Punjab-Haryana High Court
Abhishek Mills Limited vs Abhishek Industries Limited on 17 July, 2006
Equivalent citations: (2006)144PLR376
JUDGMENT S.N. Aggarwal, J.
1. The legality of the ex parte stay order granted by the Court of Incharge District Judge Sangrur on 17.6.2006 has been seriously questioned by the appellant in the present appeal.
2. The facts are that Abhishek Industries Limited Trident Complex Raikot Road Barnala (hereinafter to be referred to as the respondent) filed a civil suit under Trade Marks Act 1999 against the appellant M/s Abhishek Mills Limited Gat No. 148. Tamgaon Kolhapur-Hupari Raod Taulka Karveer District Kolhapur Maharasthra (hereinafter to be referred to as the appellant) with the allegations that the respondent Company was incorporated under the Companies Act, 1956 in 1990. It was running the business of manufacturing and marketing of inter alia terry towel yarn paper and chemicals. It has a roaring business. Not only sale of their goods within the country but they also export the same in more than 37 countries. It has a huge turn over which went on increasing since the year of its incorporation. It spent huge amount in publishing and promoting its products The respondent and its management have earned a number of awards because of its excellence.
3. It was alleged that the appellant Company is engaged in yarn manufacturing and construction. The respondent came to know about the existence of the appellant Company in the first week of June 2006 when the appellant submitted its Draft Red Herring Prospectus to the Securities and Exchange Board of India (in short SEBI). The appellant was carrying out its business activities under an identical trade name till the first week of June 2006. The respondent is aggrieved more by the proposed Initial Public Offer by which the appellant is intending to go to public and raise money from the public. There is a grave danger to the good-will and reputation of the respondent as the appellant is claiming to be operating in the same field of activity and manufacturing identical products using the identical trade and corporate name by using the word Abhishek. The appellant is inducing the trade and public to believe that it is connected or associated with the respondent. Therefore the conduct of the appellant tantamount to the passing off and was liable to be stayed forthwith by an injunction order by the Court.
4. An application Tor interim stay under Order 39 Rules 1 and 2 read with Section 151 C.P.C. was also filed for restraining the appellant Company its principal officers directors partners managers employees licensees and franchisees assigns agents and representatives from using the trade and corporate name Abhishek etc. and also for restraining the appellant Company from issuing its initial public offer/public issue under the trade and corporate name Abhishek and/or any deceptive variation thereof till the decision of the suit. The suit and the application for interim stay were filed by the respondent on 17.6.2006 on which the learned trial Court passed the following operative ex parte injunction order on the same day:
After hearing the learned Counsel for the applicant after going through the judicial pronouncement relied upon by the learned Counsel for the applicant the respondent company is restrained from using the Trade and Corporate name "ABHISHEK" and/or any deceptive variations thereof as a corporate name of as a trade name in whole or part whether in connection to any goods or its business or otherwise in any manner indulging in acts of unfair competition whatsoever so as to misrepresent to the trade public that their goods and business are those of the plaintiff and from doing any other thing as may cause confusion or deception leading to passing off its goods and business as those of the plaintiff and the respondent company is further restrained from issuing its initial forthcoming public offer/public issue under the Trade and Corporate name "ABHISHEK" and/or any deceptive variation thereof till further orders.
Notice of the application be issued to the respondents for 20.7.2006 on which the file be put up before learned District Judge Sangrur. The applicant is directed to comply with the provisions of Order 39 rule 3 C.P.C.
Sd/-
(D.S. Malwai) I/C District Judge Sangrur 17.06.06
5. Aggrieved against this order the present appeal has been filed by the appellant (defendant in the learned trial Court). The appellant pleaded that its company was incorporated in the year 1993 with corporate name as Abhishek Cotspin Mills Limited. The appellant is reputed manufacturer and supplier of yarn since the year 1999. The respondent has dishonestly and illegally claimed exclusive rights in respect of name Abhishek. Not only the appellant and the respondent about 245 companies are registered and incorporated in India under the corporate name Abhishek which have Hindu and Sanskrit religious meaning. For the last 15 years the Company has huge turn over. Even in Surat Abhishek group of industries exist which is not even remotely connected with the respondent. The respondent did not represent itself to be part of Abhishek Group of Industries. Rather the respondent is known as Trident Group of Industries. Even the do- ' main name of the respondent starts with trident India. The appellant is running the business of several crores for the last several years. Abhishek is the name of the son of the Managing Director and one of the promoters of the appellant company. The appellant company has taken steps since 1996 to set up a 100% export oriented unit (EOU) for yarn at Tamigan. Tal Karveer District Kolhapur. It has taken steps for setting up a factory installation of plant and machinery and for obtaining necessary licences permissions approvals from various authorities under the Central and State Governments. The spinning capacity of the appellant Company is on the increase. The appellant is a successful manufacturer of quality yarn and it has been supplying the same in a highly competitive global market. The turn over of the appellant Company is increasing year by year and therefore the appellant Company is one of the largest units in its own right. The appellant Company is well known and established for 100% cotton yarn in finer counts of 42 to 120 being manufactured by it. It has changed its corporate name from Abhishek Cotspin Mills Ltd. to Abhishek Mills Ltd. in the year 2005.
