KRBL VS LAL MAHAL-PRATIBHA M.SINGH(H.J.)

$~19

*                    IN THE HIGH COURT OF DELHI AT NEW DELHI

+	CS (COMM) 929/2016
KRBL LTD			..... Plaintiff
	Through:Mr. S. K. Bansal, Mr. Ajay Amitabh
		Suman  and  Mr.  Veerendra  Kumar
		Sinha, Advocates. (M:9990389539)
	versus
LAL MAHAL LTD. AND ANR.			..... Defendants
	Through:Mr.   Mohan		Vidhani,   Mr.   Sumit
		Aggarwal  and  Ms.  Shweta  Thakur,
		Advocates. (M:9811083706)
CORAM:
JUSTICE PRATHIBA M. SINGH
	O R D E R
%	04.10.2018

I.A. 13698/2018 (u/O XXII Rule 10 CPC)

1.                 This is an application seeking substitution of M/s. Vigyat Trade Pvt. Ltd. in place of the present Defendant No.1 as the said entity has now purchased the trademark CHURCH GATE from Shri Lal Mahal Ltd. For the reasons stated in the application, M/s. Vigyat Trade Pvt. Ltd. is impleaded as Defendant No.3 in the matter. However, the original Defendant, Shri Lal Mahal Ltd. shall remain a Defendant in the present suit. Ordered accordingly.

2.                 I.A. is disposed of.

REVIEW APPLICATION 381/2018

3.                 Mr. Vidhani, learned counsel appearing for the Defendants/review applicants submits that the order dated 7^th September, 2018 is liable to be reviewed, inasmuch as the delay before the Local Commissioner and the

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non-appearance on three dates was completely inadvertent.  He has pointed

out various dates on which the Plaintiff sought adjournments before the

Local Commissioner.

4.                 The  background  of  the  present  suit  is  that  vide  order  dated  23^rd

February, 2015, while expediting the trial in the suit, injunction application

was disposed of. Since 2015, for whatsoever reasons, trial has not been concluded. On 30^th July, 2018, the Local Commissioner had put up the

matter before the Court by passing the following order.

“30.07.2018

Case is listed for further cross examination of PW1 Sh.

Sunil Kapoor, who is present.

None is present on behalf of the defendant. Even on the last two dates no one was present on its behalf. However today arrangement of computer operator has not been made nor judicial file has been summoned. Ld. Counsel for the plaintiff submits that the plaintiff has been spending money in making arrangement for recording of evidence including on the last two dates also, but suddenly, Ld. Counsel for the defendant has stopped attending. Consequently there is a prayer that the right of the defendant to cross examine PWl Sh. Sunil Kapoor, be closed.

PW1 Sh. Sunil Kapoor has filed certain documents. In view of the continued absence of the defendant today and also on the last two consecutive dates, it is observed that the defendant has failed to avail right of further cross examination of the said witness.

In view of the above report will be filed before the Hon'ble Court.”

5.                 Accordingly, right of the Defendants to cross examine was closed on

27  ^th August, 2018. None appeared for the Defendants even on the said date and the matter was listed for final arguments.

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6.                 When  the  matter  was  listed  for  hearing  final  arguments  on  7^th

September, 2018, learned counsel for the Defendants appeared before the Court and informed the Court that trademark CHURCH GATE has been sold to M/s. Vigyat Trade Pvt. Ltd. After perusing the assignment deed, which was placed on record by learned counsel for the Defendants, this Court directed the Defendants to deposit a sum of Rs.30 lakhs in the Court in order to safeguard the interests of the Plaintiff. No leave was sought by the Defendants prior to the sale of the said trademark. Admittedly, the present suit in respect of the very same mark was pending.

7.                 Today, in the review application, learned counsel for the Defendants submits that right from the beginning, the Plaintiff has been delaying the recordal of evidence. Mr. Vidhani submits that the entire suit is itself valued at Rs.20 lakhs and so he is willing to deposit a bank guarantee for a sum of Rs.10 lakhs.

