Bharat Sanchar Nigam Ltd Vs Motorola India Pvt. Ltd.

Main Search Forums Advanced Search Disclaimer
[Arising Out Of Slp(C) No. 3459 Of 2007] Bharat Sanchar ... vs Motorola India Pvt. Ltd on 15 September, 2008
Cites 10 docs - [View All]
The Arbitration And Conciliation Act, 1996
Section 28 in The Arbitration And Conciliation Act, 1996
State Of Karnataka Etc. vs Shri Rameshwara Rice Mills Thirthahalli Etc. on 24 February, 1987
Datar Switchgears Ltd. vs Tata Finance Ltd. & Anr. on 18 October, 2000
Section 4 in The Arbitration Act, 1940 1
Supreme Court of India
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO.5645 OF 2008
[Arising out of SLP(C) No. 3459 of 2007]
Bharat Sanchar Nigam Ltd. & Anr. .......Appellants
Versus
Motorola India Pvt. Ltd. ....Respondent
JUDGMENT
TARUN CHATTERJEE, J.
1. Leave granted.
2. This appeal is directed against the judgment and final order
dated 26th of October, 2006 of the High Court of Kerala at
Ernakulam in AR No 18 of 2006 whereby, the High Court
had allowed the prayer for appointment of the arbitrator at
the instance of the respondents and directed the parties to
submit their disputes to arbitration.
3. The pivotal questions that need to be decided in this appeal
are:
i) Whether the levy of liquidated damages under
clause 16.2 of the tender document is an
2
"excepted matter" in terms of clause 20.1 of the
said document so that the same cannot be
referred to arbitration or looked into by the
arbitrator.
ii) Whether clause 62 of the special conditions of
the tender document will prevail over clause 16.2
of the general conditions of the contract.
4. The relevant facts, which would assist us in appreciating
the controversy involved are narrated in a nutshell, which
are as follows:
The appellant had issued a notice inviting tender
dated 4th of January, 2001, calling upon the eligible
bidders for turn key project on planning, engineering,
supply, installation and commissioning of Indian Mobile
Personal Communications System in the telecom circles
of Kerala, Karnataka, Tamil Nadu and Andhra Pradesh.
The respondent submitted its bid in response to the
notice inviting tender and after the technical, commercial
and financial bid evaluation, the respondent was
3
awarded the tender and an Advance Purchase Order
(APO) dated 5th of September, 2001 for phase I and Phase
II was issued to it by the appellant. The purchase order
provided, inter alia, the terms for payment and the
schedule for delivery of the goods. It also provided for
liquidated damages in the event of failure on the part of
the respondent to meet with the delivery schedule.
Clause 16.2 of the general conditions of the tender
document provided for liquidated damages to the extent
of 0.5% of the value of the delayed quantity of the goods
and services for each week of delay or the part thereof for
a period of upto 10 weeks and thereafter charge 0.7% of
the value of delayed quantity or part thereof, for a period
of upto 10 weeks thereafter. It is the case of the
appellants that the respondent had failed to complete
phase I and phase II of the project within the schedule as
provided in the tender document, and therefore,
liquidated damages were imposed by the Tamil Nadu
Circle of the appellant on 21st of May, 2004 under clause
16.2 of the tender document, quantification of which was
4
beyond the purview of the arbitration agreement. There
was an exchange of correspondence between the Tamil
Nadu Circle of the appellant alleging the delay in the
purchase of goods and the respondents denying any
such delay and objecting to the levy of liquidated
damages. On 24th of March, 2006, the respondent
invoked the arbitration clause by sending a letter
through its counsel to the appellants to which they did
not concede and justified the imposition of liquidated
damages. The respondent filed an arbitration application
before the High Court of Kerala at Ernakulam for the
appointment of arbitrator under section 11 of the
Arbitration and Conciliation Act, 1996 in respect of the
liquidated damages assessed by the appellant. In the
counter affidavit filed in the High Court, the appellant
alleged that the liquidated damages assessed and
quantified by the appellant under clause 16.2 of the
tender document was an excepted matter as per clause
20.1 of the said document and, therefore, not arbitrable.
The High Court, as noted herein earlier, by the impugned
5
judgment allowed the arbitration request of the
respondents holding that the imposition of liquidated
damages by the appellant was not an "excepted matter"
and therefore, subject to arbitration. It is this judgment
of the High Court, which is impugned in this appeal, in
respect of which leave has already been granted.
5. Before proceeding further, we deem it appropriate to note
the relevant clauses of the tender document and the
purchase order, which would assist us in determining
whether the matters alleged are an excepted matter.
Clause 16.2 reads as under:-
"16.2. Should the tenderer fail to deliver the
goods and services on turn key basis within the
period prescribed, the purchaser shall be
entitled to recover 0.5% of the value of the
delayed quantity of the goods & services, for
each week of delay or part thereof, for a period
upto 10 weeks and thereafter at the rate of
0.7% of the value of the delayed quantity of the
goods and services for each week of delay or
part thereof for another 10 weeks of delay. In
the present case of turn key solution of supply,
installation and commissioning, where the
delayed portion of the delivery and provisioning
of services materially hampers effective user of
the systems, Liquidated Damages charged shall
6
be levied as above on the total value of the
concerned package of the purchase order.
Quantum of liquidated damages assessed and
levied by the purchaser shall be final and not
challengeable by the supplier."
Clause 20.1 which is the arbitration clause and provides
for excepted matters, i.e., those matters the decision to
which is specifically provided in the agreement itself
reads as under:-
20.1 In the event of any question, dispute or
difference arising under this agreement or in
connection there-with (except as to the matters,
the decision to which is specifically provided
under this agreement), the same shall be
referred to the sole arbitration of the CGM,
Kerala Telecom Circle, BSNL or in case his
designation is changed or his office is
abolished, then in such cases to the sole
arbitration of the officer for the time being
entrusted (whether in addition to his own duties
or otherwise) with the functions of the CGM,
Kerala Telecom Circle, BSNL or by whatever
designation such an officer may be called
(hereinafter referred to as the said officer), and
if the CGM Kerala Telecom Circle or the said
officer is unable or unwilling to act as such,
then to the sole arbitration of some other person
appointed by the CGM, Kerala Telecom Circle or
the said officer. The agreement to appoint an
arbitrator will be in accordance with the
Arbitration and Conciliation Act, 1996.
7
There will be no objection to any such
appointment on the ground that the arbitrator is
a Government Servant or that he has to deal
with the matter to which the agreement relates
or that in the course of his duties as a
government servant he has expressed his views
on all or any of the matters in dispute. The
award of the arbitrator shall be final and
binding on both the parties to the agreement. In
the event of such an arbitrator to whom the
matter is originally referred, being transferred
or vacating his office or being unable to act for
any reason whatsoever, the CGM, Kerala
Telecom Circle, BSNL or the said officer shall
appoint another person to act as an arbitrator in
accordance with the terms of the agreement and
the person so appointed shall be entitled to
proceed from the stage at which it was left out
by his predecessors.........."
Clause 15.2 of Section III of the tender document, which
deals with the "delays in the supplier's performance"
reads as under:
"Delay by the Supplier in the performance of its
delivery obligations shall render the Supplier
liable to any or all of the following sanctions,
forfeiture of its performance security, imposition
of liquidated damages, and/or termination of
the contract for default".
8
Clause 62 of Section IV of the tender document which
deals with liquidated damages and incentive reads as
under:-
"The bidder shall be charged liquidated
damages at the rates as defined in the General
conditions of contract as contained in Section III
for any delay in the turnkey job entrusted to the
bidder. However he shall be provided an
incentive @ 0.5% of the cost of the network of
each service area (Telecom Circle), for each
week of early commissioning of the entire
network in that service area, subject to a
maximum of 3% of the value of the contract of
the circle".
6. Since this appeal arises out of an order, which appointed
an arbitrator, to decide the dispute referred to by the
respondent, we, in this appeal, need to decide that whether
in view of the arbitration clause in the tender document
provided under clause 20 of the said document, the breach
specified in 16.2 is an "excepted matter".
7. Mr. Gopal Subramaniam, Additional Solicitor General of
India appearing on behalf of the appellant contended that
in view of the decision of this Court in Vishwa Nath Sood
9
vs. UOI [(1989) 1 SCC 657], a conjoint reading of clause
16.2 and clause 20.1 would clearly show that clause 16.2 is
