Sabko Industries vs Avon Emery Industries

Manak Mohta, J.—The instant Misc. Appeal has been filed by the Defendant-Appellant against the order dated 26.8.2006 passed by the learned Additional District Judge (Fast Track) No. 3, Jodhpur in Civil Misc. Case No. 5/2006, whereby, the learned Court-below has allowed the application for temporary injunction filed by the Plaintiff-Respondent under Order 39 Rules 1 and 2 read with Section 151 CPC in his favour while restraining the Defendant-Appellant and his Agents from using the Trade Mark "SABKO" or resemble to it on their products and also on the Letter-pads, Bills publishing Advertisement material in the News-papers.

Briefly stated the facts of the case are that it is alleged by the Plaintiff-applicant that M/s. Avon Emery Industries, Jodhpur is a registered partnership firm, which came into existence on 28.8.1974. The firm is carrying on the business of manufacturing and marketing of Emery Powder since 1974 and the firm used to sell his products to M/s. Saboo Emery Stone, Jodhpur, which was also a partnership firm carrying on the business of manufacturing of Emery Stones and like other products i.e. all kinds of Emery Stones, Flour Mill Stones, Bonded Stones, Synthetic Stones, Emery Powder, Emery Grains, Flour Mills etc. having registration of the Trade Marks "SABKO" "Sabko Special" and "Saboo Special" under the Trade and Merchandise Marks Act, 1958 (hereinafter referred to as ''the Act of 1958''). That firm was by using the said Trade Marks on the products supplied by the Plaintiff-applicant M/s. Avon Emery Industries, after manufacturing and using the said Trade Marks "SABKO" "Saboo Special" and "Sabko Special" were supplying and selling the goods all over India.

The Plaintiff-applicant further submitted that in the month of January, 1985, M/s. Saboo Emery Stones, Jodhpur by way of agreement of assignment after taking the royalty amount Rs. 27,783.70 for using the said Trade Marks under the provisions of the Act of 1958 as provided in Chapter ''V'' of the Act of 1958 authorized and constituted the Plaintiff firm to use the said Trade Marks ''Sabko'', ''Saboo Special'' and ''Sabko Special'' on their products and for selling and supplying the products in open market. In this way, it was stated that the Plaintiff-applicant-firm became full authorized to use the said Trade Mark from predecessor in title since 1974 and from 1985, the Plaintiff-applicant-firm became exclusive owner to use the above mentioned Trade Marks. It is further submitted that the Plaintiff-firm earned good reputation and respect at national level market by using the said Trade Marks on their products. The Defendant-firm was also aware of all these facts. The Defendant-firm itself used to buy the said goods for sale from the Plaintiff-firm or from his predecessor in title.

It is further submitted that the Defendant-firm started manufacturing same type of goods with intention to cause loss by using "Sabko" Trade Mark on the goods of inferior quality and was passing off the goods in the market inspite of the objection. The Plaintiff has submitted that the Defendant firm also knowing all the facts but without disclosing the full facts, got registration of the same Trade Mark on 26.3.2002 in its favour. The Defendant-firm got published a news-item on 5.5.2006 in the Rajasthan Patrika, Jodhpur Edition for restraining to use the Trade Mark by any other person. It is alleged that the Defendant-firm also gave a notice for restraining the use of named Trade Mark to the Plaintiff-firm.

Being aggrieved of the wrongful acts adopted by the Defendant in the trade, the Plaintiff was compelled to prefer a suit on 3.4.2006 along with T.I. Application under Order 39, Rules 1 and 2, CPC in the Court of learned District Judge, Jodhpur for permanent injunction and for the production of accounts of sold goods of similar Trade Mark by the Defendant-firm. Later on, the suit was transferred to the Court of learned Additional District Judge (FT) No. 3, Jodhpur on 10.7.2006.

