Gujarat High Court
Deepak Ramniklal Dholakia vs Jayesh Niranjanbhai Dholakia on 12 March, 2018
Bench: M.R. Shah, A.Y. Kogje
C/FA/25/2018 JUDGMENT
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
FIRST APPEAL NO. 25 of 2018
For Approval and Signature:
HONOURABLE MR.JUSTICE M.R. SHAH Sd/
and
HONOURABLE MR.JUSTICE A.Y. KOGJE Sd/
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1 Whether Reporters of Local Papers may be allowed to see No
the judgment ?
2 To be referred to the Reporter or not ? No
3 Whether their Lordships wish to see the fair copy of the No
judgment ?
4 Whether this case involves a substantial question of law as No
to the interpretation of the Constitution of India or any
order made thereunder ?
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DEEPAK RAMNIKLAL DHOLAKIA
Versus
JAYESH NIRANJANBHAI DHOLAKIA
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Appearance:
MS MANISHA LAVKUMAR SHAH, SR. ADVOCATE with MR YJ JASANI for MR PRATIK Y
JASANI(5325) for the PETITIONER(s) No. 1
MR MIHIR THAKORE, SR. ADVOCATE with MR ANAND B GOGIA(5849) for the
RESPONDENT(s) No. 1,2,3,4
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CORAM: HONOURABLE MR.JUSTICE M.R. SHAH
and
HONOURABLE MR.JUSTICE A.Y. KOGJE
Date : 12/03/2018
ORAL JUDGMENT
(PER : HONOURABLE MR.JUSTICE M.R. SHAH) [1.0] Feeling aggrieved and dissatisfied with the impugned judgment and order dated 06.09.2017 passed by the learned Judge, Commercial Court, Rajkot (hereinafter referred to as "learned Commercial Judge") below Exh.13 in Commercial Trade Mark Suit No.3/2016 by which the learned Commercial Judge has allowed the said application and has Page 1 of 44 C/FA/25/2018 JUDGMENT rejected the plaint in exercise of powers under Order VII Rule 11 of the Code of Civil Procedure, 1908 (hereinafter referred to as "CPC"), the original plaintiff has preferred the present First Appeal under the provisions of the Commercial Courts, Commercial Division and Commercial Appellate Division of the High Courts Act, 2015 (hereinafter referred to as "Commercial Courts Act").
[2.0] The facts leading to the present First Appeal in nutshell are as under:
[2.1] That the appellant herein - original plaintiff initially instituted the Regular Civil Suit No.1/2016 in the Court of learned District Judge, Bhavnagar for declaration and perpetual injunction and for rendition of accounts / damages under the provisions of the Trade Marks Act, 1999 (hereinafter referred to as "Trade Marks Act"). That on establishment of the Commercial Court at Rajkot, the said suit came to be transferred to the Commercial Court, Rajkot, which has been numbered as Commercial Trade Mark Suit No.3/2016. That in the said suit the plaintiff had prayed for the following reliefs.
"(A) This Hon'ble Court may be pleased to declare that the claim of exclusive right of use and / or ownership made by the defendant No.1 in the jointly owned registered trade marks of the plaintiff and the proceedings initiated by him under sec.45 of the Act before the Registrar of Trade Marks is unjust, unwarranted, uncalled for and unjustifiable and contrary to the scope, object, purport and scheme of the provisions of Sec.24 of the Trade Marks Act, 1999;
(B) This Hon'ble Court may be pleased to declare that the defendant No.1 is not entitled to claim any right in and/or use of the plaintiff's jointly owned registered trade marks as detailedout in Para4 & 6 hereinabove and thereby to make unlawful hindrance and interference in the plaintiff's lawful enjoyment of statutory rights of registration in the jointly owned registered trade marks ;
(C) This Hon'ble Court may be pleased to declare that the defendant No.2, 3 and 4 are not entitled to claim any right in Page 2 of 44 C/FA/25/2018 JUDGMENT and/or use of the plaintiff's jointly owned registered trade marks as detailedout in Para4 & 6 hereinabove;
(D) The defendant No.1 by himself and/or through any other persons may please be restrained by a perpetual order and injunction of this Hon'ble Court from misappropriating the plaintiff's jointly owned registered trade marks (as detailed out in para4 & 6 hereinabove) for his own benefit and that too to the exclusion of the plaintiff;
(E) The defendant No.1, 2, 3 and 4 through their proprietors, partners, their servants, agents, dealers, distributors and all other persons on their behalf may please be restrained by a perpetual order and injunction of this Hon'ble Court from using the identical and/or deceptively and confusingly similar marks as those of the plaintiff's jointly owned registered trade marks as detailedout in Para4 & 6 hereinabove, in respect of the business of 'Snuff' and other allied tobacco products and thereby infringing the plaintiff's statutory rights of registration in such jointly owned registered trade marks;
(F) The defendant Nos.1, 2, 3 and 4 may please be ordered and decreed to render the true and accurate account of profits earned by them by misappropriating and/or infringing the plaintiff's jointly owned registered trade marks in respect of manufacture, sale and export of 'Snuff' and /or allied tobacco products and thereby damage caused to the plaintiff's statutory rights of registration in the jointly owned registered trade marks and to grant the decree of the amount so ascertained in favour of the plaintiff all such profits as damages for the illegal acts committed by them as complained off or in the alternative pay a sum of Rs.2,00,00,000/ (Rupees Two Crores) to the plaintiff;"
[2.2] That the plaintiff averred / pleaded in the plaint as under:
[2.2.1] That one Ranchhodbhai Jinabhai Dholakia started business of snuff and allied tobacco products at Shihor around 100 years ago i.e. around 1916. That his two sons Purshottam Manilal and Ramniklal Manilal were inducted as partners in the year 1942. that after 1942 onwards, family members from each branch inducted as partners from time to time maintaining 50% share of each branch of Purshottam Manilal and Ramniklal Manilal. That the plaintiff was inducted as a Page 3 of 44 C/FA/25/2018 JUDGMENT partner in the year 1977. That the original defendant No.1 was inducted as a partner in the year 1985. That between 1946 to 1999, different trade marks were registered in the category of a partnership firm either as Ranchhoddas Jinabhai Dholakia or as Mahasugandhi Snuff Works jointly in the names of then partners. That applications were filed upon induction and/or retirement of partners from time to time to record the names of subsequent partners. That in the year 1997, the partnership firm through Niranjan R. Dholakia, partner, filed Regular Civil Suit No.1 of 1997 against one Vardhychand Rameshchand Kodia, Swastik Corporation etc. in the District Court at Bhavnagar. That the defendants filed counter claim in the said suit. In AO 485, this Court directed the defendants to maintain account and confine business under the trade mark "Rani Site Chhap Tapkir" to Rajasthan and restrain the defendants from selling snuffs under the brand names "Lotus", "Chidia" and "Rani Sinh". The defendant therein filed Civil Suit against the partnership firm of Ranchhoddas Jinabhai Dholakia or Mahasugandhi Snuff Works in Udaipur. It was further averred that one Parag Navinchandra Dholakia separated from the family business vide Deed of Retirement dated 15.01.2004 and thereby waived, abandoned all his right, title and interest in the aforesaid jointly owned registered trade marks, more particularly when he was allotted trade mark "Kamal Chhap" and "Chakli Chhap". That then continuing partners Deepak Ramniklal Dholakia, Jayesh Niranjan Dholakia and Purshottamdas Manilal Dholakia inducted Navinchandra Purshottamdas Dholakia and continued the firm vide partnership deed dated 01.04.2004. That the plaintiff and Purshottam Manilal Dholakia retired from the family business vide Retirement Deed dated 31.03.2006. That in the year 2006, the application in Form TM24 in respect of various trade marks by the defendant No.1 and Navinchandra Purshottambhai Dholakia were submitted on 19.09.2006. That on 27.01.2009, an application in Form Page 4 of 44 C/FA/25/2018 JUDGMENT TM24 in respect of various trade marks by the defendant No.1, Navinchandra Purshottambhai Dholakia and defendant Nos.2 and 3 (both as minors) and admitted to the benefits of partnership.
[2.2.2] It is further averred that the original defendant No.1 tendered the evidence by way of affidavit and crossexamination in Civil Suit No.1/1997 between 24.07.2009 to 16.03.2016 claiming inter alia that the plaintiff and Purshottambhai have retired and that all the trade marks are owned by the defendant No.1. That Navinchandra Dholakia died on 28.08.2011. That on 14.12.2011 application in Form TM24 in respect of various trade marks were submitted by the defendant No.1, defendant No.2 and defendant No.3 as minor admitted to the benefits of partner. That affidavit of Jayesh Dholakia dated 08.11.2011 was filed before the trade mark Registry in support of TM24. That on 01.04.2013, the application in Form TM24 in respect of various trade marks was submitted by the defendant No.1, defendant No.2 and defendant No.3. That Purshottambhai Manilal Dholakia died on 25.11.2014. Therefore, the appellant herein - original plaintiff instituted the aforesaid suit for the aforesaid reliefs. That the assertions and averments on cause of action are in para 33 (which shall be considered hereinbelow).
