Modella Woollen Ltd. vs Modella Knitwears Ltd.
1995 Latest Caselaw 871 Del

JUDGMENT

Anil Dev Singh, J.

(1) This is an appeal from the order of the learned Single Judge dated September 19, 1994 whereby interim order dated March 18, 1994 restraining the respondents from using, selling or offering for sale or advertising goods bearing trade mark 'MODELLA' with and without lion device was vacated and consequently, the application of the appellant-plaintiff, I.A.2754/94 under Order 39 Rules 1 and 2 Civil Procedure Code was rejected and the application of the respondent-defendant, I.A. 3170/94 under Order 39 Rule 4 Civil Procedure Code was allowed. The facts necessary for the disposal of appeal are as under :- The appellant M/s. Modella Woolens Ltd., instituted a suit against the respondent M/s. Modella Knitwears Ltd. for perpetual injunction, infringement and passing off of trade mark, infringement of copyright and rendition of accounts against the respondent. It was averred inter-alia in the plaint by the appellant that the plaintiff was engaged in the business of manufacturing, marketing and dealing in textiles including tweeds, shawls, blankets, yarn, readymade garments including hosiery and knitwears etc. under the trade mark 'MODELLA', which was registered in its favor by the Registrar of Trade Marks. It was further stated that in the last week of September 1993 the plaintiff came to know that the defendant was selling shawls, blankets, tweeds, cardigans and knitwears under the trade mark 'MODELLA' with lion device representing the same artistic manner as that used by the plaintiff. It was asserted that the plaintiff had not authorised or permitted or licensed the defendant to use the plaintiff's trade mark. The plaintiff also alluded to the fact that a notice dated October 1, 1993 was given through its Trade Mark Attorney to the defendant to discontinue the use of the mark 'MODELLA' with lion device in respect of blankets, shawls, tweeds, cardigans, hosiery and knitwears. In the plaint, it is admitted that the defendant replied to the reply through its Attorney on October 26, 1993 but the notice was said to be vague and frivolous. In this regard, it would be advantageous to quote the averments of the appellant in the plaint :- "THAT the said defendant through its Advocate gave a reply dated 26th October, 1993 alleging vague and frivolous reasons of assignment of the said mark 'MODELLA with lion device in favor of the defendant by the plaintiff company. The Trade Marks Attorneys for the plaintiff by their letter dated 10th November, 1993 sent a rejoinder asking the defendant to send copies of the assignment agreement alleged to have been executed by the plaintiff and the defendant. The same, however, has remained unanswered till date."

(2) In the plaint it was further averred that the defendant has illegally adopted the trade-mark 'MODELLA' with lion device which belongs to the appellant. The plaintiff also claimed infringement of the copyright by the defendant. Along with the plaintiff, an application under Order 39 Rules 1 and 2 Civil Procedure Code was also filed by the appellant. Initially the learned Single Judge on March 18, 1994 issued an ex-parte interim injunction against the respondent. By that order respondent was restrained from using, selling or offering for sale or advertising goods bearing trade mark 'MODELLA' with or without lion device. However, subsequently, as noted above, the order was vacated on September 19, 1994. It is this order which has been impugned by the appellant in the present appeal.