After service of notice, the Defendant-Appellant filed a reply denying the facts that the Plaintiff was using the Trade Mark since 1974. The facts that from 1985, on the basis of agreement of assignment, the Plaintiff became exclusive person to use that Trade Mark were also denied. In reply, it was further submitted that under the provisions of the Trade Marks Act, 1999, the suit is also not maintainable. It was submitted by the Defendant-Appellant that they have started to manufacture Emery Stones and are authorized to use and sold the goods with the Trade Marks ''Sabko'' and ''Sabko Madar'', which are registered Trade Mark in his favour. It was further submitted that the Defendant-Appellant filed an application for registration of the Trade Mark before the competent authority and that was accepted after hearing objections. Thereafter, the Plaintiff-Respondent moved an application for rectification as well as cancellation of the Trade Mark given to the Defendant-Appellant, stating therein that the predecessor in title M/s. Saboo Emery Stone, Jodhpur has adopted and invented the Trade Marks "SABKO", "SABKO SPECIAL" and "SABOO SPECIAL" since 1974. The Trade Mark "Sabko" was registered in Class-07 in the name of predecessor and the Registrar, thereafter, issued a Registration Certificate in favour of the predecessor M/s. Saboo Emery Stones, Jodhpur. It was also stated in the application that on 25.1.85, the predecessor has given permission to use the Trade Mark to M/s. Avon Emery Industries but no order has been passed in favour of the Plaintiff-firm by the said authority. It was also submitted that the Plaintiff-Respondent has specifically stated in the application that the Firm has started manufacturing and marketing of the Emery Stone bearing the above Trade Marks since 1985. In this way on the basis of the registration of Trade Mark in his favour denied the existence of prima facie case in favour of the Plaintiff and prayed to dismiss the temporary injunction application.

The case came up for hearing before the learned Additional District Judge (Fast Track) No. 3, Jodhpur, whereby, the learned Court-below found that the Plaintiff-applicant was using the said Trade Mark since 1974 and on the basis of user found prima facie case and other ingredients in favour of the Plaintiff for temporary injunction and, thus, allowed the temporary injunction application in his favour under Order 39 Rules 1 and 2 read with Section 151 CPC for restraining the Defendant-Appellant and his Agents from using the Trade Mark "SABKO" on their products as stated above.

Being aggrieved by the order of issuing temporary injunction against him dated 26.8.2006, the Defendant-Appellant (M/s. Sabko Industries) preferred this Misc. Appeal before this Court.

I have heard learned Counsel for the parties and have carefully gone through the record of the case.

Daring the course of arguments, the learned Counsel for the Appellant submitted that the learned lower Court has not properly considered and appreciated material available on record and passed an erroneous order that is not sustainable. It was contended that the Plaintiff-applicant has not been able to establish that they were using the said Trade Mark since 1974. It was contended in the application before the Trade Marks Authority, they have submitted that firm M/s. Avon Emery Industries started production in 1985. The said firm was the registered by the Industries Department in the year 1985. It was also contended that the story of assignment of rights to the Plaintiff for using the Trade Mark by M/s. Saboo Eipry Stones is also not established. The alleged agreement of assignment is not genuine and no reliance can be imposed on it. It was submitted that Prior using and selling of goods with the said Trade Mark in open market by Plaintiff is not prima facie proved. In that position, the learned lower Court not have believed the existence of prima facie case in his favour. On the contrary, it was submitted that the Appellant is having registered Trade Mark in its favour and as per the provisions of Trade Marks Act, 1999 (hereinafter referred to as "the Act of 1999"), the Appellant is having exclusive right to use the said Trade, It was also submitted that any dispute with regard to validity of the Trade marks arises that is to be dealt with under the provisions of the Act of 1999 by the concerned authority and it was urged that u/s 93 of the Act of 1999, the jurisdiction of Civil Court is barred and the Civil Courts are not having authority to entertain such disputes. The learned lower Court has not properly appreciated important aspect he case, therefore, the suit as well as the application for porary injunction was not maintainable. It was further contended that the tea-Plaintiff-Respondent has invoked its jurisdiction under the Act of 1999 by submitting objections and applied for the said Trade Marks but could not succeeded, that cannot be raised again in Civil Courts. Thus, the remedy was available under the said Act, which he has already availed. The authority under limited jurisdiction has decided the issue, therefore, the Plaintiff is estopped to take any action by virtue of Section 11 Explanation 8, CPC under the provision of res judicata. Now no action can be taken by them. The learned Counsel for the Appellant also placed reliance on the decisions rendered in I.T.C. Ltd. v. Phurba Lama and Ors. AIR 1992 Sik 34 and ITC Limited Vs. Rakesh Behari Srivastava and others, .

