CS (COMM) 728/2018 Decided On: 18.11.2019 Arun Chopra Vs. Kaka-Ka Dhaba Pvt. Ltd. and Ors. Hon'ble Judges/Coram: Prateek Jalan, J. Counsels: For Appellant/Petitioner/Plaintiff: Shobhana Takiar, Advocate For Respondents/Defendant: Hiren Kamod and Rahul Vidhani, Advocates JUDGMENT Prateek Jalan, J. I.A. 15056/2016 in CS (COMM) 728/2018 1. This is an application by the plaintiff for stay of the proceedings in the present suit under Section 124 of the Trade Marks Act, 1999 (hereinafter referred to as "the Act"). Facts 2 . The plaintiff has filed the present suit on 06.03.2014 alleging infringement of his registered trademark "K-D-H KAKE-DA-HOTEL" by the defendants' use of the mark "KAKA-KA DHABA", "KAKA-KA HOTEL", "KAKA-KA RESTAURANT" AND "KAKA- KA GARDEN". His contention is that he is running a restaurant under the trademark "K-D-H KAKE-DA-HOTEL", the mark having been adopted by his late father in 1931 in respect of a restaurant in Lahore. The registration of the mark was first granted in favour of his father on 14.12.1950. The case of the plaintiff is that he came across the defendants'
application for registration of the label mark in February 2014 and
thereafter discovered that the defendants are trading under the names "KAKA-KA DHABA", "KAKA-KA HOTEL", "KAKA-KA RESTAURANT" AND "KAKA-KA GARDEN". The trademark application revealed that the defendants claimed use of the mark since 15.05.2006, although on their website it has been stated that the mark is being used since 1982. 3 . The defendants filed a written statement dated 13.05.2014, in which one of the
defences taken is that the defendant no. 1 has a registered trademark
which was registered on 15.05.2006. The defendant no. 1 claims to have used the mark since 14.08.1997. It is stated in the written statement that although defendant no. 1 was incorporated in 1997, and its claim of user of the mark could not predate its
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incorporation, the mark was used since 1980s for a food cart and since 1993 for a restaurant. The defendants have therefore inter alia invoked the exemption provided in Section 30(2)(e) of the Act. 4 . The replication filed by the plaintiff in July, 2014 controverted the defendants' contention that there is no similarity between the plaintiffs registered marks and the marks used by the defendants. 5 . In the present application, filed on 02.12.2016, the plaintiff states that he has applied for cancellation of the registration of the defendants' mark before Intellectual Property Appellate Board ("IPAB") in December 2016 and therefore seeks stay of proceedings in the suit under Section 124 of the Act. 6. During the course of proceedings, an ex-parte ad-interim order of injunction against the use of the impugned marks was passed on 10.03.2014. The plaintiffs application under Order XXXIX Rules 1 and 2 of the Code of Civil Procedure, 1908 (hereinafter referred to as "the CPC") (IA No. 4382/2014) and the defendants' application under Order XXXIX Rule 4 of the CPC (IA No. 9392/2014) were disposed of by a judgment dated 28.11.2018 in the following terms:- "11. It is not seriously in dispute that the defendants have been using the expression 'Kaka-ka' since at least 15 years in the city of Nashik. They were earlier running four outlets but presently three outlets are operational. They have several employees and have gained reputation locally. The Plaintiff has gained immense reputation in Delhi and the reputation may be spilled over in various parts of the country, but they have only one outlet. Various issues are to be adjudicated which would need evidence including as to whether the names/marks as also whether there is any likelihood of confusion owning to prior use of its name. On the balance, the following interim arrangement would serves the ends of justice. (1) The Defendants are permitted to use the name 'Kaka-ka' Dhaba'. 