Section 124 of Act, is applicable only to suits for stay of infringement till final decision of pending rectifications. Having recourse to Section 151 of CPC, to stay proceedings in a suit for ‘passing off’, was uncalled for as Section 124 of Act, was very specific and made it clear that it was applicable only to suits for infringement. Therefore suit for infringement of Trade mark,  stayed till final decision of pending rectification; suit filed by Plaintiff for ‘passing off’, however, will continue and was to be decided on its own merit.

MIPR 2018 (2) 0421 = MANU/DE/2101/2018
DELHI HIGH COURT
SINGLE BENCH
J.K. OIL INDUSTRIES — Appellant

Vs.

ADANI WILMAR LIMITED — Respondent
( Before : S.P. Garg, J. )
Civil Suit (Comm) No. 109 of 2018 and Interlocutory Application No. 13188 of 14, 7639 of 17
Decided on : 29-05-2018
Civil Procedure Code, 1908 (CPC) – Order 14 Rule 1, Order 39 Rule 1, Order 39 Rule 2, Order 39 Rule 4, Section 151
Trade Marks Act, 1999 – Section 124, Section 124(1), Section 134, Section 135, Section 17, Section 27(2), Section 28(3), Section 30(2)(e)
Section 124 of Trade Marks Act, 1999 (Act);

Section 151 of Code of Civil Procedure, 1908 (CPC)

Trade mark – Infringement – Proceedings can be stayed pending final disposal of rectification application filed by Defendant.
Held, apparently, Defendant never abandoned plea of invalidity, filing of rectification proceedings thereafter, within three months of framing of issues on 29th February, 2012 confirmed it. Since, rectification proceedings had been filed within three months from date of issues, it could not be inferred that, there was inordinate delay in filing rectification proceedings. Since, Defendant had never abandoned plea of invalidity and had filed rectification proceedings within three months before Board,

Section 124 of Act, is applicable only to suits for stay of infringement till final decision of pending rectifications. Having recourse to Section 151 of CPC, to stay proceedings in a suit for ‘passing off’, was uncalled for as Section 124 of Act, was very specific and made it clear that it was applicable only to suits for infringement.

Therefore suit for infringement of Trade mark,  stayed till final decision of pending rectification; suit filed by Plaintiff for ‘passing off’, however, will continue and was to be decided on its own merit.

Counsel for Appearing Parties
S K Bansal, Adv., Ajay Amitabh Suman, Adv., Rajiv Nayar, Adv., Sushant Singh, Adv., Saurabh Seth, Adv., Mohd Umar Iqbal Khan, Adv.
Cases Referred
• Astrazeneca UK Ltd. and Anr. Vs. Orchid Chemicals, (2006) 32 PTC 733
• Bhagwan Dass Khanna Jewellers Pvt. Ltd.and Ors. Vs. Bhagwan Das Khanna Jewellers, (2017) 70 PTC 56
• Dabur India Ltd. Vs. Alka Ayurvedic Pvt. Ltd, (2009) 41 PTC 614
• Formica International Ltd. Vs. Caprihans (India) Pvt. Ltd. and Ors., (1966) AIR(Cal) 247
• Formica International Ltd. Vs. Caprihans India Pvt. Ltd. and Ors., (1966) AIR(Cal) 247
• Micolube India Ltd. Vs. Maggon Auto Centre and Anr, (2010) 42 PTC 462
• Nippon Soda Co.Ltd. Vs. V.P.Goyal and Anr, (2014) 58 PTC 386
• Patel Field Marshal Agencies and Anr. Vs. P.M.Diesels Ltd. and Ors., (2018) 73 PTC 15
• Puma Stationer P.Ltd. and Anr. Vs. Hindustan Pencils Ltd, (2010) 43 PTC 479
• Shakti Traders Vs. M/s.Shakti Press Ltd, (2008) 5 AllMR 699
• Shakti Traders Vs. Shakti Press Ltd, (2008) 5 AllMR 699
• Umesh Kumar Gupta and another Vs. Shree Girraj Food Products, (2013) AIR(All) 81
• Umesh Kumar Gupta Vs. Shree Girraj Food Products, (2013) AIR(All) 81
Final Result : Allowed
JUDGMENT/ORDER
S.P.Garg, J.—Ia 13187/2014 (u/S 124 Trade Marks Act)
The defendant has filed the instant application under Section 124 of the Trade Marks Act (hereinafter ‘the Act’) read with Section 151 CPC for stay of the present proceedings pending final disposal of rectification application filed by it. The application is contested by the plaintiff.
