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Judgment
Z.S. Negi, J
1 . The above two rectification applications are filed by the same applicant seeking removal of two trade marks 'MILKA WONDER CAKE' under
No. 1242328 and 'MILK WONDER CAKE' under No. 732507, registered in the name of the respondent herein, from the Register of Trade Marks or
rectification of the Register under Section 47/57/125 of the Trade Marks Act, 1999 (hereinafter referred to as the Act).
Since the facts of both the cases and issues involved therein are similar we will, for the sake of convenience, state the brief facts of one case, i.e.
ORA/2005/2007/TM/CH. The applicant, a private limited company incorporated in the year 1987 under the Companies Act, 1956 has sought removal
of the above named trade mark on various grounds under Section 57 read with Sections 9,11 and 18 of the Act. The respondent filed their counter-
statement denying the material averments made in the application and raising objection at the outset in the counter-statement that the application is not
maintainable on the ground that the board of directors of the applicant company has not passed resolution authorizing Mr. K. Jayakrishnan to institute
the rectification proceedings against the respondent.
3 . During the pendency of the rectification proceedings, a miscellaneous petition (M.P.) accompanying an affidavit of Mr. A. Arumugam, the other
director of the applicant company, seeking withdrawal of the rectification application or dismissal thereof as withdrawn was filed on 22nd December,
2008. After communication of certain objections raised by the Registry relating to the miscellaneous petition to Mr. V. Senthil Kumar, Counsel for Mr.
Arumugam, Mr. Arumugam filed a fresh miscellaneous petition accompanying by an affidavit dated 30.1.2009 to implead himself as an intervener
(sic) rectification proceedings on the ground that he as the other director of the applicant company should be heard as he and Mr. K. Jayakrishnan are
the only two directors of the applicant company and that he had earlier filed affidavit along with petition dated 22.12.2008 before this Appellate Board
in order to set the records straight and to bring to the attention of this Appellate Board true factual position in the affairs of the applicant company and
the wrongful activities of Mr. K. Jayakrishnan so as to meet the ends of justice. It is stated by Mr. Arumugam that he is swearing the affidavit as a
director and shareholder. Mr. Jayakrishnan is a minority shareholder of the applicant company and he is also a director of Pioneer Bake House Pvt.
Ltd., Milka Bakers Pvt. Ltd. and shareholder of Milka Industries Pvt. Limited.
4 . Averment is made by Mr. Arumugam that in the year 1987 Mr. V.M. Joseph commenced the business of manufacturing and selling bread under
the trade mark MILKA and subsequent thereto M/s. Pioneer Bakeries Pvt. Ltd., M/s. New Hope Food Industries Pvt. Ltd. and M/s. Milka
Nutriments Pvt. Ltd. were incorporated in the years 1989, 1996 and 1997, respectively, having common shareholders and directors and he was the
Chairman of all the three companies from 1996 to 2003 and besides these, three sister concerns, Pioneer Bake House Pvt. Ltd., Milka Bakers Pvt.
Ltd. and Milka Industries Pvt. Ltd., of the Pioneer Bakeries Pvt. Ltd. were also under the common management and directors. In the year 1999,
Pioneer Bakeries Pvt. Ltd. owed a sum of Rs. 40 lakhs to one Mahalakshmi Trading Co. of Erode and the respondent herein has, on the request of
Mr. Arumugam, Mr. Joseph and Mr. Jayakrishnan and agreeing to repay the amounts as and when the applicant company was able to revive its
business, provided financial assistance to it during 1999 to 2003. It is stated that when the applicant company resumed its regular business in the year
2004, dispute arose between the directors and shareholders of the aforesaid six companies and Mr. Jayakrishnan on his own initiative refused to repay
the amounts to the respondent herein. It is also stated that since the year 2003 there has been no board of directors meeting, annual general body
meeting, extra ordinary general body meeting of the applicant company. Mr. Arumugam states that he has never consented to any legal actions
initiated by the applicant company and such actions are initiated by Mr. Jayakrishnan in his individual capacity without any approval or consent from
him, as the only other director and other shareholders of the applicant company and as such the applicant company will not be in any manner
responsible for the costs and consequences of legal actions initiated by Mr. Jayakumar since the year 2003. In the year 2003, Mr. Arumugam, along
with others, filed C.P. Nos. 50 to 52 of 2003 before the Company Law Board, Chennai on account of various oppressive acts and mismanagement in
the affairs of the company and the Company Law Board by order dated 7.3.2007 directed, amongst others, that the members of the companies shall
reconstitute the board of directors; appoint the managing director by 3.4.2007; carry on the regular business in accordance with the articles of
association of the companies and meet the statutory obligations. The applicant filed common reply to the instant affidavit of Mr. A. Arumugam and
thereafter Mr. A. Arumugam filed his reply statement.
