Delhi High Court
Conzerv Systems P Ltd vs T.K. Babu And Others on 20 August, 2008
Author: Rajiv Sahai Endlaw
* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ IA.No. 848/2006 in CS(OS) 1567/2005
% Date of decision : 20.08.2008
CONZERV SYSTEMS P LTD .......Plaintiff
Through: Ms Pratibha M Singh with Ms Bitika
Sharma and Mr Sudeep Chatterjee,
Advocates.
Versus
T.K. BABU AND OTHERS ....... Defendants
Through: Mr Sudhir Chandra, Sr Advocate with
Mr Dayankrishnanand and Mr Gautam
Narayan, Advocate.
CORAM :-
HON'BLE MR. JUSTICE RAJIV SAHAI ENDLAW
1.
Whether reporters of Local papers may YES
be allowed to see the judgment?
2. To be referred to the reporter or not? YES
3. Whether the judgment should be reported YES
in the Digest?
RAJIV SAHAI ENDLAW, J
1. The defendants have applied under Order 7 Rule 11(d)
of the CPC for rejection of the plaint stating that this court does
not have the territorial jurisdiction to entertain the same and the
institution of the suit in this court is an abuse of process and to
harass the defendants.
2. The plaintiffs have instituted the suit (i) for the reliefs of
permanent injunction restraining the defendants from using the
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trademark ELECON, True RMS Logo and VAF or any other
deceptively similar trade mark in relation to Digital Panel Meters,
Multi Function Load Managers, Electrical/Electronic meters or any
cognate or allied product so as to result in an infringement of the
plaintiff's registered trade mark and passing off of the plaintiff's
marks ENERCON, True RMS Logo and VAF; (ii) a decree for
permanent injunction for restraining the defendants from using the
Elecon leaflets, brochures, circuit diagrams, software etc or any
other material of the plaintiff; (iii) for restraining the defendants
from using the confidential information gathered by them from the
plaintiff; (iv) for restraining the defendants from inducing breach of
contracts between the plaintiff and its suppliers/vendors and
employees; and (v) for the relief of damages, rendition of accounts,
delivery etc.
3. The plaintiff has, in the plaint, averred that the
defendants No 1, 3 and 5 were in the employment of the plaintiff
and have started the defendants No 2 and 4 companies. The
plaintiff has in para 17 of the plaint stated its various rights which
have been infringed and violated by the defendants and which
include violation of registered trademark, violation of copyright
and the common law rights, misuse of material of the plaintiff,
rights of the plaintiff in design processes and procedures, rights of
the plaintiff in model numbers and breach of the confidentiality
agreement of the defendants with the plaintiff. The plaintiff has
further in the plaint stated that in some of the confidentiality
agreements of the plaintiff with its employees, there exists a
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negative covenant that the said employee will not engage in any
competing activities and there is also an undertaking not to
disclose any of the confidential information.
4. Since the dispute is whether from a reading of the plaint
itself it can be said that this court has no territorial jurisdiction to
entertain the suit, it must be noted that the plaintiff in the memo of
parties has given its address as that of Bangalore and at B-10A,
South Extension Part II, II Floor, New Delhi; the address of all the
defendants given in the memo of parties is of Bangalore.
5. The plaintiff has in para 50 of the plaint with respect to
territorial jurisdiction stated as under :
"This Hon'ble Court has the jurisdiction to try and
entertain the present suit, as the plaintiff's trademark
ENERCON is a registered trademark. This is a
composite suit for infringement of trademark,
infringement of copyright, passing off etc. The
plaintiff carries on business for profit and gain in New
Delhi. The defendants are offering for sale their
products in Delhi through their website and also
through their dealers in Delhi. Thus, the cause of
action arose within the jurisdiction of this Hon'ble
Court. Both under the Trade Marks Act, 1999 &
under the Copyright Act, 1957 this Hon'ble Court has
the jurisdiction to try and entertain the present suit."
