Calcutta High Court
Rajat Agarwal & Ors vs Spartan Online Pvt. Ltd. & Ors on 12 May, 2017
Equivalent citations: AIR 2017 (NOC) 846 (CAL.)
Author: Soumen Sen
Bench: Soumen Sen
IN THE HIGH COURT AT CALCUTTA
ORDINARY ORIGINAL CIVIL JURISDICTION
ORIGINAL SIDE
BEFORE:
THE HON'BLE JUSTICE SOUMEN SEN
G.A. No.687 OF 2017
G.A. No.1172 OF 2017
C.S. No. 35 OF 2017
RAJAT AGARWAL & ORS.
VS.
SPARTAN ONLINE PVT. LTD. & ORS.
For the Petitioners : Mr. Pratap Chatterjee, Sr. Adv.,
Mr. S.N. Mookherjee, Sr. Adv.,
Mr. Ranjan Bachawat, Sr. Adv.,
Mr. Ratnanko Banerjee, Sr. Adv.,
Mr. P. Sinha, Adv.,
Mr. Debnath Ghosh, Adv.,
Mr. S. Sengupta, Adv.,
Mrs. Arunima Lala Sengupta, Adv.,
Mr. Ayan Dey, Adv.
For the Respondent Nos.1, 2 and 3 : Mr. S.K. Kapoor, Sr. Adv.,
Mr. M. K. Singh, Adv., Mr. Suman Kr. Mukherjee, Adv.
For the Respondent No.7 : Mr. Tilak Bose, Sr. Adv.,
Mr. Anindya Basu, Adv.,
Mr. Sayantan Bose, Adv.,
Mr. Supriya Ranjan Saha, Adv.
Heard On : 27.02.2017, 07.03.2017, 20.03.2017,
07.04.2017.
Judgment On : 12th May, 2017
Soumen Sen, J.:- The game of dice which led to an epic battle of Kurukshetra has not deterred generations after generations irrespective of ancient or modern to pursue gambling whether we may ensconce it with a game of skill in order justify its legality and to give legal recognition although the result might be ruinous.
The game of poker which apparently appears to be demonstrably gambling as one of its kind has triggered off the present litigation between two groups who were hunky-dory until September, 2016.
The defendant No.7 was desirous of launching an Online Poker business which the said defendant could not do from its office at Maharashtra since the local laws of Maharashtra do not permit poker gaming. The West Bengal Gambling and Prize Competitions Act, 1957 in Clause 2(b) defines gaming or gambling to exclude Poker, Rummy or Nap and hence this State has been chosen for launching a webpage "Spartanpoker.com" to carry on the Poker gaming business.
The petitioners say that the petitioners have expertise in poker gaming and on being approached by the respondent Nos.2 to 5 to launch poker gaming at Calcutta, the plaintiff No.1 contributed his skill, expertise and capital for development of the said game under the domain name "spartanpoker.com". The plaintiffs have disclosed documents to show that the said domain was purchased by the plaintiff No.1 and the said plaintiff No.1 is having a valid registration as of date. The plaintiff No.1 claims to be the Co-founder and the CEO of the India's oldest, largest and most successful poker media brand, "Pokerguru" and being successfully ventured into both live and online arenas of poker through the Pokerguru Online League and Pokerguru Tour creating benchmarks in the respective fields. The petitioner No.1 claims that he was instrumental in setting up the website, www.pokerguru.in which has been disseminating information on poker games and tournaments both online and live since 2009. The said Pokerguru.in was taken over subsequently by the petitioner No.3 in or around 2011. The petitioner No.3 is wholly owned and controlled by the petitioner Nos.1 and 2 and their family members.
The respondent No.4 used to run a live poker tournament series under the name and style of "Aces Unlimited" which he later discontinued. In or around 2013, he joined hands with the respondent Nos.2 and 3 in the aforesaid India Poker Championship. While the petitioners were primarily established in the online segment of the game, the respondents were established in holding live poker events. The plaintiffs say that the parties realized that online gaming has huge potential in India and explored the possibility of joining hands to use their respective strengths and expertise to promote online poker gaming in India. The petitioners alleged that on 20th March, 2014, the petitioner and respondent Nos. 2 to 5 decided to leverage their respective expertise in online and live poker to join hands to set up an online live poker game site in partnership together with the respondent No.6 and in furtherance thereof on 22nd June, 2014, an agreement was entered into between the plaintiffs and the defendant Nos.2 to 7 by which they have agreed to set up a joint venture company, inter alia, on the following terms and conditions:-
(a) The parties would start an online poker venture as a joint venture between the petitioner No.3 and the respondent No.7.
(b) The petitioner No.3 and the respondent No.7 would be 50:50 stakeholders in the said joint venture. A suitable company and/or LLP would be set up for such purpose.
(c) The parties and their associate partners would not get involved with any other company operating in a similar business. The same would be an exclusive arrangement and the parties would maintain exclusivity.
(d) The finances for the joint venture would be provided in equal shares by the petitioner No.3 and the respondent No.7 respectively with a minimum commitment of Rs.30,00,000/- each towards start up expenses. Further expenses would be shared equally as per requirements.
(e) The parties would ensure that their respective brand, pokerguru and Indian poker championships were used to leverage the online poker venture and take advantage of their standing and goodwill for such purpose.
The petitioners have relied upon an e-mail dated 22nd June, 2014 of Peter Abraham to Rajat Agarwal which apparently records the proposed terms for the joint-venture.
