P.S. Narayana, J.
1. Heard the Counsel for appellant Sri M.S. Ramchander Rao and the Counsel for respondent Sri T.S. Anand.
2. The main Civil Miscellaneous Appeal itself is taken up for hearing with the consent of both the Counsel in view of the fact that the application for temporary injunction was opposed by the respondent/ defendant by lodging a caveat and entering appearance. Both the Counsel had addressed elaborate arguments putting forth their respective contentions.
3. The dispute is in relation to a trade mark 'Double Kamal' [Double Lotus]. The unsuccessful petitioner/plaintiff in IA No. 283/ 2002 in OS No. 11/2002 on the file of the District Judge, East Godavari at Rajahmundry is the appellant and the respondent/defendant in the said application is the respondent in the present Appeal. The appellant filed OS No. 11/2002 on the file of District Judge, East Godavari, at Rajahmundry for the relief of permanent injunction restraining the respondent/defendant from using the plaintiffs trade mark Double Kamal [Double Lotus] or carrying its business with the said mark and for other appropriate reliefs.
4. The case of the appellant in nutshell is that the appellant is a registered firm having its business office at Ambajipet, East Godavari District and doing business in gunnies, twine, coconuts (both dry and water) and other products and the appellant-firm commenced its business originally in the year 1990 and in the year 1992, the firm consisted of four partners. The said firm carried on its business since the year 1990 and due to hard work the firm acquired considerable goodwill in the business circles throughout India and the main business of the appellant firm is sale of dry and water coconuts and copra and such business is carried on by the appellant with the trade mark Double Kamal [Double Lotus] and this trade mark is having high recognition and reputation in the customers throughout India, especially in Madhya Pradesh, Rajasthan, Maharashtra and Andhra Pradesh. The appellant-firm also supplies the above commodities to wholesalers in various places in the aforesaid States and other States in India who in turn sell the same to their retail customers who recognize and identify the commodities supplied by the appellant with the help of the trade mark Double Kamal [Double Lotus] and most of the customers of these commodities in the States referred to supra are below average intellectual community and hence they are able to identify the appellant's commodities mainly with the help of the trade mark above referred to. It is further stated that one of the partners retired from the firm with effect from 30-9-1994 and the remaining partners including the managing partner of the appellant-firm and the respondent/ defendant continued to run the business by taking over the assets and liabilities under apartnership deed dated 1-10-1994. Subsequent thereto, the respondent/defendant Sri G. Viswanadham also retired from the appellant firm with effect from 31-12-2000 and the present managing partner of the appellant and another partner Gokavarapu Venkataratnam continued as partners of the appellant-firm by taking over the assets and liabilities, goodwill, trade mark and also trade mark of the firm and continuing with the said business as such. It is also the further case of the appellant that immediately after retiring the respondent/defendant also informed the tax authorities under letter dated 1-1-2001 about his retirement from the firm and also about the fact that he has nothing to do with the firm, its assets and liabilities etc. Subsequent thereto, the firm was reconstituted under a fresh partnership deed dated 1-1-2001 and the appellant-firm has been continuing the same business under the same trade name and the same trade mark. Further, a specific stand was taken by the appellant that the amounts payable to the respondent/ defendant were also paid in full settlement of the claim made by him after his retirement from the firm and the same was acknowledged by him not only in the day-to-day accounts maintained by the appellant-firm, but also by way of letter dated 9-7-2001 given by him to the appellant firm acknowledging therein about the full satisfaction of his claim and also about the fact that he is no concern with the assets, liabilities, goodwill, trade mark and trade name of the appellant firm. It is further stated that the respondent, in the month of December 2001, commenced a proprietary concern under the name and style of 'Kamal Traders' in the same village Ambajipet and while so doing with a deceitful intention, the respondent had started using the trade name Double Kamal to the commodities in which he is dealing and it is also stated that the respondent also had started a business in the same commodities in which the appellant-firm has been doing business sincethe year 1990 and by using the identical trade mark of the appellant-the respondent is resorting to passing off action and he is passing off the goods like coconuts, both dry and water, copra and other commodities as if they are the commodities of the appellant's firm. The customers are not so intelligent enough to distinguish between the commodities supplied by the appellant-firm and the commodities supplied by the respondent and thus the respondent has resorted to the passing off action and has been causing immense loss to the business of the appellant. The appellant also got a publication made in newspapers on 11-9-2001 about the usage of the trade mark and the appellant also submitted an application for registration of his trade mark before the Registrar of Trade Marks, Madras and the authorities issued additional representation dated 27-1-1997 acknowledging about the same. In the meanwhile, the respondent had lodged a caveat on the file of Principal Junior Civil Judge, Amalapuram against the partners of the appellant-firm. In the light of. the facts and circumstances referred to supra, the appellant filed an application for temporary injunction which was ultimately dismissed by the learned District Judge, East Godavari at Rajahmundry by an order dated 1-8-2002 and aggrieved by the same, the present appeal is preferred.
