M/S.J.K.OIL INDUSTRIES vs M/S. ADANI WILMAR LIMITED

The defendant has filed the instant application under Section 124 of the Trade Marks Act (hereinafter ‘the Act’) read with Section 151 CPC

for stay of the present proceedings pending final disposal of rectification application filed by it. The application is contested by the plaintiff.

I have heard the learned counsel for the parties and have examined the file.

Present suit under Sections 134 and 135 read with Section 27(2) of the Act; Copy Right Act, 1957, has been instituted by the plaintiff for permanent

injunction restraining infringement, passing off, rendition of accounts, etc. against the defendant. By an order dated 08.01.2010 in IA No.107/2010, the

defendant was restrained from using, selling, soliciting, exporting, displaying and advertising the infringing mark appended at page No.4 of the

documents filed by the plaintiff till the next date of hearing. By an order dated 10.02.2010 in IA No.107/2010 (u/O XXXIX Rule 1 & 2 CPC, by the

plaintiff) and IA No.1405/2010 (u/O XXXIX Rule 4 CPC, by defendant), this Court by a detailed order dismissed IA No.107/2010 and allowed IA

No.1405/2010. FAO(OS) No.213/2010 to challenge the said order resulted in dismissal. SLP came to be dismissed by an order dated 07.07.2010.

On 19.09.2011, when IA No.14894/2011 filed by the defendant came for hearing, the defendant sought leave of this Court to file rectification

application before the Intellectual Property Rights Board (hereinafter ‘IPRB’). Learned counsel for the non-applicant / plaintiff submitted that

there was no necessity of filing the said application as no leave of the Court was required. In view of that, the defendant submitted that no further

orders were required to be passed and that he would take appropriate steps. The said application stood disposed of that day.

On 15.12.2011, with the consent of the parties, issues were framed. It was pointed out by the learned counsel for the defendant that an application

for rectification of the trade mark of the plaintiff was pending and in view of the order dated 19.09.2011, the defendant was entitled to file an

application for rectification.Defendant’s counsel sought leave of the Court to make an appropriate application in case the application for

rectification was allowed as the same would have a direct bearing to the outcome of the present suit and an additional issue would thereafter be

required to be framed. The case was adjourned for recording plaintiff’s evidence.

When the evidence of the plaintiff was being recorded, IA No.13187/2014 in question came to be filed by the defendant along with IA

No.13188/2014 (u/O XIV R 1 CPC). By the order dated 21.07.2014, this Court directed the Registrar not to record evidence. The said directions

continued till 05.10.2015, when the Joint Registrar was permitted to record the evidence.

Learned counsel for the defendant urged that earlier IA No.14894/2011 was filed due to legal compulsion, as per the law laid down in

‘Astrazeneca UK Ltd. & Anr. Vs. Orchid Chemicals’, 2006 (32) PTC 733 Delhi, permission of the court was sine qua non for filing

cancellation pending the suit. The position of law has since been changed recently in view of Full Bench judgment ‘Data Infosys Ltd. vs. Infosys

Technologies Ltd.’, MANU/DE/0283/2016. No effective orders were passed on 19.09.2011 in IA No.14894/2011; it did not preclude the

defendant to pray to the Court to complete the statutory mandate of Section 124 of the Act by filing the instant IA. He further urged that three

months’ time to file rectification application is to commence from the date of framing of issues under Section 124(1)(b)(ii) of the Act. Cancellation

petition dated 29.02.2012 was filed within three months making it fully compliant of Section 124 of the Act. The defendant had never abandoned its

plea of invalidity as it always agitated the issue of invalidity from the very inception and also filed cancellation within three months. Additional issue

was required to be framed as urged by the defendant and for that reason the process under Section 124 of the Act remained incomplete.Relying upon

‘Bhagwan Dass Khanna Jewellers Pvt. Ltd.& Ors. vs. Bhagwan Das Khanna Jewellers’, 2017 (70) PTC 56 (Del)(DB), counsel urged that it

was the court’s duty to frame the issues and adjourn the case for three months. Counsel further urged that provisions of Section 124 of the Act

are mandatory in nature; it does not provide any such limit as to when the trial of the suit can be stayed. As per law laid down in ‘Data Infosys’

(supra) only pre condition for stay of the proceedings is that the rectification must be filed within a period of three months or the extended period of

time from the date of framing of the issues. The plaintiff cannot be permitted to take advantage of his own wrong which resulted in the passing of the

order dated 19.09.2011. Learned counsel further urged that provision of Section 124 of the Act are applicable even in a composite-suit filed for

‘passing off’.