'Kaka-ka Restaurant' and 'Kaka-ka Garden' for the three restaurants/outlets already operating in Nashik, Maharashtra. However, they will not use the name 'Kaka-ka Hotel'. (2) The Defendants shall not open any further outlet with the name 'Kaka-ka', during the pendency of the present suit. (3) The Defendants shall maintain complete accounts of all sales which they are conducting in their three restaurants/outlets. The company 'Kaka-ka Dhaba Pvt. Ltd. shall continue to operate under the said name. However, no fresh company/firm or any other entity shall be commenced by the name 'Kaka-ka'. (4) All the outlets running in Nashik, Maharashtra are stated to be under the control and management of Mr. Jugesh Chaddha and Mr. Mahesh Chaddha Defendant No. 2 and Defendant No. 6 respectively. Both the said individuals shall file their undertakings before this Court that if any order is passed for damages/rendition of accounts, they shall be abide by the same and they shall file the quarterly accounts of their outlets at the end of each quarter by the 10th of the next month. (5) The Defendants shall change the name 'Kaka-Ka Hotel' within 30
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days." The plaintiffs appeal against the said judgment [FAO (OS)(COMM) 308/2018] was dismissed by the Division Bench on 19.12.2018. Submissions 7 . I have heard Ms. Shobhana Takiar, learned counsel for the plaintiff and Mr. Hiren Kamod, learned counsel for the defendants. 8 . Ms. Takiar submits that, the plaintiff invokes Section 124 (1)(b) of the Act, as the defendants have raised a defence under Section 30(2)(e). It is her contention that the plaintiff has pleaded the invalidity of registration of the defendants' mark, and that this plea is prima facie tenable. She drew my attention to the averments contained in the replication, which are dealt with below. She also cited the decision of the Supreme Court in Patel Field Marshal Agencies and Ors. vs. P. M. Diesels Ltd. and Ors. MANU/SC/1509/2017 : (2018) 2 SCC 112, followed by this Court in Abbott Healthcare Pvt. Ltd. vs. Raj Kumar Prasad and Ors. MANU/DE/0198/2018 : 249 (2018) DLT 220. She submitted that the plaintiff has already made the requisite application to the IPAB and therefore seeks a stay of the suit until the disposal of those proceedings. 9. Mr. Kamod, on the other hand, emphasised that Section 124 of the Act can come into play for a post-suit rectification only when (i) the pleadings disclose a challenge to the validity of a registered trademark, and (ii) that plea is found to be prima facie tenable. He submitted that neither of these conditions were fulfilled in the present case. Mr. Kamod relied upon the Supreme Court decision in Patel Field Marshal (supra) and Apex Shoe Company Pvt. Ltd. vs. Baldev Singh [CRP No. 80/2019, decided on 22.08.2019]. He distinguished the judgment of this Court in Abbott Healthcare (supra). Mr. Kamod also submitted that the present application is not maintainable as the plaintiff has applied to the IPAB without any finding by this Court regarding the existence or prima facie tenability of its plea of invalidity of the defendants' trademark. Analysis 10. The relevant provisions of Sections 30 and 124 of the Act are as follows:- "30. Limits on effect of registered trade mark.- xxxx xxxx xxxx (2) A registered trade mark is not infringed where- xxxx xxxx xxxx (e) the use of a registered trade mark, being one of two or more trade marks registered under this Act which are identical or nearly resemble each other, in exercise of the right to the use of that trade mark given by registration under this Act. xxxx xxxx xxxx 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--
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(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 plaintiff's 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 a 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 attaching any property), during the period of the stay of the suit." (Emphasis supplied.) 11. The judgment of the Supreme Court in Patel Field Marshal (supra), relied upon by both sides, has laid down the procedure to be adopted while dealing with applications under Section 124 of the Act. Although the said judgment was rendered in the context of the Trade Marks Act 1958, it is noticed in paragraphs 10 and 16 thereof that the provisions of the Trade Marks Act, 1999 are in pari materia with the provisions of the 1958 Act.
