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Case Number

Appeal No. 1044 of 2010 in Notice of Motion Nos. 1263 of 2009 and 2952 of 2010 and Suit No. 3094 of 2005

Attorney(S)

V R. Dhond with N.C Parekh and Ms. Bhavna Sinde instructed by Mansukhlal Hiralal and Co.
Dr. Virendra Tulzapurkar, Senior Advocate with Shriraj Dhruv and Ms. Ranju Yadav instructed by Dhru and Co.

Judges

Dr. D.Y Chandrachud
Anoop V. Mohta, JJ.

Acts

Order 39, Rule 2A

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Smart Summary

Summary of Opinion — Dr. D.Y. Chandrachud, J.

Factual and Procedural Background

The appeal challenges an order of a learned Single Judge that made absolute a motion for interim relief in a suit for alleged copyright infringement in artistic work consisting of industrial drawings (126 drawings listed in Exhibit 'G' to the Plaint). The plaintiff alleged that several former employees resigned and that the plaintiff's drawings were later found in the custody of the first defendant (a limited company) and certain fabricators (defendant Nos. 13–23). An earlier interim injunction dated 26 June 2008 restrained defendants from using the plaintiff's drawings and from making three-dimensional reproductions of the parts depicted in those drawings.

The plaintiff subsequently sought a fresh motion for interim relief on the ground that the first defendant and defendant No. 24 (a limited company whose shares were held by certain defendants) were continuing infringement by making infringing copies, assembling electroforged grating machines from infringing parts, and marketing and selling electroforged gratings. The fresh motion sought (i) action under Order 39, Rule 2A for breach of the injunction, (ii) striking out the defendants' defence, and (iii) appointment of a Receiver over electroforged grating machines manufactured from parts based on the plaintiff's drawings.

Defendant No. 24 initially filed an affidavit stating it had imported a machine from South Africa (order placed 15 January 2008) and was conducting business from it, but did not disclose possession of two additional indigenous machines. Subsequent proceedings and affidavits revealed defendant No. 24 conceded possession of three machines (one imported, two indigenous) and produced documents relating to local purchases of parts. The plaintiff filed further affidavit material alleging the two indigenous machines were assembled from parts made in infringement of the plaintiff's drawings and pointed to invoices, purchase orders, and the absence of any drawings produced by defendant No. 24 to rebut that contention.

Legal Issues Presented

Whether, on the material before the Single Judge, a prima facie case of copyright infringement (in respect of the plaintiff's industrial drawings) was made out so as to justify interim relief including appointment of a Receiver and sealing of machines.
Whether defendant No. 24's claim that it was using an imported electroforged machine (from South Africa) defeated the plaintiff's contention that two indigenous machines in defendant No. 24's possession were assembled from parts made in infringement of the plaintiff's drawings.
Whether, in the circumstances, action under Order 39, Rule 2A for breach of the injunction and striking out of the defendants' defence was warranted.

Arguments of the Parties

Plaintiff's Arguments

The plaintiff alleged that 126 industrial drawings listed in Exhibit 'G' were its copyrighted artistic works and that former employees supplied those drawings to fabricators and/or to the first defendant after resigning.
The plaintiff relied on Exhibit 'A' to the rejoinder and further affidavit material listing orders obtained by defendant No. 24 (including orders predating the import of the South African machine) to show defendant No. 24 had machines other than the imported machine.
The plaintiff highlighted invoices and purchase orders (including a schedule titled "Illustrative invoices exposing Infringement") showing parts ordered from fabricators from whose custody the plaintiff's drawings were recovered, and noted that many invoices referenced drawings for the specific parts.
The plaintiff emphasized that defendant No. 24 failed to produce any drawings to demonstrate that the indigenous machines had been assembled on the basis of drawings other than the plaintiff's drawings.
On the basis of the documents and surrounding circumstances, the plaintiff contended a prima facie case of infringement existed and the balance of convenience favored interim relief (including appointment of Receiver and sealing of two indigenous machines).

