P.M. Diesels Private Limited, Aji Industrial Estate Vs. Thukral Mechanical Works, Railway Road, Sirhind (Punjab) and Another - Court Judgment

(Circuit Bench Sitting at Delhi)

(No.16/2011)

S. Usha, Vice- Chairman

1. Petition filed by the petitioners to implead M/S. Jain Industries as respondent No.2 in C.O. No.6/1997 (TRA/99/2004/TM/DEL). The trade mark Field Marshal bearing registration No.228867 in respect of Flour Mills, Circulating and Centrifugal Pumps, Couplings for machines, Pulleys and valves included in class 7 stood registered in the name M/s. Jain Industries. The petitioner herein initially filed the application for rectification bearing C.O. No.9 of 1986 in November 1986 before the Honble High Court of Delhi under Section 46 and 56 of the Trade and Merchandise Marks Act, 1958, for rectification of the said trade mark, on the grounds that the mark was not used for a period of more than five years and one month preceeding the filing of the said petition for rectification.

2. On January 16, 1987 no one appeared on behalf of M/s, Jain Industries. On the other hand, the present respondent No.1 M/s. Tukral Mechanical Works, all though not a party to the petition, appeared and filed their reply stating that the registration of the trade mark Field Marshal under No.228867 in respect of the goods falling in class 7 has been assigned to them. As such they are the subsequent proprietor with effect from. 30.5.1986, by virtue of the assignment deed dated 30.5.1986 and the request for recordal of subsequent proprietor has also been made before the Registrar of Trade Marks. On 16.1.1987, an order was passed by the Honble High Court of Delhi stating that this petition filed by petitioner when taken up for hearing after service of notice, the present respondent brought to the notice of the court that they are the present subsequent proprietors that M/s. Jain Industries had assigned the mark in favour of the respondent No.1 and therefore the rights M/s. Jain Industries stood extinguished. In view of the above, the petitioners counsel sought permission to withdraw the petition and file a fresh petition on this very same cause of action. The respondent No.1 did not oppose the same and the petition was dismissed with liberty to withdraw the petition and to file a fresh petition on the very same cause of action.

3. Thereafter, the petitioner herein filed another rectification petition under C.O. NO.6 of 1987 for rectification of the trade mark relating to the same registered trade mark under the provisions of the Act. In the said petition, the petitioner had also stated that the impugned trade mark was never used by the erstwhile proprietors mainly M/s. Jain Industries in respect of centrifugal pumps.

4. The respondent No.1 clearly apprehending a defeat at the hands of the petitioner in suit No.2408 of 1985 tried to get the impugned trade mark assigned in their favour by the respondent No.2. The respondent No.1 has obtained the assignment in a malafide manner with the dishonest intention to defeat the ends of law and to continue to trade upon the goodwill and reputation of the petitioner. The petitioner filed C.O. No.9 of 1986 for rectification of the impugned trade mark against the original registered proprietors. The same was withdrawn with permission to file a fresh against the present respondent No.1. The cause of action for the present petition arose in favour of the petitioner and against the respondents in the month of January, 1987 when the respondents informed the Honble Court that they have been recorded as the subsequent proprietors of the trade mark, whereupon the petitioner withdrew the application C.O. No.9 of 1986 with the permission to file the present rectification petition.

6. The respondent herein filed their reply to C.O. No.6 of 1987. The respondent in the written statement did not object to the effect that M/s. Jain Industries was a necessary party to the proceedings and the said firm was not impleaded.

7. As a matter of record C.O. No.6 of 1987 was dismissed by this Appellate Board on 27.10.2004 which was reversed by the Honble Delhi High Court by its order dated 18.1.2006. The controversy in these orders was the legal interpretation of the provisions of Section 46 of the Act and not the issue as to non-impleadment of M/s, Jain Industries. It was in the Honble Supreme Court filed by the respondents against the orders of the High Court that the Supreme Court suo moto for the very first time, held that the present proceeding wherein the question of non use by M/s. Jain Industries under section 46 (1) was involved and could not be decided in the absence of the said firm notwithstanding the fact that the trade mark was assigned in favour of the present respondent No.1.

8. The petitioner stated that in the present petition filed, it will be seen that failure of the petitioner to implead M/s. Jain Industries was the result of a bonafide error committed by the petitioner in good faith in the circumstances of the case. The present respondent if had objected about the non impleadment, the petitioner would have then and there impleaded the said firm. In the interest of justice, it is therefore necessary to implead M/s. Jain Industries as co-respondent. It is therefore prayed that the Board may be kindly pleased to order impleadment of M/s. Jain Industries.

