Full Text
HIGH COURT OF DELHI
JUDGMENT
M/S GULAB OIL AND FOOD (AHMEDABAD)
PVT. LTD. ..... Appellant
For the Appellant : Mr. Aniruddha Deshmukh & Mr. Nikhil Goel, Advs.
For the Respondent : Mr. Sanjeer Singh, Adv.
HON’BLE MR JUSTICE AMIT MAHAJAN
1. The appellant has filed the present appeal impugning an order dated 30.03.2021 (hereafter ‘the impugned order’) passed by the learned Commercial Court, whereby the application filed by the respondent under Order XXXIX Rule 1 & 2 of the Code of Civil Procedure (hereafter ‘the CPC’) was allowed and the appellant’s application under Order XXXIX Rule 4 of the CPC, seeking vacation of the ad interim order, was rejected.
2. The appellant has been restrained from using the trademark “Gulab” in connection with namkeen, roasted and baked products (ready to eat snacks). The learned Commercial Court, prima facie, found that the use of the trademark by the appellant in respect of the said product would constitute infringement of the respondent’s trademark “Gulab Ka Phool” registered under Class 30 (hereafter also referred to as ‘TM-639’) and passing off.
FACTUAL CONTEXT
3. The respondent (carrying on business as Shiv Nath Rai Sumer Chand) and Lala Shivnath Rai Sumer Chand Confectioner Pvt. Ltd., arrayed as plaintiff nos. 1 and 2 respectively, had filed the suit [being CS(COMM) No.1724/2020], inter alia, seeking a permanent injunction, restraining the appellant from infringing its trademark/copyright, passing off, damages and rendition of accounts amongst other reliefs. Plaintiff no.2 was deleted from the array of the parties and the said suit is being pursued by the respondent (plaintiff no.1).
4. The respondent claims to be carrying on the business of manufacturing and selling packaged namkeens, salted, roasted and baked products under the following trademark (TM-639); “ ”.
5. The respondent alleges that she became aware, from certain market sources, that the appellant (a company incorporated and registered on 16.11.2019) was also selling namkeen and baked snacks, peanuts, roasted and flavoured cashew nuts, and several other products mentioned in the plaint, under the impugned trademark “Gulab”. The appellant was selling various types of edible oil, agricultural products and raw materials under the said trademark; however, the respondent is, principally, concerned with the sale of namkeen, roasted and baked products, ready to eat snacks under the impugned trademark. The respondent claims that the same infringes the registered trademark (TM-639) and also constitutes passing off.
6. The respondent (plaintiff no.1 before the learned Commercial Court) claims that she acquired the proprietary rights in the said device mark “ ” through her husband – Late Shri Subhash Rai Gupta. The respondent claims that late Lala Shiv Nath Rai commenced the business in Indian traditional sweets and confectioneries (Rewari and Gajjak) in the year 1910. On 04.04.1944, he applied for registration of the wordmark “GULAB KA PHOOL” under Class 30 in relation to “confectionary, especially reoris, Indian sweet”, by trademark application no. 94636, claiming use since 01.12.1910. The respondent claims that the said business was subsequently expanded to introduce new products including rewaris, namkeens, papads, breads, biscuits and other confectionaries.
7. The respondent states that subsequently the said trademark (Gulab Ka Phool) was registered under different classes. Further, the respondent also secured copyright registration in respect of the said mark/label, its unique artistic work of the picture of ‘Gulab’, its getup, colour combination, lettering style, placement of words etc. (Copyright application no. A-123948/2018).
8. The appellant states that in the year 1966, the Nathwani family started the business of manufacturing, marketing and selling various types of “edible oils including groundnut oil and agriculture produce, i.e. food grains, ground nut seeds, cattle feed etc.” under the name and style of M/s Mangrol Oil Mill (hereafter’ Mangrol’), which it claims is its parent entity. The appellant states that Mangrol secured registration of several device marks under Classes 29 and 31. It also obtained registration of the word mark “Gulab” under Class 31, by trademark application no. 605714, on 01.09.1993.
9. The appellant states that thereafter, the Nathwani family members, started several additional businesses from time to time including M/s Pankaj Industries and M/s Pankaj Foods. The appellant further states that the successors of the constituent partners of Mangrol have, from time to time, honestly and bona fidely adopted and used the trademarks registered in its favour.
