Delhi High Court
M/S K.E.Burgmann A/S vs H.N.Shah & Ors. on 18 July, 2011
Author: V.K. Jain
Bench: V.K. Jain
THE HIGH COURT OF DELHI AT NEW DELHI
% Judgment Reserved on: 7th July, 2011
Judgment Pronounced on: 18th July, 2011
+ CS(OS) No. 1144/2001
M/s K.E.Burgmann A/S .....Plaintiff
- versus -
H.N.Shah & Ors. .....Defendant
Advocates who appeared in this case:
For the Plaintiff: Mr. D.S.Narula, Sr. Advocate with
Ms. Vandan Miglani, Advocate
For the Defendant: Mr. M.K.Miglani, Advocate with
Mr. Kapil Kumar, Giri, Advocate
CORAM:-
HON'BLE MR JUSTICE V.K. JAIN
1. Whether Reporters of local papers may
be allowed to see the judgment? Yes
2. To be referred to the Reporter or not? Yes
3. Whether the judgment should be reported
in Digest? Yes
V.K. JAIN, J
1. This is a suit for grant of permanent injunction,
rendition of accounts, delivery up of the infringing material
and damages. Plaintiff No. 1 is a company registered in
Denmark whereas plaintiff No. 2 is a subsidiary of plaintiff
No.1 and is registered in India. Plaintiff No. 1 company was
CS(OS)No. 1144/2001 Page 1 of 38
founded by Mr. Keld Ellentoft for developing, designing and
manufacturing, fabric, elastomer and fluropolymer
expansion joints/compensators, which are installed to
accommodate thermal expansion/contraction of the ducting
system due to rise and fall in temperature and claims to be
a well known manufacturer of these products carrying
business in several countries including U.K., Scandinavian
countries, North and South America and South Korea.
Pursuant to Joint Venture Agreements dated
15.1.1987 and 6.5.1987 the first agreement between
plaintiff No. 1 F.Harlay and Company and the second
between it and the directors of F. Harlay and Company,
defendant No. 2 was incorporated in India on 14.5.1987, for
the purpose of manufacturing and marketing expansion
joints/compensators, coating materials and related services.
40% of the share capital of defendant No. 2 company was
contributed by Danish partners, whereas the remaining
60% was subscribed by the Indian partners. The technology
for manufacturing and technical knowhow to defendant No.
2 was provided by plaintiff No. 1. A technical collaboration
agreement was entered into between plaintiff No. 1 and
CS(OS)No. 1144/2001 Page 2 of 38
defendant No. 2 whereby defendant No. 2 was granted a
license, by plaintiff No. 1, to use its trademark with respect
to licensed products manufactured for export only. It was
stipulated in agreement that on its termination/expiration,
defendant No. 2 shall have non-exclusive rights to use the
technical knowhow and information but would not have
right to use any trademark of plaintiff No. 1, whether
licensed during the term of the agreement or otherwise. The
Collaboration Agreement was extended for a period of 05
years and expired on 14.2.1998. In the meanwhile, the
name of Danish company was changed first from M/s Keld
Ellentoft A/S to M/s K.E. Safematic A/S and then to M/s
K.E. Burgmann A/S, when it was taken over by Feador
Burgmann Dichtungswerke GmbH & Company. Plaintiff
No. 1 and defendant No. 1 signed a Memorandum of
Agreement dated 12.6.1993 whereby they agreed to remain
bound by the earlier existing relationship between
defendant No. 2 and predecessors of plaintiff No. 1.
In December, 1999, it was decided that Danish
partners would sell their shares in defendant No. 2 company
to the Indian partners and will thereafter be free to set up
CS(OS)No. 1144/2001 Page 3 of 38
an independent business. It was further agreed that the
defendants would issue a „No Objection Certificate‟ in this
regard to plaintiff No. 1. Defendant No. 2 filed a suit for
injunction in Madras High Court which was settled in terms
of a Memorandum of Compromise whereby a „No Objection‟
was given to plaintiff No. 1 to set up its independent
business in India and defendant No. 2 was allowed to
continue to manufacture and sell only the products
specified in the Memorandum of Compromise. Defendant
No. 1 was not permitted to use any trademark or logo "KE"
of plaintiff No. 1 company and it was agreed that defendant
No. 1 will not represent itself as a company connected with
or part of plaintiff‟s.
The case of the plaintiffs is that plaintiff No. 1 uses
the "KE" mark and "KE" logo in various countries. The
aforesaid mark and "KE" logo are its exclusive property
registered in the name of plaintiff No. 1 or its subsidiary in a
number of countries. This is also the case of the plaintiffs
that defendants were allowed to use the logo as a permissive
use and they are not entitled to use the same after
termination of relationship between the parties. It is alleged
CS(OS)No. 1144/2001 Page 4 of 38
that the defendants have been found continuing to use the
"KE" logo on their letterheads, stationery, business material,
publicity brochure etc. thereby giving an impression that
they are connected with plaintiff No. 1. During the
subsistence of Joint Venture, the "KE" logo was registered in
the name of defendant No. 2 which, according to the
plaintiff was illegal and unlawful. The plaintiffs have sought
an injunction restraining the defendants from using "KE"
logo or any logo which is a substantial reproduction or a
colourable imitation of their logo. They have also sought
injunction against use of the mark "KE" in relation to any
product except to the extent it was allowed under the
Memorandum of Agreement, which formed part of the
compromise between the parties. They also sought
injunction restraining the defendants from representing that
they were registered proprietors of "KE" logo/mark. They
also sought an order directing them to transfer the aforesaid
mark to the plaintiffs. The plaintiffs have also claimed
damages amounting to Rs.25 lakh and delivery up of
stationery, brochures etc. bearing their logo and/or mark.