The plaintiffs alleged that in terms of the said agreement the plaintiffs have contributed various sums of money necessary for developing the business including working capital. The petitioners from time to time between 22nd August, 2014 and 21st August, 2015 contributed a sum of Rs.25 lacs for the purpose of the joint venture. The other respondents also made corresponding contributions towards the business of the joint venture. The petitioners provided office accommodation for the business of the joint venture firstly at Alipore and thereafter at Poddar Nagar for housing the registered office of the respondent No.7. A corporate office was also obtained on rent at Bombay and employees and staffs were hired for such purpose. The petitioner No.1 took the initiative for the website design, that is, www.spartanpoker.com and employed several associates for the said purpose. As the parties had agreed to pool their resources and expertise for common benefit, it was claimed that the parties mutually decided that each of the parties would be designated with the responsibility of looking after activities in which they have expertise. The petitioner No.1 was to be primarily responsible for marketing and similarly, the primary responsibility of the respondent No.2 would be advising on structures and guarantees of tournaments to be conducted on Spartanpoker.com. The petitioner No.1 and the respondent No.3 are the joint signatory to the bank accounts of the respondent No.7. The respondent No.3 was to primarily look after web- content. The respondent No.4 claimed to have expertise in software and was instrumental in arranging and having the entire software customised and set up for the website; setting up fraud and collusion controls for the software and monitoring player activities for the software. Ultimately, the site 'spartanpoker.com' was launched on 25th March, 2015. It is alleged that the petitioner No.1 used his expertise, skill and contacts for the purpose of actively promoting the proposed website and was able to generate huge interest in the proposed spartanpoker. Over 55 articles were written and published in numerous blogs and websites, and transmitted to the relevant sector of the industry. It is claimed that pokerguru is one of the biggest and most successful online poker website in India charging anywhere between Rs.1 lac and Rs.2.50 lacs per month for its promotional activities. Pokerguru.in ran free advertisements actively promoting Spartanpoker.com free of cost and this took Spartanpoker to the no.1 premium spot from March, 2015 to September, 2016. The aggressive marketing strategy adopted by the petitioner No.1 generated over 8,000 new signups on Spartanpoker.com with over 75% of the costs recovered within 6 months of the promotion, boosting both the member base and revenue of Spartanpoker.com. While the parties had earlier agreed that the respondent Nos.2 to 5 would have 50% shares in the joint venture and the petitioners would have 50% share therein, subsequently, it was agreed that since inputs of the respondent No.6 were also valuable for the joint venture, he would also have a share in the joint venture. However, his share would be allotted out of the 50% share of the petitioners. According to the plaintiffs, the parties have agreed to the share in the joint venture and have carried on business in partnership on the basis of the following shares:-
a) Rajat Agarwal : 12.5%
b) Bal Krishan Agarwal: 25%
c) Sameer Rattoney: 14.58%
d) Peter Abraham: 6.25%
e) Rajeev Kanjani: 14.58%
f) Amin Rozani: 14.58%
g) Rohit Bhalla : 12.5%.
The petitioners alleged that initially the parties thought of forming Limited Liability Partnership by the name of Rabana Sports LLP with Two further LLPs, Guru Sports LLP and Quadrific Entertainment LLP would have equal shares but subsequently the parties were advised that Limited Liability Partnership would be too cumbersome and unsuitable for such business and, accordingly, it was decided to carry on the business through the respondent No.7 with the shareholding pattern mentioned above.
The shareholding pattern of the respondent No.7 at the time was as follows:-
Respondent No.2 - 5000 shares.
Respondent No.3 - 5000 shares.
The plaintiffs claimed that parties have decided that the respondent Nos.2 and 3 would transfer requisite number of shares to the petitioners and the other respondents to bring the shareholding in accordance with the ratio mentioned above. Once the same was done, appropriate steps would be taken for increasing the authorized paid-up capital of the company and to allot further shares to the respective partners in accordance with the aforesaid shares. In order to give effect to such understanding, the petitioners made diverse payments to the respondent Nos.2 and 3 in accordance with their respective shares to enable transfer of shares of the respondent Nos.2 and 3 to the respective parties. The plaintiffs alleged that the petitioner Nos.1 has paid Rs.6250/- to Peter Abraham and Rs.6260/- to Sameer Rattonsey and the petitioner No.2 has paid Rs.25,000/- to Peter Abraham on 10th March, 2016. The only directors of the respondent No.7 until April, 2015 were the respondent Nos.2 and 3 after which the respondent Nos.4 and 5 were inducted as directors. Subsequently, it was decided that the business of the joint venture would be carried on in the name of the respondent No.7, the petitioner Nos.1 and 2 and the respondent No.6 were also inducted as directors in the respondent No.7.
The dispute arose when a Board meeting of the respondent No.7 was convened on November 28, 2016 and an Extra Ordinary General Meeting (EOGM) on 5th December, 2016 for removal of the respondent No.6 on the basis of the requisition given by Sameer Rattonsey and Peter Abraham followed by further notice for removal of the plaintiff No.1. It appears that the Sameer Rattonsey and Peter Abraham alleged that the respondent No.6 was brought by the plaintiffs and he has siphoned of large sums of money.
