Delhi High Court
M/S Liberty Footwear Company vs Liberty Innovative Outfits Limited on 26 May, 2020
Equivalent citations: AIR 2021 (NOC) 610 (DEL.), AIRONLINE 2020 DEL 767
Author: V. Kameswar Rao
Bench: V. Kameswar Rao
IN THE HIGH COURT OF DELHI AT NEW DELHI
Judgment delivered on: May 26, 2020
+ CS(COMM) 637/2019, I.As. 16177/2019 & 18169/2019
M/S LIBERTY FOOTWEAR COMPANY
..... Plaintiff
Through: Mr. Rajshekhar Rao, Mr. Kapil
Wadhwa, Ms. Deepika Pokharia, Ms.
Anamika Mazumdar and Mr. Areeb
Y. Anmanullah, Advs.
versus
LIBERTY INNOVATIVE OUTFITS LIMITED
..... Defendant
Through: Mr. Sandeep Sethi, Sr. Adv. with Mr.
Amit Bansal, Mr. Ravi Singhania, Mr.
Vikas Goel, Mr. Abhishek and Ms.
Tripti Aggarwal, Advs.
AND
+ CS(COMM) 638/2019, I.As. 16180/2019, 18402/2019 & 939/2020
M/S LIBERTY FOOTWEAR COMPANY
..... Plaintiff
Through: Mr. Rajshekhar Rao, Mr. Kapil
Wadhwa, Ms. Deepika Pokharia, Ms.
Anamika Mazumdar and Mr. Areeb
Y. Anmanullah, Advs.
versus
M/S LIBERTY FASHION OUTFIT
..... Defendant
Through: Mr. Sandeep Sethi, Sr. Adv. with Mr.
Amit Bansal, Mr. Ravi Singhania, Mr.
Vikas Goel, Mr. Abhishek and Ms.
Tripti Aggarwal, Advs.
CS(COMM) 637/2019 and connected matter Page 1 of 56
CORAM:
HON'BLE MR. JUSTICE V. KAMESWAR RAO
JUDGMENT
V. KAMESWAR RAO, J I.As. 16177/2019 & 18169/2019 in CS(COMM) 637/2019 I.As. 16180/2019 & 18402/2019 in CS(COMM) 638/2019
1. By this order, I shall decide four applications being I.As. 16177/2019 (Order 39 Rule 1 & 2) & 18169/2019 (Order 39 Rule
4) in CS(COMM) 637/2019 and I.As. 16180/2019 (Order 39 Rule 1 & 2) & 18402/2019 (Order 39 Rule 4) in CS(COMM) 638/2019.
I.As. 16177/2019 & 18169/2019 in CS(COMM) 637/2019
2. CS (COMM) 637/2019 has been filed by the plaintiff seeking to restrain the defendant from using the identical /deceptively similar mark LIBERTY, , and deceptively similar trade name LIBERTY INNOVATIVE OUTFITS or any identical/deceptively similar mark/logo for its goods and services so as to result in violation of the statutory and common law rights of the Plaintiff in its well-known trade mark 'LIBERTY' along with damages / account of profits against the defendant. It may be stated here that on November 20, 2019, ad CS(COMM) 637/2019 and connected matter Page 2 of 56 interim order was passed in favour of the plaintiff.
3. Some of the facts as noted from the plaint are, plaintiff, a registered partnership firm, was established in the year 1954. The plaintiff forms an integral part of Liberty Group of Companies and Firms ('Liberty Group', for short), which includes partnership firms Liberty Group Marketing Division ('LGMD', for short), Liberty Enterprise ('LE', for short) and Liberty Shoes Limited ('LSL', for short). The Liberty Group has since its establishment been engaged in the business of manufacturing and marketing footwear and fashion products. It is noted from the plaint that the foundation of the footwear business under the brand and banner of 'LIBERTY' was established by the elder son of Freedom Fighter Late Lajja Ram Gupta, a renowned and respected resident of a small town Karnal of erstwhile Punjab, now in Haryana, before independence of India in 1944. The business was incorporated to help the shoemaker community of Karnal that was for generations engaged in the production of safety shoes for army men. It is the case of the plaintiff, that the plaintiff firm was established, founded by two sons of Late Lajja Ram Gupta, namely Late Dharam Pal Gupta and Late Purushottam Das Gupta with their nephew Late Raj Kumar CS(COMM) 637/2019 and connected matter Page 3 of 56 Bansal. The Liberty Group operations started in the year 1954 from a retail outlet in Karnal and for well over six decades, the Liberty Group has been leading the Indian market with the most diversified variety of quality products under its brand such as leather bags, belts, wallets, stroller bags, school bags, ladies handbags, leather jackets, perfumes, deodorants, sweat shirts, sports & fitness apparels etc. It is the case of the plaintiff that today, the Liberty Group is amongst the largest footwear and leather accessories manufacturing group in India and forms an integral part of the leading fashion and lifestyle retail companies in India. It is also averred that the Liberty Group, in addition to its well-known trademark 'LIBERTY', has launched various international and domestic brands/sub-brands including but not limited to TIPTOPP, FORCE 10, SENORITA, FORTUNE, PREFECT, FOOTFUN, GLIDERS, COOLERS, WINDSOR etc.
4. The plaintiff devised a unique and appealing corporate logo "LIBERTY LOGO" in the year 1992 and has been continuously using the same ever since. The corporate logo has been used by the plaintiff extensively through several advertising mediums such as Cinema, Television, Radio, Audio Visuals, CS(COMM) 637/2019 and connected matter Page 4 of 56 Digital Mediums so much so, that the public associate the said trademark / logo and the goods under it to be emanating from the business of the plaintiff and the Liberty Group alone.
5. The Liberty Group's strong presence in the market is established from its expansive presence through 10 branch offices, 200 distributors, 5000 multi brand outlets and over 500 exclusive stores including 20 situated outside India. It is averred in the plaint, that the Liberty Group has been the recipient of plethora of prestigious awards. It is also stated that the plaintiff maintains a high quality standard for all its products with ISO 3001:2000 certification. The Liberty Group also has a significant online presence through its website www.libertshoesonline.com. According to the plaintiff, the long-standing success of the 'LIBERTY' brand is illustrated by its annual turnover exceeding INR 500 crores. That apart, the Liberty Group has created, developed and promoted its 'LIBERTY' brand through expenditure of extraordinary promotional and advertising efforts by spending nearly 5% of the factory price of its products on advertising and marketing activities, which run into crores of rupees annually.
6. It is averred that by the virtue of such long and CS(COMM) 637/2019 and connected matter Page 5 of 56 continuous use since over six decades and extensive sales and promotions, the 'LIBERTY' marks have achieved tremendous goodwill and reputation and as a result thereof, the 'LIBERTY' marks have become well-known for wide range of footwear and fashion products sold by the Liberty Group.
7. On the trade mark, it is averred that plaintiff is the proprietor of the well-known trademark 'LIBERTY', which was coined and adopted in 1954 and variations in the trademark 'LIBERTY' with respect to various goods and services including Classes 03, 25, 18, 35, to list a few. It is averred that an Internal Regulation dated January 20, 2003 was also signed by majority partners of the plaintiff firm, including Vivek Bansal, wherein it was decided that the plaintiffs Intellectual Property related to the mark 'LIBERTY', can only be used by a partner in his individual capacity for a competing business subject to the consent in writing of two-third majority and a validly executed License Agreement. In March 2003, pursuant to a consolidation process within the Liberty Group various assignment deeds were executed between partnership firms whereby; (a) All 'LIBERTY' trade marks and logos along with goodwill stood assigned to the plaintiff firm (LFC); (b) Sub brands of the Liberty CS(COMM) 637/2019 and connected matter Page 6 of 56 Group were transferred to the partnership firm LGMD and (c) Industrial designs were transferred to LE. Some of the registrations for the 'LIBERTY' marks owned by the plaintiff are detailed in para 21 of the plaint.
