w w w . L a w y e r S e r v i c e s . i n



Ajanta Limited & Another v/s M/s. Ajanta Transistor Clock Manufacturing Co., & Others


Company & Directors' Information:- AJANTA PRIVATE LIMITED [Converted to LLP] CIN = U74110GJ1997PTC032206

Company & Directors' Information:- AJANTA MANUFACTURING PRIVATE LIMITED [Active] CIN = U29308GJ1994PTC023531

Company & Directors' Information:- AJANTA INDIA LIMITED [Active] CIN = U70103GJ1989PLC013067

Company & Directors' Information:- R K MANUFACTURING CO LTD [Active] CIN = L27209WB1984PLC037758

Company & Directors' Information:- R K MANUFACTURING CO LTD [Active] CIN = L27209GJ1984PLC098951

Company & Directors' Information:- AJANTA PRIVATE LIMITED [Amalgamated] CIN = U33300GJ1989PTC013081

Company & Directors' Information:- INDIA MANUFACTURING CORPORATION PRIVATE LIMITED [Active] CIN = U24100DL2010PTC198947

Company & Directors' Information:- S I A MANUFACTURING PRIVATE LIMITED [Active] CIN = U74120UP2013PTC057004

Company & Directors' Information:- S K M MANUFACTURING PRIVATE LIMITED [Active] CIN = U17200DL2011PTC223768

Company & Directors' Information:- S T S MANUFACTURING PRIVATE LIMITED [Active] CIN = U28112TZ2006PTC012940

Company & Directors' Information:- A S P MANUFACTURING COMPANY PVT LTD [Active] CIN = U27109WB1991PTC051461

Company & Directors' Information:- A K MANUFACTURING PVT LTD [Active] CIN = U51909MN1988PTC003110

Company & Directors' Information:- I T A C (INDIA) MANUFACTURING CO LTD [Dissolved] CIN = L51109WB1982PLC034689

Company & Directors' Information:- J D MANUFACTURING CO PVT LTD [Active] CIN = U51909WB1996PTC079825

Company & Directors' Information:- A S P MANUFACTURING COMPANY PVT LTD [Not available for efiling] CIN = U36900WB1991PTC005146

Company & Directors' Information:- B R D MANUFACTURING PRIVATE LIMITED [Active] CIN = U51109WB1997PTC085188

Company & Directors' Information:- R J S MANUFACTURING PRIVATE LIMITED [Active] CIN = U27104DL1997PTC090521

Company & Directors' Information:- B U MANUFACTURING PVT LTD [Active] CIN = U51109WB1982PTC035271

Company & Directors' Information:- M M MANUFACTURING PVT LTD [Active] CIN = U26922WB1993PTC059837

Company & Directors' Information:- J. C. MANUFACTURING INDIA PRIVATE LIMITED [Active] CIN = U21099WB2020PTC236821

Company & Directors' Information:- S B MANUFACTURING PRIVATE LIMITED [Strike Off] CIN = U31506WB1999PTC088567

Company & Directors' Information:- K. V. J. MANUFACTURING INDIA PRIVATE LIMITED [Active] CIN = U29308DL2017PTC320213

Company & Directors' Information:- A T E MANUFACTURING CO PRIVATE LIMITED [Amalgamated] CIN = U28999GJ1973PTC002296

Company & Directors' Information:- J P MANUFACTURING AND CO PVT LTD [Strike Off] CIN = U51226WB1982PTC034927

Company & Directors' Information:- D. K. MANUFACTURING (INDIA) LIMITED [Strike Off] CIN = U37200WB2011PLC170403

Company & Directors' Information:- S M MANUFACTURING COMPANY PRIVATE LIMITED [Active] CIN = U34300HR1997PTC057824

Company & Directors' Information:- G K MANUFACTURING PRIVATE LIMITED [Strike Off] CIN = U34300PB2012PTC036073

Company & Directors' Information:- P & B MANUFACTURING PRIVATE LIMITED [Active] CIN = U29254TN2010PTC076696

Company & Directors' Information:- B. V. H. MANUFACTURING INDIA PRIVATE LIMITED [Active] CIN = U74999GJ2018FTC100633

Company & Directors' Information:- R A MANUFACTURING COMPANY PRIVATE LIMITED [Strike Off] CIN = U36900HR2012PTC047669

Company & Directors' Information:- A K R MANUFACTURING PRIVATE LIMITED [Active] CIN = U19200RJ2012PTC041177

Company & Directors' Information:- C N C MANUFACTURING PRIVATE LIMITED [Strike Off] CIN = U64204DL2015PTC281449

    Arb.A. No. 19 of 2012

    Decided On, 20 September 2013

    At, High Court of Delhi

    By, THE HONOURABLE MR. JUSTICE MANMOHAN SINGH

    For the Appellants: Sudhir Chandra, Krishnan Venugopal, Sr. Advocates with Sundar Ramanathan, Ms. Natasha Garg, Vikram Bajaj, Advocates. For the Respondents: Vivek Tankha, Sr.Adv with Puryish Malkan, Harsh Parashar, Ms. Deepa, Ravi Shah, Abhijeet Sinha, Advocates.



Judgment Text

Manmohan Singh, J.

1. This Court by an order dated 17th May, 2012 passed in O.M.P. No.431/2012 with the consent of the parties appointed the Arbitral Tribunal comprising sole Arbitrator and it was agreed by the parties to maintain status quo and comply with the MOU dated 21st July, 2004 till the disposal of the application under Section 17 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as the 'Act').

2. The present appeal is arising out of the order dated 3rd October, 2012 passed by the learned sole Arbitrator in the proceedings under Section 17 of the Act dismissing the application filed by the appellants seeking interim orders against the respondents.

3. Brief facts for the purpose of deciding the present appeal are as under:

i) The appellant No.1, Ajanta Ltd. was incorporated as Ellora Time Private Limited on 4th December, 1989. On 19th April, 2006, the name of the said company was changed to Ellora Time Limited and on 26th April, 2006 it was again changed to Ajanta Limited. Mr. Pravinbhai Odhavjibhai Patel, appellant No.2 is the Managing Director of the appellant No.1.

ii) Ajanta Transistor and Clock Manufacturing Company, respondent No.1 is a partnership firm, Mr. Jaysukhbhai Odhavjibhai Patel, respondent No.2, Mrs. Mrudulaben Jaysukhbhai Patel, respondent No.3 and Mr. Chintan Jaysukhbhai Patel, respondent No.4 are the present partners of the respondent No.1 firm.

iii) The family of Odhavji Ravjibhai Patel comprised of himself and his four sons Vasantbhai Odhavjibhai Patel, Pravinbhai Odhavjibhai Patel, appellant No.2, Jaysukhbhai Odhavjibhai Patel, respondent No.2 and Ashokbhai Odhavjibhai Patel and their respective families. Shri Vasantbhai Odhavjibhai Patel has no direct involvement in the family business and has his own business.

iv) Odhavjibhai Ravjibhai Patel started his business of manufacturing wall clocks in 1971, entered into various other businesses such as manufacturing calculators, telephones, educational toys, multimeters, etc. and the family business was known as Ajanta Group which comprised in addition to respondent No.1 firm of various entities.

v) The appellant No.1 company was incorporated as a part of the Ajanta Group under the name Ellora Time Private Limited on 4th December, 1989. Three of the sons of Odhavjibhai Ravjibhai Pattel were the Directors of the said company.

vi) As a part of Ajanta Group, another company named Ajanta Watch Limited was also incorporated in 1989. The same is now renamed as Ajanta India Limited. On 2nd January, 1989, the respondent No.1 firm, comprising of various partners, including appellant No.2 and respondent No.2, applied for registration of the mark 'AJANTA' in Class-14 under Application No.503244 in respect of watches, clocks and time pieces of all kinds and parts thereof included in Class-14. The said mark was registered on 29th July, 1994 with effect from 2nd January, 1989 in the name of the partners of the firm.

vii) The respondent No.1 firm also applied for registration of the marks 'AJANTA' vide applications Nos.555947 to 555954 on 6th August, 1991, in Class-14, in respect of watches, clocks, time pieces of all kinds and parts thereof included in the said Class.

viii) The appellant No.1 made applications for the registration of the mark 'ORPAT' in all the 34 classes under the Trade Mark Classification and most of them were registered with effect from the date of application namely 29th May, 1992 in the name of appellant no.2 who allegedly started using the mark 'ORPAT' somewhere in the year 1993.