10. The respondent No.1 herein filed their reply to the petition for impleadment of M/s. Jain Industries. The preliminary objection taken by the respondent was that the present petition is an abuse of process of law, untenable, misconceived and liable to be dismissed. There is no provision under the Intellectual Property Appellate Board (Procedure) Rules, 2003 for entertainment of the petition of impleadment under Order 1 Rule 10 (2) and (4) read with section 151 Code of Civil Procedure, 1908. On the contrary as per the provisions of Section 92 of the Trade Marks Act, 1999, the Appellate Board shall not be bound by the procedure laid down in the Code of Civil Procedure. The present petition is being filed by the petitioner after 25 years of litigation between the parties. The trade mark Field Marshal was adopted and used by the M/s. Jain Industries in respect of Centrifugal Pumps since the year 1963. The said trade mark was registered under No.228867 in class 7 as of the year 1963 and the registration was granted on 1965. The present petitioner had adopted the trade mark Field Marshal in the year 1964 and applied and obtained registration of the trade mark. In 1973, the respondent bonafidely and honestly adopted the trade mark and commenced the business of manufacturing and selling of Centrifugal Pumps under the said trade mark. The respondent had been using the same exclusively, extensively and continuously since the year 1973.

11. From 19.12.1985 to 19.1.1988, the respondent did not use the mark on account of an order of ex-parte injunction passed by the High Court of Delhi in C.S. (O.S.) 2408 of1985. In 1985, the petitioner filed the civil suit for grant of a permanent injunction against the respondent No.1 and the petitioner obtained an ad-interim injunction dated 19.12.1985. On 30.05.1986, M/s. Jain Industries assigned the trade mark along with the goodwill in favour of the respondent 1. With the execution of the deed of assignment all rights, title and interest vested in favour of the respondent No.1. On 31.5.1986, the petitioner filed a rectification petition being C.O. No.9 of 1986 against M/s. Jain Industries on the allegation of non use. On 24.10.1986, the request on Form TM-24 for recordal of the subsequent proprietor was allowed by the Registrar of Trade Marks. On 16.1.1987, the counsel for the respondent No.1 appeared before the Honble High Court of Delhi in C.O. No.9 of 1986 and brought to the notice of the High Court about the assignment and the recordal of the subsequent proprietors name in the register of trade marks, and also informed the court that M/s. Jain Industries were no more the proprietors of the trade marks Field Marshal. In view of the said fact, the rectification petition filed against M/s. Jain Industries was not maintainable and the same was withdrawn by the petitioner. However, the petitioner took liberty from the court to file a fresh rectification petition on the same cause of action. On 19.1.1987, the petitioner filed a fresh rectification petition being C.O No.6 of 1987 before the Honble High Court of Delhi against the respondent No.1 seeking rectification of the trade mark No.228867 in class 7 on a fresh case of action though the petitioner sought permission to file a fresh application for rectification against the present respondent No.1 at the time of the withdrawal of the earlier rectification petition filed against the M/s. Jain Industries. On 19.1.1988, the ex-parte injunction granted on 19.12.1985 was vacated. Thereafter, the rectification petition C.O. No.6 of 1987 was transferred to this Appellate Board and was dismissed vide detailed judgment dated 27.10.2004. On 7.12.2004, the petitioner challenged the order of this Appellate Board before the High Court of Delhi. On 5.7.2005, the Single Judge of the Honble High Court of Delhi admitted the writ petition but refused to stay the order passed by the Appellate Board. On 22.9.2005, the petitioner preferred an appeal against the refusal order of stay. On 18.1.2006, the Division Bench of the Honble High Court of Delhi set aside the order of Intellectual Property Appellate Board and remanded the matter back to this Appellate Board for reconsideration on the point of interpretation of Section 46 (1) (b) of the Act. In February 2006, the respondent No.1 filed an appeal before the Honble Supreme court. On 18.12.2008, the Supreme Court set aside the order dated 18.1.2006 and laid down the legal principles on interpretation of section 46 (1) (b) of the Act.