He further urged that the judgment ‘Puma Stationer P.Ltd. & Anr. vs. Hindustan Pencils Ltd.’, 2010 (43) PTC 479 (Del)(DB), cannot be

relied upon as it did not adjudicate the issue of staying the suit for ‘passing off’ along with infringement; it did not constitute precedent. Reliance

was placed on ‘Nippon Soda Co.Ltd. vs. V.P.Goyal & Anr.’ 2014 (58) PTC 386 (Del) and ‘Abbott Healthcare Pvt. Ltd. vs. Raj Kumar

Prasad and Ors’, MANU/DE/0198/2018.

Learned counsel for the plaintiff urged that the proceedings cannot be stayed under Section 124 of the Act as the plea of invalidity was never raised

by the defendant in the written statement. The defendant was required to file cancellation petition within three months from 19.09.2011 to get the suit

stayed. However, the cancellation petition was filed only in February, 2012 which is beyond the period prescribed under Section 124(1)(b)(ii). The

defendant had abandoned the plea of invalidity of the plaintiffs’ registered trademark. Learned counsel further urged that when the issues were

framed on 15.12.2011 with the consent of the parties, the defendant did not insist for framing of issue on invalidity of the plaintiff’s registered

trademark. The application is liable to be dismissed due to gross delay in filing the cancellation petition. The evidence is being recorded in the present

proceedings. Relying upon ‘Micolube India Ltd. vs. Maggon Auto Centre & Anr.’, 2010 (42) PTC 462 (Del), counsel urged that the present suit

relates to infringement and ‘passing off’ since Section 124 is applicable only to infringement; the suit in relation to ‘passing off’ must

continue. Reliance was placed on ‘Data Infosys Ltd. & Ors. vs. Infosys Technologies Ltd.’ (Supra); ‘Dabur India Ltd. vs. Alka Ayurvedic

Pvt. Ltd.’, 2009 (41) PTC 614 (Del.); ‘Puma Stationer P.Ltd. & Anr. vs. Hindustan Pencils Ltd.’, 2010 (43) PTC 479 (Del)(DB);

‘Formica International Ltd. vs. Caprihans (India) Pvt. Ltd. and Ors.’, AIR 1966 Cal 247; ‘M/s.Shakti Traders vs. M/s.Shakti Press Ltd.’,

2008 (5) All M.R. 699 and ‘M/s. Sarvapriya Tubes Pvt. Ltd. and Anr. vs. M/s. Madhav Udyog Pvt. Ltd. and Anr.’.

On perusal of the sequence of events referred above, it reveals that the defendant had filed the application for stay of the proceedings under

Section 124 without inordinate delay on 19.09.2011. Learned counsel for the plaintiff himself apprised the Court that there was no necessity to file the

said application as no leave was required from the Court. On that, the defendant was permitted to take appropriate steps. It is informed that the

rectification / cancellation proceedings were initiated by the plaintiff thereafter on 29.02.2012; it is not at issue. Perusal of the record reveals that the

plea of invalidity was raised by the defendant even in the IA No.14894/2011. By that application, the defendant sought permission from the Court to

file necessary rectification application for removal / rectification / modification to the registration of the plaintiff’s mark. In the written statement,

in various paras, the plea of invalidity has been indirectly raised. Order dated 10.02.2010 in IA No.107/2010 (u/O XXXIX R 1 & 2 CPC, by plaintiff)

and IA No.1405/2010 (u/O XXXIX R 4 CPC, by defendant) is crystal clear whereby the earlier ex-parte injunction granted to the plaintiff was

vacated forming a prima facie view that the trademark ‘KING’ of the plaintiff was common to English language and did not have distinctive

character and he could not enjoy exclusivity over the part of the trademark under Section 17 of the Act. It was specifically argued at that time that the

proceedings were liable to be stayed under Section 124 of the Act. At the time of consideration of issues on 15.12.2011, the defendant’s counsel

had pointed out that an application for rectification of the plaintiff’s trademark was pending. It was further urged that in view of the order dated

19.09.2011, the defendant was entitled to file an application for rectification. The defendant sought leave of the Court to make an appropriate

application and if allowed it would have a direct bearing on the outcome of the present suit and additional issue would be required to be framed.