4. Some disputes arose between brothers. The relevant part of dispute settled between three brothers i.e. appellant No.2, respondent No.2 and Ashok Bhai by virtue of deed of agreement dated 20th September, 2002, MoU dated 21st July, 2004 and Retirement Deed dated 1st August, 2004 (signed on 14th August, 2004) finds mention in the order of the learned Arbitral Tribunal in paras 10 to 15 thereof wherein the details about the disputes as well as settlement between them have been extracted. The same read as under:

'10. In or before the year 2002, some disputes arose between Ashok Bhai on one hand and Pravin Bhai and Jaisukh Bhai on the other hand. The disputes were settled by a 'Deed of Agreement" dated 20.09.2002. As on that day, Pravin Bhai and Jaisukh Bhai were partners of Ajanta Transistor Clock Manufacturing Company. Both were directors of Ajanta Electronics Pvt. Ltd. and Ellora Time Ltd. Ashok Bhai was Director of M/s. Ajanta India Ltd. The Opening part of the Deed of Agreement is extracted and reproduced hereunder:

We the undersigned the firms running in the names of M/s Ajanta Transistor Clock Mfg. Co., M/s Ajanta Electronic Private Limited and Ellora Time Limited Morbi all of Morbi of the First Party.

AND

Ajanta India Limited of Morbi Through: Ashokbhai Odhavjibhai Patel of Morbi of the Second Party.

have come to a mutual understanding and agreed as under:

The first party is the registered owner of the Trade Mark, Patent and design named 'Ajanta' of Class No. fourteenth, and is registered in matters of Trade Mark etc. not only in India but in other foreign countries out of India and holds its rights. Such rights are for wrist watches, wall clocks and time pieces, out of which rights of Trade Mark, Patent and Design for Wrist Watches except of Time Pieces are assigned or transferred to the Second Party by a writing on the Stamp Paper No.34807 dated 16.9.2002 for Rs.1,01,000/- only.

11. Consistently with what was agreed upon, need was felt for the assignment and transfer of Trade Mark, Patent and Design named 'AJANTA' by the First Party to the Second Party. An independent Deed of Assignment was accordingly executed on 19th September, 2002 for giving effect to what was agreed upon by the parties and incorporated in the Deed of Agreement dated 20th September, 2002.

12. Thus, in the settlement of September 2002 out of the several items forming subject matter of business, the items described in Group-II hereinabove went to Ashok Bhai and the items enumerated in Group-I remained with Pravin Bhai and Jaisukh Bhai (respectively claimant No.2 and respondent No.2 herein).

13. Pravin Bhai and Jaisukh Bhai, who were together in the settlement of the year 2002, also fell apart in the year 2004. In or before the year 2004, disputes arose between the two which were also mutually settled. Such disputes arising between Ellora Time Ltd., (i.e., Pravin Bhai) and ATCMC (i.e. Jaisukh Bhai) came to be settled by a Memorandum of Understanding (MoU) dated 21st July, 2004. This document and the Deed of Retirement (1.8.2004) are the two principal documents around which the controversy arising for adjudication in these proceedings, and in particular the application u/s 17, centres around. It is, therefore, considered necessary to extract and reproduce verbatim the relevant parts thereof.

14. The relevant part of MoU dated 21st July, 2004 is extracted and reproduced hereunder:

MEMORANDUM OF UNDERSTANDING

The Memorandum of Understanding which is explanatory of the Brand Name of the Company and its use among the Director-Partners of M/s Ellora Time Ltd; Morbi, M/s Ajanta Transistor Clock Manufacturing Co.; Morbi and M/s Ajanta Manufacturing Co; of Kutch and is duly executed witnesses as under:-

(1) 'ORPAT' – It is admitted that M/s Ellora Time Ltd. is the owner of the Brand Name.

(2) 'AJANTA' – It is admitted that M/s Ajanta Transistor Clock Mfg. Co; Morbi is the Owner of the Brand Name. The understanding in this behalf is arrived at between both the parties – brothers which is binding to the Owners, Directors – partners of the concerned Companies – partnership firms and the same shall be binding to their respective heirs, assignees – transferees and successors of any nature.

UNDERSTANDING

(1) M/s Ellora Time Ltd. can make use of the Brand Name 'AJANTA' only for its own products – wall clocks and time pieces and it cannot make its use for its any other product.

(2) The partnership firm of M/s Ajanta Transistor Clock Mfg. Co. will be entitled to make use of the Brand Name 'ORPAT' for its own products – 'Energy Saver, Lamps, DVDs, VCD, Wrist watch, LCD and LED clock, Digital Camera, all types of ceramics tiles and all its products of the same nature and it cannot make its use for its any other products.

(3) The above items which are manufactured by either company – firm shall not be manufactured by the other company – firm.

(4) M/s. Ellora Time Ltd. shall not manufacture the Energy Saver Lamps manufactured at present by M/s Ajanta Transistor Clock Mfg. Co. and its new developments, such as LED, LCD, Clocks, DVD, Wrist watch, digital camera and also its products of manufacturing Granite titles, which has come to the share of M/s Ajanta Mfg. Ltd.

In the same way, M/s. Ajanta Transistor Clock Manufacturing Co; or M/s Ajanta Manufacturing Co.; shall not manufacture any type of the products of M/s Ellora Time Ltd; such as clock, time piece, calculators, telephone and home appliances which are manufactured by it at present.

As well as in the future also, any company shall not manufacture any product which is manufactured by the other company or companies so that there may not be any rivalry between the brothers and unity may be maintained between them. At the one time, either party is free to develop, in own way, to manufacture new products, and the same shall not be manufactured by the other party. Information in its behalf is to be conveyed by either party to the other party in advance.

5. On 1st August, 2004 Pravin Bhai and his wife Vanitaben retired from the partnership ATCMC which as on that day consisted of four partners, viz., Jaisukh Bhai, Mrudulaben (wife of Jaisukh Bhai), Pravin Bhai and his wife Vanitaben. The Deed is signed by all the four partners and attested by witnesses. The following part of the Deed is considered relevant and significant to be extracted and reproduced as hereunder:

Retirement Deed

Out of the partners of the partnership firm known Messers, Ajanta Transistor Clock Mfg. Co., Morbi, the First Party, that is, who are shown as the Continuing/Manufacturing partner, viz. –

(1) Shri Jaysukhbhai Odhavjibhai Patel, the Karta of Hindu Undivided Family of Shri Jaysukhbhai Odhavjibhai Patel, aged adult, occupation business, religion Hindu, residing at Morbi, address: Reva Villa, Shanala Road, Morbi.

(2) Smt. Mrudulaben Jaysukhbhai Patel, occupation business, religion Hindu, residing at Morbi, address; Reva Villa, Shanala Road, Morbi.

The second party, that is, those who are shown as Retiring Partners, viz. –

That the Deed of Retirement from the aforesaid partnership is being executed between those two parties.

1. Both the aforesaid two parties together in partnership were carrying on business of manufacturing and selling wall clock, spare parts thereof etc. electronics goods at Morbi in the name of Ajanta Transistor Clock Mfg. Co. the scope of which was, and is, throughout India and also in foreign countries.

The last Deed of Change in this partnership was executed on 10.08.2003. As the partners had mutually agreed that the first party shall take charge of that partnership firm and the second party will retire from the partnership with effect from 01-08-2004, this Deed of Retirement from this partnership firm is being executed today at Morbi, which witnesses as follows. Both the parties have checked and inspected all the accounts upto 31-07-2004 of this firm, which are hereby ratified and the parties declare that they have no objection or dispute in that regard.'

2. The first party No.1 has taken charge of the running business of the firm, together with all rights, interest, share thereon, debts and liabilities, immovable and movable properties as per the books, the goodwill, rights of patent designs thereof, and the quotas, leasehold rights and rights of licenses, cash amount, bank balance, fixed deposits and the amounts lying in all types of accounts etc. and all the goods and properties, machinery, vehicles, buildings, sheds, godowns etc. and all types of properties as may be existing. Therefore, the retiring partners of party No.2 do not have any type of right, or interest or share or any other claim thereupon and they vest in the party No.1 as the absolute owner or partners. Therefore, as the goodwill, rights of trademark, patent or design also are vesting in the party No.1, the retiring partners cannot/shall not make use thereof.

xxx xxx xxx xxx

8. In this manner, by handing over all the goods, properties, rights, etc. of the firm to the party No.1, the second party no.2 are retiring from this firm from 31.7.2004. Therefore, the party No.2 hereby declare without making any claim that no right, interest or share of the second party remains on all such properties of any type of the ownership of the firm and running in any name. if any power of attorney would have been executed in favour of partner or partners of the party No.2, the same now shall be deemed to have been cancelled.

