V-Guard Industries Ltd v. Rakesh Malhotra & Ors.

BANSAL

VII. After the trial, a final judgment and decree was passed by the District

VIII. Against the aforesaid dismissal, the plaintiff filed an appeal, bearing no. RFA 117/2017 before the Kerala High Court, which appeal is stated to be pending.

IX. On 16th August, 2017, issues were framed in CS(COMM) 1018/2016 and it was recorded that no oral evidence is required to be led and that the suit would be decided on the basis of the pleadings of the parties.

X. Subsequently, an application, being I.A.10323/2017 in CS(COMM)

1018/2016 was filed on behalf of the plaintiff seeking leave to lead evidence. The said application was disposed of as not pressed on 1st February, 2018 and liberty was granted to the plaintiff to file a suit on any cause of action that was not the subject matter of CS(COMM) 1018/2016.

XI. On 19th April, 2018, the plaintiff filed a fresh suit being CS(COMM)

814/2018 against Shri Rakesh Malhotra, SAR Group (defendant no.3) and Vave India Energy Solutions Pvt. Ltd. (defendant no.1) alleging passing off of its trade dress.

XII. On 6th March, 2019, issues were framed in CS(COMM) 814/2018 and it was noted that no oral evidence is required to be led in the aforesaid suit. It was further directed that both the suits shall be heard together and were posted for final hearing.

XIII. On 4th July, 2019, the present applications were filed on behalf of the defendants seeking stay of both the aforesaid suits in view of the BANSAL pendency of the appeal filed by the plaintiff before the Kerala High Court.

6. Senior counsel appearing on behalf of the defendants has made the following submissions:

I. The District Court, Ernakulam as well as the Kerala High Court have both returned findings that there is no similarity between the marks of the plaintiff and the defendant. Reliance in this regard is placed on (i) the order dated 1st June, 2013 passed by the District Court, Ernakulam while dismissing the interim application of the plaintiff; (ii) order dated 5th July, 2013 passed by the Kerala High Court while dismissing the appeal filed by the plaintiff against the order dated 1st June, 2013 passed by the District Court, Ernakulam and (iii) the judgment and decree dated 22nd November, 2016 passed by the District Court, Ernakulam.

II. Since, the issues to be determined in both the present suits are with regard to similarity between the marks of the plaintiff and the defendants and the subject matter of the present suits is directly and substantially the same as in the suit filed by the plaintiff before the District Court, Ernakulam and the appeal pending before the Kerala High Court, the present suits liable to be stayed till the appeal filed by the plaintiff is finally decided.

III. Reliance is placed on: a) The judgment of a four Judge Bench in Manohar Lal Chopra v. Rai Bahadur Rao Raja Set Hiralal, 1962 Supp (1) SCR 450. The judgment of a Co-ordinate Bench of this Court in H.S. SAHNI v. Mukul Singhal, (2022) 1 HCC (Del) 155 to submit that provisions BANSAL of Section 10 of the CPC are mandatory and the objective behind Section 10 of the CPC is to avoid possibility of contradictory verdicts by two Courts in respect of the same relief. b) The judgment of a Co-ordinate Bench of this Court in Romesh Kumar Bhatia v. Zorrik Enterprises, 1980 SCC OnLine Del 202, where in similar circumstances, this Court had stayed a suit pending before this Court on the ground that a similar earlier suit was filed before the District Court. c) The judgment of the Supreme Court in Ruston & Hornsby Ltd. v. Zamindara Engineering Co., (1969) 2 SCC 727 to contend that both, for the purposes of infringement and for passing off, same test has to be applied by the Court with regard to likelihood of confusion or deception arising from similarity of marks.

7. Per contra, senior counsel appearing on behalf of the plaintiff has made the following submissions:

I. The aforesaid applications have been filed belatedly only when the suits were set for final hearing.

II. For a suit to be stayed under Section 10 of the CPC, the subject matter in both the suits have to be identical. Reliance in this regard is placed on the judgment of the Supreme Court in National Institute of Mental Health & Neuro Sciences v. C. Parameshwara, (2005) 2 SCC 256.

III. The reliefs of passing off and infringement are arising from entirely different causes of action and therefore, it cannot be said that the subject matters in issue in the two suits are directly and substantially the same. Reliance is placed on Mind Gym Ltd. v. Mindgym Kids BANSAL Library Pvt. Ltd., 2014 SCC OnLine Del 1240 and Pernod Ricard India (P) Ltd. v. Frost Falcon Distilleries Ltd., 2022 SCC OnLine Del 646.

