M/S. Ajanta India Ltd. vs Ajanta Ltd. & Ors
2008 Latest Caselaw 2221 Del

CS(OS) Nos. 2012-13 & 2024/2007

                                         Page no.1



                                                              REPORTABLE

       *       IN THE HIGH COURT OF DELHI AT NEW DELHI

              + I.A. Nos. 11654/2007, 1684/2008 in CS(OS)
              No.2012/2007, I.A. Nos. 11660/2007, 5964/2008,
              5245/2008 in CS(OS) No.2013/2007 and I.A. Nos.
              11768/2007 in CS(OS) No. 2024 OF 2007

       %                   Date of Decision : December                 11, 2008.

M/S. AJANTA INDIA LTD.                               .... Plaintiff.

                             Through Mr. Arun Jaitley, Mr.Sandip
                             Sethi, Sr.Advocates with Ms. Pratibha M.
                             Singh,      Ms.Archana        Sachdeva,
                             advocates.

                       VERSUS


(1) AJANTA LTD.                   ....Defendant in CS(OS) 2012/2007

(2) AJANTA MANUFACTURING LTD. & ORS.

                                  ...Defendants in CS(OS) 2013/2007.

(3) AJANTA TRANSISTOR & CLOCK

MANUFACTURING CO. ...Defendant in CS(OS) 2024/2007.

                             Through Dr.Abhishekh Manu Singhvi, Sr.
                             Advocate with Mr.Rajiv Kapur, Mr.Sanjay
                             Kapur, Mr.Preteesh Kapur, Ms.Arti Singh,
                             Mr.Gaurav,     Mr.Saurabh     Banerjee,
                             Advocates.

CORAM:

HON'BLE MR. JUSTICE SANJIV KHANNA

1.

Whether Reporters of local papers may be

allowed to see the judgment?

2. To be referred to the Reporter or not ? YES CS(OS) Nos. 2012-13 & 2024/2007

Page no.2

3. Whether the judgment should be reported YES

in the Digest ?

SANJIV KHANNA, J.:

1. This common order will dispose of interim injunction

applications and applications for vacation of EX PARTE

injunction in the three Suits filed by Ajanta India Limited being

CS(OS) Nos. 2012, 2013 and 2024/2007. The defendants in

these Suits are different companies/concerns but controlled by

the same group of persons. Common arguments were

addressed by the parties and Suit No.2012/2007 was taken as

the lead case.

2. In 1971, Mr.Odhavji Bhai R. Patel established a partnership

firm Ajanta Transistor Clock Manufacturing Co. The firm adopted

the mark AJANTA, which with passage of time became

distinctive of the origin/source of the products which primarily

consisted of wall clocks, time pieces and wrist watches. In 1989

Ellora Time Pvt. Ltd. and Ajanta Watch Ltd. were incorporated.

Another company Ajanta Electronics Pvt. Ltd. was incorporated

in 1994.

3. Persons behind and in control of the plaintiff and the

defendants are sons of Mr. Odhavji Bhai R. Patel. Mr.Ashok Bhai CS(OS) Nos. 2012-13 & 2024/2007

Page no.3

Patel is in control of the plaintiff-company, Ajanta India Ltd.,

earlier known as Ajanta Watch Ltd. Mr.Pravin Bhai Patel and

Mr.Jai Sukhbhai Patel have controlling interest in the defendant

companies/concerns, Ajanta Transistor Clock Manufacturing Co.,

Ajanta Electronics Pvt. Ltd. now known as Ajanta Manufacturing

Ltd. and Ellora Time Pvt. Ltd. now known as Ajanta Ltd. This

division/separation was mutually agreed and was by way of two

Agreements executed in 2002. The dispute revolves on

interpretation and rights of the parties under the two

Agreements.

4. The first Agreement dated 19th November, 2002,

captioned "Deed of Assignment", was executed between „Ajanta

Transistor Clock Manufacturing Company‟ as the assignor and

„Ajanta India Limited‟ as the assignee. The Deed records that the

assignors were registered proprietors or users of the mark

AJANTA and registered proprietors of design and copyright in

artistic work AJANTA as mentioned in Schedules „A‟ to „D‟ to the

Agreement. The mark AJANTA and the copyright in the artistic

work AJANTA were assigned and transferred by "Ajanta

Transistor Clock Manufacturing Company‟ to „Ajanta India Ltd‟ in

all classes including wrist watches, except clocks and time

pieces in Class 14, for a token consideration of Rs.34 lacs. CS(OS) Nos. 2012-13 & 2024/2007