6. Speaking about the exparte ad-interim injunction the appellant alleged that the said order came to their knowledge on 26.6.2006. It has been obtained by the respondent by mis-leading the trial Court in order to completely stall the business and public issue of the appellant. Apart from tieing up with the Banks and the financial institutions the appellant Company has also proposed public issue to raise capital in the region. Accordingly Draft Red Herring Prospectus was filed with the SEBI on 1.6.2006 for approval. The said Prospectus was put on the website of SEBI as well as that of the appellant so as to invite objections from the public at large within 21 days and the respondent has only filed a copy of the impugned order dated 17.6.2006 before SEBI. Since the appellant Company is entirely distinct from the respondent Company the respondent has no prima facie case for seeking an injunction order. There is no question of any deception or passing off and the respondent has no right to stop the appellant from using the word Abhishek as the respondent do not have its trade or domain name on it.
7. An application was also filed separately terming this order to be illegal void without jurisdiction with the prayer that operation of impugned order passed by the Court of Shri D.S.Malwai Incharge District Judge Sangrur dated 17.6.2006 be stayed.
8. The main thrust of the arguments of learned Counsel for the appellant was that exparte interim stay granted by the Court on 17.6.2006 is illegal perverse and against the statutory provisions: Order 39 Rule 3 mandates a Judicial Court to grant the injunction order only after giving due notice to the opposite side. The exception is only where the object is going to be defeated by the delay. Even in the situation where the injunction order is granted without notice the proviso to Rule 3 Order 39 lays down that the trial Court must record its reasons. Order 39 Rule 3 C.P.C. reads as under:
3. Before granting injunction Court to direct notice to opposite-party.- The Court shall in all cases except where it appears that the object of granting the injunction would be defeated by the delay before granting an injunction direct notice of the application for the same to be given to the opposite party.
Provided that where it is proposed to grant an injunction without giving notice of the application to the opposite party the Court shall record the reasons for its opinion that the object of granting the injunction would be defeated by delay and require the applicant....
9. Not only the statutory provisions there is a mandate of the Hon'ble Supreme Court also. Reference can be made to the judgment reported as Shiv Kumar Chadha v. Municipal Corporation of Delhi and Ors. in which it was held as under:
Power to grant injunction is an extraordinary power vested in the court to be exercised taking into consideration the facts and circumstances of a particular case. The courts have to be more cautious when the said power is being exercised without notice or hearing the party who is to be affected by the order so passed. That is why Rule 3 of Order 39 of the Code requires that in all cases the court shall before grant of injunction direct notice of the application to be given to the opposite-party except where it appears that object of granting injunction itself would be defeated by delay. By the Civil Procedure Code (Amendment) Act 1976 a proviso has been added to the said rule saying that where it is proposed to grant an injunction without giving notice of the application to the opposite-party the court shall record the reasons for its opinion that the object of granting the injunction would be defeated by delay....
It was further observed as under:
34. The imperative nature of the proviso has to be judged in the context of Rule 3 of Order 39 of the Code. Before the proviso aforesaid was introduced Rule 3 "said the court shall in all cases except where it appears that the object of granting the injunction would be defeated by the delay before granting an injunction direct notice of the application for the same to be given to the opposite-party. The proviso was introduced to provide a condition where court proposes to grant an injunction without giving notice of the application to the opposite-party being of the opinion that the object of granting injunction itself shall be defeated by delay. The condition so introduced is that the court "shall record the reasons" why an exparte order of injunction was being passed in the facts and circumstances of a particular case. In this background the requirement for recording the reasons for grant of exparte injunction cannot be held to be a mere formality. This requirement is consistent with the principle that a party to a suit is being restrained from exercising a right which such party claims to exercise either under a statute or under the common law must be informed why instead of following the requirement of Rule the procedure prescribed under the proviso has been followed. The party which invokes the jurisdiction of the court for grant of an order of restraint against a party without affording an opportunity to him of being heard must satisfy the Court about the gravity of the situation and court has to consider briefly these factors in the ex parte order. We are quite conscious of the fact that there are other statutes with contain similar provisions requiring the court or the authority concerned to record reasons before exercising power vested in them. In respect of some of such provisions it has been held that they are required to be complied with but non-compliance therewith will not vitiate the order so passed. But same cannot be said in respect of the proviso to Rule 3 of Order 39. The Parliament has prescribed a particular procedure for passing of an order of injunction without notice to the other side under exceptional circumstances. Such ex parte orders have far-reaching effect as such a condition has been imposed that court must record reasons before passing such order it is held that the compliance with the proviso aforesaid is optional and not obligatory then the introduction of the proviso by the Parliament shall be a futile exercise and that part of Rule 3 will be a surplusage for all practical purposes. Proviso to Rule 3 of Order 39 of the Code attracts the principle that if a statute requires a thing to be done in a particular manner it should be done in that matter or not at all. This principle was approved and accepted in well-known cases of Taylor v. Taylor and Nazir Ahmed v. Emperor. This Court has also expressed the same view in respect of procedural requirement of the Bombay Tenancy and Agricultural Lands Act in the case of Ramchandra Kesh Adke v. Gobind Joti Chavare.
