Hind Mosaic and Cement Works v. Shree Sahjanand Trading Corporation
2009-05-06
K.A.PUJ
body2009
DigiLaw.ai
Judgment K.A. Puj, J.—The plaintiffs have filed this Application seeking amendment in the plaint of the Suit as well as in the prayer Clause after Para 24(A) which reads as under— “The plaintiffs have suffered enormous loss due to the illegal manufacture and sale of the infringing products by the defendant No. 2. At the cost of the plaintiffs the defendant No. 2 is earning profit by effecting illegal sales of infringing products. The sales by the defendant No. 2 has created confusion in the market. The defendant No. 2 is continuing to sell the infringing products even during the pendency of the above suit However the plaintiffs have suffered loss in form of loss of opportunity and enormous expenditure incurred for the purpose of litigation against the defendant No. 2. The plaintiffs are entitled to recover the said cost already incurred by him and future; cost that may be incurred by the plaintiffs for the litigation in future along with compensation for other losses suffered. Now the plaintiffs have got prepared a report by a professional Chartered Accountant who has prepared a report, which gives a loss suffered by the plaintiffs due to the infringement caused by the defendant No. 2, as Rs. 5,20,00,000/-, which is actual and truthful loss suffered by the plaintiffs. Therefore all these facts have unfolded only after filing of the suit and the fact of exact loss was not available to plaintiff. The plaintiffs seek to rely upon the contents of the report of Chartered Accountant, which is attached herewith and which may be read as part of this affidavit.” 2. The plaintiffs also want to add after prayer No. 1 the. prayer No. 2, which reads as under:— “(ii) pass a judgment and decree awarding a compensation of Rs. 5,20,00,000/- in favour of the plaintiffs for infringing the rights of plaintiffs in respect of Patent 203004 granted by Indian Patent office.” 3. While moving this application for amendment, the case pleaded by the plaintiff is that the plaintiffs have filed Civil Suit No. 1 of 2007 for the reliefs claimed in the plaint. The plaintiffs and the defendants have already led their respective evidences on the issues framed by the Court.
While moving this application for amendment, the case pleaded by the plaintiff is that the plaintiffs have filed Civil Suit No. 1 of 2007 for the reliefs claimed in the plaint. The plaintiffs and the defendants have already led their respective evidences on the issues framed by the Court. While moving this application for amendment the plaintiffs want to make prayer for compensation which, despite best efforts and diligence on the part of the plaintiffs, could not be quantified and claimed earlier. The plaintiffs have submitted that Deepak Poddar is the inventor of Patent 203004 and he is the authorized representative of the plaintiff No. 1 and the Director of the plaintiff No. 2. The plaintiffs learnt about the infringement patent 203004 only sometime in the middle of 2007 and immediately on learning about the same, Civil Suit No. l of 2007 for injunction against the defendants was filed. The Court below has granted ex pate order of interim injunction against the defendants thereby restraining the defendants from manufacturing and selling the infringing products. But during the proceedings before, the learned Single Judge of this Court, the said ex parte order came to be vacated. Thereafter, the Division Bench of this Court has again restored the said interim injunction. In a subsequent proceedings before the Hon’ble Supreme Court, the matter came to be remitted back to the Division Bench of this Court for fresh consideration. Thereafter, as per the joint memo submitted before the Division Bench the trial of the matter started. Thus, the proceedings came to be prolonged for quite some. time. Initially the plaintiffs had no information about the quantum of sales of infringing product by the defendant No. 2. The Division Bench in fact gave, specific direction to the defendant No. 2 to render accounts of sales of infringing products which is totally and deliberately disobeyed by the defendants. Now the plaintiffs have got report from professional Chartered Accountant who has prepared a report which gives a loss suffered by the plaintiffs due to the infringement caused by the defendant No. 2. Therefore, all theses facts were unfolded only after filing of the suit and the fact of exact loss was not available to the plaintiffs.
