Delhi High Court
Aura Synergy India Ltd. & Anr. vs M/S New Age False Ceiling Co Pvt. Ltd. & ... on 10 February, 2016
Author: Vipin Sanghi
Bench: Vipin Sanghi
$~21.
* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ Date of Decision: 10.02.2016
% CS(OS) 3295/2015
AURA SYNERGY INDIA LTD & ANR
..... Plaintiffs
Through: Mr. D.K. Rustagi & Mr. B.S. Bagga,
Advocates.
versus
M/S NEW AGE FALSE CEILING CO PVT LTD & ANR
..... Defendants
Through: Mr. Shobhit Aggarwal, Advocate.
CORAM:
HON'BLE MR. JUSTICE VIPIN SANGHI
VIPIN SANGHI, J. (OPEN COURT)
I.A. No.23095/2015 (u/o 39 r 1&2 - filed by the plaintiffs) & I.A.
No.26213/2015 (u/o 39 r 4 - filed by the defendants)
1. By this common order, I proceed to dispose of the aforesaid two
applications. The plaintiffs have filed the present suit on the premise that
defendant nos.2 and 3 - the husband and wife, are the promoters and
directors of plaintiff no.1 company Aura Synergy India Ltd. It is claimed
that the plaintiffs are dealing in a variety of interior decoration materials.
Primarily, the plaintiffs are dealing in wooden flooring materials being sold
under the trade name AURA.
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2. The plaintiffs claim that over the years, the plaintiffs have earned
tremendous reputation amongst its customers-mainly major contractors
engaged in interior work for government and corporate offices. The major
marketing exercise involves seeking pre-approvals of brands for materials
before finalization of tender conditions. Based on the approvals, the related
contractors are required to deploy approved materials. One such material of
which pre-approval is obtained is False/Metallic Ceiling. The procurement
policy in such tenders does not require labels on packaging materials. It is
the trade name which alone signifies/represents the quality specification of
material.
3. The plaintiffs claim that they undertake, "massive marketing exercise
and invest heavily due to which in a short period of time the plaintiffs
earned tremendous goodwill and unique identification with the trade name
'AURA' or 'AURA AISPL' ".
4. The plaintiffs claim that in the year 2008, plaintiff nos.2 and 3
"undertook extensive research work for development of another product
'Metallic Ceiling' which is far superior in quality than the market
competitors including one marketed by the defendants under the brand name
New Age". The plaintiffs state that plaintiff nos.2 and 3, in the year 2013,
decided to float another company by the name of Aura Synergy India (P)
Ltd., and plaintiff nos.2 and 3 are its promoter/director and shareholders.
Plaintiff nos.2 and 3 have proprietary rights over the trade name AURA for
products relating to interior decoration, as detailed in classes 6 and 19 of
Schedule to the Trademarks Act, 1999.
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5. The plaintiffs applied for registration of trade name AURA and
AURA ASIPL in classes 6 and 19 with the registrar of trademarks, claiming
user with effect from 01.04.2008. The plaintiffs claim that their Metallic
Ceiling in 600mm x 600mm category has acquired instant success, as it was
meeting all government laid down specifications "but hold much superior
quality thereto despite having competitive pricing". The plaintiffs state that
they "have designed the above products after carrying out an extensive
survey of the markets which includes the requirement of major corporate
and private sector as well as the government department". The plaintiffs
allege that the defendants are resorting to unfair practice of passing off of
their "inferior products like metallic ceiling which are being sold under the
trade name 'New Age' as that of the plaintiffs to such contractors whose
awarded contracts provide installation of Metallic Ceiling pre-approved by
the trade name "AURA" or "AISPL" by lower pricing and by merely
putting "AURA" on their packets or using this name in invoices to
circumvent the approval procured by the plaintiffs for their metaling ceiling
products by this trade name".
6. The plaintiffs claim that the defendants have been managing to pass
off their metallic ceiling product as that of the plaintiff despite not getting
approvals. The plaintiffs claim to be suffering on two accounts at the
instance of the defendant, firstly, by the defendants claiming proprietary
over AURA - apparently for the first time in August, 2015 for their
metallic/false ceiling products, and secondly, by passing off their products
as the same as those with the brand names "New Age Aura" or "AURA" in
respect of contracts, where pre-approval for metallic ceiling was for the
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trade name "AURA" or "AURA AISPL".
7. The plaintiffs enlist several projects in respect whereof pre-approved
mark for metallic false ceiling is, inter alia, AURA/AURA ASIPL and in
the tabulation, the plaintiffs show that the defendants product with the trade
name "New Age" is approved in only one such project. The plaintiffs claim
that they have healthy sales figure of their products under the trade name
AURA/AURA ASIPL for metallic false ceiling.
8. The plaintiffs have disclosed-in relation to the defendants, that
defendant nos.2 to 4 are directors of defendant no.1 company, which is
engaged in the business of metallic false ceiling under the brand name "New
Age". The plaintiff claims that the defendants made presentation to various
government departments and corporate offices who were undertaking
construction of commercial office complexes. However, the defendants
succeeded in getting approval of their product/brand only in a few of them,
whereas the plaintiffs product under the trade name AURA/AURA ASIPL
got approvals in most such projects.
