Sanjay Kishan Kaul, J.
1. 'LAXMAN REKHA' my theologically is the boundary which should never have been crossed. The present dispute arises from the grievance of the respondent against the appellants for having transgressed the boundary by using LAXMAN REKHA trademark for their product over which the respondents claim exclusive rights.
2. The respondent filed a suit for perpetual injunction, infringement of copyright, passing off and delivery up etc. in respect of the trademark LAXMAN REKHA. It was stated in the plaint that in the year 1988 the predecessor-in-title of the respondent originally conceived and adopted trade marks KRAZY LINES and LAXMAN REKHA in respect of insecticides and pesticides preparation and, thereafter, commercial artists were engaged for developing the distinctive label consisting of these two brand names in a special and particular manner. It was further alleged in the plaint that there had been continuous and uninterrupted use of these two trademarks in respect of insecticide and pesticide preparations till the trademarks were assigned in favor of the respondent company in pursuance to an assignment deed dated 1.4.97 executed by m/s. Midas Marketing House - a proprietorship firm of Mr. Swadesh Kumar Kapoor with the respondent company represented by Mr. Swadesh Kumar Kapoor as the Managing Director. Extensive sales and promotional activities in respect of these two trademarks were claimed by the respondent and thus it was claimed that customers from all parts of the country associated and identified these two trademarks with the product of the respondent. It was further stated in the plaint that the respondent is the registered proprietor of the trademark LAXMAN REKHA as on 18.2.91 in class V in respect of ayurvedic medicinal preparations and the packing material of both the marks is registered under the Copyright Act in 1991. It is further stated that some changes were made in the artistic work/label of LAXMAN REKHA which is now registered under the Copyright Act in 1999.
3. The respondent gave the sales figures for different areas from 1990-91 to 1997-98 in terms whereof the sales rose from about Rs. 11 lacs to more than Rs. 27 lacs. Sales promotional expenses were also given for these years to promote the product which though for the initial years was not much yet the same rose from 1995-96 when it was bout Rs. 1.18 lacs to approximately Rs. 5.29 lacs in 1997-98. it is relevant to state that prior to this, sales promotional expenses were in the range of about Rs. 10,000/- with the exception of 1991-92 when it was almost Rs. 1 lac.
4. Appellant no. 1 was stated to be proprietor of appellant no. 2 and appellant no. 3 was stated to be the sole distributor marketing products manufactured by appellant no. 1 bearing the trademark LAXMAN REKHA/MAGIC LAXMAN REKHA with deceptively similar get up, lay out and combination of colours as used by the respondent. it was also stated that parties were closely related inasmuch as appellant no. 1 is the son of real sister of mr. Swadesh Kumar Kapoor and is stated to have come Bombay in the year 1984 and thereafter since 1985 worked with the respondent.
5. The genus of the dispute appears to be the separation of appellant no. 1 from respondent in the year 1990, when it was claimed that appellant no. 1 started manufacturing identical products and also tried to copy the brand name of the respondent. It was further stated that inspect repellent chalks under the trademarks was the result of business ingenuity of the respondent and the trademark KRAZY LINES is duly registered as a trademark. Application for registration of trademark LAXMAN REKHA was advertised on 16.19.98 but has been opposed by appellants no. 1 and 2 and is thus pending registration.
6. The first legal action arising from the dispute among the parties was apparently taken on 28.2.92 when a legal notice was served on the appellants by the respondents objecting to the making of chalks identical to that of the respondent by the appellants bearing the two trademarks. The respondent by the said legal notice asked the appellants to desist from trading under the said trademarks and to disclose the addresses of its clients and of the material etc. This legal notice was replied by the appellants and sent through their counsel on 14.3.92 refusing to accept the contention of the respondent. The similarity of the labels was disputed and it was claimed that the product of the respondent was only a herbal product. Thereafter there was apparently silence from both sides for some time.
7. In 1994 an FIR was filed against appellants 1 and 2 for duplication of products and it is stated in the plaint that the Manager of the said appellants was caught red-handed and the duplicate goods were seized. Subsequently appellant no. 1 was charged for commission of offences under section 120, 465 and 489 of the Indian Penal Code, which case is stated to be still pending. It is further stated in the plaint that in the year 1994 the family members intervened to pressurise mr. S.S. Kapoor to settle the matter in view of the close relationship between the parties and an agreement was drawn up whereby both parties agreed not to sue the names ORIGINAL LAXMAN REKHA, MAGIC LAXMAN REKHA or LAXMAN REKHAA after 30.6.1994 and would exhaust the stocks by that time. This agreement was executed on 7.3.94. However, both the parties did not abide by the said agreement and continued to use the trademark LAXMAN REKHA even after 30.6.94. In fact is it stated in the plaint that appellant no. 1 and 2 became very aggressive in the alleged violation by giving caution notices to the public. It is further claimed that not only was the trademark LAXMAN REKHA used but even packing material was copied by appellants 1 and 2 since the respondent had earlier used a pack of triangle shape and subsequently changed it to similar logo of back flap.
8. The grievance of using trademark LAXMAN REKHA identical to that of the respondent is made as also of infringement of the pacing design which is claimed to be amounting to fraud and causing confusion. it was further stated in the plaint that goods were falling in the same class and identical and there was cause for confusion and deception resulting in losses to the respondent.
9. Relevant fact which must be stated is that the cause of action has been set out in para 21 of the plaint and is stated to have arisen in the year 1994 when the premises of the appellants were raided by the police.