covered under the excepted matters as provided in clause
20.1 of the tender document. He further contended that the
High Court had erred in holding that the quantification of
the liquidated damages was subsequent to the decision of
liability of liquidated damages to be payable to the
appellant. Therefore, he contended that the respondent had
specifically subscribed to each and every clause of the
agreement without any objection at the tender stage and
accordingly, it was not open to them to claim immunity
from the contractual obligations. Thus, the matter in
respect of which the respondent sought reference to
arbitration was "excepted matter" in terms of clause 16.2 of
the tender agreement.
In order to satisfy us in the aforesaid contentions,
the learned Additional Solicitor General, Mr. Gopal
Subramanium placed strong reliance in the case of Food
Corporation of India Vs. Sreekanth Transport 1999
10
(4) SCC 491, which has given the following principles
relating to "Excepting matters" as under :-
"1. These appeals by the grant of Special
Leave pertains to the effect of the usual
`excepted clause' vis-`-vis the arbitration
clause in a Government contract. While it
is true and as has been contended, that
the authorization of the arbitrators to
arbitrate, flows from the agreement but the
High Court in the judgment impugned
thought it fit to direct adjudication of
`excepted matters' in the agreement itself
by the arbitrators and hence these appeals
before this Court.
2. At the outset, it is pertinent to note that
in the usual Government contracts, the
reference to which would be made
immediately hereafter, there is exclusion of
some matters from the purview of
arbitration and a senior officer of the
Department usually is given the authority
and power to adjudicate the same. The
clause itself records that the decision of
the senior officer, being the adjudicator,
shall be final and binding between the
parties - this is what popularly known as
`excepted matters' in a Government or
Governmental agencies' contract.
3. `Excepted matters' obviously, as the
parties agreed, do not require any further
adjudication since the agreement itself
provides a named adjudicator -
concurrence to the same obviously is
presumed by reason of the unequivocal
acceptance of the terms of the contract by
11
the parties and this is where the courts
have found our lacking in its jurisdiction to
entertain an application for reference to
arbitration as regards the disputes arising
therefrom and it has been the consistent
view that in the event the claims arising
within the ambit of excepted matters,
question of assumption of jurisdiction of
any arbitrator either with or without the
intervention of the court would not arise;
the parties themselves have decided to
have the same adjudicated by a particular
officer in regard to these matters; what are
these exceptions however are questions of
fact and usually mentioned in the contract
documents and forms part of the
agreement as such there is no ambiguity in
the matter of adjudication of these
specialized matters and termed in the
agreement as the excepted matters....."
Keeping the aforesaid principles in mind, let us
proceed further.
We may keep on record that the appellants alleged
that respondents had not completed phase I and phase II
of the project within the schedule as provided in the
tender document whereupon the appellants had to
impose liquidated damages and invoke clause 16.2 of the
tender document. But the respondents refuted these
12
allegations. The contention of the respondent in this case
was that the delay, if any, was caused due to the
appellant's delay in supplying necessary inputs to the
respondent. So the respondent contends that it had
performed its part of the contract in time and the blame
for delay lies on the appellant. Thus it is to be noted that
there is a dispute between the parties on the question
whether any breach was committed in this case.
8. The appellant had contended before the High Court of
Kerala that the levy of the liquidated damages on the
respondent was a matter outside the purview of the scope
of arbitration proceedings as it "squarely falls within the
exception provided under Clause 20 of Section III, being the
matters for which mode of decision is provided under the
Agreement itself."
The respondent on the other hand contended that
the claim of the petitioner that the dispute pertaining to
levy of liquidated damages falls outside the arbitration
agreement being an excepted matter is fallacious.
13
The High Court held that there was no reason why
the arbitration request on behalf of the respondent
should not be allowed. It held that clause 16.2 is not an
excepted matter under clause 20 of the tender document.
9. Having heard the learned counsel for the parties and after
examining the judgment of the High Court and the other
materials on record, we are of the view that this appeal
must be dismissed. Clause 20 is the arbitration clause and
provides that any question, dispute or difference arising
under this agreement or in connection therewith would be
referred to arbitration. To this, an exception is also provided
which lays down that the matters, the decision to which is
specifically provided under this agreement, would not be
referred to arbitration. From a bare reading of clause 16.2
of Section III of the tender document, it is clear that if the
tenderer fails to deliver the goods and services on turnkey
basis within the period prescribed, the purchaser shall be
entitled to recover liquidated damages and the quantum of
the liquidated damages assessed and levied by the
14
purchaser shall be final and not challengeable by the
supplier.
10. We are in full agreement with the findings of the High
Court that there was a dispute as to whether the
respondent had at all acted in breach of any terms and
conditions of the tender document.
The question to be decided in this case is whether
the liability of the respondent to pay Liquidated Damages
and the entitlement of the appellant, to collect the same
from the respondent is an excepted matter for the
purpose of clause 20.1 of the General Conditions of
contract. The High Court has pointed out correctly that
the authority of the purchaser (BSNL) to quantify the
Liquidated Damages payable by the supplier Motorolla
arises once it is found that the supplier is liable to pay
the damages claimed. The decision contemplated under
clause 16.2 of the agreement is the decision regarding
the quantification of the Liquidated Damages and not
any decision regarding the fixing of the liability of the
15
supplier. It is necessary as a condition precedent to
find that there has been a delay on the part of the
supplier in discharging his obligation for delivery
under the agreement.
It is clear from the reading of clause 15.2 that the
supplier is to be held liable for payment of liquidated
damages to the purchaser under the said clause and not
under clause 16.2. The High Court in this regard
correctly observed that it was not stated anywhere in
clause 15 that the question as to whether the supplier
had caused any delay in the matter of delivery will be
decided either by the appellant/BSNL or by anybody who
has been authorized on the terms of the agreement.
Reading clause 15 and 16 together, it is apparent that
clause 16.2 will come into operation only after a finding
is entered in terms of clause 15 that the supplier is liable
for payment of liquidated damages on account of delay
on his part in the matter of making delivery. Therefore,
clause 16.2 is attracted only after the supplier's liability
16
is fixed under clause 15.2. It has been correctly pointed
out by the High Court that the question of holding a
person liable for Liquidated Damages and the question of
quantifying the amount to be paid by way of Liquidated
Dmages are entirely different. Fixing of liability is
primary, while the quantification, which is provided for
under clause 16.2, is secondary to it.
There is no provision in the agreement, apparent on
the face of it, relating to a decision made by any specified
authority on the issue of levy of Liquidated Damages, as
is contemplated under clause 20.1 of the agreement
which is excepted from the purview of arbitration. No
decision coming within the scope of excepted matters
under clause 20.1 is envisaged by any portion of the
agreement regarding the liability of the supplier to
liquidated damages.
Quantification of liquidated damages may be an
excepted matter as argued by the appellant, under
clause 16.2, but for the levy of liquidated damages, there
17
has to be a delay in the first place. In the present case,
there is a clear dispute as to the fact that whether there
was any delay on the part of the respondent. For this
reason, it cannot be accepted that the appointment of the
arbitrator by the High Court was unwarranted in this
case. Even if the quantification was excepted as argued
by the appellant under clause 16.2, this will only have
effect when the dispute as to the delay is ascertained.
Clause 16.2 cannot be treated as an excepted
matter because of the fact that it does not provide for any
adjudicatory process for decision on a question, dispute
or difference, which is the condition precedent to lead to
the stage of quantification of damages.
The above stated position can be ascertained
through the judgment of this Court in the case of State
of Karnataka vs. Shree Rameshwara Rice Mills,
(1987) 2 SCC 160. This Court in the said case, made a
