Madras High Court
Massey Ferguson Corp vs Tractors And Farm Equipment Limited on 18 November, 2024
Author: Senthilkumar Ramamoorthy
Bench: Senthilkumar Ramamoorthy
2024:MHC:3868
O.S.A. (CAD) Nos.138 & 139 of 2024
IN THE HIGH COURT OF JUDICATURE AT MADRAS
Judgment reserved on 12.11.2024
Judgment pronounced on 18.11.2024
CORAM
THE HON'BLE MR.K.R.SHRIRAM, CHIEF JUSTICE
AND
THE HON'BLE MR.JUSTICE SENTHILKUMAR RAMAMOORTHY
O.S.A. (CAD) Nos.138 & 139 of 2024
and C.M.P.Nos.24707 & 24708 of 2024
Massey Ferguson Corp
4205, River Green Parkway, Duluth,
30096, United States of America
Represented by its
Power of Attorney
Rohit Kohli ... Appellant
(Power of Attorney recognised vide
order of Court dated 28.10.2024 made
in CMP Nos.23982 of 2024 in
OSA(CAD) (SR) No.141989 of 2024 by RSKJ & CSNJ)
Versus
Tractors and Farm Equipment Limited,
77, Nungambakkam High Road,
Chennai-600 034,
Represented by its
Authorised Signatory
Mr.C.P.Sounderarajan ... Respondent
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O.S.A. (CAD) Nos.138 & 139 of 2024
(Cause Title accepted by order of Court
dated 28.10.2024 made in CMP No.23979
of 2024 in OSA (CAD)(SR) No.141989 of 2024
by RSKJ & CSNJ)
Prayer : Appeals under Order 36 Rule 9 of the Original Side Rules read with
Clause 15 of the Letters Patent and the provisions of Section 13(1) of the
Commercial Courts Act, 2015 to set aside the order dated 17.10.2024
passed by this Court in OA.No.745 of 2024 in C.O.S.(Comm. Div) No.190 of
2024.
For Appellant : Mr.R.Sankaranarayanan,
Senior Advocate,
Mr.R.Parthasarathy, Senior
Advocate,
Mr.Suhrith Parthasarathy
Rishabh Gupta
Shreya Gupta Abhijeet
Sadikale
Prachi Gupta for
M/s.Allwin Godwin Akhila
For Respondent : Mr.C.A.Sundaram, Senior
Advocate,
Mr.Krishna Srinivasan,
Senior Advocate for
M/s.S.Ramasubramaniam
and Associates in
OSA(CAD) No.138 of 2024
Mr.A.L.Somayaji, Senior
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O.S.A. (CAD) Nos.138 & 139 of 2024
Advocate
Mr.Krishna Srinivasan,
Senior Advocate
Mr.P.S.Raman, Senior
Advocate for
M/s.S.Ramasubramaniam
and Associates in OSA
(CAD) No.139 of 2024
COMMON JUDGMENT
(Delivered by Justice Senthilkumar Ramamoorthy)
Background
An agreement dated 31.10.1960 was entered into between Massey
Ferguson Limited (MFL), a company incorporated in Canada, and
Amalgamations (Private) Limited, a company incorporated under the Indian
Companies Act, 1913. This agreement envisaged the formation of a joint
venture company by and between the two parties thereto in the name and
style of “Tractors and Farm Equipment Limited” and is hereafter referred to
as the JV Agreement. Pursuant to the JV Agreement, such company was
incorporated and is the respondent herein. The JV Agreement envisaged the
execution of a technical assistance agreement as per the template set out as
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O.S.A. (CAD) Nos.138 & 139 of 2024
Appendix II thereto. Such Technical Assistance Agreement was executed on
18.09.1961.
2. On 17.03.1978, a Trademark Users Agreement (the 1978 TM
Agreement) was executed by and between MFL and the respondent herein.
