The Single Bench of the Delhi High Court in the case of Mr. Dhananjay Rathi vs Shree Vasu Steels Private Limited & Ors. consisting of Justice Jyoti Singh observed that a court has the power at any stage of the proceeding to implead a party in whose absence the subject matter of the suit cannot be decided effectively under O1R10 CPC.
Facts
Around the year 1942, three male members of Rathi Family namely started a company called Rathi Steel Rolling Mills (‘RSRM’) under the trademark RATHI. In 1968, RSRM entered into a technical collaboration with M/s. TOR Istag Steel Corporation for manufacturing of TOR Steel Bars under the registered trademark RATHI. In 1969, RSRM split into two different groups and two companies were set up, namely, M/s. G.D. Rathi Steels Limited, and M/s. K.L. Rathi Steels Limited. K.L. Rathi Steels Limited applied for and obtained registration for the trademark RATHI in class 06 for certain items, while G.D. Rathi Steels Limited obtained registration in class 06. The Trust named Rathi Foundation was created and registered under the Indian Trusts Act, 1882 and the trademark RATHI along with the goodwill was assigned to the ‘Foundation’. To bring on record the ‘Foundation’ as the subsequent proprietor of the trademark RATHI, an appropriate form under TM-24 was filed before the Trademarks Registry and the same was accepted. Another Memorandum of Understanding (‘MoU-2’) was entered into between few other members of the Rathi Family. In furtherance of MoU-2, a Trust was created by the name of Rathi Research Centre which was duly registered under the Indian Trusts Act, 1882. A suit was filed by one of the lifetime Trustees of the ‘Foundation’, upon learning through market surveys that the Defendants were using the mark RATHI PRAGATI alleging infringement, passing off etc.
Procedural History
An ex parte ad interim injunction was granted by the Court. On being served, Defendants No.1 to 3 who are stated to be assignees/licensees, filed an application under O39R4 CPC seeking vacation of the injunction order as Defendants have been assigned the user licenses to lawfully use the trademark RATHI for specified periods as per a new Trust Deed.
Defendant also submitted that Plaintiff has not impleaded the ‘Centre’ as a party to the present suit and has concealed the execution of the new Trust Deed. After such objection to the non-impleadment, Plaintiff filed the present application for impleading the ‘Centre’ as a party Defendant.
Contentions Made
Appellant: Plaintiff was unaware of the new Trust Deed executed by the ‘Centre’ at the time of filing of the suit and learnt of the same only through the written statement and reply to the application under O39 Rules 1 and 2 CPC as well as the contents of the application under O39R4 CPC. Since the terms of the MoUs strictly prohibit use of the trademark RATHI by third parties, Plaintiff could not comprehend that the ‘Centre’ had licensed the use of the trademark RATHI to the Defendants, contrary to the terms of MoU. Due to disclosure of these facts by the Defendants, it is imperative that the Members/Trustees of the ‘Centre’ are made parties to this suit. The issue of validity of Clauses of the new Trust Deed as well as the validity of the Trademark Assignment Agreements, entered into between the ‘Centre’ and the Defendants, cannot be settled without making Members/Trustees of the ‘Centre’ as parties to the suit.
Observations of the Court
The Bench noted that since it was a common ground and a broad consensus between the Plaintiff and the Defendants that the ‘Centre’ is a necessary party, it was of the view that the application deserves to be allowed and Members/lifetime Trustees of the ‘Centre’ were required to be impleaded as Defendants in the present suit.
It was further noted that the legal position for impleading a party to a suit under O1R10 CPC was no longer res integra, this Court need not advert to in great details, in view of the fact that the parties to the lis are ad-idem with respect to impleadment of the ‘Centre’. Reliance was placed on Gonsalo De Filomena Luis v. Inacio Piedade Hildeberte Fernandes, where five tests/factors were formulated for the Courts to determine if a party sought to be impleaded is a necessary party.
Judgment
The application was allowed and the Members/Trustees of the ‘Centre’, were thereby impleaded as Defendants in the suit.
Case: Mr. Dhananjay Rathi vs Shree Vasu Steels Private Limited & Ors.
Citation: CS(COMM) 267/2022
Bench: Justice Jyoti Singh
Decided on: 15th June 2022
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