5. The respondent filed a lengthy counter opposing the application narrating several of the details which may not be essential. But, in substance, the stand taken by the respondent can be summarized as hereunder.
6. The respondent joined as Clerk in the 1976 in the firm M/s. Y.S. Prakasa Rao and Sons and gained much experience in dealing with wholesale and retail business in dry and water coconuts. The said firm is sister concern of the plaintiff. So, in the year 1982, the respondent was taken as apartner in the firm giving him Rs. 0.13 paise share. Later, M/s. Prakash Traders was dissolved in the year 1988. On account ofthe respondent's rich experience in the field he was taken as a partner in the plaintiffs firm M/s. Shiva Ramakrishna Traders, Ambajipeta. The firm was registered in the year 1991. A share of Rs. 0-25 paise was fixed. The respondent used to be paid Rs. 600/- per month extra for his services and experience. The respondent had suggested to use 'Double Lotus' as a trade mark and 'Two Lions' was used as a trade mark of M/s. Prakash Traders. Subsequently, in the year 1992 there was some change in the terms and conditions of the firm in view of the amendment of the Income Tax Act and the respondent's remuneration was fixed at Rs. 2,500/- and for others at Rs. 2,000/- per month. A partner Gokavarapu Nageswararao retired from the appellant's firm with effect from 30-9-1994 and so the firm was reconstituted with three partners. The trade mark was not at all registered. Thereafter, misunderstandings arose between the partners. So, the respondent ceased to take interest in the business with effect from 31-12-2000 and the other two partners carried on the business. No deed of dissolution of partnership was drawn and so also no accounts were settled. No intimation was sent to the Registrar of Firms that the respondent ceased to be a partner of the appellant's firm. Whenever a new firm was formed under a fresh partnership deed, the same should be registered with the Registrar of Firms as required under Section 69(2) of the Indian Partnership Act. Till this date the accounts were not settled and no payments were made to this respondent. The respondent had began its own business with effect from 1-12-2001 with the name and style of 'Kamal Traders'. The respondent is also a partner in both M/s. G.V.S. Industries and M/s. Shivaramakrishna Traders and there were inter-dealings between these firms. Some adjustment entries used to be made inthe account books of M/s. Sivaramakrishna Traders relating to the amounts due or payable from M/s. G.V.S. Industries and in that connection, the respondent's signatures were taken in the account books. The respondent had applied to Sales Tax Department for issuance of licence for his business in the name of M/s. Kamal Traders and in the said application Gokavarapu Venkata Shiva Suryanarayana Murthy, signed on behalf of M/s. Shivaramakrishna Traders and Gokavarapu Suranna representing G.V.R. Traders signed as witnesses. As Shivaramakrishna Traders was not duly dissolved by the deed of dissolution and since no agreement was entered into between the respondent and other members regarding goodwill or for using 'Double Lotus' as trade mark, the appellant's firm cannot exclusively claim any right over the use of trade mark and designs. There was no contract that the respondent should not carry on the same business much less from using 'Double Lotus'. As long as final settlements of account was done, the respondent is entitled for his due share in the profits of the appellant's firm. The appellant had fabricated two documents to buttress false claim i.e., letter dated 1-1-2001, said to be written by the respondent to the Sales Tax Officer, and another letter dated 9-7-2001 said to have been executed by the respondent to the erstwhile firm and the said documents are denied. In the usual business, there is a practice of signing on blank letter heads whether individually or together. The appellant had utilised such blank papers available with letter heads. When there is no dissolution, there was no necessity for the respondent to inform the Sales Tax Officer. It is clear from the circumstances that the documents are fabricated by the appellant. The alleged payment of Rs. 56,078-34 ps. is totally a false one. In the absence of any written stamped receipt or an agreement as to the frill and final settlement of accounts on dissolution, it is clear that the documents arebrought up. A publication should have made in the local papers about the retirement of the respondent. There cannot be any restriction on the respondent in carrying on the business by using the trade mark as 'Double Mark' (sic Double Kamal). As 'Double Lotus' is not registered with the Registrar of Trade Marks, the appellant cannot claim infringement of the alleged right and the appellant is not entitled to seek injunction.
