Madras High Court
Tractors And Farm Equipment Limited vs Massey Ferguson Corp on 5 February, 2025
Author: Abdul Quddhose
Bench: Abdul Quddhose
2025:MHC:319
O.A.Nos.744 of 2024 etc.
IN THE HIGH COURT OF JUDICATURE AT MADRAS
Reserved on : 27.01.2025
Pronounced on : 05.02.2025
CORAM:
THE HON'BLE MR. JUSTICE ABDUL QUDDHOSE
O.A.Nos.744 and 745 of 2024
in
C.S.(Comm.Div.)No.190 of 2024
Tractors and Farm Equipment Limited,
Chennai. .. Applicant/plaintiff
vs.
Massey Ferguson Corp,
USA.
Rep. By its Authorised Signatory .. Respondent/defendant
For Applicant : Mr.C.Aryama Sundaram, Senior Advocate,
Mr.A.L.Somayaji, Senior Advocate
Mr.P.S.Raman, Senior Advocate
Mr.Krishna Srinivasan, Senior Advocate
for M/s.Ramasubramaniam Associates
For Respondent : Mr.R.Sankarnarayanan, Senior Advocate
Mr.R.Parthasarathy, Senior Advocate
Mr.Rishab Gupta, Advocate
Assisted by Mr.Mithun V.Thanks,
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O.A.Nos.744 of 2024 etc.
Ms.Shreya Gupta,
Mr.Bikram Chaudhuri
Mr.Mukul Baveja
Ms.Prachi Gupta
Mr.Abhijeet Sadikale
Ms.Akhila Jayaraj
Mr.Suhrith Parthasarathy
Mr.Allwin Godwin
Mr.Pratik Singvi
Mr.Keyur Jaju
Mr.Barathwaj, T
COMMON ORDER
This Court is rehearing the interlocutory applications in these suits
pursuant to the directions issued by the Division Bench of this Court
through its common judgment dated 18.11.2024 passed in O.S.A.(CAD)
Nos.138 and 139 of 2024. By the aforesaid judgment, the Division
Bench, while remanding the matter to the learned Single Judge, set aside
the order dated 17.10.2024 passed in O.A.No.745 of 2024 in
C.O.S.(Comm.Div.)No.190 of 2024 and directed the parties to the
dispute to maintain status-quo until the interlocutory applications are
reheard by the learned Single Judge afresh and finally disposed of.
2. The dispute revolves upon the usage of the trademark ''Massey
Ferguson” (MF) by Tractors and Farm Equipment Limited (TAFE). To
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avoid repetition of facts, this Court is not repeating the same, since the
Division Bench in its common judgment dated 18.11.2024 referred to
supra has succinctly narrated the facts, which lead to the filing of the
suits and injunction applications by both the parties to the dispute. This
Court is only deciding the interlocutory applications and for the purpose
of adjudicating the same, it would suffice to consider the respective
contentions of both the parties to the dispute and thereafter adjudicate
applying the trinity tests of (a) prima-facie case (b) balance of
convenience; and (c) irreparable hardship.
3. Massey Ferguson Corp is hereinafter referred to as 'MFC';
Tractors and Farm Equipment Limited is hereinafter referred to as
'TAFE'; the Joint Venture Agreement dated 31.10.1960 entered into
between Massey Ferguson Limited (MFL) and Amalgamations (Private)
Limited is hereinafter referred to as 'the 1960 JV Agreement'; the
Trademark Users Agreement dated 17.03.1978 executed between MFC
and TAFE is hereinafter referred to as 'the 1978 TM Agreement'; and the
Trademark Registered User Agreement dated 18.03.1994 entered into
between Massey Ferguson Corp (Delaware) Inc. (MFC Delaware) and
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TAFE is hereinafter referred to as 'the 1994 TM Agreement'.
4. In O.A.No.744 of 2024, TAFE prayed for an interim injunction
to restrain MFC from holding out or representing that it is the owner,
proprietor, rights holder of the MF brands/trademarks, including by
amending MFC's website or that of AGCO, the parent company of MFC,
pending disposal of the suit.
5. In O.A.No.745 of 2024, TAFE prayed for an interim injunction
to restrain MFC from interfering with the TAFE's use of the MF
brands/trademarks, pending disposal of the suit.
6. TAFE is represented by Mr.C.Aryama Sundaram,
Mr.A.L.Somayaji, Mr.P.S.Raman and Mr.Krishna Srinivasan, learned
Senior Counsels. MFC is represented by Mr.R.Parthasarathy and
Mr.R.Sankaranarayanan, learned Senior Counsels, and Mr.Rishab Gupta,
learned counsel, and they are assisted by Mr.Mithun V.Thanks,
Ms.Shreya Gupta, Mr.Bikram Chaudhuri, Mr.Mukul Baveja,
Ms.Prachi Gupta, Mr.Abhijeet Sadikale, Ms.Akhila Jayaraj,
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Mr.Suhrith Parthasarathy, Mr.Allwin Godwin, Mr.Pratik Singvi,
Mr.Keyur Jaju and Mr.T.Barathwaj, learned counsels.
7. Submissions of Mr.C.Aryama Sundaram, learned Senior
Counsel, for TAFE:-
a) Pursuant to the 1960 JV Agreement, TAFE was incorporated
and after the incorporation, TAFE has manufactured tractors and other
allied equipments for more than 60 years. About 95% of the products
manufactured by TAFE carry MF brands/trademarks.
b) Although the 1960 JV agreement, the 1978 TM Agreement and
the 1994 TM Agreement referred to a limited number of products, TAFE
has manufactured and marketed about 500 products bearing the MF
brands/trademarks.
c) 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 only.
Therefore, even if such agreements were to be terminated, TAFE cannot
be prevented from using the MF brands/trademarks in view of the 1960
JV Agreement continuing to subsist and the use of these
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brands/trademarks on numerous products with the knowledge and
consent of MFC.
d) Although the 1978 TM Agreement and the 1994 TM Agreement
make a reference to supervision by MFC regarding the quality of
products sold and marketed by TAFE using MF brands, TAFE was
allowed to function without any supervision from 1960 onwards. In fact,
TAFE applied for and obtained multiple patent and design registrations
in respect of their tractors and allied products with the full knowledge
and consent of MFC. Consequently, the licensing was naked and the
licensor has abandoned its rights over the MF brands/trademarks.
e) Prior to the incorporation of TAFE, MFC had attempted to set
up business in India through its subsidiary Massey Ferguson (India) Ltd.
(MFL), which acted as MFC's distributor in India. However, this
business failed miserably and thereby all assets of MFL were transferred
to TAFE entity. As per Clause 4 of the JV Agreement, TAFE is the sole
entity dealing with tractors and equipment under MF brands in India.
f) MFC is an entity incorporated under the laws of USA. MFC
holds certain trademark registration in India for the 'Massey Ferguson'
and other related MF brands, against which, TAFE has filed cancellation
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actions.
g) MFC by not exercising any quality control over the products
sold under the MF brands by TAFE in India over the last six decades has
abandoned all its rights in the MF brands in India.
h) MF brands are associated by the public with the quality of
goods and services offered solely by TAFE, in respect of which, MFC
has had no role to play over a period of 60+ years. MFC does not even
have the ability to manufacture goods and offer services of the same
quality as those provided by TAFE, since MFC does not have access to
the relevant know-how, all of which has been developed and held by
TAFE.
i) TAFE's business conducted under the MF brands in India
engages/caters to;
i) over 5600 direct employees;
ii) over 1,00,000 people in rural areas through dealership and
network accounts;
iii) TAFE's suppliers, which comprise of 346 MSMEs as tier-1
suppliers and 13315 MSMEs as tier-2 suppliers, provide employment to
over 1600000; and
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iv) above all, over 10,00,000 farmers are currently owning TAFE's
MF products and being serviced directly by TAFE.
j) The critical and crucial facts which constitute the background to
the present suit is to be traced to the refusal of TAFE to sign on the
dotted lines on the standstill agreement that was proposed by the
Chairman/CEO of AGCO, the parent company of MFC, on 15.04.2024,
to extend the arrangement of standstill agreements entered into by the
parties earlier by 5 years. A standstill agreement was entered into
between TAFE and AGCO in 2014 for 5 years in spirit of partnership
and this was extended in 2019 for 5 years, which was lapsed on
30.04.2024, and it has provided that TAFE shall not increase its holdings
in AGCO beyond its current levels (which now stands at 16.3%). TAFE
having become the single largest shareholder of AGCO was perceived as
a threat for the Chairman/CEO position and power. In the discussion in
March/April, 2024, AGCO's Chairman/CEO not only wanted further
extension of the standstill agreement for 5 more years but wanted to
compel TAFE to participate in share buyback plans of AGCO to bring
down TAFE's holdings in AGCO. However, TAFE has signed only one
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year extension of the Standstill Agreement on 24.04.2024 and refused to
participate in AGCO's buyback on the legitimate expectation that the
commercial partnership between the parties will continue as earlier.