12. A bare perusal of the judgment passed by the Honble Supreme Court held that (a) fault lied with petitioner in withdrawing the petition against M/s. Jain Industries. (b) cause of action against M/s. Jain Industries was given up with the withdrawal of C. O. No.9 of 1986 and liberty granted to file a fresh petition on same cause of action was not utilized. (c) cause of action against M/s. Jain Industries cannot be tagged with the cause of action of non user against respondent No.1. (d) the computing rights, respondent No.1 and the appellant can be determined and not a right against M/s. Jain Industries. In view of the above by the Supreme Court, the present petition for impleadment is not maintainable and is liable to be dismissed at the threshold.

13. Even though liberty was granted to the petitioner to file a fresh petition against the respondent No.1, the petitioner preferred to bar the cause of action against M/s. Jain Industries while filing C.O. No.6 of 1987. C.O. No.6 of 1987 was filed on a fresh cause of action alleged against respondent No.1 and not on the basis of the same cause of action against M/s. Jain Industries and therefore cannot now plead the cause of action of non use against the respondent No.1. No cause of action under Section 46 (1) (b) survives in favour of the petitioner against M/s. Jain Industries after expiry of more than 23 years. It is also pertinent to mention that in the suit, summon was sent to Mr. K.C. Jain of M/s. Jain Industries as its witness by issuance of bailable warrants but after ensuring his presence in the Court for the purpose of examination and cross examination, the petitioner had given up as to the examination of the witness. It is further evident that the petitioner abandoned M/s. Jain Industries as its witness before the court to support its case of alleged non use against M/s. Jain Industries and against the respondent and therefore, cannot implead now. Such waiver amounts to acquiescence and abandonment.

14. M/s. Jain Industries cannot be impleaded as a party at this stage on the basis of alleged cause of action of non use. The petition would be deemed to have been instituted against M/s. Jain Industries only from the date on which an order for impleadment, is passed. The alleged non use cause of action against M/s. Jain Industries for 5 years period under Section 46 (1) (b) would be for the period of 2004-2009. During the period of 2004-2009, it is the respondent who has been proprietor as well as the registered proprietor of the impugned trade mark. The cause of action impleaded in the petition is alleged to have been accrued in January 1987 against the respondent No.1 on the basis of knowledge acquired by the petitioner that rights and trade mark have already been assigned to the present respondent No.1. Therefore, no cause of action against M/s. Jain Industries, survive and the present petition is not maintainable and is liable to be dismissed. The claims of alleged non use against M/s. Jain Industries are hopelessly time barred. M/s. Jain Industries is neither a necessary nor a proper party to the present petition. In view of the observation made by the Supreme Court in para 23 of its judgment dated 18.12.2008, the impleadment of M/s. Jain Industries is unnecessary. Para 23 read as follows :

“23. It must not, however, be forgetten that Section 46 (1) (b) provides for a special remedy. As a person obtains a right on and from the date of registration and/or renewal thereof, he can ordinarily be deprived of his right unless it is shown that the assignment thereof by his holder was not a bonafide one or had been made by way of camouflage. If the assignee has obtained assignment for bonafide use, he may not be fastened with any liability owing to non-user on the part of his predecessor. In other words, the mistake of the predecessor should not be visited with non-use of the present registered owner.”

15. It is evident from the above finding that the respondent No.1 should not be and cannot be burdened with liability arising from the alleged non use of its predecessor M/s. Jain Industries. Therefore, M/s. Jain Industries is not a necessary party and hence the present petition ought be dismissed on this ground alone.

16. The present petition for impleading M/s. Jain Industries cannot be entertained by this Appellate Board considering the fact that the impleadment would require a de-novo trial that too after expiry of 23 years of litigation between the parties. The rectification stood decided by the Appellate Board on 27.10.2004. The issue relating to the interpretation of Section 46 (1) (b) raised by the petitioner while challenging the order of the Appellate Board before the Honble High Court have been finally decided by the Supreme Court. The present petition for impleadment has been filed with ulterior motive and purpose. Even otherwise, the present petition is not maintainable because the period of non use which is relevant in the present petition is to be calculated from December 1986 backwards. Non use by M/s. Jain Industries is irrelevant since it was respondent No.1 who was the proprietor during the period from June 1986 to December 1986. The use or alleged non use of M/s. Jain Industries would have been relevant only if, the respondent No.1 had not used the trade marks prior to December 1986.