10. the suit was contested by the appellants by filing an affidavit in reply. One of the major claims made in the said affidavit was that the respondent had intentionally and with malafide intention stated their year of commencement of business as 1988 since they were aware that the appellants were in fact using the word MAGIC LAXMAN REKHA since 1989. The appellant claimed to be manufacturing under a license issued by Collector/Licensing Authority, DNH(UT) and Insecticides Act, 1968 and in pursuance to the permission to sell the said product in the State of Maharashtra by the Director, Inputs and Quality Control, Commissionerate of Agriculture, Maharashtra State, Pune. It was also stated that number of parties were manufacturing such chalks without permission from the competent authorities and the same being highly poisonous could have serious consequences. These facts are also stated to have been averred in the writ petition no. 4339/99 filed in the Bombay High Court by the appellants. it is also stated in the affidavit that subsequently petition was filed as a public interest litigation on 14.7.99 in pursuance to the order passed by Bombay High Court on 10.9.99 in the previous petition and it is alleged that the suit was filed as counter blast by the respondent. It is claimed that the respondent did not have any such license by the competent authorities till 1999.
11. An important aspect set out in the affidavit is that the appellants have been trying to stop the alleged illegal misuse of spurious chalks resembling to trademark LAXMAN REKHA of the appellants by taking out various proceedings including notices, caution notices and legal proceedings. Details of these various caution notices have been set out in the affidavit and it certainly goes to show that there were number of legal proceedings initiated by the appellants against the trade name LAXMAN REKHA. Not only this it is claimed that LAXMAN REKHA was used only as a slogan by the respondent and after the letter through Advocate sent by the appellants dated 14.3.92 the said slogan was removed by the respondent from their packing. Not only this no further action was taken by the respondent. It is common case of the defendant that the settlement arrived at in 1994 was not acted upon and in fact the appellants have claimed that the respondent breached the agreement.
12. It was also stated that the deed of assignment dated 1.4.97 was only in respect of ayurvedic medicinal preparations and for insecticide. It is only in respect of label of KRAZY LINES and he also stated that there is a subsisting dispute between the parties for registration of the trademark LAXMAN REKHA. It is claimed that the respondent acted fraudulently, that though originally the claim was for ayurvedic medicinal preparations for insects in the name of LAXMAN REKHA in February, 1991 the application was fraudulently altered for manufacturing insecticides and pesticides and user claimed since 1988 by modification of the application in 1998 although in the original application for the respondent had claimed user only one year prior to 18.2.91.
12. The appellants have claimed prior user of the trademark since 1989 and also seek to rely on one of their legal notices sent to a sister concern of the respondent (admitted to be sister concern by the respondent) Spic and Span dated 15th July, 1993.
13. After hearing learned counsel for the parties the learned Single Judge vide impugned order dated 31.7.2000 came to the conclusion that a prima facie case for interim relief and injunction had been made out by the respondents and thus restrained the appellants from using trademark LAXMAN REKHA as well as packing designs similar in colour scheme and colour combination to that of the respondents copyright during the pendency of the suit. The injunction was to operate from 16.8.2001 as there was no earlier interim orders granted in favor of the respondent.
14. The order of the learned Single Judge is based on the following conclusion, as set out in the impugned order:-
'(i) The defendant admittedly worked with the plaintiff prior to launching its business;
(ii) The plaintiff's prior and prominent user of the phrase Laxman Rekha as a part of the description of crazy lines as shown by the documents, i.e., advertisements at least of 1991 produced by the plaintiff showing prominent user of the phrase Laxman Rekha.
(iii) The defendant's non-denial of plaintiff's assertions in the notice dated 28.2.92 to the effect that the plaintiff used the phrase 'Laxman Rekha' on its product;
(iv) The plaintiff's assertion of the ownership of copyright in the packaging containing the words 'Laxman Rekha';
(v) The defendant has not chosen to give an Explanationn why he adopted 'Magic Laxmanrekha';
(vi) The defendant's averments in suit No. 1967 of 1996 that the product Magic Laxman Rekha was used by it since 1992;
(vii) The defendant's statement in the application made to the Trade Mark Registry on 30.5.1996 for registration of trade mark 'Magic Laxman Rekha' claiming continuous user since 1992.'
15. The present appeal was filed by the appellants and the operation of the impugned order was stayed on 14.8.2001 which interim order has continued till now.
16. We have heard Mr. Harish Malhotra, learned counsel for the appellants and Mr. V.P. Singh, learned senior counsel for the respondent at length and have considered the submissions advanced and the decisions cited at the bar.
17. Learned counsel for the parties agreed that in the aforesaid 7 factors mentioned by the learned Single Judge for granting the interim relief, the year should be read as 1992 and not 1996 in sub-paras VI and VII. The learned counsel for the appellant also did not seriously contest the conclusion (i), (iv), (v), (vi) and (vii) arrived at by learned Single Judge but submitted that other important factors were not taken into account which had material bearing on the question of grant of interim relief. The learned counsel for the appellant also contested the finding in (ii) and (iii) paras, arrived at by the learned Single Judge.
18. Mr. Harish Malhotra, learned counsel for the appellants submitted that material fact which has to be appreciated is that insofar as trademark LAXMAN REKHA is concerned the claim of the respondent was not one of infringement of trademark since contested proceedings were pending between the parties in respect of the said trademark. The claim of the respondent was based on prior user which was seriously contested by the learned counsel for the appellant. It was urged by learned counsel for the appellant that the appellant had been using trademark since 1989. A question was to put by us to learned counsel to point out the documents to substantiate such use from 1989 onwards. The learned counsel did, on such query being raised, concede that though there were averments to this effect the material placed on record did not show user prior to 1992.
