Delhi High Court
Kamdhenu Ispat Ltd. vs Kamdhenu Industries Ltd. on 19 May, 2010
Author: Manmohan Singh
* HIGH COURT OF DELHI : NEW DELHI
+ I.A. No.3845/2008, I.A. No.6564/2008 and I.A. No.8055/2008
in CS(OS) No.302/2008
KAMDHENU ISPAT LTD. ..... Plaintiff
Through : Mr. Amarjit Singh Chandhiok, ASG
and Senior Advocate
Mr. U.K. Chaudhary, Sr. Adv. with
Mr. Nishant Datta and Mr. Sudhir
Kumar, Advs.
versus
KAMDHENU INDUSTRIES LTD. ..... Defendant
Through : Mr. H.L. Tiku, Sr. Adv. and
Mr. Sandeep Sethi, Sr. Adv. with
Mr. Kamal Nijhawan, Mr. Jetinder
Kumar and Mr. Sumit Gaur, Advs.
AND
I.A. No.2895/2008 & I.A. No.4012/2008 in CS(OS) No.425/2008
M/S KAMDHENU ISPAT LIMITED ..... Plaintiff
Through : Mr. Amarjit Singh Chandhiok, ASG
and Senior Advocate
Mr. U.K. Chaudhary, Sr. Adv. with
Mr. Nishant Datta and Mr. Sudhir
Kumar, Advs.
versus
M/S KAMDHENU CEMENT LTD & ANOTHER ..... Defendants
Through : Mr. Sandeep Sethi, Sr. Adv. with
Mr. Kamal Nijhawan, Mr. Jetinder
Kumar and Mr. Sumit Gaur, Advs.
AND
I.A. No.10930/2008 in CS(OS) No.1882/2008
KAMDHENU CEMENT LTD. & ANR ..... Plaintiffs
Through : Mr. Sandeep Sethi, Sr. Adv. with
Mr. Kamal Nijhawan, Mr. Jetinder
Kumar and Mr. Sumit Gaur, Advs.
CS (OS) Nos.302/2008, 425/2008, 1882/2008 & 2616/2008 Page 1 of 71
versus
KAMDHENU ISPAT LTD & ORS ..... Defendants
Through Mr. Amarjit Singh Chandhiok, ASG
and Senior Advocate
Mr. U.K. Chaudhary, Sr. Adv. with
Mr. Nishant Datta and Mr. Sudhir
Kumar, Advs.
AND
I.A. No.15452/2008 in CS(OS) 2616/2008
M/S KAMDHENU ISPAT LTD ..... Plaintiff
Through : Mr. Amarjit Singh Chandhiok, ASG
and Senior Advocate
Mr. U.K. Chaudhary, Sr. Adv. with
Mr. Nishant Datta and Mr. Sudhir
Kumar, Advs.
versus
M/S KAMDHENU CEMENT LTD. & OTHERS ..... Defendants
Through : Mr. Sandeep Sethi, Sr. Adv. with
Mr. Kamal Nijhawan, Mr. Jetinder
Kumar and Mr. Sumit Gaur, Advs.
Judgment decided on : May 19, 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. Manifold litigation is on-going and pending between the
parties involved in these suits. A comprehensive outline of the litigation
between the parties is given hereinafter.
2. The plaintiff filed CS (OS) No. 302/2008 on 14.02.2008 for
permanent injunction, passing off, rendition of accounts and delivery up.
The plaintiff sought to restrain the defendants from
a) selling, manufacturing, advertising etc. the marks PRIME
GOLD, KAMDHENU, KAMDHENU GOLD, KAMDHENU
TMT GAL with respect to steel bars (sarias) of various
dimensions falling in Class 6 and the punch line
―SAMPURNA SURAKSHA KI GUARANTEE‖ or any other
trade mark/label/logo identical or deceptively similar to the
plaintiff's registered marks;
b) selling, manufacturing, advertising etc. the plaintiff's
registered trade marks/logo/label on the product S.S. Pipes of
various dimensions;
c) using in any way what so ever the logo of KAMDHENU
with the unique ‗Chakra' with colour combination yellow,
red and purple as well as other logos/marks/punch lines such
as ―DESH KI SHAAN‖ etc.
d) using the word KAMDHENU as its corporate name/ trade
name and from using the same as part of any email address,
domain name or website etc.
3. The plaintiff was incorporated in 1994 and since then has
been successfully carrying on the business of manufacturing steel bars
and other allied and cognate goods like structural steel (angles,
channels, beams etc.) under various trade marks such as KAMDHENU,
KAMDHENU GOLD, KAMDHENU SARIA, KAMDHENU TMT
GAL etc. The mark KAMDHENU has been registered since 1996 in
classes 1 to 4, 7, 10 to 17, 19, 22 to 29, 32, 34 to 39, 41 and 42. Due to
uninterrupted usage for the last 14 years, the plaintiff claims to have
made a good name and considerable goodwill in the industry. The
details of the amount spent on advertising along with the annual sales
and income tax details are given in paragraph 9 of the plaint.
4. The defendant company has as its Chairman and Managing
Director Sh. Pradeep Kumar Agarwal, who is the brother of Sh. Satish
Kumar Agarwal and Sh. Sunil Kumar Agarwal, the latter two being the
Directors of the plaintiff company. Sh. Pradeep Kumar Agarwal was a
former Director and promoter of the plaintiff company. As per the
plaint, the defendant acquired a license from the plaintiff to use its trade
marks, trade names, logos and punch lines with respect to stainless steel
pipes and fittings falling under Class 6 under a License Agreement
dated 08.10.2005 for a period of two years. Two other companies M/s.
Kali Metals Pvt. Ltd. and M/s. Raghuveer Metal Industries Ltd. being
Group Companies of the defendant also acquired licensee rights vide
agreements dated 05.09.2005 and 01.07.2006 respectively.
5. Due to bad blood between the brothers, Sh. Pradeep Kumar
Agarwal resigned from the plaintiff company in 2007 and after the
efflux of two years from the date of the aforesaid License Agreement
allegedly started illegally using the trade marks of the plaintiff. Details
of such unlawful use have been provided in paragraph 20 (A) to (C) of
the plaint. The said use by the defendant would lead to confusion/
deception in the market and downfall of the plaintiff's goodwill, hence,
the present suit was filed. A brief synopsis of the alleged unlawful use
of the plaintiff's intellectual property as mentioned in paragraph 20 (A)
to (C) is as under:
A) Use of the mark ―PRIME GOLD‖ for steel bars (sarias) in class 6
along with a promotional slogan being ‗a product of Kamdhenu
Industries Ltd.' with the punch line ―HUM DETE HAIN
SAMPURN SURAKSHA KI GUARANTEE‖. The said adoption
of ―PRIME GOLD‖ is stated to be deliberate and mala fide as the
usage of the words ―GOLD‖ along with the corporate name
―Kamdhenu Industries Ltd.‖ can lead to confusion and deception
as the plaintiff's product of steel bars has the trademark
―KAMDHENU GOLD‖ along with the punch line ―SAMPURN
SURAKHSHA KI GUARANTEE‖.
B) The defendant has unauthorisedly continued the manufacture/sale
of SS Pipes falling under Class 6 under the mark ―KAMDHENU‖
along with the plaintiff company's registered logo and get up
despite the fact that the license agreement between the two parties
expired due to efflux of time. The defendant has also allegedly
started a website kamdhenusspipes.com and stated therein that the
plaintiff company is a flagship company of the Kamdhenu Group
and that the address of the defendant company is 24, Shivaji
Marg, Najafgarh Road, New Delhi - 110015. Reference has also
been made to the 22.10.2007 issue of the magazine ‗India Today'
wherein the trade marks/logo/ punch line of the plaintiff are
shown as those of the defendant.
C) Sh. Pradeep Kumar Agarwal has wrongly claimed to be the
Chairman of the Kamdhenu Group in the above mentioned
website as the same is not true at all. Various photographs have
been put up on the website which are the intellectual property of
the plaintiff. Further, the slogan ―DESH KI SHAAN‖ used by the
defendant on the website is the prime advertising slogan used by
the plaintiff company. The defendant has admitted the proprietary
rights of the plaintiff as there was valid licensing agreement
between the two parties which expired by efflux of time and is
now only attempting to misuse the goodwill created by the
plaintiff.
6. The matter came up before this Court on 18.02.2008 wherein
an ex-parte interim injunction was passed and a Local Commissioner
was also appointed. The said order was modified on 25.02.2008 and the
operative portion thereof reads as under :
―Considering the facts and circumstances of the case, and
after perusing the plaint as also the documents placed on
record, the Court is of the opinion that the plaintiff has
made out a prima facie case for grant of ex-parte ad
interim injunction in its favour. Accordingly, till further
orders, the defendant, its directors, officers, employees
and representatives etc. are restrained from
manufacturing, selling, marketing or advertising the
products such as steel bars, SS pipes and allied goods,
registered in the name of the plaintiff in Class 6 bearing
the trademark/logo of KAMDHENU, KAMDHNU
GOLD, KAMDHENU TMT GAL and/or punch line
‗SAMPURN SURAKSHA KI GUARANTEE' and/or any
trademark/logo which is deceptively similar to that of the
plaintiff's trademark/logo as aforesaid.‖
7. The Local Commissioner appointed vide order dated
18.02.2008 filed his report on 07.04.2008. As per report, the Local
Commissioner visited the defendant's premises at M/s. Dudheswari
Steel and Alloy Pvt. Ltd., Hapur Road, Pilakhua, District Ghaziabad,
Uttar Pradesh and recorded the following :
―5. That on inspection of the factory premises I have
found only two brand names ―Diamond‖ and ―Prime
Gold‖ being used on the Saria of different sizes.
However these brand names were being
manufactured for Kamdhenu Industries, on advise of
the Kamdhenu Industries. The goods were sold
under ―Prime Gold‖ to the consumer directly.
8. I have found no promotional material on the site and
on enquiry Mr. Sharad Lahoti states that all such
material is in the Delhi office and also in the office
of the Kamdhenu Industries Ltd.
9. That on thorough (sic) search of the premises no
goods were found bearing the Trade Mark/ Logo
Kamdhenu, Kamdhenu Gold as mentioned in the
Order dated 18.02.2008 and 25.02.2008.‖
8. In the written statement filed on behalf of the defendant, it
has been submitted that Sh. Pradeep Kumar Agarwal, Chairman and
Managing Director of the defendant company had in fact conceived of
the establishment and setting up of the plaintiff company and had called
upon his brothers i.e. the current management of the plaintiff company
to join him once he had the plaintiff company up and running. With
time, the parent company Kamdhenu Ispat Ltd. incorporated various
other companies being Kali Metals Pvt. Ltd., APS Buildcon Pvt. Ltd.,
Kamdhenu Cement Industries Ltd., Kamdhenu Concast Ltd. and
Kamdhenu Infra Developers Ltd. Besides these, Sh. Pradeep Kumar
Agarwal independently promoted and incorporated Kamdhenu
Industries Ltd., defendant herein.
9. Due to irreconcilable differences between the parties, a
family settlement was arrived at in February, 2006 and then on
11.02.2007, 23.02.2007 and 26.05.2007.
10. It is submitted by the defendant that Sh. Pradeep Kumar
Agarwal ventured into the steel business independently in February,
2008 and launched steel products under the name ―Prime Gold‖ without
any conflict with the plaintiff. Various public notices were published in
leading newspapers stating that ―Prime Gold‖ products had no
connection to the plaintiff company. It was also ensured that the
corporate name ―Kamdhenu Industries Ltd.‖ did not feature anywhere
on the steel products of the plaintiff. It is the defendant's submission
that the plaintiff has concealed the factum of the Family Settlements and
misled this Court into allowing the ex-parte ad interim injunction vide
order dated 18.02.2008 be passed. Further, the Local Commissioner
appointed found no offending or illegal product/logo/mark at the
defendant's premises. The defendant specifically denied the allegation
of infringement and passing off as allege by the plaintiff.
11. In its replication to the above written statement, the plaintiff
has, among other things, denied the existence of the Family Settlements
and stated that the said settlements were in fact preliminary discussions
which were reduced into writing to satisfy the ego of Sh. Pradeep
Kumar Agarwal and the said discussions have never culminated into
definite formal agreements due to lack of any follow up and
documentation.
12. Arguments on several applications were heard by me in this
matter as well as the three other suits between the parties being CS (OS)
No. 425/2008, CS (OS) No. 1882/2008 and CS (OS) No. 2616/2008.
Since they concern the same parties and the trade mark Kamdhenu is the
bone of contention in these matters and they revolve around a common
subject, therefore with the consent of the parties, the interim
applications in all the four matters will be disposed of by this common
order.
13. The applications in the first suit being CS (OS) No.
302/2008 shall be taken up first.
IA No.6564/2008 (u/O XXXIX Rules 1 & 2) in CS (OS) No. 302/2008
14. The plaintiff has filed this application under Order XXXIX
Rules 1 and 2 read with Section 151 CPC for grant of further and
specific interim injunction restraining the defendant and its employees
etc. from using the corporate/ business/ trade name ‗Kamdhenu
Industries Ltd.' in advertisements, material etc for publicity of its
PRIME GOLD bars and for appointment of a Local Commissioner for
inspecting and seizing incriminating material as the same would amount
to evidence necessary for proper adjudication.
15. In the present application, the plaintiff has submitted that the
defendant has been trading under various trademarks/punch lines and
tagging along with them the corporate name KAMDHENU since the
said name is part of the defendant's name, i.e. ‗Kamdhenu Industries
Ltd.'. It is the plaintiff's contention that the use of the corporate name
KAMDHENU for the advertisement/sale of sarias under the name
PRIME GOLD is a deliberate attempt on the defendant's part to cash in
on the goodwill of the plaintiff as the mark/name KAMDHENU is
associated with the plaintiff. Due to such acts of the defendant, the
plaintiff has been suffering as the defendant's goods are of sub-standard
quality and are cheaper, but are being bought by the public due to the
trusted name KAMDHENU attached to them. Various dealers/
distributors have made complaints against the low quality and
misrepresentation of the defendant.
