Research › Search › Judgment

Delhi High Court · body

2008 DIGILAW 575 (DEL)

A. v. R. ENGINEERS VS SHARMA MOULDING WORKS

2008-05-26

S.RAVINDRA BHAT

body2008
JUDGMENT : S. Ravindra Bhat, J. 1. This order, will dispose of IA No. 4274/08 in CS (OS) 2362/07, preferred under Order 7 Rule 10 of the Code of Civil Procedure, 1908, ("The Code of Civil Procedure") by the second Defendant. 2. The facts relevant for deciding the applications are the following. The Plaintiff is engaged in manufacturing, marketing and selling bathroom fittings, valves, cocks and industrial valves of all types since 1984. It is averred that in the same year, it adopted the mark "Ego" and has been using it continuously and uninterruptedly ever since. The mark is also registered under the Trademarks Act, 1999 (hereafter 'the Act') in relation to products in Class 6, 7 and 11 (No. 1314352, No. 442765 and No. 1314353 respectively). It is also averred that the Plaintiff is the proprietor of the trademarks "Eco" and "Igo", both of which are also registered with respect to class 11 under the Act. It is averred that the Plaintiff is using different versions of the Ego label; all of them are original artistic works in which copyright subsists. The Plaintiff is the author, owner and proprietor of the respective copyrights too. It is claimed that on account of prior use and widespread reputation, the mark is distinctively associated with the Plaintiff. The Plaintiff alleges that the goodwill generated by the goods, is evidenced by the large turnover for the same. It places reliance on the sales figures. It also avers about to the large sums of money spent by it for advertising and promoting that brand. Therefore, it claims to be a well known mark within the meaning of Section 2(1)(zg) of the Act. 3. The Plaintiff alleges that the Defendants' adoption of the identical trademark ECO label in respect of same/similar allied/cognate goods is dishonest, malafide and fraudulent. It is alleged that they have blatantly copied the essential and striking features of Plaintiffs trade mark/label. It is averred that the Defendants' malafide intent is apparent from the mentioning on their impugned label "Technology By Hi EGO Valves" which is a direct reference to Plaintiffs said goods and business in the said trade mark/label. It is alleged that the Defendants are misrepresenting that the impugned goods are the Plaintiffs and that the first Defendant is a part of the Plaintiff. It is alleged that the Defendants are misrepresenting that the impugned goods are the Plaintiffs and that the first Defendant is a part of the Plaintiff. The Defendants are illegally projecting and canvassing their association with the Plaintiff, which causes confusion in the minds of the public and therefore, amounts, as well as passing off. It is also submitted that the second Defendant, who was for a number of years, the commission agent of the Plaintiff had suddenly started dealing with the first Defendant had severed his ties with the Plaintiff. The fact that the second Defendant is privy to the business activities of the Plaintiff and their trade secrets further shows the malafide intent of the Defendants to unlawfully benefit from the goodwill of the Plaintiff. 4. Mr. S.K. Bansal, learned Counsel appearing for the Plaintiff, contended that the impugned Trade Mark/label is identical with and deceptively similar to the Plaintiffs Trade Mark/label in each and every respect. It is phonetically, visually, structurally, in its basic idea, in its essential features, in its placements as well as in its artistic features deceptively similar to that of the Plaintiffs. The Defendants impugned goods and business is also of the same/similar/allied cognate nature to the said goods and business of the Plaintiff. Therefore, he contends that the adoption of the said mark will definitely cause confusion in the minds of the public and will prima facie amount to infringement u/s 29 of the Act. Relying on Midas Hygiene v. Sudhir Bhatia (2004) 28 PTC 121 and Laxmikant Patel v. Bharat Shah (2002) 24 PTC 1, he contends that in cases where the Plaintiff has prima facie proved likelihood of deception, an injunction must follow. 5. Learned Counsel submitted that the Defendants' objection to the jurisdiction of this Court is totally unfounded. He relied on sales invoices indicating the Plaintiffs sales to customers in Delhi and also relied on the invoices filed by the Defendants that show that the latter sell their products in Delhi. He placed reliance on Intas Pharmaceuticals v. Allergen Inc. (2006) 32 PTC 272; Amrutanjan v. Ashwin PTC (Suppl 1) 27 Mad and Pfizer Products v. Rajesh Chopra (2006) 32 PTC 301 to argue that if a part of the cause of action arises within the territorial jurisdiction of this Court, the Court can entertain the plaint. 