2. I have heard the learned counsel for the parties and have examined the file.
3. Present suit under Sections 134 and 135 read with Section 27(2) of the Act; Copy Right Act, 1957, has been instituted by the plaintiff for permanent injunction restraining infringement, passing off, rendition of accounts, etc. against the defendant. By an order dated 08.01.2010 in IA No.107/2010, the defendant was restrained from using, selling, soliciting, exporting, displaying and advertising the infringing mark appended at page No.4 of the documents filed by the plaintiff till the next date of hearing. By an order dated 10.02.2010 in IA No.107/2010 (u/O XXXIX Rule 1 & 2 CPC, by the plaintiff) and IA No.1405/2010 (u/O XXXIX Rule 4 CPC, by defendant), this Court by a detailed order dismissed IA No.107/2010 and allowed IA No.1405/2010. FAO(OS) No.213/2010 to challenge the said order resulted in dismissal. SLP came to be dismissed by an order dated 07.07.2010.
4. On 19.09.2011, when IA No.14894/2011 filed by the defendant came for hearing, the defendant sought leave of this Court to file rectification application before the Intellectual Property Rights Board (hereinafter ‘IPRB’). Learned counsel for the non-applicant / plaintiff submitted that there was no necessity of filing the said application as no leave of the Court was required. In view of that, the defendant submitted that no further orders were required to be passed and that he would take appropriate steps. The said application stood disposed of that day.
5. On 15.12.2011, with the consent of the parties, issues were framed. It was pointed out by the learned counsel for the defendant that an application for rectification of the trade mark of the plaintiff was pending and in view of the order dated 19.09.2011, the defendant was entitled to file an application for rectification. Defendant’s counsel sought leave of the Court to make an appropriate application in case the application for rectification was allowed as the same would have a direct bearing to the outcome of the present suit and an additional issue would thereafter be required to be framed. The case was adjourned for recording plaintiff’s evidence.
6. When the evidence of the plaintiff was being recorded, IA No.13187/2014 in question came to be filed by the defendant along with IA No.13188/2014 (u/O XIV R 1 CPC). By the order dated 21.07.2014, this Court directed the Registrar not to record evidence. The said directions continued till 05.10.2015, when the Joint Registrar was permitted to record the evidence.
7. Learned counsel for the defendant urged that earlier IA No.14894/2011 was filed due to legal compulsion, as per the law laid down in ‘Astrazeneca UK Ltd. & Anr. Vs. Orchid Chemicals, (2006) 32 PTC 733’ Delhi, permission of the court was sine qua non for filing cancellation pending the suit. The position of law has since been changed recently in view of Full Bench judgment ‘Data Infosys Ltd. vs. Infosys Technologies Ltd.’, . No effective orders were passed on 19.09.2011 in IA No.14894/2011; it did not preclude the defendant to pray to the Court to complete the statutory mandate of Section 124 of the Act by filing the instant IA. He further urged that three months’ time to file rectification application is to commence from the date of framing of issues under Section 124(1)(b)(ii) of the Act. Cancellation petition dated 29.02.2012 was filed within three months making it fully compliant of Section 124 of the Act. The defendant had never abandoned its plea of invalidity as it always agitated the issue of invalidity from the very inception and also filed cancellation within three months. Additional issue was required to be framed as urged by the defendant and for that reason the process under Section 124 of the Act remained incomplete. Relying upon ‘Bhagwan Dass Khanna Jewellers Pvt. Ltd.& Ors. vs. Bhagwan Das Khanna Jewellers, (2017) 70 PTC 56’ (Del)(DB), counsel urged that it was the court’s duty to frame the issues and adjourn the case for three months. Counsel further urged that provisions of Section 124 of the Act are mandatory in nature; it does not provide any such limit as to when the trial of the suit can be stayed. As per law laid down in ‘Data Infosys’ only pre condition for stay of the proceedings is that the rectification must be filed within a period of three months or the extended period of time from the date of framing of the issues. The plaintiff cannot be permitted to take advantage of his own wrong which resulted in the passing of the order dated 19.09.2011. Learned counsel further urged that provision of Section 124 of the Act are applicable even in a composite-suit filed for ‘passing off’.
