Madras High CourtA/4157/2018dismissed

Sri Narasus Coffee Company v. Narasus Roller Flour Mill

2019-09-09Honourable Mr Justice N. Sathish Kumar20 pages

IN THE HIGH COURT OF JUDICATURE AT MADRAS

(ORDINARY ORIGINAL CIVIL JURISDICTION) MONDAY, THE 09TH DAY OF SEPTEMBER 2019 THE HON'BLE MR. JUSTICE N.SATHISH KUMAR A.Nos.4157 AND 4158 of 2018 in C.S.No.291 of 2007 and 360 of 2007 C.S.No.291 of 2007 and A.No.4157/2018:

Sri Narasu's Coffee Company Pvt.Ltd A company represented by Its Managing Director Mr.P.Sivanandham,No.20, Nethaji Subhash Bose Road, George Town, Chennai - 600 001 and having its principal place of business at: 16, Court Road, Johnsonpet, Salem 636 007. ...Applicant/Plaintiff -Versus1.Narasu's Roller Flour Mill a Firm represented by its Partner Mr.M.V.Balasubramaniam 2.Mr.M.V.Balasubramaniam Partner, Narasus Roller Flour Mills 3.Mr.R.P.Sarathy Partner, Narasus Roller Flour Mills 4.Mrs.B.Latha Partner, Narsus Roller Flour Mills Respondents 1 to 4 having their place of business at No.16-A, Court Road, Johnsonpet, Salem-7 ..Respondent/Defendant C.S.No.360 of 2007:

M/s Narasu's Roller Flour Mill, a firm represented by its partner, Mr.M.V.M.V.Balasubramanian, Having their place of business at No.16-A Court Road, Johnsonpet, Salem - 636 007 ..Plaintiff -VS-

Narasu's Coffee Company, A Firm represented by its Managing partner Mr.P.Sivanandham, No.20, Nethaji Subhash Bose Road, George Town, Chennai 600 001 and having its principal place of business at: 16, Court Road, Johnsonpet, Salem 636 007.

... Defendant A.No.4158 of 2018:

..Applicant/Defendant -VsM/s Narasu's Roller Flour Mill, a firm represented by its partner, Mr.M.V.M.V.Balasubramanian, No.16-A Court Road, Johnsonpet, Salem - 636 007 ..Respondent/Plaintiff -VSA.No.4157 of 2018:

Application praying that this Hon'ble Court be pleased to frame an issue regarding the validity of respondents registrations of trademarks and consequently stay the trail of the suit in C.S.No.291 of 2007 till the disposal of the respective rectification petitions morefully mentioned in Schedule A hereunder pending before the honble intellectual property appellate Board Chennai.

A.No.4158 of 2018:

Application praying that this Hon'ble Court be pleased to frame an issue regarding the validity of respondents registrations of trademarks and consequently stay the trial of the suit in Ç.S.NO.360 of 2007 till the

disposal of the respective rectification petitions morefully mentioned in Schedule A to the Judges Summons pending before the Hon'ble intellectual property Appellate Board Chennai.

These applications coming on this day before this court for hearing, the court made the following order: These two applications have been filed to stay the trial of the suits in C.S. Nos. 291 and 360 of 2007 till the disposal of the respective rectification petitions pending before the Hon'ble Intellectual Property Appellate Board, Chennai.

It is the contention of the applicant that he has filed a suit in C.S. No. 291 of 2007 for multiple reliefs of permanent injunctions restraining the defendants from infringing the mark NARASU'S (per se) and NARASU'S COFFEE, or from passing of their products bearing the said marks, either by manufacturing or selling or offering for sale or in any manner advertising the same, or in any manner infringing the plaintiff's copyright, or from restraining the defendants from using the word NARASU'S in their name for surrender of the infringing materials and for costs.

