New Hope Food Industries (P) Limitedrep.by its Managing DirectorMr.A.RajaChinnasadayampalaymMoolapalayam (P.O.)Erode-638 002 v. Pioneer Bakeries (P) Limited 52

J U D G E M E N T K.K.SASIDHARAN, JThese original side appeals are directed against the common orderdated 7.9.2007 in O.A.Nos.708 to 710 of 2003 in C.S.No.504 of 2007 wherebythe learned Single Judge rejected the prayer for injunction pending suit.2. The appellant herein filed a suit in C.S.No.504 of 2007 againstthe respondents for the following reliefs."(a) A permanent injunction restraining thedefendants by themselves, their associate companies,heirs, legal representatives, successors in business,assigns, servants, agents, transporters, distributors,printers, stockists, wholesalers, dealers, retailers orany one claiming through or under them from committingacts of infringement of plaintiff's registered trade mark"MILKA WONDER CAKE" by use of trade mark "MILKA" or anyother mark similar thereto in respect of cakes.(b) A permanent injunction restraining thedefendants by themselves, their directors, heirs, legalrepresentatives, successors in business, assigns,servants, agents, transporters, distributors, printers,stockists, wholesalers, dealers, retailers or any oneclaiming through or under them from committing acts ofinfringement of copyright of plaintiff's artistic work inthe capsule shaped device and the trade mark "MILKA"depicted thereon by use of an almost identical and nearlysimilar capsule shaped device and the trademark "MILKA"depicted thereon amounting to substantial reproduction ofthe plaintiff's copyright or in any manner whatsoever.(c) A permanent injunction restraining thedefendants by themselves, their directors, heirs, legalrepresentatives, successors in successors in business,assigns, servants, agents, transporters, distributors,printers, stockists, wholesalers, dealers, retailersadvertisers or nay one claiming through or under themfrom manufacturing, distributing, marketing, selling,offering for sale, advertising or in any manner dealingin cakes, chat items, snacks or items other than breadsby using the name "MILKA" which is identical to theplaintiff's mark "MILKA" either as a trade mark or tradename or trading style amounting to passing off theirproducts as and for the plaintiff's products or in anyother manner whatsoever. https://hcservices.ecourts.gov.in/hcservices/ (d) The defendants be ordered to deliver up fordestruction all the wrappers, pouches, cartons, labels,packaging materials, advertisement materials, seals,dies, blocks, screen prints, pamphlets, name boards,brouchers, trade literatures and such other materialsbearing the trademark "MILKA" which is identical to theplaintiff's trade mark "MILKA".(e) The defendants be ordered to pay a sum ofRs.10,05,000/- being compensatory and punitive damage forcommitting acts of infringement of copyright and passingoff in various manner as narrated in the plaint.(f) A preliminary decree be passed in favour of theplaintiff to render true and faithful accounts of profitsearned by the defendants by sale of cakes and food itemsother than breads using the trademark "MILKA" and a finaldecree be passed in favour of the plaintiff for theamount of profits thus found to have been made by thedefendants after the latter have rendered accounts."3. In the said suit, the appellant filed O.A.Nos.708 to 710 of 2007for interlocutory injunction.4. The appellant preferred O.A.No.708 of 2007 for injunctionrestraining the respondents from committing acts of infringement inrespect of their trade mark "MILKA WONDER CAKE" by using the trademark"MILKA" or any other mark similar thereto in respect of cakes.5. In O.A.No.709 of 2007,the appellant prayed for injunction againstthe respondents pertaining to infringement of copyright in respect oftheir artistic work MILA WONDER CAKE wrapper/pouch and the trade mark"MILKA" depicted thereon.6. In O.A.No.710 of 2007 the appellant prayed for injunction inrespect of cakes, chat items, snacks or items other than bread by usingthe name "MILKA" by the respondents.7. The case of the appellant as highlighted in the affidavit filed insupport of the injunction are as follows:-8. The appellant company was incorporated in the year 1996 with themain object of dealing in cakes, biscuits and other confectionary itemsand bakery products and they are in the business of manufacturing andmarketing cakes since the year 1997 under the trade names "MILKA" and"MILKA WONDER CAKE". They