7. Sri Ramachander Rao, the learned Counsel representing the appellant had taken me through the documentary evidence, Exs.A1 to A14 and had submitted that though several facts are not in dispute and a strong prima facie case was established and balance of convenience is in favour of the appellant, if temporary injunction as prayed for is not granted, the appellant will be put to irreparable loss. The learned District Judge had erroneously negatived the relief of temporary injunction just making certain observations doubting the documents marked on behalf of the appellant without any substantial reason. The learned Counsel also had taken me through the different provisions of the Indian Partnership Act, 1932 and had also submitted that even as per the admission made in the Caveat lodged by the respondent before the Principal Junior Civil Judge, Amalapuram, it is clear that the respondent has nothing to do with the appellant-firm. The learned Counsel also pointed out that the learned District Judge had not appreciated -the different provisions of the Indian Partnership Act, 1932 in proper perspective. It was further contended that the dispute relating to 'Double Kamal' involved in the present case, in the facts and circumstances of the case, is not a dispute between the partners, but a dispute between two different business concerns. The learned Counsel also pointed out that the prior user of the Double Kamal [Double Lotus] by the appellant-firm is not in dispute at all and the learned Counsel also hadpointed out the peculiar stand now taken by the respondent that since the procedural formalities under the Indian Partnership Act, 1932 had not been followed, the respondent is having a right to use the same trade mark of the appellant-firm. The learned Counsel also had pointed out to the very object of constituting a partnership, the concept of partnership, the concept of dissolution, the concept of retirement and also had specifically drawn my attention to Sections 9, 32 and 36 of the Indian Partnership Act, 1932, hereinafter referred to as 'Act' for the purpose of convenience. The learned Counsel also had submitted that in the facts and circumstances of the case directing the respondent to maintain accounts during the pendnecy of the suit may not be advisable and desirable and in view of the fact that the appellant had made out a strong prima facie case and balance of convenience and irreparable loss being in favour of the appellant only, temporary injunction as prayed for has to be granted. The learned Counsel also had drawn my attention to Sham Lal v. Interads Advertising (P) Limited, : AIR1978Delhi270 , Laxmikant V. Patel v. Chetanbhai Shah and Anr., : AIR2002SC275 , Mahendra and Mahendra Paper Mills Limited v. Mahindra and Mahindra Limited, : AIR2002SC117 , Vedachela v. Rangaraju, : [1960]39ITR308(Mad) .
