Delhi High Court
Chartered Financial Analysis ... vs The Institute Of Chartered ... on 5 April, 2010
Author: Manmohan Singh
..* HIGH COURT OF DELHI : NEW DELHI
+ IA No. 14353/2008, IA No. 14354/2008 and IA No.
1865/2009 in CS (OS) No. 210/2004
Chartered Financial Analysis Institute ...Plaintiff
Through: Mr. Sanjay Jain, Sr. Adv. with
Ms. Ruchi Jain and Mr. Rajender Kumar,
Mr. Ashish Marbinang, Ms. Latha R.
Nair and Mr. Sumit Rajput, Advs.
Versus
The Institute of Chartered Financial Analysts
Of India and Ors. ...Defendants
Through: Mr. Mukul Rohatgi, Sr. Adv., Mr.
Rajiv Nayyar, Sr. Adv. with Ms.
Pratibha M. Singh, Ms. Saya
Chowdhary and Ms. Archana
Sachdeva, Advs for D-1 & 2
Mr. C.S. Vaidyanathan, Sr. Adv. with
Kirtiman Singh, Adv. for D- 4 to 6
Mr. Gaurav Miglani, Adv. for D-3
Judgment decided on : 5th April, 2010
Coram:
HON'BLE MR. JUSTICE MANMOHAN SINGH
1. Whether the Reporters of local papers may
be allowed to see the judgment? Yes
2. To be referred to Reporter or not? Yes
3. Whether the judgment should be reported
in the Digest? Yes
MANMOHAN SINGH, J.
1. This order shall decide three applications being IA No.
14353/2008 and IA No. 14354/2008 filed under Order VII Rule 11 of
the Code of Civil Procedure, 1908 (hereinafter referred to as „the CPC)
by defendant nos. 4 to 6 and defendant no. 3 respectively for rejection of
the plaint and IA No. 1865/2009 filed by defendant nos. 1 and 2 under
Order XXXIX Rule 4 read with Section 151 of the CPC for vacation of
the interim injunction granted by this Court vide order dated
04.08.2006.
2. The present suit was filed seeking mandatory injunction
restraining the defendants from using the plaintiff‟s trademarks CFA,
CHARTERED FINANCIAL ANALYST etc., passing off and rendition
of accounts.
3. Vide order dated 04.08.2006, this Court granted an
injunction whereby the original defendant nos. 1 and 2 were restrained
from using the trade marks/service marks "CFA, Chartered Financial
Analysts of India, ICFA and ICFAI". The said injunction was to become
operative after the end of the then current academic session. The
relevant portion of the interim order dated 04.08.2006 reads as under :
"In view of above, I allow the application under Order
XXXIX Rules 1 & 2 CPC and restrain the Defendants,
during the pendency of the suit, from using any of the
trademarks or service marks CFA, Chartered Financial
Analyst, The Institute of Chartered Financial Analysts of
India, ICFA and ICFAI or any other name or mark which
may be identical or deceptively similar to these marks and
from passing off their programmes or business as that of the
Plaintiffs. However, this order of injunction will not come
into effect till the end of current academic session of the
CFA programme run by the Defendants. Nor will anything
said herein will mean final expression of opinion of this
Court."
4. Subsequent to the passing of the order dated 04.08.2006, an
application (IA No.9950/2007) under Order 1 Rule 10 with Order 6
Rule 17 CPC was moved by the plaintiff in order to implead certain
Universities (Tripura, Meghalaya, Mizoram and Dehradun) sponsored
by the defendant No.1, as necessary parties to the present suit.
5. The reason given by the plaintiff for the purpose of
amendments/impleadment of universities sponsored by the original
defendants owes its origin to an application filed by the original
defendants filed as IA No. 1589/2005 in which the original defendants
in the midst of arguments on the plaintiff‟s application under Order
XXXIX Rules 1 and 2 of the CPC being IA No. 11547/2004 claimed
that their group had grown with the addition of various institutes
including their sponsored universities which have been newly
impleaded.
6. The following is the justification given by the plaintiff in
para 11 of the amended Plaint for impleadment of defendant nos. 3 to 6:
"Defendant Nos. 3-6 are the universities established,
sponsored and controlled by Defendant No.1 and permitted
under a purported license of Defendant No.1 to use the
impugned trade mark/trade name CFA, ICFAI, INSTITUTE
OF CHARTERED FINANCIAL ANALYSTS. In this
connection, the Plaintiff wishes to submit that :
a) Defendant No.1 has made an application for the
mark "ICFAI UNIVERSITY" as a trade mark before the
Registrar of Trade Marks, claiming itself to be the owner of
the mark in question.
b) The brochure published by Defendant No.1 for its
various programmes contains a disclosure statement to the
effect that these universities are sponsored, controlled and
established by Defendant No.1 and that their use of the trade
mark/trade name in their respective names is under license of
the said Defendant.
c) Various statues enacted at the instance of
Defendant No.1 for establishment of the proposed
respondents as private universities acknowledge the role of
Defendant No.1 in creation, administration and management
of these proposed respondents.
d) The Defendant No.1 has been operating a website
www.icfai.org which features a link to the "ICFAI
UNIVERSITY", describing the various universities
sponsored by Defendant No.1, namely Defendant Nos.3-6 to
herein.
e) The prospectus for the impugned CFA program
offered by the ICFAI University, Tripura (Defendant No.3
herein) in the Section headed "Remittance Information"
advises students to make the payment through credit cards at
the respective branch offices of Defendant No.1 and in the
Section "Admission Policies" requires the applicants to pay a
fee to "ICFAI common fund", a fund managed by and for the
benefit of Defendant No.1.
f) The Defendant No.1 and Defendant No.3 have
been acting in collusion with each other to the detriment and
grave prejudice of the Plaintiff‟s business and activities under
its CFA designation.
7. The aforesaid application of the plaintiff was allowed by this
Court vide order dated 05.08.2008.
8. In view of the above said, the plaintiff was also allowed to
amend the following paras as per the amended plaint :
"42. The Plaintiff further says and submits that it has a
cause of action against Defendants No.3-6 because the
Statutes whereunder these have been created, the brochure and
other materials published by Defendant No.1 and other acts
taken by these Defendants in collusion and nexus with
Defendant No.1 fully demonstrate that they have been acting
at the behest and instigation of Defendant No.1 herein. The
cause of action is continuing and will continue till the
Defendant Nos.3 to 6 and are injuncted by this Hon‟ble Court
from using the impugned marks CFA and CHARTERED
FINANCIAL ANALYST as part of their trading style and as
the name of their course.
43.................................................................................
.....................................................................................
Further, this Hon‟ble Court has the territorial jurisdiction to
entertain and try the present suit against the Defendant Nos.3-
6 because :
a) the examination for the impugned CFA Program
offered by the Defendant No.3 are held at various test centres
in India including one in New Delhi;
b) the advertisement relating to the impugned CFA
programme offered by Defendant No.3 have been published
and regularly appearing in various newspapers published and
circulated in New Delhi;
c) the brochure and other information relating to the
Defendants and the various courses offered by them including
the impugned CFA programme are available on the website
www.icfai.org operated and owned by Defendant No.1 and
these are accessible to and downloadable by the
students/candidates in New Delhi;
d) the prospectus for Defendant No.3 under the
heading "Remittance Information" provides information for
on-line facility for filling in the applications and making
payment through the internet by logging on the website
www.icai.org. Further, the various branch offices of
Defendant No.1 are indicated as the centers available to
renders assistance to the students equipped to accept the
completed application forms, fee and confirm spot admission,
supply all courseware, facilitate downloading admit cards,
sale of all publications of Icfai University Press including
journals, magazines and books.
45...........................................................................
...............................................................................
(aaa) An order of mandatory injunction be granted
against the Defendants both jointly and severally, directing
them to take all appropriate steps to change their respective
names including those of Defendant Nos.3 to 6 by deleting the
element "ICFAI" and the expression "Institute of Chartered
Financial Analyst" there from and to take all steps to amend
the various statues whereunder these Defendants has been
created including their nomenclature as to remove all
references therein to the trademarks, service marks and/of
trade name CFA, C.F.A., CHARTERED FINANCIAL
ANALYST, ICFA, INSTITUTE OF CHARTERED
FINANCIAL ANAYLYSTS OF INDIA AND ICFAI."
9. The defendants herein preferred appeals being FAO(OS)
Nos.415-416/2008 before a Division Bench of this Court. The said
appeals were disposed off by the learned Division Bench vide its order
dated 17.11.2008 in terms whereof the defendants No. 3 to 6were
permitted, inter alia, to raise their objections regarding maintainability
of the present suit qua them before the learned Single Judge.
10. Pursuant to the aforesaid order dated 17.11.2008 passed by
the learned Division Bench, the defendants No. 3 to 6 moved
applications (being IA Nos.14353/2008 and 14354/2008) under Order
VII Rule 11 wherein the maintainability of the present suit qua them
was challenged.
11. It is pertinent to mention that while deciding the application
under Order VI Rule 17 read with Order I Rule 10, similar submissions
of the defendant nos. 3 to 6 were also made and the same were recorded
in paras 12, 13 and 18 of the order dated 05.08.2008 passed by this
Court.
12. The main contentions as raised by the defendants No.3 to 6
in the aforesaid applications in respect of the maintainability of the
present suit are as under :
(i) That a bare reading of the plaint as amended by the plaintiff
would reveal that the same does not disclose any cause of
action whatsoever qua the defendants and thus the plaint is
liable to be rejected. The plaint is also stated to be barred by
law and barred by limitation as well.
(ii) That the defendants are creatures of Statutes which have been
enacted by their respective competent State Legislatures
therefore, the respective States are necessary parties to the
suit and due to their non impleadment, the plaint is liable to
be rejected.
(iii) That by way of the amended suit, a relief has now been sought
for amending the Statutes pursuant to which the defendants
have been constituted and such a prayer is not maintainable in
light of settled principles of law.
(iv) The allegations that have been made by the plaintiff in the
plaint pertains to the alleged collusion between the defendant
No.1 (ICFAI) and defendant Nos.3 to 6, on account of which
the concerned Legislations have been enacted and defendant
Nos.3 to 6 have been established as Statutory Universities and
it is not open to a party to challenge the validity of a statutory
enactment on grounds of mala fide and collusion.
(v) The defendants are seeking the rejection of the plaint in its
entirety and not in parts as objected by the plaintiff.
(vi) That ICFAI is merely the sponsor of the defendants and is not
involved in their day to day functioning. The defendant nos. 3
to 6 are independent Statutory Authorities which are not under
the control or supervision of ICFAI.