8. It is the case of the plaintiff, on March 31, 2003 the plaintiff firm entered into an Exclusive License Agreement with Liberty Shoes Limited ('LSL', for short), a public limited company with respect to its trademark 'LIBERTY' under Class 18 & 25 for a period of 10 years, which expired on March 31, 2013. On April 03, 2013 an Exclusive License Agreement was entered between plaintiff firm and LSL for products falling in Class 18 and 25. The License Agreement dated April 03, 2013 stipulated a term of five years commencing from March 01, 2013 with automatic renewal for two terms of five years each.
9. About the defendant Company, it is stated that the defendant Company is engaged in the business of manufacturing, trading and marketing various kinds of goods falling under Class 18 and 25 such as bags, school uniforms, socks, shoes etc. under the brand name 'ANYTHINGSKOOL'. That Vivek Bansal is the founder and one of the Directors of the defendant Company. That Vivek Bansal is also a partner of the plaintiff firm and also CS(COMM) 637/2019 and connected matter Page 7 of 56 holds a stake in other partnership firms forming part of the Liberty Group, however he does not have any personal rights in the plaintiff's registered trademark 'LIBERTY' either individually or through the defendant Company. Further, Vivek Bansal is also an employee of LSL, the Exclusive Licensee of the plaintiff. That by virtue of being a family member and partner of the plaintiff firm and an employee of plaintiff's exclusive licensee, Vivek Bansal is well aware of the plaintiff's exclusive rights in 'LIBERTY', and variations of the 'LIBERTY' mark as well as the Exclusive License granted to his employer LSL. Admittedly, no written consent and/or Licence Agreement can be executed between the defendant Company and plaintiff firm for Classes 18 & 25 and therefore, the use of the plaintiff's registered trade marks by the defendant Company is unlicensed and unauthorised. LSL is the Exclusive License holder for the use of the mark 'LIBERTY' for Classes 18 & 25. That Vivek Bansal, being a partner of the plaintiff firm has also received royalty proceeds to the tune of Rs. 3.38 Crores for the years 2003-2017 in terms of the Exclusive License Agreement.
10. It is averred that the defendant Company, without any CS(COMM) 637/2019 and connected matter Page 8 of 56 authority or license from the plaintiff, has been using the plaintiff's registered trade marks LIBERTY, LIBERTY; and various variations of 'LIBERTY' mark in the following manner:
a. Incorporated 'LIBERTY' in its trade name "LIBERTY Innovative Outfits Ltd.".
b. Using the plaintiff's corporate bird logo on its visiting cards, pamphlets, brochures, etc. thereby giving a false impression that the defendant is an off shoot/extension/part of the Liberty Group.
c. Trading, marketing and sourcing footwear and other accessories related to school products through the defendant Company & claiming it to be a "Liberty Group Venture" in its advertising materials.
d. Incorporated the LIBERTY mark LIBERTY written in red colour in the identical font in the impugned trade name logo thereby attempting to draw an association between the Liberty Group and the defendant;CS(COMM) 637/2019 and connected matter Page 9 of 56
e. Using the plaintiff's registered trade mark 'LIBERTY' individually on packaging of several products such as bags, uniform, etc. f. Apart from falsely advertising, the defendant Company has also been using the logo for its footwear products, in order to mislead the public to believe that the defendant Company's footwear products are in fact the footwear products of the Liberty Group.
11. It is the case of the plaintiff that ever since the commencement of the unauthorised use of plaintiffs trade marks 'LIBERTY' (and its variations) by the defendant Company in 2010, plaintiff has taken measures to get the defendant Company to cease the illegal and infringing use and has communicated the same to the defendant Company time and again. Vivek Bansal being a family member, the plaintiff firm has tried to amicably settle the issue with the defendant Company, however the same have failed on every occasion. It is also averred that left with no other means to amicably settle the matter, plaintiff issued a Legal Notice dated December 08, 2018 calling upon the defendant to immediately cease and desist the unauthorised / unlicensed use of CS(COMM) 637/2019 and connected matter Page 10 of 56 the plaintiffs trade mark LIBERTY and its variations and in the alternative gave a final opportunity to the defendant Company to amicably settle the dispute by March 31, 2019. The defendant Company sent a reply to the said legal notice vide letter dated December 26, 2018 seeking to enter into an arrangement with the plaintiff thereby agreeing to pay royalty subject to the condition that the terms of such arrangements be similar to those imposed on other related parties / family member entities. It is also stated that Vivek Bansal thereafter, approached the plaintiff in February, 2019, to amicably settle the dispute and requested time until March 31, 2019, extendable to August 31, 2019, to induct / transfer the business of the defendant Company with / to LSL and assured to cease and desist the use of the plaintiff's trade mark through the defendant concern.
12. It is the case of the plaintiff that the unauthorised use of the impugned trade name and identical logos is completely detrimental to the distinctive character of the plaintiff's well- known mark 'LIBERTY' and will have a negative impact on the distinctiveness of the goods and services as provided by the plaintiff. It is also stated that the use of the impugned trade name and identical logos in any manner clearly results in violation of CS(COMM) 637/2019 and connected matter Page 11 of 56 the vested rights of the plaintiff. It is also stated that the confusion would definitely be caused as the plaintiffs and defendant Company's fields of activities overlap.
13. It is stated that the defendant Company is using identical logos and as that of the plaintiff. The same is being done with a specific intent of illegally usurping the plaintiff's rights in the well-known trademark 'LIBERTY'.
14. A written statement to the plaint has been filed by the defendant Company, wherein it has raised a plea that the suit be dismissed for want of authority of the person signing the plaint. According to the defendant Company, the suit has been initiated through Adarsh Gupta, who claims to be the authorized signatory of the plaintiff firm. But there is no averment in the plaint explaining as to how and in what manner Adarsh Gupta has been authorized to institute the present proceedings on behalf of the plaintiff firm. In fact, it is the case of defendant Company, that immediately after receiving the notice dated December 08, 2018, purportedly issued on behalf of plaintiff's firm, challenged the authority of Adarsh Gupta for taking the said action, vide email dated December 10, 2018. In response, a reply dated December CS(COMM) 637/2019 and connected matter Page 12 of 56 13, 2018 was received by the defendant Company stating that Adarsh Gupta was authorised through a Power of Attorney issued in December 2004. It is stated in the written statement, that a bare perusal of Power of Attorney would reveal that the said Power of Attorney was executed for a specific purpose of filing some proceedings on behalf of the partners of the firm before this Court in the year 2004. The proceedings so initiated in the year 2004 was the suit filed by LFC, LGMD, LE and LSL against Kanishk Gupta and his sole proprietorship concern namely Liberty Trends. In other words, the Power of Attorney executed in December 2004 is limited to the said suit. Therefore, the present proceedings having not been initiated through a legally constituted / authorized person on behalf of the plaintiff firm, are liable to be dismissed.
15. A plea of non-joinder of necessary and / or proper parties is also taken. In this regard, it is stated that the LFC, LE, LGMD were engaged in the business of manufacturing and selling footwear / footwear components during different periods till 2003. The said three entities, all partnership firms, having common partners obtained registration of different trade marks for footwear and in the year 2003 appointed LSL as their CS(COMM) 637/2019 and connected matter Page 13 of 56 exclusive licensee for the footwear business. In the plaint Adarsh Gupta has made generic allegations of infringement of trade marks belonging to all the above entities, against defendant Company presumably on the basis of Assignment Deeds executed in the year 2003. Despite execution of Assignment deeds, LFC has not been recorded as registered /subsequent user of all the trade marks. It is stated that LIBERTY (word per se) is still registered in the name of LE for Footwear falling in class 25. Therefore, LFC cannot claim to be the owner of the trade mark LIBERTY (word per se). Similarly, LSL the exclusive licensee of LFC, LE and LGMD, who has been dealing with the defendant Company since more than a decade is a necessary party to the present proceedings. All the three partnership firms namely LFC, LE and LGMD receive license fee from LSL and hence cannot claim ignorance of existence of defendant Company, its business activities, which are carried from the same premises as that of LFC, LE, LGMD and LSL.