The 1978 TM Agreement recognised that MFL was the registered proprietor
of the trademarks bearing the registration numbers mentioned in the
schedule thereto. It also provided for the use of such trademarks by the
respondent herein. On the same date, an Agreement for the Sale of
Technical Information and Know-how was entered into between Massey
Ferguson Services N.V. Netherlands Antilles and the respondent herein. This
was followed by the execution of the Trademark Registered User agreement
dated 18.03.1994 (the 1994 TM Agreement) between Massey Ferguson
Corp (Delaware) Inc. (MFC Delaware) and the respondent herein, which
was effective from 30.07.1991. Like the 1978 TM Agreement, the 1994 TM
Agreement was also in respect of the use of trademarks of MFC Delaware by
the respondent herein. Clause 9 of the said agreement enables no fault
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O.S.A. (CAD) Nos.138 & 139 of 2024
termination by either party by giving six months notice in writing to the
other. A letter agreement dated 03.08.2007 was executed thereafter by and
between AGCO Corporation(AGCO), a company incorporated in Georgia,
USA, and the respondent herein. This agreement was to provide protection
in case a competitor of the respondent acquires not less than a threshold
stake in AGCO. Various other agreements were also entered into by the
appellant or the AGCO group with the respondent, but it is not necessary to
set out those details for present purposes.
3. The business relationship between the parties, thus, commenced
with the JV Agreement and continued without interruption for a period in
excess of six decades. After disputes arose between the parties, a
termination notice dated 26.04.2024 (First Termination Notice) was issued
by the appellant/Massey Ferguson Corp to the respondent to terminate the
1994 TM Agreement by invoking clause 8 thereof. It also provided that the
appellant reserves its rights to terminate the said agreement prior to the
date of termination specified therein in case of any breach by the
respondent. Around the same time, it appears that a similar termination
notice was issued in respect of another agreement. In those circumstances,
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O.S.A. (CAD) Nos.138 & 139 of 2024
initially the respondent and TAFE International LLC, Turkey filed
C.O.S.No.2 of 2024 before the Principal District Judge, Dindigul, and
obtained an ad-interim order of status quo ante against AGCO International
GmbH and AGCO. This was challenged by the defendants by filing
C.R.P.(PD)(MD) Nos. 1830 to 1833 of 2024. By order dated 08.08.2024,
the parties were referred to arbitration and pre-arbitration mediation. Such
mediation is in progress before a retired Judge of the Supreme Court of
India.
4. Thereafter, the respondent filed COS No.117 of 2024 before the
Commercial Court at Egmore, Chennai seeking a declaration that the First
Termination Notice is invalid and a permanent injunction restraining the
defendants therein, i.e. Massey Ferguson Corp and AGCO, from in any
manner interfering with the plaintiff's right to use the brand/trademarks
Massey Ferguson (MF) in India. By order dated 30.04.2024 in I.A.No.5 of
2024 in the said suit, the Court directed parties to maintain status quo as on
25.04.2024. By subsequent order dated 10.06.2024, the status quo order
was extended until 02.07.2024. The respondent filed an interim application
for amendment of the plaint and such application was allowed. Eventually,
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the plaint was returned for presentation before the jurisdictional court.
5. The respondent filed a second suit before the Commercial Court at
Egmore, Chennai bearing C.O.S.(Sr.) No.464 of 2024 seeking a declaration
that the appellant abandoned its rights in the MF trademarks in India. The
respondent also filed applications to cancel the appellant's registrations in
respect of the MF trademarks. In those circumstances, a second termination
notice dated 27.09.2024 (the Second Termination Notice) to terminate the
1994 TM Agreement with immediate effect was issued by the appellant.
Meanwhile, by order dated 16.08.2024, the plaint was returned for
presentation before the appropriate court on the basis that the suit is in
respect of intellectual property rights.
6. After unsuccessfully challenging the order dated 16.08.2024 in
C.M.A. No.2335 of 2024, the second suit was re-filed before this Court and
re-numbered as C.S. (Comm. Div.) No.190 of 2024. The respondent filed
two applications in the suit. In O.A.No.744 of 2024, the respondent prayed
for an interim injunction restraining the appellant herein from holding out
or representing that it is the owner, proprietor, rights holder of the MF
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brands/trademarks, including by amending appellant's website or that of
AGCO, the parent company of the appellant, pending disposal of the suit. In
O.A.No.745 of 2024, the respondent prayed for an interim injunction
restraining the appellant from interfering with the respondent's use of the
MF brands/trademarks pending disposal of the suit. After hearing the
appellant herein, albeit without awaiting its counter affidavit, an ad-interim
order dated 17.10.2024 was issued granting orders of interim injunction, as
prayed for, in both the above mentioned applications. The present appeals
are directed against these two orders.