The plaintiffs did not carry on with the defendants in the interest of the business to recover moneys from the respondent No.6 although the petitioners have admitted that the respondent No.6 has defalcated huge sums of money. The resilience of the petitioners, according to the respondents, is not in the interest of the respondent No.7 and, accordingly, it appears that the said respondents proposed to remove the petitioner No.1 from the board of the directors of the respondent No.7. The petitioners show their allegiance to the wrong doing of the respondent No.6 and it became a contentious issue. The plaintiffs became suspicious when the respondents not only denied the status of the plaintiffs as shareholders but also denied payment of profits and dividends on assertion and representation that the respondent No.7 has suffered loss. The petitioner challenges the propriety and validity of the notices convening a Board Meeting on November 28, 2016 and an Extraordinary General Meeting of the company on 5th December, 2016 for the purpose of removal of the respondent No.6 as a director. The plaintiffs have contended that the said notices were issued on the basis that the respondent Nos.2 and 3 alone were shareholders of the company and without reflecting the transfer of shares in the names of the petitioners. The petitioners have protested against such wrongful claims of the respondents. Despite such protest, the respondents failed and neglected to remedy the situation leading to serious disputes between the parties. The respondent No.6 has since been removed as a director. The respondent Nos.2 to 5 made no attempt to redress the petitioners' grievance and started to raise frivolous disputes and claimed that the petitioner No.1 should be held responsible for failure in monitoring and detecting the wrongful acts of the respondent No.6. The plaintiffs contended that the respondent No.4 was responsible for ensuring all compliance issues including setting up fraud and collusion controls, monitoring player activities etc. The areas where, according to the respondent No.6, has acted illegally and have caused financial loss are the extensive areas entrusted with the various responsibilities and more particularly respondent No.4 and the plaintiffs are not responsible for such losses. Moreover, the respondent Nos.2 to 5 have caused a new company to be incorporated on 9th December, 2016 that is the respondent No.1 with the object of diverting the partnership business. The respondent Nos.2 to 5 are the shareholders and directors thereof and own and control the said company. The joint venture business have been diverted to the respondent No.1 which has started operating the same facilities under the name "thespartanpoker" and using the same and/or a deceptively similar Spartan helmet logo. The plaintiffs claimed violation of the petitioners' rights as also an infringement of copyright thereof. The plaintiffs have relied upon documents to show that the plaintiff No.1 is the registered proprietor of the domain name "spartanpoker.com" and has paid the requisite licence fees. The said domain name was created on 8th November, 2012 and registered in the name of the plaintiff No.1 on 9th July, 2014 which is valid till 8th November, 2022. The petitioners alleged that in furtherance of the wrongful activities, the respondent Nos.2 to 5 have since sought to take steps for removal of the petitioner No.1 as a director of the respondent No.7 and for such purpose, have issued notices dated 18th January, 2017, 24th January, 2017 and 13th February, 2017 convening a Board meeting on 3rd February, 2017 and an Extraordinary General Meeting of the respondent No.7 on 25th February, 2017 for such purpose. The notices are oppressive and prejudicial to the interest of the petitioners and are wrongful and malafide.
The petitioners contend that the said notices are wrongful, illegal, vague, devoid of particulars, without any reason, and are not in accordance with the provisions of the Companies Act, 1956, inasmuch the said notices suffer from material defects. The said notices are/or the explanatory statement did not contain sufficient detail as would enable the petitioner No.1 to defend himself. The said meetings have been deliberately fixed at Bombay.
The petitioners further contend that the respondents had no right whatsoever to start any new website or carrying on any similar business as that of the joint venture to the exclusion of the petitioners. The same is in breach of agreement between the parties. The business model, the clientele, the online software programming used for live poker gaming, profits, trade secrets and the database of the joint venture contained in the website are the property of the said joint venture and are confidential in nature and cannot be divulged or disclosed or diverted by the respondents to the respondent No.7 or any other entities. The aforesaid confidential information in respect of the online poker games of the joint venture should be protected from being diverted and/or divulged by the respondent Nos.1 to
5. The said respondents owe a fiduciary duty to the petitioners not to disclose and/or divulge the aforesaid confidential information and/or trade secrets which the said respondents have taken wrongful and illegal control. The respondents cannot be permitted to use the confidential information and trade secrets of the respondent No.7 to the exclusion of the petitioners to use the same as a springboard activity detrimental to the petitioners and is not entitled to take any unfair advantage of such information.
The petitioners have substantial stake in the respondent No.7 Company and their assets, profits, goodwill, trademarks logo and website and the same cannot be diverted by the respondents to any other entity for their wrongful gain or otherwise. The respondent Nos.1 to 5 have started using a Trade Mark "TheSpartanPoker" which is identical and/or deceptively similar to the Trade Mark "Spartan poker'. The use of "TheSpartanPoker' is bound to create confusion and/or deception in the minds of the customers and the public. The mark "TheSpartanPoker" is not capable of distinguishing the services of the respondents and is likely to cause deception and confusion in the course of trade.
The petitioners have come to learn that on or about February 21, 2017 the respondent No.1 has also wrongfully applied for registration of the mark, "thespartanpoker.com" and various other associate marks in or around February 02, 2017. Such applications are wrongful and in bad faith.
The respondents are purporting to use the Trade Mark "TheSpartanPoker" to run a business under the name and style of "TheSpartanPoker" in the new company Spartan Online Private Limited being the respondent No.1 thereby depriving the petitioners of their rights as envisaged under agreement between the parties.
The petitioners subsequently have filed an application being G.A. No.1172 of 2017 praying, inter alia, for a restrain order upon the defendants from operating the bank accounts maintained in Yes Bank and appointment of an auditor for the purpose of examining the accounts of the respondent Nos.1 and 7 since the inception of business of the companies and prepare a balance sheet of the respondent No.7. The basis of the subsequent application appears to be that the respondent No.7 is attempting to divert the business of the said respondent No.7 to the respondent No.1 which would be evinced by the fact that the existing Online Poker business was shifted from the website hosted on "spartanpoker.com" to a website hosted on "thespartanpoker.com" in which the petitioners presumed to be owned by the respondent No.1 as the name of the owner of the said domain name "thespartanpoker.com" is not available due to privacy protection. The petitioners alleged that they have reliably come to learn that over Rs.75 lakhs have been transferred to the respondent No.1 and such funds have been siphoned away from the respondent No.7 either directly or indirectly by lifting the same through the respondent Nos.2 to 5. It is further alleged that the respondent Nos. 2 to 5 are meeting the personal expenditure by using the credit cards of the respondent No.7. The petitioners are not being consulted in relation to any major decision or the day to day running of the company or the utilization and withdrawal of funds. The daily revenue from the business being carried out through the website "thespartanpoker.com"
is in excess of Rs.10 lakhs at present, which translates into approximately Rs.3 Crores per month. The Company when initially started its business was earning a revenue between Rs.15,000/- to Rs.20,000/- per day which increased exponentially over time and was in the region of over Rs.10 lakhs in or around March, 2016. The petitioners have disclosed details of the revenue and the respondents for the period of 10th July, 2015 to March 30, 2016 and also an e-mail dated 19th September, 2016 enclosing a Cash Flow Report and Summary of Payments with details of Revenue and Expenditure on a daily basis.