8.                 It is noticed that the suit has been pending since 2014. For whatsoever reasons, there is no injunction in the matter. Shri Lal Mahal Ltd., which is the impleaded Defendant, has participated in the proceedings since beginning and at no point of time, any intention was expressed before the Court that the trademark CHURCH GATE was being sold by it to a third party. The trademark, being subject matter of the dispute in the present case, the Defendant has earned a huge sum of money by selling the said trademark during the pendency of the present suit. Admittedly, on three dates there was no appearance before the Local Commissioner. Prior to that, when the Plaintiff delayed the recordal of evidence, the Defendants did not raise any grievance, obviously, because there is no injunction in the matter. Mr. Vidhani submits that there is no order of this Court not to sell the

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trademark during the pendency of the suit. Hence, the order for deposit of Rs.30 lakhs ought to be reviewed. However, when the matter was listed for final arguments on 7^th September, 2018, for the first time the Defendants chose to inform the Court that the trademark has been sold to a third party.

9.                 The present review application seeks to place on record the facts about the Commissioner’s proceedings. Irrespective of the Plaintiff’s and

Defendants’ conduct before the Local Commissioner, the reasons behind directing deposit of Rs.30 Lakhs is two fold i.e. firstly to safeguard the interest of the Plaintiff in the present suit in respect of any final order that may be passed by this Court, and secondly, because Defendant No. 1 had chosen to sell the trademark without taking permission of this Court. The trade mark is like a property about which questions have been raised in the suit. If the trade mark is held to be infringing or if an injunction is granted or if a decree for damages is passed, the new purchaser may be able to completely shirk the liability by claiming ignorance. The order dated 7^th September, 2018 thus directed the Defendants i.e., the parties who had sold the mark, with complete knowledge of the present litigation, to deposit an amount of Rs.30 lakhs within four weeks from the said date. Time for deposit expires on 6^th October, 2018.

10.            At this stage, Mr. Vidhani submits that he represents the newly impleaded Defendant also. He further submits that the Defendants are willing to give a bank guarantee. If that is so, a bank guarantee be submitted in favour of the Registrar General of this Court within two weeks for a sum of Rs.30 lakhs by any of the Defendants. Review application is disposed of.

List before the Registrar General on 26^th October, 2018 for acceptance of bank guarantee.

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CS (COMM) 929/2016

11.            In the last order, there is a typographical error and a part of the sentence appears to have been missed, which has been corrected. Corrected order be uploaded.

12.            Amended memo of parties be filed within 10 days. Remaining cross examination of the Plaintiff’s witnesses shall be conducted on two dates before the Local Commissioner. The entire fee of the Local Commissioner shall be borne by the Plaintiff. After conclusion of the evidence of the Plaintiff, the Defendants shall lead their evidence before the Local Commissioner. The newly added Defendant Company is permitted to lead evidence along with Defendant No.1, however, not more than five witnesses shall be examined in total by the Defendants. The evidence of the Defendants shall be concluded within three months from the date when the

13.            List on 30^th  October, 2018 before the Local Commissioner for fixing

the dates for Plaintiff’s evidence.

14.            List before the Court on 30^th January, 2019.

PRATHIBA M. SINGH, J.

OCTOBER 04, 2018/dk

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VINNI COSMETICS VS ABHAY ENTERPRISES

$~4

*                    IN THE HIGH COURT OF DELHI AT NEW DELHI

+

Date of decision :1st October, 2018 CS (COMM) 1417/2016

M/S. VINI COSMETICS PVT. LTD.                                     ..... Plaintiff

Through:        Mr.    Ajay    Amitabh   Suman,      Mr.

Pankaj  Kumar  and  Mr.  Kapil  Giri,

Advocates. (M:9990389539)

versus

M/S. ABHAY ENTERPRISES & ORS.                        ..... Defendants

Through:        Ms. Pratishtha Vij, Mr. P. Hansranjan

and Mr. Prawal, Advocates for D-1.