Counsel and their contentions
7. Oral arguments on behalf of the appellant were advanced by
Mr.R.Sankaranarayanan, learned senior counsel, and Mr.R.Parthasarathy,
learned senior counsel, assisted by Mr.Suhrith Parthasarathy. Oral
arguments on behalf of the respondent were advanced by Mr.C.Aryama
Sundaram, learned senior counsel, and Mr.P.S.Raman, learned senior
counsel. Supplementary arguments were advanced by Mr.A.L.Somayaji,
learned senior counsel, and Mr.Krishna Srinivasan, learned senior counsel.
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8. The contentions on behalf of the appellant may be summarized as
under:
(i) Without giving an opportunity to file a counter, an unreasoned
order was issued.
(ii) The JV Agreement, the 1978 TM Agreement, and the 1994 TM
Agreement recognized the appellant herein or its predecessors-in-interest as
the registered proprietors of the MF brands/trademarks. In each of the
above agreements, the respondent herein is permitted to use the trademarks
either as a permitted user or registered user.
(iii) The 1994 TM Agreement provides for no fault termination by
issuing a six month notice. Such notice was issued on 26.04.2024 and the
six month period expired on 25.10.2024.
(iv) As a result of the order issued in O.A.No.744 of 2024, the
registered proprietor of the relevant trademarks has been restrained from
holding itself out or representing that it is the owner, proprietor, rights
holder. A trial is required to decide the issue of abandonment of the MF
brands/trademarks, but a conclusion on abandonment was recorded at the
pre-trial stage. Such order is ex facie invalid and liable to be interfered with.
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(v) Clause 11 of the 1994 TM Agreement imposes an obligation on
the respondent not to do anything which impairs the rights of the proprietor
in the trademarks forming the subject of these appeals. In flagrant breach
of the stipulation, the respondent has filed cancellation applications before
the Registrar of Trade Marks in Mumbai, New Delhi and Kolkata and also
filed applications for registration of deceptively similar trademarks before
the Registrar of Trademarks, Chennai. Therefore, the appellant was
constrained to issue the Second Termination Notice to terminate the 1994
TM Agreement with immediate effect.
(vi) The appellant also filed a civil suit (C.S.(Comm. Div.) No.193 of
2024) before this Court seeking inter alia an order of permanent injunction
against the respondent herein to restrain the use of the trademarks specified
in Schedule I to the 1994 TM Agreement. Although applications for interim
relief were filed in the said suit, only notice was ordered in such
applications while extending ad-interim relief to the respondent herein in its
suit.
(vii) The respondent would continue to be in a position to
manufacture and sell tractors and allied equipment even if the orders of ad-
interim injunction were to be vacated. The restriction would be limited to
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the use of appellant's trademarks. Consequently,the balance of convenience
is in favour of vacating the ad-interim orders and the respondent has failed
to establish that irreversible injury would be caused unless ad-interim relief
is granted.
9. The contentions on behalf of the respondent may be summarized
as under:
(i) The appeals are not maintainable either under Section 13 of the
Commercial Courts Act, 2015 (the Commercial Courts Act) or Clause 15 of
the Letters Patent. In support of this contention, the judgments of Division
Benches of this Court in The Special Tahsildar No.III, Land Acquisition v.
Rangasamy Reddiar (Rangasamy Reddiar), 1988-1-L.W.-38; R.Kishore
Kumar v. Durairajan and another, 2022 SCC OnLine Mad 7023, and Green
Peace Constructions Pvt. Ltd. represented by its Managing Director v.
R.Sivakumar and Others, 2011-1-L.W.17 were relied upon.
(ii) Pursuant to the JV Agreement, the respondent was incorporated.
