M/S Cinni Foundation vs M/S Raj Kumar Sah & Sons & Another
2009 Latest Caselaw 3686 Del

                                        REPORTED
*     IN THE HIGH COURT OF DELHI AT NEW DELHI
•

%                               DATE OF RESERVE: JULY 10, 2009

                                DATE OF DECISION: SEPTEMBER 11, 2009

+     IA Nos.5726/2009, 6870/2009 and 6871/2009 in CS(OS) 783/2009



      M/S. CINNI FOUNDATION                          ..... Plaintiff
                     Through: Mr. S.K. Bansal and Mr. Akshay
                              Srivastava, Advocates.



                       versus



      M/S. RAJ KUMAR SAH & SONS & ANR.               ..... Defendants
                     Through: Mr. Vikas Singh, Sr. Advocate with
                              Mr. Chandra Prakash, Advocate.

CORAM:
HON'BLE MS. JUSTICE REVA KHETRAPAL

1.    Whether reporters of local papers may be allowed
      to see the judgment?
2.    To be referred to the Reporter or not?
3.    Whether judgment should be reported in Digest?




:     REVA KHETRAPAL, J.

1. By this order, it is proposed to decide IA Nos.5726/2009 (under Order

XXXIX Rules 1 and 2 read with Section 151 CPC filed by the plaintiff),

6870/2009 (under Order VII Rule 11 read with Order I Rule 11 read with

Section 151 CPC filed by the defendants) and 6871/2009 (under Order XXXIX

Rule 4 read with Section 151 CPC filed by the defendants).

2. The plaintiff M/s. Cinni Foundation through its Managing Trustee

Chandra Kumar Sah has filed the aforesaid action under Sections 134 and 135

of the Trade Marks Act, 1999, inter alia, seeking a permanent injunction

restraining the defendants from infringement of its trade mark 'CINNI' and

from passing off its goods and business as that of the plaintiff besides delivery

up of all the impugned finished and unfinished materials bearing the violative

trademark.

3. The plaintiff, which is a private trust established under the Deed of

Trust dated 05.11.2000, duly registered with the Sub-Registrar Varanasi (U.P.),

is engaged in the business of manufacture and trade of fans of various types. It

is averred that the plaintiff has already achieved the turnover of over Rs.70

crores since the year 2000 till date under its well established and proprietory

trade mark/trade name 'CINNI' and has built up a valuable goodwill and

reputation in India as well as overseas. The trade mark 'CINNI' is registered

under the Trade Marks Act, 1999 under the following numbers:-

      Sl. Trade Mark TM Regn. Class             Journal     Status
      No.            No.                        No.
      1.     CINNI         304572      11       647         Registered
      2.     CINNI         383591      11       956         Registered
      3.     CINNI         383592      11       963         Registered
      4.     CINNI Label 503208        11       1183        Registered

4. By virtue of the said registrations, the plaintiff has exclusive right to use

the said registrations within the meaning of Sections 28 and 29 of the Trade

Marks Act, 1999 as also to prevent rival violative third party use thereof. The

plaintiff is carrying on its business under the said 'CINNI' trade mark/trade

name through a wide range of licensees, manufacturers, distributors, etc. One

such licensee firm is M/s. Panchmukhi Engg. Works, Varanasi (U.P.) and one

such distributor firm is M/s. Sah Agencies Pvt. Ltd., in Delhi.

5. It may be noted that the history of the 'CINNI' trade mark dates back to

the early 1950s when it was first adopted and used by the partnership firm

under the name and style of M/s. Raj Kumar Sah and Sons (the defendant No.1

herein), being a family business constituted of the family members of Shri Jag

Mohan Das Sah (since deceased). The defendant No.1 partnership by an

irrevocable Deed of Assignment dated 05.11.2000 assigned the 'CINNI' Trade

mark including its patent and design registrations to the plaintiff trust along

with all rights, titles, interests and claims for valuable consideration. The

'CINNI' trade marks and registrations so assigned are detailed in the Schedule

which forms part and parcel of the Deed of Assignment. The said Deed of

Assignment has been signed and executed by the defendant No.1 through both

its partners at that point of time, namely, Raj Kumar Sah (since deceased) and

his son Ravindra Kumar Sah (the defendant No.2 herein) as assignors and by

Shri Chandra Kumar Sah as Managing Trustee of the assignee, Cinni

Foundation. The Assignment Deed is registered with the Sub-Registrar

Varanasi (U.P.).

6. According to the plaintiff, the said Deed of Assignment has all the

trappings of a family settlement and the plaintiff trust itself had been

constituted by the family members of late Jagmohan Das Sah, who were also

the beneficiaries of the trust. As already stated, the defendant No.1 partnership

on 05.11.2000 consisted of only two partners, namely, Raj Kumar Sah (since

deceased) and his son Ravindra Kumar Sah (the defendant No.2 herein) and

both of them were signatories to the Deed of Assignment dated 05.11.2000.

Thus, in a sense the defendant No.1 (assignor) was the predecessor of the

plaintiff trust. The defendant No.2 is one of the trustees and settlors of the

plaintiff trust as well as a partner of the defendant No.1. The plaintiff,

however, claims that the present exact constitution of the defendant No.1

partnership is not within its knowledge.

