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Indian Agro & Recycled Paper Mills Association v/s Tafcon Projects (India) Pvt. Ltd. (Tafcon) & Others

    CS(OS). No. 867 of 2011 & IA. Nos. 5692 of2011 & 10538 of 2020

    Decided On, 24 December 2020

    At, High Court of Delhi

    By, THE HONOURABLE MR. JUSTICE VIBHU BAKHRU

    For the Plaintiff: Ashish Mohan, Akshit Mago, Advocates. For the Defendants: D1, Vivek Kohli, Malvika Jain, Advocates.



Judgment Text

IA No. 3421/20161. The plaintiff has filed the present application under Order VI Rule 17 or the Code of Civil Procedure, 1908, inter alia, seeking to amend the plaint to seek a decree of damages for a sum of Rs.3,00,00,000/- (Rupees Three Crores), being the amount paid by defendant no.3 to defendant no.1 for assignment of the marks “P” and “Paperex”, and a decree of damages amounting to Rs.1,00,00,000/- (Rupees One Crore) on account of dilution of the marks owned by the plaintiff due to allegedly wrongful and illegal acts of defendant no.1. The plaintiff also seeks to extensively amend the plaint to include assertions in support of the aforementioned prayers.2. Defendant no.1 has opposed the application on essentially three grounds. First, that the relief of damages as now sought to be claimed is barred by limitation. The present suit was filed in the month of March 2011 and the above application seeking amendment was filed on 09.03.2016, that is, after a passage of more than five years of filing the suit. It is also pointed out that the amendment is founded on a Memorandum of Understanding dated 02.04.2010, whereby defendant no.1 had assigned the trademarks in question to defendant no.3. The fact that defendant no.1 had done so was in the plaintiff’s knowledge and in any event, the plaintiff had become aware of the same on 02.07.2012 when defendant no.3 had filed an amendment application seeking impleadment in the above captioned suit. Defendant no.1 contends that in the aforesaid circumstances, the present application is barred by limitation and cannot be permitted.3. Second, that the amendments sought are also occasioned by a Memorandum of Understanding dated 14.01.2014, whereby the plaintiff has settled it’s inter se disputes with defendant no.3 and has reduced its understanding in writing. In view of their inter-se settlement, the plaintiff can no longer challenge the registration of the trademarks in question as they stand assigned to defendant no. 3. It is contended on behalf of defendant no.1 that the said MoU is only a commercial agreement between the plaintiff and defendant no.3 for jointly organizing the Paperex events and the same does not provide the plaintiff a fresh cause of action to seek damages that were not sought in the plaint as filed.4. Third, it is claimed that the amendments sought by the plaintiff effectively change the nature of the suit and therefore, cannot be permitted.The context5. The plaintiff has filed the above captioned suit, inter alia, seeking a declaration that the registration of the trademarks “Paperex” and “P” written in the manner shown in the Schedule to the Plaint, as secured by defendant no.1 in its favour is illegal. The plaintiff seeks cancelation of the registrations obtained by defendant no.1 in respect of the aforesaid Trademarks in Class 41/42 vide Application/ Registration No. 1250265. Further, the plaintiff seeks a decree for permanent injunction restraining defendant no.1, its successors, agents, assigns, directors and all other persons claiming through or under it from using or utilizing in any manner the trademarks in question.6. The plaintiff is a Society registered under the provisions of the Societies Registration Act, 1860 and claims that it is an apex association of all paper mills of India and particularly those which are based on non-conventional raw materials.7. It is averred in the plaint that the plaintiff had in the year 1991-92 conceived and conceptualized an initiative to organize an exhibition and a conference for the pulp and paper industry. It claims that its members had decided to hold a conference and an exhibition on a large scale under the banner of “Paperex”. It claims that its members specially commissioned the designing of the “Paperex” logo and symbol for the exhibition to be held by the plaintiff. It is averred in the plaint that the plaintiff decided to involve a professional event management company to give greater publicity to the event for the benefit of the Indian Paper Industry. Defendant no.1 was selected for the said purpose. It is stated that the first conference was organized in the year 1993 by the plaintiff with the professional assistance of defendant no.1 and this was under the caption “Paperex 1993”. It is stated that based on the success of the said event, the plaintiff