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12. The interpretation of the relevant provisions is contained in the following extracts of the said judgment:- "31. Rather, from the resume of the provisions of the 1958 Act made above, it becomes clear that all questions with regard to the validity of a trade mark is required to be decided by the Registrar or the High Court under the 1958 Act or by the Registrar or the IPAB under the 1999 Act and not by the civil court. The civil court, in fact, is not empowered by the Act to decide the said question. Furthermore, the Act mandates that the decisions rendered by the prescribed statutory authority [Registrar/High Court (now IPAB)] will bind the civil court. At the same time, the Act (both old and new) goes on to provide a different procedure to govern the exercise of the same jurisdiction in two different situations. In a case where the issue of invalidity is raised or arises independent of a suit, the prescribed statutory authority will be the sole authority to deal with the matter. However, in a situation where a suit is pending (whether instituted before or after the filing of a rectification application) the exercise of jurisdiction by the prescribed statutory authority is contingent on a finding of the civil court as regards the prima facie tenability of the plea of invalidity. 32. Conversely, in a situation where the civil court does not find a triable issue on the plea of invalidity the remedy of an aggrieved party would not be to move under Sections 46/56 of the 1958 Act but to challenge the order of the civil court in appeal. This would be necessary to avoid multiple proceedings on the same issue and resultant conflict of decisions. xxxx xxxx xxxx 34. The intention of the legislature is clear. All issues relating to and connected with the validity of registration has to be dealt with by the Tribunal and not by the civil court. In cases where the parties have not approached the civil court, Sections 46 and 56 provide an independent statutory right to an aggrieved party to seek rectification of a trade mark. However, in the event the civil court is approached, inter alia, raising the issue of invalidity of the trade mark such plea will be decided not by the civil court but by the Tribunal under the 1958 Act. The Tribunal will however come into seisin of the matter only if the civil court is satisfied that an issue with regard to invalidity ought to be framed in the suit. Once an issue to the said effect is framed, the matter will have to go to the Tribunal and the decision of the Tribunal will thereafter bind the civil court. If despite the order of the civil court the parties do not approach the Tribunal for rectification, the plea with regard to rectification will no longer survive. xxxx xxxx xxxx 41. Section 111 of the 1958 Act, and the corresponding Section 124 of the 1999 Act, nowhere contemplates grant of permission by the civil court to move the High Court or the IPAB, as may be, for rectification. The true purport and effect of Sections 111/124 (of the old and new Act) has been dealt with in detail and would not require any further discussion or enumeration. The requirement of satisfaction of the civil court regarding the existence of a prima facie case of invalidity and the framing of an issue to that effect before the law operates to vest jurisdiction in the statutory authority to deal with the issue of invalidity by no means, tantamount to permission or leave of the civil court, as has been contended. It is a basic requirement to further the cause of justice by
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elimination of false, frivolous and untenable claims of invalidity that may be raised in the suit." (Emphasis supplied.) 13. Ms. Takiar also cited the decision of this Court in Abbott Healthcare (supra) which holds inter alia that an application, during the pendency of the suit, filed by the plaintiff for rectification of the defendant's mark does not bar an application under Section 124 of the Act. After analysing the judgment of the Supreme Court in Patel Field Marshal (supra), a Coordinate Bench of this Court held as follows:- "17. Thus, it cannot be said that the plaintiff, for having applied to the IPAB for rectification, after the institution of this suit and without seeking the permission of the Court under Section 124 of the Act, is now precluded from seeking such permission. As per the dicta of the Supreme Court, IPAB will not have jurisdiction to decide such application for rectification filed by the plaintiff without this Court pronouncing on the prima facie tenability of the plea of the plaintiff as to invalidity of the registration of the trade mark of the defendants. xxxx xxxx xxxx 28. The counsel for the plaintiff draws attention to Section 57(2) of the Act which entitles any person aggrieved from any entry made in the Register without sufficient cause, or from any entry wrongfully remaining on the Register, or from any error or defect in any entry in the Register, to apply to the Registrar or the IPAB for rectification. Attention is next invited to Section 11 of the Act prescribing the relative grounds for refusal of registration and which inter alia provides that a trade mark shall not be registered if because of its identity with an earlier trade mark and similarity of goods or services covered by the trade mark, or because of its similarity to an earlier trade mark and the identity or similarity of the goods or services covered by the trade mark, there exists a likelihood of confusion on the part of the public, which includes the likelihood of association with the earlier trade mark. The counsel for the plaintiff contends that there is no dispute that the plaintiff is the prior registrant of its mark 'ANAFORTAN' and a reading of the entire plaint shows pleas of similarity and likelihood of confusion having been