16. Learned Counsel for the plaintiff has referred the case of
Atlas Cycles (Haryana) Ltd. Vs. Atlas Products Pvt. Ltd., 146 (2008)
DLT 274 wherein the defendants were restrained from using word
ATLAS in their corporate name/ trade name in respect of bicycles and
bicycle parts despite the fact that the products were being advertised/
sold under the brand name ―Premium Gold‖ and not ATLAS, but the
Court was of the view that the use of the word ATLAS in the
defendant's corporate name would lead to confusion/deception in the
market. Another case where the defendants were restrained from using a
word as part of their corporate name in order to avoid confusion/
deception and which has been referred is Mahendra & Mahendra
Paper Mills Ltd. Vs. Mahindra & Mahindra Ltd., AIR 2002 SC 117.
17. In reply to IA No. 6564/2008 filed by the plaintiff for
extension of the ex parte orders dated 18.02.2008 and 25.02.2008, the
defendant has submitted that Sh. Pradeep Kumar Agarwal chose the
name ―PRIME GOLD‖ as it was distinct from the plaintiff's
trademarks/names/punch lines etc. Further, the word KAMDHENU has
never been used in isolation and has always been used as part of the
defendant's corporate name Kamdhenu Industries Ltd. The defendant
has submitted that the said corporate name is being used by it since
1998 and has not been objected to till now. Further, the corporate name
Kamdhenu Industries Ltd. does not appear anywhere on the steel bars of
the defendant, thus leaving no scope for confusion and/ or deception.
With regard to the punch line SAMPURN SURAKSHA KI
GUARANTEE, the defendant has contended that it used the phrase
―HUM DETE HAIN SAMPURN SURAKSHA KI GUARANTEE‖ on
its hoardings etc. for a very short period of time and its use was
discontinued due to abundant caution practiced by the defendant. Either
way, the said phrase in English means ―We guarantee safety‖ and there
is nothing illegal or out of ordinary if a vendor/ manufacturer uses the
said words to convey the said sentiment to its consumers/ customers. It
is also contended that since the defendant has been successful in
becoming a competitor and has made a good name for itself, the plaintiff
is attempting to down-size the defendant.
IA No. 8055/2008 (u/O XXXIX Rule 4) in CS (OS) No. 302/2008
18. The second application was filed by the defendant under
Order XXXIX Rule 4 of the CPC for setting aside the orders dated
18.02.2008 and 25.02.2008. As per the defendant, the said interim
orders have been obtained by the plaintiff by concealing/ suppressing
many vital facts. The grounds for setting aside the ex parte orders
mentioned above can be enumerated as under :
a) The factum of the existence of the Family Settlements has
been suppressed by the plaintiff, as is the fact that the said
settlement was reduced into writing and signed by all the
four parties concerned in the presence of two witnesses
being Ms. Sarita Agarwal and Ms. Shaifali Agarwal.
b) It has also been suppressed by the plaintiff that further
settlements were arrived at between the parties which were
reduced in writing by none other than Sh. Satish Kumar
Agarwal, Director of the plaintiff company and was signed
by Sh. S.K. Bansal, Advocate on behalf of the plaintiff
along with Sh. Sunil Agarwal, Smt. Shaifali Agarwal, Smt.
Radha Agarwal, Sh. Ayush Agarwal, Sh. Saurabh Agarwal,
Sh. Sachin Agarwal, Sh. M.K. Duggal and Sh. S.K.
Singhal.
c) The plaintiff has also concealed that the afore mentioned
Family Settlements resulted in the passing of a Resolution
dated 14.05.2007 recording the sale of the brand
KAMDHENU in respect of cement and other allied
products to Sh. Pradeep Kumar Agarwal for Rs. 1.40
Crores. In pursuance to such resolution, the same was
intimated to the Bombay Stock Exchange as well and the
plaintiff sent a letter dated 31.05.2007 to the defendant
stating that in view of the sale, the defendant could begin
using the KAMDHENU brand for cement etc. pending
preparation of an assignment deed and the plaintiff had no
objection to the same.
d) It has also been concealed that the accounts of the dealers/
distributors of the plaintiff company with relation to cement
business were voluntarily transferred to the defendant
company in lieu of the family settlements.
e) The plaintiff suppressed that in performance of the family
settlement, Sh. Satish Kumar Agarwal and his group
members resigned from the Board of APS Buildcon Pvt.
Ltd. and Kali Metals Pvt. Ltd., both companies which fell
to Sh. Pradeep Kumar Agarwal's share. Further, the
plaintiff has concealed that it received Rs. 20 lacs from the
defendant on account of assignment of the mark
KAMDHENU to the defendant in respect of cement and
allied goods.
19. In reply, the plaintiff has submitted that the defendant's
application is barred by delay. Further, the plaintiff was never a
signatory to the alleged family settlements and being a separate legal
identity from the Directors who signed the said settlements, the same
cannot be held as binding over the plaintiff company. Various
resolutions have been quoted in the reply. All the other averments have
been denied by the plaintiff.
20. Let me now deal with the contentions of the parties in the
interim applications filed in Suit No.302/2008. It is not in dispute
between the parties that by virtue of agreements dated 01.03.2005 and
08.10.2005, the defendant was permitted to use the trademark
KAMDHENU as a licencee in relation to the goods falling class 19 and
class 6 for a period of two years subject to payment of consideration. It
is specifically mentioned in the agreements that after the expiry of the
said period, the defendant shall claim no rights, titles or benefits of the
trademark KAMDHENU in relation to the goods in question i.e.
stainless steel, pipes, steel bars and fittings etc. or any other deceptively
similar trademark thereof.
21. As per the terms, after the termination of the agreements, it
was imperative on the part of the defendant to destroy all moulds and
dies including stationery and other material bearing the trademark
KAMDHENU. In view of these agreements as well as the family
settlements dated 11.02.2007, 23.02.2007 and 26.05.2007, the defendant
is not entitled to use the trademark KAMDHENU in relation to stainless
steel, pipes, sarias, steel bars and fittings thereto.
22. It is asserted by the plaintiff that the defendant is using the
device mark Chakra with the colour combination yellow, red and purple
which was distinctive with the goods of the plaintiff after the
termination of agreements. The other submission of the plaintiff is that
use of the trademark ‗PRIMA GOLD‖ amounts to infringement and
passing off as their goods under the trademark KAMDHENU/
KAMDHENU GOLD are the goods of the plaintiff. The contention of
the plaintiff is also that the defendant is also using the punch line ‗HUM
DETE HAIN SAMPURN SURAKSHA KI GUARANTEE‖ which is
similar to the punch line of the plaintiff ―SAMPURN SURAKSHA KI
GUARANTEE‖.
23. On merit, the defendant has denied infringement and any act
of passing off. The main objection of the defendant is that the plaintiff
has intentionally, deliberately and willfully concealed and suppressed
the family settlements from this Court and it is asserted by the defendant
that the interim order be vacated on this ground itself. According to the
defendant, it was the duty of the plaintiff to disclose all material facts
and particularly when the plaintiff has sought an interim order in the
matter.
24. Learned counsel for the plaintiff has tried to justify the act of
the plaintiff on the reason that it was not necessary to disclose the said
family settlements as the subject matter of the present suit is totally
different and the same has been filed on the basis of cause of action for
violation of statutory rights of the plaintiff despite admission not to use
the trade mark after termination of two agreements dated 01.03.2005
and 08.10.2005, the details of the agreements have been mentioned in
the plaint along with the documents placed on record along with the
plaint. Learned counsel for the plaintiff has argued that the question of
concealment and suppression of facts is only relevant if it is pertaining
to the matter, otherwise, the objection is totally without any merit. He
referred the following cases in this regard :
(i) Arunima Baruah Vs. Union of India; (2007) 6 SCC 120.
(ii) Ganpat Bhai Mahijibahi Solanki Vs. State of Gujarat;
(2008) 12 SC 353.
(iii) S.J.S. Business Enterprises (P) Ltd. Vs. State of Bihar;
(2004) 4 SCC 176.
25. This Court partly agrees with the explanation given by the
learned counsel for the plaintiff that no doubt the suit was filed for
violation of registered trade mark and also for breach of terms in two
agreements as referred above but at the same time on the date of filing
of the suit, there were admittedly three family settlements between the
parties pertaining to the mark KAMDHENU. There is no averment in
the plaint about the said settlements. It might be possible that had the
plaintiff disclosed the family settlements, the Court might not have
passed the interim injunction dated 18.02.2008 and 25.2.2008.
Admittedly, when the Local Commissioner visited the premises of the
defendant he did not find any evidence in relation to the trademark with
regard to which the ex-parte orders were passed by the Court. Therefore,
at this stage, the defendant on merit is not affected by the non-disclosure
of the family settlement. Even otherwise, the position would have been
different if the averment had been made.
26. Thus, though I am not taking a serious view of the matter at
this stage, however the objection raised by the defendant is left open and
the same may be considered at the final stage of the suit. Thus, the
interim application IA no. 6564/2008 filed by the plaintiff under Order
XXXIX Rules 1 & 2 CPC and IA No.8055/2008 filed by the defendant
under Order XXXIX Rule 4 CPC are disposed of with the following
directions:
(a) the defendant, its directors, officers, employees and
representatives, etc. are restrained from manufacturing, selling,
marketing or advertising products such as steel bars, Stainless Steel
pipes and allied goods registered in the name of the plaintiff in
Class 6 bearing the trademark/logo of KAMDHENU,
KAMDHENU GOLD, KAMDHENU TMT GAL and/or punch line
‗SAMPURN SURAKSHA KI GUARANTEE' and/or any
trademark/logo which is deceptively similar to the plaintiff's
trademark/logo as aforesaid. However, the defendant is entitled to
use the slogan ‗DESH KI SHAAN‖ as the same is neither identical
nor deceptively similar to the slogan of the plaintiff i.e.
―SAMPURN SURAKSHA KI GUARANTEE‖.
(b) The defendant is entitled to use the trademark ―PRIME
GOLD‖ which is prima facie not identical with or deceptively
similar with the trademark KAMDHENU/ KAMDHENU GOLD.
(c) The defendant is also restrained from using the word/mark
KAMDHENU in relation to its web pages as well as part of domain
name or any other combination in which the trademark
KAMDHENU forms part thereof and the words ‗steel', ‗ispat' and
‗alloys' with the mark PRIMA GOLD. The defendant is also
restrained from issuing any common advertisement by way of any
media in respect of its two businesses i.e. steel and cement in order
to deceive the customers.
27. As far as the injunction prayed by the plaintiff to restrain the
defendant from using the corporate name of the defendant i.e.
Kamdhenu Industries Ltd. is concerned, the plaintiff has referred
various decisions on the point of infringement of trademarks and delay.
The details of these judgments are given as under :
(i) Gujarat Bottling Company Ltd. Vs. Coca Cola
Company; (1995) Vol. 5 SCC 545.
(ii) Midas Hygienic Industries Pvt. Ltd. Vs. Sudhir Bhatia
& Ors.; 93 (2001) DLT 667.
(iii) M/s. K.G. Khosla Compressors Ltd. Vs. M/s. Khosla
Extraktions Ltd. & Ors.; AIR 1986 (Del.) 181 (1).
(iv) British Bata Shoe Company Ltd. Vs. Czechoslovak Bata
Company Ltd.; Vol. LXIV-Reports of Patent, Design &
Trademark Cases No.4.
(v) Montari Overseas Ltd. Vs. Montari Industries Ltd.; ILR
1997 (Del.) 64.
(vi) Atlas Cycles (Haryana) Ltd. Vs. Atlas Products Pvt.
Ltd.; 146 (2008) DLT 274 (DB)
(vii) Ram Dev Food Products (P) Ltd. Vs. Arvind Bhai Ram
Bhai Patel & Ors.; (2006) 8 SCC 726.
(viii) Rob Mathys India Pvt. Ltd. Vs. Synthes AG Chur;
(1998) I RAJ 396 (Del.).
(ix) M/s. Power Control Appliances & Ors. Vs. Sumit
machines Pvt. Ltd. with Sumit Research and Holding
Vs. Sumit Machines & Anr.; (1994) 2 SCC 448.
28. Mr. Chandiok, ASG and Senior Advocate appearing on
behalf of the plaintiff has referred Section 29(5) of Trademarks Act,
1999 in support of his submission. The said provision reads as under:
―29. Infringement of registered trade marks.--(1)....
(2)....
(3)....
(4)....
(5) A registered trade mark is infringed by a person if he
uses such registered trade mark, as his trade name or part of
his trade name, or name of his business concern or part of
the name, of his business concern dealing in goods or
services in respect of which the trade mark is registered.‖
A plain reading of this provision clearly mandates that a
registered trade mark is infringed by a party if he uses the mark as his
trade name or part of his trade name.
29. The case of the defendant is that the said company
Kamdhenu Industries Ltd. was incorporated in 1998 with the knowledge
of the plaintiff who has failed to take any action against the same for the
last 10 years. Thus, the plaintiff is not entitled to an injunction because
of long delay and acquiescence.
30. In a recent judgment delivered by a Division Bench of this
Court by my respected brothers Vikramjit Sen, J. and S.L. Bhayana, J. in
the case of Atlas Cycles Haryana Ltd. vs. Atlas Product Pvt. Ltd.
reported in 146 (2008) DLT 274 (DB), the point of delay has been
extensively discussed in paragraphs 15, 16, 17, 19 and 20. The same
read as under:-
―15. As has been observed in Midas Hygiene Industries P. Ltd.