After incorporation, the JV company has manufactured tractors and allied
equipments for more than 60 years. About 95% of the products
manufactured by the JV company carry MF brands/trademarks.
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(iii) Although the 1960 JV Agreement, the 1978 TM Agreement and
the 1994 TM Agreement refer to a limited number of products, the
respondent has manufactured and marketed about 500 products bearing the
MF brands/trademarks.
(iv) Except the 1994 TM Agreement, the other agreements, including
the 1960 JV Agreement, have admittedly not been terminated. The 1994
TM Agreement is confined to about five products. Therefore, even if such
agreement were to be terminated, the respondent cannot be prevented from
using the MF brands/trademarks in view of the 1960 JV Agreement
continuing to subsist and the use of these brands/trademarks on numerous
products with the knowledge of consent of the appellant .
(v) Although the 1978 TM Agreement and the 1994 TM Agreement
provide for supervision of quality of products by the appellant or its
predecessors-in-interest, including by ensuring adherence to specifications,
the respondent functioned without any supervision. In fact, the respondent
applied for and obtained multiple patent and design registrations in respect
of these tractors and allied products with the full knowledge and consent of
the appellant. Consequently, the licensing was naked and the licensor has
abandoned its rights over the MF brands/trademarks.
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(vi) Admittedly, the appellant does not manufacture tractors or any
other allied equipments in India. Since the suit and interim orders are
limited to the use of MF brands/trademarks in India, these ad-interim
orders do not affect the business of the appellant in any manner. On the
contrary, the respondent is carrying on business in India on a very large
scale by employing thousands of people. The respondent's products are
primarily intended for use in agriculture. If the respondent is prevented
from using the MF brands/trademarks in relation to these products,
irreversible injury would be caused.
10. In response to the contention that these appeals are not
maintainable, it was submitted on behalf of the appellant that the judgment
of this Court in Rangasamy Reddiar was in the context of an ad-interim ex
parte order. By pointing out that such judgment relied upon an earlier
judgment of the Division Bench of this Court in Abdul Shukoor Sahib v.
Umachander and Others, 1976 SCC OnLine Mad 57, it was further
submitted that this judgment makes it clear that an appeal does not lie
against an ex parte unreasoned order because the aggrieved party has a
remedy under Order 39 Rule 4 of the Code of Civil Procedure. Since the
present order was issued after hearing the arguments of the contesting
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parties, it was contended that it qualifies as an order against which an
appeal lies under Section 13 of the Commercial Courts Act. As regards the
contention on abandonment of the MF brands/trademarks as a result of
naked licensing, by relying on the judgment of the US Court of Appeals for
the Fifth Circuit in Taco Cabana International v. Two Pesos, Inc. 932
F.2d.113 (1991) , it was contended that an inference of abandonment
cannot be drawn when parties had a close working relationship and no
decline in quality standards is demonstrated.
Discussion, analysis and conclusion
11. At the outset, the objection with regard to the maintainability of
the appeals is dealt with. Section 13 of the Commercial Courts Act provides
for appeals against final decrees and orders in respect of which an appeal is
maintainable under Order 43 of the Code of Civil Procedure, 1908 (the
CPC). An appeal lies under Order 43 Rule 1 of the CPC against an order
granting an interim injunction in an application under Order 39 of the CPC.
The only aspect that warrants a brief discussion is whether such appeal
would be maintainable against an ad-interim order. As discussed earlier, by
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virtue of orders impugned herein, the appellant, which asserts
proprietorship over the MF brands/trademarks has been restrained from
holding itself out as the owner/proprietor thereof. The appellant has also
been restrained from interfering with the respondent's use of the said
trademarks. Moreover, the appellant was not provided an opportunity to file
a counter and the order does not contain reasons to justify the conclusions.
Given the impact of the orders and in view of the such orders falling within
the scope of Section 13 of the Commercial Courts Act, we conclude that
these appeals are maintainable.