2. The defendants have contested the suit and have
CS(OS)No. 1144/2001 Page 5 of 38
taken a number of preliminary objections. They have
alleged that (i) this Court has no territorial jurisdiction to try
the present suit; (ii) the suit is barred by limitation; (iii) the
plaint has not been signed and verified by a competent
person; (iv) the suit suffers from delay, laches and
acquiescence; and (v) the suit is liable to be stayed in view of
the arbitration agreement between the parties. They have
also claimed that in view of compromise between the parties
before Madras High Court, the present suit is not
maintainable. On merits they have claimed that defendant
No. 2 is the proprietor of the trademark "KE" logo registered
in its name in respect of expansion joints/compensators.
They have also alleged that the registration was obtained by
defendant No. 2 with the knowledge, consent and
encouragement of the plaintiff. It is also alleged that
defendant No. 2 has been extensively using the "KE" logo on
its products, letterheads, advertisements, brochures etc. to
the knowledge of the plaintiffs. It is also alleged that "KE"
logo does not enjoy any trans-border reputation, spilling
over to India.
3. The following issues were framed:
CS(OS)No. 1144/2001 Page 6 of 38
1. Whether this Hon'ble Court has no territorial
jurisdiction to entertain and try the present suit? - OP
Parties
2. Whether the suit is liable to be stayed and the matter
be referred to Arbitration in view of the Arbitration
Agreement between the parties? - OPD
3. Whether the present suit is barred by limitation? -
OPD
4. Whether the suit has been signed and verified
properly and by a competent person?
5. Whether the suit is maintainable in view of
compromise decree granted by Hon'ble High Court of
Madras in Civil Suit No. 341/2000? - OPD
6. Whether the suit suffers from delay, latches and
acquiescence, if so to what effect? - OPD
7. Whether the plaintiff has any transborder reputation
in the impugned trademark? - OPP
8. Whether the defendant has passed off its goods as
those of the plaintiff? - OPP
9. Whether the defendant is guilty of infringement of
copyright? - OPP
10. Whether the plaintiff is owner of copyright of the
impugned logo? - OPP
11. Whether the suit has been valued properly and
requisite Court Fee has been paid thereto? - OPP
12. Whether the defendants are liable to be permanently
restrained from using the trademark "KE" for
products other than those mentioned in para 13 of
the plaint? - OPP
13. Whether the defendants are entitled to use the logo
"KE" as a part of their name and trading style? - OPP
14. Whether the defendants are liable to pay damages as
claimed? - OPP
15. Whether the NOC dated 7.6.2000 permits the
defendant to use the trademark "KE" on all its
products? - OPP
16. Relief.
CS(OS)No. 1144/2001 Page 7 of 38
ISSUE No. 1
4. Admittedly defendant No. 2 company has an office
in Delhi at the address H-49A Kalkaji, New Delhi which is
also its sole address given in the plaint. In his affidavit
annexed to the Written Statement, defendant No.1 Mr.
H.N.Shah has given the address of defendant No. 2 as H-
49A Kalkaji, New Delhi. The same address also appears on
the letterhead and brochure of defendant No. 2-company as
well as on the visiting card of its employee, filed by the
plaintiffs. Section 20(a) of the Code of Civil Procedure, to
the extent it is relevant, provides that the suit shall be
instituted in a Court within the local limit in whose
jurisdiction the defendants carry out business or work for
gain at the time of commencement of the suit. The
explanation to the Section provides that a corporation shall
be deemed to carry on business at its sole or principal office
in India or, in respect of any cause of action arising at any
place where it has also a subordinate office, at such place.
It has been specifically alleged in para 24 of the plaint that
the defendants carry on their business for profit and gain
within the territorial jurisdiction of this Court. There is no
CS(OS)No. 1144/2001 Page 8 of 38
averment in corresponding para of the written statement
that defendant No. 2-company is not carrying any business
at H-49A, Kalkaji, New Delhi and that it is only a postal
address of defendant No. 2. No witness of the defendants
has claimed that defendant No.2-company is not carrying
any business at H-49A, Kalkaji, New Delhi. The
documentary evidence produced by the plaintiff, coupled
with implied admission contained in the written statement
and no evidence from the defendants in rebuttal is sufficient
to prove that the defendants were carrying business in Delhi
when the suit was instituted.
The logo "KE" is being used by defendant No. 2 on
the brochure of its products, on its letterheads as well as on
the visiting cards of its employees. Since defendant No. 2
has been carrying business in Delhi, obviously, it must be
using the stationery such as brochure, letterheads and
visiting cards bearing the logo "KE" in Delhi and the use of
the aforesaid logo constitutes cause of action for the
plaintiffs to file this suit. Since cause of action on account of
use of use of the logo "KE" on the stationery of defendant
No. 2 arose also in the jurisdiction of this Court, this Court
CS(OS)No. 1144/2001 Page 9 of 38
has territorial jurisdiction to try the present suit.