7. The plaintiff's grievance is that the defendants in utter disregard to and

in derogation of the Deed of Assignment dated 05.11.2000 have recently, i.e.,

in or about the end of March, 2009 started using the trade mark 'CINNI' in

relation to the business of manufacture and trade of fans of various types and

have claimed their own rights therein. The said adoption and use of the

'CINNI' trade mark by the defendants is mala fide, fraudulent and in violation

of the plaintiff's statutory and common law rights in the trade mark/trade name

'CINNI' and in infringement of the plaintiff's 'CINNI' trade mark registrations.

In addition, the defendants by their impugned adoption and use are passing off

their goods and business as that of the plaintiff and are thus deceiving the

innocent and unwary purchasers, the market and the trade as to the origin of

the goods. The plaintiff is resultantly suffering tremendously in business and

in reputation and the losses being suffered by it are incalculable. Aggrieved,

the plaintiff immediately, through its Managing Trustee, issued a cease and

desist notice dated 13th April, 2009 through its attorney upon the defendants.

This apart, the plaintiff also issued Caution Notices in newspapers, protested

through family channels and requested the defendant No.2 to cease its

impugned activities. The plaintiff, in addition, also launched enquiries in the

market, which revealed that the defendants were soliciting trade from the

plaintiff's various licensees and distributors as also issuing notices to them,

asking them to cease and desist from using the trade mark 'CINNI' and instead

claiming their own rights.

8. It is alleged that one such notice was issued to the plaintiff's distributor

in Delhi, M/s. Sah Agencies Pvt. Ltd., which has its registered office at B-4,

Street No.15, Madhu Vihar, Patpar Ganj, Delhi. Thus, the defendants have set

up rights contrary to that of the plaintiff, which are also contrary to law. Apart

from this, the defendant No.2 Ravindra Kumar Sah, issued a letter dated 22 nd

April, 2009 purportedly on the letter head of the plaintiff trust to Chandra

Kumar Sah, (received by the latter on or about 25th April, 2009), inter alia,

seeking to remove Chandra Kumar Sah as the Managing Trustee of the

plaintiff trust and proclaiming himself as Chairman of the trust. All this

culminated in the filing of the present suit through Shri Chandra Kumar Sah,

Managing Trustee of the plaintiff Company on 29th of April, 2009.

9. By an order dated 01.05.2009, summons of the suit and notice of IA

No.5726/2009 under Order XXXIX Rules 1 and 2 CPC were issued to the

defendants, returnable on 24th July, 2009 and in the meanwhile, the defendant

No.2 was restrained from interfering with the business of the plaintiff in terms

of the Assignment Deed dated 05.11.2000. The defendant No.2 was further

restrained by the said order of this Court from transferring the impugned trade

mark 'CINNI' that stood assigned to the plaintiff trust by an Assignment Deed

dated 05.11.2000 in favour of any third party, except the plaintiff trust.

10. The aforesaid order led to the filing of two applications by the

defendants, one for rejection of the plaint under Order VII Rule 11 CPC, being

IA No.6870/2009 and the other for vacation of the interim injunction order,

being IA No.6871/2009. In the application under Order VII Rule 11 read with

Order I Rule 11 CPC (IA No.6870/2009), a two-fold prayer has been made,

viz., (i) that the defendants be allowed to conduct the suit by virtue of the

provisions of Order I Rule 11 CPC and (ii) that the plaint be rejected under the

provisions of Order VII Rule 11 (a) and (d). The prayer in IA No.6871/2009

under Order XXXIX Rule 4 read with Section 151 CPC, as already stated, is

for vacation of the ex parte ad interim order of injunction passed by this Court

on 01.05.2009 in IA No.5726/2009.

11. Mr. Vikas Singh, the learned senior counsel for the defendants raised a

three-fold contention to buttress his prayer for rejection of the plaint:-

(i) Firstly, the present suit has not been filed by a duly authorised person,

in that, Shri Chandra Kumar Sah, the Managing Trustee of the plaintiff trust,

who has filed the suit, was removed from the office of Managing Trustee vide

a resolution of the Board of Trustees dated 22.04.2009 and by another

resolution dated 14.05.2009, one of the trustees, namely, Sumit Agrawal had

been appointed and authorised to represent the plaintiff trust. The aforesaid

resolutions had been passed in view of the fact that Shri Chandra Kumar Sah

had mismanaged the affairs of the trust and started a rival business of

manufacturing of fans and motors under the trade name 'CINTU' and was

getting its product distributed through M/s. Sah Agencies by misrepresenting

to the dealers of the trade mark 'CINNI' that 'CINTU' was a product of 'CINNI'.

M/s. Sah Agencies was incorporated on 13.12.2002 with Chandra Kumar Sah

and Dipak Kumar Sah, son of Chandra Kumar Sah as its Directors and is the

authorised dealer of 'CINNI' fans as well as 'CINTU' fans, pumps and

appliances for the period July, 2008 to June, 2010 in accordance with the

Certificate issued by Mr. Dipak Kumar Sah, the Managing Director of M/s.

