Full Judgement
Delhi High Court
Sabu Trade Pvt Ltd vs Sh Raj Kumar Sabu And Ors on 5 March, 2024
Author: C. Hari Shankar
Bench: C. Hari Shankar
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* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ C.O.(COMM.IPD-CR) 780/2022
SABU TRADE PVT LTD .... Petitioner
Through: Mr. Saurabh Kirpal, Sr. Adv.
with Mr. Lalltaksh Joshi and Mr. Nikhil
Arora, Advs.
versus
SH RAJ KUMAR SABU AND ORS .... Respondents
Through: Mr. CM Lall, Sr. Adv. with Mr.
Divyakant Lahoti and Ms. Vindhya Mehra,
Advs. for R1
Mr. Harish Vaidyanathan Shankar, CGSC,
with Mr. Srish Kumar Mishra, Mr.
Alexander Mathai Paikaday, Mr. Krishnan
V., Advs for R2 and R3
+ CS(COMM) 761/2016, I.A. 7624/2016
MR. RAJKUMAR SABU .... Plaintiff
Through: Mr. CM Lall, Sr. Adv. with Mr.
Divyakant Lahoti and Ms. Vindhya Mehra,
Advs.
versus
MS. KAUSHALYA DEVI SABU & ORS. ..... Defendants
Through: Mr. Saurabh Kirpal, Sr. Adv.
with Mr. Lalltaksh Joshi and Mr. Nikhil
Arora, Advs.
+ CS(COMM) 97/2020, 13439/2023-I.A. 156/23
SABU TRADE PVT LTD .... Plaintiff
Through: Mr. Saurabh Kirpal, Sr. Adv.
with Mr. Lalltaksh Joshi and Mr. Nikhil
Signature Not Verified
Digitally Signed By:AJIT
KUMAR C.O.(COMM.IPD-CR) 780/2022 and other connected matters Page 1 of 38
Signing Date:14.03.2024
17:32:46
Arora, Advs.
versus
RAJ KUMAR SABU & ANR .... Defendants
Through: Mr. CM Lall, Sr. Adv. with Mr.
Divyakant Lahoti and Ms. Vindhya Mehra,
Advs.
CORAM:
HON'BLE MR. JUSTICE C. HARI SHANKAR
JUDGMENT
% 05.03.2024
IA 7624/2016 in CS (Comm) 761/2016 IA 13439/2023 in CS (Comm) 97/2020 [Under Order XXXIX Rules 1 and 2 of the CPC]
1. This judgment adjudicates IA 7624/2016 in CS (Comm) 761/2016 and IA 13439/2023 in CS (Comm) 97/2020. Raj Kumar Sabu ("RKS", hereinafter), trading as Shiv Trading Co. ("STC", hereinafter), is the plaintiff, and Kaushalya Sabu ("Kaushalya" hereinafter), her husband Gopal Sabu ("Gopal", hereinafter) and Sabu Traders Pvt Ltd ("STPL" hereinafter) are the defendants in CS (Comm) 761/2016. STPL is the plaintiff in CS (Comm) 97/2020, in which RKS is the defendant. Kaushalya and Gopal are also collectively referred to, on occasions, as "the defendants".
Case set up by RKS in CS (Comm) 761/2016
2. RKS pleads, in CS (Comm) 761/2016, as under:
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(i) RKS, Gopal Sabu (Gopal) and Shivnarayan Sabu (Shivnarayan) are brothers, and the sons of Chandrakanta Sabu (Chandrakanta).
(ii) RKS is the sole proprietor of STC, which was formed in 1972 in Indore. At that time, STC was a sole proprietorship of Chandrakanta.
(iii) STC has, since its inception, been a merchant in sabudana products, among others. STC used to procure high quality sabudana from suppliers in Salem, which was packed at Indore and sold by STC. RKS and Shivnarayan were handling the business at Indore.
(iv) In 1980, Kaushalya and Gopal went to Salem. They procured good quality sabudana from local sellers, packed them in 50 kg and 90 kg packs and sent the packed sabudana to STC at Indore for further trade.
(v) In 1982, Chandrakanta adopted the trade marks SACHAMOTI and CHAKRA, for her food/grocery products, including sabudana.
(vi) Rights in the trade mark CHAKRA were handed over by Chandrakanta to Gopal in 1982 itself.
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(vii) In 1984, Sabu Traders was established as a sole proprietorship of Kaushalya, in which Gopal was Manager.
(viii) In 1988, Chandrakanta adopted the mark SHIVJYOTI.
The mark was later transferred by Chandrakanta to Shivnarayan.
(ix) On 27 September 1991, Kaushalya applied for registration of the trade mark CHAKRA in Class 30 for, among others, sabudana, on proposed to be used basis. The application was abandoned.
(x) In 1993, Gopal applied for AGMARK for the sabudana sold under the marks SACHAMOTI and CHAKRA, in the name of Sabu Traders.
(xi) On 5 May 1993, Sabu Export Salem Pvt. Ltd. (SESPL) was incorporated, with Kaushalya, Gopal, RKS and Shivnarayan as Directors. On 9 August 2006, the name of SESPL was changed to Sabu Traders Pvt. Ltd. (STPL).
(xii) After incorporation of SESPL, sabudana under the mark SACHAMOTI was sold as "packed by Sabu Export Salem Private Limited".
(xiii) In 1997, Chandrakanta transferred the complete rights, title and interest in the trademark SACHAMOTI to RKS.
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(xiv) In 2000, RKS was made the sole proprietor of STC.
(xv) The trademark SACHAMOTI is registered in favour of STC w.e.f.1 28 January 2003 in Class 30 for sabudana preparations, w.e.f. 15 February 2006 in Class 30 for spices and salt, and w.e.f. 2 February 2012 in Class 35 for marketing, retailing, distribution and allied services in spices, sauces, salt, papad, etc, including sabudana.
