Habibur Rahman v. Kannauj Zarda Products — 1994 DIGILAW 257 (CAL)

Judgment Ruma Pal 1. THE petitioner is the sole proprietor of a concern by the name of Lucknow Zarda Factory. THE concern was initially a partnership concern of the petitioner and the respondent no.4. THE business of the firm was to manufacture and sell different forms of chewing tobacco which included Zarda and Kimam. As far as the kimam is concerned, the sale was effected in small containers with a silver foil wrapping round it. On the silver foil the words, "Gulabi Kimam" in Hindi, Urdu, Bengali and English appear against a purple background ringed in red. This small container was then packed in a cardboard carton with the dimension of about 1" x 1". On the four sides of the cardboard carton the words, "GULABI KIMAM" appear in 4 languages already referred to against a red background within a yellow ring. THE petitioner also claims that the firm also sold Zarda in a loose form in pouches. THE pouch is about 4" x 4" square with white margin and is red labelled with the words, "125 Gms." written in a circle at the top left-hand corner on a white background. THE words, "S.M. Ashraf Ali's" are written in italics in white over the word, "ZARDA" which is in bold print written in red on a white background diagonally across the pouch. At the bottom right-hand corner the words, "LUCKNOW ZARDA FACTORY" with an emblem carrying letters 'L', 'Z' and 'F' entwined appear. THE word, "LOOSE" again in bold letters is written in red on a white background at the bottom of the pouch. 2. THE petitioner's case is that the firm had built up a wide reputation in respect of Kimam and Zarda and the petitioner has given the sales figures in respect of both the products for the last 5 years. On 5th February, 1993 the firm of Lucknow Zarda Factory applied for registration of the Trade Mark, "GULABI KIMAM". In the application the date of user has been indicated as "Since January, 1977". On 22nd October, 1993 the firm of Lucknow Zarda Factory was dissolved by a Deed of Dissolution. From the Deed of Dissolution it appears that the business was being carried on since 29th March, 1973 in partnership. The relevant clauses of the Deed are Clauses 4, 5 and 6 which read as follows :- "4. On 22nd October, 1993 the firm of Lucknow Zarda Factory was dissolved by a Deed of Dissolution. From the Deed of Dissolution it appears that the business was being carried on since 29th March, 1973 in partnership. The relevant clauses of the Deed are Clauses 4, 5 and 6 which read as follows :- "4. The party of the Second Part will be entitled to the goodwill of the firm including exclusive right to use the name of M/s. Lucknow Zarda Factory as the name of the business to be carried on by him as the sole proprietor or otherwise from the date of these presents and the name S.M. Ashraf Ali as brand/trade name and will be entitled to use the following brand names for the goods manufactured by him :- (a) S.M. Ashraf Ali's Zarda. (b) S.M. Ashraf Ali's Zarda Summer Quality. (c) S.M. Ashraf Ali's Gulabi Kimam. (d) S.M. Ashraf Ali's Mushky Kimam. (e) S.M. Ashraf Ali's Kasturi Kimam. (f) S.M. Ashraf Ali's Bahar No. 19. 5. The party of the first Part will not use the firm's name of "Lucknow Zarda Factory" or the name, "S.M. Ashraf Ali" as Brand/Trade Name or the Brand Names as mentioned in Clause 4 hereof. The party of the First Part shall not be entitled to use the name "S.M. ASHRAF ALI" either deceptively similar and/or in part or full, i.e., by adding for deleting any symbol and/or word at the affix or prefix to the aforesaid name of S.M. ASHRAF ALI. 6. Subject to the compliance of the terms and conditions contained in the above Clause and also the terms and other conditions contained in the Memo of Understanding this day the party of the First Part will take over exclusively the assets which are enumerated in Schedule "A" hereunder written and the party of the Second Part will take over exclusively the assets which are listed in the Schedule "B" hereunder written." 3. IT is not necessary to refer to Schedule "A" as these were the properties which were allotted to respondent no.4. As far as the petitioner is concerned, the relevant Schedule is Schedule "B" which includes apart from certain interests in immovable properties, the goodwill of Lucknow Zarda Factory including all the Brand Names used by Lucknow Zarda Factory beginning with "S.M. ASHRAF ALI" and Trade Marks and otherwise. 4. As far as the petitioner is concerned, the relevant Schedule is Schedule "B" which includes apart from certain interests in immovable properties, the goodwill of Lucknow Zarda Factory including all the Brand Names used by Lucknow Zarda Factory beginning with "S.M. ASHRAF ALI" and Trade Marks and otherwise. 