Failure to raise validity in an initial written statement does not bar a later challenge if rectification is sought
Introduction:
The case concerns a trademark dispute between M/S Sri Laxmi Balaji Industries and M/S Lakshmi Venkateshwar over the brand name "Swamy Ayyappa Gold." The petitioners sought a stay of proceedings in a civil suit (O.S. No. 3/2012) filed by the respondent, pending the disposal of their rectification application before the Registrar of Trademarks, Chennai. The trial court had dismissed the petitioners' application under Section 124 of the Trade Marks Act, 1999, leading to the present writ petition under Articles 226 and 227 of the Constitution of India.
Detailed Factual Background:
The petitioners, M/S Sri Laxmi Balaji Industries and M/S Sri Laxmi Vinayaka Rice Industries, are engaged in the business of manufacturing and supplying rice products. They claim to have introduced "Swamy Ayyappa Gold" as a brand name in 1998 under the firm Sri Raghavendra Agro Agencies. Subsequently, they applied for trademark registration of "Swamy Ayyappa Gold" and the "Image/Device of Lord Ayyappa" in 2010.
The respondent, M/S Lakshmi Venkateshwar, filed a civil suit (O.S. No. 3/2012) before the Principal District Judge at Ballari, seeking a permanent injunction restraining the petitioners from using the "Swamy Ayyappa Gold" mark. An interim injunction was granted against the petitioners on 1 March 2012 under Order XXXIX Rule 1 & 2 of CPC.
In response, the petitioners filed a rectification application before the Registrar of Trademarks, Chennai, on 24 July 2012, challenging the respondent’s trademark registration. They then applied for a stay of the civil suit under Section 124 of the Trade Marks Act, 1999, arguing that the validity of the respondent's trademark was in question.
The trial court dismissed this application on 30 March 2013, holding that the rectification proceedings were not pending at the time of the suit’s filing and that the petitioners had not initially raised the issue of validity in their written statement. The petitioners challenged this order before the Karnataka High Court, Dharwad Bench.
Detailed Procedural Background:
1. The respondent filed O.S. No. 3/2012 before the Principal District Judge, Ballari, seeking a permanent injunction against the petitioners.
2. The trial court granted an interim injunction on 1 March 2012, restraining the petitioners from using "Swamy Ayyappa Gold."
3. The petitioners filed a rectification application on 24 July 2012 before the Registrar of Trademarks, Chennai.
4. The petitioners filed I.A. No. VII under Section 124 of the Trade Marks Act, 1999, seeking a stay of O.S. No. 3/2012 pending the rectification proceedings.
5. The trial court dismissed I.A. No. VII on 30 March 2013, holding that the rectification application was not pending when the suit was filed and that the petitioners had not initially raised the invalidity plea in their written statement.
6. The petitioners filed the present writ petition before the Karnataka High Court, Dharwad Bench, challenging the dismissal of I.A. No. VII.
Issues Involved in the Case:
1. Whether the trial court erred in dismissing the petitioners' application under Section 124 of the Trade Marks Act, 1999.
2. Whether the pendency of the rectification proceedings before the Registrar of Trademarks warranted a stay of the civil suit.
3. Whether the petitioners had raised the issue of validity of the respondent’s trademark in their written statement.
4. Whether the trial court misinterpreted the provisions of Section 124 of the Trade Marks Act, 1999.
Detailed Submission of Parties:
Petitioners (M/S Sri Laxmi Balaji Industries) argued that:
The trial court erred in dismissing their Section 124 application, as rectification proceedings were indeed pending before the Registrar of Trademarks.
Under Section 124(1)(a)(i), if rectification proceedings are pending, the civil suit should be stayed until their disposal.
The trial court incorrectly interpreted Section 124 by focusing only on Section 124(1)(b), which applies when rectification proceedings are not pending.
The petitioners had raised the issue of invalidity in their written statement, particularly in Paragraphs 20 and 21, challenging the respondent’s claim of prior use.
Respondent (M/S Lakshmi Venkateshwar) argued that:
The petitioners had not challenged the validity of the respondent’s trademark in their initial written statement.
The rectification application was not pending at the time the suit was filed, making Section 124(1)(a) inapplicable.
The petitioners filed the rectification application only after the civil suit had progressed, indicating deliberate delay.
Detailed Discussion on Judgments Cited by Parties:
The Karnataka High Court referred to Patel Field Marshal Agencies v. P.M. Diesels Ltd., (2018) 2 SCC 112, which held that:
A civil court must stay proceedings under Section 124 if a rectification petition is pending.
The court has no jurisdiction to decide trademark validity; this power lies solely with the Registrar or the High Court.
The court also cited Whirlpool Corporation v. Registrar of Trade Marks, (1999) 1 SCC 409, which emphasized that:
A trial court must stay an infringement suit if rectification proceedings are pending.
Detailed Reasoning and Analysis of Judge
The Karnataka High Court held that:
The trial court misinterpreted Section 124 by considering only 124(1)(b) and ignoring 124(1)(a).
Since the rectification proceedings were pending, the suit should have been stayed.
The petitioners had raised the issue of invalidity in their written statement, contrary to the trial court’s findings.
The trial court erred in dismissing I.A. No. VII, and its order required interference.
Final Decision:
The writ petition was allowed, and the trial court’s order dated 30 March 2013 was quashed.
The petitioners' application under Section 124 was allowed, and the proceedings in O.S. No. 3/2012 were stayed until the disposal of the rectification petition before the Registrar of Trademarks, Chennai.
Law Settled in This Case:
If rectification proceedings are pending, the infringement suit must be stayed under Section 124(1)(a).
A trial court cannot ignore a valid rectification application and must stay proceedings accordingly.
Trademark validity must be decided by the Registrar or High Court, not a civil court.
Failure to raise validity in an initial written statement does not bar a later challenge if rectification is sought.
Case Title: M/S Sri Laxmi Balaji Industries vs M/S Lakshmi Venkateshwar
Date of Order: 13 September 2024
Case No.: WP No. 77807 of 2013
Neutral Citation: 2024:KHC-D:13121
Name of Court: High Court of Karnataka, Dharwad Bench
Name of Judge: Hon’ble Mr. Justice H.P. Sandesh
Disclaimer:The information shared here is intended to serve the public interest by offering insights and perspectives. However, readers are advised to exercise their own discretion when interpreting and applying this information. The content herein is subjective and may contain errors in perception, interpretation, and presentation.
Written By: Advocate Ajay Amitabh Suman,IP Adjutor [Patent and Trademark Attorney] ,High Court of Delhi