9. The plaintiffs claim that there is huge difference between the product
of the plaintiffs and the defendants in terms of quality and durability. The
products of the defendant marketed under the brand name "New Age" are of
inferior quality when compared to that of the plaintiff. The plaintiffs state
that the defendants became envious of the plaintiff, as the plaintiff
successfully launched its metallic ceiling in the last about 7-8 years, and
time and again got approval of their product under the trade name "AURA".
10. The plaintiffs claim that the defendants are mischievously adopting a
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new trade name to create link between "New Age" and "AURA", by using
"New Age Aura" and by further claiming the mark "AURA" itself.
11. In para 17, the plaintiffs state that the defendants played mischief "by
successfully planting their loyal employee namely Kulvinder Singh @
Kulvinder Goraya in the employment of plaintiff company in July 2014 at a
salary of approximately Rs.1.00 lac per month. This employee has passed
off all trade related information to the defendants including the buyer and
the technicalities involved in approvals. It is when above design got expose
in June 2015, the said employee abandoned the employment of the plaintiffs
and rejoined the defendant company".
12. The plaintiffs state that the defendants have applied for registration of
the mark "New Age Aura", claiming user with effect from 01.04.2012, even
though the defendants had never used the trademark AURA in any form till
date. The plaintiffs allege that the defendants recently, in the last week of
September 2015, offered metallic ceiling in relation to a contract being
executed at Jodhpur under the trade name "AURA", which is the exclusive
proprietary of the plaintiffs. The plaintiffs claim to have served a notice to
defendant no.1 on 15.09.2015. However, the defendants continued to use
the trademark AURA as a part of their trade name/mark.
13. With these facts, the plaintiffs have sought a permanent injunction to
restrain the defendants from dealing in metallic false ceiling with the
deceptive trademark/name "AURA"/ "AURA ASIPL". They also seek a
permanent injunction against the defendants from, inter alia, supplying their
products in respect of contracts where the pre-approval is in the name of
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"AURA"/ "AURA ASIPL".
14. Along with the list of documents, the plaintiffs have placed on record,
what they claim to be, their catalogue of AURA (ASIPL) metallic system.
The plaintiffs, in the said catalogue, described their "registered works" at
Khasra No.304-309, Lokeshwari Industrial Area, Bhagwanpur, Roorkee,
Distt. Haridwar, Uttarakhand (India).
15. On the basis of the averments made in the plaint, on 02.11.2015 while
issuing summons in the suit and notice in the stay application, i.e. I.A.
No.23095/2015, this Court restrained the defendants from, in any manner,
using the trademark/name "AURA"/ "AURA ASIPL" with respect to the
products which the defendants are manufacturing and selling.
16. Upon being summoned, the defendants moved the aforesaid
application under Order 39 Rule 4 CPC, i.e. I.A. No.26213/2015. While
issuing notice on this application, the plaintiffs were granted two weeks time
to file the reply to the said application vide order dated 23.12.2015. Despite
the said direction, no reply has been filed by the plaintiffs even till date. I
have, therefore, proceeded to hear the arguments on the aforesaid two
applications.
17. The submission of counsel for the defendants in I.A. No.26213/2015
is that the plaintiffs have resorted to gross suppression and misstatement of
relevant facts which, if disclosed, the plaintiffs would not have been granted
the ex-parte ad-interim orders of injunction by this court. Along with the
application, the defendants have placed on record several documents which
have been referred to by learned counsel.
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18. Learned counsel for the defendant submits that the defendants have
been manufacturing and selling building material products, including false
metal ceilings, ceiling tiles, metal grid suspensions etc. under the
brand/mark 'New Age' since 2006. They are extremely well reputed in the
industry. In February/March 2012, the plaintiff no.2 had approached
defendant no.2, the director of defendant no.1company to explore
commercial arrangement between the two, for distribution of the defendants
products viz. false metal ceiling and components relating to such ceilings.
The defendants already had several other distributors, and in view of the
friendly relations between plaintiff no.2 and defendant no.2, in good faith,
the defendants entered into an agreement with the plaintiff company through
plaintiff no.2 to appoint them as the defendants channel partner for
addressing supply orders by government institutions/ organizations and
undertakings all over India. Learned counsel for the defendant, firstly,
draws the attention of the Court to the email communication sent by
Kulvinder Goraya to plaintiff no.2, Ashish Pahuja on 20.04.2012, whereby
the plaintiff was appointed as the defendants authorized channel partner.
The terms of the relationship between the parties were contained in the
appointment letter dated 20.04.2012. The parties started working together in
March 2012. Learned counsel refers to the letter dated 20.04.2012, whereby
the plaintiffs were appointed as authorized channel partner. The said letter,
inter alia, stated in relation to the defendant company:
"As a company we are already specified in many large and
medium sized projects and list of such projects is growing very
fast. Our customers prefer to work with agencies authorized by
us. We shall on a best-case basis will recommend your name
and ask customer to avail the services from you firm. (Majority
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for Government Orders)
We can also from time to time share any enquiries as received
from us.
We can also participate and held you sell by accompanying you
to your customer visits".
