Malikchand vs Manikchand: The Battle Over an Unregistered Trademark and the Supreme Court's Guidance on Passing Off, Assigned Marks, and Interim Injunctions
Introduction
When two businesses claim rights over similar-sounding trademarks for the same category of products, and neither of them holds a registered trademark, the resulting legal battle can be complex, bitter, and full of disputed facts. The situation becomes even more complicated when one party claims its rights not on the basis of its own long use of the mark, but on the basis that the mark was assigned to it by someone who used it earlier. In such circumstances, can a court grant an emergency injunction stopping one party from using its mark while the full case is being heard? And if two courts below have already decided to grant such an injunction, should the Supreme Court step in and overturn that decision?
These are the questions that the Supreme Court of India addressed in its decision dated 25 February 2005 in Dhariwal Industries Ltd. and Another v. M.S.S. Food Products, reported as (2005) 3 Supreme Court Cases 63. The judgment, delivered by a Bench comprising Justice B.P. Singh and Justice P.K. Balasubramanyan, touches upon several important legal principles — the passing off action for unregistered trademarks, the right to claim prior use through an assignor, the scope of the Supreme Court's interference in interlocutory matters, and the role of public health considerations in the balance of convenience. It is a judgment that is practical, nuanced, and genuinely useful for anyone who deals with trademark disputes in the consumer goods sector.
Factual and Procedural Background
The dispute in this case arose out of competing claims over two very similar-sounding marks: "Malikchand" and "Manikchand." Both marks were used for the same category of products — pan masala, gutkha, supari, and supari mix. Neither party held a registered trademark at the time the suit was filed, though both had subsequently applied for registration and their applications were pending.
M.S.S. Food Products, the respondent-plaintiff, claimed that it and its predecessors had been using the mark "Malikchand" since around 1960 for these products. The plaintiff's claim of prior use was not based solely on its own use of the mark. It claimed to have received the right to use the mark "Malikchand" through a series of three assignments — that is, formal transfers of the mark — from the original users. In other words, the plaintiff was saying: we may not have started using this mark ourselves from the very beginning, but the original users transferred their rights to us through proper legal documents, and we can therefore claim the benefit of their prior use. This concept of "tacking on" the prior use of the assignor to the assignee's claim is recognized under Section 39 of the Trade Marks Act, 1999, which allows an unregistered trademark to be assigned or transmitted with or without the goodwill of the business.
The defendants, Dhariwal Industries Ltd. and another, were also marketing pan masala, gutkha, and supari under the mark "Manikchand." They claimed to be well-established in the market, having built up considerable reputation and goodwill under that name. They asserted that the plaintiff was a rival trader who was well aware of their use of "Manikchand" for a considerable time, and that the plaintiff's belated approach to the court was an attempt to interfere with their established trade.
The plaintiff filed Civil Suit No. 8-A of 2004 before the District Court of Mandaleshwar, Madhya Pradesh. Along with the suit, it filed an application, designated IA No. 2 of 2004, under Order 39 Rules 1 and 2 of the Code of Civil Procedure, 1908, seeking an interim injunction to restrain the defendants from selling products under the mark "Manikchand" pending the outcome of the suit. The defendants appeared and not only filed objections to the injunction application but also filed their own application, IA No. 5 of 2004, under Order 39 Rule 4 of the Code of Civil Procedure, seeking to vacate the ad interim injunction that the trial court had initially granted.
Both parties produced various documents before the trial court, and the genuineness and validity of those documents was hotly contested from both sides. The trial court, by its order dated 6 April 2004, held that the plaintiff had made out a prima facie case for an interim injunction and that the balance of convenience was in its favour. It accordingly confirmed the ad interim injunction, allowed IA No. 2 of 2004, and dismissed IA No. 5 of 2004, meaning the injunction against the defendants would continue until the final disposal of the suit.
The defendants then appealed to the Madhya Pradesh High Court under Order 43 Rule 1(r) of the Code of Civil Procedure, which allows a party to appeal against an order granting or refusing an interlocutory injunction. The High Court, by its judgment and order dated 11 May 2004 in MA No. 904 of 2004, examined the arguments raised before it and came to the conclusion that the trial court's order could not be described as incorrect, arbitrary, or perverse. The High Court confirmed the injunction. However, it gave an additional direction to the trial court to conclude the trial of the suit expeditiously, preferably within a period of six months from the date of receipt of a copy of its order. The defendants were not satisfied with this outcome and approached the Supreme Court of India by way of a Special Leave Petition, which was converted into Civil Appeal No. 1407 of 2005.
