Ramdev Food Products Pvt. Ltd. Vs. Arvindbhai Rambhai Patel & Ors [2006] Insc 546 (29 August 2006)
S.B. Sinha & P.P. Naolekar
W I T H CIVIL APPEAL NO.8817 OF 2003 S.B.SINHA, J :
Interpretation of the provisions of the Trade and Merchandise Marks Act, 1958 (for short "the 1958 Act") arises for consideration in these appeals arising out of a judgment and order dated 08.05.2003 passed by the High Court of Gujarat at Ahmedabad.
FACTS
The appellant is a company incorporated under the Companies Act, 1956. The other parties to these appeals were/are its Directors.
In the year 1965, one Rambhai Patel started a business of grinding and selling spices under the name and style of 'Ramdev'. He had three sons and two daughters, Arvindbhai, Hasmukhbhai and Pravinbhai were his sons. A partnership firm was constituted in the year 1975. It applied for registration of the trademark 'Ramdev', which was granted on 03.01.1986 being Trademark No.447700. Another partnership deed was executed in supersession of the earlier partnership deed wherein new partners were inducted. On 06.01.1989, the appellant company was incorporated whereby and whereunder the pattern of shareholding amongst the three brothers was : Arvindbhai Group (40%); Hasmukhbhai Group (30%); and Pravinbhai Group (30%). The registered trademark was assigned by 'Ramdev Masala Stores' in favour of the appellant by a deed dated 20.05.1990. However, by the said deed the goodwill was not assigned. The trademark together with the goodwill was assigned in favour of the appellant company by another deed of assignment dated 20.05.1992. A 'user' agreement was also entered into by the same parties permitting the firm 'M/s. Ramdev Masala Stores' to use the said trademark subject to the terms and conditions stipulated therein. Another partnership firm being 'Ramdev Masala' was started on 01.04.1991 for carrying on the trade of grinding and trading of masalas. A user agreement was also entered into by and between the appellant company and the said firm permitting the latter to use the registered trade mark for seven years i.e. from 01.04.1991 to 31.03.1998 in terms whereof it was stipulated :
"AND WHEREAS the User is a firm registered under the Indian Partnership Act and wishes to use in the city of Ahmedabad except the area of Naroda City of Ahmedabad and district Mehsana, Gujarat State (India) registered proprietors aforesaid registered Trade Mark (hereinafter referred to as "the said Trade Mark") in respect of the said goods."User restricted to the cities of Ahmedabad and Mehsana;
4.C That the User will continue to use the said mark only so long as he manufactures his goods in accordance with the terms and specifications devised by the Registered Proprietor.
4.E That within the terms of this agreement and thereafter the User will not acquire any right to the said mark by any means whatsoever except in accordance with law.
4.G That the User covenants not to use the said Trade Mark in the advertisement, journal label and/ or other documents in such a manner that the said Trade Mark may in any way be diluted in respect of distinctiveness of validity if necessary and indication either usually, phonetically may be given to the purchasing public to the extent that the User uses the said mark by way of permitted use only." Indisputably, the firm 'Ramdev Masala Stores' was dissolved on 04.11.1991. Yet again a new partnership firm came into being under the name and style of 'Ramdev Exports'. The said partnership firm was constituted for the purpose of export of spices manufactured by the appellant company.
It is not in dispute that the business of manufacturing and selling of spices under the trade name of 'Ramdev' was being run by the three brothers through the appellant company.
Another partnership firm being 'Ramdev Masala' was being run through seven outlets for retail sale of the products of the Company.
It is also not in dispute that both the firms 'Ramdev Masala' and 'Ramdev Exports' had distinct and separate existence. Their areas of operation were also different. The respective roles assigned to each of the partnership firm had clearly been specified in their respective partnership deeds. Whereas M/s. Ramdev Masala was allowed to manufacture and trade in spices, the business of M/s. Ramdev Exports was limited to export of the spices manufactured by the appellant company. Yet again, the partnership deed of Ramdev Masala was amended on 01.04.1995; in terms whereof the business of the said firm was confined only to trading in spices manufactured by the appellant company. In other words, the respective businesses under the partnership deeds of the said firms are stated to be as under :
Type of business of Ramdev Masala under the first partnership deed was grinding and selling of spices.
Type of business of M/s. Ramdev Masala under the second partnership deed was trading in spices.
The business of M/s. Ramdev Exports was exporting the goods manufactured by the appellant company.
DISPUTES
Disputes and differences having arisen between the members of the family and in particular between the three brothers, the same was settled by their well-wishers, pursuant whereto and in furtherance whereof a Memorandum of Understanding (MOU) was executed by and between the parties, to which we would advert to a little later.
LEGAL PROCEEDINGS
On the premise that the respondents had been infringing its rights, trade name and logo, the appellant company filed a suit in the City Civil Court, Ahmedabad, which was numbered as CS No.828 of 2000, inter alia, for the following reliefs :
"The defendants by themselves, their servants, agents, partners and all persons claiming through or under them be restrained by a perpetual order of this Hon'ble Court from, in any manner, using the trade mark 'RAMDEV' in their label, packing materials, advertising materials, business materials etc., in respect of goods which are covered under registration of the plaintiff's mark and/or any mark which may be identical and/or deceptively similar to the plaintiff's registered trade mark and thereby restrain them from infringing the plaintiff's registered trade mark bearing No. 447700 and other marks bearing No.531084, 531085, 545253, 545253, 545255, 545257 and 545258." An application for injunction was also filed wherein the following interim prayers were made :
"The defendants by themselves, their servants, agents, partners and all persons claiming through or under them be restrained by an order of temporary injunction of this Hon'ble Court from, in any manner, using the trademark 'RAMDEV' in their label, packing materials, advertising materials, business materials etc. in respect of goods which are covered under registration of the plaintiff's mark and/or any mark which may be identical and/or deceptively similar to the plaintiff's registered trade mark and thereby restrain them from infringing the plaintiff's registered trade mark bearing No.447700 and other marks bearing No.531084, 531085, 545253, 545255. 545257 and 545258, till the hearing and final disposal of the suit.
