The importance of thorough diligence before filing: DELHI HC MODIFies EX-PARTE ORDER FOR PLAINTIFF’S NON-USE OF THE TRADE MARK

Adheesh Nargolkar, Partner, Khaitan & Co

Shwetank Tripathi, Senior Associate, Khaitan & Co

Bhavik Shukla, Associate, Khaitan & Co

In the matter of Mittal Electronics v Sujata Home Appliances Private Limited & Ors, (Ref: CS(COMM) 60/2020 (Suit)), the Learned Single Judge of the Delhi High Court (Court) has passed an order dated 9 September 2020 (Decision) partially vacating the ex-parte ad-interim injunction granted to the Plaintiff (defined hereinafter) due to its non-use of the Trade Mark (defined hereinafter) in respect of the Defendants’ goods (defined hereinafter) and suppression of material facts.

Factual Background

In February 2020, Mittal Electronics (Plaintiff), claiming to be the adopter since 1980 and registered proprietor of the trade mark ‘SUJATA’ (Trade Mark) in various classes, including in class 11, instituted the Suit against Sujata Home Appliances Private Limited & Ors (Defendants) for infringement and passing off due to the Defendants’ use of the Trade Mark and the mark ‘STAR SUJATA’ in respect of various home appliances such as geysers, water purifiers, RO systems, etc. The Plaintiff claimed in the Suit that it came to know of the Defendant’s use of the Trade Mark recently in respect of geysers.

On 7 February 2020, the Court passed an ex-parte ad-interim injunction (ex-parte order) restraining the Defendants from using the Trade Mark in respect of various goods, including water purifiers, water filters and RO systems (Defendants’ goods). Subsequently, Sujata Home Appliances Private Limited (Defendant No 1), filed an application under Order 39 Rule 4 of the Code of Civil Procedure 1908 (CPC) for limited modification of the ex-parte order allowing it to use the Trade Mark in respect of the Defendants’ goods.

Rival contentions

Defendant No 1 inter alia contended that (i) one of its directors viz Rajesh Kumar Bansal (Director) trading as Luxmi Enterprises adopted the said Trade Mark in April 2008 and was a registered proprietor of the same in respect of Defendants’ goods w.e.f. 2012; (ii) In 2017, the Director licensed the said Trade Mark to Defendant No 1; (iii) the Plaintiff had obtained registration of the Trade Mark under class 11 for wider goods but never used it in respect of the Defendants’ goods; (iv) the Plaintiff suppressed material facts that the Director was the prior registered proprietor of the Trade Mark, and this fact was known to the Plaintiff by way of opposition proceedings between the parties.

The Plaintiff objected to the above and inter alia contended that (i) it had been using the Trade Mark since 1980 and was granted registration in 1991; (ii) Defendants’ goods were allied and cognate to the goods sold by the Plaintiff; and (iii) the relationship between Director and Defendant No 1 was not ascertainable by due diligence, therefore, the Plaintiff had not suppressed any material fact.

Findings and Decision

The Court observed that the Plaintiff was aware of the registration of the Trade Mark in favour of the said Director, as the Director had initiated opposition proceedings against the Plaintiff’s application for the Trade Mark in class 11. Further, the Court observed that the Plaintiff could have ascertained the connection between the Director and Defendant No 1 by ordinary diligence of the records of Registrar of Companies. The Court observed that the Plaintiff concealed the above facts in the plaint.

Further, the Court observed that though the plaint was filed against use of the Trade Mark by the Defendants for ‘geyser’, the injunction was sought for various products, including the Defendants’ goods. The Court observed that while the Director and Defendant No 1 were prior users and registered proprietors of the Trade Mark in respect of the Defendants’ goods, the Plaintiff has not used the Trade Mark in respect of the Defendants’ goods. The Court relied upon the landmark judgment of the Supreme Court of India in Nandhini Deluxe v Karnataka Co-operative Milk Producers Federation Ltd, 2018 (9) SCC 183 (Nandhini Judgment) to observe that a proprietor of a trade mark cannot enjoy monopoly over the entire class of goods, particularly when he is not using the same in respect of certain goods falling under the class.

Accordingly, the Court modified the ex-parte order allowing the Defendants to use the Trade Mark in respect of the Defendants’ goods. The Plaintiff has preferred an appeal against the Decision before the Division Bench of the Court which is currently pending.

Comment

The Decision once again reiterates the principle of law enunciated by the Supreme Court in its landmark Nandhini Judgment that a proprietor of a trade mark cannot enjoy monopoly over the entire class of goods, when the mark is not being used for certain goods falling in the class. Further, the Decision yet again underlines the importance of conducting thorough due diligence against a defendant and candid disclosure of relevant facts.

 


The views of the author(s) in this article are personal and do not constitute legal / professional advice of Khaitan & Co. For any further queries or follow up please contact us at editors@khaitanco.com.


Photo Credits: Photo by Sarang Sena/The The India Today Group

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