Sah Agencies. The registration of the trade mark 'CINTU' was applied for on

30th May, 2002 vide application No.1137009, i.e., after the execution of the

Deed of Assignment and as a result, incalculable harm was being caused to the

business of 'CINNI'. Thus, at the time of the creation of the trust,

approximately two lakh units of fans under the brand 'CINNI' were being

produced, which have now dwindled to approximately 55,000 units. The

whole purpose of creation of the trust and assignment of the trade mark

'CINNI' to the plaintiff trust, viz., for better exploitation of the trade mark so as

to generate funds for the welfare of the beneficiaries of the trust has been

defeated since the business interests of the Managing Trustee in his personal

capacity are involved.

(ii) Secondly, the plaint is liable to be rejected on the ground that the

jurisdiction of this Court has been wrongly invoked by the plaintiff, as no part

of the cause of action had arisen within the territorial jurisdiction of this Court.

Both the plaintiff and the defendants are located and carrying on business at

Varanasi in the State of U.P. The plaintiff trust was executed and registered at

Varanasi. The Deed of Assignment dated 05.11.2000 on the basis of which the

plaintiff has filed the instant suit was also executed, signed and registered at

Varanasi. This clearly indicated that all the business activities of the plaintiff

and the defendants were being carried on at Varanasi, and that no part of the

cause of action had accrued within the jurisdiction of this Court. It was also

submitted that for conferring jurisdiction on this Court, it is averred that the

defendant No.1 wrote a letter to M/s. Sah Agencies, claimed to be the

plaintiff's main distributor having its registered office in Delhi, but there is no

privity of contract between the plaintiff and the said M/s. Sah Agencies whose

alleged office is at Delhi and, in any event, no documentary proof has been

produced on the record to show that any valid licence had been issued in

favour of said M/s. Sah Agencies or that any business transaction had been

conducted by M/s. Sah Agencies at Delhi, within the jurisdiction of this Court.

Shri Chandra Kumar Sah, as already stated, is one of the Directors of M/s. Sah

Agencies. Since the defendants have sent a notice to M/s. Sah Agencies

informing it that it has no power or authority to trade and manufacture fans

under the trade mark 'CINNI' without issuance of a licence in terms of clause

5.6 of the Trust Deed, which requires that any licence issued by the Managing

Trustee be countersigned by at least one of the two trustees, namely, Ravindra

Kumar Sah (the defendant No.2) and Shri Sumit Agrawal, no enforceable right

has been created in favour of the said Sah Agencies for conferring jurisdiction

on this Court. The said M/s. Sah Agencies is in any case not a licensee of the

plaintiff for 'CINNI' fans, but is a licensee for 'CINTU' fans.

(iii) Thirdly, there is a clear-cut admission in paragraph 27 of the plaint to

the effect that so far there is no recordial of the assignment of the trade mark

'CINNI' to the plaintiff Company with the office of the Registrar of Trade

Marks and without a recordial of the assignment, no right has accrued to the

plaintiff-trust to claim exclusive rights in the trade mark 'CINNI' in terms of

Sections 40 and 45 of the Trade Mark Act, 1999.

12. The learned counsel for the plaintiff sought to counter the first

contention of the defendants' counsel by urging that the suit had been properly

instituted through the Managing Trustee, Shri Chandra Kumar Sah. He

contended that Shri Chandra Kumar Sah had been appointed as Managing

Trustee of the Board of Trustees under Clause 5.1 of the Trust Deed dated 5 th

November, 2000 and by virtue of the provisions of Clause 5.5(a) was to

continue to be the Managing Trustee of the plaintiff trust for his life time.

Relying upon the judgment of the Hon'ble Supreme Court in United Bank of

India Vs. Naresh Kumar & Ors. AIR 1997 SC 3, it was urged that the trust

deed itself authorized the Managing Trustee, Chandra Mohan Sah to file the

instant suit. Thus, Clause 8, sub-clause (h) of the Trust Deed, which deals with

the powers of the Managing Trustees, empowered the Managing Trustee:

"To institute, conduct, defend, compound, compromise or abandon any legal proceedings by or against the Trust and to refer any claims or demands by or against the Trust to Arbitration and observe and perform any award made thereon."

13. Clause 5.1 and Clause 5.5 read as under:-

"5.1 Board of Trustees:

That the Board of Trustees shall mean and include the First Trustees of these presents, survivor or survivors of them and the Trustees for the time being of these presents. The First Board of Trustees shall consist of the following persons:-

a) Shri Raj Kumar Sah Chairman

b) Shri Chandra Kumar Sah Managing Trustee

c) Shri Ravindra Kumar Sah Trustee

d) Shri Suraj Kumar Sah Trustee

e) Shri Sumit Kumar Agrawal Trustee

5.5 Managing Trustee:

a) That Shri Chandra Kumar Sah shall be the first Managing Trustee and he shall continue to be the Managing Trustee of this Trust for his life time. He shall be empowered to nominate any person as his successor to work as Managing Trustee after his life time.

b) That in the event of absence of the Chairman in a particular meeting of the Board of Trustees, the Managing Trustee shall preside over that meeting and shall have a casting vote. Similarly, after the demise (God forbid) of Shri Raj Kumar Sah, the Managing Trustee shall preside over the meetings and shall have a casting vote."

