Delhi High Court
Manohar Singh Chadda vs M/S. Sheetal Sweets on 8 May, 2000
Equivalent citations: 2000VAD(DELHI)671, 2000(2)ARBLR584(DELHI)
Author: Vikramajit Sen
Bench: Vikramajit Sen
ORDER Vikramajit Sen, J.
1. The case set out in the plaint is that the parties were erstwhile partners in the firm "Sheetal Sweets". In April 1999, after mutual negociations between the two partners they decided that the firm would be dissolved. It is not disputed that two Dissolution Deeds, dated 22nd April 1999 and 29th April 1999 were executed. The caveat or demurer of the Defendant is that the second Deed was signed by him by mistake/oversight. It is his contention that this Deed was one of many papers and in this manner his signatures were obtained thereon by fraud. The plaintiffs' grievance is that despite the execution of these two Deeds the Defendant has set up his own business under the name of Sheetal Sweets. The Plaintiff has therefore prayed for an injunction restraining the Defendant from carrying on business under this trade name. Whilst this allegation has not been denied by the Defendant, it is his case that there was no agreement between the parties which restricted the Defendant from starting business under the name and style of Sheetal Sweets. At the time of arguments it was contended by the learned Counsel for the Defendant that it had been decided that the parties would use the firm name but with the suffix of their personal names after the trade name Sheetal sweets. Learned Counsel for the Defendant had also sought to rely on an affidavit of the attesting witness in corroboration of his case. He has further contended that the first Deed clearly states that partnership had been absolutely dissolved and that therefore the second Deed could not possibly do the same. Since the second Deed manifestly purports to do so. it cannot have any legal efficacy. He has also challenged the application of the second Deed. Relying on the case of Shri Jawaharlal and Another Vs. M/s. Bharat Tobacco Manufacturing Co. 1984 PTC 110 he has strongly contended that the injunction should be declined since it would amount to decreeing the suit before Trial. Learned Counsel has further submitted that since the Plaintiff has approached the Court with inordinate delay on 22nd August 1999, the injunction should be declined. Finally it is his contention that the suit is essentially one of passing off which is not maintainable.
2. I shall first deal of the decision in Jawaharlal's case (supra). The Defendant has relied on the opening words of the Head-Note but it would be relevant to reproduce it in its entirety, and when so done it would be clear that the Division Bench did not opine that an injunction could not be granted in the facts disclosed in the Plaint.
Interim injunction-prima facie case-passing off:
Normally, in a passing off action, the injunction is not to be granted at the interim stage but keeping in view the facts that the product as well as the tin container and wordings thereon along with the photograph on the tin are so similar to the product and the appearance of the tin being used by the plaintiffs that any reasonable man would be deceived into believing that the product being manufactured by the defendants is the same that is being manufactured by the plaintiffs, thus this being a prima facie conclusion based on material on record, the interim injunction granted by the single judge is upheld even when it may be that at the actual trial this conclusion may be displaced or weekend.
3. The Defendant's reliance on the decision of the Division Bench of this court in the case of Goramal Hari Ram Vs. Bharat Shop & Oil Industries 1985 Arb. Law Rop. 49 does not advance his case either. Once again reliance has been placed on a portion of the paragraph and I am therefore reproducing the whole paragraph-
It is difficult to draw a line between cases in which the interim injunction has to be issued and those in which it has to be refused. If it is granted as a matter of course, then the defendant will immediately stop trading in the article in question and the suit will become infructuous. If that happens, the plaintiff would have achieved his purpose without a trial. It can only be allowed to happen if the plaintiff has such a strong case that it is almost impossible to refute. We have not been shown any such material on record as would establish in our minds that the plaintiffs enjoy such a reputation in relation to the soap "Savera" as would impel the grant of an interim injunction. The fact is that a limited registration has been granted to some other manufacturers, so we doubt very much that the plaintiffs have a reputation irrevocably connected with the trade mark. It may be that at the trial such a reputation may be established and the plaintiffs may get a permanent injunction to restrain the defendants. We are satisfied that an interim injunction could not be granted on the facts and circumstances of the present case.
