M/S Drs Logistics (P) Ltd vs Drs Dilip Roadlines (Pvt) Ltd & Ors
2011 Latest Caselaw 4365 Del

         THE HIGH COURT OF DELHI AT NEW DELHI

%              Judgment Reserved on: 25.08.2011
               Judgment Pronounced on: 07.09.2011
+ CS(OS) 1486/2011

M/S DRS LOGISTICS (P) LTD                ..... Plaintiff
                Through: Mr Chander M. Lall, Ms Ekta
                Sarin and Ms Nancy Roya and Ms
                Ankita Ubeja, Advs.

                             versus

DRS DILIP ROADLINES (PVT) LTD & ORS ..... Defendants
                 Through: Mr Amit Sibal, Ms Prachi
                 Vashisht Sharma and Mr Giriraj
                 Subramanium, Advs.

CORAM:-
HON'BLE MR JUSTICE V.K. JAIN

1.

Whether Reporters of local papers may be allowed to see the judgment? Yes

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

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

V.K. JAIN, J

IA No. 9741/2011 (O. 39 R. 1&2 CPC) and IA No. 11799/2011 (O.39 R. 4 CPC)

1. This suit has been filed by DRS Logistics (P) Ltd

through its authorized signatory/Director Shri Ramesh

Agarwal. The plaintiff-company is engaged in the business

of packaging, moving and providing logistic services and has

been using the trade marks AGARWAL PACKERS &

MOVERS & DRS Group (Logo). Initially, this business was

started in the name of a partnership firm M/s AGARWAL

PACKERS & MOVERS, which on formation of the plaintiff-

company was merged into it vide agreement dated 15 th

April, 1993. The trade mark AGARWAL PACKERS &

MOVERS is registered in the name of the plaintiff-company

in a number of classes, including class 39 for providing

transporters and goods carriers, packers and storage of

goods and travelling arrangement services and in class 17

for packaging storage, etc. The plaintiff also holds copyright

in the artistic work of AGARWAL PACKERS & MOVERS

(LOGO). DRS Group (Logo) is also a registered trademark of

the plaintiff in class 39. The plaintiff-company had a

turnover or Rs 310 crores in the year 2008-2009 and Rs

360 crores in the year 2009-10. The plaintiff claims to have

incurred advertisement expenditure of Rs 1 crore 85 lakh

and Rs 2 crore 50 lakh respectively during the aforesaid two

years.

2. Defendant No. 1 DRS Dilip Roadlines (Pvt.) Ltd. is

a company managed and owned by defendants No. 2 and 3,

who are also the directors in the plaintiff-company. It is

alleged that investigations conducted by the plaintiff-

company have revealed that defendant No. 1 has printed

quotations bearing various trademarks owned by the

plaintiff-company, including the trademark Agarwal Packers

& Movers. The quotations also provide for payment to be

made in the name of defendant No. 1-company. According

to the plaintiff-company, initially, quotation is given to the

customer representing to them as if it was for and on behalf

of the plaintiff-company and when the order is confirmed, a

certificate is issued to the customer for an endorsement

from him that he had engaged Agarwal Packers & Movers

(Proprietor M/s DRS Dilip Roadlines (Pvt.) Ltd.) for

transportation of his belongings and the invoicing to the

customer is also done in the name of defendant No. 1-

company. The defendants have also issued advertisements

using the trademark Agarwal Packers & Movers on them

and when a telephone call is made on a telephone number

given in the advertisement, the pre-recorded message says

"Welcome to Agarwal Packers & Movers". The person who

answers the phone introduces himself as Agarwal Packers &

Movers and eventually, orders are booked in the name of

defendant No.1-company. The plaintiff has sought an

injunction, restraining the defendant for using its registered

trademarks Agarwal Packers & Movers, DRS GROUP logo

and Dilip Roadlines (Pvt.) Ltd., either as a trade name or

domain name and from passing off its services and

businesses as those of the plaintiff-company.