19. The defendants also stated that they would support the plaintiffs with
samples and catalogues from time to time, as per the plaintiffs business
requirement. The plaintiffs could use the defendants logo as an authorized
channel partner for government institutions/ organizations while undertaking
supply of goods all over India. The scope of obligations/ commitment of the
plaintiffs were stated as the following:
"Preferred and active promotion of all New Age products.
Participation in business on total installed solution offering to
customers. While you will buy only tiles from New Age, we
encourage you to sell complete solution to your customers.
This is the value that your firm brings to New Age products.
We also encourage you to have a trained installation team on
board so that all projects can be executed with New Age
Standards.
Other requirements as per business plans agreed with local
New Age Sales Manager".
(Emphasis supplied)
20. Reference is also made to the email communication dated 28.05.2012
sent by plaintiff no.2 to the defendants, informing that the plaintiff had
invested Rs.95,000/- for registration of 'New Age' brand in respect of - (i)
MES Chief Engineer Delhi Zone, and (ii) Air Force Chief Engineer
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(Western Air Command). The plaintiffs also sought a Memorandum of
Understanding with the defendant company for giving to the plaintiff the
distribution rights (All India) for government institution/ organizations and
undertakings as per the channel partner letter.
21. On 11.06.2012, the plaintiff sent another communication to the
defendants enclosing the Air Force approval letter for certifying 'New Age'
brand for a period of two years. He also stated in this email:
"please help us getting ISI approval from maharashtra zone as
for metal ceiling Neg age has the factory in India otherwise
all other companies import from china which will give us the
edge over our competitors for usage of our material in
government sector".
(Emphasis supplied)
22. On 29.11.2012, the plaintiff sent an email to the defendants requiring
the defendants to provide the following:
"1. catalogue - 50 immediate after that every material
dispatched from Nagpur required catalogue every time.
2. sample box on the urgent basis.
3. details for 5050 alloy ceiling for power plant.
4. ceiling with insulation material costing, & sample.
5. we want to send the samples labeled with brand name to
Hyderabad 3 set of GI & Aluminium each as he is
pursuing with two orders of 12000 sqmtr & 18000 sqmtr
Kulvinder knows the detail".
(Emphasis supplied)
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23. On 17.12.2012, the plaintiff sent another email requesting the
defendants to submit all documents, as committed to a particular client. On
26.12.2012, the plaintiff sent an email communication stating that the
defendants have assured the plaintiffs that the plaintiff will receive 50
catalogues. The plaintiff further stated:
"we have to postpone our CPWD presentation which was lined
up on Friday. We need the cohesive effort to create awareness
for new age brand".
24. On 13.03.2013, the plaintiff sent an email to the defendants with
regard to Engineers India Ltd. registration, asking the defendants to
incorporate changes in the letter template and to incorporate the following:
"This is hereby certified M/s Aura Synergy India Pvt Ltd our
authorized distributor for supply of Genuine "New Age false
Ceiling" to Engineers India Ltd directly or through contractors
all over India whichever case may be".
25. The defendants have placed on record one purchase order dated
11.01.2014 placed by the plaintiffs upon the defendants for false ceiling
system of the value of Rs.7,20,000/-. Delivery note in respect of supply
made by the plaintiffs to one of the buyers M/s Rama Construction
Company, of the defendants' product, dated 09.05.2014 has also been placed
on record to show that the defendants' product was being procured by the
plaintiffs for supply to customers.
26. The defendants have also placed on record the account statement/
ledger account of the plaintiffs Aura Synergy India Pvt. Ltd. (Gurgaon) for
the period 01.04.2011 to 09.11.2015 as maintained by the defendants, which
shows several transactions of sales made by the defendants' company to the
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plaintiffs, as well as the payments received from time to time from the
plaintiffs. Similar statements have been filed in respect of the supplies made
to M/s Aura Interiors Contract Pvt. Ltd. and to M/s Aura Synergy India Pvt.
Ltd (Delhi) for the same period. The defendants have also placed on record
several documents to show the transfer of money by the plaintiffs into the
account of the defendants through RTGS. Learned counsel for the
defendants submitted that the plaintiffs have, conveniently, completely
omitted to disclose the business relationship between the parties.
27. The defendants have also disclosed that the plaintiffs sought to
register the mark "NEWAGE AURA" by making an application on
27.07.2013 in respect of goods falling in Class-VI in the name of M/s Aura
Synergy India Pvt. Ltd. The plaintiffs also made an application for
registration of the trademark "NEWAGE" by making an application on
behalf of M/s Aura Synergy India Pvt. Ltd. on 22.07.2013. Both these
applications were made through Mr. Ashish Pahuja, plaintiff No.2. Learned
counsel submits that these applications were made by plaintiff No.2 while
serving as a Channel Partner/ Distributor of the defendants, and these
applications clearly bring out the mal-intentions of the plaintiffs to
misappropriate the marks of the defendants. It was only on 01.10.2014, that
the plaintiffs sought to withdraw the application made for registration of the
mark "NEWAGE" - after the plaintiffs had been exposed and the
arrangement between the parties terminated on 10.08.2014.
28. Learned counsel for the defendants points out that an absolutely false
claim has been made by the plaintiffs that Mr. Kulwinder Goraya, an
employee of the defendants, had joined the service of the plaintiffs, and he
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had passed off all trade related information to the defendants, including
particulars of buyers and technicalities involved in approvals. In fact, Mr.