13. For the foregoing reasons, it is alleged by the defendants that
the plaint is liable to be rejected since it does not disclose any „cause of
action‟ against the defendants on the following points:
(i) That the failure of the plaintiff to even make the
necessary pleadings in the plaint qua the Statutes under
which the defendants have been constituted clearly
disentitles the plaintiff for the consideration of any relief.
(ii) The plaintiff‟s failure to make even the necessary
averments against the defendants clearly establishes that
there exists no "cause of action" in favour of the plaintiff.
(iii) The Courts have held time and again that if on a
meaningful reading of the plaint it is manifestly clear
that the suit is meritless it can be dismissed under the
provisions of Order VII Rule 11. ("T. Arivandandam Vs.
T.V. Satyapal & Anr." (1997) 4 SCC 467 at para 5 and
"Azhar Hussain v. Rajiv Gandhi" 1986 (Suppl) SCC
315 at para 12.)
14. It is also submitted by Sh. Vaidyanathan, learned Senior
Counsel for Defendant Nos. 4 to 6 that the plaintiff has failed to implead
the respective States as necessary parties in view of the fact that the
defendants are creatures of Statutes which have been enacted by
competent State Legislatures. Admittedly, the defendants in their own
capacity have no jurisdiction, authority or competence to amend in any
manner whatsoever the Statutes/Acts by which they have been
established. The jurisdiction of the Courts extends only to
determination of the validity of a statute.
15. The defendants have brought to the notice of this Court that
by way of the present suit a relief has now been sought by the plaintiff
for amending the statutes pursuant to which the defendants have been
constituted.
16. The defendants have argued that it is not within the domain
of the Courts to either direct the Legislature to make a law or to amend
any existing law (Suresh Seth Vs. Commr. Indore Municipal
Corporation and Ors., (2005) 13 SCC 287 and Municipal Committee
Patiala Vs. Model Town Resident Association & Ors., (2007) 8 SCC
669).
17. It is submitted by the defendants that the process for
establishment of the Universities had started much prior to the
injunction order and some of the Universities were in fact already in
existence even when the order dated 04.08.2006 was passed. The
Courts have time and again held that the grounds on which a Statute
may be impugned are only two namely:
(i) Lack of legislative competence of the Legislature enacting
the law.
(ii) Violation of any Fundamental Right guaranteed in Part III of
the Constitution or any other constitutional provision.
18. The next submission of the defendants is that a challenge to
Legislation on the ground of mala fides is not maintainable and deserves
to be rejected at the threshold. The defendants are independent
Statutory Authorities that have been duly established by their respective
State Legislatures. ICFAI is merely the sponsor of the said universities
and is not involved in the day to day functioning and administration of
the same. ICFAI does not enjoy any control or supervisory power over
the defendants.
19. The original defendants have been created for setting up of
autonomous bodies in order to run and control the working of the
defendants No.3 to 6. Further, no license agreement was ever executed
between defendant no. 1 and the defendant nos. 3 to 6. Courts have
time and again held that the question of repugnancy under Article 254
arises only when a law made by the Parliament and a law made by the
State Legislature occupy the same field with respect to one of the
matters enumerated in the Concurrent List.
20. In its reply to both the applications for rejection of plaint, the
plaintiff has submitted that it has a valid cause of action against
defendant nos. 3 to 6 and that its plaint is not barred by any law. The
said defendants are linked inextricably to defendant no. 1 insofar as they
are using the trademarks injuncted against because defendant no. 1 has
licensed them and they are under the sponsorship and control of
defendant no. 1 and the right of the plaintiff to seek an injunction
against the defendant nos. 3 to 6 cannot be defeated by the defendant
No.1‟s sponsoring acts of converting its institutes into universities.
21. Learned counsel for the plaintiff has referred order dated
04.08.2006 wherein it was observed that the right of the plaintiff to seek
an injunction against the defendants cannot be defeated by the original
defendants‟ sponsoring acts of converting their institutes into
universities. The relevant extract from the order is as follows:
"A very interesting feature of the developments that take
place subsequent to the withdrawal of the license and
during the pendency of the suit is the establishment of
certain universities by state legislatures. The ICFAI
University Act of 2003 of Uttaranchal in its Preamble says
"An Act to establish and incorporate an university I the
state, with emphasis on providing high quality and industry
relevant education in the areas of Applied Financial
Management, General Management, Applied Science &
Technology, sponsored by the Institute of Chartered
Financial Analysts of India (ICFAI), Hyderabad, Andhra
Pradesh and to provide for matters connected therewith or
incidental thereto." Similar legislations are passed by the
states of Sikkim and Tripura. The Act of Sikkim also
acknowledges the role of Institute of Chartered Financial
Analysts of India (ICFAI), Hyderabad in sponsoring the
legislation. Mr. Sudhir Chandra submits that it is not
possible to injunct a legislature from using any particular
„term‟ in its legislation or to declare that the name of ICFAI
University is not permissible in law. Nonetheless, it is true
that all the universities have been created during the
pendency of the suit. The Defendants have been able to go
ahead and sponsor the Acts. This will not, however, creates
a right in them to violate the trade marks of the Plaintiffs.
Their rights to use the trade marks came to an end in 1997.
If they have gone ahead to obtain legislative sanctions to
their trade marks, they have done so at their own peril. The
rights of the Plaintiffs cannot be defeated by the act of the
Defendants during the pendency of the suit. For the
present, the attention of the court can be confined to the
averments in the plaint and the rights claimed by the
Plaintiffs against the Defendants. It is for the Plaintiffs to
decide if and when the Plaintiffs could seek redressal of
their grievance against those legislations. The Plaintiffs
have been able to establish that they are entitled to an
injunction. This right cannot be defeated by the Defendants
sponsoring Acts to convert their institute into universities."
22. In support of his submissions Mr. Sanjay Jain, learned Senior
counsel for the plaintiff has referred replies, documents and various
provisions of statutes pertaining to the Universities/ defendant Nos. 3 to
6. The details of the same are given in paras 26 to 31 of this order.
23. It is averred that defendant No.1‟s own brochure states that
the universities are the licensees of the marks ICFAI etc. attached hereto
and an extract from the said brochure is reproduced hereinbelow :
"the ICFAI University represents the multi state network of
universities, sponsored by the Institute of Chartered
Financial Analysts of India under specific University Acts
in Uttaranchal, Tripura, Sikkim, Meghalaya, Mizoram and
Nagaland under respective legislations. The Governments
of Rajasthan and Chhattisgarh issued letters of intent to the
Institute for the establishment of universities........
.............The Institute, a non-profit society established
under the A.P. (Telangana Area) Public Societies, Act 1350
F(Act 1 of 1350), is the sponsor of the University and also
the owner of the branch offices, trademarks, service marks
and trade names like ICFAI, etc. The University is a
licensed user of these trademarks, service marks and
names."
24. Mr. Jain has submitted that the defendant no.1 is alleged to
have administrative, financial and other control over the newly
impleaded defendants. All the statutes are substantially similar and have
been drafted and submitted to the respective state governments on the
basis of the original proposals submitted by the original defendant No.1.
A copy of one statute pertaining to the defendant No.3, ICFAI
University Tripura is filed.
25. Learned counsel has referred the provisions of the said
statute showing extensive control and supervision of the original
defendant No.1 over the functioning of the said university are
reproduced as follows:
i) S. 2(1) "Sponsor‟ means the Institute of Chartered
Financial Analysts of India which is registered as a
Society under the Andhra Pradesh (Telangana
Area) Public Societies Act, 1350 Fasli (Act 1 of
1350) at Hyderabad, Andhra Pradesh (Registration
No. 1602 dated 20th October 1984)
ii) S. 2(1)(xxiv) „Statues‟ means the Statues of the
University
iii) S. 2(1) (xxvii):- "The CFA Charter and
Designation" means the Chartered Financial
Analyst Charter and Designation, conferred by the
University or by an agency duly authorized upon
the successful candidates of the Chartered
Financial Analyst (CFA) Program administered by
the University or by an agency duly authorized by
the University.
iv) S. 2(1)(xxix):- "The Council for Chartered
Financial Analysts" means the Society which is
registered under the Andhra Pradesh (Telangana
Area) Public Societies Registration act, 1350 ... at
Hyderabad, Andhra Pradesh.
v) S.3 (1) The Sponsor shall have the right to
establish the University in accordance with the
provisions of this Act.
vi) (2) An application containing the proposal to
establish a University shall be made to the State
Government by the Sponsor
The proposal may contain the following
particulars, namely:
(a) The objects of the University along with
the details of the Sponsor
.............
(k) The years of experience and expertise in
the concerned discipline at the command of
the Sponsor as well as the financial
resources
vii) S.4 (1):- Where the State Government, after such
inquiry as it may deem necessary is satisfied that
the Sponsor has fulfilled the conditions specified
in sub-section (2) of Section 3, it may direct the
Sponsor to establish an Endowment Fund
viii) S. 7 :- The objectives for which the University is
established as follows:
(a) To provide instruction, teaching, training and
research in specialized fields of Finance and
Management including Financial Analysis
(leading to the CFA Charter and
Designation), .........
..........
(e) To collaborate with .........including the
Council of Chartered Financial Analysts in
India or abroad...
ix) S.8:- Subject to other provisions of this Act the
statutes or rules made there under or any other
relevant laws for the time being in force or any
other relevant laws for the time being in force, the
University shall have the following powers,
namely....
(c) To confer degrees, diplomas,
charters, certificates or other academic
distinctions and professional designations
including CFA Charter or designation .... In
the manner and conditions laid down in the
statutes.
x) S.13 (1):- The Sponsor shall, with the prior
approval of the Visitor appoint a person suitable to
be appointed as the Chancellor of the University
xi) S.20 (1):- The Board of Governors shall consist of
the following:
(a) The Chancellor
(b) The Vice-Chancellor
(c) Three persons nominated by the
Sponsor
(d) .......
xii) S.21 (1):- The Board of Management shall consist
of :
(a) The Vice-Chancellor
(b) The Registrar
(c) Three persons nominated by the
Sponsor
xiii) S.27 (1):- The first Statutes framed by the Board
of Governors shall be submitted to the State
Government for its approval, which may, within 3
months from the date of receipt of the Statutes
give its approval with or without modifications.
xiv) S.27(2):- Where the State Government fails to take
any decision with respect to the approval of the
Statutes within the period specified under sub-
section (1) it shall be deemed to have been
approved by the State Government.
xv) S.28 :- The Board of Governors may with prior
approval of the state government make new or
additional statutes or amend or repeal the statutes
xvi) S.40:- The Sponsor/ University shall establish an
Endowment Fund of at least Rupees Fifty Lakhs
xvii) S.41(1):- The University shall establish a general
fund to which the following amount shall be
credited, namely
............
(c) all contributions made by the Sponsor
xviii) S.42 (1):- The University shall also establish a
Development Fund to which the following funds
shall be credited, namely,
......