10. The appellant states that M/s Pankaj Industries (erstwhile M/s Pankaj Traders) and M/s Pankaj Foods, in addition to selling raw packaged peanuts, expanded their business in the year 2016 to include dealing in namkeens comprising different varieties of peanuts, chana, bhujia etc. under the trademark “Gulab”.
11. Thereafter, on 16.10.2019, the proprietor of M/s Pankaj Industries, Sh. Pragjibhai Gokaldas Nathwani, by way of a selfdeclaration, proposed to transfer the existing businesses to a new company. Thus, the appellant came into existence on 16.10.2019. Thereafter, a Memorandum recording the transfer of the said business was also executed on 31.03.2020.
12. As noted above, the respondent had claimed the appellant was also selling namkeen and other baked snacks etc. under the impugned trademark “Gulab”. The appellant claims that the device mark used by the respondent in relation to its products infringes her registered trademark (TM-639) and amounts to passing off.
13. The device marks of the parties are reproduced below: Appellant Respondent
14. The parties also state that various applications for registration of their trademarks are pending before the Trademarks Registry.
15. In view of the disputes between the parties concerning the use of the marks bearing the word ‘Gulab’, the respondent issued a Cease-and- Desist Notice on 12.09.2019 to Mangrol to prevent it from using the trademark “Gulab” in respect of its products falling under Class 30.
16. The respondent filed a suit before the learned Commercial Court [being CS (COMM) 1724/2020] under the provisions of the Trade Marks Act, 1999, inter alia, seeking a decree of permanent injunction restraining the appellant from using its registered mark. The respondent also filed an application under Order XXXIX Rules 1 and 2 of the CPC. By an order dated 23.11.2020, the learned Commercial Court passed an ex parte ad interim injunction against the appellant.
17. Thereafter, the appellant filed an application under Order XXXIX Rule 4 of the CPC seeking vacation of the ex parte ad interim injunction order passed against it.
THE IMPUGNED ORDER
18. The learned Commercial Court found that, prima facie, it has the jurisdiction to deal with the said suit under Section 134 of the Trade Marks Act, 1999 and Section 20 of the CPC. The learned Commercial Court also found that the cause of action had accrued in the month of October, 2020, in favour of the respondent.
19. The learned Commercial Court found that no written document had been executed between plaintiff no. 1 and 2; therefore, plaintiff NO. 2. could neither be treated as a successor of plaintiff no. 1 nor claim any right in the business of plaintiff no. 1 on the basis of some oral understanding. The learned Commercial Court further found that in terms of Section 53 of the Trade Marks Act, plaintiff no. 2 could not be held as a “permitted user of the trademark ‘Gulab’” and accordingly, held that plaintiff no. 2 did not have any locus standi to continue with the suit and was liable to be deleted from the array of the parties.
20. The learned Commercial Court examined the self-declaration dated 16.10.2019 issued by Sh. Pragjibhai Gokaldas Nathwani and found that the said document did not mention that either M/s. Pankaj Traders or M/s. Pankaj Industries had any concern or connection with Mangrol or were the successors of Mangrol. The learned Commercial Court also found that neither the family agreement dated 05.11.2019 executed between Sh. Pragjibhai Gokaldas Nathwani and other family members nor the Memorandum of Transfer stipulated the same. The learned Commercial Court, accordingly, held that the appellant is the successor of only M/s Pankaj Industries (erstwhile M/s Pankaj Traders) and not of Mangrol, which is a separate and distinct entity and was not associated with the appellant.
21. The learned Commercial Court examined the bills and advertisements produced by the parties as evidence and found that the respondent (plaintiff) had started using the trademark “Gulab Ka Phool” since the year 2000 in respect of namkeen items also. The learned Commercial Court found that the appellant and its predecessor M/s. Pankaj Industries stared using the trademark “Gulab” for its namkeen products since 03.6.2008 and therefore, the respondent was prior user of the said trademark “Gulab Ka Phool”. The learned Commercial Court, however, found that the packaging of both the parties is visually and structurally different.