clear distinction between adjudicating upon an issue
relating to a breach of condition of contract and the right
to assess damages arising from a breach of condition. It
18
was held that the right conferred to assess damages
arising from a breach of condition does not include a
right to adjudicate upon a dispute relating to the very
breach of conditions and that the power to assess
damages is a subsidiary and consequential power and
not the primary power.
11.Clause 20.1 regarding excepted matters reads "In the event
of any question, dispute or difference arising under this
agreement or in connection there-with (except as to the
matters, the decision to which is specifically provided
under this agreement)...". Therefore it is clear from this
provision, matters which will not fall within the arbitration
clause are questions, disputes or differences, the decision
to which is specifically provided under the agreement.
Clause 16.2 is not a clause where in any decision making
power is specifically provided for with regard to any
question, dispute or difference between the parties relating
to the existence of breach or the very lack of liability for
damages, i.e. the levy of Liquidated Damages.
19
12.The learned senior counsel for the appellant relied on the
decisions of this court in Vishwanath Sood vs. UOI
[(1989) 1 SCC 657], and General Manager, Northern
Railway vs. Sarvesh Chopra [(2002) 4 SCC 45]. These
cases, we are afraid, will not be of any help to the
appellants being distinguishable on facts and having
different contractual clauses. We may note that clause 16.2
cannot be treated as an excepted matter. This is because
admittedly, it does not, provide for any adjudicatory process
for decision on a question, dispute or difference, which is
the condition precedent to lead to the stage of
quantification of damages nor is it a no claim or no liability
clause.
In Vishwanath Sood's case (supra), it was held by
this court that a particular claim of the government was
excluded because the Superintendent Engineer acted as
the revisional authority to decide disputes between the
two parties by an adjudicatory process, there being a
20
complete machinery for settlement of the disputes in the
relevant clause and most importantly, the
Superintendent Engineer had the discretion on
consideration of the facts and circumstances including
mitigating facts, held no damages was payable. Again in
the case of Sarvesh Chopra, this court had held that the
claims covered by the no claims clause, i.e., where the
contractor had given up the right to make a claim for
breach on the part of the government was not arbitrable
in terms of the arbitration clause contained therein and
clause 63 of the general conditions of the contract which
provided for exclusion because no claim clause was
excepted as such claims were simply not entertainable.
In view of the discussions made hereinabove, we hold
that the disputes raised by the respondents are
arbitrable and not excepted from scope of arbitration.
13.We feel that there are certain other issues that are to be
discussed while disposing of this appeal. The respondent
contended in its written submission filed before this court
21
on 14th May, 2007 that the quantum of damages calculated
by the appellant in respect of clause 16.2 of the tender
document, simply cannot have the effect of rendering all the
above disputes as not being arbitrable. We find that there is
considerable merit in this argument. The true essence of
any arbitration agreement is to arbitrate the matters in a
cordial way in respect of issues where there is a dispute
between the parties. To construe such limited words in
clause 16.2 as being so all encompassing would destroy the
very foundation of the bargain between the parties. The
appellant in the present case is acting in an unfair way by
seeking to exclude, from arbitration, what it has agreed to
arbitrate in the first place.
14.The appellant contended that it has the unilateral right to
determine the Liquidated damages under clause 16.2 and
that the quantum of Liquidated Damages decided by the
appellant, even if it is exorbitant, would be final and cannot
be challenged. We find the contention of the respondent
that if the said contention of the appellant is supported, it
would mean that a party would be held liable to damages of
22
whatever amount the other party demands without
recourse to a remedy, to be relevant and should be given
due importance. Such a contention by the appellant would
be in violation of Section 28 and Section 74 of the Indian
Contract Act.
15.The learned counsel of the appellants had submitted before
this court that it was the appellant, which had the right to
appoint the arbitrator. This submission cannot be accepted.
The respondent had invoked the arbitration clause on the
ground that there was no delay on its part by sending a
letter to this effect to the appellants on 24th of March, 2006.
On 25th April, 2006, the appellants/BSNL replied stating
that they had rightly recovered the Liquidated Damages and
that the recovery of the damages was not arbitrable. The
appointing authority in this matter, i.e., CGM Kerala, did
not respond to the notice requiring the appointment of
arbitrator and failed to act within the time prescribed under
the Arbitration and Conciliation Act 1996. Since the
appointing authority appointed no arbitrator, the
23
respondent/Motorolla, on 25th of May, 2006, filed a petition
under Section 11 of the said Act before the High Court at
Kerala. In the case of Datar Switchgear vs. Data Finance
Lt. [(2000) 8 SCC 151], which was affirmed in Punj Llyod
Ltd. vs. Petronet MHB Ltd. [(2006) 2 SCC 638], it was
held that once a minimum of 30 days is expired and a
petition is filed to the court, the appointing authority loses
the right to make the appointment. Therefore, the
appellant/BSNL has now lost its right to appoint any
arbitrator for settling the disputes under the agreement.
16.Further, CGM Kerala Circle has already taken a decision as
is evident from his letter dated 25th of April, 2006, that the
appellant was right in imposing the liquidated damages and
therefore, the question of such a person becoming an
arbitrator does not arise as it would not satisfy the test of
impartiality and independence as required under Section
12 of the Arbitration and Conciliation Act, 1996. Moreover
it would also defeat the notions laid down under the
principles of natural justice wherein it has been
24
recognized that a party cannot be a judge in his own
cause. The judgment of this Court in State of Karnataka
vs. Shree Rameshwara Rice Mills, (1987) 2 SCC 160, is
significant in this matter. The Court had stated:
".....Even assuming that the terms of Clause 12
afford scope for being construed as empowering
the officer of the State to decide upon the
question of breach as well as assess the
quantum of damages, adjudication by the
officer regarding the breach of the contract can
not be sustained under law because a party to
the agreement cannot be an arbiter in his own
cause. Interest of justice and equity require that
where a party to a contract disputes the
committing of any breach of conditions the
adjudication should be by an independent
person or body and not by the other party to the
contract".
17.The provision under clause 16.2 that quantification of the
Liquidated Damages shall be final and cannot be
challenged by the supplier Motorolla is clearly in restraint
of legal proceedings under section 28 of the Indian
Contracts Act. So the provision to this effect has to be held
bad.
25
18.Pursuant to section 4 of the Arbitration and Conciliation
Act, 1996, a party who knows that a requirement under the
arbitration agreement has not been complied with and still
proceeds with the arbitration without raising an objection,
as soon as possible, waives their right to object. The High
Court had appointed an arbitrator in response to the
petition filed by the appellant. At this point, the matter was
closed unless further objections were to be raised. If further
objections were to be made after this order, they should
have been made prior to the first arbitration hearing. But
the appellant had not raised any such objections. The
appellant therefore had clearly failed to meet the stated
requirement to object to arbitration without delay. As such
their right to object is deemed to be waived.
19.Finally we are of the opinion that the contention of the
Respondent that Clause 62 referring to special clauses has
an overriding effect on Clause 16.2, cannot be accepted..
There is in fact no conflict between clause 62 and 16.2.
Clause 62 has two parts in it. One part referring to the
26
Liquidated damages and the other part refers to incentives
in case the respondent/Motorolla performs its part of the
contract within time. The part dealing with Liquidated
Damages under clause 62 in fact refers it back to clause
16.2 dealing with the quantification of Liquidated Damages.
So it is apparent that there is no dispute between clause 62
and clause 16.2.
20.For the reasons aforesaid, we are of the view that the High
Court was justified in passing the impugned judgment and
there is no infirmity in the impugned order for which we
can interfere with the order of the High Court. The appeal is
therefore dismissed. There will be no order as to costs.
................................J.
[Tarun Chatterjee]
New Delhi; ...................................J.
September 15, 2008. [Lokeshwar Singh
Panta]
27
28

