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Judgment
Prabha Sridevan, J
These rectification applications are for removal of the mark 'MILKA WONDER CAKE bearing No. 732507 and No. 1242328 both in class 30
respectively in ORA/134/2009/TM/CH and ORA/135/2009/TM/CH. The applicant has the sam grievance against both the marks. Since the pleadings
are the same and the issue to be decided is one and the same, a common order is passed.
2 . The case of the applicant is that they are the proprietors of the mark. The mark ""MILKA"" was coined by them. They adopted it bonafide and
honestly to use in respect of bakery and confectionery products. They commenced the use of the mark MILKA from July 1989 in respect of bread. It
has been used continuously, openly, extensively and exclusively since the adoption. Their product sold under the trade mark MILKA enjoys a high
reputation and popularity which has been distinctive and the goodwill and reputation is now not restricted to the product of their manufacture alone but
beyond that. The use of the impugned mark in relation to bakery and confectionery products will cause confusion as the goods will be goods of the
same description. The applicants are not only the prior registered proprietor of the mark MILKA but also the prior adopter and prior user. The
respondent has obtained registration by fraud and mis-representation. The impugned mark is identical to the applicant's trade mark. It is a coined and
invented word. Therefore, it is entitled to protection. The wrapper of the applicant's product is unique and distinctive. The applicant owns the copyright
in this artistic work. The applicant allowed the respondent to use the distinctive artistic work for a consideration by a license agreement dated
01.11.1996. The terms of the agreement were adhered to by the respondent till 2003. The use of the mark would tantamount to passing off. The
applicant has obtained registration with regard to several marks containing the word MILKA.
3 . The respondent has filed CS No. 504 of 2007 before the Hon'ble Madras High Court for permanent injunction. The applicant had filed two earlier
applications for rectification but they were dismissed on the ground that there was no proper Board resolution authorizing the Managing Director to
take legal action. These applications were ORA/205 & 206/2008/TM/CH. Now the Board resolution had been passed for filing these rectification
applications.
4 . In the Counter Statement, the respondent contended that the application is an abuse of the process of law. There is no valid Board resolution for
filing these applications. The Company Law Board by order dated 07.03.2007 has set-aside the appointment of Mr. K. Jayakrishnan's wife and
relatives as additional Directors of the applicant Company. No Board meeting was held thereafter nor Annual General Meeting. The affidavits filed by
Mr. Jayakrishnan's wife and relatives as other Directors are not valid. The present rectification proceedings are initiated on the same set of facts as
the earlier one and the position remains unchanged. Therefore, this should also be dismissed. There is no material to show that notice of the alleged
Board meetings was sent to and received by Mr. A. Arumugam. The mark MILKA was adopted by one Mr. V.M. Joseph, the founder promoter of
the applicant company along with other persons including Mr. Jayakrishnan and Mr. Arumugam. The artistic work in the bread wrappers was created
by Mr. Joseph who had applied for registration of the same as Managing Director of the petitioner Company. The respondent company was
established in 1996 by Mr. Joseph. Mr. Arumugam, Mr. A. Raja and others for manufacture and sale of cakes. They used the trade mark MILKA
WONDER CAKE which are sold in different flavors . The respondent used the unique packaging for selling their cakes. In 1997, another company
Milka Nutriments was established by Mr. V.M. Joseph to manufacture biscuits. In addition to the above three companies, Mr. V.M. Joseph also
founded the Pioneer Bake House (P) Ltd., Milka Bakers (P) Ltd., Milka Industries (P) Ltd., and continued to be the Managing Director of all the six
companies till 2001. Upto 2001 both the respondent and applicant were managed only by Mr. V.M. Joseph. Mr. Jayakrishnan did not play an active
role in the applicant company till 2001. Due to subsequent difference of opinion, a Memorandum of Understanding was entered into by which it was
agreed that the applicant would use the mark MILKA for bread, the respondent would use the mark MILKA for cakes and Milka Nutriments would
use the mark MILKA for biscuits Based on this, each company has been manufacturing and selling their respective products under the trade mark
MILKA without any conflict or confusion.
