V.K.JAIN 1. Whether Reporters of Local newspapers may be allowed to see the Judgment? Yes 2. To be referred to the Reporter or not? Yes 3. Whether the Judgment should be reported in the Digest? Yes V.K.Jain, J. 1. These Appeals are directed against the common Order dated 8.4.2009 passed in IA 2552/2004 in CS(OS) No.155/2004, IA 2551/2004 in CS(OS) No.156/2004, IA 2550/2004 in CS(OS ) No.157/2004, whereby the status quo order dated 7.1.97 passed in CS(OS) No.156/04 was vacated and the appellants were restrained from using the trademark FAO(OS) 131/2009, 157/2009 & 183/2009 Page 3 “Kangaro” for stationery items, till the final disposal of these suits. The brief facts, giving rise to these appeals are as under. 2. Late Shri Janki Dass Jain, father of Shri Arihant Jain, Jaininder Jain and Shri Vishwa Jain, who was doing business in the name and style of M/s.Kangaro Industries (Regd.) as its sole proprietor, adopted and started using trademark “KANGARO”. On 3.3.1963, late Shri Janki Dass Jain and his son Arihant Jain, vide partnership deed dated 3.4.1963, agreed to become partners in M/s.Kangaro Industries (Regd.), with share of Shri Janki Dass Jain at 63 per cent and that of Shri Arihant Jain at 37 per cent. On 1.4.1974, Shri Vishwa Jain and Mrs. Kiran Jain, (wife of Shri Jaininder Jain), joined as partners in M/s.Kangaro Industries (Regd.). Shri Vishwa Jain having retired on 31.3.1978, late Shri Janki Dass Jain, Shri Arihant Jain and Mrs. Kiran Jain, continued as partners of the said firm, with effect from 1.4.1978. Vide Retirement Deed dated 31.3.1995, Mrs.Kiran Jain, retired from the partnership business and remaining two partners, namely, Shri Janki Dass Jain and Shri Arihant Jain continued the partnership business. At the time of retirement of Mrs.Kiran Jain, it was agreed that she would be paid the amount standing to the credit of her capital account on 31.3.1995. A fresh partnership deed was executed on 1.4.1995 whereby Shri Vishwa Jain and Mrs. Neelam Jain, were admitted as partners of M/s.Kangaro Industries (Regd.). Vide Retirement Deed dated 15.5.1995, late Shri Janki Dass Jain also retired from the firm. The remaining partners, namely, Shri Arihant Jain, Shri Vishwa Jain, Mrs. Raman Jain, (wife of Shri Arihant Jain) and Mrs.Neelam Jain, FAO(OS) 131/2009, 157/2009 & 183/2009 Page 4 (wife of Shri Vishwa Jain) continued as the partners of M/s.Kangaro Industries (Regd.). 3. One firm, M/s.Kanin India was started on 1.4.1989 with Shri Jaininder Jain and Mrs.Neelam Jain as its partners. On 1.1.1995, Shri Arihant Jain, Shri Vishwa Jain, Mrs. Raman Jain, Mr.Amrish Jain, and Mrs. Rachna Jain were taken as partners in this firm. Vide Retirement Deed dated 31.3.1995, Jaininder Jain retired from this firm and thereafter a fresh Partnership Deed was executed on 1.4.1995 between the remaining partners of this firm. On 15.5.1995, Shri Amrish Jain and Mrs.Archana Jain also retired from this firm and a new Partnership Deed was executed on 16.5.1995 amongst the remaining four partners of the firm. A third firm, M/s.Jain Manufacturing Company was formed in the year 1978 with Mrs.Saraswati Jain, Mr.Vishwa Jain and Mrs.Rachna Jain, as its partners. After death of Mrs. Saraswati Jain, in the year 1988, Shri Vishwa Jain and Mrs.Rachna Jain, continued as its partners. Shri Janki Dass Jain, Shri Jaininder Jain and Mrs.Kiran Jain were admitted as its new partners on 1.1.1995. Shri Vishwa Jain and Mrs.Rachna Jain retired from this firm on 31.3.1995 and a fresh Partnership Deed was executed amongst the other remaining partners, namely, Janki Dass Jain, Jaininder Jain and Mrs.Kiran Jain on 1.4.1995. 4. On 10.4.1995, an Arbitration Agreement was executed between Shri Arihant Jain, Shri Jaininder Jain and Shri Vishwa Jain whereby they appointed Shri Ram Kumar Jain and Shri Raj Kumar Behl as the FAO(OS) 131/2009, 157/2009 & 183/2009 Page 5 arbitrators to settle the dispute that had arisen amongst them from time to time. They also decided not to challenge the decision of arbitrators in the Court of Law. The arbitrators were required to give verdict on the land, building and machinery of M/s.Kangaro Industries (Regd.), M/s.Jain Manufactured Company, M/s.Kenning, M/s.Kangaro Industries Pvt. Ltd. and M/s.Kanning India Private Ltd. They were also to give decision on the working of Jindal Stationary Machinery Company. They further agreed that if there was any issue left unresolved, the same will also be referred to the Arbitrators and will be binding on them. 5. A perusal of the Minutes of the Meeting held on 10.4.1995 in the presence of