6. The defendants have filed the written statement and in which
while objecting to the territorial jurisdiction of this court they have
stated (i) that the registered office of the plaintiff is at Bangalore;
(ii) all the defendants are resident of and work for gain at
Bangalore; (iii) that no part of cause of action had accrued within
the jurisdiction of this court; (iv) that the "Delhi office of the
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plaintiff is only a branch office and the location of the branch office
cannot confer jurisdiction on this Hon'ble Court"; (v) that even
assuming without conceding that in view of the provisions of the
Copyright Act and the Trademark Act, the present suit insofar as it
pertains to the allegation of infringement of trademark and
copyright is maintainable in Delhi, the suit insofar as it pertains to
passing of, breach of contract, breach of confidential information,
damages/rendition of accounts is not maintainable in this court
inasmuch as neither any part of the cause of action accrued within
the jurisdiction of this court nor any of the defendants reside
within the jurisdiction of this court; (vi) that the defendant No.1
was not made to sign any confidentiality agreement when he joined
the plaintiff but was subsequently coerced at the threat of losing
his job to sign the said agreement - the said agreement contains an
arbitration clause requiring any dispute arising out of the
agreement to be referred to arbitration, the venue of which would
be at Bangalore and thus, the present suit pertaining to breach of
confidentiality clause is not maintainable.
7. The plaintiff was permitted to file a replication in which it
reiterated the territorial jurisdiction of this court for the reason
that it carries on its business in Delhi and sells its products in
Delhi and the mark ENERCON is registered in favour of the
plaintiff; that the plaintiff has copyright in all the circuit diagrams;
that the defendants advertised their products in Delhi through
their website; that the defendants had also appointed their dealer
for the products who was in Delhi. The plaintiff filed the said
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dealership agreement alongwith its documents.
8. Needless to add that the defendants had no opportunity to
reply to the additional points with respect to the jurisdiction made
in the replication. The defendants, however, in the application
under Order 7 Rule 11(d) of the CPC stated that (i) the plaintiff
does not have any manufacturing establishment within the
jurisdiction of the court and the plaintiff only has a place at B-10A,
South Extension, Part II, Second Floor which is a residential colony
where from orders for its products are booked by it. It is stated
that no business is carried on by the plaintiff in Delhi; (ii) that they
are not selling or advertising their products for sale in Delhi; their
website not being a e-Commercial website cannot be used for the
purpose of placing orders/transacting any business; (iii) that the
defendant No.2 had initially appointed a dealer in Delhi for the
purpose of selling its products, namely, one M/s Konark Marketing,
however, the same was termintated by them when the defendants
came to know that the said dealer was also acting on behalf of
other companies including the plaintiff and no business was
transacted through the said dealer.
9. The law on the subject has been well thrashed out in the
judgment of the Single Judge of this Court in Dabur India
Limited v K.R. Industries 2006 (33) PTC 107 (Del), in the
Judgment of the Division Bench in appeal reported in 2006 (33)
PTC 348 (Del) and of the Apex Court in 2008(37) PTC 332 SC. In
the said case also rejection of the plaint on the ground of lack of
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territorial jurisdiction was in issue. In the judgment of the Hon'ble
Single Judge, in para 3, the relevant averment in the plaint has
been reproduced as under:
"para 18: This Hon'ble Court has jurisdiction to
entertain and try the present suit by virtue of the
provisions of the Section 62(2) of the Copyright Act,
1957 as the plaintiff carries on its business
activities in Delhi. The defendant is also selling its
goods in Delhi i.e. within the territorial jurisdiction
of this Hon'ble Court."
The Hon'ble Single Judge also noted that in that case also (as in
this case) there was no dispute that for the relief of infringment of
copyright this court will have jurisdiction inasmuch as the plaintiff
in that case had its office in Delhi and was carrying on business at
Delhi. The Hon'ble Single Judge, however, in para 7 of the
judgment noted that the plaintiff in that case could not point out
any sale by the defendant of its products in Delhi. Applying
Dhodha House and Patel Field Marshal Industries v S.K.
