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2006 DIGILAW 63 (CAL)

HINDUSTAN LEVER LIMITED v. CAVIN KARE LIMITED

2006-02-02

KALYAN JYOTI SENGUPTA

body2006
Before: Kalyan Jyoti Sengupta, J. ( 1 ) THE Court: Both the aforesaid two applications and connected interlocutory applications are heard together and are disposed of by this common Judgment and order. Both the two contempt applications have arisen out of an undertaking given by the respondents dated 18th of july, 2000 in Suit No. 17 of 2000 and G. A. No. 276 of 2000. The petitioner herein being a registered patentee approached this Court with the aforesaid action alleging infringement of patent by the defendant. Cavin kare Limited. In the said suit appropriate interlocutory application was taken out by the plaintiff and this Court granted appropriate interlocutory relief. During pendency of the suit and the connected interlocutory applications the parties themselves compromised outside the Court and put in terms of settlement or compromise. In the terms of settlement written undertaking was recorded. On the aforesaid date undertaking was also given before this Court apart from having recorded and signed the terms of settlement, by the appropriate officials of the defendant who are also respondents in this matter. The text of the undertaking recorded in terms of settlement and having been accepted before this Court by the officials of the respondents are set out hereunder: "1. The Defendants Nos. 1 and 2 affirm the validity of Patent No. 169917 sealed on 20th March, 1990. 2. It is recorded that the Defendants Nos. 1 and 2 are at present manufacturing and selling FAIREVER Fairness Cream in a composition consisting of Niacinamide, Parsol MCX, Parsol 1789, Silicone compound and other ingredients. 3. Defendant Nos. 1 and 2 through Mr. T. A. Srinivasan, Company secretary of the Defendant No. 1, give an undertaking to this hon'ble Court not to manufacture and/or market either by themselves or by their servants, agents or assigns any fairness cream by using Silicone compound in combination with the other ingredients covered in Patent No. 169917 of the Plaintiff namely Niacinamide, Parsol MCX. Parsol 1789 with effect from 15th September, 2000. 4. The Defendant Nos. 1 and 2 through Mr. T. A. Srinivasan, company Secretary of the Defendant No. 1, give an undertaking to this Hon'ble Court to exhaust all finished and semi-finished fairever Fairness Cream available with them at present and which may be manufactured till 14th September, 2000 in terms of Clause 3 above consisting of Silicone compound on or before 30th September. 2000. 5. T. A. Srinivasan, company Secretary of the Defendant No. 1, give an undertaking to this Hon'ble Court to exhaust all finished and semi-finished fairever Fairness Cream available with them at present and which may be manufactured till 14th September, 2000 in terms of Clause 3 above consisting of Silicone compound on or before 30th September. 2000. 5. The Plaintiff undertakes not to interfere with the sale of fairever Fairness Cream manufactured on or before 15th september, 2000 containing Silicone compound and lying with wholesalers, re-distribution stockists and retailers. 6. The said C. S. No. 17 of 1000 and G. A. No. 276 of 2000 are disposed of on the basis of the aforesaid undertaking given to this Hon'ble court. " ( 2 ) ON or about 21st December, 2000 the petitioner filed the first contempt application (380 of 2000) alleging wilful and deliberate breach of the undertaking by manufacturing and marketing Fairever Fairness cream using Silicone Oil Compound, Niacinamide Parsol MCX and parsol 1789 infringing the range of the aforesaid components as mentioned in the patent of the petitioner and the same was to be found in the product, covered by batch No. 156. It is stated in the petition that upon procurement of the samples of the said cream under the aforesaid batch the same was tested in their laboratory as well as in the laboratory outside. On such test it was found that the respondents in gross breach of the aforesaid undertaking used aforesaid ingredients infringing and offending the range of the patent. The petitioner thereafter prayed for issuance of Rule as against the respondents and also for interlocutory relief. This Court also granted interim relief by way of injunction and thereafter the Special Officer was also appointed. During pendency of the aforesaid first contempt application second contempt application was taken out being C. C. 154 of 2001. In the second application similar complaint was made and this time it was detected that the respondents have manufactured and marketed their skin cream under the batches nos. 192 of November, 2000, 226 of December, 2000, 001 of January, 2001 and 22 of February, 2001. The petitioner in support of his allegations also furnished test report carried out by its own laboratory as well as laboratory of the national repute outside. 