The defendants by themselves, their servants, agents, partners and all persons claiming through or under them be restrained by an order of temporary injunction of this Hon'ble Court from using in relation to any spices, masala bearing the name 'RAMDEV' as produced with separate list or any label or packing material or advertising material containing the trade mark 'RAMDEV' and/or any mark which is identical and/or mark containing word 'RAMDEV' either on label or in trading style or trading name, so as to pass off the defendants goods and/or business as that of the plaintiff, till the hearing and final disposal of the suit." An application was also filed for appointment of a Court Commissioner.
The principal defences raised by the respondents in the said suit are as under:
The appellant has no exclusive statutory right to use 'Ramdev' apart from the label as a whole. (Sections 15 and 17 issue)
The first respondent has a right to use the mark as concurrent user; (Section 29 issue)
That the use complained of is protected, as bona fide user and furthermore the appellant is not entitled to the reliefs sought for as the same were barred under the principles of estoppel, acquiescence, etc.
ORDER ON THE APPLICATION FOR INJUNCTION
By a judgment and order dated 17.03.2000, the learned Trial Judge opined that the plaintiff company was the owner of the trademark. It was further held that the defendants had started manufacturing and marketing the same business which is deceptively similar to the trademark of the plaintiff which created confusion in the mind of public. However, the defendants were given liberty to manufacture spices in their factory and sell the same in seven outlets under the trademark 'Ramdev Masala'.
On an interpretation of the said MOU dated 30.05.1998, it was, inter alia, held :
"Therefore, if there is agreement between the parties that the defendant No.1 should purchase spices from the plaintiff for the purpose of retail- sale in 7 outlets, it must have been mentioned in the MOU. No such condition is mentioned. If that be so, it cannot be presumed that the defendants should purchase spices from the plaintiff for the purpose of retail-sale in 7 outlets. In case of written-agreement between the parties, it should be taken as it is. It should be read as it is. No additional terms and conditions or agreement can be presumed. Therefore, in absence of any specific condition that the defendants should sell spices by using trade-mark "Ramdev" in 7 outlets by purchasing the goods from the plaintiff is not believable.
This condition also does not seem to be possible
The defendants have arranged for the packing material bearing regd. trade-mark "Ramdev" and used the same for the purpose of retail business. These facts clearly suggest that there was no restriction on the defendants to purchase spices from the plaintiff for the purpose of retail business in 7 outlets. On the contrary, the defendant was at liberty to manufacture in their factory and sell the same in 7 outlets for the purpose of retail business.
Relevant portion of MOU is reproduced earlier. Accordingly, the defendants are permitted to use the trade-mark or logo "Ramdev" for the purpose of retail-sale in 7 outlets. The words used suggest that the defendants were entitled to use the trade-mark "Ramdev" without any restriction for the purpose of retail sale of spices. It was not compulsory on the part of the defendants to purchase spices from the plaintiff. They can arrange or manufacture in their way and sell the same in 7 retail outlets under the trade-mark "Ramdev".
Therefore, he cannot sell spices in other shops under the trade-mark "Ramdev". He can run spices' business and other business in his shop Ramdev Masala. The plaintiff cannot restrict him." The respondents had been selling a large variety of spices under the trade name "Swad". However, the packings and labels adopted by them were also held to be deceptively similar to the trade-mark "Ramdev" of the appellant. Although they had been manufacturing and marketing spices under the trade name 'swad', the respondents had been writing the words "Ramdev Masala" in such a manner that it creates confusion in the minds of customers. It was, therefore, opined that the respondents had been passing off their goods as if it was manufactured by the appellant. The learned Judge, however, opined that as per the provisions of the Prevention of Food Adulteration Act, 1955, it was mandatory to disclose the name and address of the manufacturer they have been writing their name "Ramdev Masala" as manufacturer which does not create any deception or confusion.
Noticing that the appellant got it entered in the records of the Registrar of Trade Mark by following due procedure and acknowledging that the appellant company is the registered proprietor of trade name bearing logo of "Ramdev", it was held that as the respondents had started manufacturing and marketing spices under the trade name "swad" and they had been selling spices in small packets and in view of the averments made by the appellant that the labels and packings adopted by the respondents were deceptively similar to the registered trademark 'Ramdev' and, therefore, passing off goods as it is manufactured by the plaintiff. The learned Judge further observed :
"Comparing the packing material and label of both the parties, it is clear that the label of the defendants is phonetically and visibly similar with the label of the plaintiff. It is deceptively similar with the label of the plaintiff. It creates deception as well as confusion in the minds of customers who are literate, illiterate, male or female, who used to purchase in retail market from small shops as well as big departmental stores. Therefore, there is every likelihood of passing off the goods of the defendants as if it is manufactured by the plaintiff." It was opined :
"As stated earlier, it is proved that the plaintiff is the regd. proprietor of trade-mark "Ramdev" bearing registration No.44770. The plaintiff has acquired goodwill and reputation of the trade mark "Ramdev Masala" in the market.
Packing and label adopted by the defendants for their products "Swad" containing the word "Ramdev Masala" on the front page of the label in larger size, in first alphabet definitely creates deception and confusion. It is deceptively similar with the trade-mark of the plaintiff. Therefore, the plaintiff has proved prima facie case on this point.
As regards the balance of convenience and irreparable injury, it is settled legal position that in case of deception public at large is affected.
Unvaried customers are likely to be deceived.
When prima facie case is proved, it is necessary in the interest of justice to maintain status quo.
Considering above all facts and circumstances, injunction should be granted against the defendants." The learned Judge summarised his findings as under :
"Para 41
The defendant No.1 and consequently all defendants are entitled to use trade mark "Ramdev" for the retail business of spices in 7 outlets as mentioned in M.O.U. It is not mandatory for the defendants to purchase goods from the plaintiff for retail sale in the said outlets.
The defendants are at liberty to manufacture spices in their factory and carry on retail business in 7 outlets by using trade-mark "Ramdev" bearing registration No.44770.