14. The learned counsel for the plaintiff contended that there was no

question of removal of the Managing Trustee who was appointed as a life time

trustee to work for the benefit of the trust. Yet, the defendants had sought to

remove him, compelling him to file a suit in the Varanasi Courts challenging

his aforesaid removal, which suit had been filed after the defendants took the

aforesaid plea of his removal in the present case. The learned counsel also

contended that it was unsafe to hand over conduct of the suit to the defendants

or to the said Sumit Agrawal, who was in league with the defendants No.1 and

2 and was hand in glove with the said defendants. Sumit Agrawal, was the son

of the daughter of Raj Kumar Sah, while the defendant No.2 was the son of Raj

Kumar Sah and the aforesaid persons in connivance with each other were

aiming to usurp the business of the plaintiff. The said Sumit Agrawal was also

a partner/proprietor in the firm styled as U.B. Sales having its main office at C-

21/85, Mahamandal Nagar, Pishachmochan Marg, Varanasi. This firm had

been appointed by the defendant No.1 as its sole selling agent of 'CINNI' fans

and as was evident from letter dated 6th May, 2009 sent by the defendant No.2

on behalf of the defendant No.1 to M/s. Pawan Electrical Industries, Village -

Alauddinpur Lohata Road, Varanasi. The defendant No.1, through the said

firm of U.B. Sales, was carrying on the violative business of manufacture and

trade of fans under the 'CINNI' trade mark as also soliciting business and

licencing thereunder. The defendants had raised the bogey of the trade mark

'CINTU' and of M/s. Sah Agencies Private Limited even though the factum of

their existence was within their positive knowledge since the year 2002 and it

was with their consent, approval and acquiescence that the said business was

being carried on by Shri Chandra Kumar Sah.

15. With regard to the plea of lack of jurisdiction, the learned counsel for

the plaintiff, Mr. Bansal denied that the plaintiff had invoked the territorial

jurisdiction of this Court only on the basis of legal notice addressed to M/s.

Sah Agencies Private Limited, whose registered office is in Delhi, though

contended that the said legal notice by itself is sufficient to confer territorial

jurisdiction on this Court. He also contended that the documents filed by the

plaintiff clearly established that the business was being transacted within the

territorial jurisdiction of this Court.

16. With regard to the next plea raised by Mr. Bansal, the learned counsel

for the plaintiff contended that by virtue of the Deed of Assignment dated

05.11.2000 the plaintiff had become owner of the trade mark/trade name

'CINNI' from the date of the execution thereof, i.e., 05.11.2000 and the

complete rights vesting in M/s. Raj Kumar Sah and Sons from the date of the

execution of the Transfer Deed vested in the plaintiff trust. He further

contended that the defendants at no point of time had raised any dispute with

regard to the Deed of Assignment. All of a sudden in December, 2008 when it

came to the knowledge of the defendant No.3 that the trade mark 'CINNI' was

not recorded in the name of the plaintiff trust, the defendants staked a claim to

the said trade mark/trade name. This was reinforced by the fact that

throughout the defendants had adopted a stand that the royalty payable by the

dealers was payable to the plaintiff, 'CINNI Foundation', consequent to the

execution of the Deed of Assignment. In this context, my attention was drawn

by learned counsel for the plaintiff to the letter dated 16.11.2000 addressed to

M/s. Pawan Electrical Industries by Raj Kumar Sah and Sons through its

partner, which reads as under:-

"We wish to inform you that the royalty as per our agreement dated 31.12.1999 will be paid by you to us upto 8th Nov.'2000 only as the Brand Equity have been transferred to Cinni Foundation.

You are, therefore, requested to please contact Cinni Foundation, D-59/37, Mahmoorganj, Varanasi for your fresh agreement towards Cinni Royalty.

You are also requested to please clear the dues against royalty upto 8th Nov.'2000 at the earliest to square up the account."

17. The learned counsel for the plaintiff also drew my attention to the letter

dated September 13, 2005 signed on behalf of CINNI Foundation by Mr. C.K.

Sah as Managing Trustee and countersigned by Mr. Ravindra Kumar Sah as

trustee to urge that the defendant No.2 (Ravindra Kumar Sah) had explicitly

acknowledged that the trade mark 'CINNI' vested in the 'CINNI Foundation'.

The said letter being apposite is reproduced hereunder:

"September 13, 2005 M/s Pawan Electrical Industries Plot No.338, Khajuri Pandeypur VARANASI - 221 002

Kind Attn: Sri Abhishek Agrawal Dear Sir, Further to renewal of our Agreement for the use of Cinni Brand in fans manufactured/traded, please note that due to heavy payments to be made by the Foundation and Industry, we are proposing to increase the Licence fee to Rs.45/- per fan with effect from 1st September 2005.

You are requested to kindly send your confirmation alongwith Balance Sheet of the company for last 3 years and the costing of each variety of fans separately as on date.

We expect your prompt reply in this connection, preferably within this month.

