Sagar Ratna Restaurants Pvt. Ltd. vs Sri Bihari Ji And Ors
2015 Latest Caselaw 2808 Del

                 HIGH COURT OF DELHI AT NEW DELHI

+                              F.A.O. No.36/2013

                                    Decided on :     8th April, 2015


SAGAR RATNA RESTAURANTS PVT. LTD. ..... Appellant
             Through: Mr. Sushant Singh & Mr. Jagjit Singh,
                      Advocates.
                      Versus

SRI BIHARI JI'S AND ORS                            ..... Respondents
                 Through:        Mr. Sudhir Chandra Agarwala, Senior
                                 Advocate with Mr. Yogender Nath
                                 Bhardwaj, Advocate.
CORAM:
HON'BLE MR. JUSTICE V.K. SHALI

V.K. SHALI, J.

C.M. No.13114/2013 (for recall of order dated 28.1.2013)

1. By virtue of the present application, the appellant is seeking recall

of the order dated 28.1.2013 vide which the appeal of the appellant

against the order dated 15.9.2012 was permitted to be withdrawn with

liberty to file the same at an appropriate stage. Recall is sought on the

ground that by virtue of the order dated 15.9.2012, the application of the

appellant/plaintiff under Order 39 Rule 1 & 2 CPC for ad interim

injunction was partly allowed at this stage (at the stage of disposal of the

application) restraining the respondents from using the trade name 'Sagar

Ratna'. So far as the other ad interim relief, which were claimed in the

application are concerned, they were not granted.

2. Before dealing with the rival contentions of the parties, it may be

pertinent to give briefly the background in which the present application

has been filed. The appellant/plaintiff, M/s. Sagar Ratna Restaurants

Private Limited filed a suit claiming itself to be a registered company

having entered into a franchisee agreement and a supplementary

agreement with respondent No.1, M/s Sri Bihariji's and others allowing

them to open a South Indian restaurant in the name of 'Sagar Ratna' at

Vrindavan. It was alleged that vide e-mail dated 12.7.2013, the said

agreement was illegally terminated by respondent No.1 which was in

derogation of the terms and conditions and they continued to misuse the

intellectual property of the appellant/plaintiff by using the trade names

'Sagar Ratnam' and 'Ratnam'. Further, the respondent/defendant had

taken steps to get the said marks registered. It was also alleged that so far

as respondent Nos.2 and 3 were concerned, they were the employees of

the plaintiff and they were in the knowledge of the aforesaid trade names,

who had taken undue advantage of their knowledge in the capacity of

employees of the appellant/plaintiff and thereafter tendered resignation

from the services of the appellant/plaintiff on 16.4.2012 and 14.4.2012

respectively and joined hands with respondent No.1, who had usurped

publically the aforesaid two trade names 'Sagar Ratnam' and 'Ratnam'

and started business of selling South Indian preparations. It was also

alleged that search from the Registry of the trademark has revealed that

respondent No.1 had applied for registration of the aforesaid trade names

as trade mark. Apart from the main relief of permanent injunction against

the respondents, the appellant/plaintiff had also sought an ex parte ad

interim injunction in the suit by filing an application under Order 39 Rule

1 and 2 CPC.

3. The respondents were served. On the very first date, the

appellant/plaintiff is purported to have insisted on addressing arguments

on the grant of ad interim injunction without permitting the

respondent/defendants to file their reply in writing which lead to the

passing of an order dated 15.9.2012. So far as the respondent/defendant

is concerned, though it admitted the trade name 'Sagar Ratna' being

owned by the appellant but it denied that the said name is deceptively

similar to 'Sagar Ratnam' or 'Ratnam' which was claimed by them to be

their own names. As regards the condition of a restraint of not carrying

any business of selling South Indian preparations in terms of the

franchisee agreement with the appellant, the respondent took the plea that

the said agreement having been terminated and, therefore, the condition

does not foreclose their right to sell the preparation and in any case any

condition which restraint them from selling any South Indian dishes was

void ab initio as it was in violation of Section 27 of the Indian Contract

Act, 1872. They also took the plea that the appellant/plaintiff had not

filed Schedule I, II and III of the agreement and thus, they had tried to

give selective information about the franchisee agreement between the

parties.