22. The learned Commercial Court was of a prima facie view that a person of average intelligence with imperfect recollection was likely to be confused at the first impression/look of the namkeen products manufactured by the appellant, and would be deceived into think the said product was that of the respondent. Accordingly, the learned Commercial Court found that the appellant is liable to be injuncted for misuse of trade name “Gulab”, which was similar to the trademark registered in favour of the respondent since year 1944.
23. The learned Commercial Court held that the prior user of the trademark “Gulab Ka Phool” (that is, the respondent) is entitled to protection. The learned Commercial Court found that the act of the appellant to adopt the same trade name in respect of similar products has the propensity to create confusion and is likely to lead innocent buyers to presume that its product is a product of the respondent. The Court held that it showed dishonest intention and bad faith on the part of the appellant. The learned Commercial Court also found that in the facts of the case, the appellant could not be granted any benefit of using the trademark “Gulab” innocently and without any intention to defraud the respondent.
24. The learned Commercial Court rejected the appellant’s contention that since the respondent had not taken any action against the other infringers of the trademark, she was not entitled to interim relief. The learned Commercial Court held that if the respondent did not institute any action against other manufacturer or person using its trademark, the same “is not sufficient to exonerate the defendant because it is the discretion of the plaintiffs not to take action against small type of infringers who are not causing any loss to it.”
25. The learned Commercial Court relied upon the decision of this Court in the case of Automatic Electric Limited v. R.K. Dhawan: 1999 (19) PTC 81 and rejected the appellant’s contention that the word 'Gulab' is a generic and common dictionary word, and could be used by anyone as the appellant itself had applied for registration of the said trademark. The learned Commercial Court further found that the appellant had no right to oppose the trademark applications preferred by the respondent on the aforesaid ground as due to the long and continuous use of the trademark (TM-639) was associated with the products manufactured by the respondent.
26. The learned Commercial Court held that the respondent is the “first user of such mark upon namkeen items” and thus, the respondent was entitled to the protection. The respondent had been using trademark “Gulab Ka Phool” since year 2000 for namkeen products, whereas the appellant had started using the trademark “Gulab” from the year 2008.
27. The learned Commercial Court also found no merit in the contention advanced by the appellant that the respondent had allegedly concealed material facts in the plaint and thus, the said suit was liable to be dismissed on this ground.
28. The learned Commercial Court took note of various applications; however, confined the consideration of the respondent’s entitlement to interim relief in connection with the trademark (“Gulab Ka Phool”) as the same was registered in the year 1944. The learned Commercial Court further held that the namkeen items sold by the respondent can be categorised as allied and cognate goods and are thus, entitled to protection under the cover of the said registered trademark. The learned Commercial Court also held that since the respondent is not dealing with or manufacturing edible oils, agricultural products and raw seeds including peanuts, there could be no stay on the appellant from using the trademark “Gulab” in respect of goods that the respondent did not deal in.
SUBMISSIONS
29. Mr Aniruddha Deshmukh, learned counsel appearing for the appellant, has confined the challenge to the impugned order on, essentially, four fronts. First, he submitted that the learned Commercial Court had found that plaintiff no.2 could not maintain the suit and, accordingly, deleted plaintiff no.2 from the array of parties but failed to consider the necessary effect of such deletion. He submitted that it was the plaintiffs’ case that plaintiff no.2 was carrying on the business of manufacturing and selling namkeen, roasted and baked products. Thus, once plaintiff no.2 was deleted from the array of parties, it was not possible for the learned Commercial Court to find any, prima facie, case of passing off as the respondent (plaintiff no. 1) was not carrying on any business. He also submitted that the interim order was passed only on a prima facie finding of passing off and not infringement of the trademark “Gulab Ka Phool”.
30. Second, he submitted that the respondent was not the proprietor of the registered trademark “Gulab Ka Phool” as her application for recording her as the owner of the registered mark was pending before the Trademark Registry.
31. Third, he submitted that the learned Commercial Court had erred in not accepting that Mangrol was the parent entity of the appellant. Consequently, the learned Commercial Court had disregarded the user of Mangrol as well as the actions taken by Mangrol for defending the trademark in question and opposing further registrations of the trademark in the name of the respondent.
