2005 (2) TMI 774 - SC - Companies Law

Whether this Court ought to interfere with the grant of interim injunction on the ground of delay and latches, as canvassed for by counsel for the defendants? Held that - Now that the trial court had granted the interim injunction which had been affirmed by the High Court and the same had been in force for at least seven months or more, we do not think that it will be appropriate to modify the order by permitting the defendants to keep separate accounts of their sale of these products especially since the products are being marketed under a different name, subsequent to the order of injunction passed by the trial court. We cannot ignore what has been noticed by the High Court in its order. The High Court has noticed that a number of cases under the Prevention of Food Adulteration Act have been registered against the defendants on the basis of alleged adulteration of the products marketed by the defendants. Even otherwise it is stated, that Gutakha and Pan Masala that are marketed are harmful to health. If they are harmful as claimed, what would be the consequence, when they are adulterated, is an aspect that requires anxious consideration by the authorities concerned. The State cannot ignore the mandate of Article 47 of the Constitution. Any way, that aspect is referred to us only for the purpose of reinforcing the conclusion that ultimately, in the exercise of discretion by this Court, it may not be necessary to interfere with the order of interim injunction granted by the courts below. Thus, on the whole, we are satisfied that the courts below cannot be said to have erred in thinking that the balance of convenience was in favour of the grant of interim injunction in favour of the plaintiff. In any event, we are satisfied that a case for interference under Article 136 of the Constitution of India is not made out in this case. We, therefore, decline to interfere with the order of the High Court and dismiss this appeal.

Issues Involved
1. Prima facie case for interim injunction.
2. Balance of convenience.
3. Delay and latches.
4. Genuineness and validity of documents.
5. Prior user of the trademark.
6. Impact of non-registration of the trademark.
7. Public health concerns and Prevention of Food Adulteration Act violations.

Detailed Analysis

1. Prima Facie Case for Interim Injunction
The trial court held that the plaintiff has prima facie established prior user of the mark 'Malikchand' by itself and its predecessors. The documents relied on by the plaintiff, prima facie showed prior user. The High Court affirmed this finding, noting that the trial court was justified in granting an order of injunction and that the grant of interim injunction by the trial court could not be said to be in exercise of discretion which was either arbitrary or perverse.

2. Balance of Convenience
The trial court found that the balance of convenience was in favor of the plaintiff, restraining the defendants from using the mark 'Manikchand' till the final disposal of the suit. The High Court agreed, stating that the plaintiff would be seriously prejudiced and its reputation affected if the defendants were allowed to carry on their trade under the name 'Manikchand'. The Supreme Court also noted that the balance of convenience was in favor of the plaintiff and declined to interfere with the lower courts' orders.

3. Delay and Latches
The defendants argued that the plaintiff's delay in approaching the court should disentitle it to an injunction. The High Court observed that the present action was triggered by the defendants' suit in the High Court of Bombay and thus could not be rejected on the ground of delay and latches. The Supreme Court agreed, noting that the case of delay and latches had not been properly projected by the defendants in their pleadings.

4. Genuineness and Validity of Documents
The defendants challenged the genuineness of the documents relied upon by the plaintiff. The High Court felt that a wholesale condemnation of the documents as forged could not be made at this interlocutory stage and that this question should be decided at the trial. The Supreme Court concurred, stating that it was not possible to decide at this stage whether the documents were manufactured for litigation purposes.

5. Prior User of the Trademark
The trial court and the High Court both found that the plaintiff had established a prima facie case of prior user of the mark 'Malikchand'. The Supreme Court noted that the prima facie establishment of prior user goes a long way in enabling the plaintiff to claim an injunction in a passing-off action.

6. Impact of Non-Registration of the Trademark
Neither party had a registered trademark at the time of the suit. Section 27 of The Trade Marks Act, 1999, provides that the right of action for passing off goods or services is not affected by the lack of registration. The Supreme Court noted that the fact that neither party had a registered trademark could not stand in the way of granting an injunction if the plaintiff could show prior user and a prima facie case.

7. Public Health Concerns and Prevention of Food Adulteration Act Violations
The High Court noted that a number of cases under the Prevention of Food Adulteration Act had been registered against the defendants. The Supreme Court also considered this aspect, noting that the products in question were harmful to health and that this reinforced the conclusion that the balance of convenience was in favor of the plaintiff.

Conclusion
The Supreme Court declined to interfere with the orders of the trial court and the High Court, affirming the grant of interim injunction in favor of the plaintiff. The trial court was directed to complete the trial and disposal of the suit within six months.

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