AO/337/2006 1/42 JUDGMENT IN THE HIGH COURT OF GUJARAT AT AHMEDABAD APPEAL FROM ORDER No. 337 of 2006 With CIVIL APPLICATION No. 13728 of 2006 In APPEAL FROM ORDER No. 337 of 2006 For Approval and Signature: HONOURABLE MR.JUSTICE P.B.MAJMUDAR ====================================== 1 Whether Reporters of Local Papers may be allowed to see the judgment ? 2 To be referred to the Reporter or not ? 3 Whether their Lordships wish to see the fair copy of the judgment ? 4 Whether this case involves a substantial question of law as to the interpretation of the constitution of India, 1950 or any order made thereunder ? 5 Whether it is to be circulated to the civil judge ? ====================================== R.N.BHAGAT AND OTHERS Versus M/S BHAGAT MARKETING CORP. AND ANOTHER ====================================== Appearance : MR VB PATEL, Senior Counsel assisted by MR RR SHAH & MR JITENDRA SADHWANI for Appellants. MR DEVANG NANAVATI for NANAVATI & NANAVATI for Respondents. ====================================== CORAM : HONOURABLE MR.JUSTICE P.B.MAJMUDAR Date : 05/02/2007 CAV JUDGMENT 1) By filing this appeal under Order 43 of the Civil Procedure Code, AO/337/2006 2/42 JUDGMENT the appellants, who are the original defendants of Civil Suit No.2063/2006, which is filed before the City Civil Court, Ahmedabad have challenged the order passed by learned trial Judge below interim injunction application, by which learned trial Judge has allowed interim injunction application submitted by the original plaintiffs and granted injunction as prayed for. 2) Facts leading to the controversy are as under : 3) Respondents herein are the original plaintiffs of the aforesaid suit, which is filed for declaration and permanent injunction. By filing aforesaid suit, the plaintiffs have prayed that it may be declared that the defendants, their servants, agents, dealers and distributors have no right directly or indirectly to adopt the trade mark 536230 and 668188 and/or use the trade name “BHAGAT” or “R.N.Bhagat” or “N.S.Bhagat” or any other mark, name, logo, trading style, corporate name similar or deceptively similar to the word “BHAGAT”. Permanent injunction is also sought for in the suit to the effect that the defendants may be restrained from adopting or using in relation to its business, service, goods, products including all types of “Dhana ni Dal” and allied products falling under Class 30 of the Trademarks Act, 1999, Trademark no.536230 and 668188 and/or any deceptively similar marks/name/word, which would pass off or enable others to pass off the defendants' goods as that of plaintiff no.1 firm. It is also prayed that the defendants may be directed to hand over the infringed material to the plaintiffs. The plaintiffs also prayed for a decree of Rs.50 Lacs with interest as damages. 4) The case of the plaintiffs in nutshell is as under : 5) Plaintiff no.1 is a registered partnership firm of which plaintiff AO/337/2006 3/42 JUDGMENT no.2 is a partner. Said firm is engaged in business of manufacturing, marketing and selling pouched “Dhana ni Dal” and other mouth refreshing products in India. Defendant no.3 purports to be a sole proprietary concern of which defendants no.2 and 4 are the sole proprietors. As per the averments made in paragraph 2 of the plaint, the aforesaid firm has recently started business of manufacturing and selling “Dhana ni Dal” in pouches. The predecessor of plaintiff no.2, i.e., grandfather of plaintiff no.2, one Somabhai Ishwarbhai Patel had started said business in the year 1940 in Gujarat. Late Somabhai Bhagat had four sons, namely, Natwarlal S. Bhagat, Premanand S. Bhagat, Navin S. Bhagat and Dahyabhai S. Bhagat. Somewhere in the year 1963, Shri Navinbhai Bhagat, whose son is defendant no.2, had retired from the family business. 6) In the year 1990, three brothers, other than Navinbhai S. Bhagat along with their sons established plaintiff no.1 firm in which “Dhana ni Dal” was packed in sachet pouches and sold in commonly well known trademark, trade name “BHAGAT”. The partners of plaintiff no.1 firm applied for registration of trade mark 536230 and 668188 in Class 30 on 31st August, 1990 and 5th June, 1995 respectively and said trademarks are applied to the goods being sold by plaintiff no.1 firm. The plaintiffs have also applied for other trade marks as associated marks. In paragraph 5 of the plaint, the plaintiffs have given a chart regarding total sales of various products of plaintiff no.1 from 1991­1992 onwards. It is averred in the plaint that the name/word “BHAGAT” and the trade marks have acquired distinctiveness in relation to the products of plaintiff no.1. It is also averred in the plaint that over the years, the plaintiffs have attained tremendous goodwill and reputation in relation to the products manufactured by them. It is also the case of the plaintiffs that the products of plaintiff no.1 are considered to be of