(d) all contributions made by the Sponsor
(e) all incomes received from the
Endowment Fund
xix) S.47 (1) Dissolution of University:- (1) If the
Sponsor proposes dissolution of the University in
accordance with the law governing its constitution
or incorporation, it shall give at least three months
notice in writing to the State Government.
..........
xx) (3) The manner of winding up of the University
would be such as may be prescribed by the State
Government in this behalf. Provided that no such
action will be initiated without affording a
reasonable opportunity to show cause to the
Sponsor.
26. He argues that the composition of the officers of the newly
added defendants No.3 to 6 is available on the respective websites of the
defendant universities. Extracts from these websites have been placed
on record by the plaintiff. A perusal of the details of the officers shows
that Mr. Subhash Sarnikar, the Chairman of the Board of Governors of
defendant No.1 is himself the Chancellor of these Universities. The fact
that the Chancellor appointed by defendant No.1 to serve these
defendant universities is none other than the Chairman of its own Board
of Governors shows the extent of the administrative control exercised by
the defendant No.1 over the affairs of the defendant Universities.
27. Further he relied upon a copy of the Annual report of the
newly impleaded defendant No.6 downloaded from the internet which
shows that the defendant No.1 has spent a huge sum of money to
purchase land for defendant No.6. The defendant No.1 continues to
sponsor new universities and in connection therewith, acquire land for
such purpose.
28. According to Mr. Jain, the UGC approval granted to the
defendant No.3 clearly states that defendant No.1 is the sponsor of this
university and that there shall be no funding from the state government.
29. In order to buttress his submission, Mr. Jain has referred the
case of DDA Vs. Skipper Construction Company, AIR 1996 SC 2005
wherein the Supreme Court held that the fact that an individual and
members of his family have created several corporate bodies would not
prevent the court from treating all of them as one entity belonging to and
controlled by that individual and from finding that these corporate
bodies are merely cloaks behind which lurks that individual and/or
members of his family and that the device of incorporation was really a
ploy adopted for committing illegalities and/or to defraud people.
30. Mr. Jain has argued that in a similar fashion the defendant
No.1 is the creator, originator and founder of the newly impleaded
defendant universities and these universities are the brain behind the
defendant No.1. It has also been brought to my notice that contempt
actions filed in Gauhati by the employees of the defendant No.1 on
behalf of one of the newly impleaded defendants, namely, the ICFAI
University Tripura, and the same were withdrawn by defendant no. 3
after the plaintiff showed the nexus between these employees and the
defendant No.3 by way of its counter affidavit in the said contempt
petitions.
31. Lastly he referred the contempt proceedings initiated by the
plaintiff against the defendant No.1 in the United States of America, the
Virginia Court was pleased to allow these proceedings on 30th March,
2009. The following observations from the judgment are noteworthy in
that they demonstrate a judicial determination on the control exercised
by defendant No.1 over the universities. These read as under:
"Defendant‟s arguments are unpersuasive. To begin for the
reasons discussed......., the unequivocal language of the
1998 order did not limit itself to Defendant‟s CFA program.
Next, although Defendant claims it exerts no control over
ICFAI University, Defendant lists ICFAI University as one
of its "constituent units" - units Defendant refers to
interchangeably in its prospectus. Moreover, ICFAI
University has the same physical address as Defendant....
ICFAI University officials have the same email address
suffix as Defendant‟s employees, Defendant filed the
application with the PTO for the mark "ICFAI University",
Defendant contacted IANT in order to provide exams I the
US for ICFAI University students, Defendant paid IANT
for conducting exams on behalf of ICFAI University, and
ICFAI University students sign an enrolment agreement
directly with Defendant. This evidence belies any notion
that Defendant exerts no control over - or, at the very least,
has not acted in concert with - ICFAI University as this
provision of the injunction was repeatedly violated."
32. In rejoinder submissions, Sh. Vaidyanathan, learned Senior
Counsel for the Defendant Nos. 4 to 6 has further submitted that there is
a fundamental distinction between an authority such as the Registrar of
Companies and the Registrar of Trademarks and the Legislature of a
State. The actions of such authorities can be challenged on numerous
grounds whereas the actions of the Legislature can be challenged on
very restricted and special grounds.
33. It is further argued by the defendants that admittedly the
Trade Marks Act, 1999 has been enacted by the Parliament under Entry
49 of List I whereas the Statutes under which the defendants have been
enacted by the respective State Legislatures are under Entry 32 of List II
and Entry 25 of List III.
34. It is submitted by the defendants that the principle that a
special Statute will prevail over a general Statute has no application in
the present case in as much as whereas the Trade Marks Act deals with
trademarks/service marks (i.e. intellectual property), the Statutes under
which the defendants have been constituted deal with the constitution
and incorporation of Universities (i.e. education). Thus, there is no
question of any conflict between the two or as regards prevalence of
one Statute over the other.
35. Learned counsel for the defendants referred to Common
Causes Vs. Union of India & Ors., JT 2008 (4) SC 317 wherein the
Supreme Court held that it cannot give directions of a legislative or
executive nature as it would not be proper for the judiciary to encroach
upon such matters which lie outside its domain.
36. While contending that there are only two grounds on the
basis of which a statute may be impugned/ interfered with and there may
not be any third ground warranting such action, learned counsel for the
defendants has referred to State of A.P. Vs. McDowell & Co., (1996) 3
SCC 709, the relevant portion whereof is reproduced as under :
"43. .....The power of Parliament or for that matter, the
State Legislatures is restricted in two ways. A law made by
Parliament or the legislature can be struck down by courts
on two grounds and two grounds alone, viz., (1) lack of
legislative competence and (2) violation of any of the
fundamental rights guaranteed in Part III of the Constitution
or of any other constitutional provision. There is no third
ground. ................ An enactment cannot be struck down
on the ground that court thinks it unjustified. Parliament
and the legislatures, composed as they are of the
representatives of the people, are supposed to know and be
aware of the needs of the people and what is good and bad
for them. The court cannot sit in judgment over their
wisdom. In this connection, it should be remembered that
even in the case of administrative action, the scope of
judicial review is limited to three grounds, viz., (i)
unreasonableness, which can more appropriately be called
irrationality, (ii) illegality and (iii) procedural
impropriety...."
37. Challenge to the validity of a statute must be pleaded and
clearly laid out in the grounds of the pleadings and if not, the same must
be rejected in limine. Counsel referred to State of Haryana Vs. State of
Punjab,(2004) 12 SCC 673 wherein it was observed as under :
"82. It is well established that constitutional invalidity
(presumably that is what Punjab means when it uses the
word "unsustainable") of a statutory provision can be made
either on the basis of legislative incompetence or because
the statute is otherwise violative of the provisions of the
Constitution. .... Furthermore, merely saying that a
particular provision is legislatively incompetent [ground
(ii)] or discriminatory [ground (iii)] will not do. At least
prima facie acceptable grounds in support have to be
pleaded to sustain the challenge. In the absence of any such
pleading the challenge to the constitutional validity of a
statute or statutory provision is liable to be rejected in
limine."
Various other decisions have been referred by the learned
counsel for the defendant nos. 3 to 6 which are on the same principle.
38. I have gone through the rival contentions of the parties on the
aspect of maintainability of the suit against Defendant no. 3 to 6. It is
pertinent to mention that the grievance of the plaintiff against the
defendants is to restrain them from using the trade marks in question
and the plaintiff is not per se impugning any piece of legislation either
passed by the Central Government or any State Government. The prayer
made in the suit is thus consequential in nature in as much as that once
the defendants are restrained from using the marks, they shall also be
directed to take the necessary steps seeking amendments in the relevant
statutes. The corollary drawn by the defendants that it will tantamount to
directing the Legislature to make or amend laws would be enlarging the
dispute which the court is not concerned with.
39. No doubt, it is a settled law that the court may not direct the
Legislature to amend the laws. But, in this case, the situation
contemplated by the defendants does not arise. There is no challenge as
such to the legislations under which these universities are passed. The
defendants by stating that they are helpless to seek any steps for change
of name as the university is formed by an act of the State Legislature is
trying to shift the burden on the State and attempting to be sheltered by
it in order to misuse the trade mark. The States have at best recognized
the universities by forming the Acts. It is the defendant nos. 1 and 2 who
are the mastermind and the sponsors of the universities. The mark
ICFAI has of course been permitted to be used by the defendants to the
said universities.
40. No circumstances can give rise to an anomalous situation
where the court will become powerless and remain a silent spectator
only because some statutorily recognized university is formed and is
misusing the trade mark which was earlier being misused privately. The
said situation will not make any difference and will not give any
immunity to the said university from the court.
41. Section 153 of the Trade Marks Act has a binding effect on
the Government. Thus, even the Government is no exclusion when it
comes to misuse of trade marks. This makes the contention of the
defendants meritless. Again, the dispute is pertaining to the trade marks
in the present matter (which were earlier used by the defendant no. 1 and
2 and thereafter extended later on to the defendant no. 3 to 6) and not
the legislation per se. Thus, the question of impleadment of States as
parties to the proceedings does not arise.
42. The contention of the plaintiff that the special law shall
prevail over general law is equally apposite. The preamble of the trade
mark law reads as under :
"An Act to amend and consolidate the law relating to
trade marks, to provide for registration and better
protection of trade marks for goods and services and for
the prevention of the use of fraudulent marks.
Moreover in view of developments in trading and
commercial practices, increasing globalization of trade
and industry, the need to encourage investment flows and
transfer of technology and the need to simplify and
harmonize trade mark management systems, it has been
considered necessary to bring out a comprehensive
legislation on the subject."
The trade mark law is a special act meant to protect trade marks
from misuse and confusion and deception. The action taken in the
special Act and remedies sought which are mentioned therein which
otherwise are not in derogation to the general law are thus not barred
unless the general law expressly or impliedly excludes the applicability
of the said law. Thus, the trade mark dispute under the Trade Marks Act
cannot be rendered redundant only because of the existence of State
Acts recognizing the universities.
43. If the interpretation being advanced by the newly impleaded
defendants was accepted, it would arm all private Universities created
under State Acts with a claim of immunity from the Trade Marks Act,
1999 concerned with the protection of trademarks and trade names.
Further, defendant No. 1 was aware of the pendency of the present suit
at the time of sponsoring/ advancing the trade name/trade marks under
dispute to the Universities and the state governments concerned and
even some of the States, the defendant no. 1 has sponsored the trade
mark and name after passing of the interim order.