9. The party no.2 has retired from this firm so as to be effective from the day ending on 31.3.2004, but this Deed of Retirement in that regard is being executed today, which is binding to both the parties.' (underlining supplied)

5. As respondents in the year 2011 had sent circulars to dealers announcing the launch of new products, including wall clocks and time pieces and had started taking steps in this regard by purchasing packaging material for wall clocks and time pieces to be manufactured under the 'AJANTA' brand name, the appellants approached this Court by filing an application under Section 9 of the Act for restraining the respondents from manufacturing, marketing or selling the products being manufactured and marketed by the appellant No.1 such as clocks, time pieces, calculators and home appliances either under the brand name 'AJANTA' .

6. The said petition came up for hearing before this Court on various dates and finally on 17th May, 2012 this Court was pleased to allow the Section 9 petition and passed an order disposing of the OMP No.431/2012 on the following terms as agreed between the parties:

'4. The petition was heard in detail. After detailed hearing in the matter, learned counsel for the parties on instructions agree that present petition be disposed of on the following agreed terms that:

(a) a former Judge of Supreme Court of India may be appointed as sole Arbitrator to adjudicate upon all disputes and differences including claims and counter claims between the parties;

(b) the seat of the Arbitrator will be at New Delhi;

(c) the Arbitrator shall fix his own fee in consultation with the parties and the fee shall be shared by the parties equally;

(d) at the first instance, both the parties will file applications under Section 17 of Arbitration and Conciliation Act, 1996, before the Arbitrator within ten days of the Arbitrator entering upon reference;

(e) the Arbitrator would be requested to take up the applications of both the parties under Section 17 of Arbitration and Conciliation Act, 1996, at the first instance, the pleadings will be completed at the earliest and as directed by the learned Arbitrator;

(f) parties will not violate Clause 3 of the MOU dated 21.7.2004. Status quo as of today will be maintained in respect of the trademarks ORPAT and AJANTA, respectively, covered under the MOU dated 21.7.2004 qua the parties;

(g) since the respondent has already taken advanced steps towards manufacturing, marketing or sale of certain products (including wall clocks and time pieces) outside the terms of Clause 3 of the MOU dated 21.7.2004, the respondent shall not take any further steps in relation to the same from today until disposal of the applications under Section 17 of Arbitration and Conciliation Act, 1996, by the learned Arbitrator. The above is stated by the respondent in view of the learned Arbitrator taking up the Section 17 applications at the first instance.

(h) Till the disposal of the interim applications under Section 17 of Arbitration and Conciliation Act, 1996, by the learned Arbitrator no new products contrary to Clause 3 of MOU dated 21.7.2004 will be launched for sale in the market;

(i) Petitioner shall not directly or indirectly claim in any material circulated by it, including but not limited to its brochures, catalogues, etc., that respondent no.1 has been renamed as Ajanta Limited;

(j) Pending consideration of the interim applications under Section 17 by the learned Arbitrator, no details of the present proceedings between the parties shall be shared by any of them in the public domain including to any dealers, etc.; and

(k) The above arrangement is without prejudice to rights and contentions of the parties, all issues are kept open and the same shall be raised before the learned Arbitrator.'

7. The appellants thereafter filed an application under Section 17 of the Act before the learned sole Arbitrator seeking the following prayers:

'(A) Permanently restrain the respondents, their servants, agents, assigns, etc. from directly or indirectly manufacturing, marketing and/or selling the products either under the brand name 'AJANTA' or otherwise which otherwise were/are being manufactured and sold by the claimants under the MoU dated 21st July, 2004 including but not limited to wall clocks, time pieces, calculators and home appliances and/or the new products which are being manufactured by the claimant No.1 namely electrical switches and its accessories, ceiling fan, table fans, pedestal fans and exhaust fan in any manner whatsoever until the adjudication of the disputes by arbitration.

(B) Pending hearing and final disposal of the present arbitral proceedings to restrain the respondents, their servants, agents, assigns etc. by way of an interim injunction from manufacturing, marketing or selling the products being manufactured and marketed by the claimant No.1 such as wall clocks, time pieces, calculators and home appliances either under the brand name 'AJANTA' or otherwise and the new products which are being manufactured by the claimant No.1 either under the brand name 'AJANTA' or otherwise namely electrical switches and its accessories, ceiling fan, table fans, pedestal fans and exhaust fan.'

8. The contentions of the appellants before the learned Arbitral Tribunal which were recorded in para 18 of the impugned order, with regard to the rights bearing to trade mark AJANTA by virtue of MOU were as under:-

i. That the MoU dated 21.07.2004 being a family arrangement arrived at for the purpose of settling the disputes or likely disputes in the family, mainly consisting of brothers, it has to be respected and given effect to; it should not be lightly interfered with;

ii. That a family arrangement is a permanent arrangement and is irrevocable; it cannot be revoked, set aside or nullified at the instance of one of the parties who has consented to the family arrangement and accepted it as binding on him;

iii. That a family arrangement stands further strengthened and fortified if it has been acted upon;

iv. That subsequent conduct of the parties to the MoU/family arrangement can be seen for the purpose of finding out the intention of the parties behind executing the MoU/family arrangement and also to see as to what extent the deed had intended to bind the relationship of parties.

It was also the submission of the appellants before the learned Arbitral Tribunal that an inference can be drawn in view of the conduct of the parties after execution of MOU as parties have acted upon the family settlement in the following manner:- 'The parties have acted upon the family arrangement in the following manner :

a) ORPAT was registered by the Respondents after the execution of MoU.

b) Respondents sold CFLS under the brand name ORPAT till 2011.

c) Name of the appellant No.1 changed to Ajanta Ltd. when the Respondent No.2 was a Director.

d) The respondents have not manufactured wall clocks and time pieces since 2000. The respondent No.1 had also surrendered its Central Excise registration certificate on 07.04.2003.

e) The Respondents have not manufactured wall clocks and time pieces since the MoU as per Admission before the Delhi High Court in OMP 431/2010.

f) Respondent has been following the MoU by limiting himself to manufacturing only the products allotted to him under the MoU from the year 2004 to 2011.

g) Furthermore, the Respondents have also not claimed in their pleadings that they are using the mark 'AJANTA'.

9. The respondents in support of their submissions referred various instances and events as well as documents before the learned Arbitral Tribunal for the purpose of their argument with respect to rejection of interim application filed by the appellants; the details of the same are :-

(i) The Trade Mark No.503244 dt. 02.01.1989 in respect of 'watches, clocks and time pieces of all kinds and parts thereof included in Class 14' is registered in the name of respondents by the Registrar of Trade Marks and stands renewed in the name of the registered Proprietor on 02.01.2003 for a period of 10 years.

(ii) The MoU dated 21.7.2004 permits M/s. Ellora Time Ltd. to 'make use of the brand name Ajanta only for their product – wall clocks and time pieces and no other product'. (There is no consideration provided for such permissive user). It is totally incorrect to say that the appellants were permitted to make such use in perpetuity as is being now contended by them.

(iii) The Retirement Deed dated 01.08.2004 to which the appellants are the parties specifically and explicitly acknowledges the rights of Trade Mark, Patent or Design as vesting in the Respondents No.1 to 4, the Firm and its partners. It also incorporates a declaration that the appellants were giving up their all the rights in and on the firm and its properties and would have absolutely no claim thereon.

(iv) Admittedly, the appellants have not taken any steps for registering themselves as the authorized/permitted users of the trade mark. They have never claimed or asserted themselves t be the 'assignees' of any rights in the trade mark. Under Rule 63 of the Trade Mark Rules 2002 a renewal of the registration of a trade mark can be applied for only by the person who is the proprietor of the registered trade mark.

(v) The Central Excise Registration Certificate was surrendered by ATCMC on 7.4.2003. As that was done on 7.4.2003, obviously this was not pursuant to the MoU dated 21.7.2004. However, the registration was soon restored on 23.1.2004. The Deed of Retirement suggests that the manufacturing activity of the Firm was continuing in the year 2004.