Page no.4

Relevant recital Clause from the Deed of Assignment dated 19th

September, 2002 reads:

"..... Out of abundant caution, it is clarified that THIS DEED OF ASSIGNMENT purports to assign & convey unto THE ASSIGNEES the trademark "AJANTA" in respect of all classes listed in the schedules annexed hereto with specific & unambiguous assignment of WRISTWATCHES in class 14 but excluding clock & time piece therefrom. NOW THIS INDENTURE WITNESSETH AS UNDER:

              THAT     in pursuance of this DEED OF
              ASSIGNMENT        and    consideration     of

Rs.34,00,000/- (Rupees Thirty Four lacs only) paid by the ASSIGNEE to the ASSIGNORS, the receipt whereof, the said ASSIGNORS hereby admits, acknowledges and confirms AND the ASSIGNORS, HEREBY GRANT, ASSIGN, TRANSFER, upon the terms herein, the EXCLUSIVE USE, WHOLE RIGHTS, TITLE & INTEREST, PROPERTY AND ALL BENEFITS in the Trade Marks AJANTA in various classes as listed in the schedules annexed hereto (PARTICULARLY FOR WRISTWATCHES EXCEPT CLOCK & TIME PIECE IN CLASS 14), ALONG WITH the GOODWILL of the ENTIRE BUSINESS CONCERNED upon the ASSIGNEE HEREIN."

5. This Agreement dated 19th September, 2002 was followed

by another Agreement on a stamp paper purchased on 19th

September, 2002 but executed on 20th September, 2002. This

agreement is in Gujrati language, the native language and CS(OS) Nos. 2012-13 & 2024/2007

Page no.5

mother tongue of the parties. Parties have filed an English

translation of the said Deed which is undisputed, except for

some minor differences which are not relevant. This Deed is

amongst Ajanta Transistor Clock Manufacturing Co., Ajanta

Electronics Pvt. Ltd. and Ellora Time Ltd. as a party and Ajanta

India Ltd. as the second party. The Agreement records that the

first party, namely, the Ajanta Transistor Clock Manufacturing

Company, Ajanta Electronics Pvt. Ltd and Ellora Time Ltd were

the registered owners of trademark, patent and design in the

name AJANTA which was registered in India and other countries

in relation to wrist watches, wall clocks and time pieces and the

rights in the said trademark, design etc. other than right to use

mark AJANTA in respect of wall clocks and time pieces, stands

transferred to the second party, i.e. Ajanta India Ltd. by a

separate Deed. The agreement records that to avoid any

disputes in future the understanding amongst the parties was

being recorded in writing and was to be read as part and parcel

of the "Deed of Assignment". The recital Clauses read as under:-

"1. At present the first party is manufacturing items like Wall Clock, Time Pieces, Table Pieces, Calculator, Telephone and all types of electric items of domestic use such as toys, water purifier, hair dryer, hand blender, iron, mixer grinder, juicer, sandwich toaster, pop-up toaster, room heater, water CS(OS) Nos. 2012-13 & 2024/2007

Page no.6

dispenser, mug, torch, "energy saving lamp", coil, washing machine, microwave oven, etc. and/or are planning to manufacture the same in the near future. The second party hereby assures and undertakes that no such items is to be manufactured or sold by themselves or through anybody in any other name in the entire country of India.

2. In the same way, second party, is at present manufacturing wrist watch and are also manufacturing health care products, electrical switch and accessories. And are also manufacturing cosmetic item, pharmaceutical item and its related spare parts and other items related to the above item and/or are also desirous of manufacturing the same in the near future. The first party hereby assures and undertakes that no such items is to be manufactured or sold by themselves or through anybody in any other name in the entire country of India.

3. In that way, the owners of both the parties are real brother and are doing their own separate businesses. So that in future, in order to avoid any difference of opinion, dispute or misunderstanding with regard to their businesses this agreement has been executed which is binding to both the parties, for which understanding has been given to both the parties.

4. Trademark, Patent and Design of "Ajanta" has been assigned i.e. transferred by the first party to the second party and writings in that regard has been given. With regard to the understanding arrived at between both the parties at the relevant time, this separate Agreement is being executed. In order to CS(OS) Nos. 2012-13 & 2024/2007

Page no.7

avoid any complication with regard to the writing of assignment of the trade mark of "Ajant Quartz", this separate writing is being prepared, but the same is to be treated as part and parcel of the writing and agreement of Assignment of Trademark."