(xvi) Products sold under the SACHAMOTI trade mark have also been widely advertised by RKS on his website www.sachamoti.com.
(xvii) RKS has, therefore, proprietorial and common law rights in the trade mark SACHAMOTI.
(xviii) On 25 January 2007, Kaushalya applied for registration
of the device mark in Class 30 for wafers, flour, tapioca and starch, claiming user since 14 January 1996. The application was refused by the Trade Marks Authorities on 7 September 2012.
1 With effect from Signature Not Verified Digitally Signed By:AJIT KUMAR C.O.(COMM.IPD-CR) 780/2022 and other connected matters Page 5 of 38 Signing Date:14.03.2024 17:32:46 (xix) On 23 February 2010, the defendants applied for
registration of the mark in Class 30 for, inter alia, sabudana, claiming user since 1 January 2010. The application was abandoned.
(xx) On 31 October 2011, Kaushalya applied for registration
of the device mark in Class 30 for, among others, sabudana appalam, claiming user since 19 July 1993.
(xxi) Simultaneously, on 31 October 2011, the defendants also
applied for registration of the mark in Class 30 for, among others, sabudana appalam, claiming user since 19 July 1993. RKS's registered trade marks were cited in the First Examination Report (FER) as conflicting prior marks. In their
reply to the FER, the defendants claimed adoption of the since July 1993. Thus, alleges RKS, the defendants have sworn false affidavits before the Registrar of Trade Marks, besides changing their stand in their response to the FER.
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(xxii) The application for registration of the mark on 23
February 2010, and the application for registration of the mark, were both filed without knowledge or, or authorization from, RKS. According to RKS, this was completely illegal.
(xxiii) On 23 February 2013, the defendants created the webpage http://www.sabuji.com, which, on being clicked, redirects to a "SACHAMOTI" homepage in Hindi.
(xxiv) RKS also holds copyright registration, w.e.f. 19 August
2013, its distinctive "oyster with pearl" device.
(xxv) In 2015, RKS resigned from Directorship of STPL.
(xxvi) On 28 May 2015, the defendants filed an application before the ROC seeking cancellation of STC's copyright
registration in the label.
(xxvii) On 10 June 2015, the defendants created the webpage http://www.sachamoti.in.
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(xxviii) On 17 August 2015, the defendants created the webpage http://www.sachamotisabudana.com.
(xxix) The creation, by the defendants, of the webpages www.sabuji.com, www.sachamoti.in, www.sabuindia.com and www.sachamotisabudana.com are also alleged to be deceitful and aimed at misrepresenting, to the public, proprietorship of the defendants over the SACHAMOTI trade mark.
(xxx) Vide e-mail dated 24 August 2015, addressed to RKS, Vikas Sabu, the son of Kaushalya and Gopal requested for a "No objection certificate" from him to enable them to register
the trade mark .
(xxxi) In November 2015, the defendants filed ORA 302/2015/TM/CH and ORA 303/2015/TM/MUM before the IPAB for cancellation of STC's registered SACHAMOTI trade marks as registered in Class 30 w.e.f. 28 January 2003 and 15 February 2006. No adverse order has been passed against RKS/STC therein.
(xxxii) Vide a forged assignment deed dated 1 March 2016, Kaushalya transferred rights in the CHAKRA and SACHAMOTI trade marks to Gopal for ₹ 1 lakh. No stamp duty has been paid thereon.
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(xxxiii) In April 2016, the defendants approached RKS for execution of a Memorandum of Understanding (MoU) whereby RKS/STC were to undertake not to object to, or challenge, the registration, use and ownership of the trade marks SACHAMOTI and CHAKRA by defendants. RKS refused to sign the MoU.
(xxxiv) The defendants have, thereafter, been issuing misleading public notices asserting that the "distributorship" of STC and RKS has been cancelled, and inviting distributors for the state of Madhya Pradesh.
(xxxv) RKS, therefore, also issued caution notices in various newspapers asserting his statutory trade mark and copyright in SACHAMOTI.
The defendants' acts are alleged to be infringing the trade mark and copyright of RKS and STC in the SACHAMOTI trade mark and the
label and also to be misleading consumers into believing the existence of such rights with the defendants, to the exclusion of RKS/STC who are the actual holders thereof.
3. The plaint, therefore, asserts RKS/STC's rights in the
SACHAMOTI trade mark and the label on the basis of Signature Not Verified Digitally Signed By:AJIT KUMAR C.O.(COMM.IPD-CR) 780/2022 and other connected matters Page 9 of 38 Signing Date:14.03.2024 17:32:46
(i) the transfer, by Chandrakanta, of the complete title, right and interest in the SACHAMOTI trade mark to RKS in 1997, and of the CHAKRA mark to Gopal in 1982, in support of which Chandrakanta's affidavit so testifying has been placed on record,
(ii) the fact that Chandrakanta made RKS the sole proprietor of STC in 2000,
(iii) trade mark Registration Nos. 1169589, 1421804 and 2278219 of the trade mark SACHAMOTI in favour of STC w.e.f. 28 January 2006, 15 February 2006 and 2 February 2012 respectively,
(iv) the advertisements of the products bearing the SACHAMOTI trade mark on their website www.sachamoti.com,
(v) the copyright registration of the label in favour of RKS,
(vi) the applications dated 27 September 1991, 25 January 2007 and 31 October 2011 of Kaushalya for registration of the CHAKRA word and device marks,
(vii) the continuous use, by STPL, of CHAKRA on its letter heads since 1982, and
(viii) the e-mail dated 24 August 2015 from Vikas to RKS, seeking a "no objection" to enable the defendants to register the
trade mark .