Further it was contended that the Appellant being a registered owner of Trade Mark and legally entitled to use on his products, the prima facie case stands in his favour. The Plaintiff-Respondent was not entitled to seek any interim relief by way of temporary injunction in his favour, the Appellant would suffered great loss, in case, the impugned order is continued. On the basis of the above submissions, it was prayed that the appeal may be allowed and the order challenged under appeal, may be quashed and set aside.

On the contrary, the learned Counsel for the Plaintiff-Respondent refuted the contentions raised by the Appellant''s side and supported the impugned order passed by the learned lower Court. It was submitted that the Plaintiff-firm is registered in 1974 and since then, the firm is manufacturing the said emery products. It was submitted that the Plaintiff has clearly stated in his plaint that from 1974 to 1984, the firm was supplying the goods to M/s. Saboo Emery Stones, Jodhpur, a registered partnership firm having registration of the said Trade Mark in its favour, who used to apply Trade on the products supplied by the Plaintiff-firm and in this way, the products of the Plaintiff-firm was getting the same reputation and good-will in the market and every concerned including the Defendant-Appellant was having full knowledge of it. From 1985, the Plaintiff-firm was authorized by way of agreement of assignment to use the said Trade Mark on its products which was legally permissible under the Act of 1958. The agreement of assignment is on record that has been proved by the partners of M/s. Saboo Emery Stones, Jodhpur, therefore, prima facie, prior using of the said Trade Marks are well established. In that case, mere registration of the similar Trade Marks in favour of the Defendant-Appellant will not come in the way seeking relief in Civil Court. It was also submitted that the Plaintiff has not challenging the validity of issuing the Trade Marks by the concerned Authority, therefore, the barring provisions under the said Act will not apply. The suit is maintainable and learned lower Court, after considering all these aspects, has granted the interim order in their favour, that should be maintained and the appeal is liable to be dismissed. The learned Counsel for the Respondent also submitted that in similar type of cases, where registration was in the name of the opposite party, on the basis of prior user, the Civil Courts have granted relief to protect the interest of prior user. It was further contended the registration of the Trade Marks is only, prima facie, evidence of validity of an entry but it does not affect the rights of prior user of the same or similar Trade Marks. He placed reliance in support of his contentions on the decisions rendered in (1) N.R. Dongre v. Whirlpool Corporation 1996 (16) PTC (Del) 476 , (2) N.R. Dongre and Others Vs. Whirlpool Corpn. and Another, , (3) Milmet Oftho Industries and Others Vs. Allergan Inc., , (4) Midas Hygiene Industries (P) Ltd. v. Subhir Bhatia and Ors. 2004 (28) PTC (SC) 121, (5) Wander Ltd. and Anr. v. Antox India (P) Ltd. 1990 (Suppl.) SCC 727 : 1991 PTC 1 (SC) (6) Corn Products Refining Co. Vs. Shangrila Food Products Ltd., , (7) Century Traders Vs. Roshan Lal Duggar Co., , (8) National Garments Vs. National Apparels, and (9) M/S S. M. Dyechem Ltd. Vs. M/S Cadbury (India) Ltd., .

On the aforesaid submissions, it was prayed that the order of the learned lower Court may be confirmed and the appeal may be dismissed.

I have considered the rival submissions raised by the learned Counsel for the parties and perused the impugned order dated 26.8.2006 passed by the learned lower Court. I have also perused the authorities cited by the learned Counsel for the parties. The main question for consideration arises in this appeal is that whether prima facie the Plaintiff-Respondent has been able to establish prior user of the Trade Marks "Sabko" and "Sabko Special" on his products and has earned good reputation and good-will in that respect and further can the Plaintiff-Respondent maintain an action for passing off goods against the Defendant-Appellant in respect of use of similar Trade Mark.