44. Learned counsel for the plaintiff in support of his submission
has referred various judicial precedents and submitted that the
nomenclature of the application/petition is immaterial and only the
substance of the same is to be seen. He further submits that in case the
interim order is granted against defendants No.3 to 6, there would be no
inconvenience or bar to the States as only directions are to be given to
the Universities to change their respective names. He has referred
various case laws in this regard which read as under :
(i) State of West Bengal Vs. Kesoram Industries Ltd. & Ors.,
(2004) 10 SCC 201
"31(5). Where the legislative competence of the
legislature of any State is questioned on the ground that
it encroaches upon the legislative competence of
Parliament to enact a law, the question where the
legislative competence of the legislature of any State is
questioned on the ground that it encroaches upon the
legislative competence of Parliament to enact a law, the
question one has to ask is whether the legislation relates to
any of the entries in List I or III. If it does, no further
question need be asked and Parliament‟s legislative
competence must be upheld. Where there are three lists
containing a large number of entries, there is bound to be
some overlapping among them. In such a situation the
doctrine of pith and substance has to be applied to
determine as to which entry does a given piece of
legislation relate. Once it is so determined, any incidental
trenching on the field reserved to the other legislature is of
no consequence. The court has to look at the substance of
the matter. The doctrine of pith and substance is sometimes
expressed in terms of ascertaining the true character of
legislation. The name given by the legislature to the
legislation is immaterial. Regard must be had to the
enactment as a whole, to its main objects and to the scope
and effect of its provisions. Incidental and superficial
encroachments are to be disregarded."
(ii) State of A.P. & Ors. Vs. McDowell & Co. & Ors., (1996) 3
SCC 709
"17. Part XI of the Constitution deals with relations
between the Union and the States. Chapter I in this part
bears the heading "Legislative Relations: Distribution of
Legislative Powers". Clause (1) of Article 245 declares that
"Subject to the provisions of this Constitution,
Parliament may make laws for the whole or any
part of the territory of Indian, and the Legislature
of a State may make laws for the whole or any
part of the State."
Clause (1) of Article 246 declares that
"Notwithstanding anything contained in clauses
(2) and (3), Parliament has exclusive power to
make laws with respect to any of the
matters enumerated in List I in the Seventh
Schedule (in this Constitution referred to as the
„Union List‟)."
Clause (2) of Article 246 declares that
"Notwithstanding anything in clause (3),
Parliament, and, subject to clause (1), the
Legislature of any State also, have power to make
laws with respect to any of the matters
enumerated in List III in the Seventh Schedule (in
this Constitution referred to as the „Concurrent
List‟)."
Clause (3) of Article 246 then declars that
"Subject to clauses (1) and (2), the Legislature of
any State has exclusive power to make laws for such
State or any part thereof with respect to any
of the matters enumerated in List II in the Seventh
Schedule (in this Constitution referred to as the
„State List‟)."
Clause (4) says that
"Parliament has power to make laws with respect
to any matter for any part of the territory of
India not included in a State notwithstanding that
such matter is a matter enumerated in the State
List."
Article 248 vests the residuary legislative power in the
Union. Article 249 empowers Parliament to legislate with
respect to a matter in the State List in national interest while
Article 250 empowers Parliament to legislate with respect to
any matter in the State List if a proclamation of emergency
is in operation. Article 251 says that the provisions of
Articles 249 and 250 do not restrict the power of the
legislature to make any law which it is competent to make
but if such law is repugnant to any of the provisions of the
law made by parliament under the said articles, the law
made by Parliament shall prevail so long only as the law
made by Parliament continues to have effect. Article 252
empowers Parliament to legislate for two or more States by
their consent. It also provides for adoption of such
legislation by other States. Article 254 declares that if any
provision of law made by the legislature of a State with
respect to matters enumerated in the Concurrent List is
inconsistent with the provisions of any law made by
Parliament, whether made earlier to the State enactment of
later, the State enactment shall to the extent of repugnancy
be void. If, however, the State enactment is reserved for an
receives the assent of the President, such law will prevail in
that State notwithstanding its repugnancy with a
Parliamentary enactment.
18. After considering the aforesaid provisions and the
scheme of the Constitution, a nine-Judge Bench of this
Court in S.R. Bommai v. Union of India has opined that
within the sphere allotted to States, they are supreme.
19. It has been repeatedly pointed out by this Court
and the Federal Court (dealing with a similar distribution of
legislative powers among the Centre and the provinces
under the Government of India Act, 1935) that the several
entries in the three Lists in the Seventh Schedule are mere
legislative heads and that it is quite likely that very often
they overlap. Wherever such a situation arises, it is held, the
issue must be solved by applying the rule of pith and
substance. As explained by T.L. Venkatarama Ayyar, J. in
A.S. Krishna v. State of Madras.
"............it must be remembered that we are construing a
federal Constitution. It is of the a\essence of such a
Constitution that there should be a distribution of the
legislative powers of the Federation between the Centre and
the Provinces. The scheme of distribution has varied with
different Constitutions, but even when the Constitution
enumerates elaborately the topics on which the Centre and
the States could legislate, some overlapping of the fields of
legislation is inevitable. The British North America Act,
1867, which established a federal Constitution for Canada,
enumerated in Sections 91 and 92 the topics on which the
Dominion and the Provinces could respectively legislate.
Notwithstanding that the lists were framed so as to be fairly
full and comprehensive, it was not long before it was found
that the topics enumerated in the two sections overlapped,
and the Privy Council had time and again to pass on the
constitutionally of laws made by the Dominion and
Provincial legislatures. It was in this situation that the Privy
Council evolved the doctrine, that for deciding whether an
impugned legislation was intra vires, regard must be had to
its pith and substance. That is to say, if a statute is found in
substance to relate to a topic within the competence of the
legislature, it should be held to be intra vires, even though it
might incidentally trench on topics not within its legislative
competence. The extent of the encroachment on matters
beyond its competence may be an element in determining
whether the legislation is colourable, that is, whether in the
guise of making a law on a matter within its competence, the
legislature is, in truth, making a law on a subject beyond its
competence. But where that is not the position, then the fact
of encroachment does not affect the vires of the law even as
regards the area of encroachment. Vide Citizens Insurance
Co. of Canada vs. William Parsons; Attorney General for
Ontario v. Attorney General for the Dominion of Canada;
Attorney General of Ontario v. Attorney General for the
Dominion; Union Colliery Co. of British Columbia v.
Bryden; Attorney General for Canada v. Attorney General
for Ontario; Attorney General for Alberta v. Attorney
General for Canada; and Board of Trustees of Lethbridge
Northern IrrigationDistt. V. Independent Order of
Foresters."
(iii) Living Media India Limited Vs. Jitender V. Jain & Anr.,
2002 (25) PTC 61 (Del)
"7. The nature of enquiry under the PRB Act is for
the purpose of approval of the name of a magazine or
publication and as such it cannot have precedence over the
provisions of the TMM Act which is a special enactment
and was made for the purpose of governing disputes
relating to names, titles or trade marks. This conclusion
emanates from the comparison of the object of the aforesaid
two Acts. The preamble of PRB Act shows that it was made
for regulating printing presses and news for preservation of
copies of every book and registration of such book,
newspapers. Thus, the main concern of the Legislature was
to enact a law would help in preservation of the copies of
the books and newspapers.
8. The TMM Act was enacted to provide for the
registration and better .....of trade marks and for the
prevention of the use of fraudulent marks ...chandise."
(iv) KG Khosla Compressors Ltd. Vs. Khosla Extraktions Ltd.
& Ors., AIR 2002 SC 117
"32. I cannot accept the argument of Mr. Sanghi that
a person is entitled to carry on his business in his own
name and that there could not be any restraint on
that. This is in fact too general a proposition. Even S.
34 of the Trade and Merchandise Marks Act referred to
by Mr. Sanghi protects a person of the bona fide
use of his own name. However, this is not the
case before me and I would say no more on
this submission of Mr. Sanghi. The point that is at issue is
if a person is entitled as of right to have a company
registered in a name which happened to be his own name. I
would say he has no such right. The right to incorporate a
company in a particular name is a statutory right. S. 20 of
the Act prescribes that no company shall be registered by a
name, which in the opinion of the Central Govt., is
undesirable. Sub-s. (2) of S. 20 says that if a name which is
identical with or too nearly resembles the name by which a
company in existence has been previously registered it
may be deemed to be undesirable. I cannot read into S. 20
of the Act that whenever a person applies for registration of
a company in his name or in the name of his family
members it must be registered. This is not the law and
could not be the law."
45. The defendant No.1 in the present case has not denied the
fact that somehow defendant no.1 has connections with the Universities
and now indirectly the same very defendant No.1 is claiming immunity
from the process of the court in order to render redundant the interim
order already passed against defendant nos. 1 and 2. These Universities
have been sponsored and created by the defendant No.1. The
administrative and financial control of these universities is in the hands
of the defendant No.1 as per documents placed on record in relation to
the following:-
- purchase of land for the campus by the main
defendant;
- nominees of the defendant no.1 to sit on the
board of governors of the universities;
- the universities being a purely private
university.
The universities are private entities with no participation of
the State in their affairs. These are created by Acts of State Legislature
and the same is not unique to the defendant Universities alone.
46. I shall now consider the aforesaid contentions for the
purposes of the rejection of the plaint under Order VII Rule 11 CPC.
The plaint is liable to be rejected if any of the grounds set out under
Order VII Rule 11 are satisfied. The defendants‟ contention that the
plaintiff‟s amended suit does not disclose cause of action against
defendant no 3 to 6 is rejected. The argument advanced was that because
of the existence of the State Acts, the cause of action is not disclosed in
the plaint qua the States and hence there is no cause of action against the
defendant no. 3 to 6. I am unable to accept the contention of the
defendants that the plaint does not disclose any cause of action against
the defendant no. 3 to 6. The success or the merit of the matter will not
determine whether the plaint disclose a cause of action or not. It is the
contention of the defendants that the plaintiff cannot seek such relief
because of the intervening the State Acts. The said contention even if
accepted does not mean that there is no cause of action in the plaint.
47. It is trite that there is a difference between the plaint not
disclosing cause of action and the suit based upon a weak cause of
action. At best, the contention of the defendants is that the cause of
action of the plaintiff contended in the plaint is weak. However, that is
not a ground for rejection of the plaint under Order VII Rule 11 CPC.
48. The next contention is that the suit is barred by law as there
are State Acts regulating the defendant no. 3 to 6. It was further
submitted that this court cannot direct the Legislature to amend the laws.
Thus, the suit is barred by law. The said contention of the defendants
cannot be accepted. There is no express or implied bar in the said Acts
for maintaining a civil suit and in the absence of the same, it would not
be appropriate to assume that the suit is barred merely by existence of
the Acts. The applicability of special law over general law is another
reason for arriving at the conclusion that the suit is not barred.
49. Further, the question of whether a plaint is barred by any law
or is not maintainable due to want of cause of action can only be
determined on the basis of a meaningful and close reading of the plaint.