However, AGCO, after deceptively getting TAFE to sign the one year
standstill agreement, immediately two days thereafter, on 26.04.2024,
issued notices purportedly terminating various commercial agreements
and trademark agreements entered into between the parties in a clear
illegal and unlawful attempt to coerce TAFE.
k) Having made out a prima-facie case and having established
balance of convenience and irreparable hardship, interim injunction
sought for by TAFE in these applications has to be granted by this Court,
otherwise, irreparable loss and hardship will be caused to TAFE and
other entities, who are associated with TAFE, and public interest will
also be affected as there are several licensees and farmers who have
purchased tractors and other farm equipments from TAFE under the MF
brands, for which, no one else except TAFE will be in a position to
service those tractors.
l) The question whether the trademarks pertaining to MF brands
were obtained by MFC or not, cannot be adjudicated in interlocutory
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applications and it is a matter for trial.
m) Admittedly, MFC does not manufacture tractors or other allied
equipments in India. Since the suits and interlocutory applications are
limited to the use of MF brands/trademarks in India, there is no
immediate threat for MFC and therefore, no prejudice will be caused to
MFC if the parties to the dispute are directed to go for trial.
n) If on the other hand TAFE is prevented from using the MF
brands/trademarks in addition to their products, irreversible injury would
be caused to them, which cannot be compensated in terms of money.
8.Submissions of Mr.A.L.Somayaji, learned Senior Counsel, for
TAFE:-
A bare perusal of the plaint in the present suit and the termination
suit makes it clear that the termination suit was filed by TAFE to enforce
its contractual obligation, whereas the present suit has been filed for
declaration of a legal right, and therefore, the cause of action in both the
suits are not identical. There must be identical cause of action in both the
suits to attract the bar of Order 2 Rule 2 CPC. Further, the question
whether the cause of action in the present suit and the termination suit is
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identical or not, is a triable issue and therefore, the same cannot be
decided without letting in evidence.
9.Submissions of Mr.P.S.Raman, learned Senior Counsel, for
TAFE:-
The case on hand is a fit case for dispensation with the
requirement of Section 12-A of the CC Act, since the suit clearly
contemplates grant of interim injunction. Initially, the suit was filed
before the Commercial Court at Egmore in COS (SR) No.464 of 2024 on
08.07.2024, along with a formal application seeking dispensation of
requirement of Section 12-A of the CC Act. However, vide order dated
16.08.2024, the plaint was returned by the Egmore Commercial Court.
Aggrieved by the same, TAFE filed an appeal before the Division Bench
of this Court, whereby, vide its order dated 27.08.2024, the Division
Bench dismissed the said appeal and upheld the order passed by the
Egmore Commercial Court. Within 2 days thereafter, TAFE re-presented
the plaint before this Court along with a separate application seeking
dispensation with the requirement of Section 12-A of the CC Act.
However, the Registry of this Court directed TAFE to remove the said
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application and after compliance, the suit was numbered on 01.10.2024.
Therefore, the said series of events make it clear that TAFE has sought
for urgent interim reliefs. By citing a recent judgment of the Hon'ble
Supreme Court in the case of Yamini Manohar Vs. T.K.D. Keerthi
[2024 (5) SCC 815], learned Senior Counsel submits that there is no
mandatory requirement to file a formal application seeking dispensation
with Section 12-A of the CC Act.
10.Submissions of Mr.Krishna Srinivasan, learned Senior Counsel,
for TAFE:-
In relation to termination of contract by AGCO International for
supply by TAFE to AGCO International for Turkey, the parties were
referred to mediation and it is still going on. He would further submit
that to protect the interest of TAFE, status quo in the present case ought
to be maintained pending final adjudication of the suit and in fact, MFC
itself has admitted in their counter affidavit stating that status quo should
be maintained.
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11. Brief submissions of Mr.R.Sankaranarayanan and
Mr.R.Parthasarathy, learned Senior Counsels for MFC, are as follows:-
a) The 1960 JV Agreement, the 1978 TM Agreement and the 1994
TM Agreement recognized MFC or its predecessors-in-interest as the
registered proprietors of the MF brands/trademarks. In each of the above
agreements, TAFE is permitted to use the trademarks either as a
permitted user or a registered user.
b) The 1994 TM agreement provides for no fault termination by
issuing a six months' notice. Such a termination notice was issued on
26.04.2024 by MFC and the six month period expired on 25.10.2024.
c) TAFE is estopped from taking a plea of abandonment of
trademark by MFC. MFC, having exercised supervisory control over
TAFE's usage of MF trademarks, the question of abandonment of the
trademark by MFC does not arise. A false and frivolous plea has been
taken by TAFE that MFC has abandoned its MF trademarks insofar as
India is concerned.
d) Clause 11 of the 1994 TM Agreement imposes an obligation on
TAFE not to do anything which impairs the rights of the proprietor in the
trademarks forming the subject of these appeals. In flagrant breach of
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the stipulation, TAFE has filed cancellation applications before the
Registrar of Trademarks in Mumbai, New Delhi and Kolkata, and also
filed applications for registration of deceptively similar trademarks
before the Registrar of Trademarks, Chennai. Therefore, MFC was
constrained to issue the Second Termination Notice to terminate the 1994
TM Agreement with immediate effect.
e) MFC has also filed a civil suit in C.S.(Comm.Div.) No.193 of
2024 before this Court seeking inter alia an order of permanent
injunction against TAFE to restrain the use of the trademarks specified in
Schedule I to the 1994 TM Agreement.
f) The 1978 TM Agreement as well as the 1994 TM Agreement
enable MFC to terminate the licence granted to TAFE, and MFC having
terminated the license in terms thereof, has established that they are the
sole proprietor of the trademarks mentioned in those TM Agreements,
and no one else can use MF trademarks without their permission.
g) TAFE are the owners of other trademarks, which are also used
by them, and therefore, the termination of the trademark user agreement
will not have any impact on TAFE, whereas, if TAFE is allowed to use
MF trademarks, the reputation of MFC in the Indian Market will be
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grately jeopardized on account of irregularities committed by TAFE and
MFC will be put to irreparable hardship, if status-quo is allowed to
continue. The balance of convenience is also in their favour for vacating
the status-quo order.
h) Plea of abandonment of MF trademarks is barred under the
doctrine of election. TAFE has accepted its position as a licensee
continuously eversince the trademark license was granted by MFC in
their favour in the year 1960 and TAFE has chosen to file a license suit
to protect licensor-licensee relationship under the 1994 TM agreement by
challenging the termination of the 1994 TM Agreement. In the license
suit, TAFE has demonstrated its intention to continue to use MF
trademarks and therefore, TAFE cannot now change its stand by
claiming that MFC has abandoned their MF brands/trademarks in India.
i) The suit filed by TAFE has to be rejected for non-compliance
with Section 12A of the Commercial Courts Act, 2015 (in short “the CC
Act”). TAFE has demonstrated no urgency whatsoever for the
dispensation of 12A requirement. TAFE re-filed the present suit on
29.08.2024 after it was returned by the Egmore Commercial Court on
16.08.2024. However, it took no immediate steps to seek interim relief
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and on the other hand, it has moved the suit only on 01.10.2024, i.e., 33
days after presenting the suit and 46 days after the Egmore Court
returned the plaint. Further, these steps were in response to MFC's
Second Termination Notice on 27.09.2024 and the filing of suit by MFC
on 28.09.2024.
j) The suit filed by TAFE is barred under Order II Rule 2 CPC,
since the cause of action in the later suit (i.e., the present suit) is the same
as in the earlier suit (i.e., the license suit). In the license suit, TAFE has
pleaded that the cause of action arose on 26.04.2024 (i.e., First
Termination Notice). Similarly, in the present suit, TAFE has pleaded
that the cause of action arose on the same date, i.e., 26.04.2024 (First
Termination Notice). Hence, as per TAFE's own pleadings, the cause of
action for both the suits are one and the same. TAFE has failed to seek
leave of Egmore Commercial Court under Order II Rule 2 CPC for
institution of the second suit (present suit).
k) The plea of naked licensing cannot be a ground to seek a relief
of declaration to declare that TAFE is the owner of MF trademarks in
India. At best, it can be used only as a defence to resist a suit for
infringement by a registered proprietor and/or licensor. The standard of
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proof for the proponent of the naked licensing defence is very high and
they must meet a stringent standard of proof. Since most of the
agreements contain quality control clauses, the question of naked
licensing does not arise. MFC has produced documents to prove that
inspection and quality control measures were exercised by them over
TAFE.
l) In any event, the prayer sought for by TAFE is mutually
exclusive. TAFE having preferred proceedings for rectification of
registration and for independent registration of its name, cannot maintain
the present suit as it is hit by the doctrine of election.
m) The suit is barred by limitation. Article 58 of the Schedule to
the Limitation Act, 1963, provides for a limitation period of 3 years for
filing a suit for declaration, and this period runs from the date on which
the cause of action first arose. In the suit, TAFE claims that the cause of
action arose on 26.04.2024 with the termination of the 1994 Agreement.