Territorial Jurisdiction of a Civil Court Vis a Vis application filed for registration of trade mark in an action for trade mark infringement and pass

The existence is outcome of continuous process of Struggle. A baby is outcome of fight amongst hundreds of thousands of brother sperms in penetrating one ovum. In ancient days man struggled against the nature in order to survive. Changing time witnessed the fight amongst the feudal society in order to advance their respective interest on the land. With Advent of nuclear era and advent of global economy ,concept of direct war amongst the nations seems to be a distant possibility and the same has been replaced by the battle amongst the multinational corporations/companies on economic front. Modern days, the multinational companies are trying to extend their economic interest in as much countries as possible.

A civilized society guarantees the fairness in battle. Providing equal opportunities to all the contesting parties is one of the prime objectives of the modern society. While writing this article ,the mythological story of famous battle between the giant Elephant and the Crocodile ( as mentioned in the Hindu scriptures),flickers across my mind.

“Once upon a time there was a giant Elephant. His mere glimpse was sufficient to instill feeling of fear amongst the small animals. Once the Elephant went to the bank of the Ganga, in order to quench his thirst. Inside the water there was a Crocodile, lying in waiting for a prey. As soon as the Elephant entered into the water, the Crocodile caught one of his legs and started to drag him into the water. As tug of war progressed, the Crocodile was prevailing over the Elephant and for a moment life of Elephant was seemed to come to an end. Getting panicky, the Elephant fervently began to pray Lord Vishnu (The Hindu God) and Lord Vishnu descended upon Earth in order to rescue the life of Elephant by killing the Crocodile." The Crocodile prevailed over the Elephant not because he was more powerful than the Elephant but because of the fact that the battle was fought inside the water, which was more suitable to the Crocodile . Place of battle plays decisive role in its outcome and present story highlights the same. Had the battle would have been fought on the land , there would have been different story. "

In modern civil disputes, the concept of territorial jurisdiction draws its origin from the fact that defending party should not be put to inconvenience at the instance of another party. The idea is to provide fair opportunity to both the party. Today territorial jurisdiction plays important role in outcome of civil disputes amongst the parties. This article proposes to deal with the significance of trade mark application vis-à-vis territorial jurisdiction in an action of Trade Mark Infringement and an action of Passing off especially in light of recent Judgment passed by the Hon'ble Apex Court in DHODHA HOUSE VS. S.K.MAINGI as reported in 2006(32) PTC 1 (SC) and different interpretations given thereto by the Hon’ble High Courts.

CAUSE OF ACTION.

Sections 16-20 of Code of Civil Procedure deal with the territorial jurisdiction in civil court. Section 16-18 of C.P.C deal with territorial jurisdiction in suits pertaining to immovable property. Section 19 of C.P.C deals with territorial jurisdiction in suit pertaining to movable property. Section 20 of C.P.C deals with all other cases not covered by the aforesaid provisions of C.P.C. Indisputably suit for Infringement of trade mark/Passing off would be governed by Section 20 of C.P.C and according to which all such suit may be filed ,at the option of plaintiff , in any of the following court viz:-

(a) Within whose local jurisdiction ,the cause of action , wholly or in part arises or

(b) Within whose local jurisdiction the defendant resides or carries on business or personally works for gain.
To appreciate the significance of trade mark application filed either by the plaintiff or the by the defendant, in conferring the jurisdiction of the court, it is necessary to understand the term “cause of action” as application for filing of registration of trade mark, would be covered under the Section 20 (c) of C.P.C, which says that the suits can be filed at the places where the cause of action, wholly or in part arises.
The term cause of action has not been defined in C.P.C however this term can be understood with the help of interpretations given thereto by various courts.
A Cause of action means every fact, which if traversed, it would be necessary for the plaintiff to prove in order to support his right to a judgment of the court. AIR 1949 PC 78(at 86),AIR 1989 SC 1239.