8. Per contra, the learned Counsel representing the respondent/defendant Sri T.S. Anand, with all vehemence had submitted that the learned District Judge had recorded convincing reasons at paragraphs 5 to 11 of the order questioned in the present Appeal and the reasons recorded are convincing reasons and hence while deciding an application for grant of temporary injunction, such convincing reasons recorded by the learned trial Judge are to be given due weight and in view of the same, the Appeal is liable to be dismissed. The learned Counsel also had taken me meticulously through thestand taken by the respondent in the elaborate counter filed by him and had explained that in the light of the same, the validity or otherwise of Exs.A4 and A5 and also Exs.A11 to A14 may have to be gone into at the time of the trial and the same cannot be decided at this stage. The learned Counsel further maintained that prima facie, the stand taken by the respondent relating to the obtaining of signatures on blank papers may have to be accepted for the purpose of deciding prima facie case. The learned Counsel also submitted that at no point of time general notice was issued and prudent person would retire without complying with the procedural formalities under the Act. The learned Counsel also pointed out that Ex.A4 is a suspicious document and even otherwise in view of the facts and circumstances of the case, it cannot be said that the respondent had retired as a partner of the appellant-firm in the absence of clear proof relating to the settlements of account and dissolution of partnership. The learned Counsel also pointed out Exs.B1 and B2 and had contended that one of the partners of the appellant-firm had attested Exs. B1 and B2, being aware of the fact that the respondent had started the same business under the name and style of 'Kamal Traders' having 'Double Kamal' as the trade mark. No doubt, the learned Counsel elaborately argued relating to the ingredients to be satisfied in the case of passing off action and had placed reliance on Cadila Health Care Limited v. Cadila Pharmaceuticals Limited, : [2001]2SCR743 . The learned Counsel also while concluding his submissions had pointed out that this trade mark forms part and parcel of the assets of the partnership and in the absence of clear proof, the respondent who is a partner cannot be restrained by means of a temporary injunction from using such trade mark and in such a case, the only direction that can be issued is that the respondent also should maintain accounts relating to this business during thependency of the suit. Reliance was placed on Sohanlal v. Amin Chand and Sons, : [1974]1SCR453 , in this regard.
9. Heard both the Counsel at length. As already specified supra, the appellant is the unsuccessful petitioner/plaintiff in IA No. 283/2002 in OS No. 11/2002 on the file of the District Judge, East Godavari at Rajhamundry and the said application was filed for temporary injunction restraining the respondent, its men, agents from using or carrying on its business with the appellant's trade mark Double Kamal [Doubt Lotus] on their products pending disposal of the suit. Several of the facts are not in dispute. The respondent also was a partner in the appellant-firm, also is not in dispute. The controversial question between the parties is that the appellant claiming that the respondent is a retired partner and has nothing to do with the appellant partnership firm and on the contrary, the respondent taking a stand that there was neither dissolution nor retirement in accordance with the provisions of the Act and hence in the eye of law, it can be deemed that the respondent continues to be a partner of the appellant-firm and hence the respondent also is entitled to use the same trade mark which is the asset of the appellant-firm. The prior user of the 'Double Kamal' or 'Double Lotus' by the appellant firm also is not in dispute. The respondent claiming to be a partner who had subsequent thereto commenced a rival business in the same field, now takes a stand that he is entitled to use the same Double Kamal [Double Lotus] while transacting his business too. Ex.A7 is the Caveat lodged by the respondent against the partners of the appellant-firm in the Court of the Principal Junior Civil Judge, Amalapuram. The fact that the Caveat had been lodged is not in dispute, but no doubt an explaiation had been given that the word 'dissolved' had been used in a liberal sense. It may be relevant to have a look at the contents of the said Caveat:
'The petitioner and respondents 1 and 2 carried on business with the firm name 'Siva Ramakrishna Traders'. It was a Registered firm and they all entered into a partnership deed dated 1-10-1994. But since some time past the petitioner discontinued in the firm and he is doing business since 1-12-2001 with the name 'Kamal Traders'. The original firm though dissolved the goodwill of the firm, the trade mark of the firm were kept intact as all the partners in 'Siva Ramakrishna Traders' firm and all of the them are entitled to use the trade mark of the firm. The trade mark of the firm is 'Double Kamal'.
The petitioner as well as the respondents are carrying on their individual businesses and both are using the trade mark 'Double Kamal' without any objections from any side. The respondents are threatening to file a suit against the petitioner and proclaiming that they will obtain some interim orders against the petitioner in respect of his business and also in using the 'Double Kamal' trade mark by the petitioner. If any interim orders are given without hearing the petitioner, the petitioner will sustain serious loss. Hence this caveat has been filed.'