An MOU was drafted on 19.06.2003 which was signed by all except Mr. Jayakumar who did not do so for ulterior motives. Mr. Joseph applied for
registration of trade mark MILKA WONDER CAKE under No. 732507 dated 30.12.1996, MILKA under N 759880 dated 08.07.1997 and
WONDER under No. 759879 dated 08.07.1997. These applications with the goodwill and the copyright were assigned by a deed of assignment dated
30.11.2000. The respondent is the registered proprietor of the mark and the prior adopter and user. They have made extensive sales of the goods
bearing the mark and spent heavily for promotion and advertisement. The applicant does not have any registration for trade mark MILKA in respect
of any bakery product other than bread. The applicant filed CS No. 891 of 1998 against New Star Food Products for infringement of the mark
MILKA and CS No. 896 of 1998 against the same defendant for infringement of the artistic work for the mark WONDER CAKE. This would show
the demarcation of line of activity between the two companies.
6 . Against the order of the learned Single Judge refusing to grant injunction to the respondent in CS No. 504 of 2007 appeals were filed where
injunction was granted. The SLP has been dismissed.
The respondents are manufacturing, marketing goods using the trade mark MILKA for more than a decade and the trade and the public associate
the mark with the respondent company alone. Mr. Jayakrishnan is an attesting witness to the deed of assignment and he is stopped from acting
contrary to the terms of assignment. The artistic work of the applicant and respondent are completely different. The respondent is not the licensee of
the applicant to the trade mark MILKA much less for cakes. The dispute has arisen only because the applicant entered the respondent's business
territory by manufacturing cakes. The license agreement does not refer to the trade mark MILKA and the product cakes. At that time, the applicant
was not even the registered proprietor of the trade mark MILKA. There is no dishonesty on the part of the respondent in applying for registration of
the impugned mark. It is bonafide and has been continued for more than a decade. For all these reasons the rectification petitions be dismissed.
8 . Some orders in proceedings inter parties are relevant. Annexure-I is the order passed in OA Nos. 360 and 361 of 2004 and the other applications in
CS No. 361 of 2004. The plaintiff is the respondent herein and the defendant, the applicant herein. The plaintiff claimed that it is the owner of the
copyright in the artistic work MILKA WONDER CAKE and that the defendant was selling breads under the name and style Milka Bread and that
MILKA, therefore, only pertain to bread and nothing to do with sale of cakes and since the defendant had started selling cakes injunction was sought
for. Interim injunction was granted but by the order dated 16.7.2004 the interim injunction was vacated holding that the plaintiff is not the originator of
the design and the word MILKA belonging to the defendant and the plaintiff is only a licensee. Against this appeals were filed on 11.12.2004. The
Division Bench dismissed the appeals filed by the respondent herein. The respondent also filed C.S. No. 504/2007 and sought for injunction
considering the license agreement. The learned Single Judge held that the plaintiff did not meet the case for interim relief. This order was passed on
07.09.2007. ORA/205 & 206/2007/TM/CH filed by the applicant herein for removal of trade mark No. 124328 and 732507 were dismissed as not
maintainable on the ground that the proper Board resolution has not been filed authorizing Mr. Jayakrishnan to file the ORAs. Appeals were filed
against the order passed in the interim application in C.S. No. 504/2007. These appeals were allowed by a Division Bench on the ground that license
agreement was confined to bread alone and the trade mark MILKA was not the subject matter of the said agreement. Now these rectification
applications have been filed on the basis of a resolution passed allegedly at the meeting of the Board of Directors held on 25.05.2009. The Company
Law Board had passed an order in C.P. No. 50-52/2003 in the matter of Pioneer Bakers Private Limited, Milka Bakers Private Limited, Pioner Bake
House Private Ltd. These petitions were filed alleging acts of suppression and mis-management by Mr. Jayakrishnan. The Company Law Board
found that there was no valid service of notice of the Board meetings and directed that all transfers effected after June, 2003 in respect of shares
would be set-aside. The members of the companies shall reconstitute the Board of Directors and appoint a Managing Director by 30.04.2007. Against
this Mr. Jayakrishnan and other Directors filed appeals before the Hon'ble Madras High Court. The learned Single Judge was of the opinion that the
Company Law Board was correct in setting aside all transfers effected after June 2003 and did not interfere with the order.