(vi) Although the Respondents were manufacturing and marketing CFL products under the trade mark ORPAT, since 2006-2007 after the execution of the MoU they discontinued use of ORPAT; however, in the meantime they had developed the mark OREVA and hence stopped using the mark ORPAT. In the year 2011, the Respondents have not marketed any products under the mark of ORPAT though they have undertaken some activities for repair and replacement. As to the Respondent No.2 having applied for registration of label mark 'ORPAT-POWER SAVER, BETTER LIGHT, MORE SAVING' under Class 9 vide application No.1342921 dated 7.3.2005, it is explained that the papers for registration including application were sent to the Advocate before 2004 and erroneously (for want of communication) the application was filed by the Advocate, but the mark ORPAT was not used by the Respondent after the year 2005-2006 once the Respondents switched over to their own brand OREVA. It appears that somewhere in 2006-2007 they (i.e. the Respondents) had stopped marketing products under the mark 'ORPAT'. But started marketing it under the mark OREVA. It also appears that they again marketed the said product under the mark ORPAT in 2011. The Ld. Counsel for the Respondent submitted that there is no material on record to support the submission that the Respondents have throughout the period from the year 2004 till date continued use of ORPAT for manufacturing and sale.

(vii) Several letters written and available go to show that in fact they are the appellants who were themselves conducting in a manner contrary to such understanding as they are alleging to have been arrived at and recorded in MoU dated 21.7.2004 and the Respondents have been raising timely protests.

10. Alternative plea was also raised by the respondents before the learned Arbitral Tribunal by stating that assuming that there was some sort of understanding arrived at between the parties, there are circumstances which disentitle the petitioners to get the relief by way of interim injunction.

11. After considering the material on record and hearing of the parties, learned Arbitral Tribunal rejected the application of the appellants and held that the interim arrangement made by this Court by order dated 17th May, 2012 comes to an end.

12. It was observed in the impugned order that the findings recorded in the order are only prima facie and made only for the purpose of interim application and no final opinion was formed either on facts or on law on the merits of the case.

13. It was found by the learned Arbitrator in para 16 of the impugned order that what transpired between the parties between 21st July, 2004 (the date of the MoU) and 1st August, 2004 (the date of Deed of Retirement is not known but it was signed by the parties on 14th August, 2004). There is no document, no paper and not even an oral version of anything that might have transpired or intervened. The fact remains that between the date of MoU of 21st July, 2004 and the date of Deed of Retirement dated 1st August, 2004, there was no deed executed assigning and/or permitting use of rights in any Trade Mark so as to give effect to what was contemplated by and incorporated as a recital in the MoU dated 21st July, 2004. Hon’ble Arbitrator after having considered the two documents particularly from the Deed of Retirement dated 1st August, 2004 held as under:

(i) the Deed of Retirement is an independent deed between the parties thereto, complete in itself and it does not make any reference to the MoU dated 21st July, 2004. (This assumes additional significance on account of the fact that the MoU also does not make provision for or in any manner contemplate any further deed being executed pursuant thereto). In other words, there is no intrinsic indication in either of the two documents that the two are part of the one and the same transaction or that one has to be read necessarily in conjunction with the other;

(ii) the Deed of Retirement dated 1st August, 2004 makes a reference only to an earlier deed of change in the partnership which was executed on 10th August, 2003; this is an additional internal indication that in so far as the relationship arising out of partnership deed are concerned, the same were being worked out as partnership, in the capacity of partners and by reference to the partnership firm only;

(iii) all the right, title and interest in the partnership firm respondents (as a running firm), its business and its asses including goodwill have been given up by the retiring partners in favour of the firm and its continuing partners;

(iv) the Deed of Retirement though executed on 1st August, 2004, has been given retrospective effect from a back date i.e. 31st March, 2004.

(v) had it been the intention of the parties to save the MoU dated 21st July, 2004 from the operation of Deed of Retirement dated 1st August, 2004 then the parties should have (a) either said so, (b) or would have observed silence but said nothing about the trade mark, goodwill etc. afresh in this deed.'

14. Apart from other reasons, the learned Arbitral Tribunal while rejecting the interim application of the petitioners, inter-alia gave the following reasons:-

'i. A permitted use can always be terminated by the person who granted the permission unless the user can make out a case within the four corners of law that its permitted user cannot be terminated.

ii. the grant of relief by way of temporary injunction, the plaintiff has to make out a prima facie case which on a totality of the facts and circumstances of the case, I am unable to find in favour of the Claimants herein. The balance of convenience also does not lie in favour of a person entitled only to a permitted user seeking a restraint order against user by one in whose name the Trade Mark is validly and legally registered. So far as the question of irreparable injury is concerned, the interest of the Claimants can be adequately safeguarded by making such arrangement relating to the accounts which will protect the interest of the Claimant subject to the Claimant making an application in that regard.

iii. the biggest hurdle staring at the face of the Claimants is Section 27 of the Indian Contract Act, according to which every agreement by which anyone is restrained from exercising a lawful profession, trade or business of any kind, is to the extent void. Additionally such a restraint amounts to creating of monopoly and restrictive trade practice which too will be violative of the provisions of the Competitions Act.'

15. The appellants filed the present appeal which was listed before Court on 17th October, 2012 when the notice of the appeal was issued to the respondents and directions were passed to continue status quo order passed on 17th May, 2012 between the parties. The appellants also filed the contempt petition being Cont. Case (C) No.114/2012 for violation of the order. Notice of that contempt petition was issued on 2nd November, 2012 and Sh. Jaysukhbhai Patel was directed to remain present in Court on the next date and to provide full details of sales undertaken by the respondents of wall clocks subsequent to the order dated 17th October, 2012 and the respondents were directed not to further manufacture or sell wall clocks and time pieces made by the respondents under the mark 'AJANTA'.

16. The arguments in the appeal were heard in part before the same Bench which passed the interim order but due to change of roster, the matter was released from part heard and was put up before the roster bench on 16th January, 2013.

17. In the meanwhile, the respondents challenged the restoration of order of status quo before the Supreme Court by filing of Special Leave Petition, being Civil No.4084/2013. The said appeal was disposed of with the following orders:

'This Special Leave Petition has been directed against an interim order passed by the Delhi High Court on 17/10/2012 in Arbitration Petition No.19/2012, extending the order of status quo, which had been passed earlier, till the next date of hearing.

However, we are informed by learned counsel that the matter is not being heard for some reason or the other. In such circumstances, we request the learned Single judge of the Delhi High Court, before whom the matter is pending, to hear out the Arbitration Appeal No.19 of 2012, within 28th February, 2013.

This Order is being passed in the presence of learned counsel for the respondents, who are represented on caveat and are equally eager to have the matter heard before the High Court. The Special Leave Petition is disposed of with the aforesaid requests.'

In view of directions, hearing fixed in the month of July, 2013 was preponed by allowing the application of respondents being I.A. No. 2673/2013. Thereafter, both parties made their respective submissions and matter was reserved for orders. It appears to the court that both parties have almost same submissions as made before the learned Arbitration however, it is necessary to discuss the same while deciding the present appeal even for the sake of repetition.

18. Case of the Appellants in appeal

i) The MoU dated 21st July, 2004 was a family arrangement that put an end to the disputes between the members of the family. The retirement deed dated 1st August, 2004 was executed pursuant to the MoU dated 21st July, 2004 to give effect to the family settlement. The retirement deed was a part of the family settlement that was entered into between the members of the family.

ii) The respondents had accepted that the MoU dated 21st July, 2004 was a family arrangement. The affidavit filed by Mr. O.R. Patel, Mr. Nanjibhai Lodaria and Mr. Babulal Harjibhai Ghodasara identified the final nature of the family arrangement under the MoU dated 21st July, 2004. The learned Arbitrator has thereby erred in holding that the MoU dated 21st July, 2004 was not a permanent and irrevocable family arrangement. The learned Arbitrator has treated the MoU dated 21st July, 2004 as a mere agreement and has not taken into consideration the fact that the MoU dated 21st July, 2004 is a family arrangement and cannot be revoked. The learned Arbitrator has erred in law and in fact by not upholding the family arrangement in the MoU dated 21st July, 2004 on which the respondents have acted upon and have also taken an advantage.

iii) The respondent No.2 got registered the trade mark ORPAT for Clause 9 on 7th March, 2005 after the family settlement, it proves from another fact that the respondents manufactured and sold CFL bulbs under the trade mark ORPAT till 2011 and evidence in this regard was also produced before the Tribunal in the form of CFL bulbs that were manufactured and sold by the respondents. The name of the appellant No.1 was changed to Ajanta Limited where the respondent No.2 was a director in appellant No.1. The respondents have not manufactured and sold wall clocks and time pieces for considerable period and have not manufactured the other products under the trade mark ORPAT which came into share of the appellant under the MoU. Those goods were only manufactured by the appellant No.1.

