Full Text
HIGH COURT OF DELHI
Date of Decision: 2nd November, 2022
SILVERMAPLE HEALTHCARE SERVICES PRIVATE LIMITED ..... Plaintiff
Through: Mr. Tushar Singh, Ms. Sugandh Virmani and Mr. Aditya Kumar, Advocates.
Through: Ms. Sneha Jain, Mr. Sidharth Chopra, Mr. Vivek Ayyagari, Mr. Sudarshan M.J., Ms. Paushi Sridhar and Ms. Ramya A., Advocates.
JUDGMENT
1. Present application has been preferred on behalf of the Defendant under Order VII Rule 11 read with Section 151 CPC, 1908 seeking rejection of the plaint on two grounds: (a) Plaintiff is legally disentitled to institute a suit for infringement of DHI marks by virtue of provisions of Section 53 of the Trade Marks Act, 1999 (hereinafter referred to as the ‘Act’); and (b) non-joinder of necessary party qua the claim for disparagement under Proviso to Rule 9 of Order I CPC.
2. Relevant it would be to mention at this stage that during the course of hearing of the present application, with respect to the claim of infringement of the DHI trademarks, learned counsel for the Plaintiff had fairly given up the relief of infringement on account of the Plaintiff being a licensee under the Master Franchise Agreement dated 26.03.2018 (hereinafter referred to as the ‘MFA’) in light of the statutory bar under Section 53 of the Act. Therefore, this Court is not adjudicating on the first ground raised by the Defendant for rejection of the plaint.
3. Arguing in support of the second ground qua disparagement, learned counsel for the Defendant submitted that the present suit is, in fact, a suit for defamation of the DHI trademarks, disguised as a suit for trademark disparagement, which is evident from the averments in the plaint. In paragraph 64 of plaint, it is pleaded that the cause of action first arose when the Defendant posted the defamatory content and in paragraph 24, it is averred that the suit is for defamation viz. disparagement of Plaintiff’s brand. It is Plaintiff’s own case that it is merely a licensee of the DHI trademarks. It is trite that in cases of defamation, it is only the ‘defamed’ who has locus to institute proceedings. The DHI technique of hair transplantation was conceived, developed and is owned by ‘DHI Global Medical Group’ and not the Plaintiff. Plaintiff claims to have acquired the license under the MFA, Clause 5.2(d) whereof clearly provides that franchisee will never become entitled to any part of this goodwill nor any indemnification for promoting or protecting the goodwill. In the absence of any goodwill vesting in the Plaintiff in the DHI marks/technique, no claim for defamation/disparagement can lie in the absence of the owner/proprietor of the said marks. The cause of action for defamation, if any, is based on the impugned videos which only make a reference to the DHI brand and technique and it is not even the Plaintiff’s case that they make any reference to the Plaintiff i.e. SilverMaple Health Care Services Private Limited. Positive assertions in the plaint relate to invasion of goodwill and reputation of DHI marks and technique.
4. Section 48(2) of the Act is clear in its scope and provides that permitted use of a trademark shall be deemed to be used by the proprietor thereof and shall be deemed not to be used by a person other than the proprietor, for the purposes of Section 47 or for any other purpose for which such use is material under this Act or any other law. Use by a licensee is always a use by the owner and licensee cannot claim any independent proprietorship on the marks. Further, in the case of Ramdev Food Products (P) Ltd. v. Arvindbhai Rambhai Patel and Others, (2006) 8 SCC 726, it was held that when a right to use a trademark is given under an agreement, such a right can be exercised only in the manner laid down in the agreement. Thus, Plaintiff cannot sue for disparagement of DHI marks/technique in the absence of the proprietor/owner, who is a necessary party in the present suit. Present plaint is thus liable to be rejected under Order VII Rule 11(d) CPC as being barred under law by virtue of Proviso to Rule 9 of Order I CPC, on account of non-joinder of a necessary party.
5. Without prejudice to the above submission, it was contended that Plaintiff may have an independent positive right under the common law in goodwill/reputation associated with the business of hair transplantation, however, Plaintiff would then require to plead and show that the goodwill has been generated by Plaintiff’s own efforts and is not of the brand owner. Present plaint totally lacks in any such pleading and rightly so, as the Plaintiff was conscious of the fact that under Clause 5.2(d) of MFA, no goodwill or reputation in the DHI brand or technique has passed on to the Plaintiff.