19. Learned counsel for the appellant drew our attention to the notice of respondent dated 28.2.92 and the reply on behalf of the appellants dated 14.3.92. In the reply the similarity of the packing is seriously disputed. An important aspect is the contention of the appellant in the said reply as also advanced by the learned counsel for the appellant before us that LAXMAN REKHA was used only as a slogan i.e., 'Drew a LAXMAN REKHA to your Cockroach Problem'. The learned counsel for the appellant referred to the packing of trademark KRAZY LINES to contend that LAXMAN REKHA was not used as a trademark but as an expression of drawing a boundary i.e., Draw a LAXMAN REKHA to the Cockroach/Lizar/Insect Problems. In fact the appellant's contention in 'the reply was that LAXMAN REKHA was a trademark of their clients while KRAZY LINES was the trademark of the respondent.
20. The learned counsel for the appellant also referred to the notice dated 16.7.93 addressed by appellant no.2 to the respondent referring to the product of one Spic and Span, Bombay claiming that the said Spic and Span seem to have a connection with the respondent and that the said appellant was aggrieved by the products of Spic and Span which was an attempt to pass off the said products of Spic and Span under original LAXMAN REKHA as the product of the appellant was clearly illegal. It is contended that the said product was thereafter withdrawn from the market by Spic and Span. It is not disputed before us by the learned senior counsel for the respondent that Spic and Span was in fact run by a close relation of the Managing Director of the respondent.
21. The learned counsel for the appellants referred to the affidavit filed in opposition to the plaint where there has been detailed recital of the large number of legal proceedings initiated by the appellants to protect their rights in the trademark LAXMAN REKHA apart from publicity and caution notice issued. It was further contended that in fact the appellants had obtained the reliefs of injunction against various parties. Thus it was contended that the appellants had been taking all steps to protect their rights in the trademark LAXMAN REKHA, though not registered as a mark in the name of the appellants, and these proceedings at least arise from the year 1996 apart from the earlier caution notices and legal notices.
22. Learned counsel for the appellant referred to the application filed for registration of trademark LAXMAN REKHA. Learned counsel pointed out that originally the application was for LAXMAN REKHA in respect of ayurvedic medicinal preparations for insects in the name of Swadesh Kumar Kapoor trading as Midas Marketing House claiming to be the proprietor of trademark by continuously using it since the last one year of the date of the application which was 18.2.91 and it was thus urged that using the claim by the respondent since 1988 is ex-facie false. This application was thereafter altered on 19.8.1998 as is apparent from the endorsement on the same whether the trademark is referred to as LAXMAN REKHAA i.e., an extra 'A' is added to REKHA. Further registration was modified in respect of insecticides and pesticides preparations, name of Swadesh Kumar Kapoor was deleted, trading name was referred to of the respondent and the address was consequently changed and further continuous use was claimed since 1988. There is no factual dispute about these modifications. A further application is available filed on 12.3.91 by Midas Marketing House for ayurvedic medicinal preparations for insects. Thus it was claimed that the respondent could not have claimed any rights prior to at least the deed of assignment dated 9.4.97 and in terms of the said deed the right which was transferred was only the ownership of the copyright of the original artistic work. The learned counsel also referred to a certificate issued by Mr. T.R. Subramaniam, Joint Director of Trademarks dated 5.8.98 to the appellants that on search being conducted no trademark identical or deceptively similar to that of the appellants have been found nor any application has been made under the Trade and Merchandise Marks Act, 1958 for registration by any other person of a deceptively similar mark. This was in respect of the carton of the appellants with the heading of MAGIC/ PREMIUM LAXMAN REKHA.
23. Mr. Malhotra, learned counsel for the appellants, referred to caution notice issued on 17.7.93 in Mid-Day to advance his submission that in the said caution notice itself the appellants had claimed rights in the trademark MAGIC LAXMAN REKHA since 1989 though he fairly stated, as recorded earlier, that apart from this no material for sales or other documents have been placed to substantiate the same. It could also not be disputed that in certain proceedings before the sale tax authorities a statement had been made on behalf of the appellants that for the period 1.4.90 to 31.3.92 no sales or purchase had been effected by the company and no business had been done by the said company during the said period as recorded in para 5 of the impugned order.
24. Learned counsel for the appellant referred to an application dated 23.4.99 by respondent company to the Registrar of Copyrights claiming title in the work 'Original LAXMAN REKHAA' where it was claimed that the user was in India since 1988. it was contended that along with this application packing filed was not the packing which was used since 1988 and this packing of the original LAXMAN REKHAA was introduced by the respondent much later. It is interesting to note that the same Joint Registrar of Trademarks T.R. Subramaniam has issued as certificate to the respondent dated 21.9.98 stating that no application for registration has been received or applied for deceptively similar to the artistic work or mark LAXMAN REKHA. The learned counsel for the appellant forcefully contended that the respondent was marketing its product only under the trademark KRAZY LINES and referred to a packing of the same for the year 1992 where admittedly only 'New KRAZY LINES' had been used and there is no mention of LAXMAN REKHA. It was contended that only after the reply of 14.3.92 sent by the counsel for the appellants that the respondent for the first time started using LAXMAN REKHA and that too really as a slogan. The learned counsel also referred to the various advertisements filed on record inter alias on 27.6.96 in Mid-day; Indian Express of 21.10.95; Samna of 6.10.93; Sanja Loksatta of 16.9.92 and some other advertisements to contend that LAXMAN REKHA was not a trademark used by the respondent. Learned counsel for the appellant stated that the sales figures of the appellants were available for the period 1992 onwards on the basis of the documents filed by the respondent itself.