[2.2.3] That having been served with the summons of the aforesaid suit, the original defendants submitted the application Exh.13 and requested to reject the plaint under Order VII Rule 11 of the CPC. It was the case on behalf of the defendants that the plaintiff has not disclosed any cause of action in the plaint and the alleged cause of action is non existent, it being inconsistent with the settled case laws / statutory provisions. It was submitted that the plaintiff has no right whatsoever in claiming the trademarks of the defendants as jointly owned trade marks, moreso when about a decade ago the plaintiff has parted with the Page 5 of 44 C/FA/25/2018 JUDGMENT defendants by retiring from the partnership. It was also submitted that in the Retirement Deed dated 15.05.2006 by which the plaintiff was retired from the partnership firm with effect from 31.03.2006 it was agreed and declared that as from the beginning of 01.04.2006, the continuing partners have become the owners of the said business and the goodwill thereof and all its assets, effects and properties as well as licenses and trade marks, permits and privileges pertaining to the said partnership business and all pending contracts and engagements in connection therewith including the benefits of electrical and telephone connections installed at the business premises. It was further submitted that it was also agreed and declared that as from the beginning of the 1st Day of April, 2006, the continuing partners have become the owners of the said business and the goodwill thereof and all other premises shall cease as from the closing of the 31st Day of March, 2006 and that the retiring partner shall have no claim or demand against the said partnership business or against the continuing partners on account of his share therein or otherwise howsoever. Therefore, it was submitted that the suit is filed on an illusory cause of action and therefore, the suit is nothing but abuse of process of law and the Court. It was submitted that even otherwise the suit is barred by law of limitation.
[2.2.4] That the aforesaid application was vehemently opposed by the plaintiff. It was submitted that whether the plaintiff as a retiring partner had any right in the trade marks or not is a question to be considered at the time of trial. It was submitted that the cause of action has been specifically averred and pleaded in the plaint and therefore, it cannot be said that the plaint does not disclose any cause of action. It was further submitted that there are contentious issues in the suit which are required to be considered at the time of trial and therefore, it was requested to reject the application Exh.13.
Page 6 of 44C/FA/25/2018 JUDGMENT That by impugned judgment and order the learned Commercial Judge has rejected the plaint under the provisions of Order VII Rule 11(a) of the CPC for the reason the plaintiff having pleaded illusory cause of action.
[2.2.5] Feeling aggrieved and dissatisfied with the impugned judgment and order passed by the learned Commercial Judge in rejecting the plaint under Order VII Rule 11 of the CPC, the original plaintiff has preferred the present First Appeal.
[3.0] Ms. Manisha Lavkumar Shah, learned Senior Advocate has appeared on behalf of the appellant and Shri Mihir Thakore, learned Senior Advocate has appeared on behalf of the respondents herein - original defendants.
[3.1] Ms. Shah, learned Counsel appearing on behalf of the appellant has vehemently submitted that in the facts and circumstances of the case learned Commercial Judge has materially erred in rejecting the plaint under Order VII Rule 11(a) of the CPC.
[3.2] It is further submitted by Ms. Shah, learned Counsel for the appellant that as such the trade marks were registered as jointly owned trade marks and notwithstanding the Deed of Retirement, the appellant continues to be joint proprietor of all the jointly owned registered trade marks and the necessary averments are made in the plaint inasmuch as, the provisions of the Trade Marks Act support the same. It is submitted that the appellant has also produced documents including the documents relating to the certificates of registration of the jointly owned registered trade marks at Mark 4/1 to 4/17. It is submitted that Trade Marks Act does not recognize a firm but it only recognize an individual, Page 7 of 44 C/FA/25/2018 JUDGMENT living or a juristic person, in whose name Trade Mark can be registered. In support of her above submission, Ms. Shah, learned Counsel appearing on behalf of the appellant - original plaintiff has relied upon sections 18(1) and 24(2) of the Trade Marks Act. It is further submitted that "Partnership Firm" is not a legal personality or person and hence cannot apply for registration of a trade mark in the name of the firm. It is submitted that if trade mark is registrable in the name of firm, in that case, no necessity of the provisions for the recordal of assignment or transmission and the entire ChapterV of the Trade Marks Act would be nugatory.
[3.3] It is further submitted that the issue as to whether the appellant after retirement would continue to have joint ownership rights over the registered trade marks can be decided only after leading evidences and after fullfledged trial, as the question is about interpretation of the intention of parties at the time of executing the Deed of Retirement for which both the parties need to be put to trial.
[3.4] It is further submitted by Ms. Shah, learned Counsel appearing on behalf of the appellant that question of law arose in the suit whether the statutory rights in the jointly owned registered trade mark can automatically be deemed to have been 'assigned', in absence of specific deed of assignment and can the 'Retirement Deed' be termed as 'Deed of Assignment' merely because the word 'trade marks' is found in Clause9 of the Retirement Deed. It is submitted that in any case such Retirement Deed is required to be interpreted and the issue cannot be decided or adjudicated without trial and without leading the evidence by the parties.
[3.5] Relying upon Clause 11 of the Deed of Retirement, it is
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submitted that the rights over the jointly owned trade marks are subsisting in favour of the appellant, otherwise there was no need of giving such authority to the continuing partners.
[3.6] It is further submitted that the original defendant Nos.2 and 3 cannot use the jointly owned registered trade marks without the consent of the appellant.
[3.7] It is further submitted by Ms. Shah, learned Counsel appearing on behalf of the appellant that continuing partners had made the payment to the appellant only with respect to his share in the goodwill of the business as is evident from the Schedule appended to the Deed of Retirement and there is no dispute raised by the appellant in the suit in as much as, the suit is not for the dispute on such Retirement Deed and/or under the Partnership Act.
[3.8] It is further submitted by Ms. Shah, learned Counsel appearing on behalf of the appellant that the reference of trade marks referred to in clause 9 of the Retirement Deed relates to the trading name of the business, i.e. 'Ranchhoddas Zinabhai Dholakia' and 'Mahasugandhi Snuff Works' under which the business was going on and takenover by the continuing partners. It is submitted that as such name of the business itself is also a 'Trade Mark' which is allowed to be used by the appellant and the respondents misunderstood the word 'Trade Mark' referred to in the Deed as 'jointly owned registered Trade Marks'. It is further submitted that the transmission or assignment of trade mark cannot be oral and it can be done only as per the procedure stipulated under the Trade Marks Act. It is submitted that the procedure prescribed under the Act regarding assignment is not an empty formality. It is submitted that there is elaborate procedure prescribed in ChapterV of Page 9 of 44 C/FA/25/2018 JUDGMENT the Trade Marks Act and more particularly, Sections 38, 39, 42 and 45 for the recordal of the names of subsequent proprietors of the jointly owned registered Trade Marks as also subjective satisfaction of the Registrar of Trade Marks as to veracity of any statement or document furnished in support of the request on Form TM24. In support of her above submission, she has relied upon the decision of this Court in the case of Cadila Healthcare Ltd. vs. Speciality Meditech Pvt. Ltd. reported in 2010 (5) GLR 3742.
[3.9] It is further submitted by Ms. Shah, learned Counsel appearing on behalf of the appellant that neither in the suit filed by Udaipur party against the partners of the firm in Udaipur Court nor in the suit filed by the firm or the partners against Udaipur Party at Bhavnagar, the respondents have at all declared as to the retirement of the appellant or the appellant has relinquished his rights on the jointly owned registered trade marks nor in the proceedings on Form TM24 before the Authority. It is further submitted that even the respondents - original defendants also did not disclose the factum of retirement of Parag and/or the registered trade marks 'Chakli Chhap' and 'Kamal Chhap' allotted to him.
[3.10] It is further submitted that even the suit cannot be said to be barred by law of limitation as contended on behalf of the defendants. It is submitted that cause of action arose for the appellant only in the month of March 2016 when the respondent No.1 deposed before the Court at Bhavnagar that he has received all registered trade marks, free of cost from the retired partners.
[3.11] It is further submitted by Ms. Shah, learned Counsel appearing on behalf of the appellant that the impugned order passed by Page 10 of 44 C/FA/25/2018 JUDGMENT the learned Commercial Judge is beyond the scope and ambit of Order VII Rule 11 of the CPC. It is submitted that while considering the application under Order VII Rule 11 of the CPC, what has to be seen is 'whether the plaint discloses cause of action' and not as to 'whether plaintiff has a cause of action'. It is submitted that there is a fine distinction as to 'plaint does not disclose cause of action' and 'the plaintiff is having no cause of action', well recognized by the settled law in catena of decisions.
[3.12] It is further submitted that while submitting the application under Order VII Rule 11 of the CPC, the Court has not to take into consideration the tenability of the claim or strength and validity and contents of the documents and that too without a trial and there is no short circuited by deciding the issue of fact merely on pleadings and documents, without a trial. In support of her above submissions, learned Counsel appearing on behalf of the appellant herein - original plaintiff has relied upon the following decisions of the Hon'ble Supreme Court more particularly on exercise of powers under Order VII Rule 11 of the CPC.