6. To overcome the threshold objection under Order VII Rule 11 CPC, Plaintiff has, in its reply to the present application, for the first time, averred that an independent legal right under the MFA to conduct business of hair transplant using ‘know how’ and ‘technique’ in India and earn profit from it, vests in the Plaintiff. Plaintiff has also for the first time pleaded in the reply that it is not seeking any right in the goodwill of the DHI technique or trademarks but seeks to protect the reputation, goodwill and business of its clinic which is interdependent on DHI technique and trademarks. Therefore, going by these pleadings, Plaintiff only pleads statutory and proprietary right in the DHI trademarks and no substantive right is pleaded in favour of the Plaintiff in the reputation, goodwill and business of its clinics. In fact, reading of the plaint shows that contrary to what is now claimed, Plaintiff has asserted in the plaint that it has spent crores of rupees in advertising DHI marks, which has contributed to the popularity of ‘DHI Hair Transplantation’ brand name and trademarks.
7. Relying on the judgment of this Court in Trans Tyres India Pvt. Ltd. v. Double Coin Holdings Ltd. & Anr., 2012 SCC OnLine Del 596, it was submitted that Plaintiff has not pleaded in the plaint that consumers in India associate the business of hair transplantation run through Plaintiff’s clinics exclusively with the Plaintiff and none-else or that the consumers identify the DHI brand/technique in India with the Plaintiff alone, as the source identifier for the DHI hair transplantation services in India.
8. Responding to the arguments, learned counsel for the Plaintiff contended that under the MFA, Plaintiff has been licensed to use DHI technique and over a period of time, Plaintiff has gained immense trust and respect of the public in India and has created a goodwill, reputation and business in its clinics. Defendant has uploaded the impugned videos with malicious intent to disparage/denigrate the DHI technique using which Plaintiff runs its business, with a view to lure the current and prospective hair transplant clients of the Plaintiff to its own clinic. Under Clause 5.2(d) of the MFA, Plaintiff is obliged to protect and promote the goodwill of DHI technique and trademarks since it is a beneficiary of the goodwill and in that capacity, Plaintiff has the locus to file the suit for disparagement of the DHI technique against the Defendant. Plaintiff has clearly averred in several paragraphs of the plaint that the impugned videos have been published with the sole malicious intent to discredit Plaintiff’s hair transplant technique and tarnish and injure Plaintiff’s brand, reputation and hair transplant business. The pleadings unequivocally demonstrate cause of action in favour of the Plaintiff. Reliance was placed on paragraphs 1, 2, 13, 14, 15, 16, 30, 31, 36, 38, 46, 50 and 53 of the plaint and predicating its case on the averments in the said paragraphs, it was argued that the licensor/franchisor is neither a necessary nor a proper party with respect to the lis, cause of action and the relief claimed in the present suit and the suit is maintainable in the present form.
9. Without prejudice to the aforesaid submission, it was submitted that a bare perusal of provisions of Order VII Rule 11(d), CPC would show that non-joinder of necessary parties is not a permissible ground for rejection of the plaint under the said provisions. Furthermore, the Supreme Court in the case of Mumbai International Airport Private Limited v. Regency Convention Centre and Hotels Private Limited and Others, (2010) 7 SCC 417, has held that a Court may at any stage of the proceedings, either upon an application or even suo moto add anyone as Plaintiff or Defendant, if it finds that such party is a necessary or a proper party. Since the Code of Civil Procedure itself provides a recourse to the Plaintiff and to the Court to implead a necessary party at any stage of the proceedings in order to adjudicate upon the matter efficaciously, the alleged non-impleadment of a necessary party cannot lead to rejection of the plaint at the threshold by invoking Order VII Rule 11 CPC, without affording an opportunity to the Plaintiff to implead the party i.e. the franchisor in the present case, assuming without admitting that it is a necessary party. To the same effect are the observations in Baluram v. P. Chellathangam and Others, (2015) 13 SCC 579, relying upon the earlier judgement in Mumbai International Airport Private Limited (supra). It was, therefore, submitted that the present application being devoid of merit only deserves to be dismissed.