decided to hold the event on a regular basis and also decided to involve defendant no.1 in organizing the same as a partner event manager. The plaintiff claims that the conference and exhibition “Paperex” continued to remain the event of the plaintiff, and defendant no.1 was involved only for the purposes of organizing it on a professional basis. The said event was organized on a biennial basis in the years 1995, 1997 and 1999 in terms of the Memorandum of Understanding entered into between the plaintiff and defendant no.1. The plaintiff claims that although the Memorandum of Understanding with defendant no.1 expired due to efflux of time, it continued to utilize the professional services of defendant no.1 to organize the subsequent fairs held in the years 2001, 2003 and 2005, under the banner of “Paperex”. The trademarks in question were used in connection with the said conference and exhibition. Accordingly, the plaintiff claims that it is the owner of the said trademarks.8. It is stated that the exhibition and conference organized in the year 2007 – “Paperex 2007” – was also organized with the involvement of defendant no. 1 and at its instance M/s Expo Media was included in organizing the same. This was because defendant no.1 had allegedly represented that Expo Media would be able to secure overseas exhibitors and participants. The exhibition/conference in the year 2009 was also organized in a similar manner – that is, with the assistance of defendant no.1 and with the involvement of Expo Media in the expectation that Expo Media would bring foreign participants.9. M/s Expo Media was not arrayed as a defendant in the suit as initially filed.10. During the course of the proceedings, International Trade and Exhibitions India Private Limited – defendant no.3, filed an application seeking impleadment in the above captioned suit on the ground that its predecessor (India Exhibition Management Private Limited) had acquired the trademarks in question from defendant no.1 in terms of an “Acquisition Agreement” dated 29.08.2005. The said Application (IA 17458/2011) was allowed by an order dated 30.11.2011 and defendant no.3 was added to the array of parties.11. The plaintiff claims that prior to filing of the said application it was not aware that defendant no.1 had assigned the trademarks in question in favour of defendant no.3. Apparently, the plaintiff and defendant no.3 negotiated a settlement and in terms of their mutual understating, entered into a Memorandum of Understanding dated 14.01.2014 recording the terms of their inter-se settlement. Thereafter, the plaintiff filed an application under Order XXIII Rule 1 and 3 of the Code of Civil Procedure, 1908, inter alia, praying that the suit qua defendant no.3 be disposed of as it is settled in terms recorded under the MoU dated 14.01.2014. The plaintiff also sought leave to withdraw the suit qua defendant no.1 with liberty to file a fresh suit seeking damages and rendition of accounts from defendant no.1.12. The said application was allowed by an order dated 24.11.2015 and the plaintiff was granted time to move an appropriate application for “amending the suit with respect to relief of damages”.13. Thereafter, the plaintiff has filed the present application seeking to amend its suit against defendant no.1.Submissions14. Mr. Ashish Mohan, learned counsel appearing for the plaintiff/applicant contended that the present application merely seeks to substitute the prayer for injunction by prayers for a decree of damages. He submitted that in terms of Section 40 of the Specific Relief Act, 1963 (hereafter ‘the Specific Relief Act’), such an application is permissible at any stage of the proceedings. He referred to the decisions of Coordinate Benches of this Court in Dr. D.K. Seth v. Dr. Durga Prasad Ray: CM(M) 806/2017, decided on 01.08.2017 and Jagdish and Ors. v. Har Sarup: (14) 1978 DLT 66 and the decision of the Madras High Court in Hi. Sheet Industries v. Litelon Limited: AIR 2007 Mad 78 in support of his contention.15. Mr. Kohli, learned counsel appearing for defendant no.1 countered the aforesaid submissions. He submitted that the provisions of Section 40 of the Specific Relief Act could not be read in the manner as contended by Mr. Mohan. He submitted that the opening words of Sub-section (1) of Section 40 of the Specific Relief Act curtailed the scope of the said provision to a suit for perpetual injunction under Section 38 or a suit for mandatory injunction under Section 39 of the Specific Relief Act. He submitted that once the prayer for injunction is given up and damages are sought in lieu thereof, it ceases to be a suit for perpetual injunction as contemplated under Sub-section (1) of Section 40 of the Specific Relief Act. He submitted that in view of the above, the words “in