Thus, it was specifically admitted in the Caveat that since sometime past the respondent discontinued in the firm and he is doing business since 1-12-2001 with the name 'Kamal Traders' and the original firm though dissolved the goodwill of the firm, the trade mark of the firm were kept intact as all the partners in 'Sivaramakrishna Traders' are entitled to use the trade mark of the firm. Apart from Ex.A7, Exs.A4 and A5 also in a way establish the stand taken by the appellant. Apart from this, the katha entries -Exs.A11 to A14, also lend support to the stand taken by the appellant. However, submissions were made with all emphasis that all these are manipulated documents and reliance cannot be placed on these documents and these are all suspicious documents and hence the validity or otherwise of these documents can be decided only at the time of trial and not whiledeciding an application for grant of temporary injunction. I am not inclined to accept with the reasoning adopted by the learned District Judge in this regard for the reason that apart from the admissions made in the Caveat - Ex.A7, the katha entries in the account books - Exs. A11 to A14, and also the intimation to the tax authorities relating to the retirement - Ex.A4, coupled with Ex.A5, definitely point out a strong prima facie case in favour of the appellant for the grant of temporary injunction for the reasons which are further elaborated infra.
10. Here is a case where for certain reasons, the respondent - one of the partners of the appellant firm, had decided to go out of the firm and in fact had intimated the same to the tax authorities and had also settled the accounts, as can be revealed from the katha entries. These documents are no doubt disputed, but for the purpose of deciding an application for temporary injunction and for establishment of the prima facie case, documentary evidence referred to supra, coupled with admission made by the respondent in the Caveat lodged, definitely will be sufficient to arrive at a conclusion that the respondent had left the appellant-firm. This leads us to the next question whether all the rights and liabilities of the respondent in the appellant-firm came to an end or any other rights relating to the settlement of accounts or otherwise, are to be worked out in accordance with the provisions of the Act. No doubt, this is a question which may have to be decided while deciding the main suit for the relief of permanent injunction. Be that as it may, it may be relevant to look at certain of the provisions of the Act for the purpose of better appreciation of the facts of the case. Section 9 of the Act dealing with general duties of partners specifically says that partners are bound to carry on the business of the firm to the greatest common advantage, to be just and faithful to each other, and to render true accounts and fullinformation of all things affecting the firm to any partner or his legal representative. Sub-section (1) of Section 32 of the Act specifies that a partner may retire--
(1) with the consent of all the other partners,
(2) in accordance with an express agreement by the partners, or
(3) where the partnership is at will, by giving notice in writing to all the other partners of his intention to retire.
Section 36 of the Act deals with rights of outgoing partner to carry on the business and the said provisions reads as hereunder:
(1) An outgoing partner may carry on a business competing with that of the firm and he may advertise such business, but, subject, to contract to the contrary, he may not--
(a) use the firm name,
(b) represent himself as carrying on the business of the firm, or
(c) solicit the custom of persons who were dealing with the firm before he ceased to be a partner.
Agreement in restraint of trade.
(2) A partner may make an agreement with his partners that on ceasing to be a partner he will not carry on any business similar to that of the firm within a specified period or within specified local limits; and, notwithstanding anything contained in Section 27 of the Indian Contract Act, 1872, such agreement shall be valid if the restrictions imposed are reasonable.'