4. The learned trial court, after hearing the learned counsel for the

parties and on the basis of the admission purported to have been made by

respondent No.1 granted an ex parte ad interim injunction in favour of the

appellant/plaintiff and against the respondent from using the trade name

'Sagar Ratna' at this stage. The court had consciously used the word at

this stage at the time of disposal of the application perhaps on the ground

that the written reply of the respondents to the application or the written

statement was not on record.

5. The appellant feeling aggrieved by the aforesaid grant of partial

relief had preferred an appeal which came up before this court on

28.1.2013.

6. After hearing the learned counsel for the appellant, the court was of

the view that as the application under Order 39 Rule 1 and 2 has been not

finally disposed of by the impugned order, therefore, the appeal at that

point of time may not be an appropriate remedy and accordingly, the

learned counsel representing the appellant/plaintiff before this court

sought the permission to withdraw the appeal with liberty to approach at

an appropriate stage. Meaning thereby, as and when their application

under Order 39 Rule 1 and 2 CPC is decided on merits by the trial court,

they would be entitled to prefer an appeal against the said order.

7. Later on they have filed the present application in the month of

August, 2013 seeking recall of this order on the ground that the trial court

while granting the relief partially to the appellant and rejecting the other

part of the relief has already expressed its view on the merits of the matter

and, therefore, even though the reply on behalf of the respondent is filed,

it will only result in an empty formality to go back to the same court for

the decision on the application under Order 39 Rule 1 and 2 CPC on

merits and, therefore, they would like this court to only consider the

appeal on merits and decide the appeal. This, in essence, is the

background and contention of the learned counsel for the appellant.

8. Mr. Chandra, the learned senior counsel for the

respondent/defendant has contested the maintainability of the application

seeking recall of the order dated 28.1.2013 primarily on three grounds.

(i) Firstly, it has been contended by the learned senior counsel that the

order dated 28.1.2013 clearly was an order invited by the appellant

themselves with liberty to file an appeal at an appropriate stage.

Filing of an appeal at an appropriate stage would mean that they

had to file an appeal against the order dated 15.9.2012 within the

period of limitation and since the period of limitation to file the

appeal itself has expired, they innovated this novel method to seek

recall of the order to overcome the question of limitation. In any

case, it has been contended that the situation before the court as

was available on 28.1.2013 and as on today has not resulted in any

change of circumstances which may warrant the entertaining of the

present application. As a matter of fact, it has been contended by

him that by filing the aforesaid application, the appellant/plaintiff is

not only in gross abuse of the processes of law but is also trying to

overreach the court inasmuch as otherwise the period of limitation

would come in the way of the appellants and, therefore, the

application deserves to be dismissed on this third ground itself.

(ii) The second submission made by the learned senior counsel Mr.

Chandra is that the application filed by the appellant seeking recall

of that order dated 28.1.2013 cannot be entertained because the

court has become functus officio and once the court becomes

functus officio, no application can be entertained for the purpose of

revival of the appeal itself. The learned senior counsel in support

of his submission has placed reliance on Ajay Mohan and Others

vs. H.N. Rai and Others; 2008 (2) SCC 507 para 24 which reads as

under:-

"24. The order of the City Civil Court dated 13.10.2006 may be bad but then it was required to be set aside by the court of appeal. An appeal had been preferred by the appellants there against but the same had been withdrawn. The said order dated 13.10.2006, therefore, attained finality. The High Court, while allowing the appellant to withdraw the appeal, no doubt, passed an order of status quo for a period of two weeks in terms of its order dated 23.11.2006 but no reason therefor had been assigned. It ex facie had no jurisdiction to pass such an interim order. Once the appeal was permitted to be withdrawn, the Court became functus officio. It did not hear the parties on merit. It had not assigned any reason in support thereof. Ordinarily, a court, while allowing a party to withdraw an appeal, could not have granted a further relief."