Kulwinder Goraya never served under the plaintiffs. Pertinently, it was the
said Mr. Kulwinder Goraya, who had sent the first communication to the
plaintiffs appointing the plaintiffs as the Authorised Channel Partner. Mr.
Kulwinder Goraya always was, and continues to be an employee of the
defendant company. The e-mail communications sent by the plaintiffs from
time to time, above referred to, also show that the plaintiff No.2 interacted
with Mr. Kulwinder Goraya as the defendants employee/ representative. The
defendants state that the plaintiff No.2 had sought a personal loan from Mr.
Kulwinder Goraya, since he was also a personal friend of plaintiff No. 2. A
friendly loan of about Rs.8 Lakhs was advanced to plaintiff No.2 in July and
August 2014, and it was this loan, which was being repaid by the plaintiff
No.2 in installments of about Rs.60,000/- per month. This repayment has
been twisted by the plaintiffs to claim that Mr. Kulwinder Goraya was being
paid salary by the plaintiffs. In this regard, the bank statement of Mr.
Kulwinder Goraya has been placed on record. The said statement of account
shows payment of Rs.1,35,000/- to M/s Aura Synergy India Pvt. Ltd. on
28.07.2014, and Rs.7 Lakhs on 05.08.2014 to Mr. Ashish Pahuja, plaintiff
No.2 by Mr. Kulvinder Goraya.
29. Learned counsel for the defendants also points out that the plaintiffs
have been resorting to spreading false information with a view to promote
their business amongst the customers. The defendants have placed on
record the brochure published and circulated by the plaintiffs, wherein, the
photographs showing the manufacturing process of the metallic false
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ceilings are those lifted from the defendants' brochure. In fact, even the
employees shown in the photographs - working in the manufacturing plant,
are those of the defendants. Learned counsel submits that the plaintiffs have
claimed in their brochure-filed along with the suit, that its "registered
works" are situated at Khasra No.304-309, Lokeshwari Industrial Area,
Bhagwanpura, Roorkee, Uttarakhand, India. He submits that a visit to the
said premises by the defendants has revealed that the said premises belong
to "Alucopanel Industries" and not to the plaintiffs. In fact, the said factory
is lying locked and there is no manufacturing activity being undertaken
there. The photograph taken by the defendants of the board put up by
"Alucopanel Industries" on the said premises has been placed on record.
30. Learned counsel points out that while the plaintiffs claim that the
plaintiffs No.2 & 3 have been in business since 2008, as a matter of fact,
plaintiff No.2 was in employment of another employer, and he tendered his
resignation on 06.05.2013. The defendants have placed on record the e-mail
communication sent by plaintiff No.2 on 06.05.2013 to his then employer
Forms-Surfaces.
31. Learned counsel for the defendants points out that the plaintiffs have
no manufacturing plant of their own of metallic false ceiling. He submits
that the plaintiffs have been distributing the products of the defendants. The
plaintiffs, fraudulently, used the brand name "AURA" in the tenders, instead
of "NEW AGE", so that the defendants are disabled from participating in
those tender processes after the termination of relationship between the
parties.
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32. The projection made by the plaintiffs with regard to their manufacture
of the products is completely fraudulent and false. Learned counsel points
out that the plaintiffs, though claim to be in business since 2008, have not
disclosed even a single Government order/ tender that they may have
secured for metallic false ceiling prior to 2012 under the brand name AURA,
or any other name - i.e. prior to the plaintiffs being appointed as a Channel
Partner of the defendants. Learned counsel for the defendants submits that
initially, plaintiff No.2 participated in all Government purchases under the
trade mark "NEW AGE". Due to friendly relations between defendant No.2
and plaintiff No.2, the defendants did not object to the plaintiff using
"AURA" and "NEWAGE AURA", as the defendants did not doubt the
plaintiffs' intentions, and were unaware of his mala fide designs and
intentions. As the plaintiffs were sourcing the entire requirement from the
defendants (which they were obliged to under the agreement) the use of the
marks "AURA", "AURA AISPL" and "NewAge AURA" did not
prejudicially affect the defendants, as they all related to, and were used in
respect of the products of the defendants. Learned counsel submits that the
projection made by the plaintiffs was that both "NEW AGE" and "AURA"
and "NEWAGE AURA" are the brands of the defendants. The trademark
"AURA" came to be recognized and associated with the defendants and
their products alone.
33. Learned counsel submits that the defendants learnt from one of the
customers that the plaintiffs had supplied counterfeit material of inferior
quality while claiming the same to be of "NEW AGE". It was then that the
fraudulent actions and conduct of the plaintiffs got exposed. Consequently,
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the defendants terminated the plaintiffs agreement on 10.08.2014 and sent
out the communication dated 08.08.2015 to its customers in the industry.
34. Learned counsel for the defendants submits that the plaintiffs have
been fraudulently and clandestinely using the mark "AURA", "NEWAGE
AURA" and "AURA ASIPL", even though the product in respect whereof
the said marks are used are those of the defendants-also marketed with the
mark "NEW AGE". The approvals of the material obtained by the plaintiffs
from Government Departments/ Public Sector Undertakings is also in
respect of the material manufactured by the defendants - as the plaintiffs do
not manufacture any material of their own, and they were distributors of the
defendants. The approval was obtained, mala fide, under the brand name
"AURA", "NEWAGE AURA" and "AURA ASIPL" instead of "New Age",
so that, in case of termination of the plaintiffs distributorship, the defendants
are disabled from supplying their products under the brand name 'NewAge'.