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4. The plaint alleges that the defendants have infringed RKS/STC's intellectual property rights in the trade mark
SACHAMOTI and in the label by
(i) applying for registration of the trade marks and
in Class 30, without any information to RKS/STC,
(ii) creating the websites www.sabuji.com, www.sachamoti.in, www.sabuindia.com and www.sachamotisabudana.com,
(iii) applying to the IPAB for cancellation of STC's registered SACHAMOTI trade marks,
(iv) transferring the trade mark rights in the SACHAMOTI trade mark from Kaushalya to Gopal by a forged assignment deed dated 1 March 2016,
(v) seeking cancellation of the copyright registration of the
label held by RKS, and
(vi) issuing public notices misleading the public into believing that RKS and STC were merely distributors of SACHAMOTI products and that the distributorship had been cancelled.
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5. RKS, trading as STC has, therefore, instituted CS (Comm) 761/2016, seeking a decree of permanent injunction, restraining the
defendants from using the mark SACHAMOTI or the label or any other mark or label which may be deceptively similar thereto, apart from ancillary prayers for damages, costs and the like.
Written statement by the defendants Kaushalya, Gopal and STPL
6. In their written statement, filed in response to the plaint of RKS/STC, the defendants have contended as under:
(i) Before travelling to Salem, Gopal was a commission agent for the sale of sabudana.
(ii) Gopal himself decided to start business in sabudana at Salem in 1984 in the name of Sabu Traders, a proprietorship of Kaushalya, in which he was Manager. Sabu Traders commenced the business of marketing sabudana under the trademark SACHAMOTI and CHAKRA, which was bonafide and honestly adopted by the defendants in 1984.
(iii) On 5 May 1993, SESPL was incorporated. Its name was subsequently changed to STPL on 9 August 2006. The entire business of Sabu Traders was merged with STPL.
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(iv) Accordingly, SACHAMOTI and CHAKRA became brands of STPL.
(v) With effect from 1994, RKS was appointed Distributor of STPL in Madhya Pradesh.
(vi) On 9 October 1994, the defendants held a "Sachamoti Sabudana Recipe Contest". RKS also participated in it. In the contest, RKS rendered a speech in Hindi, part of which has been translated into English in the written statement thus:
".... Before 20 years when our elder brother Shri Gopal Sabu, who is at Salem, went to Salem, where there is primary sabudana production mandi. After going there he saw about the quality and saw about scope of experimenting and he devoted himself to that work. For the past 20 years he is in this business. Before 11 years to cater to the needs of the consumers of sabudana in small packing he was the first to start in Chakra brand."
In the aforesaid speech, therefore, RKS has admitted SACHAMOTI and CHAKRA to be the business and creation of Gopal.
(vii) In 1994, RKS and Gopal gave several press briefings in which it was categorically made known that defendants were the owner of the SACHAMOTI and CHAKRA brands. It was an admitted position that STPL had obtained AGMARK certification in the SACHAMOTI and CHAKRA brands in 1993 itself.
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(viii) It was further admitted by RKS that the defendants had been conducting the business of manufacturing, packaging and sale of SACHAMOTI and CHAKRA since 1984 continuously.
(ix) RKS was the defendants' distributor in Madhya Pradesh. RKS would place an order for SACHAMOTI sabudana, the defendants would supply the product and raise invoices on RKS and RKS would pay the invoiced amount. The invoices form part of the record. Reliance has specifically been placed by the defendants on the following advertisement filed with the plaint:
The above advertisement, it is submitted, clearly indicates that STC was the distributor of the defendants in the State of Madhya Pradesh.
(x) STPL filed an application for registration of the SACHAMOTI trademark in Class 30 on 23 February 2010, in which the user was mistakenly declared as of 25 January 2010.
Owing to this mistake, the application was abandoned and a fresh application was filed on 31 October 2011 in Class 30 Signature Not Verified Digitally Signed By:AJIT KUMAR C.O.(COMM.IPD-CR) 780/2022 and other connected matters Page 14 of 38 Signing Date:14.03.2024 17:32:46 claiming user since 19 July 1993.
(xi) The adoption and use of mark SACHAMOTI by the defendants at least since 1993 was evidenced by
(a) the AGMARK certificate and authorisations issued on 19 July 1993 and February 1996,
(b) Sales Tax assessment for the year 1993-1994 and
(c) advertisements of the defendants.
(xii) Thus, by virtue of honest and bonafide adoption and continuous and uninterrupted user of the trademark SACHAMOTI by the defendants or other family concerns since 1984, the defendants had gained common law and statutory rights over the SACHAMOTI trademark.
(xiii) The defendants were the first proprietors of the SACHAMOTI trademark. The revenue earnings of the defendants including earnings from the SACHAMOTI trademark and the sales and advertisement expenses incurred have been provided from 1993-1994 till 2013-2014. However, it is not deemed appropriate to make any reference to the said figures as they are admittedly only including the mark SACHAMOTI and not specific to the SACHAMOTI trademark.
(xiv) The defendants came to learn of the SACHAMOTI trademark registrations of STC only when they themselves applied for registration of the trademark SACHAMOTI.
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(xv) The application and obtaining of the trademark registration for the mark SACHAMOTI by the RKS amounted to cheating, fraud and criminal breach of trust and also infracted Section 630 of the Companies Act,1956. At the time when RKS had applied for, and obtained, registration of the trademark SACHAMOTI in 2003 and 2006, he was one of the Directors of STPL. Nonetheless, he neither informed STPL nor obtained any permission or entitlement from STPL before applying for registration of SACHAMOTI in his own name, though SACHAMOTI was admittedly the brand owned by STPL by virtue of continuous and uninterrupted use since 1993 and, in fact, since 1984.
(xvi) However, as RKS was Gopal's brother and Director in STPL, in order to avoid controversy and dispute in the family, RKS was requested to withdraw the SACHAMOTI registrations held by him and to grant a no objection so that the defendants have the mark registered in their name.