(emphasis supplied)

6. Based upon these two Agreements the plaintiff, M/s.Ajanta

India Limited, has objected to and seeks restraint against the

defendants from using the word AJANTA as part of their

corporate name or using the words AJANTA QUARTZ or "A

product from Ajanta Quartz" on the packaging of their products,

except wall clocks and time pieces. Plaintiff has challenged

change of name of Ellora Time Pvt. Ltd. to Ajanta Ltd. in 2006.

Objections have been raised against the defendants from

claiming and calling themselves as AJANTA Group in the red

herring prospectus inviting initial public offer.

7. At this stage, the interim injunction applications and

application for vacation of stay have to be decided by applying

the three principles of : prima facie case, balance of convenience

and irreparable harm and loss.

8. The defendants are today manufacturing ceramic tiles,

CFL bulbs, electric cycles etc. in addition to wall clocks and time

pieces. The plaintiff, on the other hand, as a group is CS(OS) Nos. 2012-13 & 2024/2007

Page no.8

manufacturing CFL bulbs, wrist watches and fast moving

consumer goods (FMCG) products. The plaintiff is also

manufacturing ceramic tiles but their turnover from sale of tiles is

substantially lower than the defendants‟ turnover from sale of

ceramic tiles.

9. The products manufactured by the defendants except for

clocks and time pieces are being marketed under the mark

OREVA/ORPAT. The said marks are prominent. However, the

packaging/cartons also mention "A product of AJANTA

QUARTZ" and the name of the manufacturing company with the

word AJANTA. The principal plea of the plaintiff is that in view of

the Assignment Deed dated 19th September, 2002, the

defendants cannot use the word AJANTA as a part of their

corporate name, words „AJANTA GROUP‟, „AJANTA QUARTZ‟

or „A product of AJANTA QUARTZ‟ on the packaging or

otherwise for products other than wall clocks and time pieces. It

is highlighted that by the Deed of Assignment dated 19th

September, 2002, the defendants have assigned and transferred

the copyright and the trademark rights in the mark and design

AJANTA to the plaintiff, except for time pieces and wall clocks.

10. The Deed of Assignment dated 19th September, 2002 has

to be read along with second Deed dated 20th September, 2002 CS(OS) Nos. 2012-13 & 2024/2007

Page no.9

and is not to be read in isolation. The second Deed recognizes

the transfer or assignment of the trademark and copyright in

favour of the plaintiff in the mark and design AJANTA for all

Classes, except time pieces and wall clocks. The Deed further

delineates and divides the area of activity of business or

proposed area of business of the two groups. Both the groups

had decided not to interfere and compete with each other in their

areas of activities/business and businesses/activities they were

likely to enter into in near future.

11. The plaintiff was aware that the defendants are carrying

on business under the name AJANTA, as M/s. AJANTA

TRANSISTOR CLOCK MANUFACTURING COMPANY and

M/S. AJANTA ELECTRONICS PVT. LTD. Thus, though the

mark and design AJANTA was assigned to the plaintiff, yet there

was no agreement or understanding that the defendants would

change their corporate name and delete the word AJANTA

therefrom. There was no embargo or bar to use of the word

AJANTA as a part of their corporate name by the defendants.

Parties did not feel this was required. Concurrent user in the

corporate name by both parties was accepted. The defendants

thereafter have continued to use the word AJANTA as their

corporate name from 2002 onwards. The defendants still CS(OS) Nos. 2012-13 & 2024/2007

Page no.10

continue to hold trademark and design rights in the word

AJANTA for time pieces and wall clocks. To that extent, there

was no assignment.

12. Reading of the second Deed dated 20th September, 2002

reveals that the parties were also aware that each group may

venture or had already ventured into different businesses, other

than wall clocks, wrist watches or time pieces. Line of activities

and different businesses of the two Groups were recognized and

accepted by the second Deed with the understanding that the

two groups should not compete with each other in the same

goods/products. The second Agreement did not stipulate that the

manufacturing activities by the defendants for products other

than time pieces and wall clocks would be undertaken by a

company/concern with the corporate name without the word or

mark AJANTA. On the other hand, it was recognized by the

second agreement that M/s. Ajanta Transistor Clock

Manufacturing Company, M/s. Ajanta Electronics Pvt. Ltd. or

Ellora Time Ltd. had the right to manufacture various products

mentioned in Clause 1 of the recitals. Distinction was drawn

between use of the mark Ajanta on products and as a corporate

name.