3. In their written statement, the defendants have

taken a preliminary objection that Mr Ramesh Agarwal is

not competent to act, the plaintiff on behalf of the plaintiff-

company, has concealed material facts from this Court by

not disclosing that Mr Ramesh Agarwal has been sued by

the plaintiff-company, in Secunderabad, for infringement of

its trademarks. It is also alleged that the Board Resolution

dated 25th January, 2007, relied upon by the plaintiff, is a

fake and forged document. It is further alleged that Mr

Ramesh Agarwal has floated a company by the name of

Agarwal Packers & Movers Pvt. Ltd and diverted the

business of the plaintiff-company to that company by using

its name, brand, logo, etc. It is also alleged that since Mr

Ramesh Agarwal and Mr Dinesh Agarwal had siphoned off

funds of the plaintiff-company and played frauds upon it, a

family meeting took place on 18th March, 2009 in the

presence of the representative of Kotak Mahindra Bank,

which is a strategic investor in the plaintiff-company. In the

meeting, a decision was taken for geographical division of

the operations of the plaintiff-company. Thereafter, Mr

Ramesh Agarwal and Mr Rajinder Agarwal formed a group

taking the operational divide as the division of the business

and also started doing business outside their areas. In view

of these acts of Mr Ramesh Agarwal and Mr Rajinder

Agarwal, the defendants were constrained to carry on

business under the name and style of M/s DRS Dilip

Roadlines Pvt. Limited and receive payment from the

customer in the name of defendant No. 1-company.

4. Though the suit pertains a number of trademarks

owned by the plaintiff-company, the arguments by the

parties were advanced only with respect to use of

trademarks Agarwal Packers & Movers bearing registration

No. 1275683 and DRS GROUP (Label) bearing registration

No. 1480427 which were subject matter of the interim order

dated 03rd June, 2011.

5. It is not in dispute that the trademarks Agarwal

Packers & Movers, DRS GROUP logo are owned by the

plaintiff-company and are duly registered in its name.

6. Section 29 of Trademarks Act, to the extent it is

relevant provides that a registered trade mark is infringed

by a person who, not being a registered proprietor or a

person using by way of permitted use, uses in the course of

trade, a mark which is identical with that trade mark, in

relation to goods or services in respect of which the trade

mark is registered and in such manner as to render the use

of the mark likely to be taken as being used as a trade

mark. Sub-Section 29 (2), to the extent it is relevant,

provides that a registered trade mark is infringed by a

person who, not being a registered proprietor or a person

using by way of permitted use, uses, in the course of trade,

a mark which because of its identity with the registered

trade mark and the similarity of the goods or services

covered by such registered trade mark is likely to cause

confusion on the part of the public or is likely to have an

association with the registered trademark.

"Registered user" has been defined in 2(x) of the

Act to mean a person who is for the time being registered as

such under Section 49. Section 49 of the Act prescribes a

procedure for registration of a person as a registered user of

the trademark. Registered proprietor as well as the

proposed registered user have to jointly apply in writing to

the Registrar in the prescribed manner and such an

application is to be accompanied by the documents

prescribed in clause (a) and (b) of sub-Section (1) of Section

49. On the requirement of sub-Section (1) being complied

with, the Registrar is to register the proposed registered

user in respect of goods and services as to which he is so

satisfied.

7. Admittedly, defendant No.1-company does not own

the trademarks in question which stand registered in the

name of the plaintiff-company. Since neither the procedure

prescribed in Section 49 has admittedly been followed nor

defendant No. 1-company has been registered under Section

49 (2) of the Act, it cannot be said that defendant No. 1 is a

registered user of trademarks in question.

8. It is not in dispute that the trademarks Agarwal

Packers & Movers and DRS GROUP logo are being used by

defendant No.1-company. The advertisement published in

Times of India, New Delhi on 30th May, 2011 would show

that the trademark Agarwal Packers & Movers has been

prominently used by defendant No. 1 which also claimed

that it was a DRS Group company.

9. The quotations submitted by defendant No. 1,

copies of which have been filed by the plaintiff-company as

Annexure A to the plaint would show that DRS GROUP logo

as well as the trademark Agarwal Packers & Movers had

been prominently used on them and the quotations also

contain stipulation that payment is to be made in favour of

DRS Dilip Roadlines Private Limited. In fact, the receipt,

issued by defendant No. 1, describes it as an associate of

DRS Logistics Private Limited and Agarwal Packers &

Movers. In fact, this is not the case of the defendants that

they are not using the trademark Agarwal Packers & Movers

and DRS Group logo, their case is that since Mr Ramesh

Agarwal, Mr Dinesh Agarwal and Mr Rajinder Agarwal had

formed a group to harm their interests, they were compelled

to use the aforesaid marks and receive payment in the name

of defendant No.1-company. Since defendant No. 1 is

neither the proprietor nor the registered user of the

trademarks Agarwal Packers & Movers and DRS GROUP

logo, it has absolutely no right to use them and any such

use by defendant No. 1 would amount to infringement of

these trademarks, which are owned by the plaintiff-

company.