8. He further urged that the judgment ‘Puma Stationer P.Ltd. & Anr. vs. Hindustan Pencils Ltd, (2010) 43 PTC 479’ (Del)(DB), cannot be relied upon as it did not adjudicate the issue of staying the suit for ‘passing off’ along with infringement; it did not constitute precedent. Reliance was placed on ‘Nippon Soda Co.Ltd. vs. V.P.Goyal & Anr, (2014) 58 PTC 386’ (Del) and ‘Abbott Healthcare Pvt. Ltd. vs. Raj Kumar Prasad and Ors’, MANU /DE/0198/2018.
9. Learned counsel for the plaintiff urged that the proceedings cannot be stayed under Section 124 of the Act as the plea of invalidity was never raised by the defendant in the written statement. The defendant was required to file cancellation petition within three months from 19.09.2011 to get the suit stayed. However, the cancellation petition was filed only in February, 2012 which is beyond the period prescribed under Section 124(1)(b)(ii). The defendant had abandoned the plea of invalidity of the plaintiffs’ registered trademark. Learned counsel further urged that when the issues were framed on 15.12.2011 with the consent of the parties, the defendant did not insist for framing of issue on invalidity of the plaintiff’s registered trademark. The application is liable to be dismissed due to gross delay in filing the cancellation petition. The evidence is being recorded in the present proceedings. Relying upon ‘Micolube India Ltd. vs. Maggon Auto Centre & Anr, (2010) 42 PTC 462’ (Del), counsel urged that the present suit relates to infringement and ‘passing off’ since Section 124 is applicable only to infringement; the suit in relation to ‘passing off’ must continue. Reliance was placed on ‘Data Infosys Ltd. & Ors. vs. Infosys Technologies Ltd.’ ; ‘Dabur India Ltd. vs. Alka Ayurvedic Pvt. Ltd, (2009) 41 PTC 614’ (Del.); ‘Puma Stationer P.Ltd. & Anr. vs. Hindustan Pencils Ltd, (2010) 43 PTC 479’ (Del)(DB); ‘Formica International Ltd. vs. Caprihans (India) Pvt. Ltd. and Ors, (1966) AIR Calcutta 247’; ‘M/s.Shakti Traders vs. M/s.Shakti Press Ltd, (2008) 5 AllMR 699’ and ‘M/s. Sarvapriya Tubes Pvt. Ltd. and Anr. vs. M/s. Madhav Udyog Pvt. Ltd. and Anr.’.