12. The next question to be considered is whether interference with
the impugned orders, whether by way of modification or otherwise, is called
for at this juncture. We are acutely conscious that the challenge is to ad-
interim orders. In the plaint, the respondent herein has set out the entire
history of the relationship between the parties and provided details of the
range of products manufactured and sold by the respondent under the MF
brands/trademarks. We note that the assertion by the respondent that it has
used the MF brands/trademarks for about six decades has not prima facie
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been refuted by the appellant. Indeed, on a prima facie examination of the
materials on record, the said assertion is liable to be accepted at least for
interlocutory purposes. It also appears prima facie that the agreements
placed on record do not embrace all the products manufactured and
marketed by the respondent under the MF brands/trademarks.
13. In C.O.S No.117 of 2024, an ex parte order dated 30.04.2024 was
issued directing the appellant herein to maintain status quo as on
25.04.2024. Such order continued in force until the plaint was returned by
the Commercial Court, Egmore, Chennai for re-presentation before the
competent court. Consequently, the time limit of six months stopped
running while such order was in force. By virtue of impugned order dated
17.10.2024, the appellant was restrained from interfering with the
respondent's use of the MF brands/trademarks until the applications are
disposed of and this order is in force as on date. We notice that the
appellant and the respondent have initiated action against each other after
25.04.2024, in the form of the Second Termination Notice or the
application for cancellation of trademark registrations, respectively. From a
business perspective, however, as on date, the appellant has not entered the
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Indian market directly or indirectly (through a licensing agreement or the
like), and the respondent continues to manufacture and sell tractors and
other farm equipment by applying the MF brands/trademarks thereto.
Effectively, the situation on ground has not changed since 25.04.2024.
Mediation proceedings are also ongoing and the possibility of an amicable
and wholesale resolution of the dispute cannot be ruled out. Considering all
these aspects, at this juncture, the interest of justice warrants the
preservation of the status quo outlined above so as to ensure that
irreversible changes do not occur.
14. Turning to the relief granted in O.A.No.744 of 2024, the effect of
the order is to restrain the appellant herein from holding itself out as the
owner, proprietor or rights holder of MF brands/trademarks. Even
proceeding on the basis that such order is confined to the territory of India,
we find prima facie that the appellant or its predecessors-in-interest were
referred to as the proprietor(s) of the MF brands/trademarks in the 1960 JV
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agreement, the 1978 TM Agreement and the 1994 TM Agreement. It is also
common ground between the parties that several of these trademarks were
registered by the appellant or its predecessors-in-interest and the
respondent has sought cancellation of such registrations before the
jurisdictional Registrar of Trade Marks in pending proceedings. One of the
rights conferred by registration is the exclusive right to use the relevant
trademarks. In these facts and circumstances, the order issued in O.A.
No.744 of 2024 is ex facie unjustified and notwithstanding its ad-interim
nature, interference is warranted. Any apprehension on the part of the
respondent that the appellant would apply the MF brands/trademarks to
similar goods in India would be effectively addressed by directing the
parties to maintain status quo. In these circumstances, notwithstanding the
issuance of the First and Second Termination Notices and the expiry of the
six month period specified in the former, we are inclined to direct the
parties to maintain status quo until disposal of these applications.
15. For reasons aforesaid, the impugned orders are modified by
directing the parties to maintain status quo until the original applications
are heard and disposed of by the learned single Judge. For the avoidance of
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doubt, we hasten to add that the observations made herein are tentative
and solely intended for the purpose of disposing of these appeals. Hence,
we have not delved much into the various rival submissions. All rights and
contentions are kept open.
16. OSA (CAD) Nos.138 & 139 of 2024 are disposed of on the above
terms. There shall be no order as to costs. Consequently, the interim
petitions are also closed.
(K.R.SHRIRAM, C.J.) (SENTHILKUMAR RAMAMOORTHY,J.)
18.11.2024
Index : Yes/No
NC : Yes/No
kal
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O.S.A. (CAD) Nos.138 & 139 of 2024
THE HON'BLE CHIEF JUSTICE
AND
SENTHILKUMAR RAMAMOORTHY,J.
kal
Pre-delivery Judgment made in
O.S.A. (CAD) Nos.138 & 139 of 2024
18.11.2024
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