the highest AO/337/2006 4/42 JUDGMENT quality which has led to progressive growth in the business of plaintiff no.1. In paragraph 6 of the plaint, the plaintiffs have produced a chart of advertisement expenditure incurred by the plaintiffs since 1991­1992. It is averred in paragraph 7 of the plaint, that recently on 16th October, 2006 the plaintiffs were informed by one of the distributor that the defendants have recently started manufacturing sachet product of “Dhana ni Dal” adopting similar trade marks, label of plaintiff no.1. As per the case of the plaintiffs in paragraph 8 of the plaint, the sachets of “Dhana ni Dal” manufactured by the defendants are identical in get up, colour scheme and design in comparison to the sachets of plaintiff no.1, which is a registered trade mark no.536230. It is further averred in paragraph 8 of the plaint that the defendants have deliberately adopted the registered trademark of the plaintiffs and have, therefore, infringed the plaintiffs' trademark. The defendants have also adopted the trade name and trading style “BHAGAT” of the plaintiffs and are applying the word “BHAGAT” on the products manufactured by them. The adoption of name “BHAGAT” by the defendants, which forms an essential feature of the plaintiffs trademarks and trading style tantamount to an act of infringement and passing off by the defendants under the provisions of the Trade Marks Act, 1999. It is also the case of the plaintiffs that defendants have also adopted identical outer packing in which the pouches are sold across the counter to customers, retailers and distributors. Outer packing of plaintiff no.1 is also a registered trade mark no.668188. It is further averred in paragraph 8 of the plaint that the defendants have committed infringement of plaintiffs' trademark no.668188 by adopting identical outer packing as that of plaintiff no.1. The defendants are also infringing trade marks, trading style by adopting M/s.R.N.Bhagat as trade name of its business. The adoption of trade name “BHAGAT” is an act of infringement under the provisions of Trademarks Act. It is also averred in paragraph 8 of the plaint that AO/337/2006 5/42 JUDGMENT adoption of trade name by defendants is with intention to pass off their goods as that of plaintiffs and to trade upon the goodwill and reputation of the plaintiffs. 7) In paragraph 9 of the plaint, it is averred that the adoption of trade name and trading style and trademarks of plaintiff no.1 by the defendants is with mala fide and dishonest intention for the reason that the father of defendant no.2 had since long retired from family business and, therefore, he and his sons have relinquished their rights in family business. 8) In paragraph 10 of the plaint, it is averred that recently the plaintiffs came to know that the defendant has applied for registration of similar/deceptively similar trade mark for its sachet pouches. Said trade mark has been registered bearing number 1337837. It is further averred in said paragraph that the plaintiffs, after having came to know about such registration, they preferred rectification application against the said trade mark no.1337837 and the said application is pending before the Registrar of Trade Marks. The alleged user claimed by the defendants in their trade mark is since 1st April, 1994. As per the registration of the trademark of the plaintiffs, i.e., number 536230, mark was used by the plaintiffs from 31­8­1990. Therefore, even as per the alleged claim of the defendants, they have subsequently used the trade mark in 1994 whereas the plaintiffs are using the trade mark since 1990. It is also the case of the plaintiffs that the plaintiffs are prior users. On these and such other grounds, aforesaid suit is filed. 9) According to the plaintiffs, cause of action arose when the defendants infringed the trademarks of the plaintiffs and when the plaintiffs came to know from their distributors on 16th October 2006 that AO/337/2006 6/42 JUDGMENT defendants have launched their products adopting infringing trademarks as that of the plaintiffs. 10) In paragraph 12 of the plaint, it is averred that the defendants are using identical packing, colour scheme, get up and design and name “BHAGAT” with a sole intention to pass off their goods as that of the plaintiffs. 11) In the aforesaid suit, the plaintiffs gave an application for interim injunction with a prayer to restrain the defendants from adopting trademarks of plaintiff no.1 or using it in relation to any of its business/services/goods/product including all types of products falling under Class 30 of Trade Marks Act, 1999 or name “BHAGAT”, “R.N.BHAGAT” or “N.S.BHAGAT” or any other deceptively similar name containing word “BHAGAT”. It is also prayed in the interim injunction application that during the pendency of the suit the defendants may be restrained by way of temporary injunction from adopting, using, in relation to any of its business, service, goods, products including all types of “Dhana ni Dal” and allied products falling under the Trade Marks Act, trade mark no.536230 and 668188 and/or deceptively similar marks, names, words, which would pass off or enable others to pass off the defendants' goods or products and/or business and/or services as that of goods, products, business or services of plaintiff no.1 firm. The plaintiffs also prayed that the defendants may be directed to hand over the infringed material to the plaintiffs. 