           Thanking you,

           Yours faithfully,
           for CINNI FOUNDATION

           sd/-                                 sd/-
           (C.K. SAH)                 (RAVINDRA KUMAR SAH)
           MANAGING TRUSTEE                   TRUSTEE"

18. Likewise, letter dated August 09, 2008 addressed to M/s. Panchmukhi

Pvt. Ltd. by 'CINNI Foundation' through Ravindra Kumar Sah, trustee and

Chandra Kumar Sah, Managing Trustee; letter dated August 13, 2008

addressed to M/s. Lahartara Engineering Works; letter dated August 13, 2008

addressed to M/s. SMT Electricals Pvt. Ltd.; letter dated August 13, 2008

addressed to M/s. Chandra Motors; letter dated August 13, 2008 addressed to

M/s. Churamanpur Engineering Works; letter dated August 13, 2008 addressed

to M/s. Rohania Engineering Works; letter dated August 13, 2008 addressed to

M/s. Sah Machine Tools Pvt. Ltd.; letter dated August 16, 2008 and letter

dated September 08, 2008 addressed to M/s. Pawan Electrical Industries were

relied upon to show that all through the defendant No.2 as trustee of 'CINNI

Foundation' was taking the stand that the trade mark 'CINNI' vested in 'CINNI

Foundation', the plaintiff herein. It was for the first time on 30th March, 2009

that a caution notice was issued by the newspaper 'AAJ', Varanasi Mahanagar

informing the general public that M/s. Raj Kumar Sah & Sons, the defendant

No.1 herein, was the exclusive owner of the trade mark 'CINNI' for all types of

fans and other products. This was followed on 31st March, 2009 with a legal

notice sent on behalf of the defendant No.1 to the plaintiff claiming exclusive

right to the trade mark 'CINNI' and caution notices dated 17.04.2009,

18.04.2009 and 19.04.2009.

19. Having considered the contentions raised at the bar, I am unable to

agree with the learned counsel for the defendants that the suit deserves to be

rejected under Order VII Rule 11 CPC on any of the grounds urged in the said

application. Dealing first with the contention that the suit has not been filed by

a duly authorized person, in that, the person who had instituted the suit on

behalf of the plaintiff-trust, had been removed as the Managing Trustee for his

various acts of omission and commission, viz. mis-management of the Trust,

starting of a rival business of manufacturing the fans, pumps, etc. and

marketing the same under the new registered trademark of "CINTU", thereby

causing infringement and passing off of the trademark of the defendant No.1,

and causing serious prejudice to the interests of the trust as well as of the

beneficiaries, it needs to be noted that there is no denial on the part of the

defendants that the trademark 'CINNI' had been assigned to the plaintiff under

the Deed of Assignment dated 05.11.2000 whereunder the Managing Trustee

was to continue as such for his lifetime and was authorized to institute legal

proceedings. Even assuming there had been any denial of the said fact, this

Court could not have taken notice of the same for the purpose of adjudicating

upon an application under Order VII Rule 11 CPC, it being settled law that the

averments made in the plaint must be taken to be correct for the purpose of

adjudicating upon such an application. The remaining facts as to whether the

Managing Trustee was not authorized to file the present suit on account of the

fact that he had been removed as Managing Trustee by a resolution dated

22.04.2009 and as to the reasons for his removal, these are matters which have

to be decided upon after evidence is adduced by both the parties. As regards

this aspect, viz., the removal of the Managing Trustee of the plaintiff-trust, a

suit has been filed by the Managing Trustee at Varanasi (U.P.), challenging his

removal, which is pending trial. It is, therefore, too early in the day to come to

the conclusion that the Managing Trustee, who was admittedly a lifetime

trustee, was liable to be removed and could be removed from the post of

Managing Trustee by the Board of Trustees comprising of two other trustees,

including the defendant No.2.

20. Adverting next to the plea of want of jurisdiction of this Court, it defies

logic that this Court has no territorial jurisdiction to entertain the suit when the

plaintiff allegedly works for gain and carries on business in Delhi through its

distributors, M/s. Sah Agencies Pvt. Ltd., whose registered office is at Delhi

and the defendants have themselves issued a cease and desist notice through

their attorneys to the said M/s. Sah Agencies at Delhi. The challenge to the

license issued in favour of the said M/s. Sah Agencies is also a matter which

cannot be decided pre-trial, more so as certain invoices with regard to supply

of goods in Delhi to M/s. Sah Agencies have also been placed on record by the

plaintiff. Apart from this, the defendants are using the impugned trade mark as

well as soliciting business and trade thereunder in the course of trade in Delhi,

besides other parts of the country, and had issued caution notices in "Aaj"

newspaper, which has wide circulation in Delhi and is available in the market

and to the trade in Delhi. Even otherwise, whether the plaintiff was or was not

carrying on business at Delhi is a matter which can only be decided post-trial.