It is the further case of the applicant that the predecessor of the applicant, Narasu's Coffee Company, a partnership firm was primarily engaged in the trade of manufacture and marketing of coffee powder and its allied products. The present applicant was incorporated under Chapter IX of the Companies Act, 1956, and a direct successor of the said partnership firm. He stated that, with a view to diversify its business activities, the predecessor of

the applicant entered into the business of manufacturing and marketing wheat and wheat products in the year 1989 and established the first respondent as its division / subsidiary. The management, financial control, investments, procuring raw material, manufacture, sale and distribution of end products were under the control of applicant's predecessor. It was mutually decided among the partners who were running both applicant's predecessor and the first respondent that the former would use NARASU'S in respect of all its products, while later would promote a new brand ULLASH in respect of its products.

This arrangement is corroborated by the fact that the applicant's predecessor was selling packed products under the trademark NARASU'S Sooji, NARASU'S Maida, NARASU'S Atta along with the device of lady sipping coffee from cup enclosed with the circle and oval dotted line for a substantial period of time, while the first respondent was selling their product under the mark ULLASH Sooji, ULLASH Maida and ULLASH Atta. The trade and public identified the products maida, sooji, atta under the brands ULLASH, NARASU'S and the device of a lady sipping from a cup to be originating from the applicant's predecessor.

At this juncture, in the year 2006, a conflict arose between the partners of applicant's predecessor and a Memorandum of Understanding was arrived at between the partners. Thereafter, in the year 2007, the first respondent suddenly started misusing the applicant's registered trademark NARASU'S and the device of lady holding a cup enclosed in a circle in respect

of their products, with the ostensible malafide intention of encashing, trading upon on the reputation and goodwill solely vested with the applicant. As a result, the applicant's predecessor instituted the instant civil suit before this Hon'ble Court.

In the said suit, in the course of arguments on the interim applications, the respondents / defendants have averred that they have equal right over the mark in view of their being owners / registered proprietors of the various marks containing the word NARASU'S and the device of lady holding a cup enclosed within a circle, a list of which is as follows:- 6.

It is pertinent to note that during the pendency of suit, some of the above mentioned marks were not registered and registration was granted subsequent to the filing of the suit and passing of interim order dated 07.11.2007 in O.A. Nos. 424 to 427 of 2007 filed in the above suit. Further, subsequent to the filing of above suit, the respondents have applied for and obtained registration for the following trademarks:-

The adoption of the identical trade marks NARASU'S or the device of lady holding a cup by the respondents is a deliberate assault on the exclusive rights vested with the applicant qua their prior adopted and well known trademarks NARASU'S or the device of lady holding a cup. The question regarding validity of the registration of the trademarks containing the word NARASU'S and / or the device of lady holding a cup in favour of the respondents is tenable and liable to be answered in negative on the grounds mentioned above. Unless the question of validity of registrations of the aforementioned trademarks is decided by the specialized statutory body i.e., Intellectual Property Appellate Board, effective adjudication of the dispute before this Hon'ble Court would not be possible. 8.

Under Section 124 of the Trademarks Act, 1999, when any proceeding for rectification of the Register in relation to the trademark in question is pending before the Appellate Board, the suit pending for the same

issue, has to be stayed until the final disposal of the proceedings before the Intellectual Property Appellate Board.

It is the contention of the respondents that the core issue between parties is only property and title issue and not on trademark registrability and it is only a family dispute. There is no tenability whatsoever to stay the proceedings. The application has been filed after pleadings are completed and the matter is ripe for trial in the suit. The issue in the suit is not relating to the validity of registration but plaintiff claims exclusive ownership of trademarks. 10.

It is further stated that, deeds of retirement of partnership reveals that Mr. Sivanandan and his family retired from the Narasu's Roller Flour Mills and Mr. R.P. Sarathy, his daughters and son in law retired from the Narasu's Coffee business. It was specifically agreed that the retiring partners will not claim right from the firm's assets including good will. Therefore, the firms will continue to own the marks and the present and erstwhile partners will be treated as joint owners. While marking Trademark applications the retiring partners were also the applicants. There was also Memorandum of Understanding between the parties. The retiring partners have paid the amount of balance outstanding in their respective capital account. The Deeds of Retirement and Memorandum of Understanding in simplicitor amounts to a family arrangement among the members of the family. Hence the applications are not maintainable since the issue involved in the suit is not with regard to the

trademark, whereas the issue is with regard to the title of the trademark. 11.