5. The learned counsel for the defendants has
referred to Dabur India Limited v. K.R.Industries 2008(37)
PTC 332 (SC), Patel Roadways Limited v. Prasad Trading
Company AIR 1992 SC 1514, Saranya Zaveri v. Kamdon
Academy Pvt. Ltd. 2008(38) PTC 554 Ker. & Dhodha
House & Patel Field Marshal Industries v. S.K. Maingi
2006(32) PTC 1 (SC) in support of his contention that this
Court has no territorial jurisdiction to try the present suit.
None of these judgments applies to the facts of this case
since cause of action to file this suit arose also in the
jurisdiction of this Court and defendant No. 2-company has
also been carrying business within the jurisdiction of this
Court. In the case of Dabur India Ltd. (supra), defendant
was a resident of Andhra Pradesh and there was no
evidence to prove that it was selling goods in Delhi. It was in
these circumstances that Supreme Court held that a
composite suit for infringement of copyright and passing off
would not lie in the same forum.
In the case of Patel Roadways Limited (supra),
the defendant-corporation had a subordinate office at the
CS(OS)No. 1144/2001 Page 10 of 38
place where cause of action arose. It was held that where
the defendant does not have a sole office, but has principal
office at one place and a subordinate office at another place,
it is not the Court within whose jurisdiction the principal
office of the defendant is situated, but the Court within
whose jurisdiction it has a subordinate office, which alone
shall have jurisdiction in respect of the cause of action
arising at a place where it also has a subordinate office.
Since the cause of action which led to the filing of this suit
arose in the jurisdiction of this Court on account of the
defendant having office in Delhi and using the stationery
bearing the logo "KE" in Delhi also, the territorial
jurisdiction of this Court cannot be disputed.
In the case of Saranya Zaveri (supra), it was held
that in a suit falling under clause 3(c) of Section 134 (1) of
Trade Marks Act, 1999, the territorial jurisdiction of the
Court has to be decided with reference to general provisions
of the Code of Civil Procedure, namely, under Section 15 to
20 and not with reference to sub-Section (2) of Section 134
of Trade Marks Act. This judgment does not help the
defendant for the simple reason that if Section 20 of the
CS(OS)No. 1144/2001 Page 11 of 38
Code of Civil Procedure is applied, this Court does have
territorial jurisdiction to try the present suit.
In the case of Dhodha House (supra), it was held
that territorial jurisdiction cannot be conferred upon a
Court by joining two cause of action, one for infringement of
trademark and the other for copyright. This judgment is of
no help to the defendants since there is no such clubbing of
causes of action in the present suit and the suit of the
plaintiff, to my mind, is based primarily on passing off and
the contractual obligation arising out of the agreements
between the parties.
For the reason given in the preceding paragraphs,
the issue is decided against the defendants and in favour of
the plaintiffs.
Issue No. 3
6. This issue was not pressed during arguments. The
issue is accordingly decided in favour of the plaintiff.
Issue No. 2
7. A careful analysis of Section 8 of Arbitration and
Conciliation Act, 1996 would show that the following
conditions are required to be fulfilled before the Court can
CS(OS)No. 1144/2001 Page 12 of 38
refer the matter to arbitration;
(a) the dispute between the parties should be
subject matter of an arbitration agreement;
(b) one of the parties to the suit should apply for
referring the parties to arbitration;
(c) the application should be filed on or before
submitting first statement on the substance of
the dispute and;
(d) the application should be accompanied by the
original arbitration agreement or its certified
copy.
8. In Sukanya Holdings Pvt. Ltd. v. Jayesh H.
Pandya & Anr. AIR 2003 SC 2252 Supreme Court, while
interpreting Section 8 of the Act, inter alia, observed as
under:
"Further, the matter is not required to be
referred to the arbitral Tribunal, if-(1) the
parties to the arbitration agreement have
no filed any such application for referring
the dispute to the arbitrator; (2) in a
pending suit, such application is not filed
before submitting first statement on the
substance of the dispute; or (3) such
application is not accompanied by the
original arbitration agreement or duly
certified copy thereof."
CS(OS)No. 1144/2001 Page 13 of 38
9. It was contended by the learned counsel for the
defendants that since they have pleaded in the written
statement that the suit is liable to be dismissed and the
matter is to be referred to arbitration as the agreement,
being relied upon by the plaintiffs, contains an arbitration
clause, failure of the defendants to file an application under
Section 8 of Arbitration and Conciliation Act would not be
material. I, however, find no merit in this contention. It is
not as if a Civil Court lacks inherent jurisdiction to
adjudicate upon the civil disputes which are covered by an
arbitration agreement between the parties. Nothing
prevents a party to the suit from submitting to the
jurisdiction of the Civil Court, despite there being an
arbitration agreement between the parties and such
submission to the jurisdiction of the Civil Court needs to be
inferred when the defendants do not file an appropriate
application under Section 8 of the Act, seeking reference to
the arbitration in terms of agreement between the parties.
The purpose behind requirement of filing such an
application before submitting the first statement on the
substance of the dispute is to ensure that the precious time
of the Court is not spent on adjudicating upon a dispute
CS(OS)No. 1144/2001 Page 14 of 38
which is covered by an arbitration agreement. The
jurisdiction of Civil Court is not ousted on account of an
arbitration agreement between the parties. It is ousted only
when an application under Section 8 of the Act is filed by
the defendant.