The Dispute
The central issues before the Supreme Court were of both law and fact, though the Court was careful to recognize the limited scope of its jurisdiction at this interlocutory stage. The core factual question was whether the plaintiff had prima facie established that it was the prior user of the mark "Malikchand" — either through its own use or through the assignments from its predecessors. The defendants argued strenuously that the assignment documents relied upon by the plaintiff were forged or manufactured specifically for the purpose of this litigation, and hence entirely unreliable.
The core legal questions were threefold. First, can a plaintiff in a passing off action base its claim of prior use on assignments received from earlier users — that is, can it "tack on" the prior use of its assignors? Second, what documents and materials can be considered by the Supreme Court when hearing an appeal against an interlocutory order, particularly when fresh documents have been placed before it that were never shown to the trial court or the appellate court? Third, given that both the trial court and the High Court had granted and confirmed the interim injunction, was there any ground for the Supreme Court to interfere at this stage under its special leave jurisdiction under Article 136 of the Constitution of India?
Additionally, two subsidiary questions arose. The defendants had argued that even if the injunction was to be maintained, they should be allowed to sell their products under the "Manikchand" name if they maintained separate accounts of sales, so that any damages payable to the plaintiff at the end of the trial could be calculated. They also argued that the plaintiff had been guilty of delay and laches — meaning that the plaintiff had known about the defendants' use of "Manikchand" for a long time and had waited too long before filing the suit, thereby disentitling itself to an urgent remedy.
Reasoning and Analysis of the Judge
The judgment was delivered by Justice P.K. Balasubramanyan on behalf of the Bench. The reasoning is careful, practical, and marked by a clear awareness that at the interlocutory stage, a court must be cautious about making final pronouncements on disputed questions of fact.
The Court first addressed the legal foundation for the passing off action. It noted that Section 27 of the Trade Marks Act, 1999 expressly states that nothing in the Act shall be deemed to affect the right of action against any person for passing off goods as the goods of another person, or the remedies in respect thereof. This provision makes clear that a passing off action is completely independent of registration — the absence of a registered trademark does not stand in the way of a party bringing a passing off suit and seeking an injunction, as long as it can establish prima facie that it was the prior user of the mark and that the balance of convenience favours the grant of an injunction.
On the question of whether an assignee can claim the benefit of its assignor's prior use, the Court referred to Section 39 of the Trade Marks Act, 1999. That provision states that an unregistered trademark may be assigned or transmitted with or without the goodwill of the business concerned. The Court held that this provision makes it legally possible for a plaintiff or defendant to show that an unregistered trademark that was being used by another person earlier had been assigned to it, and that such an assignee can tack on the prior use of its predecessor. This is an important and clear ruling: in a passing off action, a party whose title to a mark derives from an assignment is not at a disadvantage compared to someone who has personally used the mark from the beginning, provided the assignment is valid and genuine. The plaintiff was therefore legally entitled to rely on the assignments to assert prior use of the mark "Malikchand."
The Court then addressed the fundamental evidentiary question at this stage: what happens when the very documents on which a party's case rests are challenged as forged or fabricated? The defendants had invested considerable time and effort before the Supreme Court in challenging the three assignment deeds produced by the plaintiff, raising issues about the stamp papers used, the dates of execution, and the licence status of the stamp vendor. The Court observed that the trial court had noted the prima facie evidence of prior use while also acknowledging that the question of whether the assignment documents were genuine was one to be finally decided only at trial. The High Court had similarly taken the view that a wholesale condemnation of the plaintiff's documents as forged could not be made at the interlocutory stage. The Court in the Supreme Court agreed with this approach. It noted that even before it, a document relating to one of the prior assignments had allegedly been seized during an income tax raid in 2001, and a document acknowledging that seizure was produced. The Court held that at this prima facie stage, it was not possible to decide whether the documents had been manufactured for the litigation. Questions of genuineness, admissibility, and discrepancy in documents are matters to be decided at trial, not at the interlocutory stage.