10. In the present case even the respondent has not made out a case regarding the urgency or exigency for seeking an exparte interim stay against the appellant. The learned Counsel for the respondent could not point any paragraph in the plaint or in the application for interim stay disclosing the immediate urgency for the grant of interim stay. In other words nothing is pleaded which calls for the grant of injunction order forthwith the delay of which was going to defeat the very object. Even if the party had pleaded these facts of urgent nature for the grant of exparte interim stay the Court was also required to apply its mind and to examine the facts from judicious angle if actually there existed an emergent situation where the non grant of exparte interim stay would have defeated its purpose. The immediate grievance of the respondent was that the appellant has filed Draft Red Herring Prospectus before the SEBI on 1.6.2006 which was available in the internet. The filing alone did not generate any urgency in itself. Objections were to be filed and the process was to be completed which could have taken months before the said draft could have been approved by the competent authority or before the public issue could have provided the purchase of shares by the general public. The respondent could have filed objections before the SEBI and the non grant of stay order exparte could not have caused any damage to the respondent. Even the respondent has pleaded that the appellant has its business abroad. There was no immediate damage when the appellant was not passing off its goods in the area of the respondent. Prima facie therefore no ground was made out for the grant of exparte interim stay against the appellant. The learned trial Court has not applied its mind at all as to what was the urgency which necessitated the grant of interim stay order immediately exparte.
11. Secondly no reasons have been recorded in the order for exercising that jurisdiction which was not only a statutory requirement but was also emphasised by the Hon'ble Supreme Court time and again. The reasoning when given in the order of stay granted exparte the aggrieved party gets an opportunity to know the reasons for passing the order exparte.
12. The learned trial Court appeared to be oblivious of the consequences which could flow from the grant of exparte stay order on the business of the appellant particularly when no opportunity of hearing was granted to the appellant before the grant of stay order against it. The grant of ex parte order was palpably wrong illegal erroneous and against the statutory provisions of law.
13. The submission of learned Counsel for the respondent on the other hand was that the appeal was not maintainable against the impugned order dated 17.6.2006. If the appellant was aggrieved it could file an application for vacation of stay in the learned trial Court and could have availed the right of being heard. It was also submitted that the respondent is ready now if this Court directs the parties to appear before the trial Court to get this application decided finally. On the other hand the submission of the learned Counsel for the appellant was that the appeal was maintainable.
14. Both the learned Counsel for both the parties relied upon the judgment of Hon'ble Supreme Court reported as A. Venkatasubbiah Naidu v. S. Chellappan and Ors. . In the reported case also stay was granted ex parte while the operation of the ex parte stay order granted by the trail Court was later on stayed ex parte by the Hon'ble High Court in a petition under Article 227 of the Constitution of India. The Hon'ble Supreme Court was pleased to observe in this judgment that when an ex parte stay order was granted the aggrieved party has two remedies either to file an appeal or to go to the trial Court. After examining the provisions of Section 104 Order 43 Rule 1 Order 39 Rule 1 C.P.C. the Hon'ble Supreme Court was pleased to observe in para No. 30 as unden:
It cannot be contended that the power to pass interim exparte orders of injunction does not emanate from the said Rule. In fact the said Rule is the repository of the power to grant orders of temporary injunction with or without notice interim or temporary or till further orders or till the disposal of the suit. Hence any order passed in exercise of the aforesaid powers in Rule 1 would be appealable as indicated in Order 43 Rule 1 of the Code. The choice is for the party affected by the order either to move the appellate court or to approach the same court which passed the exparte order for any relief.