Pursuant to the MoU dated 21st July, 2004, the respondents have neither manufactured nor sold nor engaged in the business that have been segmented for the appellants. The respondents have been following the MoU by limiting themselves to manufacturing only the products allotted to them under the MoU dated 21st July, 2004 from the year 2004 to 2011. Therefore, a family arrangement has been acted upon by the parties and an advantage has also been gained by the respondents pursuant to the MoU dated 21st July, 2004.

iv) The subsequent conduct of the parties would determine the way in which the documents have to be interpreted. The parties have acted upon the MoU dated 21st July, 2004. Similarly, the appellants have only manufactured calculators, telephones, home appliances etc. bearing the mark ORPAT.

v) The family arrangement entered into between the families of the appellant No.2 and the respondent No.2 was for the business of wall clocks, time pieces, calculators, telephone and home appliances was to undertaken by the family of appellant No.2 through appellant No.1 and the business of energy saver lamps, DVDs, VCDs, Wrist Watches, LCD and LED clocks, Digital Camera and all types of ceramic tiles was to be undertaken by the family of respondent No.2 through respondent No.1 and respondent No.5. There was a clear separation and demarcation of businesses amongst the families of the brothers.

vi) The alleged letters dated 17th November, 2009, 20th October, 2010 and 17th December, 2010 written by the respondent No.2 would also show the intention of the parties not to supersede MoU by the retirement deed dated 1st August, 2004 which is signed by the parties on 14th August, 2004.

vii) Once it was decided that wall clocks and time pieces would only be manufactured and sold by the appellants, execution of separate document in the nature of transmission/assigning the right to the appellants does not arise. No transmission or written assignment document was required as the assignment took effect as a result of the family arrangement.

19. It was argued by Mr.Sudhir Chandra, learned Senior Counsel appearing on behalf of the appellants, that despite of order of status quo having been extended by the order of 17th October, 2012 passed by this Court in the present arbitration appeal, the said respondents in willful disobedience and utter disregard of the said order dated 17th October, 2012 are still continuing with their illegal and contemptuous activities that is to say that the respondents have already taken supply orders from its various dealers for supply of wall clocks and time pieces which under a MoU dated 21st July, 2004 could only have been manufactured and sold by the petitioners and no one else. The appellants‟three petitions being Contempt Case (C) No.612/2012, CCP (O) No.114/2012 and CCP (O) No.12/2013 are pending against the respondents for breach of MoU and orders passed by this Court on 17th May, 2012 and 17th October, 2012.

20. It is submitted by him that before the family arrangement/settlement between the brothers in July, 2004 it was only the appellants company (wherein the appellant No.2 and respondent No.2 were jointly working) that was manufacturing Wall Clocks under the brand 'AJANTA', Digital Clocks (LED and LCD Clocks) under the brand 'ORPAT', Ordinary Analogue Time Pieces under the brand 'ORPAT' and Digital Time Piece (LCD Time Pieces) under the brand 'ORPAT'. After the family arrangement/settlement the appellant No.1 Company continued to manufacture wall clocks under the brand 'AJANTA', Ordinary Analogue Time Pieces under the brand 'ORPAT'. After the family arrangement/settlement the appellant No.1 Company continued to manufacture wall clocks under the brand 'AJANTA', Ordinary Analogue Time Pieces under the brand 'ORPAT' and LCD Time Pieces under the brand 'ORPAT' at the time of execution of the MoU dated 21st July, 2004. Therefore, as per the MoU dated 21st July, 2004 the appellants are entitled to manufacture all types of Clocks except LED and LCD clocks which were allowed to the respondents. The respondents have been permitted to manufacture LED and LCD clocks only. With regard to trade mark Orpat, the appellants are using the trade mark ORBAT in respect of Digital Clocks i.e. LED and LCD Clocks and Digital Time Piece (LCD Time Pieces) for which they are entitled to use as per MoU.

21. It is also submitted by appellants that the respondents have been manufacturing and marketing CFL products since 2002 under the trade mark ORPAT and continued to do so after MoU but somewhere in 2006-2007 they stopped using the said trade mark but started using the trade mark OREVA and they again marketed the said products under the trade mark ORPAT in 2011 and they the appellants have no objection if the mark ORPAT in respect of LED & LCD clocks is used by the respondents but not for wall clocks and time pieces.

22. Case of the Respondents in Appeal

i) The respondent No.1 was the owner of the mark 'AJANTA' for wall clocks and time pieces and was entitled to manufacture the same. The appellants were allowed by the respondents for a temporary period to use the same for their wall clock and time pieces free of cost for temporary period only till both parties develops and switched to their own brand in due time. The basic understanding was that both parties will jointly use common marketing network.

ii) Even if assuming the terms of MoU are applied, as per MoU, respondents were permitted to use 'ORPAT' brand on their products, namely, Energy Saver, Lamps, D.V.D., V.C.D., Wrist Watches, L.C.D., L.E.D., Clocks, Digital Cameras and Ceramic Tiles and also there is no stipulation on respondents cannot use their brands 'AJANTA' or 'AJANTA QUARTZ' in respect of clocks. The appellants are producing incorrect photocopy of the MoU dated 21st July, 2004 wherein they have removed (,) after word L E D in para 2, they tried to mean the sentence as 'L.E.D Clock' instead of 'L.E.D, Clock' which was, in fact, the intention of the parties at the time of entering into the MoU.

However, after passing the status quo order, the respondents have stopped using the products in respect of clocks and time pieces though they are entitled to use the same if Clauses 2 and 4 of the MoU are read conjointly. Being the owner of the trade mark AJANTA, admittedly the respondents had manufactured and sold one lac pieces of clocks before 4th May, 2012 and when the status quo order was passed on 17th May, 2012 by that time the respondents had already taken advanced steps to stop manufacturing, marketing or sale of Clocks. The Court was well aware at the time of passing the order that the respondents have sold one lac clocks, therefore, the respondents were directed not to take any further steps in relation to manufacturing, marketing or sale of wall clocks and time pieces. Therefore, the respondents have not breached the order dated 17th May, 2012.

The appellants are aware about the said circumstances but they are taking the advantage of order dated 17th May, 2012 and keep on filing the false and frivolous contempt petitions against the respondents in order to harass them and their dealer in order to harm the business. The appellants are producing previous documents and literatures in order to tell the Court that the order dated 17th May, 2012 has been breached by them which in fact is untrue.

iii) The appellants were only allowed to use the respondents‟mark AJANTA for wall clock and time pieces in terms of the MoU dated 21st July, 2004 as a permissive user but the appellants are also using the trade mark AJANTA for other products such as calculators, telephones, educational toys, multi meter fans, room heaters for which the respondents are holding copyright registration of said logo/artistic work which was not the subject matter of MOU. Not only that the appellants are also using the copyright logo of the respondents Ajanta Quartz in similar script in violation of the order of this court passed on 17th May, 2012.

iv) As per MoU the appellants are not allowed to use the brand ORPAT for in their products of wall clocks and time pieces but the appellants are selling all their products under the brand of ORPAT which is reflected in their boxes, packing material, catalogues, literatures and other places such as advertisement. The appellants are also manufacturing wall clocks and time pieces with LCD and LED products which is contrary to the MOU bearing both trademarks AJANTA as well as ORPAT attempting to confuse the consumers that mark ORPAT and AJANTA have the same source origin.

23. It is not denied by the respondents that over a period of time it has stopped manufacturing products under the trade mark ORPAT and started new brand OREVA as after separation of the companies, appellant No.2 had developed ORPAT and respondent No.2 developed OREVA and has incurred an expenditure of approximately Rs. 25 crores. Since the appellants themselves manufactured the products which were not allowed to them, the respondent No.2 was left with no other option but to claim his ownership over the trade mark in AJANTA and terminated the user agreement with the appellants. It is submitted that clock is a separate product than LED, LCD and Wall Clock under the Central Excise Tariff of India. Therefore, MoU does not restrain the respondents from manufacturing the clocks.