6. In relation to passing off, Mr. (2006) 32 PTC 272; Amrutanjan v. Ashwin PTC (Suppl 1) 27 Mad and Pfizer Products v. Rajesh Chopra (2006) 32 PTC 301 to argue that if a part of the cause of action arises within the territorial jurisdiction of this Court, the Court can entertain the plaint. 6. In relation to passing off, Mr. Bansal contended that the Defendant's registration of its trademark is irrelevant, since the primary concern in an action for passing off is the protection of goodwill and the not the property right in the mark. He relied on Corn Products Refining Co. Vs. Shangrila Food Products Ltd. AIR 1960 SC 142 , Century Traders v. Roshan Lal Duggar, AIR 1978 Del 250 and N.R. Dongre v. Whirlpool Corporation, (1996) 16 PTC 1997, to contend that Section 27 and 28(3) of the Act, due to the Plaintiffs prior use, protects its goodwill and therefore, an action for passing off is a maintainable. 7. Learned Counsel also contended that the Plaintiff is also the owner and author of the copyright in the original artistic work in the marks, and therefore, can sue for infringement of copyright as well. Placing reliance on Glaxo Operations v. Middlesex AIR 1984 Del 265 , he contended that in such cases a separate registration of the copyright is not needed. He also relied on the sales tax registration, central excise registration, ISI certification, ISO 9001 certification and advertisements placed in prominent newspapers like Indian Express to submit that the Plaintiff is a bonafide user of the mark and that it has established for itself considerable reputation over the years. It is contended that the Defendants' activities, have led to the Plaintiffs' suffering from a loss of reputation, which cannot be monetarily compensated and hence, the injunction must be confirmed. Learned Counsel submitted that the present application for return of the plaint, for want of jurisdiction should not be entertained, since in a similar application, the other Defendant had impeached the jurisdiction of the court, but, during the hearing, sought permission and withdrew it. 8. Mr. Seeraj Bagga, learned Counsel appearing on behalf of the Defendants, at the outset itself contended that this Court does not have the territorial jurisdiction to try the suit. 8. Mr. Seeraj Bagga, learned Counsel appearing on behalf of the Defendants, at the outset itself contended that this Court does not have the territorial jurisdiction to try the suit. He argues that a mere averment in the plaint that the Plaintiff and the Defendant carry on business in Delhi is not sufficient to make the suit amenable to the jurisdiction of this Court, especially since both the Plaintiff and the first Defendant do not have any registered office, sub-office or branch office in Delhi. He contends that it is well settled law that the expression "carries on business" alone are insufficient to confer/invoke jurisdiction. He further states that to constitute "carrying on business" at a certain place, the essential part of the business must take place in that place. Since neither the Plaintiff nor the first Defendant have their registered offices at Delhi nor are based at Delhi and all the essential characteristics of the business, viz, the manufacture, packing, dispatch, sales, receipt of orders, all takes place at Jalandhar; this Court cannot have territorial jurisdiction in this regard. It is settled law that a corporation in view of the Explanation appended to Section 20 of the Code would be deemed to be carrying on business inter alia at a place where it has a subordinate office. Merely because the first Defendant's goods are being sold at a place would thus evidently not mean that it carries on business there. It is reiterated that since the first Defendant is a firm and does not have any subordinate office or sub-office at Delhi, and its sole or principal office is at Jalandhar, Punjab, this Court has no territorial jurisdiction. 9. Mr. Bagga further argues that no cause of action has arisen within the territorial jurisdiction of this Court. He argues that though the Plaintiff has demonstrated its considerable sales in Delhi, it has not been unable to prove that the Defendants also sell their products here, in the absence of which no cause of action can be established in Delhi. He placed reliance on Kensoft Infotech v. Krishnaswami (2008) 146 DLT 657 to say that a plea of demurer, such as the a case under Order 7 Rule 10, is to be decided on the basis of the plain averments only and that the written statement should not be gone into. He placed reliance on Kensoft Infotech v. Krishnaswami (2008) 146 DLT 657 to say that a plea of demurer, such as the a case under Order 7 Rule 10, is to be decided on the basis of the plain averments only and that the written statement should not be gone into. He further contended that even according to the Plaintiff, (as