IV. The Section 10 is merely a rule of procedure and the Courts are not bound by the same. Reliance is placed on the judgment of the Supreme Court in Pukhraj D. Jain And Ors. v. G. Gopalakrishna

V. For provisions of Section 10 of the CPC to apply, the Court in which earlier suit has been filed has to be a Court with competent jurisdiction to decide the said suit. In the present case, the District Court, Ernakulam did not have the territorial jurisdiction in respect of the claim of the plaintiff for passing off and therefore, the bar under Section 10 would not apply. Reliance is placed on the order passed by the Kerala High Court on 24th November, 2015, whereby the plaintiff has been allowed to withdraw its claim in so far as the relief of passing off is concerned, with liberty to file it before a competent Court. Reliance is placed on the judgment in Bristol-Myers Squibb Holdings Ireland Unlimited Company And Ors. v. Natco Pharma,

VI. The Section 10 of the CPC only envisages a stay of the trial and the same cannot apply to the present suit, where it has been recorded that no evidence is to be recorded and the suit has been set for final hearing.

8. In rejoinder, senior counsel on behalf of the defendants has made the following submissions: BANSAL

I. There is no delay on the part of the defendants in filing the present application. The present application was filed immediately after the issues were framed in CS(COMM) 814/2018 on 6th March, 2019.

II. The word „jurisdiction‟ used in Section 10 of the CPC is not in relation to territorial jurisdiction of the Court but in the context of inherent jurisdiction. It cannot be denied that the District Court, Ernakulam, Kochi had the inherent jurisdiction to entertain a suit for passing off. Reliance in this regard is placed on the judgment of the Karnataka High Court in Channabasappa Kamadal & Sons v. Kishan Chand & Co. & Anr., 1971 SCC OnLine Kar 182.

III. It is wrong to contend that the word „trial‟ in Section 10 of the CPC is confined to the recording of evidence in the suit. The term „trial‟ includes the final hearing of the suit as well.

9. I have heard the counsels for the parties and perused the record.

10. I do not find any merit in the submissions made on behalf of the plaintiff that the present applications have been filed belatedly only to delay the final adjudication of the suit. CS(COMM) 814/2018 was filed on behalf of the plaintiff only on 19th April, 2018 and issues were framed therein on 6th March, 2019 and it was directed that both the suits were to be heard together. The present applications were filed on behalf of the defendants on 1st July, 2019. Therefore, it cannot be said that there was a delay in filing the present applications.

11. As far back in 1962, the four Judge Bench in the Manohar Lal Chopra (supra) has held that the provisions of Section 10 of the CPC are clear, definite and mandatory, and the Court in which the subsequent suit BANSAL has been filed is prohibited from proceeding with the trial of the suit if the parameters of Section 10 of the CPC are fulfilled.

12. Relying upon the judgment of the Supreme Court in Aspi Jal v. Khushroo Rustom Dadyburjor, (2013) 4 SCC 333, a Co-ordinate Bench of this Court in H.S. SAHNI (supra) has reiterated the position that provision of Section 10 of the CPC is mandatory in nature. The relevant observations in H.S. SAHNI (supra) are set out below: “22. Even in Aspi Jal (supra), which is relied upon by the learned senior counsel for the plaintiff, the Supreme Court has reiterated that the use of the negative expression in Section 10 CPC makes the provision mandatory and the court in which the subsequent suit has been filed is prohibited from proceeding with the trial of that suit. It was reaffirmed that the basic purpose and the underlying object of Section 10 of the Code is to prevent the courts of concurrent jurisdiction from simultaneously entertaining and adjudicating upon two parallel litigations in respect of same cause of action, same subject matter and the same relief. The objective is also to avoid the possibility of contradictory verdicts by two courts in respect of the same relief and is aimed to protect the defendant from multiplicity of proceedings.

23. The fundamental test that is to be applied to determine whether Section 10 was applicable or not, is to see whether on the final decision being reached in the first suit, such decision would operate as res-judicata in the subsequent suit. Where there was “identity of matter” in both the suits i.e., the whole of the subject matter in both the proceedings were identical, even if further reliefs were claimed in the subsequent suit, it would be immaterial and the second suit would necessarily have to be stayed.” BANSAL

13. The appeal against the aforesaid judgment, being FAO(OS) (COMM) 70/2022, was dismissed by a Division Bench of this Court vide order dated 11th November, 2022.