9 . The learned counsel appearing for the applicant submitted that undeniably there was a license agreement and once a licensee is deemed to be one,
he cannot set up a title to the property for himself or anyone else. He submitted that there can be only one source of title and as on date until a new
Board is constituted Mr. Jayakrishnan continues to run the day to day affairs of the company and it is possible that Mr. Arumugam may become the
Managing Director. Even if a new Board is constituted the ownership of the mark will always remain with the company. Neither Jayakrishnan nor
Arumugam can dilute the mark by registering an identical mark in relation to allied and cognate goods. The learned counsel submitted that the so
called MOU was never signed by Mr. Jayakrishnan. Therefore, it never came into effect. The learned counsel submitted that he is willing to state
before this Board that the applicant has no objection to the respondent using the word mark in connection with the cakes. His only objection is to the
registration. The learned counsel submitted that the person aggrieved is the Company not Mr. Jayakrishnan. The learned counsel submitted that
MILKA was a coined and invented word and it had to be protected. The learned counsel referred to the various documents which shall be the
advertisement effected by MILKA and the sales figures. He submitted that the reputation gained by MILKA was a substantial one. The license
agreement is dated 01.11.1996. It refers to the applicant as registered copyright owner of the artistic work MILKA. The respondent had agreed to
pay royalty of 0.25% on the sales annually. Exh. H onwards are the payment made by the respondent towards license fee. At Exh.M1 onwards are
affidavits given by persons who were inducted as directors of the Board who had no objection to Mr. Jayakrishnan initiating action to protect the trade
mark MILKA.
1 0 . The learned counsel for the respondent submitted that annexure R24, the Memorandum of Understanding, annexure R21 and 22, the sale deeds
of unregistered trade marks and copyrights are clear evidence to show that the Managing Director of the applicant company Mr. Jayakrishnan was
fully aware and had acquiesced in the respondent using the mark MILKA. The learned counsel referred to various documents to show sale and
advertisement of the products of the respondent company.
The learned counsel appearing for the applicant submitted that the document R- 21 which is signed by Mr. Jayakrishnan as witness will not in any
way operate as estoppel and he relied on 2008 (5) CTC 219 Chidambara Padayachi vs. Vellaiya Padayachi and 7 others where the Hon'ble Madras
High Court held that attestation proves no more than signature of an executing party being attached to a document in presence of such witness and it
will not imply estoppel or consent of attesting witness.
There is a Board Resolution (EXh.P) authorizing Mr. Jayakrishnan to initiate legal action. This is dated 25.05.2009. According to the respondent
Shri A. Arumugam did not receive notice for the Board meeting. It is admitted by all the parties that a new Board has not been constituted. The
Company Law Board has set aside the transfer of shares and directed reconstitution of the Board. But until then the company must continue at least
to conduct the day to day affaiRs. To that limited extent, we accept the Board Resolution for filing these rectification applications. On the one hand
we have a Managing Director whose appointment as such is under challenge who seeks rectification of marks which will dilute the property of the
applicant. On the other hand we have persons who attack his locus standi and want to succeed by default in keeping the offending mark intact. We
will accept the Board Resolution only because that is the way we can decide both the issues of public interest and purity of Register. The fact that we
have accepted the Board Resolution cannot be construed to give Mr. Jayakrishnan any right which he does not have under the provisions of the
Companies Act. It is accepted only for the purpose of maintaining the application.
The registration of the mark MILKA in No. 513603 is in the name of the applicant company and it is in respect of bread. There is no dispute
regarding this. The original mark was this mark. Annexure R-21 is a deed of sale between V.M. Joseph, the seller and the respondent as the buyer.
The schedule of property is Annexure A which contains three marks: MILKA (Word Mark) No. 759880 in class 30 for cakes, MILKA WONDER
CACKE (Label Mark) No. 732507 which is impugned in ORA/134/2009/TM/CH and the mark WONDER which is a word mark No. 759879 fo
cakes. The recitals of R-21 are to the effect that the buyer has agreed to buy the unregistered trade mark and goodwill. One of the witnesses is Mr.
Jayakrishnan, the Managing Director of the applicant herein. Annexure R-22 is a similar document between V.M. Joseph and Milka Nutriments in
respect of biscuits. We are not concerned with this deed. Shri Jayakrishnan has not signed this as witness either. Annexure R-24 is the MOU in which
about eighteen persons are shown as parties. But, only five have signed it. They are V.M. Joseph, Arumugam, K. Palanisamy, A. Raja and Joy John,
who are the parties 1, 2, 3, 9 and 10. Jayakrishnan has not signed it. He is party No. 4. According to him, it never came into effect. Clause 16, 17 and
18 read as follows:
16 . The Company M/s Pioneer Bake House (P) Limited, M/s Milka Bakers Private Limited & Milka Industries (P) Limited are manufacturing Bread
under the Brand name ""MILKA"" using license agreement with M/s Pioneer Bakeries Private Limited. It is expressly agreed that the Directors of
these Companies, relatives of such directors as defined under the provision of the Companies Act and these Companies themselves should not
manufacture Cakes and Biscuit under the brand name ""MILKA"". They are authorized to manufacture any other Product under the Brand name
MILKA"".