4. THE Deed of Dissolution is not in dispute and the petitioner since 1973 became the sole proprietor of the firm along with its goodwill, business, Trade Names, etc. The respondent no.1 is a firm the partners of which are the respondents nos.2 and 3. The respondents nos. 2 and 3 are the sons of respondent no.4 and nephews of the petitioner. On 22nd November, 1993 the respondents nos.1, 2 and 3 applied under the Trade and Merchandise Marks Act, 1958 (hereinafter referred to as 'the Act') in which they claimed registration of the Trade mark in respect of Zarda sold in pouches. In their application they have claimed that they had been using the Mark continuously since February, 1992. The Mark of which registration was sought for is virtually identical with the Mark of the petitioner's firm except that instead of "S.M. Ashraf Ali's" written in Italics over the words, "ZARDA", the words, "Nayyar Rahman Nasir Rahman's" are written also in Italics. At the bottom right-hand corner in place of "LUCKNOW ZARDA FACTORY" the words, "KANNAUJ ZARDA PRODUCTS 32/H, G.J. KHAN ROAD, CALCUTTA-800 039" are written and the emblem which is placed is almost identical with that on the petitioner's Zarda pouch. That application is still pending. On 18th April, 1994 the respondent no.1 applied for registration of a Trade Mark in respect of "GULABI KIMAM". The words, "GULABI KIMAM" are written in white on a red background. The Kimam is in a small container with a silver foil. The silver foil contains the words "GULABI KIMAM" in 4 languages on a blackish background with a red ring round it. The container is in pack of 1" x 1" square with the words, "GULABI KIMAM" written in English, Bengali, Hindi and Urdu in white on a red background within a yellow ring. 5. AS far as the petitioner's product is concerned, the words, "LUCKNOW ZARDA FACTORY" and the address are written in black on a yellow background at the bottom of the carton. 5. AS far as the petitioner's product is concerned, the words, "LUCKNOW ZARDA FACTORY" and the address are written in black on a yellow background at the bottom of the carton. So far as the respondents nos.1, 2 and 3s' product is concerned the name of the respondent no.1 has been written in black on a yellow background at the bottom of the carton. The other difference is that where in the petitioner's carton the words, "S.M. ASHRAF ALI'S" are written above the words, "GULABI KIMAM" in the respondent no.1's product the word, "ASLI" is written. Visually, both the containers as well as the cartons are substantially similar and it would appear, prima facie, deceptively so. 6. ACCORDING to the petitioner, the respondents nos.1, 2 and 3 have deliberately been manufacturing Kimam and selling the same in the same style and get up as that of the petitioner and have also started selling pouches of Zarda virtually identical with the petitioner's pouches of Zarda. In May, 1994 the petitioner filed a petition of complaint under Section 156(3) of the Code of Criminal Procedure before the Chief Metropolitan Magistrate. The case has been numbered as C-885/94. The petitioner has alleged that the respondents nos.1, 2 and 3 have committed offences under Sections 78 and 79 of the Trade and Merchandise Marks Act, Section 63 of the Copy Right Act and Section 120B/420 of the Indian Penal Code. On 20th May, 1994 the Chief Metropolitan Magistrate had directed the Deputy Commissioner, Enforcement Branch to investigate the matter treating the petition of complaint of the petitioner as F.I.R. A search and seizure in the factory premises of the respondent no.1 was conducted by the Enforcement Branch and a large quantity of Gulabi Kimam had been seized. 7. ON 30th May,1994 the petitioner applied for registration of its Trade Mark, "S.A. Ashraf Ali's", in respect of loose Zarda being sold in pouches. 8. THE petitioner's case is that he has built up a considerable reputation in the article concerned. It is said that the respondents were not only guilty of passing off their products as being those of the petitioner, but they were acting in direct violation of the Deed of Dissolution as well. THE petitioner has annexed copies of the Bills, Challans, Gate-Passes for removal of Zarda and Kimam under Rule 52A and 173G of the Central Excise and Salt Act, 1944. THE petitioner has annexed copies of the Bills, Challans, Gate-Passes for removal of Zarda and Kimam under Rule 52A and 173G of the Central Excise and Salt Act, 1944. THE Gate-passes show that the goods were being removed from the factory which were Gulabi Kimam as well as loose Zarda in pouches. According to the petitioner, some of those Gate-Passes were signed by the respondent no.2 who was then an employee of the firm. That apart, the petitioner has also relied upon the Price Lists showing that they sold Gulabi Kimam in different foils since 1974. Correspondence relating to the sale of Zarda in polyester pouches and Gulabi Kimam with the Excise Authorities in 1986 has also been annexed. Details of the sale effected in respect of these two products have also been given. The respondents nos.1, 2 and 3 have submitted that Gulabi Kimam was not and could not be identified with that of the petitioner. It is said that the word, 'Gulabi' is descriptive and the word, 'Kimam' is a Trade Name or the product itself. Therefore, there was, according to the respondents, no question of the petitioner acquiring any special right in these two words. Reliance has been placed on the decision of the House of Lords in the case of "Horlick's Malted Milk Company v. Summerskill", reported in XXXIV Reports of Patent, Design and Trade Mark Cases, page 63 : 34 RPC. In that case a claim had been made by the plaintiffs that Malted Milk was identified with Horlicks and that the defendant who sold the same product under the name "Hedley's Malted Milk" should not be permitted to do so. The House of Lords held that the words 'Malted Milk' were truly descriptive of the article and as such, the plaintiff could not restrain the defendant from using the words 'Malted Milk'. 