192 of November, 2000, 226 of December, 2000, 001 of January, 2001 and 22 of February, 2001. The petitioner in support of his allegations also furnished test report carried out by its own laboratory as well as laboratory of the national repute outside. In the second application this Court having been satisfied with the prima facie case issued Rule likewise the first contempt application. The interlocutory applications were taken out for appropriate reliefs for effective adjudication of both the contempt applications. ( 3 ) THE respondents, apart from making various applications for vacating and/or discharging interim order passed in the contempt proceedings, made two applications for discharging of the Rule alleging that no contempt proceedings shall lie on the plea that undertaking recorded in the compromise, was given to the party petitioner and not to the Court. Such an undertaking cannot be enforced in the contempt jurisdiction and the same can be brought into action in some other proceedings. This Court heard this question, by a Judgment and order dated 16th July, 2003 held that undertaking recorded in the said compromise was given to the Court, not to the parties. The respondents appealed against this Judgment and order unsuccessfully and an attempt was made to assail the same by filing a special leave petition before the Hon'ble Supreme Court. However, the said special leave petition was rejected upon withdrawal of the same. Thus, this matter was heard on merit after the respective affidavits having been filed. ( 4 ) IN order to ascertain the input used for manufacturing of the cream by the respondents the Special Officer was appointed by this court, who submitted report after having the product tested by the laboratory maintained by Tata Institute of Fundamental Research. The said sample was given by the Special Officer and it was found that there has been no infringement of the ingredients mentioned in the patent. But it was contended by the petitioner, that the cream manufactured by the respondents and marketed under the aforesaid batch numbers contains offending ingredients, for which undertaking was given to the court not to use as has been recorded. In support of the statement, averment the analysis report was submitted by filing affidavit by the researcher and/or scientist of the petitioner and also the report of the analysis made by the various outside laboratories. In support of the statement, averment the analysis report was submitted by filing affidavit by the researcher and/or scientist of the petitioner and also the report of the analysis made by the various outside laboratories. Similarly the respondents in their affidavits produced various reports of analysis made by their scientists and researchers as well as from the outside laboratories. In view of conflicting and rival reports this Court decided with consent of the parties that the sample collected by the petitioner from the market, should be sent for testing through the Special Officer to the laboratory maintained by Tata Institute of Fundamental research. Against this order the petitioner preferred an appeal and such appeal has been dismissed by the Appellate Court. Therefore, the decision of this Court for getting the said sample tested by Tata Institute of Fundamental Research has reached its finality. ( 5 ) IN the background of the aforesaid admitted fact now learned counsels for the parties have advanced their arguments which are summarized hereunder: m/s. Goutam Chakraborty, Sudipta Sarkar, both the. learned Senior advocates and Ajoy Gupta, Advocate appearing in support of both the applications, submit that it will appear from the report of the analysis that the aforesaid respondents and each of them have deliberately breached undertaking given to this Court. There has been no justification nor even explanation as to why ingredients of the patent of the petitioner has been infringed and/or offended by the respondents. The feeble justification raised by the respondents is that silicone oil is not used by the respondents in their formulation but is generated by chemical reaction during manufacturing of the product is not believable and tenable either on fact or in law. In terms of the order of this Court the Special Officer sent the cream manufactured by the respondents under batch Nos. 156, 192, 200 and 226 to Tata Institute of Fundamental research for analysis. On analysis of the cream covered by the said batches it was found that silicone oil contained at levels offending and or infringing their range mentioned in the patent of the petitioner. No amount of dispute or argument is now tenable in view of the order passed by this Court on 8th August, 2003 for testing. He submits that undertaking is breached if any sample of the fairness cream of the respondents is found to contain silicone oil. No amount of dispute or argument is now tenable in view of the order passed by this Court on 8th August, 2003 for testing. He submits that undertaking is breached if any sample of the fairness cream of the respondents is found to contain silicone oil. It was the duty and responsibility of the respondents to take care so much so to ensure that the product, manufactured and marketed by them did not contain any silicone oil. Inspite of the undertaking given before this Court the