the Arbitrators and Shri Janki Dass Jain would show that, inter alia, the following decisions were taken in that meeting: “Part-I: “That Sh. Jaininder Jain will own the following properties & business: … (E) He will also be he sole owner of „Kangaro‟ as trade mark after 31st March 1996, but he shall have no right on „Kangaro’ as trade name. (F) He will also be the sole owner of „Kanin‟ as trade name but he shall have no right on „Kanin‟ as trade mark after 31.03.96. (G) However, he shall not be eligible to join hands with the 3rd person to use „Kangaro‟ as trade mark or „Kanin‟ as trade name until & unless he has his own interest of minimum 49% upto the year 31.3.2000. ... (K) He will be manufacturing Index File Clip at Plot No.840-Industrial Area „A‟ & Stapler FAO(OS) 131/2009, 157/2009 & 183/2009 Page 6 HP-45, Stapler m-10, Staple Remover SR-300, Stapler HD-10N and Stapler HD-10D at Faridabad under “Kangaro” trade mark after 31.03.96, but he will be allowed to use „Kanin’ also as trade mark upto 31.03.96 only. (L) He will not manufacture any identical item manufactured by Mr.Arihant Jain & Mr.Vishwa Jain upto 31.03.1998. .... Part-II That Mr. Arihant Jain & Vishwa Jain will own the following properties & business:- 4) They will be the sole owners of „Kanin’ as trade mark after 31.03.96, but they shall have no right on ‘Kanin as trade name. 5) They will also be the sole owners of ‘Kangaro’ as trade name, but they shall have no right on „Kangaro’ as trade mark after 31.03.96. 6) However, they shall not be eligible to join hands with the 3rd person to use „Kanin’ as trade mark or „Kangaro’ as trade name until and unless they have their own interest of minimum 49% upto the year 31.3.2000. .... 10) They will be manufacturing all types of Paper Punches being manufactured by the group till 31.03.95 along with staplers manufactured by the group till 31.03.95 except Stapler No.HD-10N, HD-10D, M-10, HP-45 & Staple Remover SR-300. They will also be manufacturing Board Clip & Single Punch & all the other items under “Kanin’ as trade mark after 31.03.96, but they will be allowed to use „Kangaro’ also as trade mark upto 31.03.96. 11) They will not manufacture any identical item manufactured by Mr.Jaininder FAO(OS) 131/2009, 157/2009 & 183/2009 Page 7 Jain upto 31.03.98 except INDEX FILE CLIP, which they will be allowed to manufacture after 31.03.96 in „Kanin’ trade mark which can be identical or may be different.” This document was signed by Shri Arihant Jain, Shri Jaininder Jain and Shri Vishwa Jain and also by their father, Shri Janki Dass Jain and both the arbitrators. 6. Two disputed pages purporting to be an agreement later than 14.4.95 and signed by all the 3 brothers, their father and the arbitrators have been filed by the respondents, but, denied by the appellants. To the extent they are relevant for the purpose of these appeals, these two disputed pages stipulate as under:- “That Sh. Jaininder Jain will be manufacturing Stapler Models No. 10-N, 10-D, HD-45, 555 & 999 alongwith Index File Clips. Sales of which has been expected to the tune of Rs.5.50 crores in the unit Kanin (India). Focal Point Given to him. That Mr. Arihant Jain & Mr. Vishwa Jain will be manufacturing all types of Paper Punches, Staple No.10, Model 10-B, HP-10, 10-JA, 45-L, HP-45, M-10, Staple remover & HD-12S-17 & any other model if left therein, sales of which is expected to the tune of Rs. 11.00 crores. All types of Paper Punches means No.52, 280, 480, 500, 600, 600P, 4 Hole, 700 & Board Clip, 520, 540, 560 model 800 & Single Punch. That no identical model will be manufactured by any of the party upto three years i.e. upto 31.3.98.” 7. The trade mark „KANGARO’ which is the bone of contention in these Appeals stands registered as per details given below:- FAO(OS) 131/2009, 157/2009 & 183/2009 Page 8 M/s. Kangaro Industries (Regd.) REGISTERED TRADE MARK NO. CLASS GOODS DATE OF REGISTRATION 376224 16 Paper Punches and Board Clips 25.5.1981 384556 16 Staple Presses (Office use) and other staples thereof. 