24. While passing the impugned order, it was observed that only the prima facie view was taken by the Arbitral Tribunal. It was also mentioned in the order about the proposal of mutual settlement between the parties during the hearing of interim application. Date of meeting was also fixed, however, settlement could not be materialized between the brothers.

25. After hearing both parties, the matter was reserved for orders. In the meanwhile, the appellants have filed fresh contempt petition against the respondents by alleging that the respondents are in breach with the interim orders passed on 17th May, 2012. The respondents also filed in the contempt petition being CCP (O) No.15/2013 for breach of interim order passed on 17th May, 2012 against the appellants. It is stated by the respondents in the contempt petition inter alia, that as per clause 2, the appellants were not obliged to use the trade mark ORPAT in respect of wall clocks and time pieces but they are using the same. The said petition was listed on 6th May, 2013, the learned counsel for the appellants made a statement that his client is not violating any terms of MoU dated 21st July, 2004 and are neither acted contrary to any terms of MoU nor violated the orders passed by the court on 17th May, 2012, it is the respondents who have violated the orders. In order to show their bona fide filed an affidavit of Satya Prakash Singh dated 16th May, 2013 in the registry and was placed on record in the month of July, 2013. Since the issues involved in the main matter as well as those are raised in the contempt petitions filed by both parties against each other, it is found that one way or the other, the same are connected and common, thus, it took some time to pronounce the present order as affidavit filed by the appellants was placed in July, 2013.

26. It is correct that the retirement has no reference to the MoU. There is no separate assignment deed with regard to the trademarks and there is no registration of documents in the Trade Marks Registry under Section 45 of the Trade Marks Act, 1999. It is also a question to be determined as to whether both the documents i.e. MoU and retirement deed can be read together or not and whether there is a valid assignment as claimed by the appellants.

27. The respondents have not denied that after the execution of MoU, the respondent No.2 has applied for registration of trademark ORPAT in respect of goods falling in Class 9 which have come into the share of the respondents. The said application by respondent No.2 was filed after the execution of MoU in respect of goods which were come into the share of the respondents by virtue of MoU claiming user after the date of MoU. In 2006, the name of respondent No.1 was changed to Ajanta Limited. There was no open and continuous use on commercial scale shown by the respondents in respect of clocks and other products which had not fallen into the share of the respondents for the last more than eight years bearing the two trade marks, rather the respondents have been manufacturing and selling CFL bulbs under the trade mark ORPAT and other goods which have come to the share of the respondents under MoU. Correspondences exchanged between respondent No.2 and his father and mediators rather show the reference about MoU and its non-compliance on the part of the appellants.

Affidavits placed on record by the appellants of father and mediator Mr. O.R. Patel, Mr. Nanjibhai Lodaria and Mr. Babulal Harjibhai Ghodasara who have identified the final nature of the family arrangement under the MoU dated 21st July, 2004. Though, the same have been challenged by the respondents before the Arbitral Tribunal. It is doubted by the court that if MoU executed between the parties was for short period, since at the time it contained the arrangement of business activities as well as mode of acquiring the developed product for future in view of clause 4 thereof and incase MoU was only for the term of 10 days then there was no occasion to make the reference of future business activities of the parties. While considering the rival submissions this aspect has to be kept in mind.

28. It is also felt by the Court prima facie from the conduct of respondents that though reluctantly or under protest, the respondents have shown their willingness to accept the terms of MOU but they were sure that the said MOU could not be enforced and is not workable in view of malafide conduct of the appellants in view of such details mentioned by them.

29. As referred earlier, the respondents have taken due stand in their pleadings from the very beginning. The same are:

i) MoU was executed for short-period;

ii) Assuming it is applied, it is the appellants who are breaching the same in order to destroy the business of the respondents.

Before further discussion, it is necessary to reproduce the contents of Memorandum of Understanding dated 21st July, 2004; copy of which is filed by the appellants:

'MEMORANDUM OF UNDERSTANDING

The Memorandum of Understanding which is explanatory of the Brand Name of the Company and its use among the Director-Partners of M/s Ellora Time Ltd; Morbi, M/s Ajanta Transistor Clock Manufacturing Co.; Morbi and M/s Ajanta Manufacturing Co; of Kutch and is duly executed witnesses as under:-

(1) 'ORPAT' – It is admitted that M/s Ellora Time Ltd. is the owner of the Brand Name.

(2) 'AJANTA' – It is admitted that M/s Ajanta Transistor Clock Mfg. Co; Morbi is the Owner of the Brand Name.

The understanding in this behalf is arrived at between both the parties – brothers which is binding to the Owners, Directors – partners of the concerned Companies – partnership firms and the same shall be binding to their respective heirs, assignees – transferees and successors of any nature.

UNDERSTANDING

(1) M/s Ellora Time Ltd. can make use of the Brand Name 'AJANTA' only for its own products – wall clocks and time pieces and it cannot make its use for its any other product.

(2) The partnership firm of M/s Ajanta Transistor Clock Mfg. Co. will be entitled to make use of the Brand Name 'ORPAT' for its own products – 'Energy Saver, Lamps, DVDs, VCD, Wrist watch, LCD and LED clock, Digital Camera, all types of ceramics tiles and all its products of the same nature and it cannot make its use for its any other products.

(3) The above items which are manufactured by either company – firm shall not be manufactured by the other company – firm.

(4) M/s. Ellora Time Ltd. shall not manufacture the Energy Saver Lamps manufactured at present by M/s Ajanta Transistor Clock Mfg. Co. and its new developments, such as LED, LCD, Clocks, DVD, Wrist watch, digital camera and also its products of manufacturing Granite titles, which has come to the share of M/s Ajanta Mfg. Ltd.

In the same way, M/s. Ajanta Transistor Clock Manufacturing Co; or M/s Ajanta Manufacturing Co.; shall not manufacture any of the products of M/s Ellora Time Ltd; such as clock, time piece, calculators, telephone and home appliances which are manufactured by it at present.

As well as in the future also, any company shall not manufacture any product which is manufactured by the other company or companies so that there may not be any rivalry between the brothers and unity may be maintained between them. At the one time, either party is free to develop, in own way, to manufacture new products, and the same shall not be manufactured by the other party. Information in its behalf is to be conveyed by either party to the other party in advance.

30. From the said MoU, it is evident that on the date of execution, it is the admitted position that the trademark AJANTA was registered in respect of large number of product was owned by the respondent No.1. With regard to trade mark ORPAT, the appellants‟predecessor i.e. Ellora Time Ltd. was the owner and were using continuously prior to execution of two documents. The said document discloses that there was a division of products used by the parties as well as trade names on the date of execution of MoU. There were also understanding with regard to future that new products if developed by a party, other party should not use the same after information. As per MoU the products and brand names are divisioned to both parties as under:

Appellants:

i) Brand name AJANTA only in respect of wall clocks and Timepieces in terms of Clause 1.

ii) Can use brand ORPAT other than the products Energy Saver, Lamps, DVD’s VCD, Wrist Watch, LCD and LED Clocks, Digital Camera and all types of ceramics tiles and all its products of the same nature which has come to the share of M/s. Ajanta Manufacturing Ltd.

Respondents:

i) Can use the brand names in respect of Energy Saver, lamps and new developed products such as LED, LCD Clocks, DVD and Wrist Watches, Digital Camera, all types of Ceramics Tiles and all its products of the same nature but cannot manufacture the product Clock, Time Pieces, Calculators, Telephones and Home Appliances.

ii) Brand name ORPAT in respect of Energy Saver, Lamps, DVDs, VCD, Wrist Watch, LCD and LED clock, Digital Camera and all types of ceramics tiles and all its products and cannot use any other products.

31. It is clear from Clause 1 of the MoU that the brand name AJANTA can be used by the appellants in respect of only Wall Clocks and Timepieces and not for any other product. As per Clause 3, it was agreed by the parties that above said items which were being manufactured by other company/firm shall not be manufactured by either company/firm. For future new products if developed by either party, subject to information to the other party, right can be claimed.

32. It is true that under Section 2(1)(b) of the Trademark Act and Section 18 of the Copyright Act, 1957, 'Assignment' means an assignment in writing by act of the parties concerned. Clause 2 of the Understanding if read in a meaningful manner, makes clear that the words 'can make use of the brand name' and 'would be entitled to make use' are mentioned. Nowhere it is mentioned that such use would be treated as 'Assignment' in the entire document. The said aspect is still sub-judice before the learned Arbitral Tribunal who would in its final award give its finding about the meaning of documents after the evidence of the parties as to whether it is an assignment or a permissive user as alleged by the respondents.