respondents continued to make and market fairness cream containing silicone oil. They were restrained even in the contempt proceedings from using any silicon oil along with other ingredients. Only on 28th march, 2005 the respondents in their affidavit mentioned that they have changed the formulation of their product "fairever" by eliminating niacinamide. Such change in the formulation was brought about only atter contemnors were detected having breached undertaking. There has been no challenge as to the correctness of the report of the contents of the four samples, the batch Nos. 156, 192, 200 and 226 at any stage and furthermore order of testing dated 8th August, 2003 of this Court was appealed against and sustained. ( 6 ) HE urges that having undertaken not to manufacture or market by themselves the respondents have used silicon compound in combination with other ingredients covered by patent No. 169917 of the petitioner viz. Niacinamide Parsol 1789 with effect from 15th september, 2000. The defendant's statement made through the learned counsel that silicone oil is generated by inter se chemical reaction or otherwise did no. exonerate the respondents from their liability in discharging their undertaking. It is not enough that it is not used at the time of manufacturing. It has to be ensured before marketing, that cream does not contain silicone compound nor the other ingredients within the range of the said materials as mentioned in the patent. The respondents have been committing breach of the undertaking deliberately and wilfully for the last four years. Significantly the respondents did not offer any apology to this Hon'ble court in the course of the present proceedings which lasted for four years. The respondents have been committing breach of the undertaking deliberately and wilfully for the last four years. Significantly the respondents did not offer any apology to this Hon'ble court in the course of the present proceedings which lasted for four years. ( 7 ) HE concludes contending that it is thus clear from the Court that there has been deliberate and wilful breach of the undertaking and so it should be dealt with appropriately and further appropriate relief should be granted. ( 8 ) MR. S. Pal with Mr. Arvind P. Dattar, Senior Advocates appearing for the respondents contended that these two contempt applications had been taken out only to harass the respondents. The whole idea of initiation of these proceedings of the petitioner is to destroy the market of the respondents by issuing misleading advertisement throughout india holding out threat to the distributors and retailers of the respondents. They say there has been no basis at all for initiation of the contempt proceedings for the following facts and reasons. ( 9 ) AS per order dated 20th December, 2000 Special Officer was appointed by this Court to make complete inventory of batch cards of manufacturing of their product on and from 16th September, 2000 onwards. The Special Officer quoted the xerox copies of the batch cards and it will appear therefrom that there is no indication of use of silicone as an ingredient. Detailed materials, reconciliation statement of purchase and use of silicone oil by the respondent No. 2 from 31st July, 2000 till 31st March, 2001 was filed before this Hon'ble Court. In presence of this Special Officer in terms of the order of this Court dated 2nd June, 2001 manufacturing process using ingredient as per approved formula was to be carried out with the help of the experts of both the parties. At that time there has been no trace of use of silicone oil. The samples of product as aforesaid were sent to Tata Institute of fundamental Research for analysis and the said authority reported on 24th October, 2001, that silicone ingredient was found although at the time of manufacturing the same was not used. Therefore, it is clear that presence of the silicone oil in the cream is inadvertence and because of inter se chemical reaction the same emerges. Therefore, it is clear that presence of the silicone oil in the cream is inadvertence and because of inter se chemical reaction the same emerges. The contempt applications are based on so-called test of the samples conducted by the private laboratories and the respondents seriously challenge the correctness and veracity of this report. The test report conducted by the private laboratories contained serious errors and the defects were pointed out in the affidavit-in-opposition of Mr. T. A. Srinivasan. The samples bearing batch Nos. 156, 192, 200, 226 collected from the market by the petitioners were tested by the Tata Institute of fundamental Research without notice to the respondents and the same were sent for testing and analysis to Tata Industrial Fundamental research. The respondents objected to the said samples being used for precise reasons that these were done after lapse of three years. Even otherwise, the test results show substantial variation and this variation will be appearing from the comparative table. This will clearly indicate that the wide variation of results of various samples which conclusively establishes