(xvii) Instead of complying, RKS resigned from the directorship of STPL on 14 August 2015.
(xviii)It was, in these circumstances that the defendants sought the cancellation of the SACHAMOTI registrations held by RKS during the period when he was the dealer/distributor and Director of STPL and also challenged the copyright registration Signature Not Verified Digitally Signed By:AJIT KUMAR C.O.(COMM.IPD-CR) 780/2022 and other connected matters Page 16 of 38 Signing Date:14.03.2024 17:32:46 held by RKS in the label .
(xix) The defendants also filed Civil Suit 148/2016 against RKS in the Salem District Court. Notice stands issued to RKS in the said suit. The present suit has been instituted by RKS as a counter-blast to the suit instituted by the defendants before the Salem District Court.
(xx) It was admitted in the plaint that AGMARK certificate was obtained by STPL, in which RKS himself was a Director, in 1993.
(xxi) It was also admitted that STPL had been manufacturing, packing and selling SACHAMOTI sabudana from Salem since 1993.
(xxii) Having thus admitted that the SACHAMOTI trademark was created and originated, and business was conducted under the said trademark, by the defendants since 1984, and RKS having merely been a distributor/agent of STPL, RKS has no authority to assert any right or ownership over the mark SACHAMOTI.
(xxiii)The assertion, by RKS, that Chandrakanta had transferred all rights in the trademark SACHAMOTI to RKS in 1997 was Signature Not Verified Digitally Signed By:AJIT KUMAR C.O.(COMM.IPD-CR) 780/2022 and other connected matters Page 17 of 38 Signing Date:14.03.2024 17:32:46 false. No family arrangement evidencing such transfer, has been placed on record by RKS.
(xxiv) Neither has RKS placed any document on record to indicate that Chandrakanta had any proprietorial right in the trademark SACHAMOTI, which she could have transferred to RKS in 1997. RKS was relying, for this purpose, upon a "horridly and desperately created affidavit" of Chandrakanta, sworn just two days prior to the date of first listing of the present suit. The affidavit was in English and the signatures of Chandrakanta were in Hindi. Moreover, Chandrakanta was 86 years of age and not in a position to walk. It was not understood, therefore, how she was present before the Notary Public who attested the affidavit. The complete details of the Notary Public are also not forthcoming on the affidavit. The defendants had the signatures of Chandrakanta, as contained on the affidavit, verified from a handwriting expert, J.K. Consultancy, who certified that the signatures were fake.
(xxv) The Will dated 20 March 1989 of late Sita Ram Ji Sabu, the husband of Chandrakanta, made no reference to any such assets/business of Chandrakanta existing since 1982.
(xxvi) The documents filed by the defendants with the written statement indicated that RKS had admitted from time to time that, since 1993, he was merely an agent of STPL, with his agency limited to Madhya Pradesh.
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(xxvii) Thus, the trademark SACHAMOTI never belonged to RKS/STC. The act of RKS/STC in getting the trademark registered in favour of STC was, therefore, illegal.
(xxviii) The Plaintiff, after the alleged adoption of SACHAMOTI by his mother in 1982, admittedly, came to know about the use of said brand by the STPL in the year 1984 itself and the action if any could have been brought by Chandrakanta against the defendants in 1984 itself.
(xxix) There was no explanation as to why no action was taken against STPL for obtaining the AGMARK certificate for SACHAMOTI, obtained in 1993-1996.
(xxx) The AGMARK certificate had also been renewed from time to time by STPL.
(xxxi) As the defendants had been using the mark SACHAMOTI since 1984, they were entitled to protection against injunction even by virtue of Section 342 of the Trade Marks Act.
2 34. Saving for vested rights.-- Nothing in this Act shall entitle the proprietor or a registered user of registered trade mark to interfere with or restrain the use by any person of a trade mark identical with or nearly resembling it in relation to goods or services in relation to which that person or a predecessor in title of his has continuously used that trade mark from a date prior--
(a) to the use of the first-mentioned trade mark in relation to those goods or services by the proprietor or a predecessor in title of his; or
(b) to the date of registration of the first-mentioned trade mark in respect of those goods or services in the name of the proprietor of a predecessor in title of his; whichever is the earlier, and the Registrar shall not refuse (on such use being proved) to register the second mentioned trade mark by reason only of the registration of the first-mentioned trade mark.
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Moreover, asserts the written statement, the invoices raised by the defendants on RKS/STC expressly made no dispute subject to Salem jurisdiction alone. As such, the suit was bad for want of territorial jurisdiction as well.
Replication by RKS/STC
7. In his replication, RKS has contended, inter alia, as under:
(i) It was the defendants' own case that the trademark SACHAMOTI was assigned by Kaushalya to STPL in March 2016. There was no occasion, therefore, for STPL to have applied to the authorities for registration of the mark SACHAMOTI claiming ownership prior to March 2016.
(ii) No document had been placed on record to support the contention that the entire business of Sabu Traders merged with STPL resulting in the trademarks SACHAMOTI and CHAKRA becoming the trademarks of STPL.
(iii) The defendants were pleading contradictory stands regarding use, by them, of the trademark SACHAMOTI. In their application dated 23 February 2010 for registration of the trademark SACHAMOTI, the defendants claimed user since 25 January 2010. They withdrew the said application and filed a second application for registration of the same mark on 31 Signature Not Verified Digitally Signed By:AJIT KUMAR C.O.(COMM.IPD-CR) 780/2022 and other connected matters Page 20 of 38 Signing Date:14.03.2024 17:32:46 October 2011, claiming user since 19 July 1993. For the first time, in the written statement filed by way of response to the present suit, the defendants had claimed user of the SACHAMOTI mark since 1984. If, in fact, the defendants had been using the SACHAMOTI mark since 1984, there is no reason why it was not so mentioned in the applications for registration filed on 23 February 2010 and 31 October 2011.