33. The case of the respondents is that the said MoU was executed between the parties for short period. The retirement deed does not make any reference to the MoU. The said MoU does not make any provision for any further documents. Therefore, the terms are not binding in nature. The second stand taken by respondents is that even if the MoU is taken into consideration at this stage, it is the appellants who have violated the same as the appellants were only allowed to use the respondents‟mark AJANTA for wall clock and time pieces in terms of the MoU dated 21st July, 2004 but they have been using the trade mark AJANTA in respect of other products also, such as, calculators, telephones, educational toys, multi meter fans, room heaters and are also infringing the logo of the respondents AJANTA QUARTZ by using in similar script which was not part and parcel of the subject matter of MoU as per material by way of documents placed on record. They were not permitted to use the mark ORPAT in respect of Wall Clocks and Time Pieces, but it is being used for the abovementioned item as reflected from their boxes, packing material, catalogues, literatures and other places such as advertisement along with the mark 'AJANTA'. The respondents allege that the appellants have been using both marks in relation to the goods which were not allotted to them by MoU. It is being done by them in order to get the commercial gain and to confuse the consumers as well as to destroy the business of the respondents by giving them indication that both marks ORPAT and AJANTA have sourced from the house of the appellants. It has caused financial loss to the respondents. Thus they are violating the terms of MoU as well as the order of this Court dated 17th May, 2012. Thus, under these circumstances, it is very difficult for the respondents to accept the terms in the present situation, the appellants cannot force the respondents to comply with the terms unless they also comply. The respondents have filed large number of documents in support of their submission.

34. Out of many documents, few documents at this stage are examined by the Court. In the product catalogues (that of February 2011, July, 2011 and May, 2012) though the products shown have been embossed with the mark ORPAT, the catalogues have been issued by AJANTA LTD. In fact the product catalogue of February, 2011, in the introductory page mentioning about the company’s profile expressly uses the marks AJANTA QUARTZ and ORPAT as the marks of the appellants. The relevant portion is produced as under:

'Ajanta Quartz' and 'Orpat' universally eminent brand names which needs no introduction, a vast established organization set up in Morbi Dist : Rajkot, Gujarat. The beginning of this group was from a small scale industry, Ajanta Transistor Clock Mfg. (Now Ajanta Limited) before 38 years, with an aim to be pioneer in electronics. The group since had continued its conspicuous growth in the electronics industry globally and had never turned back.'

So, it is very clear from the appellants product catalogues of February, 2011 and that of May, 2012, AJANTA QUARTZ has been used in respect of the different types of clocks and the mark ORPAT has been used in respect of various products i.e. Time Pieces, Telephones, calculators, educational toys, electronic digital health scale. The mark ORPAT in the product catalogue July, 2011 has been used in respect of Irons, Emergency Lanterns, Mixer Grinders, Juicer Mixer Grinders, Hand Blenders, Heaters, Toasters, Electric Kettle, Fans. The said use of products when the trade mark AJANTA also appears in the products catalogue and other advertisement materials in such a manner, one can easily get an impression that the above said items are owned by the appellants under both trademarks. Though the mark AJANTA was only permitted to be used by the appellants in respect of wall clocks and time pieces but in the manner the other products are displayed/advertised, on the face of it one can easily say that all the products mentioned in the product catalogues and advertisement material are under both trademarks AJANTA and ORPAT. The said documents demonstrate that the appellants have been using the products which were not allotted to them by virtue of MoU.

35. The appellants have embossed on back of their all products (Calculators, Telephones, Home appliances fans, switches etc.) 'ORPAT – MADE IN INDIA – Ajanta Ltd.' and thus using 'AJANTA' trade mark also on all their products in any way to mislead the market and customers and to damage the business of the respondents. They are contrary to the MoU, they commenced its use on all their product catalogues, brochures as they have used Mark 'AJANTA' on their products but on packaging boxes they use – 'ORPAT', or 'ORPAT since 1971', along with AJANTA on one side and ORPAT on other side, or, exclusive ORPAT on both side or 'AJANTA since 1971' on one side and ORPAT since 1971 on other side.

36. The AJANT QUARTZ logo which was registered under the Copyright Act, despite of no assignment or permission in that respect are being used by the appellants on their products, packaging material, catalogue, literature and claiming that they are the owner of the brand AJANTA QUARTZ.

37. It is settled law that it is not necessary that there must be use of brand name on the product itself under Section 2(2) of Trade Marks Act, 1999. In order to constitute 'use of a mark' may be considered of a printed or other visual representation. It is mandated in law that in relation to goods shall also be considered as a reference to use of the mark upon or any physical or in any relation whatsoever to such goods. The advertisement of the products also amounts to user of the trade mark.

i) In the case of Umesh Chandra Banerjee and Kalyanmoy Ganguli, AIR 1994 Calcutta 43 (DB), the Court held as under :

'20. Incidentally, it is to be noted that use of the mark does not postulate actual sale of the goods bearing such a mark. 'Use' to my mind can be in any form or way and does not necessarily mean and imply actual physical sale and it is now well settled that even mere advertisement without having even the existence of the goods can be said to be an use of the mark…..'

ii) In the case of Consolidated Foods Corporation Vs. Brandon & Co. Private Ltd., AIR 1965 Bom 35, it was found that the petitioner was the proprietor of the trade mark Monarch in respect of its food products in several countries of the world and its products were advertised in American Magazines which had large circulation in several countries including this country. Though the goods of the petitioner had not been imported continuously, the petitioner’s right to use the trade mark 'Monarch' in this country in preference to the adoption of the mark by the respondent’s was recognized on the strength of the advertisement. Accordingly, the order of the Joint Registrar of Trade Marks granting registration of the mark in favour of the latter was set aside by the Bombay High Court and while doing so it held as under:

'………….. Not only that the petitioner corporation products are widely advertised in American Magazines of common interest, which have a fairly large circulation in this country, but even these products have been imported into this country though not quite continuously. There can, therefore, be no doubt that the petitioner corporation has a right to the use of the mark 'Monarch' in preference to the respondent company which sought to introduce that mark for the first time in 1951.'

38. In view of above and the advertisement displayed by the appellants, there is a force in the submission of the respondents that a party cannot be allowed to take the advantage of the part of the agreement or covenant therein and avoid the rest of the same which is operating to its detriment. (See the judgment of Supreme Court in relation to election C. Beepathumma & Ors. Vs. V.S. Kadambolithaya & Ors., 1964 (5) SCR 836, wherein the apex Court relied on Maitland as saying: 'That he who accepts a benefit under a deed or will or other instrument must adopt the whole contents of that instrument, must conform to all its provisions and renounce all rights that are inconsistent with it.'; (Maitlands Lectures on Equity, Lecture 18). The apex Court also took note of the principle stated in White Tudor's Leading Case in Equity volume 18th edition at p.444 - wherein it is stated, Election is the obligation imposed upon a party by Courts of equity to choose between two inconsistent or alternative rights or claims in cases where there is clear intention of the person from whom he derives one that he should not enjoy both... That he who accepts a benefit under a deed or will must adopt the whole contents of the instrument.'

39. In the case of New Bihar Biri Leaves Co. And Others v. State Of Bihar And Others, Nathalal Doshi And Others Vs. State Of Bihar And Others, (1981) 1 SCC 537, the apex Court observed that it is a fundamental principle of general application that if a person of his own accord, accepts a contract on certain terms and works out the contract, he cannot be allowed to adhere to and abide by some of the terms of the contract which proved advantageous to him and repudiate the other terms of the same contract which might be disadvantageous to him. The maxim, qui approbat non reprobat (one who approbates cannot reprobate), applies in our laws too.

40. If the MoU is read as per Clause 1, it mandates that the appellants can only use the brand AJANTA for products Wall Clocks and Time Pieces and they are entitled for use Wall Clocks and Timepieces. At the best, they can use the same for all kind of said goods including analogue and digital under new technology but cannot make its use for any other products under the trade mark AJANTA which were not allowed. However, as per material available on record, it shows that they have been using advertising the trade mark AJANTA in respect of other products also. They are also using the mark ORPAT in respect of Wall Clocks, Timepieces and LED clocks alongwith the trade mark AJANTA as appeared from their boxes, packing material, catalogues and literatures in the manner likely to create confusion and misrepresentation. Such act of the appellants amounts to use of the trade marks within the meaning of Section 2(2) of Trade Mark Act, 1999. The appellants were not entitled to take the advantage by meaning of Clause 1 of MoU and it appears to the court that it is done by the appellants in order to gain their business and at the same time to harm the business of the respondents. It has been rightly noticed by the Arbitral Tribunal who has rightly rejected the application for interim protection sought by the appellants.