& Anr. v. Sudhir Bhatia & Ors., II (2004) SLT 627=2004 (1)
RAJ 586 (SC) where infringement of a trade mark occurs
normally an injunction must issue even though there may be
some delay in initiating proceedings. If the adoption of the trade
mark is dishonest or notorious a prima facie case would exist in
favour of the Plaintiff. We are unable to discern from the Report
of Midas the extent of the delay in that case. If there is
inordinate delay the distinguishing line between delay and
acquiescence becomes so blurred, in our opinion, that the grant
or refusal of an ad interim injunction would hang in the balance.
Dishonesty or notoriety on the part of the Defendant would then
tilt the scales in favour of the Plaintiff. The Trial Court must
exercise its discretion in this regard, and unless the result falls in
that extremely rare category of perversity, the Appellate Court
must always be loath in substituting that decision with its own.
16. In Mahendra and Mahendra Paper Mills Ltd. v. Mahindra
and Mahindra Ltd., VIII (2001) SLT 12=AIR 2002 SC
117=2002 (24) PTC 112 (SC) the Supreme Court noted that the
Plaintiff/Respondent had numerous associate and subsidiary
companies and was transacting business in that name and style
since 13-1-1948; and ‗Mahindra' was its registered trade name.
The Defendant commenced business in 1974 as a sole
proprietorship concern, Mahendra Radio House and thereafter a
number of other concerns were flouted. The ad interim
injunction granted in favour of the Plaintiff by the Single Judge
was affirmed by both appellate Courts. In Montari Overseas Ltd.
v. Montari Industries Ltd., 1996 (16) PTC 142 the Plaintiff was
incorporated in 1983, and had several subsidiary companies also.
The Defendant was incorporated in 1993 and it claimed to be
operating in textiles, allegedly an altogether different field from
the operation of the Plaintiff. Nevertheless the Defendant was
injuncted from using the corporate name. Upholding the grant of
the interim injunction a Division Bench of this Court opined that
―no company is entitled to carry on business in a manner so as to
generate a belief that it is connected with the business of another
company, firm or individual. The same principle of law which
applies to an action for passing off of a trade mark will apply
more strongly to the passing off of a trade or corporate name of
one for the other‖.
17. The following passage from Kerly's Law of Trade Marks
and Trade Names is indeed of relevance:
MANDATORY INJUNCTIONS; ORDERS TO CHANGE NAME
18-86 The Court has power to make mandatory as well as
prohibitory injunctions. Procedurally, mandatory injunctions
may be more difficult, because they require to be policed, but
this is simply a factor to be considered (and in relation to interim
injunctions it is a matter going to the balance of convenience,
since it may be more prone to cause injustice than an order
preserving the status quo, Nottingham Building Society v.
Eurodynamics, [1993] F.S.R. 468).
18-87 Mandatory relief in a passing-off action may include an
order to compel the defendants to state that they are not
connected with the claimant, where they are selling the
claimant's goods but also falsely giving the impression that they
are authorised agents [Sony v. Saray (1983) F.S.R. 302].
18-88 A defendant whose company name is inherently deceptive
may be ordered to change its name. Such an order may even be
made at an interim stage : Glaxo v. Glaxowellcome, (1996)
F.S.R. 388. Likewise, a company registering a website with a
name which is so inherently deceptive as to amount to an
instrument of fraud may be ordered to change the name of the
site or to transfer it to the claimant. Marks and Spencer v. One-
in-a-million, (1998) F.S.R.265, (1999) F.S.R.1 (the order there
being made following a successful application for summary
judgment).
19. We now turn our attention to Section 22(1)(ii) of the
Companies Act, 1956 and Section 29(5) of the Trade Marks Act,
1999 which reads thus--
22. Rectification of name of company.--(1) If, through
inadvertence or otherwise, a company on its first
registration or on its registration by a new name, is
registered by a name which,--
(i) ....
(ii) on an application by a registered proprietor of a trade mark,
is in the opinion of the Central Government identical with,
or too nearly resembles, a registered trade mark of such
proprietor under the Trade Marks Act, 1999, such
company,--
(a) may, by ordinary resolution and with the previous
approval of the Central Government signified in writing,
change its name or new name; and
(b) shall, if the Central Government so directs within
twelve months of its first registration or registration by its
new name, as the case may be, or within twelve months of
the commencement of this Act, whichever is later, by
ordinary resolution and with the previous approval of the
Central Government signified in writing change its name or
new name within a period of three months from the date of
the direction or such longer period as the Central
Government may think fit to allow:
Provided that no application under Clause (ii) made by a
registered proprietor of a trade mark after five years of
coming to notice of registration of the company shall be
considered by the Central Government.
29. Infringement of registered trade marks--
.... .... ...
(5) A registered trade mark is infringed by a person if he
uses such registered trade mark, as his trade name or part of
his trade name, or name of his business concern or part of
the name, of his business concern dealing in goods or
services in respect of which the trade mark is registered.
(6) For the purposes of this Section, a person uses a
registered mark, if, in particular, he--
(a) affixes it to goods or the packaging thereof;
....
The phrase ‗a name which is identical with or too nearly
resembles the name by which a company in existence has
been previously registered', is also to be found in Section
20(2) of the Companies Act which along with Section
22(1)(i), 22(ii) and its proviso was introduced thereto with
effect from 15.9.2003. The date from which these
amendments came into operation appears to have escaped
the notice of the parties since the subject suit had been filed
over a year earlier, in April 2002. Obviously Parliament had
Section 29(5) of the Trade Marks Act, 1999 in sight.
20. Our attention has been drawn to Ellora Industries Delhi v.
Banarsi Das 1981 PTC 46 in which this Court had injuncted the
Defendant even from using the word 'Ellora' as part of its
business name as it would be misleading in the context of the
Plaintiff's 'Elora' trade mark registered six years prior to the
Defendant's use of the mark Ellora. Both parties were selling
clocks. The Division Bench opined that the misrepresentation
pertained to the origin of the goods, and passing off could occur
even where the goods were not similar. More recently, in
Montari the Division Bench had ruled that the Plaintiff has two
independent rights of relief against the Defendant who may be
using the corporate name of the previously incorporated
Plaintiff, firstly under Section 22 of the Companies Act and
secondly of causing confusion (passing off) under the common
law. These two provisions have been relied upon by Mr.
Sundaram to contend that since the Plaintiff has ventilated its
grievance against the Defendant's use of ‗Atlas' as a part of its
trade or corporate name only in 2002 whereas they had specific
knowledge of this user since August, 1995, its demur had
become statutorily barred. In Montari the Division Bench had
rejected the argument to the effect that the Plaintiff had to seek
redressal only under the Companies Act. However, the suit had
been filed and the injunction had been granted in 1995 much
before the amendments to Sections 20 and 22 of the Companies
Act came into force. As these provisions stood in 1995, no
prescription had been provided under the Companies Act for
initiating an action under Section 20 of that statute. It is trite that
there is no legal bar against a party traversing or selecting one of
several avenues leading to its ultimate destination. We are in
respectful agreement with Montari with the caveat, however, that
the Bench did not have to consider the question of limitation
either under the Companies Act or the Trade Marks Act, 1999.
Furthermore, the Bench was not called upon to construe
provisions analogous inter alia to Section 29(5) of the Trade
Marks Act, 1999, which does not contain any period of
limitation after which the right to object gets extinguished, so far
as litigative action is concerned. It is of significance that the
present Sections 20 and 22 were introduced by Section 158 read
with the Schedule thereto of the Trade Marks Act, 1999. The
legislative intent is clear, namely, that whilst recourse to the
Companies Act must be taken within five years, the right to
restrain infringement or passing off is ever enduring, since no
limitation period has been prescribed either under Section 29 or
30 of the Trade Marks Act. Of course, delay in filing a suit
would always remain an important factor so far as interim relief
in an infringement or passing off action is concerned. In any
event, since the present Suit has been filed seventeen months
before September 2003, when the amendments came into force,
there is absolutely no merit in the arguments of the Defendants.
For this reason we are also not required to delve deeper into the
interesting but complex question of the effect of the unhappily
worded proviso to Section 22(1) of the Companies Act. In our
opinion the provisions should read thus -- ‗Provided that no
application under Clause (ii) made by a proprietor of a trade
mark shall be considered by the Central Government after the
expiry of five years from the date on which the applicant noticed
the registration of the company having an offending name'.
Assuming that a plaintiff noticed the registration of an
offensively named company in August 1998 would his challenge
thereto stands extinguished being statutorily barred immediately
on 15.9.2002, even though prior thereto neither remedy nor its
limitation had been provided for. We would have expected the
statute to clarify that where the cause of action had already
arisen five years prior to the introduction of the provision,
requisite action should be initiated within one or more months.
As already observed by us, we do not have to rule on this
conundrum. The amendment to Section 22 incorporates
widespread changes in form, but in substance introduces the
proprietors' right to compel a company to change its name in
certain circumstances.‖
31. Even otherwise if the family settlements are read carefully
and the intention of the parties is considered after the execution of the
documents, the main intention of the parties was to partition the group
companies in order to avoid competition of business in the market,
therefore different fields of activities were allotted to the rival parties
under the trade mark/ name of Kamdhenu.
32. Clauses (g), (j) and (k) of the family settlement dated
23.02.2007 indicate as under:
g) It was agreed that Sh. Pradeep Agarwal will form new
company to transfer Cement Brand or could transfer it in Kamdenu
Industries Ltd. on cost to be decided by Sh. M.K. Doogar.
j) It was further agreed that all assets and liabilities related to
Cement, Plaster of Paris, Water Proofing Compound and wall Care
Putty will be transferred to Company related Shri P.K. Agarwal
and all securities related to those items will also be transferred
after all adjustments upto 31.01.200.
k) It was agreed that name of Kamdhenu Cement Ltd. will be
changed in due course and promoters of Kamdhenu Ispat will not
use the name of cement in any Company/firm. Similarly Sh.
Pradeep Agarwal and his group was not to use the word of ‗Steel'
‗Ispat' ‗Alloys' or similar related to steel in any company or firm
with Kamdhenu. [Kandhenu Cement Ltd. referred to in the said
clause was intended to be Kamdhenu Cement Industries Ltd.]
33. In view of the abovesaid reasons, this court is of the
considered view that the defendant is not entitled to use the corporate
name Kamdhenu Industries Ltd. or any other corporate name in which
the mark Kamdhenu shall form part in relation to its business of
Stainless Steel, Saria. The defendant is granted time up to 31.03.2011 to
adopt/use different name in this regard. However, the defendant is
entitled to use the said corporate name in relation to its business of
cement, POP and Wall Putty and allied goods as allowed as per Clause
(g) of the family settlement dated 23.02.2007.
34. For the reasons mentioned above, IA No.6564/2008 and IA
No.8055/2008 are disposed of.
IA No. 3845/2008 (u/O XXXIX Rule 2A) in CS (OS) No. 302/2008
35. The third application being IA No. 3845/2008 under Order
XXXIX Rule 2A has been filed by the plaintiff due to the defendant's
alleged violation of the orders dated 18.02.2008 and 25.02.2008 insofar
as the name/mark KAMDHENU is still being used by the defendant as
is the punch line ―SAMPURN SURAKSHA KI GUARANTEE‖ and the
contentions in that application have been invoked as part of the
contentions in IA No.6564/2008. The following grounds for contempt
have been made in the said application :
a) That the defendant company through its Directors/ Officials
is consistently manufacturing and selling SS Pipes and
Steel Bars (sarias) by using the corporate name
KAMDHENU which is the proprietary mark of the
plaintiff. The said name is also being used by the defendant
and all the contemnors on posters, sales promotion
material, pamphlets, hoardings etc. The plaintiff has
submitted that it is in possession of the defendant's
infringing product SS Pipes with the contemptuous use of
the trade mark KAMDHENU and the punch line
―SAMPURN SURAKSHA KI GUARANTEE‖. Further,
the steel bars being sold under the name PRIME GOLD are
advertised as a ‗premium product of Kamdhenu Industries
Ltd. (Pradeep Agarwal Group)'. The use of the name
KAMDHENU near the word GOLD is clearly infringing
upon the plaintiff's registered trademark KAMDHENU
GOLD.
b) The said name is being used on the website
kamdhenugroup.com despite this Court's orders to the
contrary. Further, by representing itself through a domain
name like ‗kamdhenugroup.com' the defendant is misusing
the trade name/ trademark of the plaintiff.
c) On 03.03.2008 Sh. Pradeep Kumar Agarwal while
launching the product steel bars misrepresented to the Press
that the defendant was the real Kamdhenu Group and that it
was in fact the owner of the plaintiff company as well. The
said Press Release in various newspapers has been attached
along with the application. A perusal of the newspaper
reports shows that in several places Sh. Pradeep Kumar
Agarwal has been referred to as the Director of Kamdhenu
Ispat Ltd.
36. Replying to the contempt petition, the defendant reiterated
the details of the family settlements and submitted that in addition to the
fact that the corporate name has been used by the defendant since 1998,
in lieu of the family settlements Sh. Pradeep Kumar Agarwal along with
certain other persons is entitled to use the name ‗Kamdhenu' without
any objections/ claims of the plaintiff or its group companies. The
defendant has denied all the allegations of the plaintiff pleaded in the
application.
37. It is asserted by the defendant that the family settlement
dated 23.02.2007 restricted the defendant's usage of the words ‗Ispat',
‗Alloys', ‗Steel' or any similar/related word. Further, the defendant
specifically got published a public notice to ensure that there was no
confusion vis-à-vis the products of the defendant and the plaintiff.