Learned counsel submits that the purpose of a trademark is to identify the
source of the goods and, therefore, the defendants are not wrong, or, in any
manner misleading anyone, by claiming that they are also manufacturing all
tiles under the brands "NEWAGE" AURA" and "AURA" Merely because
the plaintiffs name is M/s Aura Synergy India Pvt. Ltd., it does not follow
that the plaintiffs can appropriate the said trade name/ mark even though the
same has been used in respect of the defendants' products, and identify the
products with that mark, as those of the defendant .
35. In the face of the aforesaid disclosures made by the defendants in their
application for vacation of stay, at the outset, learned counsel for the
plaintiffs was asked as to where does the plaintiffs manufacture its products,
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namely metallic false ceilings. Learned counsel for the plaintiffs has no
answer to this question, and he submitted that the Court may proceed on the
assumption that the plaintiffs have no manufacturing facility of their own
and source their products from other manufacturers. The submission of
Mr.Rustagi is that there is no necessity that the plaintiffs should be
manufacturing the said products of their own. The plaintiffs are entitled to
source their products from other manufacturers and market the same under
their own brand name "AURA" and "AURA AISPL". Mr. Rustagi submits
that for the plaintiffs, it is but natural to use the mark "AURA" and "AURA
AISPL" since "AURA" is a part of the corporate name of plaintiff No.1.
36. So far as the non-disclosure of the past relationship between the
plaintiffs and the defendants is concerned, the submission of Mr. Rustagi is
that the same was not relevant or material to be disclosed in the facts of the
present case, since the said relationship had come to an end on 10.08.2014,
i.e. much prior to the filing of the present suit.
37. Mr. Rustagi submits that the plaintiffs are not claiming any
proprietary rights over the mark "NewAge". He submits that the defendants
have already withdrawn their application for registration of the mark
"NewAge", as disclosed by the defendants themselves. He submits that the
plaintiffs are also proceeding to withdraw their application for registration of
the mark "NewAge Aura". Mr. Rustagi submits that just as the plaintiffs
have no right in the mark "NEWAGE" - which belongs to the defendants,
the defendants have no right to use the mark "AURA" or "AURA AISPL"
or "NEWAGE AURA" - which has been used exclusively by the plaintiffs.
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38. I may observe that Mr. Rustagi has not defended the allegations of the
defendants with regard to the falsity of the claims made by the plaintiffs in
respect of:
(i) The plaintiffs having a manufacturing facility of their own for
metallic false ceiling;
(ii) The brochures of the plaintiffs containing the photographs and other
materials lifted from the defendants' brochures;
(iii) The defendants' employee Mr. Kulvinder Goraya - that he joined the
plaintiffs employment at a monthly salary of about Rs.1 Lakh and
took away the business contacts and information and rejoined the
defendants.
39. The submission of Mr. Rustagi is that the plaintiffs got pre-approval
of the materials under the plaintiffs' mark "AURA" and "AURA AISPL" in
respect of metallic false ceilings sourced by the plaintiffs from other
sources, and not in respect of the defendants' products. He, therefore,
submits that the defendants, in any event, have no right to appropriate the
marks "AURA", "AURA AISPL" and "NEWAGE AURA".
40. Having heard the submission of learned counsel and perused the
pleadings as well as the documents filed and relied upon by the parties, I am,
prima facie, of the view that the plaintiffs have not only resorted to stating
blatant falsehood in the present proceedings, but they have also, prima facie,
defrauded the defendants. The manner in which the plaintiffs have sought to
covertly use the marks "AURA" and "AURA AISPL", and got pre-
I.A. Nos.23095/2015 & 26213/2015 in CS(OS) 3295/2015 Page 17 of 28
approvals for metallic false ceilings with those brand names, while
remaining under contract with the defendants as their distributor/ Channel
Partner, is demonstrative of the plaintiffs cunning and apparently dishonest
ways. The mala fides of the plaintiffs is completely exposed, inter alia, by
the fact that the plaintiffs even went to the extent of making applications for
registration of the marks "NEWAGE" and "NEWAGE AURA" in respect of
items falling under Class-VI, which includes metallic false ceilings while
working as a Channel Partner of the defendants.
41. The submission of Mr. Rustagi that the plaintiffs were not obliged to
disclose the past relationship between the parties needs only to be stated to
be rejected. The plaintiffs have claimed in their plant in paragraph 5 that in
the year 2008, plaintiffs No.2 and 3 "undertook extensive research work for
development of another product "metallic false ceiling"". This averment,
apart from not being supported with any document or material, is
contradicted by the fact that the plaintiffs were appointed as a Channel
Partner of the defendants on 20.04.2012 in respect of the defendants
products, namely metallic false ceiling. Pertinently, the plaintiffs
commitment to the defendants under the terms & conditions contained in the
letter dated 20.04.2012 issued by the defendants, inter alia, was that "... ...