25. Learned counsel thus contended that firstly they were the prior user of LAXMAN REKHA; secondly that while they were using the expression MAGIC LAXMAN REKHA or MAGIC REKHA/TM LAXMAN REKHA, the respondent was using the original LAXMAN REKHAA and thirdly the trademark registered and under which trading took place of the respondent was KRAZY LINES and the original LAXMAN REKHAA was a much later development. Thus the counsel contended that the parties had been trading under the trademarks and in fact the settlement arrived at between the parties dated 7.3.94 was given a go-by. The settlement was referred to show that both parties had agreed not to use LAXMAN REKHA but both continued to use the same. It was alleged that the appellants had built up considerable goodwill in the market and it was a malafide attempt on the part of the respondent to stop the business of the appellant under the trade name LAXMAN REKHA.
26. Learned counsel for the appellant referred to para 21 of the plaint which was the cause of action paragraph where according to own averment of the respondent the cause of action arose in the year 1994. The last cause of action was pleaded to arose in February, 1999. Thus it was contended that in any case it was not a case for grant of injunction as the respondent had approached the court after considerable delay and laches.
27. The learned counsel referred to the judgment of learned Single Judge of this court in Paras Traders vs. Rajasthan Copy Manufacturers Association 1996 (16) PTC 229 in support of his contention in respect of the plea of delays and laches. In the said judgment, the learned Single Judge dealt with the claim of infringement of copyright to hold where plaintiff is aware about the infringement and the suit is filed after delay of 5 years the plaintiff would not be entitled to interim relief of injunction. The learned counsel for the appellant contended that this was the exact position in the present case where as per the own averment of the respondent the cause of action had arisen in 1994 and the suit has been filed in 1999 and thus on account of delays and laches in any case the respondent was not entitled to any interim relief.
28. The learned counsel also relied upon the judgment of a Division Bench of this court in Gopal Krishan vs. M/s. Mex Switchgear (P) Ltd. & Anr 1993 (13) PTC 1 to advance his submission that the application filed by the respondent for registration of LAXMAN REKHA can only be treated as an application filed in 1998 and not in 1991 as the category of registration had been changed from ayurvedic medicinal preparations for insects to insecticides and pesticides preparations, user date has been changed and the name of the persons seeking registration had also been changed. The Division Bench of this court had held that where an application for registration of trademark was accepted in a particular class, an amendment of the application seeking change of the class, user and specification of goods could not be permitted. It was held that an amendment contemplated under section 22 of the Trade and Merchandise Marks Act cannot permit a change in the class of an application which is the substance of the matter as rule 26 of the Trade and Merchandise marks Rules, 1959 contemplates one application for one class. It was further held that similarly any mistake which may occur with regard to the date of the user may be permitted to be amended but within the same class and under no circumstances under the garb of amendment a new application can be filed under a different class. It may, however, be added here that the respondent though has made all the changes noted hereinbefore, the class of registration was still class (v).
29. Mr. V.P. Singh, learned senior counsel for the respondent supported the conclusion arrived at by the learned Single Judge and prayed for maintaining the order of the learned Single Judge.
30. Mr. V.P. Singh, learned senior counsel for the respondent referred to the contends of legal notice dated 28.2.92 and the factum of the FIR being filed by the respondent company in which the goods of the appellants were seized, details of which were set out are in para 14 of the plaint. Mr. Singh also referred to the statement of the Manager of appellant no. 2 given at the police station, Goregoan, Mumbai accepting that the brand names LAXMAN REKHA and KRAZY LINES as belonging to the company of Swadesh Kumar Kapoor and seeking pardon. Thus Mr. Singh contended that the conduct of the appellants was never bonafide. The learned senior counsel also referred to the common case of the parties at least to the extent that agreement dated 24.6.94 was never acted upon and submitted that since the appellants failed to stop the sue of the trademark, the case which were to be withdrawn by the respondent filed in the criminal courts in pursuance to the agreement dated 7.3.94 were also never withdrawn and are still pending. The learned senior counsel referred to the order passed by the learned Single Judge on 31.1.2001 with the consent of the parties whereby two weeks' time was granted to the appellants to file cogent and contemporaneous evidence to show user by the appellants prior to February, 1991. The learned senior counsel contended that no such documents were filed and further contended that no sales figures were available of the appellants for the period 1994-99. The learned senior counsel also submitted that no advertisement had really bene filed by the appellants to show user of the trademark LAXMAN REKHA even for period 1992 to 1996 and that the caution notice published in July, 1993 of the Mid-day was not an advertisement but only a caution notice. The learned senior counsel referred to the Trademark Journal dated 16.10.98 where the claim of the respondent of user since January, 1998 in pursuance to application filed on 18.2.91 in respect of the insecticides and pesticides preparation was published. Learned counsel also referred to the advertisement published in Indian Express on 19.5.91, Mid-day of 25.6.91, Indian Express of 18.9.91 to show that the advertisements were published by the respondent in respect of LAXMAN REKHA even at earlier points of time in 1991. It would, however, be relevant to add that the packing shown in all the 3 ads is of herbal KRAZY LINES for cockroaches using the expression 'Draw a LAXMAN REKHA to your Cockroach Problems'. The ad contains LAXMAN REKHA prominently and uses the expression 'LAXMAN REKHA it's a few lines miracle'.