17. The present petition is also liable to be dismissed since the non use by the respondent No.1 for the period from 19.12.1985 to 19.1.1988 is anyway, protected under section 46 (3) of the Act on account of injunction order. The petitioner is not entitled to seek relief of amendment of the petition under the provisions of Code of Civil Procedures and therefore is liable to be dismissed.

18. We have heard Shri S.C. Aggarwal, learned senior counsel for the petitioner and Shri Amarjit Singh, learned counsel for the respondent No.1 during the Circuit Bench Sitting at Delhi on 12^th November, 2010.

19. Learned counsel for the petitioner submitted that they adopted the trade mark Field Marshal in the year 1963 in respect of class 7 and in respect of centrifugal pumps in the year 1970. The respondent started to use the trade mark and therefore filed a civil suit. The proposed respondent M/s. Jain Industries adopted the trade mark in the year 1965 only for flour mills and not for centrifugal pumps. The suit was filed in the year 1985 against the present respondent No.1. The assignment deed was executed on 30.05.1986. The counsel brought to our notice the observation of the order made in the earlier rectification petition C.O. No.9/1986. In view of the Supreme Court order, it was necessary that the proposed respondent M/s. Jain Industries be impleaded as necessary party to decide the issue of non user.

20. In reply the learned counsel for the respondent No.1 submitted that the 1^st rectification petition was filed on 31.5.1986 in C.O. No.9 of 1986 against M/s. Jain Industries on the ground of non user. When notice was issued to M/s. Jain Industries, the respondent No.1 herein appeared and informed the court of the change by assignment on 16.01.1987. The petitioner therefore was aware of the change on 16.01.1987. On 19.01.1987, the 2^nd rectification petition filed. In fact the petitioner had sought permission from the court while withdrawing the earlier rectification petition to file fresh rectification application against the present respondent No.1 on the same cause of action. But the petitioner has filed on a different cause of action against the present respondent No.1.

21. In the grounds there is no whisper of the trafficking of the trade mark only at this stage this has been pleaded. The present petition is only to delay the proceedings. The counsel drew our attention to the grounds of the rectification petition in C.O. No.6 of 1986 where at ground (a) it was stated that the respondent No.1 had not used the trade mark for more than five years and one month and at ground (w) it was stated that M/s. Jain Industries was not in existence and therefore M/s. Jain Industries could not have assigned the trade mark to the respondent No.1 herein. The cause of action arose in the month of January, 1987 when the petitioner became aware of the change in favour of the respondent No.1 in the present rectification application. Whereas the cause of action in the 1^st rectification petition arose in May 1986 is averred in the petition No. C.O. No.9 of 1986. The counsel then brought to our notice, the cross examination recordal dated 7.2.1996, where the petitioner did not wish to examine Mr. Kailash Chand Jain of M/s. Jain Industries. The counsel also stated that the period of non user has been briefly dealt and observed by the Appellate Board which passing the order earlier. This was also considered by the High Court when the order by the Board was challenged and a different view was taken by the High Court and the High Court set aside the order dated 27.10.2004. The respondent No.1 then moved the Supreme Court being aggrieved by the order of the High Court.

22. The counsel also stated that whether a case has been made out or not to implead M/s. Jain Industries depends on the facts of the case. The counsel pointed out to para 25 of the Supreme Court order that it was stated that for the purpose of making out a case, both the original registrants and the assignee were required to be impleaded as parties.

23. The counsel also raised another issue as to how the period of five years is to be calculated if M/s. Jain Industries is impleaded as this stage. The counsel relied on the provisions of order 1 rule 10 of the Code of Civil Procedure. The provisions to Section 21 of the Limitation Act, 1963 was also relied on. The powers of the Appellate court as per the provisions of section 107 of the Code of Civil Procedure was also relied on. The counsel submitted powers of the Appellate court to remand is as per the provisions of Order 41 Rule 23 Code of Civil Procedure. The ground of trafficking does not arise as was not pleaded earlier. Rule 15 of the Intellectual Property Appellate Board Rules also not applicable as it is not a third party intervention.

24. In rejoinder the counsel for the petitioner submitted that para 25 and 33 of the Supreme Court is very clear and M/s. Jain Industries is therefore a necessary party and ought to be impleaded. The counsel submitted that the respondent cannot object to the impleadment as per the provisions of Order 1 Rule 13 of Code of Civil Procedure. The counsel also relied on the provisions of Order 1 Rule 10(2) of Code of Civil Procedure.