The plea of use by the defendants, of the SACHAMOTI trademark since 1984 was, therefore, false.
(iv) The invoices filed by the defendants could not be believed. In their invoice dated 11 June 1993, the defendants had advertised their product as "Use always Sachamoti & Chakra Agmark Sago" whereas AGMARK certification was obtained by STPL only on 19 July 1993.
(v) The assertion regarding a statement having been made by Gopal during the "Sachamoti Sabudana Recipe Contest" on 9 October 1994 was denied. It is asserted that the defendants were not even present at the said event.
The rival stands, in precis
8. It would be beneficial to view, in precis, the rival stands.
RKS/STC's stand
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9. The stand of RKS/STC is this.
10. STC was formed in 1972. At that time, it was a sole proprietorship of Chandrakanta.
11. Since inception, STC was procuring sabudana from Salem and packing and selling it in Indore and neighbouring states. W.e.f. 1980, Gopal and Kaushalya ("the defendants", hereinafter), situated in Salem, were procuring sabudana from local sellers and sending it to Indore, where it was packed and sold by STC.
12. Chandrakanta adopted the trade marks SACHAMOTI and CHAKRA in 1982. The rights in the mark CHAKRA were given to Gopal that very year. Chandrakanta retained the rights in the mark SACHAMOTI.
13. Sabu Traders, as a sole proprietorship of Kaushalya, was established in 1984.
14. AGMARK registration for SACHAMOTI sabudana was granted in 1993 in the name of Sabu Traders.
15. On 5 May 1993, SESPL was incorporated, in which RKS, Gopal and Kaushalya were all Directors. RKS resigned from Directorship in 2015.
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16. Chandrakanta transferred all rights in the SACHAMOTI mark to RKS in 1997, and made him sole proprietor of STC in 2000.
17. The trade mark SACHAMOTI was registered in STC's name on 28 January 2003 in Class 30 for sago (sabudana) preparations.
18. The defendants also applied for registration of the
SACHAMOTI device marks and . The application
for registration of the mark was abandoned. Registration of
the has been sought in Class 30, for Tapioca sago appalam, papad, poha, namkeen and turmeric on 31 October 2011. The application is pending. On 24 August 2015, the defendants sought a
"no objection" from RKS to enable them to register the mark, which RKS refused.
19. The defendants have applied for cancellation of the SACHAMOTI trade mark registrations, and the copyright registration
in the label, held by RKS/STC.
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20. The defendants are representing themselves, through their websites as also through other public representations, as the proprietors of the SACHAMOTI trade mark.
Points on which the defendants join issue
21. The defendants dispute that STC was procuring sabudana from Salem and selling it at Indore, that Chandrakanta had adopted, or had any right, in the trade mark SACHAMOTI, or that Chandrakanta gave rights in the SACHAMOTI mark to RKS. There is, to my understanding, no other factual submission, in the plaint, which the defendants dispute.
The defendants' stand
22. The defendant's stand is this.
23. Gopal moved to Salem with his wife and sons in or around 1977. They started selling sabudana from Salem in the name of Sabu Traders, a sole proprietorship of Kaushalya, under the marks SACHAMOTI and CHAKRA, which were adopted by them in 1984. Neither had Chandrakanta any rights in the SACHAMOTI trade mark, nor had she transferred the mark to RKS.
24. SESPL (later STPL) was incorporated in 1993. The business of Sabu Traders merged with STPL. Kaushalya assigned all rights in the Signature Not Verified Digitally Signed By:AJIT KUMAR C.O.(COMM.IPD-CR) 780/2022 and other connected matters Page 24 of 38 Signing Date:14.03.2024 17:32:46 SACHAMOTI trade mark to STPL vide Assignment Deed dated 1 March 2016. Consequently, SACHAMOTI became the brand of STPL. SESPL obtained Agmark registration for SACHAMOTI sabudana in 1993.
25. RKS was a director in, and a distributor of, STPL, in Madhya Pradesh, since 1994. RKS would make payments against invoices raised by the defendants.
26. It was during this period that, without informing the defendant, RKS got the SACHAMOTI word and device marks registered in his name. To avoid family conflict, the defendants first requested RKS to give no objection to the registration of SACHAMOTI in the defendants' favour. When RKS did not oblige, the defendants sought cancellation of RKS' SACHAMOTI trade mark and copyright registration.
Points on which RKS/STC joins issue
27. RKS/STC contests the stand of the defendants that
(i) the defendants had adopted, or started using the SACHAMOTI mark for sabudana from 1984, through Sabu Traders,
(ii) Sabu Traders merged with STPL, resulting in SACHAMOTI coming under the ownership of STPL,
(iii) RKS was merely a distributor, in Madhya Pradesh, of Sabu Traders and, later, of STPL, and Signature Not Verified Digitally Signed By:AJIT KUMAR C.O.(COMM.IPD-CR) 780/2022 and other connected matters Page 25 of 38 Signing Date:14.03.2024 17:32:46
(iv) the no objection had been sought from RKS merely to avoid family conflict.
Parameters of the controversy
28. It is important to understand the borders of the controversy with which we are seized, in the backdrop of the fact that, at present, the interlocutory applications filed by the parties are being decided.
The substantive prayers
29. The substantive prayers of the parties, vis-à-vis each other, insofar as interlocutory relief is concerned, are the following:
(i) In I.A.7624/2016 in CS (Comm) 761/2016:
RKS/STC seeks an order of interim injunction, restraining the defendants, Kaushalya, Gopal and STPL, and all others acting on their behalf, from dealing, in any manner, with any product under the SACHAMOTI marks or label, or any deceptively similar mark or label, pending disposal of the suit.