The petitioners alleged that from the basis of the materials available, it would appear that the revenue for the period 10th July, 2015 to 30th March, 2016 and 1st August, 2016 to 19th September, 2016 was in excess of Rs.15,88,76,197.83.
Mr. S.K. Kapoor, learned Senior Counsel appearing on behalf of the defendant Nos.1, 2 and 3 submits that the defendant No.7 is a Private Limited Company which was incorporated on 20th March, 2014, having a share capital of Rs.1 lakh with two directors, namely, the defendant Nos. 2 and 3. Peter Abraham was the promoter-director of the respondent No.7 and he has conceptualized the word "Spartan" to be used in connection with the Online poker business. He had suggested purchase of various portals on behalf of the respondent No.7 and have been doing this since 2014 even when the incorporation of the respondent was being contemplated. Mr. Peter Abraham had an account with Bigrock, a domain vendor of repute. The account of Peter Abraham with Bigrock would show that Peter Abraham had applied for various domain names, namely, indiacardclub.com in January, 2014 and had applied for namastepoker.com in Jun, 2014. When the domain name of the respondent No.7 online business was being contemplated, both the promoter-shareholders and directors of the respondent No.7 as well as the plaintiff No.1 were based in Mumbai and were carrying on business from Mumbai. Pending finalization and selection of a domain name, the respondent No.7 took various steps to set up its online poker business. Since its incorporation in March, 2014, the respondent had been contemplating use of the word "Spartan" in connection with its online poker business. On 4th July, 2014, Peter Abraham, on behalf of the respondent No.7 made an application to Bigrock for purchase of the domain name "spartanpoker.com". The said domain name was chosen because the same was available in the web for purchase and such domain was not only associated with the word "Spartan" but also with "poker"
business. Immediately upon swiping the personal credit card of Peter Abraham an invoice was generated by Bigrock which clearly shows sale of the domain name "spartanpoker.com" to Peter Abraham. However, by reason of certain problems the transaction by Credit Card of Peter Abraham was declined on 6th July, 2014 by Bigrock. At the relevant time, Rajat was based in Mumbai and had shown keen interest in managing the financial affairs of the forthcoming online business of the respondent No.7. At the request of Peter Abraham, the said Rajat Agarwal made an application on 9th July, 2014 to Bigrock for immediate purchase of "spartanpoker.com" on behalf of the respondent No.7. Immediately after purchase of the domain names, the respondent No.7 took steps for development of the logo and design of the "spartanpoker.com".
Rajat Agarwal on behalf of the respondent No.7 was also entrusted to take necessary steps for development of the logo and design of "spartanpoker.com" and other domain names containing the word "Spartan" which had been or were being purchased on behalf of the respondent No.7.
On 6th August, 2014, the logo and design of spartanpoker was finalized by the respondent No.7. The said logo and design was purchased from a graphic licensor company by the respondent No.7 for valuable consideration. The parties exchanged several emails between 14th July, 2014 and 22nd July, 2014, regarding finalization of the logo and design of the spartanpoker .com. in the name of the respondent No.7. After finalization of the logo and design for various domain names acquired by the respondent No.7 and bearing the word "Spartan" in connection with poker online business, the respondent No.7 took various steps for registration of its mark. The logo and design consist of helmet of a Spartan soldier. The said logo is printed in red and yellow colour against black background, the top portion of the helmet is yellow and the rest of it and particularly the portion covering the face is in red. The word "Spartan" is written in red below the helmet. Depending on the domain name the words "Poker", "Rummy" or "gaming arena" are printed below in yellow. The respondent No.7 has different trade dresses depending on the choice of domain name.
The word "Spartan" was thought of by the respondent No.7 ever since its incorporation. An application for first domain name was made by and on behalf of the respondent No.7 on 4th July, 2014. The word "Spartan" as well as other associated words with "Spartan" and the trade name and trade dress mentioned above have acquired tremendous goodwill in the market and such mark and trade dress are associated only with the respondent No.7 and none other. The respondent No.7 has incurred huge expenses to advertise the aforesaid mark "Spartan".
