Delhi High Court

Kiran Jain vs Arihant Jain & Ors. on 13 August, 2009

Author: V. K. Jain

*     IN THE HIGH COURT OF DELHI AT NEW DELHI


+           FAO(OS) 131/2009, 157/2009 & 183/2009


                                          Reserved on: July 8, 2009.
%                                 Pronounced on: August 13, 2009.


    1. FAO(OS) 131/2009 & CM 8410/2009

#     JAININDER JAIN & ORS.                    ..... Appellant


!                 Through : Mr Dushyant Dave, Sr. Advocate with
                  Mr.Ramesh Singh and Mr Navin Chawla, Advocates

            versus

$     ARIHANT JAIN & ORS.                    ..... Respondent


^                 Through : Mr Sandeep Sethi, Sr.Advocate with Mr
                  Amarjit Singh, Mr Mahendra Rana and Mr Dhruva
                  Bhagat, Advocates.


    2. FAO(OS) 157/2009 & CM 5965/2009

#     JAININDER JAIN & ORS.                    ..... Appellant


!
                  Through      Mr Dushyant Dave, Sr. Advocate with Mr
                               Ramesh Singh and Mr Navin Chawla,
                               Advocates

            versus

$     ARIHANT JAIN & ORS.                    ..... Respondent



^                 Through    Mr Sandeep Sethi, Sr.Advocate with Mr
                  Amarjit Singh, Mr Mahendra Rana and Mr Dhruva
                  Bhagat, Advocates.

FAO(OS) 131/2009, 157/2009 & 183/2009                              Page 1
      3. FAO(OS) 183/2009 & CM 6743/2009

#      KIRAN JAIN                   ..... Appellant


!                 Through   Mr Dushyant Dave, Sr. Advocate with Mr
                  Ramesh Singh and Mr Navin Chawla, Advocates

            versus

$      ARIHANT JAIN & ORS.                     ..... Respondent



^                 Through    Mr Sandeep Sethi, Sr.Advocate with
                  Mr.Amarjit Singh, Mr Mahendra Rana and Mr Dhruva
                  Bhagat, Advocates.

CORAM:
THE HON'BLE MR. JUSTICE VIKRAMAJIT SEN
THE HON'BLE MR. JUSTICE V.K.JAIN



       1. Whether Reporters of Local newspapers may be
          allowed to see the Judgment? Yes

       2. To be referred to the Reporter or not? Yes

       3. Whether the Judgment should be reported in the
          Digest? Yes
V.K.Jain, J.

1. These Appeals are directed against the common Order dated

8.4.2009 passed in IA 2552/2004 in CS(OS) No.155/2004, IA 2551/2004

in CS(OS) No.156/2004, IA 2550/2004 in CS(OS ) No.157/2004, whereby

the status quo order dated 7.1.97 passed in CS(OS) No.156/04 was

vacated and the appellants were restrained from using the trademark

FAO(OS) 131/2009, 157/2009 & 183/2009 Page 2 "Kangaro" for stationery items, till the final disposal of these suits. The

brief facts, giving rise to these appeals are as under.

2. Late Shri Janki Dass Jain, father of Shri Arihant Jain, Jaininder Jain

and Shri Vishwa Jain, who was doing business in the name and style of

M/s.Kangaro Industries (Regd.) as its sole proprietor, adopted and

started using trademark "KANGARO". On 3.3.1963, late Shri Janki Dass

Jain and his son Arihant Jain, vide partnership deed dated 3.4.1963,

agreed to become partners in M/s.Kangaro Industries (Regd.), with share

of Shri Janki Dass Jain at 63 per cent and that of Shri Arihant Jain at 37

per cent. On 1.4.1974, Shri Vishwa Jain and Mrs. Kiran Jain, (wife of Shri

Jaininder Jain), joined as partners in M/s.Kangaro Industries (Regd.).

Shri Vishwa Jain having retired on 31.3.1978, late Shri Janki Dass Jain,

Shri Arihant Jain and Mrs. Kiran Jain, continued as partners of the said

firm, with effect from 1.4.1978. Vide Retirement Deed dated 31.3.1995,

Mrs.Kiran Jain, retired from the partnership business and remaining two

partners, namely, Shri Janki Dass Jain and Shri Arihant Jain continued

the partnership business. At the time of retirement of Mrs.Kiran Jain, it

was agreed that she would be paid the amount standing to the credit of

her capital account on 31.3.1995. A fresh partnership deed was executed

on 1.4.1995 whereby Shri Vishwa Jain and Mrs. Neelam Jain, were

admitted as partners of M/s.Kangaro Industries (Regd.). Vide Retirement

Deed dated 15.5.1995, late Shri Janki Dass Jain also retired from the

firm. The remaining partners, namely, Shri Arihant Jain, Shri Vishwa

Jain, Mrs. Raman Jain, (wife of Shri Arihant Jain) and Mrs.Neelam Jain,

FAO(OS) 131/2009, 157/2009 & 183/2009 Page 3 (wife of Shri Vishwa Jain) continued as the partners of M/s.Kangaro

Industries (Regd.).

3. One firm, M/s.Kanin India was started on 1.4.1989 with Shri

Jaininder Jain and Mrs.Neelam Jain as its partners. On 1.1.1995, Shri

Arihant Jain, Shri Vishwa Jain, Mrs. Raman Jain, Mr.Amrish Jain, and

Mrs. Rachna Jain were taken as partners in this firm. Vide Retirement

Deed dated 31.3.1995, Jaininder Jain retired from this firm and thereafter

a fresh Partnership Deed was executed on 1.4.1995 between the

remaining partners of this firm. On 15.5.1995, Shri Amrish Jain and

Mrs.Archana Jain also retired from this firm and a new Partnership Deed

was executed on 16.5.1995 amongst the remaining four partners of the

firm.

A third firm, M/s.Jain Manufacturing Company was formed in the

year 1978 with Mrs.Saraswati Jain, Mr.Vishwa Jain and Mrs.Rachna Jain,

as its partners. After death of Mrs. Saraswati Jain, in the year 1988, Shri

Vishwa Jain and Mrs.Rachna Jain, continued as its partners. Shri Janki

Dass Jain, Shri Jaininder Jain and Mrs.Kiran Jain were admitted as its

new partners on 1.1.1995. Shri Vishwa Jain and Mrs.Rachna Jain retired

from this firm on 31.3.1995 and a fresh Partnership Deed was executed

amongst the other remaining partners, namely, Janki Dass Jain, Jaininder

Jain and Mrs.Kiran Jain on 1.4.1995.

4. On 10.4.1995, an Arbitration Agreement was executed between

Shri Arihant Jain, Shri Jaininder Jain and Shri Vishwa Jain whereby they

appointed Shri Ram Kumar Jain and Shri Raj Kumar Behl as the

FAO(OS) 131/2009, 157/2009 & 183/2009 Page 4 arbitrators to settle the dispute that had arisen amongst them from time

to time. They also decided not to challenge the decision of arbitrators in

the Court of Law. The arbitrators were required to give verdict on the

land, building and machinery of M/s.Kangaro Industries (Regd.), M/s.Jain

Manufactured Company, M/s.Kenning, M/s.Kangaro Industries Pvt. Ltd.

and M/s.Kanning India Private Ltd. They were also to give decision on

the working of Jindal Stationary Machinery Company. They further

agreed that if there was any issue left unresolved, the same will also be

referred to the Arbitrators and will be binding on them.

5. A perusal of the Minutes of the Meeting held on 10.4.1995 in the

presence of the Arbitrators and Shri Janki Dass Jain would show that,

inter alia, the following decisions were taken in that meeting:

"Part-I:

"That Sh. Jaininder Jain will own the following properties & business:

...

(E) He will also be he sole owner of „Kangaro‟ as trade mark after 31st March 1996, but he shall have no right on „Kangaro' as trade name.

