2021 (3) TMI 544 - HC - Customs

Revocation of suspension of clearance of its consignment - bearings imported by petitioner - respondent No.6 had filed complaint with respondent Nos. 2 to 5 raising a system alert that the goods imported by petitioner No.1 are suspected to be goods infringing Intellectual Property Rights and such import is in contravention of the provisions of Rule 7 of the IPR Rules enacted under the Customs Act, 1962 and the Trade Marks Act, 1999 - HELD THAT - By notification bearing Notification No. 56/2018Customs dated 22.06.2018, Government of India in exercise of its powers conferred by sub-section (1) of section 156 of the Customs Act, 1962 read with clauses (n) and (u) of subsection (2) of section 11 of the said Act effected an amendment to the Intellectual Property Rights (Imported Goods) Enforcement Rules, 2007 dated 08.05.2007 (IPR Rules) - It is seen that condition(d) has been inserted which states that in the event of any amendment, cancellation, suspension or revocation of the Intellectual Property Right by the authorities under the Intellectual Property Law or by any Court of law or Appellate Board, Commissioner of Customs may accordingly amend, suspend or cancel the notice and the corresponding protection. In the present case it is an admitted position that petitioners and respondent No.6 are litigating against each other to establish their respective right, title and entitlement to the ownership of TR brand. Both counsels have fairly argued and submitted across the bar that both parties have been unsuccessful in obtaining any interim order of injunction / restraint against the other party from using the TR trademark. As alluded to hereinabove though various proceedings are pending in courts, neither the petitioners nor respondent No.6 have been in a position to obtain any order from the civil court and produce the same before the customs authorities to take benefit of the statutory provisions. That apart if respondent No.6 succeeds in the suit proceedings filed in the Delhi High Court in proving that respondent No.6 is the owner and proprietor of the trademark TR and that the petitioners are infringing copyright in the artwork of trademark / label TR , it is only then that respondent No. 2 to 5 can confiscate / dispose of the goods in accordance with the statutory provisions and/or continue suspension of clearance of goods imported by the petitioners. In the absence of any interim order / order from the civil court from being placed on record by respondent No.6 it will therefore not be appropriate for respondent Nos. 2 to 5 to withhold / detain the consignments imported by the petitioners beyond the prescribed period of 14 days - In the present case, it has been clarified and is an admitted position that both parties i.e. petitioners and respondent No.6 have appeared before the customs officers / authorities i.e. respondent Nos. 2 to 5 and have presented documentary evidence, interalia, pertaining to their respective entitlement to the TR mark; the lis in respect of establishing ownership to the TR is admittedly pending before the Delhi High Court and the Bombay High Court. Unless there is finality to the suit proceedings between the petitioners and respondent No.6 pending in the civil courts i.e. Delhi High Court and Bombay High Court or any interim order is passed by the said courts, both the parties having referred to and relied upon several documents which cannot be adjudicated or veracity of which cannot be gone into in the present writ proceeding, such documents produced by both the parties will have to be accepted as prima-facie evidence supporting the case of each party by this Court. Further in the absence of a court order as contemplated under sub-section (4) of section 53 of the Customs Act, 1962 would not be justified for respondent Nos. 2 to 5 to withhold the consignment imported by the petitioners until respondent No.6 i.e. owner of the copyright obtains an order / interim order from the civil court declaring respondent No.6 as the owner of the mark TR brand and places the same before the customs authorities. There are merit in the submissions made on behalf of the petitioners. Since there has been no finality to the proceedings which are pending between the petitioners and respondent No.6 in the Delhi High Court and Bombay High Court in respect of ownership of TR brand, the imported goods vide Bills of Entry Nos. 2220018, 2221281, 2224083, 2224577, 2224920, 2225033 all dated 04.01.2021 suspended from clearance will have to be released to the petitioners subject to the petitioners executing such bond with such surety or security and such conditions as may be specified in the bond in accordance with law - petition disposed off.

Summary

Issues Involved:
1. Suspension of clearance of imported goods.
2. Violation of principles of natural justice.
3. Compliance with statutory provisions of Rule 7 of the IPR Rules and the Copyright Act, 1957.
4. Ownership and entitlement to the trademark "TR".
5. The validity of customs authorities' actions under the IPR Rules.
6. The relationship between the Copyright Act and the IPR Rules.
7. The legal effect of pending civil suits on customs actions.

Detailed Analysis:

1. Suspension of clearance of imported goods:
The petitioners filed a writ of mandamus under Article 226 of the Constitution, requesting the revocation of the suspension of clearance of their consignment by the customs authorities. The petitioners argued that the suspension was without any confiscation order and violated Rule 7 of the IPR Rules and the Copyright Act, 1957.

2. Violation of principles of natural justice:
The petitioners contended that the suspension of clearance without informing them of the grounds for such seizure and detention violated the principles of natural justice. They argued that the continued suspension was arbitrary, high-handed, and without authority of law.

3. Compliance with statutory provisions of Rule 7 of the IPR Rules and the Copyright Act, 1957:
The petitioners submitted that Rule 7 of the IPR Rules prescribes the procedure for suspension of clearance of goods. They argued that the customs authorities had no authority to suspend clearance beyond 20 days and that the goods should be released after the prescribed period of 3 days from the date of interdiction, subject to the condition of depositing a specific bond along with 25% security of the value of the interdicted goods.

4. Ownership and entitlement to the trademark "TR":
The petitioners and respondent No.6 were involved in litigation over the ownership and right to use the trademark "TR". The petitioners argued that they were the registered proprietors of the trademark "TR" in India and had submitted all relevant documents to the customs authorities. They contended that the customs authorities should have sought a restraint order from the court having jurisdiction over the matter.

5. The validity of customs authorities' actions under the IPR Rules:
The customs authorities argued that they had acted in accordance with the Customs Act, 1962, and the IPR Rules. They contended that respondent No.6 was the registered owner of the trademark "TR" and had filed a complaint with the customs department, leading to the suspension of clearance of the imported goods.

6. The relationship between the Copyright Act and the IPR Rules:
The court noted that the IPR Rules do not confer any new intellectual property rights but merely provide a mechanism to enforce existing ones. The court emphasized that the provisions of the Copyright Act, 1957, and the IPR Rules must be read harmoniously. The court held that the customs authorities could not detain the consignment beyond the prescribed period of 14 days without a court order from the right holder.

7. The legal effect of pending civil suits on customs actions:
The court observed that both the petitioners and respondent No.6 were involved in pending civil suits regarding the ownership and entitlement to the trademark "TR". The court held that in the absence of any interim order from the civil courts, the customs authorities could not withhold the consignment beyond the prescribed period.

Conclusion:
The court found merit in the petitioners' submissions and held that the customs authorities could not detain the consignment beyond the prescribed period of 14 days without a court order. The court directed the customs authorities to release the imported goods to the petitioners, subject to the execution of a bond with surety or security and other conditions as specified in the bond. The writ petition was disposed of accordingly.