1. Kamala and Ors. vs. K.T. Eshwara Sa & Ors.
(2008) 12 SCC 661
2. C. Natarajan vs. Ashim Bai and Another (2007) 14 SCC 183
3. Alka Gupta vs. Narendra Kumar Gupta (2010) 10 SCC 141
4. Vishnu Dutt Sharma vs. Daya Sapra (Smt.) (2009) 13 SCC 729
5. State of Orissa vs. Kockner & Co.
(1996) 8 SCC 377
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6. Vaish Aggarwal Panchayat vs. Inder Kumar
AIR 2015 SC 3357
7. K.P.V. Guru Raj Reddy vs. Neeradha Reddy
(2015) 8 SCC 331
8. Popat and Kotecha Property vs. State Bank of India Staff Association (2005) 7 SCC 510
9. Narne Rama Murthy vs. Ravula Somasundaram & Ors.
(2005) 6 SCC 614
10. Balasaria Construction (P) Ltd. vs. Hanuman Seva Trust and Ors.
(2006) 5 SCC 658 Learned Counsel appearing on behalf of the appellant has also relied upon the following decisions on assignment and transmission of the trade marks as well as 'recurring cause of action'.
1. Radha Kishan Khandelwal vs. Asstt. Registrar of Trade Marks AIR 1969 Delhi 324
2. Cadila Healthcare Pvt. Ltd. vs. Speciality Meditech Pvt. Ltd.
2010 (5) GLR 3742
3. Kalekhan Mohd. Hanif vs. Mohammad Iqbal AIR 2009 MP 84
4. K.L. Rajakrishnan vs. Parthas Textiles 1997 (17) PTC 205 (Madras DB)
5. M/s. Bengal Waterproof Ltd. vs. M/s. Bombay Waterproof Mfg. Co.
AIR 1997 SC 1398 Ms. Shah, learned Counsel appearing on behalf of the appellant has also relied upon the following decisions on the goodwill and trade mark, infringement and passing off.
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1. Toyota Jidosha Kabushiki Kaisha vs. M/s. Prius Auto Industries Ltd.
(2017) 14 Scale 472
2. Laxmikant V. Patel vs. Chetanbhai Shah AIR 2002 SC 275
3. Bharat Tiles and Marbles Pvt. Ltd. vs. Bharat Tiles Mfg. Co.
1978 GLR 518 (Gujarat High Court) Making above submissions and on the following grounds the appellant herein - original plaintiff has assailed the impugned judgment and order passed by the learned Commercial Judge.
[3.12.1] That the learned Commercial Judge while considering the application under Order VII Rule 11 of the CPC filed by the respondents, has decided the disputed questions of facts and that too without allowing the parties to lead the evidence at the trial.
[3.12.2] That the gist of the averments made in the plaint and if the allegations made against the respondents are to be accepted as true in the manner and in the form in which they have been made, the conclusion is inescapable that the plaint does disclose the cause of action and the respondents must be taken to admit for the sake of arguments that the claims and allegations of the plaintiff in his plaint are true mode it forma and in doing so they may reserve to themselves the right to show that these allegations are actually or partially false in the further stages of action but so far as the decision at the preliminary stage, everything contained in the plaint must be taken to be true as stated.
[3.12.3] That the learned Commercial Judge has gone on conjectures and surmises while dealing with the matter. The learned Commercial Judge has interpreted the Deed of Retirement by presuming the intentions of the parties at the time of executing the said deed. Such Page 13 of 44 C/FA/25/2018 JUDGMENT interpretation at the initial stage of the suit under Order VII Rule 11 of the CPC without allowing the parties to lead the evidence is impermissible. If the document is ambiguous, then the intention of executing must be adjudged by leading evidence. What the parties meant at the time of executing the Deed of Retirement could be decided only upon leading evidence and not in a summary manner.
[3.12.4] By observing that the Deed of Retirement is not nicely drafted and there is clumsy drafting of clauses, the learned Commercial Judge reads 'assignment of trade marks' in a retirement deed. In fact, there is no deed of assignment as contemplated under ChapterV of the Trade Marks Act. There is no reference to any assignment of Trade Mark in the Retirement Deed nor has any such deed been executed at any point of time.
[3.12.5] The learned Commercial Judge has ousted the appellant on the count of 'plaintiff not having cause of action' and not on the count that the 'plaint does not disclose cause of action'. Only when the respondent No.2 in March 2016 deposed before the learned Commercial Judge about having received the trade marks free of cost, the cause of action had arisen. Therefore, such a course adopted by the learned Commercial Judge is illegal as a plain reading of the averments as to the 'cause of action' in para33 of the plaint which clearly discloses cause of action, and therefore, it is incorrect to hold that the plaint does not disclose cause of action.
[3.12.6] In the judgment, the learned Commercial Judge poses various questions to it which relate to the intention of the parties behind executing the Deed of Retirement and thereafter arrives at conclusions without allowing the parties to lead the evidence, which is impermissible. What would be the intention of the parties at the time of Page 14 of 44 C/FA/25/2018 JUDGMENT executing a particular document could only be decided after leading of evidences by the parties.
[3.12.7] Assignment of a registered trade mark and the manner in which it is to be assigned is mentioned in the Trade Marks Act and for assignment of a registered trade mark; every such procedure as contemplated in the Act has to be complied with. Such procedure contemplated is not an empty formality. In the instant case, there is no 'assignment' in the eyes of law. However, by misinterpreting the Deed of Retirement, the learned Commercial Judge reads 'assignment' in the said deed, which is in appropriate.
[3.12.8] As per Section 45 of the Trade Marks Act, the Registrar of the Trade Marks, before registering the title over such registered trade mark, is required to consider the effect of the assignment and thereafter cause the particulars of such assignment or transmission be entered on the Register and in case, if the Registrar is having reasonable doubt about the veracity of any statement or any document furnished with the request on Form TM24, in that case, may require the applicant to furnish evidence or further evidence in proof of title and where the validity of an assignment or transmission is in dispute between the parties, the Registrar may refuse to register the 'assignment' until the rights of the parties have been determined by a competent Court.
In the instant case, the respondent No.1 has, in his requests on Form TM24 dated 18.09.2006, 27.01.2009, 14.12.2011 and 01.04.2013, has not prayed to delete the name of the appellant in respect of all or any of the jointly owned registered trade marks, howsoever, the Registrar of trade marks has yet not granted such requests of the respondent No.1.
[3.12.9] The respondent No.1 herein has not prayed for the deletion
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of the name of the appellant in the request on Form TM24 under section 45 of Trade Marks Act and simply prayed to record the names of the respondent No.2 and 3 herein as the joint proprietors of such jointly owned registered trade marks, the same makes amply clear that it was understood by the respondents that the appellant is the joint proprietor of the jointly owned registered trade marks and the appellant has neither assigned nor transferred the same to the respondent No.1 and not at any rate abandoned his rights, title and interest in such jointly registered trade marks.
[3.12.10] As per the provisions of Section 45(3) of the Trade Marks Act, the Registrar of the Trade Marks is having no jurisdiction to register the assignment or transmission unless the rights of the parties in the jointly owned registered trade marks upon assignment has been 'determined' by competent Court.
In the instant case, the learned Commercial Judge while deciding the application under Order VII Rule 11 of the CPC, has virtually determined and considered the rights of the parties in the jointly owned registered trade marks for which the plaintiff has brought the instant suit for declaration and injunction as provided under Section 134(1)(b) of the Trade Marks Act and that too without trial, the same is impermissible under the law.
[3.12.11] Whether any legal heir of a retired partner asserts his rights on the registered trade marks or not, cannot make the case of the appellant weak. The other retired partners and/or their legal heirs may or may not claim any right, would not ipso facto mean that the trade marks are 'assigned' by executing a Deed of Retirement.
[3.12.12] The cause of action arose in the year 2016 when the appellant came to know that the respondents are claiming their Page 16 of 44 C/FA/25/2018 JUDGMENT exclusive right of the registered trade marks of which the appellant is a joint proprietor. The respondents had deposed before the Court of law that he has received the trade marks 'Free of Cost' and therefore, it is apparent that no payment is made towards trade marks and the appellant is only paid goodwill of the Firm at the time of executing Deed of Retirement. Therefore, the observation of the learned Commercial Judge that the cause of action for appellant arose in the year 2016 i.e. at the time of retirement, is not correct. Till 2016, there was no right of refusal by the respondents as at no point of time, the respondents have ever prayed for deletion of name of the appellant from the statutory record of rights before the Registrar of Trade Marks and all the applications in Form TM24 made by the respondents are for recording their names. Only in the year 2016, when the respondent No.1 deposed before the District Court at Bhavnagar that he has received the trade marks 'Free of Cost', the appellant got the cause and therefore, the suit of the appellant is within limitation and it clearly discloses valid and subsisting cause of action.
The 'cause of action' in a suit for infringement of trade mark or for any right relating to a registered trade mark or for passing off as contemplated under Section 134(a), (b) & (c) of the Trade Marks Act is a continuous and recurring cause of action and hence, not barred by the law of limitation.
[3.12.13] The rival claims of the parties would need leading of evidences and the appellant cannot be ousted at this stage by reading retirement deed alone. The name of the appellant as joint proprietor of the jointly owned registered trade marks still subsists in the statutory records i.e. before the Registrar of Trade Marks and therefore, the appellant has all the rights available under the Act to assert. Therefore also, the plaint of the appellant cannot be rejected at the threshold. The Page 17 of 44 C/FA/25/2018 JUDGMENT provisions of section 24 of the Trade Marks Act are very much clear conferring the statutory rights of registration in favour of the appellant to maintain the suit for declaration and injunction.