Defendant No. 24 (Appellant)'s Arguments

Defendant No. 24 initially asserted (in affidavit dated 9 June 2009) that the brochures relied on by the plaintiff pertained to an electroforged machine imported from South Africa (order placed 15 January 2008) which it had commissioned and was using for manufacture of electroforged gratings.
The principal contention advanced on appeal was that the learned Single Judge had not made any comparison between the machines in defendant No. 24's custody and the plaintiff's artistic drawings, and that without such a comparison a case for infringement could not properly be made out.

Table of Precedents Cited

No precedents were cited in the provided opinion.

Court's Reasoning and Analysis

The Court reviewed the record and the materials placed before the learned Single Judge and addressed the appellant's contention that no comparison had been made between the machines and the plaintiff's drawings. The court's reasoning proceeded on the basis of documentary and circumstantial evidence rather than a direct mechanical-to-drawing side-by-side comparison:

The Single Judge had examined the documents produced (including invoices, purchase orders and Exhibit 'A' and other affidavits) and the surrounding circumstances which indicated how the two indigenous machines had come into existence.
Defendant No. 24 had, in initial affidavits, stated only the existence of an imported machine and had not disclosed the two indigenous machines; later it conceded possession of three machines and provided some documents concerning local purchases of parts.
The plaintiff pointed out that many of the purchase orders and invoices relating to parts were prior to defendant No. 24's incorporation and that none of the invoices were raised on defendant No. 24, suggesting that the indigenous machines were assembled from parts procured from third parties (fabricators) who had had the plaintiff's drawings.
Significantly, defendant No. 24 failed to produce any drawings to demonstrate that the indigenous machines had been assembled from non-infringing drawings; certain fabricators from whom parts were sourced were the very parties from whose custody the plaintiff's drawings had been recovered.
On the cumulative effect of the documents and circumstantial indicators—orders predating import, invoices referencing drawings, absence of any exculpatory drawings produced by defendant No. 24, and the history of the plaintiff's drawings being found with fabricators and the first defendant—the Single Judge found a prima facie case for infringement and that the balance of convenience favored granting the relief sought.
The Court accepted the Single Judge's conclusion that defendants had attempted to use the import story as a device to defeat the injunction, and that appointment of a Receiver and sealing of the two indigenous machines was justified while permitting the defendants to continue to use the imported machine from South Africa.

Holding and Implications

APPEAL DISMISSED.

Direct consequences of the holding for the parties:

The order of the learned Single Judge granting interim relief (including appointment of a Receiver in respect of the two indigenous electroforged grating machines and directing the Receiver to seal those two machines) was upheld.
Defendants were permitted to use the electroforged machine imported from South Africa; the two indigenous machines were subject to the Receiver's control and sealing as ordered below.
The appeal was dismissed with no costs awarded to either party.
As a procedural consequence, the Notice of Motion pending before this Court did not survive the disposal of the appeal and was accordingly disposed of.

The opinion does not discuss or establish any broader precedent beyond the direct effect on the parties; it affirms the grant of interim relief on the basis of the documents and circumstances before the Single Judge rather than requiring a physical comparison of the complete machines with the plaintiff's drawings at the interlocutory stage.

Appeal dismissed.

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Kanade Anand Udyog Pvt. Ltd. v. Indiana Gratings Pvt. Ltd. And Others

Dr. D.Y Chandrachud, J.:— The appeal arises out of an order of a learned Single Judge by which a motion for interim relief in a suit based on infringement of copyright was made absolute. Parties will be referred to by their appellations in the Plaint.

2. The action by the plaintiff is founded on an alleged infringement of its copyright in artistic work. The artistic work in the present case consists of Industrial Drawings. The plaintiff sought protection in respect of 126 drawings which have been referred to in Exhibit ‘G’ to the Plaint.