10. In K.Jayakumaran Nai vs. Vertex Securities Ltd.
AIR 2005 Ker. 294, the defendant filed Written Statement
raising a contention that there was an arbitration agreement
between the parties. After framing of issues he filed an
application seeking reference of the dispute for arbitration.
The High Court noted that Section 8 of the Act clearly
provides that the application had to be made not later than
submitting the first statement whereas the application
before it had been filed after the issues were framed. The
Court expressly rejected the contention that since the
matter had been raised in the Written Statement that was
enough. While doing so the Court noted that the Written
Statement contained no prayer for referring the matter for
arbitration.
In West Bengal State Electricity Board and Ors.
Vs. Shanti Conductors Private Ltd. AIR 2004 Gau 70, the
defendants filed Written Statement indicating that the
CS(OS)No. 1144/2001 Page 15 of 38
dispute which had arisen between the parties and led to
institution of the suit, was covered by arbitration clause.
After submitting the Written Statement on 22.9.2000 the
defendants filed an application under Section 8 of the Act
on 7.11.2000 seeking reference of the dispute to the
arbitration. The trial Court having rejected the application
the matter was agitated by the defendant before the High
Court and it was contended that in the plaint itself the
plaintiff had admitted the existence of the arbitration clause
and the Written Statement also indicated about its existence
and therefore the Court below had taken a misconceived
view of law as to its jurisdiction. Rejecting the contention,
the High Court inter alia held as under:
In the case at hand, the application
under Section 8 was made by the
defendants after the written statement
stood submitted. Hence, this application
was not maintainable. The fact that the
existence of the arbitration clause was
admitted in the plaint or asserted in the
written statement is immaterial
inasmuch as the Court, under Section 8,
can refer for arbitration a dispute
pending in a civil suit only when the
party or parties concerned make
application for getting the dispute
referred to arbitration. If despite
existence of arbitration clause, the
parties choose to contest the suit, the
powers under Section 8 cannot be
CS(OS)No. 1144/2001 Page 16 of 38
invoked.
11. The learned counsel for the defendants has
referred to Hindustan Petroleum Corporation Ltd. vs.
Pinkcity Midway Petroleum (2003) 6 SCC 503 and P.
Philip vs. Director of Enforcement, New Delhi AIR 1976
SC 1185. In the case of Hindustan Petroleum
Corporation Ltd. (supra), an application under Section 8 of
Arbitration and Conciliation Act was filed by the defendant
in reply to the suit summons. There is nothing in this
judgment which would support the proposition that a Civil
Court lacks inherent jurisdiction to adjudicate upon a
dispute covered by an arbitration agreement and is
precluded from doing so even if the defendant do not file an
application under Section 8 of Arbitration and Conciliation
Act. As far as the decision in the case of P. Philip (supra) is
concerned, the reliance on the judgment is wholly misplaced
since this judgment does not even pertain to the question of
jurisdiction of Civil Court to adjudicate upon a dispute
covered by an arbitration agreement. The issue is, therefore,
decided against the defendants and in favour of the
plaintiffs.
Issue No. 4
CS(OS)No. 1144/2001 Page 17 of 38
12. The plaint has been signed and verified and the
suit had been instituted by Mr D. Lahiri as Constituted
Attorney of the plaintiff-companies. Ex. PW-2/2 is the copy
of the Resolution passed by Board of Directors of plaintiff
No. 1 in its meeting held on 06th April, 2001. Vide this
Resolution, it was decided that legal action be initiated
against M/s Keld Ellentoft India Pvt. Ltd. and its Directors
and for this purpose, Mr D. Lahiri, Managing Director of
plaintiff No. 2-company, was authorized to institute a suit
against defendant No. 1-company as well as its directors.
The authority delegated to him included authority to engage
advocates, institute or defend legal proceedings and sign &
verify the pleadings. Plaintiff No. 2 is a subsidiary of plaintiff
No.1-company. Order XXIX Rule 1 of the Code of Civil
Procedure, to the extent it is relevant, provides that in suits
by or against a corporation, any pleading may be signed and
verified on behalf of the corporation by the Secretary or by
any director or other principal officer of the corporation who
is able to depose to the facts of the case. Since Mr D. Lahiri
is the Managing Director of plaintiff No. 2-company, he is
competent to sign and verify its pleadings on its behalf. In
United Bank of India vs. Naresh Kumar & Ors. (1996) 6
CS(OS)No. 1144/2001 Page 18 of 38
SCC 660, Supreme Court, reading the provisions of Order VI
Rule 14 of the Code of Civil Procedure together with Order
XXIX Rule 1 thereof was of the view that even in the
absence of any formal letter of authority or power of
attorney having been executed a person referred to in Rule 1
of Order XXIX can, by virtue of the office which he holds,
sign and verify the pleadings on behalf of the corporation. It
was further held that in addition thereto and de hors Order
XXIX Rule 1 of the Code of Civil Procedure, as a company is
a juristic entity, it can duly authorize any person to sign the
plaint or the written statement on its behalf and this would
be regarded as sufficient compliance with the provisions of
Order VI Rule 14 of the Code of Civil Procedure.
