Delhi High Court

M/S. Micolube India Ltd. vs Maggon Auto Centre & Anr. on 14 January, 2010

Author: Manmohan Singh

*               HIGH COURT OF DELHI : NEW DELHI

+           I.A. No. 3915/2009 in CS (OS) No. 2015/2007

     M/s. Micolube India Ltd.                                   ...Plaintiffs
                     Through        : Mr. S.K. Bansal with Mr. R.K.
                                      Rana, Advs.

                                    Versus

     Maggon Auto Centre & Anr.                       ...Defendants
                   Through : Mr. Jawaharlal with Mr. Kalyan,
                               Advs. for D-2

Reserved on : September 15, 2009
Decided on : January 14, 2010

Coram:

HON'BLE MR. JUSTICE MANMOHAN SINGH

1. Whether the Reporters of local papers may
   be allowed to see the judgment?                         No

2. To be referred to Reporter or not?                      Yes

3. Whether the judgment should be reported
   in the Digest?                                          Yes

MANMOHAN SINGH, J.

1. The application under consideration being I.A. No.

3915/2009 has been filed by defendant no. 2 under Section 124 (1) of the

Trade Marks Act, 1999 read with Section 151 of the Code of Civil

Procedure, 1908 (referred to as the CPC for brevity) for stay of the

present suit.

2. The present suit has been filed by the plaintiff for permanent

injunction restraining the defendants from infringing of trade mark,

passing off, rendition of accounts, damages, royalty, delivery up etc.

praying, inter alia, for the following reliefs :

"(a) For a decree of permanent injunction restraining the defendants by itself as also through their individual proprietors, partners, directors, agents, representatives, distributors, assigns, heirs, successors, stockists and all others acting for and on their behalf from using, selling, soliciting, exporting, displaying, advertising by visual, audio, print mode or by any other mode or manner or dealing in or using the impugned trade mark/label MICO or any other identical with and/or deceptively similar word/mark/label in relation to their impugned goods and business of manufacturing and marketing of Lubricants, Petroleum Products viz. Engine Oil, Gear Oil etc. and from doing any other acts or deeds amounting to or likely to:-

(i) Infringing the registered trade mark of the plaintiff under No.433800 and 433801 in class 04.

(ii) Passing off and violation of the plaintiff‟s rights in the plaintiff‟s said trade mark/label MICO.

(b) Restraining the defendants from disposing off or dealing with its assets including its shops and premises at M/s Motor Industries Co. Ltd., Automotive Aftermarket, Hosur Road, Adugodi, Banglore-560303; and of Maggon Auto Centre, Y 234 Mangolpuri, Delhi-110083 and its stocks-in-trade or any other assets as may be brought to the notice of this Hon‟ble Court during the course of the proceedings and on the defendants disclosure thereof and which the defendants are called upon to disclose and/or on its ascertainment by the plaintiff as the plaintiff is not aware of the same as per Section 135(2)(c) of the Trade Marks Act, 1999 as it could adversely effect the plaintiff‟s liability to recover the costs and pecuniary relief thereon.

(c) For an order for delivery up of all the impugned finished and unfinished materials bearing the impugned and violative trade mark/label or any other deceptively similar trade mark/label including its blocks, labels, display boards, sign board, trade literatures and goods etc. to the plaintiff for the purposes of destruction and erasure.

(d) For an order for rendition of accounts of profits earned by the defendants by their

impugned illegal trade activities and a decree for the amount so found in favour of the plaintiff on such rendition of accounts.

(e) In the alternative to accounts, for a decree for grant of damages of Rs.20,01,000/-

(Rupees Twenty Lakh and One Thousand only) from the defendants, jointly and severally to the plaintiff."