23.12.1981 463530 07 Punching Machine 24.11.1986 486516 08 Hand Tools 26.02.1988 M/s.Jain Manufacturing Company REGISTERED TRADE MARK NO. CLASS GOODS DATE OF REGISTRATION 486510 16 Index File Clip 26.2.1988 8. Registrar of Trade Mark carried out amendments in the Register of Trade Marks, in terms of deeds executed on 31.3.1995 and 1.4.1995. His order was challenged by the appellants in this court vide CO 4/97. Their petition was dismissed by the learned single Judge. That order was upheld by a Division Bench and Special Leave Petition against the order of the Division Bench was also dismissed by the Hon‟ble Supreme Court. The appellant Jaininder Kumar Jain had in the meanwhile filed a civil suit setting up the family settlement dated 14.4.95. His wife, appellant Kiran FAO(OS) 131/2009, 157/2009 & 183/2009 Page 9 Jain also filed a civil suit to assert her own right. A civil suit was also filed by the respondents. Injunction against use of Trade Mark “Kangaro” by the opposite group was claimed by both the groups; during pendency of civil suits. All the 3 suits were filed in Ludhiana. An order granting status quo, as regards use of Trade Mark “Kangaro” was passed by Civil Court at Ludhiana on 7.1.1997. Later, all the 3 suits were transferred to this court. Vide impugned order dated 8.4.09, learned single Judge vacated the status quo order and granted injunction, to the respondents, restraining the appellants, from using the trademark “Kangaro” during pendency of the suits. Being dissatisfied, the appellants have challenged the order passed by the learned single Judge. 9. It is an admitted case that M/s. Kangaro Industries (Regd.) holds four registered trademarks bearing Nos. 376224, 384556, 463530 and 486516 in respect of Paper Punchs and Board Clips, Staple Presses (Office use) and other staples thereof, Punching Machine and Hand Tools whereas Jain Manufacturing Co. holds registered trademark No.486510 in respect of Index File Clip. Admittedly, Smt. Kiran Jain w/o Sh. Jaininder Jain retired from M/s Kangaro Industries (Regd.) with effect from 31.03.1995. Shri Jaininder Jain was never a partner of M/s Kangaroo Industries (Regd.) In terms of clause 3 of the Retirement Deed, whereby Smt. Kiran Jain retired from M/s Kangaro Industries (Regd.), the business, goodwill, property, assets etc. of the firm came to be vested in the continuing partners i.e. Mr. Arihant Jain and Janki Dass FAO(OS) 131/2009, 157/2009 & 183/2009 Page 10 Jain. Sh. Janki Dass Jain having retired on 15th May, 1995, all the properties and assets of M/s Kangaro Industries (Regd.) came to be vested in Shri Arihant Jain and in Sh. Vishwa Jain, Mrs. Raman Jain and Mrs. Neelam Jain who were inducted as partners with effect from 1st April, 1995, after retirement of Smt. Kiran Jain. After retirement of Sh. Vishwa Jain and Mrs. Raman Jain from M/s Jain Manufacturing Company on 31st March, 1995, all the properties and assets of M/s Jain Manufacturing Company came to be vested in Shri Janki Dass Jain, Sh. Jaininder Jain and Mrs. Kiran Jain who were the continuing partners with effect from 1.4.95, as Clause 3 of the Retirement Deed provided that the business, goodwill, property and assets of the partnership will be held by the continuing partners. If the rights of the parties are determined only on the basis of the Dissolution Deeds dated 31st March, 1995, coupled with Retirement Deed of Sh. Janki Dass Jain, the right to use trademark “Kangaro” vide registration Nos. 376224, 384556, 463530 and 486516 would vest solely in the existing partners of M/s Kangaro Industries (Regd.) and none of the appellants would have any right to use this trademark. Similarly, if the parties are governed only by the Retirement Deeds, registered trademark No.486510 in respect of Index File Clip can be used only by the appellants, who are the partners of M/s Jain Manufacturing Company. 10. However, a sea change in the rights of the parties seems to have been brought about by documents executed on and after 10.4.1995. It is an admitted case that the Arbitration Agreement dated 10th April, 1995 FAO(OS) 131/2009, 157/2009 & 183/2009 Page 11 bears signature of all the three brothers, their father and both the arbitrators named in the agreement. It is also an admitted case that the document dated 14th April, 1995, which is termed as a family settlement by the appellant and as a proposal/counter proposal by the respondents is also signed by all the three brothers, namely, Arihant Jain, Vishwa Jain, Jaininder Jain, their father, Sh. Janki Dass Jain, and both the arbitrators. The case of the appellants is that the document dated 14th April, 1995 ran into six pages whereas the case of the respondents is that this document ran into 8 pages. We have perused the disputed two pages. During the course of arguments, it was not disputed before us that these two pages are in the hand of respondent Sh. Arihant Jain, who had written the arbitration agreement dated 10th April, 1995 as well as the document dated 14th April, 1995 consisting of six papers. These two disputed pages, hereinafter referred to by us as „Supplementary