9. IN my view, this submission cannot be accepted. The word,' Gulabi' is not descriptive of 'kimam' as the 'Malted Milk' was in the case before the House of Lords. Furthermore, the complaint is not limited to the use of the words but really to the entire get up which, as has already been observed, is deceptively similar. 9. IN my view, this submission cannot be accepted. The word,' Gulabi' is not descriptive of 'kimam' as the 'Malted Milk' was in the case before the House of Lords. Furthermore, the complaint is not limited to the use of the words but really to the entire get up which, as has already been observed, is deceptively similar. IN any event, it is doubtful whether the respondents would be entitled to raise this particular point as they have themselves applied for registration of the Mark presumably on the basis that the Mark is a distinctive one. 10. IT cannot be said that no material has been produced by the petitioner to show that the words, "GULABI KIMAM" were identified with the petitioner. The particulars of sales have been given. Documents have been adduced which are, prima facie, sufficient to establish that the petitioner is the user of the Trade Mark, "GULABI KIMAM" for several years. Significantly, in the application by the respondents nos.1, 2 and 3 for registration of the words, "GULABI KIMAM" in their favour in respect of user, they have said that they only propose to use the Mark. This application was made on 18th April, 1994. In other words, till that date there was no user of the Mark by the respondents nos.1, 2 and 3 on their own showing. Their statement to the contrary in their affidavit does not appear to be correct. Similarly, there is no doubt that the two pouches, in which Zarda is being sold by the petitioner as well as by the respondents nos. 1, 2 and 3 are sufficiently similar to cause confusion. The respondents nos.1, 2 and 3 have said that no document had been produced by the petitioner to show that he was, in fact, selling tobacco (Zarda) in pouches in the manner specified earlier. As already noted, in the documents annexed to the Affidavit-in-Reply there is a reference to the sale of Zarda in polyester pouches. It is not the case of the respondents that the petitioner was selling Zarda in any other form of polyester pouch. There is no reason why this Court should at this stage reject the submissions of the petitioner on affidavit that he was selling Zarda in pouches in the manner indicated in the body of the petition. Contrasted with this is the case of the respondents nos. 1, 2 and 3. There is no reason why this Court should at this stage reject the submissions of the petitioner on affidavit that he was selling Zarda in pouches in the manner indicated in the body of the petition. Contrasted with this is the case of the respondents nos. 1, 2 and 3. There is a singular lack of evidence of any kind that the respondents have, in fact, been selling either 'Kimam' or Zarda in the forms claimed. The only document relied upon is a Central Excise Licence which does not refer to the sale either in pouches or in containers but only refers to the sale of tobacco products, such as, Zarda, Kimam and Khainee. 11. THE respondents nos. 1, 2 and 3 have submitted that the entire case of the petitioner is based upon the Deed of Dissolution, and that under the Deed of Dissolution the petitioner was entitled to use the name, "S.M. Ashraf Ali's" and not the words, "GULABI KIMAM" or any other name or word. This submission is not acceptable also at this stage. It appears, prima facie, that the Trade Name the exclusive use of which was given to the petitioner was not limited to the 'S.M. Ashraf Ali'. Schedule B to the Deed of Dissolution has given the exclusive right to the petitioner to use all brand names of the firm whether beginning with the name 'S.M. Ashraf Ali' or otherwise. As already seen, the application for registration in respect of 'GULABI KIMAM' was made by the firm before the dissolution. It therefore appears that the benefit was not restricted to the name of S.M. Ashraf Ali. 12. AN ancillary part of this argument has been that the reputation, if any, belongs to the firm and that the petitioner was not entitled to bring a passing off action taking advantage of such reputation. This, like the other submissions, is also not acceptable. The Deed of Dissolution unequivocally assigned to the petitioner name and the entire goodwill of the firm. The goodwill would include the firm's reputation. In fact reputation or goodwill of the firm is inextricably linked with its name which was expressly given to the petitioner. The goodwill of the firm could not have been assigned to the petitioner while depriving the petitioner of the right to sue to protect the reputation or goodwill. An action in passing off is to protect such reputation. In fact reputation or goodwill of the firm is inextricably linked with its name which was expressly given to the petitioner. The goodwill of the firm could not have been assigned to the petitioner while depriving the petitioner of the right to sue to protect the reputation or goodwill. An action in passing off is to protect such reputation. 