The defendant No.1 is at liberty to run business under the trade name "Ramdev Masala" for retail and wholesale business of spices, instant mix and other articles.
However, he should not use trade-mark "Ramdev" except 7 outlets as mentioned in M.O.U.
Label and packing adopted by the defendants for their goods under the trade- name "Swad" containing word "Ramdev Masala" is creating infringement of the trade-mark of the plaintiff as it is deceptively similar. Therefore, the defendants should be prevented in using the word "Ramdev Masala" on their label and packing in any manner. However, the defendants are at liberty to manufacture and market spices in any trade name without using the word "Ramdev" or "Ramdev Masala".
The respondents were, thus, restrained by temporary injunction from using registered trademark, logo 'Ramdev' or any other trademark, which is identical and deceptively similar to the trademark of the appellant in respect of label and packing material of their goods except in seven outlets mentioned in MOU till final disposal of the suit. They were held to be at liberty to run business of spices under the trade name 'Ramdev Masala' without using the registered trademark 'Ramdev Masala' except in seven outlets.
Both the parties preferred appeals thereagainst before the High Court. The High Court by reason of its judgment opined:
The chain of events goes to show that the business of grinding spices by using the words "Ramdev" and "Masala" in the formation of firm name continued all throughout and, thus, the respondents could be restrained from carrying on business of manufacturing and selling of spices.
The respondents were permitted users in view of the registered user agreement executed between the parties.
The effect of the MOU could not be wholly determined as the deeds of retirement had not been produced.
Even if the MOU is kept out of consideration in view of the Rules framed under Prevention of Food Adulteration Act and Standards of Weights and Measures Act, the manufacturer is duty bound to display its name and address in the manner, size and placement as prescribed, on the packets. Thus, once a statute prescribes an obligation on manufacturer and stipulates the minimum standards of measurement, the manufacturer is bound to act in accordance with law and cannot be restrained from complying with specific statutory provisions.
It, while upholding the findings of the learned trial Judge contained in paragraphs 41(i) and 41(ii); in respect of the directions contained in Para 41(iii), opined:
42.3 "However, finding in paragraph 41(iii) of the impugned judgment requires to be modified. The trial court was in error for the aforestated reasons when it held that printing and publication of the principal display panel was creating infringement of trade mark as it was deceptively similar. The defendants cannot be prevented from using the words "Ramdev" and "Masala" on their label and packing in light of the statutory requirements as stated hereinbefore. However, the defendants shall print the name of the manufacturer using only the minimum standard prescribed, depending upon the nature of the packing and the placement of the principal display panel shall be only at the bottom on the reverse side of the packing and the front portion of the packing shall not carry any principal display panel except for its own brand name "SWAD".
SUBMISSIONS:
Mr. C.A. Sundaram and Mr. Ashok Desai, learned Senior Counsel appearing on behalf of the appellant, in support of these appeals submitted :
The appellant was entitled to an order of injunction in view of the well-settled principles of law that in case of a registered trade mark, the use thereof by any other person would constitute an infringement thereof.
As there can be only one mark, one source and one proprietor and in particular having regard to the public interest, it was impermissible for the Trial Judge as also the High Court to allow the respondents to use the registered trade mark of the appellant either in the seven outlets or the goods manufactured by them independently.
The trade mark 'Ramdev Masala' used by the respondents being deceptively similar with that of the registered trade mark, the same would interfere with the quality control product of the appellant and, thus, an order of injunction as was prayed for should have been passed.
The learned Trial Judge as also the High Court misconstrued and misinterpreted the provisions of the 1958 Act vis-`-vis Prevention of Food Adulteration Act and Standards of Weights and Measures Act, as in a case of such nature, a mandatory injunction could be issued directing change of the corporate name of the respondent No.1; as the appellant's right to protect its trade mark is absolute.
By reason of the MOU, the respondents were only allowed to carry on the existing trade and thereby the respondents were not permitted to start manufacturing spices under the name and style of 'Ramdev Masala' as would be evident from the fact that they were only entitled to carry on retail business from the seven outlets for the purpose of selling only the end products upon printing the words "not for resale" which is a clear pointer to the fact that merely a right to trade therefrom and not manufacture of spices in the said name had been granted in terms thereof.
Mr. F.S. Nariman, learned Senior Counsel appearing on behalf of the respondents, on the other hand, submitted:
The appellant could exercise their right only for the purpose of implementing the MOU which must be read with the deed of retirement dated 1st June, 1998, the remedies under the Trade Marks Act are not available against the respondents who were members of the family.
The Company, although was not a party to the MOU, but having been represented by the Directors therein must be held to be bound thereby and the parties to the MOU having not filed any special leave petition in their individual capacities, these appeals are liable to be dismissed.
As a distinction exists between a lis based on infringement of a registered trade mark and passing off, the principles which are applicable for grant of injunction in an action for passing off are applicable in the instant case.
The claim of the appellant to obtain an order of injunction is clearly barred by Sections 15(1) and 15(2) of the 1958 Act insofar as a distinctive label having been registered as a whole, no order can be passed restraining the defendants from using a part thereof, as has been held in The Registrar of Trade Marks v. Ashok Chandra Rakhit Ltd. [(1955) 2 SCR 252] and Re Cadbury Brothers' Application [1915 (2) Ch. 307].
The appellant itself having applied for 'Ramdev' as a separate trade mark as would appear from a public document, viz., the Trade Mark Journal No. 6 dated 25.11.2003 and the said trade mark having not yet been registered in its favour, no order of injunction as had been prayed for can be passed in its favour.
In any event, if an order of injunction is passed, against the respondents, they would have to be completely dependent upon the appellant for carrying on business which would lead to discord between the members of the family, which was sought to be avoided by the MOU.
In view of the stipulations made in the MOU whereby and whereunder Shri Arvindbhai became the absolute owner of both 'Ramdev Exports' and 'Ramdev Masala' and Hasmukhbhai and Pravinbhai haing given up their right thereupon, the First respondent is entitled to carry on the said business in those names which were not required to be changed by reason of the said MOU.