CS(OS) Nos. 2012-13 & 2024/2007

Page no.11

13. Clause 4 of the Second Agreement is rather ambiguous

and the last sentence in the said Clause is confusing. Prima

facie, it appears that the defendants were allowed to use the

words AJANTA QUARTZ, quartz being associated with time

pieces and clocks with the quartz movement. It was not intended

that the defendants could use the words "AJANTA QUARTZ"

with products other than time pieces and wall clocks. This would

have defeated the very purpose of exclusive assignment of the

mark Ajanta in favour of the plaintiff for products, other than wall

clocks and time pieces, division of business and the non

compete clauses.

14. Section 2(m) of the Trade Marks Act, 1999 defines the

term "Mark". It includes corporate names. Purpose of a

trademark is to establish connection between the goods and the

source or origin thereof, which suggests and is indicative of the

quality of the goods. Normally each distinctive mark should have

only one source or a proprietor. If one mark is used by two

sources or proprietors, there can be confusion and deception, in

cases of same, similar or cognate goods or when a mark is well

established. This should be avoided. A party can suffer dilution

or damage to reputation and goodwill if their mark is used by a

third person, by acts, omission or deeds of the said third party. CS(OS) Nos. 2012-13 & 2024/2007

Page no.12

Trademark is vital and important part of goodwill and should be

protected. However, in cases of division or separation when the

mark or design is also divided or concurrent use is accepted,

each party agrees to let the other side use the same mark or

design. Agreement and the terms should prevail and should be

acted upon. Parties have agreed to take risks associated with

concurrent use of marks by two or more persons.

15. Learned counsel for the plaintiff has laid considerable

emphasis with reference to page 87 of the prospectus. It was

submitted that the defendants themselves have stated and have

admitted that the second Agreement did not deal with the

assignment of trademark but division of business fields or

activities. Page 87 is not to be read in isolation but has to be

read with other averments made in the prospectus. Moreover,

the prospectus was issued on 10th April, 2008, whereas the

defendants had filed written statement in CS(OS) No. 2013/2007

nearly four months before the prospectus was issued. In the

written statement the defendants had submitted that in terms of

the second Agreement they were entitled to use the word

AJANTA for their business activities.

16. Learned counsel for the defendants had relied upon

Section 20(2) of the Companies Act, 1956 read with proviso CS(OS) Nos. 2012-13 & 2024/2007

Page no.13

thereto. The argument that the Registrar alone has exclusive

jurisdiction when a question of infringement in relation to a

corporate name arises has to be rejected in view of the judgment

of the Delhi High Court in Atlas Cycles Ltd. versus Atlas

Product Pvt. Ltd. reported in (2007) 4 RCJ 515 (Del) (see para

20). In the said decision it has been held that the Companies Act

is an independent remedy and does not in any manner curtail

jurisdiction of civil courts to decide the question of infringement

by adopting a corporate name.

17. From the above, it is apparent that the plaintiff has

been able to establish a prima facie case that the trademark and

design AJANTA in all categories, except time pieces and wall

clocks was assigned by the defendants as a Group to them.

However, the defendants have been able to prima facie establish

that they are entitled to continue using the corporate names M/s.

Ajanta Transistor Clock Manufacturing Company and M/s.Ajanta

Electronics Pvt. Ltd. and the trademark AJANTA in respect of the

wall clocks and time pieces continued to vest with them. Change

of name of Ajanta Electronics Pvt. Ltd. to Ajanta Manufacturing

Ltd. is inconsequential as the name Ajanta continues. Prime

facie there is no bar or embargo on the defendants not to use the

word Ajanta as part of their corporate name. For the same CS(OS) Nos. 2012-13 & 2024/2007

Page no.14

reason I do not think any interim direction should be issued to

the defendants to amend the corporate name Ajanta Ltd.

adopted in 2006 by re-naming Ellora Time Ltd. It has also been

prima facie established that the defendants could manufacture

other products and do business/trade in electronic, electrical

items, etc in addition to wall clocks and time pieces. There was

no restriction that M/s. Ajanta Transistor Clock Manufacturing

Company or M/s. Ajanta Electronics Pvt. Ltd. could not

manufacture or do business in products other than wall clocks

and time pieces. Concurrent use of the word Ajanta in corporate

name by both parties was accepted. Regarding use of the

trademark AJANTA QUARTZ by the defendants, it prima facie

appears that there is merit in the contention of the plaintiff that

the mark AJANTA QUARTZ could be used by the defendants for

wall clocks and time pieces and not in respect of other products.