is evident from his bill books and challans,) the jurisdiction in respect of any dispute between the Plaintiff and any other party has been restricted to the Courts at Jalandhar, where alone the production, marketing and distribution of the goods took place. He submitted that primacy should be given to that place where the cause of action arose, and if the Plaintiff was able to prove his allegations, the cause of action could have arisen only at Jalandhar-the plade where the Defendant was carrying on business. Therefore, he submitted that no cause of action arose within the territorial jurisdiction of this Court, u/s 20 of the CPC or u/s 62(2) of the Copyright Act, 1957 or under the Trade Marks Act, 1999. To this end he relied upon decisions reported as Kensoft Infotech v. Krishnaswami 146 (2008) DLT 657; SS Products v. Starplast (2001) PTC 835 and Austin Reed Ltd. v. Suntex Garments (2007) 35 PTC 774. He also submitted the court should apply the doctrine of forum conveniens, as both the Plaintiff and the first Defendant were based in Jalandhar and carried out their business from there. 10. Learned Counsel also argued that the Plaintiff was guilty of misrepresentation as material facts were not intentionally disclosed when the injunction was obtained. It is submitted that the first Defendant adopted the mark "Eco" and obtained the registration for the same with effect from 2001 in Class-6, much before the Plaintiff got it registered in 2004 in class-11. He also submitted that due to the prior adoption, the copyright in the said label also vested in the Defendants. Relying on the registration certificate, learned Counsel urged that the first Defendant came into existence in 1976, whereas the Plaintiff came into being in 1984. He also relied on documents to show that the first Defendant was using the label "Eco" even before the Plaintiff came into existence. Relying on the registration certificate, learned Counsel urged that the first Defendant came into existence in 1976, whereas the Plaintiff came into being in 1984. He also relied on documents to show that the first Defendant was using the label "Eco" even before the Plaintiff came into existence. He contended that the ex parte interim injunction deserves to be set aside and the suit merits to be dismissed as the order is non est in the eyes of law in view of the decision in S.P. Chengalvaraya Naidu (dead) by L.Rs. Vs. Jagannath (dead) by L.Rs. and others, (1994) 1 SCC 1 wherein the Court has held that where any decision or judgment is obtained by playing a fraud then the same is non-est in the eyes of law. 11. Mr. Bagga also contended that prima facie case lies in the favour of the Defendants since not only do they enjoy prior use and prior registration, but also have obtained copyright in respect of the label ECO along with the distinct style and colour scheme of the packaging along with the inscription "Technology by Hi EGO Valves" on 9.6.2006. He submits that the said copyright certification was obtained after due enquiries were made and a No Objection Certificate was obtained. The reference to Ego Valves in the inscription was not a reference to the Plaintiff but a reference to the second Defendant-M/s. Hi Ego valves, established in 1968. Therefore, he contended that since the Defendants had a prior registration and also a copyright registration in respect of the said label, the interim injunction ought to be vacated. In this regard he relied on Uniply Industries Ltd. Vs. Unicorn Plywood Pvt. Ltd. and Others, (2001) 5 SCC 95 , Jindal Industries v. Nirmal Steel Tubes, AIR 1995 Del 42 and SS Products (supra). 12. This Court, in the above circumstances, is of the opinion that the issue of territorial jurisdiction needs to be addressed first. The Plaintiffs averments and contentions in this regard are two-fold. Firstly, that the Plaintiffs and the Defendants are selling their respective products, and therefore carry on business within the territorial jurisdiction of this Court, and two, that the respective registrations have been effected in Delhi. The Plaintiffs averments and contentions in this regard are two-fold. Firstly, that the Plaintiffs and the Defendants are selling their respective products, and therefore carry on business within the territorial jurisdiction of this Court, and two, that the respective registrations have been effected in Delhi. Section 20 of the Code of Civil Procedure, 1908, Section 62(2) of the Copyright, 1957 and Section 134 of the Trade Marks Act, 1999, provide for the following fora where the disputes could be adjudicated. First, the place at which the Defendant actually and voluntarily resides or carries on business. Second, the place at which the cause of action, wholly or in part arises. Lastly, by an amendment to the Copyright Act and the Trade Marks Act, the suit can be instituted at the place where the Plaintiff resides and carries on business. 