Aligarh Lock House vs Tilak Raj Hora And The Registrar Of Trade Marks

Z.S. Negi, J

The appellant has filed the above appeal under Section 91 of the Trade Marks Act, 1999 (hereinafter referred to as the Act) against the order dated

19.9.2007 passed by the Registrar of Trade Marks, Chennai on the request filed by the first respondent on Form TM-24 dated 6.2.2007 in respect of

registered trade mark No. 261178 in class 6.

The appellant M/s. Aligarh Lock House, a partnership firm, is stated to be engaged in the business of locks and other allied goods. It is the case of

the appellant that they through their predecessor adopted the trade mark SHEEL in the year 1960 and got the same registered under No. 261178 as of

9.12.1969 in class 06 and since 1960 up till now using the same continuously. It is claimed that the business carried on by the appellant is at a very

extensive scale and the goods bearing the trade mark have been distributed in major parts of the country. Averment is made that the trade mark

SHEEL was initially registered in the name of Mr. Tilak Raj Hora, trading as M/s. Aligarh Lock House and subsequently by a partnership deed dated

1.4.1977 Mr. Susheel Kumar Hora, elder son of Mr. Tilak Raj Hora was inducted as a partner in the firm and the request filed on Form TM-24 for

recordal of changes was allowed by and consequently Mr. Tilak Raj Hora and Mr. Susheel Kumar Hora, trading as Aligarh Lock House, became the

subsequent proprietors of the trade mark. As per deed of dissolution of partnership firm dated 31.3.2000, Mr. Tilak Raj retired from the partnership

firm and Mr. Susheel Kumar Hora took over the entire business of the appellant firm along with all assets and liabilities including the said trade mark.

Mr. Amit Hora, son of Mr. Susheel Kumar Hora was, by the partnership deed dated 1. 4.2000, added as partner in the appellant firm and a request

on Form TM-24 was filed on 17.7.2006 to bring the aforesaid changes on record which is pending adjudication before the Registrar. On 23.3.2005,

one M/s Sheel Security Products, Hyderabad filed an application No. 1346695 for registration of SHEEL LABEL in class 06 which was advertised in

the Trade Marks Journal No. 1336 Suppl.(1), dated 15.11.2005 at pages 1042-1043 and the appellant on 17.7.2006 opposed registration thereof by

filing opposition on TM-5 being MAS-2311533. Thereupon, the applicant on 24.1.2007 filed counter-statement on 24.1.2007, a copy of which was

received by counsel for the appellant along with letter of second respondent on 22.9.2007 and therein the applicant claimed proprietary rights in the

trade mark on the basis of letter dated 19.1.2007 purportedly issued to them by the first respondent. The applicant further filed evidence along with

exhibits in support of their application on 18.2.2008 before the second respondent, though the counsel for the appellant received copy of affidavit only

(without exhibits), but on request being made, the applicant supplied copies of exhibits to counsel for appellant/opponent which the counsel received on

17.3.2008. It is alleged that the perusal of those exhibits revealed that Mr. Tilak Raj Hora got the trade mark SHEEL of the appellant, registered under

No. 261178 in class 06, assigned in his favour on the basis of a purported Memorandum of Family Business Settlement dated 4.6.1999 (hereinafter

referred to as MOU), by filing request on Form TM-24 dated 6.2.2007 and, further, by filing false and wrong affidavit before the second respondent

that no proceedings are pending relating to the said trade mark in which it is relied.

Aggrieved by the order of the second respondent to bring on record Mr. Tilak Raj Hora as subsequent proprietor of trade mark SHEEL, the

appellant/opponent has preferred the instant appeal on the grounds, inter alia, that the impugned order passed by second respondent suffers from non-

application of mind and the discretion exercised on irrelevant and extraneous considerations; that the second respondent did not give hearing to the

appellant before allowing the request on Form TM-24 dated 6.2.2007 filed by first respondent; that the purported Memorandum of Family Business

Settlement dated 4.6.1999 (MOU) is not a binding and enforceable document in law because it was never acted upon by the parties and as such is

non-est especially when the appellant never assigned the said trade mark to the first respondent but rather it was the first respondent who by deed of

dissolution dated

3.2000 relinquished all his rights in the said trade mark in favour of the appellant; that the second respondent acted malafidely as she did not

consider at all the request on From TM-24 filed on 17.7.2006 by the appellant to bring on record the changes whereas Form TM-24 dated 6.2.2007

which was filed much later on false claims and the assertions by the first respondent is allowed; that the counsel for the first respondent herein and

also applicant in application No. 1346695 before the second respondent is the same person; that the first respondent is guilty of suppression of facts

and that the impugned order has caused wrongful gain to the first respondent and wrongful loss to the appellant. It is the prayer of the appellant that in

the interest of justice, equity and good conscience, the instant appeal may be allowed.