However, TAFE has raised a defence stating that the cause of action is
materially different and for the present suit, the cause of action arose
when MF failed to exercise quality control. TAFE, in its plaint, has not
disclosed any date on which it has become the owner of the MF
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trademarks, but, it has stated that it has been making modified versions
of tractors from 1961, and no inspection or quality control was exercised
at any point of time. Since TAFE has never sought to claim ownership
for over 60 years and in fact, signed the 1994 agreement, which confirms
the ownership of MFC over MF marks, it would mean that the suit is also
hit by delay, laches and acquiescence.
n) The relief sought for by TAFE is barred by law, since there is
no provision in the Trade Marks Act, which deals with the concept of
bare-licensing/naked licensing on account of the alleged abandonment of
the registered trademark. Trade Marks Act provides only for the
cancellation of the registration of registered user under Section 50 of the
Trade Marks Act on account of non-compliance with the provisions of
quality control under the license agreement. Further, the only specific
provision in the Trade Marks Act that addresses abandonment is Section
47, which governs the removal of a trademark from the register due to
non-use for a continuous period of five years and no bonafide intention
to use the trademarks at the time of registering the marks. There is no
corresponding statutory mechanism under the Trade Marks Act granting
an applicant the right to claim ownership of another party's registered
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mark via an alleged 'naked licensing' scenario. In other words, the
scheme of the Act provides no basis for asserting that a registered
trademark is forfeited and ownership appropriated by another simply on
account of 'naked licensing'. The present suit is framed based on the law
prevailing in USA, and drawing its inspiration from judicial
pronouncements in India as well as UK. Even the UK statute does not
have a pari materia provision for naked licensing. The position in the
USA is that the effect of naked licensing is that the mark becomes
generic. It was codified as a form of 'involuntary abandonment', distinct
and separate from non-use, which has been the only statutorily
recognised form of abandonment in India and UK. Therefore, once a
mark becomes generic or becomes incapable of acting as a trademark, the
applicant cannot claim any legal right or character into and upon such a
generic mark. This is why the argument of naked licensing is only used
as a shield in defence and not a sword to seek any affirmative right. The
only way to read naked licensing into the Trade Marks Act is by reading
it into Section 9(3)(a) as an absolute ground for refusal, and thereafter,
bringing it within the ambit of Section 57 as a ground for rectification. If
that is so, the mark becomes one that is not capable of registration and
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the applicant can seek no right into and upon the mark.
o) No prima-facie case, much less a strong prima-facie case, has
been made out by TAFE. TAFE has not made out any such case on
documents filed by it and in any event, the statutory law on the subject,
i.e., the Trade Marks Act, 1999, effectively bars it from doing so.
Various provisions of the TM Act both singularly read and read in the
collective, are salient, and they are as follows:-
i) Section 31 of the TM Act stipulates that the original registration
of a trademark and of all subsequent assignments and transmissions of
the trademarks shall be prima-facie evidence of the validity thereof. In
the present case, it is undisputed that MFC is the registered proprietor of
the marks. Section 28 of the TM Act stipulates that the registered
proprietor of a trademark has the exclusive right to use the mark. On a
reading of Sections 31 and 28, it becomes clear that there can be no
assailment of the validity of MFC's ownership over the MF marks at this
interlocutory stage. Since prima-facie it is seen that MFC is the owner of
the MF brands/trademarks, MFC alone is entitled to the exclusive usage
of their trademarks. Therefore, any interim order granted by this Court in
favour of TAFE would effectively run counter to the Trade Marks Act
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and would tantamount to rewriting the statutory law.
ii) Section 48(2) of the TM Act states that “permitted use of a
trademark shall be deemed to be used by the proprietor thereof, and shall
be deemed not to be used by a person other than the proprietor.....” On a
reading of Section 48(2) with the definition contained in Section 2(r), it
is clear that any use of the MF trademarks by TAFE over the years is
essentially deemed to be a use of those marks by MFC. Thus, both
TAFE's plea of alleged abandonment of the MF trademarks by MFC and
its claim of ownership over the MF trademarks, are unsustainable on
account of Section 48(2) read with Section 28 of the TM Act.
p) TAFE is now seeking an order of interim injunction, which will
effectively thwart the mandate of the Trade Marks Act. TAFE has been a
mere licensee of the MF trademarks under the license agreements, which
stand terminated as on date. Grant of interim injunction in favour of
TAFE will effectively give sanctity to the unauthorised use of MF
trademarks, which otherwise constitutes infringement, and is liable to be
injuncted under the scheme of the Trade Marks Act. The principle of
one mark, one source and one proprietor is universally accepted in
trademark law, and therefore, if interim injunction is granted, then this
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would be against this principle.
q) Balance of convenience is in favour of MFC and no irreparable
injury will accrue to TAFE. MFC is not making any claim over the
patents obtained by TAFE. TAFE remains free to manufacture and
market tractors under its alternative brands, such as, TAFE, Eicher and
IMT. Indeed, it has already bolstered its presence in the international
market by venturing into multiple jurisdictions, such as, Mexico and
Europe, with its TAFE branded tractors. Therefore, it will suffer no
serious prejudice through a denial of interim relief.
12. Submissions of Mr.Rishab Gupta, learned counsel, for MFC:-
The dispute with respect to MFC's exercise of quality control and
MFC's license to TAFE to use the MF trademarks on the concerned
products is a contractual issue that is governed by the terms of the
individual agreements, namely, 1961 Technical Assistance Agreement,
1994 Trade Mark Registered Users Agreement, 2010 Intellectual
Property License and Technical Assistance Agreement and 2012 Farm
Machinery/Distributor Agreement. Even under the Trade Marks Act,
1999, the question of whether a licensor has prescribed, and complied
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with, quality control measures, is determined on the basis of the license
agreement executed by it. Therefore, these disputes are to be resolved
under the dispute resolution forum provided under those individual
agreements in accordance with the terms of those individual agreements.
In this regard, it is pertinent to note that FMDA arbitration is already
underway in London under the ICC Rules between TAFE and MFC.
Under the FMDA arbitration, the proceedings of the arbitration will
reveal that TAFE and MFC have agreed to go for mediation to resolve
quality control disputes between them. Courts have held that there is no
necessity to file a separate application under Section 45 of the
Arbitration and Conciliation Act, 1996, in case of international
commercial arbitration, to refer the dispute to arbitration.
DISCUSSION:
13. These applications are being re-heard by this Court pursuant to
the directions issued by the Division Bench of this Court through its
common judgment dated 18.11.2024 passed in O.S.A.(CAD) Nos.138
and 139 of 2024 and C.M.P.Nos.24707 and 24708 of 2024. Eventhough
the Division Bench in the aforesaid judgment has made it clear that the
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observations made in its common judgment are solely intended for the
purpose of disposing of the appeals, the Division Bench has however
recorded the undisputed fact in paragraph 13 of its judgment dated
18.11.2024 that from a business perspective, MFC, as on date, has not
entered the Indian Market directly or indirectly (through a licensing
agreement or the like), and TAFE continues to manufacture and sell
tractors and other farm equipments by applying the MF
brands/trademarks. The Division Bench has also observed that the
situation on ground has not changed since 26.04.2024, being the date of
first termination notice issued by MFC to TAFE. The Division Bench
has also observed that mediation proceedings are also ongoing and the
possibility of an amicable and wholesale resolution of the dispute cannot
be ruled out. The Division Bench, after recording the aforesaid
undisputed facts, came to the conclusion that the interest of justice
warrants the preservation of the status quo outlined above so as to ensure
that irreversible changes do not occur. The aforesaid fact as recorded by
the Division Bench has not been disputed by MFC before this Court as
well.