Now the plaintiffs have got report from professional Chartered Accountant who has prepared a report which gives a loss suffered by the plaintiffs due to the infringement caused by the defendant No. 2. Therefore, all theses facts were unfolded only after filing of the suit and the fact of exact loss was not available to the plaintiffs. The plaintiffs, therefore, beg to reply upon the contents of the report of the Chartered Accountant which is attached with the present application and the same is requested to be read as part of the affidavit filed in support of this application. 4. It is, therefore, requested that the amendment sought to be made in the plaint of the suit is required to be granted and the suit may be proceeded further on the basis of amended plaint. 5. A reply to this amendment application is filed by the defendant No. 2, wherein objection is raised on the basis of provisions contained in Section 108 of the Patents Act, 1970 and it is contended that the amendment application is liable to be summarily rejected. Mr. Pranav Trivedi, learned advocate appearing for the defendants has submitted that Section 108 of the Act specifies two reliefs in the alternative, (1) damages or (2) an account of profits and the plaintiffs have the option to elect one of these two reliefs. He has further submitted that the plaintiffs have already opted for account of profits from defendant No. 2 as is evident from the prayer made in Para 29(C) of the Suit plaint. He has further submitted that the plaintiffs have already exercised their option provided under the Act, and hence the plaintiffs are not entitled to seek amendment of the prayer for compensation of Rs. 5,20,00,000/- in addition to the account of profits already prayed for. Mr. Pranav Trivedi has, therefore, submitted that the plaintiffs application for compensation and consequential amendment is in violation of Section 108 of the Act and is also liable to be rejected. 6. Without prejudice to the above contentions, Mr. Trivedi has submitted that the plaintiffs’ application is also liable to be rejected for the several other reasons, which are as under:— (a) The plaintiffs’ prayer for compensation is bad in law for want of adequate Court fees.
6. Without prejudice to the above contentions, Mr. Trivedi has submitted that the plaintiffs’ application is also liable to be rejected for the several other reasons, which are as under:— (a) The plaintiffs’ prayer for compensation is bad in law for want of adequate Court fees. Unless and until the plaintiffs pay requisite Court fees proportionate to the amount claimed as compensation, no prayer for compensation can be entertained by this Court. (b) Since the plaintiffs is required to pay Court fees, consequential amendment to the Court fees paid by the plaintiffs under the suit needs to be amended. The plaintiffs have not sought any amendment to the issue of Court fees. (c) The plaintiffs are prevented from amending the pleadings under Order VI Rule 17 of the Civil Procedure Code. The proviso to Order VI Rule17 states that no application for amendment shall be allowed after the trial has commended, unless the Court comes to the conclusion that inspite of due diligence, the party could not have raised the matter before the commencement of trial. The present suit was filed in July, 2007. Section 108 of the Patents Act, 1970 specifically provides that relief which a Court may grant in a suit for infringement includes either damages or any account of profits. Thus, the plaintiffs were aware even at the time of institution of suit that they were entitled to only one of the two reliefs. The plaintiffs have, already prayed for accounts of profits in the plaint filed on July 2, 2007 in the present suit. Thus, the plaintiffs may be prevented from praying damages at this point of time. (d) This Court on the joint application of both the parties had ordered commencement of trial in March, 2008. All the evidences by way of affidavit and cross-examination of witnesses have been completed by the Court Commissioner in December 2008, thus, completed the trial in December 2008. The trial was in progress for a long time and the plaintiffs had not filed the amendments till the completion of trial. Thus, as the trial in the present is already completed the plaintiffs should not be allowed to file amendments to the pleadings by inserting a paragraph and a prayer in view of proviso to Order VI Rule 17.