... you will buy only tiles from NewAge, ... ... ...". Thus, the plaintiffs were
obliged to buy only the metallic false ceilings of the defendants, which were
marketed under the brand name "NewAge", and the plaintiffs on being
appointed as the Channel Partner could not have procured the said item from
any other source. It is not the plaintiffs' case, and it has not been argued by
Mr. Rustagi that this term & condition contained in the letter of appointment
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dated 20.04.2012 was not imposed upon the plaintiffs; was not accepted by
the plaintiffs, or; that this condition was ever relaxed by the defendant. It is
not even denied by the plaintiffs that they acted as the defendants' Channel
Partner on the basis of the terms & conditions contained in the letter dated
20.04.2012. This position is evident from the e-mails exchanged between
the parties which have been referred to and taken note of hereinabove.
Thus, for the plaintiffs to claim that since 2008, they had developed another
product, namely metallic false ceiling after undertaking "extensive research
work" appears to be a complete lie, as they have nothing to show in support
of this submission. This submission of the plaintiffs is also belied by their
own communication sent to the defendants on 11.06.2012 on the subject:
"Air-Force approval letter", which has been taken note of hereinabove. In
this e-mail communication, plaintiff No.2 himself stated that "NewAge" has
factory in India "otherwise all other companies import from China". Thus,
the plaintiffs - who claim to have undertaken "extensive research work for
development of" metallic false ceiling, have themselves stated that the
defendants were the only manufacturers of the said item in India as on
11.06.2012.
42. While the plaintiffs claim to be in the same line of business since
2008, the e-mail communication dated 26.12.2012 sent by the plaintiffs on
the subject "catalogue and samples" shows that the plaintiffs were entirely
dependent for marketing the said products on the defendants. The plaintiffs
were pleading with the defendants to provide them with catalogues, as they
could not proceed with the presentation/ marketing of the products to
CPWD. In this communication, the plaintiffs talk about the need of the
I.A. Nos.23095/2015 & 26213/2015 in CS(OS) 3295/2015 Page 19 of 28
parties to make cohesive efforts "to create awareness for "NewAge"
brand". The e-mail communication on 13.03.2012 also reveals that the
plaintiffs requested the defendants to certify that the plaintiffs were the
authorized distributors for supply of genuine "NewAge" false ceiling, for
presentation to be made to Engineers India Limited. From the
correspondence exchanged between the parties referred to and relied upon
by the defendants, it is abundantly clear that the plaintiffs were entirely
dependent upon the defendants for supply the metallic false ceiling, and it
was only their product which was being sourced by the plaintiffs and
supplied to various contractors. Pertinently, the plaintiffs have not stated
anywhere in their pleadings that they were procuring the metallic false
ceilings from other sources as well, while in relationship with the defendants
as their channel partner. The oral submission of Mr. Rustagi to this effect
cannot be accepted in the absence of pleadings and supporting documents,
particularly because that course of conduct was also not permitted under the
terms of appointment of the plaintiffs as the defendants channel partner.
The tremendous "goodwill as manufacturers of interior related products"
that the plaintiffs claim to have acquired (in paragraph 7 of the plaint), by
using the trade name "AURA" in relation to the metallic false ceilings
appears to have been actually acquired in relation to the products sourced
from the defendants. As noticed above, the plaintiffs have practically
conceded that they have no manufacturing facility of their own.
43. The story woven by the plaintiffs "That the plaintiffs have designed
the above products after carrying out an extensive survey of markets" and
that the "plaintiffs have not only improved the quality of their product but
I.A. Nos.23095/2015 & 26213/2015 in CS(OS) 3295/2015 Page 20 of 28
retained pricing flexible to suit approved sites", also appears to be false as,
there is nothing to show that the plaintiffs have designed the metallic false
ceiling, much less after carrying out the so-called extensive survey of the
markets. Since the plaintiffs are not manufacturing the said product and,
even according to their own statement, the defendants were the only Indian
manufactures of the product in question, the question of the "extensive
market survey" and development of the product does not arise. From the
terms & conditions of the plaintiffs appointing as a Channel Partner it is
evident that the application of the plaintiffs was to actively promote all the
products of the defendants under the brand name "NewAge". It is also
evident that the plaintiffs were appointed as the Channel Partner of the
defendants "for Government institutions/ organization and undertakings" on
all-India basis. Thus, as the distributor/ Channel Partner of the defendants, it
was the obligation of the plaintiffs to get pre-approval of the defendants
product under the brand name "NewAge". The correspondence shows that
the plaintiffs initially also acted on the said obligation.
44. There appears to be merit in the submissions of the defendants that
though, initially, the plaintiff promoted the defendants products with the
marks "NewAge", subsequently, and in a clandestine manner, the plaintiffs
appear to have got the same product pre-approved under the brand name
"AURA", "AURA AISPL" and "NewAge AURA". This conduct of the
plaintiffs, prima-facie, appears to be fraudulent and in breach of the
plaintiffs obligations set out in the letter dated 20.04.2012 which contains
the terms & conditions for appointment of the plaintiffs as the defendants'
Channel Partner.