14. In Romesh Kumar Bhatia (supra) a Co-ordinate Bench of this Court was seized of a similar issue. In the said case, a suit was filed by the plaintiff before an Additional District Judge based on the claim of passing off and the said suit was dismissed. An appeal against the said dismissal was pending before the High Court. During the pendency of the appeal, a suit for infringement of registered trade mark was filed by the plaintiffs. One of the issues framed in the infringement suit was whether the said suit was liable to be stayed. While considering the issue of grant of stay under Section 10 of the CPC, the following observations were made: “17. The question that therefore, arises is whether an independent and different finding on the matter of deception and conclusion can be given in this suit. This will be inescapable as no relief can be granted to the plaintiffs unless it is held that the use of the word “Zorrik” by the defendants results in deception and confusion so as to infringe the trade mark of the plaintiffs.

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22. With this state of law, there is no escape from the conclusion that as long as the finding of the Additional District Judge in the earlier suit that the sale of ties by the defendants under the mark “Zorrik” does not result in deception and confusion with the consumers in the market so as to identify them as those of the plaintiffs stands, no relief whatsoever can be granted to the plaintiffs in the present suit. The proper course for the plaintiffs, therefore, is to pursue their remedy in the appeal now pending in the High Court. The subject-matter in the present suit to this extent, therefore, must be held as directly and substantially similar to that involved in that appeal. The BANSAL provisions of S. 10 of the Code of Civil Procedure are, therefore, attracted. It is not necessary that the subject matter and cause of action in two suits should be identical. Where there is substantial identity between matters in dispute in earlier and later suits, the final decision in the earlier suit would operate as binding in the subsequent suit. It is also immaterial that different reliefs are claimed, in case the matters in issue in the two suits are substantially the same. (See in this respect AIR 1973 Madras 473, in Shorab Merwanji Modi v. Mansata Film Distributors, AIR 1957 Calcutta 727, in Guruswami Asari v. Raju Asari.”

15. The aforesaid legal principles and particularly, the aforesaid observations in Romesh Kumar Bhatia (supra) as set out above are squarely applicable in the facts and circumstances of the present case.

16. In the suit filed before the District Court, Ernakulam, the following issue was framed as issue no.3: “3. Is the trademark „LIVGUARD‟ identical with or deceptively similar to the trademark „V-GUARD‟?”

17. The District Court, Ernakulam, after a detailed discussion gave a finding that the aforesaid marks of the plaintiff and the defendants are not deceptively similar. The conclusion as set out in paragraph 43 of the judgment dated 22nd November, 2016 is set out below: “43. To conclude, what is revealed is that on scores of phonetic similarity, visual similarity, similarity of the nature of presentation like words similarity and label similarity, and other given scores of comparison, as revealed from the law trite on the point discussed supra, the plaintiff is not able to establish that either the marks are similar or even deceptively similar. Issue no.3 is, therefore, found against the plaintiff. It necessarily follows that both marks shall not go to create any confusion in the mindsets of those intended purchasers buying these products from the often market. This is answer to Issue number 4.” BANSAL

18. Admittedly, an appeal has been filed by the plaintiff against the aforesaid judgment dated 22nd November, 2016, which is pending adjudication before the Kerala High Court.

19. In the amended plaint filed by the plaintiff in CS(COMM) 1018/2016, the case set up by the plaintiff is that the wordmark “LIVGUARD” is confusingly visually, structurally, phonetically and deceptively similar to the plaintiff‟s mark “V-GUARD”. Reference in this regard may be made to paragraphs 2A, 2C and 2K of the amended plaint. Based on the above, a decree of permanent injunction is sought against the defendants restraining the defendants from passing off the defendants‟ goods as that of the plaintiff‟s on the ground of the defendants‟ mark “LIVGUARD” being deceptively similar to the plaintiff‟s mark “V-GUARD”.

20. Issues were framed in CS(COMM) 1018/2016 on 16th August, 2017. Reference may be made to issues no.1 and 4, which are set out below: “1. Whether defendants' adoption and use of the mark "Livguard" amounts to passing off of, goods as those originating from the plaintiff?

OPP XXX XXX XXX

4. Whether use of defendant's mark "Livguard" word per se and/ or as it is being actually used, does not amount to passing off as plaintiff s mark? OPD”

21. In CS(COMM) 814/2018, the plaintiff has sought an injunction against the defendants in respect of defendants passing off the plaintiffs‟ trade dress. A comparison has been drawn out in respect of the trade dress of the plaintiff and the defendants in paragraph 2 of the plaint, which shows that the wordmark “LIVGUARD” is a prominent BANSAL part of defendants‟ trade dress and the wordmark „V-GUARD‟ is a prominent part of the plaintiff‟s trade dress. Issues were framed in the said suit on 6th March, 2019. A reference may be made to the following issues: “(i) Whether the trade dress of the defendants is similar / deceptively similar to the trade dress of the plaintiff? OPP.