The defence of the defendants is not to be looked into at this stage
(Mayar (H.K.) Ltd. Vs. Owners & Parties, Vessel M.V. Fortune
Express, (2006) 3 SCC 100 and Manmohan Singhy Chawla Vs. Rajesh
Berry & Anr., 2009 (3) AD (Delhi) 259).
50. The next submission of the defendants is that the plaint
discloses no cause of action against the defendant nos. 3 to 6 and the
Court has the power to reject the entire plaint against all defendants and
not against a portion of them. Learned counsel for the defendants has
referred the case of Mt. Phool Sundari Vs. Gurbans Singh & Ors., AIR
1957 Raj 97 wherein it has been held as under:
"9. We have given our earnest consideration to this matter
and we do not see why where a plaint discloses no cause of
action against some of the Defendants it cannot be rejected
against those Defendants. We can understand that a plaint
has to be rejected in toto in the sense that a Court cannot
reject one part of the plaint against all the Defendants and
carry on with the rest of the plaint against them, but we
cannot understand why the Court cannot reject the entire
plaint against a particular Defendant and carry on with the
entire plaint against others.
In such a case, there is a total rejection of the
plaint so far as a particular Defendant is concerned. There
being such a total rejection of the plaint so far as the
particular Defendant is concerned, we are of opinion that
such an order would be open to appeal as a decree.
10. Assuming, however, that this is not so and that the plaint
has to be rejected in toto in the sense that it must be rejected
against all the Defendants and there remains nothing before
the Court the rejection of the plaint against some Defendants
would not be an order under Order 7, Rule 11 (a)."
51. Learned counsel for the plaintiff has, in turn, referred to
various judgments as well. In Popat and Kotecha Property v. State
Bank of India Staff Assn.,(2005) 7 SCC 510, the Court held as under :
"10. Clause (d) of Order 7 Rule 7 speaks of suit, as appears
from the statement in the plaint to be barred by any law.
Disputed questions cannot be decided at the time of
considering an application filed under Order 7 Rule 11
CPC. Clause (d) of Rule 11 of Order 7 applies in those
cases only where the statement made by the Plaintiff in the
plaint, without any doubt or dispute shows that the suit is
barred by any law in force.
19. There cannot be any compartmentalisation, dissection,
segregation and inversions of the language of various
paragraphs in the plaint. If such a course is adopted it
would run counter to the cardinal canon of interpretation
according to which a pleading has to be read as a whole to
ascertain its true import. It is not permissible to cull out a
sentence or a passage and to read it out of the context in
isolation. Although it is the substance and not merely the
form that has to be looked into, the pleading has to be
construed as it stands without addition or subtraction of
words or change of its apparent grammatical sense. The
intention of the party concerned is to be gathered primarily
from the tenor and terms of his pleadings taken as a whole.
At the same time it should be borne in mind that no
pedantic approach should be adopted to defeat justice on
hair-splitting technicalities."
52. While discussing the effect of misjoinder of parties with
regard to rejection of the plaint under Order VII Rule 11 of the CPC, the
Supreme Court in Prem Lala Nahata v. Chandi Prasad Sikaria,(2007)
2 SCC 551 observed as follows :
"17. Thus, when one considers Order 7 Rule 11 of the Code
with particular reference to clause (d), it is difficult to say
that a suit which is bad for misjoinder of parties or
misjoinder of causes of action, is a suit barred by any law.
A procedural objection to the impleading of parties or to the
joinder of causes of action or the frame of the suit, could be
successfully urged only as a procedural objection which
may enable the court either to permit the continuance of the
suit as it is or to direct the Plaintiff or Plaintiffs to elect to
proceed with a part of the suit or even to try the causes of
action joined in the suit as separate suits.
18. ...... If there is power in the court to consolidate
different suits on the basis that it should be desirable to
make an order consolidating them or on the basis that some
common questions of law or fact arise for decision in them,
it cannot certainly be postulated that the trying of a suit
defective for misjoinder of parties or causes of action is
something that is barred by law. The power to consolidate
recognised in the court obviously gives rise to the position
that mere misjoinder of parties or causes of action is
not something that creates an obstruction even at the
threshold for the entertaining of the suit.
21. The legal position in an identical situation as ours has
been considered by a learned Judge of that Court in
Assembly of God Church v. Ivan Kapper. The learned
Judge has held that a defect of misjoinder of parties and
causes of action is a defect that can be waived and it is not
such a one as to lead to the rejection of the plaint under
Order 7 Rule 11(d) of the Code. As we see it, the said
decision reflects the correct legal position."
53. There is no force in the submissions of the defendants that
the plaint is barred by limitation. It is not stated in the application for
rejection as to how the plaint is barred by limitation as it is the admitted
case of the parties that some of the Universities are sponsored by the
defendant no. 1 even after passing of the interim order, hence, the
submission of the defendants is totally meritless and is rejected. In the
absence of valid reason, it is settled law that the question of limitation is
a mixed question of law and fact.
54. In C. Natrajan v. Ashim Bai,(2007) 14 SCC 183 it was held
as under :
"8. An application for rejection of the plaint can be filed if
the allegations made in the plaint even if given face value
and taken to be correct in their entirety appear to be barred
by any law. The question as to whether a suit is barred by
limitation or not would, therefore, depend upon the facts and
circumstances of each case. For the said purpose, only the
averments made in the plaint are relevant. At this stage, the
court would not be entitled to consider the case of the
defence. (See Popat and Kotecha Property v. SBI Staff
Assn.)"
55. There is also no merit in the submission of the defendants
that the States are necessary parties and there are no pleadings against
the defendants. When the amended plaint, particularly paragraph 11, is
read carefully, there are clear pleadings against the defendants. As
regards the objection as to whether the States are necessary parties or
not, the issues in the matter are yet to be framed and the same cannot be
determined at this stage.
56. In the present case, the defendant No.1 itself has filed
trademark applications for the marks "ICFAI UNIVERSITY" and
"ICFAI UNIVERSITY PRESS". The ownership of the trademark is
claimed by the defendant No.1 and lent by it to all the entities created
and established by it including the newly impleaded defendants.
57. Defendant No.1‟s own brochure states that the universities
are the licensees of the marks in so far as the brochure of defendant
No.1 (ICFAI) mentions that "the ICFAI University represents the multi
state network of universities, sponsored by the Institute of Chartered
Financial Analysts of India under specific University Acts in
Uttaranchal, Tripura, Sikkim, Meghalaya, Mizoram, and Nagaland
under respective legislations. The Governments of Rajasthan and
Chhattisgarh issued letters of intent to the Institute for the establishment
of universities...............
..................The Institute, a non-profit society established under the
A.P. (Telangana Area) Public Societies, Act 1350 F (Act 1 of 1350 F), is
the sponsor of the University and also the owner of the branch offices,
trademarks, service marks and trade names like ICFAI, etc. The
University is a licensed user of these trademarks, service marks and
trade names."
58. It appears prima facie that defendant no.1 has administrative,
financial and supervisory control over the newly impleaded defendants.
All the statutes under which defendant Nos. 3 to 6 have been created are
substantially similar and have been drafted on the basis of the original
proposals submitted by the defendant No.1.
59. The submission of Mr. Sanjay Jain, learned Senior counsel is
correct that even before filing of the present suit, the defendant No.1 had
been aware of the trademark rights of the plaintiff in the disputed marks
and, pending hearing and final disposal of the suit, while sponsoring the
name „ICFAI‟ for its Universities, apart from taking risk at its own peril
even after passing of the interim order, the defendant No.1 misled the
State governments and as such cannot claim shelter under the University
Acts for perpetuating its wrongful acts and claiming immunity.
60. Mr. Jain is right in his submission that the ambit of Order VII
Rule 11 (d) contemplates a bar enacted by law. In fact, the University
Acts relied upon by the newly impleaded defendants do provide for their
respective boards of governors vested with powers to amend these Acts
under various provisions.
61. Having considered all the aspects of the matter and keeping
in mind the law on the subject and the circumstances of the present case,
the applications for rejection of plaint cannot be allowed as a reading of
the plaint shows that cause of action does subsist against the defendant
nos. 3 to 6. Both the applications are false and frivolous and the same
are dismissed.
62. No costs.
I.A. No. 1865/2009
63. I shall now proceed to discuss the contentions of the parties
as regards IA No. 1865/2009 i.e. application for vacation of interim
order dated 04.08.2006 due to development of subsequent events which
have brought about a change in the circumstances and situation of the
parties.
64. A perusal of the record indicates that the Defendant nos.1
and 2 filed an appeal being FAO(OS) No. 517/06 against the order dated
04.08.2006 passed in Plaintiff‟s application under Order XXXIX Rule
1&2. The appeals were admitted for regular hearing. As regards the
interim stay is concerned the prayer as made in CM No. 10798/08 was
rejected by the Division Bench of this Court on 25.08.2008.
65. Another CM No. 1050/09 for stay was filed by the
Defendant Nos. 1 and 2 in FAO(OS) No. 517/06 which was also
dismissed by the Division Bench vide order dated 23.01.2009 with the
direction that it would be appropriate for the Defendants to move the
learned Single Judge under Order XXXIX Rule 4 rather to move an
application before this Court. The said application was withdrawn by
the Defendant Nos. 1 and 2 with liberty to move the same before the
Learned Single Judge.
66. In view of the said order, the present application being I.A.
No. 1865/2009 has been filed by the Defendants under Order XXXIX
Rule 4 of Code of Civil Procedure for vacation of the interim order on
the basis of subsequent developments. The details of the subsequent
developments enumerated in the application are given as under:
1. Issuance of Trademark Certificates in favour of ICFAI,
Hyderabad in India.
2. Cancellation of the Trademark Certificate issued in favour of the
Plaintiff in India.
3. Issuance of Trademark Certificates in favour of ICFAI,
Hyderabad outside India.
4. Rejection of the Plaintiff‟s application for registration of
„Chartered Financial Analyst‟ as a trademark in the United
Kingdom/
5. Refusal of grant of ad interim injunction in favour of the Plaintiff
by the High Court of Colombo.
6. Evidence given by the Plaintiff‟s own witnesses in proceedings
before the Courts in Virginia, USA.