It is a action which gives occasion for and forms the foundation of the Suit. AIR 1970 SC 1059. Cause of action is bundle of essential facts which are necessary for the plaintiff to prove before he can succeed in the suit. (1978) 2 SCC 91(Para10). Cause of action means every fact which it would be necessary for the plaintiff to prove, if traversed in order to support his right to the judgment of the court. It doesn’t comprise every piece of evidence which is necessary to prove each fact but every fact but every fact which is necessary to be proved .Everything which, if not proved, gives the defendant an Immediate right to judgment must be part of cause of action. Read Vs Brown (1888) 22 Q.B.D 128. From the aforesaid interpretations given by various courts it can be said that cause of action means every fact which is necessary for the plaintiff to prove to support his right to the judgment of the court and everything which if not proved, gives the immediate right to the defendant for the judgment.

WHAT FACTS ARE NECESSARY TO BE PROVED IN AN ACTION OF PASSING OFF

In Trade Mark Act 1999, the term Passing off is nowhere defined, however some guidance can be taken from the interpretation given to the term Passing Off by different courts.
In N.R.Dongre Vs Whirlpool Corporation 1996 (5) SCC 714 case the Hon'ble Apex Court observed: "The concept and principle on which passing off action is grounded is that a man is not to sell his own goods under the pretence that they are the goods of the another man". The Apex court further clearify in Kaviraj Durga Dutt Sharma Vs Navratna Pharmaceutical Laboratories AIR 1965 SC 980. " The use by the defendant of the trade mark of the plaintiff is essential in an action of Passing off". In Ruston & Hornby Ltd Vs Zamindara Engineering Co AIR 1970 SC 1649,the Hon'ble Court observed that " In a passing off action the issue is as follows - Is the defendant is selling his goods so marked as to be designed or calculated to lead purchasers to believe that they are the plaintiff's good." In Laxmikant V Patel Vs Chetanbhai Shah AIR 2002 SC 275,The apex Court observed " the law does not permit anyone to carry on his business in such a way as would persuade the customers or client in believing that the goods or services belonging to someone are his or associated therewith. In Ellora Industries Vs Banarasi Dass Gupta AIR 1980 Del 254 the Hon'ble Delhi Court observed as follow " In an action of passing off all that is needs to be proved is that the defendant's Goods are so marked ,made up or described by them as to calculated to mislead ordinary purchasers and to lead them to mistake the defendant's goods for those of the plaintiff's and it is the tendency to mislead or to confuse that forms the gist of passing off action.

In an action of passing off the plaintiff is required to prove (1) Reputation (2) Deception and (3) Damage . P. Narayanan (Para 25.13 ,Vol VI,Page 696).
Section 134 (1) (c) of Trade Marks Act 1999,also helps us in understanding that what are the things/facts, which the plaintiff is not required to establish in an action of passing off. Section 134 (1) (c) of Trade Marks Act 1999 reads as follows:-
"No suit for passing off arising out of use by the defendant of any trade mark which is identical with or deceptively similar to the plaintiff's trade mark, whether registered or unregistered ,shall be instituted in any court inferior to a District court having jurisdiction to try the same."

Bare perusal of the above mention section makes it quite clear that an action of passing off has got nothing to With the plaintiff’s Trade Mark being registered or unregistered. Further reading of the section clearly establishes this fact that the cause of action for Passing off arise only by the use of impugned Trade Mark by the defendant. This fact has been confirmed by the various courts.
To appreciate the term use by the defendant of any trade mark, it is necessary to understand the term trade mark, as defined in Trade Mark Act 1999.
Section (zb) of Trade Mark Act 1999, reads as follows:
2(zb)Trade Mark means a mark capable of being represented graphically and which is capable of distinguishing the goods or services of one person from those of others and may include shape of goods, their packaging and combination of colours; and-
(i) In relation to chapter XII(other than Section 107), a registered trade mark or a mark used in relation to goods or services for the purposes of indicating or so to indicate a connection in the course of trade between the goods or services, as the case may be, and some person having the right as proprietor to use the mark; and
(ii)In relation to other provisions of this Act , a mark used or proposed to be used in relation to goods or services for the purposes of indicating or so to indicate a connection in the course of trade between the goods or services , as the case may be , and some person having the right, either by way of permitted user ,to use the mark whether with or without ant indication of the identity of that person and includes a certification trade mark or collective mark.
The above mentioned section makes it clear that for a mark, to be qualified as a trade mark, its user; inter-alia has to in the course of trade. In other way the user of the trade mark has to be in the course of trade or a commercial user. It is submitted that a user which does not pertain to user of a mark in the course of trade and/or a commercial user it can never amount to user of a trade mark and by necessary implication the same can never be basis of bringing an action of either Infringement of trade mark or an action of passing off.
From the above discussion, it is quite clear that in an action of passing off, the cause of action can be based on every fact which
(a) establishes tremendous reputation of plaintiff’s trade mark,

(b) proves misrepresentation/user by the defendant in the course of trade, that his good are the goods of the plaintiff, and(c) pertains to damage occurred to the plaintiff because of impugned activity of the defendant. Every fact which establishes these facts, can be said to form the part of cause of action in an action of passing off.

SIGNIFICANCE OF TRADE MARK APPLICATION IN CREATING JURISDICTION IN AN ACTION OF PASSING OFF.

In para 38 of the Dhodha House case (Supra) the Hon'ble Apex Court, after relying on the Premier distelleries Pvt Ltd Vs Shashi Distilleries cae [2001 PTC 907(Mad)],held that the cause of action in a suit for passing off has nothing to do with the location of Registrar's office or the factum of applying or not applying for registration. In AIR 1991 Karnataka 303 and 2002 ( 25) PTC 704 (Karnataka) , it has been held that registration of trade mark is wholly irrelevant for the action of passing off. In AIR 1978 Delhi 250, the Hon'ble court observed that the registration of the mark or similar mark prior in point of time to user by the plaintiff is irrelevant in an action of passing off.

CONCLUSION: From above discussions it is quite clear that in an action of passing off, the filing of trade mark application either by the plaintiff or by the defendant is totally irrelevant and no cause of action can be based thereon. It is trite to say that cause of action constitutes every fact, which if not proved, gives the defendant an immediate right to judgment. In an action of passing off, every fact which is necessary in establishing goodwill and reputation of the plaintiff’s trade mark can be said to gives accrual of cause of action. Now question is that whether filing the trade mark by the plaintiff, establishes the goodwill and reputation of the plaintiff’s trade mark or not? Answer is no. As the goodwill and reputation of a trade mark can be established only by the commercial user of the same in the market and filing of trade mark application has got nothing to do with commercial user of the same. Thus trade mark application filing by the plaintiff does not give rise to accrual of cause of action in an action of passing off.