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14. Apart from the above, the following facts are also undisputed:-
a) The Joint Venture Agreement dated 31.10.1960 entered into
between Amalgamations Private Limited and Massey Ferguson Limited
with the intention to manufacture, assemble, distribute, sell and service
tractors and other farm equipments under 'MASSEY FERGUSON'
trademarks has not been terminated by MFC till date.
b) At the time of TAFE's incorporation in the year 1960,
Amalgamations group through its subsidiary Simpson & Co. held 49%
shares of TAFE and remaining 51% shares were held by MFL. As on
date, MFC's group company, AGCO Holding BV Netherlands, holds
20.7% shares in TAFE and remaining 79.3% shares are held by Simpson
& Co. and other related persons/entity. Similarly, TAFE currently owns
16.3% shares in AGCO Corporation, parent company of MFC.
c) Clause 6 of the Joint Venture Agreement dated 31.10.1960
entered between Amalgamations Private Limited and Massey Ferguson
Limited makes it clear that TAFE was to be the sole entity dealing with
tractors and farm equipments under the MF brands in India. Till the
termination notice dated 26.04.2024 issued by MFC, TAFE was
exclusively using the MF brands in India, i.e., for a period of more than
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60 years. Subsequent to the issuance of the termination notice by MFC,
TAFE has filed cancellation actions against some of MFC's trademark
registrations in respect of the MF brands.
d) MFC as on date does not have the facility to manufacture goods
and offer services in relation to tractors and farm equipments in India.
MFC has also not sold by itself in India any product under the MF brands
for the past 60 years.
e) TAFE has in its rolls thousands of employees. They have also
entered into several dealership contracts with dealers for the sale of their
equipments under the trademark “MASSEY FERGUSON”.
f) The tractors sold by TAFE under the trademark “MASSEY
FERGUSON” are very much in use in India in the agricultural sector.
Several farmers are being benefited by it.
g) TAFE was incorporated in the year 1960 and after its
incorporation until 1978, they were using the MF brands openly,
continuously and extensively in relation to the products manufactured by
it without any trademark license agreement in place with MFC.
h) Only through the 1978 TM Agreement entered between TAFE
and MFC, the terms and conditions for the usage of the trademark license
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were set out in writing.
i) Under the 1978 TM Agreement, there is a reference only to
tractor models, MF 1035 and MF 245, and TAFE could use the licensed
marks only if it was registered as a registered user. However, TAFE has
been using the MF brands in relation to various other models sold in the
Indian market.
j) The 1978 TM Agreement was terminated by the Indian
government with effect from 29.08.1986. From 29.08.1986 upto
18.03.1994, i.e., for a period of 8 years, TAFE used the MF brands
without a trademark license agreement, similar to the period from 1960
to 1978.
k) Clause 2 of the 1994 TM Agreement discloses the obligation of
the parties to register TAFE as the sole registered user of the MF brands
in India and this agreement also did not impose any obligation of
payment of royalty / remuneration by TAFE. The said 1994 TM
agreement also did not fix the term of the usage of the trademark license
by TAFE.
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15. Apart from the aforesaid undisputed facts, TAFE also claims
the following:-
a) They have obtained 55 patent registrations and 31 design
registrations for various technologies and designs developed by TAFE
in-house with respect to the tractors and equipments sold under the MF
brands.
b) TAFE has spent extensively on advertising the MF brands and
has launched various novel campaigns incurring huge advertisement
costs. TAFE claims that from the financial year 2007-2008 to 2023-
2024, they have spent over Rs.1113 crores towards product development
and over Rs.8351 crores towards market development.
c) They have been using the MF brands along with its corporate
mark 'TAFE' over the past six decades.
d) TAFE has won several awards marketed under the MF brands.
They have also claimed that they have received testimonials from various
parties, which includes its dealers and customers.
e) TAFE has also claimed that MFC has not exercised actual
quality control over TAFE's use of the MF brands. They have also
claimed that MFC's global website and website of AGCO do not mention
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India as one of the geographical locations where MFC or AGCO directly
or through licensing offer tractors and equipments under the MF brands.
f) By not exercising any quality control measures, MFC has
abandoned its right in the MF brands in India and has distanced itself
from the conduct of the Indian 'Massey Ferguson' business leaving the
same to the total discretion of TAFE.
g) TAFE has single handedly established the entire 'Massey
Ferguson' business in India and has operated the same for over six
decades without any support or input from MFC. By not exercising any
form of quality control over the use of the MF brands by TAFE in India,
MFC has completely abandoned its rights in the MF brands and the same
are now exclusively associated by the Indian public only with TAFE.
h) Any disruption in TAFE's business conducted under the MF
brands will have irreversible financial impact on TAFE, its distributors,
vendors and clients. The harm due to stocks/materials being held at
TAFE and dealers alone will be in excess of Rs.2000 crores, besides
impact on financiers/financial institutions.
i) 99.55% of tractors and farm equipments are being manufactured
and sold by TAFE in India using only the MF brands and only the
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remaining percentage is being used through the other brand names of
TAFE.
j) TAFE has through its Research and Development (R&D)
activities launched over 30+ tractor models and 500+ tractor model
variants over MF brands. TAFE has developed dealership network
across the country and covers 95% of the Indian tractor market.
16. The suit in C.S(Comm.Div.)No.190 of 2024 has been filed by
TAFE against MFC on the ground that MFC has abandoned its
trademark 'MASSEY FERGUSON' in India, as they have not exercised
quality control measures over TAFE, who has been using the MF brands
continuously without any interruption from 1960 onwards. TAFE has
therefore taken the plea of naked licensing. When a trademark licensor
fails to supervise its licensee and allows the licensee to depart from the
licensor's quality standards, it may be deemed 'naked licensing', that
results in abandonment of the trademark.
17. The basic function of a trademark is not only to distinguish
between the goods or services of one proprietor from those of others but
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also to ensure a certain level of quality on all goods bearing the same
trademark. This is known as the quality function of a trademark. It is
pertinent to note that the quality function does not require the quality of
the goods to be of supreme quality, rather, it implies that the quality of
goods bearing the same trademark consists of the same level of quality.
Thus, in a license, it is the obligation of the proprietor that the goods
manufactured by the licensee are consistent with the goods manufactured
by the proprietor, so as to ensure there is no market confusion as to the
source of goods. This requires the proprietor to exercise quality control
measures while granting licenses to use the trademark, as a deviance in
the quality would cause confusion.
18. A naked license is a situation where a license is granted by the
proprietor, but, the proprietor has no quality control measures over the
licensee. Such licenses are barred by law and the implications of
granting a naked license in favour of any licensee can extend upto the
revocation or cancellation of the monopolistic rights granted to the
proprietor.
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19. The concept of naked licensing under the trademark law finds
its roots in the US. The rationale behind the abandonment of rights by
granting naked licenses under the US law is that naked licenses are
inherently deceptive, as an uncontrolled trademark license may allow the
licensee to change the quality of the products, resulting in the failure of
the quality function of the trademark. Thus, a naked license is
considered abandonment as the licensor fails to fulfil his duty to protect
his mark's reputation.
20. The Trade Marks Act, 1999, does not provide any explicit
provision prohibiting the concept of naked licenses nor does India have a
strong mechanism to ensure quality control between the goods of the
proprietor and the licensee. However, Sections 49 and 50 of the Trade
Marks Act provide for certain conditions wherein the proprietor is under
obligation to keep a quality check on the licensee. For instance, Section
49(1)(b)(i) of the Trade Marks Act provides that whenever any person
has to be registered as a registered user of a mark (not being the original
proprietor), the registered proprietor has to provide an affidavit along
with the application explicitly stating, among other things, the degree of
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control over such permitted use. Further, Section 50(1)(d) of the Trade
Marks Act provides that the registration of a registered user may be
cancelled by the Registrar on an application filed by any person on the
ground that any stipulation in the agreement regarding the quality check
is either not enforced or not been complied with. However, these
provisions will be applicable only when the licensee is registered as a
registered user under Section 49 of the Trade Marks Act, which is not
mandatory in India. Further, these provisions only provide that the
registration as a registered user shall be cancelled by the Registrar of
Trade Marks, and not the registration of the mark itself, unlike the
situation in the USA, where the mark is deemed abandoned.