The Court addressed the scope of its own jurisdiction in a pointed and practical way. It noted that the present appeal had come before it under Article 136 of the Constitution of India, which allows the Supreme Court to grant special leave to appeal from any judgment or order passed by any court or tribunal in India. When the Supreme Court exercises this jurisdiction in an interlocutory matter, the materials it can properly consider are normally those that were produced before the trial court or before the appellate court with the permission of that court under Order 41 Rule 27 of the Code of Civil Procedure. In this case, the defendants had produced a large number of documents before the Supreme Court that had never been shown to the trial court or the High Court. The Court firmly declined to enter into an adjudication based on these fresh documents, particularly since their authenticity and genuineness were mutually questioned. It confined itself to the materials that had been before the courts below, as is appropriate in an interlocutory appeal of this nature.
On the question of delay and laches, the Court accepted that this was a potentially relevant consideration in the balance of convenience analysis. However, it noted two important factors. First, the High Court had concluded that the present suit was in substantial part triggered by the defendants' own suit filed in the High Court of Bombay, where they had sought to restrain the plaintiff from using the mark "Malikchand" on the ground that it was deceptively similar to their mark "Manikchand." The plaintiff, apprehensive that its mark was about to be annihilated by a court order, responded by filing the present suit to assert its own prior user rights. In that context, the delay in approaching the trial court was understandable and was not the kind of unjustified delay that disentitles a party to interim relief. Second, and more importantly, the argument of delay and laches had not been properly or clearly raised by the defendants in their written submissions before the trial court or the High Court. It would not be appropriate for the Supreme Court to refuse relief on a ground that had not been squarely put before and considered by the courts below. The Court noted that in any event, once the trial court had adverted to the question and granted the injunction, and the High Court had confirmed it, the Supreme Court at the special leave stage would not be justified in reversing that decision solely on the ground of delay and laches. The argument was kept open for the defendants to raise at the final trial.
On the question of balance of convenience, the defendants had argued that instead of maintaining the injunction, the Court should allow them to continue selling under the "Manikchand" mark on the condition that they maintained separate accounts of sales, so that any ultimate liability could be quantified. The Court rejected this suggestion. It noted that the interim injunction had been in force since 16 March 2004 — at least seven months by the time the matter came before the Supreme Court. Importantly, the defendants had already changed the format of their product wrapper and were continuing to market their products under the brand name "RMD" after the injunction was granted. In this context, directing them to maintain separate accounts would in effect mean modifying the injunction and allowing them to resume use of the disputed name "Manikchand," which the courts below had specifically prohibited. The Court declined to do this.
The Court also noted, in a passage of significant public interest value, that the High Court had drawn attention to several cases registered against the defendants under the Prevention of Food Adulteration Act on the ground of alleged adulteration of the pan masala and gutkha sold by them under the name "Manikchand." The Court invoked Article 47 of the Constitution of India, which places a duty on the State to improve public health and nutrition and to prohibit the consumption of intoxicating drinks and drugs injurious to health. The Court clarified that it was referring to the adulteration aspect not to pronounce on the merits of those prosecutions, but only to reinforce the conclusion that in exercising its discretion, it would not interfere with the injunction granted below. The product itself — gutkha and pan masala — was noted to be potentially harmful to health, and adulterated versions of it even more so. This consideration reinforced the balance of convenience in favour of maintaining the injunction.
Finally, the Court reiterated the general principle that there cannot be any absolute rule regarding interference or non-interference in interlocutory matters when the Supreme Court exercises its jurisdiction under Article 136. The arguments of both sides must be kept in mind. However, the Court must also guard against making final pronouncements on contested issues of fact lest it prejudice the fair trial of the suit. Both the balance of convenience and the prima facie case had been decided in the plaintiff's favour by two courts. The Supreme Court found no basis to disagree.
Final Decision of the Court
The Supreme Court dismissed the appeal filed by Dhariwal Industries Ltd. It declined to interfere with the order of the Madhya Pradesh High Court confirming the interim injunction granted by the trial court. The injunction restraining the defendants from selling products under the mark "Manikchand" was upheld. The Court also directed the trial court to comply with the High Court's earlier direction to try and dispose of the suit expeditiously, and to complete the trial and final disposal within a period of six months from the date of the Supreme Court's order of 25 February 2005.