16. It is also stated that the plaintiff has also not approached this Court with clean hands and has suppressed the material information from this Court. In this regard, it is stated that Adarsh Gupta purportedly acting in the name of the plaintiff firm CS(COMM) 637/2019 and connected matter Page 14 of 56 has made averments, which are factually incorrect and misleading. Defendant Company was incorporated in the year 2008 and primarily deals in school uniforms including shoes and school bags. Defendant Company does not manufacture shoes at all and the entire stock of shoes to be used in its business by the defendant company, is purchased by it from LSL, which is the exclusive licensee of LFC, LGMD and LE since the year 2003. The transactions between the defendant Company and LSL started since the incorporation of defendant Company, or thereabout, and are continuing till date. Adarsh Gupta was one of the shareholders and Executive Director of LSL till the year 2015 and hence was fully aware of the existence of defendant Company as well as its business. It is also stated that even prior to incorporation and commencement of business by the defendant Company, Adarsh Gupta, vide his email dated January 12, 2008 addressed to Vivek Bansal of the defendant Company, approved idea of defendant Company exploring and promoting the business opportunity of "One Shop School Shop". It is the case of the defendant that Adarsh Gupta, in his aforesaid email, even suggested a name for defendant Company i.e. Liberty Dream 18 Pvt. Ltd., which necessarily included the trade mark 'LIBERTY' CS(COMM) 637/2019 and connected matter Page 15 of 56 as integral part of it. Therefore, there was no objection of any kind in use of the mark 'LIBERTY' as trade name of the defendant Company. It is conceded by the defendant Company that the name suggested by Adarsh Gupta could not be adopted due to some technical reason. Defendant Company was incorporated with the name Liberty Innovative Outfits Ltd. ('LIOL', for short) Furthermore, Adarsh Gupta has deliberately placed on record, copies of some old packing material / catalogue / visiting cards, which were printed at or about the time of commencement of business of defendant Company's in the year 2008-09. The said packing material / catalogue / visiting cards contained one of the trade mark of LFC which was discontinued by the defendant Company, more than 10 years ago. Defendant Company has not been using any of the trade mark belonging to LFC and all assertion and allegations made by Adarsh Gupta in the plaint are false to his specific knowledge. In so far as use of expression 'LIBERTY' as a part of corporate name is concerned, it is stated that the defendant Company was incorporated with consent, concurrence and knowledge of all the partners of the plaintiff's firm and no objection of any kind was CS(COMM) 637/2019 and connected matter Page 16 of 56 ever raised. Ever since its incorporation the defendant Company is carrying out its business, using corporate name LIOL. It is also stated that defendant Company had applied for obtaining the trade mark of the device in the year 2009, which inadvertently got abandoned in the year 2018. Adarsh Gupta was well aware of defendant Company's application but never objected to the same, as the said application was filed with his concurrence as well. The defendant Company is using only the aforesaid trade mark on its packing material, business cards and catalogues, none of which contains the trade mark of the plaintiff firm. It is also stated that none of the products of defendant Company, except shoes which are procured by it from LSL alongwith the trademark affixed thereon by LSL, bear trade mark of the plaintiff firm. The products of the defendant Company, other than footwear, bear the trade mark "Anything Skool", which is the proprietary mark registered in the name of defendant Company. Adarsh Gupta has concealed all these facts for obtaining interim injunction.
17. That apart, it is also stated that the present suit has been filed for settling personal scores against promoters / shareholders CS(COMM) 637/2019 and connected matter Page 17 of 56 / directors of the defendant Company, who are also partners of plaintiff firm. Adarsh Gupta who has failed in all his independent business ventures leading to sale of his shares in LSL, started making illegal demands from the partners of plaintiff firm. Having failed in achieving his illegal designs, Adarsh Gupta has resorted to filing false and frivolous proceedings against defendant Company and another business venture of Bansal family namely Liberty Fashion Outfit.
18. A plea of acquiesce / limitation has also been taken, inasmuch as the defendant Company had been using the corporate name of Liberty Innovative Outfits Ltd. since its incorporation in the year 2008 and commencement of business thereafter, which fact is well within the knowledge of all the partners of the plaintiff firm. Out of all its products sold by defendant Company each year, more than 50% sales are attributable to shoes/footwear, which are purchased by the defendant's Company from LSL, the exclusive licensee of plaintiff firm. Hence, all the partners of the plaintiff firm have acquiesced in use of the trade mark as well as company name of defendant since 2008. Accordingly, the plaintiff firm cannot seek injunction for restraining the defendant Company from using the CS(COMM) 637/2019 and connected matter Page 18 of 56 aforesaid trade mark and trade name in any manner. I.As. 16180/2019 & 18402/2019 in CS(COMM) 638/2019
19. This suit has been instituted seeking to restrain the defendant from using the identical/deceptively similar mark 'LIBERTY FASHION OUTFIT' and deceptively similar trade name 'M/s LIBERTY FASHION OUTFITS' or any other identical/deceptively similar mark/logo for its goods and services so as to result in violation of the statutory and common law rights of the plaintiff in its well-known trademark 'LIBERTY'.
20. I may state here that the averments qua the plaintiff are identical to the one made in CS (COMM) 637/2019 and an ad interim order was passed on November 20, 2019, in favour of the plaintiff.
21. Insofar as the defendant is concerned, the relevant averments in the plaint are that M/s Liberty Fashion Outfits, is a partnership firm engaged in the business of trading, importing and marketing various kinds of goods falling under Class 18 and 25 such as purses, bags, belts, socks, etc and is illegally using the brand names 'LIBERTY FASHION OUTFIT', and / or CS(COMM) 637/2019 and connected matter Page 19 of 56 plaintiff's registered trademark 'LIBERTY'. Raman Bansal is one of the partners of the defendant firm. That Raman Bansal is also a partner of the plaintiff firm and also holds a stake in other partnership firms forming a part of the Liberty Group, however he does not have any personal rights in the plaintiff's registered trade mark 'LIBERTY' either individually or through the defendant firm. It is also stated, Raman Bansal is also an employee of LSL, the exclusive licensee of the plaintiff.
22. It is stated that the defendant firm, without any authority or license from the plaintiff, has been using the plaintiff's registered trademark 'LIBERTY' and various variations of 'LIBERTY' mark in the following manner:
a. Incorporated 'LIBERTY' in its trade name 'LIBERTY Fashion Outfits';
b. Incorporated 'LIBERTY' in its trade mark 'LIBERTY FASHION OUTFIT' 'LFO' and device mark for competing business;
c. Trading, importing and marketing leather and fashion accessories such as bags, wallets, belts, socks, etc. through defendant firm using deceptively similar marks and claiming the CS(COMM) 637/2019 and connected matter Page 20 of 56 impugned marks to be a party of the 'Liberty Brand' and an extension of Liberty Group into the accessories industries in its advertising materials;
d. Using the plaintiff's corporate bird logo on online portals to identify the source of the products sold under the impugned marks;
e. Using the plaintiff's registered trademark 'LIBERTY' individually on several products such as wallets, bags, etc. f. Operating a website under a deceptively similar domain name www.libertyfashionoutfits.com with the intention to give an impression that the defendant firm is an extension of the Liberty Group.
23. Similar submissions have been made to amicably settle the issue with the defendant firm. A reference is also made with regard to issuance of the legal notice dated December 08, 2018 and reply dated December 26, 2018. It is also stated that the settlement talks reached the final stage of signing the agreements however, the same has again failed. It is also stated that while parties were discussing a settlement to resolve the matter related to unauthorised use of plaintiff's trademark 'LIBERTY', the CS(COMM) 637/2019 and connected matter Page 21 of 56 defendant firm fraudulently applied for trade mark applications bearing number 4173267, 4173268, 4173289 in Class 18 and 25 seeking registration of the impugned device mark and a variation of the same. The plaintiff has filed opposition proceedings against the said applications. It is also stated that the plaintiff has also instituted proceedings against the defendant firm's registered trademark , bearing no. 1995902 in Class 25.