3. The brief facts leading up to the present case are that the

plaintiff was company duly incorporated under the Companies Act, 1956

in 1986 and is engaged in the business of manufacturing and marketing

petroleum products like brake and clutch fluid, lubricating oil, greases

and other allied and cognate goods. In 1960, the plaintiff through its

predecessors Sh. Chaman Lal Malhotra, Sh. Satinder Pal Malhotra and

Sh. Deepal Malhotra trading as „Malhotra Oil Corporation at C 65/1,

Phase II, Mayapuri, Industrial Area, New Delhi‟ adopted the trade mark

„MICO‟ and „MICO‟ label. „MICO‟ trade mark and „MICO‟ label have

been registered by the said predecessors vide application no. 433800 and

433801 respectively, both dated 12th February, 1985 and in Class 4. The

user claimed with respect to both is since 4th October, 1960. The

registrations are stated to be renewed and valid.

4. Vide an agreement dated 20th September, 1994 the legal

predecessors of the plaintiff assigned all rights, interest and title in the

mark/ label „MICO‟. The plaintiff filed Form TM-24 in the Trade Mark

Registry for recordial of the said assignment and the application with

regard to the label „ MICO‟ has been allowed, whereas the application

with respect to the trade mark „MICO‟ is still pending.

5. It is the plaintiff‟s case that the mark „MICO‟ forms a

substantial and imperative portion of the name of the plaintiff. The

goods and products of the plaintiff are of superior quality and have

acquired large amount of goodwill and reputation. Details as regards

advertisement and promotion of its products are mentioned in para 14 of

the plaint. The trade mark „MICO‟ is stated to have acquired the status

of a well known trade mark within the definition of Section 2 (1) (zg)

and Section 11 of the Trade Marks Act, 1999.

6. Defendant no. 2 M/s. Motor Industries Co. Ltd., Automotive

Aftermarket, Hosur Road, Adugodi, Bangalore - 560303 is engaged in

the business of manufacturing and marketing petroleum products like

engine oil and gear oil etc. Defendant no. 1 is the dealer of the products

of defendant no. 2. The defendants have started using/ or intend to use

the mark „MICO‟ with regard to their products and business. The said

mark of the defendants is claimed to be deceptively similar to the

plaintiff‟s trade mark/label „MICO‟, leading to passing off of

defendants‟ products as those of the plaintiff‟s, dilution of the plaintiff‟s

goodwill etc. In these circumstances, the plaintiff filed the present suit.

7. By an ex parte ad interim order dated 9th October, 2007 this

Court passed the following order :-

"......The defendants are restrained from using, selling, soliciting, exporting, displaying, advertising by visual, audio, print mode or by any other mode or manner or deal in or use the impugned trademark/label "MICO" or any other identical and/or deceptively similar word/mark/label in relation to lubricants, petroleum products including engine oil, gear oil. The defendants are also restrained from doing any other acts or deeds amounting to or likely to

infringe the registered trademark of the plaintiff No.433800 and 433801 in class 04 as also from passing off their goods as those of the plaintiff."

8. By order dated 7th February, 2008 this Court dismissed the

plaintiff‟s application under Order XXXIX Rules 1 and 2 and allowed

the defendants‟ application under Order XXXIX Rule 4 thereby vacating

the order dated 9th October, 2007. Thereafter the plaintiff filed an appeal

against order dated 7th February, 2008 being FAO (OS) No. 146/2008

and the said appeal was dismissed vide order dated 4th April, 2008.

9. The defendant no. 2 has submitted that it applied for

registration of the trademark „MICO‟ in January, 2004 with respect to

oils, greases and lubricants for automotive vehicles etc. in Class 4 and

the same was registered on 17th October, 2005 as trade mark no.

1259864 for the mark „MICO‟ and trade mark no. 1259863 was given

with regard to the wheel device with the word „MICO‟ on 13 th January,

2007. Subsequently, defendant no. 2 began manufacturing and marketing

engine and gear oils. It is submitted that in terms of Section 30 (2) (e) of

the Trade Marks Act, usage of a trade mark which is registered under the

same Act does not constitute an act of infringement.

10. It is further submitted that the plaintiff‟s registration is

invalid and ought not to have been granted in the first place.