21. Under the Trade Marks Act, a permitted use may or may not be
registered. This raises an important question – why does the Indian law
allow a dichotomy between a registered permitted user and an
unregistered permitted user? The answer to this question can be found
under Sections 52 and 53. Section 52 provides that a registered user may
take action for infringement of the trademark in his own name as if he
was the registered proprietor of the mark. Further, Section 53 provides
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that an unregistered permitted user cannot take action for infringement.
22. MFC denies that the trademark license granted to TAFE
amounts to naked licensing, as, according to them, the trademark license
agreements contain the right of MFC to monitor quality control of the
goods manufactured and sold by TAFE by using the MF brands. To
establish whether MFC has exercised quality control measures in respect
of the goods manufactured and sold by TAFE by using the MF brands,
MFC has placed before this Court the following instances:-
a) Letter dated 11.05.1999 from AGCO
Limited to TAFE concerning the violation of the
terms regarding the export of Massey Ferguson-
branded tractors.
b) Email dated 05.12.2011 sent by the
AGCO Group to TAFE regarding the approval of
an oil seal update specifically for the 'MF240',
'MF245', and 'MF2605' models manufactured in
India by TAFE.
c) Minutes of the meeting dated 19.11.2013
and 21.11.2013 between the AGCO Group and
TAFE where AGCO Group inspected the workings
of the tractors at premises in Kanchipuram and
Maduranthakam.
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d) Email trails from 21.02.2013 to
12.03.2013 sent to the AGCO Group by Al-
Ghodwa Group reporting repeated issues with the
MF290 tractor model due to certain failures in a
component which were procured from TAFE and
were of Indian origin.
e) Email dated 14.08.204 from TAFE to the
AGCO Group regarding a brake rod failure issue
observed in its manufacturing plant, attributing the
problem to increased material hardness, which led
to brittleness during welding.
f) Minutes of the joint meeting dated
18.11.2015 and 19.11.2015 between
representatives of AGCO Group and TAFE in
Chennai/Madurai, India, to discuss key areas for
improving product quality.
g) Emails between 05.09.2016 and
16.09.2016 between the AGCO Group and TAFE
regarding a scheduled visit by AGCO Group to
inspect TAFE'S manufacturing sites at TAFE from
7.11.2016 to 11.11.2016.
h) Emails dated 21.12.2016 and 22.12.2016
wherein AGCO representatives engaged in detailed
correspondence with TAFE regarding the technical
specifications and validation data required to
introduce new, higher-powered Massey Ferguson
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tractor models, MF290T and MF295T.
i) AGCO Group and TAFE'S Steering
Committee met in Chennai dated 01.03.2018. The
topics of discussion, inter alia, included the
potential for higher horsepower tractors in the
Indian domestic market. AGCO'S product
management team was presented with market
expectations and demand projections, focusing on
both immediate and mid-term needs.
j) Email dated 18.06.2019 written by the
AGCO Group to TAFE regarding air filter issues in
the MF 290 and MF 275 models of tractors
manufactured by TAFE.
k) Email dated 08.06.2020 by AGCO
providing access to TAFE to the Massey Ferguson
Brand Manual in response to a request from
TAFE's Head of Corporate Communications.
l) Email exchanges from 13.12.2016 to
09.07.2020 between the AGCO Group and TAFE,
wherein TAFE requested AGCO Group to share
the standard RAL colour code and texture for
fender inner trims, head liner, mat (black / grey)
and dashboards since it was entering into the
tooling of the accessories of the MF 2635 tractors
with an alternate supplier.
m) AGCO Group's letter dated 11.03.2021 to
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TAFE highlighting concerns over its unsatisfactory
performance in three critical areas.
n) Email dated 15.06.2023 wherein AGCO
shared the updated MF logo design with TAFE for
incorporating it across designated tractor
components, including the hood, steering wheel
cap, and instrument console, to ensure a consistent
brand identity across all markets.
o) Minutes of the meeting dated 15.12.2023
between AGCO Group and TAFE wherein AGCO
group raised concerns regarding TAFE'S
"Operating Performance in the Key Domestic
Markets of India, Bhutan, and Nepal," highlighting
subpar performance impacting AGCO Group's
interests in these regions.
p) Letter dated 26.02.2024 by AGCO to the
Applicant recording the key points discussed
during the meeting held on 23.02.2024 in London
between the AGCO Group and TAFE.
23. MFC also claims that through the opposition petitions filed by
them before the trademark registry against third parties, who had applied
for trademark registration for deceptively similar trademarks, MFC had
exercised quality control measures. The details of the opposition
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petitions filed against third parties before the trademark registry have
also been given by MFC through the documents filed before this Court
and the reference number of the said opposition petitions is stated
below:-
PO – 4310001856; GN2189; GN2183;
GN2425; GN2405; GN2282; GN2288;
GN2424; and GN2382.
24. Whether or not a given level of quality control and inspection
is sufficient is determined on a case-by-case basis, however, in all
instances, it must be sufficient to meet the reasonable expectations of the
customers.
25. Trademark licenses are, as a general matter, permitted if the
trademark owner exercises sufficient control over the nature and quality
of the licensee’s products or services marketed and sold in connection
with the licensed mark. Quality control in this context is referring, of
course, to consistency of quality, not the level of quality. The purpose of
the quality control requirement is to protect the consumer. If the licensor
does not exercise sufficient quality control, the consumer may be lured
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into a mistaken belief as to the nature and quality of products bearing the
licensed mark. In the case on hand, TAFE and MFC were having a
special relationship from 1960 onwards. Through the 1960 JV
Agreement, MFC became 49% share holder in TAFE. They continue to
hold shares in TAFE even now. A special relationship was in existence
between TAFE and MFC from 1960 onwards and in fact, only on
account of the special relationship, even without the trademark license
agreements, TAFE was permitted to use MF brands in India from 1960 to
1978 and only in the year 1978, a formal trademark license agreement
was entered into between TAFE and MFC. Excepting for few instances
placed on record before this Court by MFC, where they claim that quality
control measures were taken over TAFE's products using the MF brands,
the said few instances at the interlocutory stage without oral evidence
cannot be tested whether those few instances will suffice for the purpose
of proving that MFC had exercised actual quality control measures over
TAFE's products using the MF brands. TAFE has been using the MF
brands from 1960 onwards continuously without any legal hurdles until
the termination of the trademark license by MFC through their
termination notices dated 26.04.2024 and 27.09.2024. By their long,
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continuous and uninterrupted usage, TAFE would have certainly
invested huge amount of money towards setting up their
factories/infrastructure and for marketing their business under the MF
brands, though the figures given by TAFE with regard to the
expenditures may not be correct. Admittedly, TAFE has a dealership
network with various dealers all over India for the sale of MF brands of
tractors / farm equipments.
26. It is also to be noted that all the agreements between TAFE and
MFC do not contain quality control clauses. MFC has also not
terminated the 1960 JV Agreement entered with TAFE for the reasons
best known to them and may be due to the special relationship they have
been having with TAFE. MFC has terminated only the 1994 TM
Agreement with TAFE, without assigning any reasons for the said
termination. If the termination of the license by MFC was on account of
the quality control issues, MFC could have very well disclosed the same
in the termination letters. A categorical plea has been taken by TAFE in
the suit that MFC did not exercise quality control measures in respect of
the goods manufactured and sold by TAFE by using the MF brands.
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TAFE also claims that by the long, continuous and uninterrupted usage
of MF brands by them, MF brands deemed to have been abandoned by
MFC in India, since they have not exercised the right of quality control
over TAFE's products using the MF brands. The JV Agreement with
TAFE entered into as early as in the year 1960 continues to remain valid
as the said agreement has not been terminated by MFC. This goes to
show that there is a special relationship existing between TAFE and
MFC even now. Therefore, it is surprising to note as to why no reasons
have been given in the termination notices issued by MFC for
terminating the 1994 TM Agreement.
27. Generally, the quality control measures involve the following:-
a) Whether the licensee was required to provide
product samples to the licensor prior to selling the
products and whether the licensee did in fact adhere to
this approval process.
b) Whether the quality control measures are
effective in generating consistent quality.
c) Whether the licensor enforces the quality
control measures.
d) The frequency of inspections by the licensor.
e) The thoroughness of the inspections.
f) Whether the parties have agreed upon when,
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how often, and under what circumstances inspections
will take place.
g) Evidence of an actual decrease in quality
relative to the trademark owner’s products/services.
h) Whether the licensor has the right to terminate
the license in the event of derogation from the quality
control standards.
i) Whether the licensor’s quality control measures
are mandatory.
j) The degree to which the public expects local
variation in the products or services.
k) How potentially dangerous the products or
services are to the public.
l) Whether there are restrictions on the degree to
which the licensee may modify the products in
connection with which the mark is used.
m) The percentage of the licensee’s relevant
inventory that is supplied by the licensor.
n) The licensor’s knowledge of the licensee’s
quality control procedures.
o) Whether a “special relationship exists” between
the parties; taking into account, among other factors,
how close a working relationship the licensor and
licensee have, whether the owners of the licensor and
licensee are related in a familial sense, and whether and
to what extent there is an overlap of ownership and/or
management between the licensor and licensee.