[3.12.14] The term 'Goodwill' and 'trade mark' are distinct and different. A business has goodwill, however, a trade mark has a reputation. trade mark and goodwill relate to different spheres. The observation of the learned Commercial Judge that the trade mark is included in goodwill of the firm is misconceived.
The term 'goodwill' and 'trade mark' are two different, distinct and separate intangible intellectual properties. The Trade Marks Act (as also the earlier repealed Acts) recognized and maintained the distinction between 'goodwill' and 'trade mark' in as much as the term 'goodwill' is not synonymous with the term 'trade mark'. ChapterV of the Trade Marks Act and more particularly, sections 38, 39 and 42 supports the same.
[3.12.15] The appellant claimed rights in the jointly owned registered trade marks as detailed out in plaint para4 and 6.
Under the Common Law, the property in a given trade mark or name can be acquired only upon 'use' thereof, whereas, as per the provisions of Section 18(1) of the Trade Marks Act, registration is permitted in any given trade mark, either upon use or as 'proposed to be used'.
Out of 34 jointly owned registered trade marks (plaint para
4), and 9 jointly owned registered trade marks (plaint para6), the same have been granted upon user claimed or on the 'proposed to be used' claim.
The trade mark label of Swastik Chhap (No.316609), Queen & Lion (No.721173) and Full Kesar (No.853905) have been granted as Page 18 of 44 C/FA/25/2018 JUDGMENT PROPOSED TO BE USED as jointly owned registered trade marks.
Therefore, such registrations which are granted registration on 'proposed to be used' claim and also not used, the same cannot be assigned with goodwill within the meaning of Section 38 of the Trade Marks Act. The assignment of such registrations which are granted on 'proposed to be used' claim, the mandatory provisions of Section 42 of the Trade Marks Act are required to be followed. In the instant case, no such procedure as envisaged by Section 42 is followed and therefore, it cannot be gainsaid that such 'proposed to be used' jointly owned registered trade marks are deemed to have been by reading clauses of the Retirement Deed.
[3.12.16] In any case, no 'goodwill' could be said to have accrued in favour of the 'firm' on such 'proposed to be used' registrations and therefore, such registrations could not be part of 'goodwill' of the business concerned within the meaning of Section 38 of the Trade Marks Act and therefore also, finding arrived at by the learned Commercial Judge in para 54 of the impugned judgment that the meaning of the term 'trade marks' in clause9 and 10 would mean all the trade marks which were being used by the firm and the reference of the word 'trade marks' in the Retirement Deed would mean clear assignment of registered trade marks in favour of the continuing partners, is ex facie perverse.
Since the aforesaid three registrations are granted on 'proposed to be used' claim, whether the same had been in use at any point of time till the appellant retired in the year 2006, is a question of fact and that can be found at the trial by leading the evidences and therefore, such disputed question of fact cannot be gone at the stage of deciding the application under Order VII Rule 11 of the CPC.
Page 19 of 44C/FA/25/2018 JUDGMENT [3.12.17] Out of 34 jointly owned registered trade marks (plaint para
4) and further 9 jointly owned registered trade marks (plaint para6), applications for the registration of the label marks 'Swastik Chhap' and 'Queen & Lion' (Sr.Nos.4 & 5) and label mark of 'Ful Kesar' (Sr.No.9) in the joint names of 5 family members were advertised during the year 2001 to 2006 in the Trade Marks Journals, i.e. prior to the retirement of the appellant, however no one including the respondent No.1 opposed.
The certificates of registration 'Swastik Chhap' (No. 663110), 'Queen & Lion' (No.721173) and 'Ful Kesar' (No.853905) came to be issued on 31.03.2007, 05.03.2007 and on 28.10.2006 respectively in the name of 5 persons including the appellant herein as jointly owned registered trade marks, i.e. after the retirement of the appellant and therefore, it cannot be gainsaid that merely the word 'trade marks' is found in clause9 of the Retirement Deed, the same would amount to assignment of all such jointly owned registered trade marks by the appellant and / or by other retired partner in favour of the continuing partners as concluded by the learned Commercial Judge while deciding the application under Order VII Rule 11 of the CPC.
[3.12.18] It is well settled that the trading name of the business is also a 'trade mark' and the word 'trade marks' referred to in clause 9 of the deed would mean the trading name of the business, i.e. 'Ranchhoddas Zinabhai Dholakia' and 'Mahasugandhi Snuff Works' under which the business was going on.
[3.12.19] As per Clause11 of the said Retirement Deed, the continuing partners were appointed as lawful Attorneys of the retiring partners and the continuing partners were to protect the rights of the retiring partners. If the rights, title and interest of the appellant (retired partner) in all or any of the jointly owned registered trade marks are Page 20 of 44 C/FA/25/2018 JUDGMENT presumed to have been 'assigned' or 'transferred' or 'sold' to the continuing partners because the term 'trade marks' is mentioned in clause9 and if meant for 'jointly owned registered trade marks', in that case there would be no necessity for the retired partners to appoint the continuing partners as lawful attorneys to protect the same and the continuing partners would also not be required to indemnify the retiring partners for the acts done by them.
[3.12.20] As per Clause2 of the Retirement Deed, the continuing partners shall have taken over the business alongwith all its assets and liabilities, save as mentioned in this agreement which is taken over by the retiring partner with effect from 31.03.2006 and since the said deed do not find any particulars of the assets or liabilities, it cannot be gainsaid that whatever property is not mentioned, the same are deemed to have been taken over by the continuing partners or the retired partners have assigned the rights, title and the interest in the jointly owned Registered Trade Marks.
Making above submissions and relying upon above decisions, it is requested to allow the present First Appeal and quash and set aside the impugned judgment and order passed by the learned Commercial Judge rejecting the plaint under Order VII Rule 11 of the CPC.
[4.0] Present First Appeal is vehemently opposed by Shri Mihir Thakore, learned Counsel appearing on behalf of the respondents herein
- original defendants.
[4.1] Shri Thakore, learned Counsel appearing on behalf of the original defendants that in the facts and circumstances of the case and even considering the pleadings / averments in the plaint as they are, the Page 21 of 44 C/FA/25/2018 JUDGMENT learned Commercial Judge has rightly rejected the plaint under Order VII Rule 11 of the CPC mainly on the ground that the suit is based on [illusory cause of action.
[4.2] Shri Thakore, learned Counsel appearing on behalf of the original defendants has taken us to the necessary averments pleaded in different paras of the plaint more particularly paras 15, 16, 18, 19, 24, 25, 28 and 29. It is submitted that on the aforesaid pleadings, the plaintiff has sought the prayers prayed for in para 37 of the plaint, which primarily is, the original defendant No.1 is not entitled to claim any right in and/or use of the plaintiff's jointly owned registered trade marks and that application under Section 45 of the Trade Marks Act is unwarranted and uncalled for and contrary to the scope and scheme of Section 24 of the Trade Marks Act.
[4.3] It is further submitted by Shri Thakore, learned Counsel appearing on behalf of the original defendants that in the present case admittedly the plaintiff has retired as a partner of the partnership firm who was owning the registered trade mark / trade marks. It is submitted that when the trade marks are registered in the name of the partnership firm and are jointly owned by the partners of the partnership firm, on retirement of a partner, his rights in the trade marks cease moreso when the retirement deed categorically provides that the continuing partners are becoming the owners of the said business, goodwill, all his assets, effects and properties as well as licenses and trade marks. Relying upon Clauses 5 to 10 of the retirement deed, it is submitted that while the appellant herein - original plaintiff retired as a partner of the partnership firm, thereafter all the rights including the rights under the trade marks vested with the remaining partners and the plaintiff as a retiring partner thereafter ceases to have any right, title or interest in the Page 22 of 44 C/FA/25/2018 JUDGMENT registered trade marks which was in the name of partnership firm. It is submitted that as such no separate deed of assignment is required. In support of his above submissions, he has relied upon the decision of the Delhi High Court in the case of Harmohan Singh vs. Gurbax Singh reported in AIR 2001 Delhi 507 (Paras 4 to 6 and 9) and another decision of the Delhi High Court in the case of Bharat Tobacco Mfg. Co. and Ors. vs. Nav Bharat Tobacco Mfg. Co. etc. reported in 1984 PTC 76 (Paras 7 to 11).
[4.4] It is further submitted by Shri Thakore, learned Counsel appearing on behalf of the original defendants that the plaintiff having executed the retirement deed, he cannot be allowed to adhere to abide by some of the terms of the contract which proves advantageous to him and repudiate the other terms of the contract which are disadvantageous to him. It is submitted that he cannot be permitted to approbate and reprobate. In support of his above submissions, Shri Thakore, learned Counsel has relied upon the decision of the Hon'ble Supreme Court in the case of New Bihar Biri Leaves Company vs. State of Bihar reported in (1981) 1 SCC 537 (Para 48).