4. What has to be established by every Plaintiff as a prerequisite for the issuance of an injunction is firstly the existence of a prima facie case in his favour. In my view the present case is an instance of an overwhelming case having been presented to the court. The parties were erstwhile partners who had decided to dissolve the firm. Two Dissolution Deeds have been filed and it has been contended by Learned Counsel for the Plaintiff that the first Deed concerned the Relinquishment of rights n the shop in which the firm's business was transacted and the second, the agreement between the parties that the assets, goodwill and other benefits would inure only to the Plaintiff. He as sought the support of the case Montari Overseas Limited Vs. Montari Industries Ltd., 1996 PTC (16) in which a Defendant does business under a name which is sufficiently close to the name under which the Plaintiff is trading and that name has acquired reputation and the public at large is likely to be misled that the Defendant's business is the business of the Plaintiff, or is a branch or a department of the Plaintiff, the Defendant is liable for an action in passing off." The Division Bench had expressed the opinion that the learned Single Judge was right in granting the ad interim injunction rayed for by the Plaintiff. He has also relied on Power Control Appliances Vs. Sumit Machine Pvt. Ltd. 1994 (1) Arbitration Law Reporter 308. The Apex Court observed that "if the Plaintiff stood by knowingly and let the defendant build upon important' trade until it had become necessary to crush it, then the Plaintiffs would be stopped by their acquiescence." Even though the members of the two concerns before the Court were clearly related to each other the Supreme Court had granted the injunction denied by the High Court. Learned counsel for the Plaintiff has further cited M/s. Virendra Dresses, Delhi Vs. M/s. Varinder Garments, Delhi and Century Traders Vs. Roshan Lal Duggar & Co. and Others . These precedents, to my mind, are not relevant to the present case.
5. The name under which persons transact business is definitely one of the most important concomitant of goodwill. Black's law Dictionary defines "Goodwill" inter alia as "inclusive of every advantage, every positive advantage, that has been acquired by a proprietor in carrying on his business, whether connected with the premises in which the business is conducted, or with the name under which it is managed, or with any other matter carrying with it the benefit of the business, or with the name under which it is managed. . Shorn of legal estuaries the first idea or thought which would arise in the mind of any businessman in relation to the "goodwill" would be the name of the concern. The Defendant has not denied that he had retired from the partnership, therefore, prima facie, he must have known that the Plaintiff would be entitled to the use of the firm name thenceforward even in the absence of Dissolution Deeds. I am satisfied that a prima facie case has been shown by the Plaintiff against the retired partner/defendant for the issuance of an injunction restraining the latter from using or business in the name of the erstwhile firm. The burden would heavily lie on the retiring partner to establish that it was clearly and specifically understood that he would be permitted to start a fresh competing business using the same name. This burden has not been conclusively or even preponderantly discharged, atleast at this stage. What is contended is that the Defendant was not aware, as a consequence of the Plaintiff's subterfuge, that he was signing the second Deed. The persons involved are not illiterates, but seasoned businessmen. Having signed a document, they must be held prima facie, to be bound by its terms. Even at the trial stage, it is almost an unbearable burden on the party raising a defense de hors, opposed or contrary to a document to successfully prove its veracity. The onus can only be discharged at the time of trial, keeping in perspective the sundry proscriptions contained in the Evidence Act. Surely the party relying on a document must be held to have made out a prima facie against a party who assails it on the ground that he signed it blindly. The Defendant can blame only himself for being negligent, if his contention of having blindly signed the Deed dated 29.4.1999 without realising what he was doing, is to be countenanced. Furthermore, the Defendant has put up a story that an oral agreement was arrived at whereby he was permitted to use the name 'Sheetal Sweets' with the suffix of his name i.e. Manohar Singh. This covenant/agreement does not show up in any of the documents. I have specifically inquired as to whether the Defendant had used this suffix, of his personal name Daljit and the answer was in the negative. This ground, therefore, is clearly not available at least at this preliminary stage. In any event, the proscription contained in the Evidence Act, i.e. setting up a case contrary to that expressed in a written document, may even stand in the way of the Defendant at the time of trial. He cannot however, be allowed to raise this ground to obstruct the issuance of an ad interim injunction.