More so in an action of passing off, the plaintiff is not required to establish that he is registered proprietor of the trade mark. In the other way it can be said that an action of passing off lies irrespective of this fact that whether the plaintiff is registered proprietor of trade mark or not? It has also been observed by the Apex Court in Corn Products Refining Co Vs Shangrilla Food Products Ltd AIR 1960 SC 142 that preserve of mark in the register doesn’t prove its user at all. This view was supported by various courts AIR 1978 DELHI 250. Thus the factum of plaintiff, being registered proprietor of a trade mark also does not give rise to accrual of cause of action in an action of passing off.

Moreover filing of trade mark application by the defendant doesn’t correspond to defendant's user. In other way filing of trade mark application by the defendant has got nothing to do with the user in the course of trade and by mere filing trade mark application, the defendant is not trying to misrepresent in the course of trade that his goods are the goods of the plaintiff. It is well settled proposition of law that registration is prima facie evidence of the validity and preserve of a mark on the register does not proves the user at all. Hence filing of trade mark application by the defendant and/or registered trade mark of defendant is irrelevant in an action of passing off. In other way it can be said that in an action of passing off, the locus of trade mark office, in no way gives rise to cause of action. The same view has been duly supported by the Apex court in Dhodha House(Supra) Judgment.

With due respect to the Hon'ble Delhi High Court, it is submitted that the in its recent judgment viz: Pfizer Products Inc Vs Rajesh Chopra & others 2006 ( 32) PTC 301 (Del) the Hon’ble court did not perceive the ratio of Dhodha House Judgment in right perspective in as much as in an action of passing off the Hon’ble court relied on the filing of trade mark application.
In a very recent Judgment titled as M/s Parle Products Pvt. Ltd Versus M/s Surya Food 7 Agro Ltd , reported as 2007 (35) PTC 542 (Mad), the Hon’ble Madras High Court observed “ in order to establish his right to an injunction in an action for passing off, it is wholly un necessary for the plaintiff to demonstrate that he had applied for registration of the mark under the Trade Mark Act . His failure to demonstrate that he had applied an application for registration will not clothe the defendant with a right to obtain dismissal of the suit. The application for registration is therefore , a factor of no relevance in an action for passing off(para 6)”.

In the said judgment the Hon’ble Court further observed “ the essence of the action of passing off id deceit on the part of the defendant in trying to pass off his goods as that of the plaintiff. That is a pure question of fact to be established by the proper evidence. The cause of action can arise where deceit is practiced. It can not arise at a location where the plaintiff who claims the relief, chooses to lodge an application for registering his mark, without any deceit having been practiced within that Jurisdiction.(para 7)”.
In para 9 of the said Judgment the Ho’ble have gone one step further in observing that that in an action for passing off , the cause of action has got nothing to do with the location of the registrar’s office or factum of applying or not applying for registration. Filing of an application for registration of a trade mark therefore doe snot constitute a part of cause of action where the suit is one for passing off”.