(F) He will also be the sole owner of „Kanin‟ as trade name but he shall have no right on „Kanin‟ as trade mark after 31.03.96. (G) However, he shall not be eligible to join hands with the 3rd person to use „Kangaro‟ as trade mark or „Kanin‟ as trade name until & unless he has his own interest of minimum 49% upto the year 31.3.2000.

...

(K) He will be manufacturing Index File Clip at Plot No.840-Industrial Area „A‟ & Stapler

FAO(OS) 131/2009, 157/2009 & 183/2009 Page 5 HP-45, Stapler m-10, Staple Remover SR-300, Stapler HD-10N and Stapler HD-10D at Faridabad under "Kangaro" trade mark after 31.03.96, but he will be allowed to use „Kanin' also as trade mark upto 31.03.96 only.

(L) He will not manufacture any identical item manufactured by Mr.Arihant Jain & Mr.Vishwa Jain upto 31.03.1998.

....

Part-II That Mr. Arihant Jain & Vishwa Jain will own the following properties & business:-

4) They will be the sole owners of „Kanin' as trade mark after 31.03.96, but they shall have no right on 'Kanin as trade name.

5) They will also be the sole owners of 'Kangaro' as trade name, but they shall have no right on „Kangaro' as trade mark after 31.03.96.

6) However, they shall not be eligible to join hands with the 3rd person to use „Kanin' as trade mark or „Kangaro' as trade name until and unless they have their own interest of minimum 49% upto the year 31.3.2000. ....

10) They will be manufacturing all types of Paper Punches being manufactured by the group till 31.03.95 along with staplers manufactured by the group till 31.03.95 except Stapler No.HD-10N, HD-10D, M-10, HP-45 & Staple Remover SR-300. They will also be manufacturing Board Clip & Single Punch & all the other items under "Kanin' as trade mark after 31.03.96, but they will be allowed to use „Kangaro' also as trade mark upto 31.03.96.

11) They will not manufacture any identical item manufactured by Mr.Jaininder

FAO(OS) 131/2009, 157/2009 & 183/2009 Page 6 Jain upto 31.03.98 except INDEX FILE CLIP, which they will be allowed to manufacture after 31.03.96 in „Kanin' trade mark which can be identical or may be different."

This document was signed by Shri Arihant Jain, Shri Jaininder Jain

and Shri Vishwa Jain and also by their father, Shri Janki Dass Jain and

both the arbitrators.

6. Two disputed pages purporting to be an agreement later than

14.4.95 and signed by all the 3 brothers, their father and the arbitrators

have been filed by the respondents, but, denied by the appellants. To the

extent they are relevant for the purpose of these appeals, these two

disputed pages stipulate as under:-

"That Sh. Jaininder Jain will be manufacturing Stapler Models No. 10-N, 10-D, HD-45, 555 & 999 alongwith Index File Clips. Sales of which has been expected to the tune of Rs.5.50 crores in the unit Kanin (India). Focal Point Given to him.

That Mr. Arihant Jain & Mr. Vishwa Jain will be manufacturing all types of Paper Punches, Staple No.10, Model 10-B, HP-10, 10-JA, 45-L, HP-45, M-10, Staple remover & HD-12S-17 & any other model if left therein, sales of which is expected to the tune of Rs. 11.00 crores. All types of Paper Punches means No.52, 280, 480, 500, 600, 600P, 4 Hole, 700 & Board Clip, 520, 540, 560 model 800 & Single Punch. That no identical model will be manufactured by any of the party upto three years i.e. upto 31.3.98."

7. The trade mark „KANGARO' which is the bone of contention

in these Appeals stands registered as per details given below:-

FAO(OS) 131/2009, 157/2009 & 183/2009                               Page 7
                     M/s. Kangaro Industries (Regd.)


REGISTERED         CLASS          GOODS          DATE OF REGISTRATION
  TRADE
 MARK NO.
  376224             16             Paper              25.5.1981
                                Punches and
                                Board Clips
     384556          16             Staple            23.12.1981
                                   Presses
                                (Office use)
                                 and other
                                   staples
                                   thereof.
     463530          07           Punching            24.11.1986
                                  Machine
     486516          08          Hand Tools           26.02.1988




              M/s.Jain Manufacturing Company


REGISTERED         CLASS           GOODS         DATE OF REGISTRATION
   TRADE
 MARK NO.
486510               16        Index File Clip   26.2.1988

8. Registrar of Trade Mark carried out amendments in the Register of

Trade Marks, in terms of deeds executed on 31.3.1995 and 1.4.1995.

His order was challenged by the appellants in this court vide CO 4/97.

Their petition was dismissed by the learned single Judge. That order was

upheld by a Division Bench and Special Leave Petition against the order

of the Division Bench was also dismissed by the Hon‟ble Supreme Court.

The appellant Jaininder Kumar Jain had in the meanwhile filed a civil suit

setting up the family settlement dated 14.4.95. His wife, appellant Kiran

FAO(OS) 131/2009, 157/2009 & 183/2009 Page 8 Jain also filed a civil suit to assert her own right. A civil suit was also

filed by the respondents. Injunction against use of Trade Mark

"Kangaro" by the opposite group was claimed by both the groups; during

pendency of civil suits. All the 3 suits were filed in Ludhiana. An order

granting status quo, as regards use of Trade Mark "Kangaro" was passed

by Civil Court at Ludhiana on 7.1.1997. Later, all the 3 suits were

transferred to this court.

Vide impugned order dated 8.4.09, learned single Judge vacated

the status quo order and granted injunction, to the respondents,

restraining the appellants, from using the trademark "Kangaro" during

pendency of the suits. Being dissatisfied, the appellants have challenged

the order passed by the learned single Judge.

9. It is an admitted case that M/s. Kangaro Industries (Regd.) holds

four registered trademarks bearing Nos. 376224, 384556, 463530 and

486516 in respect of Paper Punchs and Board Clips, Staple Presses

(Office use) and other staples thereof, Punching Machine and Hand Tools

whereas Jain Manufacturing Co. holds registered trademark No.486510

in respect of Index File Clip. Admittedly, Smt. Kiran Jain w/o Sh.

Jaininder Jain retired from M/s Kangaro Industries (Regd.) with effect

from 31.03.1995. Shri Jaininder Jain was never a partner of M/s

Kangaroo Industries (Regd.) In terms of clause 3 of the Retirement

Deed, whereby Smt. Kiran Jain retired from M/s Kangaro Industries

(Regd.), the business, goodwill, property, assets etc. of the firm came to

be vested in the continuing partners i.e. Mr. Arihant Jain and Janki Dass

FAO(OS) 131/2009, 157/2009 & 183/2009 Page 9 Jain. Sh. Janki Dass Jain having retired on 15 th May, 1995, all the

properties and assets of M/s Kangaro Industries (Regd.) came to be

vested in Shri Arihant Jain and in Sh. Vishwa Jain, Mrs. Raman Jain and

Mrs. Neelam Jain who were inducted as partners with effect from 1 st

April, 1995, after retirement of Smt. Kiran Jain. After retirement of Sh.

Vishwa Jain and Mrs. Raman Jain from M/s Jain Manufacturing Company

on 31st March, 1995, all the properties and assets of M/s Jain

Manufacturing Company came to be vested in Shri Janki Dass Jain, Sh.

Jaininder Jain and Mrs. Kiran Jain who were the continuing partners with

effect from 1.4.95, as Clause 3 of the Retirement Deed provided that the

business, goodwill, property and assets of the partnership will be held by

the continuing partners.

If the rights of the parties are determined only on the basis of the

Dissolution Deeds dated 31st March, 1995, coupled with Retirement Deed

of Sh. Janki Dass Jain, the right to use trademark "Kangaro" vide

registration Nos. 376224, 384556, 463530 and 486516 would vest solely

in the existing partners of M/s Kangaro Industries (Regd.) and none of

the appellants would have any right to use this trademark. Similarly, if

the parties are governed only by the Retirement Deeds, registered

trademark No.486510 in respect of Index File Clip can be used only by

the appellants, who are the partners of M/s Jain Manufacturing Company.