made. It is further contended that the plaintiff in view of Section 12 of the Act, has in para No. 13 of the plaint reproduced above, also pleaded the registration of the mark of the defendants to be in bad faith. xxxx xxxx xxxx 32. The pleas of the plaintiff in the plaint, qua similarity and confusion are found to be in the context of infringement and passing off and the plaintiff is not found to have made the requisite pleas of the entry made in the Register with respect to the defendants' mark being without sufficient cause. In my view, when no proceedings for rectification of the Register in relation to the trade mark of the opposite party to a suit are pending before the Registrar or the IPAB, Section 124 of the Act cannot be invoked till the party invoking the same has, in its pleadings, pleaded the invalidity of registration of the mark of the opposite party. However, merely pleading invalidity would not suffice, inasmuch as the further requirement of Section 124 of the Act, is that the party so invoking Section 124 of the Act, must satisfy the Court that the plea regarding invalidity of registration of the mark of other is prima facie tenable and the Court raises an
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issue regarding the same. For the Court to raise an issue qua the plea of invalidity, the provisions of Order XIV Rule 1 of CPC, which provides that issues arise when a material proposition of fact or law is affirmed by one party and denied by the other. Issues are not to be framed on all propositions of fact or law to be found in the pleadings. xxxx xxxx xxxx 36. I am thus of the opinion that a mere plea of invalidity in the pleading would not be enough to raise an issue of invalidity or to satisfy the Court that the said plea is prima facie tenable. The party invoking Section 124 of the Act in its pleading will have to make specific averments that may entail it to have the registration of the mark of the other expunged from the Register, even though no such relief can be claimed from the Civil Court. 37. Supreme Court in Patel Field Marshal Agencies supra analyzed by me in the earlier judgment dated 4th December, 2017 in this suit, held that the plea with regard to invalidity of registration of trade mark can be deemed to have been abandoned on non-filing of an application for rectification, after order under Section 124 of the Act. It follows that (i) if no application under Section 124 of the Act is filed, even though plea of invalidity is taken in the suit, the said plea would also be deemed to be abandoned; and, (ii) that if plea of invalidity, though is taken but, is not a plea within the meaning of Order 14 Rule 1 of CPC on which the Court can raise an issue or on which the Court can be satisfied of the prima facie tenability thereof, even then the party taking such a plea would be deemed to have abandoned the right to challenge the validity of the registration of the mark of the other. 38. Though I have hereinabove observed that the pleas in the plaint pointed out by the counsel for the plaintiff are not requisite but following the principle enunciated in Teva Pharmaceutical Industries Ltd. v. Natco Pharma Ltd., MANU/DE/1373/2014 : (2014) 210 DLT 591 (DB), that the litigant ought not to suffer for poor pleadings and in view of the fact that Patel Field Marshal Agencies (supra) is of recent vintage and the counsels, on enquiry, state that there is no precedent on the said aspect, I am of the view that benefit should be given to the plaintiff and the aforesaid weakness in the pleadings of the plaintiff should not be allowed to come in the way of the plaintiff to now have an issue on the said aspect framed. " (Emphasis supplied.) 14. On the aforesaid analysis, the Court raised an additional issue as to the validity of the defendant's mark and stayed the suit pending adjudication of the rectification application by the IPAB. 15. It is in the context of the above decisions that the pleadings in the present case must be analysed, to come to a conclusion as to whether they are sufficient to support a plea of invalidity and that any such plea is prima facie tenable. The registration of the mark by defendant no. 1 having been pleaded only in the written statement, it is the replication to which we must turn. 16. The plaintiff, in the replication, has inter alia stated as follows:- "IV. The contents of paragraph IV of the preliminary objections are denied as
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utterly frivolous and baseless. It is vehemently denied that the Defendants has any reputation or is known to the public at large as claimed. On the contrary, it is the Plaintiff's submission that the Defendants have adopted the infringing trading name with the malafide to ride upon the Plaintiff's immense goodwill and reputation in the trademark KAKA-DA-HOTEL... xxxx xxxx xxxx VI-VII ...It is further denied as utterly frivolous that the Defendants' infringing trading names bears no similarity with the Plaintiff's well known trademarks "KAKA" and "KAKA-DA-HOTEL... xxxx xxxx xxxx XII ...It is submitted that Section 30 of the Trademarks Act, 1999 is available as an exception to the use of the registered trademarks only and hence it is prayed that the suit be decreed in terms of this admission alone. In any case, it is vehemently denied that the use of infringing mark by the Defendants is in bonafide and hence is allowed under any provision of law, let alone the sections as mentioned in the paragraphs under reply." 