The respondent No.7, in fact, had engaged one trademark attorney True Blue Legal for filing trade mark applications for registration of various marks bearing the word "Spartan" including "spartanpoker.com". The respondent No.7 commenced its online business with the domain names "spartanpoker.com" sometimes in March, 2015. The payments made for the online poker business attracts service tax for which application for service tax registration was made in the name of the respondent No.7 on 7th April, 2015 and for all income generated under the online business using the mark "spartanpoker.com" Service Tax is being paid by the respondent No.7. The Mark "spartanpoker.com" was primarily being used for its online poker business. The reason for making trademark application for trademark registration in the names of other marks bearing the word "Spartan" was to protect the word "Spartan" so that the word "Spartan" is exclusively associated with the respondent No.7 in respect of poker business. The plaintiff No.1 was appointed as a director of the respondent No.7 with effect from February, 2016. The plaintiff No.1 has been paid remuneration till October, 2016 ever since the online business of the respondent No.7 using the word "Spartan" flourished. Apart from the aforesaid, the respondent No.7 has reimbursed the plaintiff No.1 all expenses incurred by the said respondent when the said Rajat Agarwal was looking after the financial matters of the respondent No.7. In or about April, 2016, a fraud in respect of financial matters of the respondent No.7 was detected at corporate office in Mumbai and during enquiry it was transpired that Rohit Bhalla who had been introduced by plaintiff and was appointed as director of the company on 5th February, 2016 had siphoned huge sums of money from the respondent No.7. A show cause notice was issued to Rohit Bhalla on 20th August, 2016. Criminal proceedings were also initiated against him. Rajat stopped attending the office since August, 2016. The plaintiff No.1, however, showed great displeasure for taking such steps against Rohit since September, 2016 the plaintiff No.1 had stopped associating the petition in the financial matters and had ceased to have in connection with the affairs of the respondent No.7. On 19th November, 2016, the Board of Directors of the respondent No.7 issued a notice for removal of Rohit as director of the company in view of serious financial irregularities which had surfaced. The plaintiff No.1 by a letter dated 25th November, 2016 objected to such steps being taken by the company for removal of Rajat. On 4th December, 2016, in the website of the company a publication was made by Rajat who was still then a director making defamatory statement against the respondent No.7 and threatening to commence competing online poker business using the word "spartanpoker". It was during this time, it came to the knowledge of the respondent No.7 that without giving any notice to the said respondent No.7, Rajat had filed several objections before the Trade Mark Registry objecting to the registration of the trademark in favour of the respondent No.7 and claiming user thereof since 9th July, 2014.
The learned Senior Counsel had submitted that plaintiffs were never shareholders of the respondent No.7. They were duly paid for their services and had received their due remuneration for service rendered.
All expenses incurred by the plaintiff in connection with the said business have been duly paid. The working capital provided by the plaintiffs has been duly returned to them. The alleged Memorandum of Understanding contained in the email dated 22nd June, 2014 is inchoate and the alleged terms and conditions are not enforceable in law. At the best, it may be considered as an agreement to enter into a partnership agreement. Moreover, the said alleged understanding refers to one Mr. Raman who is like Hamlet's father, a contemplated associate who appears to have left the plaintiffs. The mass of verbiage in this tortuous long ended pleading would fail to demonstrate that the plaintiff No.1 has developed the said domain name "spartanpoker.com". A claim that he owns the domain name is a humbug. In fact, the defendant No.3 was the principle person who obtained various domain names on behalf of the respondent No.7. The contribution made by the plaintiffs for acquisition of the domain name was due to the rejection of the Credit Card which fact has been conveniently suppressed. The petitioner has also suppressed that all expenses for logo trade business including application made for registration of trademark are borne by the respondent No.7. The learned Senior Counsel has referred to Section 4 of the Partnership Act and Sections 14 and 38 of the Specific Relief Act and submits that an agreement to enter into a partnership agreement would not be enforceable more particularly having regard to Section 14(b) of the Specific Relief Act, 1963. Even if it is contended and held that the parties were, in fact, carrying on a partnership business, the said partnership would be construed as a partnership at Will and revocable by the service of notice and for a partnership of this nature, no specific performance can be granted.
Mr. Kapoor has relied upon Pravudayal Agarwala Vs. Ramkumar Agarwala reported at AIR 1956 Cal 41 Paragraph 19 where a passage from Lindley on Partnerships was quoted. The said Paragraph reads:-
"19. The other alternative prayer is for directing the defendant to execute a proper deed of partnership in accordance with the deed of agreement and to perform all other acts and deeds necessary to put the partnership on a complete legal basis. Under Clause (d) of Section 21, Specific Relief Act a contract which is in its nature revocable cannot specifically be enforced. In view of the terms of the agreement the partnership even if entered into would be a partnership at will and even if such a contract were to be specifically enforced it could be terminated immediately thereafter. Moreover, as observed by Lindley on Partnerships (11th Edn., p.582) on principles also such a contract should not be specifically enforced.
"If two persons have agreed to enter into a partnership, and one of them refuses to abide by the agreement, the remedy for the other is an action for damages, and not, excepting in the cases to be presently noticed, for specific performance. To compel an unwilling person to become a partner with another would not be conductive to the welfare of the latter, not more than to compel a man to marry a woman he did not like would be for the benefit of the lady.
Moreover, to decree specific performance of an agreement for partnership at will would be nugatory, inasmuch as it might be dissolved the moment after the decree was made; and to decree specific performance of an agreement for a partnership for a term of years would involve the Court in the superintendence of the partnership throughout the whole continuance of the term. As a rule, therefore courts will not decree specific performance of an agreement for a partnership".
We have consequently required to consider the amount of damages which the plaintiff is entitled to. There had been a breach of contract for which the defendant is liable. That is the finding of the trial Court which we affirm for reasons already indicated above."
The exclusive clause in the alleged agreement cannot be enforced since the said memorandum itself is unenforceable in law and no such partnership deed has been executed till date. The respondent No.7 is a juristic entity and is only having two directors. The said respondent No.7 cannot be treated as partnership of the parties. The very fact that on 9th July, 2014, the application for registration of the trade mark "spartanpoker.com" was made in the in the name of the respondent No.7, the claim of the plaintiff No.1 that it is owner of the trade mark is devoid of any merit.
Mr. Sayantan Bose, the learned Counsel appearing on behalf of the defendant No.7 has adopted aforesaid submission made on behalf of the respondent Nos.1, 2 and 3.