12) The aforesaid suit is resisted by the defendants by filing reply to injunction application and written statement to the suit, which is at Exh.19 in the compilation. According to the defendants, defendant no.1's father Navinchandra Somabhai Bhagat started the business of grinding AO/337/2006 7/42 JUDGMENT and marketing “Dhana ni Dal” under the brand name “SUPREME BHAGAT” since 1976 in a plastic pack in the quantity of 250 grams and 500 grams under the said brand name. Thereafter, the small duly printed pouch packing containing two grams “Dhana ni Dal” is being honestly and bona fidely used since 1993 with the brand name “Supreme Bhagat” with distinctive colour scheme, get up and trading style by defendant no.1's predecessors, namely, Navinchandra Somabhai Bhagat and, thereafter, defendant no.1 became the sole proprietor of the said firm of his father in the year 2000. It is also their contention that brand “Supreme Bhagat” is continuously used since 1976 and that the word “BHAGAT” is continuously, honestly and bona fidely used since 1976 in open market within the knowledge of the plaintiffs. 13) As per the averments made in paragraph 3 of the written statement, defendant no.1's father and predecessor­in­title of the trade mark visited the office of advocate of the plaintiffs, Mr.Y.J.Trivedi & Co., for applying for registration of said trademark “Supreme Bhagat” label in the year 1994 and Mr.Y.J.Trivedi advised him not to use the said label proposed to be applied for registration and he initiated the settlement talks in the year 1994. It is also the case of the defendants that they were asked to meet Premanand, Dahyabhai and Natvarbhai partners of the plaintiff no.1 firm and accordingly, defendant no.1's father and predecessor­in­title of the trade mark met them and discussed with them. It was suggested by partners of plaintiff no.1 firm that defendant no.1's father and predecessor­in­title should confine to use “BHAGAT” label for the State of Uttar Pradesh, Bihar and Rajasthan, which was not accepted by defendant no.1's father and hence said predecessor­in­title, Mr.Navinchandra Bhagat wrote a letter on 29­4­1994 to advocate Shri Y.J.Trivedi apprising him about said facts. Settlement failed in April 1994 and thus the defendants' use of said label is within the knowledge AO/337/2006 8/42 JUDGMENT of the plaintiffs and that fact is suppressed by the plaintiffs in the suit. It is also averred by the defendants in their reply that the defendants have built up tremendous reputation in trade before public, consumers and that the defendants have spent lacs of rupees in factory and advertisement, publicity of the suit trade mark/ label. The sales of the said products have increased year by year and that the suit product has acquired its popularity and that the plaintiffs are knowing these developments of the defendants' business activity since last more than 13 years. It also averred that the plaintiffs are guilty of acquiescence and they are not entitled to injunction. It is also the case of the defendants that the plaintiffs and the defendants are family members and the predecessor­in­title of the trade mark, Mr.Navinchandra Bhagat, started his business of “Dhana ni Dal” with a brand name and trade mark of “Bhagat Supreme” since 1976. It is also the case of the defendants that when the defendant was trying to sell the suit product by forming a new firm M/s. V.R.Bhagat and when the plaintiffs came to know about said development of the defendants, the plaintiffs' advocate Jatin Y. Trivedi wrote a letter dated 11th March, 2006 to the plaintiffs advising the plaintiffs to take legal action against the defendants, which fact has been suppressed by the plaintiffs. 14) In paragraph 5 of the written statement, it is averred that the defendants have published a public notice in the newspaper, namely, Divya Bhaskar in its Ahmedabad edition dated 1­4­2005 informing the trade and public that henceforth the defendants will market themselves directly the said product 'Supreme Bhagat Dhana Dal', instead of any agent under the name M/s.V.R.Bhagat. In paragraph 9 of the written statement, it is averred that defendants are using the suit label, trade mark since 1993 within the knowledge of the plaintiffs and suit is filed after a long period and the plaintiffs have obtained ex­parte injunction at AO/337/2006 9/42 JUDGMENT the time of Diwali festival, which has affected the business of defendants and their reputation. It is also the case of the defendants that the defendants are registered proprietors of the suit label trade mark pouch under the Trade Marks Act, 1999 and, therefore, no infringement action would lie against the registered proprietors. On this and such other grounds, the suit of the plaintiffs is resisted by the defendants. 