The trial was in progress for a long time and the plaintiffs had not filed the amendments till the completion of trial. Thus, as the trial in the present is already completed the plaintiffs should not be allowed to file amendments to the pleadings by inserting a paragraph and a prayer in view of proviso to Order VI Rule 17. After filing reply to the amendment application the defendants have filed additional reply on 05.05.2009, alongwith which copies of statement of account from March 2008 to September, 2008 and October 2008 to March 2009 are annexed. It is stated in the additional reply that due to inadvertence or bonafide mistake the statement of account could not be filed, despite the fact that the Division Bench of this Court has directed to file the same. As a matter of fact there was a factual error in Para-6 of the original reply wherein it is stated that the statement of accounts is already filed. In order to set-right the. said error, additional affidavit was filed alongwith statement of accounts. As per certificates of Chartered Accountant dated 22.10.2008 and 30.04.2009, the Sales of Column Pipe with Coupler and PVC Thread Lock system during the period from April, 2008 to September, 2008 are to the tune of Rs. 4,35,43,009.15 and between the. period from October, 2008 to March, 2008 (sic) are to the tune of Rs. 4,44,58,241.10 respectively. 7. Mr. Trivedi in support of his submission that in view of the proviso to Order VI Rule 17, no application for amendment shall be allowed after the trial has commenced, has relied on the decision of the Hon’ble Supreme Court in the case of Vidyabai & Ors. vs. Padmalatha & Anr. Reported in AIR SCW 899. wherein it is held that proviso appended to Order VI Rule 17 of the Code restricts the power of the Court. It puts an embargo on exercise of its jurisdiction. The Court’s jurisdiction, in a case of this nature is limited. Thus, unless the jurisdictional fact, as envisaged therein, is found to be existing, the Court will have, no jurisdiction at all to allow the amendment of the plaint. Mr. Trivedi has, therefore, submitted that in view of this judgment of the Hon’ble Apex Court the amendment application moved by the plaintiffs should not be entertained by this Court. 8.
Thus, unless the jurisdictional fact, as envisaged therein, is found to be existing, the Court will have, no jurisdiction at all to allow the amendment of the plaint. Mr. Trivedi has, therefore, submitted that in view of this judgment of the Hon’ble Apex Court the amendment application moved by the plaintiffs should not be entertained by this Court. 8. Dealing with the objections raised by the defendants in their affidavit-in-reply and meeting with the submissions made by Mr. Trivedi, Mr. Unmesh Shukla, learned Advocate, appearing for the plaintiffs has submitted that there is no substance in any of the objection raised by the defendants. As far as Section 108 of the Patents Act is concerned, he has submitted that the plaintiffs at the option, in a suit for infringement prays for the relief either for damages or an account of profits and such option can be exercised even after filing of the suit. In support of this submission he relies on observations made in the third edition of K.S. Shavaksha, “The Trade and Merchandise Marks Act, 1958” edited by Justice R.K. Abichandani wherein at page 291 it is observed that the plaintiff is entitled to elect between damages and account of profits after the liability of the defendant has been decided by the Court. In the case of J.C. ENO Ltd. vs. Vishnu Chemical Co. reported in Vol. XLII Bombay Law Reporter 924, it is held that neither the case in the Privy Council nor the case, in Gujarat Ginning and Manufacturing Company Limited vs. Swadeshi Mills Company, Limited, lay down that a plaintiff is not entitled to an account of profits if he gives up his claim for damages. In the 6th Edn. of Kerly on Trade Mark, at p. 517, it is said that the plaintiff may, in general, makes his choice of either an account and payment to him of the profits which the defendant has gained by his wrongful conduct, or an enquiry as to, and payment of, the damages occasioned to the plaintiff by reason of it, and Weingarten Bros. vs. Charles Bayer and Co. (1905) 22 R.P.C. 341 is relied upon in support of that proposition. Towards the end of his judgment at page 351, Lord Macnaghten said, “Ever since the case of Edlesten vs. Edlesten, (1863) 1 De GJ.