[4.5] It is further submitted by Shri Thakore, learned Counsel appearing on behalf of the original defendants that on a meaningful and nonformal reading of the plaint, particularly, paragraphs 15, 16, 18, 19, 24, 25, 28 and 29, thereof, the pleading are manifestly vexatious and meritless in that the plaintiff is seeking to plead that he continues to be the owner of the trade marks in spite of executing the Retirement Deed on the basis of the fact that no Deed of Assignment has been executed and on the basis that in the Trade Mark Registry his name still appears as one of the joint owners. It is submitted that such claim and the relief prayed for on that basis are clearly vexatious and are pleaded just to Page 23 of 44 C/FA/25/2018 JUDGMENT show a cause of action which on the basis of the earlier pleadings in the plaint and the documents produced with the plaint does not exist. It is submitted that therefore the relief sought in the plaint / suit are either on nonexistent cause of action and/or on illusory cause of action. It is submitted that therefore considering the object and purpose of Order VII Rule 11 of the CPC, the plaint is, therefore, required to be rejected under Order VII Rule 11 of the CPC and therefore, the learned Commercial Judge has rightly rejected the plaint under Order VII Rule 11 of the CPC. In support of his above submissions, Shri Thakore, learned Counsel appearing on behalf of the original defendants has heavily relied upon the following decisions of the Hon'ble Supreme Court.
1. T. Arivandandam vs. T.V. Satyapal & Anr.
(1977) 4 SCC 467 (Paras 5 to 7)
2. ITC Limited vs. Debts Recovery Appellate Tribunal (1998) 2 SCC 70 (Paras 10 to 17, 22, 25, 26, 27) [4.6] It is further submitted by Shri Thakore, learned Counsel appearing on behalf of the original defendants that this Court in First Appeal arising from an order under Order VII Rule 11 of the CPC is entitled to consider the plaint, documents produced with the plaint and the law and if it finds that the plaint on a meaningful reading is cleverly drafted solely with a view to create a cause of action, the Court ought to reject the plaint. In support of his above submission, Shri Thakore, learned Counsel appearing on behalf of the original defendants has heavily relied upon the decision of this Court in the case of Maharaj Shri Manvendrasinhji Ranjitsinhji Jadeja vs. Rajmata Kunverba reported in 1998 (2) GLH 823 more particularly Paras 17 to 22 of the said decision.
[4.7] Shri Thakore, learned Counsel appearing on behalf of the
Page 24 of 44
C/FA/25/2018 JUDGMENT
original defendants has further submitted that registration of assignment is only a formality post assignment of trade mark as clearly envisaged in Section 45 read with Section 38 and 39 of the Trade Marks Act read with Rule 68 of the Trade Marks Rules and absences of recordal does not give a cause of action when title is lost pursuant to the dissolution deed. It is submitted that therefore merely because some formalities in the record of the trade mark registered is yet to be completed, the plaintiff cannot assert the right which otherwise he has lost pursuant to the dissolution deed. It is submitted that the plaintiff is bound by the contract entered into between the parties more particularly the clauses contained in dissolution deed to which he is a signatory.
[4.8] It is further submitted that in view of the above and when on a meaningful nonformal reading of the plaint, the plaint does not disclose a cause of action and/or the cause of action so pleaded on the basis of which the suit is preferred is either nonexistent and/or illusory cause of action and by clever drafting the cause of action which as such is not there is created, the plaint is liable to be rejected under Order VII Rule 11 of the CPC. It is submitted that therefore as such the learned Commercial Judge has rightly rejected the plaint under Order VII Rule 11(d) of the CPC.
[4.9] It is further submitted by Shri Thakore, learned Counsel appearing on behalf of the original defendants that even otherwise the plaint is liable to be rejected under Order VII Rule 11(d) of the CPC, as the same is barred by law of limitation. It is submitted that the deed of retirement of partnership has been executed on 15.05.2006 and the claim to title in the trade marks is made in the plaint filed in 2016. It is submitted that therefore the suit is manifestly barred by limitation and therefore, the same is liable to be rejected under Order VII Rule 11(d) of Page 25 of 44 C/FA/25/2018 JUDGMENT the CPC.
Making above submissions and relying upon above decisions, it is requested to dismiss the present First Appeal.
[5.0] Heard learned Counsel appearing on behalf of the respective parties at length. We have perused the impugned order passed by the learned Commercial Judge rejecting the plaint under Order VII Rule 11 of the CPC. We have also considered the material on record more particularly the averments in the plaint and the supporting documents produced alongwith the plaint.
[5.1] At the outset it is required to be noted that by the impugned order, the learned Commercial Judge has rejected the plaint in exercise of powers under Order VII Rule 11 of the CPC more particularly under Order VII Rule 11(a) of the CPC by specifically observing and holding that the suit is based on illusory cause of action and that by clever drafting the plaintiff has tried to create a cause of action and has asserted the right which does not exist. Therefore, short question which is posed for consideration of this Court is whether in the facts and circumstances of the case, the learned Commercial Judge is justified in rejecting the plaint under Order VII Rule 11 of the CPC?
[5.2] At this stage the decision of the Division Bench of this Court in the case of Masrur Fatema Jafarali Saiyed & 2 vs. Vishnubhai Ambalal Patel & 44 reported in 2016 SCC Online Guj 5971 is required to be considered and referred to. The Division Bench of this Court in the aforesaid case, in paras 55, 56, 57 and 60 has observed and held as under:
"55. Before considering the present appeal on merits, few decision of the Hon'ble Supreme Court as well as this Court on Page 26 of 44 C/FA/25/2018 JUDGMENT Order 7 Rule 11 of the Code of Civil Procedure are required to be referred to and considered.
56. In the case of T. Trivandam v. T.V. Satyapal reported in (1977) 4 SCC 467 while considering the very same provision i.e. Order 7 Rule 11 of the Code of Civil Procedure and the decree of trial Court in considering the such application, the Hon'ble Supreme Court in para 5 has observed and held as under:
"We have not the slightest hesitation in condemning the petitioner for gross abuse of the process of the court repeatedly and unrepentently resorted to. From the statement of the facts found in the judgment of the High Court, it is perfectly plain that the suit now pending before the First Munsif's Court, Bangalore, is a flagrant misuse of the mercies of the law in receiving plaints. The learned Munsif must remember that if on a meaningful not formal reading of the plaint it is manifestly vexatious, and meritless, in the sense of not disclosing a clear right to sue, he should exercise his power under Order VII, Rule 11, C.P.C., taking care to see that the ground mentioned therein is fulfilled. And, if clever drafting has created the illusion of a cause of action, nip it in the bud at the first hearing by examining the party searchingly under Order X, C.P.C. An activist Judge is the answer to irresponsible law suits.
57. In the case of The Church of Christ Charitable Trust and Educational Charitable Society vs. M/s. Ponniamman Educational Trust reported in AIR 2012 SC 3912, in para 8 to 10 has observed and held as under:
8. While scrutinizing the plaint averments, it is the bounden duty of the trial Court to ascertain the materials for cause of action. The cause of action is a bundle of facts which taken with the law applicable to them gives the plaintiff the right to relief against the defendant. Every fact which is necessary for the plaintiff to prove to enable him to get a decree should be set out in clear terms. It is worthwhile to find out the meaning of the words "cause of action". A cause 9 Page 10 of action must include some act done by the defendant since in the absence of such an act no cause of action can possibly accrue.
9. In A.B.C. Laminart Pvt. Ltd. and Anr. v. A.P. Agencies, Salem (1989) 2 SCC 163 : (AIR 1989 SC 1239), this Court explained the meaning of "cause of action" as follows:
"12. A cause of action means every fact, which if Page 27 of 44 C/FA/25/2018 JUDGMENT traversed, it would be necessary for the plaintiff to prove in order to support his right to a judgment of the court. In other words, it is a bundle of facts which taken with the law applicable to them gives the plaintiff a right to relief against the defendant. It must include some act done by the defendant since in the absence of such an act no cause of action can possibly accrue. It is not limited to the actual infringement of the right sued on but includes all the material facts on which it is founded. It does not comprise evidence necessary to prove such facts, but every fact necessary for the plaintiff to prove to enable him to obtain a decree. Everything which if not proved would give the defendant a right to immediate judgment must be part of the cause of action. But it has no relation whatever to the defence which may be set up by the defendant nor does it depend upon the character of the relief prayed for by the plaintiff."
10. It is useful to refer the judgment in Bloom Dekor Ltd. v. Subhash Himatlal Desai and Ors. (1994) 6 SCC 322, wherein a three Judge Bench of this Court held as under:
"28. By "cause of action" it is meant every fact, which, if traversed, it would be necessary for the plaintiff to prove in order to support his right to a judgment of the Court, (Cooke v. Gill, 1873 LR 8 CP
107). In other words, a bundle of facts which it is necessary for the plaintiff to prove in order to succeed in the suit."
It is mandatory that in order to get relief, the plaintiff has to aver all material facts. In other words, it is necessary for the plaintiff to aver and prove in order to succeed in the suit.
60. Considering the law laid down by the Hon'ble Supreme Court in the aforesaid decisions and applying the same to the facts of the case on hand, for the reasons below stated, we are of the opinion that the learned trial Court has rightly rejected the plaint under Order VII Rule 11(d) of the Code of Civil Procedure."
[5.3] While considering the aforesaid question / issue the necessary averments / pleadings in the plaint and the cause of action pleaded and the relief sought in the plaint are required to be considered.