38. As regards the website kamdhenugroup.com, the defendant
has indulged in no willful disobedience as contended by the plaintiff and
the same had not been changed simply because it escaped the
defendant's attention. However instructions in this regard have been
issued now and the said website cannot be reached/ found on the
internet. As regards the hoardings/ SS Pipes, it is contended that
―PRIME GOLD‖ can in no way be said to be identical or deceptively
similar to the plaintiff's marks.
39. The defendant has denied all the allegations made by the
plaintiff in its contempt petition accusing the defendant of violating
orders dated 18.2.2008 and 25.2.2008. The defendant has also relied
upon the report of the Local Commissioner in support of its submission.
It is stated that when the Local Commissioner visited the premises of the
defendant no incriminating material was available or seized by the Local
Commissioner and no evidence in this regard was recovered by the
Local Commissioner.
40. The learned counsel for the plaintiff referred various
documents filed by the plaintiff along with the application. After having
gone through the material produced by the plaintiff by way of
documents, prima facie it appears that the defendant has tried to use the
trademark KAMDHENU directly/indirectly as appears from the
publicity material, newspapers and other printed material and has also
used the logo of Chakra as well as the punch line. The defendant is not
entitled to use the mark KAMDHENU on its products, advertisement
material or by way of interviews in the newspapers. In case the
defendant is allowed to use the same, the business of the plaintiff will
definitely be harmed.
41. No doubt, when the Local Commissioner had visited the
premises of the defendant no offending material was recovered.
Therefore, considering the overall situation of the matter and in view of
the above mentioned, I am of the opinion that in the present
circumstances as two views are possible vis-à-vis the allegations of
contempt leveled by the plaintiff against the defendant. It would be
proper to give final warning with imposing punitive cost and the
directions that if the defendant will violate the interim order passed in
this matter in future, this Court will take stringent action in accordance
with law. The contempt petition of the plaintiff is disposed of with the
following directions:
(a) The defendant shall have to bear the cost of Rs.
2,00,000/- (two lac) for violation of the order and shall pay
the same in the following manner:
(b) One lac to be deposited by the defendant within two
weeks from today by way of a bank draft with the Registrar
General of this Court. The Registrar General shall keep
available this whole amount for utilization in Juvenile
Justice.
(c) Remaining one lac to be deposited by the defendant with
the Prime Minister's Relief Fund within two weeks from
today.
With the above mentioned directions, IA No.3845/2008 is
disposed of.
42. During the pendency of the first suit, three more suits have
been filed by the parties against each other. CS (OS) No. 425/2008 was
filed by the plaintiff seeking an injunction restraining Sh. Pradeep
Kumar Agarwal and his company Kamdhenu Cement Ltd. from using
the trademark KAMDHENU with respect to cement, PoP, wall putty,
water proofing compound and allied products.
43. M/s. Kamdhenu Cement Ltd., the defendants herein filed a
third suit being CS (OS) No. 1882/2008 against the plaintiff company
and its Directors for specific performance of the Family Settlements
mentioned above and for permanent injunction restraining the plaintiff
from using the trademark Kamdhenu in respect of Cement POP, putty
and allied goods.
44. The plaintiff filed the fourth suit against the defendants being
CS (OS) No. 2616/2008 praying for declaration that the alleged Family
Settlements are inapplicable and unenforceable qua the plaintiff, and
that no legal assignment of the trademark KAMDHENU has occurred
vis-à-vis the plaintiff and the defendants in respect of cement, plaster of
paris or any other allied goods as well as for permanent injunction
restraining the defendants from acting on any of the alleged family
settlements. I shall take up each application in each case one by one.
45. I have heard all the interim applications filed by the parties
being I.A. No. 2895/2008 (u/O XXXIX Rules 1 & 2 CPC by plaintiff)
and I.A. No. 4012/2008 (u/O X Rules 1 & 2 CPC by the defendants) in
CS(OS) No. 425/2008, IA No. 10930/2008 (u/O XXXIX Rules 1 & 2
CPC) in CS(OS) No. 1882/2008 and IA No. 11542/2008 (u/O XXXIX
Rules 1 & 2 CPC) in CS(OS) 2616/2008.
IA No.2895/2008 (u/O XXXIX Rules 1 & 2 CPC) in CS (OS) No.
425/2008
46. As mentioned earlier, this suit was filed by the plaintiff
Kamdhenu Ispat Ltd. against Kamdhenu Cement Ltd. for restraining the
defendants from infringing and/or passing of any goods and/or services,
including but not limited to cement, plaster of paris, water proofing
compound and wall putty etc. using the plaintiff's registered trade mark
KAMDHENU, its copyright therein, punch lines and slogans including
SAMPURN SURAKSHA KI GUARANTEE and DESH KI SHAAN
and also from using the word KAMDHENU as part of its corporate
name.
47. The grounds for filing this suit are the same as those in CS
(OS) No. 302/2008 and the plaintiff has contended that since Sh.
Pradeep Kumar Agarwal failed to pay the agreed amount for transfer of
selected rights in the trademark KAMDHENU, the permission to use the
same pending the completion of formalities of transfer was retracted
vide letter dated 06.11.2007 and use of the same by the defendants is
unlawful.
48. With this in view, IA No. 2895/2008 was filed seeking ex
parte ad interim injunction against the defendants. It is the plaintiff's
case that the word KAMDHENU has become synonymous with its
corporate identity and the use of the said word by the defendants in
relation to their products, for its corporate name and domain name is
only to cause deception and confusion in the trade and in the mind of the
consumers. 49. The plaintiff has also referred an incident whence the
plaintiff received summons from District Consumer Court at Aligarh in
Case no. 242/2007 titled Madan Singh Vs. M/s. Anil Traders wherein
the complainant/ consumer had used Kamdhenu cement for construction
and due to low quality of the same, the roof slab had collapsed. Though
the cement was manufactured by the defendants, it was the plaintiff who
was impleaded due to the confusion caused by the use of KAMDHENU.
50. In its reply, the defendants have contended that no
cancellation letter/ email was sent to it by the plaintiff for revoking the
transfer of selected rights of the mark KAMDHENU. The said emails
have been alleged to be unreliable as a perusal of the same would
indicate that the emails were only between the plaintiff company and its
directors/officials. Further, a part payment of Rs. 20 lac was made to the
plaintiff for the name ‗KAMDHENU CEMENT' by way of three
cheques dated 14.11.2007, 16.11.2007 and 24.11.1007 being cheque
numbers 960291, 960293 and 960297 for Rs. 10 lac, 5 lac and 5 lac
respectively.
51. The rest of the consideration i.e. Rs. 1.20 Crores was to be
paid after the Assignment Deed was executed, but the same was not
executed by the plaintiff despite reminders. The defendants have never
denied that it is still to pay the balance consideration of Rs. 1.20 Crores
and to show its bona fide, the defendants have filed a suit for specific
performance being CS (OS) No. 1882/2008 and has placed on record a
cheque of Rs. 1.20 Crores in the said suit.
IA No. 4012/2008 (u/O X Rule 2 CPC) in CS (OS) No. 425/2008
52. The second application has been filed by the defendants in
this suit under Order X Rule 2 of the CPC praying for calling of Sh.
Satish Kumar Agarwal into the witness box to examine him in view of
the facts alleged as under :
i) The plaintiff is trying to deprive the defendants of their lawful
rights by one way or the other by filing suit after suit and by
attempting to conceal/ render invalid the family settlements
between the parties.
ii) The Resolution of the plaintiff company dated 14.05.2007
wherein the transfer of KAMDHENU rights vis-à-vis cement,
wall putty etc. was allowed and various other documents have
been misrepresented/ sought to be nullified by the plaintiff.
iii) The part payment by the defendants has been out rightly and
wrongfully denied by the plaintiff. The suit filed by the
plaintiff has been signed and verified by Sh. Satish Kumar
Agarwal in his capacity as the Chairman and Managing
Director of the plaintiff company, and it is the same Sh. Satish
Kumar Agarwal who wrote down the terms and clauses of the
family settlements between the parties.
53. In its reply, the plaintiff has submitted that Sh. Satish Kumar
Agarwal has already been examined by this Court in so far as the Court
in order dated 12.03.2008 directed the Chairman and Managing
Directors of both the companies to be present in Court on 02.04.2008 on
which date, both Sh. Satish Kumar Agarwal and Sh. Pradeep Kumar
Agarwal were present and were questioned by the Court. The allusions
of the defendants to the family settlements are stated to be misleading as
the plaintiff being a separate identity from its Directors could not be part
of the said settlements.
54. Further, the Resolution dated 14.05.2007 has been referred
selectively by the defendants and in fact, the conditions laid out in the
Resolution were not adhered to by the defendants, leading to its
termination as only a preliminary understanding. Further, the payment of
Rs. 20 lac was also not in lieu of any transfer of rights to the word
KAMDHENU but was towards the transfer/ assignment of the Keyman
Insurance Policy taken by the plaintiff for its erstwhile Director Sh.
Pradeep Kumar Agarwal. The said Rs. 20 lac has no connection with the
agreed amount of Rs. 1.40 Crore to be paid by the defendants.
55. It is admitted case of the witness that none of the parties has
denied its signature or execution in the four family settlements dated
February 2006, 11.02.2007, 23.02.2007 and 26.05.207.
IA No. 10930/2008 (u/O XXXIX Rules 1 & 2) in CS(OS) No.
1882/2008
56. The above mentioned suit has been filed by Kamdhenu
Cement Ltd. (defendant in other suits and referred to as ‗Kamdhenu
Cement' herein for convenience) against Kamdhenu Ispat Ltd. (plaintiff
in other suits and referred to as ‗Kamdhenu Ispat' for convenience) for
specific performance of the Family Settlements and permanent and
mandatory injunction against Kamdhenu Ispat. IA No. 10930/2008 has
been filed by Kamdhenu Cement in this case under Order XXXIX Rules
1 and 2 of the CPC for an ex parte ad interim injunction seeking the
following :
a) restraining Kamdhenu Ispat and its representatives from
issuing any communication with respect to ‗Kamdhenu
Cement' and allied products to its franchisees, distributors,
dealers or to the general public;
b) restraining Kamdhenu Ispat from using the trademark
KAMDHENU with respect to cement and allied products;
c) restraining Kamdhenu Ispat from assigning the trademark
KAMDHENU with respect to cement and allied products to
anyone except Kamdhenu Cement; and,
d) restraining Kamdhenu Ispat from appointing franchisees,
dealers and distributors with respect to the Kamdhenu Cement
brand.
57. While alleging the details of the family settlements of
February, 2006 and the subsequent family settlements as already laid out
above, Kamdhenu Cement has submitted that the said settlements were
acted upon and the name KAMDHENU came to be associated with it in
relation to cement and allied products. As per Kamdhenu Cement, while
waiting for the assignment deed to be executed in terms of the family
settlement, it came across the ‗Un-audited financial results' of
Kamdhenu Ispat for the quarter ending 31.12.2007 published in Nav
Bharat Times dated 31.12.2008 wherein in the Kamdhenu Product
Portfolio, ‗cement' has been mentioned as one of the products of
Kamdhenu Ispat. However, in the earlier two quarterly results published
by Kamdhenu Ispat, cement was not mentioned in the product portfolio.
58. Taking cognizance of the newspaper publishing, Kamdhenu
Cement sent a communication dated 02.02.2008 apprising Kamdhenu
Ispat that the same was in violation of the Family Settlements to which
Kamdhenu Ispat replied on 22.02.2008 backtracking from the
settlements and stating that no such settlements indeed existed.
Kamdhenu Cement has submitted that Kamdhenu Ispat has accepted
three cheques totaling Rs. 20 lac from it, details of which have been
mentioned in this order. In utter disregard of the settlements, Kamdhenu
Ispat filed two suits being nos. 302/2008 and 425/2008 against
Kamdhenu Cement herein.
59. It has also been submitted that from time to time Kamdhenu
Ispat issues communications to the Kamdhenu Cement's franchises,
distributors and dealers threatening them with dire consequences if they
continue to deal with Kamdhenu Cement. Kamdhenu Ispat is illegally
trying to nullify the effect of the family settlements and is damaging
needlessly and irreparably the reputation and goodwill of Kamdhenu
Cement in its attempt to do so. Kamdhenu Ispat has no right to terminate
the sale by absolute assignment of the trademark KAMDHENU with
respect to cement and allied products especially since it has received
part payment of consideration for the same and therefore, the application
for interim relief has been filed.
60. In its reply to IA No. 10930/2008, Kamdhenu Ispat herein
has contended the following points :
i) Kamdhenu Cement has no prima facie case against
Kamdhenu Ispat as the latter is the registered proprietor of
the name/mark KAMDHENU with respect to various
products including cement, wall putty etc. Further, the
proposed assignment brought into effect by Kamdhenu
Ispat's letter dated 31.05.2007 was terminated by it through
its letter dated 06.11.2007 due to deliberate default of
payment by Kamdhenu Cement.
ii) Kamdhenu Cement is not itself manufacturing the product in
question as it has no manufacturing unit nor does it have any
legal right to trade under the mark KAMDHENU with
regard to cement and allied products.
iii) The agreements entered into by the parties termed ‗family
settlements' by Kamdhenu Cement are not binding upon
Kamdhenu Ispat since the signatories to the agreement are
family members and have no bearing on Kamdhenu Ispat
which is a separate entity.
iv) It is matter of fact that trademark related rights cannot be
sold but can only be assigned and in this case, the said
assignment was rescinded by the Kamdhenu Ispat. Various
other arguments raised by Kamdhenu Ispat have not been
stated herein as its stand on all these arguments/ issues has
been recorded in this order already.
IA No. 15452/2008 (u/O XXXIX Rules 1 & 2 CPC) in CS (OS) No.