vs. Charles Bayer and Co. (1905) 22 R.P.C. 341 is relied upon in support of that proposition. Towards the end of his judgment at page 351, Lord Macnaghten said, “Ever since the case of Edlesten vs. Edlesten, (1863) 1 De GJ. and S. 185, it has been the established rule that a plaintiff succeeding in a case of this sort may at his option take an inquiry as to damages or an inquiry as to profits, I do not see any ground for departing from that practice in the present case”. 9. Mr. Shukla has further invited Court’s attention to the observations made in Kerly’s Law of Trade Marks and Trade Names, Fourteenth Edition at Paras 19-144 on page 675which laid down the proposition that the damages are a matter of right, the account of profits is an equitable remedy and the Court has a discretion whether or not to grant it. Accordingly, a successful claimant in an infringement action is entitled to an inquiry as to damages (at his own risk as to costs) in any case where there is a prospect that the inquiry would reach a positive result, whilst only in certain cases will the Court grant an account of profits. in these cases, the claimant has an option (exercisable at the conclusion of the hearing of the case) to claim either damages or profits; he cannot have both. Accordingly, it is usual in particulars of claim to ask for the two in the alternative. The principle upon which the Court grants an account of profits is that where one party owes a duty to another, the person to whom the duty is owned is entitled to recover from the other party every benefit which that other party has received by virtue of his fiduciary position if in fact he has obtained it without the knowledge or consent of the party to whom he owed the duty. An account is generally refused if the defendant had no knowledge of the claimant’s mark and, when ordered, is limited to the period during which such knowledge had existed; whilst knowledge or absence of knowledge does not affect the right to damages.
An account is generally refused if the defendant had no knowledge of the claimant’s mark and, when ordered, is limited to the period during which such knowledge had existed; whilst knowledge or absence of knowledge does not affect the right to damages. It is further observed that a claimant who has been successful in an action for trade mark infringement or passing off may not have sufficient knowledge of the defendant’s activities to make an informed decision as to whether he should seek an inquiry as to damages or an account of profits. In such a case he may seek disclosure before making his election: Island Records vs. Tring. Disclosure given in such circumstances should be limited to that which is necessary for the claimant to make an informed decision within a reasonable time: he is not entitled to all the disclosure which would be given in the inquiry, and in appropriate circumstances in audited schedule of infringing dealings may be a substitute for documentary disclosure. 10. Mr. Shukla further invited Court’s attention to the observations made in Copinger And Skone James On Copyright, Volume One, under the heading “Election between damages and account of profits” on page 1054 in Para 22-91, wherein it is observed that, a successful plaintiff is usually entitled to an inquiry as to damages or, at his election, an account of profits. He is not entitled to both, since the principle which lies behind the equitable remedy of an account of profits is that the plaintiff condones the infringement and takes the profits made by the infringer for the use of his property. The remedies are, therefore, mutually inconsistent and the plaintiff must elect between the two. Once a clear, unequivocal election has been made, for example the entering of judgment for one or the other, the plaintiff cannot change his mind and opt for the other remedy. A writ claiming only damages does not amount to such an election and the plaintiff will usually be permitted to amend at any time before judgment to include a claim for an account. The election should be made at the latest when infringement is established, but the plaintiff cannot be forced to make an election before then.