10. However, a sea change in the rights of the parties seems to have

been brought about by documents executed on and after 10.4.1995. It is

an admitted case that the Arbitration Agreement dated 10 th April, 1995

FAO(OS) 131/2009, 157/2009 & 183/2009 Page 10 bears signature of all the three brothers, their father and both the

arbitrators named in the agreement. It is also an admitted case that the

document dated 14th April, 1995, which is termed as a family settlement

by the appellant and as a proposal/counter proposal by the respondents

is also signed by all the three brothers, namely, Arihant Jain, Vishwa Jain,

Jaininder Jain, their father, Sh. Janki Dass Jain, and both the arbitrators.

The case of the appellants is that the document dated 14 th April, 1995

ran into six pages whereas the case of the respondents is that this

document ran into 8 pages. We have perused the disputed two pages.

During the course of arguments, it was not disputed before us that these

two pages are in the hand of respondent Sh. Arihant Jain, who had

written the arbitration agreement dated 10th April, 1995 as well as the

document dated 14th April, 1995 consisting of six papers. These two

disputed pages, hereinafter referred to by us as „Supplementary

Settlement‟, purport to bear the signature of the same persons who have

signed the arbitration agreement dated 10th April, 1995 and the

document dated 14th April, 1995. The original documents have not been

filed by either party and the same are stated to be in possession of the

arbitrators. We have ourselves compared the signatures on the

Supplementary Settlement, with the admitted signatures on the

arbitration agreement dated 10th April, 1995 and the admitted document

dated 14th April, 1995. Prima facie, we are of the opinion that the persons

who signed the arbitration agreement dated 10th April, 1995 and the

admitted document dated 14th April, 1995 also signed this supplementary

settlement. In any case, as far as the respondents are concerned, they do

FAO(OS) 131/2009, 157/2009 & 183/2009 Page 11 not deny the execution of document referred to by as a „Supplementary

Settlement.‟ We, therefore, are of the view that the document dated 14 th

April, 1995 alongwith two additional pages filed by the respondents has

to be taken into consideration to determine the rights of the parties.

11. That brings us to question as to what is the true nature of the

document dated 14th April, 1995. A bare reading of the document dated

14.4.1995 indicates that it incorporates a family arrangement/settlement

between the parties and is not only a proposal or counter proposal. It

will amount to doing violence to English language, if this document is to

be construed as a proposal or counter proposal. A proposal is not

recorded as „a decision‟. The use of the words "it has been decided"

leads to the inference that this document is not a proposal or counter

proposal. The last para of the document which provides for decision by

arbitrators on disputes which have remained unsettled is yet another

indicator of the document being a settlement of the disputes mentioned

therein. The words used in the document are not consistent with the

interpretation of its being only a proposal or counter proposal.

Moreover, a proposal indicates the name of the proposer and is usually

signed only by its maker, so as to bind him. It is not signed by the other

parties, unless they agree to it. The document dated 14th April, 1995 as

well as the Supplementary Settlement being signed by all the three

brothers as well as their father and the arbitrators, is yet another

circumstance giving rise to inference that the document(s) is a family

arrangement/settlement and not a proposal/counter proposal. Had the

document been only a proposal/counter proposal, it would have indicated

FAO(OS) 131/2009, 157/2009 & 183/2009 Page 12 the name of the proper, would not have been signed by all the parties to

a dispute and the parties would not have used the words "it has been

decided" in the document(s).

12. Admittedly, the Respondents had filed a Petition under Section 34

of the Arbitration Act for stay of the suit filed by the Appellants. The

document dated 14.4.1995, was all along described as a family

arrangement in this application. In paragraph 3 of the application, they

alleged that „in the family arrangement‟, there was a provision for

reference to arbitration of any discussion or dispute relating to the said

arrangement. In paragraph 4, they stated that under the said „family

arrangement‟, Shri Ram Kumar Jain and Shri Amar Nath Jain were

appointed as Arbitrators. An application under Section 8 of the

Arbitration and Conciliation Act, 1996 was also filed by the Respondents

in the suit. Identical averments were made in that application. A perusal

of the order of the learned Single Judge dated May 1, 1997 in IA

No.1397/97 in CO 4/97 as well as the order of the Division Bench dated

May 10, 2002 in FAO (OS) 130/97 shows that the respondents had

consistently been claiming that the applicants before the learned Single

Judge (appellants herein) had withheld and suppressed two important

pages forming part of the family arrangement, which they (the

respondents) had disclosed along with their written statement. A perusal

of the judgment of the learned Single Judge dated 1.5.1997 in I.A.

1397/2007 in CO. 4/1997, records the following submissions of the

learned counsel for the Respondents.

FAO(OS) 131/2009, 157/2009 & 183/2009 Page 13 "It is stated by the learned senior counsel for the respondents 3 to 6 that the complete set of documents forming part of this family arrangement was not filed and two important pages had been suppressed by the petitioners which respondents 3 to 6 had disclosed alongwith the written statement in this Court and respondents 3 to 6 have no objection to the proposed terms in those two sheets being considered and orders passed on the basis of those proposals."

It is thus evident that the Respondents themselves have at times

referred to this document as a family arrangement. Therefore, it is not

open to them to say that it was only a proposal/counter proposal. We

cannot remain oblivious to the fact that parties to these documents are

experienced businessmen, who, having already executed a number of

documents, including agreement of 20.3.1992 and various Retirement

Deeds and Partnership Deeds, knew very well, what they had to write, to

convey their decisions. Therefore, they were unlikely to use the

expression „decisions‟ and "decided", in a proposal/counter-proposal.

13. An analysis of the family arrangement dated 14.4.1995 would show

that besides giving trade mark "Kangaro" and trade name „Kanin‟ to Shri

Jaininder Jain, while giving trade mark „Kenin‟ and trade name „Kangaro‟

to Shri Arihant Jain and Shri Vishwa Jain after 31.3.96, the parties also

decided, presumably with a view to avoid competition with each other, to

allocate some of the models to Shri Jaininder Jain while allocating other

models to Shri Arihant Jain and Shri Vishwa Jain. Under this document,

Shri Jaininder Jain could manufacture only, Stapler m-10, Staple

Remover SR-300, Stapler HD-10N and Stapler HD-10D with effect from

1.4.1996, besides Index File Clip. He, however, was allowed to use

FAO(OS) 131/2009, 157/2009 & 183/2009 Page 14 „Kenin‟ as his trade mark upto 31.3.1996. He was also prohibited from

manufacturing any item identical with the items manufactured by Shri

Arihant Jain and Shri Vishwa Jain upto 31.3.1998. Thus, under this

family arrangement dated 14.4.1995, though Shri Jaininder Jain was

given ownership of trade mark „Kangaro‟ w.e.f. 1.4.1996 he could not

have manufactured all the products in respect of which trade mark

„Kangaro‟ was granted to M/s.Kangaro Industries and M/s. Jain

Manufacturing Company, for three years, i.e., upto 31.3.1998. He could,

during this period, have manufactured only those items which were not

being manufactured by Shri Arihant Jain and Shri Vishwa Jain. Upto

31.3.1996, he could manufacture, using trade mark "Kanin", any product

which was not allocated to Ahihant Jain and Vishwa Jain. With effect

from 1.4.1996, he could manufacture Index File Clip and Stapler on 10,

Staple Remover SR-300, Staple HD - 10N and Stapler HD-10D using the

trade mark "Kangaro". However, after 31.3.1998, there was no

restriction on his rights to manufacture any item even if they were being

manufactured by Shri Arihant Jain and Shri Vishwa Jain.