(3) We have heard learned Counsel for the parties and gone through the record and the order of the learned Single Judge. At the out set we wish to point out that the appellant has been guilty of concealment of facts. In the plaint there is no mention of certain agreements which the appellant had executed. In this regard it will be necessary to state a few facts. The appellant, Modella Woollen Ltd., had another subsidiary, namely, Modella Knitwears Ltd. located at390. Industrial Area, Ludhiana. In a meeting of Board of Directors of Modella Woolens Ltd. on August 22, 1989 it was decided to transfer 50,000 shares of Modella Knitwears which the appellant was holding to an intending buyer. Pursuant to the decision of the Board of Directors of the appellant, by an agreement dated August 28, 1989 between the appellant on the one hand and Mr. M:L. Goel of M/s. Laminator India Pvt. Ltd. on the other, the appellant agreed to sell and Mr.M.L. Goel agreed to purchase the said 50,000 equity shares of Rs. 10.00 each. On the execution of the agreement, the appellant delivered to Mr. M.L. Goel and his nominees certificates in respect of 50,000 shares in the Modella Knitwears Ltd. together with related transfer deed duly signed by the vendor, for which the purchasers paid a sum of Rs. 2,50,000.00 being the full purchase price of the said shares by a bank draft to the appellant. The aforesaid agreement declared that the machinery and equipment installed in the factory premises of Modella Knitwears Ltd. belongs to the company (Modella Knitwears) and the appellant shall have no claim upon it whatsoever. At the time of the agreement, Modella Knitwear sowed a sum of Rs. 16,23,000.00 to the appellant, Modella Woolens Ltd., as principal sum and Rs. 8,69,000.00 as interest thereon. It was agreed between the parties that upon payment by the Modella Knitwears Ltd. and the purchasers, a sum of Rs. 12,51,000.00 in six equal monthly Installment of Rs. 2,85,000.00, the liabilities of Modella Knitwears to the appellant shall stand discharged. The aforesaid agreement further stipulated that the trade-mark of the company 'MODELLA' used by the company shall be continued to be used by it and the vendor shall not do anything to disturb the user of the same. The relevant clause reads as follows :- "(C)The trade mark of the Company 'Modella' used by the Company shall be continued to be used by the Company and the Vendor shall not do anything to disturb the user of the said trade mark."

(4) It may be pointed out that under the agreement Modella Knitwear has been described as the 'Company'. This agreement is not denied by the appellant. The appellant made no mention whatsoever of the aforesaid agreement in the plaint. There is another agreement dated September 1,1989 to which our attention has been drawn by the Counsel for the respondent. This agreement is purported to be executed by the appellant and Mr. M.L. Goel. According to this agreement, the appellant allowed the exclusive use of the trade mark 'MODELLA' for manufacture and sale of knitwears and garments to Mr. M.L. Goel to the exclusion of the appellant for a consideration of Rs. 2,00,000.00 which amount was included in the aforesaid total amount of Rs. 12.51 lakhs. It would be convenient at this stage to extract the relevant part of the agreement :- "And whereas the 1st Party has agreed to transfer all assets and liabilities of Subsidiary Company i.e. Modella Knitwears Limited located at390 Industrial Area, Ludhiana to the 2nd Party vide agreement dated 1st Sept. 1989andnow is intending to allow the use of the aforesaid Trade Mark for manufacture & sale of knitwears and the 2nd party is willing to accept the use of said Trade Mark for knitwears and garments. Now it is hereby agreed as follows : 1. That the 1st party has irrevocably allowed the 2nd party to use the Trade Mark for manufacture & sale of knitwears & other garments shall in no ease disturb the '2nd party' for its use as mentioned above. 2. That 1st party' shall not make any use of the said Trade Mark against manufacturing ofknitwears & other garments after the date Of agreement of Trade Mark. 3. That the 1st party' shall keep 2nd party harmless and indemnified for use of Trade Mark. 4. That the 1st party shall not enter into any agreement with any other party other than 2nd party for use of the said Trade Mark for manufacture and sale of knitwears & other garments. 5. That 2nd party has agreed to pay Rs. 2,00,000.00 lacs for the use of Trade Mark for knitwears & other garments as mentioned above. This amount is included in the total amount as per Agreement."

(5) There is yet another agreement to which our attention has been drawn by the Counsel for the respondent (page 142 of the paper book). According to this agreement, the appellant agreed to hand over the Modella Retail Shop at 181, Industrial Area, Ludhiana to the respondent. Both these agreements have been purported to be signed on behalf of the appellant by Mr. Rajinder Vaid, its manager. The appellant has taken a stand that Mr. Rajinder Vaid was not authorised to execute the agreements on its behalf. All the three agreements were referred to by the respondent in its reply dated October 26,1993 to the notice of the appellant dated October 1, 1993. However, the date of the principal agreement and the date of the agreement of the transfer of Modella Retail Shop was not mentioned, but all the important particulars and the stipulations contained in those agreements were mentioned .In so far as the other remaining agreement is concerned, viz. agreement of September 1,1989, its date was also mentioned in the reply. Therefore, there was no justification for the appellant not to have disclosed all the facts in the plaint. The appellant has not disputed at least the agreement dated August 28,1989 which was signed by its Chairman. Why this agreement was not referred to in the plaint is a question which the appellant was bound to answer. It has not given any reason before us why it failed to allude to the agreement in the plaint. The other two agreements, one exclusively relating to the trade mark of knitwears and garments and the other relating to the transfer of Modella Retail Shop, a mention should have been made in the plaint even though the appellant was disputing the authority of its manager to execute the same. When the respondent had referred to these agreements in its reply to the notice of the appellant, it was only fair that the appellant should have referred to these agreements explaining why in its opinion the agreements were not valid in the eyes of law. It is obvious that by concealing the material facts, the appellant wanted to draw undue benefit and actually succeeded in obtaining ex-parte order restraining the respondent from using the trade mark 'MODELLA' with the device of lion. The appeal of the appellant can be thrown out on this ground alone but we also propose to examine the merits of the controversy as well.