24. A written statement has been filed by the defendant to the plaint. Similar objections have been taken in the written statement, as have been taken in the written statement filed in CS (COMM) 637/2019. Additionally, it is stated that the defendant firm got its trade mark registered as in Class 25 vide trade mark application no. 1995902, which is valid upto July 20, 2020. Adarsh Gupta was well aware of defendant firm's trade mark of the device as well as its use on the products of the defendant firm in Class 18 as well as Class 25. He never objected to such use, as the above trade mark was registered and CS(COMM) 637/2019 and connected matter Page 22 of 56 being used with his concurrence as well. It is also stated that the defendant firm has also applied afresh for registration of its trade mark as well as in Class 18 vide trademark application nos. 4173268 and 4173267 both dated May 10, 2019 respectively. The defendant firm is using only the aforesaid trade mark on its products, packing materials, business stationery and catalogues, none of which contains the trade mark of the plaintiff as alleged.
SUBMISSIONS:-
25. Mr. Rajshekhar Rao, learned counsel appearing for the plaintiff firm has made common submissions to the applications in both the suits. According to him, plaintiff firm is the first adopter and prior user of trademark 'LIBERTY' since the year 1954 till date and has been using the 'LIBERTY' brand continuously and uninterruptedly. According to him, this fact has been admitted by the defendant Company in CS (COMM) 637/2019 at page 16 of the written statement, which is reply to para 4 of the plaint as well as by the defendant Firm in CS (COMM) 638/2019 at page 17 of the written statement, which is reply to para 4 of the plaint. According to Mr. Rao, LE was CS(COMM) 637/2019 and connected matter Page 23 of 56 established later in 1976, LGMD was established in the year 1984 and LSL in the year 1989. LSL is the exclusive licensee of the 'LIBERTY' trade mark. Trade mark applications for 'LIBERTY' and LIBERTY formative marks were applied in the name of the plaintiff firm (LFC). However, the same inadvertently lapsed. Some applications were inadvertently filed in the name of LE and LGMD and by a consolidation process, LE and LGMD applications / registrations were assigned to the prior user and owner of 'LIBERTY' i.e LFC, the plaintiff firm herein. In substance, it is his plea that LE is not a prior user of trade mark 'LIBERTY' and only assigned the trade mark filed in its name. Execution of assignment in favour of the plaintiff firm is admitted and not challenged till date by the defendants and similarly, the assignments given effect to by the plaintiff by granting exclusive licenses to LSL from 2003 till date have not been challenged. In fact, Mr. Rao, by drawing my attention to reply to paras 15 and 16 of the plaint in both the written statements would urge that this aspect has been admitted by the defendants. He relied upon the judgment of this Court in the case of Century Traders vs. Roshan Lal Duggar AIR 1978 (Del) 250, in support of his contention that being a prior user, the rights of CS(COMM) 637/2019 and connected matter Page 24 of 56 the plaintiff in the trade mark are protected.
26. That apart, it was his submission that the rights in trade mark registrations vested with the plaintiff immediately upon execution of the assignments and merely non-recordal of assignments in favour of the plaintiff does not preclude the plaintiff firm from claiming ownership, more so, when such application for recordal of assignments are pending with the Trade Marks Registry. In support of his submission, he has relied upon the judgment in the case of Sun Pharma Industries vs. Cipla Ltd., 2009 (108) DRJ 207.
27. That apart, on the plea of the defendants that a single partner cannot maintain an action on behalf of the partnership firm, he has relied upon the following judgments to contend that majority cannot be allowed to act against the interest of the firm to protect trade mark rights.
(a) Economic Transport Carrier vs. Economic Transport Carrier, AIR (2003) Del 201;
(b) Suresh Kumar Sanghi vs. Amrit Kumar, AIR (1982) Del 131;
(c) Novartis vs. Aventis Pharma Ltd., (2009) SCC OnLine Bom 2067.
CS(COMM) 637/2019 and connected matter Page 25 of 56
28. That apart, it was his submission that the defendants' partners / Directors, Vivek Bansal / Raman Bansal admittedly earned royalty receipts under two exclusive licenses as partners of the plaintiff firm from 2003-13 and 2013 till date. So, they are barred from challenging the right of the plaintiff in the trade mark.
29. He also made a submission that the plea of the defendants of delay / acquiescence / limitation is totally misconceived, inasmuch as the plaintiff objected to the defendants' unauthorized business since commencement. In this regard, he has drawn my attention to para 26 of both the plaints, to show the steps taken by the plaintiff firm to get the defendants to cease the illegal and infringing use of the trade mark and also the efforts made to amicably settle the issue. In substance, it was his submission that the settlement talks continued till 2019, hence, there is no question of delay or acquiescence. He stated that the defendants being "At risk users" cannot now claim equities in their favour, after having knowledge of the plaintiff's prior use of mark since 1954. He has relied upon the following judgments in support of his contention.
1. Hindustan Pencils Ltd. Vs. India Stationery Products, CS(COMM) 637/2019 and connected matter Page 26 of 56 AIR 1990 (Del) 19;
2. Power Control Appliance vs. Sumeet Machines, (1994) 2 SCC 448;
3. Superflo vs. Sandhyamani, (2015) SCC OnLine Del 14403;
4. Alfred Dunhill Ltd. Vs. Kartar Singh Makkar & Ors., (1999) 19 PTC 294;
5. Novartis AG vs. Crest Pharma Pvt. Ltd. & Ors., 2009 (41) PTC 57 (Del);
6. General Mills Marketing Inc. & Anr. Vs. South India Beverages Pvt. Ltd., 2014 SCC OnLine (Del) 3779;
30. Additionally, Mr. Rao's submission in CS (COMM) 638/2019 is that the registration of defendant firm's deceptively similar and subsequent mark does not override the rights of the plaintiff, who is the prior user since 1954. In other words, passing off action based on prior use is unaffected by registration. In this regard, he has relied upon the following judgments:-
1. S. Syed Mohideen vs. Solochana Bai, (2016) 2 SCC 683;
2. Sun Pharma Laboratories Ltd. Vs. Lupin Ltd. And Ors., 2018 (74) PTC 103 (Del);CS(COMM) 637/2019 and connected matter Page 27 of 56
3. Sun Pharma vs. Ajanta Pharma, 2019 (79) PTC 86;
31. On the other hand, Mr. Sandeep Sethi, learned Senior Counsel appearing for the defendants, in both CS(COMM) 637/2019 as well as CS(COMM) 638/2019 would submit that the following entities are together known as Liberty group:-
(i) Liberty Footwear Company (LFC); (ii) Liberty Group Marketing Division (LGMD); (iii) Liberty Enterprise (LE) and; (iv) Liberty Shoes Limited (LSL).
32. All the above entities, except LSL are registered partnership firms and are owned by family members. Vivek Bansal is a Director in defendant Company, LIOL, in CS(COMM) 637/2019 as well as plaintiff firm, LE and LGMD.
33. Insofar as Raman Bansal is concerned, he is a partner in defendant firm, LFC, in CS(COMM) 638/2019 as well as in plaintiff firm, LE and LGMD. Both Vivek Bansal and Raman Bansal are the shareholders as well as key managerial personnels of LSL. Therefore, defendants are interested parties in all the entities and cannot even think of causing any loss to either of the entities. In 2003, the businesses of all four entities were consolidated and LFC, LE and LGMD appointed LSL as their CS(COMM) 637/2019 and connected matter Page 28 of 56 exclusive licensee for manufacturing and selling footwear. The defendant Company (in CS(COMM) 637/2019), LIOL, was formed in 2009 and since is trading in school uniforms, school bags, socks, shoes etc., under its registered trademark 'ANYTHINGSKOOL'. Defendant Company purchased shoes from LSL only, which is admittedly the exclusive licensee of trademark 'LIBERTY'. Defendant Company's products therefore, do not compete with those of plaintiff (LFC). According to him, it is a settled law that a registered proprietor cannot have monopoly over the entire class of goods. Defendant Company, LIOL, do not compete with plaintiff's or LSL's products, hence merely because the defendant goods fall in Class 18 or 25, no infringement can be alleged. He relied upon the judgment of the Supreme Court in the case of Nandini Deluxe vs. Karnataka Cooperative Milk Producers Federation Ltd., (2018) 9 SCC 183.