10. On perusal of the sequence of events referred above, it reveals that the defendant had filed the application for stay of the proceedings under Section 124 without inordinate delay on 19.09.2011. Learned counsel for the plaintiff himself apprised the Court that there was no necessity to file the said application as no leave was required from the Court. On that, the defendant was permitted to take appropriate steps. It is informed that the rectification / cancellation proceedings were initiated by the plaintiff thereafter on 29.02.2012; it is not at issue. Perusal of the record reveals that the plea of invalidity was raised by the defendant even in the IA No.14894/2011. By that application, the defendant sought permission from the Court to file necessary rectification application for removal / rectification / modification to the registration of the plaintiff’s mark. In the written statement, in various paras, the plea of invalidity has been indirectly raised. Order dated 10.02.2010 in IA No.107/2010 (u/O XXXIX R 1 & 2 CPC, by plaintiff) and IA No.1405/2010 (u/O XXXIX R 4 CPC, by defendant) is crystal clear whereby the earlier ex-parte injunction granted to the plaintiff was vacated forming a prima facie view that the trademark ‘KING’ of the plaintiff was common to English language and did not have distinctive character and he could not enjoy exclusivity over the part of the trademark under Section 17 of the Act. It was specifically argued at that time that the proceedings were liable to be stayed under Section 124 of the Act. At the time of consideration of issues on 15.12.2011, the defendant’s counsel had pointed out that an application for rectification of the plaintiff’s trademark was pending. It was further urged that in view of the order dated 19.09.2011, the defendant was entitled to file an application for rectification. The defendant sought leave of the Court to make an appropriate application and if allowed it would have a direct bearing on the outcome of the present suit and additional issue would be required to be framed. Apparently, the defendant never abandoned the plea of invalidity, filing of rectification proceedings thereafter within three months of the framing of the issues on 29.02.2012 confirms it. Since the rectification proceedings have been filed within three months from the date of issues, it cannot be inferred that there was inordinate delay in filing the rectification proceedings. In ‘Bhagwan Dass Khanna Jewellers Pvt. Ltd.& Ors. vs. Bhagwan Das Khanna Jewellers’ , the Division Bench of this Court observed that it is the Court’s duty to frame the issue and adjourned the case for three months and non-observance of the said recourse cannot lead to the abandonment of the plea or the application under Section 124 being time barred and the time limitation in such a case shall not start running against the party. Settled position is that the issue with respect to invalidity of the trademark is to be decided by the Board and not by the Civil Court.
11. In the recent judgment ‘Patel Field Marshal Agencies & Anr. vs. P.M.Diesels Ltd. & Ors, (2018) 73 PTC 15’ (SC), the Hon’ble Supreme Court while interpreting Section 111 para materia to Section 124 of the Act held that in that case the issue with respect to the invalidity of the trademark would be decided by the Tribunal and not by the Civil Court. However, the Tribunal will come in sesin only if the Civil Court was satisfied that the issue with regard to invalidity ought to be framed in the suit. Once an issue to the said effect is framed, the matter will thereafter go to the Tribunal and the decision of the Tribunal will thereafter bind the Civil Court. If despite the order of the Civil Court, the parties do not approach Tribunal for rectification, the plea of invalidity will no longer survive.
12. Since the defendant has never abandoned the plea of invalidity and has filed the rectification proceedings within three months before the Board, the proceedings in the present case under Section 124 of the Act regarding plaintiff’s suit for infringement of the trademark are liable to be stayed.
13. This Court finds merit in the plea of the learned counsel for the plaintiff that in a suit for ‘passing off’, the proceedings, however, would continue. Section 124 of the Act is applicable only to the suits for stay of infringement till the final decision of the pending rectifications. This Court in ‘Micolube India Ltd. vs. Maggon Auto Centre & Anr.’ decided on 14.01.2010 categorically held :
“18. A plain reading of the said provision indicates that while considering an application for the stay of the proceedings where the validity of the registration of the trade mark is questioned, an order can be passed in a suit for infringement of trademark. In the present case, since both the parties are holding the registration of the same mark, thus the suit filed by the plaintiff for infringement of trademark is not maintainable in view of Section 28(3) and Section 30(2)(e) of the Act. It cannot be disputed that the suit for passing off would be maintainable. Section 124 does not specifically mandates that while staying the suit for infringement of trademark, an action for passing off shall also be stayed. Therefore, I am of the view that the suit for passing off can continue.
XXXX XXXX XXXX
20. In view of the aforesaid circumstances, the present application is allowed partly as far as the suit of infringement of trade mark is concerned and the same is stayed till the final decision of the pending rectifications. But, the suit filed by the plaintiff for passing off shall continue and is to be considered on its own merit, and the prayer of stay the suit for passing off cannot be accepted. I.A. No. 3915/2009 is disposed of with the abovementioned observations.”
14. Again, the Division Bench of this Court in ‘Puma Stationer P.Ltdd. & Anr. vs. Hindustan Pencils Ltd.’ decided on 16.02.2010 held :
“15. We are of the view, therefore, that the law on this issue is quite well settled. Where an application for rectification/cancellation of a registered trade mark is pending before the statutory authority, the High Court is obliged to stay further proceedings in the suit pending before it pursuant to Section 124(1) of the Trade Marks Act, 1999.