(6) According to the agreement dated August 28, 1989 the respondent was allowed to use the trade mark of the company 'MODELLA' which was used by it earlier as well. The agreement postulated that the appellant shall not do anything to disturb the user of the said trade mark. If we only go by this agreement even then we have to allow the respondent to use the trade mark which was being used by it even prior to the agreement.

(7) The learned Counsel for the appellant submitted that in any event the respondent has to be confined to the use of the trade mark 'MODELLA' with the device of lion with respect to knitwear and garments and they cannot be permitted to use the same in respect of textiles including tweed, shawls and blankets which do not fall within the meaning of the word 'knitwear'. In this regard the appellant refers to the agreement of September 1,1989 though it disputes the authority of its manager who is said to have executed the agreement. According to the appellant trade mark 'MODELLA' as per agreement dated September 1, 1989 has been assigned in favor of the respondent only in respect of knitwears and garments.

(8) We have considered the submissions of learned Counsel for the appellant. We are prima facie of the opinion that the agreement dated August28,1989permits the respondent to use the trade mark 'MODELLA' and the use of the same is not restricted to knitwears and garments alone. There are no restrictive words limiting the operation of Clause 3(c) of the agreement which has been extracted above. The said clause is of a wide import and its operation cannot be cut down by the subsequent agreement dated September 1, 1989. It appears that the subsequent agreement dated September 12, 1989 was meant to place a restriction on the appellant to the use of trade mark 'MODELLA' with the device of lion in respect of knitwear and other garments. Clause (2) of the agreement specifically prohibits the appellant (which is the first party in the agreement) from making use of the said trade mark in respect of knitwears and other garments after the date of agreement of trade mark. This agreement gives exclusive right to the respondent to the use of trade mark 'MODELLA' to the exclusion of the appellant in respect of knitwear and garments. Therefore, while both the appellant and the respondent can use the aforesaid trade mark in respect of textiles including shawls, tweeds and blankets, it is the respondent alone who can use the trade mark in respect of manufacture and sale of knitwear and other garments.

(9) Learned Counsel for the appellant submitted that in the application of the respondent under Order 13 Rule 4 and in the reply to the notice of its Counsel, the respondent had been claiming the use of the trade mark only in respect of knitwear and garments. In this regard it may be mentioned that in the reply to the said notice, the respondent was claiming an exclusive right to use the said trade mark in respect of knitwear and garments. In application of the respondent under Order 39 Rule 4 Civil Procedure Code it is categorically stated that the respondent has been carrying on its business of sale of textile including shawls, tweeds, knitwears, garments etc. from the Retail Showroom. The respondent also relied upon Clause 3(c) of the agreement dated August 28, 1989 whereby the parties specifically agreed the use of trade mark 'MODELLA' by the respondent in respect of its goods. Besides the respondent has also placed on record various advertisements showing that it was using trade mark 'MODELLA' in respect of textiles including blankets, shawls etc. since 1989 (Pages 123 to 134 of the appeal paper book). In the circumstances, therefore, we are of the opinion that the appellant has not made out a case for grant of interim injunction and accordingly we uphold the order of the learned Single Judge dated September 19,1994.

(10) For the foregoing reasons, the appeal fails and the same is dismissed with costs which are quantified at Rs. 5,000.00.

(11) Any observation made in this order will not be taken as an expression of opinion on the merits of the case in the main suit.