5 . The miscellaneous petitions came up before us for hearing on 27.3.2009, when Shri R. Vidhya Shankar, Advocate appeared for petitioner in the
miscellaneous petitions, Shri P.H. Arvinda Pandiayan, Advocate appeared for the applicant in rectification applications and Shri A.A. Mohan,
Advocate appeared for the respondent in the rectification applications.
Learned Counsel Shri Vidhya Shankar contended that the rectification applications filed by Mr. K. Jayakrishnan, managing director, for and on
behalf of Pioneer Bakeries
(P) Limited (hereinafter referred to as the applicant company) are not maintainable as the same are filed without any authority from the board of
directors of the applicant company. He pointed out that no individual director can do any act in respect of which power is vested in the board of
directors and unless any action or litigation is authorized by the board of directors no action taken or litigation initiated by him in his individual capacity
can bind the applicant company. To fortify his contention, the learned Counsel relied upon the judgment in K.N. Sankaranayanan and Anr. v. Shree
Consulations and Services Pvt. Ltd. and Ors. 80 Com. Cas 558, wherein while allowing the appeal it was held by the Madras High Court ""that the
question of authority to institute a suit on behalf of a company is not a technical matter. Unless power to institute a suit is specifically conferred on a
particular director, he has no authority to institute a suit on behalf of the company. Such power can be conferred by the board of directors only by
passing a resolution in that regard."" By taking us to the articles of association of the applicant company, the learned Counsel submitted that it is
expressly declared under Clause 38 that the board of directors shall have the power to institute, conduct, defend, compound or abandon any legal
proceedings by or against the company, etc. Learned Counsel further submitted that no board meeting has taken placed since the year 2003 and Mr.
Arumugam, the only other director has not received any notice for the board of directors meeting and the company has no proof of such notice
dispatched to Mr. Arumugam. The notices of board meetings have not been sent to Mr. Arumugam despite he in his communications dated 1.2.2003,
15.4.2003 and 10.6.2003 had requested the managing director of the Pioneer Bakeries Pvt. Ltd., Milka Bakers Pvt. Ltd. and Pioneer Bake House Pvt.
Ltd. separately, to send notice of board meetings only by Registered Post with Acknowledgement Due as is observed by the Company Law Board in
its Order dated 7.3.2007. In support of his submission, learned Counsel relied on the judgment of Apex Court in Parmeshwari Prasad Gupta v. The
Union Of India MANU/SC/0395/197 3wherein the Hon'ble Court held at para 10 thus:"" 10. Now, it cannot be disputed that notice to all the Directors
of a meeting of the Board of Directors was essential for the validity of any resolution passed at the meeting and that as, admittedly, no notice was
given to Mr. Khaitan, one of the Directors of the Company, the resolution passed terminating the services of the appellant is invalid."" He brought to
our notice the provision of Section 286 of the Companies Act, 1956 which provide for giving notice in writing of every meeting of the board of
directors of a company to every director for the time being in India.
7 . It was submitted that in order to have control over the applicant company, Mr. Jakrishnan had indulged in transfer of shares illegally in violation of
the articles of association and without the previous sanction of the board of directors of the applicant company. Mr. Jayakrishnan's wife, brother-in-
law, mother-in-law were co-opted and appointed/co-opted as the additional directors on 26.06.2003 and 30.07.2003, especially when the disputes
between the two directors were at the helm of affairs. Further, such appointment of the said persons as directors were made behind the back of Mr.
Arumugam, which is held by the Company Law Board vide its Order dated 07.03.2007 in C.P. No. 50/2003 to be illegal and oppressive. In any event,
the said directors having been appointed only as additional directors, have ceased to be the directors of the applicant company in terms of Section 260
of the Companies Act, 1956 on the last date by which the annual general meeting for the relevant year was required to be held in terms of Section 166
read with Section 210 of that Act, which date was 30th September, 2003. It is submitted that as a consequence of Order of the Company Law Board
dated 07.03.2007, it is only Mr. Arumugam and Mr. Jayakrishnan who continue to be validly appointed directors and the Company Law Board had
directed the members of the applicant company to reconstitute the board of directors on or before 30.4.2007. Even before any additional directors
could be appointed and board reconstituted in terms of the Order of the Company Law Board, the Hon'ble High Court of Madras in its interim order
dated 12.04.2007 ordered that ""The reconstitution of Board of Members as it stands today will continue without any disturbance"". It may be noted that
the High Court did not order status quo ante. Consequently, it could be seen that the High Court has only directed the board to the extent reconstituted
as on 12.04.2007 to be continued which means that it is only Mr. Arumugam and Mr. Jayakrishnan who constitute the board of directors of the
applicant company as of 12.04.07 continue as directors. He strenuously contended that the affidavits of Additional directors ratifying the act of
institution of present rectification proceedings by Mr. Jayakrishnan are not valid documents as they are deemed to have ceased to be directors in
terms of first proviso to Section 260 of the Companies Act, 1956. It was also submitted that Mr. Jayakrishnan is self proclaiming and styling himself as
the managing director of the applicant company from 30th July 2003. Such purported appointment of Mr. Jayakrishnan as managing director is illegal
and void and oppressive and it is so held by the Company Law Board. The High Court order deals only with the Board and not with the managing
director. The Company Law Board's order is to appoint a new managing director which is yet to take place. In the circumstance Mr. Jayakrishnan
cannot claim status as managing director.