32. In addition to the above submissions, Mr Deshmukh also contended that the learned Commercial Court did not have the territorial jurisdiction, as the registered office of the respondent was not located in Delhi and the respondent also did not reside in Delhi. He, however, did not press this contention as concededly, the appellant was selling its products within the territorial jurisdiction of the learned Commercial Court; and the same were similar to the respondent’s product sold within the territorial jurisdiction of the learned Commercial Court.
33. Fourth, he submitted that though the learned Commercial Court had found that packaging of the product was not deceptively similar, it proceeded on the basis that a prima facie case for passing off was established by the respondent. He submitted that in view of the finding that the packaging is dissimilar, the respondent’s case for passing off ought to have been rejected.
REASONS AND CONCLUSION
34. The appellant’s contention that the impugned order is based solely on the prima facie case of passing off, is erroneous. A plain reading of the impugned order indicates that the learned Commercial Court had found in favour of the respondent, both in respect of a prima facie case of infringement of the trademark as well as passing off. The learned Commercial Court had noted that several applications preferred by both the parties for registration of their trademarks, were pending at various stages.
35. After noting the above, the learned Commercial Court had considered the respondent’s (plaintiff) case confined to the registered trademark “Gulab Ka Phool” (TM-639). Undisputedly, the said trademark was registered under Class 30 for sweet edible items, namely, Gajjak and Rewari, in the year 1944. However, the respondent (or her predecessors) had commenced the business of selling namkeen and other ready to eat snacks from the year 2000 onwards. The learned Commercial Court found that the said items were allied and cognate goods and were entitled to protection of the registered trademark. In addition, the learned Commercial Court found that the appellant was not entitled to use the trademark “Gulab Ka Phool” or any other deceptively similar marks in relation to namkeen and other baked and roasted ready to eat snacks as the same would constitute passing off. This Court finds no flaw with the reasoning of the learned Commercial Court that namkeen and other ready to eat sweets such as Gajjak and Rewari are allied and cognate goods.
36. The contention that no case of passing off has been made out as the respondent does not carry on the business of manufacturing and selling any items, is unpersuasive. It was the case of the plaintiffs before the learned Commercial Court that plaintiff no.2 company had been selling goods under an arrangement with plaintiff no.1 company. Plaintiff no.2 is a closely held company. Plaintiff no.1 is also a Director of plaintiff no.2 company. In addition, the plaintiffs plead that they carry on the business through various franchises and their names and locations were set out in the plaint. It is also material to note that the plaintiffs had also provided the figures of their sales turnover separately for plaintiff no.1 and for plaintiff no.2 company.
37. Plaintiff no.2 company was directed to be deleted from the array of parties. The court noted that one of its objects was to take over the business of M/s Lala Shiv Nath Rai Sumer Chand, which belonged to plaintiff no.1 but no formal document had been executed for such a take over. The learned Commercial Court was of the view that plaintiff no.2 company could not be legally treated as a successor of the respondent (plaintiff no.1) and therefore, could not assert rights to the business of the respondent (plaintiff no.1) on the basis of an oral understanding. The said findings are clearly inconsistent with the contention that plaintiff no.1 was not carrying on any business.
38. Admittedly, the business is being carried out. Whether there has been any formal transfer from the respondent (plaintiff no.1) to plaintiff no.2 is a contentious issue. The issue of formal transfer need not concern this Court at this stage. However, it is obvious that if the running business was not formally taken over from the respondent (plaintiff no.1), it would be apposite to assume that it was being carried out on her behalf. In any view of the matter, this Court is unable to accept that the learned Commercial Court had erred in proceeding on the basis that the respondent (plaintiff no.1) is using the trademark in connection with namkeen and roasted and baked products.
39. The contention of the appellant that the respondent (plaintiff no.1) is not entitled to claim rights as the proprietor of the registered trademark “Gulab Ka Phool”, as her name has not been recorded as a proprietor, is also unpersuasive. The respondent (plaintiff no.1) claims the ownership of the registered trademark by succession.
40. Lala Sh. Shiv Nath Rai had commenced the business under the trademark in question. The same devolved on his son - Late Sh. Sumer Chand, who carried on the business under the said trademark. It is stated that Late Sh. Sumer Chand executed a Will dated 01.03.1995 bequeathing his assets under the said tradename to his sons - Late Sh. Subhash Rai Gupta and Sh. Sudhir Gupta. The plaintiffs claim that they carried on the business by forming a partnership using the said trademark. Thereafter, the said partnership was dissolved by a Dissolution Deed dated 11.12.1995 and Late Sh. Subhash Rai Gupta became the sole proprietor of the business including the trademark/tradename in question (TM-639).