Furthermore, the stipulations made in the MOU clearly do not oblige the respondent to buy any product from the appellant- Company, and in the event, if it be held that the respondent is bound to sell only the products of the appellant, running of business by the respondent would clearly depend upon the supply of the materials by the appellant alone.
As by reason of the said MOU, the respondent No.1 became entitled to use of mark from seven outlets, the same envisages its right to sell goods having the said mark and not sell of the plaintiffs' goods alone. The MOU must be interpreted in the light of the deed of retirement dated 1.6.1998, which categorically contained a stipulation that the continuing partner "have also decided to continue the said business in the same firm names, viz., 'Ramdev Exports' and 'M/s. Ramdev Masala'" and, thus, the appellant cannot now turn round and contend that the respondent cannot carry on business of grinding and selling masala.
In the event the appellant's contention is accepted, the right of the respondent to continue the business under the name and style of or in the firm name of 'M/s. Ramdev Masala' and 'Ramdev Exports' would become inconsistent with the deed of retirement of Hasmukhbhai and Pravinbhai from 'M/s. Ramdev Masala' and 'Ramdev Exports'.
Dr. A.M. Singhvi, learned senior counsel appearing on behalf of some of the respondents supplemented Mr. Nariman urging that a document upon reading contextually may be found to be a family settlement although the said expression was not used therein. It was, therefore, urged that the courts would lean strongly in favour of the family settlement and the MOU, so read, would operate as estoppel against the other family members who have taken advantage thereof from denying or disputing implementation thereof.
STATUTORY PROVISIONS
It is not in dispute that the lis between the parties would be governed by the 1958 Act.
"Deceptively similar" has been defined in Section 2(d) of the 1958 Act to mean as under:
"A mark shall be deemed to be deceptively similar to another mark if it so nearly resembles that other mark as to be likely to deceive or cause confusion." Section 2(j) defines "Mark" to include "a device, brand, heading, label, ticket, name, signature, word, letter or numeral or any combination thereof". The expression "registered proprietor" has been defined in Section 2(q) to mean a person for the time being entered in the register as proprietor of the trade mark in relation to a trade mark.
Chapter II provides for appointment of the Controller-General of Patents, Designs and Trade Marks for the purpose of the said Act. Sections 15 and 17 read as under:
"Registration of parts of trade marks and of trade marks as a series.—
Where the proprietor of a trade mark claims to be entitled to the exclusive use of any part thereof separately, he may apply to register the whole and the part as separate trade marks.
Each such separate trade mark shall satisfy all the conditions applying to and have all the incidents of, an independent trade mark.
Where a person claiming to be the proprietor of several trade marks in respect of the same goods or description of goods which, while resembling each other in the material particulars thereof, yet differ in respect of—
statement of the goods or services in relation to which they are respectively used or proposed to be used; or
statement of number, price, quality or names of places; or
other matter of a non-distinctive character which does not substantially affect the identity of the trade mark; or
colour; seeks to register those trade marks, they may be registered as a series in one registration.
Registration of trade marks subject to disclaimer.If a trade mark –
contains any part—
which is not the subject of a separate application by the proprietor for registration as a trade mark; or
which is not separately registered by the proprietor as a trade mark; or
contains any matter which is common to the trade or is otherwise of a non-distinctive character, The tribunal in deciding whether the trade mark shall be entered or shall remain on the register, may require, as a condition of its being on the register, that the proprietor shall either disclaim any right to the exclusive use of such part or of all or any portion of such matter, as the case may be, to the exclusive use of which the tribunal holds him not to be entitled, or make such other disclaimer as the tribunal may consider necessary for the purpose of defining the rights of the proprietor under the registration:
Provided that no disclaimer shall affect any rights of the proprietor of a trade mark except such as arise out of the registration of the trade mark in respect of which the disclaimer is made." Chapter III provides for the procedure for and duration of registration. The 1958 Act envisages filing of an application (Section 18), advertisement thereof (Section 20), opposition thereto (Section 21) and correction and amendment thereof (Section 22). Registration of a trade mark is envisaged in Section 23 of the 1958 Act, the effect whereof is stated in Section 27 thereof.
The rights which are conferred by registration are stated in Section 28 of the 1958 Act in the following terms:
"Rights conferred by registration.—
Subject to the other provisions of this Act, the registration of a trade mark in Part A or Part B of the register shall, if valid, give to the registered proprietor of the trade mark the exclusive right to the use of the trade mark in relation to the goods or services in respect of which the trade mark is registered and to obtain relief in respect of infringement of the trade mark in the manner provided by this Act.
The exclusive right to the use of a trade mark given under sub-section (1) shall be subject to any conditions and limitations to which the registration is subject.
Where two or more persons are registered proprietors of trade marks, which are identical with or nearly resemble each other, the exclusive right to the use of any of those trade marks shall not (except so far as their respective rights are subject to any conditions or limitations entered on the register) be deemed to have been acquired by any one of those persons as against any other of those persons merely by registration of the trade marks but each of those persons has otherwise the same rights as against other persons (not being registered users using by way of permitted use) as he would have if he were the sole registered proprietor."
Section 29 provides for the consequences of infringement of trade marks in the following terms:
"Infringement of registered trade marks.—
A registered trade mark is infringed by a person who, not being a registered proprietor of the trade mark or a registered use thereof using by way of permitted use, uses in the course of trade mark which is identical with, or deceptively similar to, the trade mark in relation to any goods in respect of which the trade mark is registered and in such manner as to render the use of the mark likely to be taken as being used as a trade mark.
In an action for infringement of a trade mark registered in Part B of the register an injunction or other relief shall not be granted to the plaintiff if the defendant establishes to the satisfaction of the court that the use of the mark of which the plaintiff complains is not likely to deceive or cause confusion or to be taken as indicating a connection in the course of trade between the goods in respect of which the trade mark is registered and some person having the right, either as registered proprietor or as registered user, to use the trade mark." Section 33 provides for saving of vested rights.