A writ claiming only damages does not amount to such an election and the plaintiff will usually be permitted to amend at any time before judgment to include a claim for an account. The election should be made at the latest when infringement is established, but the plaintiff cannot be forced to make an election before then. Prior to making his election, the plaintiff is entitled to discovery and inspection of those documents and an order for the provisions of that information which are necessary to enable him to make an informed choice. This should not be an over-lengthy or unnecessarily sophisticated exercise. The. plaintiff is not entitled to know exactly the amount of any damage or profits, but only to such information as the Court considers to be a fair basis in the circumstances of the particular case for an election. 11. In support of his submission Mr. Shukla relied on the decision of Court of Appeal in the case of Lever vs. Goodwin, reported in Vol. XXXVI Court of Appeal page-1 wherein Lord Justice Cotton after pausing two questions, namely, (1) Whether Mr. Justice Chitty was right in granting an injunction against the defendants (2) If that be decided against the appellants, what ought to have been the form of the decree as regards profit? held that the injunction was right and while dealing with the second question it is held that, it is well known that, both in trade-mark cases and patent cases, the plaintiff is entitled, if he succeeds in getting an injunction, to take, either of two forms of relief; he may either say, “I claim from you the damage I have sustained from your wrongful act,” or “I claim from you the profit which you have made, by your wrongful act.” 12. Mr. Shukla further relied on the decision of the High Court of justice (Chancery Division) in the case of Island Records Limited vs. Tring International PLC, 1995 Fleet Street Reports 560 wherein, the plaintiff sought and obtained by way of motion, summary judgment and judgment on admissions against the defendants. The plaintiff, in its statement of claim prayed, inter alia, for an amount of profits, or in the alternative an inquiry as to damages.
The plaintiff, in its statement of claim prayed, inter alia, for an amount of profits, or in the alternative an inquiry as to damages. During the hearing of the motion, the question arose, as to the time when the plaintiff had to elect for either an inquiry or an account The plaintiff argued that no election should be. made until such time as it was in a position to make an informed choice and accordingly applied for discovery of documents relating to the sums received or receivable by the defendants in respect of infringing “copies, sales of such copies, the number of unsold copies and the costs incurred in manufacture, distribution and sale of such copies. It also sought time to consider its position before electing. The defendants argued that the plaintiff had to elect at the hearing of the motion for judgment. On these facts, the Court directed the defendants to provide an audited schedule and giving the plaintiff time to make an informed choice. After considering various judgments the Court held as under :— (1) It was settled law that a plaintiff (or a person in the position of a plaintiff) is entitled to pray for an inquiry as to damages or, in the alternative, on account of profits although only one such remedy will be ordered - the plaintiff having to elect which, (2) It was also settled law that once judgment has been entered for either an inquiry or an account, then the right of election was lost forever. (3) A plaintiff should not, however, be forced to make an election whilst he is unable to make an informed choice. Further, a right of election must also enhance the right to see and consider readily available information relating to the likely entitlement in the case of each of the alternative remedies. (4) The exercise of the right of election should not be unreasonably delayed to the prejudice of the other party.
Further, a right of election must also enhance the right to see and consider readily available information relating to the likely entitlement in the case of each of the alternative remedies. (4) The exercise of the right of election should not be unreasonably delayed to the prejudice of the other party. (5) The Court should adopt a procedure whereby the party seeking to elect between remedies was put in a position whereby he could make an informed decision within a reasonable time as to which remedy he sought and in order to assist, the Court would order discovery of the relevant documents although the extent of discovery should only be such as to provide the plaintiff with sufficient information to enable him to have a fair basis upon which to make an election. (6) Prima facie, discovery should be granted as sought but the defendants offer of an audited schedule was an appropriate alternative. 13. Based on the aforesaid legal position Mr. Shukla has strongly urged that Section 108 of the Patents Act would not come in the way of this Court to grant the amendment application as the option contemplated therein can be exercised by the plaintiff even after the Court comes to the condusion that there is an infringement and to decide as to what relief the plaintiff is entitled to. 14. While dealing with the second objection raised by the defendants on the basis of proviso to Order VI Rule 17 of the C.P.C, Mr. Shukla has submitted that the proviso itself makes it clear that inspite of due diligence, the parties could not have raised the matter before the commencement of trial. The plaintiffs had no occasion at all to claim damages for loss suffered by the plaintiffs as a result of infringement action. This occasion arose only when the Division Bench has directed the defendants to submit account of profits and on furnishing of such details regarding account of profits, the plaintiffs has to move the present amendment application. In absence of the prayer for seeking damages, it would be very difficult to elect any one of these two options and convince the Court to award either damages or an account of profits so elected by the plaintiffs.