(M:9971919461)

CORAM:

JUSTICE PRATHIBA M. SINGH

Prathiba M. Singh, J. (Oral)

1.                 Plaintiff has filed the present suit for permanent injunction restraining passing off, infringement of trademark, infringement of copyright, rendition of accounts etc. The case of the Plaintiff is that it is engaged in the manufacturing and marketing of various kinds of cosmetics and proprietary products, lotions, talcum powder, powder (make up), creams, deodorant, styling gel, perfume, shaving cream, soap, shampoo, bleaching preparations etc.

2.                 One of the products being manufactured and sold by the Plaintiff is the „GLAM-UP LABEL‟ powder cream in a distinctive red coloured packaging. It is the case of the Plaintiff that the mark and label was adopted by it in September, 2012 and the same has been in use since August, 2013. It has applied for registration, in various classes for the word-mark and label-mark.

3.                 The  Plaintiff  came  to  know  that  Defendant  No.1  –  M/s  Abhay

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Enterprises had started using an identical mark and carton and imported the same from foreign countries. According to the Plaintiff, Defendant No.1 is not only selling the products at its own outlets but also supplying the same to various dealers and retailers. It is the case of the Plaintiff that the information about Defendant No.1 was revealed when the Commissioner of Customs, Mumbai sent a notice dated 2^nd April, 2014 to one of the manufacturers, who was manufacturing and supplying the products to the Plaintiff. The customs authorities informed the manufacturer about the arrival of a consignment of 14,400 pieces of GLAM-UP POWDER CREAM products at the customs and called upon the Plaintiff‟s manufacturer to furnish the requisite security bond and bank guarantee so that the said counterfeit products could be detained. The Plaintiff was then informed by its manufacturer, who took steps to file the present suit against the Defendants.

4.                 In the present suit, the Plaintiff has impleaded Abhay Enterprises as Defendant No.1 as also the customs authorities as Defendant Nos.2 & 3.

Vide order dated 20^th August, 2014 this Court granted an ex-parte injunction order in favour of the Plaintiff. On 5^th November, 2014 the said injunction was also confirmed. On 1^st December, 2014, the Court recorded the

Defendant No.1‟s statement as under:

“Learned counsel for the defendants submit that defendants are willing to suffer a decree provided the plaintiff gives up the relief of damages.”

5.                 On the next date i.e. 2^nd December, 2014, learned counsel for the Plaintiff reverted with instructions and submitted as under:

“Counsel for the plaintiff submits that in case defendants pay reasonable costs and damages and also

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agree for destruction of the seized goods, he will instructions from his client.”

6.                 Thereafter, there were some objections raised by the Defendant No.1 that one Mr. Mahesh Thakkar had misused its IEC (Import Export Code) and imported the goods without its permission. The Defendant No.1 delayed in filing the written statement and costs also were imposed. Finally, the written statement was taken on record vide order dated 23^rd February, 2017.

7.                 On 14^th September, 2018, a new counsel was engaged and adjournment was sought to seek instructions.

8.                 In the written statement, the basic case made out by the Defendant No.1 was that one Mr. Mahesh Thakkar had fraudulently misused the IEC of Abhay Enterprises. It is claimed that the said Mr. Mahesh Thakkar was the one who had imported the products. In paragraph 1 of the reply on merits, the Defendant No.1 stated as under:

“To this, answering Defendant has already stated that it is neither disputed nor the legality of the trademark has been challenged by the answering Defendant at any occasion. The trademark of GLAM-UP LABEL has never been used by answering Defendant in any manner and thus rights associated with the trademark have not been infringed as alleged by the Plaintiff.”

9.                 Today, learned counsel appearing for Defendant No.1 submits that as per the show cause notice issued by the customs authorities on 17^th

September, 2014, it is clear that there were several other goods apart from

GLAM-UP products, which are part of the consignment and huge losses

have been suffered by the Defendant.  She, however, submits that she has no

objection if a permanent injunction is passed against her client.  However, it

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is submitted by her that the Defendant No.1, being a small entity, ought not to be burdened with any damages.

