Lalit Kumar Arya & Anr. v. M/S Prabhat Zarda Factory International (Noida)

Delhi High Court · 13 Mar 2019 · 2019:DHC:1536

Prathiba M. Singh

CS(COMM) 1031/2016

2019:DHC:1536

civil appeal_allowed Significant

AI Summary

The Delhi High Court held that the assignee recorded by the Registrar of Trademarks is entitled to continue trademark infringement suits as successor in interest under Order XXII Rule 10 CPC, subject to trial on validity of assignment and competing Will claims.

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CS(COMM) 1031/2016, 1032/2016 & CS (OS) 1319/2013
HIGH COURT OF DELHI
Date of Decision: 13th March, 2019

CS(COMM) 1031/2016
LALIT KUMAR ARYA & ANR. ..... Plaintiffs
Through: Mr. Vidit Gupta, Advocate for P-2 & Applicant (M-9910995511)

VERSUS

M/S PRABHAT ZARDA FACTORY INTERNATIONAL (NOIDA) ..... Defendant
Through: Mr. Ravi Gupta, Sr. Advocate with Mr. Amit Trivedi, Mr. Sachin Jain, Ms. Diya Kapoor, Advocates
(M-99682283100

JUDGMENT

3 WITH + CS(COMM) 1032/2016 LALIT KUMAR ARYA & ANR...... Plaintiffs Through: Mr. Vidit Gupta, Advocate for P-2 and Applicant in I.A.546/2019 (M-9910995511)

VERSUS

PRABHAT ZARDA FACTORY CO...... Defendant 9 AND + CS(OS) 1319/2013 & I.A. 526/2019 JYOTI KUMAR ARYA & ORS...... Plaintiffs versus LALIT KUMAR ARYA & ORS...... Defendants Through: Mr. Vidit Gupta, Advocate for D-1(a), 1(o), 1(P) & D-2 CORAM: JUSTICE PRATHIBA M. SINGH 2019:DHC:1536 O R D E R % 13.03.2019 I.As. 8640/2016 & 532/2019 (u/O XXII Rule 10 CPC), I.A. 8956/2016 (u/O XXII Rule 3(2) CPC) & I.A. 2893/2019 (u/o I Rule 10 CPC) in CS(COMM) 1031/2016 I.As. 8627/2016 & 549/2019 (u/O XXII Rule 10 CPC), I.A. 8958/2016 (u/O XXII Rule 3(2) CPC) & I.A. 2894/2019 (u/o I Rule 10 CPC) in CS(COMM) 1032/2016

1. The present suits relate to the trademarks “RATNA”, “RATNACHHAP”, “PRABHAT ZARDA”, “RATNA CHHAP ZAFRANI PATTI” “RAJRATAN” and the numeral “300” which were owned by Sh. Lalit Kumar Arya. Disputes have arisen amongst the various family members of Sh. Lalit Kumar Arya who was married to Smt. Rukmini Devi. They had three sons, namely, Sh. Vijay Kumar Arya, Sh. Jyoti Kumar Arya and Sh. Pradeep Kumar Arya. Sh. Vijay Kumar Arya pre-deceased Sh. Lalit Kumar Arya. His interest is being represented in the proceedings filed by his wife - Smt. Chaya Devi. Sh. Pradeep Kumar Arya also pre-deceased his father and he is represented through his son – Sh. Purushottam Kumar Arya. The litigation has had a chequered history in respect of the trademarks which are used by the various businesses. There were several entities which have been established during the lifetime of Sh. Lalit Kumar Arya. The said entities are: i) Prabhat Zarda Factory (India) Pvt. Ltd. – this was a company promoted by Sh. Lalit Kumar Arya in which all the family members were Directors and shareholders. Sh. Lalit Kumar Arya passed away on 3rd February, 2016. The control of this company was subject matter of various proceedings before this Court and in a Company Law Board proceeding, a settlement was entered into between the parties which was recorded by the Supreme Court in its order dated 4th December, 2017. By virtue of the said settlement, Smt. Chaya Devi has resigned from the said company. Currently, the shareholders and the Directors of this company are Smt. Rukmini Devi who is the Managing Director and the Chairperson and Sh. Jyoti Kumar Arya and Sh. Purushottam Kumar Arya and their families. Smt. Chaya Devi is also 33% shareholder in this company; ii) Prabhat Zarda Factory International (Noida) – This is a firm under the control of Sh. Jyoti Kumar Arya; iii) Prabhat Zarda Factory Company: This is a firm which is in the control of Sh. Purushottam Arya; iv) Prabhat Zarda Factory (Overseas): This firm is in the control of Smt. Chaya Devi.