Page 28 of 44C/FA/25/2018 JUDGMENT The necessary pleadings in the plaint are in para 15, 16, 18, 19, 24, 28 and 29 which read as under:
"15. The plaintiff herein was shocked and surprised to learn that the said Mr. Jayes Niranjan Dholakia while tendered his affidavit at Exh.189, he knowingly, willfully, intentionally and deliberately suppressed the vital material and important fact as also withheld relevant documents.... as also attempted to encroach upon the plaintiff's vested proprietary rights in several registered trade marks which the plaintiff herein is holding as being the joint proprietor thereof as provided under Section 24 of the Trade Marks Act.
16. The Plaintiff humbly submits that the plaintiff is one of the joint proprietors of several jointly owned registered trade marks as detailed out hereinabove inasmuch as the plaintiff has not at all assigned or transferred or sold his rights of registration in such jointly owned registered trade marks to the said Jayesh Niranjan Dholakia ..... Jayesh Niranjan Dholakia in his cross examination also knowingly, willfully and intentionally made false and untrue statements...."
18. The plaintiff further states ..... also caused search into the records of Trade Mark Registry made available on the website and learnt that the Defendant No.1 has filed as many as four applications on TM 24 under Section 45 to record the names of Defendants 1, 2 and 3 herein as the subsequent proprietors of severally, jointly owned trade marks...
19. The Plaintiff humbly submits that Plaintiff has at no point of time assigned, transferred or sold rights in any of the trade marks....
24. The Plaintiff further states that the plaintiff was awarded his share in the goodwill of the firm as he being a partner of the firm, only because a term to that effect was agreed by and between the parties vide Deed of Partnership dated 01.04.2004 as aforesaid. The plaintiff further states that the goodwill of a firm is an asset for all the partners of the firm and the plaintiff was awarded an amount towards the share in the goodwill of the firm as per the terms so agreed by and between the parties in the said Deed of Partnership dated 01.04.2004, whereas the plaintiff's right, title and interest in the jointly owned registered trade marks as detailed out in Para 4 & 6 hereinabove, is an altogether different, distinct and separate property rights of the plaintiff for which no partition took place till date in as much as at no point of time the plaintiff has assigned or transferred his rights, title or interest in the statutory rights of registration in all or any of the jointly owned registered trade marks to either of the defendants or to any other persons. Furthermore, at no point of time, the plaintiff herein has waived or abandoned his Page 29 of 44 C/FA/25/2018 JUDGMENT rights in the jointly owned registered trade marks and the defendants are fully aware of the same.
25. The plaintiff submits that none of the defendants could claim exclusive right to use all or any of the jointly owned registered trade marks and/or use of all or any of such jointly owned registered trade marks by them for their personal benefit or to the exclusion of the present plaintiff, the same is impermissible in law.
28. The plaintiff submits that the defendants.... made the false claims of being exclusive owner of such jointly owned registered trade marks while he tendered his affidavit in lieu of examination in chief at Exh.189 in Regular Civil Suit No.1/1997 and thereby attempted for unlawful hindrance and/or interference in the plaintiff's lawful enjoyment of the statutory rights of registration vested in all such jointly owned registered trade marks.
29. .... The plaintiff further states that since the defendant No.2 & 3 have joined hands with the defendant No.1 and commenced unauthorized and unlawful use of all or any of the jointly owned registered trade marks of the plaintiff and thereby committed illegal acts of 'infringement of registered trade marks' within the meaning of Sec.28 & 29 of the Trade Marks Act, 1999, the plaintiff is constrained to invoke the jurisdiction of this Hon'ble Court against the defendant No.2, 3 and 4 as provided under Sec.134(1) of the said Act."
[5.4] The cause of action is pleaded in para 33 which reads as under:
"33. The cause of action of this suit arose firstly in the month of March, 2016 when the plaintiff learnt from the records and more particularly from the affidavit at Exh.189 filed by the defendant No.1 an deposition made in his cross examination in Reg. Civil Suit No.1/1997 pending before the Hon'ble 3rd Addl. District Judge, Bhavnagar whereinnnn he made false statement on oath that he received or acquired the exclusive rights in the jointly owned registered trade mark from the plaintiff FREE OF COSTS and thereby made unauthorized and unlawful claim of exclusive rights of use and ownership in the jointly owned registered trade marks of the plaintiff and thereafter when the defendant No.1 denied the right, title and interest of the present plaintiff in the jointly owned Page 30 of 44 C/FA/25/2018 JUDGMENT registered trade marks while he filed his written objections at Exh.338 dated 30.04.2016 to the plaintiff's application at Exh.335 in the said suit and when during the month of March, 2016 the plaintiff learnt from the records of the Trade Marks Registry made available on the website that the defendants herein submitted applications on Form TM24 with the copy of partnership deed of the defendant No.4 as also false affidavit of the defendant No.1 in support thereof before the Ld. Registrar of Trade Marks to record their names as 'the subsequent proprietors' of the plaintiff's jointly owned registered trade marks, to which the plaintiff submitted his written objections vide letters dated 17.03.2016 and 05.05.2016 and thereafter when the defendants continued illegal acts of misappropriation of the statutory rights of registration in the jointly owned registered trade marks for their own benefit and to the exclusion of the plaintiff as also continued thereafter the infringement of plaintiff's statutory rights of registration in the jointly owned registered trade marks and as such, the illegal acts of misappropriation of statutory rights of registration and/or infringement of plaintiff's jointly owned trade marks by the defendants continued to arise "de die in dem" within the territorial jurisdiction of this Hon'ble Court till the defendants are restrained by this Hon'ble Court from committing such illegal acts any more. The plaintiff submits that the cause of action for the illegal acts so committed by the defendants are arising day to day and are of recurring nature till the defendants are restrained by this Hon'ble Court by appropriate injunction order from committing further wrongs to the rights of the plaintiff as complained off."
[5.5] Considering the aforesaid averments / pleadings in the plaint and the cause of action pleaded and the facts arising out of the material on record including the retirement deed dated 31.03.2006 it is to be considered whether the suit is based on illusory cause of action Page 31 of 44 C/FA/25/2018 JUDGMENT and/or no cause of action and/or by clever drafting the plaintiff has tried to make out a cause of action which as such does not exist and thereby the learned Commercial Judge is justified in rejecting the plaint under Order VII Rule 11(a) of the CPC. While considering the aforesaid issue few uncontroverted facts and the dates of events are required to be considered, which are as under:
"That around the year 1916 i.e. 100 years, one Shri Ranchhodbhai Jinabhai Dholakia started business of snuff and allied tobacco products at Shihor. That in the year 1942, his two sons Purshottam Manilal and Ramniklal Manilal were inducted as partners. That thereafter 1942 onwards, family members from each branch were inducted as partners from time to time maintaining 50% share of each branch of Purshottam Manilal and Ramniklal Manilal. That in the year 1977, the plaintiff was inducted as a partner. That in the year 1985, the original defendant No.1 was inducted as a partner. That between 1946 to 1999, different trade marks were registered in the category of a partnership firm either as Ranchhoddas Jinabhai Dholakia or as Mahasugandhi Snuff Works jointly in the names of then partners. That applications were filed with the Registry of the Trade Mark, upon induction and/or retirement of the partners from time to time to record the names of subsequent partners. That on 15.01.2004, one Parag Navinchandra Dholakia separated from the family business vide Deed of Retirement dated 15.01.2004 and thereby waived, abandoned all his right, title and interest in the aforesaid jointly owned registered trade marks and he was allotted trade mark "Kamal Chhap" and "Chakli Chhap". That on 01.04.2004, the then continuing partners Deepak Ramniklal Dholakia (original plaintiff), Jayesh Niranjan Dholakia (original defendant No.1) and Purshottamdas Manilal Dholakia inducted Navinchandra Page 32 of 44 C/FA/25/2018 JUDGMENT Purshottamdas Dholakia and continued the firm vide partnership deed dated 01.04.2004. That on 31.03.2006, the plaintiff - Deepak Ramniklal Dholakia and Purshottam Manilal Dholakia retired from the family business and a Retirement Deed executed on 31.03.2006. That the material clauses of the Deed of Retirement are as under:
"2. THAT parties of the first part shall taken over the business along with all its assets and liabilities, save as mentioned in this agreement which is taken over by the retiring partner, with effect from 31.03.2006.
5. That the said business of the partnership as form the beginning of the 01 day of April 2006 shall be carried on by the Continuing Partners for their own benefit and on their own account.
6. That all accounts of the partnership as inter so between the partners and the partners of the firm have not been settled and the account will be adjusted by partners with mutual understanding on basis of account as on 31st March 2006.
7. That so far as regards the goodwill of the firm is concerned, it is determined as per 'Annexure A' attached to this deed. The retiring partners shall be paid their share in the goodwill on the date of 1st April 2006.
8. That it is agreed and declared that as from the beginning of the 01 day of April 2006 the Continuing Partners shall be entitled to carry on the said business on their own account and for their own benefit in the same firm, name or in such other name or names and either by Page 33 of 44 C/FA/25/2018 JUDGMENT themselves or in partnership with any other person or persons as the Continuing Partners may deem fit.