Apparently, the defendant never abandoned the plea of invalidity, filing of rectification proceedings thereafter within three months of the framing of

the issues on 29.02.2012 confirms it. Since the rectification proceedings have been filed within three months from the date of issues, it cannot be

inferred that there was inordinate delay in filing the rectification proceedings. In ‘Bhagwan Dass Khanna Jewellers Pvt. Ltd.& Ors. vs. Bhagwan

Das Khanna Jewellers’ (supra), the Division Bench of this Court observed that it is the Court’s duty to frame the issue and adjourned the

case for three months and non-observance of the said recourse cannot lead to the abandonment of the plea or the application under Section 124 being

time barred and the time limitation in such a case shall not start running against the party. Settled position is that the issue with respect to invalidity of

the trademark is to be decided by the Board and not by the Civil Court.

In the recent judgment ‘Patel Field Marshal Agencies & Anr. vs. P.M.Diesels Ltd. & Ors’, 2018 (73) PTC 15 (SC), the Hon’ble

Supreme Court while interpreting Section 111 para materia to Section 124 of the Act held that in that case the issue with respect to the invalidity of

the trademark would be decided by the Tribunal and not by the Civil Court. However, the Tribunal will come in sesin only if the Civil Court was

satisfied that the issue with regard to invalidity ought to be framed in the suit. Once an issue to the said effect is framed, the matter will thereafter go

to the Tribunal and the decision of the Tribunal will thereafter bind the Civil Court. If despite the order of the Civil Court, the parties do not approach

Tribunal for rectification, the plea of invalidity will no longer survive.

Since the defendant has never abandoned the plea of invalidity and has filed the rectification proceedings within three months before the Board,

the proceedings in the present case under Section 124 of the Act regarding plaintiff’s suit for infringement of the trademark are liable to be

stayed.

This Court finds merit in the plea of the learned counsel for the plaintiff that in a suit for ‘passing off’, the proceedings, however, would

continue. Section 124 of the Act is applicable only to the suits for stay of infringement till the final decision of the pending rectifications. This Court in

‘Micolube India Ltd. vs. Maggon Auto Centre & Anr.’(supra) decided on 14.01.2010 categorically held :

“18. A plain reading of the said provision indicates that while considering an application for the stay of the proceedings where the validity of the

registration of the trade mark is questioned, an order can be passed in a suit for infringement of trademark. In the present case, since both the parties

are holding the registration of the same mark, thus the suit filed by the plaintiff for infringement of trademark is not maintainable in view of Section

28(3) and Section 30(2)(e) of the Act. It cannot be disputed that the suit for passing off would be maintainable. Section 124 does not specifically

mandates that while staying the suit for infringement of trademark, an action for passing off shall also be stayed. Therefore, I am of the view that the

suit for passing off can continue.

XXXX XXXX XXXX

In view of the aforesaid circumstances, the present application is allowed partly as far as the suit of infringement of trade mark is concerned and

the same is stayed till the final decision of the pending rectifications. But, the suit filed by the plaintiff for passing off shall continue and is to be

considered on its own merit, and the prayer of stay the suit for passing off cannot be accepted. I.A. No. 3915/2009 is disposed of with the

abovementioned observations.â€​

(Emphasis given)

Again, the Division Bench of this Court in ‘Puma Stationer P.Ltdd. & Anr. vs. Hindustan Pencils Ltd.’ (supra) decided on 16.02.2010 held

:

“15. We are of the view, therefore, that the law on this issue is quite well settled. Where an application for rectification/cancellation of a registered

trade mark is pending before the statutory authority, the High Court is obliged to stay further proceedings in the suit pending before it pursuant to

Section 124(1) of the Trade Marks Act, 1999.

In so far as the suit out of which present appeal arises is concerned, there is an allegation against the Appellants of passing off the trade mark

'Plasto' as well as 'Non-Dust' and there is an allegation of infringement of the trade mark 'NonDust'.