By necessary implication it is clear that filing of trade mark application either by the plaintiff or by the defendant has got nothing to do with the passing off action. Or in other words it can safely be said that locus of office of trade mark office , either qua the plaintiff’s trade mark application filing or qua defendant’s trade mark application filing do not form part of cause of action in an action of passing off. Any reliance on the same is extraneous and irrelevant in such cases.WHAT FACTS ARE NECESSARY/RELEVANT IN AN ACTION OF INFRINGEMENT OF TRADE MARKIn order to understand that what facts are necessary/relevant in an action of Infringement of trade mark, few relevant sections of the Trade Marks Act 1999 are required to be gone through.Section 27(1) of trade marks act 1999 reads as follows:No person shall be entitled to institute any proceeding to prevent, or to recover damages for, infringement of an unregistered trade mark.While Section 134(1)(a)and (b) or trade marks act 1999 reads as follows:No Suit (a) for infringement of a registered trade mark, or (b) relating to any right in a registered trade mark; shall be instituted in any court inferior to a District Court having jurisdiction to try the suit.Combined reading of section 27(1) and section 134 (1)(a) and (b) of Trade Marks act 1999 makes it quite clear that for the purposes of bringing an action of Infringement of a trade mark, plaintiff is required to establish that he is the registered proprietor of the trade mark. In other way it can be said that in an action of infringement of trade mark, the factum of plaintiff in failing to establish that he is registered proprietor of the trade mark, gives an immediate right of judgment to the defendant. The logical conclusion is that, every fact which establishes that the plaintiff is registered proprietor of the trade mark, gives rise to cause of action in an action of infringement of trade mark. Prima facie it appears that locus of trade mark office, qua the plaintiff’s trademark application filing, gives rise to cause of action.More so same view was supported by Division Bench, Madras High Court in Premier Distilleries Pvt Ltd Vs Shashi Distilleries Case 2001 PTC 907 (Mad)(DB) Where the Hon’ble DB observed as follows” The right to bring an action for infringement in the court within whose jurisdiction the trade mark registry is located ,is founded on the fact that the relief sought in the action one for infringement and not merely for passing off. Where it is alleged that a trade mark is infringed, it is essential for the plaintiff to show that the mark had, in fact, been registered. The failure to establish that fact will result in the dismissal of the suit for infringement, satisfying the test formulated by Fry, L.J. ”for ascertaining the cause of action, namely everything which, if not proved, entitles the defendant to an immediate right to judgment”.With due respect to the Hon’ble DB it is submitted that mere the locus of trade mark registry , qua the plaintiff’s trade mark application filing can not be basis in assuming the jurisdiction of court.Let us examine relevant section of the Act. Section 134(2)of Trade Marks Act1999 provides for additional forum to the plaintiff according to which the suit for infringement of trade mark can be filed to the court, in whose jurisdiction, at the time of institution of suit, the plaintiff actually and voluntarily resides or carries on business or works for gain. This additional forum was not there in the old Trade & Merchandise Marks Act 1958.Had the presumption “that the locus of trade mark registry, qua the plaintiff’s trade mark application filing can provide the jurisdiction of court” be taken to be reasonable, then there would not have been any occasion for the legislature to providing for additional forum to the plaintiff by virtue of Section 134 (2) of Trade Mark 1999. Let this proposition be explained by one example.A legal entity namely X carries on its business in Delhi. A files trade application before the trade mark registry, at Delhi office and after some time the same gets registered in his name. A files a suit for infringement against Y(residing at Ghaziabad )before the Delhi High Court in the old Trade & Merchandise Marks Act1958.In old Act additional forum was not there. If we take the above presumption to be reasonable i.e.( the locus of trade mark registry , qua the plaintiff’s trade mark application filing can provide the jurisdiction of court), then mere this fact that plaintiff’s trade mark was filed and registered from trade mark registry, Delhi, could give rise to accrual of cause of action even in old Act. Hence even in old act , for the purposes of conferring jurisdiction to Delhi High Court this fact became irrelevant, whether the plaintiff was actually carrying on its business or works for gain at Delhi or not? The insertion of additional forum by legislature in Section 132(2)Trade Marks Act 1999 creates clouds over this proposition. There are also many other reasons which further fortify this argument that in infringement case ,trade mark application filing by the plaintiff cannot give rise of accrual of cause of action, or in other words it can be said that the same can not be a basis of conferring jurisdiction in such cases.Bare perusal of Scheme of the Trade Mark Act 1999 and rules framed there under clearly establishes this fact that location of trade mark registry is not based on jurisdiction basis, rather it meant for facilitating the registration of trade marks only.Section 5 of the Trade Marks Act 1999 provides for head office and branch offices of Trade Mark Registry. In fact in Mumbai, there is head office of Trade Mark Registry while branch offices are located in Delhi, Chennai, Calcutta and Ahmedabad. Section 6 of the Trade Mark Act provides for the register where entry shall be entered pertaining to all the registered trade mark. The compilation and publication of the trade mark journal is handled only by the head office. Thus it is quite clear that different branch offices are not intended to work as independent offices. Rule 4(a)(ii) of Trade Marks Rule 2002 provides that where there is no any entry in the register as to principal place of business in India ,Appropriate office of trade mark registry for the purposes of making trademark application, or for the purposes of filing notice of opposition would be guided by the place mentioned in addresses for service in India. Thus the locus of appropriate trade mark office does not correspond to actual place of business of the applicant. Rule 5 of the Trade Marks Rules 2002 provides that jurisdiction of the appropriate Trade Mark office is not altered by change in the principal place of business or address for service in India. Under Trade Marks Act 1999,all the appeals against the order of Registrar of Trade Marks, instead of going to Different High Court according to the Jurisdiction, has to go before the Intellectual Property Appellate Board at Chennai only, irrespective of the jurisdiction. Thus in view of scheme of the Trade Marks Act 1999 and rules made there under it is clear that locus of trade mark registry cannot be taken to be one of the basis for the purposes of conferring jurisdiction in Infringement of Trade Marks cases. More so , in AIR 1974 DELHI 40 the Hon’ble High Court also returned this finding that the registration in plaintiff’s favour of the trade mark by itself is not sufficient to support the action of infringement.Now let us examine that whether in infringement cases, jurisdiction can be based on the factum of trade mark application filed by the defendant?Let us examine Dhodha House Case in this behalf. In Dhodha House case(Supra) the Apex court dealt With two civil appeals.In Civil Appeal no 6248 of 1997,the plaintiff was carrying on its business in the District of Ghaziabad while the defendant was based in Faridkot. Plaintiff claimed to be registered proprietor of Trade Mark Dhodha House under no 277714-B in class 30 and registered copyright holder under no A-5117/1970 and A-5330/1970.The Plaintiff filed composite suit of infringement of trade mark/passing off/infringement of copyright against the defendant before the District Judge Ghaziabad. It is important to mention here that no trade mark application was filed by the defendant.In Civil Appeal No.16/1999,both the plaintiff and the defendants were based at Rajkot. The plaintiff claimed to be registered proprietor of Trade Mark and copyright Field Marshal. The first defendant was alleged to be registered under the Companies Act in Delhi. The impugned Trade Marks of defendant were published in India by trade mark registry in respect of defedant's applications for registration, including the Union Territory of Delhi. The Plaintiff filed composite suit of infringement of trade mark/passing off/infringement of copyright against the Defendant before the Hon'ble Delhi High Court.In Civil Appeal no 6248 of 1997, counsel for the plaintiff relied on M/S Jawahar Engineering Company Vs M/S Jawahar Engineers Pvt Ltd 1983 PTC 207. In Jawahar Engineers Case ,plaintiff was registered proprietor of Trade Mark Jawahar whereas the defendant has applied for registration of the trade mark Jawahar for few states of India. In that case it was held “ having regard to the fact that an advertisement had appeared in the trade mark journal as regard application for registration of the trade mark of defendant therein, the Delhi high Court would have jurisdiction in the matter.”In para no 31 of the Dhodha House Judgement , the Hon’ble Supreme Court discussed the Jawhar Engineering case and returned the finding as follows:-The said decision has no application in the instant case for more than one reason. For the purposes of registration of a trade mark,an application must be filed in the branch office of registrar of trade mark. In the said para the Hon’ble Court further observed “ An advertisement by itself in a journal or a paper would not confer jurisdiction upon a court.In para 32 the Dhodha House Judgement,the Apex Court further observed” a cause of action will arise only when a trade mark is used and not when an application is filed for registration of the trade mark. In a given case an application for grant of registration certificate may or may not be allowed. In said para the Hon’ble Apex Court further observed “ In other words a suit may lie where an advertisement of trade mark or copyright has taken place but a cause of action for filing the suit would not arise within the jurisdiction of court only because an advertisement has been issued in the Trade Mark Journal or any other Journal notifying the factum of filing of such an application”.Thus it is quite clear that the