Amaravathi Enterprises v. Karaikudi Chettinadu

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1. The unsuccessful petitioner in O.A.Nos. 775 and 776 of 2007 in C.S.No. 559 of 2007 is the appellant in these appeals.

2. The appellant herein as plaintiff filed C.S.No. 559 of 2007 against the respondent herein for a judgment and decree of permanent injunction restraining the respondent herein from in any manner using or otherwise dealing with the trade mark "KARAIKUDI CHETTINADU RESTAURANT" amounting to infringement of the appellant's registered trade mark "KAARAIKUDI CHETTINAD RESTAURANT" under No. 615430 in class 29? "KARAIKUDI" under Nos. 615442 in class 32, No. 61551 in class 31 and "KAARAIKUDI CHETTINAD RESTAURANT "under No. 1268034 in class 42 or in any other manner whatsoever and also for a decree of permanent injunction to restrain the respondent from advertising or otherwise dealing with the trade mark/trade name "KARAIKUDI CHETTINADU RESTAURANT" and thereby passing off their products, services and business of the appellant or in any other manner whatsoever and for payment of a sum of Rs. 10,05,000/- as damages for continuing infringement of trademarks and passing off its products as and for the appellant's product and services and to order the respondent to surrender to the appellant for destruction, name boards, invoices/bills, prints, dies, blocks, moulds and plates, screen prints, packing and advertising material and other material in the respondent's possession, which bears the trade mark/trade name "KARAIKUDI CHETTINADU RESTAURANT" and for a preliminary decree directing the respondent to render accounts of profits Page 0232 made by use of identical trade mark/trade name "KARAIKUDI CHETTINADU RESTAURANT".

3. The appellant also filed two interlocutory applications in O.A.Nos. 775 and 776 of 2007 along with the suit for an interim injunction restraining the respondent from in any manner using the trade mark "KARAIKUDI CHETTINADU RESTAURANT" amounting to infringement of the appellant's registered trade marks "KAARAIKUDI CHETTINAD RESTAURANT" under No. 615430 in class 29; "KARAIKUDI" under Nos. 615442 in class 32, 61551 in class 31 and "KAARAIKUDI CHETTINAD RESTAURANT" under No. 1268034 in class 42 or in any other manner whatsoever pending disposal of the suit (O.A. No. 775 of 2007) and for an injunction restraining the respondent from advertising or otherwise dealing with the trade mark "KARAIKUDI CHETTINADU RESTAURANT" and thereby passing off their products, services and business as and for the products, services and business of the appellant. (O.A. No. 776 of 2007).

4. According to the appellant they are in the hospitality industry and running Hotels and other catering industries being part of famous SAVERA group and they are conducting restaurants under various trade names like Amaravathi, Malgudi, The Dhaba, Palki, Kabul and Duchess in addition to "Karaikudi". The appellant also obtained trade mark in various classes for their business and as per registration No. 615430 dated 4.1.1994 they obtained registration under class 29 for Meat, fish, preserved dried and cooked fruits and vegetables, jellies, jams etc. and as per registration No. 615442 dated 4.1.1994 they obtained registration in class 32 for fruit juices and other non-alcoholic drinks and as per registration No. 61551 the appellant was granted registration in class 31 for Agricultural, horticultural and forestry products including fresh fruits and finally as per registration No. 1268034 dated 19.2.2004 they were granted trademark "KAARAIKUDI CHETTINAD RESTAURANT" under class 42 providing for food and drinks, hotel, boarding, canteen, snacks, bar, restaurants etc.

5. It is the case of the appellant that their restaurants are family landmarks in the city of Chennai and has immense reputation and goodwill in its exclusive areas. Their restaurant "KARAIKUDI" is very popular and well-known for Chettinad food and its patrons includes several popular personalities from all walks of life. The appellant has got restaurants with the trade mark "KARAIKUDI" In several places in the city and suburban and their trade mark attained tremendous reputation and goodwill with respect to its restaurants and food and variety of beverages. It is the further case of the appellant that they are using the service mark/trade name "KAARAIKUDI CHETTINAD RESTAURANT" for its restaurants since the year 1989. They have also furnished their turn over for different years commencing from 1989-90. The appellant further contended in the plaint that by virtue of long, extensive, continuous use, the service mark/trade name "KAARAIKUDI CHETTINAD RESTAURANT" has acquired a secondary meaning and is identified by the public at large exclusively.