Shri Arihant Jain and Shri Vishwa Jain besides ownership of

trade mark „Kenin‟ w.e.f. 1.4.96 and trade name „Kangaro‟ also got right

to manufacture all types of paper punches and staplers being

manufactured by the group till 31.3.1995 except Stapler No. HD-10, HP-

10D, M-10, HP-45 and Staple Remover SR-300. They were also allowed

to use „Kangaro‟ as trade mark upto 31.3.1996. After 31.3.1996, they

were not allowed to use the trade mark „Kangaro‟ even in respect of the

products which they were allowed to manufacture under clause-10 of

FAO(OS) 131/2009, 157/2009 & 183/2009 Page 15 part-II of this Settlement. They could also manufacture Board Clips and

Single Punch as well as all other items under trade mark „Kenin, after

31.3.1996. However, till 31.3.1998, they could not have manufactured

Stapler No.HD-10N, HP-10D, M-10, HP-45 and Staple Remover SR-300

since right to manufacture these items was given to Shri Jaininder Jain

under Clause (K) of Part-I of this Agreement. Since the prohibition

against manufacturing item identical to items manufactured by Shri

Jaininder Jain, was applicable only upto 31.3.1998 except Index File Clip,

it is obvious that the non-competing clause was to remain in force only

upto 31.3.1998.

14. The supplementary Settlement modified the earlier decision taken

by the parties and recorded in the family Settlement dated 14.4.1995 to

the extent that Shri Jaininder Jain, who was earlier given right to

manufacture Index File Clips, Staplers HP-45, Stapler M-10, Staple

Remover SR-300, Stapler HD-10N and Stapler HP-10D was permitted to

manufacture Stapler Models No.10-N, 10-D, HD-45, 555 & 999 alongwith

Index File Clips. It further modified the family Settlement recorded on

14.4.1995 by stipulating that Shri Arihant Jain and Shri Vishwa Jain, who

were permitted under the family Settlement recorded on 14.4.1995 to

manufacture all types of Paper Punches and Staplers except Stapler HD-

10N and HP-10D, M-10 and HP-45 and Staple Remover SR-300, were

given right to manufacture all types of Paper Punches, , Staple No.10,

Model 10-B, HP-10, 10-JA, 45-L, HP-45, M-10, Staple remover & HD-12S-

17 & any other residuary model besides all types of Paper Punches, that

is Punches No.52, 280, 480, 500, 600, 600P, 4 Hole, 700 & Board Clip,

FAO(OS) 131/2009, 157/2009 & 183/2009 Page 16 520, 540, 560 model 800 and Single Punch. It reiterated that no

identical model was to be manufactured by any of the parties upto

31.3.1998.

15. The „Supplementary Settlement „ has to be read in conjunction with

and not in isolation from the Family Settlement/Arrangement dated

14.4.95 for two reasons. Firstly, the opening words of the document "in

further continuation of the meeting held in between all three of us"

clearly show that the stipulations contained in the document was to be

read along with and not divorced from the covenants contained in the

document dated 14.4.1995. Had the intention of the parties been to

cancel or abrogate the previous document, they would have clearly

stated so in the document itself and would not have used the above noted

opening words. Secondly, the Supplementary Agreement, if read as a

standalone document, does not address the major disputes between the

parties as it neither deals with properties nor with ownership of the

trademarks „Mangaro‟ and „Kenin‟.

16. Thus, the supplementary Agreement did not make any change as

regarding ownership of trade mark „Kangaro „ and „Kenin‟, w.e.f.

1.4.1996 and consequently, Shri Jaininder Jain continued to be the owner

of the trade mark „Kangaro w.e.f. 1.4.1996, in terms of the family

Settlement dated 14.4.1995. However after execution of the

Supplementary Agreement, Shri Jaininder Jain could have manufactured

only the models specified in this document. Shri Arihant Jain and Shri

Vishwa Jain could have manufactured all types of Paper Punches, Board

FAO(OS) 131/2009, 157/2009 & 183/2009 Page 17 Clips, Single Punch, Staplers and Staple removers specified in the

document and the residual model, if any. This division of various

products and models amongst two groups was to remain in force upto

31.3.1998, as is evident from the stipulation against manufacture of the

product of the other party, upto 31.3.1998.

17. The position which emerges from the family Settlement

Arrangement dated 14.4.1995 and supplementary Settlement filed by the

Respondents is that after 31.3.1998, i.e. with effect from 1.4.1998, there

was no restriction on manufacture of any product by any party. They

could manufacture any product even it was being manufactured by the

other group. But, since the ownership of trade mark „Kangaro‟ was given

to Shri Jaininder Jain and ownership of the trade mark „Kenin‟ was given

to Shri Arihant Jain and Shri Vishwa Jain w.e.f. 1.4.1996, neither Shri

Jaininder Jain can use the trade mark „Kenin nor Shri Arihant Jain and

Shri Vishwa Jain, can use the trade mark „ Kangaro‟, w.e.f. 1.4.1998, if

the rights of the parties are to be determined in terms of the family

Settlement dated 14.4.1995, whether read with or without the

Supplementary Settlement, filed by the respondents.

18. Relying upon the provisions contained in Section 19 of Partnership

Act, it was contended by the learned counsel for the Respondents that

Shri Vishwa Jain and Shri Arihant Jain, being only two of the four

partners, did not have legal authority to assign the trade mark „Kangaro‟

to Shri Jaininder Jain. He has, in this regard, relied upon Narayanappa

versus Bhaskara Krishnappa, AIR 1966 Supreme Court 1300.

FAO(OS) 131/2009, 157/2009 & 183/2009 Page 18 In the above referred case, the Hon‟ble Supreme Court

observed that during the subsistence of partnership, no partner can deal

with any portion of the property as his own nor can he assign his interest

in a specific item of partnership property to anyone. There is no quarrel

within the proposition of law that only an account of being a partner in

the firm, no partner has an implied authority, in law, to assign the

property of the partnership firm. However, this does not prevent a

partner from assigning the partnership property with the consent of the

other partners. In a given case, the consent of the other partners need

not be express and may be implied from inter se relationship amongst

partners and attending circumstances. This is more so, in the case of

family firms where only husbands and wives are partners, husbands

carry on business of the firm and wives are normally dormant partners.

Admittedly, Shri Vishwa Jain and Shri Arihant Jain, who are parties to the

„Family Settlement‟ were partners in Kangaro Industries (Regd.), on the

date of Settlement / Arrangement. Admittedly, their wives were the only

other partners in the firm. A perusal of the Agreement dated 20.3.1992

executed amongst M/s.Kangaro Industries, M/s.Jain Manufacturing

Company and M/s.Kenning(India), would show that it were only the

husbands, i.e. Shri Arihant Jain, Shri Vishwa Jain and Shri Jaininder Jain,

who executed this document on behalf of the firm. The wives, though

partners in various firms did not come forward to sign this document.

This would indicate that in fact, the husbands had been acting not only

for themselves but also on behalf of the respective wives and had a

verbal authority from them to act for and on behalf of the firm.

FAO(OS) 131/2009, 157/2009 & 183/2009 Page 19 In any case, there is no restriction on the right of a partner to

permit concurrent users of the property of the firm by another person. If

a partner in a firm assigns a property of the firm without consent of the

other partners though his implied authority extends only to allow

concurrent use of the property of the firm by another person, the firm

will be bound at least to the extent of concurrent user. Therefore, in the

present case, even if it is assumed that Shri Vishwa Jain and Shri Arihant

Jain did not have authority from their wives who were the other partners

in the firm, to assign the trade mark ‟Kangaro‟ to the Appellant - Shri

Jaininder Jain, in terms of the family Settlement dated 14.4.1995, the

firm would be bound to permit concurrent user of the trade mark, as Shri

Arihant Jain and Shri Vishwa Jain being partners of the firm had the

authority to permit concurrent user of the trade mark by their brother

Shri Jaininder Jain, without excluding the partnership from its user. In

other words, there cannot be any valid objection from the wives to use as

the trade mark „Kangaro‟ by the firm in which they are partners as well

as by Shri Jaininder Jain. In any case, as noted earlier, the wives of Shri

Arihant Jain and Shri Vishwa Jain, have not come forward to assail the

family Settlement and have not sought any declaration to the effect that

the family Settlement entered into by their husbands, is not binding on

them and does not affect the exclusive right of the firm M/s.Kangaro

Industries (Regd.) to use the trade mark „Kangaro‟ to the exclusion of all

others including Shri Jaininder Jain.