that no contempt has been committed. It is further submitted by the learned counsels for the respondents with emphasis that undertaking was given not to use silicone oil but there is no undertaking that silicone will be absent from the fairever cream. It has already been submitted that in presence of the Special Officer when the manufacturing process was undertaken there was no use of silicone or silicone compound. The respondents had also undertaken separate tests by SPIC Research Foundation headed by Dr. Narasimhan. This reputed laboratory has reported that silicone content is below the patented range. Therefore, it shows clearly that conflicting nature of the conclusions reached and the wrong procedure adopted. In essence, there is no evidence of silicone oil being used in the manufacturing of fairever cream. ( 10 ) THEY contended that all the samples collected by the petitioners were retained by them for several months. There had been no Court supervision or independent supervision. The samples were not sealed or stamped. Legally, the procedure is to take three samples - one for the Government/official laboratory, one for the party and one to be stored for the record purpose. In the absence of proper sampling methods adopted, the test results cannot be followed for the purpose of contempt. The samples were not sealed or stamped. Legally, the procedure is to take three samples - one for the Government/official laboratory, one for the party and one to be stored for the record purpose. In the absence of proper sampling methods adopted, the test results cannot be followed for the purpose of contempt. The explanation of the learned counsels on behalf of the respondents is that there has been ingredient of silicone inadvertently. Silicone compound has been in wide use in various industries. This will be revealed from an examination of website www. freepatentsonline. com. The silicone compound was present in 1,44,940 US patents. It is the second most abundant element on earth and is widely used in industry viz. in the plastic industry or used as mould releasing agent, extruders, for smoothness and feel improvement and elastomers. Even the same will also be found in the mineral water evern if it is manufactured under controlled conditions. Mr. Pal with his learned Junior Mr. Dattar, Senior advocate, submits that all creams and lotions are high water contents (in case of fairever cream 75% ). They are packed in plastic pouches and satches. Every such product is bound to have traces of silicone. The patented quantity itself is 0. 1% and above. So in a 100 gms. tube, the amount of silicone compound will be as low as 1/10th of a gm. ( 11 ) THERE has been no proof of the standard of a criminal trial in this case. It is settled position of law in contempt proceedings that there should be wilful disobedience of an undertaking and this must be proved with aforesaid standard viz. the act of contempt must be proved beyond reasonable doubt. The act of contempt must be apparent on the face of the records and it must be distinctively obvious, self-evident and unambiguous. Where there are conflicting reports no contempt can be said to have been made out. ( 12 ) MR. Pal further contends that the expression "undertaking to the court" should not receive a pedantic interpretation. "to Court" signifies the active involvement of the Court. In other words, the undertaking offered, has to be considered and accepted by the Court and should operate as a reason for the Court not adopting the course of action which it would otherwise have adopted but for such undertaking. "to Court" signifies the active involvement of the Court. In other words, the undertaking offered, has to be considered and accepted by the Court and should operate as a reason for the Court not adopting the course of action which it would otherwise have adopted but for such undertaking. In support of his contention he has referred to a decision of the Supreme court reported in 1996 (6) SCC 14 (Rita Markandey v. Surjit Singh Arora ). When there is highly disputed question of fact, they remind me contempt jurisdiction is not appropriate, and this proposition of law has been established; according to them, by the judicial pronouncement of this Court reported in 77 CWN 642 (Gopal Chandra Biswas and Ors. v. State of West Bengal and Ors.), 1997 Cr U 2839 (Namita Senguptav. The State of west Bengal and Ors. ). Moreover, the theory of alternative remedy will also be relevant in this case particularly when there has been a compromise regarding undertaking. This compromise decree can be executed instead of proceeding with the contempt jurisdiction. Mr. Pal has brought decisions for assistance of the Court for this proposition viz. 1998 Cri LJ 1299 (Radhey Shyam v. Sushil Kumar Kanaujia and Ors.), 1993 (1) ALT 35 (Mohd. Afzalv. M/s. Common Wealth Hotel Private Limited, rep. by its Director), 2000 (4) SCC 400 (R. N. Dey and Ors. v. Bhagyabati pramanik and Ors. ). ( 13 ) THEREFORE, they conclude that these two contempt applications should be dismissed with costs. ( 14 ) I have heard the contentions of the learned counsels of