I.A. Nos.23095/2015 & 26213/2015 in CS(OS) 3295/2015 Page 21 of 28
45. It is also evident from the aforesaid narration that the plaintiffs are
guilty of blatant falsehood in the matter of projecting that: (i) the plaintiffs
have a manufacturing facility at Khasra No.304-309, Lokeshwari Industrial
Area, Bhagwanpur, Roorkee, Distt. Haridwar, Uttarakhand (India). It is also
evident that the plaintiffs have falsely projected this claim in the industry by
coming out with a false and fabricated brochure and including therein
pictures showing the process of manufacturing of metallic false ceiling tiles,
which appear to be lifted from the brochure of the defendants.
46. The claim of the plaintiffs that since the year 2008 they are engaged
in the manufacture and sale of metallic false ceiling based on their so-called
extensive research is also belied by the fact that plaintiff No.2 appears to
have in employment with "Forms-Surfesis" as a Sales Manager - North. It
is also evident that the plaintiffs have made an absolutely false claim that
Mr. Kulvinder Goraya, an employee of the defendants joined the plaintiffs
on a monthly salary of about Rs.1 Lakh and left the employment of the
plaintiffs and re-joined the defendants after taking away information about
the plaintiffs clientele, etc. The plaintiffs have not explained the
advancement of loan by Mr. Kulvinder Goraya to the plaintiffs amounting to
Rs.8,35,000/-, and there is no answer to the explanation given by the
defendants that the said friendly loan was being repaid in monthly
installments by the plaintiffs to the said Sh. Kulvinder Goraya. This
averment of the plaintiffs is also falsified on a plain reading of the e-mail
communications exchanged between the parties which clearly show that
plaintiff No.2 sent e-mail communications, inter alia, to Mr. Kulvinder
Goraya as the representative of the defendants.
I.A. Nos.23095/2015 & 26213/2015 in CS(OS) 3295/2015 Page 22 of 28
47. Grant of injunction by the Court is matter of discretion, which has to
be judiciously exercised. It is well-settled that a party who approaches the
Court with unclean hands, i.e. a party which either conceals relevant and
material facts from the Court, and/ or makes false claims and assertions
before the Court, is not entitled to exercise of discretion by the Court in his
favour, even if such a party, on merits, is deserving of exercise of such
discretion. In Satish Khosla Vs. M/s. Eli Lilly Ranbaxy Ltd. & Another, 71
(1998) DLT 1 (DB), a Division Bench of this Court, inter alia, observed as
follows:
"15. In S.P. Chengalvaraya Naidu v. Jagannath and Others,
AIR 1994 SC 853 it was held that the Courts of Law are meant
for imparting justice between the parties. One who comes to
the Court, must come with clean hands. "It can be said
without hesitation that a person whose case is based on
falsehood has no right to approach the Court. He can be
summarily thrown out at any stage of the litigation. A litigant,
who approaches the Court, is bound to produce all the
documents executed by him which are relevant to the
litigation. If he withholds a vital document in order to gain
advantage on the other side then he would be guilty of playing
fraud on the Court as well as on the opposite party".
16. ... ... ... The following observations of the Supreme Court
in the aforesaid case are relevant for purposes of present case:
"The High Court in our view, fell into patent error.
The short question before the High Court was
whether in the facts and circumstances of this
case, Jagannath obtained the preliminary decree
by playing fraud on the Court. The High Court,
however, went haywire and made observations
which are wholly perverse. We do not agree with
the High Court that "there is no legal duty cast
upon the plaintiff to come to Court with a true
I.A. Nos.23095/2015 & 26213/2015 in CS(OS) 3295/2015 Page 23 of 28
case and prove it by true evidence". The principle
of "finality of litigation" cannot be pressed to the
extent of such an absurdity that it becomes an
engine of fraud in the hands of dishonest litigants.
The Courts of Law are meant for imparting
justice between the parties. One who comes to the
Court, must come with clean hands. We are
constrained to say that more often than not,
process of the Court is being abused. Property-
grabbers, tax-evaders, bank-loan-dodgers and
other unscrupulous persons from all walks of life
find the Court process a convenient lever to
retain the illegal-gains indefinitely. We have no
hesitation to say that a person whose case is
based on falsehood, has no right to approach the
Court. He can be summarily thrown out at any
stage of the litigation.
A litigant, who approaches the Court, is bound to
produce all the documents executed by him which
are relevant to the litigation. If he withholds a
vital document in order to gain advantage on the
other side than he would be guilty of playing
fraud on the Court as well as on the opposite
party."
... ... ... A party must come to the Court with clean hands and
must disclose all the relevant facts which may result in
appreciating the rival contentions of the parties. In our view, a
litigant, who approaches the Court, must produce all the
documents which are relevant to the litigation and he must also
disclose to the Court about the pendency of any earlier
litigation between the parties and the result thereof.
17. As held by the Supreme Court in Advocate-General, State
of Bihar v. M/s. Madhya Pradesh Khair Industries and
Another, (1980) 3 SCC 311, every abuse of the process of the
Court may not necessarily amount to Contempt of Court. Abuse
of the process of the Court calculated to hamper the due course
I.A. Nos.23095/2015 & 26213/2015 in CS(OS) 3295/2015 Page 24 of 28
of a judicial proceeding or the orderly administration of justice
is Contempt of Court. It may be that certain minor abuses of the
process of the Court may be suitably dealt with as between the
parties, by striking out pleadings under the provisions of Order
6, Rule 16 or in some other manner. But it may be necessary to
punish, as a contempt, a course of conduct which abuses and
makes a mockery of the judicial process and which thus extends
it pernicious influence beyond the parties to the action and
affects the interest of the public in the administration of justice.