The learned counsel appearing for the applicants contended that since the applications are pending before the Hon'ble Intellectual Property Appellate Board under section 124 of the Trademarks Act, 1999, the Appellate Board is a competent authority to decide the validity of the trademark with the registration and when the invalidity of the trademark is questioned and pending before the appropriate authority, the suit cannot be proceeded under Section 124 of the Trademarks Act, 1999. Hence, it is contended that now the matter is adjourned by the Hon'ble Intellectual Property Appellate Board till December. In view of the same, the suit has to be stayed. 12.

Learned Counsel appearing for the respondents contended that in the entire written statement the invalidity of the trademark was never raised and similarly, there is no plea with regard to the invalidity of the registration of the trademark. In fact all the parties were parties in the application filed for trademark. The only dispute is with regard to the Memorandum of Understanding. This Court, in the order in O.A. Nos. 424 to 427 of 2007 in C.S. No. 291 of 2007 and O.A. Nos. 491 and 492 of 2007 in C.S. No. 360 of 2007 has held that, the plaintiff can use mark "Narasu's" in respect of the coffee products and defendants should use the mark only in respect of wheat products. The above interim order has reached finality, the suit cannot be stayed.

13. In support of his submissions he placed reliance of the Judgment in Country Inn Private Limited vs Country Inns reported in 2018 SCC Online Del 8549 in the HighCourt of Delhi at New Delhi has been produced and the materials have been placed before this Court. 14.

The suit in C.S. No. 291 of 2007 has been filed by Narasu's Coffee Company, a Firm represented by its Managing Partner Mr. P. Sivanantham against the defendants who are Narasu's Roller Flour Mill, a Firm represented by its partner Mr. M.V. Balasubramaniam and others. For permanent injunction restraining the defendants claiming infringement in any manner of the registered trademarks of the plaintiff's 'Narasu's' (word per se) and 'Narasus Coffee', passing off, infringment of the plaintiff's copyright etc,. 15.

The suit in C.S. No. 360 of 2007 has been filed by the Narasu's Roller Flour Mill, a Firm represented by its Partner Mr. M.V. Balasubramanian against the Narasu's Coffee Company, a Firm represented by its Managing Partner Mr. P. Sivanandham for a permanent injunction restraining the defendants from infringing the plaintiff's trademarks with or without device of the lady drinking coffee by use of the trademarks NARASUS or any mark deceptively similar to plaintiff's registered trademarks, passing off, etc,.

16. The disputed facts leading to the above suits are as follows:- (i) A person by name Lakshmi Narasimhan, who was also known as

'Narasu' established a shop selling coffee powder and coffee bean, under the name and style of 'Narasu's Coffee Company', way back in the year 1926. On account of his failure to meet the financial commitments, the business of Narasu's Coffee Company, was sold in a Court auction in the year 1966. One Mr. R.P. Sarathy, who is the third defendant in C.S. No. 291 of 2007, purchased the said business. The said R.P. Sarathy had two sons and two daughters. One of his sons died in a road traffic accident. The sole surviving son of R.P. Sarathy is P. Sivanantham, who is the present Managing Partner of Narasu's Coffee Company, the plaintiff in C.S. No. 291 of 2007. (ii) One of the daughters of R.P. Sarathy is Mrs. B. Latha, who is the fourth defendant in C.S. No. 291 of 2007. Her husband M.V. Balasubramaninan is the Managing Partner of Narasu's Roller Flour Mills, who is the first defendant in C.S. No. 291 of 2007 and the plaintiff in C.S. No. 360 of 2007.

(iii) R.P. Sarathy (third defendant in C.S. No. 291 of 2007), his two daughters B. Latha and B. Jayashree, his son P. Sivanantham and one Mahalakshmi Charities were originally the partners of M/s. Narasu's Coffee Company. Mahalakshmi Charities retired from the partnership with effect from 01.04.2006 and the wife of Sivanantham viz., Mrs. Lalitha was inducted as a partner, on 26.08.2006. On 27.08.2006, R.P. Sarathy and his daughters B. Jayashree and B.Latha retired from the partnership and P. Sivanantham's minor son (grandson of R.P. Sarathy) was inducted as a partner. Therefore, Narasu's Coffee Company, as on date, is a partnership firm consisting or Mr. P.