the parties. I have gone through the explanations and the material placed before me. In this case, the question is whether the undertaking given by the respondents and recorded in terms of settlement has been breached by the respondents deliberately, wilfully or not. The contentions of the respondents that undertaking was given to the parties and not to the Court is the underlying issue. I have already quoted that this contention has been decided by this Court initially and it has been in real sense accepted by the Supreme Court that undertaking has been given to the Court. The nature of the undertaking, is as follows: "defendants Nos. 1 and 2 viz. I have already quoted that this contention has been decided by this Court initially and it has been in real sense accepted by the Supreme Court that undertaking has been given to the Court. The nature of the undertaking, is as follows: "defendants Nos. 1 and 2 viz. the respondents herein shall not manufacture and/or market either by themselves or by their servants, agents or assigns any fairness cream by using silicone compound in combination with the other ingredients covered in patent. No. 169917 of the plaintiff, viz. Niacinamide Parsol MCX, parsol 1789 with effect from 15th September, 2000". ( 15 ) IT is clear from the above that the respondents' obligation not only relate to manufacture, but not to market also their products using silicone compound in combination with the other ingredients covered in patent of the petitioner. Therefore, it is not the question of percentage or extent of ingredients that matters, in relation to discharge of undertaking. To my mind the respondents undertook not to use silicone as ingredient in any manner. According to Mr. Pal that contempt application was based on incorrect report and these applications deserve to be dismissed. I think there is no basis of this contention. The petitioner at the first instance is to approach with the contempt application with the materials as available, or collected by it. It is not necessary at that stage to prove the breach of undertaking beyond all reasonable doubts. Even proof, according to me, at that stage is unnecessary, mere allegations with particulars would have been suffice. Therefore, the materials supplied at that stage is not decisive factor but had some relevance to help the Court at the threshold. Similarly, materials viz. the report of the chemical analysis supplied by the respondents are of no conclusive assistance in support of their defence also. When the Court finds the evidence and counter evidence from both the sides on the same subject and issue are conflicting with each other and are not clinching the issue in any manner, it ought to, rather must take action to collect independent report of the expert. When the Court finds the evidence and counter evidence from both the sides on the same subject and issue are conflicting with each other and are not clinching the issue in any manner, it ought to, rather must take action to collect independent report of the expert. ( 16 ) IT is true in terms of the order of this Court the Special Officer collected the batch cards regarding the manufacturing process of the product of the respondent at early stage and from these batch cards it reveals that there has been no physical use of silicone compounds or use of any ingredients infringing and/or offending the patented ingredients of the petitioner going by language of undertaking. But nonuse of the silicone compounds and other ingredients at the time of the manufacturing is not complete discharge of undertaking. The respondents are obliged to ensure that their cream is not marketed and/or sold with the silicone compound or in combination with other ingredients. In my considered view before putting their finished product into market sample of each and every batch of the manufactured cream should have been chemically examined that there is no element of silicone compound in terms of the undertaking. The plea of inadvertence emergence of silicone oil because of inter se chemical action is not at all acceptable to this Court. ( 17 ) THIS Court, therefore, asked the Special Officers to send the samples of the cream collected from the market for testing by the third expert viz. Tata Institute of Fundamental Research. The order of testing of the samples passed by this Court was challenged in the Appeal Court and this order has been upheld. Therefore, at this stage it is not open for the respondents to question the course of action taken by this Court for testing. ( 18 ) THE test results that in the cream there has been existence of silicone compound and other offending ingredients as patented as far as four samples bearing batch numbers 156,192,200 and 226 are concerned. The text of the result is set out as follows: Cream Sample Batch Silicone Oil Estimate M 1/100g. 156 445 192 234 200 219 226 <200 Thereafter the said estimate of silicone was calculated in percentage, and found as follows: Cream Sample Batch % Silicone Oil 156 0. 445% 192 0. 234% 200 0. 