Hence, in view of the provisions of Order XXIX Rule
1 of the Code of Civil Procedure, the Resolution passed by
plaintiff No. 1-company on 06th April, 2001 and Mr D.
Lahiri, being the Managing Director of plaintiff No. 2-
company, I have no hesitation in holding that the suit has
been instituted and the pleadings signed and verified by a
competent person on behalf of the plaintiff-companies. In
fact, even I proceed on the assumption that Mr D. Lahiri
had authority to institute the suit only on behalf of plaintiff
CS(OS)No. 1144/2001 Page 19 of 38
No. 1-company, in terms of the Resolution passed on 06th
April, 2001, but, being its Managing Director, he had no
authority to institute a suit on behalf of plaintiff No. 2 in the
absence of a Board Resolution from plaintiff No. 2-company
in his favour, the suit would still be maintainable since it is
plaintiff No. 1-company, which owns the logo "KE", which is
aggrieved on account of use of the logo "KE" by defendant
No. 2-company, and is aggrieved on account of its use by
defendant No.2-company on its stationery, etc.
The learned counsel for the defendants has
referred to the decision of this Court in Nibro Limited Vs.
National Insurance Co. Ltd AIR 1991 Del 25 and H.P.
Horticultural Produce vs. United India Insurance
Company AIR 2000 HP 11. However, neither of these
judgments can be of any help to the defendants in view of
the authoritative pronouncement of the Supreme Court in
the case of United Bank of India (supra) and the
Resolution passed by plaintiff No.1-company, authorizing
Mr D.Lahiri to institute this suit and sign & verify the
pleadings on its behalf. As held by Karnataka High Court in
M/s Private Eye (P) Ltd. v. Hind High Vaccum Co. Pvt.
Ltd. AIR 2003 Karnataka 95, relying upon the decision of
CS(OS)No. 1144/2001 Page 20 of 38
Supreme Court in the case of United Bank of India (Supra),
dismissal of a suit on such technical grounds is not
appropriate. In the case before Karnataka High Court, the
plaint was signed by the director of the company. The suit
was dismissed on the ground that the company had not
authorized the director to file the suit and sign the plaint.
The judgment of the trial Court was set aside by the High
Court.
The issue is decided against the defendants.
Issue No. 5
13. Clause 12 of the Compromise Deed between the
parties before Madras High Court in CS No. 341/2000 Ex.
PW-2/11 reads as under:
"The parties hereto agree and confirm
that all issues between them whether as
joint venture partners or share holders
have been discussed, addressed and
finally resolved and all the parties hereto
confirm that none of them are having any
rights or claims against each other
whether monetary or otherwise (except as
provided herein) and that the parties do
not have any further cause or grievance
against each other for any future action
on any account whatsoever arising out of
the joint venture."
Relying upon the aforesaid clause, it has been
contended by the defendants that after this compromise, no
CS(OS)No. 1144/2001 Page 21 of 38
suit by the plaintiffs against defendants is maintainable
with respect to use of the logo "KE" by the defendants. I,
however, find no merit in this objection. The case of the
plaintiff is that though the compromise between the parties
clearly stipulated that defendant No. 2 would ensure that its
stationery, publicity material, audio/visual material, etc.
shall not indicate or imply that defendant No.2-company
was anymore connected with plaintiff No.1-company or
International Burgmann Group, the defendants have
committed breach of that agreement by using the logo "KE"
on the stationery, including brochure, letterhead and
visiting cards. If this is so, it cannot be said that the
plaintiff-companies are precluded from filing a suit for grant
of injunction, restraining the defendants from committing
breach of the aforesaid contractual obligation. The dispute
with respect to use of the logo "KE" on the stationery of
defendant No-2-company contrary to the terms of the
settlement before Madras High Court having arisen after the
aforesaid settlement, it cannot be said that it is barred by
res judicata or otherwise. The issue is, therefore, decided
against the defendant and in favour of the plaintiff.
Issue No. 7
CS(OS)No. 1144/2001 Page 22 of 38
14. No evidence has been led by the plaintiffs to prove
that "KE" logo enjoys a trans-boarder reputation in India.
The issue, therefore, is decided against the plaintiff and in
favour of the defendant.
Issue No. 11
15. No arguments were advanced on this issue. Even
otherwise, the plaintiffs have paid ad valorem court fee on
the valuation given by them. The issue is decided against
the defendant and in favour of the plaintiffs.
Issue Nos. 8, 9, 10, 12 ,13 and 15
16. These issues are interconnected and can be
conveniently decided together.
It is not in dispute that defendant No.1-company
knew it very well that "KE" logo was owned by plaintiff No.1-
company in a number of countries. This is not the case of
the defendant No.2 that the trademark "KE" logo was coined
and adopted by it. On all the pages of agreement dated 15th
January, 1987, the logo "KE" was embossed. Vide Article
10 of Technical Collaboration and Assistance Agreement
dated 19th May, 1987, plaintiff No.1, granted to defendant
No.1-company, a non-exclusive licence, royalty free right to
use the trademarks with respect to licensed products
CS(OS)No. 1144/2001 Page 23 of 38
manufactured for export only and it was stipulated that on
each licensed product manufactured for export pursuant to
said licence, licensee shall place or have placed
prominently, in a legible from and permanent manner such
trademark identification as the licensor from time to time
may direct. Defendant No. 2 was required to use such
identification in all advertising of the licensed products
intended for export. Thus, it was very well known to
defendant No.2-compnay that the trademark "KE" logo was
owned by plaintiff No.1-company.