In absence of the prayer for seeking damages, it would be very difficult to elect any one of these two options and convince the Court to award either damages or an account of profits so elected by the plaintiffs. He has, therefore, submitted that this proviso would not come in the way of the plaintiffs from seeking such amendment in the plaint nor in the way of this Court to grant such amendment to the plaint. He has, therefore, submitted that the present application deserves to be allowed and the suit may be ordered to be proceeded with on the basis of their amended plaint. 15. Having heard learned Counsels appearing for the parties and having considered their rival submissions in the light of relevant statutory provisions contained in the Patent Act and other allied statutes as well as Civil Procedure Code and the decided case law on the subject, the Court finds sufficient force in the submissions made by Mr. Shukla for the plaintiffs and hence, prayers made in the present amendment application deserve to be granted. The main challenge to the amendment application is on two counts. Section 108 of the Patent Act talks, of relief’s in suit for infringement. Sub-section (1) of Section 108 reads as under:— “The relief’s which a Court may grant in any suit for infringement include an injunction (subject to such terms, if any, as the Court thinks fit) and, at the option of the plaintiff, either damages or an account of profits.” 16. This sub-section, therefore, envisages two type of reliefs (i) injunction, and (2) damages or an account of profits, if an injunction is granted in favour of the plaintiff, the defendant is restrained from producing or manufacturing the infringed materials or goods. The question then arose to claim recoupment or reimbursement of losses suffered by the plaintiff as a result of such infringement. Normally, the plaintiff claims an account of profits along with an injunction in the suit, as it happens in the present case. This, however, does not estopps the plaintiff to claim damages at a subsequent stage, in any case, before the judgment is pronounced. Section 108 (1) gives an option to the plaintiff to claim either damages or an account of profits. However, it confers powers on the Court to grant such relief once the plaintiff exercises such option.
This, however, does not estopps the plaintiff to claim damages at a subsequent stage, in any case, before the judgment is pronounced. Section 108 (1) gives an option to the plaintiff to claim either damages or an account of profits. However, it confers powers on the Court to grant such relief once the plaintiff exercises such option. The plaintiff can take an informed decision only on the basis of detailed inquiry and on production of all necessary materials. The defendants have produced the figures of their turnover only after the Division Bench has directed them to do so. The proper verification and correctness of such figures are yet to be made. Under these circumstances, if the plaintiffs move the present application so as to enable them to have, an option either to claim damages or an account for profits, the same cannot be objected to on the ground that the plaintiffs have, already exercised an option by claiming an account of profits, at the time of filing of the suit. Such an interpretation violates the basic scheme and fabrics of the Act and it cannot be upheld. While interpreting the similar provisions contained in other Statutes, namely, the Trade Marks Act as well as Copy Rights Act, the Courts have taken the same view as indicated above. 17. The Proviso to Order VI Rule 17 of the Civil Procedure Code does not render any assistance to the defendants. This proviso was inserted to the Code by virtue of Civil Procedure Code (Amendment) Act, 2002. It reads as under:— “Provided that no application for amendment shall be allowed after the trial has commenced, unless the Court comes to the conclusion that inspite of due diligence, the party could not have raised the matter before the commencement of trial.” 18. From the facts discussed and circumstances narrated above, it is difficult to arrive at the conclusion that inspite of due diligence, the plaintiffs could not have raised the plea regarding claim of damages before the commencement of trial. The sales figures duly certified by the Chartered Accountants on 22.10.2008 and 30.04.2009 are produced only on 05.05.2009, that too, after the amendment application filed by the plaintiffs. Thus, the due diligence theory would not come in the way of the plaintiffs from moving such application nor it would come in the way of the Court from granting such relief. 19.
Thus, the due diligence theory would not come in the way of the plaintiffs from moving such application nor it would come in the way of the Court from granting such relief. 19. In view of the foregoing discussion, this application is allowed. Amendment to the plaint as prayed for is granted. The amendment be carried out accordingly. 20. This application stands disposed off.