17. It is clear from the above that the plaintiff has inter alia averred that the marks being used by the defendants are deceptively similar to the plaintiff's registered mark and likely to cause confusion in the mind of the consumer. The plaintiff has also specifically alleged malafides in respect of the registration of the mark by defendant no. 1. Although there is no express plea with regard to the invalidity of the mark or the entry having been made in the register without having sufficient cause, the enquiry for the present purposes must be based on a holistic and meaningful reading of the pleadings rather than an insistence on a formulistic recital of a particular plea. This is particularly important because a finding against the party claiming cancellation of a registered trademark (in this case, the plaintiff) would render the plea abandoned for all time. In terms of the judgment in Patel Field Marshal (supra), the civil court would have no jurisdiction to decide this plea and, in the face of such a finding, neither would the IPAB. 18. Following paragraph 38 of Abbott Healthcare (supra), I notice that in the present case also, the replication was filed on 15.07.2014, well prior to the judgment in Patel Field Marshal (supra), which was delivered on 29.11.2017. Viewed in this context, I am of the view that the pleading is sufficient to support the present application of the plaintiff. 19. Mr. Kamod's submission regarding the maintainability of this application is based upon the proper procedure to be adopted when a rectification application is proposed to be made after the institution of the suit in the civil court. He submits that the proper course is for the Court to be asked to render findings on the pleading and tenability prior to filing of a rectification application. However, I am not satisfied that a reversal of that sequence renders the application itself incompetent. The Supreme Court in paragraph 31 of Patel Field Marshal (supra) expressly contemplated a situation where the suit may have been instituted before filing of a rectification application, and held that the exercise of jurisdiction by statutory authorities would be contingent on the finding of the civil court regarding prima facie tenability on the plea of invalidity. In such a case, the party alleging invalidity is bound to approach this Court after the institution of rectification proceedings, but the jurisdiction of IPAB to proceed would be contingent on the findings of the civil court.
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20. Mr. Kamod finally struck a note of caution, inasmuch as he submitted that all suits would be liable to be stayed if a plea of similarity of marks is considered sufficient to stay a suit under Section 124 of the Act. He submitted that every plaintiff in a trademark infringement action asserts similarity of the defendant's mark with his own registered trademark, and something more than that should be required in the present context. In my view, the statutory scheme, as explained by the Supreme Court in Patel Field Marshal (supra), cannot be restricted or rendered ineffective even if it has such a consequence. That said, Mr. Kamod's apprehension would apply if at all, only to cases where Section 124 is invoked pursuant to a defence being asserted under Section 30 (2) (e) of the Act, and the plaintiff pleading invalidity of the defendant's registered mark. The same would not be the case where the defendant does not have a registered mark at all, and/or in any event does not plead invalidity of the plaintiff's registered mark. In fact, the present case itself is an example of a situation where the defendants do not plead invalidity of the plaintiff's mark. I therefore do not consider this submission to be of such significance as to require a restricted approach to construction of the pleadings. 2 1 . In the written submissions filed on behalf of the defendants, the judgment in Abbott Healthcare (supra) is sought to be distinguished by reference to the pleadings filed in that case, as one of the counsel for the defendants in that case also represents the defendants in the present case. At the outset, I do not think that it is appropriate to enter into a comparative analysis of the pleadings in the two cases to the extent that they are not reflected in the order of the Court. The circumstance that one of the counsel is common is purely fortuitous. Those pleadings were not cited during arguments, and counsel for the plaintiff has had no opportunity to make submissions on them. I have, therefore, proceeded on a consideration of the pleadings in the present case alone, upon which the plaintiff's case must ultimately be determined. 22. Keeping in mind the phonetic and structural similarity between the registered mark of the plaintiff and the words "KAKA-KA" which form the principal part of the mark registered by defendant no. 1, the plea of the plaintiff is also prima facie tenable. This test is also satisfied by the grant of an interim order by this Court on 28.11.2018, affirmed by the Division Bench on 19.12.2018. The judgment of this Court dated 28.11.2018 notices that the issue of likelihood of confusion would require adjudication at the trial. The injunction against the defendants from opening any further outlet with the name "KAKA-KA" during the pendency of the suit, which has been affirmed by the Division Bench after noticing the registration obtained by the defendant no. 1, also indicates the prima facie tenability of the plaintiffs plea. 23. Mr. Kamod referred me to the order of a Coordinate Bench in Apex Shoe Company (supra), wherein the Court has upheld the order of the Trial Court declining to frame an issue regarding the validity of the mark in the absence of pleadings supporting the same. In view of my finding that the pleadings in the present case are sufficient for this purpose, the said judgment is inapplicable here. Conclusion 2 4 . As issues have not yet been framed in the suit, at this stage, I consider it appropriate to frame only the issue necessary for disposal of this application, and to defer the comprehensive framing of issues to a later stage. Consequently, for the present, the following issue is framed:
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