10. It was contended by the learned counsel for the

defendants that in the meeting of the Board of Directors

held on 18th September, 2009, the defendants were

permitted to use these trademarks and thereby the plaintiff-

company had acquiesced in the use of trademarks in

question by them. The relevant extract from the minutes of

the meeting held on 18th September, 2009 read as under:-

"The Chairman referred to the Share Subscription-cum-Shareholders Agreement dated February 6, 2007 executed with the Investor whereunder it was agreed that the business of the Company shall be done only in DRS Logistics Private Limited.

The Chairman stated that he has received emails containing information relating to DRS Dilip Roadlines Private Limited ("DRS Dilip Roadlines") and Agarwal Packers & Movers Private Limited ("Agarwal Packers & Movers"), being companies where allegedly business of the Company is being diverted by the regions controlling the respective companies.

The Chairman requested the Founder Directors to provide the reasons for the operations of these companies and how can he, as a Director of the Company, derive any comfort that these companies and their operations are not prejudicial to the interest of the company. He also requested members to provide the names of other entities set-up by them.

He further stated that he would like to put on record, and asked Ms Asha to take

note of the same, that none of the promoters/founders of the Company are entitled to float any entity in similar business as that of DRS Logistics Private Limited except with the prior written approval of the Investor and why and how these companies and their operations have come into existence without the prior consent of the Investor.

Mr A.K. Agarwal stated that the business was commenced in DRS Dilip Roadlines on knowing that business was being conducted through Agarwal Packers & Movers by the othr Founder Directors. He stated that the DRS Dilip Roadlines was an old entity which was converted into a private limited company. The Chairman inquired that does it mean that DRS Dilip Roadlinees is a new company, Mr A.K. Agarwal nodded and said yes it is a new company. Further, Mr A.K. Agarwal claimed that DRS Dilip Roadlines has started business only for servicing the client, MRF Limited, because he was facing some practical problem of payment and bookings on this customer‟s account. Mr A.K. Agarwal stated that while Agarwal Packers & Movers is doing other business, he confirmed that he has not started any other business in DRS Dilip Roadlines.

The Chairman intervened and asked him to focus on DRS Dilip Roadlines. The Chairman restated that first and foremost this company, DRS Dilip Roadlines, has been set up without the prior permission of the Investor and asked Mr A.K. Agarwal to give comfort to the Board that there is no diversion resulting in loss of business to the Company. Mr A.K. Agarwal sought some time from the

Chairman to discuss the point internally with Mr Dayanand Agarwal and Mr Sanjay Agarwal as to what comfort could be given to the Board. The Chairman reiterated that he should also respond as to why DRS Dilip Roadlines was formed without the consent of the Board. To this Mr A.K. Agarwal responded that there are many things that have been done without the consent of the Board and this is one of such hundred things The Chairman stated that this doesn‟t absolve the wrongdoings and that he would like Mr A.K. Agarwal to state how he intends to set these things right."

11. In Power Control Appliances (1994) 2 SCC 448,

Supreme Court, inter alia, observed as under:

"Acquiescence is sitting by, when another is invading the rights and spending money on it. It is a course of conduct inconsistent with the claim for exclusive rights in a trade mark, trade name etc. It implies positive acts; not merely silence or inaction such as is involved in laches. In Harcourt v. White10 Sr. John Romilly said: "It is important to distinguish mere negligence and acquiescence." Therefore, acquiescence is one facet of delay. If the plaintiff stood by knowingly and let the defendants build up an important trade until it had become necessary to crush it, then the plaintiffs would be stopped by their acquiescence. If the acquiescence in the infringement amounts to consent, it will be a complete defence as was laid down in Mouson (J. G.) & Co. v. Boehm". The acquiescence must be such as to lead to the inference of a licence sufficient to create a new right in the defendant as was laid down in Rodgers v. Nowill12.

"Delay simpliciter may be no defence to a suit for infringement of a trade mark, but the decisions to which I have referred to clearly indicate that where a trader allows a rival trader to expend money over a considerable period in the building up of a business with the aid of a mark similar to his own he will not be allowed to stop his rival's business. If he were permitted to do so great loss would be caused not only to the rival trader but to those who depend on his business for their livelihood. A village may develop into a large town as the result of the building up of a business and most of the inhabitants may be dependent on the business. No hard and fast rule can be laid down for deciding when a person has, as the result of inaction, lost the right of stopping another using his mark. As pointed out in Rowland v. Michell15 each case must depend on its own circumstances, but obviously a person cannot be allowed to stand by indefinitely without suffering the consequence."