Points of Law Settled in the Case
This judgment settles several important and practically useful legal principles that continue to be relevant in trademark and passing off litigation.
The first and most significant point is that an assignee of an unregistered trademark can claim the benefit of the prior use of its assignor. Under Section 39 of the Trade Marks Act, 1999, an unregistered mark can be assigned with or without the goodwill of the business. The assignee is entitled to "tack on" the earlier use by its predecessor to establish its own priority of use for the purpose of a passing off action. This means that a person who acquires an unregistered mark through a valid assignment does not have to start counting priority only from the date of the assignment — it can go back to when the original user first used the mark.
The second point is that in a passing off action, the absence of registration does not bar a plaintiff from claiming an interim injunction, provided it can make out a prima facie case of prior user and a balance of convenience in its favour. Section 27 of the Trade Marks Act, 1999 expressly preserves the common law right of action for passing off regardless of whether either party holds a registered mark.
The third point relates to the evidence at the interlocutory stage. A court cannot wholesale condemn documents produced by a party as forged or fabricated at the interim stage of a lawsuit. The genuineness of documents is a matter to be decided at trial. At the interlocutory stage, the court only needs to satisfy itself that the documents prima facie support the case being made, and that there is no compelling reason to reject them entirely before the trial.
The fourth point concerns the scope of the Supreme Court's jurisdiction under Article 136 of the Constitution in interlocutory matters. The Court should not base its decision on fresh documents produced for the first time before it, especially when those documents' authenticity is disputed. The materials to be considered are normally those that were before the trial court and the appellate court.
The fifth point is that delay and laches, while relevant to the balance of convenience, will not automatically disentitle a party to an interim injunction — particularly when the delay was triggered by the conduct of the opposing party itself, and when the argument of delay was not properly raised and argued before the courts below.
Case Details
Title: Dhariwal Industries Ltd. and Another v. M.S.S. Food Products
Date of Order: 25 February 2005
Case Number: Civil Appeal No. 1407 of 2005 (Arising out of SLP (C) No. 14862 of 2004)
Citation: (2005) 3 Supreme Court Cases 63
Name of Court: Supreme Court of India
Name of Hon'ble Judges: Justice B.P. Singh and Justice P.K. Balasubramanyan
Disclaimer: Readers are advised not to treat this as a substitute for legal advice as it may contain errors in perception, interpretation, and presentation.
Written By: Advocate Ajay Amitabh Suman, IP Adjutor [Patent and Trademark Attorney], High Court of Delhi
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Headnote
SC-Dhariwal Industries Ltd. and Another Vs. M.S.S. Food Products — Supreme Court of India — Civil Appeal No. 1407 of 2005 — Decided on 25 February 2005 — (2005) 3 SCC 63
Held: In a passing off action concerning an unregistered trademark, the plaintiff is entitled to maintain the action and claim interim injunction by demonstrating prima facie prior user of the mark, even in the absence of registration, in view of Section 27 of the Trade Marks Act, 1999, which expressly preserves the common law passing off remedy. Under Section 39 of the Trade Marks Act, 1999, an unregistered trademark may be assigned with or without the goodwill of the business, and an assignee of such an unregistered mark is entitled to tack on the prior use of its assignor to establish priority of use for the purpose of a passing off action. The genuineness and authenticity of assignment documents relied on to establish prior user cannot be conclusively determined at the interlocutory stage; such questions are to be decided only at trial. The Supreme Court, exercising jurisdiction under Article 136 of the Constitution in an interlocutory matter, confines its consideration to materials that were before the trial court and the appellate court and does not enter into adjudication based on fresh documents produced for the first time before it, particularly when their authenticity is disputed. Where both the trial court and the first appellate court have, on a consideration of the relevant materials, granted and confirmed an interim injunction in favour of the plaintiff in a passing off action, and those courts have prima facie accepted the case of prior user, the Supreme Court will not interfere with such orders unless they can be characterized as perverse or unreasonable. Argument of delay and laches, while relevant to balance of convenience, does not automatically defeat a claim for interim injunction, particularly where the delay was provoked by the opposing party's own litigation and the argument was not clearly raised before the courts below. Appeal dismissed.