The first respondent filed his counter-statement to the appeal denying the material averments made in the appeal. It is claimed by the first

respondent that he is the true proprietor of the registered trade mark SHEEL which was adopted bona fide under his advice and stewardship in the

year 1960 and the brand is being continuously, extensively and uninterruptedly used in respect of locks for the last 48 years and resultantly the mark

has earned secondary meaning thereof. It is claimed that huge amount of time capital and great efforts have been expended since the inception of the

brand in its promotion and establishment by virtue of which the brand SHEEL stands at the pinnacle of success and enjoys immense reputation of

goodwill. The registration of trade mark SHEEL was obtained as of 9.12.1969 in class 06 in the name of Tilak Raj Hora, trading as Aligarh Lock

House and the registration is valid and undoubtedly in force. Admitting the induction of Mr. Susheel Kumar in the business of M/s. Aligarh Lock

House and also allowance of request to bring on record the name of the appellant, it is stated that a few years later his younger son Mr. Inderpal Hora

also joined them in the business.

6 . It is claimed that as the business enhanced manifold, several firms within the family were formed for ease and convenience in carrying out

business operations and were reasonably divided amongst the family members of the first respondent including himself, his elder son Mr. Susheel

Kumar (to called as the elder son) and younger son Inderpal (to be called as the second son). As small differences have started arising amongst the

family members, the Memorandum of Family Business Settlement (MOU) was entered into between the first respondent, elder son and second son.

On the date of entering into the MOU, four firms existed, the details of which were enumerated in the MOU. The MOU is claimed to constitute the

basis of continuing the business activities in the house name 'Sheel' to be adhered to by the family members since its execution and implementation as

on 4th June, 1999 and envisioned the following inter-alia:

(i) Retention of ownership in the brand 'Sheel' by the patron founder and eldest member of the family Mr. Tilak Raj Hora to guide the Trade Mark

affairs among all family members.

(ii) Modus operandi to be adopted in the running of the business.

(iii) Division of business operations amongst family members.

It is stated that the intention of MOU was to check and safeguard the brand 'Sheel' from the infighting between the family members and to arrive at a

solution for the usage of the brand 'Sheel' equally and mutually by members of the family as per terms enshrined in the MOU. The MOU was carried

to implementation, however, the brand was to belong to the first respondent and the same was being used under license by all the four firms and was

proposed to be used so, clauses relating to use/non-use of brand were not necessary. The first respondent claimed that it came to their knowledge and

notice that his elder son was attempting to claim absolute rights and unlawful claim of exclusive ownership over the trade mark Sheel registered in the

name of M/s. Aligarh Lock House which firm consequent to the execution of MOU stood transferred to the appellant.

The appellant along with appeal has filed an application (being M.P. No. 80/2008) seeking stay of operation and effect of the impugned order dated

19.9.2007. The application for stay came up for hearing on 18.2.2009 when learned Counsel for the appellant completed his arguments and learned

Counsel for the first respondent fairly submitted that the pleadings in appeal are complete, therefore, application and appeal can be heard together and

also undertaken not to take any benefit of the impugned order till the next date of hearing, which we fixed for 26.3.2009, and accordingly the

application was closed. We heard learned Counsel for both the sides on 26.3.2009 and reserved the orders with the direction to maintain status quo of

order dated 18.2.2009 until this order is pronounced.

Shri S.K. Bansal, learned Counsel for the appellant, contended that the impugned order passed by the second respondent suffers from non-

application of mind as the same is passed mechanically, without due care and caution in the exercise of the discretion vested to that authority. He

contended that the second respondent has exercised the discretion on irrelevant and extraneous considerations and such exercise of discretion is

abusive, arbitrary, unreasonable and fanciful.