19. It was pointed out by learned counsel for the Respondents that the

appellants did not set up the family Settlement dated 14.4.1995 before

FAO(OS) 131/2009, 157/2009 & 183/2009 Page 20 the Registrar of Trade Mark while applying to record changes in the

Registration No.486510, and in fact relied upon the Retirement Deed

dated 31.3.1995 for this purpose. In our view, this conduct is not very

material in the facts and circumstances of this case. As noted earlier, the

family Settlement dated 14.9.1995 is in the handwriting of respondent

Shri Arihant Jain and two disputed pages, which have been denied by the

appellant, have been filed and relied upon by none other than the

respondents themselves. Since the document incorporating the family

Settlement amongst the parties has been filed by the respondents

themselves, they cannot say that these are not authentic and reliable

documents. In fact, this is not the case of the respondents that the

documents incorporating the family Settlement dated 14.4.1995 are

manufactured documents. Their case is that all these documents are

only proposals/counter-proposals and do not amount to a family

Settlement. Whether these documents are merely proposals/counter-

proposals or constitute a valid family Settlement is to be decided by the

Court, on the basis of terms of the documents and attending

circumstances, and, prima facie we are of the opinion that they

constitutes family arrangement/settlement.

20. It was next contended by the learned counsel for the respondents

that in his letter dated 19th August, 1996 sent to Registrar of Trademarks,

Sh. P.N. Talwar, then counsel for the appellants specifically wrote that

the trademark matter had not been decided till date between his clients

and continuing partners of M/s Kangaro Industries (Regd.), which shows

FAO(OS) 131/2009, 157/2009 & 183/2009 Page 21 that there was no settlement as is now being claimed by the appellants.

We, however, find that in the public notice issued in newspapers on 30 th

June, 1996, the appellants expressly referred to the family settlement.

The public notice having appeared much before the letter written by Sh.

Talwar, the letter written by Sh. Talwar loses its significance, as far as

setting up of family settlement is concerned. As a matter of fact, the

date when the appellants set up family settlement for the first time

becomes irrelevant when the existence and authenticity of the document

is not disputed by the respondents and the stand taken by them is that

though the document was executed, it was not a family settlement but

was only a proposal/counter proposal. Therefore, nothing turns on the

failure of the appellant to set up the family settlement soon after it was

executed.

21. It was also contended by learned counsel for the Respondents that

in any case, alleged family Settlement dated 14.9.1995 was not acted

upon by the parties as is evident from the fact that Shri Jaininder Jain did

not apply to the Registrar of the Trade Marks, for transfer of ownership

of the trade mark „Kangaro‟ in his name on the strength of the alleged

family Settlement.

It is true that Shri Jaininder Jain did not request the Registrar of

Trade Mark, at any time, prior to 10.2.1997, for transferring the

ownership of trade mark „Kangaro‟ in his name. It was only on 10.2.1997

that he applied for rectification of the registration of trade mark and for

recording him as the owner of the trade mark „Kangaro‟. But we cannot

FAO(OS) 131/2009, 157/2009 & 183/2009 Page 22 lose sight of the fact that Shri Arihant Jain and Shri Vishwa Jain also did

not apply for rectification immediately after execution of the Dissolution

Deed dated 31.3.1995.They applied for change only on 23.11.1995 which

was more than seven months after the Retirement Deeds were executed.

If there was no family Settlement between the parties on 11.4.1995,

there was no reason for Shri Arihant Jain and Shri Vishwa Jain to wait for

more than seven months before applying for changes in record of trade

mark Registry. We also have to keep in mind the fact that under the

family Settlement, Shri Arihant Jain and Shri Vishwa Jain, were allowed

to use „Kangaro‟ as trade mark upto 31.3.1996 and ownership in the

trade mark „Kangaro" was to come to Shri Jaininder Jain only w.e.f.

1.4.1996. Therefore, Shri Jaininder Jain was not in a great hurry to apply

for transfer of the trade mark in his name immediately after the

execution of the family Settlement dated 14.4.1995. The truth of the

matter appears to be that though the parties entered into a family

Settlement on 14.4.1995 and also subsequently modified it vide an

undated Supplementary Affidavit, neither group was happy with all the

terms of the Settlement and that is why, neither Shri Jaininder Jain nor

Shri Arihant Jain and Shri Vishwa Jain immediately rushed to Trade Mark

Registry for necessary changes in term of the document and both the

groups chose to take extreme positions of having sole right to use the

trade mark „Kangaro‟, without any restriction on the use. To our mind,

in the facts and circumstances of this case, Shri Jaininder Jain cannot be

said to have abandoned or given up his rights under the family

FAO(OS) 131/2009, 157/2009 & 183/2009 Page 23 Settlement dated 11.4.1995 merely because he did not rely upon this

document before the trade mark Registry soon after 14.4.1995.

22. It was also contended by learned counsel for the respondents that

had there be any settlement between the parties on 14.4.1995, it would

have been so mentioned in the deed executed by late Shri Janki Dass Jain

on 15.5.1995. In our view, there was no reason for Shri Janki Dass Jain

to refer to the family Settlement in the Retirement Deed executed by

him, as he did not get any right in the trade mark „Kangaro‟ under the

Family Settlement and had no right or interest left in M/s.Kangaro

Industries(Regd.) after execution of the family Settlement amongst his

sons. He was only a witness and not a party to the family Settlement

and, therefore, had no occasion to refer to it in the Retirement Deed

executed by him.

23. It was also contended by learned counsel for the respondents that

family Settlement dated 14.4.1995 requires compulsory registration

since it affects rights in immovable properties worth more than Rs.100/-.

It is settled proposition of law, if a family arrangement by itself declares,

creates, assigns or extinguishes rights in immovable properties worth

more than Rs.100/-, it requires compulsory registration. But, if the

document only evidences an oral agreement between the party, it would

not require compulsory registration as in such a case, the document by

itself does not create transfer or extinguish any right but is only a record

of oral agreement between the parties. Halsbury‟s Law of England

FAO(OS) 131/2009, 157/2009 & 183/2009 Page 24 (Vol.17) 3rd Edition at page-215-216) defines the family Settlement and

underlies principles governing the same as under:

"Definition of family arrangements. A family arrangement is an agreement between members of the same family, intended to be generally and reasonably for the benefit of the family (a) either by compromising doubtful or disputed rights or by preserving the family property (b) or the peace and security of the family by avoiding litigation (c) or by saving its honour (d).

The agreement may be implied from a long course of dealing (e), but it is more usual to embody or to effectuate the agreement in a deed to which the term "family arrangement"

is applied.

Principles governing family arrangements. Family arrangements are governed by principles which are not applicable to dealings between strangers(f).

The court, when deciding the rights of parties under family arrangements or claims to upset such arrangements, considers what in the broadest view of the matter is most for the interest of families, and has regard to considerations which, in dealing with transactions between persons not members of the same family, would not be taken into account(g). Matters which would be fatal to the validity of similar transactions between strangers are not objections to the binding effect of family arrangements(h)."

The question as to whether a family Settlement requires

registration and if so, in what circumstances, came up for consideration

before the Hon‟ble Supreme Court in Kale And Others vs. Deputy

Director of Consolidation and Others, (1976 3 SCC 119). After

reviewing case law on the subject, the Hon‟ble Supreme Court inter alia

held as under:-



FAO(OS) 131/2009, 157/2009 & 183/2009                                   Page 25
                  "10 (3)     The family arrangements may be
                 even oral in which case no registration is
                 necessary;

(4) It is well settled that registration would be necessary only if the terms of the family arrangement are reduced into writing. Here also, a distinction should be made between a document containing the terms and recitals of a family arrangement made under the document and a mere memorandum prepared after the family arrangement had already been made either for the purpose of the record or for information of the Court for making necessary mutation. In such a case the memorandum itself does not create or extinguish any rights in immoveable properties and therefore does not fall within the mischief of Section (Section of the Registration Act and is, therefore, not compulsorily registrable;

"24. This Court has also clearly laid down that a family arrangement being binding on the parties to the arrangement clearly operates as an estoppel so as to preclude any of the parties who have taken advantage under the agreement from, revoking or challenging the same.