3. The first defendant is a Limited Company controlled by the Kanade family. The Second defendant is a partnership firm of which defendant Nos. 8, 10 and 11 are partners, defendant Nos. 4 to 7 are former employees of the plaintiff. Defendant Nos. 13 to 23 are fabricators, who had, in the past, made parts for the plaintiff which were used for manufacturing electroforged grating machines. The case of the plaintiff is that defendant Nos. 4 to 7 resigned from the service of the plaintiff. Of them, defendant Nos. 5 to 7 joined service with the first defendant. On a police complaint being lodged, in the course of the investigation, the drawings of the plaintiff were found in the custody of the first defendant and with some amongst the fabricators, defendant Nos. 13 to 23. According to the plaintiff, these drawings were furnished to them by the plaintiffs employees.

4. A Notice of Motion was taken out for interim orders in the suit. By an order dated 26 June, 2008, a learned Single Judge of this Court found prima facie merit in the contention of the plaintiff. An order of injunction was passed restraining the defendants from using the plaintiffs drawings mentioned in Exhibit ‘G’ to the Plaint and thereby infringing the copyright of the plaintiff or making any three dimensional objects of machine parts which would be a reproduction of the plaintiffs drawings.

5. A fresh motion for interim relief was taken out by the plaintiff. The foundation for the fresh motion is that the first defendant had, despite the order of injunction, not only continued to infringe the plaintiffs copyright in the original artistic drawings by making infringing copies, but also made three dimensional copies, electroforged gratings machines and was marketing and selling electroforged grating made in complete violation of the plaintiffs right in the original artistic work. These acts of infringement were alleged to have been committed in collusion with defendant No. 24. defendant No. 24 is a Limited Company. All the shares of the Company are held by defendant Nos. 8 to 12, the son of defendant No. S and by the wife of defendant No. 10. The case of the plaintiff in the affidavit in support was that the first defendant, through defendant No. 24, has started marketing and selling the electroforged gratings manufactured by the use of electroforged grating machines which was an infringement of the plaintiffs original artistic work in the drawings. The plaintiff averred that defendant No. 24 has been awarded six contracts of the value of Rs. 4.7 crores by Bharat Heavy Electricals Ltd. Essentially, in the fresh motion three reliefs were sought by the plaintiff - (i) Action under Order 39, Rule 2A for breach of the order of injunction; (ii) The striking out of the defence of the defendants; and (iii) The appointment of a Receiver of electroforged grating machines manufactured from parts based on the drawings of the plaintiff.

6. Defendant No. 24 filed an affidavit in response to the Notice of Motion on 9 June, 2009. In the affidavit, it was stated that the brochures which are relied upon by the plaintiff pertain to a machine which was imported by the defendant from a South African supplier against an order placed on 15 January, 2008. Defendant No. 24 stated that the Company had commissioned the electroforged machine imported from the South African supplier and “has been conducting its business from the said machine”. What defendant No. 24 did not disclose in his affidavit is that besides the machine imported from South Africa, the Company was in possession of two additional machines which were sourced indigenously.

7. A rejoinder was filed by the plaintiff on 29 August, 2009. Exhibit ‘A’ to the rejoinder contains a statement of the orders obtained by defendant No. 24, many of which were prior to the date of the import of the machine from South Africa. This was relied upon by the plaintiff in order to establish the case that defendant No. 24 was in possession not only of an imported machine, but other machines which were based on the use of the parts made in infringement of the copyright of the plaintiff.

8. On 22 June 2010, in a statement made on behalf of defendant No. 24 before the learned Single Judge, the Company conceded that it had three electroforged grating machines one of which was imported from South Africa. The learned Single Judge directed defendant No. 24 to show how and when these three electroforged grating machines or parts thereof had been purchased. In response to those directions, an affidavit was filed by defendant No. 24 on 28 June, 2010. In the affidavit, it was stated that defendant No. 24 has three machines, one of them being sourced from South Africa and for the other two machines, parts were purchased locally in India from diverse manufacturers. Documents were disclosed by defendant No. 24.