Mr. Tilak Bose on behalf of the defendant No.7 has submitted that the defendant No.7 has already filed an application for revocation of leave under Clause 12 of the Letters Patent. The entire cause of action against the defendant No.7 has arisen at Mumbai. The plaintiff No.1 has already been removed by Extra Ordinary General Meeting (EOGM) held on 25th February, 2017 at its corporate office at Mumbai. The domain name "spartanpoker.com" along with other similar domain names were purchased by the respondent No.7 Company through various brokers, namely, Bigrock, Goodday required registration through individual account and/or individual names is a quicker and convenient method with registration in the name of the company for which additional documents and formalities are required that is why Peter Abraham had applied in his individual name for purchasing various domain names through such brokers on behalf of the company for any online business domain has to be purchased. The domain names acquired on behalf of the respondent No.7 are purchased from the aforesaid vendors. It is always prudent to purchase the domain name in the name of an individual in which case all that a person is required to do is to register himself as an applicant and, thereafter, making payment and the domain name is immediately purchased, if available, by the broker if an application is made by a company, the broker requires various other details. Usually, therefore, domain names are always applied in the name of an individual on behalf of the Company. It is for this reason, Peter Abraham had applied individually for various domain names with the word "Spartan" on behalf of the company through the aforesaid vendors.
Mr. Bose has adopted the submission made by Mr. Kapoor with regard to the association of the mark "Spartan" with Peter Abraham. It is submitted that on 2nd July, 2014, the software developers sent the quotation for the content development of the website a draft agreement was received in the name of the defendant No.7. It relates to poker software. It came from Russia. On 4th July, 2014, Peter Abraham for the purpose of Spartan on behalf of the defendant No.7 applied for "Spartanpoker.com". Mr. Bose had reiterated that registration of the domain name by Rajat was due to the rejection of the Credit Card of Peter Abraham. He has also relied upon emails exchanged between the parties to show that Rajat and the other directors and shareholders of the company had taken steps for setting up logo and registration of the mark "Spartan". The fact that Peter Abraham had applied for domain names of said "Spartan" mark from August, 2014 is also suppressed. Rajat has also suppressed that he had filed objections on 21st October, 2016 to the applications for trade mark registration filed by the company on 14th September, 2014. All expenses related to domain and trademarks were not made by respondent No.7. All TDs and Sertice Tax related to the said domain have been paid by the company and all such final decision was taken by Rajat who was looking after financial matters of the company in Mumbai. The service tax registration is in the name of respondent No.7. Mr. Bose has referred to the email dated 2nd February, 2017 to explain the apparent inconsistencies in the notice convening the meeting for removal of the plaintiff No.1 from the Board of Directors of the defendant No.7 as was urged by the plaintiff No.1 that the notice convening the meeting was in respect of Rohit Bhalla whereas a decision purported to have been taken for removal of Rajat Agarwal.
Mr. Pratap Chatterjee, the learned Senior Counsel appearing with Mr. Ranjan Bachawat, Senior Advocate, in reply has submitted that Specific Relief Act, 1963 was enacted to amend the law relating to certain grounds of specific relief. It has repealed its predecessor Act of 1877. The judgment of the Division Bench of the Calcutta High Court in Pravudayal Agarwala (supra) was rendered earlier to 1963. Section 14(3)(b) of the 1963 Act permits specific performance of a partnership agreement and, accordingly, the said judgment cannot be made applicable in the instant case.
The learned Senior Counsel has referred to various emails exchanged by and between the parties prior to September, 2016 to show that there cannot be any doubt that the plaintiffs were considered as equal shareholders of the defendant No.7 and were treated to be so which would be evident from the distribution of profits according to the shares contemplated. The contents of the website publication on 4th December, 2016, on behalf of the plaintiffs that Pokerguru has no control over the day to day operation of finances of Spartan Poker and that Pokerguru would be launching a new and improved Spartan Poker soon is explained by contending that since by that time, the defendant No.1 was incorporated and the defendant No.7 was diverting its business to defendant No.1 in order to make the defendant No.7 the shell company such caution notice was issued so that the customers could exercise their discretion properly as they would normally associate the plaintiff No.1 as the person with an expertise in online poker gaming. It is submitted that if the defendants have never considered the plaintiffs to be partners in arm then there were no necessity to describe the plaintiffs as partners in several communications exchanged between the parties since June, 2014 or treating the respondent No.7 as a partnership of the plaintiffs and the said defendant Nos.2 to 6 and distribute the profits according to the argued shares.
The dispute relates to control and management of the defendant No.7. It also involves right to use and exploit the domain name "www.spartanpoker.com" and trade mark as well as copyright in "Spartanpoker" over which the plaintiffs claim exclusive right.