7. Minutes of Meeting not valid License Agreement.
67. The Plaintiff opposed the application filed by the Defendant
No.1 and 2 on various grounds. It is argued that the ground made in the
application cannot be considered as a subsequent event as almost all the
events were available with the Court when the Plaintiff‟s application
under Order XXXIX Rule 1 and 2 was decided on merit after hearing
the parties. The submission of the Plaintiff is that there is not any
change of circumstances, therefore, the application is not maintainable,
and is liable to be dismissed. The next contention of the Plaintiff is that
a party seeking the vacation of interim injunction must show bona fides,
good faith and honest conduct while approaching the court. Further
contention of the Plaintiff is that the Defendant No.1 has deliberately
and intentionally taken a number of steps to bypass and evade the effect
of interim order dated 04.08.2006. The Plaintiff has given various
instances to prove its point, details whereof are given as under:
a) the Defendant No.1 after passing off the interim order dated
04.08.2006 has been filing trademark applications on its own or
through its affiliated entities, asserting ownership right in the CFA
marks on deceptive variations thereof despite of interim injunction
Order dated 04.08.2006.
b) the Defendant No.1 continues to lend its injuncted name ICFAI
and the CFA marks to universities sponsored and created by the
Defendant No.1.
c) In January, 2007, the Defendant No.1 through its sponsored
University in Tripura issued an advertisement in number of
leading newspapers under the name „The ICFAI University,
Tripura, offering admissions to the CFA program. The Plaintiffs
thereafter issued the caution notice in this respect informing the
public at large that the Defendant No.1 and its affiliates are no
longer authorized to offer CFA programme.
d) In March, 2007, the Defendant No.1 and 3 filed a writ in Gauhati,
seeking a direction to the All India Council for Technical
Education to take action against the Plaintiff.
e) In April, 2007, the Defendant No.1 filed a Criminal Defamation
case at Kolkata against the officers of the Plaintiff and its member
society in India on the ground that its caution notice of February
12, 2007 had defamed the Defendant No.1. The contempt
proceedings in Gauhati High Court initiated by the Defendant No.1
and 3 against the Plaintiff.
f) In August, 2007 another Criminal Defamation case was filed by the
Defendant No.1 in Banglore against officers of the Plaintiff and its
member society in India.
68. As per Plaintiff, facing with the said situation the Plaintiff in
August, 2007 filed CCP No. 40/2007 in this Court for disobedience of
order dated 04.08.2006 by Defendant No.2. The Plaintiff has also
alleged that on February 6, 2008, the Division Bench hearing the appeal
filed by Defendant Nos. 1 and 2 passed direction to Defendants to seek
an adjournment in Criminal Defamation case in Calcutta however, the
Defendants pressed for fresh summons against the Plaintiff‟s principal
officers when the defamation case was taken up by the Magistrate in
Calcutta in February, 2008. On May 7, 2009, internet news stated that
the Defendant No. 1 was to invest Rs. 150 crores to set up a university
in the State of Orissa. The said news item stated that the said Defendant
had identified 30 acres of land in Orissa for its university project.
69. It is settled law that the application under Order XXXIX
Rule 4 for vacation of order is only maintainable in case subsequent
events have taken place during the pendency of the application
otherwise normally, where the court has granted an interim order after
hearing both the parties, the order cannot be vacated/varied in the same
proceeding except when necessitated by change in circumstances or by
undue hardship to a party. In the present case, this Court has to examine
the above-mentioned issue as to whether the Defendant No.1 and 2 are
able to make out a case of change in circumstances or not.
70. Now I shall deal with the subsequent developments as
mentioned in the application filed by defendant nos.1 and 2 number
wise:
(i) Issuance of Trademark Certificates in favour of ICFAI,
Hyderabad in India.
It is submitted by defendant no.1 that he had
applied for registration of trade marks „CFA logo‟, „CFA
Programme‟ and „ ICFAI‟ under Class 16 in 1990. These
trade marks were opposed by the Plaintiff. However, by
order dated 22.09.2008, the Registrar of Trade Marks
rejected these oppositions thereby making Defendant no. 1
the registered proprietor of the above-stated trade marks in
Class 16 under Nos. 523513, 523515 and 523516.
Defendant no. 1 had also applied for registration of the
trade mark „CFA‟ in Class 9 on 10.08.2004 and the same
was granted in July 2006 vide registration No. 1301678.
The order sought to be set aside i.e. order dated 04.08.2006
was reserved by the learned Single Judge on 26.04.2006
and the development of registration of the mark „CFA‟ in
Class 9 therefore, is a subsequent one which could not have
been brought to the Court‟s notice at that time.
71. The Plaintiff‟s contention is that once the injunction order
was passed, the Defendants ought to have ceased filing new applications
and also all activity as regards the pending applications. The Defendants
cannot take advantage of their failure to act as per law and the goings-on
in the Trademarks Registry. The issuance of the trademark certificate
does not in any way merit the vacation of order dated 04.08.2006 as per
the law laid down by the Supreme Court at various points in time, the
said law being that (a) in a suit for passing off action, registration of
trademark is irrelevant and the issue to be determined is who the prior
user of the trademark is (Whirlpool case) and (b) non-user of the
trademark in the territory of India is irrelevant if the user is the first in
the world (Milmet case). It is also contended that registration had been
mala fidely sought in 1990 by Defendant no. 1 as there was a subsisting
relationship/ licensing agreement between the parties at that time.
Further, the unbecoming conduct of Defendant no. 1 and the
Trademarks Registry has been elucidated upon on pages 18-20 of the
Plaintiff‟s submissions dated 17.06.2009.
72. No doubt the Defendant No. 1 has been able to obtain the
registration of the trademarks bearing no. 523513, 523515 and 523516
from the Trademark Registry on the basis of the order passed on
22.09.2008 in opposition Nos. MAS-52359-60 and MAS-51762 filed by
the Plaintiff. The orders were admittedly passed in the three oppositions
filed by the plaintiff to the defendant no.1‟s application by the Deputy
Registrar of Trademarks on 22.09.2008 and the registration certificates
were issued on 30.09.2008. It is pertinent to mention that the Deputy
Registrar of Trademarks while passing the order has given the specific
finding in favour of the Defendant no.1 that (a) there is no dishonest
intention or bad faith on the Defendant No.1‟s side in adopting the mark
in question; (b) there is no likelihood of confusion/deception amongst
the general public; (c) that the trademark applied by the Defendant No.1
CFA and CFA Programme is nowhere identical to the Plaintiff mark
ICFA and the mark cannot be refused registration because the use of the
marks have to be prevented under the law of passing off action; (d) that
the Plaintiffs are not entitled to operate their CFA Programme in India
as the USA company has no outlets or branches in India. Therefore, the
question of passing off does not arise. (e) that Defendant No.1 is the
lawful proprietor of the trademark CFA, CFA monogram and they are
entitled for registration.
73. All these findings given by the Deputy Registrar of
Trademark are totally contrary to the findings given by this Court in
order dated 04.08.2006 while deciding the application of the Plaintiff
under Order XXXIX Rules 1 and 2 after hearing the parties. It is
pertinent to mention that while deciding the application for injunction
this court has come to the following conclusion :
a) There is no dispute that the Plaintiff is the first user of the
mark CFA and the Defendants are using the mark only after
they entered into a kind of collaboration with the Plaintiff.
b) That the genesis of ICFAI lay in the license granted by the
Plaintiff.
c) As far as the Defendants work under the license, there is no
question of any acquiescence and it cannot be said that the
Plaintiff had acquiesced to the use of the name and the marks
by the Defendants.
d) If the Defendants are allowed to use the mark the Plaintiff will
lose the exclusive right to use the marks and its valuable rights
in the marks will be lost or substantially damaged.
e) The Defendants were restrained from passing off their
programmes of business as that of the Plaintiff.
74. It is also a matter of great surprise that the impugned order
was passed on 22.09.2008 and the registration certificate in all the three
trademarks was issued on 30.09.2008 in favour of defendant no.1 by the
Trade Marks Registry. In normal course, it has been seen that the
certificates are not issued in such a great haste. Admittedly, there is a
limitation period of three months to challenge the orders passed by the
Registrar/Deputy Registrar of Trademarks in opposition proceedings.
75. Even otherwise if issuance of the registration certificates
constitutes a subsequent event, the same is irrelevant to a passing off
suit wherein statutory rights are secondary to prior rights acquired
through use. Section 27(2) of the Trade Marks Act, 1999 preserves the
passing off remedy and is to the following effect:
"Nothing in this Act shall be deemed to affect
rights of action against any person for passing
off goods or services as the gods of another
person or as services provided by another
person, or the remedies in respect thereof."
76. In N.R. Dongre and Ors. Vs. Whirlpool Corporation and
Ors. AIR 1995 Delhi 30, it is laid down that prior registration cannot
defeat the rights of a Plaintiff in a passing off action. Similarly in case
of Austin Nichols and Company and Anr. Vs. Arvind Bahl and Anr.
(Blenders Pride) reported in 2006 (32) PTC 133 an injunction was
issued against the Defendants despite of obtaining registration. Further,
the case law relating to first use in India lays down that the mere fact
that a Plaintiff "has not been using the mark in India would be
irrelevant if it was first in the world market" (the Supreme Court of
India in the Milment case). The test laid down by the Supreme Court is
that "merely being first past the post in India is not enough. The
Plaintiffs were first past the post worldwide and this is of crucial
importance". In any event, the fact remains that even in India the use of
the disputed trade marks by the Plaintiff is prior to that of Defendants.
The Plaintiff has filed a copy of its newsletter dated August 1981 in
these proceedings to demonstrate that its first CFA examination in India
was conducted in the year 1981, much prior to the license granted by the
Plaintiff to the Defendant No.1 in 1985.
77. For the aforesaid reason this Court is of the view that the
registration certificates obtained by the Defendant No.1 do not help the
case of Defendant No.1 for vacation of interim order as this court has
already held in its order dated 04.08.2006 that the Plaintiff is the prior
user of the trademark in question. Further, these applications were filed
prior to the filing of the Suit. The plaintiff has filed the passing off
actions, even if the certificates are taken into consideration as
subsequent development, the Suit of the Plaintiff would remain the Suit
for passing off. So I am of the considered view that the said ground is
not a valid ground for the purpose of vacating the interim order already
granted by this court.
(ii) Cancellation of Plaintiff's trade mark in India
78. It is alleged by the defendant no.1 that the predecessor of the
Plaintiff AIMR was the registered proprietor of the mark „CFA‟ bearing
registration No. 399072 however, by order dated 25.07.2007, the
Deputy Registrar of Trademarks cancelled the said registration. The
trademark application vis-à-vis the said mark has been re-advertised by
the Plaintiff in the trade mark journal and the same has been duly
opposed by Defendant no. 1.
79. The plaintiff has mentioned the fact that it was only at the
instance of the Defendant No.1 that the Deputy Registrar of Trademarks
initiated proceedings under Section 57(4) of the Trade Marks Act, 1999
to rectify the said registration. It is clearly mentioned in the order dated
25.07.2007 that the Defendant No.1 wrote a letter to the Trade Mark
Office on 26.11.2006 after passing the interim order stating that: (a) the
entry made in the register in respect of the said application was wrongly
made and ought to be removed; (b) the said application was advertised
before acceptance under Section 20(1) of the Trade Marks Act; (c) the
advertisement erroneously published the name and address of the
Defendant No.1 and hence the Defendant genuinely believed that it was
its own application.