12. In my view, the aforesaid minutes do not amount

to any permission/acquiescence on the part of the plaintiff-

company with respect to use of the trademarks Agarwal

Packers & Movers and/or DRS Group Logo by defendant No.

1. Defendant No. 2 Mr A.K. Agarwal, when questioned

about the business of defendant No. 1-company, claimed

that this business was started only for serving MRF Limited

because he was facing some practical problem in making

payments on this customer‟s account. He specifically stated

that he had not started any new business in DRS Dilip

Roadlines. In fact, the explanation given by Mr A.K. Agarwal

did not satisfy the Chairman, who asked him to give comfort

to the Board that there was no diversion resulting in loss of

business to the plaintiff-company. The Chairman also

questioned the formation of DRS Dilip Roadlines without

consent of the Board and when Mr A.K. Agarwal stated that

a number of other things had been done without consent of

the Board, the Chairman maintained that this did not

absolve the wrongdoings on the part of Mr A.K. Agarwal.

13. In my view, this resolution at best can mean that

the Board of Directors of the plaintiff-company condoned

the act of defendant No. 1 in serving MRF Limited on

account of some practical problems which Mr A.K. Agarwal

claimed to be facing in respect of payments and bookings on

this customer‟s account. This resolution cannot by any

stretch be interpreted to mean that the Board of Directors of

the plaintiff-company had permitted the use of the

trademark Agarwal Packers & Movers by defendant No. 1-

company and forever. This is not the case of defendant No.

1 that it is using the trademark Agarwal Packers & Movers

and DRS Group Logo only for serving one client MRF

Limited. In fact, the plaintiff-company had not permitted

use of its trademarks by defendant No. 1 even for serving

MRF Limited in future.

14. The defendants have taken a preliminary objection

that the resolution dated 25th January, 2007 is a forged and

fabricated document and in any case, it does not authorize

Mr A.K. Agarwal to file the present suit on behalf of the

plaintiff-company. It, however, transpired during arguments

that though the list of documents filed with the plaint

referred to Board of Resolution dated 06th October, 2006 in

favour of Mr Ramesh Agarwal, the copy filed by the plaintiff

was of the resolution dated 25th January, 2007. The plaint,

however, has no reference to the Resolution dated 25 th

January, 2007. The plaintiff has already placed on record a

copy of the Resolution dated 06th October, 2006. This

Resolution has not been disputed by the defendants and

admittedly, it bears the signature of the father of defendants

No. 2 and 3. A perusal of the resolution passed by the

Board of Directors of the plaintiff-company on 06th October,

2006 would show that vide this Resolution, Mr Ramesh

Agarwal was authorized to file suits for injunction for

infringement of trademark, passing off and unfair

competition before this Court against the

companies/persons for infringement of the trademark of the

plaintiff-company. In view of this resolution, it is difficult to

say that Shri Ramesh Agarwal does not have authority from

the plaintiff-company to file the suit alleging infringement of

the trademark of the plaintiff-company by defendant No. 1-

company.

15. It was vehemently contended by the learned

counsel for the defendants that the plaintiff is not entitled to

equitable and discretionary relief of injunction since it did

not disclose to the Court that a suit has already been filed

against Shri Ramesh Agarwal, Shri Rajinder Agarwal and

their company against Agarwal Packers & Movers (Pvt.) Ltd.

by the plaintiff-company for infringement of its trademarks.

The suit at Secunderabad has been filed through one Mr

Bhoopal Rao, before the First Additional Chief Judge, City

Civil Court.

16. Emanating from equity jurisdiction, injunction is a

discretionary relief. This is made amply clear also by

Section 38 of Specific Relief Act which specifically provides

that a perpetual injunction may be granted to the plaintiff.

The Court is not bound to grant injunction merely because

it is lawful to do so. Even if the plaintiff is able to make out

violation of an alleged right, the Court may still refuse to

protect him, if it is satisfied that looking into his conduct, it

will not be equitable to exercise the discretion in his favour.

The conduct of a party seeking injunction is an

important factor to be taken into consideration by the Court

while exercising its discretion in a matter. The Court relies

upon the pleadings set out and documents filed before it, in

forming the requisite opinion and, therefore, it naturally

expects the injunction seeker to disclose all the material

and relevant facts which would enable the Court to form a

correct opinion and exercise a sound judicial discretion. If a

material fact having bearing on the matter in controversy,

which was in the knowledge of the plaintiff has been

withheld, he would be disentitled to grant of injunction in

his favour. The Court would then rather not enter into

merits of the case and may deny relief to him on this ground

alone. The plaintiff in an injunction suit must come to the

court with clean hands and do nothing which is not

expected from an honest, upright and deserving litigant.