15) At the time of issuing urgent notice to the defendants, learned trial Judge granted ad­interim injunction in terms of paragraph 18 (A) and 18(B) of the injunction application. After hearing both the sides and after considering prima facie evidence on record, learned trial Judge allowed injunction application and ultimately, granted interim injunction as prayed for in paragraphs 18 (A) and (B). Learned trial Judge also granted prayer 18 (C), which is in connection with direction to the defendants to hand over all the infringing material to the plaintiffs. At the time, when the trial Court had granted ex­parte ad­interim injunction, present appellants preferred an Appeal from Order before this Court wherein this Court had directed the trial Court to decide notice of motion within the prescribed time limit and, thereafter, after hearing both the sides, learned trial Judge passed aforesaid order, which is impugned at the instance of the original defendants in the present Appeal from Order. 16) While passing the impugned order, learned trial Judge stayed the said order till 30th November, 2006 with a condition that defendants shall act in compliance of their undertaking given in Appeal from Order No.310/2006. So far as said Appeal from Order is concerned, that was preferred by the appellants herein against an ex­parte order, wherein this Court had asked the trial Court to decide notice of motion within the prescribed time limit and the defendants gave an undertaking that in the AO/337/2006 10/42 JUDGMENT meanwhile they will not manufacture or market the product in question. Now the question which requires consideration is whether the order passed by the trial Court suffers from any infirmity and whether the trial Court has committed an error of law in passing the impugned order. 17) Learned advocates for the appellants as well as the respondents have addressed the Court at great length and voluminous documents, which were placed before the trial Court are also placed before this Court. Both the learned advocates have relied upon numerous judgments in connection with infringement of trade mark as well as passing off. 18) Mr.V.B.Patel, learned Senior Counsel appearing with learned advocates Mr.R.R.Shah and Mr.Jitendra Sadhwani submitted that the order of the trial Court is contrary to law and contrary to the provisions of Trade Marks Act, 1999. It is also argued by Mr.Patel that “Dhana Dal” is a natural product and it is not a manufactured article of novelty. Mr.Patel also submitted that the suit trade mark is used by the defendants since 1994 and it is not identical or deceptively similar trade mark, as stated in the certificate issued by the registering authority. Mr.Patel submitted that the defendants are in market since many years and, therefore, by applying principle of acquiescence, no injunction can be granted restraining them from continuing their business. Mr.Patel has pressed reliance on Exh.4/1 to 4/3. Mr.Patel submitted that the averment made in the plaint that, plaintiffs came to know about business activities of the defendants very recently, is not correct, as there is documentary evidence to show that the defendants were in business since long. Mr.Patel further submitted that the plaintiffs are estopped from asking any relief, as the defendants are doing their business since long and it is within the knowledge of the plaintiffs. Mr.Patel also submitted that before registering trade mark of the defendants, an AO/337/2006 11/42 JUDGMENT inquiry was held by the Registrar and after appropriate inquiry the trade mark is registered and, therefore, no injunction can be granted against the registered trade mark owner. Mr.Patel also submitted that since years, the defendants are doing the business in the name of “Supreme Bhagat Dhana Dal”. He submitted that there is no evidence either regarding infringement or regarding passing off. In order to substantiate his say, Mr.Patel has relied on certain documentary evidence as well as case laws on the subject. It is submitted by him that trial Court has given contradictory findings and even on the ground of acquiescence no injunction should have been granted, as within the knowledge of the plaintiffs, the defendants are doing their business since long. Mr.Patel submitted that when the authority under the Trade Mark Act has granted registration, weightage should be given to such registration. He submitted that his client is user of said mark since 1976 and it is not