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Swati Auto Agencies v/s New Kapoor Auto Centre

    F.A.O. (O.S.) No. 135 of 2001

    Decided On, 19 April 2001

    At, High Court of Delhi

    By, THE HONOURABLE MR. JUSTICE DEVINDER GUPTA & THE HONOURABLE MR. JUSTICE MUKUL MUDGAL

    For the Appellant: R.K. Aggarwal, Advocate. For the Respondent: M.R. Bhalerao & K.C. Kareer, Advocates.



Judgment Text

Mukul Mudgal, J:

1. This is an appeal filed by the appellants, M/s. Swati Auto Agencies, against the ex parte interim order of the learned single Judge dated 14th March 2001.

2. The facts of the case, as per the appellant, are as follows :

The appellant/defendant adopted the word SWATI as their trade mark in respect of head lamps, tail lamps, car accessories, wheel caps and other electrical fittings, outside mirrors, rear mirrors, etc. in the year 1992 and has been using the said trade mark continuously extensively and regularly throughout the country. The appellant's sales run into lakhs of rupees per year. The defendant is also spending lakhs of rupees towards advertising their trade mark. The respondent/plaintiff served a legal notice dated 19th November 1996 on the appellants asking them to refrain from using the mark SWATI in respect of the goods which was replied to by the appellants through their counsel on 19th December 1996. By the said reply the appellant's counsel asserted that the trade mark SWATI was used by appellants honestly and bona fide since the year 1992 without any break and the user was not going to be stopped, particularly, when the goods of both the parties were entirely different. It was stated that the respondent/plaintiff was using the trade mark SWATI for two wheelers parts where the appellant was using the trade mark for electric fittings in respect of 4 wheelers. Persuant to the said reply of the defendant, there was no further response or communication from the plaintiff until 25th January 1998 when another notice was issued asking for compliance of the notice dated 19th November 1996. The said notice was also replied to promptly on 31st January 1998 by the appellant and the stand taken in the earlier reply dated 19th December 1996 was reiterated and reaffirmed. It was also brought to the notice of the respondent that rectification petition had been filed on 23rd December 1996 for cancellation of the registered Trade Mark of the plaintiff. There was no response to and further communication from the plaintiff to this letter dated 31st January 1998.

3. On the other hand the case of the respondent-plaintiff is that it is the registered proprietor of trade mark SWATI since 1980 for automobiles and the label SWATI is also registered under the Copyright Act. further stated that the sales and advertisement expenses during the year 1999-2000 were Rs. 21,09,725/- and Rs. 3,274 respectively. It is further submitted that the respondent for the first time came to know about the infringement of their trade mark in the month of November 1996 by the defendants-appellants for which a legal notice dated 19th November 1996 was served on the appellants-defendants. Another notice was served on 25th January 1998. Since the defendants-appellants did not stop the infringement of the trade mark and copyright SWATI inspite of notices the respondent/plaintiff filed a suit on 12th March 2001 for infringement and passing off, and the impugned ex parte interim order was passed on 14th March 2001 by the learned single Judge.

4. The appellants/defendant, M/s. Swati Auto Agencies, in this appeal has challenged the said ex parte order of the learned single Judge dated 14th March 2001 restraining the defendant from manufacturing, selling, manufacturing (sic) for sale, advertising and directly or indirectly dealing in parts and fittings for use on automobiles, auto electrical parts, bulbs and accessories, head lamps, fog lamps, tall lumps, and parts and fillings thereof under the trade mark SWATI or any other trade mark identical or deceptively similar to the plaintiff's trade mark SWATI. This injunction was granted on the prima facie view of the learned Single Judge that SWATI is a registered mark of the plaintiff and registered under the Copyright Act and that the defendant was marketing its goods under the trademark SWATI and the trade name SWATI Auto Agencies was adopted with a view to trade upon the goodwill and reputation of the plaintiff's trade mark SWATI and to deceive and cause confusion amongst the general public.