18. x x x x x x x x x
19. As held by the Supreme Court in T. Arivandandam v. T.V.
Satyapal and Another, AIR 1977 SC 2421, the pathology of
litigative addiction ruins the poor of this country and the Bar
has a role to cure this deleterious tendency of parties to launch
frivolous and vexatious cases. "It may be a valuable
contribution to the cause of justice if Counsel screen wholly
fraudulent and frivolous litigation refusing to be beguiled by
dubious clients. And remembering that an Advocate is an
officer of justice he owes it to society not to collaborate in
shady actions. The Bar Council of India, we hope will activate
this obligation. We are constrained to make these observations
and hope that the co-operation of the Bar will be readily
forthcoming to the Bench for spending judicial time on
worthwhile disputes and avoiding the distraction of sham
litigation such as the one we are disposing of. Another moral of
this unrighteous chain litigation is the gullible grant of ex parte
orders tempts gamblers in litigation into easy Courts. A Judge
who succumbs to ex parte pressure in unmerited cases helps
devalue the judicial process."
20. We are of the opinion that the above noted passage of the
aforesaid judgment in T. Arivandandam v. T.V. Satyapal's
case is fully applicable to the facts and circumstances of the
present case. Having not succeeded in getting stay in Suit No.
3064/96, in our view, the Lawyer should have refused to move
an application for stay in the second suit.
I.A. Nos.23095/2015 & 26213/2015 in CS(OS) 3295/2015 Page 25 of 28
21. We are of the view that an attempt has been made by the
respondent to over-reach the Court and the respondents have
played fraud upon the Court as well as upon the opposite party and is thus clearly guilty of contempt. Respondents cannot be heard in the case unless it purges itself of the contempt so committed and in our view it can only be if we non-suit the respondents in Suit No. 261/97. While, therefore, we do not propose to take action against the respondent for contempt except to issue a warning to respondent No. 2 to be more careful in future, we direct the dismissal of the suit (being Suit No. 261/ 97) itself. While, therefore, allowing this appeal, we dismiss Suit No. 261/97 and dispose of the contempt petition in the above terms. "
[ Emphasis supplied ]
48. In the present case, the defendants have grossly suppressed and concealed relevant and material facts and have gone ahead to make blatantly false claims. These claims have not only been made in the present proceedings, but even openly made to the people in the trade. The plaintiffs have falsely claimed to have a manufacturing unit- for manufacturing metallic false ceiling which, concededly, is not the case. The plaintiffs deliberately concealed their earlier business relationship with the defendants since 2012 and made contradictory/false claims of being engaged in manufacture and sale of the products in question since 2008. The plaintiffs have also, calculatedly, used the marks "AURA", "AURA AISPL" and "NewAge AURA" in relation to the products of the defendants, and it appears that the plaintiffs did not object to the same as the said marks were being used in relation to the defendants' products only, and not in relation to the products of any other manufacturer. As noticed hereinabove, under the terms of the plaintiffs appointment as the Channel Partner, the plaintiffs I.A. Nos.23095/2015 & 26213/2015 in CS(OS) 3295/2015 Page 26 of 28 could not have sourced the material from any other source and even according to the plaintiffs, the defendants were the only manufacturers of the said items in India.
49. The purpose of a trade mark is only to identify the goods which bear the said trade mark with its source of origin. In the present case, though it is the plaintiffs who may have started using the marks "AURA", "AURA AISPL" and "NewAge AURA", in respect of metallic false ceiling, it appears that the said marks were used in relation to the products of the defendants, and no one else. This being the position, the defendants cannot be faulted in claiming that they are manufacturers of tiles which are sold in two more brands, namely "New Age - AURA" & "AURA".
50. The aforesaid being the position, in any event, there is no justification to restrain the defendants in the manner as sought by the plaintiffs. Consequently, I am of the view that the plaintiffs are not entitled to the interim relief sought in the application and granted by this Court vide ex- parte order dated 02.11.2015, firstly, on account of the plaintiffs disentitling themselves from claiming any such relief as they have resorted to gross suppression and misstatement in their suit, and secondly, because, even on merits, the plaintiffs have not made out a prima-facie case for grant of the said reliefs. Looking to the conduct of the plaintiffs, as noticed hereinabove, the plaintiffs' application, i.e. I.A. No.23095/2015 is dismissed and I.A. No.26213/2015 of the defendants is allowed with costs of Rs.2 Lakhs, to be paid to the defendants within four weeks. The ex-parte ad interim order of injunction dated 02.11.2015 stands vacated.
I.A. Nos.23095/2015 & 26213/2015 in CS(OS) 3295/2015 Page 27 of 2851. List on 25.07.2015.
VIPIN SANGHI, J FEBRUARY 10, 2016 Sl/ B.S. Rohella I.A. Nos.23095/2015 & 26213/2015 in CS(OS) 3295/2015 Page 28 of 28