9. That it is also agreed and declared that as from the beginning of the 01 day of April 2006 the Continuing Partners have become the owners of the said business and the goodwill thereof and all its assets, effects and properties as well as licenses and trade marks, permits and privileges pertaining to the said partnership business and all pending contracts and engagements in connection therewith including the benefits of electrical and telephone connections installed at the business premises.
10. That it is agreed and declared that on the retirement the share of the Retiring Partner in the said partnership business and all its properties effects, credits, and assets including the goodwill thereof and all other premises hereinabove mentioned shall cease as from the closing of the 31 day of March 2006 and that the Retiring Partner shall have no claim or demand against the said Partnership business or against the Continuing Partners on account of his share therein or otherwise howsoever.
11. That the Continuing Partners, as the owners of the properties of the said firm and the business thereof shall have all powers to receive and recover in the name of the said firm or otherwise as the nature of the case may require.....
19. Save as herein otherwise provided the parties hereto release each other from all actions, claims, accounts Page 34 of 44 C/FA/25/2018 JUDGMENT and demands whatsoever in connection with or arising out of the said partnership and also from all clauses, covenants, agreements, matters and things mentioned or recited in the herein before recited Deed of Partnership under which the portion hereto were heretofore carrying on the said business and Retirement of the Retiring Partner from the said Partnership."
That on 19.09.2006, the application in Form TM24 in respect of various trade marks by the original defendant No.1 and Navinchandra Purshottambhai Dholakia, the continuing partners were presented with the Registrar of Trade Mark. That on 27.01.2009, an application in Form TM24 in repsect of various trade marks by the defendant No.1, Navinchandra Purshottambhai Dholakia and defendant Nos.2 and 3 (both as minors) and admitted to the benefits of partnership was made. It appears that in the meantime and prior thereto in the year 1997, the partnership firm through one of the then partner Niranjan R. Dholakia filed Regular Civil Suit No.1/1997 against one Vardhychand Rameshchand Kodia, Swastik Corporation, etc. in the District Court, at Bhavnagar. The defendants filed the counter claim in the said suit. In Assessing Officer 485, this Court directed the defendants to maintain account and confine business under the trade mark "Rani Site Chhap Tapkir" to Rajasthan and restrained the defendants from selling snuffs under the brand names "Lotus", "Chidia" and "Rani Sinh". That the defendants therein filed Civil Suit against the partnership firm against the partnership firm of Ranchhoddas Jinabhai Dholakia or Mahasugandhi Snuff Works in Udaipur. That in the said Regular Civil Suit No.1/1997, the original defendant No.1 tendered the evidence by way of affidavit and crossexamination claiming, inter alia, that the original plaintiff herein and Purshottambhai have retired and that all the Page 35 of 44 C/FA/25/2018 JUDGMENT trade marks are owned by the Defendant No.1. That in the meantime Navinchandra P. Dholakia - one of the Continuing Partner who was inducted in the year 2004 as a partner died on 28.08.2011. That thereafter the application in form TM24 in respect of various trade marks was filed by the original defendant No.1, original defendant No.2 and original defendant No.3 as minor admitted to the benefits of the partner on 14.12.2011 alongwith affidavit of original defendant No.1 - Jayesh Dholakia dated 08.11.2011 filed before the Trade Mark Registry in support of TM24. That on 01.04.2013, one another application in Form TM24 has been filed in respect of various trade marks by the original defendant Nos.1 to 3. That even Purshottambhai Manilal Dholakia died on 25.11.2014. The plaintifff has filed the present suit and has claimed the aforesaid reliefs mainly on the ground that in the Registry of Trade Marks, the name of the plaintiff still continues and that there is noseparatee Deed of Assignment executed in favour of the original defendants more particularly original defendant No.1whoo claims to be the owner of the trade marks and still the plaintiff continues to be the joint proprietor of the trade marks. However, at this stage it is required to be noted that respective trade marks are in the name of partnership firm but being the partners, the names of the partners of the partnership firm in whose favour the trade marks are registered are mentioned in the Register of Trade Marks. Therefore, as such the names of the partners as joint owners are mentioned being partners of the partnership firm in whose favour the trade marks are registered.
[5.6] It is an admitted position that the original plaintiff has retired from the family business vide Retirement Deed dated 31.03.2006, material clauses of Deed of Retirement are clauses 2, 5 to 11 and 19, are reproduced hereinabove. From the aforesaid it appears that all the parties to the Deed of Retirement dated 31.03.2006 Page 36 of 44 C/FA/25/2018 JUDGMENT including the plaintiff and the original defendant No.1 agreed and declared that from the beginning of 01.04.2006 the Continuing Partners have become the owners of the said business, goodwill thereof and all its assets, effects and properties as well as licenses and trade marks, permits and privileges pertaining to the said partnership business. Thus, on and after 01.04.2006 only, the Continuing Partners continued to be the owners of the said business and the goodwill thereof and all properties as well as licenses and trade marks. It cannot be disputed that the plaintiff being the signatory to the said Retirement Deed is bound by the said terms and conditions / clauses of the Retirement Deed. Merely because the necessary changes are yet to be made on the application TM24 submitted by the respective parties including the original defendant No.1 and other Continuing Partners and merely because in the Registry of Trade Marks the name of the plaintiff continues as joint owner of the registered trade marks as the then partners of the partnership firm in whose name the trade marks are registered, the plaintiff cannot assert any right in the trade marks contrary to the terms mentioned in the Retirement Deed dated 31.03.2006. Even for the aforesaid, separate Deed of Assignment of registered trade marks is also not required.
[5.7] At this stage the decision of the Delhi High Court in the case of Bharat Tobacco Mfg. Co. and Ors. (Supra) and in the case of Harmohan Singh (Supra) are required to be referred to. In the case before the Delhi High Court in the case of Bharat Tobacco Mfg. Co. and Ors. (Supra), the plaintiff who continued to run the business after dissolution of the partnership firm instituted the suit and prayed for injunction against the retiring partners restraining them from carrying on the business under the registered trade marks of the partnership firm on the ground that after dissolution of the firm the defendants - retiring Page 37 of 44 C/FA/25/2018 JUDGMENT partners have no right to continue to do the business in the name of registered trade marks of the partnership firm. In the aforesaid case it was the case on behalf of the defendants that there should have been separate stamps of the deed of dissolution in respect of assignment of trade mark and copyright. The High Court did not accept the same by observing that everything is contained in and forms part of the deed of partnership. Relying upon the aforesaid decision, in the subsequent decision in the case of Harmohan Singh (Supra) also, the Delhi High Court has taken the similar view interpreting the similar clause in the dissolution deed. In para 6 the Delhi High Court has observed as under:
"6. As per the aforesaid para in the Dissolution Deed, the defendant had relinquished and surrendered his rights and interest in the various assets of the partnership firm in favor of the plaintiff. These assets and rights include the 'goodwill and any other rights(s) whatsoever'. By this surrender, the plaintiff has given right to hold the aforesaid properties 'absolutely in future'. Goodwill and all other rights would naturally include right in the trade mark of the partnership. In view of this Clause 2 in the Dissolution Deed, there is no force in the contention of the defendant that only name of the partnership firm was given and not the trade mark. For the same reason, I do not consider any merit in the argument of the defendant that for trade mark no consideration was given, and therefore, defendant had right to use the trade mark. It was sought to be argued by learned counsel for the defendant that if there was no intention to pass on trade mark to the plaintiff, the defendant would have executed assignment deed also. I am not impressed. Admittedly the trade mark stands applied in the name of both person as partners of the firm. It was partnership property. When by Dissolution Deed, rights and liabilities of the parties are determined and defendant agrees to give goodwill and all other rights in the said partnership firm to the plaintiff, it will include the right in the trade mark of the partnership firm as well. Between the two partners, there may not be necessity to execute a separate assignment deed once the Dissolution Deed laying down rights and obligation of the erstwhile parties was reduced into writing. Even if there was any necessity, on the strength of such a Dissolution Deed, the plaintiff has right to compel the defendant to execute the said assignment deed also. In fact the Dissolution Deed itself would become an assignment under the law as held in the case of Bharat Tobacco Mfg. Co. & Ors. Vs. Nav Bharat Tobacco Mfg. Co. etc. reported as 1984PTC76. Be as it may, merely the assignment deed is not executed is no ground for the defendant to contend that his Page 38 of 44 C/FA/25/2018 JUDGMENT right in the trade mark still remains. If such a contention of the defendant is accepted, it may lead to absurdities as after the dissolution of the partnership deed, the trade mark of the firm, as per the arrangement of the parties, would be used by one of the parties. If both are allowed to use the same trade mark in relation to same goods, consumer would not be able to ascertain as to goods of which person the said consumer is buying. The very purpose of the Trade Mark Act is to avoid such situation. thus if the intention was that trade mark GP would be used by both the erstwhile partners. the stipulation to that effect would have been specifically provided in the Dissolution Deed. In the absence of any such covenant in the Dissolution Deed and on the contrary in the face of the language used in para 2 of the Dissolution Deed, one can safely infer that intention of the parties was that after dissolution, trade mark GP belongs to the plaintiff as the defendant has surrendered his rights therein."