5. The main plea of the learned counsel for the appellant/defendant is that neither were there the necessary averments in the plaint or in the application for grant of ex parte interim relief as per the requirement of Order XXXIX Rule 3 of the Code of Civil Procedure, nor did the learned single Judge's impugned order state that the conditions required under the said provision were satisfied and consequently the impugned ex parte order cannot be sustained.

6. Learned counsel for the plaintiff urged that in view of the prior user of the plaintiff since 1978 and its registration which was granted in 1984 and the averments of the plaintiffs that they started using the trade mark only in the year 1989, this was a fit case where the impugned order was not only justified but was imperative.

7. Order XXXIX Rule 3 of the Civil Procedure Code reads as follows :

"The court shall in all cases, except where it appears that the objet of granting the injunction would be defeated by the delay, before granting an injunction, direct notice of the application for the same to be given to the opposite party:

Provided that, where it is proposed to grant an injunction without giving notice of the application to the opposite party, the court shall record the reasons for its opinion that the object of granting the injunction would be defeated by delay, and require the applicant -

(a) to deliver to the opposite party, or to send to him by registered post, immediately after the order granting the injunction has been made, a copy of the application for injunction together with -

i) a copy of the affidavit filed in support of the application.

ii) a copy of the plaint ; and

iii) copies of the documents on which the applicant relies, and

b) to file on the day on which such injunction is granted or on the day immediately on the following that day, an affidavit stating that the copies of aforesaid have been so delivered or sent.

8. The factors which are required to be considered while granting an ex parte injunction have been laid down by the Supreme Court in Shiv Kumar Chadha v. Municipal Corporation of Delhi, 1994 (3) SCC 161 as follows :

".... The courts have to be more cautious when the said power is being exercised without notice or hearing the party who is to be affected by the order so passed. That is why Rule 3 of Order 39 of the Code requires that in all cases the court shall, before grant of an injunction, direct notice of the application to be given to the opposite party, except where it appears that object of granting injunction itself would be defeated by delay. By the Civil Procedure Code (Amendment) Act, 1976, a proviso has been added to the said rule saying that "where it is proposed to grant an injunction without giving notice of the application to the opposite-party, the court shall record the reasons for its opinion that the object of granting the injunction would be defeated by delay".

"......The imperative nature of the proviso has to be judged in the context of Rule 3 of Order 39 of the Code. Before the proviso aforesaid was introduced, Rule 3 said "the court shall in all cases, except where it appears that the object of granting the injunction would be defeated by the delay, before granting an injunction, direct notice of the application for the same to be given to the opposite-party". The proviso was introduced to provide a condition, where court proposes to grant an injunction without giving notice of the application to the opposite-party, being of the opinion that the object of granting injunction itself shall be defeated by delay. The condition so introduced is that the court "shall record the reasons" why an ex parte order of injunction was being passed in the facts and circumstances of a particular case. In this background, the requirement for recording the reasons for grant of ex parte injunction, cannot be held to be a mere formality. This requirement is consistent with the principle, that a party to a suit, who is being restrained from exercising a right which such party claims to exercise either under a statute or under the common law, must be informed why instead of following the requirement of Rule 3, the procedure prescribed under the proviso has been followed. The party which invokes the jurisdiction of the court for grant of an order of restraint against a party, without affording an opportunity to him of being heard, must satisfy the court about the gravity of the situation and court has to consider briefly these factors in the ex parte order."

9. In Morgan Stanley Mutual Fund v. Kartick Das, (1994) 4 SCC 225 also the above principles laid down in Shiv Kumar Chadha's (Supra) case were approved and the position of law was summed up as under :-

".....As a principle, ex parte injunction could be granted only under exceptional circumstances. The factors which should weigh with the court in the grant of ex parte injunction are :

(a) Whether irreparable or serious mischief will ensue to the plaintiff ;

(b) Whether the refusal of ex parte injunction would involve greater injustice than the grant of it would involve ;

(c) the court will also consider the time at which the plaintiff first had notice of the act complained so that the making of improper order against a party in his absence is prevented ;

(d) the court will consider whether the plaintiff had acquiesced for sometime and in such circumstances it will not grant ex parte injunction ;

(e) the court would expect a party applying for ex parte injunction to show utmost good faith in making the application ;

(f) even if granted, the ex parte injunction would be for a limited period of time ;

(g) General principles like prima facie case, balance of convenience and irreparable loss would also be considered by the court."