6. The contention that the grant of an interim injunction would have the consequences of closing the business of the Defendant cannot also be appreciated. In the first place the cases relied upon by the Learned Counsel for the Defendant itself countenance the issuance of an injunction where a good case had been made out. The Division Bench did not state, although it could have, that injunction of this nature should never be granted. I am of the view that it is better and pragmatic to injunct the Defendant at the earliest stage, when his business is in the process of being established and is at its incipient and nascent stages, than at the end of what is invariably a protracted trial, when he has already transacted business for some years and has perhaps built up goodwill in the business style. In the present case, where the trade name is identical, and is being employed by a former partner, the injunction ought to be issued forthwith. At the first date of hearing, ex parte orders were not considered because Shri M.L. Mangla appeared for the Defendant and stated that if the Defendant had signed the second Dissolution Deed, he would impress upon his client to settle the matter. The original Deed was subsequently produced in Court by the Plaintiff and it was thereafter that the Defendant sought time to file its Written Statement.
7. I am also unable to appreciate the argument that the Plaintiff has approached the Court with delay. It is not in dispute that the Defendant had opened his shop under the name Sheetal Sweets on 22.8.1999 and the suit has been filed within six months. The Defendant has also not acted with bona fides since he has used the symbol R to represent that his concern was registered, whereas this was not so. Learned Counsel for the Defendant had sought to rely on an affidavit of the Attesting Witnesses, But I have declines to examine it at this stage, since it is in the nature of partisan testimony which should be relied upon after the witness has been cross-examined. Such an affidavit can be properly looked into only at the final stage; at the preliminary stage only documents whose execution is not in serious challenge should be considered.
8. I am, therefore, satisfied that a prima facie case has been overhelmingly established by the Plaintiff. The balance of convenience is clearly in favour of the Plaitiff. The Defendant has retired from the partnership concern and is, therefore, setting up his fresh business in opposition to the erstwhile firm. His goodwill is in process of being established. It would be far more damaging for him to have to adopt a different trading style after a few years. Moreover, by that time the Plaintiff would already have suffered irreparable damage to his business, even in the face of an agreement reduced to writing. Equity demands immediate interference.
9. Under these circumstances, the application is allowed and the Defendant is restrained from manufacturing, selling offering for sale, advertising or displaying directly or indirectly or dealing in sweet including milk products, confectionery (non-medicated). Bakery products, Namkeens and allied goods under the trade mark SHEETAL and SHEETAL SWEETS and also from running a Restaurant under the trade name identical with and deceptively similar to the plaintiffs trade mark SHEETAL and trade name SHEETAL SWEETS and from doing any other things as is likely to cause confusion and deception in the course of business activities of the plaintiff and the defendant and from passing off defendants' goods and business as and for the goods and business of the Plaintiff till the next date of hearing.
10. I am of the prima facie opinion that having retired from the erstwhile partnership the Defendant was not justified to start his own new business under the name of the firm from which he had retired. Prima facie it is unreasonable and unconscionable. None of the grounds raised in opposition to the passing of ad interim orders can be considered at this stage. They could only be adjudicated upon after the parties have led their leading evidence. Some of his defenses relied upon are contrary to covenants contained in the written document, and the Defendant may be precluded from setting up a regime contrary thereto.
11. The application is therefore allowed with costs of Rs. 5000/- to be paid by the Defendant to the Prime Minister's National Relief Fund for drought Victims within fifteen days by a Demand Draft should be made in favour of Prime Minster's National Relief Fund and be Deposited with Registrar of this Court.
12. Application stands disposed of.