Sivanantham (Son of R.P. Sarathy), his wife Lalitha and his minor son only as partners.

(iv) After the father and sisters of Mr. P. Sivanantham, decided to leave the partnership firm, Narasu's Coffee Company, so that the said Sivanantham could take over complete control of the firm, a Memorandum of Understanding was entered into on 10.08.2006 between the said Sivanantham on the one hand and his father and sisters viz., R.P. Sarathy, B. Jayashree and B. Latha on the other hand. Under the Memorandum of Understanding, the said Sivanantham paid a sum of Rs. 26.5 crores to his father and sisters, which eventually led to their retirement from the firm on 27.08.2006. (v) Contending that with the aforesaid payment and the retirement of the father and sisters from the partnership firm, the entire goodwill of the partnership firm (Narasu's Coffee Company) which includes the trademark in the word and device 'Narasu's', vested absolutely with them, Narasu's Coffee Company, has come up with the suit C.S. No. 291 of 2007 for the various reliefs mentioned the preceding paragraphs.

(vi) It is the case of the plaintiff in C.S. No. 291 of 2007, that the trade mark with the word 'Narasu's' per se and the device of a lady drinking coffee enclosed in a circle is the exclusive property of Narasu's Coffee Company. It is their further case that the first defendant firm Narasu's Roller Four Mills agreed and undertake to market their products such as Atta, Suji and Maida under the trade name "Ullash', but started using the trademark and the device, in violation of such a specific understanding.

(vii) The plaintiff in C.S. No. 291 of 2007 Narasu's Coffee Company has obtained registration of the word mark 'NARASU'S COFFEE', under trade mark No. 337509 dated 15.06.1978 in respect of coffee beans, coffee powder, chicory powder, coffee roasted, instant coffee and liquid coffee, included in Clause 30 and the same has been renewed. The same trade mark in Tamil was registered under trade mark No. 337510. They have also obtained registration for the trademark Narasu's Delite in respect of Coffee under Clause 30 under trade mark No. 733371 dated 11.02.1997. The plaintiff has obtained registration of yet another trade mark 'Narasu's Udhayam' under trade mark No. 733369 dated 11.12.1997.

(viii) Though all the above registrations stand in the names of several persons trading as Narasu's Coffee Company, it is not in dispute that as on date, Narasu's Coffee Company is a partnership firm and that the said Sivanantham, his wife Lalitha and his minor son alone are the partners of Narasu's Coffee Company.

(ix) The plaintiff in C.S. No. 360 of 2007 viz., Mahalakshmi Roller Flour Mills was also started in the year 1989 by the father Mr. R.P. Sarathy and the said firm also had all the family members as partners. Just as R.P. Sarathy and his two daughters retired from Narasu's Coffee Company, leaving it exclusively to his son P. Sivanantham, a similar reconstitution of Narasu's Roller Flour Mills also took place, by which P. Sivanantham and one of his sisters by name Jayashree retired from Narasu's Roller Flour Mills. Therefore, Narasu's Roller Flour Mills got reconstituted with R.P. Sarathy, his daughter

Latha and his son-in-law M.V. Balasubramanian alone continuing as its partners.

(x) Narasu's Roller Flour Mills also claims to have applied for registration of certain trade marks carrying the word Narasu's. While four of the applications of Narasu's Roller Flour Mills for registration of the trade marks, are at various stages of processing, Narasu's Roller Flour Mills had obtained registration of two marks viz., (i) 'Narasu's Vetri' with trade mark No. 1320608 dated 16.11.2004 in respect of goods falling under Clause 30 and (ii) 'Narasu's Power' with trade mark No. 1320610 dated 16.11.2004 in respect of the goods falling under Clause 30.

(xi) Claiming that they have adopted the word 'Narasu's' with the device of a lady drinking coffee from a cup held in her hands enclosed within a circle and that their application for registration of the same is also pending. Narasu's Roller Flour Mills has come up with the suit C.S. No. 360 of 2007 for the relief's stated supra."

17.