16. In so far as the suit out of which present appeal arises is concerned, there is an allegation against the Appellants of passing off the trade mark ‘Plasto’ as well as ‘Non-Dust’ and there is an allegation of infringement of the trade mark ‘NonDust’.
17. In view of the express provisions of Section 124 of Trade Marks Act, we stay further proceedings in the suit in so far as the alleged infringement is concerned with regard to the trade mark ‘NonDust’ until the disposal of the matter before the Intellectual Property Appellate Board. It is, however, made clear that the passing off action may continue.”
15. Similar view was taken in ‘Formica International Ltd. vs. Caprihans India Pvt. Ltd. & Ors, (1966) AIR Calcutta 247’:
“9. From what I have observed above it follow that the causes of action for infringement and ” passing off ” are distinct and separate and one of them may fail while the other may succeed on the same evidence. In a suit where the two causes of action are combined and the defendant seeks to invoke the provisions of Section 111 the Court, in my view, has the power and the duty to stay the suit so far us it relates to infringement of trade mark. The Court trying the suit must wait for the result of the rectification proceedings before it passes any final order or decree involving the validity of the registration. I realise that the result will be that the suit may have to be tried piecemeal. But having regard to the mandatory provisions of Section 111, I do not see any other alternative. Learned counsel for the petitioner has urged that where a plaintiff with full knowledge of the pending rectification proceedings drafts his plaint in such a manner as to make the issues of infringement and “passing off” inseparable the whole suit ought to be stayed. But the legislature does not give to the Court the power to stay a suit for “passing off”. At the same time the legislature says that when rectification proceedings are pending it is the duty of the Court to stay the suit for infringement in order that conflicting decisions may be eschewed. The legislature says further that the Court must dispose of the suit in conformity with the final order in the rectification proceeding in so far as the suit relates to the validity of the registration, I do not think that learned counsel for the respondent is right in contending that a combined action is outside the purview of Section 111. If that were the case the entire purpose of enacting this section can be frustrated in every case by combining an action for infringement with an action for “passing off”, and conflicting decisions in the rectification proceedings and in the suit may create problems incapable of being solved. It should be remembered that these proceedings may be pending either before the Registrar or the High Court and my attention has not been drawn to any provision in the statute which provides for a solution of the problem that I have broached. The only course left to the court which is concerned with the suit is to stay the action for infringement till the rectification proceedings are finally disposed of. That, I am of opinion, was the intention of the legislature, when Section 111 was introduced into the Trade and Merchandise Marks Act, 1958.”
16. High Court of Judicature at Bombay, Nagpur Bench, Nagpur, in ‘Shakti Traders vs. Shakti Press Ltd, (2008) 5 AllMR 699’, decided on 29.07.2008 in Writ Petition No.4736/2007 held :
“11. Perusal of the above provisions clearly discloses that a suit can be filed either for infringement of a registered trade mark or for passing off action under Section 134 of the Act. Under Section 124 of the Act the court trying the suit for infringement of a trade mark is bound to stay the suit if any proceedings for rectification of the registration in relation to the plaintiff’s or defendant’s trade marks are pending before the Registrar or the Appellate Board. Thus, it is clear that the court dealing with a suit for infringement of a trade mark only is bound to stay the suit when proceedings are pending before the Registrar or the Appellate Board.
Section 124 does not provide for stay of a suit filed for passing off under Section 134(1)(c) of the Act. 12. Perusal of the plaint in the above suit discloses that the suit is primarily based on passing off action and the suit is not for infringement of the trade mark. In paragraph 19 of the plaint, the plaintiff has specifically averred that he has made out a strong case based on passing off action. It is, therefore, clear that the suit is based on passing off action and as such suit has been filed under clause (c) of sub section 1 of Section 134 of the Act. Obviously, therefore, Section 124 of the Act which is applicable only in a suit filed for infringement of trade mark is not attracted. The learned counsel for the respondent fairly submitted that there is no other provisions in the Act permitting stay of the suit.”