17. Defendant No. 1-company is not a party to the

Civil Suit filed at Secunderabad. The plaintiff is vehemently

disputing the authority of Shri Bhopal Rao to file the

aforesaid suit on behalf of the plaintiff-company. The

proceedings in that suit have admittedly been stayed by

Andhra Pradesh High Court. The case set up in the suit

filed at Secunderabad, through Mr. Bhopal Rao is that

assuming that Agarwal Packers & Movers is not a registered

user of the trademarks in question as is being claimed by

that company and it had infringed the registered

trademarks of the plaintiff-company by using them for its

business purposes, that would have no bearing on the

question as to whether defendant No. 1 has infringed the

trademarks of the plaintiff-company or not. The question

which arises for consideration of the Court in such matters

is as to whether disclosure of the fact withheld by the

plaintiff could have made any difference to the interim order

passed by this Court on 03rd June, 2011. In my view, even

if the plaintiff had disclosed the factum of filing of the suit

by Shri Bhoopal Rao on its behalf at Secunderabad against

Ramesh Agarwal and Rajinder Agarwal, that would have

made no difference to the interim order passed by this Court

since defendant No.1-company has no authority in law to

use the registered trademarks owned by plaintiff-company

and infringement of these trademarks by Agarwal Packers

and Movers (Pvt.) Ltd. does not condone the infringement by

the plaintiff. The subject matter of the suit at

Secunderabad therefore is altogether different from the

subject matter of the present suit. It is, therefore, difficult

to say that the plaintiff has obtained ex parte injunction

from the Court by withholding a material fact.

18. In support of his contention, based on

concealment, the learned counsel for the defendant has

relied upon M/s Seemax Construction (P) Ltd. v. State Bank

of India and Another, AIR 1992 Delhi 197 and Virumal

Praveen Kumar vs. Gokal Chand Hari Chand 87(2000) Delhi

Law Times 327.

In the case of Seemax (supra), this Court inter alia,

observed as under:

"The suppression of material fact by itself is a sufficient ground to decline the discretionary relief of injunction. A party seeking discretionary relief has to approach the court with clean hands and is required to disclose all material facts which may, one way or the other, affect the decision. A person deliberately concealing material facts from court is not entitled to any discretionary relief. The court can

refuse to hear such person on merits. A person seeking relief of injunction is required to make honest disclosure of all relevant statements of facts otherwise it would amount to an abuse of the process of the court."

There is no quarrel with the proposition of law laid

down in this case, but, in my view, the suit filed at

Secundrabad cannot be said to be such a material fact as

would have affected the decision of the Court even on ex

parte injunction and non disclosure of this suit therefore,

does not disentitle the plaintiff to the discretionary relief of

injunction. In that case, the plaintiff had suppressed the

factum of having filed a suit for permanent injunction in

respect of encashment of the bank guarantee and had

further concealed filing of another suit in Munsif Court at

Ganganagar seeking injunction in regard to encashment of

bank guarantee of Rs 4,38,000/-. In these circumstances,

the Court was of the view that a material fact had been

concealed by the plaintiff from the Court and had not made

full, complete and honest disclosure of the material fats.

The facts here are altogether different.

In Virumal Praveen Kumar (supra), the plaintiff

filed a suit claiming to be lawful proprietor of the trademark

„555‟ and claimed that it was registered under an

application dated 30 th July, 1991. The plaintiff concealed

from the Court that a suit had been filed against it by M/s.

Needle Industries and William Prim GmbH & Co. Ltd.,

seeking relief of infringement of the trademark „555‟ and

when the defendant disclosed this fact to the Court, the

plaintiff, tried to take advantage of an incorrect suit number

having been given by the defendant to claim that no such

suit had been filed against it. It was for this reason that the

Court hold that the plaintiff had suppressed the vital fact on

the dispute before it and, therefore, was not entitled to

interim injunction which he had obtained from the Court.

However, as noted earlier, the suit at Secundrabad has not

been filed against DRS Logistics Private Limited though it

has been filed against Ramesh Chand Agarwal and his

company Agarwal Packers & Movers Private Limited. That

suit has no bearing on the question of infringement of the

trademarks of the plaintiff-companies by defendant No. 1.