34. The trade mark 'LIBERTY INNOVATIVE OUTFITS Ltd.' and its trade name are being used by defendant company since 2009 and also applied for its registration but the same was abandoned inadvertently. Since the financial year 2012-13, its transactions are being disclosed in the related party transaction of CS(COMM) 637/2019 and connected matter Page 29 of 56 LSL where Adarsh Gupta was a Director till 2015 and was approving all the transactions. Besides, all the partners of plaintiff including Adarsh Gupta were also being paid royalty since last ten years for the business being carried out between LSL and defendant.
35. Similarly, with regard to the defendant firm's LIBERTY FASHION OUTFITS in CS(COMM) 638/20189, he stated that the defendant firm is the registered owner of its trademark since 2009 in Class 25. The defendant firm had also applied for the above mark in Class 18 in 2010 but inadvertently, the same got abandoned. It deals in leather accessories and shoe care products such as socks, laces, belts, leather wallets, stroller bags etc. and do not compete with either LSL or the plaintiff firm. He stated that the defendant firm does not own any showroom or shops and all its products are being sold through LSL, the exclusive licensee of plaintiff. He further stated that since the financial year 2017-18, its transactions are being disclosed in the related party transaction of LSL where Adarsh Gupta is an existing shareholder.
36. That apart, all the partners of plaintiff firm including CS(COMM) 637/2019 and connected matter Page 30 of 56 Adarsh Gupta were also being paid royalty from the turnover of LSL, which included business being carried out between LSL and defendant firm. He makes a similar submission based on the judgment in the case of Nandini Deluxe (supra).
37. It was also his submission that plaintiff is not the registered proprietor of the trademark 'LIBERTY'. In this regard, he stated that the mark 'LIBERTY' in Class 25 is registered in the name of LE. Therefore, plaintiff is not a registered proprietor of the trade mark 'LIBERTY' in terms of Section 2(1)(v) of the Trade Marks Act, 1999 ('Trade Marks Act', for short) as claimed in the suit. The plaintiff cannot maintain the present suit in view of Section 28 of the Trade Marks Act. So, it follows that Mr. Rao's contention that nobody can use the word 'LIBERTY' is also liable to be rejected. According to Mr. Sethi, as per the document at page 28 filed by the plaintiff, which is a document of the Trade Marks Registry depicting the name of 'LIBERTY ENTERPRISE' clearly establishes that even on that date, LE is the registered proprietor of the trademark 'LIBERTY' in Class 25 and registration is valid upto 2026. In other words, the registration having been renewed in 2016 in favour of LE and not in the name of plaintiff, hence CS(COMM) 637/2019 and connected matter Page 31 of 56 the plaintiff's claim of proprietorship of assignment falls flat on that ground alone. Mere filing of renewal application by the plaintiff does not make it registered proprietor in terms of Section 2(1)(v) of the Trade Marks Act. In fact, it is his submission that all family members are using 'LIBERTY' trade mark as part of the trade name since so many years and there has never been any dispute in that regard. It is only in the year 2018, for certain mala fide reasons Adarsh Gupta had raised dispute. He laid stress on the fact that, no Assignment Deed by LE in favour of the plaintiff has been filed with the suit or even thereafter.
38. That apart, it was his submission that since admittedly there is no recordal of assignments in favour of the plaintiff and there are disputes between the partners, the assignments, if any cannot be said to be valid after 17 years. In support of his submission that recordal of assignment under Section 45 of the Trade Marks Act is mandatory, he has relied upon the judgment of this Court in the case of Su-kam Power Systems Ltd. Vs. Kunwer Sachdev & Ors., 264 (2019) DLT 326.
39. It was his submission, that, in any case, even under Section 45(3) of the Trade Marks Act, in case of dispute, Registrar may refuse to register the assignment unless a CS(COMM) 637/2019 and connected matter Page 32 of 56 competent Court decides such dispute. That apart, in an arbitration between the partners of LE, it was clearly held that all the partners as well as their children can use 'LIBERTY'.
40. It was his endeavor to challenge the maintainability of the suit on the ground that Adarsh Gupta lacks authority from the plaintiff firm to institute the same. In this regard, he has stated that the Power of Attorney of the year 2004 was for specific purpose and the purpose having been achieved by filing a suit in the year 2004, he could not have filed this suit on that basis. That apart, he stated that the Power of Attorney has been revoked by majority partners of plaintiff firm, LE and LGMD vide separate letters dated November 08, 2019 and an undertaking dated December 16, 2019 by the partners of the plaintiff who hold 56% shares in the plaintiff firm and hence, the suit is liable to be dismissed on that ground as well. That apart, it was also his submission that under Section 12 of the Trade Marks Act, any differences have to be decided by majority partners. In this case, majority partners have withdrawn all the authorities from Adarsh Gupta even before filing of these suits. He draws a distinction between a partnership firm and a company by stating that the firm does not have separate and independent rights from its partners CS(COMM) 637/2019 and connected matter Page 33 of 56 and Mr. Gupta could not have filed the present suits. In this regard, he has relied upon the judgment of the Supreme Court in the case of Malabar Fisheries Company vs. Commissioner of Income Tax, 1979 (120) ITR 49 (SC) and Purushottam Umedbhai & Co. vs. Manilal & Sons, AIR 1961 SC 325.
41. Mr. Sethi had also submitted that properties of a partnership firm including trade mark is owned by all partners and can be used by all partners and therefore even if it is presumed, though not admitted, that plaintiff firm is the proprietor of trade mark 'LIBERTY' then also, the suits are legally untenable against one of the partners of the plaintiff firm. In this regard, he has relied upon the judgment in the case of Sohanlal & Ors. Vs. Amin Chand & Sons & Ors., AIR 1973 SC 2572, American Dry Fruit Stores vs. ADF Foods Limited, 2006 (3) Bom CR 837; Kalinga Gudakhu Udyog vs. Konark Gudakhu Factory, 1990 (10) PTC 216 (Del).
42. Mr. Sethi, during his submissions, has also highlighted conduct of Mr. Gupta, inasmuch as Adarsh Gupta was himself carrying on business using the name 'LIBERTY' and no royalty has been paid by him till date for such use. According to him, Adarsh Gupta has initiated action selectively with the sole CS(COMM) 637/2019 and connected matter Page 34 of 56 intention of personal vendetta. Moreover, Mr. Gupta himself suggested the use of 'LIBERTY' in his email dated January 12, 2008. He also highlighted that these suits have been filed by Mr. Gupta after being unsuccessful in making illegal demands such as 25 years salary from LSL. According to Mr. Sethi, partners held meetings to settle all the issues but Adarsh Gupta deliberately did not participate in the said meetings, as his unlawful demands were not being accepted.
43. It was also the case of Mr. Sethi that the suits are barred by limitation, inasmuch as the suits have been filed after ten years. The plaintiff was aware of the defendant firm and usage of its trade mark and business since the year 2009 and also enjoying royalty from the business between defendants and LSL. Hence, it is a clear case of acquiescence as well. In the end, Mr. Sethi, submitted, that, there is no compliance of Order 39 Rule 3 CPC. This Court directed the compliance of the said provision within two weeks, which period expired on December 04, 2019, whereas the petition was served on December 05, 2019. He relied on Ashwani Pan Products Pvt. Ltd. vs. Krishna Traders, 2012 (128) DRJ 592. Mr. Sethi has also contested the judgments relied upon by Mr. Rao in support of his contentions to state that the CS(COMM) 637/2019 and connected matter Page 35 of 56 same are not applicable to the facts of this case.
44. Having heard the learned counsel for the parties, the first and foremost issue that need to be decided is whether, the suit is maintainable or not, due to lack of authority in favour of Adarsh Gupta, as was contended by Mr. Sethi.