17. In ‘M/s.Sarvpriya Tubes Pvt. Ltd. & Anr. vs. M/s. Madhav Udyog Pvt. Ltd. & Anr.’, in CR.No.6058/2015 decided on 12.04.2016, taking into consideration ‘Nippon Soda Co.Ltd.’ , ‘Shakti Traders’ , ‘Umesh Kumar Gupta vs. Shree Girraj Food Products, (2013) AIR Allahabad 81’, High Court of Punjab & Haryana observed :
“4. The contention is that in an action for passing off the issue of mere rectification of register cannot serve the purpose and the extent of evidence and the proposition to be advanced would be different. The learned counsel would refer me to a decision of the Bombay High Court (Nagpur Bench) in Shakti Traders vs. M/s.Shakti Press Ltd, (2008) 5 AllMR 699. The Bombay High Court had held that Section 124 of the Act relating to stay of proceedings would apply only in a suit for infringement of trade mark but if the suit is primarily based as passing off action under Section 134(1)(c) the Act, the provision of Section 124 would not be attracted at all. Similar view was also expressed by the Allahabad High Court in ‘Umesh Kumar Gupta and another vs. Shree Girraj Food Products, (2013) AIR Allahabad 81’.
5. I find the distinction made out by the plaintiff is tenable and I am in respectful agreement with the views expressed by the Bombay High Court and the Allahabad High Court. The decision cited of the Delhi High Court has no bearing to a situation that obtains in this case and also does not address a situation of a suit complaining of passing off action. The order passed by the court below is correct and would require no intervention.”
18. Learned counsel for the defendant heavily placed reliance upon ‘Nippon Soda Co.Ltd.’ to buttress the arguments that Section 124 of the Act is applicable to the suit for ‘passing off’ the goods as well. In the said judgment delivered on 28.02.2014 the Co- ordinate Bench of this Court itself observed in para 18 “As far as the stay of the suit /counter claim in so far as for the relief against passing off is concerned, there is no manner of doubt that Section 124 can have no application thereto ..”. The said Bench, however, agreed with the view taken in CS(OS) 1172/2008 titled ‘Mount Everest Mineral Water Ltd. vs. Kadir Khan’ that the suit for the same relief on the ground of infringement as well as passing off cannot be split up and cannot be decided at different points of time. Apparently, the applicability of Section 124 of the Act was not at issue in the said proceedings.
19. Reliance was further placed on the Abbott Healthcare Pvt. Ltd. vs. Raj Kumar Prasad and Ors. in CS(OS) 3534/2012 decided on 03.01.2018 by the said Bench. Defendant’s counsel urged that in the said judgment the Co-ordinate Bench had considered the judgment in ‘Puma Stationer P.Ltd.’ and was of the view that the said judgment had not adjudicated the issue, it did not constitute a precedent or to have decided contrary to Mount Everest Mineral Water case . This Court finds no substance in the arguments of the learned counsel for the defendant as Section 124 of the Act is crystal clear and the words ‘passing off’ do not find mention therein. The Division Bench in ‘Puma Stationer P.Ltd.’ was very much oblivious of the relief claimed in the said suit and was of the view that Section 124 did not have any application to the suits for ‘passing off’. The Co-ordinate Bench of this Court in ‘Micolube India Ltd. vs. Maggon Auto Centre & Anr.’ categorically discussed the said aspect and was of the view that the proceedings for ‘passing off’ would continue.
20. This Court finds no valid reasons to take different view than the one taken by the Division Bench of this Court in ‘Puma Stationer P.Ltd.’ and ‘Micolube India Ltd.’. Having recourse to Section 151 CPC to stay the proceedings in a suit for ‘passing off’, as urged by the learned counsel for the defendant, is uncalled for as Section 124 is very specific and makes it clear that it is applicable only to suits for infringement.
21. In view of the above circumstances, the instant application is partly allowed. So far as the suit for infringement of Trademark it is stayed till the final decision of the pending rectification; the suit filed by the plaintiff for ‘passing off’, however, shall continue and is to be decided on its own merit.
CS(COMM) 109/2018
22. In view of recent judgment ‘Patel Field Marshal’ , the defendant will be at liberty to urge the framing of additional issue regarding the invalidity of the registration mark before Roster Bench as per law.
23. List before Roster Bench on 10th July, 2018.

Add a Comment

Your email address will not be published. Required fields are marked *