11. Defendant no. 2 has contended that as per Section 124 (2) of

the Trade Marks Act, the present proceedings should be stayed. In

support of his contention as regards the stay of suit under Section 124 (2)

of the Trade Marks Act, counsel for the defendant no. 2 has submitted

certain facts i.e. that in pursuant to filing of the present suit, the plaintiff

filed two applications being ORA No. 202/2007 and 203/2007 before the

Intellectual Property Appellate Board (hereinafter referred to as the

„IPAB‟) seeking rectification/ removal of the defendants‟ registration

certificates being registration nos. 1259863 and 1259864. Subsequently,

defendant no. 2 filed two applications being ORA No. 146/2008 and

149/2008 before the IPAB seeking cancellation of the two registration

certificates of the plaintiff on the ground that Class 4 of Schedule IV of

the Trade Marks Act does not provide for the goods „petroleum

products‟ and therefore, the plaintiff‟s registration of „MICO‟ in Class 4

with regard to petroleum products is invalid de hors. Defendant no. 2 has

submitted that the registration accorded to the plaintiff was with respect

to only "brake fluid (oil)" and "greases for technical and industrial

purposes", indicating that the plaintiff‟s use of the mark „MICO‟ with

respect to gear oil, coolant, petroleum jelly etc. is a clear violation of the

said registration.

12. The pleadings in the four applications filed by the parties

before the IPAB (two filed by the plaintiff and two by the defendant no.

2) are complete and evidence has also been led. The applications are

pending consideration with the IPAB and in these circumstances,

defendant no. 2 has prayed for stay of the present suit proceedings till

the said applications are finally disposed of by the IPAB.

13. In its reply to the application for stay of proceedings, the

plaintiff submitted that the present suit is a composite suit seeking relief

for infringement as well as passing off. Section 124 of the Trade Marks

Act is applicable only to suits pertaining to infringement of trademarks.

Further, in the written statement the defendants have relied upon

Sections 28 (3) and 30 (2) (e) of the Trade Marks Act while claiming

that the suit is not maintainable as far as the relief of infringement is

concerned and in such circumstances, at this point the defendants cannot

be allowed to rely upon Section 124 which relates only to infringement.

Further, since the written statement was filed in October, 2007 and the

present application has been filed on 18th March, 2009, the said

application is barred by virtue of undue delay.

14. In its rejoinder, defendant no. 2 has submitted that for

invocation of Section 124 of the Trade Marks Act in a suit for

infringement can be made if either of the following two conditions exist:

(a) that the defendant should have pleaded the plaintiff‟s

registration as invalid or,

(b) that the defendant should have raised a defence under Section

30 (2) (e) of the Trade Marks Act and the plaintiff should have

pleaded invalidity of the registration of the defendant‟s trade

mark.

15. In keeping with the said conditions, defendant no. 2 has

stated that in para 3 of the written statement it specifically pleaded that

the registration of the plaintiff‟s trade mark is invalid and that defendant

no. 2 proposes to initiate appropriate action for the rectification of the

same. Further, in para 5 of the written statement the defendant no. 2 also

raised a plea under Section 30 (2) (e). Since both the conditions for

invocation of Section 124 of the Trade Marks Act are satisfied, there is

no bar restraining the defendant no. 2 from invoking the same.

16. I have heard the submissions of both parties. In the present

case, it appears to be an undisputed fact that both the parties have

obtained registration in their favour and the rectification applications

have been admittedly filed after the filing of the present suit and neither

of the parties has taken the permission of this Court before filing their

respective applications for rectification of the mark. Although the

plaintiff has filed the present suit, inter alia, for infringement of trade

mark also, but in view of the registration granted in favour of the

defendant no. 2, by operation of law no suit for infringement of trade

mark is maintainable under the specific provision of Sections 28 (3) and

30 (2) (e) of the Trade marks Act, 1999, but at the same time, in view of

settled law, a suit for passing off is maintainable. This aspect of the

matter has also been dealt with by this court in order dated 7 th February,

2008 while disposing of the interim injunction application. Section 28

and Section 30 (2) (e) of the Trade Marks Act have been reproduced

hereinbelow :

"Section 28 - Rights conferred by registration (1) Subject to the other provisions of this Act, the registration of a trade mark shall, if valid, give to the registered proprietor of the trade mark the exclusive right to the use of the trade mark in relation to the goods or services in respect of which the trade mark is registered and to obtain relief in respect of infringement of the trade mark in the manner provided by this Act.