substitution for” as used in Sub-section (1) of Section 40 of the Specific Relief Act must be construed to mean in substitution for some prayers as sought in the suit but if such substitution results in giving up the relief of injunction altogether then the same cannot be considered to be included in Section 40(1) of the said Act.16. Mr. Mohan countered the aforesaid submission and submitted that the word ‘substitute’ or ‘substitution’ would necessarily by definition entail giving up the relief of injunction. He relied upon the decision of the Supreme Court in Government of India and Ors. v. Indian Tobacco Association: (2005) 7 SCC 396 in support of his contention.Reasons and Conclusion17. At the outset, it is relevant to observe that there is no dispute that the amendments sought to be introduced by the plaintiff are essentially averments to the effect that defendant no.1 had assigned the trademark in question for consideration of Rs.3 crores. The same is used as a measure of damages suffered by the plaintiff as it claims that it is the proprietor of the trademarks purportedly assigned by defendant no.1 to defendant no.3. The plaint is sought to be amended to introduce averments pertaining to the assignment to the trademarks in question, which according to the plaintiff is an event which came to its knowledge subsequently. Thus, there is no controversy that the averments now sought to be introduced are in support of the claim of damages, which the plaintiff now seeks in lieu of the relief of injunction and cancellation of the registration of the trademarks in favour of defendant no.1.18. Having noted the above, it would be apposite to now address the question whether the amendment sought by the plaintiff falls within the scope of Section 40 of the Specific Relief Act. The said Section is set out below:“40. Damages in lieu of, or in addition to, injunction.-(1) The plaintiff in a suit for perpetual injunction under section 38, or mandatory injunction under section 39, may claim damages either in addition to, or in substitution for, such injunction and the court may, if it thinks fit, award such damages.(2) No relief for damages shall be granted under this section unless the plaintiff has claimed such relief in his plaint:Provided that where no such damages have been claimed in the plaint, the court shall, at any stage of the proceedings, allow the plaintiff to amend the plaint on such terms as may be just for including such claim.(3) The dismissal of a suit to prevent the breach of an obligation existing in favour of the plaintiff shall bar his right to sue for damages for such breach.”19. A plain reading of Sub-section (1) of Section 40 clearly indicates that it is open for a plaintiff in a suit for perpetual injunction to claim damages either in addition to, or in substitution for such injunction. The proviso to Sub-section (2) of Section 40 makes it expressly clear that the Court shall allow the plaintiff to amend the suit to claim damages at any stage of the proceedings.20. The language of the proviso to Sub-section (2) of Section 40 of the Specific Relief Act is similarly worded as the proviso to Sub-section (5) of Section 21 of the said Act. The scheme of Section 21 also bears similarity with Section 40 of the Specific Relief Act. The said Section is set out below:“21. Power to award compensation in certain cases - (1) In a suit for a specific performance of a contract, the plaintiff may also claim compensation for its breach, either in addition to, or in substitution of, such performance.(2) If, in any such suit, the court decides that specific performance ought not to be granted, but that there is a contract between the parties which has been broken by the defendant, and that the plaintiff is entitled to compensation for that breach, it shall award him such compensation accordingly.(3) If, in any such suit, the court decides that specific performance ought to be granted, but that it is not sufficient to satisfy the justice of the case, and that some compensation for breach of the contract should also be made to the plaintiff, it shall award him such compensation accordingly.(4) In determining the amount of any compensation awarded under this section, the court shall be guided by the principles specified in section 73 of the Indian Contract Act, 1872.