(ii) In I.A. 13439/2023 in CS (Comm) 97/2020
STPL seeks an interlocutory injunction restraining RKS/STC and all others acting on its behalf from Signature Not Verified Digitally Signed By:AJIT KUMAR C.O.(COMM.IPD-CR) 780/2022 and other connected matters Page 26 of 38 Signing Date:14.03.2024 17:32:46 manufacturing or selling sabudana or any allied or cognate product under the SACHAMOTI trade mark or label.
30. Who is entitled to the use of the SACHAMOTI trade mark and label? That, quite plainly, is the only issue in controversy.
A prefatory observation
31. This judgment decides the rival prayers for interlocutory injunction, whereby RKS/STC on the one side, and STPL on the other, have sought an order restraining the other from using the SACHAMOTI trade mark or label, pending disposal of the suit.
32. Arguments, on this limited issue, were advanced on 24 July 2023, 1 August 2023, 3 August 2023, 8 August 2023, 10 August 2023, 18 August 2023, 24 August 2023 and 16 October 2023. Copious written submissions, counter written submissions, rejoinder written submissions, clarificatory written submissions and tabular statements have been filed. Allegations, and counter-allegations, have been raised.
33. If all the submissions advanced are to be adjudicated, nothing would survive for decision in the suit, even if the findings were to be caveated as prima facie.
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34. It is appropriate to note, here, what the Supreme Court has said on the manner in which interlocutory applications in intellectual property matters are to be dealt with. This aspect was underscored in para 15 of the report in Astrazeneca AB v Intas Pharmaceuticals Ltd3, rendered by a Division Bench of this Court:
"15. Supreme Court, in order dated 16th August, 2017 in Civil Appeal No. 18892/2017 titled AZ Tech (India) v. Intex Technologies (India) Limited, commented on the disturbing trend, of the orders of disposal of applications for interim relief in Intellectual Property Rights matters governing parties for a long time, with exhaustive judgments, virtually on merits of the suit, being written and expressed the need for addressing the said malady. In fact, suo moto Writ Petition (Civil) No. 8/2017 titled Re : Case Management of Original Suits, was initiated in pursuance to the said order and in which proceedings this Court informed the Supreme Court of the remedial measures being taken."
More recently, the Supreme Court, in Pernod Ricard India Pvt Ltd v. United Spirits Ltd4, echoed the above sentiment in the following words:
"At the insistence of counsel for the petitioner, we clarify that it is well settled proposition of law that decisions on interlocutory applications are only made to protect rival interests pending suit. Somehow the interim applications itself are treated as final decision but it is not so. In all such cases, interim arrangements should be made and the trial should proceed rather than to spend time only on interlocutory applications. That protects the petitioner against the apprehension that the impugned judgment may be cited in other Court qua petitioner's cases of a similar nature."
Appreciating the scope of examination in the light of the above dicta of the Supreme Court
3 (2021) 87 PTC 374 (DB) 4 Order dated 6 September 2023 in SLP (C) 17674/2023 Signature Not Verified Digitally Signed By:AJIT KUMAR C.O.(COMM.IPD-CR) 780/2022 and other connected matters Page 28 of 38 Signing Date:14.03.2024 17:32:46
35. In the present case, RKS/STC is, undisputedly, the proprietor of trade mark rights in the SACHAMOTI trade mark, and copyright in
the label. These rights subsist, even if they have been challenged by the defendants.
36. There is - and can be, therefore - no dispute about the fact that
any use of the SACHAMOTI mark, or the label, would amount to infringement of RKS/STC's trade mark and copyright registrations, within the meaning of Section 29(1), (2), (3) and (4)5 of the Trade Marks Act, 1999, and Section 516 of the Copyright Act, 1957, respectively.
5 29. Infringement of registered trademarks. --
***** (4) A registered trade mark is infringed by a person who, not being a registered proprietor or a person using by way of permitted use, uses in the course of trade, a mark which--
(a) is identical with or similar to the registered trade mark; and
(b) is used in relation to goods or services which are not similar to those for which the trade mark is registered; and
(c) the registered trade mark has a reputation in India and the use of the mark without due cause takes unfair advantage of or is detrimental to, the distinctive character or repute of the registered trade mark.
6 51. When copyright infringed. --Copyright in a work shall be deemed to be infringed--
(a) when any person, without a licence granted by the owner of the Copyright or the Registrar of Copyrights under this Act or in contravention of the conditions of a licence so granted or of any condition imposed by a competent authority under this Act--
(i) does anything, the exclusive right to do which is by this Act conferred upon the owner of the copyright, or
(ii) permits for profit, any place to be used for the communication of the work to the public where such communication constitutes an infringement of the copyright in the work, unless he was not aware and had no reasonable ground for believing that such communication to the public would be an infringement of copyright; or]
(b) when any person--
(i) makes for sale or hire, or sells or lets for hire, or by way of trade displays or offers for sale or hire, or
(ii) distributes either for the purpose of trade or to such an extent as to affect prejudicially the owner of the copyright, or
(iii) by way of trade exhibits in public, or
(iv) imports [* * *] into India, Signature Not Verified any infringing copies of the work: Digitally Signed By:AJIT KUMAR C.O.(COMM.IPD-CR) 780/2022 and other connected matters Page 29 of 38 Signing Date:14.03.2024 17:32:46
37. Infringement of a validly registered trade mark entitles its proprietor, as of right, to remedy against infringement thereof, by virtue of Section 28(1)7 of the Trade Marks Act.
38. Section 31(1)8 statutorily envisages the very fact of registration of a trade mark as being "prima facie evidence of its validity". There is, therefore, no initial onus on the proprietor of the registered trade mark to establish its validity; that onus stands statutorily discharged by Section 31(1). The initial onus is, therefore, on the person assailing the validity of the registered trade mark to make out his case.