35. Another argument advanced by Counsel for the respondents was that the family arrangement was not valid because the appellant had absolutely no title to the property so long as Mst. Ram Pyari was in lawful possession of the property as the sole heir to Lachman, and if under the family arrangement any title was conveyed to the appellant, the said conveyance can only be by a registered instrument under the provisions of the Registration Act and the Transfer of Property Act. This argument also, in our opinion, suffers from a serious misconception.

We have already pointed out that this Court has widened the concept of an antecedent title by holding that an antecedent title would be assumed in a person who may not have any title but who has been allotted a particular property by other party to the family arrangement by relinquishing his claim

FAO(OS) 131/2009, 157/2009 & 183/2009 Page 26 in favour of such a done. In such a case the party in whose favour the relinquishment is made would be assumed to have an antecedent title. In fact a similar argument was advanced before this Court in Tek Bahadur Bhujil‟s case (supra) relying on certain observations made by BOSE, J. in Sahu madho Das‟s case (supra), but the argument was repelled and this Court observed as follows:

Reliance is placed on the following in support of the contention that the brothers, having no right in the property purchased by the mother‟s money, could not have legally entered into a family arrangement. The observations are:

" It is well settled that a compromise or family arrangement is based on the assumption that there is an antecedent title of some sort in the parties and the agreement acknowledges and defines what that title is, each party relinquishing all claims to property other than that falling to his share and the portions allotted to them respectively.

These observations do not mean that some title must exist as a fact in the persons entering into a family arrangement. They simply mean that it is to be that the agreement clinches and defines what that title is.

The observations‟ of this Court in that case, therefore, afford complete answer to the argument of the learned counsel for the respondents on this point."

In Tek Bahadur Bhujil versus Debi Singh Bhuji, AIR 1966 SC 292,

the Hon‟ble Supreme Court pointed out that a family arrangement could

be arrived at even orally and that a document which was not more than a

Memorandum of what had been agreed to did not require registration.

In this regard, the Hon‟ble Court observed as under:-

FAO(OS) 131/2009, 157/2009 & 183/2009 Page 27 "Family arrangement as such can be arrived at orally. Its terms may be recorded in writing as a memorandum of what had been agreed upon between the parties. The memorandum need not be prepared for the purpose of being used as a document on which future title of the parties be founded. It is usually prepared as a record of what had been agreed upon so that there be no hazy notions about it in future. It is only when the parties reduce the family arrangement in writing with the purpose of using that writing as proof of what they had arranged and, where the arrangement is brought about by the document as such, that the document would require registration as it is then that it would be a document of title declaring for future what rights in what properties the parties possess."

Learned counsel for the Respondents had referred to

A.C.Lakshmipathy and Another versus A.M.Chakrapani Reddiar

and Others, AIR 2001 Madras 135, where Madras High Court held that

if the family arrangement is reduced to writing, it purports to create

declare, assign, limit or distinguish any right, title or interest of any

immovable property, it must be properly stamped and duly registered as

per Stamp Act and Registered Act. We, however, find, in this very

judgment, the High Court also said that if a document, is in the nature of

a Memorandum and evidences a family arrangement already entered

into, and has been prepared as a record of what had been agreed upon, it

need not be stamped or registered. The family arrangement, in this case,

it prima facie appears to us, does not by itself create, declare, assign,

limit or extinguish any right, title or interest, in any immovable property.

It only records what the parties to the settlement agreed, to amicably

settle their disputes and, therefore, is only an evidence of the oral

FAO(OS) 131/2009, 157/2009 & 183/2009 Page 28 agreement between the parties. Such a document would not require

compulsory registration.

24. Even if we assume, for the sake of arguments that the document

dated 14.4.1995 requires compulsory registration under Section 17(1b)

of Registration Act, that would not come in the way of giving effect to

that part of the document which deals with granting ownership of trade

mark „Kangaro‟ to Shri Jaininder Jain and therefore does not require

compulsory registration. Section 49 of the Registration Act prescribes

effect of non-registration documents which are compulsorily registrable.

It provides that if a document is required to be a compulsory registered

but is not registered, the document will not affect any immovable

property comprised therein and will not be received as evidence of any

transaction affecting such property or confers such right, unless it has

been registered. It follows that a compulsorily registrable document, if

unregistered, will not affect the immovable properties comprised in the

documents, is inadmissible only for a limited purpose mentioned in

Section 49(c), namely, as evidence of a transaction affecting immovable

properties comprised therein. It is admissible for a collateral purpose,

i.e., for any purpose, other than that of creating, declaring, assigning,

limiting or extinguishing any right or interest in an immovable property.

Where a document, which as a whole, requires registration, contains

separable parts which do not require registration, these parts may be

admitted in evidence to prove transactions which do not affect

immovable property of the value of Rs.100/- or more. In Hanmant

Apparao Vs. Ramobai Hanmant, AIR 1919 Bombay 38, litigation arose

FAO(OS) 131/2009, 157/2009 & 183/2009 Page 29 on a compromise with regard to both movable and immovable property,

The High Court held that the document could be looked into for the

purpose of claim of a share in respect of a cash allowance, which was

treated as a movable property in Pirozshah Dajibhoi Malaowalla v.

Najamai Rustomji, AIR 1947, Bombay 464, the agreement between the

parties provided that in order to avoid disputes, the plaintiff should

receive certain maintenance per month from the defendant and should

have a right of residence in two houses. The agreement was not

registered. In a suit on the agreement it was contended that the

document as a whole could not be received in evidence even of the part

of the agreement relating to maintenance as the consideration for the

document could not be separated, so as to attach part of it to the

maintenance clause and part to the residence clause. It was noted by the

High Court that in the case before it though the claim for maintenance as

well as the claim of residence were mentioned in the agreement, they

were not connected in the agreement except in so far as it provided one

consideration for the agreement as well. As a result, the High Court held

that the agreement could be used in evidence of the claim for

maintenance. In Mohd. Qasim and others Vs. Mt. Ruqia Begum AIR

1935 Lahore 375, the contract of marriage mentioned the amount of

dower and also dealt with right in immovable property. It was contended

before the High Court that the document being unregistered could not be

used for any purpose whatsoever. The High Court noted that Section 49

of Registration Act lays down in clear terms that the only effect of non-

registration will be that the document shall not affect any immovable

FAO(OS) 131/2009, 157/2009 & 183/2009 Page 30 property covered by it or be received as evidence of any transaction

affecting such property. The High Court noted that the covenant

regarding dower stands altogether detached from declarations regarding

the immoveable property and therefore was clearly separable. In coming

to this decision, the High Court also relied upon a decision of Madras

High Court in Thandavan vs. Valliamma 2 MLJ 130 where an instrument

provided for distribution of both moveable and immoveable properties

but was not got registered. One of the parties to the document sued the

other party on the instrument in question to recover his agreed share of

moveable property comprised in it. It was held by a Division Bench of

Madras High Court that "the unregistered instrument was admissible in

evidence in support of the plaintiff‟s claim for the moveable property." In

Karam Chand Vs. Uma Datt-Hans Raj and others, AIR 1932 Lahore

545, vide a deed dated 19th May, 1959 executed by four sons of one

Thakar Dass in his favour, the business of the family on various places

and other moveable property was divided between them and with regard

to the immoveables, it was stated that they shall continue to be joined. It

was held that even if the declaration qua the immoveable properties

required compulsory registration this does not affect the admissibility of

first part of the deed which deals with the partition of the moveable. In

the present case, though the document dated 14.4.95 purports to

evidence settlement of all disputes, including rights of parties in

immovable properties, it does not show any direct linkage between

ownership in trademarks "Kangaro" and "Kanin" and ownership in

FAO(OS) 131/2009, 157/2009 & 183/2009 Page 31 immovable properties. Therefore, the part relating to ownership and use

of trademarks appears to be severable from rest of the document.