31. Mr. V.P. Singh, learned senior counsel for the respondent strongly relied on the fact that in para 4 of the judgment the learned Single Judge had recorded that the suit was filed for passing off in respect of the trademark LAXMAN REKHA and the violation of the copyright in the package design. Mr. Singh, learned senior counsel further contended that no Explanationn had been forthcoming from the appellants for using the trademark LAXMAN REKHA and the same was to be appreciated in the light of two material facts (1) that appellant no. 1 had worked with the respondent and (2) the counterfeiting of the earlier packages of respondent were found by the police resulting in the FIR and the criminal case being registered which was pending. This, according to the learned senior counsel, showed the dishonesty of the respondent. The learned senior counsel referred to certain facts which were according to him the admitted position which are set out herein under:
a) The date of application for registration of the trade mark LAXMAN REKHA is prior to the date of application of the appellant.
b) The date of advertisement of the respondent in the year 1991 is definitely prior to the date of advertisement of the appellant.
c) The appellant did not dispute that the worked with the respondent from the year 1985 to 1990.
d) the appellant did not dispute that FIR was lodged by the Police in Goregaon being FIR No. 102/94.
e) The appellant also did not dispute that he has filed an affidavit before the Sales Tax Department and in Paras No. 2 and 3 of the said affidavit he has made the following statement:
'2. I have further to state that for the period from 1.4.90 to 31.3.91 and 1.4.91 to 31.3.92 no sales or purchase have been effected by the company and thus no business has been done by the said company during the said period. Since, no business has been done by the company for the period from 1.4.90 to 31.3.91 and 1.4.91 to 31.3.92 no books of accounts were maintained by the company.
3. I have further to state that during the period from 1.4.90 to 31.3.91 and 1.4.91 to 31.3.92, no purchases or sales of capital assets have been effected by the said company.
f) The appellant also did not dispute that he is a relative of the respondent.
g) The appellant also did not dispute regarding the second FIR lodged by the Traders against his representatives being FIR No. 30/99 dated 12th January, 1999.
h) The appellant also did not dispute that he has signed the plaint and made a statement in Suit No. 1967/96 filed by appellant No. 1 against M/s. Jadu Quality Products and in Para No. 3 it is mentioned that he has been using the trademark LAXMAN REKHA since the year 1992.
i) it is the admitted position that the appellant did not file any Rectification to the copyright registered in favor of the respondent. There is also no dispute that the colour scheme, pack design, get-up and layout used by the appellant is deceptively similar with that of the respondent.
32. It was thus submitted that it was a clear case of malafide intention of the appellants to appropriate the trademark of the respondent and it was contended that the same was an example of rest ipsa locator where things speak for themselves.
33. Mr. Singh, learned senior counsel for the respondent compared the cartons and referred to the carton of the respondent which was in triangle shape with LAXMAN REKHA prominently written. This carton is of 1992 with MAGIC LAXMAN REKHA written on top. This was to establish that LAXMAN REKHA was being used by the respondent even on that date. mr. Singh, sought to compare the cartons of the respondent and the appellant which are at pages 248 and 249 of the appeal paper book. The respondents' cartons bear the trademark the original LAXMAN REKHAA while that of the appellants bears the work MAGIC LAXMAN REKHA/TM LAXMAN REKHA. Both are in yellow colour. The carton of the respondent displayed a cockroach on the top and has a prominent red colour along with the yellow colour. This is for the year of manufacture of 2000. The carton of the appellant has yellow colour with the word MAGIC and REKHA in red. The cockroach is not where the expression portion. Both contain a silver seal stated to be for detection of counterfeit material which, when put under light, show the original LAXMAN REKHA in case of carton of the respondent and MAGIC in case of the carton of the appellants.
34. The learned senior counsel also referred to the advertisement in the Trademark Journal No. 1204 (Supplementary) where the application of appellant no. 1 is stated to be for 'proposed to be used'. Thus the learned counsel contended that the said advertisement relating to the application dated 24.2.92 of appellant no. 1 referred only to proposed user and not to actual user at least till that date and thus the respondent was a prior user.
35. Mr. V.P. Singh, learned senior counsel for the respondent referred to various judgments in support of his arguments. The learned senior counsel cited the case of Centaury Traders vs . Roshan Lal Duggar & Co. : AIR1978Delhi250 to contend that in action of passing off in order to succeed in getting interim injunction the plaintiff has to establish user of the mark prior in point of time to the impugned user by the defendant. This was a Division Bench judgment of the Delhi High Court and Mr. Singh referred to another Division Bench judgment of this court in N.R. Dongre vs . Whirlpool Corporation & Ors. : AIR1995Delhi300 to rebut the contention of the appellants based on delays and laches. In the said judgment the Division Bench negatived the contention of the defendants in the suit that the plaintiff was guilty of culpable delay and laches which would disentitle them from claiming the relief of injunction. The reason for the same was recorded as the fact that opposition had been filed to registration of trademark and appeal was also filed. Thus, the Division Bench was of the view that right from the time the plaintiffs came to know about the application for registration for the trademark by thedefendants they have been contenting the same. The Division Bench also made some important observations in respect of the another aspect - the fact of appreciable business. The defense of culpable delays, acquiescence and laches was, in view of the Division Bench ,available to the party which had done appreciable business and delay without being coupled with prejudice could not be a good defense by itself. The Division Bench observed that defense of laches or delay could be set up in equity but it cannot be put forth by someone who has not acted fairly and honestly and had used the trademark of another person. In the absence of any satisfactory Explanationn for use of trademark 'Whirlpool' the court came to the prima facie conclusion that the said user cannot be regarded to be honest and thus the plea of delay and laches would be of no avail to them. Mr. V P Singh, learned senior counsel for the respondent contended that there was a similar situation in the present case where the criminal case and the application for registration was being followed by the respondent. In view of the user of the trademark LAXMAN REKHA by the appellants not being honest, the learned senior counsel contended that the appellants could not set up the ground the delay, acquiescence and laches. The learned senior counsel further referred to the other of learned Single Judge in the same case reported in Whirlpool Corporation vs. N R Dongre 1996 (16) PTC 415 to contend that in the said judgment the learned Single Judge had taken note of the expression of willingness on the part of the plaintiffs to file an undertaking for compensating the defendants for loss and damages incurred by them in the event of plaintiffs suit failing and had directed the plaintiff to file such an undertaking within four weeks. The learned senior counsel on instructions, stated that the respondent is willing to give such an undertaking to the court. Mr. Singh also referred to the judgment of the Supreme Court in the same matter reported as N R Dongre vs . Whirlpool Corporation : (1996)5SCC714 .