39. Section 18(1)9 of the Trade Marks Act allows any person claiming to be the proprietor of a trade mark to apply for its registration. The grounds for refusal of registration are contained in Sections 9 (which contain absolute grounds) and 11 (which contain relative grounds). The only ground, of all the grounds on which registration can be refused in Sections 9 or 11, which the submissions of the defendant may be said to invoke, is Section 11(10)(ii), which requires the Registrar to, "while considering an application for registration of a trade mark and opposition filed in respect thereof ...
[Provided that nothing in sub-clause (iv) shall apply to the import of one copy of any work for the private and domestic use of the importer.] 7 28. Rights conferred by registration. -- (1) Subject to the other provisions of this Act, the registration of a trade mark shall, if valid, give to the registered proprietor of the trade mark the exclusive right to the use of the trade mark in relation to the goods or services in respect of which the trade mark is registered and to obtain relief in respect of infringement of the trade mark in the manner provided by this Act. 8 31. Registration to be prima facie evidence of validity. -- (1) In all legal proceedings relating to a trade mark registered under this Act (including applications under Section 57), the original registration of the trade mark and of all subsequent assignments and transmissions of the trade mark shall be prima facie evidence of the validity thereof.
9 18. Application for registration. -- (1) Any person claiming to be the proprietor of a trade mark used or proposed to be used by him, who is desirous of registering it, shall apply in writing to the Registrar in the prescribed manner for the registration of his trade mark.
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take into consideration the bad faith involved either of the applicant or the opponent affecting the right relating to the trade mark".
40. Apart from Section 11(10)(ii), the submissions of the defendants only plead, as it were, the ground that RKS/STC was not the proprietor of the SACHAMOTI marks.
41. This, in fact, is what the defendants seek to contend. Their case is that RKS had no right over the SACHAMOTI trade mark which was created, adopted and used by them since 1984. They dispute RKS' contention that Chandrakanta had conceived the marks SACHAMOTI and CHAKRA and had been using them since 1982. They also dispute, consequently, RKS' contention that Chandrakanta assigned rights in the SACHAMOTI mark to him. According to the defendants, RKS was merely a distributor of Sabu Traders and later STPL, for selling SACHAMOTI sabudana in Madhya Pradesh. As such, the very application of RKS for registration of the SACHAMOTI mark was incompetent, fraudulent and vitiated by bad faith.
42. Sections 30 and 35 of the Trade Marks Act provide for situations in which no injunction against use of the allegedly infringing trade mark by the defendant can be granted, but they do not apply in this case, and have not been invoked by the defendants. The defendants have, however, invoked Section 3410, which proscribes
10 34. Saving for vested rights.-- Nothing in this Act shall entitle the proprietor or a registered user of registered Signature Not Verified trade mark to interfere with or restrain the use by any person of a trade mark identical with or Digitally Signed By:AJIT KUMAR C.O.(COMM.IPD-CR) 780/2022 and other connected matters Page 31 of 38 Signing Date:14.03.2024 17:32:46 interference with the use, by a defendant, of his trade mark, even if it is identical or deceptively similar to the trade mark of the plaintiff, if its user precedes the date of registration and the date of user of the plaintiff's trade mark.
43. This is the second limb of the defendants' argument. They contend that the user, by the defendants, of the SACHAMOTI mark pre-dates the registration of the mark in favour of RKS/STC, as well as its user by user by RKS/STC and that, therefore, RKS/STC cannot interfere with the use of the SACHAMOTI mark by the defendants.
44. Two issues arise, therefore, at this stage, for prima facie consideration:
(i) Has the plaintiff been able to make out a prima facie case of user of the SACHAMOTI mark by him, or by Chandrakanta, prior to the registration of the mark in favour of STC?
Alternatively, has the defendant been able to make out a prima facie case against such asserted user of the plaintiff?
(ii) Have the defendants been able to make out a case of user of the SACHAMOTI mark prior to the registration, and user, of the mark by the plaintiff?
nearly resembling it in relation to goods or services in relation to which that person or a predecessor in title of his has continuously used that trade mark from a date prior--
(a) to the use of the first-mentioned trade mark in relation to those goods or services be the proprietor or a predecessor in title of his; or
(b) to the date of registration of the first-mentioned trade mark in respect of those goods or services in the name of the proprietor of a predecessor in title of his; whichever is the earlier, and the Registrar shall not refuse (on such use being proved) to register the Signature Not Verified second mentioned trade mark by reason only of the registration of the first-mentioned trade mark. Digitally Signed By:AJIT KUMAR C.O.(COMM.IPD-CR) 780/2022 and other connected matters Page 32 of 38 Signing Date:14.03.2024 17:32:46
45. As against this, Mr. Lall relied on
(i) the Account books of STC for Assessment Years 1975- 76, 1976-1977 of Chandrakanta as proprietor of STC, which reflect sales of sabudana,
(ii) the C-Form of STC for the year 1975-1976 indicating Chandrakanta as the proprietor,
(iii) an affidavit dated 8 June 2016 of Chandrakanta,
(iv) invoice dated 3 February 1983 issued by Tarun Trading Co. to STC for 100 gunny bags of SACHAMOTI sabudana,
(v) C-Forms issued by the Central Sales Tax Authorities for the years 1982 to 1984, regarding procurement of sabudana by STC from The Sagoserve, in which Chandrakanta is shown as the proprietor of STC,
(vi) letter dated 6 August 1982 from The Sagoserve to Gopal, appointing him as a commission agent, and
(vii) Sales Tax assessment order dated 30 April 1983,
(viii) letter dated 27 August 1986 from the defendants to Kamath & Kamath, followed by a letter dated 5 September 1986, in which the defendants admitted that they were "intending to brand", for sabudana, inter alia, SACHAMOTI,
(ix) invoice dated 11 June 1993 of Sabu Traders for 224 kg SACHAMOTI sabudana, which has a watermark reading "Sachamoti brand AGMARK Tapioca Sago", whereas Sabu Traders was granted AGMARK registration only in July 1993,
(x) Sabu Traders' response dated 18 November 2014 to the First Examination Report (FER) of the Trade Marks Registry Signature Not Verified Digitally Signed By:AJIT KUMAR C.O.(COMM.IPD-CR) 780/2022 and other connected matters Page 33 of 38 Signing Date:14.03.2024 17:32:46 against STPL's Application No., 2226836 seeking registration of the SACHAMOTI trade mark in Class 30, in which it was acknowledged that the applicant of Trade Mark Registration No. 1169589 was a family member of the applicants, and undertaking to submit an NOC from them, and
(xi) e-mail dated 24 August 2015, whereby Sabu Traders sought a no objection from STC for applying for registration of the trade mark SACHAMOTI.