The contention of the Appellant is that the Plaintiff-firm got registration in the Industries Department in 1985, therefore, contended that manufacturing the goods since 1974 is not believable and further contended that the existence of authority given to the M/s. Saboo Emery Stones in favour of the Plaintiff in 1985 is not proved. On the other hand, the Plaintiff-Respondent supported his stand on the basis of documentary evidence. From perusal of the record, it is revealed that the Plaintiff-firm was registered in 1974 under the Indian Partnership Act and the Plaintiff has stated that from 1974 of 1984, the firm was manufacturing Emery products and used to supply to M/s. Saboo Emery Stones Jodhpur. These facts have, not been denied by the Appellant. In this respect the Plaintiff has produced several documents and from perusal of those documents, prima facie, supply of products to M/s. Saboo Emery Stones is established. The Plaintiff further stated that in 1985 by way of agreement of assignment, the Plaintiff-firm was made authorized to use the said Trade Marks on its products. In that respect, an agreement of assignment dated 25.1.85 is said to be executed between the Plaintiff-firm and M/s. Saboo Emery Stones. On behalf of M/s. Saboo Emery Stones, the partner has signed. That agreement dated 25.1.1985 has been produced by the Plaintiff. Further the partners of the said firm have confirmed the terms of the agreement by giving affidavits in this respect in favour of the Plaintiff. On the basis of these material, the contentions of the Appellant, are not tenable and it is evident from the record that the Plaintiff was made authorized to use the said Trade Mark by M/s. Saboo Emery Stones. It is also revealed that the Trade Marks ''Sabko'' and ''Sabko Special'' and ''Saboo Special'' were registered Trade Marks in the name of M/s. Saboo Emery Stones and that has not been disputed that these Trade Marks were not registered in favour of M/s. Saboo Emery Stones. Therefore from 1985 onwards, prima facie, it is established that the Plaintiff-firm was authorized and was using Trade Marks ''Sabko'' and ''Sabko Special'' on their products and selling the goods in the market. The learned lower Court has discussed the full facts in this respect. It is said that the firm has developed a good-will and good reputation on their products. That finds support from the documents, bills, advertisement and news-items, the copies thereof have been produced by the Plaintiff. On the contrary, the Appellant''s contentions are based on registration in his favour. From the record, it is revealed that in the year 2002, the Appellant applied for registration of Trade Marks and that has granted on 26.2.2005 w.e.f. 26.3.2002 but it is not the case of the Appellant that he was also prior using the said Trade Marks at their level. From the material available on record, prior to the application and issuing of the Trade Mark in favour of the Appellant, using of the said Trade Marks by the Plaintiff is, prima facie, established without expressing anything on the merit of the case. The finding to this extent of the learned lower Court is not suffering from any defect and infirmity. In this way, the Plaintiffs right of prior user is having important consideration. On the similar facts, the judgments are cited by the Respondent, in which, the right of prior user has been protected. In N.R. Dongre''s case (supra), it was held by the Division Bench of Delhi High Court that prior user is having right to protect his interest. The relevant portion of para 31 of the said judgment is reproduced below:

According to Section 28(1) of the Act, registration of a Trade Mark gives to the registered Proprietor thereof exclusive right to use the same in relation to the goods in respect of which it has been registered. But from the opening words of Section 28(1) namely, "subject to other provisions" it is clear that the right conferred on a trader is not an indefeasible right as the same is expressly made subject to other provisions of the Act. This is further made clear by Section 27(2) of the Act, which provides that "nothing in this Act shall be deemed to affect the right of action against any person for passing off the goods as goods of another person or the remedies in respect thereof". Thus it is manifest that Section 28 of the Act and all other provisions come within the over-riding sway of Section 27(2) of the Act. Similarly Section 33 of the Act also saves vested rights of a prior user. It lays down that nothing in the Act shall entitle a registered proprietor of a trade mark to interfere with the use of the Trade Mark by a prior user of f the same. Thus, the right created by Section 28(1) of the Act in favour of a registered proprietor of a Trade Mark is not an absolute right and is subservient to other provisions of the Act namely; Sections 27(2), 33 etc. Neither Section 28 nor any other provision of the Act bars an action for passing off by an anterior user of a Trade Mark against a registered user of the same. In other words, registration of a Trade Mark does not provide a defence to the proceedings for passing off as u/s 27(2) of the Act, a prior user of a Trade Mark can maintain an action for passing off against any subsequent user of an identical Trade Mark including a registered user thereof. Again this right is not affected by Section 31 of the Act, under which, the only presumption that follows from registration of a mark is its prima facie evidentiary value about its validity and nothing more. This presumption is not an un-rebuttable one and can be displaced. Besides Section 31 is not immune to the over-riding effect of Section 27(2).

The above judgment of Delhi High Court was further challenged before the Apex Court by N.R. Dongre but the appeal was dismissed and the judgment was confirmed. The said judgment was reported in N.R. Dongre and Others Vs. Whirlpool Corpn. and Another, .

In this respect, other authorities (1) Milmet Oftho Industries and Others Vs. Allergan Inc., , (2) Midas Hygiene Industries (P) Ltd. v. Subhir Bhatia and Ors. 2004 (28) PTC (SC) 121 and (3) Wander Ltd. and Anr. v. Antox India (P) Ltd. (1990) (Suppl.) SCC 727 : 1991 PTC 1 (SC) cited by the Respondent, also support the contention of the Respondent. On the basis of the aforesaid discussion, the finding with regard to prima facie case and other ingredients in favour of the Plaintiff, concluded by the learned lower Court is not suffering from any infirmity.

The further contention of the Appellant that the Plaintiff was not entitled to file civil suit as he has made objection before the Trade Mark Authority and they have been rejected. Therefore, the finding of the said Authority became final and on the basis of Explanation 8 of Section 11 of the Code of Civil Procedure, the suit is barfed. Further under the provision of the Trade Marks Act, 1999, the suit is not maintainable but from perusal of the plaint and the application and looking to the relief claimed by the Plaintiff, it is revealed that the Plaintiff has not challenged any order of the Trade Mark Authority and he has maintained his action on the basis of prior user. In this way, the contentions of the Appellant are not tenable. The authorities cited by the Appellants'' side do not help his contention. In the case of ITC Ltd. v. Phurba Lama and Ors. AIR 1992 Sik 34 , the relief was claimed with regard to validity of the Trade Mark. In that reference, it was held that the Civil Court has no jurisdiction but that is not the position in the present case. In the case of ITC Limited Vs. Rakesh Behari Srivastava and others, , the validity of the Trade mark was in dispute, that is not the position in the present case. Likewise, the Plaintiff has not challenged any order of the concerned authority in the suit, thus, prima facie, the contentions are not sustainable and further more, these objections will be seen at the time of trial. On the other hand, the authorities (1) N.R. Dongre v. Whirlpool Corporation 1996 (16) PTC (Del) 476 , (2) N.R. Dongre and Others Vs. Whirlpool Corpn. and Another, , (3) Century Traders Vs. Roshan Lal Duggar Co., and (9) M/S S. M. Dyechem Ltd. Vs. M/S Cadbury (India) Ltd., cited by the Respondents'' side, also support the action taken by the Plaintiff and they are all relevant. Thus, the contentions of the Appellant are not sustainable and the appeal is liable to be rejected.

In view of the aforesaid discussion, the contentions raised by the Appellant are not tenable. Thus, the appeal filed by the Defendant-Appellant is hereby dismissed and the impugned order dated 26.8.2006 is confirmed. Looking to the facts of the case, it is further directed that without influencing from any observations made in this order, the learned lower Court will expedite the hearing of the case as far as possible. No order as to costs.