In view of the express provisions of Section 124 of Trade Marks Act, we stay further proceedings in the suit in so far as the alleged infringement

is concerned with regard to the trade mark 'NonDust' until the disposal of the matter before the Intellectual Property Appellate Board. It is, however,

made clear that the passing off action may continue.â€​

(Emphasis given)

Similar view was taken in ‘Formica International Ltd. vs.

Caprihans India Pvt. Ltd. & Ors.’, AIR 1966 Cal 247 :

“9. From what I have observed above it follow that the causes of action for infringement and "" passing off "" are distinct and separate and one of

them may fail while the other may succeed on the same evidence. In a suit where the two causes of action are combined and the defendant seeks to

invoke the provisions of Section 111 the Court, in my view, has the power and the duty to stay the suit so far us it relates to infringement of trade

mark. The Court trying the suit must wait for the result of the rectification proceedings before it passes any final order or decree involving the validity

of the registration. I realise that the result will be that the suit may have to be tried piecemeal. But having regard to the mandatory provisions of

Section 111, I do not see any other alternative. Learned counsel for the petitioner has urged that where a plaintiff with full knowledge of the pending

rectification proceedings drafts his plaint in such a manner as to make the issues of infringement and ""passing off"" inseparable the whole suit ought to

be stayed. But the legislature does not give to the Court the power to stay a suit for ""passing off"". At the same time the legislature says that when

rectification proceedings are pending it is the duty of the Court to stay the suit for infringement in order that conflicting decisions may be eschewed.

The legislature says further that the Court must dispose of the suit in conformity with the final order in the rectification proceeding in so far as the suit

relates to the validity of the registration, I do not think that learned counsel for the respondent is right in contending that a combined action is outside

the purview of Section 111. If that were the case the entire purpose of enacting this section can be frustrated in every case by combining an action for

infringement with an action for ""passing off"", and conflicting decisions in the rectification proceedings and in the suit may create problems incapable of

being solved. It should be remembered that these proceedings may be pending either before the Registrar or the High Court and my attention has not

been drawn to any provision in the statute which provides for a solution of the problem that I have broached. The only course left to the court which is

concerned with the suit is to stay the action for infringement till the rectification proceedings are finally disposed of. That, I am of opinion, was the

intention of the legislature, when Section 111 was introduced into the Trade and Merchandise Marks

Act, 1958.â€​

High Court of Judicature at Bombay, Nagpur Bench, Nagpur, in ‘M/s.Shakti Traders vs. M/s.Shakti Press Ltd.’, 2008 (5) ALL MR 699,

decided on 29.07.2008 in Writ Petition No.4736/2007 held :

“11. Perusal of the above provisions clearly discloses that a suit can be filed either for infringement of a registered trade mark or for passing off

action under Section 134 of the Act. Under Section 124 of the Act the court trying the suit for infringement of a trade mark is bound to stay the suit if

any proceedings for rectification of the registration in relation to the plaintiff’s or defendant’s trade marks are pending before the Registrar or

the Appellate Board. Thus, it is clear that the court dealing with a suit for infringement of a trade mark only is bound to stay the suit when proceedings

are pending before the Registrar or the Appellate Board. Section 124 does not provide for stay of a suit filed for passing off under Section 134(1)(c)

of the Act. 12. Perusal of the plaint in the above suit discloses that the suit is primarily based on passing off action and the suit is not for infringement

of the trade mark. In paragraph 19 of the plaint, the plaintiff has specifically averred that he has made out a strong case based on passing off action. It

is, therefore, clear that the suit is based on passing off action and as such suit has been filed under clause (c) of sub section 1 of Section 134 of the

Act. Obviously, therefore, Section 124 of the Act which is applicable only in a suit filed for infringement of trade mark is not attracted. The learned

counsel for the respondent fairly submitted that there is no other provisions in the Act permitting stay of the suit.â€​

(Emphasis given)

In ‘M/s.Sarvpriya Tubes Pvt. Ltd. & Anr. vs. M/s. Madhav Udyog Pvt. Ltd. & Anr.’, in CR.No.6058/2015 decided on 12.04.2016, taking

into consideration ‘Nippon Soda Co.Ltd.’ (supra), ‘Shakti Traders’ (supra), ‘Umesh Kumar Gupta vs. Shree Girraj Food Products’,