6. The appellant's Chettinad restaurant is offering a wide range of vegetarian and non-vegetarian specialties of Chettinad cuisine. While so, the appellant came to know that the respondent is running a restaurant at Ambattur in Page 0233 the name of "KARAIKUDI CHETTINADU RESTAURANT". It is the further case of the appellant that the use of identical service mark/trade name "KARAIKUDI CHETTINADU RESTAURANT" would confuse and deceive the patrons of the appellant and other members of the public, who had knowledge of the appellant's restaurant under the service mark/trade name "KAARAIKUDI CHETTINAD RESTAURANT" and its reputation for exquisite Chettinadu Cuisine and goodwill will be eroded. Therefore the appellant prayed for decreeing the suit.

7. The appellant also filed application Nos. 775 and 776 of 2007 and in the affidavit filed in support of the interlocutory injunction, the appellant has reiterated the contentions raised in the plaint.

8. The respondent herein filed common counter affidavit in both the interlocutory applications and opposed the prayer. According to the respondent, they are the prior user of the trade mark "KARAIKUDI CHETTINADU RESTAURANT" and they have been running the hotel at Ambattur with effect from 2000. The respondent also contended that the name Karaikudi cannot constitute a trade mark as the same has become public juris in view of its usage by persons running similar hotels. The name "Chettinadu" denotes "Karaikudi" and its surroundings and Chettinadu cuisine is the style of food that is specific to Karaikudi and its surroundings and as such the word "Karaikudi" being used by all the persons in the trade in geographical sense to denote the place of origin and as such no one can adopt the word "Karaikudi" or "Karaikudi Chettinadu Restaurant" as a trade mark. Therefore the respondent prayed for dismissing the suit as well as the interlocutory applications.

9. The learned Judge on consideration of the matter rejected the prayer for interlocutory injunction and aggrieved by the said order, the petitioner/plaintiff has come up in appeal.

10. In the above factual background, we have heard Mr. A.A. Mohan, learned Counsel for the appellant and Mr. R. Murari, learned Counsel for the respondent.

11. The grant of injunction being an equitable remedy provided under the Specific Relief Act is governed by the principles of prima facie case, balance of convenience and irreparable injury.

12. In the case of Seema Arshad Zahebr and Ors. v. Municipal Corporation of Greater Mumbai and Ors. 2006 (5) Scale 263 the Apex Court laid down the salient principles governing the grant of injunction thus:

The discretion of the court is exercised to grant a temporary injunction only when the following requirements are made out by the plaintiff: (i) existence of a prima facie case as pleaded, necessitating protection of plaintiff's rights by issue of a temporary injunction; (ii) when the need for protection of plaintiff's right is compared with or weighed against the need for protection of defendant's right or likely infringement of Page 0234 Defendant's rights, the balance of convenience tilting in favour of plaintiff; and (iii) clear possibility of irreparable injury being caused to plaintiff if the temporary injunction is not granted. In addition, temporary injunction being an equitable relief, the discretion to grant such relief will be exercised only when the plaintiff's conduct is free from blame and he approaches the court with clean hands.

13. In the case of Ramdev Food Products Pvt. Ltd. v. Arvindbhai Rambhai Patel and Ors. 2006 (8) Scale 631, the Apex Court considered the question of prima facie case and balance of convenience and held as follows:

116. Registration or a trade mark and user thereof per se may lead to the conclusion that the plaintiff has a prima facie case, however, existence thereof would also depend upon the determination of the defences raised on behalf of the respondents. The appellant has raised a triable issue. The same by itself although may not be sufficient to establish a prima facie case but in view of our findings aforementioned, we are satisfied that the appellant has been able to establish existence of a legal right in itself and violation of the registered trade mark on the part of the respondents. We have also considered the comparable strength of the cases of the parties and are of the opinion that the case of the plaintiff-appellant stands on a better footing than the defendants-respondents.