Hon’ble Apex Court returned the finding that cause of action for infringement of trade mark shall arise only when the trade mark is used and not an trade mark application is filed. By logical conclusion it can be said that no cause can be based on defendant’s application, as the same does not correspond to defendant’s commercial user.Even Section 31 of trade marks Act 1999 says as follows:- Registration to be prima facie evidence of validity.Section 29 of trade marks act provides that in what circumstances it can be said that a registered trade mark is being infringed.29 (1) A registered trade mark is infringed by a person who, not being a registered proprietor or a person using by way of permitted use, uses in the course of trade ,a trade mark which is identical with ,or deceptively similar to ,the trade mark in relation to goods or services in respect of which the trade mark is registered and in such a manner as to render the use of the mark likely to be taken as being used as a trade mark.29(2) A registered trade mark is infringed by a person who, not being a registered proprietor or a person using by way of permitted use ,uses in the course of trade ,a mark which because of ---------29(4) A registered trade mark is infringed by a person who not being a registered proprietor or a person using by way of permitted use, uses in the course of trade , a trade mark which --------29(5) A registered trade mark is infringed by a person if he uses such registered trade mark as his trade name or part of his trade name or name of the business concern or part of the name ,of his business concern dealing in goods or services in respect of which the trade mark is registered.29(6) For the purposes of this section, a person uses a trade mark, if, in particular, he-(a) affixes it to the goods or the packaging thereof;(b) Offers or exposes goods for sale, puts them on the market, or stocks them for those purposes under the registered trade mark , or offers or supplies services under the registered trade mark(c) imports or exports goods under the mark;(d) uses the registered trade mark on business papers or in advertising.29(7) A registered trade mark is infringed by a person who supplies such registered trade mark to a material intended to be used for labeling or packaging goods, provided such person, when he applied the mark, knew or had reason to believe that the application of the mark was not duly authorized by the proprietor or a licensee.29(8) A registered trade mark is infringed by any advertising of that trade mark if such advertising-(a) takes unfair advantage of and is contrary to honest practices in industrial or commercial matters; or(b) is detrimental to distinctive character; or(c) is against the reputation of the trade mark.29(9) Where the distinctive elements of a registered trade mark consists of or includes words, the trade mark may be infringed by spoken use of those words as well as by their visual representation and reference in this section to use of a mark shall be construed accordingly.It is clear that for an action of Infringement, the commercial user of impugned trade mark by the defendant has to be established.Now let us examine that on the question of infringement of trade marks, what stand has been taken by the various courts.Infringement is use by the defendant for trading purposes upon or in connection with the goods of the kind for which the plaintiff’s right to exclusive use exists, not being the goods of the plaintiff, of a mark identical with the plaintiff’s mark or comprising something some of its essential features or colorably resembling it so as to be calculated to cause goods to be taken by ordinary purchasers for the goods of the plaintiff. Abbey Sports Co Ltd Vs Priest Brothers, (1936)53 RPC 300 at 304.A Plaintiff , in a suit on the basis of infringement, has to provide not only that his trade mark is infringed but a person who is not a registered proprietor of the mark or the registered user thereof but that the said person is using a mark in the course of trade. S.M.Dychem Ltd Vs Cadbury (India) LTD AIR 2000 SC 2114.The use by the defendant of the trade mark of the plaintiff is sine qua non in an action for infringement of trade mark. Kaviraj Pandit Durga Dutta Sharma Vs Navratna Pharmaceutical Laboratories AIR 1965 SC 980. In the same judgment it was further held that “ When once the use by the defendant of the mark which is claimed to infringe the plaintiff’s mark is shown to be in the course od trade , the question whether there has been an infringement is to be decided by the comparison of the two trade mark.From above mentioned discussions it can be said that in order to bring an action of infringement of registered trade mark, the plaintiff has to establish the user/proposed user of trade mark by the defendant in the course of trade. Any user , which is not in the course of trade, cannot be said to form cause of action in infringement of trade mark cases.Now let us examine the term Use in the course of trade. The term use in the course of trade has no where been defined in the Trade Mark Act 1999.In Hermes Tm (1982)RPC 425 AT 432 it is observed that “In the course of trade is wide enough to cover the steps necessary for the production of goods as well as their actual placing on the market.”The user of trade mark can further be explained by bare perusal of a recent judgment of Hon’ble Delhi high Court titles as M/s Yonex Kabushiki Kaisha Versus M/s Phillips International & others , reported as 2007 (35) PTC 345 (DEL) , where in para 14 of the judgment the Hon’ble Court observed as follows” the plaintiff has sought to establish the allege use of the trade mark YONEKA in the India on account of the letter dated 06.08.2005 purported to have been issued by the Badminton Association of India.The said declaration also did not prove use of the trade mark on commercial basis in any manner whatsoever. The said letter talks about supply of the shullecocks “free of costs”. The question whether any shuttlecocks, as per alleged agreement with association ,were supplied or not remains unanswered on the part of the plaintiff. Furthermore , distribution of free samples does not constitute commercial use of the trade mark ‘.
It is submitted that the Hon’ble Delhi High Court emphasized on this fact that alleged user of the trade mark has to be commercial user and in the given case the Hon’ble Court returned the finding that distribution of free samples does not constitute commercial use of the trade mark. The facts remains that use of a trade mark has to be commercial in nature.Further it is observed in para no. 23.24 of Trade Marks & Passing off, Volume VI, P.Narainan , relying on the Irvings Vs Horsenail (1934) 51 RPC 110 at 116 case explained the term “ use as a trade mark”. The expression (use as a trade mark) means “ in such a manner as to render the use of the mark likely to be taken as being use as a trade mark”. Thus it is clear that in order to constitute infringement the defendant must use the offending mark as a trade mark within the meaning of definition under 2 S(1)(Zb).It is submitted that Section 2 S(1)(Zb) of the act contemplates the user by the defendant in the course of trade. In para 2.21 of the said book, P.Narainan further observed “it is fundamental principle of law that the function of a trade mark is to indicate the origin of the goods to which it is applied. Aristoc Vs Rysta (1945) 62 RPC 65 at 79. Connection in the course of trade would therefore, mean any kind of connection consistent with this principle. A connection with the goods in the course of trade means an association with the goods in the course of their production and preparation for the market.CONCLUSION: From combined reading of section 2 (zb)(i)(ii)of Trade Mark Act 1999 [as already mentioned in passing off section of this article],section 29 of Trade Mark Act 1999, and also from perusal of the above mention judgments of the courts, it is quite clear that in order to succeed in an action of Infringement of trade mark, the plaintiff is required to prove the user/proposed user of the impugned trade mark by the defendant in the course of its trade activity. The said user has to be commercial user.Thus every fact which proves the actual commercial user and/or proposed commercial user of impugned trade mark by the defendant is a relevant fact and the same gives rise to cause of action.Defendant’s filing of application and/or advertisement thereof in the trade mark journal does not amount to commercial user/proposed commercial user at all. Even Hon’ble Delhi High Court observed in AIR 1972 DELHI 248 that mere acceptance of an application for registration of a trade mark or its advertisement confers no right. Mentioning of user column in the application is not conclusive proof of the commercial user/proposed commercial user by the defendant. That’s why there is provision of opposition so that the claimed user and or proposed user(remember, the same doesn’t qualify for proposed commercial user) of the defendant can be challenged. Even if the defendant’s application qualifies the opposition and gets registered, even then there is provisions for rectification of the same whereby the proprietary rights of the defendant over the impugned trade mark including its user can also be challenged. Even various court also held that registration is prima facie evidence of validity(AIR 1972 DELHI 248 , AIR 1972 DELHI 46).The defendant is not getting any right in the trade mark by filing application or by its advertisement nor the same is any proof the user of the defendant’s trade mark, leave aside the commercial user. This is the reason why the legislature, while enacting the Trade Mark Act 1999, did not include the act of trade mark application filing by the defendant as infringement of trade mark (Section 29 of Trade Mark Act 1999).While bringing an action of infringement of trade mark, onus heavily lies on the plaintiff to establish the infringement of his trade mark by the defendant and the same cannot be discharged only qua defendant’s trade mark application filing. Thus it can be safely be said that in an action of infringement of trade mark/passing off, no cause of action can be based on trade mark application filling, either by plaintiff or by defendant.

Disclaimer:

Information and discussion contained herein is being shared in the public Interest. The same should not be treated as substitute for expert advice as it is subject to my subjectivity and may contain human errors in perception, interpretation and presentation of the fact and issue involved herein.

Advocate Ajay Amitabh Suman,

IP Adjutor: Patent and Trademark Attorney

Email: ajayamitabhsuman@gmail.com,

Mob No: 9990389539