2. During the lifetime of Sh. Lalit Kumar Arya, various firms and companies were using the trademarks as licensees of Sh. Lalit Kumar Arya. Disputes had arisen between Sh. Lalit Kumar Arya and his two sons – Sh. Jyoti Kumar Arya and Sh. Pradeep Arya which had led to termination of the licenses which were issued for use of the marks. However, there was a settlement which was entered into in suit no.2113/2006 which was finally compromised and the licensees were allowed to continue to use the marks. The licence agreements were renewed from time to time on agreed terms. In 2013, a partition suit was filed by Sh. Jyoti Kumar Arya and Sh. Purushottam Arya which is suit no. 1319/2013. In this suit, the claim of the two families is that the movable and immovable assets constitute joint family property and are not the exclusive property of Sh. Lalit Kumar Arya. On 18th January, 2014, Sh. Vijay Kumar Arya, the youngest son with whom Sh. Lalit Kumar Arya was closely associated, passed away.

3. In October, 2013, however, Sh. Lalit Kumar Arya terminated the licenses in favour of Sh. Jyoti Kumar Arya and Sh. Purushottam Kumar Arya and their firms and filed two suits being suit no.1031/2016 and 1032/2016. Thus, three suits i.e., CS(OS) 1319/2013, CS(COMM) 1031/2016, and CS(COMM) 1032/2016 are pending adjudication before this Court.

4. In the said two suits, i.e., suit Nos. 1031-32/2016, vide order dated 2nd November, 2015, an interim injunction has been passed in the following terms:

“16. The plaintiffs have made out a strong prima facie case in their favour. The balance of convenience is also in favour of the plaintiff in view of the long user of the trademarks as exclusive proprietors. 17. Ad interim injunction order is passed in favour of the plaintiff and against the defendant restraining the defendant, their partners, proprietors, directors etc. as the case may from manufacturing, marketing or selling chewing tobacco/zafrani patti, Zarda and Quiwam under the trademark RATNA and RATNACHHAP and numeral 300 and Prabhat Zafrani Patti or any other Trade Mark deceptively similar to the said trade marks or the colour scheme, get up, layout and arrangement and features similar to that of the plaintiff. IA No.16580/2014 is disposed of on the above terms. …………… 20. In view of the judgment passed above in IA No. 16580/2014 in CS(OS) 2622, these two applications, i.e. IA Nos.20893/2014 and 24158/2014 are disposed of in terms of the injunction, which is stated above. The same injunction shall apply to the defendant herein

also. Thus, these applications i.e. IA 20893/2014 and IA 24158/2014 stand disposed of on the above terms.”

5. On 17th December, 2015, an assignment deed was executed by Sh. Lalit Kumar Arya in favour of Smt. Chaya Devi – wife of deceased Sh. Vijay Kumar Arya, who was his daughter-in-law. As per the assignment deed, all trademarks belonging to Sh. Lalit Kumar Arya, were assigned to Smt. Chaya Devi. Sh. Lalit Kumar Arya passed away on 3rd February, 2016. On 10th February, 2016, Form TM-24 was filed seeking recordal/enforcement of the assignment of the marks, in favour of Smt. Chaya Devi as the subsequent proprietor of the trademarks of Sh. Lalit Kumar Arya. The other parts of the family filed objections to the recordal of the assignment.

6. The Registrar of Trademarks on 6th January, 2018 recorded the said assignment and Smt. Chaya Devi has been made the subsequent proprietrix of the trademarks. The said order has been challenged in Writ Petition (Civil) 558/2018 in which notice has been issued. The order dated 13th April, 2018 passed therein is set out herein below:

1. “Mr. Hemant Khosla, Senior Examiner of Trade Marks submits that when objections are considered vis-à-vis application for registration of trademark, no hearing is held and orders are passed, based on material placed before the concerned authority.

2. Mr. Sibal, learned Senior counsel, relies upon copies of the additional documents filed with the Registry of this Court on 12.04.2018, vide diary NO. 108032. Out of the bunch of the documents placed before me reliance is placed by learned counsel on the status report of respondent No. 2, which, inter alia, records the following: - “Pursuant to a request on form TM-24 dated 10.02.2016 and order thereon dated 06.01.2018 Chhaya Devi W/o late Vijay Kumar Arya has been brought on record as subsequent proprietor in respect of the said registered trademark”.

3. A perusal of the aforesaid extract would show that no hearing was given to the petitioners with regard to the objections lodged vis-à-vis form TM-24 filed by respondent No.3. since, counsel for respondent No.2 seeks time to file an affidavit to bring its stand formally, on record before this Court, let the needful be done within two weeks from today.