2013 AIR (Allahabad) 81, High Court of Punjab & Haryana observed :

“4. The contention is that in an action for passing off the issue of mere rectification of register cannot serve the purpose and the extent of

evidence and the proposition to be advanced would be different. The learned counsel would refer me to a decision of the Bombay High Court (Nagpur

Bench) in ‘M/s.Shakti Traders vs. M/s.Shakti Press Ltd.’, 2008 (5) ALL MR 699. The Bombay High Court had held that Section 124 of the

Act relating to stay of proceedings would apply only in a suit for infringement of trade mark but if the suit is primarily based as passing off action

under Section 134(1)(c) the Act, the provision of Section 124 would not be attracted at all. Similar view was also expressed by the Allahabad High

Court in ‘Umesh Kumar Gupta and another vs. M/s.Shree Girraj Food Products’, 2013 AIR (Allahabad) 81.

I find the distinction made out by the plaintiff is tenable and I am in respectful agreement with the views expressed by the Bombay High Court and

the Allahabad High Court. The decision cited of the Delhi High Court has no bearing to a situation that obtains in this case and also does not address a

situation of a suit complaining of passing off action. The order passed by the court below is correct and would require no intervention.â€​

Learned counsel for the defendant heavily placed reliance upon ‘Nippon Soda Co.Ltd.’ (supra) to buttress the arguments that Section 124

of the Act is applicable to the suit for ‘passing off’ the goods as well. In the said judgment delivered on 28.02.2014 the Coordinate Bench of this

Court itself observed in para 18 “As far as the stay of the suit /counter claim in so far as for the relief against passing off is concerned, there is no

manner of doubt that Section 124 can have no application thereto…..â€. The said Bench, however, agreed with the view taken in CS(OS) 1172/2008

titled ‘Mount Everest Mineral Water Ltd. vs. Kadir Khan’ that the suit for the same relief on the ground of infringement as well as passing off

cannot be split up and cannot be decided at different points of time. Apparently, the applicability of Section 124 of the Act was not at issue in the said

proceedings.

Reliance was further placed on the Abbott Healthcare Pvt. Ltd. vs. Raj Kumar Prasad and Ors. in CS(OS) 3534/2012 decided on 03.01.2018 by

the said Bench. Defendant’s counsel urged that in the said judgment the Co-ordinate Bench had considered the judgment in ‘Puma Stationer

P.Ltd.’ (supra) and was of the view that the said judgment had not adjudicated the issue, it did not constitute a precedent or to have decided

contrary to Mount Everest Mineral Water case (supra). This Court finds no substance in the arguments of the learned counsel for the defendant as

Section 124 of the Act is crystal clear and the words ‘passing off’ do not find mention therein. The Division Bench in ‘Puma Stationer

P.Ltd.’ (supra) was very much oblivious of the relief claimed in the said suit and was of the view that Section 124 did not have any application to

the suits for ‘passing off’. The Co-ordinate Bench of this Court in ‘Micolube India Ltd. vs. Maggon Auto Centre & Anr.’(supra)

categorically discussed the said aspect and was of the view that the proceedings for ‘passing off’ would continue.

This Court finds no valid reasons to take different view than the one taken by the Division Bench of this Court in ‘Puma Stationer P.Ltd.’

(supra) and ‘Micolube India Ltd.’(supra). Having recourse to Section 151 CPC to stay the proceedings in a suit for ‘passing off’, as

urged by the learned counsel for the defendant, is uncalled for as Section 124 is very specific and makes it clear that it is applicable only to suits for

infringement.

In view of the above circumstances, the instant application is partly allowed. So far as the suit for infringement of Trademark it is stayed till the

final decision of the pending rectification; the suit filed by the plaintiff for ‘passing off’, however, shall continue and is to be decided on its own

merit.

CS(COMM) 109/2018

In view of recent judgment ‘Patel Field Marshal’ (supra), the defendant will be at liberty to urge the framing of additional issue regarding

the invalidity of the registration mark before Roster Bench as per law.

List before Roster Bench on 10th July, 2018.