Quartz being a type of movement used in the clocks/time pieces.

Use of words "AJANTA QUARTZ" by the defendants or "from the

house of Ajanta Quartz" for products other than clocks/time

pieces is not justified and correct. Defendants having transferred

and assigned their rights in the mark and design in AJANTA to

the plaintiff, except for wall clocks and time pieces cannot be

permitted to call themselves as „AJANTA GROUP‟. The Plaintiff

has equal, if not a better right to call themselves as „AJANTA CS(OS) Nos. 2012-13 & 2024/2007

Page no.15

GROUP‟. The plaintiff is rightly concerned as it loses right and

claim to call themselves as „AJANTA GROUP‟, inspite of the

Assignment Deed.

18. The balance of convenience requires that each party

should abide by the terms of the agreements. At the same time

public or the customers should not be confused about the source

and the manufacture. Balance of convenience also requires that

neither party should be affected by any act or omission of the

other side. Public interest demands that the two Groups should

be identified as distinct and separate as they have presently

nothing to share except history and a common father.

Managements are different. The two Groups should be

distinguished as separate in view of the red herring prospectus

for initial public offer by Ajanta Manufacturing Limited in which

they have described themselves as „AJANTA GROUP‟. General

public may not understand the difference in the two groups and

read small lines of the prospectus. Irreparable injury may be

caused to the plaintiff in case there is confusion in the minds of

the general public about the source of the goods manufactured

by the defendants and the persons behind the public issue. In

case of defective products or default, failure of the defendants is

likely to misled and cause loss of goodwill and reputation of the CS(OS) Nos. 2012-13 & 2024/2007

Page no.16

plaintiff and vice versa. Harm and loss of reputation and

goodwill to either side can be visualized.

19. Balancing out all these factors and keeping in view that at

this stage only an interim order is being passed, the following

directions are issued:-

(i) The defendants will not use the words „AJANTA

QUARTZ‟ or "from the house of Ajanta Quartz" on

any of their packaging, advertisements, web sites

except in respect of packaging or advertisements for

time pieces and wall clocks.

(ii) The defendants will not describe themselves as

AJANTA GROUP. They are at liberty to call

themselves „OREVA/ORPAT Group‟ or „J.O. Patel

Group‟.

(iii) The defendants can continue with the corporate

name AJANTA Manufacturing Ltd., Ajanta Transistor

Clock Manufacturing Company and Ajanta Ltd. and

use the corporate name on their packaging, labels,

etc., if required and mandated by any statutory

provision. Size and font will be the minimum, if any,

prescribed by the statute. But whenever corporate or CS(OS) Nos. 2012-13 & 2024/2007

Page no.17

source name with the word AJANTA is used by the

defendants it will be followed in equally prominent

disclaimer „J.O. Patel Group‟ or „ORPAT/OREVA

Group‟. Further in all such cases, the mark

ORPAT/OREVA/REVA shall be prominently

displayed and should be the main mark/design.

(iv) The defendants will not set up or incorporate the new

concern/company with the mark/ name AJANTA till

decision of the suits.

       (v)    Ajanta Manufacturing Limited can go ahead with the

              public       issue     but      with     the     following

amendments/clarifications in the prospectus :

(a) that the right of the said company to use the

word or mark AJANTA is subject matter of challenge

before the High Court.

(b) It shall be stated that the plaintiff Company is

owner of the trademark/label AJANTA in terms of

Deed of Assignment dated 19th September, 2002,

except time pieces and wall clocks. The defendant

company has no connection with M/s.Ajanta India

Limited, who has copyright and trademark rights on CS(OS) Nos. 2012-13 & 2024/2007

Page no.18

the mark AJANTA in respect of all products, except

for time pieces and wall clocks.

(c) Defendants will not describe themselves

either in the prospectus or otherwise as „AJANTA

GROUP‟. They are at liberty to call themselves

„OREVA/ORPAT Group‟ or „J.O. Patel Group‟.

(e) The last paragraph on page 87 stating that

the defendants are entitled to use the phrase „A

product from Ajanta Quartz‟ shall be deleted. Other

parts of the prospectus will be suitably amended or

modified with the directions given in paragraph 19

and the prima facie findings.

Applications are accordingly disposed of. No order as

to costs.

Opinion expressed in this Order is prima facie and

tentative and will not influence final judgment/decision.

                                                    (SANJIV KHANNA)

                                                          JUDGE

       DECEMBER            11, 2008.

       P