2616/2008
61. This suit was filed by the plaintiff against the defendants for
declaration and permanent injunction vis-à-vis the family settlements
alleged to have been executed by the defendants. IA No. 15452/2008
was filed praying for an interim injunction restraining the defendants
from claiming before distributors, public etc. that it had rights in the
mark KAMDHENU with respect to cement, plaster of paris, wall putty
etc; from using the brand name KAMDHNU CEMENT and from
claiming any right, title or interest on the basis of the settlements dated
February, 2006, 11.02.2007, 23.02.2007 and 26.05.2007 as well as the
resolution dated 31.05.2007 and the plaintiff's letter dated 31.05.2007.
62. In the interim application the main contentions of the
plaintiff can be summarized as under :
i) The discussions between the brothers of the Agarwal family were
inconclusive and lacked authorization of the plaintiff company.
The said discussions have been mala fidely misrepresented as
‗Family Settlements' by the defendants.
ii) The Resolution dated 14.05.2007 was for negotiation of the
matter of assignment of trademark related rights vis-à-vis cement
and allied products to the defendants for a consideration of
Rs. 1.40 Crore. Since the amount was never paid to the plaintiff,
the negotiation could not be enforced or acted upon.
iii) The plaintiff company is not bound by the alleged family
settlements insofar as it is a separate juristic entity from the
parties to the settlement. The parties that signed the said
documents did so in their personal capacities and not as Directors
of the plaintiff company and hence the same cannot bind the
plaintiff company. The plaintiff has referred the following cases
in its support which are as under :
(i) Potti Lakshmi Perumallu Vs. Potti Krishna Venamma;
(1965) 1 SCR 26
(ii) Good Media Ltd. Vs. Prasar Bharti; (1999) 48 DRJ 399
(iii) V.B. Rangraj Vs. V.B. Gopalkrishnan & Ors.; (1992) 1
SCC 160
(iv) Shilpi Modes Vs. Shilpi Unitech; 70 (1997) DLT 636
(v) United Bank of India Vs. Ram Das Mahadeo Prasad;
(2004) 1 SCC 25255, SC 74.
(vi) Kiran Jain Vs. Janki Das Jain & Ors.; (2009) 40 PTC-
1, (Del.).
(iv) Further contention of the plaintiff is that since the defendants
failed to pay the agreed consideration due to which the plaintiff
cancelled the assignment by letter dated 6.11.2007 therefore, the
plaintiff is entitled to equitable and discretionary relief and no
benefit should be given on the basis of family settlements as these
settlements between the parties are not to be considered as a
concluded contract. The plaintiff has referred the case of PVR
Pictures Ltd. Vs. Studio 18; MANU/DE/0895/2009.
63. The defendants have denied all the allegations made by the
plaintiff in the plaint and application and have almost taken the same
defences as raised in Suit Nos. 302/2008 and 425/2008.
64. Learned counsel for the plaintiff has made his submission
that Kamdhenu Ispat Limited has never signed the documents dated
11.02.2007, 23.02.2007 and 26.05.2007, though he has not denied the
fact the same have been signed by the family members.
65. It has been argued that the plaintiff company is a separate
legal juristic corporate entity and as shareholders are not owners of
assets, assets cannot be divided amongst them by shareholders or even
by the Directors. As regards the plaintiff being a separate entity, the
learned counsel for the plaintiff has referred Section 46, 48, 56, 291 and
293 of the Companies Act. The following decisions are also referred by
the learned counsel for the plaintiff in support of his submission :
(i) Bacha F. Guzdar, Bombay Vs. Commissioner of
Income Tax, Bombay; AIR 1955 SC 74.
(ii) Madhur Poddar Vs. Ashok Poddar & Ors.; (2006) 2
CAL LT 133 (HC).
(iii) Smt. Pushpa Katoch Vs. Manu Maharani Hotel Ltd.;
121 (2005) DLT 333.
66. Learned counsel appearing on behalf of the plaintiff submits
that it is a public limited company and is not a closely held family
company. Therefore, the signing of the documents/family settlements
dated 11.02.2007, 23.02.2007 and 26.05.2007 in an individual capacity
are not binding upon the plaintiff company.
67. He further submits that Mr. Pradeep Agarwal/defendant has
resigned from the plaintiff company on his own and there are no EGM/
any meeting resolutions or letters referred to which state anything about
the existence of family settlements. It is further submitted that the
plaintiff company is a listed company wherein in the shareholders of the
members of the Agarwal family is only restricted to 51% and the
remaining stock is with the general public comprising more than 60%
shareholders in India and abroad. Hence, the decision cannot be taken
by one family member or Directors of the plaintiff company.
68. On the other hand, the submission of the defendants is that
due to expansion of families of the brothers, some dispute between the
families had arisen and in order to resolve the same between the family
members, the family settlements were mutually reduced into writing.
Initially the family settlement was entered into in the month of February,
2006 amongst three brothers and a nephew and thereafter on
11.02.2007, 23.02.2007 and 26.05.2007.
69. The said family settlements were executed between the
family members i.e. the shareholders and the directors of the plaintiff
company. The said family settlements were recorded in the handwriting
of Sh. Satish Kumar Agarwal who is the Chairman and Managing
Director of the plaintiff company. Another Director of the plaintiff Mr.
M.K. Doogar is also a signatory to the settlement dated 11.02.2007. So
is the position of Mr. S.K. Singhal, auditor of the plaintiff and Mr. S.K.
Bansal, Advocate of the family/plaintiff who were both signatories to
the family settlements. It is also contended by the defendants that the
family settlements were admitted, confirmed, accepted, acted upon and
adopted by the members of the Agarwal family.
70. It is asserted by the defendants that as per the family
settlements, it was agreed by all the parties that the trademark
KAMDHENU in relation to the goods Cement, POP, Water Proofing
Compounds and Wall Care putty were assigned to Kamdhenu Cement
Ltd., defendant no. 1 in Suit no. 425/2008, a company promoted and
incorporated by Mr. Pradeep Agarwal who resigned from the Board of
Directors of Kamdhenu Ispat Limited i.e. plaintiff company on
14.04.2007.
71. According to the defendants the said assignment was effected
in the meeting and as per the valuation report of M/s. Vaish & Associate
and M/s. Singhal & Co., the mark KAMDHENU was assigned in favour
of Mr. Pradeep Agarwal in relation to cement etc. for a consideration of
Rs. 1.40 crores and as per the family settlement, Mr. Pradeep Agarwal
and his group transferred their 3% shares in favour of Mr. Satish
Agarwal and his group. Similarly, as per the family settlement Mr.
Pradeep Agarwal also resigned from the other group.
72. As far as the plaintiff company being a separate juristic entity
is concerned, it is contended by the defendants that the plaintiff is a
listed company of which the substantial shareholding is held by the
Agarwal family and there is no bar in the Companies Act, 1956 which
prohibits family members from entering into a family settlement. In
pursuance to the family settlement, Sh. Pradeep Kumar Agarwal
transferred his 3% share capital in the plaintiff company. Further,
pursuant to passing of the Resolution dated 14.05.2007 the plaintiff
company issued a communication to the Bombay Stock Exchange
informing it of the same. Even a confirmation letter dated 31.05.2007
was issued by the plaintiff company in favour of Kamdhenu Cement
Ltd. affirming that the trade mark KAMDHENU in relation to cement
and allied products had been assigned.
73. It is argued by the defendants that the plaintiff had concealed
the said family settlements in Suit no. 302/2008 and as there was no
pleading reflecting the same in the matter, the said fact was brought to
light by the defendants in the written statement although during the
course of admission/denial of the documents the plaintiff through Satish
Kr. Agarwal, the Chairman and Managing Director of the Company has
admitted the documents filed in CS(OS) 1882/2008.
74. Further submission of the defendants is that the family
settlements clearly recorded that all the groups were entitled to use
trademark KAMDHENU. Therefore, the defendant no. 1 company was
incorporated in view of the settlements and assignments in favour of
Kamdhenu Cement Ltd. and on the resignation of Mr. Pradeep Kr.
Agarwal from the Plaintiff company the Keyman insurance policy of
Mr. Pradeep Kumar Agarwal was assigned in favour of the defendant
no. 1 i.e. Kamdhenu Cement Ltd. for which the said company has issued
a cheque dated 17.12.2007 bearing no. 960259 drawn on State Bank of
Bikaner & Jaipur, Paschim Vihar, New Delhi for a sum of Rs. 7,68,000/-
in favour of the plaintiff. However, the said cheque was not presented
for encashment.
75. It is also contended by the defendants that the plaintiff
company passed a Resolution on 14.05.2007 in the Extraordinary
General Meeting of the plaintiff company wherein consent was accorded
to transfer/assign the trademark KAMDHENU pertaining to the goods
Cement, POP, Water Proofing Compounds and Wall Putty to the
defendant No. 1 Kamdhenu Cement Ltd. for consideration not less than
Rs. 1.40 crores. The plaintiff company also issued communication to
the Bombay Stock Exchange thereby informing it of the Extraordinary
General Meeting Resolution dated 14.05.2007.
76. According to the defendants, in pursuance to the family
settlements as well as Extraordinary General Meeting dated 14.05.2007
the defendant no. 1 company made a part payment of Rs. 20 lacs to the
plaintiff by way of three cheques drawn on State Bank of Bikaner and
Jaipur towards part consideration for assignment. By communication
dated 31.05.2007 issued by the plaintiff the assignment of trademark
KAMDHENU was confirmed and no objection was raised by the
plaintiff against the defendant No. 1 company stopping it from using the
said trademark in a full-fledged manner. The defendants thereafter
started their business at a large scale and achieved a unique reputation.
77. According to the defendants, in order to dislodge their
business the plaintiff fabricated letter dated 06.11.2007 which came into
the notice of defendants only on 22.02.2008 whereby the assignment
deed was cancelled contrary to the fact that Mr. Pradeep Kumar
Agarwal defendant No. 2 from time to time had informed his brother on
social gatherings and otherwise kept reminding him as regards the
preparation of the papers pertaining to assignment deed.
78. The defendants submit that the said letter dated 06.11.2007 is
a forged and fabricated document. Otherwise, the plaintiff company
could not have terminated the settlement when the said assignment deed
had already been executed as part of the family arrangement and by the
time of termination of the agreement, the defendant no. 2 had already
established his business by appointing various franchisees in relation to
the cement business and most of the terms and conditions had been
acted upon by the parties.
79. The contention of the defendants is that the said e-mails filed
by the plaintiff in Suit no. 2616/2008 are fabricated as it appears that the
defendants are not party to the said e-mail and the same apparently were
exchanged between the employees of the plaintiff itself. The minutes of
the alleged meeting held on 16.10.2007 cancelling the understanding
between the parties for assignment is also forged and fabricated as the
defendant No. 1 company has paid part consideration and is ready to pay
the remaining consideration as and when the assignment papers are
finalized and there was no occasion on the part of the plaintiff to cancel
the understanding between the parties or the assignment.
80. The learned counsel for the defendants has also denied the
plaintiff's averment that Rs. 20 lacs paid by the defendants are not
towards the part payment of the consideration of the assignment but the
same are the value of an insurance policy. It is argued that vide letter
dated 16.11.2007 sent by Max New York Life to the defendant no. 2 for
his request for cash Surrender Value, the same is clearly worth Rs.
12,28,344.65. The question of adjustment of the said amount of Rs. 20
lacs toward the premium of policy does not help the case of the plaintiff.
81. Let me examine the rival submission of the parties.
Admittedly, the following are the relevant excerpts of the four family
settlements executed by the family member of the parties:-
A. February, 2006
―The ―Kamdhenu Group‖ is presently, directly or indirectly,
owned and controlled by Sh. Pradeep Agarwal, Sh. Satish
Agarwal, Sh. Sunil Agarwal and Sh. Ayush Agarwal, in the
ratio of : 30%, 25%, 25% and 20% respectively.
5.3 All the brands of the group may also be clubbed
and may be transferred to the parties on the basis of mutual
agreement. In case of any disagreement, the ownership shall
be determined in such a way that no one's interest is
jeopardized. Any difference or dispute on this particular
account shall be settled by way of arbitration by one r more
mutually acceptable arbitrator and as per the laws for the
time being in force. Any Kamdhenu Brand of any product
already acquired or applied by anyone of the four parties or
any company related to any of the four parties will be the
joint property of all the four parties of this agreement.
However, in case of ‗Kamdhenu Saria' or any other brand,
which is not divisible, shall be distributed on the basis of
Region. For this purpose the country shall be divided into
four prominent Regions on the basis of market share of the
Brand. The business relating to the Regions shall be
distributed among four parties. Any difference of dispute
on this particular account shall be settled as mentioned in the
above paragraph i.e. by way of arbitration by one or more
mutually acceptable arbitrator and as per the laws for the
time being in force, or through the Court of Law.‖
B. Family Settlement dated 11.02.2007
―a) The Net worth of the Plaintiff Company and
other Companies was assessed at Rupees 95.56 Crores,
inclusive of brand valuation as per the following breakup :
1) Steel Rupees 60.00 crores.
2) Cement Rupees 15.00 crores
3) Housing Rupees 5.00 crores.
b) Shri Pradeep Agarwal was assigned the Cement
Brand; a family company namely Kali Metals (P) Ltd. and
cash/land.
c) Shri Pradeep Agarwal was to manufacture the
Steel Products under license agreement of franchisees from
Kamdhenu Ispat Ltd.
d) It was also agreed between the parties that the
Cement Brand will be transferred to Sh. Pradeep Agarwal for
a suitable amount as per the legal advice.‖
C. Family Settlement dated 23.02.2007
―b) It was agreed that Shri Pradeep Agarwal will be
entitled for Cement Product worth 15 crores; Kali Metals
Pvt. Ltd. worth Rs.5.33 crores; cash/land worth 8.34 crores.