(iii) The third submission made by the learned senior counsel Mr.

Chandra is that the application under Section 151 CPC as has been

filed by the appellant/plaintiff seeking recall of the order dated

28.1.2013 is concerned, that does not warrant to be entertained for

the simple reason that the exercise of inherent powers sought to be

invoked by the appellant is actuated by malafides. For this

purpose, the learned senior counsel has referrd to the conduct of the

appellant. It has been contended by Mr. Chandra when the

respondent/defendant appeared for the first time, they sought time

to file their written statement and reply to the application which

was opposed by the appellant tooth and nail and thereby the

appellant/plaintiff himself only invited the order by addressing

arguments, without their being any formal reply on the part of the

respondent on record. It has been further contended when the court

expressed its view on certain points and reserved the orders on

4.9.2012, which were not to the liking of the appellant/plaintiff, he

filed an application in the court of district judge on 12.9.2013 for

transfer of the suit from the court of the trial judge knowingly fully

well that the trial judge has reserved the orders on the application.

This application of the appellant for transfer was dismissed by the

learned district judge for the reason that there was no ground for

transfer made out by the appellant and more particularly when the

order had been reserved by the learned trial judge. It has been

further contended that on 15.9.2012, the trial court passed the order

against the appellant and they instead of waiting for the

adjudication of the application on merits in the light of the reply

and the written statement filed by the appellant chose to rush to the

High Court by filing the appeal which was also withdrawn by them

and now they want to wriggle out of that withdrawal on a spacious

ground that the learned trial judge has already expressed the view

on certain aspects on the merits of the matter and therefore, they

may be permitted to address the arguments on the merits of the

appeal. This clearly shows that the appellants are doing forum

shopping and a flip flop only in order to get the complete relief as

was sought by them in the application. It has been contended that

the tendencies on the part of such like litigants deserve to be curbed

and rejected with a heavy hand.

9. It has also been contended by the learned senior counsel after the

withdrawal of the appeal, the appellant/plaintiff has voluntarily consented

to the framing of the issues and gone into arena of adducing evidence and

thus tacitly given up the challenge to the impugned order. Further after

the filing of the appeal, the appellant has got the record summoned to the

high court and the said record remained here for a period of almost two

years as a result of which, the trial court could not proceed.

10. Mr. Sushant Singh, the learned counsel for the appellant has

contested the submission of Mr. Chandra on all the three aspects. It has

been contended by Mr. Singh that there is no abuse of the process of law.

All that the appellant prays is that their appeal may be heard by this court

on merits or alternatively the matter may be remanded to the trial court

for the purpose of consideration of their remaining prayers in the light of

the stand having been taken by the respondents.

11. So far as the non-maintainability of the application filed by the

appellant on the ground of court having become functus officio is

concerned, it is contended by Mr. Singh that this question of having

become functus officio would not apply to an application where

modification, recall, etc. of an order is sought or where an order which

has been obtained by fraud or which is passed under a mistake by the

court itself or under a mistaken belief on the statement having been made

by the counsel or a party in such a case the court having become functus

officio will not be a bar from entertaining an application. In this regard,

the learned counsel for the appellant has relied upon the judgment of the

Apex Court in Indian Bank vs Satyam Fibres (India) Pvt. Ltd.; (1996) 5

SCC 550 wherein it has been specifically observed that where a court is

mislead by a party or the court itself commits a mistake which prejudices

a party, the court has an inherent power to recall its own order. It has

been contended that in the instant case, the appellant had withdrawn the

appeal under a mistaken belief that the appeal can be argued before the

trial judge on the merits and, therefore, the same was withdrawn.