45. Mr. Rao has relied upon a Power of Attorney of December, 2004 to contend that Adarsh Gupta has the authority whereas Mr. Sethi stated that the said Power of Attorney was executed for a specific purpose, that is filing of a suit in the year 2004, by LFC, LGMD, LE and LSL against Kanishk Gupta and its sole proprietorship concern namely Liberty Trends from infringing the trade mark of the plaintiffs' therein and in fact a suit bearing No. CS (OS)1447/2004, had been filed in this Court. Additionally, it was stated that neither the plaintiff firm nor its partners have decided to file this suit. I have seen the Power of Attorney executed in December 2004. Prima facie, the said document does not appear to have been executed for the purpose of filing a case in 2004. It has been executed by partners of the plaintiff firm in favour of Adarsh Gupta for doing the following acts, deeds, matters of things:-
"1. To make, declare, swear, affirm, sign, seal, deliver, CS(COMM) 637/2019 and connected matter Page 36 of 56 verify pleadings, affidavits, caveats, declarations, applications, petitions, counter-claims, papers, instruments, agreements, documents and writings usual, necessary or expedient for or in furtherance of writ petitions to be filed by the Partners / Firm before the Hon'ble High Court of Delhi and to institute such petitions (s) (hereinafter called the said "proceedings").
2. To institute, file, commence, prosecute, enforce, defend; answer, oppose, appear in said writ petitions and all actions and legal proceedings and demands whether civil, political or administrative in which the Partners are / Firm is or may be concerned or interested in India or appeal against, institute and prosecute appeal, revision and review proceedings in respect of the said petitions and all actions and legal proceedings and demands whether civil, criminal, political or administrative in which the Partners are/ Firm is or may be concerned or interested in India and to file and or initiate appeal against any, order passed by any court; tribunal or authority in India relating to any Intellectual Property Rights of the Partners / Firm and to sign, execute, affirm, and verify petitions, memoranda of appeal, affidavits, applications or any pleadings and to depose on behalf of the Partners / Firm and if thought fit to compromise, settle, refer to arbitration, abandon, submit to judgment, proceed to judgement and execution or become non suited in the said Suits / petitions or any such action as CS(COMM) 637/2019 and connected matter Page 37 of 56 and to defend or resist any actions or proceedings as aforesaid and also in connection, with the said petitions. In any such, action or proceedings, to retain employ and remunerate advocates, solicitors and other legal practitioners and advisors and to sign warrants, Vakalatnamas and others necessary authorities.
3. To delegate the aforesaid powers in respect of the institution and prosecution of the writ proceedings / civil and / or criminal proceedings.
4. To concur in doing any of the acts, instruments, matters, deeds and things hereinabove mentioned."
46. It is seen from the above, it is a General Power of Attorney executed by all the partners not confining to filing of suit referred above. It is for filing pleadings / documents etc., in legal proceedings to be filed on behalf of partners / firm or in which they are interested. This suit has been filed in the name of the firm, the same could be filed on the strength of the said Power of Attorney. In any case, the plea raised by Mr. Sethi is a mixed question of fact and law, to be decided after evidence is adduced by the parties on a specific issue framed in that regard. The plea as raised by Mr. Sethi cannot come in the way of this Court to decide these applications under consideration.
47. Now coming to the plea of Mr. Sethi that, the plaintiff is CS(COMM) 637/2019 and connected matter Page 38 of 56 not the registered proprietor of the trade mark is concerned, this plea is primarily for the following reasons:-
(1) The mark 'LIBERTY' in Class 25 is registered in the name of LE and hence the plaintiff is not a proprietor in terms of Section 2(1)(v) of the Trade Marks Act for it to maintain a suit in view of Section 28 of the Trade Marks Act;
(2) The plaintiff's contention that nobody can use the word 'LIBERTY' is also liable to be rejected as per Section 17 of the Trade Marks Act;
(3) All family members are using 'LIBERTY' as trade mark for so many years without any dispute raised in that regard;
(4) No assignment deed by LE in favour of LFC has been filed with the suit or even with bunch of documents filed on January 31, 2020. Even otherwise, there are disputes existing between the partners, such assignment cannot be said to be valid;
(5) Recordal of assignment under Section 45 of the Trade Marks Act is mandatory and in case of dispute, the Registrar has been given power under Section 45(3) to refuse registration of the assignment;
(6) In terms of Arbitration Award between the parties of LE, it was clearly held that all the partners as well as their children CS(COMM) 637/2019 and connected matter Page 39 of 56 can use 'LIBERTY'.
48. Insofar as the pleas at (1) to (4) above are concerned, no doubt that, the mark 'LIBERTY' is registered in the name of LE (Ref: page No. 28 of the documents filed on January 30, 2020), but reliance is placed by Mr. Rao on the assignment deed (s) executed in favor of the plaintiff by which, the trade marks with 'LIBERTY' have been assigned in favour of the plaintiff, as is stated in para 20 of the plaint (s). In fact, I find one such assignment in favour of the plaintiff is dated March 28, 2003 and pursuant to the assignment, a communication dated December 14, 2003 was sent to the Trade Marks Registry to change the name of the proprietor of the mark as 'Liberty Footwear Company' (Ref: Page 143 of plaintiff's documents). It is also the case of the plaintiff that it has registrations of 'LIBERTY' marks in its favour. That apart, it is a fact, that in the year 2004, on the basis of Power of Attorney executed by Vivek Bansal and Raman Bansal, also the plaintiff firm had filed a suit against Liberty Trends, for infringing the same trade marks of the plaintiff firm, which are subject matter of the these suits. So, now, Vivek Bansal and Raman Bansal as Partners of the defendants cannot contend otherwise.
CS(COMM) 637/2019 and connected matter Page 40 of 56
49. Insofar as the plea of Mr. Sethi that mere assignment without recordal of assignment by the Trade Marks Registry shall not confer any right of the plaintiff to contend infringement, by relying on the judgment of the Co-ordinate Bench of this Court in Su-kam Power Systems Ltd. (supra), is concerned, this plea was opposed by Mr. Rao by relying on the judgment of another Co- ordinate Bench in Sun Pharmaceuticals (supra).
50. I have seen the judgments as relied upon by the counsels including the judgment in the case of Ramaiah Life Style Café Vs. Eminent Entertainment and Ors., CS (COMM) 1433/2016, of which a reference is made in the judgment of Su-kam Power Systems Ltd. (supra).
51. In Ramaiah Life Style Café (supra), the Court has in paras 15, 16, 18, 19, 21 to 24 has stated as under:-
"15. I, in Sun Pharmaceuticals Industries Limited supra, on consideration of the aforesaid judgments held (i) that the reasoning which prevailed with the Madras High Court in Soundarapandian Match Works supra had not been considered in Modi Threads Limited supra and Grandlay Electricals (India) Ltd. supra; (ii) however another learned Single Judge of this Court in Astrazeneca UK Ltd. Vs. Orchid Chemicals and Pharmaceuticals Ltd. (2006) 32 PTC 733 had also taken the same view and held that the rights in CS(COMM) 637/2019 and connected matter Page 41 of 56 the trade mark come on the basis of assignment deeds and the plaintiffs cannot be denied the rights in the trade mark which they had got on the basis of the assignment deeds in their favour on the ground that in the records of the Registrar of Trade Marks, the trade mark was still shown in the name of the assignor; (iii) the Supreme Court in Collector of Central Excise Ahmedabad Vs. Vikshara Trading and Investment (P). Ltd. 2003 (27) PTC 603 though not directly concerned with the issue had held that once it was not in dispute that there was an assignment, the mere fact that the assignment was not registered could not alter the position; (iv) that the learned Single Judge of the Madras High Court in Soundarapandian Match Works supra had not considered the earlier judgment of the Division Bench of that Court in T.I. Muhammad Zumoon Sahib supra; (v) that registered trade mark is different from registered proprietor; (vi) that assignment under Section 2(b) is an assignment in writing by an act of parties concerned and does not require registration; (vii) that for assignment to be complete, the Registrar is not involved;
(viii) that from the language of Section 45(1) of the Trade Marks Act also, the assignee acquires title to the registered trade mark on assignment and not by registration; (ix) that registration is of title acquired by assignment; (x) that a dispute as to assignment can be raised by the assignor or by some person claiming prior assignment and not by strangers or by persons claiming adversely to the assignor;CS(COMM) 637/2019 and connected matter Page 42 of 56
(xi) that thus the assignee immediately on assignment acquires title to the registered trade mark and title to the registered trade mark exists in assignee even before registration under Section 45(1); (xii) that what prevailed with the Madras High Court in Soundarapandian Match Works supra was the inaction of the plaintiff therein to even apply to the Registrar of Trade Marks; (xiii) that however the plaintiff in Sun Pharmaceuticals Industries Limited supra had applied for registration of the assignment as far back as in the year 2000 and there was nothing to show that the plaintiff was in any way to blame for the Registrar having not decided the application either way; the plaintiff could not be made to suffer for the actions of the Registrar;
(xiv) that Section 45(2) of the Trade Marks Act prohibiting admission into evidence of any assignment till registered was in the nature of Section 35 of the Indian Stamp Act, 1899 prohibiting the Courts from admitting into evidence documents not duly stamped i.e. to ensure registration of assignments; (xv) thus the plaintiff, notwithstanding being not registered was held entitled to exercise rights as registered proprietor of the trade mark.