Clause (F) of Technical Collaboration and
Assistance Agreement dated 19th May, 1987 reads as
under:-
"F. Termination or expiration of this
Agreement shall not relieve licensee of its
obligation to pay any money which has
accrued prior to said termination or
expiration. From and after the
termination/expiration of this Agreement
and any extensions thereof, licensee shall
have the non-exclusive right to use the
technical know-how and information in
the Territory and in such manner that it
deems necessary and desirable. The
foregoing rights do not include the right
to use any trademarks of licensor
whether licensed during the term of this
CS(OS)No. 1144/2001 Page 24 of 38
Agreement or otherwise." (emphasis
supplied)
Clause 10 of the Compromise Deed filed in Madras
High Court reads as under:
"10. Within 3 months from this date, the
second defendant shall ensure that in all
its stationery, publicity material,
audio/visual material in any form or
media shall not indicate or imply that the
said company is in any manner and more
connected with or forming part of or
having any relations with the first
defendant company or the International
Burgmann Group..."
NOC dated 07th June, 2000 (Ex.PW-2/12), issued
by defendant No. 1-company, which forms part of the
settlement before Madras High Court, inter alia, reads as
under:
"We further confirm that the decision
aforesaid was taken mutually and that it
is agreed that KEI will as in past continue
its operation of manufacturing, selling,
servicing and marketing of the present
range of products and future
developments thereof. The present range
of products being:-
1. KE-FLEX (Single layer expansion
joint for low temperature non
aggressive medium)
2. KE-FLUAFLEX (Multilayer expansion
CS(OS)No. 1144/2001 Page 25 of 38
joint)
3. KE-CEMFLEX (Multilayer expansion
joint)
4. KE-FLUASTAL (Multilayer expansion
joint)
5. KE-CONVOLUTED BELLOWS as per
Feodor Burgmann design fabric
multi layer.
6. KE-CHIMNEY SEALS
7. KE-FIRE SEALS
8. KE-COAL MILL GAITER
9. FLUACHEM "O"
10. And future developments.
...KEB would be free to manufacture, sell,
market and service in India the products
(all kind of flexible joints) other than
those presently manufactured, sold and
serviced by KEI as mentioned above in
points (1) to (9). KEB would not use the
same trade names of the products listed
in points (1 to 9) above. However, KEB is
free to manufacture, market and sell all
other products including single layer and
multilayer expansion joints using
laminates or any other technology which
are in substitution to the above products
even if it is in competition with the
aforementioned products in points (1) to
(9)."
It can, therefore, hardly be disputed that
registration of the trademark "KE" logo in favour of
CS(OS)No. 1144/2001 Page 26 of 38
defendant No.2-company was obtained with the tacit
consent of plaintiff No.1-company and was very much in its
knowledge. Mr D. Lahiri has admitted in his cross-
examination that registration of trademark "KE" logo in
favour of defendant No.2-company was very much in the
knowledge of the directors of plaintiff No.-1-company.
Clause (F) of Technical Collaboration and
Assistance Agreement dated 19th May, 1987 makes it quite
clear that on termination or expiry of that agreement,
defendant No.-2-company was not to have any right to use
any trademark of plaintiff No. 1 irrespective of, whether it
was licensed during the term of the agreement or otherwise.
The term "KE" logo not only belonged to plaintiff No.1 in a
number of countries, this fact was very much in the
knowledge of defendant No.2-company, as is evident from
the aforesaid documents and, therefore, it is difficult to
dispute that once the Technical Collaboration and
Assistance Agreement came to an end, it has no right to use
the aforesaid logo, despite registration in its favour.
Permission to defendant No.2 to use the technical knowhow,
even after termination of the Technical Collaboration
Agreement, coupled with a clear prohibition against use of
CS(OS)No. 1144/2001 Page 27 of 38
the trademark of the plaintiffs‟ leaves no ambiguity in this
regard. Neither the Compromise Deed nor the NOC,
annexed to it, entitles defendant No. 2 to use the trademark
"KE" logo. If defendant No. 2 was to continue to use the
trademark "KE" logo, it would have been specifically stated
so in the Compromise Deed and/or the NOC dated 07 th
June, 2000 and in that case, it would have been further
stipulated that the plaintiffs will not use the aforesaid logo
on the products which they may manufacture, sell and
market in India. Neither the settlement nor the NOC place
any embargo on the right of the plaintiffs to use the
trademark "KE" logo. The plaintiffs were rather specifically
permitted to manufacture, sell, market and service all
products, except nine products, identified in the NOC. Since
there was no stipulation in the NOC, prohibiting the plaintiff
from using the trademark "KE" logo, which it owned in a
number of countries, it would be obvious to defendant No. 2
that the products which the plaintiff-company
manufactures, sells and markets in India would be
manufactured, sold and marketed under the trademark
"KE" logo. Therefore, grant of permission to the plaintiffs to
manufacture, sell and market products other than the nine
CS(OS)No. 1144/2001 Page 28 of 38
products, identified in the NOC dated 07th June, 2000,
coupled with right of defendant No. 2, having been
restricted to manufacture of only those nine products,
clearly indicates that defendant No. 2 was contractually
obliged not to use the trademark "KE" logo, which could
thereafter be used only by the plaintiff-companies on those
products, which it was permitted to manufacture and sell in
India. It would be pertinent to note here that the NOC
specifically stipulated that plaintiff No. 1 would not use the
trade name of the nine products listed in the document.