15. The learned Counsel for the respondent made a reference to para No. 21 of this judgment in which it was observed by the Hon'ble Supreme Court that an aggrieved party should not approach the appellate or revisional court during the pendency of application for grant or vacation of temporary injunction was pending in the learned trial Court therefore the appellant was not legally justified to resort to the remedy of appeal. The only remedy of the appellant was to go to the trial Court and apply for getting the ex parte stay order vacated. This submission appears to be without merit. As discussed above the Hon'ble Supreme Court has held above that the aggrieved party has the choice to file an appeal or to go to the same Court for vacation of ex parte stay order which granted it. Secondly the Hon'ble Supreme Court was pleased to notice the provisions of Order 39 Rule 3-A C.P.C. which mandates a Court to decide an application for grant of stay within 30 days. The Hon'ble Supreme Court was further pleased to observe in the later part of para No. 21 as under:
So we are of the view that in a case where the mandate of Order 39 Rule 3-A of the Code is flouted the aggrieved party shall be entitled to the right of appeal notwithstanding the pendency of the application for grant or vacation of a temporary injunction against the order remaining in force. In such appeal if preferred the appellate court shall be obliged to entertain the appeal and further to take note of the omission of the subordinate court in complying with the provisions of Rule 3-A. In appropriate cases the appellate court apart from granting or vacating or modifying the order of such injunction may suggest suitable action against the erring judicial officer including recommendation to take steps for making adverse entry in his ACRs. Failure to decide the application or vacate the ex parte temporary injunction shall for the purpose of the appeal be deemed to be the final order passed on the application for temporary injunction on the date of expiry of thirty days mentioned in the Rule.
16. In the present case not only the trial Court has given the notice for the period exceeding 30 days but even the appeal is not likely to be heard within 30 days as the Civil Courts are closed up to 15.7.2006 and 16.7.2006 is Sunday. In any case 30 days would expire on 16.7.2006 up to which the Civil Courts are closed and therefore the application for vacation of stay order could not possibly be decided within a period of 30 days from 17.6.2006 as provided by law. For this reason also the appellant had no option but to file an appeal before this Court. Therefore it is held that the appeal is maintainable and the submission for the learned for the respondent has no merit.
17. The next submission of learned Counsel for the respondent was that once the trial Court has exercised its discretion this Court should not substitute its own opinion. In support of this submission reference was made to the judgment of the Hon'ble Supreme Court reported as Laxmikant V. Patel v. Chetanbhat Shah and Anr. in which the Hon'ble Supreme Court was pleased to observe as under:
We are conscious of the law that this Court would not ordinarily interfere with the exercise of discretion in the matter of grant of temporary injunction by the High Court and the trial Court and substitute its own discretion therefor except where the discretion has been shown to have been exercised arbitrarily or capriciously or perversely or where the order of the Court under scrutiny ignores the settled principles of law regulating grant or refusal of interlocutory injunction. An appeal against exercise of discretion is said to be an appeal on principle. Appellate Court will not re-assess the material and seek to reach a conclusion different from the one reached by the Court below solely on the ground that if it has considered the matter at the trial stage it would have come to a contrary conclusion. If the discretion has been exercised by the trial Court reasonably and in a judicial manner the fact that the appellate Court would have taken a different view may not justify interference with the trial Court's exercise of discretion.
18. Reference was also made to an earlier judgment of the Hon'ble Supreme Court to the same effect reported as Wander Ltd. and Anr. v. Antox India Pvt. Ltd. 1990 (Supp.) Supreme Court Cases 727.
19. This submission has been considered.lt has no force and in the facts of the present case the judicial discretion exercised by the learned trial Court is totally unwarranted illegal erroneous and palpably wrong. It is not only violative of the statutory requirements but is also not in consonance with judicial pronouncements coming down from the Hon'ble Apex Court. The appellant has been restrained by the injunction order from running its business in the trade/corporate name Abhishek without hearing it Therefore the present case falls in the exceptional clause laid down in the judgments relied upon by the learned Counsel for the respondent.
20. In view of the discussion held above this Court is totally convinced that the grant of ex parte stay order was neither called for nor there was any emergent situation nor any reasons have been given for granting it ex parte i.e. without hearing the appellant. Therefore the said order dated 17.62006 is bad in the eyes of law.
21. The learned Counsel for the appellant also raised arguments that the Civil Court at Sangrur had no jurisdiction but this Court does not feel inclined to take up this topic for discussion. This topic is left open for the trial Court to decide.
22. This appeal is accordingly accepted. The impugned order dated 17.6.2006 is vacated. The parties may appear before the learned District Judge on 20.7.2006 who will decide the application for interim stay expeditiously preferably within a period of one month from the date of appearance.
23. Nothing said in this order shall have any effect on the merits of the case. The trial Court shall be free to dispose of the application for interim stay after hearing the parties in accordance with law.