Of course, it would have been desirable had the plaintiff

disclosed the suit filed at Secundrabad, but, considering the

nature of the controversy involved in that suit and the

question in dispute in the suit before this Court, it cannot

be said that failure of the plaintiff to disclose the aforesaid

suit amounts to suppression of a fact material to this extent

that the plaintiff-company which owns these registered

trademarks should be deprived of its right to seek

injunction against infringement of those marks by

defendant No.1-company.

19. The learned counsel for the defendants has also

submitted copies of the judgments Micolube India Ltd. v.

Maggon Auto Centre 150 (2008) DLT 458, Satish Khosla

vs. M/s Eli Lilly Ranbaxy Ltd. and Anr. 71 (1998) DLT 1,

Smt Champa Arora v. Shiv Lal Arora 94 (2001) DLT 658,

Vijay Sayal and Anr. v. State of Punjab (2003) 9 SCC 401,

Udai Chand v. Shankar Lal (1978) 2 SCC 209, S.P.

Chengalavaraya v. Jagannath (1994) 1 SCC 1, Rajabhai

Abdul Rehman Munshi v. Vasudev Dhanjibhai Mody AIR

1964 SC 345 on the issue of suppression of material facts.

There is no dispute with the proposition of law applied in

these cases, but, in the facts and circumstances of the case,

I do not think that failure of the plaintiff to disclose the suit

at Secundrabad against Agarwal Packers & Movers Private

Limited, Ramesh Agarwal and Rajinder Agarwal, amounts to

suppression of material facts and disentitles the plaintiff

from claiming injunction against use of its registered

trademarks by defendant No.1.

20. On the question of acquiescence and permissive

user, the learned counsel for the defendant has submitted

copies of decisions in Hari Narain v. Badri Das AIR 1963

SC 1558, Vee Excel Drugs and Pharmaceuticals Ltd. HAB

Pharmaceuticals and Research LIM 2009 (111) DRJ 192.

M/s Ansul Industries v. M/s Shiva Tabacoo Company ILR

(2007) I Delhi 409, M/s Power Control Appliances and

Ors. v. Sumeet Machines Pvt. Ltd. (1994) 2 SCC 448,

Ramdev Food Products Pvt. Ltd. v. Arvindbhai Rambhai

Patel and Ors (2006) 8 SCC 726, P. John Chandy and Co.

Pvt. Ltd v. John P. Thomas (2002) 5 SCC 90, M/s

Hindustan Pencils Pvt. Ltd. v. M/s India Stationery

Proucts Co. And Anr. ILR (1989) I Delhi 115, Khoday

Distilleries v. Scotch Whiskey Association and Ors.

(2008) 10 SCC 723, Marie Stops Intl. v. Parivar Seva

Sanstha 2010 (43) PTS 141 (Del), Baker Hughes and Anr v.

Hiroo Khushlani and Anr. 74 (1998) DLT 715.

He has relied upon the following observations

made by this Court in Ansul Industries (supra):

"Implied or express consent to use of a

trademark under Section 30(1)(b) of the Act is a statutory defense to a suit for infringement. Consent involves affirmative acceptance and not merely standing by and absence of objection. Affirmative acceptance can be in writing and can be termed as express consent. Implied consent can be oral and by conduct. The conduct, however, must indicate acceptance and not mere inaction or inactivity. Inaction in every case without anything more does not lead to an inference of implied consent. However where the plaintiff has laid by and inspite of his right by his conduct has encouraged the defendant to alter his condition and the latter has acted upon this faith of encouragement so held out, the plaintiff loses his claim to claim injunction"

Section 30 of Trademarks Act has absolutely no

application to the facts of this case and in fact, no defence

based on Section 30 of the Act has been taken by the

defendants. In this case, the appellant M/s Ansul

Industries as well as the respondent M/s Shiva Tobacco

were manufacturing and selling the same product, i.e.,

chewing tobacco, the appellant under the name „Udta

Panchhi‟ and the respondent under the name „Panchhi

Chhap‟. The respondent was also the registered user of the

brand name „Punchhi Chhap‟ under the Trade and

Merchandise Marks Act, whereas there was no registration

of the trademark „Udta Panchhi‟ in favour of the appellant.

In para 44 of the judgment, this Court referred to certain

principles of law in the matter of granting interim injunction

in such matters and principle (vi) referred therein read as

under:-

"Where initial adoption by the defendant itself is vitiated by fraud and/or is dishonest, delay is not a valid ground to allow misuse. If user is at the inception is tainted by fraud and dishonesty, continuous use does not bestow legality."