16. I have wondered whether the reasoning which prevailed with me in Sun Pharmaceuticals Industries Limited supra should prevail in the facts of the present case also, where the plaintiff inspite of assignment claimed in its favour as far back as on 9th December, 2009 and inspite of CS(COMM) 637/2019 and connected matter Page 43 of 56 knowledge of infringement of the said trade mark by the defendants as far back as in 2012, has till date not taken any steps for registration of the assignment in its favour.
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18. It needs to be considered whether Section 45 as it now stands requires re-consideration of the view taken in Sun Pharmaceuticals Industries Limited supra.
19. Sub-section (4) of Section 45 of the Trade Marks Act as it now stands is new. It makes the assignment ineffective against a person acquiring a conflicting interest in or under the registered trade mark without the knowledge of assignment or transmission. The defendants herein have however not acquired any conflicting interest in or under the registered trade mark.
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21. The said changes in Section 45 however do not call for a change in the view taken in Sun Pharmaceuticals Industries Limited supra. I may however record that the Division Bench of the High Court of Bombay in Parksons Cartamundi Pvt. Ltd. Vs. Suresh Kumar Jasraj Burad 2012 SCC OnLine Bom 438 has held that though prior to the amendment registration of assignment under Section 45 could not be said to be a mere formality but is so after the amendment.
CS(COMM) 637/2019 and connected matter Page 44 of 56
22. One thing which is however clear as a day light on a reading of Section 45 is that registration of assignment under Section 45 is mandatory. This is evident from the use of the word „Shall‟ in Section 45(1).
23. Thus it is mandatory for a assignee of a registered trade mark to apply in the prescribed manner to the Registrar, Trade Marks to register his title thereto.
24. Seen in this light what distinguishes the present case from Sun Pharmaceuticals Industries Limited supra and the judgments relied upon therein is that while in all those cases the plaintiff had applied to the Registrar, Trade Marks for registration of his title to the trade mark by assignment or transmission and non-registration was not attributable to any default on the part of the plaintiff therein, the plaintiff herein for the last nearly eight years from the date of the claimed assignment and for the last nearly five years since the admitted knowledge of claimed infringement has not even applied to the Registrar of the Trade Marks for registering the assignment of trade mark in its favour. The possibility of the plaintiff not doing so for reasons not spelled out before this Court cannot be ruled out."
52. From the above, it is seen the Court has held; (i) that under Section 45 of the Trade Marks Act, registration of CS(COMM) 637/2019 and connected matter Page 45 of 56 assignment is mandatory; (ii) It is mandatory for an assignee of a registered trade mark to apply in the prescribed manner to the Registrar of Trade Marks to register his title thereto.
53. It is also seen that the Court had distinguished the case from Sun Pharmaceuticals (supra) and the judgments relied upon therein, by stating that in all those cases, the plaintiff had applied to the Registrar of Trade Marks for registration of his title to the trade mark by assignment or transmission and non- registration was not attributable to any default on the part of the plaintiff therein. The Court also stated that the plaintiff therein for nearly eight years from the date of claimed assignment and for the last five years since admitted knowledge of claimed infringement has not applied to the Registrar of Trade Marks for registering the assignment of the trademark in its favour.
54. In the case in hand, in reply to application under Order 39 Rule 4, the plaintiff in reply to para 4 of the application has stated as under:-
"The plaintiff has further applied to the Registrar of Trade Marks for recordal of assignment and consequently, taking the Plaintiff on record as the subsequent proprietor. It is submitted that any inaction of part of the Trade Marks Registry with respect to a few registration, does not CS(COMM) 637/2019 and connected matter Page 46 of 56 preclude the Plaintiff herein from exercising its rights which accrued to the Plaintiff immediately upon the said assignment of LIBERTY trademarks in its favour by Liberty Enterprises (LE) and Liberty Group Marketing Division (LGMD) in the year 2003."
55. In rejoinder to the reply to para 4, the defendant has not disputed the fact that the plaintiff has applied for recordal of assignment (Refer to page 143 of the plaintiff's documents). If that be so, the judgment in the case of Ramaiah Life Style (supra) is distinguishable, as in that case the plaintiff has not filed any application for recordal of assignment. In fact, this aspect prevailed with the Court to deny interim injunction. The effect thereof is that the ratio of the judgment in Sun Pharmaceuticals (supra) was upheld.
56. Now coming to the judgment in the case of Su-kam Power Systems Ltd. (supra), the said judgment is distinguishable inasmuch as: (i) therein the Court has held the deed of assignment to be void on the ground of breach of fiduciary duty. There is no such challenge to the assignment in this case by the defendant;
(ii) in any case the application for recordal is made after twelve years, after commencement of Insolvency Resolution process, CS(COMM) 637/2019 and connected matter Page 47 of 56 whereas in the case in hand, the plaintiff has in fact made an application for recordal of assignment immediately in 2004 itself, which is still pending. Any delay on the part of the Trade Marks Registry cannot be to the prejudice of the plaintiff firm, who has every right to protect its right in the trade marks. The observation of the Coordinate Bench in Sun Pharmaceuticals (supra) that, "If the interpretation canvassed by defendant herein is to be adopted it will amount to allowing a person who is divested by assignment of title to registered trade mark to nevertheless continue exercising such rights; it would play havoc with assignability and trading in trade mark, expressly permitted under the Act. If the person in whom title has vested by assignment is held to be not entitled to exercise such rights owing to non-registration, the same result will follow besides giving premium to third parties", is important and conclusive.
57. Insofar as the plea of Mr. Sethi that trade mark of a partnership firm is owned by all the partners is concerned, the same is primarily for the following reasons:-
(i) Majority partners have withdrawn all the authorities from Adarsh Gupta;
(ii) Plaintiff is not a Company but a partnership firm, which CS(COMM) 637/2019 and connected matter Page 48 of 56 does not have separate and independent right from the partners.
In this regard, he had relied upon the judgments in the cases of;
(i) Malabar Fisheries (supra) and Purushottam Umedbhai & Co. (supra);
(iii) Properties of a partnership firm including trade mark is owned by all the partners and can be used by all the partners by placing reliance on Sohanlal & Ors. (supra), American Dry Fruit Stores (supra), Kalinga Gudakhu Udyog (supra).