8 . Shri Pandian, learned Counsel for the applicant for rectification proceedings submitted that Mr. Arumugam has vested interest to frustrate the
proceedings initiated by the applicant as he is the shareholder and director in the respondent company. The affidavit of Mr. Arumugam is devoid of
merits and is nothing but an attempt to defeat and dilute the legitimate rights of ownership in the trade mark MILKA which is enjoyed by the applicant
company uninterruptedly since 1989 till now. He submitted that the statement of Mr. Arumugam that he and Mr. Jayakrishan are the only directors of
the company is false as Mr. Arumugam himself had prayed to the Company Law Board to declare the respondents No. 3 to 6 (Mrs. Shanthini
Jayakrishnan, Mr. K. Sahadevan, Mrs. Usha Rani Sahadevan and Mrs. N. Chellammal) in the C.P. No. 50 of 2003 are not directors of Pioneer
Bakeries Pvt. Ltd. on which the Company Law Board has observed that the board had to be properly constituted on or before 30.4.2007. Learned
Counsel submitted that it is denied that Mr. Jayakrishnan has filed the applications in his individual capacity whereas he has moved the applications on
behalf of the company as its managing director and with the sole purpose to safeguard the company's valuable assets that is to say the trade mark
MILKA to be enjoyed uninterruptedly and without any dilution of any third party claims. The claim of Mr. Arumugam that he is the majority
shareholder is an issue which is pending decision in CMA before the Madras High Court and as on date Mr. Jayakrishnan is the majority shareholder
of the applicant company. Mr. Arumugam has confused between the status of a director and managing director since in terms of Section 2(26) of the
Companies Act, 1956 a managing director can take all steps to protect the assets of the company whereas a director is not in charge of the day to day
affairs and cannot act on behalf of the company unless properly authorized through board resolution to do so. Learned Counsel for applicant produced
a copy of resolution of the board of directors passed on 15.3.2004 authorising the managing director of the company to sign necessary papers,
vakalats, affidavits, etc. and to take all other necessary legal steps against any person including Mr. A. Arumugam in the interest of protecting the
affairs of the company and all his actions will bind the company submitted that the necessary resolution for instituting the present proceeding to show
that such resolution already existed and on that day Mr. Arumugam did not attend the meeting. Placing reliance upon the judgment of the Supreme
Court in Maharashtra State Mining Corporation v. Sunil MANU/SC/2368/200,6 learned Counsel brought to our notice the affidavits of Mr. K.
Sagadevan, Mrs. Usha Sagadevan, and Mrs. N. Chellammal, directors of the applicant company and submitted that they have ratified the act of filing
the present proceedings by Mr. Jayakrishnan.
9 . Shri Mohan, learned Counsel for the respondent in the rectification proceedings submitted that the applications for removal of respondent's
registered trade marks are not maintainable in the eyes of law due to the reason that there is no board resolution from the board of directors of the
applicant company authorizing Mr. K. Jayakrishnan, the managing director of the applicant company, to file present applications. It is categorically
submitted that there is no document placed on record to show that the signatory of the present applications is authorized to file these applications. The
present rectification proceedings are initiated by the said managing director on his own accord without the consent of board of directors of the
company. He submitted that the rectification applications are, therefore, void ab initio and liable to be rejected in limine on this preliminary issue of
locus standi.