(2) The exclusive right to the use of a trade mark given under sub-section (1) shall be subject to any conditions and limitations to which the registration is subject.

(3) Where two or more persons are registered proprietors of trade marks, which are identical with or nearly resemble each other, the exclusive right to the use of any of those trade marks shall not (except so far as their respective rights are subject to any conditions or limitations entered on the register) be deemed to have been acquired by any one of those persons as against any other of those persons merely by registration of the trade marks but each of those persons has otherwise the same rights as against other persons (not being registered users using by way of permitted use) as he would have if he were the sole registered proprietor.

Section 30 - Limits on effect of registered trade mark (1) xxxxx

(a) xxxxx

(b) xxxxx

(2) A registered trade mark is not infringed where--

(a) xxxxx

(b) xxxxx

(c) xxxxx

(d) xxxxx

(e) the use of a registered trade mark, being one of two or more trade marks registered under this Act which are identical or nearly resemble each other, in exercise of the right to the use of that trade mark given by registration under this Act.

(3) xxxxx

(a) xxxxx

(b) xxxxx (4) xxxxx"

17. In order to determine the present application filed by

defendant no. 2 under Section 124 of the Trade Marks Act, it is

appropriate that the said provision may be referred to hereunder :

"Section 124 - Stay of proceedings where the validity of registration of the trade marks is questioned, etc.

(1) Where in any suit for infringement of a trade mark--

(a) the defendant pleads that registration of the plaintiff's trade mark is invalid; or

(b) the defendant raises a defence under clause (e) of sub- section (2) of section 30 and the plaintiff pleads the invalidity of registration of the defendant's trade mark,

the court trying the suit (hereinafter referred to as the court), shall,--

(i) if any proceedings for rectification of the register in relation to the plaintiff's or defendant's trade mark are pending before the Registrar or the Appellate Board, stay the suit pending the final disposal of such proceedings;

(ii) if no such proceedings are pending and the court is satisfied that the plea regarding the invalidity of the registration of the plaintiff's or defendant's trade mark is prima facie tenable, raise an issue regarding the same and adjourn the case for a period of three months from the date of the framing of the issue in order to enable the party concerned to apply to the Appellate Board for rectification of the register.

(2) If the party concerned proves to the court that he has made any such application as is referred to in clause (b) (ii) of sub-section (1) within the time specified therein or within such extended time as the court may for sufficient cause allow, the trial of the suit shall stand stayed until the final disposal of the rectification proceedings.

(3) If no such application as aforesaid has been made within the time so specified or within such extended time as the court may allow, the issue as to the validity of the registration of the trade mark concerned shall be deemed to have been abandoned and the court shall proceed with the suit in regard to the other issues in the case.

(4) The final order made in any rectification proceedings referred to in sub-section (1) or sub-section (2) shall be binding upon the parties and the court shall dispose of the

suit conformably to such order in so far as it relates to the issue as to the validity of the registration of the trade mark.

(5) The stay of a suit for the infringement of a trade mark under this section shall not preclude the court from making any interlocutory order (including any order granting an injunction directing account to be kept, appointing a receiver or attaching any property), during the period of the stay of the suit."

18. A plain reading of the said provision indicates that while

considering an application for the stay of the proceedings where the

validity of the registration of the trade mark is questioned, an order can

be passed in a suit for infringement of trademark. In the present case,

since both the parties are holding the registration of the same mark, thus

the suit filed by the plaintiff for infringement of trademark is not

maintainable in view of Section 28 (3) and Section 30 (2) (e) of the Act.

It cannot be disputed that the suit for passing off would be maintainable.

Section 124 does not specifically mandates that while staying the suit for

infringement of trademark, an action for passing off shall also be stayed.

Therefore, I am of the view that the suit for passing off can continue.

19. The present case is not a case where the rectification