21. Next, it is proposed to deal with contention of the defendants that there

was no valid assignment of the trademark 'CINNI' in view of the non-recordial

of the said assignment with the Registrar. Though no such plea was raised by

the defendants in their application under Order 7 Rule 11 CPC, in the course of

arguments, it was urged by counsel that in view of Section 45 of the

Trademarks Act the title in the trademark cannot pass unless the assignment or

transmission thereof is registered with the Registrar. Section 45 which is

apposite reads as under:-

"45. Registration of assignments and transmissions. - (1) Where a person becomes entitled by assignment or transmission to a registered trade mark, he shall apply in the prescribed manner to the Registrar to register his title, and the Registrar shall, on receipt of the application and on proof of title to his satisfaction, register him as the proprietor of the trade mark in respect of the goods or services in respect of which the assignment or transmission has effect, and shall cause particulars of the assignment or transmission to be entered on the register.

Provided that where the validity of an assignment or transmission is in dispute between the parties, the Registrar may refuse to register the assignment or transmission until the rights of the parties have been determined by a competent court.

(2) Except for the purpose of an application before the Registrar under sub-section (1) of an appeal from an order thereon, or an application under Section 57 or an appeal from an order thereon, a document or instrument in respect of which no entry has been made in the register in accordance with sub-section (1), shall not be admitted in evidence by the Registrar or the Appellate Board or any court in proof of title to the trade mark by assignment or transmission unless the Registrar or the Appellate Board or the court, as the case may be, otherwise directs".

22. A bare reading of Section 45 shows that the effect and purport of

Section 45 of the Act is that the title of the assignor to the trademark accrues

prima facie on the execution of the deed of assignment and on his furnishing

proof of his title to the Registrar, the Registrar shall register him as the

proprietor thereof. To put it differently, acquisition of title to the trademark is

not dependent upon the assignment being registered, as the purpose of the

registration is only to place on record the fact that title has been created and

registration by itself does not create title which already stands created on the

execution of the assignment deed.

23. The above position is clarified by a bare reading of Entry 27 of the First

Schedule, which lays down the fees payable for the registration of the

assignment and has a graded structure, depending upon the time lapse between

the assignment and the application for registration thereof. Entry 27 of the First

Schedule is reproduced hereunder:-

THE FIRST SHCEDULE FEES

Entry On what payable Amount (Rs.) Corresponding No. Form Number (1) (2) (3) (4)

27. On application under section 45 to TM-23 OR register a subsequent proprietor in a TM-24 case of assignment or transfer of a single trade mark.

If made within six months from the 5000.00 date of acquisition of proprietorship.

If made after expiration of six months but before 12 months from the date of 7500.00 acquisition of proprietorship.

If made after 12 months from date of 10,000.00 acquisition of proprietorship.

24. A glance at the aforesaid entry makes it abundantly clear that the fees

prescribed for registration of a trademark under Section 45 of the Act in a case

of assignment varies with the time period after which the registration is sought

viz., if the application for registration is made within six months from the date

of acquisition of proprietorship, the fees is Rs.5,000/- only. However, if such

an application is made after expiration of six months, but before 12 months

from the date of acquisition of proprietorship, the fees which must accompany

an application for registration is fixed at Rs.7,500/-. If made within 12 months

from the date of acquisition of proprietorship, the fees prescribed is

Rs.10,000/-. Thus, the acquisition of proprietorship clearly precedes the

registration of such proprietorship. The registration is not an act which creates

proprietorship.

25. The above position is further clarified by the proviso to sub section (1)

of Section 45, which lays down that where the validity of an assignment or

transmission is in dispute between the parties, the Registrar may refuse to

register the assignment or transmission, until the rights of the parties have been

determined by a competent court. Thus, the question of title is not a matter

which will be gone into by the Registrar. It can only be adjudicated upon in a

court of competent jurisdiction and after adjudication thereon, the party, in

whose favour the decision is rendered by the competent court, may apply for

registration of its proprietorship/title.

26. In the instant case, the plaintiff-trust has applied for registration of its

title to the trademark 'CINNI' in view of the assignment thereof by the

defendant No.1 to the plaintiff-trust and the matter is stated to be pending

before the Registrar, who has yet to adjudicate upon the same, after arriving at

a satisfaction "on proof of title". Significantly, there is no dispute raised with

regard to the execution of the Deed of Assignment.

27. More than five decades ago a Division Bench of the Madras High Court

in T.I.Muhammad Zumoon Sahib Vs. Fathimunnissa alias Bibijan and Ors.

AIR 1960 Madras 80, taking the view that there was nothing in Section 35 of

the Trademarks Act, which could support the argument that it is only the order

of registration under Section 35 which conferred a right on the heirs of the

original registered proprietor to bring an action for infringement of the

trademark, held as follows:-

" The registration is expressly stated in Section 35 to be "on proof of title", the title already exists in the legal representatives and on proof of such title to his satisfaction, the Registrar registers him as the proprietor of the trademark".

28. It was further held in the aforesaid case that the cause of action is the

infringement of the trademark. The order of the Registrar under Section 35 by

itself does not give a cause of action. All that it gives is the recognition of the

title which already inheres in the legal representatives of the deceased

proprietor.