This all was worth 28.67 crores which was 30 percent of
95.56 crores, net worth of promoter company.
d) It was agreed that all assets other than cement
brand, Kali Metals and land at Najafgarh will belong to
Kamdhenu Ispat Ltd. Shri P.K. Agarwal, if require any
assets, will pay the cost to Kamdhenu Ispat Ltd.
g) It was agred that Sh. Pradeep Agarwal will form
new company to transfer Cement Brand or could transfer it
in Kamdenu Industries Ltd. on cost to be decided by Sh.
M.K. Doogar.
j) It was further agreed that all assets and
liabilities related to Cement, Plaster of Paris, Water Proofing
Compound and wall Care Putty will be transferred to
Company related Shri P.K. Agarwal and all securities related
to those items will also be transferred after all adjustments
upto 31.01.200.
k) It was agreed that name of Kamdhenu Cement
Ltd. will be changed in due course and promoters of
Kamdhenu Ispat will not use the name of cement in any
Company/firm. Similarly Sh. Pradeep Agarwal and his group
was not to use the word of ‗Steel' ‗Ispat' ‗Alloys' or similar
related to steel in any company or firm with Kamdhenu.
[Kandhenu Cement Ltd. referred to in the said clause was
intended to be Kamdhenu Cement Industries Ltd.]
l) It was agreed that Sh. Pradeep Agarwal will
transfer the shares of his family members and company i.e.
Kamdhenu Industries Ltd. at cost price as per their balance
sheet if the shares are transferred at indexed cost than the
additional cost of funds mobilized by the transferees shall be
reimbursed by the transferor. Market value of shares was no
consideration in any circumstances. Shares were to be
transferred by 30.04.2007.
m) It was agreed that A.P.S. Buildcon (P) Ltd. will
be retrained by Sh. P.K. Agarwal and shares of other
companies like Kamdhenu Ispat Ltd., Kamdhenu Cement
Ltd. or the companies not related to Sh. P.K. Agarwal will
be transferred to names related to Sh. Pradeep Agarwal.
n) It was agreed that all shares of Kali Metals (P)
Ltd. will be transferred to companies or share holder related
to Sh. P.K. Agarwal from Kamdhenu Ispat Ltd. and other
related companies, at indexation cost on the date of transfer.
o) It was agreed that all other brands other than
Steel (class-6) Cement and Housing will be settled among
four promoters with mutual consent.‖
D. Family Settlement dated 26.05.2007
―the parties divided the brands and reduced the same into
writing in the following manner :
SHRI PRADEEP AGARWAL
Class 05 Pharmaceutical
Class 10 Surgical and Medical
Class 11 Apparatus Heating Refrigeration
Class 12 Vehicle
Class 19 Building Material Natural
Class 19 Building Material non metallic
Class 20 Furniture and Mirrors
Class 22 Ropes and Strings
Class 28 Games
Class 31 Agriculture products
Class 33 Alcoholic Beverages
Class 36 Insurance
SHRI SUNIL AGARWAL
Class 01 Chemical
Class 07 Machine and Machine Tools
Class 08 Hand Tools
Class 16 Paper and card Board
Class 17 Rubber Gutta
Class 19 Ply Board.
Class 24 Textile
Class 29 Meat, Fish and Poultry.
Class 34 Tobacco.
Class 40 Treatment of Metal
SHRI SATISH AGARWAL
Class 02 Paint and Varnishes.
Class 03 Cosmetics
Class 06 Metal excluding Steel
Class 09 Photography, cinema etc.
Class 13 Ammunition.
Class 15 Musical Instruments
Class 18 Leather Goods
Class 23 Yarn and Threads
Class 25 Clothing
Class 26 Lace and Embroidery
Class 30 Tea, Coffee and Sugar
Class 41 Education
SMT. SHAIFALI AGARWAL
Class 04 Oils and Greases
Class 14 Jewellery
Class 19 Tiles
Class 21 Kitchen Utensils (Excluding all Steel Items)
Class 27 Carpet, Rugs and Mats
Class 32 Beers and Minerals
Class 38 Telecommunication
Class 42 Providing Foods and Drinks
82. The plaintiff has not denied the fact that after the family
settlements, Mr. Pradeep Kumar Agarwal/defendant no. 2 transferred
3% share capital to the plaintiff company in favour of other groups.
Similarly, the Chairman of the plaintiff company had also resigned from
the Board of APS Buildcon Private Ltd. and Kali Metals Private Ltd.
and transferred his group shareholdings in these companies in favour of
Mr. Pradeep Kumar Agarwal. The following are the admitted facts as
per the pleading and documents produced by the parties:
A. The family settlements were mutually reduced into writing.
Initially, a family settlement was entered into in February 2006
amongst three bothers and a nephew (son of deceased brother Sh.
Shailender Agarwal).
B. Thereafter on 11.2.2007, 23.2.2007 and 26.5.2007, the
parties entered into family settlements between the family
members, shareholders and Directors of the plaintiff company.
The above mentioned three family settlements were recorded in the
handwriting of Mr. Satish Kumar Agarwal who is the Chairman
and Managing Director of the plaintiff company.
C. Sh. M.K. Doogar, who was Director of the plaintiff company
was also a signatory to the family settlement dated 11.2.2007.
Besides them, Sh. S.K. Singhal, auditor of the plaintiff and Sh. S.K.
Bansal, plaintiff's Advocate were also signatories to the family
settlement executed on 11.2.2007.
D. Mr. Satish Agarwal, the Chairman of the plaintiff company
had also resigned from the Board of APS Buildcon Private Ltd. and
Kali Metals Private Ltd. and transferred his group shareholdings in
these companies in favour of Mr. Pradeep Kumar Agarwal. Mr.
Pradeep Kumar Agarwal after the family settlement started using
the trademark ―PRIME GOLD‖ and also issued public notices in
the leading newspapers informing the public that he had nothing to
do with the plaintiff company.
E. A rolling mill i.e. M/s. Kali Metals Pvt. Ltd. as per the family
settlement fell to the share of Mr. Pradeep Kumar Agarwal who
already owned a rolling mill namely M/s. Raghuveer Metal
Industries.
F. Mr. Satish Kumar Agarwal who is the Chairman and
Managing Director of the plaintiff company is admittedly one of
the signatories of the family settlements.
83. In furtherance to the family settlement, the plaintiff company
passed a Resolution at the general body meeting held on 14.5.2007
which reads as under:
―2. To consider and if thought fit, to pass with or without
modification(s), the following resolution as an
ORDINARY RESOLUTION:
―Resolved that consent be and is hereby accorded
to transfer/assign trade mark related rights pertaining to
cement, POP, water proofing compounds and wall putty
business including to increase its efficiency, production,
supply, distribution, profitability and market standing the
cement, POP, water proofing compounds and wall putty
goods only (hereinafter referred as assigned goods), to M/s
Kamdhenu Cement Limited, (A company under
incorporation) proposed to have its registered office at 24,
Shivaji Marg, Najafgarh Road, New Delhi-110 015 along
with the trade marks/trade names/copyright Kamdhenu and
logo and Kamdhenu formative trade marks/logos in relation
thereto for a sum as may be felt appropriate by the
management at its absolute discretion, provided that the
sale amount shall not be below Rs.140 lacs (Rs. One Crore
Forty Lacs Only) towards the trade marks/trade
names/copyrights and in such a manner that company
except for the above said assigned goods retains its rights
in its said trade marks/trade names/copyrights in relation to
all other goods/business and services including of
allied/cognate nature whether present or prospective along
with its goodwill and reputation.
Resolved that the company shall not use nor cause
to be used the said trade marks/trade names/copyrights in
relation to the goods/units assigned only. Further, resolved
that the assignment/ transfer be made only on the condition
that the assignee company shall not use nor cause to be
used nor manufacture trade or a deal in any other goods or
business under the said trade marks/trade names/copyrights
or confusingly similar thereto or bearing the same other
than for the goods/hereby assigned and would perverse the
strength and standing of the said trade marks/trade
names/copyrights.‖
Item No.2 of the Explanatory Statement also reads as
under:
―Item No.2 - As you are aware that your company
has entered into various segments and usage of the trade
marks. Off late your management is contemplating on its
focused attention in the core business of manufacturing,
marketing and branding of the steel products, which are at
present mainly contributing to the profits of the company.
As such your board has decided that as there has not been
much contribution from cement trademark, therefore, this
trademark be disposed off alongwith the brand pertaining
to the cement and its allied businesses/ activities of POP,
water proofing compound and wall putty. In order to
ascertain the value of the brand your company has got it
valued from a reputed firm of chartered accountants M/s.
Vaish and Associates, New Delhi, and from auditors of the
company. They have valued the same at Rs.138.05 lac and
Rs.130.38 lac respectively vide their letters dated
11.04.2007 and 12.04.2007. These letters are open for
inspection at the registered office of the company on all
working days during the business hours upto the date of
this meeting. Shri Pradeep Agarwal, Ex-Whole time
director was the person who was looking after this
segment. He has shown his intention to purchase the said
trademark/trade name/copyright of cement, POP, Water
Proofing compound and wall putty alongwith its all assets
and liabilities, if any, within the said price of Rs.140 lac
under the name of the company ―Kamdhenu Cement
Limited‖ which as on date of issue of this notice is under
incorporation. Though it is neither a sale of whole or
substantially the whole of the undertaking and there is no
specific requirement of taking shareholders approval yet
your directors feel that as a prudent corporate practice
matter be brought to the knowledge of the shareholders by
seeking their approval by way of an ordinary resolution.
Your directors recommend the passing of the resolution.
None of the directors except Shri Satish Kumar Agarwal
and Shri Sunil Kumar Agarwal being relatives of Shri
Pradeep Agarwal are interested or concerned in the above
resolution.‖
84. The detail of the transfer of shareholding of the plaintiff to
M/s. Kali Metals Pvt. Ltd. and APS Buildcon Private Ltd. are placed on
record. Form 32 was also attached with the documents. Admittedly,
Mr. Pradeep Kumar Agarwal resigned from the plaintiff company with
effect from 14.4.2007 and information in this respect was given to the
Registrar of Companies and Security and Exchange Board of India,
Bombay Stock Exchange and National Stock Exchange. Bombay Stock
Exchange in view of the Bombay Stock Exchange vide information
dated 25.4.2007 made a corporate announcement, the operative part of
which reads as under:
―2. To transfer/assign trademark related rights
pertaining to cement POP, water proofing compounds and
wall putty business including to increase its efficiency,
production, supply, distribution, profitability and market
standing the cement, POP, water proofing compounds and
wall putty goods only (assigned goods), to M/s. Kamdhenu
Cement Ltd. (A company under incorporation) proposed
to have its registered office at Najafgarh Road, New
Delhi alongwith the trade marks/trade names/copyright
Kamdhenu and Logo and Kamdhenu formative trade
marks/logos in relation thereto for a sum as may be felt
appropriate by the management at its absolute discretion
provided that the sale amount shall not be below Rs.140
lac towards the trademarks/trade names/ copyrights and in
such a manner that company except for the above said
assigned goods retains its rights in its said trade
marks/copyrights in relation to all other goods/business
and services including of allied/cognate nature whether
present or prospective alongwith its goodwill and
reputation, subject to necessary provisions and
approvals........‖
85. Admittedly, later on a letter dated 31.5.2007 was issued by
the plaintiff to the defendant M/s. Kamdhenu Cement Limited signed by
Mr. Satish Agarwal, Chairman and Managing Director which reads as
under:
―M/s. Kamdhenu Cement Ltd.
24, Shivaji Mark, Najafgarh Road,
New Delhi-110015
K/A : - Sh. Pradeep Agarwal-Chairman
Sub : Assignment of Kamdhenu brand in your
favour for Cement, POP, WPC and WP
With reference to the above, we confirm that we have sold
the trade mark selected rights with respect to the above
brands for Rs.1.40 crores to you. The necessary assignment
deed for giving affect to the said sale is under preparations.
In the mean time, we hereby confirm that, we have no
objection if you start using the ‗Kamdhenu' brand for
above products.
Thanking you,
Yours faithfully,
for KAMDHENU ISPAT LTD.
(SATISH KUMAR AGARWAL)
Chairman & Managing Director‖
86. There is a material on record to show that the defendant
company M/s. Kamdhenu Cement Ltd. issued licence agreements to
various parties allowing them to use the trade mark Kamdhenu in
relation to cement, POP (Plaster of Paris), wall putty, water proofing
compound and various other goods and services.
87. The correspondence between the plaintiff, defendant and
customers/traders is also available on record to reveal information as
regards the start of business by the defendants in relation to the products
cement, PoP, wall putty and water proofing compound. There is
material on record to show that the defendants were using the trade
mark KAMDHENU CEMENT on television and newspapers and in
various media from the month of May 2007 onwards. The said
documents and advertisement material shows the knowledge of the
plaintiff in this regard.
88. The defendants have placed on record their letter dated
02.02.2008 written to Mr. Satish Kumar Agarwal, Chairman and
Managing Director of the plaintiff company, expressing their
displeasure by referring the unaudited financial result of the plaintiff for
the quarter period ending on 31.12.2007 published in the newspaper
Nav Bharat Times dated 31.01.2008 wherein the plaintiff had advertised
cement as one of its products bearing trade mark Kamdhenu. The said
letter was duly replied by the plaintiff on 22.2.2008 informing that in
view of the defendants' failure to make the payment of the consideration
amount and completion of the related paper formalities including
execution of the assignment agreement after a lapse of six months, the
plaintiff had already issued a letter dated 6.11.2007 asking the
defendants to cease all use of the trade mark KAMDHENU. It was also
indicated in the letter that in case the letter dated 6.11.2007 is not
complied with, the plaintiff would initiate legal proceedings against the
defendants.