25. It was contended by the learned counsel for the respondents that

the right of the respondents to use the trademark "Kangaro" to the

exclusion of the appellants, was upheld not only by Hon‟ble the Single

Judge but also by the Division Bench as well as by the Hon‟ble Supreme

Court in the proceedings instituted by the appellants by filing C.O.

No.4/97 against the order of Registrar dated 30 th October, 1996, passed

in favour of the respondents, we should not take a contrary view in these

Appeals. We have gone through all the judgments. We find that though

the appellants relied upon the family arrangement dated 10/14.4.95, the

respondents took the stand that they had not filed complete set of the

documents forming part of the family arrangement as they had

suppressed two important pages. The respondents specifically stated

before the learned single Judge that they had no objection to the

proposed terms in these two sheets being considered and orders being

passed on the basis of those proposals. The learned single Judge

dismissed the petition on the ground that the proceedings which

culminated in the order dated 30th October, 1996 was very much in the

knowledge of the petitioners. No opinion was expressed by the learned

single Judge on the family arrangement set up by the appellants. A

perusal of the judgment of the Division Bench dated May 10, 2002 shows

that though arguments were advanced on behalf of the parties as regards

the evidentiary value and binding character for a family settlement and

also the effect of registration of trademark, the Division Bench did not go

FAO(OS) 131/2009, 157/2009 & 183/2009 Page 32 into this question since it was hearing appeal against an order passed by

the learned single Judge on an interim application. The Division Bench in

para 21 of its judgment noted as under:-

"Rights of the parties will have to be decided primarily as regards the family settlement, whether it is final and conclusive or whether it was only a proposal in a pending civil proceedings between the parties at Ludhiana Courts. The scope in this appeal before us is only to examine the legality and validity of the impugned order passed by learned Single Judge that whether the learned Single Judge was justified in not staying the operation of the order of the Trade Mark Registry dated 30.10.1996."

In para 23 of the judgment, the Division Bench noted as under:-

"It is not in dispute that insofar as the legality and validity of the document, which is the foundation of the appellants‟ claims, is the family settlement. The same is already a subject matter of civil suit between the parties, which is pending adjudication in a competent court, which will have to decide the same in accordance with law.

The points, which were raised before us on behalf of the appellants about legality and validity of the so-called family settlement, which are seriously disputed by respondents 3 to 6, cannot be decided by us in this appeal, which will have to be adjudicated and decided in civil proceedings, which are already pending."

Thus, the validity or otherwise of the family settlement set up by

the appellants was not examined either by the learned single Judge or by

the Division Bench and the matter was left to be decided by the civil

court in the suit filed by the appellants. Therefore, the civil court, for the

purpose of deciding application for grant of interim injunction has to take

FAO(OS) 131/2009, 157/2009 & 183/2009 Page 33 a prima facie view on the nature and validity of the document dated

14.4.95 which has been termed as a family settlement by the appellants

and as a proposal/counter proposal by the respondents, though in their

application u/s 34 of the Arbitration Act and Section 8 of Arbitration and

Conciliation Act, the respondents also referred to this document as a

family settlement and while arguing before the learned single Judge, they

agreed to an order in terms of the two page document, referred to by us

the Supplementary Settlement.

Another important aspect in this regard is that the learned senior

counsel representing the respondents before the learned single Judge

specifically stated that the petitioners (appellants herein) had obtained

an order of status quo and since there was an order against the

respondents therefore, there was no injury caused to the petitioners.

Thus, the factum of a status quo order having been passed by the civil

court, in the suit filed by the appellants at Ludhiana, was also taken into

consideration by the learned single Judge while passing the order dated

May 1, 1997. The orders passed from time to time in C.O. No. 4/97,

therefore, do not come in the way of relief being granted to the

appellants on the basis of family settlement dated 14.4.95.

26. It was contended by the learned counsel for the respondents that

since they are the registered proprietors of the trade mark „Kangaro‟, its

use by the Appellants would be contrary to the provisions of Trade Mark

Act. We are unable to agree with the learned counsel. Section 2 (r)(ii) of

Trademarks Act envisages permitted use by a person other than the

FAO(OS) 131/2009, 157/2009 & 183/2009 Page 34 registered proprietor and registered user with the consent of the

registered proprietor. Section 29 of Trademarks Act prohibits

infringement of registered trademark by persons other than registered

proprietors or persons using by way of permitted use. Section 38 of the

Act provides for assignment of the trademark by its proprietor. Under

family settlement dated 14.4.95, trademark "Kangaro" purports to have

been assigned by its registered proprietors to Sh. Jaininder Jain. In any

case, he was permitted to use the aforesaid trademark. Therefore, it

cannot be said that if the appellants are permitted to use trademark

"Kanagaro" during pendency of the suit that would amount to violation of

the provisions contained in Trademarks Act.

27. It was contended by the learned counsel for the respondents that if

there was a settlement during arbitration proceedings, as is the case of

the appellants, the arbitrator would have understood it accordingly and

would have passed an award in terms of the settlement as provided in

Section 30(2) and (3) of Arbitration and Conciliation Act. No doubt, the

arbitrators if requested by the parties would have recorded the

settlement in the form of an arbitral award on agreed terms as provided

in Section 30(2) of Arbitration and Conciliation Act. But, even if it is not

done, it does not lose its character of being a settlement and it does bind

the parties to the settlement inasmuch as they are precluded from acting

in violation of the terms of the settlement and it is open to any of them to

enforce the document as a settlement, though it cannot be enforced and

executed as an arbitral award. The document dated 14.4.1995 as well as

two pages constituting Supplementary Settlement are signed not only by

FAO(OS) 131/2009, 157/2009 & 183/2009 Page 35 the parties but also by the arbitrators. Therefore, it cannot be said that

the arbitrators had not understood and interpreted the same to be a

settlement of disputes between the parties. If the parties did not request

them to record the settlement in the form of an arbitral award, there was

no occasion for them to do so. But, as far as the parties are concerned,

they became bound by the terms of the settlement.

28. Relying upon the decision of the Supreme Court in Wander Ltd.

and Another -vs- Antox India P. Ltd. 1990(Suppl.) SCC 727, it was

contended by the learned counsel for the appellant that this court should

not interfere with the discretion exercised by the learned single Judge, as

the discretion was exercised reasonably and judiciously on the basis of

material available on record. The decision of the Hon‟ble Supreme Court

in Wander Ltd. and Another (Supra) envisages interference by the

Division Bench if it is shown that the learned single Judge had ignored

the settled principles of law regulating grant or refusal of interlocutory

injunction.

The principles for grant of temporary injunction either under Rule

1 or 2 of Order 39 or under Section 151 of Code of Civil Procedure are

now well settled and the Courts are required to see

1. whether the Plaintiff have a prima facie case;

2. whether the balance of convenience is in favour of the

Plaintiff;

3. Whether the Plaintiff would suffer an irreparable injury if his

prayer for interlocutory injunction is not allowed;

FAO(OS) 131/2009, 157/2009 & 183/2009 Page 36 In Gujarat Bottling Co. Ltd. vs. Coca Cola Company and Others,

1995(5) SCC 545, the Hon‟ble Supreme Court, inter alia, observed as

under:-

"The object of the interlocutory injunction is to protect the plaintiff against injury by violation of his right for which he could not be adequately compensated in damages recoverable in the action if the uncertainty were resolved in his favour at the trial. The need for such protection has, however, to be weighed against the corresponding need of the defendant to be protected against injury resulting from his having been prevented from exercising his own legal rights for which he could not be adequately compensated. The court must weigh one need against another and determine where the „balance of convenience‟ lies."