46. To support their case on this account, the defendants relied on
(i) the transcript of a video taken on 9 October 1994, purportedly containing a statement made by RKS,
(ii) the fact that the affidavit of Chandrakanta was dated 8 June 2016, a day prior to the filing of the suit on 9 June 2016,
(iii) the report of a handwriting expert who opined that the signature on the affidavit was not Chandrakanta's,
(iv) the absence of any document by Chandrakanta in favour of RKS/STC, assigning rights in the SACHAMOTI trademarks,
(v) communication dated 5 September 1986 from Sabu Traders to Kamath & Kamath, stating that Sabu Traders was intending to use the brand SACHAMOTI for sabudana, starch and other tapioca products,
(vi) invoice dated 5 May 1990 issued to Sabu Traders by KIS Jag Decorators for "Drawing charges for New Desing creation of 'SACHAMOTI' Brand and 'CHAKRA' Brand",
(vii) the Agmark certificate dated 19 July 1993, which was issued in the name of Sabu Traders, Signature Not Verified Digitally Signed By:AJIT KUMAR C.O.(COMM.IPD-CR) 780/2022 and other connected matters Page 34 of 38 Signing Date:14.03.2024 17:32:46
(viii) a news article dated 7 February 1994, which refers to "Sabu Traders' Sachamoti Tapioca Sago (sabudana)" and also states that STC was appointed its distributor for Madhya Pradesh,
(ix) an advertisement dated 26 August 1994 in the Nai Duniya newspaper, which referred to Sachamoti Sabudana as "marketed by Sabu Traders" and to STC as its "authorized distributor",
(x) an advertisement for SACHAMOTI Sabudana (making no reference to its source), which refers to STC as the distributor,
(xi) notice dated 31 December 1994 from the Food Inspector to Sabu Traders for having the sample of SACHAMOTI sabudana tested for adulteration,
(xii) assessment order dated 27 March 2000, which states, towards the conclusion, that "a verification of copy of sales invoices, received from the Check Post, revealed that (Sabu Traders) have sold sago under 'Sacha Moti Brand Agmark'",
(xiii) the meta and Whois details for the webpage Sabuindia.com, created on 10 May 1999, which indicated Sabu Traders, Salem to be the manufacturer of SACHAMOTI Sabudana,
(xiv) invoices dated 8 September 2000, 20 September 2004, 28 September 2005, 27 January 2006, 11 April 2006 and 16 May 2006 issued to Sabu Traders for manufacturing packing material for SACHAMOTI sabudana,
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(xv) notice dated 28 April 2008 issued by the Inspector (Weights & Measures) to STPL alleging irregularities in the packages of, inter alia, SACHAMOTI, manufactured/sold by STPL, (xvi) the reply thereto, dated 19 May 2008, by RKS as the Director of STPL, in which he did not claim ownership of the SACHAMOTI mark either by himself or by STC, and (xvii) the Deed of Dissolution of STC, dated 1 April 2001, which makes no reference to the transfer of the SACHAMOTI mark to RKS, or to STC as a sole proprietorship of RKS.
47. Clearly, there is a lot to be said either way. The documents, on which both sides place reliance, and their veracity, would have to be tested through evidence and trial. At an interlocutory stage, this Court cannot rely on the said documents to hold one way or the other.
48. That said, Mr. Lall has drawn attention to communications and documents indicating use of the brand SACHAMOTI, for sabudana, by Chandrakanta, from 1972 or, at the very least, from 1983. The defendants have been vacillating in their stance, first claiming user of the SACHAMOTI mark, by them, in their application dated 23 February 2010 for registration of SACHAMOTI as a trade mark, of STPL, thereafter abandoning said application and filing a second application dated 31 October 2011 claiming user since 19 July 1993 and, as Mr. Lall correctly submits, claiming user for the first time, in the written statement filed in the present suit, of 1984.
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49. The evidence on which the defendants rely cannot, therefore, be said to be so strong as to unseat the presumption of validity available to the SACHAMOTI mark as registered in favour of the petitioner, under Section 31(1) of the Trade Marks Act.
50. Any kind of detailed analysis of the veracity, validity and reliability of the documentary material relied upon by either learned counsel by this Court, at this stage, would be premature, especially as they would have to be proved, or disproved, during trial. The Court is only required to take a prima facie view of the matter and, thus viewed, it cannot be said that the defendants have placed, on record, material clinching enough to unseat the presumption of validity of the RKS/STC's registration of the SACHAMOTI trade marks, or the copyright held by it in the said marks.
51. For the same reason, it cannot either be said that the defendants have succeeded in establishing, even prima facie, that they have been using the SACHAMOTI mark prior to 1982. They cannot, therefore, be regarded as entitled to the benefit of Section 34 of the Trade Marks Act.
Conclusion
52. For all the above reasons, it cannot be said that the defendants have been able to make out a case for vacation, by this Court, of the ad interim order dated 10 July 2016 passed by this Court in IA 7624/2016.
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53. Accordingly. IA 7624/2016 is allowed and IA 13439/2023 is dismissed.
C. HARI SHANKAR, J
MARCH 5, 2024
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