INTERPRETATION OF DEED
PRINCIPLES OF MOU, for the purpose of these appeals, may be treated to be a family settlement. It is, however, well-known that intention of the parties to an instrument must be gathered from the terms thereof examined in the light of the surrounding circumstances. [See Sohan Lal Naraindas v. Laxmidas Raghunath Gadit, (1971) 1 SCC 276] In Delta International Ltd. v. Shyam Sundar Ganeriwalla [(1999) 4 SCC 545], this Court noticed:
"For construction of contracts between the parties and for the interpretation of such document, learned Senior Counsel, Mr Desai has rightly relied upon some paragraphs from The Interpretation of Contracts by Kim Lewison, Q.C. as under:
1.03 "For the purpose of the construction of contracts, the intention of the parties is the meaning of the words they have used. There is no intention independent of that meaning.
6.09 Where the words of a contract are capable of two meanings, one of which is lawful and the other unlawful, the former construction should be preferred.
Sir Edward Coke [Co. Litt. 42a] expressed the proposition thus:
'It is a general rule, that whensoever the words of a deed, or of one of the parties without deed, may have a double intendment and the one standeth with law and right, and the other is wrongful and against law, the intendment that standeth with law shall be taken.'" It is further stated:
"For that purpose, he referred to the following observations of Buckley, J. from the paragraphs which are sought to be relied upon from The Interpretation of Contracts by Kim Lewison, Q.C.:
"My first duty is to construe the contract, and for the purpose of arriving at the true construction of the contract, I must disregard what would be the legal consequences of construing it one way or the other way."" Moreover, the document is to be read as a whole. It is equally well settled that the deed has to be construed keeping in view the existing law.
It is now a well-settled principle of law that a document must be construed having regard to the terms and conditions as well as the nature thereof. [Union of India v. M/s. Millenium Mumbai Broadcast Pvt. Ltd. 2006 (5) SCALE 44] MOU We may proceed on the basis that the MOU answers the principles of family settlement having regard to the fact that the same was actuated by a desire to resolve the disputes and the courts would not easily disturb them as has been held in S. Shanmugam Pillai and Others v. K. Shanmugam Pillai and Others [(1973) 2 SCC 312], Kale and Others v. Deputy Director of Consolidation and Others [(1976) 3 SCC 119] and Hari Shankar Singhania & Ors. v. Gaur Hari Singhania & Ors. [JT 2006 (4) SC 251].
Although at one point of time the appellant-Company had taken a stand that it being not a party to the MOU, it is not bound by the terms thereof but the same would not mean that in an action for infringement of trade mark, when the MOU was put as a shield to its claim, it could not have taken recourse to proper interpretation thereof for the purpose of determination of the rights of the parties to use the trade mark in question.
It is not a case where the courts refused to lean in favour of family arrangement or base its decision on technical or trivial ground. We have been taken through the MOU again and again. It fell for judicial interpretation. Interpretation processes were undertaken by the Courts below. The same would also be reviewed by us hereafter.
MOU
ANALYSIS OF The appellant before us is a Company registered and incorporated under the Companies Act. Indisputably, the parties to the MOU being Arvindbhai, Hasmukhbhai and Pravinbhai were its Directors. They are all brothers. All the shares of the Company were held by them and their family members. The Company although is a juristic person was not made a party thereto. The effect of the Company being not a party may have to be considered by the Trial Court in the suit; but, as the parties for the purpose of disposal of this appeal proceeded on the basis that the MOU was entered into by and between the parties thereto; an endeavour shall be made to construe the same as it stands. We would, however, like to observe that in the event any other attending circumstances are brought on record by way of adduction of oral evidences, if permissible in law, warranting a different interpretation of the said MOU, the learned Trial Judge would be at liberty to do so. We may furthermore place on record that we are construing the said MOU only for the purpose of disposal of an interlocutory matter which would not, thus, be binding on the courts below at the final hearing of the suit.
The broad propositions which are evident from a perusal of the said MOU appear to be as under:
Among all the three brothers, Arvindbhai who was the eldest among them is on one side and Hasmukhbhai and Pravinbhai are on the other. The division of the assets is broadly arrived at in that proportion. The Counsel appearing before us proceeded on the basis that MOU for all intent and purport was a family settlement. Disputes and differences having arisen between the parties, the said MOU was entered into with a view to resolve the same as regards the business and property held by them so as to enable them to be in peace, harmony and understanding in the family. The said settlement was arrived at through the mechanism of mediation of the well- wishers of the family. MOU was, thus, entered into for the purpose of distribution of the properties and business and the same was given effect to on and from 1.4.1998. It stipulates:
Manufacturing and selling of masala (spices) and instant mix was being done by the Company.
The goods used to be manufactured in a factory situated in village Sola. Another factory was constructed on block No. 527, 542 and 528 at Changodar. The Joint family, viz., the Partnership (Ramdev Masala) had been selling goods in retail in the name of 'Ramdev Masala' to seven outlets named therein.
The export business in respect of goods, viz., pepper-spices, instant mix, groceries and other articles was being done in the name of Ramdev Exports.
The Trade Mark or trade name which was registered in the name of the company, viz., Ramdev and its logo of a saint astride on a horse with a standard went to the Company. The expression "Ramdev" is written in the Gujarati language just above the said logo and the word "masala" which is again in the Gujarati language appears just below the same.
Arvindbhai became the exclusive owner of the business Ramdev Exports (Partnership Firm) and Ramdev Masala (another Partnership Firm).
MOU contained a clarification to the effect that the other two brothers, viz., Hasmukhbhai and Pravinbhai became the owners thereof and would carry on the management of the business of the Company. The two brothers, Hasmukhbhai and Pravinbhai were given the right to carry on export business under the brand name of 'Ramdev' but in a manner which would not cause any loss to Arvindbhai or vice-versa. Whereas the land situated at Sola went to Arvindbhai along with the building, the machineries belonging to the company remained with the Company. The new factory and machinery also went to the Company. A right of pre-emption in respect of the trade mark Ramdev was also created in terms whereof Hasmukhbhai and Pravinbhai was to offer sale of the said trade mark to Arvindbhai in the event they intend to do so. It was, thus, made clear that the manufacturing activities were to be restricted to the Company through Hasmukhbhai and Pravinbhai.