have been using the trade mark continuouslysince then in respect of cakes. The appellant is the owner of the copyright in the artistic work Milka and Milka Wonder Cake wrapper/pouchhaving distinctive colour scheme, get up, lay out and artistic features https://hcservices.ecourts.gov.in/hcservices/ and the same was registered with the Registrar of Copyrights underNo.54521/97 dated 30.12.1997 and as such all the rights, title andinterest in the said artistic work vested exclusively with the appellant.The appellant is also the registered proprietor of trade mark "MILKAWONDER CAKE" under No.1242328 dated 9th October, 2003 in class No.30 inrespect of cake and the trade mark "MILKA WONDER CAKE" is also registeredunder No.732507 dated 30th December, 1996 in class 30 in respect of cakes,biscuits and other confectionary items. It is the further case of theappellant that they have made extensive sale of cakes bearing the trademarks "MILKA" and "MILKA WONDER CAKE" in distinctive wrapper/pouch allover the country since the year 1997. The cakes sold by the appellantunder the said trade mark have captured huge market resulted in acquiringimmense reputation and goodwill. The appellant has also shown their salesturn over for cakes under the trade marks "MILKA" and "MILKA WONDER CAKE"from 1996-97 onwards till 2004-2005. The appellant also claims that theyhave spent substantial amount towards sales promotion, advertisement andpublicity for marketing cakes under the trade mark "MILKA" and "MILKAWONDER CAKE" in distinctive wrapper/pouch and by virtue of the long,continuous, extensive use and wide publicity, the appellant has acquiredexclusive right to use the trade marks "MILKA" and "MILKA WONDER CAKE".The appellant contended that the use of any such similar trade mark andartistic work for cakes is bound to cause confusion and deception andamounts to misuse. According to the appellant the trade mark "MILKA" isexclusively identified by the trade and public with the cakes marketed bythem.9. The appellant further submitted that one Mr.V.M.Joseph, Mr.A.Arumugham and the second respondent were the founder promoters of thefirst respondent company, which was incorporated in the year 1989 andMr.V.M.Joseph was the Managing Director of the said company and the firstrespondent company has all along being engaged in the business ofmanufacturing and marketing breads only. In the year 1997 the saidV.M.Joseph in his individual capacity had applied for registration of thetrade mark "MILKA" as per application NO.759880 and "WONDER" as perapplication No.759879, both dated 8.7.1997 in respect of cakes included inclass 30. Mr.V.M.Joseph had also applied for registration of the trademark MILKA WONDER CAKE label as per application No732507 dated 30.12.1996in class 30 in respect of cakes, biscuits and confectionary items, cookeddishes for human consumption etc., falling in class 30. The saidregistration has been assigned to the appellant as per agreement dated30.11.2000 and in the said document the second respondent was an attestingwitness. The appellant thus became the proprietor of the aforesaid trademarks "MILKA", "WONDER" and "MILKA WONDER CAKE" in respect of cakes.10. The appellant contended that until the year 2003 all thepromoters were together and Mr.V.M.Joseph was the Managing Director of thegroup companies and there was no dispute at all. SubsequentlyMr.V.M.Joseph fell ill and there was re-organisation of management.Accordingly a Memorandum of Understanding was prepared on 19.6.2003 in andby which it was agreed that the appellant is entitled to use the trade https://hcservices.ecourts.gov.in/hcservices/ mark "MILKA" for cakes and another company by name Milka NutrimentsPrivate Limited is entitled to use the trade mark "MILKA" for biscuits andthe respondents to manufacture breads using the trade mark "MILKA". Thesaid Memorandum of Understanding was handed over to respondent No.2 forhis signature but he did not sign the same and retained with him.Difference of opinion aggravated between the parties which resulted infiling C.S.No.361 of 2004 by the appellant herein and C.S.No.790 of 2004by the respondents herein against each other and the said suits are stillpending. It is the further case of the appellant that the respondentsstarted manufacturing cakes in the year 2007 which resulted in filing thepresent suit in as much as the respondent committed acts of infringementof appellant's registered trade mark "MILKA WONDER