This is yet another indicator that the plaintiff-company
could have used the trademark "KE" logo on any of the
products, manufactured, sold, marketed and serviced in
India though it cannot use the trade names, as noted in the
NOC.
Clause 10 of the Memorandum of Compromise filed
in Madras High Court (Ex.PW-2/11), required defendant No.
2 to ensure that the stationery, publicity material, etc. used
by it, would not indicate or imply any connection or
association with plaintiff No. 1-company or International
Burgmann Group. Since the trademark "KE" logo belongs
to plaintiff No. 1-company and International Burgmann
CS(OS)No. 1144/2001 Page 29 of 38
Group in a number of countries, use of the aforesaid logo on
the brochure, letterhead, etc. of defendant No. 2 is bound to
give an impression to those buying the products,
manufactured by defendant No.2-company or otherwise
having business dealings with him, that this company
continues to be associated/connected with plaintiff No. 1
and in fact, forms part of International Burgmann Group.
Any person coming across the stationery material, bearing
the trademark "KE" logo is likely to believe that defendant
No. 2-company had not severed its connection with plaintiff
No. 1 and/or International Burgmann Group. In fact, in its
brochure, defendant No. 2 continues to refer to the joint
venture agreement between Keld Ellentoft A/S and the Shah
Business House under the heading „The Group Genesis‟.
Again, under the heading KEI Profile, it has been stated that
Keld Ellentoft & Private Ltd. was started in the year 1987 as
a joint venture with M/s Keld Ellentoft A/S of Denmark with
60% holding by the Indian promoters and that they had two
terms of technical collaboration of five years each till 1998
during which period they had assimilated all necessary
expertise for selection designing, manufacturing, selling and
servicing of non-metallic expansion joints. It is further
CS(OS)No. 1144/2001 Page 30 of 38
stated that in June, 2000, the Indian promoters have taken
over the share of JV partner and had acquired the complete
control of the company. It thus appears that even after
purchase of the equity of plaintiff No. 1-company by the
Indian promoters, defendant No. 2 continues to encash on
the goodwill and technical expertise of plaintiff No. 1 by
referring to the collaboration agreements and the equity
participation by it to the extent of 40% of the equity capital
of defendant No.2-company, which it had with plaintiff No.
1-company in the past.
17. For the reasons given in the preceding paragraphs,
I have no hesitation in holding that defendant No. 2-
company is under a contractual obligation not to use the
trademark "KE" logo on its stationery, on the products,
manufactured by it or for marketing and promoting its
products and business activities. The registration of the
trademark "KE" logo in favour of defendant No. 2 being
permissive, it has no right to continue to use the aforesaid
logo, particularly in the light of the contractual obligations,
contained in clause (F) of Technical Collaboration and
Assistance Agreement, Article 10 of Memorandum of
CS(OS)No. 1144/2001 Page 31 of 38
Compromise filed in Madras High Court and the terms of
the NOC dated 07th June, 2000, issued by it to the plaintiff-
company.
18. The learned Counsel for the defendants has
submitted copies of the decisions in Shankar Sitaram
Sontakke v. Balkrishna Sitaram Sontakke AIR 1954 SC
352, Bhavan Vaja v. Solanki Hanuji Khodaji AIR 1972 SC
1371, Person's Co. Ltd. v. Catherine Christman Lexsee
900 F2D 1565, ITC Limited v. Punchgini Inc. 482 F.3d
135, The Gillette Comopany v. A.K.Stationery 2001 PTC
513 (Del.), Smithkline Beecham Pic & Ors. v. M/s
Hindustan Level Limited & Ors. 2000 PTC 83 Del. and
Punjab Urban Planning v. Shiv Saraswati AIR 1998 SC
2352. However, none of these judgments is relevant to the
disputes involved in this case. The decisions in the case of
Person‟s Co. Ltd. (supra), ITC Limited (supra), The Gillette
Company (supra) and Smithkline Beecham (supra) deal
with trans-border reputation. While deciding Issue No. 7, I
have already held that the plaintiff company has failed to
prove any trans-border reputation in respect of the
trademark "KE" logo. The decision in the case of Shankar
CS(OS)No. 1144/2001 Page 32 of 38
Sitaram (supra) and Bhavan Vaja (supra) deal with
construction of decree whereas in the case of Punjab Urban
Planning (supra) it was observed that the plaintiff/appellant
must succeed or fail on his own case and cannot take
advantage of weakness in the defendant/respondent‟s case
to get a decree. None of these judgments lays down any
such proposition of law which would disentitle the plaintiffs
from obtaining injunction against use of the trademark "KE"
logo.
The issues are decided accordingly.
Issue No. 6
19. The case of the defendants is that the trademark
"KE" logo was registered in favour of defendant No.2 with
the knowledge, consent and encouragement of plaintiff
No.1-company and even the No Objection Certificate (NOC),
issued by defendant No. 2, which forms part of the
compromise decree passed by Madras High Court being on
the letterhead bearing "KE" logo, the plaintiffs are guilty of
laches and acquiescence. I find no merit in the plea taken
by the defendants. It can hardly be disputed that the
registration of "KE" logo in favour of defendant No. 2 was
CS(OS)No. 1144/2001 Page 33 of 38
very much in the knowledge of plaintiff No.1-company
through its directors. It has also been admitted by Mr D.