Settlement‟, purport to bear the signature of the same persons who have signed the arbitration agreement dated 10th April, 1995 and the document dated 14th April, 1995. The original documents have not been filed by either party and the same are stated to be in possession of the arbitrators. We have ourselves compared the signatures on the Supplementary Settlement, with the admitted signatures on the arbitration agreement dated 10th April, 1995 and the admitted document dated 14th April, 1995. Prima facie, we are of the opinion that the persons who signed the arbitration agreement dated 10th April, 1995 and the admitted document dated 14th April, 1995 also signed this supplementary settlement. In any case, as far as the respondents are concerned, they do FAO(OS) 131/2009, 157/2009 & 183/2009 Page 12 not deny the execution of document referred to by as a „Supplementary Settlement.‟ We, therefore, are of the view that the document dated 14th April, 1995 alongwith two additional pages filed by the respondents has to be taken into consideration to determine the rights of the parties. 11. That brings us to question as to what is the true nature of the document dated 14th April, 1995. A bare reading of the document dated 14.4.1995 indicates that it incorporates a family arrangement/settlement between the parties and is not only a proposal or counter proposal. It will amount to doing violence to English language, if this document is to be construed as a proposal or counter proposal. A proposal is not recorded as „a decision‟. The use of the words “it has been decided” leads to the inference that this document is not a proposal or counter proposal. The last para of the document which provides for decision by arbitrators on disputes which have remained unsettled is yet another indicator of the document being a settlement of the disputes mentioned therein. The words used in the document are not consistent with the interpretation of its being only a proposal or counter proposal. Moreover, a proposal indicates the name of the proposer and is usually signed only by its maker, so as to bind him. It is not signed by the other parties, unless they agree to it. The document dated 14th April, 1995 as well as the Supplementary Settlement being signed by all the three brothers as well as their father and the arbitrators, is yet another circumstance giving rise to inference that the document(s) is a family arrangement/settlement and not a proposal/counter proposal. Had the document been only a proposal/counter proposal, it would have indicated FAO(OS) 131/2009, 157/2009 & 183/2009 Page 13 the name of the proper, would not have been signed by all the parties to a dispute and the parties would not have used the words “it has been decided” in the document(s). 12. Admittedly, the Respondents had filed a Petition under Section 34 of the Arbitration Act for stay of the suit filed by the Appellants. The document dated 14.4.1995, was all along described as a family arrangement in this application. In paragraph 3 of the application, they alleged that „in the family arrangement‟, there was a provision for reference to arbitration of any discussion or dispute relating to the said arrangement. In paragraph 4, they stated that under the said „family arrangement‟, Shri Ram Kumar Jain and Shri Amar Nath Jain were appointed as Arbitrators. An application under Section 8 of the Arbitration and Conciliation Act, 1996 was also filed by the Respondents in the suit. Identical averments were made in that application. A perusal of the order of the learned Single Judge dated May 1, 1997 in IA No.1397/97 in CO 4/97 as well as the order of the Division Bench dated May 10, 2002 in FAO (OS) 130/97 shows that the respondents had consistently been claiming that the applicants before the learned Single Judge (appellants herein) had withheld and suppressed two important pages forming part of the family arrangement, which they (the respondents) had disclosed along with their written statement. A perusal of the judgment of the learned Single Judge dated 1.5.1997 in I.A. 1397/2007 in CO. 4/1997, records the following submissions of the learned counsel for the Respondents. FAO(OS) 131/2009, 157/2009 & 183/2009 Page 14 “It is stated by the learned senior counsel for the respondents 3 to 6 that the complete set of documents forming part of this family arrangement was not filed and two important pages had been suppressed by the petitioners which respondents 3 to 6 had disclosed alongwith the written statement in this Court and respondents 3 to 6 have no objection to the