The learned counsel for the defendant has relied

upon the following observations made by the Supreme

Court in Ramdev Food Products Pvt. Ltd. (supra):-

"103. Acquiescence is a facet of delay. The principle of acquiescence would apply where: (i) sitting by or allow another to invade the rights and spending money on it; (ii) it is a course of conduct inconsistent with the claim for exclusive rights for trade mark, trade name, etc.

104. In M/s. Power Control Appliances and Others v. Sumeet Machines Pvt. Ltd. [(1994) 2 SCC 448], this Court stated:

"26. Acquiescence is sitting by, when another is invading the rights and spending money on it. It is a course of

conduct inconsistent with the claim for exclusive rights in a trade mark, trade name etc. It implies positive acts; not merely silence or inaction such as is involved in laches."

105. In an infringement of trade mark, delay by itself may not be a ground for refusing to issue injunction as has been observed by Lahoti, J. (as His Lordship then was) in Midas Hygiene Industries (P) Ltd. v. Sudhir Bhatia and Others [(2004) 3 SCC 90] in the following terms:

"5. The law on the subject is well settled. In cases of infringement either of trade mark or of copyright, normally an injunction must follow. Mere delay in bringing action is not sufficient to defeat grant of injunction in such cases. The grant of injunction also becomes necessary if it prima facie appears that the adoption of the mark was itself dishonest." (Emphasis supplied).

106. The defence of acquiescence, thus, would be satisfied when the plaintiff assents to or lay by in relation to the acts of another person and in view of that assent or laying by and consequent acts it would be unjust in all the circumstances to grant the specific relief."

In P. John Chandy and Co. Pvt. Ltd (supra),

Supreme Court made a distinction between acquiescence

and consent, in a dispute between a landlord and tenant. I,

however, find no such proposition in this case as would be

of help to the defendants in any manner.

The following observations made by this Court in

Hindustan Pencils (supra) have been relied upon by the

learned counsel for the plaintiff:-

"It would appear that 'inordinate delay', which has never been defined by the Courts so far, would be analogous or similar to 'laces'. In Whitman v. Disney Productions, 263 F2d 229 it was observed by the 9th Circuit Court of Appeal in U.S.A. as follows:

"Mere passage of time cannot constitute laces, but if the passage of time can be shown to have lulled defendant into a false sense of security, and the defendant acts in reliance thereon, laces may, in the discretion of the trial Court, be found."

It would follow, logically, that delay by itself is not a sufficient defense to an action for interim injunction, but delay coupled with prejudice caused to the defendant would amount to 'laces'."

However, neither any case of latches nor of

inordinate delay has been set up by the defendant in the

written statement nor is it otherwise made out in the facts

and circumstances of the case.

In this case, the plaintiffs were the registered

proprietors of the trademark „Nataraj‟ with device of „Nataraj‟

in respect of a number of stationery products, including

pins and clips. The defendants in that case had obtained

copyright in a label similar to the label of the plaintiffs in

respect of the pins. The case of the plaintiffs was that they

had come to know about copyright registration granted to

the defendants only in the middle of the year 1995, whereas

the case of the defendants was that the plaintiffs were aware

of the use of the trademark „Nataraj‟ by them sine the year

1982 when the advertisement of the plaintiffs and

defendants appeared in the magazine. It was contended by

the defendants that there was six years delay on the part of

the plaintiffs in filing the suit and, therefore, they were not

entitled to injunction. This Court in para 31 of the

judgment, inter alia, observed as under:

"If a party, for no apparent or a valid reason, adopts, with or without modifications, a mark belonging to another, whether registered or not, it will be difficult for that party to avoid an order of injunction because the Court may rightly assume that such adoption of the mark by the party was not an honest one. The Court would be justified in concluding that the defendant, in such

an action, wanted to cash in on the plaintiff's name and reputation and that was the sole, primary or the real motive of the defendant adopting such a mark. Even if. in such a case, there may be an inordinate delay on the part of the plaintiff in bringing a suit for injunction, the application of the plaintiff for an interim injunction cannot be dismissed on the ground that the defendant has been using the mark for a number of years."