36. The Supreme Court, once again, reiterated the well settled principle that interference in appeal would only be called for only if the appellate court reached to a conclusion that the exercise of discretion in favor of the plaintiffs is contrary to settled principles for grant of temporary injunctions or that it is arbitrary or perverse. The Supreme Court referred to the judgment in Wander Ltd. & Anr vs . Antox (I) Pvt. Ltd. . Thus Mr. V.P. Singh, learned senior counsel, contended that learned Single Judge has exercised his jurisdiction on well settled principles of law and cogent reasons which could not be categorised as either arbitrary or capricious or perverse or that the same were contrary to the settled principles of law for grant of temporary injunction or the refusal thereof.
37. Learned senior counsel also contended on behalf of the respondent that there was a continuous cause of action prior to filing of the suit in 1999 by the respondent and for that reason also there could not be any question of delay and laches. Mr. Singh referred to the judgment of Supreme Court in M/s. Bengal Waterproof Ltd. vs Bombay Waterproof Mfg. Co. : AIR1997SC1398 . The Supreme Court was of the view that there could be no bar to a second suit where the first suit was based on infringement of trademark and passing off action till the date of the suit and the second suit was regarding the continuous acts of infringement of trademark and passing off action subsequent to the filing of the earlier suit which had continued till the date of second suit. Learned counsel further contended that the criteria in case of a passing off action would be very different from that under Copyright Act and thus the judgment cited by the learned counsel for the appellant in Paras Trader's case(supra) would not apply.
38. The Supreme Court in M/s Bengal Waterproof's case (supra) observed in para 20 as under :-
'It is now well-settled that an action for passing off is a common law remedy being an action in substance of deceit under the law of torts. Wherever and whenever fresh deceitful act is committed the person deceived would naturally have a fresh cause of action in his favor. Thus every time when a person passes off his goods as those of another he commits the act of such deceit. Similarly, whenever and wherever a person commits breach of a registered trademark of another he commits a recurring act of breach of infringement of such trademark giving a recurring and fresh cause of action at each time of such infringement to the party aggrieved. It is difficult to agree how in such a case when in historical past earlier suit was disposed of as technically not maintainable in absence of proper reliefs, for all time to come if future defendants of such a suit should be armed with a license to go on committing fresh acts of infringement and passing off with impunity without being subjected to any legal action against such future acts.'
39. Certain other observations made by the Supreme Court in respect of the plea of bar under order II rule 2, sub-rule (3) of CPC were also referred to by the learned counsel for the respondent but in our considered view the same would not have any application. The relevant aspect is the observations of the Supreme Court that an act of passing off is an act of deceit and tort and every time when such tortuous act or deceit are committed a fresh cause of action would arise for the party to approach the court.
40. The learned counsel for the respondent relied on the judgment of Single Judge of this court in Alfred Dunhill Limited vs. Kartar Singh Makkar & Ors. 1999 (19) PTC 294 where the plea of delay and laches of 11 years was negatived by the learned Single Judge relying on the observations of this court in Hindustan Pencils (Pvt.) Ltd. vs . M/s. India Stationary Products Co. : AIR1990Delhi19 . The learned Single Judge in Alfred Dunhill's case (supra) held that in case of passing off action of infringement of trademark delay or laches could not come in the way of granting an injunction so long as the plaintiff company had acted reasonably and not slept on its rights. It was thus held that the defendant company acted on its own peril by continuing by use mark Dunhill and delay of 11 years was excusable because the plaintiff was engaged in legal proceedings on the same subject against the defendants. Mr. V P Singh, learned senior counsel for the respondent submitted that the same ratio should be applied to the present case as the respondent applied for registration of the trademark as far back as on 18.2.91 and the same was published in the Trademark Journal of 16.10.98 to which objections, filed by the appellants, were pending. It was stated that the respondent had been diligently following up the criminal cases which are neither withdrawn nor settled. Thus it was contended that the respondent was engaged in continuous legal proceedings to defend its rights.
41. Mr. V P Singh, learned senior counsel for the respondent thus submitted that there was no reason why the impugned order of the learned Single Judge be interfered with by the appellate court.
42. Mr. Harish Malhotra, learned counsel for the appellant, in rejoinder submitted that the respondent could not draw strength from the application made in 1991 as the same was altered in 1998 which was the relevant date and that the cartons at the relevant stage of time were different form the one using expression MAGIC LAXMAN REKHA or the expression ORIGINAL LAXMAN REKHAA.
43. Mr. Harish Malhotra, learned counsel for the appellant referred to the list of documents filed by the respondent before the learned Single Judge dated 21.3.2000 where the sales figures of appellant no.2 are referred to by the Deputy Commissioner of Sales Tax. This shows substantial increase in the sales specially form the period 1.4.92 - 31.3.93 to 1.4.97 - 31.3.98 where the figures grew from Rs.3,73,332/- to Rs. 25,13,439/-. The learned counsel also referred to the documents which were filed after the order passed by the learned Single Judge giving an opportunity to the appellants to do so vide order dated 31.1.2000. These documents were filed on 13.3.2000. The documents included paper cuttings of the period 1994 onwards where even cross-work puzzles had been advertised at pages 62 to 64 of the said documents. The advertisement of 21.8.93 published in Star of Mysore by the appellants under trademark LAXMAN REKHA was also at page 66. Sales tax records were also filed with these sets of documents. Another set of documents are filed on 19.7.2000 which show payments to ad agencies for promotional activities. Thus it was contended that the arguments advanced on behalf of the respondent that there were not documents to either support sales figures ore advertisement publicity expenses on behalf of the appellants was without any basis.