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28. A determination as to whether or not a trademark
owner/licensor maintains sufficient quality control over a licensee’s
products or services is a fact-intensive analysis, which cannot be decided
in these interlocutory applications, and it can be decided only after trial.
29. Admittedly, MFC does not own any factory in India and the
entire infrastructure establishment and the dealership network for the
manufacture and sale of tractors and other farm equipments in India, has
only been built by TAFE and they alone have the supervisory control
with regard to the day-to-day affairs.
30. TAFE also claims the following:-
a) They engage over 5600 direct employees.
b) They engage 1,00,000 people in rural areas through dealership
and network accounts.
c) Their suppliers, which comprises of 346 MSMEs as tier-1
suppliers and 13315 MSMEs as tier-2 suppliers, provide employment to
over 16,00,000; and above all, over 10,00,000 farmers are currently
owning TAFE's MF products and being serviced directly by TAFE.
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31. The trademark license agreements which have been terminated
by MFC through their termination notices, on a prima-facie
consideration, reveal that they pertain only to few models, though MFC
claims that their trademark license granted to TAFE is for all products
manufactured and sold by TAFE by using the MF brands. With the
available materials placed on record, this Court cannot decide at the
interlocutory stage without any oral evidence as to whether the trademark
license agreements entered into between the parties cover all products
manufactured and sold by TAFE under the MF brands as the license
agreements refer to few products only.
32. It is also to be noted that the 1978 TM Agreement was
terminated by the Indian Government on 29.08.1986 and from then till
18.03.1994, i.e., for a period of another 8 years, TAFE used MF brands
without a trademark license agreement, similar to the period from 1960
to 1978. Clause 2 of the 1994 TM Agreement captured the obligation of
the parties to register TAFE as the sole registered user of the MF brands
in India. That agreement also did not impose any obligation of payment
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of royalty / remuneration on TAFE and it was not for any fixed term.
TAFE also claims that they have used MF brands in relation to its 30+
models and 500+ model variants including models, such as, MF 5118,
MF 6026, MF 7235, MF 241 and MF 9000, and also for various other
implements, all designed and developed by TAFE through its R & D
team. TAFE also claims that they have obtained 55 patent registrations
and 31 design registrations for various technologies and designs
developed by TAFE in-house with respect to the tractors and farm
equipments sold under the MF brands. TAFE also claims that they have
spent extensively on advertising the MF brands and has launched various
novel campaigns including by engaging celebrity, bollywood actors, for
promoting their products under the MF brands. TAFE also claims that
they have won several awards for its tractors marketed under the MF
brands and they have also received raving testimonials from various
parties including dealers and customers, all of whom associate MF
brands with TAFE alone. Though the aforesaid contentions of TAFE
have been denied by MFC, this Court at this interlocutory stage cannot
ignore TAFE's contentions with regard to its credentials.
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33. An email dated 02.09.2016 sent by MFC has also been placed
on record by TAFE, which states that “there is no control or influence
related to this investment”, which, according to TAFE, is an admission
on the part of MFC that they do not have any quality control over the
business conducted by TAFE under the MF brands in India, though a
different interpretation is given by MFC's counsels during their course of
submissions in support of MFC. Though TAFE may not have directly
exercised ownership over MF brands, it cannot be construed that TAFE
cannot claim that MFC has abandoned the MF brands in India. There are
materials placed on record before this Court for and against TAFE's
contentions before this Court that MFC has abandoned their MF brands
in India.
34. The Trade Marks Act also provides for statutory defences
insofar as the trademark infringement claims are concerned, which
includes the defences of honest and concurrent user . Admittedly, TAFE
has filed rectification petitions before the trademark registry to cancel the
trademark registrations which were earlier granted to MFC for their MF
brands on the ground that MFC has abandoned their trademarks insofar
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as India is concerned. The said rectification petitions are pending on the
file of the trademark registry.
35. Acquiescence is also a statutory defence available to TAFE for
the usage of MF brands by them in India under the Trade Marks Act.
Though MFC claims that the question of acquiescence by them does not
arise by referring to certain letters dated 31.07.2012 and 06.08.2013,
those letters are old ones and as seen from them, it cannot be
conclusively established that there was no acquiescence on the part of
MFC for TAFE using the MF brands in India.
36. It is also to be noted that mediation of the dispute between
TAFE and MFC is under progress through a court appointed Mediator,
namely, by Hon'ble Mr.Justice V.Ramasubramanian, former Judge of the
Hon'ble Supreme Court of India. The Madurai Bench of this Court, vide
its order dated 08.08.2024 and 16.08.2024 passed in CRP(MD) Nos.1830
to 1833 of 2024, had directed the aforesaid Mediator to mediate all the
disputes, which includes the present one between the parties, and the
mediation is ongoing. Therefore, at this interlocutory stage, when
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mediation is in progress and that too, when voluminous evidence has
been filed by both the parties in support of their respective contentions,
which requires in-depth analysis, which can be done only after trial, this
Court is of the considered view that status quo as on date has to be
necessarily maintained by both the parties to the dispute till the disposal
of the suit, considering the irreversible loss that may be caused to TAFE
by their long, continuous and uninterrupted usage of MF brands for the
past more than 60 years in India. If the status quo is not maintained till
the disposal of the suit, it will lead to a chain reaction resulting in
multiplicity of legal proceedings involving third parties.
37. MFC has raised a ground that TAFE failed to comply with
Section 12-A of the CC Act by instituting pre-suit mediation. The said
contention has to be rejected by this Court for the following reasons:-
a) As per the decision of the Hon'ble Supreme Court in Yamini
Manohar's case (cited supra), there is no mandatory requirement to file
a formal application seeking dispensation of pre-suit mediation.
b) The plaint averments clearly contemplate the necessity for
TAFE to seek for urgent reliefs without instituting pre-suit mediation.
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The suit was filed originally before the Commercial Court at Egmore in
C.O.S.(SR) No.464 of 2024 on 08.07.2024. TAFE had also claimed
urgent interim relief and had also filed formal application seeking
dispensation of requirement of Section 12A of the CC Act. However, by
order dated 16.08.2024, the plaint was returned by the Egmore Court. As
against the same, on 21.08.2024, TAFE filed a Civil Miscellaneous
Appeal in C.M.A.No.2335 of 2024, whereby the Division Bench of this
Court, vide its order dated 27.08.2024, dismissed the appeal and upheld
the order passed by the Egmore Commercial Court.
c) On 29.08.2024, i.e., 2 days after the Division Bench order,
TAFE re-presented the plaint before this Court. Along with the plaint,
TAFE sought to file a separate application seeking dispensation with
requirement of Section 12A of the CC Act, as was filed before the
Commercial Court at Egmore. However, High Court Registry directed
TAFE for removal of dispensation application due to the practice
followed by this Court of not requiring such an application. Thereafter,
Registry examined the re-presented plaint and the suit documents and
raised procedural objections which were beyond the control of TAFE.
After rectification of the defects, the suit was numbered on 01.10.2024
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and thereafter, TAFE moved these interlocutory applications on
04.10.2024 itself. The said series of events make it clear that TAFE has
not only sought urgent interim reliefs in the suit but has also duly
prosecuted the suit diligently.
d) Interim injunction reliefs were granted in favour TAFE by this
Court on 17.10.2024. As against the said order, O.S.A (CAD) Nos.138
and 139 of 2024 were preferred and in the said appeals, objection under
Section 12A was specifically raised by MFC. The Division Bench of this
Court, vide its order dated 18.11.2024, while remanding the matter,
directed both the parties to maintain status-quo. The Division Bench did
not go into the question of the alleged non-compliance of Section 12A of
the CC Act, despite the fact the Division Bench had granted a status quo
order, which goes to show that the Division Bench was satisfied that the
plaint filed by TAFE contemplated urgent interim reliefs favouring
TAFE which are supported by materials/evidence. If not for the said
fact, the Division Bench would not have granted the status quo order.
e) TAFE also contends that grant of urgent injunctive reliefs in
favour of TAFE is essential not only to protect TAFE's legal rights but
also to protect public interest. According to TAFE, any interference by
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O.A.Nos.744 of 2024 etc.