29. At almost the same time, a Division Bench of the Mysore High Court in

M/s. Hindustan Lever Ltd. Vs. Bombay Soda Factory, AIR 1964 Mysore 173,

relying upon the aforesaid judgment of the Division Bench of the Madras High

Court, held as follows:-

"9. The view of the court below that as the necessary change in the name of the Registered Proprietor had not been effected by the time the suit was instituted, the same should fail, is wrong. The registration of the name of the Proprietor does not confer title on him. It is merely an evidence of his title. The plaintiffs were the owners of the trademark in question at all times. The alteration in the name of the Registered Proprietor became necessary in view of the change in the name of the Company. But that change in the name did not affect the title.

Merely because the trademark in question did not stand registered in the name of the plaintiffs on the date of the suit, the plaintiffs could not have been non-suited................."

30. A learned Single Judge of this Court in M/s. Modi Threads Ltd. Vs.

M/s. Som Soot Gola Factory & Anr., AIR 1992 Delhi 4, relying upon the

Division Bench judgment of the Madras High Court in T.I.Muhammad

Zumoon Sahib's case (supra) and the Division Bench judgment of the Mysore

High court in M/s. Hindustan Lever Limited (supra) observed as follows:-

"6..........It is true that the plaintiff's application for getting transferred the registered trademark in its name is still pending, but that does not debar the plaintiff to protect violation of the aforesaid trademark at the hands of unscrupulous persons by filing an action in a court of law for injunction. It is prima facie clear to me that during the interregnum period when the application of the plaintiff is kept pending for consideration by the Registrar of Trademarks the dishonest persons cannot be allowed to make use of the said trademark in order to get themselves illegally enriched earning upon the reputation built up qua that trademark by the predecessor-in- interest of the plaintiff .................."

31. In M/s. Grandlay Electricals (India) Ltd. & Ors. Vs. Vidya Batra and

Ors. 1998 VII A.D (Delhi) 618, the plaintiff, who had entered into the

partnership with two other persons, who subsequently retired from the

partnership, relinquishing all their rights in the said partnership and assigning

their rights and interests in the partnership property, including the trade name

and trademark 'GRANDLAY' in favour of the plaintiff, brought an action for

infringement of the said trademark against the defendants, who opposed the

same, inter alia, on the ground that the plaintiffs were neither the proprietors

of the trademark 'GRANDLAY' nor the firm 'Grandlay Electricals (India)', as

the said trademark had not been registered in favour of the plaintiffs. Hence the

plaintiffs were debarred from bringing an action for infringement of the

trademark.

32. A learned Single Judge of this Court, while dealing with the aforesaid

preliminary objection, raised by the defendant in paragraph-14 of his

judgment, relying upon the earlier judgment of this Court in M/s. Modi

Threads Ltd. (supra) held as follows:-

"14. ............The plaintiffs herein have further applied to the Registrar of Trade Marks for their names being entered in the register of Trade Marks as a proprietor of the impugned Trade Mark No.214129 in Clause 9 from October 22, 1988 onwards. The said matter is still sub judice and no order thereon has so far been passed. Thus if no action has been taken by the Registrar of Trade Marks on the application of the plaintiffs the plaintiffs cannot be blamed thereof. Admittedly the impugned trade mark "GRANDLAY CABLES' was a registered trade mark under No.214129 dated March 2, 1963 in Clause 9 in relation to the insulated electric wires and insulated cables. It was allotted to the plaintiffs with the consent of the defendants vide the consent arbitration award dated December 5, 1985. Thus the plaintiffs have virtually become the owners and proprietors of the trade mark as per the consent of the other partners in the erstwhile partnership including the defendant Shri C.L.Batra. Hence the defendants should not have any quarrel on the said score and I feel they cannot be permitted to raise any sort of objection on the said ground.........."

33. In Astrazeneca UK Ltd. and Anr. Vs. Orchid Chemicals and

Pharmaceuticals Ltd.., 2006(32) PTC 733 (Delhi), where the plaintiff who

had acquired rights in the trademark 'Meronem' by virtue of deeds of

assignment executed in their favour by M/s. Zeneca Ltd., brought an action

against the defendants for infringement of their trademark by using the

trademark 'Meromer'. The defendants challenged the right of the plaintiffs in

the trademark on the ground that the trademark 'Meronem' was still registered

in favour of M/s.Zeneca Ltd. and, therefore, the plaintiffs were not the

proprietors of the said trademark. Following its earlier decisions, this Court

held as follows:-

"36. The application for registration of trademark in favour of plaintiff No.1 is still pending with the Registrar of Trademarks. During the interregnum the rights emanating from the assignment cannot be denied to the plaintiffs on account of non- registration by the Trademark registry. The plaintiffs have filed the appropriate application and form and have also filed the copies of the correspondence with the Trademark Registry in this Court to show that their application for registration is still pending. Prima facie it cannot be inferred that the application for registration of trade mark on the basis of assignment of the plaintiffs is not pending. Registration/recordal of the name of the proprietor does not confer title but is merely an evidence of title. The rights in the trademark have come to the plaintiffs on the basis of assignment deeds which cannot be denied, prima facie in the facts and circumstances.