4. Mr. Sudhir Chandra, Sr. Adv., who appears for respondent No.3, also seeks time to file a counter affidavit in the matter. Let a counter affidavit be filed within two weeks from today. Rejoinder thereto, if any, be filed before the next date of hearing.

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5. Renotify the matter on 24.05.2018.”

7. In the meantime, the appeals which were filed against the order dated 2nd November, 2015 were decided by the Ld. Division Bench on 29th November, 2018. The said order is reproduced hereinbelow:

“1. These two appeals are against a common temporary injunction order made by the learned Single Judge in two suits. The injunction restrains the appellant, from using certain registered trademarks. 2. It is a matter of record that the said trademark proprietor Mr. Lalit Kumar Arya died on 3rd February, 2016. The impugned interim orders were made prior to that on 2nd November, 2015. It is contended that before his death the trademark proprietor had assigned all his rights in favour of Ms.Chhaya Devi, the widow of his pre-deceased son [Mr.Vijay Kumar Arya]. On the other hand it is also claimed that he bequeathed all property [including the registered trademarks] to his widow Ms.Rukmini Devi. Of course, this is contested by Ms.Chhaya Devi. 3. Learned counsel for Ms.Chhaya Devi submits that

the assignment has since been noted in the trademark register [which is also the subject matter of contest] and that she is therefore entitled to contest the proceedings as the plaintiff/petitioner. We notice that applications under Order 22 Rule 10 CPC for substitution of the deceased Mr.Lalit Kumar Arya are pending.

4. Having regard to the nature of the proceedings and the injunction given, this Court is of the opinion that all the rights and contentions of the parties – including the right to enforce the injunction [and validity thereof] should be and are therefore, kept open. In the event of any other order adverse to any party, made by the learned Single Judge, in the course of the pending Order 22 Rule 10 CPC proceedings, it would be open to them to approach this Court in a fresh appeal in the light of the subsequent events.

5. The appeal is disposed of in the above terms.”

8. Thus, all the applications filed for recordal of the legal representatives/assignments, etc. and devolution of title in the marks have been taken up today for hearing. The submissions of the various counsels appearing for the different wings of families are set out below.

9. Sh. Sushant Singh, Advocate appearing for Smt. Chaya Devi submits that his client had moved an application under Order XXII Rule 10 seeking to step into the shoes of Sh. Lalit Kumar Arya by virtue of the assignment deed dated 17th December, 2015. It is his submission that applications were filed by his client in July, 2016 being I.A. Nos. 8640/2016 and 8627/2016 in Suit Nos. 1031/2016 and 1032/2016, respectively. Mr. Singh submits that the assignment having been taken on record and his clients have been recorded as the subsequent owner of the marks, she is entitled to pursue the present suits as the successor in interest of Sh. Lalit Kumar Arya. He relies on a judgment of the Supreme Court Chandra Bai (Dead) Through Legal Representatives v. Khandalwal Vipra Vidyalaya Samiti & Anr. 2016 12 SCC 534 (hereinafter, „Chandra Bai‟) to argue that there is no limitation prescribed for an application under Order XXII Rule 10, unlike an application under Order XXII Rule 3. It is his further submission that his client deserves to be recorded as the subsequent proprietor of the marks and the injunction order passed on 2nd November, 2015 deserves to be continued against all the Defendants.

10. Mr. Vidit Gupta, Advocate appearing for Smt. Rukmini Devi submits that his client is the sole and absolute owner of all the assets, including the trademarks as per the registered Will dated 12th July, 2007. It is his submission that as per the said Will, which has been placed on record, barring one property, all the remaining immovable properties and the trademarks have devolved upon Smt. Rukmini Devi. The submission of Mr. Gupta is that since Smt. Rukmini Devi is alive, she has become the absolute owner of all the assets of Sh. Lalit Kumar Arya.

11. On the other hand, Sh. Ravi Gupa, Ld. Senior Counsel appearing on the behalf of families of Sh. Jyoti Kumar Arya and Sh. Purushottam Kumar Arya, as also their firm, submitted that the suits filed by Sh. Lalit Kumar Arya stand abated due to non-filing of the applications for impleadment of legal representatives, within the time prescribed in law i.e. 90 days. Since, the suits already stand abated, unless an application is filed and considered for setting aside the abatement of the suits, neither Smt. Chaya Devi nor Smt. Rukmini Devi can be held to be the successors in interest, and can be permitted to continue the suits on behalf of Sh. Lalit Kumar Arya. He further submits that his clients have filed suit no.1319/2013 seeking partition of all the assets of Sh. Lalit Kumar Arya and all the issues in respect of the trademarks and other immovable properties have to be adjudicated in the said suit.