(5) No compensation shall be awarded under this section unless the plaintiff has claimed such compensation in his plaint:PROVIDED that where the plaintiff has not claimed any such compensation in the plaint, the court shall, at any stage of the proceeding, allow him to amend the plaint on such terms as may be just, for including a claim for such compensation.Explanation : The circumstance that the contract has become incapable of specific performance does not preclude the court from exercising the jurisdiction conferred by this section.”21. In Jagdish and Ors. v. Har Sarup(supra), a Coordinate Bench of this Court had held that the proviso to Section 40 of the Specific Relief Act makes it mandatory for the Court to allow an amendment to claim damages in case the same were not claimed. The Court also noted that there was a distinction between the language of Order VI Rule 17 of the Civil Procedure Code and the proviso to Sub-section (2) of Section 40 of the Specific Relief Act. Whereas under Order VI Rule 17, the Court has the discretion to allow or to reject an application for amendment; the proviso to Sub-section (2) makes it mandatory for the Court to allow the same. The Court had noted that whereas Order VI Rule 17 uses the word “may”, in contradistinction, the proviso to Sub-section (2) uses the word “shall”.22. In Jagdish and Ors. v. Har Sarup (supra), the plaintiff (Har Sarup) had instituted an action against the defendants praying for a mandatory injunction for them to restore earth. The lands of the defendants in that case were adjacent to the lands owned by the plaintiff. The defendants while excavating earth from their land had allegedly excavated earth from the part of the plaintiff’s land as well. In this context that the plaintiff sought a mandatory injunction for restoration of earth.23. The Trial Court concluded that the said suit was not maintainable under Section 41(h) of the Specific Relief Act as an equally efficacious remedy of damages was available. Since the plaintiff had not claimed damages in the suit, the suit was dismissed.24. The plaintiff had filed an appeal, inter alia, contending that the Trial Court ought to have afforded the plaintiff an opportunity to amend the plaint to enable it to claim damages in the alternative. The plaintiff had also filed an application for amending the plaint under Order VI Rule 17 of CPC while the matter was before the Appellate Court. The Appellate Court allowed the amendment to the plaint and set aside the judgment and decree rendered by the Trial Court and remanded the matter to it. The defendants filed a second appeal before this Court. This Court dismissed the said appeal and held that the word “proceeding” would also include an appeal that may arise from a suit. Thus, an amendment to the suit could also be permitted at an appellate stage.25. In Hi. Sheet Industries v. Litelon Limited (supra), the Full Bench of the Madras High Court considered the scope of Section 40 of the Specific Relief Act and held as under:“7.02. Specific Relief :(i) A plain reading of Section 40, Sub-section (2) proviso clarifies that the Court shall at any stage of the proceedings allow the plaintiff to amend the plaint on such terms as may be just, provided that no such damages have been claimed.(ii) A combined reading of Sub-section (1) and (2) with proviso clarifies that plaintiff may claim damages in suit for injunction but no relief for damages shall be granted unless the plaintiff has claimed such relief; provided where no such damages have been claimed, the Court SHALL at any STAGE OF THE PROCEEDINGS allow to amend the plaint to claim damages (emphasis supplied).(iii) Thus, it is clear that when the plaintiff has claimed damages in his plaint, he is entitled to do so. When he intends to amend his plaint to claim such damages, where no such damages have been claimed, the Court shall have to permit the plaintiff to amend the plaint at any stage of the proceedings. The word "such damages" means, the specific damages viz., the amount of damages sought to be claimed through the amendment.(iv) The language of Section 40 makes it clear that it is for the plaintiff to claim damages in lieu of injunction. Section 40 clarifies that if the plaintiff does not claim damages, the question of awarding damages does not arise. But when the plaintiff claimed damages and is praying for amendment to specify such damages, the plaintiff is entitled for amendment of plaint for specifying such damages, as he did not claim such damages by specifying the amount.(v) Therefore, it is clear that in a suit for permanent injunction according to proviso to Sub-section (2) of Section 40, it is imperative and the Court has no option but to allow the amendment by adding the prayer for such damages, this being the provision of law.