Lahiri in his cross-examination. But, the facts and
circumstances of the case clearly show that the registration
of trademark "KE" logo in favour of defendant No.2 was
permissive on account of plaintiff No. 1 company having
40% equity participation in the share capital of defendant
No.2 at that time. There is no positive act on the part of
plaintiff No.1 company, particularly after compromise before
Madras High Court, which would indicate that the plaintiffs
had given up their right in the trademark "KE" logo or had
otherwise consented to its being used by defendant No.2
even after the aforesaid settlement. Acquiescence is an act
of encouragement by the plaintiff to the defendant to use
the infringing mark. To constitute acquiescence there needs
to be a tacit or expressed assent by the plaintiff to the
defendant using its mark in a manner as would encourage
the defendant to continue his business using the infringing
mark. In case of acquiescence, the infringer acts under a
mistaken belief that he is not infringing the trademark of
the plaintiff. It is also settled proposition of law that the
onus lies on the defendant to prove acquiescence by the
CS(OS)No. 1144/2001 Page 34 of 38
plaintiff, which cannot be inferred merely on account of the
plaintiff not taking action against the defendant for infrining
its rights.
In Power Control Appliances vs. Sumeet
Machines Pvt. Ltd. (1994) 2 SCC 448, Supreme Court, inter
alia, observed as under:
"Acquiescence is sitting by, when another
is invading the rights and spending
money on it. It is a course of conduct
inconsistent with the claim for exclusive
rights in a trade mark, trade name etc. It
implies positive acts; not merely silence
or inaction such as is involved in laches.
In Harcourt v. White10 Sr. John Romilly
said: "It is important to distinguish mere
negligence and acquiescence." Therefore,
acquiescence is one facet of delay. If the
plaintiff stood by knowingly and let the
defendants build up an important trade
until it had become necessary to crush it,
then the plaintiffs would be stopped by
their acquiescence. If the acquiescence in
the infringement amounts to consent, it
will be a complete defence as was laid
down in Mouson (J. G.) & Co. v. Boehm".
The acquiescence must be such as to
lead to the inference of a licence sufficient
to create a new right in the defendant as
was laid down in Rodgers v. Nowill12.
"Delay simpliciter may be no defence to a
suit for infringement of a trade mark, but
the decisions to which I have referred to
clearly indicate that where a trader allows
a rival trader to expend money over a
considerable period in the building up of
CS(OS)No. 1144/2001 Page 35 of 38
a business with the aid of a mark similar
to his own he will not be allowed to stop
his rival's business. If he were permitted
to do so great loss would be caused not
only to the rival trader but to those who
depend on his business for their
livelihood. A village may develop into a
large town as the result of the building
up of a business and most of the
inhabitants may be dependent on the
business. No hard and fast rule can be
laid down for deciding when a person
has, as the result of inaction, lost the
right of stopping another using his mark.
As pointed out in Rowland v. Michell15
each case must depend on its own
circumstances, but obviously a person
cannot be allowed to stand by indefinitely
without suffering the consequence."
In the case before this Court, there has been no
delay on the part of the plaintiffs in initiating legal action
against the defendants, the compromise before Madras High
Court having been effected only on 27 th April, 2000 and the
suit itself having been filed on 30th May, 2001. Therefore,
the plaintiff company cannot even be said to be guilty of
laches or delay.
The issue is decided against the defendants and in
favour of the plaintiffs.
CS(OS)No. 1144/2001 Page 36 of 38
Issue No. 14
20. The plaintiffs have not laid any evidence to prove
the actual damages, if any, suffered by them on account of
use of the trademark "KE" logo by the defendants. No
arguments on the issue of damages were advanced by the
parties. In the facts and circumstances of the case,
including that since the plaintiffs could not have
manufactured the 9 products which defendant No. 2 was
permitted to manufacture and defendant No. 2 could not
have manufactured any product, other than those identified
in the compromise filed before the Madras High Court, I do
not deem it appropriate to award any damages to the
plaintiffs.
The issue is decided accordingly.
Issue No. 16
21. In view of my finding on the other issues, the
plaintiffs are entitled to grant of permanent injunction
against use of the trademark "KE" logo by defendant No.2
either on its stationery etc. or on the products
manufactured by it. The plaintiffs are not entitled to any
relief against defendant No.1, who is only a director of
CS(OS)No. 1144/2001 Page 37 of 38
defendant No.2 company.
ORDER
A decree for perpetual injunction is hereby passed in favour of the plaintiffs and against defendant No.2 restraining the defendant No.2 from using the trademark "KE" logo either on its stationery such as brochures, letterheads, invoices, visiting cards etc. or on the products manufactured and/or sold by it in India. Defendant No.2 is also restrained from representing that it is the proprietor of the trademark "KE" logo. The facts and circumstances of the case do not warrant any order as to costs against defendant No. 2. The suit against defendant No.1 is dismissed with no order as to costs.
Decree sheet be drawn accordingly.
(V.K. JAIN) JUDGE JULY 18, 2011 vn/bg CS(OS)No. 1144/2001 Page 38 of 38