41. The respondent (plaintiff no.1) is the widow of Late Sh. Subhash Rai Gupta and she claims to have acquired title to the registered trademark by virtue of a Will dated 22.04.2016 executed by her husband (Late Sh. Subhash Rai Gupta). Admittedly, the necessary applications for recording the change of ownership were filed with the Trademark Registry. It is well settled that there is no hiatus in succession and the estate of the deceased is transmitted to the successors immediately on his/her demise. Therefore, the contention that plaintiff no.1 (the respondent) cannot maintain the suit as an owner of the registered trademark in question cannot be readily accepted. More so, when there is no real dispute as to whether she has succeeded to the estate of her late husband. There is no material to suggest that any of his legal heirs are contesting the bequest in her favour.
42. The next question to be addressed is whether the learned Commercial Court had erred in not accepting that Mangrol was a parent entity of the appellant. The appellant claims that it was formed by the family members and partners of the parent concern - Mangrol. It also claimed that Mangrol had commenced the business in various types of edible oils, food grains, wheat, groundnut, seeds, raw peanuts under the trademark “Gulab” since the year 1985. It had also opposed several applications filed by the respondent for registration of the trademark “Gulab”. Admittedly, there is no document on record, which indicates that Mangrol is the holding entity of the appellant. Therefore, the contention that the learned Commercial Court had erred in not accepting it as the appellant’s parent entity, is unpersuasive.
43. The appellant claims that Mangrol is the parent entity solely on the basis that it was promoted by one Sh. G.K. Nathwani and the appellant company is promoted by his grandchildren. It is relevant to note that the appellant claims proprietary rights in respect of the trademark “Gulab”, as used in connection with “packaged roasted and baked peanuts” through M/s Pankaj Traders. The appellant claims that M/s Pankaj Traders had commenced the business of “packaged roasted and baked peanuts, i.e. namkeen in the year 2016”. It claims that Mangrol was, in any event, involved in the sale of raw groundnut seeds prior to the said date. The appellant relies on a self-declaration executed on 16.10.2019 by Sh. Pragjibhai Gokaldas Nathwani and a Family Agreement entered into on 15.11.2019. It is relevant to refer to the said declaration. The said extract reads as under: “I state that, I commenced my sole proprietary business initially under the name and style of M/s. Pankaj Traders on and from 7-12-1997 as manufacturer, dealer, trader, refiner, processor, importer, exporter, agent, representative and merchant, inter alia in respect of Agriculture Products including food grains and Edible & Non- Edible Oils. I further state that during the year 2006 while I continued the business of the aforesaid goods, changed the trade name of my said business, i.e. M/s. Pankaj Industries in place of M/s. Pankaj Traders. I further state that during the year 2008, in addition to the business of the aforesaid goods, I have also started business of ‘Packaged Peanuts (Ground Nut Seeds), i.e. Raw Peanuts’ under the unique packaging with the novel logo containing the name ‘Gulab’ in English and Hindi script with the unique device of ‘Rose’ and continued the said business till the present days. I further state that, thereafter, I have also expanded the aforesaid existing business and started another Division during the year 2016 for Food Products - Fast Moving Consumer Goods (FMCG), viz.
(i) Packaged Food Eatables, Namkeen &
Peanuts, viz. Flavored Peanuts (Tangy Mint), Flavored Peanuts (Salted), Flavored Peanuts (Spicy Masala), Flavored Peanuts (Hing Jeera), Flavored Peanuts (Black Pepper), Flavored Peanuts (Cheese Tomato), Flavored Peanuts (Chilly Garlic), Chocolaty Peanuts, Chatpata Chana (Flavored Chana), Sing Bhujiya (Nut Crunch), Masala Sing Chane, Hing Jeera Chana (Flavored Chana), Spicy Masala Chana (Flavored Chana) and other preparations made from Cereals (for short ‘ Packaged Namkeen & Peanuts’) under the eye aesthetic, attractive and novel artistic works having unique logo containing the name ‘Gulab’ in English & Hindi script with the device of Rose (for short ‘trade mark’ & ‘artistic work’) during the year 2016 and continued till the present days; and.....”