The undisputed facts that emerge from the submission of the respective parties and the pleading before the Alipore Court are that the plaintiff No.1 and the respondent Nos.2 to 5 have agreed to carry on Poker gaming business from Calcutta through the respondent No.7. The website "spartanpoker.com" was launched in Calcutta on 25th March, 2015. The registration of the domain name stands in the name of petitioner No.1. The respondent No.7 since 25th March, 2015 was carrying on Poker gaming business through the website "sprtanpoker.com". The petitioners were actively involved in the development, growth and prosperity of the said business. All the stakeholders of respondent No.7, namely, plaintiff Nos.1 and 2 and the respondent Nos.2 to 6 have from time to time received their share of profits which would be evident from the disclosures made in the petition as well as by the respondent No.7 in the Alipore proceeding. The emails exchanged between the parties prior to the dispute also clearly recognize that the business of the respondent No.7 was carried as a partnership business of the two groups, namely, the plaintiffs on one side and the respondent Nos.2 to 6 on the other side. The dispute apparently started during August, 2016 when the respondent No.7 discovered defalcation and misappropriation of fund by Rohit Bhalla. The respondents contend that plaintiff No.1 was not supportive in their acts to initiate legal proceedings against Rohit Bhalla for such acts of misdeed. Rajat Agarwal apparently did not take a stand on the issue and seems to be more concerned of acquiring Rohit's shares in the respondent No.7. Rohit was inducted as a director of the respondent No.7 at the instance of Rajat. Rajat, in my mind, should have taken a definite stand on the issue either supporting Rohit or prosecuting Rohit. The email dated 25th November, 2016 does not show that Rajat has taken a definite stand against Rohit. It appears that the said Poker game prospers and the stakeholders have received their return of the initial contributions towards working capital and also shared profits. It further appears that although contribution towards issuance of shares in favour of the plaintiffs have been received by the respondent No.7 but no share, in fact, have been allotted in favour of the plaintiffs. The respondent No.7, however, at a later point of time has denied receipt of such sums as share application money and has contended that at no point of time, the plaintiffs were considered to be a shareholder of the respondent No.7. The respondents contend that thirty percent of profit depending on individual performance was distributed as and by way of remuneration from April 2016 till October 2016. Since the plaintiff no.1 did not perform any work since October 2016 no remuneration was paid since thereafter. This version of the respondents prima facie does not appear to be borne out from record where the parties have described themselves as partners. It appears that a sense of mistrust and ill-filling started growing amongst the stakeholders as the business prospered and misdeed of Rohit surfaced and that had culminated in a resolution for removal of the plaintiff No.1 from the Board of Directors of the respondent No.7. The petitioners have relied upon negative covenant in the purported Memorandum of Understanding dated 22nd June, 2014 to prevent the respondent Nos.2 to 5 to carry on poker gaming. It, however, appears that the plaintiff No.1 by a paper publication on December 4, 2016 has expressed his clear intention to launch an improved version of the Poker game and thereby, in my view, has forfeited his right to rely upon the said clause. Moreover, it would appear that the plaintiffs have blocked the domain names "spartanpoker.com" and this has caused the respondent No.1 to apply for a fresh domain name and is presently using the domain name "thespartanpoker.com". However, having regard to the fact that the parties continued to treat the respondent No.7 as a quasi-partnership and have distributed the shares of profits equally, the plaintiffs are entitled to the shares of profits and all accounts at least till December 4, 2016 when the plaintiffs have published notice expressing its intention to launch a separate website for Poker game which would be in competition with the respondent No.7. The use of the domain name "the spartanpoker.com" since 6th December 2016 by the defendant no. 7 appears to be by reason of the plaintiffs blocking its domain name since 4th December 2016. However, a click at "thespartanpoker.com" leads to "spartanpoker.com" in respect whereof applications for registrations and objections to such registrations are pending. Rajat's action of filing objection to the trademark registration and for separate trademark registration of same and/or similar marks shows that Rajat is not acting in the interest of the respondent No.7. The plaintiffs have acted in breach of the alleged purported Memorandum of Understanding dated 22nd June, 2014 on which the plaintiffs have strongly relied. Rajat had filed several objections before the Trademark Registry to the registration of various trademarks in favour of the respondent No.7 claiming user thereof since 9th July, 2014 whereas it appears that an application for registration of the said trademarks has been filed by the respondent No.7 through his attorney True Blue Legal on 14th July, 2014. The respondent no.7 appears to have incurred necessary expenses for and in relation to the said application. The filing of the said objections is against the interest of the respondent No.7. Moreover, the plaintiff No.1, at the relevant time, was a director of the company and he has never informed the Company about filing of such objections before the Trademark Registry. Moreover, the plaintiff No.1 on 4th December, 2016 in the website of the Company made a publication threatening to commence competing Online Poker business using the word "Spartanpoker". At the relevant time, the plaintiff No.1 was one of the directors of the Company. The defendant No.1 was incorporated much later on December 9, 2016. In the Alipore proceeding an order was passed on 4th April, 2017 restraining Rajat Agarwal and Guru Sports Media Pvt. Ltd. their men, agents, servants, assignees from carrying any Online Poker business using the trade name, trademarks, trade address of the plaintiff bearing the word "Spartan" in any manner till 3rd May, 2017. However, the fact remains that the plaintiff would be entitled to share of profits, in the event, the plaintiffs ultimately are able to establish that the defendant No.7 is a partnership of two groups and there is a diversion of business in favour of the defendant No.1 and borrowing the partnership principle that the parties would be entitled to settlement on dissolution of the partnership, the plaintiffs would be entitled to the accounts of the defendant No.1 and the defendant No.7 till the disposal of the application.
The petitioners relying upon two decisions of the Hon'ble Supreme Court in Satyam Infoway Ltd. Vs. Siffynet Solutions (P) Ltd. reported at (2004) 6 SCC 145 and Suresh Dhanuka Vs. Sunita Mohapatra reported at (2012) 1 SCC 578 submits that a domain name is recognizable as a trademark and any use of such domain by the respondent No.1 is an infringement of the trademark. Since the respondent No.7 is a joint-venture of the plaintiffs and defendant Nos.2 to 5, the respondent No.7 cannot use the said mark "Spartan" to the exclusion of the plaintiffs and deny the benefits of earnings to the petitioners by using the said mark.
A domain name is an identity or name which distinguishes a registrant from another. Internet allows universal access cutting across boundaries. Domain name therefore gives universal exclusivity. No two domain names can be exactly similar. The original role of a domain name was no doubt to provide an address for computers on the internet, but the internet has developed from a mere means of communication to a mode of carrying on commercial activity. With the increase of commercial activity on the internet, a domain name is also used as a business identifier.
Therefore, the domain name not only serves as an address for internet communication but also identifies the specific internet site. In the commercial field, each domain name owner provides information/services which are associated with such domain name. Thus, a domain name may pertain to provision of services within the meaning of section 2(1)(z) of the 1999 Act. A domain name is easy to remember and use, and is chosen as an instrument of commercial enterprise not only because it facilitates the ability of consumers to navigate the Internet to find websites they are looking for, but also at the same time, serves to identify and distinguish the business itself, or its goods or services, and to specify its corresponding Internet location.