(ii) Whether the cumulative effect of the use of the trade dress along with trade mark by the defendants amounts to the defendants passing off their goods as that of the plaintiff? OPP.”

22. On 6th March, 2019, the Court also made an observation that the outcome of the suit would be governed only on a comparison of the two marks, whether there is any similarity/ dissimilarity between the two marks.

23. The intent behind Section 10 of the CPC is to prevent Courts of concurrent jurisdiction from simultaneously deciding suits between the same parties, involving directly and substantially the same cause of action. The objective is based on the principle of judicial comity and to avoid two contradictory verdicts by Courts of competent jurisdiction.

24. A reading of the judgment and decree dated 22nd November, 2016, passed by the District Court, Ernakulam, the pleadings in the present suits and the issues framed herein, leaves no doubt in my mind that the issues that have to be adjudicated in the present suits, were subject matter of the suit before the District Court, Ernakulam, and a definite finding has been given in the said suit. The finding given by the District Court, Ernakulam that there is no phonetic or visual similarity between the trademarks of the BANSAL plaintiff and the defendant, constitutes res judicata and is binding on the plaintiff and in light of the aforesaid finding, no relief can be granted to the plaintiffs in the present suit. Therefore, in my considered view the subject matter of the present suits is directly and substantially identical to the subject matter of the suit before the District Court, Ernakulam, and is now the subject matter of an appeal pending before the Kerala High Court. It is to be noted that no submission has been made on behalf of the plaintiff to the effect that the issues to be determined in the present suits and the suit before the District Court, Eranakulam are not directly and substantially the same. Therefore, if the present suits are permitted to proceed, there could be a possibility of conflicting judgments in respect of similar issues between the same parties.

25. Counsel for the plaintiff has placed reliance on National Institute of Mental Health & Neuro Sciences (supra) to contend that for a suit to be stayed under Section 10 of the CPC, the subject matter in both the suits have to be identical. Paragraph 8 of the aforesaid judgment relied upon by the plaintiff is set out below: “8. The object underlying Section 10 is to prevent courts of concurrent jurisdiction from simultaneously trying two parallel suits in respect of the same matter in issue. The object underlying Section 10 is to avoid two parallel trials on the same issue by two courts and to avoid recording of conflicting findings on issues which are directly and substantially in issue in previously instituted suit. The language of Section 10 suggests that it is referable to a suit instituted in the civil court and it cannot apply to proceedings of other nature instituted under any other statute. The object of Section 10 is to prevent courts of concurrent jurisdiction from simultaneously trying two parallel suits between the same parties in respect of the same matter in issue. The fundamental test to attract Section 10 is, whether on final BANSAL decision being reached in the previous suit, such decision would operate as res judicata in the subsequent suit. Section 10 applies only in cases where the whole of the subject-matter in both the suits is identical. The key words in Section 10 are “the matter in issue is directly and substantially in issue” in the previous instituted suit. The words “directly and substantially in issue” are used in contradistinction to the words “incidentally or collaterally in issue”. Therefore, Section 10 would apply only if there is identity of the matter in issue in both the suits, meaning thereby, that the whole of the subject-matter in both the proceedings is identical.”

26. As can be seen from the extract quoted above, the Supreme Court sought to distinguish the key words used in Section 10 of the CPC, matter in issue is “directly and substantially in issue” in a previously instituted suit, from the words “incidentally or collaterally in issue”. In the case before the Supreme Court, the respondent sought stay of a suit under Section 10 of the CPC on the ground that appellant had filed a Writ Petition against the award of the Labour Court and the same was pending before the High Court. The Supreme Court held that since the scope of the Writ Petition was entirely distinct and separate from the suit filed before the Civil Court, stay under Section 10 of the CPC could not have been granted. Therefore, the reliance placed by the plaintiff on National Institute of Mental Health & Neuro Sciences (supra) is misplaced.

27. The Supreme Court in Ruston & Hornsby Ltd. (supra) has categorically held that where the marks of the defendant and the plaintiff are not exactly identical, but are similar, the test of infringement would be the same as in an action for passing off i.e., whether there is a likelihood of confusion or deception arising from the similarity of marks. The causes of BANSAL action in a suit for infringement and in a suit for passing off may be different, as infringement is a statutory remedy and passing off is a common law remedy, however, the issue with regard to likelihood of confusion arising from the similarity of marks has to be decided in both the actions. In view thereof reliance placed by the plaintiff on the judgment in Mind Gym Ltd. (supra) and Pernod Ricard (supra), is misplaced.