44. It is clear from the above that M/s Pankaj Traders (subsequently known as M/s Pankaj Industries) was a sole proprietorship concern of Sh. Pragjibhai Gokaldas Nathwani and not an offshoot of Mangrol. Sh. Pragjibhai Gokaldas Nathwani had claimed that he had commenced the business under “Novel Logo containing the name ‘Gulab’” in the year
2008. The said business was confined to raw peanuts and other products and not any ready to eat packaged food. He expanded his business and started a separate division for food products in the year 2016.
45. The Family Agreement relied upon by the appellant indicates that the appellant company was incorporated to take over the business of the sole proprietorship concern of M/s Pankaj Industries. Therefore, in terms of the said documents, the appellant had acquired the rights in respect of the trademark “Gulab” that were vested with Sh. Gokaldas Nathwani as a proprietor of M/s Pankaj Industries. The appellant relies on the aforesaid documents. In the given facts, this Court finds no infirmity with the decision of the learned Commercial Court in not accepting that Mangrol is a parent entity of the appellant.
46. It is also material to note that according to the appellant “Novel Logo containing the name ‘Gulab’ in English and Hindi script with the unique device of ‘Rose’” was adopted for flavoured and roasted peanuts, namkeen etc. for the first time during the year 2016. In this view, the learned Commercial Court’s finding that prima facie, the respondent (her predecessor) was a prior user of the trademark in question (Gulab ka Phool), cannot be faulted.
47. The last question to be addressed is whether the learned Commercial Court had erred in finding that a prima facie case of passing off was made out despite finding that the packaging used by the parties were dissimilar. According to the appellant, the said conclusion is erroneous as there is no finding that the respondent had established any goodwill in respect of the products in question sold under the trademark “Gulab”.
48. The learned Commercial Court had found that there were dissimilarities in the device marks and the packaging used by the plaintiffs and the defendant (appellant). However, the learned Commercial Court was of the view that notwithstanding the dissimilarities, there is likelihood of confusion as both the marks used the device of a rose and the word ‘Gulab’. The learned Commercial Court had also reasoned that customers who buy the products belong to a homogeneous class and there was no market differentiation between them. The learned Commercial Court viewed the question whether there would be any confusion from the standpoint of a person of average intelligence with imperfect recollection. Considering the facts and circumstances, the learned Commercial Court was of the view that customers were likely to be deceived into believing the appellant’s products as that of the respondent. We do not find any fundamental flaw in this view. We are unable to accept that the said view is arbitrary, perverse or capricious. Thus, on the anvil of the principle as set out by the Supreme Court in Wander Ltd. and Anr. v. Antox India P. Ltd.: 1990 Supp. SCC 727, no interference with the said prima facie finding is warranted.
49. The contention of the appellant that the learned Commercial Court had not returned any prima facie finding that the respondent had established any goodwill or reputation in the market and thus, has erred in finding that a prima facie case of passing off is made out, is also unpersuasive. A plain reading of the impugned order indicates that the learned Commercial Court had looked into various invoices and publicity expenses and accepted that the respondent’s trademark had a presence in the market. The learned Commercial Court also noted that the respondent’s mark was an old mark registered way back in the year
1944. And, there was material on record to indicate that the business under the said trademark had commenced in the year 1910. The learned Commercial Court had also noted that the respondent had established that the products under the said tradename were sold across various cities through franchises.
50. A meaningful reading of the impugned order clearly indicates that the learned Commercial Court was of the view that the respondent had prima facie established that there was significant goodwill and reputation associated with the trademark in question.
51. Before concluding, it is also relevant to note that the learned Commercial Court has not interdicted the appellant from using its trademark in relation to other products. The appellant has been restrained to use the trademark “Gulab Ka Phool” or any other deceptively similar mark only in connection with namkeen, roasted and baked ready to eat products.
52. This Court is unable to accept that the impugned order warrants any interference in these proceedings. The appeal is, accordingly, dismissed. All pending applications are disposed of.
VIBHU BAKHRU, J AMIT MAHAJAN, J NOVEMBER 15, 2022 Ch/RK