25. We have heard and carefully considered the arguments of both the counsel and have gone the pleadings and documents.

26. The miscellaneous petition is only to decide the issue of impleading a party to the matter which has reached the stage of finality and is remanded back to the lower court. In this case of hand, the rectification petition was filed before the Honble High Court of Delhi and subsequently transferred to this Appellate Board due to the provisions of section 100 of the Trade Mark Act, 1999.

27. The matter was heard and decided by the Board dismissing the rectification petition on the only issue of non user. The petitioner herein challenged the said order before the High Court of Delhi where the High Court set aside the order of the Appellate Board. The respondent No.1 moved the Supreme Court being aggrieved by the orders of the High Court. The Honble Supreme Court had set aside the order of the High Court and remanded back the matter to the Appellate Board to proceed and determine afresh the application in the light of legal principles.

28. The applicant has now filed this instant petition to implead the assignor ie. M/s. Jain Industries to decide the matter finally on two grounds based on the observation of the Supreme Court at para 25 and 33.

Para 25 – The submission of Shri Sudhir Chandra that the appellant was an infringer both of the right of M/s. Jain Industries as also the first respondent and, thus, its use was not bonafide in a case of this nature cannot be accepted. If appellant infringed the right of M/s. Jain Industries, it was for it to take action therefore. It did not, first respondent itself accepts that atleast immediately prior to the institution of the suit, appellant had been using the same.

We are not concerned herein as to since when it had been doing so. It obtained an or of injunction. The order of injunction was vacated. For one reason or the other, the said order attained finality, Prima facie, therefore, appellant has been held to be the registered owner of the trade mark. It is one thing to say that for the purpose of frustrating an application for rectification, the appellant had colluded with its predecessor for the purpose of trafficking by entering into the deed of assignment which is otherwise illegal and bad in law but it is another thing to say that the appellant could be proceeded against alone for non-user of the registered trade mark for a period of more than five years. For the purpose of making out such a case, both the original registrants as also the assignee were required to be impleaded as parties.

Para33 – We do not think that the approach of the learned author is entirely correct. An assigner can transfer only such right which he possesses. If his title is not extinguished by reason of a provision of a statute for non-user of the trade mark for a period of five years, any assignment made shall be valid subject to such situation which we have noticed in paragraph 25 supra.

The Supreme Court in the same order at para 23 has also observed that, “If the assignee has obtained assignment for bonafide use, he may not be fastened with any liability owing to non user on the part of his predecessor.

Based on the above observation, we are of the view that the intend of the Supreme Court was not to implead M/s. Jain Industries to decide the issue of non user. We also consider that the purpose of impleadment M/s. Jain Industries by the petitioner will not to solved.

29. The impugned trade mark was registered as early as 1965. The 1^st rectification was filed in the year 1986 against M/s. Jain Industries and the same was withdrawn with liberty to file a fresh against the respondent No.1 with the same cause of action, whereas the 2^nd rectification petition has been filed against the respondent No.1 on a different cause of action. The 2^nd rectification petition is filed on a different cause of action against a different person and also there is no relief sought for against that person who is now to be impleaded Once the mark has been assigned to a person, the assignors right in the trade mark is totally extinguished and the assignee acquires the right of that trade mark. The assignor M/s. Jain Industries who has no direct/legal interest in the mark shall not be interested/affected in the outcome of the proceedings and therefore shall not be impleaded.

30. We also find force in the arguments of the counsel for the respondent No.1 stating that the petitioners in their application for rectification in C.O. No.6/87 at ground (g) it was stated that the respondent (M./s. Jain Industries) has not used the trade mark for a period of five years and one month and at ground (w) it was stated that M/s. Jain Industries was not in existence. When the petitioners themselves have admitted that the proposed respondent is not in existence, the issue as to impleading does not arise.

31. The other contention of the petitioner that the respondent No.1 did not object to the non-joinder of the parties in the initial stage does not hold good. By impleading M/s Jain Industries when no relief is sought against them will be of no use in our considered opinion.

32. The Apex Court has also held in yet another case that when impleadment of a third party would mean denova trial, third party should not be impleaded. Following that observation, in this case, if M/s. Jain Industries is impleaded the entire procedure of pleadings are to be gone into as a second round which would mean a de-novo trial which cannot be allowed.

33. For the reasons stated above, we are of the view that the petitioner has not made out a case for allowing the miscellaneous petition. The miscellaneous petition is therefore dismissed with no order as to costs.