correct to say that only recently they have come in the market and it is a case of long user. Mr.Patel also submitted that trial Court should not have granted ad­interim injunction, which resulted into closure of the defendants business. Mr.Patel has also relied upon provisions of Sections 23, 28, 29, 33 and 34 of the Trade Marks Act, 1999. It is submitted by him that there is no prima facie case in favour of the plaintiffs and, therefore, the appeal is required to be allowed and injunction order granted by the trial Court is required to be vacated. Mr.Patel further submitted that Section 29 read with Section 30 and 34 put the infringement out of orbit of Section 28. It is submitted by him that Section 33 and 34 debars the plaintiffs to oppose the use of subsequent trade mark, as the defendants are using trade mark for a continuous period of five years. 19) It is submitted by Mr.Patel that there is no evidence or material to prove passing off. It is submitted that the suit for infringement of trade AO/337/2006 12/42 JUDGMENT mark is not maintainable and suit for passing off is also not maintainable and no interim relief could have been granted to the plaintiffs. It is also submitted by him that trade marks even superficially show marked distinction by device of circles and triangles and the name of the appellants and the photographs. It is also argued by him that learned trial Judge has granted injunction beyond the prayers in the suit. 20) Learned advocate Mr.V.B.Patel has relied upon various judgments in order to substantiate his say regarding acquiescence as well as maintainability of the suit of the plaintiffs on merits. 21) Learned advocate for the appellants has placed reliance on the decision of the Supreme Court in M/s Power Control Appliances and Others Vs. Sumeet Machines Pvt. Ltd., reported in (1994) 2 SCC 448. In the aforesaid case, the Supreme Court has held that acquiescence is one of the defences available under Section 30 (1) (b) of the 1958 Act. In the aforesaid case, one Mrs.Madhuri Mathur was the sole proprietrix of M/s Power Control Appliances Company. As per the facts narrated in paragraph 5 of the judgment, she started manufacturing power operated kitchen mixies since 1963 under the brand name “Sumeet”. The first defendant of that case was incorporated in 1984 and it was manufacturing and selling mainly washing machines and vacuum cleaners from September/October 1991. While considering the question of acquiescence it has been held by Supreme Court in paragraphs 29 and 38 to 42 as under : “29. This is the legal position. Again in Halsbury's laws of England, Fourth Edn., Vol.24 at paragraph 943 it is stated thus: “943. Acquiescence. ­ An injunction may be refused on the AO/337/2006 13/42 JUDGMENT ground of the plaintiff's acquiescence in the defendant's infringement of his right. The principles on which the court will refuse interlocutory or final relief on this ground are the same, but a stronger case is required to support a refusal to grant final relief at the hearing. [Patching v. Dubbins; Child v. Douglas; Johnson v. Wyatt; Turner v. Mirfield; Hogg v. Scott; Price v. Bala and Festinog Rly. Co.] The reason is that at the hearing of the cause it is the court's duty to decide upon the rights of the parties, and the dismissal of the action on the ground of acquiescence amounts to a decision that a right which once existed is absolutely and for ever lost: Johnson v. Whyatt at 25; and see Gordon v. Cheltenham and Great Western Union Rly. Co. per Lord Langdale MR.” 38. So, as such there is no evidence of manufacture. As rightly contended by Mr. Chidambaram, learned counsel, marketing may not advance the case of the first defendant­respondent. We do not think, as is urged by Mr Soli J. Sorabjee, learned counsel, either the criminal complaint or the averment in the plaint would amount to implied consent, more so, when no oral evidence has been let in, the parties having chosen to proceed on affidavit and counter­affidavit. 39. In 1984 the first defendant­company came to be incorporated. This was for the purpose of diversifying the industrial activity of the family group for manufacturing other technical appliances like washing machines, vacuum cleaners etc. But there is nothing on record to show that the first defendant was manufacturing earlier than the alleged violation of trade mark, copyright and design, as stated in the plaint. AO/337/2006 14/42 JUDGMENT 40. We find considerable difficulty in appreciating the conclusion of the Division Bench which had failed to note that the proprietor of the trade mark is Sumeet Research and Holdings Ltd. Again, the complaint of infringement of trade mark is not against Ajay Mathur but against Sumeet Machines Private Limited and M/s Sekar and Sagar. 41. It is a settled principle of law relating to trade mark that there can be only one mark, one source and one proprietor. It