9 . Learned Counsel contended that the second respondent has not given any opportunity of being heard to the appellant despite the fact that the

record of the Registry of Trade Marks show that Mr. Tilak Raj Hora and Mr. Susheel Kumar Hora trading as Aligarh Lock House are the

subsequent proprietors of the trade mark SHEEL as from 1.4.1977. Apart from this, learned Counsel took us to paragraph 4 of the Exhibit-XV, which

is a copy of affidavit evidence under Rule 50 in support of opposition No. MAS-231533, wherein histories of trade mark SHEEL is narrated by the

appellant. He further pointed out that in paragraph 4 of the notice of opposition dated 17.7.2006 also the appellant had stated that changes have been

taken place in the constitution of the firm from time to time and recordal petition has been filed in this connection. Despite these, no notice of hearing

is issued to the appellant before passing the impugned order by the second respondent. The impugned order is passed in gross and utter violation of the

principles of natural justice. Placing reliance upon the order of this Appellate Board in the case of Vestfarma Limited v. Vest Pharma Pvt. Ltd. and

Ors. 2008 (37) PTC 296 (IPAB), learned Counse submitted that the impugned order be set aside on the sole ground of violation of principles of natural

justice.

1 0 . Learned Counsel for the appellant contended that the purported MOU dated 4.6.1999 was never acted upon by the parties because the first

respondent continued to be the partner in the appellant firm until 31.3.2000 when he retired from the appellant firm by entering in to the dissolution

deed dated 31.3.2000. It is, therefore, evident that the first respondent by his conduct himself rescinded the said MOU. The said MOU is not a binding

and enforceable document in law and is non-est. Further, the appellant never ever assigned the trade mark SHEEL to the first respondent and in fact

the first respondent by deed of dissolution dated 31.3.2000 himself relinquished all his rights in the said trade mark in favour of the appellant.

It was the submission of the learned Counsel that the appellant had filed Form TM-24 dated 17.7.2006 to bring the said registered trade mark in

the names of Mr. Susheel Kumar Hora and Mr. Amit Hora, trading as M/s. Aligarh Lock House with effect from 1.4.2000 by virtue of partnership

deed dated 1.4.2000 but the second respondent ignored the same and did not consider the said Form TM-24 of the appellant and passed order on From

TM-24 which was filed by the first respondent about 7 months subsequent to the appellant's Form TM-24. This shows that the second respondent

acted malafidely by ignoring to consider the Form TM-24 filed by the appellant which was prior in point of time.

Learned Counsel contended that the first respondent has filed an affidavit along with Form TM-24 stating that no proceedings are pending relating

to the said registered trade mark in any Court of Law or Tribunal, as relying document. Such an affidavit is patently false in view of the of the fact

that prior filed Form TM-24 of the appellant in relation to recordal of names of subsequent proprietors of the trade mark in question. He also

contended that the counsel for the first respondent and applicant in application No. 1346695 is the same person and the trade mark SHEEL is relied in

the said application and opposition thereto. The learned Counsel submitted at the end that the impugned order be set aside and second respondent be

directed to appoint a hearing after giving proper notice to the appellant.

Shri Rajasekaran, learned Counsel for the first respondent, opposing the appeal submitted that the present appeal is filed with mala fide intention to

step into the shoes of the first respondent who has the exclusive right over the trade mark SHEEL and then to use the registration as a weapon to stop

the second son of the first respondent from using the brand and block the registration of trade mark under application No. 1346695 filed by the said

second son. The appellant has filed an opposition to the said application for registration just because by virtue of MOU, M/s. Aligarh Lock House has

been allotted to one of the partners of the appellant and the registered trade mark SHEEL was then in the name of M/s. Aligarh Lock House.

Learned Counsel asserted that the purpose of MOU is to buy peace and harmony amongst the family members and that it is the utmost desire of

the first respondent that all the family members shall use the trade mark SHEEL as envisaged in the MOU. He submitted that it is erroneous to say

that the MOU is not binding and enforceable in law as the same is acted upon and the same is enforceable in law. The courts have taken a very

liberal and broad view of the validity of the family settlement and have always tried to uphold it and maintain it. The court viewed that technical

considerations should give way to peace and harmony in enforcement of family arrangements or settlements. The Court has also held that another

fact that assumes importance is that, a family settlement is treated differently from any other formal commercial settlement as such settlement in the

eyes of law ensures peace and goodwill among the family members. Such family settlements generally meet with approval of the Courts and such

settlements are governed by a special equity principle where the terms are fair and bona fide, taking into account the well being of a family. To fortify

his submissions, learned Counsel relied upon the decision of the Supreme Court in the cases (i) Hansa Industries Pvt. Ltd v. Kidarsons Industries Pvt.