89. The said letter of the plaintiff was replied to by the
defendants in the letter dated 4.3.2008. The contents of the letter read
as under:
―March 4, 2008
Shri Satish Kumar Agarwal,
Chairman & Managing Director
Kamdhenu Ispat Limited,
Regd. Office-L-311, Street No.7,
Mahipalpur Extension,
New Delhi
Subject :
Dear Sir,
We are in receipt of your letter dated February 22nd 2008,
received by us on February 25th, 2008 and are rather
intrigued to note its contents. Without even adverting to
the contentions raised by you in the aforesaid reply dated
February 22nd, 2008, at the very outset we would like to
state that we are shocked at the volt face committed by
you. To once again put the records straight we would like
to point out that since with the grace of God, the business
of Agarwal Group was expanding by leaps and bounds
and the family too had expanded over the years, therefore,
it was considered expedient that to avoid any future
disputes, the family should sit together and demarcate the
business/ properties/assets so as to ensure peace, harmony
and understanding in the family. It was decided that
through the mechanism of mediation of the well wishers of
the family, understanding and settlement be arrived at to
achieve the aforesaid. Accordingly, the first sitting was
held on February 11, 2007 at Sushant Lok.
After deliberations, a settlement amongst family members
was arrived at and was reduced into writing, taken
acknowledgement of any signed by all present.
In continuation to the first meeting, another meeting was
held on February 23, 2007, at E-127, RIICO, Phase-I,
Gurgaon, Haryana and a final settlement was agreed,
arrived and reduced into writing which was also signed
by concerned parties.
The last and final meeting was held on May 26, 2007 at the
residence of Shri Satish Agarwal at Gurgaon when details
of class wise products was prepared and distributed
amongst all, which as well was reduced into writing
between the parties.
It is unfortunate that you have despite the family
settlements referred to above pretended ignorance. Your
retraction and denial about execution of family settlement
is fallacious besides being purposeful.
The settlements have been partly acted upon by all the
parties and remaining are in the process of execution. To
your knowledge the said family settlements were adopted
and accepted by the Kamdhenu Ispat Ltd. in the Extra
Ordinary General Meeting of the company held on May 14,
2007. In pursuance to said family settlements, you have
derived benefit under the same in that; Shri Pradeep
Agarwal transferred his three percent shares of the Value
of Rs.1.27 crore (Approx) in Kamdhenu Ispat Ltd. in
favour of different members of your group. Shri Pradeep
Agarwal also tendered his resignation from the Kamdhenu
Ispat Ltd. on April 14, 2007. In furtherance to the said
settlements, Shri Pradeep Agarwal also paid to your group
a part payment of a sum of Rs.20 lac as and by way of
consideration for transfer and assignment of Trademarks,
rights in respect of ―Kamdhenu Cement‖ in favour of
Kamdhenu Cement Ltd. of Shri Pradeep Agarwal group and
the balance payment of Rupees One Crore Twenty Lac is
payable at the time of your having got prepared the
assignment deeds and the declarations. Your group also
acted upon the settlements and in furtherance thereto
resigned from the board of APS Buildcon (P) Ltd. and Kali
Metals (P) Ltd.
Despite repeated reminders from Shri Pradeep Agarwal,
the assignment deeds were not forthcoming from you,
therefore, there was no occasion for Shri Pradeep Agarwal
to pay balance money of Rupees One Crore Twenty Lac
which Shri Pradeep Agarwal is prepared to pay upon you
fulfilling your part of the corresponding obligations in this
behalf.
In furtherance to the said settlements in the Extra Ordinary
General Meeting of the Kamdhenu Ispat Ltd. on May 14,
2007, it was resolved that the company shall not use nor
cause to be used the trademarks/trade names/copyrights in
relation to goods/units assigned. Shri Pradeep Agarwal
was always and is still ready and willing to make the
balance and has never backed out from the same.
Your letter dated November 6, 2007 has never been
received by us. The said letter is an afterthought and it
seems that you have manufactured the said letter with
ulterior motives of backing from the settlements arrived
between you and Shri Pradeep Agarwal. It is unfortunate
that you should give go by to the settlements arrived at in
the family without objectively to ensure peace, harmony in
the respective families. Please be assured that we will not
permit you to thwart the settlements arrive at.
We hereby request you to forward the assignment deed and
our client is ready with Rupees one Crore Twenty Lacs.
You are also requested to perform the other acts for final
de-merger.
Authorised Signatory
(Kamdhenu Cement Ltd.)‖
90. It emerges from the above facts that the parties do not deny
the execution of the family settlements and it seems that the said
arrangements have been partly acted upon between the parties. Analysis
of the family settlements referred above clearly shows that as far as the
trademark Kamdhenu in respect of cement, PoP, wall putty and water
proofing compound is concerned, the said business was apparently
assigned to the defendants with a view to avoid competition with other
groups by bifurcation of the products.
91. The main arguments of the plaintiff are as under:
a) That the family settlements are not binding upon the
plaintiff company as the signatories to the agreements are
family members and have no bearing on plaintiff company i.e
Kamdhenu Ispat Limited which is a separate entity. Thus,
the said arrangements were inconclusive and were merely a
negotiation of the matter of assignment.
b) The said assignment of the trademark Kamdhenu in
respect of cement, PoP, wall putty and water proofing
compound was resented by the plaintiff as no consideration
was made by the defendants to the plaintiff. Therefore, the
said proposed assignment was terminated by the plaintiff
vide letter dated 6.11.2007 due to deliberate default of
payment.
c) As regard Resolution dated 14.5.2007, it was merely
passed on the basis of negotiations of the assignment of the
trademark Kamdhenu in respect of cement, PoP, wall putty
and water proofing compound to the defendants for
consideration of Rs.1,40,00,000/-. Since the said amount
was not paid, the defendants cannot take any benefit of the
same.
d) Since the plaintiff has already cancelled the assignment
by letter dated 6.11.2007, the defendants are, therefore, not
entitled for the equitable and discretionary relief claimed by
the defendants in their suit in IA No.10930/2008 under Order
39 Rule 1 & 2 CPC and the plaintiff's application under
Order 39 Rule 1 & 2 CPC in suit No. 425/2008 being IA
No.2895/2008 ought to be allowed.
92. As already discussed, the parties do not deny the execution of
the family settlements/family arrangement. As far as the first contention
of the plaintiff is concerned, that the said agreements are not binding
upon the plaintiff company as the plaintiff company itself had not signed
the family settlements being a separate entity, I do not accept the plea
raised by the learned counsel for the plaintiff in view of the conduct of
the parties after the execution of the family settlements. This argument
of the plaintiff is self-defeating in view of the following excerpt from
the following arrangement of February, 2006:
DEFINITION OF "KAMDHENU GROUP:
―Kamdhenu Group‖ means and includes the companies, business,
properties and assets being jointly owned controlled and held by
the four parties i.e. Sh. Pradeep Agarwal, Sh. Satish Agarwal, Sh.
Sunil Agarwal and Sh. Ayush Agarwal, except the following
companies, which are promoted or controlled by one or more of
the parties on individual basis:
1. M/s Kamdhenu Industries Ltd., owned by Sh. Pradeep Kumar
Agarwal
2. Kamdhenu Concast Ltd. owned by Sh. Sunil Kumar Agarwal
3. Kamdhenu Overseas Pvt. Ltd. owned by Sh. Satish Kumar
Agarwal
But shall include any future development/inclusion in the joint
properties/business of the parties.
CONTROL OF "KAMDHENU GROUP" OR "GROUP
BUSINESS"
The ―Kamdhenu Group‖ is presently, directly or indirectly, owned
and controlled by Sh. Pradeep Agarwal, Sh. Satish Agarwal Sh.
Sunil Agarwal and Sh. Ayush Agarwal, in the ratio of: 30% 25%
25% and 20% respectively.
93. The plaintiff cannot deny the fact that as per the material
available on record, prima facie it appears that the family settlements
have been partly acted upon by both the parties as various actions have
been taken in furtherance to the family settlements including passing of
Resolution dated 14.5.2007 and in furtherance thereto a letter dated
31.5.2007 issued by the plaintiff to the defendants which establishes that
the plaintiff company itself agreed to assign the trademark Kamdhenu in
respect of cement, PoP, wall putty and water proofing compound to the
defendants against consideration. The letter dated 31.5.2007 confirmed
that the said trademark was sold to the defendants for a consideration of
Rs.1,40,00,000/-. The information given by the plaintiff to the Registrar
of Companies and Security and Exchange Board of India, Bombay
Stock Exchange and National Stock Exchange and the circulation of
letter dated 24.5.2007 which issued the corporate announcement by the
Stock Exchanges fortifies that the plaintiff company Kamdhenu Ispat
had virtually accepted the various terms and conditions of the family
settlements.
94. Family Settlement and underlying principles are defined in
the Law of England (Vol.17) 3rd Edition at page-215-216) as under:
―Definition of family arrangements. A family
arrangement is an agreement between members of the
same family, intended to be generally and reasonably
for the benefit of the family (a) either by
compromising doubtful or disputed rights or by
preserving the family property (b) or the peace and
security of the family by avoiding litigation (c) or by
saving its honour (d). The agreement may be implied
from a long course of dealing (e), but it is more usual
to embody or to effectuate the agreement in a deed to
which the term ―family arrangement‖ is applied.
Principles governing family arrangements. Family
arrangements are governed by principles which are not
applicable to dealings between strangers(f). The court,
when deciding the rights of parties under family
arrangements or claims to upset such arrangements,
considers what in the broadest view of the matter is
most for the interest of families, and has regard to
considerations which, in dealing with transactions
between persons not members of the same family,
would not be taken into account(g). Matters which
would be fatal to the validity of similar transactions
between strangers are not objections to the binding
effect of family arrangements(h).‖
95. The point of family Settlement came up for consideration
before the Hon'ble Supreme Court in Kale And Others vs. Deputy
Director of Consolidation and Others, (1976 3 SCC 119). After
reviewing case law on the subject, the Hon'ble Supreme Court inter alia
held as under:-
―10. In other words to put the binding effect and the
essentials of a family settlement in a concretised form, the
matter may be reduced into the form of the following
propositions:
(1) The family settlement must be a bona fide one so as to
resolve family disputes and rival claims by a fair and
equitable division or allotment of properties between the
various members of the family;
(2) The said settlement must be voluntary and should not be
induced by fraud, coercion or undue influence;
(3) The family arrangement may be even oral in which case
no registration is necessary;
(4) It is well settled that registration would be necessary
only if the terms of the family arrangement are reduced into
writing. Here also, a distinction should be made between a
document containing the terms and recitals of a family
arrangement made under the document and a mere
memorandum prepared after the family arrangement had
already been made either for the purpose of the record or
for information of the court for making necessary mutation.
In such a case the memorandum itself does not create or
extinguish any rights in immovable properties and therefore
does not fall within the mischief of Section 17(2) of the
Registration Act and is, therefore, not compulsorily
registrable;
(5) The members who may be parties to the family
arrangement must have some antecedent title, claim or
interest even a possible claim in the property which is
acknowledged by the parties to the settlement. Even if one
of the parties to the settlement has no title but under the
arrangement the other party relinquishes all its claims or
titles in favour of such a person and acknowledges him to
be the sole owner, then the antecedent title must be
assumed and the family arrangement will be upheld and the
courts will find no difficulty in giving assent to the same;
(6) Even if bona fide disputes, present or possible, which
may not involve legal claims are settled by a bona fide
family arrangement which is fair and equitable the family
arrangement is final and binding on the parties to the
settlement.‖
Other relevant excerpts from the judgment being
paragraphs 12 to 14, 17 and 18 read as under :
12. In Lala Khunni Lal v. Kunwar Gobind Krishna Narain
the statement of law regarding the essentials of a valid
settlement was fully approved of by their Lordships of the
Privy Council. In this connection the High Court made the
following observations which were adopted by the Privy
Council:
The learned Judges say as follows:
―The true character of the transaction appears to us to have
been a settlement between the several members of the
family of their disputes, each one relinquishing all claim in
respect of all property in dispute other than that falling to
his share, and recognizing the right of the others as they
had previously asserted it to the portion allotted to them
respectively. It was in this light, rather than as conferring a
new distinct title on each other, that the parties themselves
seem to have regarded the arrangement, and we think that it
is the duty of the courts to uphold and give full effect to
such an arrangement.
Their Lordships have no hesitation in adopting that view.‖
This decision was fully endorsed by a later decision of the
Privy Council in Mt Hiran Bibi v. Mt. Sohan Bibi.
13. In Sahu Madho Das v. Pandit Mukand Ram this Court
appears to have amplified the doctrine of validity of the
family arrangement to the farthest possible extent, where
Bose, J., speaking for the Court, observed as follows:
―It is well settled that a compromise or family arrangement
is based on the assumption that there is an antecedent title
of some sort in the parties and the agreement acknowledges
and defines what that title is, each party relinquishing all
claims to property other than that falling to his share and
recognising the right of the others, as they had previously
asserted it, to the portions allotted to them respectively.