10. I have heard learned counsel for the parties and examined their respective contentions.
11. As noted above, Plaintiff has given up the relief of infringement and is only pressing the relief of disparagement against the Defendant and the objection, therefore, that remains to be decided by this Court in the present application, is with respect to the alleged non-joinder of necessary party. A bare perusal of the provisions of Order VII Rule 11(d) CPC shows that under the said provisions, plaint is liable to be rejected where the suit appears from the statement in the plaint to be barred by any law and therefore, question that arises is whether non-impleadment of a necessary party can stated to be covered under the expression ‘barred by law’.
12. In the opinion of this Court not much cogitation is required to answer the question as the same question came up before this Court in Gajinder Pal Singh v. Mehtab Singh and Others, 2001 SCC OnLine Del 1682. In the said case, an application was filed on behalf of some of the Defendants under Order VII Rule 11 CPC for rejection of the plaint for non-joinder of necessary party. After considering the submissions of both parties, the Court held that the ground taken, namely, non-joinder of necessary party is not covered by any of the Clauses (a) to (d) of Rule 11 of Order VII CPC. This was a matter which will have to be considered at the appropriate stage after framing of issues including the issue on this aspect. After framing of issues, this particular issue can be treated as ‘preliminary issue’ and if no evidence is required, it can be listed for arguments. It was further held that even if it is ultimately held that the party alleged to be a necessary party is found to be one, the suit may not necessarily be dismissed without giving an opportunity to the Plaintiff to amend the plaint by adding the absent party. The application was dismissed by holding that on the basis of Order VII Rule 11 CPC, the suit could not be dismissed and the Court can always exercise power under Order I Rule 10 and Order VI Rule 17 CPC, as also held by the Guwahati High Court in Motoi Mia and Others v. Abdul Haque and Others,
13. This Court in Prem Prakash Dhawan v. Aman Dhattarwal and Others, 2021 SCC OnLine Del 2547, while dealing with a similar objection has held that ground of non-joinder of parties is not available in an application under Order VII Rule 11 CPC and to the same effect is the decision of the Bombay High Court in Ramesh Shriram Sule v. Dilipraj Niranjankumar Goenka and Another, 2008 SCC OnLine Bom 1118.
14. In the case of P. Govindasamy v. Manickam and Others, 2015 SCC OnLine Mad 13147, one of the questions before the Division Bench of the Madras High Court was whether the objection of nonimpleadment of necessary parties or proper parties is an issue to be determined in the suit on the basis of evidence adduced by the parties at the time of trial or was the same to be decided in an application filed under Order VII Rule 11(a) and (d) CPC. After analysing the provisions of Order I Rule 10 CPC as well as various eventualities where a party may be considered as a necessary party, the Court observed that learned Single judge fell in error in rejecting the plaint under Order VII Rule 11(d) CPC on the ground of non-joinder of a necessary party.
15. In Civil Revision Petition No. 3026/2019 titled as Soyal Infra and Another v. Smt. Rameez Bee and 5 Others, vide order dated 09.03.2022, the Telangana High Court has reiterated the position of law that non-joinder of necessary parties is not a ground for rejection of plaint under Order VII Rule 11 CPC. It was held that even if there is non-joinder of necessary parties, Plaintiffs can be afforded opportunity at appropriate stage of the suit by framing an additional issue for impleading necessary parties, if required. However, the same cannot be stretched to reject the plaint without any opportunity for impleadment. If after an opportunity being granted, Plaintiffs fail to act upon and do not implead the necessary party, the suit can always be ultimately dismissed, but only after framing of issues and trial. Accordingly, the Court had rejected the contention that non-joinder of parties can be a ground for rejection of the plaint.
16. From a conspectus of the aforesaid judgments, it is indisputably clear that plaint cannot be rejected at the threshold for non-joinder of necessary party under Order VII Rule 11(d) CPC. Even assuming that the Plaintiff has not impleaded the franchisor as a party in the present suit, Court can always frame a preliminary issue on this aspect, as expounded in the aforesaid judgments and if the Court comes to a conclusion that the franchisor of the Plaintiff and the owner of DHI brand is a necessary party, opportunity can be given to the Plaintiff for impleadment under Order I Rule 10 CPC.
17. To strengthen the argument of rejection of plaint on the ground of non-joinder, learned counsel for the Defendant had urged an alternative argument that even if pleadings in the plaint are taken on a demurrer, there is an admission of interdependency and intrinsic intertwining of owner’s goodwill in the DHI marks/technique and there is no averment regarding rights in the goodwill, reputation and business of Plaintiff’s clinics, accruing by its efforts and the plaint also lacks minimum pleadings necessary to make out a claim for disparagement that the consumers in India associate the business of hair transplantation run through Plaintiff’s clinics under the DHI brand with the Plaintiff and none-else.