219% 226 <0. The text of the result is set out as follows: Cream Sample Batch Silicone Oil Estimate M 1/100g. 156 445 192 234 200 219 226 <200 Thereafter the said estimate of silicone was calculated in percentage, and found as follows: Cream Sample Batch % Silicone Oil 156 0. 445% 192 0. 234% 200 0. 219% 226 <0. 200% ( 19 ) THE analysis report of the third party has not been challenged by supplying any report of another third party's laboratory of repute. Rather it has been accepted by necessary implication by both the parties to make it binding. I, therefore, hold that there has been breach of undertaking of the respondents by marketing their products with the silicone compound and other ingredients as mentioned in the undertaking. It also appears to me that the respondents have not used and/or marketed their product with the silicone compound and other ingredients in respect of their products bearing all the batch numbers. So it cannot be said that respondents have used it in regular manner, yet they cannot be relieved of undertaking being discharged. ( 20 ) WHETHER it is a deliberate or not, cannot be found with direct evidence. It will appear from the act and conduct and/or omission of the parties. I have already recorded that the respondents and each of them did not take any precautionary measure and care to see that products are marketed without the silicone compound. There is no explanation why it was not done. In absence of this explanation I think that the respondents have breached the undertaking deliberately or wilfully. ( 21 ) THE contentions of Mr. Pal and his learned Junior are that when there is a doubt, benefit of doubt should be given. I do not find any doubt. I agree with the contentions of Mr. Pal that standard of the proof must be that of criminal trial viz. beyond the reasonable doubt, the case has to be proved. It is equally true under the law that the circumstantial evidence and other acts and conduct of the accused relating to the facts in issue is also a guiding factor to record conviction. When there cannot be any direct evidence in a criminal trial it is settled law that circumstantial evidence with an unbroken chain of all events constituting circumstance leading to commission of offence is also a guiding factor to record conviction. When there cannot be any direct evidence in a criminal trial it is settled law that circumstantial evidence with an unbroken chain of all events constituting circumstance leading to commission of offence is also a guiding factor to record conviction. Here explanation given in the affidavit clearly suggests that there has been deliberate and wilful violation and breach of undertaking on the facts and circumstances of this case. Therefore, the decisions in this regard cited by Mr. Pal are of no assistance on the facts and circumstances of this case. The evidences produced before this Court, in my view, are clear and cogent. ( 22 ) AS far as the theory of alternative remedy is concerned it is for the litigant to choose which course of action in case of the breach of the terms of compromise order should be taken. Alternative theory does not strip off the power of the Court to deal with the alleged contemnors in a suitable manner. In the contempt jurisdiction principally the contemnors are punished for the act and conduct already committed, but the litigant who has suffered loss because of this breach is also entitled to be compensated. If, in my view, relief of compensation affords the petitioner complete remedy in that case contempt proceedings should not be resorted to by the Court nor by the litigants. But when the breach of undertaking is brazen and desparate the Court certainly will spring to take action appropriately. Therefore, I am of the view that justification and the defence either on fact or law by the alleged contemnors are not acceptable by this Court. ( 23 ) I hold that all the respondents Nos. 3-16 are held guilty for deliberate and wilful breach of the undertaking given to this Court. ( 24 ) THEREFORE, they and each of them are sentenced to pay fine of a sum of Rs. 5,000/ -. Such fine shall be deposited with this Court within a period of three weeks from the date of communication of the order failing which they shall undergo fifteen days' imprisonment. ( 25 ) THE respondents are also directed to produce the sale figure of all the products bearing the aforesaid offending batch numbers and this shall be done within three weeks from the date and on that date appropriate order shall be passed in this regard. Contempt proceedings, thus, allowed with costs. ( 25 ) THE respondents are also directed to produce the sale figure of all the products bearing the aforesaid offending batch numbers and this shall be done within three weeks from the date and on that date appropriate order shall be passed in this regard. Contempt proceedings, thus, allowed with costs. ( 26 ) MR. Jhunjhunwalla has prayed for stay of operation of this judgment and Order. Since nobody is there to oppose such prayer, stay is granted for a period of three weeks from date. Let signed copy of the operative portion of this Judgment and Order be made available to the parties. Contempt petition allowed with cost