44. Mr. Harish Malhotra, learned counsel also emphasised the fact that the law would be different in case of registration of trademark and passing off action. Thus it was submitted that the judgment in the Hindustan Pencil's case (supra) has no application as the same dealt with the registered trademark. The learned counsel also referred to the judgment by the Supreme Court in Power Control Appliances &others; vs . Sumeet Machines Pvt. Ltd. : [1994]1SCR708 , in which the observations of Eve, J in Codes vs. Addis & Sons 1923 (40) RPC 130 were cited with approval. The observations of Eve, J are as under:-
'For the purpose of determining this issue I must assume that the plaintiffs are traders who have started in this more of less small way in this country, and have been continuously carrying on this business. But I must assume also that they have not, during that period, been adopting a sort of Rip Winkle Policy of going to sleep and not watching what their rivals and competitors in the same line of business were doing. I accept the evidence of any gentleman who comes into the box and gives his evidence in a way which satisfies, me that he is speaking the truth when he says that he individually did not know of the existence of a particular element or a particular factor in the goods marketing by his opponents. But the question is a wider question than that : ought not he to have known is he entitled to shut his eyes to everything that is going on around him, and then when his rivals have perhaps built a very important trade by the user of indicia which he might have prevented their using had he moved in time, come to the court and say: ' Now stop them from doing it further, because a moment of time has arrived when I have awakened to the fact that this is calculated to infringe my rights.' Certainly not. He is bound, like everybody else who wishes to stop that which he says is in invasion of his rights, to adopt a position of aggression at once, and insist, as soon as the matter is brought to court, it ought to have come to his attention, to take steps to prevent its continuance; it would be an insufferable injustice were the court to allow a man to lie by while his competitors are building up an important industry and then to come forward, so soon as the importance of the industry has been brought home to his mind, and endeavor to take from them that of which they had legitimately made use; every day when they used it satisfying them more and more that there was no one who either could or would complain of their so doing. The position might be altogether altered had the user of the factor or the element in question been of a secretive or surreptitious nature; but when a man in openly using, as part of his business, names and phrases, or other elements, which persons in the same trade would be entitled, if they took steps, to stop him form using, he gets in time a right to sue them which prevents those who could have stopped him at one time from asserting at a later stage their right to an injunction.
45. Thus, the learned counsel contended that the respondent cannot permit the appellant to build its own business which was seen from the sales figures spent on promotional activities and then try to stop and business after a number of years. It was contended that at least it was not a case for grant of 'interim injunction'. The learned counsel also referred to the judgment of Supreme Court in Kaviraj Pandit Durga Dutt Sharma vs . Navratna Pharmaceutical Laboratories : [1965]1SCR737 for the same proposition that the action of passing off and action of infringement of trademark are totally different in nature. In cases of trademark it was a claim based on violation of statutory right under section 21 of the Act while the claim of passing off was based on deceit and similarity of products. The learned counsel also referred to a recent judgment of the Division Bench of this court in the case B L & Company vs. Pfizer Products Inc. in FAO (OS) 276/2001 decided on 30.6.2001 to support his submission that where a party permits opposite party to incur promotional and other expenses on trails etc., launching of products and other such activities, the factor of delay alone is sufficient to deny the restraint order. In the said judgment the Division Bench quoted with approval the commentary by Christopher Wadlow and the law of passing off to the following effect:
'Delay in applying for interlocutory relief is a very serious matter. As a rule of thumb, delay of up to about a months, or perhaps six weeks, generally has no adverse effect on an inter partes application and delay of up to twice that period need not be fatal if it can be explained and the plaintiff's case is otherwise strong. On an ex parte application even delay of a few days can be critical. Unjustified delay of more than a few months is almost always fatal to the plaintiff's case, even though delay of this order has no effect on the plaintiff's rights at trial. Unlike many of the issues which can arise on motion, the existence of delay does not normally admit or much argument. Delay, if present, is thereforee, a short, safe and simple basis for refusing relief. This means that application for interlocutory injunctions in which there is significant delay are unlikely even to get as far as a hearing, and those that do are quite likely to be refused without going into the merits or the balance of convenience.'
46. The conspectus of the aforesaid submissions and the analysis of the ratio of the judgment clearly bring for the importance if issue of delay, laches and acquiescence as an important factor to determine the present case at this stage, which was not duly considered by the learned Single Judge in the impugned order.
47. The genus of the dispute arose when appellant no.1 started his own business. Apart from one single caution notice of 9th July, 1994 where mention is made of sales of 1988 appellants have not been able to substantiate a case of sales prior to 1992. However, post 1992 there is no doubt about the sales of the appellant . It fact the document filed by the respondent being the latter dated 1.2.2000 issued on behalf of the Deputy Commissioner of Sales Tax (Administration), Mumbai to the Additional Prosecutor, Borivili (East) Mumbai shows continuous increase of sales from 1.4.92 and over a period of 6 years the sales figures have gone up 7 times. Post 1992, the appellant have placed considerable material of advertisements, promotional activities to show that they had aggressively carried out a campaign for their products under the trademark MAGIC LAXMAN REKHA/LAXMAN REKHA. Not only this the affidavit filed by the appellants in opposition to the plaint of the respondent has given details of various litigation instituted by the appellants to protect their right in the said trademark apart from caution notice and legal notices. It is thus difficult to accept the submissions of learned counsel for the respondent that there is no material on record to substantiate the sales and promotional activities of the appellant.