18. It is a settled law that under Order VII Rule 11 CPC, Court is only required to consider the averments in the plaint on a demurrer to ascertain whether it discloses a cause of action or is barred by law. The stand of the Defendant in the written statement or even in an application for rejection of the plaint, is wholly immaterial at the stage of exercise of power under Order VII Rule 11 CPC. It is also a settled position of law that while deciding an application under Order VII Rule 11 CPC, the adjudication will be confined to looking at the plaint presuming the averments to be correct on their face value as also the documents filed in support thereof. In my view, the language of Order VII Rule 11 CPC is clear and unambiguous and admits of no other interpretation. In this context, I may refer to the judgment in the case of P.V. Guru Raj Reddy Represented by GPA Laxmi Narayan Reddy and Another v. P. Neeradha Reddy and Others, (2015) 8 SCC 331, wherein the Supreme court held as follows:-
19. A Coordinate Bench of this Court in CNH Industrial (India) Pvt. Ltd. v. Tirth Agro Technology Pvt. Ltd., 2019 SCC OnLine Del 7484, held as follows:-
16. Hence for the purpose of considering an application under Order 7 Rule 11 CPC only the averments made in the plaint have to be taken presuming them to be correct on the face of it along with the documents filed in support of the plaint.
17. In my opinion, in the present case if it is presumed that the averments are correct, it cannot be said that the suit is filed without any cause of action. A clear cause of action in terms of Section 17 of the Copyright Act is spelt out.
18. That apart, the suit is filed seeking multiple reliefs including the relief of permanent injunction for passing off of the trade dress. There is no plea raised that this plea in the plaint also attracts Order 7 rule 11 CPC. It is well established that a plaint cannot be rejected in part by a civil court, while exercising its powers under Order 7 Rule 11. The rule was enunciated in Roop Lal Sathi v. Nachhattar Singh Gill, (1982) 3 SCC 487, where it was held by the Supreme Court that only a part of the plaint cannot be rejected and if no cause of action is disclosed, the plaint as a whole must be rejected. The relevant para noted as follows:
”
20. Plaintiff has, in its reply to the present application, extracted relevant portions from the plaint, wherein according to the Plaintiff, there are clear pleadings alleging disparagement of goodwill and denigration of Plaintiff’s reputation and business apart from the consequential loss of trust in the public on account of the impugned videos posted by the Defendant in public domain. It is stated in the plaint that the impugned videos have been published with the sole malicious intent to discredit, slight, tarnish and injure Plaintiff’s reputation and its hair transplant business, simultaneously puffing up and selling its own hair transplant technique as being better in comparison with Plaintiff’s business. It is further averred that Plaintiff has gained immense trust and respect of the public by complying with exemplary standards maintained by various clinics owned by the Plaintiff and its sub-franchisees. On account of the impugned action of the Defendant, it is stated that a consumer with ordinary intelligence would assume that Plaintiff’s technique does not produce good results and is harmful and should be shunned/rejected. The averments also reveal that Plaintiff has alleged that Defendant’s utterly false statements which are disparaging the technique are causing loss to the reputation of the Plaintiff and the continuing effect is damaging, harming and destroying its reputation and goodwill in general public and business community, specifically the current and potential customers of the Plaintiff.
21. Reading the averments in the plaint holistically and taking them to be correct at this stage, this Court is of the view that the contention of the Defendant that the plaint lacks pleadings with respect to disparagement qua the Plaintiff’s business, reputation and goodwill, cannot be sustained. Therefore, the plaint cannot be rejected at the threshold under Order VII Rule 11(d) CPC and the application is bereft of merits.
22. For the aforesaid reasons, the application is dismissed. CS(COMM) 430/2022 & I.A. 9660/2022 (under Order 39 Rules 1 and 2 CPC, by Plaintiff), 13229/2022 (under Order 39 Rule 4 CPC, by Defendant)
23. Since the Plaintiff has given up the claim for infringement, the suit shall proceed with respect to the remaining reliefs sought by the Plaintiff.
24. List before the Joint Registrar on 24.01.2023 for further proceedings.
JYOTI SINGH, J NOVEMBER 2, 2022/rk