13. In the present scenario, the cause title would reveal that both the Plaintiff and the first Defendant are residents and carry on business in Jalandhar, whereas the second Defendant is a resident of Chennai. The explanation to Section 20 of the Code of Civil Procedure, makes it clear that the place at which a corporate entity carries on business is either the place at which it has its sole or principle office or where it has a subordinate office. The Defendants do not have any offices in Delhi, let alone its principle or sole office. The first Defendant's office is based in Jalandhar. 14. Undoubtedly, the court has to see only the averments in a plaint, to decide whether the suit discloses a triable cause of action, and whether this Court has jurisdiction. In this context, it would be useful to notice the judgment of the Supreme Court in Liverpool and London SP and Liverpool and London S.P. and I Asson. Ltd. Vs. M.V. Sea Success I and Another, (2004) 9 SCC 512 , where it was held that for the purposes of rejecting a plaint under Order 7 Rule 11 the Court should not only look at the averments in the plaint but also must look into documents filed along with, in view of Order 7 Rule 14. In Sopan Sukhdeo Sable and Others Vs. In Sopan Sukhdeo Sable and Others Vs. Assistant Charity Commissioner and Others, (2004) 3 SCC 137 , the Court opined that for the purposes of deciding an application under Order 7 Rule 11, the averments made in the plaint are germane and that the pleas taken by the Defendant in the written statement would be irrelevant. Further, the court also emphasized that a meaningful and not formal reading of the plaint was to be adopted so as to nip in the bud any clever drafting of the plaint. This approach has been emphasized by this Court in Kensoft Infotech (supra). 15. In Indian Performing Rights Society v. Sanjay Dalia (2007) 143 DLT 617 , this Court, relying on Lok Nath Prasad Gupta Vs. Bijay Kumar Gupta, (1995) 32 DRJ 350 , held that the expression "carries on business" in Section 62 of the Copyright Act has the same meaning as in Section 20 of the Code of Civil Procedure. It was further held that merely having a branch office in Delhi would not mean that the Plaintiff carries on business in Delhi. The Plaintiff would be deemed to carry on business at a branch office only if a cause of action had arisen in Delhi. A well established principle of law is that to amount "to carrying on business" in a certain place, the essential part of the business must take place in that place. Dhodha House Vs. S.K. Maingi, (2006) 6 SCC 41, Nedungadi Bank Ltd. Vs. Central Bank of India Ltd. AIR 1961 Ker 50 , Bharat Insurance Co. v. Vasudev, AIR 1956 Nag 203. In Dodha House, the Court went on to observe that it was possible that the goods manufactured by the Plaintiff were available in the markets in Delhi or they are sold in Delhi, but that by itself would not mean that the Plaintiff carries on any business in Delhi. On an application of the above principles and a consideration of the documents submitted by the Plaintiff will indicate that though he has been able to establish that he markets his goods in Delhi, he has not been able to establish that the Defendants also manufacture and market their goods in Delhi. 16. It was held, in Sector Twenty-one owners Welfare Association (STOFWA) Vs. 16. It was held, in Sector Twenty-one owners Welfare Association (STOFWA) Vs. Air Force Naval Housing Board, (1997) 65 DLT 81 that a trivial or insignificant part of the cause of action arising at a particular place would not be enough to confer jurisdiction on the court to entertain the lis. Citing a number of precedents it observed that the emphasis had shifted from the residence or location of the person or authority sought to be proceeded against, to the situs of the accrual of the cause of action. In Himachal Pradesh Horticulture Produce Marketing and Processing Corporation Ltd. Vs. Mohan Meakin Breweries Limited, AIR 1981 P&H 117 in relation to action for passing off the Court observed as follows: In a case of present nature, the cause of action partly or wholly can arise in a given jurisdiction only if it is the Defendant who is proved to have directly made sale of the goods under the impugned trademark (within a given court) not to an individual customer but to a distributor or a wholesaler or retailer and that such a sale should be at a commercial scale. In Gold Seal Engineering Product Pvt. Ltd. and others Vs. Hindustan Manufacturers and others, AIR 1992 Bom 144 it was held that a suit for passing off could not be filed in Bombay if the Defendants carry on business in Calcutta and that supply of goods to Delhi was on a commercial basis. In Gupta Brothers Conduit Pipe Manufacturing Co. v. Anil Gupta (2001) 24 PTC 159, this Court held that since neither Plaintiff nor the Defendants have offices in Delhi and are not carrying on business in Delhi, the suit had to be returned due to lack of jurisdiction. The court held, in Haryana Milk Foods v. Chambel Diary Products (2002) 25 PTC 156 that for the purposes of ascertaining territorial jurisdiction the entire a plaint has to be taken into consideration. In that case since the Plaintiff could not prove that the Defendant had a office in Delhi or carries on business in Delhi, the Court held that it did not have territorial jurisdiction to adjudicate the matter. 