That explains why no conveyance is required in these cases
to pass the title from the one in whom it resides to the
person receiving it under the family arrangement. It is
assumed that the title claimed by the person receiving
the property under the arrangement had always resided
in him or her so far as the property falling to his or her
share is concerned and therefore no conveyance is
necessary. But, in our opinion, the principle can be carried
further and so strongly do the courts lean in favour of
family arrangements that bring about harmony in a family
and do justice to its various members and avoid in
anticipation, future disputes which might ruin them all, and
we have no hesitation in taking the next step (fraud apart)
and upholding an arrangement under which one set of
members abandons all claim to all title and interest in all
the properties in dispute and acknowledges that the sole and
absolute title to all the properties resides in only one of
their number (provided he or she had claimed the whole and
made such an assertion of title) and are content to take such
properties as are assigned to their shares as gifts pure and
simple from him or her, or as a conveyance for
consideration when consideration is present.‖
14. In Ram Charan Das v. Girjanandini Devi this Court
observed as follows:
―Courts give effect to a family settlement upon the broad
and general ground that its object is to settle existing or
future disputes regarding property amongst members of a
family. The word ‗family' in the context is not to be
understood in a narrow sense of being a group of persons
who are recognised in law as having a right of succession or
having a claim to a share in the property in dispute .... The
consideration for such a settlement, if one may put it that
way, is the expectation that such a settlement will result in
establishing or ensuring amity and goodwill amongst
persons bearing relationship with one another. That
consideration having been passed by each of the disputants
the settlement consisting of recognition of the right asserted
by each other cannot be permitted to be impeached
thereafter.‖
17. In Krishna Biharilal v. Gulabchand it was pointed out
that the word ―family‖ had a very wide connotation and
could not be confined only to a group of persons who were
recognised by law as having a right of succession or
claiming to have a share. The Court then observed: [SCC p.
843, paras 7-8]
―To consider a settlement as a family arrangement, it is not
necessary that the parties to the compromise should all
belong to one family. As observed by this Court in Ram
Charan Das v. Girjanandini Devi the word ―family‖ in the
context of a family arrangement is not to be understood in a
narrow sense of being a group of persons who are
recognised in law as having a right of succession or having
a claim to a share in the property in dispute. If the dispute
which is settled is one between near relations then the
settlement of such a dispute can be considered as a family
arrangement -- see Ram Charan Das case.
The courts lean strongly in favour of family arrangements
to bring about harmony in a family and do justice to its
various members and avoid in anticipation future disputes
which might ruin them all.‖
18. In the recent decision of this Court in S. Shanmugam
Pillai v. K. Shanmugam Pillai the entire case law was
discussed and this Court observed as follows: [pp. 319,
321-322, paras 12, 24-25]
―If in the interest of the family properties or family peace
the close relations had settled their disputes amicably, this
Court will be reluctant to disturb the same. The courts
generally lean in favour of family arrangements.
* * *
Now turning to the plea of family arrangement, as observed
by this Court in Sahu Madho Das v. Pandit Mukand Ram
the courts lean strongly in favour of family arrangements
that bring about harmony in a family and do justice to its
various members and avoid, in anticipation, future disputes
which might ruin them all. As observed in that case the
family arrangement can as a matter of law be inferred from
a long course of dealings between the parties.
In Maturi Pullaiah v. Maturi Narasimham this Court held
that although conflict of legal claims in praesenti or in
future is generally a condition for the validity of family
arrangements, it is not necessarily so. Even bona fide
disputes present or possible, which may not involve legal
claims would be sufficient. Members of a joint Hindu
family may to maintain peace or to bring about harmony in
the family, enter into such a family arrangement. If such an
agreement is entered into bona fide and the terms thereto
are fair in the circumstances of a particular case, the courts
would more readily give assent to such an agreement than
to avoid it.‖
96. Learned counsel for the plaintiff had heavily relied upon
the decision passed by the Single Bench in the case of Jaininder Jain &
Ors. Vs. Arihant Jain& Ors., 136(2007) DLT 418 wherein in similar
circumstances, according to the plaintiff, the Court has not accepted the
concept of family settlement. As a matter of fact the said decision of the
Single Bench has been overruled by a Division Bench of this Court
reported in Jaininder Jain & Ors. Vs. Arihant Jain & Ors., 2009 (41)
PTC 492 (Delhi) (DB) which has accepted the concept of family
settlement arrived between the parties. In that case, similar pleas were
raised by the parties.
97. The judgments referred by the plaintiff in support of its
contention that the plaintiff company being a different legal entity is not
bound by the family settlement do not help the case of the plaintiff. All
the plea raised by the plaintiff in this regard are unacceptable on the
face of the material produced by the plaintiff itself.
98. As far as the consideration amount of Rs.1,40,00,000/- as
agreed for assignment of trade mark in favour of the defendants is
concerned, both the parties have submitted different versions during the
course of the argument. According to the defendants, they have made
a part payment of Rs.20,00,000/- (Rupees Twenty Lac only) to the
plaintiff by way of cheques dated 14.11.2007, 16.11.2007 and
24.11.1007 being cheque numbers 960291, 960293 and 960297 for Rs.
10 lac, 5 lac and 5 lac respectively drawn on State Bank of Bikaner and
Jaipur in view of passing the resolution in extraordinary general meeting
for the assignment of trademark in furtherance of family settlement. As
regard the balance amount of Rs.1,20,00,000/- is concerned, the
contention of the defendants is that as per arrangement the plaintiff was
to send all the requisite papers of assignment deeds and other related
papers but the plaintiff did not send the same despite various personal
reminders, therefore, the balance amount was not paid though the
defendants had always been ready to pay the same subject to the
compliance of signing the assignment papers. In order to show their
bona fide, the defendants have deposited the balance consideration in
this court.
99. It is further alleged by the defendants that the said
arrangement could not have been terminated as a part of the family
settlement had been acted upon by the parties. The defendants have
specifically denied having receipt of final draft of deed of assignment/
competition agreement which are allegedly signed by the plaintiff. The
defendants have also denied the arrangement of the plaintiff for
adjustment of Rs.20 lac towards the premium of the policies. It is
submitted by the defendants that vide letter dated 6.11.2007 sent by
Max New York Life to the defendant no. 2 for his request for cash of
Surrender Value, the same is worth Rs. 12,28,344.65/- and therefore, the
question of adjustment of the said amount of Rs.20 lacs towards the
premium of policy does not arise.
100. On the other hand, learned counsel for the plaintiff has
referred various e-mails exchanged between the parties in order to
establish that the draft papers of the assignment deed/agreements were
sent to the defendants but there was no response from the defendants'
side. As per plaintiff, the said arrangement of assignment of the
trademark Kamdhenu was cancelled and the defendants were informed
in this regard by way of communication dated 6th November, 2007. It is
alleged by the plaintiff that the said alleged amount of Rs.20 lacs
received by the plaintiff was not towards part consideration of
assignment but the same was the adjustment of value of the insurance
policies.
101. In view of the contradictory stand taken by both the parties
and after having considered the material on record, this Court is of the
opinion that these issues would be determined after the trial of the
matters so that the exact position may be known as to whether part
consideration has been made towards consideration of assignment or
adjustment of the Keyman insurance policies. The dispute about e-mails
also needs trial in view of the specific denial by the defendants.
102. Let me now deal with the alleged letter dated 6.11.2007
written by the plaintiff to the defendants according to which the
understanding was interim in nature and subject to the receipt of
consideration and since no negotiation had taken place on account of
default of requisite consideration the defendants were asked to stop
using the intellectual property rights and also to settle the accounts.
The plaintiff has also relied upon the resolution passed in the Board
meeting on 16.10.2007 in support of the said letter. The defendants
have specifically denied the receipt of this letter. The contention of the
defendants is that this letter is forged and fabricated and the resolution
dated 16.10.2007 has been manipulated by the plaintiff.
103. After having considered the submissions of the parties on
this aspect of the matter, prima facie, I agree with the submission of the
defendants on the following reasons:
a) In case the submission of the plaintiff is correct then one
is failed to understand why the plaintiff has not placed the copy of the
letter dated 6.11.2007 as well as copy of the resolution dated 16.10.2007
which is the best evidence lying with the plaintiff when the first suit was
filed by the plaintiff against the defendants in February, 2008.
b) When the first suit was filed by the plaintiff in February,
2008, there were no pleadings whatsoever about the cancellation of the
arrangement of assignment by virtue of letter dated 6.11.2007 as well as
the alleged resolution dated 16.10.2007 in that regard. The defendants
admittedly at that time were using the trademark Kamdhenu in relation
to cement, PoP, wall putty and water proofing compound.
c) Lastly, in case the consideration was not paid by the
defendants, there is no letter/communication on the part of the plaintiff
to caution the defendant before sending the letter dated 6.11.2007 about
the cancellation of the arrangement of the assignment of the trademark
Kamdhenu in relation to the goods mentioned above. Prima facie, at
this stage I accept the contention of the defendants that they sent the
letter dated 2.2.2008 to the plaintiff wherein they raised their protest
with regard to the advertisement of the mark Kamdhenu in relation to
the business of cement, PoP, wall putty and water proofing compound
and first time came to know about the cancellation of the arrangement of
assignment by reply dated 22.2.2008 received from the plaintiff.
104. Without forming any final opinion about the said letter, this
Court is of the considered view that the plaintiff at this stage is not
entitled to take any benefit arising out of this letter. Admittedly, the
defendants had been using the trade mark Kamdhenu in respect of
cement business extensively from the month of May 2007, within the
knowledge of the plaintiff who had not raised any objection. The suit
was filed by the plaintiff against the defendants for restraining them
from using the mark in respect of cement, PoP, wall putty and water
proofing compound after about a year later, when the business of the
defendants was considerably established. By this time, the user of the
defendants is more than three years. On the other hand, there is no
material on record to show that the plaintiff is carrying on business on
commercial scale bearing the trade mark Kamdhenu in respect of
cement, PoP, wall putty and water proofing compound.
105. The civil court, for the purpose of deciding an application for
grant of interim injunction has to take a prima facie view on the nature
and validity of the documents i.e. family settlements in the present
matter.
106. The principles for grant of temporary injunction either under
Rule 1 or 2 of Order 39 or under Section 151 of Code of Civil Procedure
are now well settled and the Courts are required to see
1. Whether the Plaintiff have a prima facie case;
2. Whether the balance of convenience is in favour of the
Plaintiff; and,
3. Whether the Plaintiff would suffer an irreparable injury if
his prayer for interlocutory injunction is not allowed.
107. In Gujarat Bottling Co. Ltd. vs. Coca Cola Company and
Others, 1995(5) SCC 545, the Hon'ble Supreme Court, inter alia,
observed as under:-
―The object of the interlocutory injunction is to protect
the plaintiff against injury by violation of his right for
which he could not be adequately compensated in
damages recoverable in the action if the uncertainty
were resolved in his favour at the trial. The need for
such protection has, however, to be weighed against
the corresponding need of the defendant to be
protected against injury resulting from his having been
prevented from exercising his own legal rights for
which he could not be adequately compensated. The
court must weigh one need against another and
determine where the ‗balance of convenience' lies.‖
108. ―Prima facie case‖ means that the Court should be satisfied
that there is a serious question to be tried at the hearing, and there is a
probability of a party obtaining the relief at the conclusion of the trial on
the basis of the material placed before the Court. If a fair question is
raised for determination, it should be taken that a prima facie case is
established. Considering the overall facts and circumstances of the
present cases, prima facie this Court is of the opinion that family
settlements as already referred are binding on the parties and operate
accordingly. The plaintiff has taken advantage of the same and is not
entitled to challenge the same at this interim stage. As per arrangement,
the defendants are entitled to use the trade mark Kamdhenu in respect of
cement, PoP, wall putty, water proofing compound and allied goods. At
the same time the plaintiff is to be restrained from using the mark in
respect of above mentioned goods.
109. In the present matter the prima facie opinion clearly lies in
favour of the defendants as does the balance of convenience in view of
the aforesaid reasons. In case relief sought by the defendant company
Kamdhenu Cement Ltd. is not granted, it would suffer irreparable loss
and injury.
110. In the facts and circumstances of the present cases in hand,
I feel that at this stage it will be most appropriate that all the interim
applications pending between the parties being IA Nos.2895/2008,
4012/2008, 10930/2008 and 15452/2008 are disposed of with the
following directions:
A. Till the disposal of suit, the defendants are allowed to use
the trade mark/name Kamdhenu in respect of the business of
Cement, POP, Water Proofing Compounds and Wall Care putty
etc. during the pendency of the suit, subject to deposit of
Rs.1,40,00,000/- with the Registrar General of this Court within
four weeks from today. Liberty is granted to the plaintiff to
withdraw the said amount during the pendency of the matters
within eight weeks from the date of deposit of the said amount by
the defendants without any condition. The said withdrawal would
be without prejudice to rights and contentions of the plaintiff to
contest the matter on merit. In case the said amount is not
withdrawn by the plaintiff, the Registrar General of this Court shall
keep the said amount in FDR initially for the period of two years.
The earlier amount by way of cheque deposited by the defendants
stand cancelled.
B. The defendants, however, shall not be entitled to use the
logo of chakra, punch line ―SAMPURNA SURAKSHA KI
GUARANTEE‖ as well as similar colour scheme and get up similar
as that of the plaintiff.
C. The defendants shall also not give the common
advertisement through media or by way of letters, information and
publicity of the two set of businesses of the defendants under the
mark ―PRIME GOLD‖ with respect to steel bars, saria etc. and
cement, PoP and wall putty.
D. Consequently, the plaintiff is restrained from using the
trade mark / trade name Kamdhenu in relation to the business of
cement, PoP, wall putty and allied goods during the pendency of
the suit.
E. The defendants' application I.A. No. 4012/2008 under
Order X Rule 2 is disposed of in view of the fact that the matter is
fixed for framing of issues and direction for trial of the parties.
CS (OS) No. 302/2008, CS (OS) No. 425/2008, CS (OS) No.
1882/2008 and CS (OS) No. 2616/2008
List for framing of issues on 6th July, 2010 before the
Roster Bench.
Dasti.
MANMOHAN SINGH, J.
MAY 19, 2010
jk/sa