117. A question as regards the matter relating to grant of injunction has been dealt in S.M. Dvechem Ltd. v. Cadbury (India) Ltd. wherein upon noticing a large number of decisions including Colgate Palmolive (India) Ltd. v. Hindustan Lever Ltd.. as also the subsequent distinction made in respect of the decision of the House of Lords in American Cyanamid v. Ethicon Ltd. 1975 1 ALL ER 853, it was stated:

...Therefore, in trademark matters, it is now necessary to go into the question of "comparable strength" of the cases of either party, apart from balance of convenience.

118. In Transmission Corporation of A.P. Ltd., v. Lanco Kondapalli Power Pvt. Ltd. , it was held:

The interim direction ordinarily would precede finding of a prima facie case. When existence of a prima facie case is established, the Court shall consider the other relevant factors, namely, balance of convenience and irreparable injuries. The High Court in its impugned judgment although not directly but indirectly has considered this aspect of the matter when on merit it noticed that the Appellant has raised a dispute as regard payment of an excess amount of Rs. 35 crores although according to the Respondent a Page 0235 sum of Rs. 132 crores is due to it from the Appellant and the Appellant had been paying the amount for the last two years as per the contract.

Conduct of the parties is also a relevant factor. If the parties had been acting in a particular manner for a long time upon interpreting the terms and conditions of the contract, if pending determination of the lis, an order is passed that the parties would continue to do so, the same would not render the decision as an arbitrary one, as was contended by Mr. Rao. Even the Appellant had prayed for adjudication at the hands of the Commission in the same manner. Thus, it itself thought that the final relief would be granted only by the Arbitrator.

121. Relief by way of interlocutory injunction would be material in a suit for infringement of trade mark. Balance of convenience, however would have a vital role to play.

123. Kerly's Law of Trade Marks and Trade Names, Thirteenth Edition states as under about the general test for grant of an interim injunction.

In trade-mark infringement causes irreparable damage, in this sense, is relatively easily shown, since infringement may easily destroy the value of a mark or at least nullify expensive advertising in a way that is hard to quantify for the purposes of an inquiry into damages. This has more recently come to be referred to, in cases where the defendant's conduct is not directly damaging but merely reduces the distinctive character of the claimant's mark, as "dilution"....

...In particular, although it is usually neither necessary nor appropriate to assess the degree of probability of success which the claimant's action has (provided that it is arguable, and subject to the principle of American Cyanamid that the merits may be resorted to as a 'tie-breaker' if the balance of convenience is very even) in trade mark and passing off cases, it is very hard to avoid doing so, since the better the claimant's case on the likelihood of deception (frequently the major issue) the greater the harm which he is likely to suffer. Accordingly, in appropriate cases, where the state of the evidence permits it, the court may seek to weigh up the merits in deciding whether to grant interim relief.

124. Thus, when a prima facie case is made out and balance of convenience is in favour of the appellant, it may not be necessary to show more than loss of goodwill and reputation to fulfil the condition of irreparable injury. In fact, if the first two pre-requisites are fulfilled, in trade mark, actions irreparable loss can be presumed to have taken place.

125. The expression "irreparable injury" is that sense would have established injury which the plaintiff is likely to suffer.

14. Keeping in view the principles laid down by the Supreme Court in the matter of temporary injunction by exercise of discretion we have perused the order of the learned Single Judge impugned in these appeals.

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15. The learned single Judge rejected the prayer for interlocutory injunction on the ground that the respondent is the prior user having commenced the business in the year 2000. Therefore, in short injunction was rejected on account of the failure of the appellant to prove that irrespective of any usage and registration made in the year 2004, there had been prior usage, which had earned the reputation to identify the line of business with the appellant.

16. We have perused the pleadings as well as the documents produced on either side to ascertain the basis for the findings of the learned Judge.