34. The law as enunciated above, was recently reiterated by this Court in the

case of CICO Technologies Ltd. and Anr. Vs. Tapcrete Marketing (P) Ltd.

and Ors. 2008 (38) PTC 621 and in Sun Pharmaceuticals Industries Ltd. Vs.

Cipla Ltd., 2009(39) PTC 347 (Del). In both the said cases, the right of the

plaintiff to institute a suit for infringement of registered trademark was

questioned on the ground that the plaintiff was not yet the registered owner of

the impugned trademark. Dealing with the aforesaid question, it was held that

it would play havoc with the assignment and trading of trademarks, expressly

permitted by the Act, if the assignor, who has divested himself of title by

executing an assignment deed can nevertheless continue exercising rights over

the registered trademark and the person in whom title has been vested by

assignment is held not entitled to use the same owing to non-registration. It

was ruled, relying upon the judgments of this Court in Modi Threads Ltd.,

Grandley Electricals Ltd. and Astrazeneca UK Ltd. (supra) that rights in the

trademark accrue on the basis of assignment deeds, though in the records of the

Registrar of Trademark, the mark may still be shown in the name of the

assignor.

35. The Hon'ble Supreme Court in the case of the Collector of C.Ex. Vs.

Vikshara Trading and Investment Pvt. Ltd. 2003 (27) PTC 603 (Supreme

Court), where no document had been shown with regard to the registration of

the subsequent assignment in favour of M/s. Vikshara Trading and Investment

Pvt. Ltd., held as follows:-

" When as a matter of fact it is held that there was an assignment in favour of the first respondent and that fact was not in serious dispute, the mere fact that the assignment was not registered could not alter the position. Therefore, we decline to

interfere with the order made by the Tribunal and to that extent the appeal is dismissed in respect of respondent No.1"

36. In view of the aforesaid law laid down by the Hon'ble Supreme Court

and the various High Courts, including our own High Court, this Court has no

hesitation in coming to the conclusion that though Section 45 (2) is couched in

premptory language, the assignee, immediately on assignment, i.e. by writing

acquires the rights of the registered holder. This is obviously for the reason that

"assignment" has been defined in Section 2(b) of the Act to mean "the

assignment in writing by act of the parties concerned". Thus, it is the act of the

parties which vests title in the assignee and not the registration thereof.

Registration under Section 45(1) is "on proof of title". In other words, title

inheres in the assignee even before registration. Section 2(v), on the other

hand, defines "registered proprietor" in relation to a trademark to mean "the

person for the time being entered in the register as proprietor of the

trademark". Thus, though an assignee of the trademark is vested with the title

to the trademark by virtue of the assignment which is by an act of the parties

concerned, in contra distinction, the "registered proprietor" of a mark is vested

with title of the trademark on account of his name being entered in the register

as proprietor of the trademark.

37. The matter is further clarified by the definition of transmission in

Section 2(zc) of the Act wherein "transmission" has been defined to mean

"transmission by operation of law, devolution on the personal representative of

a deceased person and other mode of transfer, not being assignment". It is not

difficult to visualize a case where the title in the trademark may devolve on the

legal representative of a deceased person or in the case of an entity may

devolve by operation of law to the successor-in-interest, but such transmission

may not be recorded with the Registrar, though the person/entity concerned has

applied for registration thereof. Certainly, in such a case it cannot be said that

there can be no transmission without registration. Applying the same rationale,

the argument that the assignee acquires no title without registration of the

assignment deed is specious to say the least.

38. For all the aforesaid reasons, I find no merit in the application filed by

the defendants under Order 7 Rule 11 read with Order 1 Rule 11 CPC nor there

is any merit in the prayer of the defendants that the defendants be given the

conduct of the suit.

39. Dealing next with the injunction application, in my considered opinion,

for all the reasons aforesaid, the plaintiff has made out a prima facie case in its

favour. The balance of convenience also tilts in favour of the plaintiff. The

result of the test of irreparable injury also goes in favour of the plaintiff-trust

which has acquired valuable vested rights in the trademark 'CINNI' by virtue of

the Deed of Assignment executed by the defendants in its favour and which

has been using the said trademark for its products ever since. The defendants

have nowhere denied the execution of the Deed of Assignment, which is

signed by the defendant No.2. The effect and purport of the said Deed of

Assignment is also not in dispute nor it is denied that no suit has been

instituted for the cancellation of the said Deed of Assignment, which still holds

the field. Since the entire action instituted by the plaintiff-trust is on the basis

that the defendants have started manufacturing and marketing various types of

fans using the impugned trademark 'CINNI' that already stood assigned to the

plaintiff-Trust, the interim orders passed by this Court on 1st May, 2009,

restraining the defendant No.2 from interfering with the business of the

plaintiff in terms of the assignment deed dated 05.11.2000 and further

restraining the said defendant from transferring the impugned trademark

'CINNI' that stood assigned to the plaintiff-trust by the aforesaid assignment

deed in favour of any third party except the plaintiff-trust, appear to be wholly

justified, and are made absolute.

IA No.5726/2009 stands allowed to the aforesaid extent.

IA Nos.6870/2009 and 6871/2009 are dismissed.

REVA KHETRAPAL, J.

SEPTEMBER 11, 2009 km/dc