Maingi & P.M. Diesel Ltd 2006 (32) PTC 1 (SC) the Hon'ble
Single Judge held that the cause of action for infringement of
registered trademark and copyright, over which this court had
territorial jurisdiction, could not be combined with the cause of
action for passing off and ordered the plaint to be returned.
The Division Bench in appeal also noted that in that case there was
no documentary evidence to show that the defendants in the case
were selling goods in Delhi. The Division Bench while upholding
the order of the Hon'ble Single Judge modified it to the extent that
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the plaintiff in that case was left free to sue in Delhi with respect to
relief of infringement of copyright.
The Apex Court also noted the finding of the Division Bench that
there was no documentary evidence to show that the defendnat
was selling goods in Delhi and dismissed the appeal.
10. In the present case also, as aforesaid, the defendants
have not disputed that this court would have territorial jurisdiction
insofar as the relief of infringement of registered trademark and
copyright is claimed by the plaintiff. The objection is to the
territorial jurisdiction of this court for the other reliefs of passing
off breach of contract, breach of agreement. The matter being at
the stage of adjudication of Order 7 Rule 11, it is only the plaint
which is to be looked at and nothing else.
11. The plaint in this case, if seen, invokes jurisdiction of
the courts at Delhi for the other reliefs, for the reason of the
defendants carrying on business at Delhi. But so was the averment
in Dabur India Limited. Notwithstanding the said averment, in
Dabur India Limited it was held that the courts at Delhi would
have no jurisdictin to entetain the suit for the relief of passing off.
It was held so in that case because the Single Judge held that the
plaintiff had not been able to point out any sale by the defendants
of its product in Delhi and the Division Bench finding that the
plaintiff had not placed a single document to show that the
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defendants were carrying on business at Delhi. Can the same be
said to be the position in this case also? I find in the negative.
12. Though the defendants have denied carrying on
business in Delhi but, as aforesaid, in the application under Order
7 Rule 11(d) CPC, upon the plaintiff in the replication referring to
the agreement with a distributor entered into by the defendants in
Delhi, the defendants were forced to admit the execution of the
said agreement with M/s Konark Marketing, New Delhi; though
stated that the same had been terminated and no business had
been carried on thereunder. The plaintiff has filed a copy of the
said agreement before the court. Of course, the said copy is
purported to be signed by the defendant No.1 only and does not
have the signature of the dealer; the same being a photocopy was
not subject to admission/denial. However, the date of the said
agreement is 9th June, 2005 i.e., of prior to the institution of the
present suit. Thus, there is in this case an admission of the
defendant of having entered into an agreement with a distributor
at New Delhi and copy of such agreement has been filed, all unlike
as in Dabur India Ltd.
13. It is settled position in law that at the stage of Order 7
Rule 11 CPC the plaint and the plaint alone is to be looked into.
From a bare look of the plaint in the present case, it cannot be said
that the same does not disclose this Court to be having territorial
jurisdiction. The Senior Counsel for the defendants has also not
argued that even if the defendants were to be carrying on business
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at Delhi, this court would still not have jurisdiction over the reliefs
to which objection has been taken (there being admission with
respect to the relief qua infringement of registered trademark and
copyright). The senior counsel for the defendants on the contrary
sought to draw support from Nedungadi Bank Ltd. v Central
Bank of India Ltd. AIR 1961 Kerala 50 to urge that even if the
defendants were carrying on business within the jurisdiction of the
court but if no cause of action accrued within the jurisdiction of
that court, that court would still not have territorial jurisdiction
over the dispute. Arguments were also addressed that the office of
the plaintiff at Delhi was in a residential locality wherefrom no
business activity could be carried on. Support was also sought to
be drawn from the explanation to Section 20 of the CPC.