However, in para 33 of the judgment, this Court

expressed the following view:

"As already noted, acquiescence may mean an encouragement by the plaintiff to the defendant to use the infringing mark. It is as if the plaintiff wants the defendant to be under the belief that the plaintiff does not regard- the action of the defendant as being vocative of the plaintiff's rights. Furthermore, there should be a tacit or an express assent by the plaintiff to the defendant's using the mark and in a way encouraging the defendants to continue with the business. In such a case the infringer acts upon an honest mistaken belief that he is not infringing the trade mark of the plaintiff and if, after a period of time when the infringer has established the business reputation, the plaintiff turns around and brings an action for injunction the defendant would be entitled to raise the defense of acquiescence. Acquiescence may be a good defense even to the grant of a permanent injunction because the defendant may legitimately contend that the encouragement of the plaintiff to the

defendant's use of the mark in effect amounted to the abandonment by the plaintiff of his right in favor of the defendant and, over a period of time, the general public has accepted the goods of the defendant resulting in increase of its sale. It may, however, be stated that it will be for the defendant in such cases to prove acquiescence by the plaintiff. Acquiescence cannot be inferred merely by reason of the fact that the plaintiff has not taken any action against the infringement of its rights."

In Khoday Distilleries (supra), Supreme Court

observed that Delay would be a valid defence where it has

caused a change in the subject matter and action or

brought about a situation in which justice cannot be done.

In Marie Stops Intl. (supra), the Court quoted Ziff

Davis with respect to permissive user. I fail to appreciate

how these observations can be of any help to the defendants

in a case of infringement of trademark. When defendant

No.1 is neither the proprietor nor the registered user of

trademarks in question. I have also gone through the

observations made in the case of Baker Hughes and Anr

(supra), but, I find no such proposition of law in this case as

would be any help to the defendants.

The learned counsel for the defendants has also

referred to Kale and Ors. v. Deputy Director of

Consolidation and Ors. (1976) 3 SCC 119 and Rajni Dua

and Ors. v. Bhushan Kumar and Ors. ILR (1998) II Delhi

870 with respect to family arrangement. However, in the

present case, no family arrangement permitting the

defendants to use the trademarks Agarwal Packers &

Movers and DRS GROUP (Label) has been made out. This is

not a case where the defendants are using the trademark

owned by the plaintiff-company and crediting the receipts in

the account of the plaintiff-company. They have been

receiving payments in the name of defendant No. 1 and not

in the name of the plaintiff-company. In any case, the

trademark is owned by the plaintiff which is a corporate

entity and defendant No. 1 has no right to use it without its

being the registered user for these trademarks.

21. The learned counsel for the defendants vehemently

contended that Agarwal Packers & Movers Private Limited, a

company formed by Ramesh Agarwal and Rajinder Agarwal

was infringing the registered trademarks of the plaintiff-

company. The case of the plaintiff is that there was a

registered user agreement between the plaintiff-company

and Agarwal Packers & Movers Private Limited. The case of

the defendants, on the other hand, is that no such

agreement has been executed under the authority of the

plaintiff-company and in any case the Memorandum and

Articles of Association of the plaintiff-company prohibit the

plaintiff-company from entering into such an agreement

without affirmative vote of strategic investor Kotak

Mahindra Bank. In this regard, he relied upon class 22 and

24 of the Articles of Association of the plaintiff-company. I,

however, need not go into this aspect of the matter since a

suit has already been filed at Secundrabad against Agarwal

Packers & Movers Private Limited and that company is not a

party to this suit. If Agarwal Packers & Movers Private

Limited is infringing the trademarks of the plaintiff-

company, it is for the Court at Secundrabad to pass

appropriate order against that company if it finds that the

suit before it has been file by a person duly authorized by

the plaintiff-company in this regard. But, infringement of

the trademarks of the plaintiff-company by Agarwal Packers

& Movers Private Limited does not entitle defendant No. 1

also to infringe those marks.

22. For the reasons given in the preceding paragraphs,

defendant No. 1 is restrained from using the trademarks

Agarwal Packers & Movers bearing registration No. 1275683

and DRS GROUP (Logo) bearing registration No. 1480427 on

any advertising or promotional material, on its invoice or in

any other manner, during pendency of the suit. Interim

order dated 03rd June, 2011 stands merged in this order.

However, in the facts and circumstances of the case, it is

directed that the trial will be fast tracked by appointing a

Local Commissioner, at the cost of the plaintiff, to record

evidence of the parties in a time bound manner.

The applications stand disposed of.

CS(OS) 1486/2011 and IA No. 11800/2011 (O. 1 R. 10 CPC)

List on 12th October, 2011 for disposal of IA.

(V.K. JAIN) JUDGE SEPTEMBER 07, 2011 bg