(vi) Since the proviso to Section 40 Sub-section (2) of the Specific Relief Act reads as an imperative and the Court has no option except to allow the amendment of the plaint and the fact that the application is belated is immaterial. The only discretion left to the Court is as regards the terms on which the plaintiff may be permitted to amend. Thus, any proposed amendment is to be allowed in view of the mandatory nature of the language employed under the proviso to Section 40(2) of Specific Relief Act.”26. The contention that the present application is barred by limitation is also unpersuasive.27. In Jagdish and Ors. v. Har Sarup (supra), the Court had while referring to proviso to Sub-section (2) of Section 40 of the Specific Relief Act observed that “the proviso further shows that howsoever belated the request for amendment may be and even if the claim put forward by way of amendment is hopelessly barred by limitation, it is the bounden duty of the Court to allow amendment”.28. It is also contended on behalf of defendant no.1 that the plaintiff is now seeking to set up a new case on a fresh cause of action and the same is barred by limitation. The said contention is also unmerited. The plaintiff’s case, from the inception, is that it is the proprietor of the trademarks “P” and “Paperex” and the registration of the said trademarks in favour of defendant no.1 is illegal. It had also maintained that defendant no.1 was not entitled to use the said trademarks. Although the plaintiff did not claim any damages either in addition to or in the alternative to its prayers of injunction, it is clear that the plaintiff is entitled to do so by amending the plaint. The contention that the plaintiff is seeking to set up a new case on a fresh cause of action is, essentially, premised on the basis that the plaintiff has entered into a settlement with defendant no.3, who is the successor in interest, in respect of the trademarks in question and therefore, is no longer pursuing the remedy for restraining defendant no.1 or defendant no.3 from using the trademarks in question. However, as noticed above, there is nothing that prevents the plaintiff to give up its prayer for an injunction and claim damages instead.29. Viewed in the aforesaid perspective, it is clear that the plaintiff’s claim for damages is not based on a fresh cause of action but the same cause as is set out in the plaint.30. The plaintiff has sought to quantify the damages on the basis of the consideration received by defendant no.1 from defendant no.3 for assigning the trademarks in question. The plaintiff’s claim for damages is not based on such assignment; however, the consideration received is sought to be used as a measure of damages suffered.31. The contention advanced by Mr. Kohli that the word “in substitution for” must be read i

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n a restrictive manner and Sub-section (1) Section 40 would not apply to a case where on substituting a claim of damages, the suit ceases to be a suit for permanent or mandatory injunction, is also unpersuasive. The import of the expression “in substitution for” is unambiguous. It would clearly mean ‘in replacement of’. Thus, in a suit where a relief of permanent injunction as contemplated under Section 38 or mandatory injunction under Section 39 of the Specific Relief Act is sought and such relief is sought to be replaced by a claim of damages, the same would clearly fall within the scope of Sub-section (1) of Section 40 of the Specific Relief Act. A plain reading of Sub-section (1) of Section 40 indicates that the claim of damages may be made in addition to or in substitution for such injunction. The expression “such injunction” clearly refers to the perpetual injunction under Section 38 or a mandatory injunction under Section 39 as mentioned in the opening part of Sub-section (1) of Section 40 of the Specific Relief Act.32. It is difficult to accept the contention that the suit for permanent or mandatory injunction must continue to be one seeking such relief even after the said suit is amended by seeking claim of damages in substitution for such an injunction.33. The plain language of Sub-section (1) of Section 40 of the Specific Relief Act indicates that an amendment seeking the relief of damages in addition to, or in substitution of, the relief injunction may be made in the suit which is for permanent or mandatory injunction as referred to in Section 38 or 39 of the said Act. The reference is plainly to a suit in its pre-amended form, in which such relief is sought; it does not stipulate that even after such a relief of damages is sought in substitution of the relief of injunction, the suit must continue to be one seeking the relief of injunction. The interpretation sought to be placed on behalf of defendant no.1 is not supported by the plain language of Sub-section (1) of Section 40 of the Specific Relief Act.34. For the reasons stated above, the application is allowed.35. Let an amended petition be placed on record within a period of two weeks. The amended written statement be filed within a period of four weeks thereafter.36. List before the concerned Registrar for completion of pleadings on 23.02.2021.
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