80. Even if the cancellation of the Plaintiff‟s registration can be
pleaded as a subsequent development as the cancellation was affected
due to a clerical error on the part of the Trade Marks Registry in the
details of the published application and not as a result of any decision of
the rights of the Plaintiff in the marks in question. Thus, it cannot be
considered as change in circumstances in the nature and circumstances
of the case in any manner.
(iii) Registration of Defendant no. 1's trademarks outside India
81. It is submitted by the defendant no.1 that the Plaintiff‟s
goodwill and repute as regards the trade marks in question is only
limited to the United States of America as Defendant no 1 has the mark
„ICFAI‟ registered in its favour in two foreign countries being UAE
(Classes 41 and 16) and Singapore (Classes 41, 36 and 16) and even in
India, the use of the words/marks „ICFAI‟ and „CFA‟ are related to the
Defendant no. 1 and not to the Plaintiff.
82. In reply, the Plaintiff has contended that the afore-mentioned
registrations obtained by Defendant no. 1 have been adopted in bad faith
as at the time of adoption of trademarks and subsequent applications,
Defendant no. 1 was a licensee of the Plaintiff. The registration of these
trademarks in favour of Defendant no. 1 in foreign countries can in no
way obliterate the extensive user/ registrations of the Plaintiff.
83. It is settled law that in case a licensee filed the application for
the registration of the same trademark for registration without the
consent of the licensor, it amounts to a fraudulent move as during the
license period, a party cannot claim the owner of the trademark, even
otherwise the foreign registrations, if granted, have no consequence in
the matter as no exclusive rights can be claimed by virtue of foreign
registrations even if granted by the process of law, hence ground (iii)
has no force and the interim injunction cannot be vacated on this ground
also.
(iv) Rejection of Plaintiff's application for registration of
trademark in United Kingdom
84. It is averred by the defendant no.1 that the Plaintiff filed an
application for registration of the trade mark „Chartered Financial
Analyst‟ in Class 36 in the United Kingdom in the year 2000. The said
application was opposed by an organization being „The Chartered
Insurance Institute‟ and the Registrar of Trade Marks, United Kingdom
rejected the Plaintiff‟s said application.
85. The Plaintiff has contended that Defendant no. 1 has
suppressed material facts insofar as the said application was rejected due
to a law peculiar to the United Kingdom, i.e. the expression „chartered‟
conveys the impression that the mark enjoys an approval equivalent to
the Royal Charter, which is not permissible under Section 3 (3) (b) of
the UK Trademarks Act. Any application seeking registration of a mark
including the word „Charter‟/ „Chartered‟ would face the same
opposition and rejection.
86. For the reasons given in Para 78-80 of my order, I do not find
any merit in this ground also for vacation of the interim order.
(v)Refusal of High Court of Colombo, Sri Lanka to grant
ad interim injunction
87. In this ground the submission of defendant no.1 is that the
Plaintiff had filed a suit in the High Court of Colombo, Sri Lanka
seeking to restrain the Sri Lankan chapter of Defendant no. 1 from using
the trade marks „ICFA‟, „CFA‟ etc. and had also filed an application for
temporary injunction in the same regard. The said application was
disallowed by a speaking order dated 13.10.2008.
88. Addressing this contention of Defendant no. 1, the Plaintiff
has submitted that the said order is being referred to without the
necessary details insofar as it has been made to appear as if the said
order has attained finality despite the fact that the Defendant no. 1 is
aware that the said order has been appealed against on 27.03.2008 and
has been listed thereafter before the Supreme Court of Sri Lanka on
seven occasions for hearing/arguments etc.
89. In the present case, this Court had passed the interim order
after hearing the rival submissions of the parties and the Court had also
come to the conclusion that the Plaintiff is the prior user of the
trademark in question and the defendants are passing off their services
as that of the Plaintiff. Even if the Plaintiff‟s application for injunction
has been refused by the Colombo High Court, that is no reason to vacate
the interim order already passed on merit. This Court is not aware under
what circumstances the interim orders were not passed, therefore, I find
no force in this ground also for vacating the order.
(vi) Admissions made by Plaintiff while giving Evidence in
Discovery Proceedings in Virginia, USA
90. It is argued by defendant no.1 that in the „Discovery
Proceedings‟ took place in the United States of America pursuant to the
orders of the District Court, Eastern District of Virginia, USA in Civil
Action No. 3-98CV417 instituted by the Plaintiff against Defendant no.
1. As per the applicant, certain statements have been made by Mr.
Jeffrey J. Diermeier, former President and CEO of the Plaintiff, Mr.
William P. McKeithan, former General Counsel of the Plaintiff and Mr.
Thomas Bowman, erstwhile President of the Plaintiff‟s predecessor
AIMR amongst other persons which are admissions regarding the
absence of any relationship between the Plaintiff/ its predecessor and
Defendant no. 1 and are to the effect that they negate the contention of
the Plaintiff that the Minutes of the Meeting held on 14.08.1985 actually
constituted a trade mark licensing agreement between the parties. The
details of these admissions have been laid out on pages 14-20 of the
present application.
91. The Plaintiff‟s arguments and contentions vis-à-vis this
aspect are that Defendant no. 1 has suppressed material facts and
presented this contention completely out of context and in bad faith.
92. Admittedly these depositions were made in a contempt action
filed by the Plaintiff against the Defendant No.1 and on March 30, 2009
the District Court in Virginia has allowed the said contempt action.
Some relevant dates which are available on record are necessary to
mention which read as follows:
a) 1995- During the subsistence of its license arrangement
with the Plaintiff in India (which was only in respect of the
CFA program in India), the Defendant No.1 intended to set
up a university called the Transworld University in the
United States of America to offer its „CFA Program‟ in the
United States of America and Canada. The Plaintiff raised
an objection to the same on the basis of its prior
registrations and use of the CFA marks in the United States
of America. Pursuant to discussions between the parties, a
settlement agreement was entered into between them
wherein the Defendant No.1 acknowledged and admitted
the rights of the Plaintiff I the CFA marks and agreed not to
use the same for the territories of the United States of
America and Canada. While forwarding the said settlement
agreement to the Defendant, the Plaintiff made it known to
the said Defendant that the issue of use of the CFA marks
in India was a separate issue being dealt with through
negotiations in India.
b) 1998 - Subsequent to signing the 1995 settlement
agreement, the Defendant No.1 reneged on its terms,
compelling the Plaintiff to seek enforcement of the same
before the Virginia Federal District Court. On October 7,
1998, the Virginia Court entered a default judgment in
favour of the Plaintiff and against the Defendant No.1.
c) May 2007 - After 9 years of subsistence of the default
judgment, the Defendant No.1 filed an application before
the District Court, challenging the said default judgment on
the ground of lack of personal jurisdiction over the
Defendant No.1 when the judgment over the Defendant
No.1 when the judgment was passed. At first instance, the
District court agreed with the Defendant No.1 and vacated
the said default judgment. The Plaintiff preferred a review
motion before the same court, citing evidence of facts
showing the court‟s personal jurisdiction over the
Defendant. The said motion was allowed and the default
judgment was reinstated.
d) September 2007 - The Defendant No.1 appealed the
reinstatement order to the Virginia Court of appeal.
e) September 2007 - Besides the reinstatement motion, the
Plaintiff also filed a contempt petition before the District
Court against the Defendant for breach of the default
judgment on the ground, inter alia, that in breach and
violation of the prohibition on the Defendant No.1‟s use of
the Plaintiff‟s marks in the territories of the United States
of America and Canada, the said Defendant had been
taking steps to use the marks in the United States of
America including filing of trademark applications on the
basis of use of these marks in commerce in the US and
shipping material bearing the CFA marks to candidates in
the United States of America.
f) January 2009 - The appeal filed by the Defendant No.1
against the reinstatement order was also dismissed by the
Virginia Court of Appeal on January 9, 2009 and the
reinstatement order of 2008 was confirmed.
g) March 2009 - On March 30, 2009, the contempt petition
filed by the Plaintiff against the Defendant No.1 for stated
breaches of the default judgment during the period of its
currency was also allowed by the District Court.
93. Extract from the order dated January 9, 2009 marked as
Annexure 18
"The District Court, however, agreed with the
CFA Institute's Rule 4 (k) (2) contention. In contrast
to the extensive findings made in the 1998 opinion, the
reinstatement opinion made a more limited assessment
of the facts underlying in the court's jurisdictional
analysis. By the reinstatement opinion, the court
observed that, "the parties, at a minimum, agree" to
the following:
As of 1995, ICFAI's then executive director,
Subhash Sarnikar: (1) registered a corporation on
behalf of ICFAI in California; (2) made the decision to
let that registration expire; and (3) had a relationship
with Transworld University, a California entity. In
addition to these California contacts, (4) an ICFAI
representative visited Virginia in 1984, although
defendant avers no business was conducted; (5) an
ICFAI representative attended a CFA Institute Board
meeting in Virginia in 1987; (6) ICFAI corresponded
and collaborated with the CFA Institute over an
extended period; and (7) the entities are parties to a
1995 settlement agreement."
94. Extract from the order dated March 30, 2009 marked as
Annexure 16
"Finding the language of the injunction is both specific
and unequivocal, CFAI needs only to demonstrate clearly
and convincingly that Defendant ran afoul of any of the
injunction's provisions to satisfy this element of civil
contempt. As the following demonstrates CFAI has done
so....
Additionally, Defendant filed applications wit the Patent
and Trademark Office ("PTO") for several marks
prohibited by the injunction. In those applications,
Defendant averred under penalty of perjury that it first
used "ICFAI" in US commerce as early as August 31,
2000; "ICFAI Business School" as early as March 31,
2002;....... "ICFAI University Press" as early as March
31, 2003;....... "ICFAI University" as early as April 30,
2003. All of these dates follow Defendant's notice of the
injunction. ........
Defendant's arguments are unpersuasive. To begin for the
reasons discussed......, the unequivocal language of the
1998 order did not limit itself to Defendant's CFA
program. Next, although Defendant claims it exerts no
control over ICFAI University, Defendant lists ICFAI
University as one of its "constituent units" - units
Defendant refers to interchangeably in its prospectus.
Moreover, ICFAI University has the same physical address
as Defendant... ICFAI University officials have the same
email address suffix as Defendant's employees, Defendant
filed the application with the PTO for the mark "IFCAI
University", Defendant contacted IANT in order to provide
exams in the US for ICFAI University students, Defendant
paid IANT for conducting exams on behalf of ICFAI
University, and ICFAI University students sign a enrolment
agreement directly with Defendant. This evidence belies
any notion that Defendant exerts no control over - or, at
the very least, has not acted in concert with - ICFAI
University as this provision of the injunction was
repeatedly violated.