28. Reliance has been placed on behalf of the plaintiff on the judgment in Pukhraj D. Jain (supra) to contend that provisions of Section 10 of the CPC are procedural and mere filing of an application under Section 10 of the CPC does not preclude the Court from examining the merits of the matter. However, the said judgment does not bar the Court from dealing with an application under Section 10 of the CPC before the final adjudication of the suit. As noted above, a four Judge Bench of Supreme Court in Manohar Lal Chopra (supra) has categorically held that provisions of Section 10 of the CPC are mandatory. Therefore, reliance placed on Pukhraj D. Jain (supra) is also misplaced.

29. Next, it has been contended on behalf of the plaintiff that the District Court, Ernakulam did not have the territorial jurisdiction to entertain the claim of passing off and therefore, the bar under Section 10 of the CPC would not apply in view of the language used in Section 10 i.e., “Court in India having jurisdiction to grant the relief claimed”. In this regard, reliance has been placed on a judgment of a Co-ordinate Bench in Bristol-Myers (supra).

30. On the other hand, senior counsel on behalf of the defendants submits that the expression “Court in India having jurisdiction to grant the relief BANSAL claimed” refers to a Court having inherent jurisdiction to entertain the suit and not territorial jurisdiction.

31. Reliance placed on behalf of the plaintiff on the judgment in Bristol- Myers (supra) is misplaced as the findings in the aforesaid judgment were made in the context of a prior suit having been instituted by the defendant therein in a Court which did not have the inherent jurisdiction to entertain the suit. Therefore, in Bristol-Myers (supra) the Court held that the earlier suit was an abuse of the process of law. In the present case, it was the plaintiff itself that had filed the earlier suit in District Court, Ernakulam and it is nobodies‟ case that the District Court, Ernakulam lacked inherent jurisdiction to try the suit.

32. In Channabasappa Kamadal & Sons (supra), the Karnataka High Court expressed the view that the expression “Court in India having jurisdiction to grant the relief claimed” used in Section 10 of the CPC does not deal with territorial jurisdiction and only refers to the competency of the Court to entertain and grant the relief sought in the suit. I am in respectful agreement with the view expressed by the Karnataka High Court in Channabasappa Kamadal & Sons (supra). The expression “Court in India having jurisdiction to grant the relief claimed” used in Section 10 of the CPC cannot be applied in the context of a Court in India not having territorial jurisdiction and would be applicable only when the Court where the earlier suit has been instituted lacks the inherent jurisdiction to try the said suit.

33. There is another aspect to be considered with regard to the aforesaid issue. The plaintiff had filed the suit based on both infringement as well as BANSAL passing off before the District Court, Ernakulam. The interim application filed on behalf of the plaintiff was dismissed by the District Court, Ernakulam and appeal against the said order was dismissed by the Kerala High Court and subsequently, the SLP filed before the Supreme Court was withdrawn by the plaintiff. It was only thereafter that the plaintiff filed an application under Order XXIII Rule 1 of the CPC seeking to withdraw a part of the claim in the said suit relating to passing off with liberty to file the same before a Court with competent jurisdiction. This application was allowed by the District Judge, Ernakulam, Kochi by permitting the plaintiff to withdraw the part of the claim relating to passing off with liberty to institute a fresh suit. Pursuant to the said liberty, CS(COMM) 1018/2016 was filed on behalf of the plaintiff.

34. There is no definite finding given by the District Court, Ernakulam with regard to the District Court, Ernakulam not having territorial jurisdiction. It was only at the asking of the plaintiff that the plaintiff was permitted to withdraw the part of the claim in the said suit with liberty to file a fresh suit in respect of the subject matter of the part of the claim. The plaintiff did not wait for the District Court, Ernakulam to give a finding that it lacked territorial jurisdiction and straight away filed an application for withdrawal of part of the claim on the ground of District Court, Ernakulam not having the territorial jurisdiction to try the said suit. It appears that not having got an interim injunction in its favour, the plaintiff withdrew the part of the claim in the said suit to take a chance before another Court.

35. The submission of the plaintiff that the bar under Section 10 of the CPC is only in respect of trial of the suit and the expression „trial‟ has to be BANSAL given a narrow meaning to include only the recording of evidence in the suit, is wholly misplaced. A reference to Order XVIII of the CPC would demonstrate that the recording of evidence in a suit cannot be treated separately from the final arguments in the case. The term „trial‟ would include the entire composite process of recording of evidence as well as addressing final arguments.

36. Accordingly, both the applications are allowed and both the present suits are stayed with liberty to the parties to get the same revived after the decision in RFA 117/2017 pending before the Kerala High Court.

37. The date 23rd January, 2023 stands cancelled. AMIT BANSAL, J. January 09, 2023 BANSAL