58. The plea of Mr. Rao in this respect is that Adarsh Gupta being a partner in the plaintiff firm is entitled to institute these suits to protect the interest and intellectual property rights of the plaintiff firm. He stated that in the past also, Mr. Gupta had filed a suit concerning the intellectual property rights of the plaintiff firm. This is because as a partner Mr. Gupta has a vital interest in the activities of the partnership firm and thus is entitled to institute these suits on behalf of the plaintiff firm against the defendants, more so, when some of the partners of the plaintiff firm are inclined to act in bad faith and in breach of fiduciary duties and contrary to the interest of the partnership firm solely for their personal gains and in this background, a suit filed by one partner, to protect the intellectual property of the firm against CS(COMM) 637/2019 and connected matter Page 49 of 56 another partnership firm, whose partner is the partner of the plaintiff firm is maintainable by relying on the judgments in the case of Suresh Kumar Sanghi (supra), Novartis (supra), Economic Transport Carrier (supra).
59. There is no dispute on the proposition of law as laid down by the judgments as relied upon by Mr. Sethi, but the relevant issue is whether a partner is precluded from initiating action, to protect the intellectual property rights of the firm. The answer, in view of the judgments relied upon by Mr. Rao is "NO". In Suresh Kumar Sanghi (supra), this Court held that the majority of the partners are not vested with a power to bind the other persons with regard to the matter of vital importance and decision with regard to the same must be taken with the consent of all the partners. Further, the majority must act in good faith, is another important aspect. The following observation of the Court in Suresh Kumar Sanghi (supra), is also of relevance:-
"32......
No doubt, a partnership being the business of all the partners, the powers of management of the partnership are co-extensive but the control and management of partnership business can be exercised by a single partner and need not be by CS(COMM) 637/2019 and connected matter Page 50 of 56 majority....".
60. An identical issue arose in the case of Economic Transport Carrier (supra), wherein a suit was filed by one of the partners of the plaintiff therein against a firm, for using the name and trade name. The question that arose was whether the majority of the partners have the right to withdraw the suit filed by one of the partners of the firm without any permission or authority of the original partnership firm. This Court, in para 4 of the judgment, held as under:-
"4. In such a situation the decision of the majority of the partners cannot be binding on the other partners particularly when the suit is for passing off the name of a firm or infringement of the trade name as commercial activity of every kind is prosecuted through a partnership firm. In no circumstances, the majority of the partners can be allowed to permit a stranger to use their name or trade name as it would amount to offence of passing off. Every partner has a vital interest in the activities of a partnership firm. Majority cannot trample or impede the interests of minority partners."
61. I find, Mr. Vivek Bansal and Mr. Raman Bansal, apart from being partners in the plaintiff firm, are Director in the defendant Company in CS (COMM) 637/2019 and partner in CS(COMM) 637/2019 and connected matter Page 51 of 56 defendant firm in CS (COMM) 638/2019 respectively. So, by opposing the action initiated by the plaintiff firm, through Adarsh Gupta, they stand to gain as Director/ partner of defendants. The plea is rejected.
62. Insofar as the pleas of Mr. Sethi of acquiescence and limitation are concerned, it is averred by the plaintiff firm that, since 2009, the plaintiff firm, has taken measures to get the defendants to cease the illegal and infringing use and has communicated the same to the defendant time and again. Instances have been given in para 26 of the plaint (s) about the efforts made on different occasions to come to a common understanding / settling the issue. The plaintiff firm also averred that the defendants through Vivek Bansal and Raman Bansal had discussed settlement, with the plaintiff firm including giving up the use of plaintiff trade mark 'LIBERTY'. It is also stated that the defendants had sent email, seeking to enter into a settlement with the plaintiff, thereby agreeing to pay royalty. Noting the averments made, suffice would it be to state that the issue of acquiescence / limitation is a mixed question of fact and law, which cannot be decided at this stage. Parties should be permitted to prove their case on these aspects by leading CS(COMM) 637/2019 and connected matter Page 52 of 56 evidence, on specific issues framed in that regard.
63. During the course of his submissions, Mr. Sethi has, highlighted, that conduct of Adarsh Gupta, as mala fide. The instances highlighted are:-
(i) Adarsh Gupta was himself carrying out a business using the name 'LIBERTY' without paying any royalty;
(ii) There are many other companies not owned by LIBERTY family, who are using 'LIBERTY' as their trade name as 'LIBERTY' is a generic term;
(iii) Action has been initiated against selected family members as a personal vendetta.
64. I am afraid, the said submission shall not have any bearing on the rights of the plaintiff firm to initiate action for infringement of the trademark 'LIBERTY', based on the assignments of 2003 and / or in terms of registrations in its favour. If any person has any grievance / claim, against Adarsh Gupta, in his individual capacity (not as a Partner of the plaintiff firm), he is at liberty to agitate the same in accordance with law.
65. Insofar as the plea of Mr. Sethi that a registered proprietor cannot have a monopoly over the entire class of goods by relying on the judgment of the Supreme Court in Nandini Deluxe CS(COMM) 637/2019 and connected matter Page 53 of 56 (supra) is concerned, there is no dispute on the proposition of law as pleaded by Mr. Sethi, but it is also the case of the plaintiff that passing off action based on prior use is unaffected by registration. Whether the plaintiff is a prior user; the effect of assignment; registrations, if any in favour of the plaintiff shall be considered, after evidence is led by the parties, and not at this stage when the plaintiff has made out, a prima facie case in its favour. Moreover, the defendants have not been able to show, their right in the trademark 'LIBERTY' and its variations.
66. That apart, the plea on behalf of the plaintiff firm that Vivek Bansal / Raman Bansal have not taken any objection to the institution of the suit being CS(OS) 1447/2004, against Kanishk Gupta / Liberty Trends seeking permanent injunction from using the plaintiff's trademark 'LIBERTY' and various sub-brands of the LIBERTY group, which are also the prayers in these suits, is appealing.
67. I must also, note the submission of Mr. Sethi that Adarsh Gupta was a Director of LSL till 2015 and all partners including Adarsh Gupta were being paid royalty since last almost 10 years for business carried out between LSL and defendants is also appealing, but the effect thereof, that too keeping in view the CS(COMM) 637/2019 and connected matter Page 54 of 56 averments made by the plaintiff, in para 26 of the plaint, has to be seen and decided finally in the suit, after the parties lead their evidence in support of their respective case.
68. Insofar as the submission of Mr. Sethi that the interim order need to be vacated as the plaintiff has not complied with Order 39 Rule 3, inasmuch as the plaint was served on the defendant on December 05, 2019, and affidavit of compliance was filed on December 07, 2019 by relying on the judgment of Ashwani Pan Products Pvt. Ltd. (supra) is concerned, no doubt, this Court has directed compliance to be made within two weeks, which expired on December 04, 2019, which means, the plaint was served on the defendant one day after the period expired and the affidavit was also filed beyond time, but the delay is not fatal. It is not a case, where the complete paper book was not served on the defendant as has happened in the judgment relied upon by Mr. Sethi. The said judgment is distinguishable on facts. In so far as the plea of Mr. Sethi, that in an arbitration between the partners of LE it was clearly held that all the partners as well as their children can use 'LIBERTY' is concerned, the same is not appealing. The plaintiff has no locus to make such a plea. It is for the partners of LE to make a claim against the plaintiff, if any CS(COMM) 637/2019 and connected matter Page 55 of 56 right exist in their favour.
69. In view of my above discussion, this Court is of the view, the order dated November 20, 2019 passed in the suits require no interference, except as modified vide order dated December 24, 2019 in CS(COMM) 638/2019. The orders are confirmed till the disposal of the suits.
70. It is made clear the aforesaid conclusion of mine is only a tentative view.
71. The applications being I.A. 16177/2019 in CS(COMM) 637/2019 and I.A. 16180/2019 in CS(COMM) 638/2019 are disposed of and applications being I.A. 18169/2019 in CS(COMM) 637/2019 and I.A. 18402/2019 in CS(COMM) 638/2019 are dismissed.
CS(COMM) 637/2019 CS(COMM) 638/2019 Replication, if not filed, shall be filed as per rules. List before Joint Registrar on July 3, 2020 for completion of pleadings and further proceedings.
V. KAMESWAR RAO, J MAY 26, 2020/ak/jg CS(COMM) 637/2019 and connected matter Page 56 of 56