14. As far as the jurisdiction for the relief of infringment of
registered trademark and copyright is concerned, not only Dabur
India Limited but also Justice A.P. Shah (as his Lordship then
was) speaking for the Division Bench in Wipro Limited v
Oushadha Chandrika Ayurvedic India Pvt Limited AIR 2008
Madras 165 has held that after the radical change introduced by
Section 134 of the Trademark Act and Section 62 of the Copyright
Act, insistence on satisfaction of the requirements of Section 20 of
the CPC to invoke jurisdiction was misplaced. Thus, this court has
the jurisdiction to entertain the suit insofar as with respect to
infrigement of registered trademark and copyright. At this stage
the question also arises that when the court admittedly has
jurisdiction to entertain the plaint in part or vis-à-vis some of the
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reliefs, can the provisions of Order 7 Rule 11 CPC for rejection of
the plaint, which can only be in whole, be invoked. Should in such
cases, the courts reject the plaint in part, and call upon the plaintiff
to amend the plaint or reject the application under Order 7 Rule 11
and leave the question of jurisdiction to be decided at the time of
final decision of the suit. The purpose of Order 7 Rule 11 CPC is to
nip an action, which the court is of the definite opinion is ultimately
to doom, in the bud. However, when so cannot be said with
respect to the entire claim, should Order 7 Rule 11 be permitted to
be invoked. However, I am, at this stage, not entering into this
controversy feeling bound by the judgments in Dabur India
Limited as well as Dodha House though I respectfully state that
the said question was not gone into in either of the said cases.
15. The counsel for the plaintiff has also relied upon
Laxman Prasad v Prodigy Electronics Ltd & Anr 2008(37) PTC
209 (SC) which was also a suit in relation to trademark/copyright
against an ex employee. In that case the address of the defendant
was of Gaziabad outside Delhi. However, the Apex Court held that
the suit could be instituted in Delhi as part of the cause of action
had accrued within the territorial jurisdiction of Delhi owing to the
defendant having used the trademark/trade name in Delhi and
because in the plaint it was specifically alleged by the plaintiff
company that the defendant committed breach of terms and
conditions of agreements at Delhi and the said averments were
held sufficient to entitle the plaintiff to institute the suit in Delhi,
notwithstanding the agreement being executed between the
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parties outside Delhi and notwithstanding the defendants being
resident outside Delhi. The Apex court emphasised that since the
cause of action had arisen within the local limits of Delhi as
averred in the plaint by the plaintiff, the question has to be
considered on the basis of such averment and the institution of the
suit at Delhi was held in order.
16. Applying the aforesaid law, since the plaint in the
present case also avers of the defendants carrying on business at
Delhi, it cannot be said that the plaint does not disclose any
territorial jurisdiction of this court vis-à-vis the reliefs claimed
besides the reliefs of infringement of registered trade mark and
copyright. This is more so in the face of the admission of the
defendant of having entered into an agreement with a
dealer/distributor in Delhi for sale of products in Delhi. The
termination pleaded by the defendant of the said agreement is a
matter of evidence. The plaintiff by entering into the agreement
with a dealer at Delhi for sale of its products at Delhi, would cause
passing off and breach of contract at Delhi, conferring jurisdiction
on this court. The denial by the defendant of the said averments is
of no avail at this stage and it cannot be said that the plaint and the
documents filed do not disclose this court to be having territorial
jurisdiction. This aspect distinguishes the present case from
Dabur India Limited. I may also record that the Senior Counsel
of the plaintiff was quick to point out that the Apex Court in
Laxman Prasad was guided by the principles of, justice being
brought as near as possible to every man's hearthstone and of the
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defendant not being put to the trouble and expense of travelling a
long distance in order to defend himself and urged that situation
was converse in the present case; the defendants are at Bangalore
and will have to travel long distance in order to defend themselves.
Once it is found that the defendants had given cause of action to
the plaintiff within the jurisdictin of this court, the said principles
cannot bar the jurisdiction of this court, at least at the stage of
Order 7 Rule 11 of the CPC. We cannot also forget the legislative
change in Section 134 of the Trademark Act and Section 62 of the
Copy Right Act which, in any case, compel the infringer to travel to
the place of business of the plaintiff.