9. The plaintiff filed an affidavit before the learned Single Judge on 6 July, The affidavit buttressed the case of the plaintiff that the two indigenous machines which were in the custody of defendant No. 24 had been assembled from the use of parts which were made in infringement of the copyright of the plaintiff in its artistic work. For instance, in respect of the first machine, the plaintiff pointed out that defendant No. 24 was incorporated only on 12 July, 2005 and hence the company could not have procured or acquired the parts of that machine. Most of the purchase orders corresponding to the invoices were prior to the date of incorporation of defendant No. 24. None of the invoices were raised on defendant No. 24. Of the total payment of Rs. 72.52 lakhs, defendant No. 24 made a payment of Rs. 2.84 lakhs. Significantly, defendant No. 24 failed to produce even a single drawing to establish that the two indigenous machines had been assembled on the basis of drawings other than the drawings of the plaintiff. The plaintiff also highlighted various invoices which pertain to specific machine parts for which drawings were necessarily required. Exhibit ‘A’ to the affidavit filed by the plaintiff is titled “Illustrative invoices exposing Infringement”. Exhibit ‘A’ contains a list of orders placed by defendant No. 24 on parties from whom drawings pertaining to the particular part were recovered. For instance, in Sr. No. 1 of Exhibit ‘A’ which relates to defendant No. 20, the drawings of the plaintiff” were recovered from that defendant and from the workshop of the first defendant. Exhibit ‘D’ to the affidavit contains a statement of invoices produced by defendant No. 24 which as a matter of fact referred to drawings. Despite being called upon to produce the drawings by the plaintiff, defendant No. 24 failed to produce any drawings.

10. The principal contention which has been urged on behalf of the Appellant, original defendant No. 24, is that no comparison was made by the learned Single Judge of the machines in the custody of defendant No. 24 with the artistic drawings of the plaintiff and it is only on that basis that a case for infringement could have been made out. In our view, the learned Single Judge has carefully evaluated the documents which were produced on the record and the surrounding circumstances of the case before entering a finding that the two indigenous machines in the custody of defendant No. 24 were assembled on the basis of parts which in turn had utilized drawings of the plaintiff. Significantly, defendant No. 24 did not produce any drawings at all, The case of the plaintiff was that the machines were assembled on the basis of the parts sourced from various fabricators to whom the plaintiffs drawings had been supplied in the past by its employees who had since resigned from service and joined the first defendant. A prima facie case was made out for the grant of interim relief. The balance of convenience clearly lay in favour of the grant of relief as sought. Despite an order of injunction that was granted by the learned Single Judge in the earlier motion, a device was created to defeat the order by setting up a case that defendant No. 24 was now in custody of the electroforged machine sourced from South Africa which is producing electroforged gratings. In these circumstances, the learned Single Judge was entirely justified in appointing a Receiver in respect of the two indigenous electroforged grating machines and in directing the Receiver to seal the two machines. The defendants have been permitted to use the machine which has been imported from Sough Africa.

11. No case for interference is, therefore, made out. The Appeal is dismissed. No costs.

12. In view of the disposal of the appeal, the Notice of Motion does not survive and is accordingly disposed of.

Appeal dismissed.

Kanade Anand Udyog Pvt. Ltd. v. Indiana Gratings Pvt. Ltd. And Others

Summary of Opinion — Dr. D.Y. Chandrachud, J.

Factual and Procedural Background

Legal Issues Presented

Arguments of the Parties

Plaintiff's Arguments

Defendant No. 24 (Appellant)'s Arguments

Table of Precedents Cited

Court's Reasoning and Analysis

Holding and Implications

Kanade Anand Udyog Pvt. Ltd. v. Indiana Gratings Pvt. Ltd. And Others

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