41. In the present case the appellants are not entitled to use the trade mark AJANTA in respect of other products except wall clocks and time pieces but they have been using the mark AJANTA by virtue of advertisement along with the mark ORPAT allowed to appellants for other products. The said acts of the appellants are giving clear indication that both brand names are owned by them in respect of those products. Under these circumstances, they themselves are not complying the terms of MOU.

42. Similarly, the respondents were using the trade mark AJANTA in respect of clocks after the execution of MOU upto April, 2012 as admitted by them in their pleadings. They have also filed an affidavit in order to inform the court that the use of the trade mark AJANTA is continuous and without any interruption though they are trying to justify such user i.e. the clocks is a separate product than wall clocks and time pieces and secondly Gujrati version of clause-2 MoU does have comma (,) after the expressions LCD and LED and the presence of comma (,) before the word clock allows them to manufacture clocks being different products. The said plea of the respondents is yet to be determined before the Arbitral Tribunal in view of denial of the appellant and of production of original MoU. Unless the said plea of the respondents is allowed, this Court is of the opinion that the use of the product clocks by the respondents under the trade mark AJANTA would be contrary to the terms of MOU.

43. In view of above said reasons, this Court found prima facie that neither of the parties have fully and sincerely complied with the terms of MoU, nor it has been fully acted upon. Both parties are trying to justify their conduct. They have their own versions and are making allegations against each other. They have even filed contempt petitions against each other for non-compliance of MoU as well as breach of orders dated 17th May, 2012 and 17th October, 2012.

44. While rejecting the application, it was also observed that in order to protect the interest of the appellants and to allow them a reasonable time to pursue such remedy as they may wish to, two weeks‟time was granted for the purpose of operating the impugned order. More than 10 months have been passed, there were no settlement in the matter. In view of arbitration clause, possibly no other remedy is available rather both parties have filed various contempt petitions against each other and pressing action, blaming each other for non-compliance of MoU in addition to other stands taken by them.

45. The learned Arbitral Tribunal did not grant the interim protection by accepting the argument of the respondents and held that there is no prima facie case in favour of the appellants. The balance of convenience also does not lie in their favour as being appellants user and irreparable injury can be adequately safeguarded by making such arrangement relating to account. Various other reasons were also given in the impugned order by not passing the interim protection. In case, the strict provisions of injunction are applied, no interference and indulgence is to be granted in the matter.

46. The Apex Court has laid down law in the case of Kale and Ors. Vs. Dy. Director of Consolidation and Ors., (1976) 3 SCC 119 that the family settlement must be a bonafide one so as to resolve family disputes and rival claims by a fair and equitable division or allotment of properties between the members of the family and should not be induced by fraud, coercion or undue influence.

47.

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In the present case no such plea has been raised by the respondents that the said MoU was executed by playing fraud or coercion. The arrangement about the division of brand names and products are not denied by either of parties as it was meant for short period or perpetual. The case of the appellants is that said MoU being a family arrangement and was executed for the purpose of settling the dispute forever and is irrevocable and the stand of the respondents is that it was meant for short period. The respondents have also raised the issue ever assuming it is to enforce, it is the appellants who have violated the terms for their benefit and against the business of the respondents. Para 9 of the Kale’s case (supra) are also necessary to refer herein : '9. Before dealing with the respective contentions put forward by the parties, we would like to discuss in general the effect and value of family arrangements entered into between the parties with a view to resolving disputes once for all. By virtue of a family settlement or arrangement members of a family descending from a common ancestor or a near relation seek to sink their differences and disputes, settle and resolve their conflicting claims or disputed titles once for all in Order to buy peace or mind and bring about complete harmony and goodwill in the family. The family arrangements are governed by a special equity peculiar to themselves and would be enforced if honestly made. In this connection, Kerr in his valuable treatise Kerr on Fraud at p. 364 makes the following pertinent observations regarding the nature of the family arrangement which may be extracted thus : The principles which apply to the case of ordinary compromise between strangers, do not equally apply to the case of compromises in the nature of family arrangements. Family arrangements are governed by a special equity peculiar to themselves, and will be enforced if honestly made, although they have not been meant as a compromise, but have proceeded from an error of all parties, originating in mistake or ignorance of fact as to what their rights actually are, or of the points on which their rights actually depend. The object of the arrangement is to protect the family from long drawn litigation or perpetual strifes which mar the unity and solidarity of the family and create hatred and bad blood between the various members of the family. Today when we are striving to build up an egalitarian society and are trying for a complete reconstruction of the society, to maintain and uphold the unity and homogeneity of the family which ultimately results in the unification of the society and, therefore, of the entire country, is the prime need of the hour. A family arrangement by which the property is equitably divided between the various contenders so as to achieve an equal distribution of wealth instead of concentrating the same in the hands of a few is undoubtedly a milestone in the administration of social justice. That is why the term 'family' has to be understood in a wider sense so as to include within its fold not only close relations or legal heirs But even those persons who may have some sort of antecedent title, a semblance of a claim or even if they have a spes successionis so that future disputes are sealed for ever and the family instead of fighting claims inter se and wasting time, money and energy on such fruitless or futile litigation is able to devote its attention to more constructive work in the larger interest of the country. The Courts have, therefore, leaned in favour of upholding a family arrangement instead of disturbing the same on technical or trivial grounds. Where the Courts find that the family arrangement suffers from a legal lacuna or a formal defect the Rule of estoppel is pressed into service and is applied to shut out plea of the person who being a party to family arrangement seeks to unsettle a settled dispute and claims to revoke the family arrangement under which he has himself enjoyed some material benefits. The law in England on this point is almost the same. In Halsbury’s Laws of England, Vol. 17, Third Edition, at pp. 215-216, the following apt observations regarding the essentials of the family settlement and the principles governing the existence of the same are made: A family arrangement is an agreement between members of the same family, intended to be generally and reasonably for the benefit of the family either by compromising doubtful or disputed rights or by preserving the family property or the peace and security of the family by avoiding litigation or by saving its honour. The agreement may be implied from a long course of dealing, but it is more usual to embody or to effectuate the agreement in a deed to which the term 'family arrangement' is applied. Family arrangements are governed by principles which are not applicable to dealings between strangers. The Court, when deciding the rights of parties under family arrangements or claims to upset such arrangements, considers what in the broadest view of the matter is most for the interest of families, and has regard to considerations which, in dealing with transactions between persons not members of the same family, would not be taken into account. Matters which would be fatal to the validity of similar transactions between strangers are not objections to the binding effect of family arrangements.' 48. From the entire gamut of the matter one cannot deny the fact that parties have executed MoU and it was a family arrangement which was arrived at between the members of the same family. In order to maintain the peace and harmony of families by avoiding litigation including contempt cases, unless the rights of the parties are finally decided, this Court is of the view that till such time, some interim measures are necessary to be passed. This Court is of the opinion that instead of passing different directions of interim arrangement, without prejudice as to whether MoU was executed for a short period or not and it is to be read with retirement deed or not and whether it is valid document after execution of subsequent document and its legal implication in view of the facts and circumstances of the present case, let till the final Award is passed by the Arbitral Tribunal, the same terms of MoU be complied with by both the parties as interim measures. 49. Both parties are granted one final opportunity to file an undertaking by way of affidavits as temporary arrangement confirming that they shall strictly comply with all the clauses of MoU until the final findings are arrived at by the learned Arbitral Tribunal after trial. The said undertaking would be filed by the parties before the Tribunal within six weeks from today in view of my discussions in the earlier paras. 50. In case of violation of undertaking or any term of MoU by either party, the opposite party would be entitled to move an application for interim injunction. Subject to furnishing the undertaking by both parties by way of affidavits and compliance of terms by both the parties, an arrangement of settlement of MoU shall continue without prejudice. No other orders are required to be passed in the present appeal. The impugned order is modified only to the limited extent as mentioned above. 51. As far as impugned order is concerned, it is already observed by the Arbitral Tribunal in para 47 that the findings are prima facie and only for the purpose of interim application and no final opinion is formed which shall be done only after the evidence has been adduced. 52. The appeal is accordingly disposed of. 53. No costs.
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