MFC with TAFE's usage of MF brands, pending disposal of the suit,
would severely and irreparably harm TAFE as well as thousands of
employees, dealers, suppliers, customers and financiers, jeopardizing
their livelihood and causing severe financial loss.
f) This Court, after giving due consideration to the contentions of
TAFE for not having exercised pre-suit mediation, is of the considered
view that only due to the fact that there was an imminent threat of
disruption in TAFE's business in India on account of the termination
notices issued by MFC, TAFE was constrained to file the suit on an
urgent basis without going for pre-suit mediation. Having used the MF
brands for more than 60 years continuously without any legal hurdle
whatsoever, all of a sudden, MFC's termination of the trademark license
agreement issued in favour of TAFE will certainly jeopardize the
business interest of TAFE, which has been being built by them over a
long period of time from 1960 onwards. After giving due consideration
to the aforesaid factors, this Court is of the view that TAFE has not
violated Section 12A of the CC Act for not having gone for pre-suit
mediation.
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O.A.Nos.744 of 2024 etc.
38. The next defence raised by MFC in the injunction application
filed by TAFE is that the suit is hit by Order II Rule 2 CPC, since the
cause of action in the earlier suit (termination suit) filed by TAFE in
C.O.S.No.117 of 2024 is identical to the cause of action for filing the
present suit in C.S.(Comm.Div.) No.190 of 2024. Accoriding to MFC's
counsels, since no leave was sought for by TAFE as per Order II Rule 2
CPC in the earlier suit filed in C.O.S.No.117 of 2024, the present suit is
not maintainable as it is hit by Order II Rule 2 CPC. It is settled law that
for bar under Order II Rule 2 to apply, the cause of action under the two
suits should be 'identical' and not 'similar'. The Hon'ble Supreme Court
in the case of Kunjan Nair Sivaraman Nair Vs. Narayanan Nair [2004
(3) SCC 277] held that Order II Rule 2 sub-rule(3) requires that the cause
of action in the earlier suit must be the same on which the subsequent
suit is based. Therefore, it is clear that there must be identical cause of
action in both the suits to attract the bar of Order 2 Rule 2 CPC.
39. MFC's own case, as seen from their pleadings, is that the cause
of action under the termination suit (C.O.S.No.117 of 2024) and the
present suit are substantially similar. The same is reflected in paragraph
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O.A.Nos.744 of 2024 etc.
25 of the common counter affidavit filed by MFC. It is not MFC's case
that the cause of action under the two suits are identical and for the said
reason itself, the maintainability objection raised under Order II Rule 2
CPC by MFC is unsustainable at the interlocutory stage and if at all the
same can be proved only after trial.
40. TAFE in paragraph 11F of the amended plaint of the
termination suit (C.O.S.No.117 of 2024) has reserved its right to file a
declaratory suit to declare that the MF brands belong to TAFE. The
relevant portion of paragraph 11F of the amended plaint is extracted
hereunder:-
“11F. While the present suit is a suit against the
termination of the 1994 Agreement and for a
permanent injunction against the termination and
against all actions to interfere with the rights of the
plaintiff under the 1994 Agreement, the Plaintiff, by
way of abundant caution, reserves its right to institute
appropriate proceedings including but not limited to
filing of a declaratory suit that the brand rights of the
MF Brand has vested and belongs to the Plaintiff and
also seek the leave of the Court to merge the present
suit with the proposed declaratory suit when filed to
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O.A.Nos.744 of 2024 etc.
protect its right in and to the MF brands as matter of
law in India."
41. The Hon'ble Supreme Court in Uniworld Logistics Pvt. Ltd.
Vs. Indev Logistics Pvt. Ltd. [2024 SCC Online SC 1698] has also held
that the plaintiff having reserved its rights in the first suit, there was
neither any relinquishment at any stage, nor omission to claim relief.
Further, the question as to whether the cause of action in the present suit
and the termination suit (C.O.S.No.117 of 2024) is identical or not is a
triable issue and cannot be decided without any oral evidence.
Therefore, at this interlocutory stage, this Court cannot decide as to
whether the present suit is hit by Order II Rule 2 CPC or not. Further, on
a prima-facie consideration, as stated supra, this Court is of the view that
the previous suit in C.O.S.No.117 of 2024 and the present suit cannot be
held that both the suits arise out of the same cause of action, and are
identical.
42. The cause of action in C.O.S.No.117 of 2024 reads as follows:-
“The cause of action for the instant Suit has
arisen in Chennai within the territorial jurisdiction
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of this Hon'ble Court where the Plaintiff not only
has its place of business but also distributes and
sells its products under the MF brands, on various
dates when discussions have taken place between
the representatives of the Plaintiff Company and the
Defendants over 6 decades since the year 1960,
more particularly on 28.02.2003 when the
discussions took place between the representatives
of Plaintiff Company and Defendant No.2 at the
Plaintiff's corporate office in Chennai, on
03.08.2007 when the representative of the Plaintiff
Company signed the Letter Agreement delineating
measures to address potential ramifications arising
from changes in ownership between the parties, on
31.07.2012 when Defendant No.1 issued a letter to
the Plaintiff company regarding the branding of
"over the tractor combine" product line, on
06.08.2013 when Defendant No.2 issued a letter to
the Plaintiff Company regarding the MF trademark
usage on implements to the Plaintiff's Company's
Corporate office at Chennai and to which address
the Defendants have issued the Termination Notice
dated 26.04.2024, the consequences of which give
rise to a continuing cause of action.”
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O.A.Nos.744 of 2024 etc.
43. The cause of action in the present suit in C.S.(Comm.Div.)
No.190 of 2024 reads as follows:-
“47. As set out in detail above, the cause of
action for the present suit first arose when, on
8.07.2024, the Plaintiff was served with the
Defendant's Egmore 2 suit filed before the Egmore
Commercial Court (i.e., within the jurisdiction of this
Hon'ble Court), in which the Defendant challenged
the Plaintiff's ownership rights in the MF Trademarks
covered by the 1994 TM Agreement and other similar
to the MF Trademarks.
48. Further, the cause of action again arose
when, in August 2024, the Defendant as a part of its
online searches discovered that on 20.07.2024 the
Defendant has filed the Registration Applications
seeking registration of trade marks which are identical
and/or deceptively similar to the MF Trademarks in
the Trademark Registry at Chennai (which is the
Defendant's place of business and also has their
registered as well as business office) and Cancellation
Applications in relation to the MF Trademarks in the
Trademark Registries at Mumbai, Delhi and Kolkata.
49. The cause of action again arose on
24.09.2024, when the Plaintiff's trademark agents,
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O.A.Nos.744 of 2024 etc.
Remfry and Sagar were served with six Cancellation
Applications (Table 2 above, Sr Nos. 1, 2, 5, 7, 10,
11) by the Trademark Registry.”
44. The cause of action for filing the first suit by TAFE is in
respect of the cancellation of the specified trademark license agreements
by MFC. Those trademark license agreements on a prima-facie
consideration covers only certain products. However, subsequent to the
first termination notice, MFC has claimed that TAFE does not have the
right to use any of the MF brands, though the trademark license
agreements on a prima-facie consideration covers only certain products.
Only under those circumstances, TAFE was constrained to file the
present suit and there seems to be no necessity for them to seek to seek
leave under Order II Rule 2 CPC in the earlier suit filed by them. On a
prima-facie consideration, this Court is of the view that the cause of
action are different for both the suits.
45. Admittedly, as highlighted above, mediation before the
Hon'ble Mr.Justice V.Ramasubramanian, former Judge of the Hon'ble
Supreme Court, is under progress between TAFE and MFC, and the said
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O.A.Nos.744 of 2024 etc.
mediation covers all aspects of the disputes between the parties. Both
the TAFE's representative and MFC's representative are also
participating in the said mediation. The mediation has been commenced
only recently. However, as stated before this Court by MFC's counsels,
MFC wants the suit to be proceeded parallely along with the ongoing
mediation between the parties to the dispute. This Court is surprised
with such a stand being taken by MFC. The ongoing mediation between
the parties to the dispute, namely, TAFE and MFC through a court
appointed mediator, that too, by a former Judge of the Hon'ble Supreme
Court, also weighs in the mind of this Court for not changing the status
quo order granted by the Division Bench of this Court eventhough the
Division Bench of this Court has directed this Court to rehear the
applications and dispose of the same uninfluenced by any of the
observations of the Division Bench.