10 . After hearing the learned Counsel for the parties, the central issue for our consideration is whether the present rectification applications are
maintainable and whether Mr. A. Arumugam can be allowed to intervene in the rectification proceedings. The Trade Marks Act, 1999 provide that
any person may file notice of opposition to the registration but only a person aggrieved may file application for removal of trade mark from the
Register of Trade Marks or rectification of the Register. A company, though a legal person, cannot sign and verify the application and pleadings on its
own, it has to authorize certain person in accordance with its articles of association to sign and verify the application and pleadings on its behalf. When
the company is the registered proprietor of the trade mark MILKA, it could be the only 'person aggrieved' to file applications for rectification and as
such the board of directors of the company ought to have passed the resolution authorizing Mr. K. Jayakrishnan to sign and verify the application for
rectification and pleadings and to sign/execute vakalat on behalf of Pioneer Bakeries Pvt. Limited. In the absence of any resolution passed by the
board of directors to this effect, the company has not determined that it is the person aggrieved to initiate rectification proceedings against the
respondent. Any such proceeding initiated by the person not authorized by the board of directors by validly passed resolution will not be sustainable
unless the action of initiating such proceedings is ratified by the board of directors in a validly convened board meeting. It is seen from the Articles of
Association of the company that the power to institute any legal proceedings by or against the company is exclusively conferred on the board of
directors of the company in terms of Sub-clause (f) of Clause 38 thereof, which reads as under:
38 . Without prejudice to the general powers conferred by the preceding Clause and the other powers conferred by the Articles, it is hereby expressly
declared that the Board of Directors shall have the following powers namely:
(f) to institute, conduct, defend, compound or abandon any legal proceedings by or against the company, or its officers or otherwise concerning the
affairs of the company and also to compound and allow time for payment or satisfaction of any debts due to and of any claim or demand by or against
the company.
The validity of the affidavits of additional directors of the applicant company ratifying the act of filing the present rectification applications by Mr.
KJayakrishnan are ""not free from doubt as Company Law Board in its Order dated 7.3.2007 in C.P. Nos. 50 to 52 of 2003 has held that the
appointment of Mr. K. Jayakrishnan's family members as directors (the three directors who have given affidavits, of ratification now) with a view to
control the board is neither bonafide nor in the interest of the companies. The Company Law Board has also passed order that the members of the
company shall reconstitute the board of directors; appoint the managing director by 30.4.2007; carry on the regular business in accordance with the
articles of association of the companies and meet the statutory obligations but that order is subjudice as appeal against it is pending before the Hon'ble
High Court of Madras. Besides this, Mr. Arumugam has disputed the existence of such directors on the date when they affirmed the ratification
affidavits. The judgment relied upon in the Maharashtra State Mining Corporation case (supra) will be of no help as the facts are distinguishable. We
are conscious that this Appellate Board has no jurisdiction to decide as to whether the board of directors is validly constituted or the present
rectification proceedings instituted by Mr. Jayakrishnan is validly ratified or not, our endeavor is to ascertain whether prima facie there is any valid
authority with Mr. Jayakrishnan to institute the present proceedings before this Appellate Board. It is worth noting that a registered proprietor can be
the person aggrieved or it can not be but it is impossible to visualize a situation that such a proprietor is both aggrieved and at the same time not
aggrieved also, like the case on hand. We are therefore of the firm view that the present rectification applications are not filed by the person
aggrieved. Having regard to the facts of the case and also in the view that Mr. Jayakrishanan and Mr. Arumugam being at loggerheads (both
promoter directors and shareholders in the companies), calling upon the applicant herein to furnish requisite resolution from the board of directors to
cure the defect will yield no tangible results.
In rectification proceedings there appears to be neither any precedent nor there is any rules of procedure whereunder this Appellate Board can
allow the other director of the applicant company to oppose the rectification application filed for and on behalf of the company by his
counterpart/colleague in the same company. There can be only one person aggrieved for a trade mark, i.e. the company in the name of which the
trade mark is registered. Rule 15 of the Intellectual Property Appellate Board (Procedure) Rules, 2003 provide for third party intervention in appeal
against the order of Registrar passed for removal/rectification of a trade mark and such third party can be other than the registered proprietor of a
trade mark alleging interest in the registered trade mark but there is no parallel prevision for third party intervention in rectification application before
the Appellate Board. Mr. Arumugam is neither a third party in terms of rule 15 of the above referred Rules nor his miscellaneous petitions filed in the
capacity of director of the applicant company can be maintainable in the absence of any resolution of board of directors, of the applicant company
authorizing him to file such miscellaneous petitions.
In view of the above, the result is that the miscellaneous petition Nos. 27 & 28 /2009 filed by Mr. A. Arumugam are not maintainable and the
original rectification application Nos. 205 & 206/2007 filed by Mr. K. Jayakrishnan are dismissed as not maintainable in view of the preliminary
objection raised by the respondent in the counter-statement. There is no order as to costs.