12. With regard to the third submission made by the learned senior

counsel that the application under Section 151 CPC is not maintainable

on the ground of the fact that the appellant has not come with clean

hands. It is contended by Mr. Singh that no doubt an application for

transfer was filed by the appellant before the learned district judge which

stood rejected but there was no attempt made by the appellant either to

overreach the court or to do forum shopping or to do anything which may

be actuated with mala fide reasons. It has been contended that the

appellant was ill advised by the counsel which resulted in filing of an

application for transfer which of course stood rejected by the district

judge on the judicial side and mere filing of an application which has

ultimately been rejected this should not hold against the appellant and

thereby causing serious prejudice to him to get justice. It has been denied

that there has been any mala fide attributed to the appellant in filing the

application. It has also been disputed that he has tacitly given the

challenge to the impugned order by permitting the court to frame issues.

So far as the summoning of the record by the high court is concerned, it

has been contended that the respondent could have got record sent back.

It was disputed that the appellant has got the record summoned.

13. Accordingly, it is prayed that the application of the appellant may

be allowed.

14. I have carefully considered the submissions made by the learned

counsel for the appellant as well as the respondent. There is no dispute

about the fact that the order of 28.1.2013 was passed on the statement

made by the learned counsel for the appellant and the statement of the

learned counsel was at this stage actuated by the words which were used

by the learned trial judge in the operative portion of the order where a

restraint order was given in favour of the appellant and against the

respondent from prohibiting them from using the word 'Sagar Ratna' at

this stage. Meaning thereby that at that point of time when the reply and

the written statement of the respondent was not available on record, the

court on the basis of the oral submissions of the respondent considered it

fit to grant only partial relief and get the application pending to be

decided on merits after the reply and the written statement was filed.

That is the reason why the court permitted withdrawal of the appeal with

liberty to the appellant to file an appeal at an appropriate stage meaning

the right to file an appeal was reserved to the appellants after getting their

application adjudicated on merits.

15. The appellant has not taken any steps before the trial court by filing

an application and inviting the attention of the trial court to the language

used in the impugned judgment dated 15.9.2012 that the application has

still remained pending and therefore, that application be decided. The

contention of the learned senior counsel for the respondent that the

appellant has appeared thereafter before the court and permitted the court

to frame issues and enter into the arena of evidence does not preclude the

court or for that matter, the appellant to request the court from deciding

the application. Therefore, in my considered opinion, the proper course

of remedy open to the appellant was to go back to the trial court and file

an application before the said court for deciding the application on merits.

The appellant instead of doing so, has filed the present application before

this court seeking recall of the order dated 28.1.2013 on the ground that

the appeal itself may be heard on merits because the trial court has

already expressed its opinion on the merits of the case in regard to certain

aspects and therefore, it may be an empty formality. This submission on

the part of the learned counsel for the appellant does not have any merit

as that observation which may have been passed by the trial court while

granting them an injunction partially is only to be treated as tentative in

nature and that too in the absence of any formal reply on behalf of the

respondent and it cannot bind the court while deciding the application on

merits. Therefore, I feel that this ground will not be a valid ground for

recall of the order dated 28.1.2013.

16. So far as the submission made by the learned senior counsel Mr.

Chandra with regard to this court having become functus officio and

consequently the application filed by the appellant as being not

maintainable is concerned, that also, in my view, does not hold any water.