Ltd. MANU/SC/4488/2006 (II) Kale v. Deputy Director of Consolidation MANU/SC/0529/197 6and (III) Hari Shankar Singhania v. Gaur Hari

Singhania MANU/SC/1686/2006.

1 5 . Learned Counsel went on to submit that the ulterior motive of appellant is evident from the fact that while the execution of MOU is not denied,

the elder son implement the MOU to the extent it suits him and opts not to act upon its clauses which are inconvenient to him. The person having

acted on the MOU himself cannot be heard to say that it was never acted upon. In fact the appellant tacitly admits the binding nature of the MOU by

entering into various deeds but only chooses to ignore those parts which are not in his interest. The appellant acted mala fide who did not submit the

vital and basic document/evidence that is to say the MOU while filing Form TM-24 before the Registry of Trade Marks.

Learned Counsel submitted that by allowing the Form TM-24, the Registrar of Trade Marks has rendered justice to the first respondent. The

Registrar has discussed every provision pertaining to the case and arrived at a logical decision and order. It is evident from the perusal of the order

that the Registrar has listed out all the documents relied upon by the first respondent and then arrived at a logical conclusion which goes to show

proper application of mind by the authority.

The learned Counsel submitted that there was neither any violation of principles of natural justice nor the impugned order resulted in wrongful gain

or loss to anyone. The MOU duly signed by the appellant is manifestly evidential and fit to substantiate the case before the Registrar, as such the

appellant was not required to appear before the Registrar.

After having heard the learned Counsel for both the parties and also perusal of the records, two issues emerge for our decision, first whether

MOU dated 4.6.1999 is in dispute and second whether the rule audi alteram partem have been violated by the Registrar in the proceedings. The

parties are disputing the MOU dated 4.6.1999 before us as the appellant claims that the same is never acted upon by the parties, therefore, not binding

on the parties and not enforceable under law and the mark was never assigned to the first respondent, whereas the first respondent claims that the

MOU is acted upon by the parties and as such the same is binding on the parties and enforceable under law and as MOU the brand was to belong to

the first respondent. The learned Counsel for the first respondent by citing certain decision of the Apex Court stressed that technical considerations

should give way to peace and harmony in enforcement of family arrangements or settlements. The appellant has made a specific averment in

paragraph D of the appeal that the appellant never assigned the said trade mark to the first respondent rather it was first respondent who by deed of

dissolution dated 31.3.2000 relinquished all his rights in the said trade mark in favour of the appellant. The basis of recording first respondent as

subsequent proprietor of trade mark Sheel is the MOU dated 4.6.1999. Obviously, such dispute can be decided by the court of competent jurisdiction

provided the Registrar in exercise of its discretionary powers refers the dispute to such court. Here it is none of the case that the dispute existed

before the Registrar and the Registrar has exercised its discretion not referring it to a civil court. In any case, this issue can neither be decided by this

Appellate Board for want of jurisdiction nor refer to a civil court for deciding the issue as there is no provision at par with the Registrar available under

the Act to this Appellate Board. Hence, we do not consider it appropriate to go into the binding ness and enforceability or otherwise of the MOU.

In so far as the second issue is concerned, it is evident from the impugned order that the Registrar of Trade Marks without issuing notice to the

appellant and calling upon it to show cause has granted the prayer made in the said Form TM-24. The copy of legal proceedings certificate, on record

issued by the Registry of Trade Marks, Chennai show that the said trade mark was in the names of Mr. Tilak Raj Hora and Mr. Susheel Kumar Hora,

trading as Aligarh Lock House. It is recorded in the impugned order that the first respondent along with Form TM-24 filed a copy of Trade Marks

Journal dated 1.4.1991 as regards publication of registration of subsequent proprietors of the trade mark SHEEL, copy of MOU, etc. Despite that, by

allowing the Form TM-24, the Registrar removed the name of the Mr. Susheel Kumar Hora from the Register of Trade Marks without satisfying

herself about the proof of title. In other words, the Registrar has totally lost sight of the rights and interest of Mr. Susheel Kumar Hora. Sub-section

(1) of Section 45 of the Act contemplates that before registering the title of the applicant the Registrar shall on proof satisfy himself about the title of

the applicant. In the case of Brakes International v. Tilak Raj Bagga 1997 (17) PTC 591 (Del,) the Court rejected the contention that Section 44