[5.8] As observed hereinabove, in the present case by executing the retirement deed dated 31.03.2006 by which the original plaintiff retired as a partner of the partnership firm, the plaintiff agreed that on and from 01.04.2006, the continuing partners have become the owners of the business of the partnership firm and the goodwill thereof and all its assets, effects and properties as well as licenses and trade marks. Thus, as such on and from 01.04.2006, the original plaintiff who as such has retired as a partner of the partnership firm, thereafter cannot claim any right or title in the registered trade marks which are registered in the name of partnership firm. As observed hereinabove merely because some formalities are yet to be concluded for making necessary changes in the register of trade marks the plaintiff cannot claim any right in the trade marks which otherwise he is not possessing in view of the clauses mentioned in the retirement deed dated 31.03.2006 reproduced hereinabove. At this stage it is required to be noted that the entire pleadings in the plaint more particularly referred to hereinabove and the cause of action pleaded is / are illusory cause of action and/or by a clever drafting the plaintiff has tried to create a cause of action which does not exist. On the aforesaid finding the next question which is posed Page 39 of 44 C/FA/25/2018 JUDGMENT for consideration of this Court is whether in the facts and circumstances of the case the learned Commercial Judge is justified in rejecting the plaint under Order VII Rule 11(a) of the CPC?
[5.9] While considering the scope and ambit of exercise of powers under Order VII Rule 11 of the CPC and the trial Court's duty in case of vexatious and meritless suits, in paras 5 to 7 the Hon'ble Supreme Court in the case of T. Arivandandam (Supra) has observed and held as under:
"5. We have not the slightest hesitation in condemning the petitioner for the gross abuse of the process of the court repeatedly and unrepentantly resorted to. From the statement of the facts found in the judgment of the High Court, it is perfectly plain that the suit now, pending before the First Munsif's Court, Bangalore, is a flagrant misuse of the mercies of the law in receiving plaints. The learned Munsif must remember that if on a meaningful - not formal
- reading of the plaint it is manifestly vexatious, and meritless, in the sense of not disclosing a clear right to sue, he should exercise his power under Order VII, Rule 11, C.P.C. taking care to see that the ground mentioned therein is fulfilled. And, if clever, drafting has created the illusion of a cause of action, nip it in the bud at the first hearing by examining the party searchingly under Order X C.P.C. An activist Judge is the answer to irresponsible law suits. The trial Courts would insist imperatively on examining the party at the first bearing so that bogus litigation can be shot down at the earliest stage. The Penal Code is also resourceful enough to meet such men, (Cr.XI) and must be triggered against them. In this case, the learned Judge to his cost realised what George Bernard Shaw remarked on the assassination of Mahatma Gandhi "It is dangerous to be too good."
6. The trial Court in this case will remind itself of Section 35A, C.P.C. and take deterrent action if it is satisfied that the litigation was inspired by vexatious motives and altogether groundless. In any view, that suit has no survival value and should be disposed of forthwith after giving an immediate hearing to the parties concerned.
7. We regret the infliction of the ordeal upon the learned Judge of the HighCourt by a callous party. We more than regret the circumstance that the party concerned has been able to prevail upon one lawyer or the other to present to the court a case which was disingenuous or worse. It may be a valuable contribution to the cause of justice if counsel screen wholly fraudulent and frivolous litigation refusing to be beguiled by dubious clients. And Page 40 of 44 C/FA/25/2018 JUDGMENT remembering that an advocate is an officer of justice he owes it to society not to collaborate in shady actions. The Bar Council of India, we hope will activate this obligation. We are constrained to make these observations and hope that the cooperation of the Bar will be readily forthcoming to the Bench for spending judicial time on worthwhile disputes and avoiding the distraction of sham litigation such as the one we are disposing of. Another moral of this unrighteous chain litigation is the gullible grant of ex parte orders tempts gamblers in litigation into easy courts. A judge who succumbs to ex parte pressure in unmerited cases helps devalue the judicial process. We must appreciate Shri Ramasesh for his young candour and correct advocacy."
Similar view is taken by the Hon'ble Supreme Court in the case of ITC Limited (Supra).
[5.10] Now, so far as the submission on behalf of the plaintiff that while considering the application under Order VII Rule 11 of the CPC, the Court is required to consider only the averments in the plaint and not the defence and/or the averments in the written statement is concerned, at this stage the decision of the Division Bench of this Court in the case of Maharaja Shri Manvendrasinhji R. Jadeja (Supra) is required to be referred to and considered. In the case before the Division Bench, the plaintiff instituted the suit on the footing that the deceased Mayurdhvajsinhji having expired intestate, the plaintiff is entitled to inherit all the properties led by him under the rule of primogeniture. While allowing the application under Order VII Rule 11 of the CPC, the trial Court considered and observed that the rule of primogeniture has ceased to apply and the trial Court rejected the plaint under Order VII Rule 11(a) of the CPC. In the appeal it was submitted on behalf of the plaintiff that while deciding the application under Order VII Rule 11(a) of the CPC, the trial Court ought not to have gone into the merits of the case at all and ought not to have opined whether rule of primogeniture has ceased to apply or not. Negating the aforesaid submission/objection, Page 41 of 44 C/FA/25/2018 JUDGMENT the Division Bench has observed and held that as such in order to find out whether the plaint discloses a cause of action or not, it becomes important to consider whether the rule of primogeniture still applies, subsist or not. The Division Bench observed that infact the rule of primogeniture is sole and entire basis of the plaint and therefore, if the Court addresses itself to the question whether the said rule of primogeniture subsist or not, it cannot be said that the Court is deciding the matter on merits. The Division Bench has further observed that while deciding the application under Order VII Rule 11(a) of the CPC the Court has to apply the statutory law as well as the case law to the facts pleaded in the plaint and find out whether any cause of action is disclosed or not. It is further observed that if such an attempt is made, it can hardly be said that merits of the case are taken into consideration while deciding the application for rejection of the plaint as not disclosing any cause of action.
[5.11] Applying the law laid down by the Hon'ble Supreme Court in the aforesaid decisions and the observations made by the Division Bench of this Court in the case of Maharaja Shri Manvendrasinhji R. Jadeja (Supra) to the facts of the case on hand, considering the averments in the plaint it can be said that the plaintiff has averred and pleaded and the plaint is based on the footing that as his name continues as a joint owner of the registered trade marks in the Trade Mark Registry and in absence of any separate deed of assignment assigning the registered trade marks of partnership firm in favour of the continuing partners, the plaintiff is entitled to continue to have right in the registered trade marks of the partnership firm which are jointly owned by the partners. However, as observed hereinabove, by executing the retirement deed dated 31.03.2006, the entire business, goodwill, thereof and all its assets, effects and properties as well as licenses and trade Page 42 of 44 C/FA/25/2018 JUDGMENT marks etc. are agreed to be continued to be with the continuing partners of the partnership firm and thereafter, the plaintiff ceases to have any right, title in the registered trade marks which were in the name of the partnership firm. Thus, even considering the averments in the plaint and the cause of action pleaded, it can safely be said that the plaint does not disclose a cause of action and/or it is an illusory cause of action and/or the plaintiff does not have any cause of action at all and by clever drafting the plaintiff has tried to create a cause of action which does not exist as by executing the retirement deed dated 31.03.2006, the plaintiff the plaintiff had abandoned the right / title in the registered trade marks of the partnership firm. Under the circumstances, we are of the opinion that the learned Commercial Judge has rightly exercised the powers under Order VII Rule 11(a) of the CPC and has rightly rejected the plaint on the ground that the suit is based on an illusory cause of action by clever drafting. The impugned order passed by the learned Commercial Judge is absolutely in consonance with the object and purpose of Order VII Rule 11 of the CPC, which as such is the need of the day when such meritless cases are filed in the Courts increasing the burden of the Courts.
[5.12] Now, so far as the reliance placed upon the decisions of the Hon'ble Supreme Court relied upon by the learned Counsel appearing on behalf of the plaintiff, referred to hereinabove on Order VII Rule 11 of the CPC are concerned, there cannot be any dispute with respect to proposition of law laid down by the Hon'ble Supreme Court in the aforesaid decisions. However, we are of the opinion that none of the decisions shall be applicable to the facts of the case on hand more particularly in view of the findings recorded hereinabove. As observed hereinabove, on the contrary, considering even the averments in the plaint and considering the case of the plaintiff as it is and considering Page 43 of 44 C/FA/25/2018 JUDGMENT the retirement deed dated 31.03.2006, which is on record, the plaintiff has no cause of action at all and the plaintiff has instituted the suit on an illusory cause of action and/or the claim of the plaintiff is absolutely meritless even considering the averments in the plaint. Therefore, we are of the opinion that this is a fit case to exercise powers under Order VII Rule 11 of the CPC and to reject the plaint at the threshold in exercise of powers under Order VII Rule 11 of the CPC.
[6.0] In view of the above and for the reasons stated above, the learned Commercial Judge has not committed any error in rejecting the plaint under Order VII Rule 11 of the CPC. We are in complete agreement with the view taken by the learned Commercial Judge rejecting the plaint under Order VII Rule 11 of the CPC. No interference of this Court is called for.
[7.0] In view of the above and for the reasons stated above, present First Appeal fails and the same deserves to be dismissed and is, accordingly, dismissed. No costs.
Sd/ (M.R. SHAH, J.) Sd/ (A.Y. KOGJE, J.) Ajay** Page 44 of 44