The appellant definitely is not aggrieved by the respondent carrying on a competing business. But the grievance of the appellant is that the trade mark Double Kamal [Double Lotus] of the appellant-firm cannot be used for the purpose of transacting such business. In Hookham v. Pottage, (1872) 8 Ch.App.91, it was held that a trader who has been a manager or a partner in the firm ofestablished reputation has a right on setting up an independent business to make known to the public that he has been with the firm, but he must take care not to do so in a way calculated to lead the public to believe that he is carrying on the business of the old firm or he is in any way connected with it. In Churton v. Douglas, (1859) John 174, where the firm was named after the name of the retired partner, even in such a case, the retiring partner is not at liberty to set up a precisely similar business under the same name. In Banks v. Gibson, (1865) 34 BEAV 566, it was held that the name and style of a firm constitutes part of its assets and the name symbolizes goodwill. In David v. Mathews, (1899) 1 Ch. 378, it was held that a retiring partner does not have a right to use the name of the firm though he has a right to carry on a similar or a rival business, but he can be restrained from carrying on the rival business in the name of the partnership firm so as to create a belief that he was carrying on the partnership business or so as, through the use of the same name, to appropriate himself the benefits of the goodwill of that business.
11. I am conscious of the fact in the present case, we are concerned with the using of a trade mark which is intimately connected with goodwill of the firm and also the assets of the firm. In the decision referred in Sham Lal's case (supra), where the plaintiff was able to establish the prior use of trade mark in the facts and circumstances even in the case of an unregistered trade mark the balance of convenience was held to be in favour of the plaintiff and temporary injunction was granted. For the requirements to be established for granting the temporary injunction in passing off action, reliance was placed on the decisions in Laxmikant's case, Mahendra's case and Cadila's case referred supra.
12. This is not a case of deceptive similarity. Here is a case where there is nodispute that the trade mark Double Kamal [Double Lotus] of the appellant-firm is being used even by the respondent on the ground that he continues to be a partner since his being partner was not put an end to in accordance with the provisions of the Act. I had already discussed how this contention for the purpose of deciding prima facie case cannot be accepted in the light of the overwhelming documentary evidence established in the light of the admission made in the Caveat. In the decision referred in Vedachela's case (supra), the distinction between the retirement of a partner and the dissolution of the firm had been pointed out. In the decision referred in Sohanlal's case (supra), it was held that in the case of dissolution of firm, when the trade mark forms part of the assets, the Court will not be justified in granting an injunction restraining the legal representatives of one of the partners from using the trade mark. Placing strong reliance on this decision, the learned Counsel for the respondent made a serious attempt to convince the Court that the respondent is prepared to maintain the accounts during the pendnecy of the suit and hence in view of the same, temporary injunction as prayed for need not be issued. In Ralli v. Fleming, (1877-78) ILR 3 Cal 417 at 427, it was held:
'In this particular case, I do not think that their keeping an account of sales would be a sufficient protection to the plaintiffs, because if the defendants were allowed to use these marks in the market for several months in order to sell their cloth, they would become as well known in the market as importers and sellers of the cloth as the plaintiffs; and so the very mischief which the injunction is intended to guard against would have been effected.'
On the overall glance of all the facts and circumstances of the case, inasmuch as prima facie it had been established that the respondent, having gone out of the firm, is trying to utilise the goodwill of the firm byusing the self-same trade mark which will definitely seriously prejudice and hamper the business of the appellant-firm since undisputedly the trade mark Double Kamal [Double Lotus] forms part and parcel of the assets of the appellant-firm. It is not as though the respondent is left with no remedy. But, for the reasons best known, for sufficiently a long time till now, the respondent had not initiated any action on the ground that the firm has to be dissolved in accordance with law or the accounts are to be settled in accordance with the provisions of the Act. I am not inclined to comment any further on this aspect of the matter, suffice for me to say that in the present case, since the appellant not only had established a strong prima facie case and balance of convenience and inasmuch as if temporary injunction is not granted the appellant-firm will be definitely put to irreparable loss and inasmuch as the respondent also will be using the same symbol to the total detriment of the business prospects of the appellant-firm, I am thoroughly 'satisfied that the appellant/ plaintiff definitely has been able to satisfy the ingredients essential for the grant of temporary injunction as prayed for in the application referred to supra. Hence, the appellant is bound to succeed and accordingly temporary injunction is granted as prayed for in IA No. 283/2002 in OS No. 11/2002 till disposal of the suit OS No. 11/2002 on the file of District Judge, East Godavari at Rajahmundry.
13. Accordingly, the Civil Miscellaneous Appeal is allowed, with costs throughout.