1 7 . The Company M/s New Hope Food Industries (P) Limited, are manufacturing Cakes under the Brand name ""MILKA: using license agreement
with M/s Pioneer Bakeries Private Limited. It is expressly agreed that the Directors of these Companies, relatives of such directors as defined under
the provisions of the Companies Act and these Companies themselves should not manufacture Bread and Biscuit under the brand name ""MILKA"".
1 8 . The Company M/s Milka Nutriments (P) Limited, are manufacturing Biscuits under the Brand name ""MILKA"" using license agreement with M/s
Pioneer Bakeries Private Limited. It is expressly agreed that the Directors of these Companies, relatives of such directors as defined under the
provision of the Companies Act and these Companies themselves should not manufacture Bread and Cakes under the brand name ""MILKA"".
Para 22, 23 read as follows:
It is expressly agreed that the directors of M/s Pioneer Bakeries Private Limited Company themselves should not object usage of brand name
MILKA"" by M/s New Hope Food Industries Private Limited all varieties of Cakes and M/s Milka Nutrients Private Limited all varieties of Biscuits.
23 . The Directors of the company M/s Pioneer Bakeries Private Limited Company themselves should not enter into any franchise agreement with
any companies/firm/proprietary concerns/ any other individuals etc., for manufacture of Cakes and Biscuits. Also the Company M/s Pioneer Bakeries
Private Limited should not manufacture Cakes and Biscuits under the brand name ""MILKA"".
When the respondent rests its claim on these documents, it is clear that it admits that it is manufacturing cakes under the brand name MILKA
under the license agreement with the applicant company. It is the applicant who claims that the MOU did not come into effect. However, the
applicant too contends that there was a license agreement and that license fees were paid. The respondent who claims that the applicant had agreed
to the MOU must stand by what is stated in para 16, 17 and 18. This is a clear admission that it is only under a license agreement from the applicant
company that the respondent is using the brand name MILKA for its cakes. Clause 21 also does not advance the case of the respondent. It does not
concede to the respondent the right to have a trade mark registered. It only states that the applicant shall not object to the use of the brand name
MILKA by the respondent. Even before us the learned counsel for the applicant categorically stated that the applicant has no objection to the
respondent using the word MILKA in connection with cakes but it objects to the respondent getting the mark registered thus diluting the property
rights of the applicant company. In the Law of Trade Marks and Geographical Indications by Shri K.C. Kailasam II edition, it is stated that a licensee
is deemed to be always a licensee and cannot set up a title to the property himself or anyone else. In this case the respondent is evidently a licensee
permitted to use the mark MILKA for its cakes on payment of a license fee. New Hope Food Industries Pvt. Limited cannot have the mark
registered contrary to the rights of the registered proprietor who is the respondent's own licensor. As held by the Hon'ble Madras High Court the
attestation of a document does not imply consent. In any event, Mr. Jayakrishnan signing the witness in his individual capacity cannot adversely affect
the rights of the company who alone is the registered proprietor. So neither of the documents which are projected as the trump card by the respondent
comes to its aid.
It is unfortunate that both Shri Joseph and Shri Arumugam who were originally the founder Directors of the company as seen from the
Memorandum of Agreement of the applicant company have now chosen to execute or enter into documents which will dilute the property of the
company. The registered trade mark does not belong to Mr. Jayakrishnan. Even if Mr. Jayakrishnan is removed as Managing Director of the applicant
this mark will belong to the applicant. What is sought to be protected by these ORAs is that the property of the applicant company shall not be diluted.
It is well settled that a trade mark can have only one source. The impugned trade mark is identical to the mark which admittedly belongs to the
licensor, the applicant and the respondent cannot be the registered proprietor.
17 . In these circumstances, both the ORAs are allowed directing the Registrar of Trade Marks to remove the trade mark ""MILKA WONDER
CAKE"" bearing No. 73250 and 1242328 both in class 30.