Consequently a domain name as an address must, of necessity, be peculiar and unique and where a domain name is used in connection with a business, the value of maintaining an exclusive identity becomes even more critical.
As more and more commercial enterprises trade or advertise their presence on the web, domain names have become more and more valuable and consequently the potential for dispute is high. Whereas a large number of trade marks containing the same name can comfortably co-exist because they are either associated with different products or belong to business in different jurisdictions etc., the distinctive nature of the domain name providing global exclusivity is much sought after. The fact that many consumers searching for a particular site are likely, in the first place, to try and guess its domain name has further enhanced this value.
In India it is now well settled that domain names are to be protected on the same lines as trademarks. The cases had started happening early enough in about 1996, when 'Tanishq' complained of an unconnected and unauthorized person who had registered 'tanishq.com' who was consequently restrained by an injunction. From that time onwards, a line of cases spanning in various high courts, similar judgments were pronounced. In May, 2004 the Supreme Court in the case of Satyam Infoway (supra), has laid down that Indian courts shall protect domain names on the legal principles applicable of trademarks and trade names.
In Satyam Infoway Ltd. (supra), the appellant used 'SIFY' as a main component of its domain name as www.sifymall.com, www.sifyrealestate.com and the respondent infringed its domain name using deceptively similar domain name such as www.sifynett.com. The Supreme Court held that appellant was entitled to an injunction order restraining respondent from using the domain names in dispute and held the respondent guilty of passing off. In Info Edge (India) v. Shailesh Gupta, 2002 (24) PTC 355 (Del), the Delhi High Court considered a case where respondent's domain name www.naukari.com (which was used as hyperlink to lead to www.jobsourceindia.com) was held to be deceptively similar to plaintiff's www.naukri.com, court reiterated the principle that a domain name is more than an internet address and is entitled to equal protection as a trade mark. [Card Service International Inc. v. Mc Gee, 42 USPQ 2d 1850; Pen books Pvt. Ltd. v. Padmaraj, Emily Estate, Kalpatta, 2004 (29) PTC 37 (Ker); Casio India Ltd. v. Ashita Tele Systems, 2003 (27) PTC 265 (Del)].
In Satyam Infoway Ltd. (supra) after referring to the definition of trade mark and mark, the Supreme Court stated that the question which was apposite was whether a domain name could be said to be a word or name which was capable of distinguishing the subject of trade or service made available to potential users of the internet. The Court answered the question in affirmative. The Court held that a domain name could be said to be a word or name which was capable of distinguishing the subject of trade or service made available to potential users of the Internet. On the question of whether the principles of trade mark law and in particular those relating to passing off apply to domain name, the Court held that "it is apparent that a domain name may have all the characteristics of a trade mark and could found an action for passing off". The Court has also observed:
"As far as India is concerned, there is no legislation which explicitly refers to dispute resolution in connection with domain names. But although the operation of the Trade Marks Act, 1999, itself is not extraterritorial and may not allow for adequate protection of domain names, this does not mean that domain names are not to be legally protected to the extent possible under the laws relating to passing off."
However, in the instant case, the defendant No.7 has applied for registration of the various marks with the name "Spartan" being permanently displayed and mentioned. The application filed by the defendant No.7 for registration of the mark "Spartan" is already on record. The petitioner No.1, however, has contended that, in fact, it was the petitioner No.1 who was instrumental in filing the said application and the defendant No.7 could not have filed the application without the petitioner No.1 first obtaining a registration of the domain name "spartanpoker.com". However, the said domain name "spartanpoker.com" is not being identified with the petitioner No.1 unlike in the Satyam Infoway Ltd. (supra) where it was found that the appellant was able to produce the evidence to show that the public associates the trade name "Siffy" with the appellant.
Prima facie it appears that apart from registration of the domain name no substantial expenditure has been incurred by the petitioners for developing the web page, trade dress and designing of the mark and related expenses for its registration in the Trade Mark Registry. Moreover, the application for registration of the mark "Spartan" by the respondent No.7 is prior in time.
In view of the proceeding pending before the Trademark Registry and having regard to the order already passed in the Alipore proceeding, the respondent No.1 is not restrained from using the domain name "thespartanpoker.com". If ultimately it is found that the objection of the petitioner No.1 is upheld and the petitioner No.1 is entitled to registration of the said trademarks, the petitioner No.1 can recover compensation by way of damages from the respondents.
The respondent No.7, however, in the affidavit to be filed shall disclose all transactions and accounts since 15th March, 2015 when the website "spartanpoker.com" was launched till date. The respondent No. 1 similarly shall also disclose all transactions and details of accounts since its inception till date. In addition to the aforesaid the respondent Nos.1 and 7 shall furnish statement of accounts for the subsequent periods month by month to the petitioners until disposal. Since the respondent No.7 has passed a resolution for removal of the petitioner no.1 from the Board of Directors of the respondent no.7 and prima facie it appears that the petitioner No.1 has acted against the interest of the respondent No.7, the interim order stands vacated. The Board Resolution removing the plaintiff No.1 from the Board of Directors of the respondent No.7, however, shall abide by the result of this application. The petitioner No.2 is already in the Board and interest of the petitioners are adequately protected. The composition of the board of the respondent no.7 shall not be charged without the leave of the Court.
Affidavit in opposition in both the applications shall be filed within two weeks after summer vacation reply thereto if any, within two weeks thereafter. Both the applications shall appear as "Motion Adjourned" on the first available Monday in July, 2017.
Urgent Photostat certified copy of this judgment, if applied for, be given to the parties on usual undertaking.
(SOUMEN SEN, J.)