10.            Learned counsel for the Plaintiff, on the other hand, submits that a perusal of the seizure memo issued by the customs authorities dated 15^th

May, 2014 shows that the value of the seized products i.e. 14,400 pieces is more than Rs.23 lakhs. The Plaintiff was forced to give a bank guarantee to the customs to the tune of Rs.5,93,560/- as a security for getting the goods seized. The Defendant No.1 is a habitual infringer and is also involved in importing various other counterfeit products.

11.            This Court has perused the pleadings and documents on record. There is no doubt that the competing mark and label cartons are absolutely identical. The same are extracted herein below:

PLAINTIFF’S MARK

DEFENDANT’S MARK

CS (COMM) 1417/2016

Page 4 of 7

12.            In the written statement, Defendant No.1 denies his involvement in the imports and appears to be shifting the blame to a third party, however, this Court is not going into the said issue, as the said third party is not before this Court. Admittedly, the name of Abhay Enterprises i.e. Defendant No.1 appears as the importer with the customs authorities which is evident from

the show cause notice dated 17^th September, 2014 as also from the seizure memo dated 15^th May, 2014. Both documents are on record. The consignment, in respect of which the show cause notice was issued, appears to have various other products including silver jewellery, mobile accessories, etc. The present dispute does not relate to any of those products. In the present case, the Court is concerned only with the products under the name and label GLAM-UP.

13.            This is a case of res ipsa loquiter. The violation of the rights of the Plaintiff is writ large even on a perusal of the carton and products‟

packaging. Such import of counterfeit products cannot be countenanced in any manner. If such imports are permitted, they would cause huge losses to trademark owners, especially since markets would be flooded with such passed off products. Apart from the fact that this has resulted in serious violation of rights, there is also an issue in respect of the quality of such products, especially cosmetics, which are used on the skin. The imported products do not go through the same quality control measures and thus, can prove to be harmful for the skin. Such imports are also likely to result in severe damages and losses to the owners of the intellectual property and as also the consumers. It is in order to protect against such misuse and harm that the Intellectual Property Rights (Imported Goods) Enforcement Rules, 2007 have been introduced. The customs authorities were right in calling

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upon the owner as per the Rules and detaining the infringing products. The Defendant No.1 having now agreeing not to import, manufacture or use the infringing mark, carton and get up under the name/packaging GLAM-UP, the permanent injunction, as prayed for, is liable to be granted.

14.            No triable defence exists in favour of Defendant No.1. As per the provisions of The Commercial Courts, Commercial Division and Commercial Appellate Division of High Courts Act, 2015 and the Delhi High Court (Original Side) Rules, 2018 it is not necessary that evidence should be recorded in every suit. In the present case, right from beginning the Defendant No.1 has made a statement that he is willing to give an undertaking to not manufacture, sell or import these products. Thus, the only issue which remains is that of damages. Since Defendant No.1 has not disclosed his accounts or sale figures, keeping in mind the value of consignment i.e. approximately Rs.25 Lakhs, the suit of the Plaintiff is decreed for a sum of Rs.5 Lakhs which is 20% of the value of the consignment. Decree in terms of paragraph 30(a) be drawn up. In addition, a decree of Rs.5 Lakhs as damages is also granted in favour of the Plaintiff against the Defendant no.1.

15.            The Defendant Nos.2 & 3 i.e. the customs authorities are directed to release the bank guarantee furnished by the Plaintiff in respect of this consignment and to also hand over to the Plaintiff the 14,400 pieces of GLAM-UP LABEL powder cream to the Plaintiff for the purpose of destruction and erasure.

16.            Other products of the Defendant No.1, which have been seized by the customs authority, if any, may be released to the Defendant No.1 through its authorized signatory.

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16.            The suit is decreed in the above terms. No orders as to costs.

PRATHIBA M. SINGH, J.

JUDGE

OCTOBER 01, 2018/dk

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