(corresponding to Section 45 of the Act) no where provides for pre-decisional hearing and that even Form TM-24 does not envisage giving any notice

was negative. In the Kohinoor Paints Faridabad (P) Ltd. v. Paramveer Singh and Anr. 1996 PTC 69 De,l .it was held thus: ""Registrar ought to have

given notice to the petitioner and without calling upon the petitioner to ascertain whether any assignment had been given by the petitioner company to

the respondent the Registrar ought not have ordered the petition for assignment. The proviso to Section 44 in unmistakable terms provides that if there

is a dispute relating to the right to the trade mark competent court should adjudicate on the matter and Registrar should have ascertained on the prima

facie consideration whether there was any dispute at all."" The impugned order records that the first respondent has, amongst other documents, filed an

affidavit stating that no proceedings are pending relating to the said registered trade mark in any court of law or Tribunal, as relying documents. This is

disputed by the appellant in view of the fact that Form TM-24 filed by the appellant, much before the From TM-24 of the first respondent, in respect

of the same trade mark is pending before the Registry of Trade Marks, Chennai. The first respondent was aware that the appellant has filed

opposition to an application No. 1346695 filed by Sheel Security Products, a concern of his second son, for registration of trade mark in which the

SHEEL trade mark is relied upon. On the face of these facts, such an affidavit of the first respondent is false.

The decision of the Registrar does not contain detailed reasons as to how she satisfied herself that the first respondent has an undisputed title to

enter his name as the subsequent proprietor and on what basis the name of Mr. Susheel Kumar Hora is sought to be removed. It is no where stated

that the Registrar has verified the genuineness of the title claimed and is satisfied herself that such a claim is genuine or undisputed. Assignment of

trade mark and application to bring the name of the subsequent proprietor on register of Trade Marks necessarily consist of removal of name of the

person which existed there before and substituting the name of the applicant in its place and such action seriously affects the proprietary rights of the

person whose name is removed from the register. It is held in the case of Radha Kishan Khandelwal v. Assistant Registrar of Trade Marks and Ors.

MANU/DE/0059/1969:

I am firmly of the view that a proceeding for making an alteration of this nature in the Register of trade marks can by no means be regarded as a

purely administrative proceeding and that the Registrar while discharging his duties in that behalf performs quasi-judicial functions, whereby he

decides, prima facie at least, the rights of the parties. It is, therefore, of the essence of the procedure required for performing that duty that the party

whose rights are going to be adversely affected by the decision taken by the Registrar should also be supported by reasons. The necessity for reasons

in support of the decision arises also from the fact that the Registrar's decision is open to an appeal before the High Court.

Also, the ratio in the above case is that the party whose rights are going to be adversely affected by the decision of the Registrar, the party should

have notice of those proceedings and the decision should also be supported by reasons.

This Appellate Board had occasion to consider the case of Vets farma Limited v. Vest Farma Pvt. Ltd. and Ors. 2008 (37) PTC 296 (IPAB) wherein

the main grievance of the appellant is that despite the deed of cancellation of assignment the same was neither considered by the Registrar nor

brought to notice of the registrar by the respondent and the applicant for the assignment was proceeded with suppression of the said facts. The

appellant objected to the recordal of the assignment and also filed a notice seeking a hearing before the Registrar in the matter. No hearing was

afforded to the appellant and the impugned order was passed. This Appellate Board while setting aside the order observed as under:

I am inclined, and I say this with respect, to the view as in Brakes International case (supra). In the result the appeals are allowed on the sole

ground of violation of principles of natural justice and for that reason it was not considered necessary to go into the merits of various other contentions

urged before us. The three matters are required to be and are accordingly remitted to the Registrar having jurisdiction in the matter to decide the

question of assignment in accordance with law and in compliance with principles of natural justice. For the said reasons the orders impugned are set

aside. The matters are remitted to the Registry concerned to decide the applications in Form TM-23 afresh in accordance with law.

A breach of natural justice at the original stage cannot be cured by sufficiency of natural justice before appellate body. The correct thing to do will be

for the trial body to rehear the matter. The High Court of Orissa ruled in Laxmidhar v. Orissa MANU/OR/0039/1974, that when the trial body did not

observe natural justice, the same cannot be remedied by an appellate body by giving a sufficient hearing to the party.

21 . In view of the above, we are of the view that the Registrar has passed the impugned order mechanically and without observing the principles of

natural justice. We, therefore, allow the appeal and consequently set aside the impugned order of the registrar dated 19.9.2007 and remit the matter to

the Registry of Trade Marks, Chennai with the direction to decide afresh the question assignment in accordance with law after proper notices given to

the parties. However, there shall be no order as to costs.