13. THE third submission of the respondents is that they had been marketing the products in pouches much prior to the dissolution of the firm since 1991 in the form in which they are being marketed in 1994. It is said that the erstwhile partners of Lucknow Zarda Factory were well-aware of the user of the getup as far as the pouches were concerned and had never objected to the same and that after the dissolution it was understood that the same permission would continue. 14. THIS submission runs counter to the submission made earlier that there was no proof that the petitioner or the firm had been selling tobacco in pouches prior to 1991. If the firm had not been so selling the pouches in 1991 there was no question of the permission being granted to the respondent Nos. 1 to 3 to use the same getup to sell Zarda outside Calcutta. The plea appears to be one of a licence and it is doubtful that a licence granted by the firm would survive the firm's dissolution. However, it is not necessary for the Court to consider this question. In the absence of any document in support of such alleged permission this Court is not inclined to accept the same on the basis of evidence as it stands. The Deed of Dissolution categorically gives the petitioner the exclusive right to the user of the name together with the goodwill annexed therewith. THIS grant of exclusive right would militate against a permissive user by any other party. In any event, the case of permissive user is not available as far as 'GULABI KIMAM' is concerned because it is evident from the documents annexed to the affidavit itself that the respondents have not used the word 'GULABI KIMAM' at least till 18th April, 1994. There is ample evidence on record to show that the petitioner has been using the trade mark in respect of which the suit has been filed for a long period of time. There is ample evidence on record to show that the petitioner has been using the trade mark in respect of which the suit has been filed for a long period of time. As held by Shah J. (as His Lordship then was) in the case of Consolidated Foods Corporation v. Brandon and Co. Ltd. reported in AIR 1965 Bombay 35, priority in adoption of a use of a trade mark is superior to priority in registration and the Court will afford protection to a prior user despite the fact that his marks may not be registered. The protection may be lost if it is found that others have been using the same mark over a period of time without protest by the plaintiff. In this case two instances have been given of such user by third parties by the respondent nos. 1 to 3. The first is of a seller called Vijay Products allegedly carrying on business at Kharagpur. There is no doubt that the mark 'Gulabi Kimam' is very similar to the marks of the petitioner. However there are no particulars as to from when the Vijay Products has been selling its product, if at all, or to what extent. Similarly, in the second case which has been referred to in the supplementary affidavit of the respondents, it appears that a concern Bimal Jyoti is selling "Rose Kimam". The annexure refers to a copyright number referable to 1983. This is given on the top of a picture of a gentleman in an ornamental ring. It is not clear whether the copyright is in respect of the picture of the gentleman in the ring or of the Rose Kimam. Furthermore there is no evidence of volume or period of user. As held by the Supreme Court in the case of National Bell Co. v. Metal Goods Mfg. Co. reported in AIR 1971 p. 898 at p. 908 the plea of common use must fail for, "to establish it the use by other persons should be substantial". No doubt that was case where the plaintiff had complained of an infringement of a registered trade mark. But the defence there as in this case was that the mark was in common use. There is no reason why the same principle should not apply to this case also. No doubt that was case where the plaintiff had complained of an infringement of a registered trade mark. But the defence there as in this case was that the mark was in common use. There is no reason why the same principle should not apply to this case also. There being no evidence before this Court that either Vijay Products or Bimal Jyoti have substantially sold the products in question using the marks complained of, this submission of the respondents must also fail. 15. IT is significant that the respondents have not made any argument to the effect that the marks as used by them both in respect of Kimam and in respect of Zarda are dissimlar in the marks used by the petitioner or not likely to cause confusion. The position that the marks used by the respondents in respect of the same product are sufficiently similar and likely to cause deception must therefore be taken to be conceded. 16. A faint argument was sought to be raised that the petitioners were not really interested in protecting their mark as no stops had been taken by them to avail of the benefit of the interim relief granted by this Court. The failure of the petitioner to avail of the benefit could not detract from the merits of the case. This application is allowed. There will be an order in terms of prayers (a), (b) and (d) of the Notice of Motion. 17. STAY of operation of this judgment for a period of two weeks is asked for and is granted. 18. LET a xerox copy of this judgment duly counter signed by the Assistant Registrar of this Court be given to the parties upon their undertaking to apply for certified copy of the judgment upon payment of usual charges.