The two brothers, viz., Hasmukhbhai and Pravinbhai, also had the right to carry out export business under the brand name of Ramdev but in a manner which would not cause any loss to the eldest brother or vice-versa.
We have noticed hereinbefore that the partnership Ramdev Masala had an user agreement for seven years from 1.4.1991 which lapsed on 31.3.1998. MOU came into force with effect from 1.4.1998. By reason of the said MOU prima facie Arvindbhai had not been given any manufacturing right through the user agreement. The trade mark Ramdev, thus, belonged exclusively to the Company.
Although several trade marks were registered and belonged to the Company, we are primarily concerned with the trade mark bearing No. 447700 having the aforementioned description.
Both the learned Trial Judge as also the High Court proceeded on the basis that in terms of the said MOU, the Company acquired an exclusive right to use the same.
It is not in dispute that the respondents have been manufacturing spices under and name and style of 'Swad'. The said mark is a registered one.
The Courts below proceeded on the basis that the mark used by the respondents are deceptively similar to the trade mark registered in favour of the appellant. There is no dispute in regard to the said findings. We would hereinafter consider the effect thereof.
TRADE MARK-CONCEPT
The concept of trade mark dates back to ancient times. Even in the Harappan Civilization marks of trade with foreign countries such as Mesopotamia and Babylonia were found embossed on articles. The law of trade marks was formalised with the process of registration which gave exclusivity to a trader right to deal in goods using a symbol or mark of some sort to distinguish his goods from similar goods sold by other traders.
Even today the grant of a trade mark is an indicator of exclusivity in trade under that mark and this right cannot be transferred. Only a limited right of user can be granted via licence.
In The Modern Law of Trade Marks by Christopher Morcom, Butterworths 1999, it is stated:
"The concept of distinguishing goods or services of the proprietor from those of others was to be found in the requirements for a mark to be registrable. Essentially, whatever the wording used, a trade mark or a service mark was an indication which enabled the goods or services from a particular source to be indentified and thus distinguished from goods or services from other sources. In adopting a definition of 'trade mark' which simply describes the function in terms of capability of 'distinguishing the goods or services of one undertaking from those of other undertakings' the new law is really saying precisely the same thing." In Gujarat Bottling Co. Ltd. and Others v. Coca Cola Co. and Others [(1995) 5 SCC 545], it was held that licensing of trade mark is governed by common law which is also statutorily permissible provided:
"the licensing does not result in causing confusion or deception among the public;
it does not destroy the distinctiveness of the trade mark, that is to say, the trade mark, before the public eye, continues to distinguish the goods connected with the proprietor of the mark from those connected with others; and
a connection in the course of trade consistent with the definition of trade mark continues to exist between the goods and the proprietor of the mark"
Making use of another's trade mark is not only a violation of business ethics but has also been linked to dishonestly making use of the goodwill and reputation built up and associated with the mark.
In Laxmikant V. Patel v. Chetanbhai Shah and Another [(2002) 3 SCC 65], it was stated:
"A person may sell his goods or deliver his services such as in case of a profession under a trading name or style. With the lapse of time such business or services associated with a person acquire a reputation or goodwill which becomes a property which is protected by courts. A competitor initiating sale of goods or services in the same name or by imitating that name results in injury to the business of one who has the property in that name. The law does not permit any one to carry on his business in such a way as would persuade the customers or clients in believing that the goods or services belonging to someone else are his or are associated therewith. It does not matter whether the latter person does so fraudulently or otherwise. The reasons are two.
Firstly, honesty and fair play are, and ought to be, the basic policies in the world of business.
Secondly, when a person adopts or intends to adopt a name in connection with his business or services which already belongs to someone else it results in confusion and has propensity of diverting the customers and clients of someone else to himself and thereby resulting in injury."
PURPOSE OF TRADE MARK
A trade mark is the property of the manufacturer. The purpose of a trade mark is to establish a connection between the goods and the source thereof which would suggest the quality of goods. If the trade mark is registered, indisputably the user thereof by a person who is not otherwise authorised to do so would constitute infringement. Section 21 of the 1958 Act provides that where an application for registration is filed, the same can be opposed. Ordinarily under the law and, as noticed hereinbefore, there can only be one mark, one source or one proprietor. Ordinarily again right to user of a trade mark cannot have two origins. The first respondent herein is a rival trader of the appellant-Company. It did not in law have any right to use the said trade mark, save and except by reason of the terms contained in the MOU or continuous user. It is well-settled that when defences in regard to right of user are set up, the onus would be on the person who has taken the said plea. It is equally well-settled that a person cannot use a mark which would be deceptively similar to that of the registered trade mark. Registration of trade marks is envisaged to remove any confusion in the minds of the consumers. If, thus, goods are sold which are produced from two sources, the same may lead to confusion in the mind of the consumers. In a given situation, it may also amount to fraud on the public.
A proprietor of a registered trade mark indisputably has a statutory right thereto. In the event of such use by any person other than the person in whose name the trade mark is registered, he will have a statutory remedy in terms of Section 21 of the 1958 Act. Ordinarily, therefore, two people are not entitled to the same trade mark, unless there exists an express licence in that behalf.
DIFFERENT FUNCTIONS OF A TRADE MARK
We may now note a few precedents on the function of a trade mark.