proposed terms in those two sheets being considered and orders passed on the basis of those proposals.” It is thus evident that the Respondents themselves have at times referred to this document as a family arrangement. Therefore, it is not open to them to say that it was only a proposal/counter proposal. We cannot remain oblivious to the fact that parties to these documents are experienced businessmen, who, having already executed a number of documents, including agreement of 20.3.1992 and various Retirement Deeds and Partnership Deeds, knew very well, what they had to write, to convey their decisions. Therefore, they were unlikely to use the expression „decisions‟ and “decided”, in a proposal/counter-proposal. 13. An analysis of the family arrangement dated 14.4.1995 would show that besides giving trade mark “Kangaro” and trade name „Kanin‟ to Shri Jaininder Jain, while giving trade mark „Kenin‟ and trade name „Kangaro‟ to Shri Arihant Jain and Shri Vishwa Jain after 31.3.96, the parties also decided, presumably with a view to avoid competition with each other, to allocate some of the models to Shri Jaininder Jain while allocating other models to Shri Arihant Jain and Shri Vishwa Jain. Under this document, Shri Jaininder Jain could manufacture only, Stapler m-10, Staple Remover SR-300, Stapler HD-10N and Stapler HD-10D with effect from 1.4.1996, besides Index File Clip. He, however, was allowed to use FAO(OS) 131/2009, 157/2009 & 183/2009 Page 15 „Kenin‟ as his trade mark upto 31.3.1996. He was also prohibited from manufacturing any item identical with the items manufactured by Shri Arihant Jain and Shri Vishwa Jain upto 31.3.1998. Thus, under this family arrangement dated 14.4.1995, though Shri Jaininder Jain was given ownership of trade mark „Kangaro‟ w.e.f. 1.4.1996 he could not have manufactured all the products in respect of which trade mark „Kangaro‟ was granted to M/s.Kangaro Industries and M/s. Jain Manufacturing Company, for three years, i.e., upto 31.3.1998. He could, during this period, have manufactured only those items which were not being manufactured by Shri Arihant Jain and Shri Vishwa Jain. Upto 31.3.1996, he could manufacture, using trade mark “Kanin”, any product which was not allocated to Ahihant Jain and Vishwa Jain. With effect from 1.4.1996, he could manufacture Index File Clip and Stapler on 10, Staple Remover SR-300, Staple HD – 10N and Stapler HD-10D using the trade mark “Kangaro”. However, after 31.3.1998, there was no restriction on his rights to manufacture any item even if they were being manufactured by Shri Arihant Jain and Shri Vishwa Jain. Shri Arihant Jain and Shri Vishwa Jain besides ownership of trade mark „Kenin‟ w.e.f. 1.4.96 and trade name „Kangaro‟ also got right to manufacture all types of paper punches and staplers being manufactured by the group till 31.3.1995 except Stapler No. HD-10, HP- 10D, M-10, HP-45 and Staple Remover SR-300. They were also allowed to use „Kangaro‟ as trade mark upto 31.3.1996. After 31.3.1996, they were not allowed to use the trade mark „Kangaro‟ even in respect of the products which they were allowed to manufacture under clause-10 of FAO(OS) 131/2009, 157/2009 & 183/2009 Page 16 part-II of this Settlement. They could also manufacture Board Clips and Single Punch as well as all other items under trade mark „Kenin, after 31.3.1996. However, till 31.3.1998, they could not have manufactured Stapler No.HD-10N, HP-10D, M-10, HP-45 and Staple Remover SR-300 since right to manufacture these items was given to Shri Jaininder Jain under Clause (K) of Part-I of this Agreement. Since the prohibition against manufacturing item identical to items manufactured by Shri Jaininder Jain, was applicable only upto 31.3.1998 except Index File Clip, it is obvious that the non-competing clause was to remain in force only upto 31.3.1998. 14. The supplementary Settlement modified the earlier decision taken by the parties and recorded in the family Settlement dated 14.4.1995 to the extent that Shri Jaininder Jain, who was earlier given right to manufacture Index File Clips, Staplers HP-45, Stapler M-10, Staple Remover SR-300, Stapler HD-10N and Stapler HP-10D was permitted to manufacture Stapler Models No.10-N, 10-D, HD-45, 555 & 999 alongwith Index File Clips. It further modified the family Settlement recorded on 14.4.1995 by stipulating that Shri Arihant Jain and Shri Vishwa Jain, who were permitted under the family Settlement recorded on 14.4.1995 to manufacture all types of Paper Punches and Staplers except Stapler HD- 10N and HP-10D, M-10 and HP-45 and Staple