12. He relies on the following judgments:  M/s Rashtriya Yuva Udhyog v. Smt. Dheeraj Kanwar AIR 200 Raj  Ban Kreiss AG v. Ashok K. Chauhan I.A. No.8275/2013 & IA No.8670/2003 in CS(OS) 675/1999, Decided on 23-10-2007;  Kedarnath Kanoria and Ors. v. Khaitan Sons and Co. AIR 1959 Cal

13. This Court has heard the counsels for the parties. The applications under Order XXII Rule 10, Order XXII Rule 3 and Order I Rule 10, all raise a common plea i.e. as to who should step into the shoes of Sh. Lalit Kumar Arya. The nature of the suit in the present two cases are for injunction, restraining infringement of trademark, copyright, passing off, etc. The said trademarks being registered trademarks, the rights under the statute, after an assignment takes place flow in favour of the subsequent owner of the mark. In the present case, the assignment deed dated 17th December, 2015 has been placed on record of the Trademark Registry by Smt. Chaya Devi. She has been recorded as the subsequent owner of the marks belonging to Sh. Lalit Kumar Arya. The right of a subsequent owner to be recognized as the registered owner of the mark flows from various provisions of the Trademark Act, 1999. In fact, under the Trademarks Act, 1999, under Section 2(1)(v) a “registered proprietor” of a mark is defined as: ““registered proprietor”, in relation to a trade mark, means the person for the time being entered in the register as proprietor of the trade mark”

14. The rights pleaded by Smt. Chaya Devi are not just under Order XXII Rule 10. In any event, even under Order XXII Rule 10, the devolution of rights in the registered trademark has, for the time being, having been recognized in favour of Smt. Chaya Devi by the Registrar of Trade marks, so long as the said order of recordal stands, she enjoys statutory rights. As per the judgment in Chandra Bai (supra), limitation does not apply in the case of Order XXII Rule 10. The relevant portion of the said judgment is set out herein below:

“4. We have also noticed that in Amit Kumar Shaw v. Farida Khatoon this Court has held that it is not necessary to make a detailed enquiry at the stage of granting leave under Order 22 Rule 10 CPC. The Court at that point of time has to be prima facie satisfied for exercising its discretion in granting leave for continuing the suit by or against the person on whom the interest has devolved by assignment or devolution. The question about the existence and validity of the assignment or devolution can be considered at the final hearing of the proceedings. 5. In Vidur Impex & Traders (P) Ltd., Bibi Zubaida Khatoon and Thomson Press (India) Ltd. this Court though dealt with impleadment under Order 22 Rule 10 CPC and Section 52 of the Transfer of Property Act the said decisions do not apply to the facts of this case. Therefore, the judgments cited by Mr Jain, in our opinion, cannot help him in the attendant facts and circumstances. 6. Mr Sanjib Sen, learned Senior Counsel appearing for Respondent 1 Society submitted that in a case under Order 22 Rule 10 CPC, where rights are derived by an assignee or a successor-in-interest pending litigation, it is for that assignee or transferee to come

on record if he so chooses and to defend the suit. In support of his submission he relied on the decisions of this Court in State of Orissa v. Ashok Transport Agency and Dhurandhar Prasad Singh v. Jai Prakash University and pointed out that under Order 22 Rule 10, the right of the assignee and/or the successor-in-interest will continue when there has been a devolution of interest during the pendency of a suit. The suit can, by leave of the Court, be continued by or against the persons upon whom such interest has devolved and this entitles the person who has acquired interest in the subject-matter of a litigation by assignment or creation or devolution of interest pendente lite or any other person in interest, to apply to the Court for leave to continue the suit.

7. Mr Sanjib Sen further contended that no period of limitation is prescribed under Order 22 Rule 10 CPC. In fact the right to apply under this Rule is a continuous right and application can therefore be made at any time till the proceedings are pending. He further contended that the question of delay/laches or setting aside abatement of suit arises only where the case falls under Order 22 Rule 3 or Rule 4 and not where the case is covered by Rule 10. According to him, it is the discretion of the Court and if the Court is prima facie satisfied with the facts so pleaded before the Court, it can allow such application.