In Sumat Prasad Jain v. Sheojanam Prasad (Dead) and Others and State of Bihar [(1973) 1 SCC 56], this Court held:
"Thus, the distinction between a trade mark and a property mark is that whereas the former denotes the manufacture or quality of the goods to which it is attached, the latter denotes the ownership in them. In other words, a trade mark concerns the goods themselves, while a property mark concerns the proprietor. A property mark attached to the movable property of a person remains even if part of such property goes out of his hands and ceases to be his." In Canon Kabushiki Kaisha v. Metro-Goldwyn-Mayer Inc. [(1999) RPC 117], the European Court of Justice emphasised the test of likelihood of confusion in the following terms:
"That view is also confirmed by the judgment of the court in SABEL, in which it held that the "likelihood of confusion mustbe appreciated globally, taking into account all factors relevant to the circumstances of the case" (at paragraph 22).
It is true that that statement was made in a different context: the court was there considering the question whether conceptual similarity of the marks alone could give rise to confusion within the meaning of Article 4(1)(b), in a situation in which the goods in question were clearly the same.
However, the statement is one of general application." In Baker Hughes Limited v. Hiroo Khushalani [1998 PTC (18) 580], the question as regards likelihood of confusion even by the enlightened public was noticed in the following words :
"Again in Grotrian, Helfferich, Schulz, Th. Sons, a corporation, 365 F.Supp. 707 (1973), striking a similar note the Court held as under:
"Plaintiff argues that purchaser will not be confused because of the degree of their sophistication and the price (B & L Sales supra, 421 F.2d at 354). It is true that deliberate buyers of expensive pianos are not as vulnerable to confusion as to products as hasty buyers of inexpensive merchandise at a newsstand or drug store [Callmann, Unfair Competition Trademarks and Monopolies, (3d ed. 1971)]. The sophistication of buyers, however, does not always assure the absence of confusion Comcet, Inc., 429 F.2d at 1252]. It is the subliminal confusion apparent in the record as to the relationship, past and present, between the corporate entities and the products that can transcend the competence of even the most sophisticated consumer.
Misled into an initial interest, a potential Steinway buyer may satisfy himself that the less expensive Grotrian-Steinweg is at least as good, if not better, than a Steinway.
Deception and confusion thus work to appropriate defendant's good will. This confusion, or mistaken beliefs as to the companies' interrelationships, can destroy the value of the trademark which is intended to point to only one company [American Drill Busing Co. v. Rockwell Mfg. Co., 342 F.2d 1922, 52 CCPA 1173 (1965)]. Thus, the mere fact that purchasers may be sophisticated or discriminating is not sufficient to preclude the likelihood of confusion. "Being skilled in their own art does not necessarily preclude their mistaking one trademark for another when the marks are as similar as those here in issue, and cover merchandise in the same general field" [Id].
Having regard to the above discussion prima facie I am of the opinion that the word Baker occurring in the corporate name of the second defendant suggests its connection or nexus with 'Baker', which depicts a wrong picture as from February, 1995 'Baker' has terminated its relation with the defendants. The continuance of the word Baker as part of the corporate name of the second defendant is likely to cause deception and confusion in the mind of the customers. There would be no justification for the second defendant to use the word Baker as part of its corporate name after the ties between the first plaintiff and the second defendant have ceased to exist." The said decision has been noticed by this Court in Baker Hughes Ltd. and Another v. Hiroo Khushlani and Another [(2004) 12 SCC 628].
In Milmet Oftho Industries and Others v. Allergan Inc. [(2004) 12 SCC 624], in regard to medicinal products, this Court opined:
"Whilst considering the possibility of likelihood of deception or confusion, in present times and particularly in the field of medicine, the courts must also keep in mind the fact that nowadays the field of medicine is of an international character.
The court has to keep in mind the possibility that with the passage of time, some conflict may occur between the use of the mark by the applicant in India and the user by the overseas company. The court must ensure that public interest is in no way imperilled" We may in this connection notice a recent judgment of the European Court of Justice in Canon Kabushiki Kaisha (supra) wherein it was opined:
"That case concerned the interpretation of Article 4(1)(b) of the Directive in so far as it refers to "a likelihood of confusion on the part of the public, which includes the likelihood of association with the earlier trade mark". The court explained that it had been submitted that "the likelihood of association may arise in three sets of circumstances:
where the public confuses the sign and the mark in question (likelihood of direct confusion);
where the public makes a connection between the proprietors of the sign and those of the mark and confuses them (likelihood of indirect confusion or association);
where the public considers the sign to be similar to the mark and perception of the sign calls to mind the memory of the mark, although the two are not confused (likelihood of association in the strict sense). (Paragraph 16 of the judgment).
The court stated that it was therefore necessary to determine "whether Article 4(1)(b) can apply where there is no likelihood of direct or indirect confusion, but only a likelihood of association in the strict sense" (paragraph 17 of the judgment). It concluded: "The terms of the provision itself exclude its application where there is no likelihood of confusion on the part of the public". (paragraph 18 of the judgment). Thus, the court held that "the mere association which the public might make between two trade marks as a result of their analogous semantic content is not in itself a sufficient ground for concluding that there is a likelihood of confusion" within the meaning of Article 4(1)(b)."
TRADE MARK AND GOODWILL
Traditionally, a trade mark has always been considered a vital and inseparable part of the goodwill of the business. In fact, the sale of a trade mark without the sale of the goodwill to the same buyer is considered null and void. However, the trade mark can be assigned with or without the goodwill of business though subject to certain conditions. [See V.A. Mohta's Trade Marks, Passing Off and Franchising, pages 12, 313.]
ENTITLEMENT TO USE
The contention of the appellant before the Courts below was that its right to the said trade mark has been entrenched by the respondents on account of use of the same as part of the trade name in view of the fact that although it has started the business in the trade name 'Swad', the first respondent, on the label and the packing material of the said product, had printed the name of the manufacturer 'Ramdev Masala' in such a prominent manner that the same would create an impression in the mind of the ordinary unwary customer that the same is a product of the appellant Company. It also alleged that the respondents had adopted advertisements, marketed and displayed boards in such a manner so as to deliberately deceive the customer.
The concurrent finding of fact arrived at by both the courts was that the packing material and wrapper of both the parties was phonetically and visibly similar to the registered mark. The packing material and label used by the respondents were deceptively similar to that of the appellant and the same creates deception as well as confusion in the minds of customers who are literate, illiterate, male or female, who used to purchase in retail market from small shops as well as big departmental stores.