46. As stated above, the Division Bench, while remanding these
applications for fresh consideration, has also recorded the undisputed
fact that the mediation is in progress and that an amicable settlement
between the parties of the dispute cannot be ruled out. The Division
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Bench has also recorded the undisputed fact that TAFE has been dealing
with the MF brands from 1960 onwards till the date of the termination
notice issued by MFC on 26.04.2024. The very same ground has been
raised by MFC in these applications objecting to the grant of the intermin
injunction order in favour of TAFE. Eventhough the Division Bench in
its order has made it clear that any observation made by the Division
Bench will not have any bearing for adjudicating these applications, the
undisputed fact recorded by the Division Bench in its order about the
uninterrupted usage of MF brands by TAFE for more than 60 years and
the ongoing mediation before a retired Judge of the Hon'ble Supreme
Court will certainly strengthen the case of TAFE for this Court to
continue the status quo order granted by the Division Bench of this Court
till the disposal of the suit.
47. The CC Act stipulates strict timelines for the disposal of the
suit. When strict timelines are fixed for the disposal of the main suit, this
Court spending considerable amount of time in deciding the interlocutory
applications will defeat the objectives of the CC Act, namely, speedy
disposal of the commercial disputes. This Court has already spent
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O.A.Nos.744 of 2024 etc.
considerable amount of time in these interlocutory applications as seen
from the following events:-
a) A learned Single Judge of this Court had granted an order of
interim injunction as prayed for in these applications in favour TAFE.
b) Aggrieved by the same, the matter was taken up on appeal
before the Division Bench of this Court by MFC.
c) The Division Bench by its order dated 18.11.2024 set aside the
order of the learned Single Judge and remanded the matter back to this
Court once again after directing the parties to maintain the status-quo,
and this Court was directed to dispose of the applications after hearing
the parties afresh.
d) This Court has disposed of these applications today after
hearing the parties at length and after giving due consideration to the
pleadings and the documents filed by the respective parties, which is
voluminous in nature.
e) TAFE's interest has been protected pending disposal of the suit.
Initially, a learned Single Judge of this Court had granted an order of
interim injunction on 17.10.2024. However, the said interim injunction
order was modified by the Division Bench into a status-quo order. Due
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O.A.Nos.744 of 2024 etc.
to the said interim protection, admittedly, the termination of the
trademark license has not come into effect.
48. When strict timelines have been fixed under the CC Act for the
disposal of the main suit itself, Courts should not be burdened with
spending considerable amount of time in disposing of interlocutory
applications. The case on hand is one such case that due to the
protracted arguments in interlocutory applications, no progress could be
shown for the disposal of the main suit. Since a prima-facie case,
balance of convenience and irreparable hardship have been established
by TAFE in their favour, necessarily, status-quo order granted by the
Division Bench of this Court has to be continued till the disposal of the
suit.
49. It is for the first time before this Court, that too, only during
the course of the arguments in these applications, MFC has raised a plea
that since some of the agreements entered into between the parties
contain an arbitration clause, the suit and the connected applications filed
by TAFE are not maintainable. Mr.Rishab Gupta, learned counsel for
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O.A.Nos.744 of 2024 etc.
MFC, who has raised the said ground, also relied upon a judgment of the
Hon'ble Supreme Court and would submit that there is no necessity for
MFC to file a separate application under Section 45 of the Arbitration
and Conciliation Act, seeking for reference of the dispute to arbitration.
Admittedly, MFC has also filed a suit before this Court in
C.S.(Comm.Div.) No.193 of 2024 seeking to protect its interest. If MFC
claims that there exist an arbitration agreement with TAFE pertaining to
the subject matter of the dispute, they would have made the claim by
initiating arbitration proceedings, but, having chosen to file a suit
themselves before this Court against TAFE, they are estopped from
raising such a plea. Further, it is to be noted that in none of the pleadings
filed by MFC before this Court, they have taken a plea that the suit filed
by TAFE is not maintainable on account of the arbitration clause
contained in the agreements entered into between TAFE and MFC. The
said plea was also not taken before the Division Bench of this Court.
The decision of the Hon'ble Supreme Court relied upon by the learned
counsel for MFC dealt with a case involving different facts and did not
deal with a case wherein for the first time that too only during the course
of the arguments pursuant to an order passed by the Division Bench of
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O.A.Nos.744 of 2024 etc.
this Court, an oral plea has been raised that the suit is not maintainable
on the ground that there exists an arbitration agreement between the
parties to the dispute. The defence of arbitration taken by MFC through
an oral plea made by its counsels during the course of their submissions,
is a frivolous plea and it does not deserve any merit whatsoever.
50. Another oral plea has been taken by MFC claiming that the suit
filed by TAFE is barred by limitation on the ground that TAFE did not
claim ownership of MF brands/trademarks, despite the fact that TAFE
was permitted to use the MF brands by MFC since 1960 itself when the
JV Agreement was entered into. It is seen from the pleadings of MFC
before this Court that no specific plea has been taken by them that the
suit filed by TAFE is barred by limitation. Admittedly, the cause of
action for the suit arose only after MFC terminated the trademark license
agreement in April, 2024. Since the trademark license was terminated in
April, 2024, TAFE was constrained to file the present suit immediately
thereafter. Hence, the plea of limitation taken by MFC is devoid of any
merit and has to be rejected outright by this Court.
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O.A.Nos.744 of 2024 etc.
51. This Court is deciding only interlocutory applications and not
the main suit and therefore, there is no necessity for this Court to
individually consider each of the judgments relied upon by both the
counsels. An application seeking interim injunction is decided either for
or against a party by applying the trinity tests, namely, (a) prima-facie
case (b) balance of convenience; and (c) irreparable hardship. A prima-
facie case is a legal claim that is supported by enough evidence to justify
a verdict in the claimants favour. It is a Latin term that translates as “at
first sight” or “on the face of it”. Balance of convenience is a legal test
that courts use to decide whether to grant temporary injunction or not. It
weighs the potential benefits to the plaintiff and the public against the
potential harm to the defendant. Irreparable loss/hardship is a loss that is
too serious or bad to be fixed or restored.
52. In the case on hand, TAFE has been using the MF brands
continuously without interruption whatsoever since 1960 and only in the
month of April, 2024, on account of invocation of the termination clause
of the license agreement, there became a stumbling block for TAFE to
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O.A.Nos.744 of 2024 etc.
use the MF brands/trademarks. MFC also as on date does not have any
factory to commence production of MF brands of tractors/farm
equipments in India. Either they will have to engage the services of
another trading/manufacturing partner, who is already in the field, or
they need to build infrastructure by building up new factories for the
production in India. TAFE by its long existence in India from 1960
onwards is having the requisite infrastructure for the manufacture of
tractors/farm equipments and they have built up a large network of
dealers and reputation all over India. If the status-quo order granted by
the Division Bench of this Court is not extended until the disposal of the
suit, it will cause huge loss and hardship only to TAFE and not MFC,
which cannot be compensated in terms of money as it would be an
irreversible loss to TAFE. Balance of convenience is certainly in favour
of TAFE for continuation of the status-quo order granted by the Division
Bench of this Court. While deciding an application seeking for interim
injunction, the Court should exercise the discretion judiciously. In the
case on hand, since TAFE has made out a prima-facie case and they have
also established balance of convenience and irreparable loss, necessarily
this Court has no other option left except to continue the status-quo order
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granted by the Division Bench of this Court till the disposal of the suit.
53. For the foregoing reasons, these applications are disposed of in
the following manner:-
(i) The parties to the dispute, namely, TAFE
and MFC, are directed to maintain status-quo with
regard to the subject matter of the dispute till the
disposal of the suit.
(ii) These applications are disposed of by this
Court uninfluenced by any of the observations made
by the Division Bench of this Court.
(iii) It is made clear that any observation
made by this Court in this common order either
for/against any of the parties to the dispute for the
purpose of adjudicating these applications will not
have any bearing when this Court is disposing the
main suit.
(iv) The observations made against any of the
parties to the dispute in this common order can be
overturned if the said party is able to produce
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evidence during trial to disprove those observations.
Post the matter for filing of the written statement by the defendant
in C.S.(Comm.Div.) No.190 of 2024 on 06.03.2025.
05.02.2025
Index: Yes
Speaking order
Neutral citation : Yes
rkm
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O.A.Nos.744 of 2024 etc.
ABDUL QUDDHOSE, J.
rkm
O.A.Nos.744 and 745 of 2024
in
C.S.(Comm.Div.)No.190 of 2024
05.02.2025
https://www.mhc.tn.gov.in/judis