8. We have further noticed that in Baijnath Ram v. Tunkowati Kuer the Full Bench of the Patna High Court has held: (SCC OnLine Pat para 15)

“15. … Another thing to notice in connection with this rule is that a party on whom the interest of the deceased plaintiff or defendant devolves is not entitled to continue the suit or appeal as a matter of right, it is essential to obtain the leave of the Court. The granting of leave is within the discretion of the Court. The Court, however, is to exercise its discretion judicially and according to well-established principles. Further, unlike Rules 3 and 4, no limitation is prescribed for presentation of an application under this rule and no penalty is laid down for failure to substitute the person on whom the interest of the deceased plaintiff or defendant was devolved. Therefore, the right to make an application under this rule is a right which accrues from day to day and can be made at any time during the pendency of a suit. There is no abatement under this rule.” (emphasis supplied)

9. Accordingly, we find that the High Court, after considering the facts and circumstances of this case, has correctly come to the conclusion in the matter and we do not have any room to interfere with the order so passed by the High Court. Accordingly, the special leave petition is dismissed.”

15. The objection that the recordal of Smt. Chaya Devi took place without hearing the other contesting parties is now pending in the writ petition which has been filed by them. Smt. Chaya Devi is thus, held to be successor in interest insofar as the trademarks and other rights in the suit are concerned. However, the same would be subject to the decision in the writ petition which is pending before this Court.

16. Insofar as the rights of Smt. Rukmini Devi are concerned under the registered Will, the Will is yet to be probated, even though probate is not necessary in Delhi. The Will is dated 12th July, 2007 and the same has been placed before this Court for the first time in 2018. The Court is informed, that the probate proceedings are pending in respect of the said Will. If the Will is held to be valid and genuine, Smt. Rukmini Devi would be inheriting all the assets of Sh. Lalit Kumar Arya and at that stage, the issue as to whether the Will would prevail over the assignment deed or not, would have to be decided.

17. Under Section 45(3) of the Trademarks Act, if the validity of the assignment is in dispute between the parties, the same would have to be adjudicated by a competent Court. Clearly, there are various objections raised by the parties qua the genuineness and validity of the assignment deed. An issue in this regard would be framed in the present suit and would have to be decided after trial.

18. Under these circumstances, Smt. Chaya Devi and Smt. Rukmini Devi are impleaded as Plaintiffs No.1A and 1B in the two pending suits. Insofar as Prabhat Zarda Factory (India) Pvt. Limited is concerned, the same is a company which was Plaintiff No.2 all along. The said company shall continue to remain as Plaintiff No.2 inasmuch as the dispute between the parties require adjudication and cannot be determined before the trial in the suit takes place. Accordingly, applications under Order XXII Rule 10, Order XXII Rule 3 and Order I Rule 10 are disposed of in the above terms. I.A. 3621/2019 (for additional documents) in CS(COMM) 1031/2016 I.A. 3622/2019 (for additional documents) in CS(COMM) 1032/2016

19. Both these applications have been filed seeking to bring on record additional documents on behalf by Smt. Chaya Devi. The said additional documents are taken on record subject to inspection being given and their being proved in accordance with law, if required, at the time of trial.

20. I.As are disposed of. I.A. 14016/2014 (u/O XXXIX Rule 4 CPC) in CS(OS) 1319/2013 I.A. 14017/2014 (u/O VII Rule 11 CPC) in CS(OS) 1319/2013

21. Both these applications have been moved by Smt. Rukmini Devi and Sh. Lalit Kumar Arya in suit no.1319/2013 where they were Defendants No.1 and 2. Ld. Counsel for Smt. Rukmini Devi submits that she does not press these two applications. However, since Sh. Lalit Kumar Arya is now deceased and the question as to who inherits his rights is to be determined, Mr. Sushant Singh, Advocate submits that his client who has acquired the trademark by means of assignment be permitted to urge the contentions raised in these applications, if he is so advised. Giving liberty as sought to Smt. Chaya Devi, the applications are dismissed as withdrawn. I.A. 6595/2018 (u/O XXIII Rule 3 CPC) in CS(OS) 1319/2013

22. List on 27th May, 2019. If any of the legal heirs have any objections to the recordal of this compromise, the same shall be filed by means of a reply affidavit to this application. CS(COMM) 1031/2016, CS(COMM) 1032/2016, CS(OS) 1319/2013 & 526/2019 (Stay)

23. Considering the Division Bench order dated 29th November, 2018, the enforcement of the injunction and the validity thereof is to be considered by the Court. All parties are directed to place their written submissions before the next date. On this issue, the matter will be heard on the next date.

24. Parties are directed to place on record the current status of the use of the trademark by all the parties.

25. List on 27th May, 2019.

PRATHIBA M. SINGH JUDGE MARCH 13, 2019

Lalit Kumar Arya & Anr. v. M/S Prabhat Zarda Factory International (Noida)

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