The learned Trial Court as also the High Court proceeded on the basis that the respondents are entitled to use the said trade mark by reason of the stipulations contained in the said MOU as a result whereof they became entitled to use the trade mark Ramdev for their retail business of spices in seven outlets, which used to be belonging to the company. The said outlets were meant to be used for retail sale of the products of the appellant alone.
The learned Trial Judge as also the High Court, however, failed to notice two significant and important provisions in the said MOU, viz.,
the defendants could not carry on business in wholesale of the said products;
it was meant to be sold directly to the consumers and on the productions "not for resale" was required to be printed on each packet.
What, therefore, could be done by the respondents was to sell the products of the appellant through the said outlets. It was one of the primary business of the partnership firm which was given to the first respondent. Prima facie, therefore, the first respondent could sell only the product of the appellant. The respondents, however, were not restrained from manufacturing spices in their own factory. They were entitled to do so.
They started the same under the brand name of 'Swad'. They could even use the same retail outlets for the purpose of promoting their own products but prima facie they could not use the mark registered in the name of the appellant Company. The registration number of trade mark is 447700.
Once the appellant had acquired goodwill and reputation thereto, in the event of any infringement to the said right, the remedies provided for in the 1958 Act would be available to it. The terms of the MOU, in our opinion, are clear and unambiguous. It was required to be construed, even if it was obscure to some extent by making attempt to uphold the one which would be in consonance with law and not offend the same. Quality control by a registered trade holder vis-`-vis the one produced by an unregistered one is one of the factors which is required to be taken into consideration for the purpose of passing an order of injunction. It is one thing to say that the respondents were permitted to carry on trade but it would be another thing say that they would be entitled to manufacture and market its products under a name which would be deceptively similar to that of the registered trade mark of the appellant. So long the parties to an arrangement can continue to carry out their respective businesses without infringing the right of another, indisputably the terms thereof must be given effect to. But the matter would be entirely different when a party who has not been expressly authorised to manufacture the goods in which the Company had been carrying on business under the same name, the respondents under law could not have been permitted to carry on the manufacturing and marketing of their products under the same name. In a case of this nature, even a mandatory injunction can be granted. The respondents in the instant case have adopted a part of the appellant's registered trade mark as a part of its corporate name. They had merely been permitted to trade from seven outlets. In that view of the matter, they had a limited right under the MOU and by reason thereof they could not have been permitted to start manufacturing of spices under the name and style of 'Ramdev Masala'.
Even under the common law, licence has to be interpreted to subsume the law and prevent the mischief which is deceptive having regard to the fact that trafficking in trade mark is not permitted.
It is true that the respondents have been permitted in terms of the MOU to continue their business in the name of the partnership firm and to use the label mark, logo, etc. but the said MOU must be construed in the light of the law operating in the field. For the said purpose, prima facie, the deeds of retirement are not required to be looked into. When a right to use a trade mark is given, such a right can be exercised only in the manner laid down therein. If in absence of any express licence or agreement to use its label the respondents use the self-same trade mark, the same would not only lead to confusion but may also cause deception. Even a common law licence, it is well-settled, cannot result in the dilution of the trade mark.
In that view of the matter, we are not in a position to subscribe to the views of the learned Trial Judge and the High Court that although the first respondent would be at liberty to carry on the business of manufacture of spices, it can use the mark 'Ramdev' only in seven outlets. It evidently in view of the legal position, could do so in respect of the products of the appellant alone, which would be evident from the fact that at the relevant point of time, the respondents were not carrying any such business. The direction of the learned Trial Judge that the respondents should be prevented from using the word "Ramdev Masala" and their label and packing, however, has been over-turned by the High Court on the premise that they are required to observe the statutory requirements under the Prevention of Food Adulteration Act, 1955 as also the Standards of Weights and Measures Act, 1976.
NON-OBSTANTE PROVISIONS
The non-obstante nature of a provision although may be of wide amplitude, the interpretative process thereof must be kept confined to the legislative policy. A non-obstante clause must be given effect to, to the extent the Parliament intended and not beyond the same. [See ICICI Bank Ltd. v. Sidco Leathers Ltd. & Ors., 2006 (5) SCALE 27] The question which also escaped the attention of the High Court was that having regard to the non-obstante clause contained in the 1958 Act ordinarily for any purpose, the trade mark cannot be infringed. If an infringement of trade mark is established, the onus would be on the defendants to show that he is entitled thereto either by reason of acquiescence on the part of the owner of the registered trade mark or he himself has acquired a right thereto. The Provisions of the Standards of Weights and Measures Act or the Prevention of Food Adulteration Act do not confer such right. Yet again, significantly, a pre-emptive right had been conferred in favour of the first respondent which is itself suggestive of the fact that the first respondent admitted and acknowledged the right of the appellant to the said trade mark.
In the MOU, furthermore it was categorically stated that the use of the trade mark was only to the extent of retail sale as on the packages, the words "not for resale" were to be printed. If the parties intended to allow the first respondent herein to manufacture his own products and to market the same by using the name of Ramdev Masala, the question of grant of a right to sell only in retail and that also printing the words 'not for resale' would not have arisen. A manufacturer is not only entitled to sell his own products in retail but also in wholesale. It can use any outlet for the said purpose whether belonging to it or any other. It would lead to an anomaly if it be held that the first respondent would be permitted not only to sell the products of the appellant but also its own products under the same trade name albeit only from the seven outlets.
By reason of the said MOU, the respondents are not bound to buy any product from the appellant but there is an obligation on the part of the appellant to supply the same as otherwise it would lead to closure of business of Arvindbhai which would have been the intention of the parties.
When the parties had settled their disputes, it was expected that the outlets would be utilised for the purposes for which they were meant to be utilised.
What were the mutual obligations of the parties is a matter which can be considered only at the trial or in any other appropriate proceeding, but prima facie it goes without saying that