........ In sum, the evidence demonstrates clearly and
convincingly, and, therefore, the court finds, that
Defendant violated numerous provisions of the Injunction
issued by this Court in its 198 Order. Specifically, the
Court finds that ICFAI has (I) used and promoted the
prohibited marks generally, (2) used and promoted the
prohibited marks in relation to business transactions, (3)
used the prohibited marks in connection with a website
accessible in the United States and Canada, and (4) failed
to submit the written report required by the 1998 order.
95. As already stated that in the discovery proceedings as per
Defendant No.1, certain disclosures are stated to have been made by the
representatives of the Plaintiff in the United States of America pursuant
to the orders of the District Court, Eastern District of Virginia, USA.
The substance of this ground is linked with the ground (vii) of the
application made by the Defendant Nos. 1 and 2. It is pertinent to
mention that in the order dated 04.08.2006, learned Judge has already
considered the point of License Agreement in Para 14-17 of the order.
In the present application the Defendant No.1 has given the details of
statement of witnesses/representatives of the Plaintiff and according to
the Defendant No.1 the disclosure statement made by the witnesses are
good enough to demolish the case of the Plaintiff about the License
Agreement. I do not agree with the submission of the Defendant No.1
firstly, on the ground that the learned Judge of this Court who has
passed the interim order has clearly come to the prima facie conclusion
that the Defendant No.1 is the licensee of the Plaintiff and all the
objections raised by the Defendant No.1 have been considered.
Secondly, on the ground that the decisions given by the District Court,
USA dated 09.01.2009 and 30.03.2009 wherein it is clearly held that the
evidence demonstrates clearly and convincingly that the Defendant
violated the numerous provisions of the injunction orders. The said
order was passed after depositions of the representatives of the Plaintiff.
Thirdly, it appears that on the basis of depositions given by the
witnesses, the motion has been allowed while rejecting the claim of the
Defendant No.1.
96. Further, both the parties are trying to justify their
submissions by referring the statement of the witnesses. I am of the view
that the present action is an independent action and it has to be decided
as per its own merit as per evidence produced by the parties. Issues in
the matter are yet to be framed, therefore, any statement or part of the
statement, if recorded in favour of any of the parties, no benefit can be
derived as all these contentions are relevant for the purpose of trial. The
Defendant No.1 is, therefore, entitled for the relief claimed on this
ground for vacation of the interim order.
(vii) Minutes of Meeting not valid License Agreement
97. As per the details set out by Defendant no. 1 in light of the
alleged „admissions‟, it is contended that there was no licensing
agreement between the parties and since the impugned order is based on
the assumption that the Minutes of Meeting dated 14.08.1985 was
actually a licensing agreement, the said order is based on an erroneous
conclusion. Further, the said Minutes were not construed as a licensing
agreement by either of the parties till the institution of a suit by the
Plaintiffs in 1997.
98. The Plaintiff‟s submissions in this regard are that the learned
Single Judge in order dated 04.08.2006 has dealt with all these facts in
painstaking detail and has only then proceeded to make the said order.
Further, the alleged „admissions‟ on the basis of which the Defendant
no. 1 has stated its last two contentions were part of a contempt motion
which had since been allowed in favour of the Plaintiff and in fact, as
the documents filed in those proceedings were admitted by the
Defendant no. 1, it cannot now resile from the evidence that indicates
the existence of the license agreement between the parties.
99. The Plaintiff has produced the evidence of a license
arrangement between the Plaintiff and Defendants. There are specific
pleadings in this respect. Some of the documents have been admitted by
the Defendant no. 1 at the time of admission/denial of documents.
100. It is not denied by the Defendant no. 1 that Mr. Morley, the
then President of the Plaintiff and signatory to the license agreement
dated August 14, 1985 was invited by the Defendant No. 1 and served
on the Board of Governors of the Defendant. During his tenure, Mr.
Morley on behalf of the Plaintiff monitored the Defendant‟s program
and co-signed the charters issued to successful candidates of the
Defendant‟s CFA program. The CFA Digest was published under
license of the Plaintiff, thereby indicating a collaborative relationship
between the parties.
101. The most important aspect of the matter is that the Learned
Single Judge had considered all these facts while passing the interim
injunction order of August 4, 2006 in para 14 to 17 of her order, the
same read as under:-
"14. In the present case there is no dispute
that the plaintiffs are the first users of the mark
`CFA' and the defendants started using the
mark only after they entered into a kind of
collaboration with the plaintiffs and claimed to
be imparting the same kind of education and
training as that provided by the plaintiffs. The
first defendant has been using the marks `CFA'
and `ICFAI' or `Institute of Chartered
Financial Analyst of India' now for quite
sometime. While the plaintiffs claim that the
defendants' user has its origin in a license
granted by the plaintiffs, the defendants
contend that the plaintiffs have acquiesced in
the user of these acronyms and, therefore, are
estopped now from seeking an injunction
against the defendants. The question of
acquiescence and license are thus related
questions. The plaintiffs rely upon a document
dated 14.8.1985 as the one by which the
plaintiffs expressed their consent to the
defendants using the mark. As the facts are
disclosed in the plaint, the representatives of
the defendants visited plaintiff No.2 at its
headquarters at Charlottesville, Virginia, USA
sometime in the year 1985 to discuss the
establishment of an education and testing
programme for investment professionals in
India by the first defendant. Shortly thereafter
in August 1985 the President of the plaintiff
No.2 went to India and met the first
defendant's representatives to discuss the
project. It was during this visit that plaintiff
No.2 and the first defendant reached an
agreement which was recorded in the minutes
signed by the respective parties on 14.8.1985
which is claimed to be a license agreement.
15. The plaintiffs also rely upon certain
other documents regarding the incident of
meetings between the parties particularly
involving the plaintiffs' representative
Mr.Morley. The document dated 14.8.1985
described itself as minutes and is inscribed on
the letterhead of Institute of Certified
Financial Analysts. It is the claim of the
plaintiffs that while the defendants named
itself Institute of Certified Financial Analysts
or ICFA, it was eying the reputation of the
plaintiffs. The minutes are signed by
Mr.V.Sankaran of the defendants and
Mr.Alfred C.Morley of the plaintiffs. The
minutes open with the following words,
"These notes summarise and confirm the
thoughts and decisions arising out of
discussion between and among M/s.Alfred
C.Morley, Mr.N.J.Yasaswy, Dr.Besant Raj,
Dr.Prasanna Chandra and Mr.V.Sankaran,
during the period August 12-14, 1985 in
Bombay, Hyderabad and Bagalore, India."
16.The salient features of the minutes are
extracted below:
"1. The ICFA (USA), now better
understanding and accepting the purpose and
mission of the proposed ICFA (INDIA), is
willing to assist and encourage in a variety of
ways the development and success of ICFA
(INDIA).
2. Assistance and encouragement as identified
above is subject to approval of ICFA (USA)
Trustees, and it is expected that the Trustees
will take action at their September 1985
meeting.
3. Details of assistance and encouragement
include, but are not limited to the following:
a) Use of the ICFA and CFA initials by ICFA
(INDIA) after it has been
determined by the ICFA (US) that the
admissions standards, study programme and
materials and examination process are and
continue to be of the highest calibre relative to
conditions and circumstances in India.
.......
f) The ICFA (USA) is willing to countersign
the CFA certificate awarded by ICFA (INDIA)
subject to the conditions outlined in a) above
having been met.
4. ICFA (US) has no intention of its
collaboration and other involvement with
ICFA (INDIA) generating for its unrealistic
profits. However, direct cost of assistance and
encouragement as defined above will be borne
by ICFA (INDIA). Such direct cost would
include applicable travel to and food and
lodging in India, expense of creating and/or
delivering study programme material and
related documents for use by ICFA (INDIA),
and the like. In addition, to be negotiated is a
"Time Cost" of ICFA (US) assistance and
encouragement, possibly in the form of a
minimum base amount and/or a fee per
candidate accepted by ICFA (INDIA).
Whatever is negotiated in this respect will be
subject to approval by appropriate
governmental authorities in India."
17.The document, unmistakably shows
collaboration between the plaintiffs and the
first defendant. It also indicates by para 3(a)
extracted above that the use of the initial
`ICFA' and `CFA' were approved of by the
plaintiffs. While permitting the user of the
marks the plaintiffs ensured that the
marks/acronyms are not devalued in any way
and, therefore, they insisted that the standards
of the study programmes and material,
examination process are of highest calibre
relative to the conditions and circumstances in
India. The collaboration actually put the
plaintiffs on the top as clause 3(f) extracted
above shows that the defendants and the
plaintiffs agreed that all CFA certificates
awarded by the defendants would be
countersigned by ICFA (US). Obviously the
defendants were encashing upon the goodwill
and reputation of the plaintiffs. The
defendants, it appears, persuaded the plaintiffs
in entering into this kind of collaboration by
undertaking and promising to maintain the
highest of the standards in the training to be
given to the financial analysts to be trained by
their institute or organization. It is true, as
pointed out by Mr.Sudhir Chandra, that the
document is not drawn up in the legal form of
a collaboration agreement. Nonetheless the
nature of the document has to be ascertained
from the contents and not from the form. The
document is clearly indicative of the origin of
relationship between the two parties. It shows
beyond doubt that defendant No.1 wanting to
establish itself as a institute of good standard
wanted to, in some way, associate or
collaborate with the plaintiffs and persuaded
the plaintiffs to give consent to the user of the
name in order to project its image in India as a
counterpart or the Indian Chapter of the
Institute of Chartered Financial Analysts, US."
102. For the aforesaid reasons, it is not possible for this Court at
this juncture of considering the application mentioning subsequent
events to examine the entire issue again. The Court while disposing off
the main application for injunction has already arrived at its finding in
favour of the Plaintiff and the same can not be relooked in the present
stage of the matter. Hence, the grounds raised in this application are
without any force and are rejected. As for the submission of the
plaintiff about the steps taken by the defendant no.1 in order to
bypass and evade the effect of interim order, the plaintiff‟s CCP in this
respect is already pending, thus the contention raised by the plaintiff
cannot be determined in the present application.
103. Having considered the submissions of the parties and
material placed on record, I do not find any merit in the application and
the same is dismissed with costs of Rs. 50,000/-.
104. All observations made in this order are tentative and shall
have no bearing on the final outcome of the Suit.
105. List the matter before Regular Bench on 16th April, 2010 for
further proceedings.
MANMOHAN SINGH, J.
APRIL 05, 2010
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