17. In that case since the Plaintiff could not prove that the Defendant had a office in Delhi or carries on business in Delhi, the Court held that it did not have territorial jurisdiction to adjudicate the matter. 17. In Dabur India Limited v. KR Industries (2006) 33 PTC 348 , a Division Bench of this Court held that since the Defendant was from Andhra Pradesh and since there was no documentary evidence to show that the Respondent was selling its goods in Delhi, this Court did not have territorial jurisdiction. In Oil and Natural Gas Commission Vs. Utpal Kumar Basu and Others, (1994) 4 SCC 711 the Court had categorically held that a mere advertisement in a journal or paper by itself, will not confer jurisdiction on the Court. In that context it also observed that cause of action will arise only when the infringing goods are used not when an application for registration is made or pending. 18. Cause of action, though not defined by the legislature, consists of that bundle of facts, which give cause to enforce the legal injury. In A.B.C. Laminart Pvt. Ltd. and Another Vs. A.P. Agencies, Salem, (1989) 2 SCC 163 the Supreme Court held that cause of action means that set of facts, which taken with the law applicable to them, gives the Plaintiff a right to claim relief against the Defendant. If that were so, the cause of action in a case of passing off would arise only when the Defendant uses the impugned trademark. The object of action for passing off being to protect the goodwill, the goodwill will get affected only when the Defendant markets his good under the impugned mark. Therefore, the mere advertisement in the Trademarks Journal or preferring of application or even the registration of a trademark at a particular place, will not and cannot confer jurisdiction, since it cannot amount to cause of action in relation to passing off. 19. It is no doubt a fact that the first Defendant had earlier filed an application for rejection of plaint, which inter alia, contained averments about lack of territorial jurisdiction, but later withdrew it. However, that Defendant has not filed the present application. Moreover, it is under Order VII Rule 10, for return of plaint. The Supreme Court has in Arjun Singh Vs. However, that Defendant has not filed the present application. Moreover, it is under Order VII Rule 10, for return of plaint. The Supreme Court has in Arjun Singh Vs. Mohindra Kumar and Others, AIR 1964 SC 993 held that where the principle of res judicata is invoked in the case of the different stages of proceedings in the same suit, the nature of the proceedings, the scope of the enquiry which the adjectival law provides for the decision being reached, as well as the specific provisions made on matters touching such decision are some of the material and relevant factors to be considered before the principle is held applicable. In this case, the issue of jurisdiction is fundamental; it goes to the root of maintainability of the action before the court. Consequently, this Court does not and is not prevented from going into this aspect of maintainability, as it was not decided in the earlier part of the proceeding. The Plaintiff had sought to rely on a copy of one sale voucher pertaining to a transaction, which took place in Delhi, placed on the record along with the Defendant's pleading, to claim that this Court possesses jurisdiction. Besides the fact that such tenuous connection ("one swallow does not a summer make" ) cannot be made by the Plaintiff, since it has been unable to provide any material about the Defendant's sale or any meaningful commercial presence within jurisdiction of this Court, to enable exercise of jurisdiction. Here admittedly, both parties reside and carry on business at Jalandhar, the sales of products of the Defendants have not been shown to be within jurisdiction of the Court, the suit cannot be entertained. 20. In view of the above reasoning, it is concluded that this Court does not possess territorial jurisdiction to entertain and try this suit. IA No. 4274/08 has to succeed; it is accordingly allowed. CS (OS) 2362/07 is therefore, returned, with leave to file it in the court of competent jurisdiction. The applications are accordingly disposed off.