This Court by an order dated 07.11.2007 held that in view of the above, a journey into the law relating to infringement or passing off of a trade mark or copy right, is wholly unnecessary for deciding the dispute on hand. Prima facie, the partnership firms own these trade marks and hence the partners who now constitute these firms will have exclusive rights over the marks owned by them. Hence, all the applications are disposed of with the following directions:-

"(a) The word marks Narasu's, Narasu's Coffee, Nasasu's Delite and Narasu's Udhayam as well as the device mark with a lady sipping coffee from a cup held in her hand enclosed within a circle, can be used by the plaintiff in C.S. No. 291 of 2007 viz., Narasu's Coffee Company, to the exclusion of the defendants, in respect of coffee beans, coffee powder, chicory powder, roasted coffee, instant coffee and liquid coffee included in Clause 30, subject to any restriction (including disclaimer, if any) that had been imposed under the Certificates of Registration bearing trade mark Nos. 337509, 337510, 73371 and 73369. The defendants in C.S.No. 291 of 2007 are restrained from using the same word mark and device mark in respect of these goods such as coffee and coffee products.

(b)The work marks Narasu's power, Narasu's Vetri, Narasu's Wheel and euR!; with the device of a lady sipping coffee from a cup held in her hand enclosed within a circle and found within a dotted oval shaped outline, may be used by Narasu's Roller Flour Mills in relation to all types of Wheat products including Atta, Maida, Suji, Rough Bran, Bran Flakes, Wheat Atta to the exclusion of Narasu's Coffee Company. (c)If Narasu's Coffee Company, carries on business in Wheat products, it shall not use the above same or similar word mark and the device mark for those products. Similarly, if Narasu's Roller Flour Mills carries on business in coffee products, it shall not use the same or similar word mark or device mark in relation to such products."

18. Though the said order has been challenged before the Division Bench of this Court, the Division Bench by an order dated 29.08.2016

dismissed the appeals with certain observations which are as follows:- "7. The learned Counsel for the parties state that in view of what has been observed aforesaid and considering the suit is quite old, they are willing to take steps to expedite the trial in the suit. Thus, the following agreed directions are passed:- (i) In the suit in question as well as the connected suit, pleadings be completed. Written statement, if not filed, will be filed within four weeks from today.

(ii) Replication be filed within two weeks thereafter. (iii) Parties will file the respective original documents in their possession within the same period of time. (iv) The suits be listed before the Master of this Court for exhibiting the documents on 01.11.2016.

(v) The suits will be listed before the Court for settlement or Issues on 16.11.2016.

(vi) In view of the heavy board of the Master of this Court, the parties will get the evidence recorded before a retired Judicial officer to act as the Commissioner and the fee and expenses will be shared equally between the parties. (vii) The Commissioner will endeavour to complete the recording of evidence within a period of four months of the first date fixed by him.

(viii) On conclusion of the evidence, the suits will be listed before the Court for direction for final hearing. (ix) Mr. J. Krishnamurthy, retired District Judge (Mobile No. 9442092363), B2/D, First Floor, Nu-Techkrishna, old No. 15, New No. 37, Soundarajan Street, T.Nagar, Chennai - 17 is appointed as the Commissioner to record the evidence and the fee of the Commissioner is fixed at Rs. 50,000/- (Rupees Fifty

Thousand), apart from out of pocket expenses to be shared equally between the parties."

19.

The Division Bench of this Court has passed an order in the year 2016 and the order has become final and the same is not disputed. From 2016, the parties have not gone for trial, despite the directions of the Division Bench and the applications have been filed in the year 2018 for stay of the suit. The stay, if sought on the ground that proceedings for rectification of the registration in relation to the plaintiff's or defendant's trade mark are pending before the Registrar or the Appellate Board. It is useful to refer under Section 124 of the Trademarks Act 1999, which are as follows:- "124. Stay of proceedings where the validity of registration of the trade mark is questioned, etc.