48. There is no doubt that the disputes had arisen as far back as on 28.2.1992, when the legal notice was sent by the respondent to the appellants who sent a reply dated 14.3.92 and denied the case of the respondent. Not only this on 16.6.93 a notice was sent a behalf of the appellants to the respondent (a sister concern) about the use to the trade name LAXMAN REKHA by a third party which is admittedly directly connected with the respondent and was working under the name and style of Spic and Span Enterprises. A caution notice was also published in the papers. It cannot thus be believed that the respondent would be unaware of the promotional activities of the appellants. The question is can the mere following up of a criminal case filed in pursuance to some raid at the inception of this dispute be enough to grant an interim order in favor of the respondent in an action brought forward after several years? We think not. Another aspect to be considered is that the application originally filed under the Trade and Merchandise Marks Act, 1958 by the respondent was different and in respect of ayurvedic medicinal preparations of insects which was only modified on 19.8.98 for insecticides and pesticides preparations. Not only this the original application dated 18.2.91 had set out the user as one year prior to the said date. It is only on 19.8.98 that the same was sought to be amended. There is some force in the contention of learned counsel for the appellant that this cannot be an innocuous mistake or that the same would have continued uncertified for a period of 7 years. This has to be read with assignment deed dated 9.4.92. The said assignment is in respect of the copyright in original artistic work. The schedule to the said agreement does refer to the LAXMAN REKHA but if schedule is seen where there are various artistic works annexed, the packing is the original one for KRAZY LINES where it is stated 'Draw a LAXMAN RAKHA to your Cockroach/Lizard/Insect Problems'. thereforee there is also some force in the submissions of learned counsel for the appellant that original LAXMAN REKHA was used as a slogan or as an indication of sketching out boundaries and not as a trademark. Other than one advertisement where the word used is LAXMAN REKHA there is no material placed on record of user of LAXMAN REKHA by the respondent prior to 1993.
49. In 1994 a settlement was arrived at dated 7.3.94. It is common case that both the parties failed to abide by the same and went their own way. Despite this both parties continued to use the word LAXMAN REKHA contrary to the terms of the agreement whereas both the parties should have refrained from using it. The respondent had used the original LAXMAN RAKHAA and the appellants had used MAGIC LAXMAN REKHA/TM LAXMAN REKHA. This continued for a period of at least 5 years. Though the cartons of the two are in colour combination of red and yellow they are not totally similar and the differences between the two have been sketched earlier in the judgment while dealing with the cartons.
50. In any case these are matters yet to be examined in the trial of the suit. There can be no doubt about the proposition that principles governing infringement of trademark and passing off action would be different. Thus the principles laid down in Hindustan Pencil's case (supra) would not ipso facto apply since that case was dealing with the infringement of trademark. There seems to be considerable force in the submissions of learned counsel for the appellant that till 1999 both the parties continued to act and trade under LAXMAN REKHA. An extremely important aspect is that the respondent itself has averred in the plaint in para 15 that after the agreement dated 30.6.94 far from refraining from using trademark LAXMAN REKHA the appellants became aggressive in their advertising. No. action was taken for a period of 5 years. The cause of action paragraph itself being para 21 categorically states that the cause of action has arisen in 1994.
51. The question is that there being such a substantial delay in bringing an action for infringement by the respondent should the respondent be granted a restraint order taking into consideration the contentions advanced by the parties? In our considered view this is not a case for grant of temporary injunction. The respondent by its conduct of delay and laches in bringing an action it is disentitled to the reliefs. We are in agreement with the view of the Division Bench of this court in B L & Company's case (supra). The importance of delay in such matters has been considered in depth by the Supreme Court in Power Control's case (supra) where the observations of Eve,J in Codes vs. Addis & Sons were cited with approval. If a party adopts a sort of Rip Van Winkle policy of going to sleep and not watching what his rivals and competitors in the same business were doing they are disentitled to any injunction. In the present case parties were very much aware of their respective rights and were legally advised as is apparent from the communication of the Advocates yet the respondent chose to remain silent on an action to prevent the appellants from using the trademark LAXMAN REKHA. There is thus an element of acquiescence on behalf of the respondent.
52. The principle that no party who sleeps over his rights should be entitled to relief is well settled. It would squarely apply in the present case. Delay has been too long for granting prohibitory injunctive relief to the respondent. The submission of learned senior counsel for the respondent that they are willing to give an undertaking to compensate the appellants as was done in the case of Whirlpool's case (supra) would thus not be an acceptable arrangement.
53. The respondent by their inaction has permitted the appellant to make endeavors to increase its business vigorously pursue its promotional activities and further to pursue the litigation to defend the trademark LAXMAN REKHA.
54. The learned Single Judge himself has rightly treated the case as one of the passing off in respect of the trademark LAXMAN REKHA and of violation of the copyright and package design. We are of the considered view that the judgment of the learned Single Judge is contrary to the well settled principles in respect of the grant of temporary injunction where there is delay and laches on the part of the plaintiff in approaching the Court for interim relief. Thus it is a fit where the appellate court has to come to the rescue of the appellant and as a consequence set aside the impugned judgment.
55. In our considered view taking into consideration the facts and circumstances of the case the only interim order which is liable to be passed is for the appellants to file regular accounts of their sales before the court. These accounts should be filed for the period commencing from 1.4.99. The accounts for the period commencing from 1.4.99 and ending 31.3.2001 should be filed on the record of the suit on or before 31.12.2001 and similarly for each subsequent financial year it should be filed by the 31st December of that year. Ordered accordingly.
56. The result is that the impugned order dated 31.7.2001 is set aside and the restraint order is vacated. is 8127/99 filed by the respondent in the suit is dismissed. The appellant shall, however, filed accounts of their sales figures in court with advances copy of learned counsel for the respondent in terms mentioned hereinbefore.
57. The appellant will also be entitled to costs quantified at Rs.5,000/-.
58. Needless to add that any observations made while disposing of the appeal are prima facie expression on the matter in controversy and will not influence fair trial of the suit on merits.