10. Neither the application under Order 39 Rules 1 & 2 C.P.C. (IA 2420 of 2001) in which the impugned order was passed, nor the plaint, contain an averment satisfying the mandatory requirement of Order XXXIX Rule 3. Even the impugned order does not record the mandatory reasons that the object of granting the injunction would be defeated by delay. As such the sine qua non for granting ex parte injunction of recording reasons that the object of granting injunction would be defeated by delay is absolutely lacking and consequently the said order cannot be sustained."

11. We are of the view that for the purpose of this appeal, it is not necessary for us to delve into or discuss the merits of the dispute as well as the rival pleas. We have perused the application for injunction and the plaint which do not aver that the object of grant of injunction would be defeated by delay if ex parte injunction is not granted. Furthermore on 19th November 1996 a legal notice was sent by the plaintiff to the appellant which was responded to by the appellant on 19th December 1996. The plaintiff did not take any steps thereafter to assert its right in any Court of law. Another notice was sent on 25th January 1998 which was replied to on 31st January 1998. In both the replies the respondent asserted its right to user of the mark SWATI. Since January 1998 the respondent did not take any further action and thereafter suit was filed only on 12th March 2001 for infringement and passing off and the impugned ex parte injunction was granted by the learned single Judge on 14th March 2001.

12. After perusal of the pleadings and records before the learned Single Judge, we are satisfied that no satisfactory explanation has been given in the plaint for the period beyond January 1998 when the respective rights were asserted by both the parties by exchange of legal notices. While the application for interim relief is silent on this issue the only averment made in this respect in the plaint is as follows :

"..... As the defendant's goods have again surfaced very recently, and the defendant has failed to comply with the requisitions of the legal notices issued to him, the cause of action is still continuing from day to day and is subsisting. Unless the defendant is restrained from using the impugned trade mark SWATI and also the trading style/trade name SWATI AUTO AGENCIES which is deceptively similar and identical to the plaintiff 's registered trade mark SWATI in respect of Parts included in Class 12 for automobiles, the plaintiff shall suffer irreparable injury and loss to its business."

13. We are satisfied on the perusal of the above pleadings that a case for ex parte ad interim injunction was not made out on the above pleadings, particularly, when no satisfactory explanation was given by the plaintiff for the period from 31st January 1998 to 12th March 2001, the date of filing of the suit. Therefore, in accordance with th

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e position of law laid down in Shiv Kumar Chadha & Morgan Stanley cases (supra) the appeal deserves to be allowed. 14. In this view of the matter we are satisfied that the learned single Judge was not justified, on the record before him, to pass an ex parte ad interim order impugned in the present appeal. The plea of the learned counsel for the respondent/plaintiff, however, is that the order is otherwise justified on merits irrespective of the fact whether or not an ex parte order ought to have been passed. This is an issue which is required to be determined by the learned single Judge after notice and hearing both the parties. Accordingly the appeal is allowed, the impugned ex parte interim order dated 14th March 2001 is set aside. The application for grant of temporary injunction is ordered to be decided on merits in accordance with law. 15. Parties to appear before the learned single Judge on 7th May 2001. Written statement and reply filed by the defendant/appellant within two weeks from today. The observations made by us while deciding this appeal are confined to the plea that the ex parte order could not have been passed on the existing pleas and is not in any way an expression on the merits of the dispute. It will be open for the learned single Judge to consider the matter after hearing both the parties and pass appropriate order in accordance with law uninfluenced by the observation made by us in this order.
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