17. Not only is there an admission as aforesaid of the
defendants having appointed a dealer/distributor at Delhi, it is also
the admitted position that the defendants are at least advertising
their goods on their website which can be seen from Delhi. The
question whether it is an interactive website or not or whether it
amounts to sale/ offering for sale in Delhi is a matter of evidence
and cannot be adjudicated at this stage. The views expressed in
Casio India Co Limited v Ashita Tele Systems Pvt Limited
2003 (27) PTC 265 (Del) relied upon by the counsel for the plaintiff
were also at the interim stage. The territorial jurisdiction of the
court is to be tested vis-à-vis the said fact also and the plaint
cannot be thrown out for this reason also. In the present day when
more and more people are preferring to shop from their living
rooms/office via Internet which knows no boundaries, the question
of website being interactive or not having any relevance is also to
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be tested. After knowing of the product through website, whether
the sale is affected through website or via contact particulars on
website may not be so relevant. All these questions are outside the
domain of Order 7 Rule 11 CPC.
18. The counsel for the plaintiff has also drawn attention
to Pfizer Products, INC v Rajesh Chopra & Others 127 (2006)
DLT 783 to urge that a threat that the offending goods could be
sold at a particular place would definitely give jurisdiction to the
court in such a place. In the present case as aforesaid not only was
there a threat but in fact an agreement was entered into which is
claimed to have been terminated. The plaintiff cannot be non-
suited on the statement of the defendant of having terminated the
agreement and cannot be compelled to keep a continuous watch.
19. There is yet another aspect of the agreement between
the pliantiff and the defnedant No.1 stated to be containing a
clause for exclusive jurisdcition of the courts at Bangalore. The
plaintiff has filed the orignal of the said agreement and the
defendants at the time of admission/denial of documents have
made an endorsement "content denied signature admit" on the
same. Clause 7 of the said agreement is as under:
"That any dispute arising out of or in relation to this
agreement shall be referred for arbitration to a person
to be nominated by the company, whose decision shall
be final and binding upon all the parties hereto and
such reference shall be deemed to be a submision to
arbitration under the Arbitration and Conciliation Act.
The venue of arbitration shall be at Bangalore."
The court in Bangalore shall have exclusive
jurisdiction to the exclusion of all other courts."
IA.No. 848/2006 in CS(OS) 1567/2005 Page no. 13 of 15
20. It is the plea of the defendants that they were coerced
into entering the agreement. In my view, the defendants who have
denied the contents of the agreement and who claim to have been
coerced into entering the agreement cannot be permitted to at the
same time rely upon one clause of the agreement, at least not at
the stage of Order 7 Rule 11 CPC. The same would amount to
permitting the party to blow hot and cold and to reprobate and
approbate. Moreover, the aforesaid clause is a clause of
arbitration. The defendants did not opt to enforce arbitration.
Upon the defendants submitting to the jurisdiction of the court, the
agreement of arbitration became otiose. The aforesaid clause,
prima facie, does not represent an agreement vesting exclusive
jurisdiction in the courts in Bangalore over disputes between the
parties. The parties had agreed to arbitration and to the
jurisdiction of the courts at Bangalore over the said arbitration
proceedings. However, once the arbitration was given a go bye, at
this stage, it cannot be said that owing to the said clause, the plaint
can be rejected.
21. I may also refer to the Division Bench judgment of this
court in Intas Pharmaceuticals Ltd v Allergan Inc 2006 (32)
PTC 272. In that case also there was an averment in the plaint that
the offending product was sold by the defendant in and around
Delhi within the jurisdiction of this court. The Division Bench held
that the said averment in the plaint attracted Section 20 of the
CPC, vesting jurisdiction in courts at Delhi to entertain the suit.
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22. I therefore, do not find any merit in the application. The
same is dismissed, however, without any order as to costs. It is
further clarified that whatever has been said therein is for the
purpose of decision of Order 7 Rule 11 of the CPC and will not
come in the way of any decision on any issue as to territorial
jurisdiction if pressed by the defendants.
RAJIV SAHAI ENDLAW
(JUDGE)
August 20, 2008
M
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