"Prima facie case" means that the Court should be satisfied that

there is a serious question to be tried at the hearing, and there is a

probability of Plaintiff obtaining the relief at the conclusion of the trial on

the basis of the material placed before the Court. "Prima facie case" is a

substantial question raised bona fide which needs investigation and a

decision on merits. The Court, at the initial stage, cannot insist upon a

full proof case warranting an eventual decree. If a fair question is raised

for determination, it should be taken that a prima facie case is

established. The real thing to be seen is that the Plaintiff‟s claim is not

frivolous or vexatious. The purpose is to preserve status quo until the

question before the Court is finally disposed of.

The learned counsel for the Respondents has referred to Ramji

Dayawala & Sons (P) Ltd. vers Invest Import, AIR 1981 SC 2085.

FAO(OS) 131/2009, 157/2009 & 183/2009 Page 37 We find that in the above referred case, the Hon‟ble Supreme

Court, intere alia, held as under:

"But it is equally well settled that where the trial court ignoring the relevant evidence, side tracking the approach to be adopted in the matter and overlooking various relevant considerations has exercised its discretion one way, the appellate court keeping in view the fundamental principle can and ought to interfere because when it is said that a matter is within the discretion of the court it is to be exercised according to well established judicial principles, according to reason and fair play, and not according to whim and caprice."

It is an admitted case that at the time of passing of status quo

order by Ludhiana Court on 7.1.97, the appellants as well as the

respondents were using the trademark "Kangaro". It is also an admitted

case that for more than at least 12 years from that date, till the

injunction was vacated by learned single Judge on April 8, 2009, both the

groups were using trademark "Kangaro" on the products being

manufactured by them. Same was the position during the pendency of

C.O. No. 4/97 as well as the appeals arising therefrom. In para 13 of the

judgment, the learned single Judge inter-alia noted that "on 14.4.95 a

document purporting to be a family arrangement was prepared and

signed by all the three brothers, their father and the two arbitrators". In

para 33 of the judgment, the learned single Judge noted that "there

appears to be a serious dispute between them over a decade about the

use of mark "Kangaro" by each one of them for different items of

stationery manufactured and marketed by them. Both of them claim a

right to use mark "Kangaro" and have prayed for interim injunction

FAO(OS) 131/2009, 157/2009 & 183/2009 Page 38 against each other from using the mark "Kangaro". In para 51 of the

judgment, the learned single Judge noted that "Arihant Group does not

dispute the existence of the document dated 10/14.4.95. What it disputes

is the nature of the said document, "whether the document is a family

settlement or merely a proposal." Therefore, the learned single Judge

recognised that there was a serious dispute between the parties as

regards use of the trademark "Kangaro". The rival contentions raised by

the parties as regards use of the trademark "Kangaro" required

investigation during trial. The respondents are not disputing the

existence or authenticity of the document termed as family settlement by

the appellants. Prima-facie, the document does not appear to be a

proposal/counter proposal and in fact appears to be a family settlement.

Therefore, it cannot be denied that the appellants have made out a prima

facie case in their favour.

In Colgate Palmolive (India) Ltd. versus Hindustan Lever

Limited, 1999(7) SCC 1, the Hon‟ble Supreme Court observed as under:-

"10. Another redeeming feature in the matter of grant of interlocutory injunction is that in the event of a grant of injunction in regard to a party defendant where the latter‟s enterprise has commenced, and in that event, the consideration may be somewhat different from that where the defendant is yet to commence its enterprise."

Trademark "Kangaro" having been used more or less as a family

trademark till 31.3.1995 and the appellants having concurrently used it

for more than 12 years at a stretch, the principles governing grant of

injunction necessarily required that the status quo, as regards use of the

FAO(OS) 131/2009, 157/2009 & 183/2009 Page 39 registered trademark "Kangaro" should have continued till the court

came to a final conclusion on the rival contentions of the parties, after

recording evidence and taking a considered view in the light of the oral

and documentary evidence which may be adduced at the trial. Since the

settled principles in the matter of grant of ad interim injunction were not

correctly applied, this court would be justified in stepping in and setting

aside or modifying the order passed by the learned single Judge.

In Ram dev Food Products Pvt. Ltd. versus Arvind Bahl,

2006(8) SCC 726, the Hon‟ble Supreme Court found that the Courts

below had proceeded on a prima facie misconstruction of documents and

had adopted and applied wrong standards and, therefore, it was of the

opinion that a case for interference has been made out. In our opinion,

prima facie, the learned Single Judge has misconstrued the family

Settlement when he observed that it was not a family arrangement but

was only a proposal/counter-proposal and further said that the document

required compulsory registration. The document, to us, appears to be

family arrangement/Settlement since it only records the arrangement

agreed to between the parties and if so, it does not require compulsory

registration. In any case, the part which deals with ownership and use of

trademarks appears to be severable, from the remaining document and

does not require compulsory registration.

29. In the compilation given by the learned counsel for the

Respondents, he has relied upon Prahalad Singh versus Sukhdev

Singh, AIR 1987 SC 1145, Barkat Ali and Another versus

FAO(OS) 131/2009, 157/2009 & 183/2009 Page 40 Badrinarain (Dead) by LRS., 2008(4) SCC 615. Midas Hygiene

Industries (P) Ltd. and Another versus Sudhir Bhatia and Others,

2004 (3) SCC 90, the decision of a Division Bench of this Court dated

29.5.2009 in FAO No.138/96, titled Amar Singh Chawal wala versus

M/s.Shree Vardhman Rice And Genl. Mills, decision of a Division

Bench of this Court in Atlas Cycles (Haryana) Ltd. vs. Atlas Products

Pvt. Ltd., 2007(4) RAJ 515, to which one of us was a party and the

decision of the Hon‟ble Supreme Court in Satyadhyan Ghosal vs. Smt.

Deorajin Debi, AIR 1960 SC 941, and the decision of the Division Bench

of this Court in Babu Ram Dharam Prakash vs. Izuk Chemical

Works, 2008 (38) PTC 209, to which one of us was a party. In none of

these case s, we find any such proposition as would persuade us to agree

with the view taken by the learned Single Judge or to maintain the order

passed by him.

30. That brings us to the question, as to what would be the most

appropriate interim order, in the facts and circumstances of the case. If

we go by the family settlement/arrangement, there is a prima facie, case

in favour of the appellants who are plaintiffs in two civil suits, as, after

31.3.96, the respondents are not entitled to use the trade mark

"Kangaro". If we go only by the Retirement Deeds, excluding the family

settlement/arrangement from consideration, the respondents who are

plaintiffs in one suit have a prima facie case to exclusive use of the

trademark "Kangaro".

FAO(OS) 131/2009, 157/2009 & 183/2009 Page 41 Keeping in view the fact that (i) trade mark "Kangaro" was being

used more or less as a family trademark till 31.3.1995; (ii) both the

groups are using this trademark since prior to 7.1.1997, when status quo

order was passed; (iii) No serious effort was made by the respondents

for vacation of status quo order dated 7.1.1997, even after dismissal of

SLP of the appellants in the proceedings arising out of C.O. No.4/97; (iv)

both the groups have substantial turnover from use of the trademark

"Kangaro", though turnover of the respondents is stated to be much

brighter than that of the appellants, (v) In some countries the appellants

are using this trade mark while in some other countries it is being used

by the respondents; (vi) the court can take a final view on the nature,

admissibility and applicability of the documents termed as family

settlement/arrangement by the appellants and proposal/counter proposal,

by the respondents, only after recording evidence, to be adduced during

trial, we direct as under:

1) During pendency of these suits, the parties shall maintain the

status quo, as it existed on 7.1.1997, as regards use of the

trademark "Kangaro", but, in order to ensure that there is no

confusion as regards the manufacturer of the product they shall

also prominently display the name of the manufacturer on the

box in which the product reaches the ultimate customer.