(1) Where in any suit for infringement of a trade mark- (a) the defendant pleads that registration of the plaintiff's trade mark is invalid ; or (b) the defendant raises a defence under clause (e) of sub-section (2) of section 30 and the plaintiff pleads the invalidity of registration of the defendant's trade mark, the court trying the suit (hereinafter referred to as the court), shall,- (i) if any proceedings for rectification of the register in relation to the plaintiff's or defendant's trade mark are pending before the Registrar or the Appellate Board, stay the suit pending the final disposal of such proceedings; (ii) if no such proceedings are pending and the court is satisfied that the plea regarding the invalidity of the registration

of the plaintiffs or defendant's trade mark is prima facie tenable, raise an issue regarding the same and adjourn the case for a period of three months from the date of the framing of the issue in order to enable the party concerned to apply to the Appellate Board for rectification of the register.

(2) If the party concerned proves to the court that he has made any such application as is referred to in clause (b) (ii) of sub-section (1) within the time specified therein or within such extended time as the court may for sufficient cause allow, the trial of the suit shall stand stayed until the final disposal of the rectification proceedings.

(3) If no such application as aforesaid has been made within the time so specified or within such extended time as the court may allow, the issue as to the validity of the registration of the trade mark concerned shall be deemed to have been abandoned and the court shall proceed with the suit in regard to the other issues in the case.

(4) The final order made in any rectification proceedings referred to in sub-section (1) or sub-section (2) shall be binding upon the parties and the court shall dispose of the suit conformably to such order in so far as it relates to the issue as to the validity of the registration of the trade mark.

(5) The stay of suit for the infringement of a trade mark under this section shall not preclude the court from making any interlocutory order (including any order granting an injunction, directing account to be kept, appointing a receiver or attracting any property), during the period of the stay of the suit."

20.

On the facts and perusal of the consequential orders, it is seen that mere pendency of any application for rectification is not a ground to stay the suit, only when the plea as to invalidity or validity the trademark registered in favour of the plaintiffs is in issue rigour of Section 124 words apply. The trademarks have been registered in the name of various persons particularly, family members of the plaintiffs and defendants. All of them are parties to applications.

21.

In the entire written statement, except the pleadings that registration of trademark by the plaintiff in C.S. No. 360 of 2007 by fraud and suppression no particulars as to the nature of fraud have been pleaded. It is well settled that the party who plead fraud should give details as to the fraud, as contemplated under Order VI Rule 4 of Civil Procedure Code. 22.

Similarly, in paragraph No. 38 of the written statement, it is stated that the plaintiff has obtained registration of the trademark Narasu's under No. 1320610 and NARASU'S VETRI by playing fraud and deceit on the statutory authority as well as the erstwhile partners of the plaintiff firm. Such statement also bereft of details.

23.

However, invalidity of certificate has not been raised in the entire written statement except the vague denial of allegations. In view of that, on the basis of such stand taken in the written statement, it cannot be contended that the plea with regard invalidity has been raised in the written statement. Whereas, the entire pleadings of both sides are in respect of the Memorandum of Understanding and its implementation. The entire list relates to running of the business of the family members. The issue is actually not in respect of registration or validity or invalidity of the trademarks. The main focus of the issue involves in the suit is with regard to the Memorandum of Understanding reached between the family members in the business. In such view of the matter, I am of the view that merely on the basis of some applications have been filed by one of the defendant before the Intellectual Property Appellate Board, it cannot be stated that the suit has be stayed.

24. Admittedly, the suit is pending from the year 2007 and for more than ten years the applicant herein has suffered an interim order, which has reached finality, despite the directions of the Court to complete the trial, applicant has adopted dilatory tactics in prolonging the suit. Since the entire issue relates to the dispute of the family members, this Court is of the view that, those issues can be decided only by the Civil Court with the proper evidence by the parties.

25. Taking into consideration of the nature of the dispute between the parties, this Court is of the view that, invalidity or validity is not an issue and the main issue relates to the control and management of the family business and those issues can be gone into only by the Civil Court and not by IPAB.

26. In view of the aforesaid facts, these two applications are dismissed. No costs.

Post the suits for framing issues on 23.09.2019. Sd/.N.S.K.J.

09.09.2019 //Certified to be a true copy// Dated this the th day of 2019. SU.20.09.2019 COURT OFFICER From 25.09.2008 the Registry is issuing certified copies of the Order/Judgment Decree in this format.