The reason for this is that what is sought to be recalled is only an order

which has permitted the appellant to withdraw the appeal with liberty to

file the same at an appropriate stage. The learned counsel for the

appellant has relied upon the judgment of the Apex Court which has

taken note of the fact that no act of the court will prejudice any party and

if any order has been passed by the court on the statement purported to

have been made by the counsel under a mistaken belief or an order has

been obtained by a fraud or for that matter, the review of an order is

sought that can never preclude the entertaining of an application on the

ground that the court has become functus officio. If such a preposition is

held, it is practical that the same court will never be able to correct its

own mistake either under review, recall, modification, clarification and it

will only result in opening of the floodgate of appeals being filed for

something which is inconsequential and deserves to be corrected by the

court which has passed the order. Therefore, this submission of the

learned senior counsel, in my view, does not preclude the court from

entertaining the application and in any case what is the relief which is

sought by the appellant. The appellant is only seeking recall of the order

and adjudication of the appeal on merits. The appellant cannot be made

to suffer for an order which will not be the subject matter of judicial

scrutiny by the appellate court. In case, the argument of the appellant is

rejected and the arguments of the learned counsel for the respondent is

accepted then practically it would mean that though the law envisages

that there must be an appeal permissible against the rejection or allowing

of an application under Order 39 Rule 1 and 2 CPC by at least one

speaking order of the court but that right in the instant case would stand

denied to the appellant. The reason for this is that the trial court has not

passed the order on merits. The appellate court has divested itself of the

very consideration of the appeal on the ground that the party will go back

to the trial court and have the matter adjudicated where the party has

never gone and it has sought recall of the order to be considered on merits

which the court will not entertain by rejecting their application meaning

thereby effectively the first and the last judicial review by an appellate

court would be denied by the High Court. This is not the purport of law.

Actus Curiae Neminem Gravabit, that is, an act of court shall prejudice no

one. Therefore, I feel on this reasoning also, the submission of the

learned counsel for the respondent that the court has become functus

officio does not have any merit.

17. The third submission of the learned counsel Mr. Chandra that the

court should not entertain an application under Section 151 CPC and

exercise inherent powers because the conduct of the appellant has been

such that he has not come to the court with clean hands or that it is

actuated by mala fides or that he has tried to do forum shopping also does

not convince the court to secure the larger interest of justice. The reason

for this is that no doubt the appellant may have acted foolishly on the

advice of the counsel by filing an application for transfer notwithstanding

the fact that the order was reserved but he has already made his waterloo

by obtaining an order of rejection. It was also inappropriate on the part of

the appellant to have necessitated in passing the order ex parte without

the court being permitted to grant a reasonable amount of time to the

respondent to file their written statement and the reply to the application

as heavens would not have fallen. But merely because of these

submissions on the part of the appellant, the judgment of the court should

not get clouded and deprive a party in obtaining justice and decision on

merits of his application. Therefore, this ground also does not convince

the court. Accordingly, the application of the appellant is being

entertained by the present court.

18. Now, the only question which arises for consideration is as whether

the order dated 28.1.2013 should be permitted to be withdrawn and

decide the appeal on merits or whether this court in exercise of its

inherent power should direct the trial court to decide the application

under Order 39 Rule 1 and 2 CPC on merits taking into consideration the

written statement and the reply of the respondent without being in any

manner influenced by the observations passed by this court and the

observations which it may have passed earlier in the order dated

15.9.2012. Since the trial court has specifically and consciously used the

word at this stage meaning thereby that the application was being

considered in the absence of any formal written statement and reply on

record, therefore, the stay application deserves to be decided on merits by

the trial court. This would also give an advantage to this court to have the

view of the trial court on the merits of the matter while deciding the

application. Accordingly, though I reject the application of the appellant

for recall of the order dated 28.1.2013 in terms of the prayer of the

appellant and hear the appeal on merits; however, in exercise of the

powers under Section 151 CPC, this court gives a direction to the parties

to appear before the trial court on 20.4.2015 and direct the trial court to

decide the application of the appellant under Order 39 Rule 1 & 2 CPC as

is available on the record on merits after taking into consideration the

written statement and the reply to the application and after giving both the

learned counsel for the parties an opportunity of being heard and without

getting influenced by any of the observations passed by this court in the

present order or by itself in the order dated 15.9.2012. Needless to say

that if any party feels aggrieved by the order so passed, he is free to take

such recourse as may be available in law.

19. With these observations the application stands disposed of.

V.K. SHALI, J.

APRIL 08, 2015 'AA'