17. The appellant in their plaint in C.S. No. 559 of 2007 as well as in the affidavit filed in support of the injunction petition clearly stated about the business in food items and the registration obtained under the provisions of the Trade Marks Act. The appellant was granted registration under the Trade Marks Act in class 29, 31 and 32 as of the date 4.1.1994. They have also stated that they are in the hospitality industry running hotels and other catering industries and they are part of a renowned business group having many restaurants functioning in the City. They have also produced advertisements given in the newspapers to show that they have been doing business much earlier to the respondent, using the name "KARAIKUDI" even though the registration in their favour in class 32 was only on 4.1.1994. The appellant was able to get registration in class 42 only on 5.10.2006 which dates back to 19.2.2004. The learned Counsel for the appellant during the course of his arguments submitted that the registration in respect of service mark could not be obtained prior to September, 2003 as the inclusion of service mark in the Trade Marks Act, 1999 took place only in September, 2003.

18. The documents produced by the appellant in respect of advertisements cannot be brushed aside. Ultimately, the appellant obtained registration of trade mark in class 42 as on 19.2.2004 on 5.10.2006. It is trite law that the registration of trade mark is prima facie evidence in favour of the holder of such mark. Of course Section 34 is an exception to the said section for the reason that prior user is not bound by such registration.

19. When a party is using prior user as a shield in an action for infringement, it is necessary to prove that they have been continuously using the trade mark in respect of goods manufactured or marketed by them.

20. In the present case, the respondent relies on an unregistered partnership deed dated 15.9.2000, Nil IT returns for the year 2000-2001 and the licence fee receipt issued by Ambattur Municipality in support or their contention that they are the prior user of the name "KARAIKUDI CHETTINADU RESTAURANT".

21. When a defence of prior user is taken, burden lies on such trader/manufacturer to prove the continuous usage of the said trade name. Here the volume of sales also assumes significance. Similarly advertisement and other modes adopted for promotional sales also assumes significance. The reason being that the statutory presumption under Section 28 of the Trade Marks Act, 1999 loses its significance once prior user as provided under Section 34 of the Act is established.

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22. The documents produced by the respondent even if taken in its face value will not satisfy the test to determine the continuous user. In the income tax returns, what is reported is only trading loss. The other documents are all receipts for payment of fees. Those documents do not show the volume of sales or continuous usage. There is no evidence of any advertisement or sales promotional activities undertaken by the respondent. There is also no prima facie evidence to show the volume of business of the respondent. Therefore we are convinced that the respondent miserably failed to prove the continuous usage so as to defeat the right conferred on the appellant under Section 28 of the Trade Marks Act.

23. The appellant in this case though obtained the registration in class 42 only on 19.2.2004, there is prima facie material to prove that they are the prior user much before the commencement of partnership business by the respondent. The appellant had also got registration in class 29 on 4.1.1994, the same being cognate to the services rendered by the appellant as per class 42. It is also a prima facie evidence of prior user.

24. Now coming to the irreparable injury, the business being food item covered under class 42, there is likelihood of harm to the reputation and goodwill of the appellant. In case the food items prepared by the respondent is found to be below average in terms of quality and taste, the same will affect the business interest of the appellant as the common man will not be able to distinguish between the restaurant of the appellant and the respondent. In such circumstances there will be serious implication on the business of the appellant, reported to be running chain of hotels in the very same trade mark "KARAIKUDI CHETTINADU RESTAURANT" in and around Chennai. Therefore we are convinced that the appellant has a prima facie case in the matter and balance of convenience is also in favour of the appellant and in case injunction is not granted, the appellant would be put to irreparable loss and hardship.

25. We are conscious of the legal position that the appellate court normally will not interfere with the discretionary order of the trial court unless such orders are made totally disregarding the salient principles governing the law of injunction.

26. In the case of Wander Ltd. v. Antox India (P) Ltd. 1990 (Supp) SCC 727 the Supreme Court in para 14 of the judgment observed thus:

14. The appeals before the Division Bench were against the exercise of discretion by the Single Judge. In such appeals, the appellate court will not interfere with the exercise of discretion of the court of first instance and substitute its own discretion except where the discretion has been shown to have been exercised arbitrarily, or capriciously or perversely or where the court had ignored the settled principles of law regulating grant or refusal of interlocutory injunctions. An appeal against exercise of discretion is said to be an appeal on principle. Appellate court will not reassess the material and seek to reach a conclusion different from the one reached by the court below if the one Page 0238 reached by that court was reasonably possible on the material. The appellate court would normally not be justified in interfering with the exercise of discretion under appeal solely on the ground that if it had considered the matter at the trial stage it would have come to a contrary conclusion. If the discretion has been exercised by the trial court reasonably and in a judicial manner the fact that the appellate court would have taken a different view may not justify interference with the trial court's exercise of discretion. After referring to these principles Gajendragadkar, J. in Printers (Mysore) Private Ltd. v. Pothan Joseph 1 : (SCR 721) ...These principles are well established, but as has been observed by Viscount Simon in Charles Osenton & Co. v. Jhanaton 2 '...the law as to the reversal by a court of appeal of an order made by a judge below in the exercise of his discretion is well established, and any difficulty that arises is due only to the application of well settled principles in an individual case'.

The appellate judgment does not seem to defer to this principle.

27. In the case or Ramdev Food Products v. Aryindbhai Rambhai Patel 2006 (8) scale 631 the Apex Court considered the issue regarding the appellate court's jurisdiction to interfere with the discretionary order of the trial Judge and held thus:

127. We are not oblivious that normally the appellate court would be slow to interfere with the discretionary jurisdiction of the trial court.

128. The grant of an interlocutory injunction is in exercise of discretionary power and hence, the appellate courts will usually not interfere with it. However appellate courts will substitute their discretion if they find that discretion has been exercised arbitrarily, capriciously, perversely, or where the court has ignored settled principles of law regulating the grant or refusal of interlocutory injunctions. This principle has been stated by this Court time and time again. (see for example Wander Ltd. v. Antox India P. Ltd. 1990 Supp. SCC 727, Lakshmikant v. Patel V. Chetan Bhai Shah (2202) 2 SCC 65 and Seema Arshad Zaheer v. MC of Greater Mumbai )

129. The appellate court may not reassess the material and seek to reach a conclusion different from the one reached by the court below if the one reached by that court was reasonably possible on the material. The appellate court would normally not be justified in interfering with the exercise of discretion under appeal solely on the ground that if it had considered the matter at the trial stage it would have come to a contrary conclusion.

130. However, in this case the courts below proceeded on a prima facie misconstruction of documents. They adopted and applied wrong Page 0239 standards. We, therefore, are of the opinion that a case fro interference has been made out.

28. In cited supra the Apex Court pointed out the instances where the Appellate Court would be justified in interfering with the discretionary order of the trial Judge and held as follows:

31. Where the lower court acts arbitrarily, capriciously or perversely in the exercise of its discretion, the appellate court will interfere. Exercise of discretion by granting a temporary injunction where there is "no material", or refusing to grant a temporary injunction by ignoring the relevant documents produced, are instances of action which are termed as arbitrary, capricious or perverse. When we refer to acting on "no material" (similar to "no evidence)", we refer not only to cases where there are total dearth of material, but also to cases where there is no relevant material or where the material, taken as a whole, is not reasonably capable of supporting the exercise of discretion. In this case, there was "no material" to make out a prima facie case and therefore, the High Court in its appellate jurisdiction, was justified in interfering in the matter and vacating the temporary injunction granted by the trial court.

29. We are convinced that the learned trial Judge omitted to consider the vital and relevant documents produced by the appellant and the discretion has not been exercised in accordance with the settled principles governing the grant/rejection of interlocutory injunction.

30. Therefore the appellant is entitled for an order or interlocutory injunction till the disposal of the suit. Accordingly the order dated 1.10.2007 in O.A. Nos. 775 and 776 of 2007 are set aside. The applications in O.A. Nos. 775 and 776 of 2007 are allowed as prayed for. The respondent is granted three months time to remove the word "KARAIKUDI CHETTINADU RESTAURANT" from their trade name and to comply with the order of injunction granted as per our judgment. The learned Trial Judge is requested to expedite the hearing of the suit. It is needless to mention that the observations made above are all for the purpose of deciding the interlocutory applications and the same may not be construed to be an opinion on the merits or otherwise of the case, which has to be established during the time of trial and as such the learned Judge has to decide the matter purely on merits without in any way being influenced by the observations made in our judgment.

31. In the result, both the appeals are allowed. Consequently the connected MPs are closed. No costs.