CAKE" by using thetrade mark "MILKA."11. Along with the suit the appellant also filed O.A.Nos.708 to 710of 2007 for interim injunction pending disposal of the suit and in theaffidavit filed in support of the injunction application the appellant hasnarrated the course of events which resulted in filing the suit as well asthe interlocutory applications.12. The second respondent as the Managing Director of the firstrespondent company filed a common counter affidavit in the interlocutoryapplications and opposed the prayer. According to the respondents, theappellant was granted the limited licence to use the artistic work "MILKA"under the agreement dated 1.11.1996 so as to enable them to manufacturebreads and the said agreement did not permit the appellant to use thetrade mark "MILKA" for the purpose of manufacturing and selling cakes andother bakery products. It is the case of the respondents that the firstrespondent is manufacturing cakes since the year 2004 and they continuedto manufacture, market and sell the cakes in the name and style "MILKATALENT CAKE" and they are the prior user of trade mark "MILKA" and theartistic work contained therein. The respondents also alleged collusionbetween the appellant and Mr.V.M.Joseph and as according to therespondents in the earlier suit there was no interim order in favour ofthe appellant and both the learned Single Judge as well as the DivisionBench negatived the prayer made for injunction at the instance of theappellant. Therefore the respondents prayed for dismissing theapplications as well as the main suit.13. The appellant has filed a reply affidavit in answer to the commoncounter affidavit filed by the respondents wherein he contended that theappellant is a user and registered proprietor of the trade mark "MILKA"in respect of cakes.14. The learned Single Judge having found that there is no primafacie case in favour of the appellant dismissed the applications, againstwhich the unsuccessful petitioners in O.A.Nos.708 to 710 of 2007 havepreferred these appeals. https://hcservices.ecourts.gov.in/hcservices/

15. In the above factual matrix, we have heard Mr.Aravind P.Datrar,learned Senior Counsel for the appellant and Mr.P.S.Raman, learned SeniorCounsel for the respondents.16. The learned Senior Counsel for the appellant took us through theentire pleadings and contended that the finding of the learned SingleJudge in the applications for interim injunction is perse erroneous and assuch it is necessarily to be set aside in these appeals. The learnedSenior Counsel further contended that in the face of the trade markregistration obtained by the appellants in class No.30 under No.732507dated 30.12.1996 and trade mark number 1242328 dated 9.10.2003 both inrespect of cakes under class 30, the learned Single Judge should haveconsidered the prima facie case in favour of the appellant. It is thefurther contention of the learned Senior Counsel that the agreement dated1.11.1996 relied on by the learned Single Judge to reject the prayer forinjunction is in fact relates to bread only and it has nothing to do withcakes and the learned Single Judge failed to consider the factum ofproduction of cakes by the appellant right from 1997. Ultimately thelearned Senior Counsel sought interference in the order impugned in theseappeals and according to the learned Senior Counsel the finding of thelearned Judge is perverse and capricious.17. The learned Senior Counsel for the respondents supported theorder of the learned Single Judge and contended that temporary injunctionbeing purely an equitable relief to be granted keeping in view the balanceof convenience, existence of prima facie case and irreparable injury andas the appellant failed to prove these fundamental factors, the learnedsingle Judge was perfectly correct in rejecting the prayer for injunction.By placing reliance on the certificate dated 2.9.1997 issued by theAssistant Registrar of Trade Marks, Mumbai, the learned Senior Counselcontended that the appellant played fraud on the authorities as in thecopy right application they have given intimation that New Hope Industriesand Pioneer Bakeries Limited are one and the same and accordingly got thecopy right registered. With respect to the trade mark obtained by theappellant for cakes in class 30, learned Senior Counsel submitted that therespondents have already initiated proceedings for rectification and thesame is now pending before the Intellectual Property Appellate Tribunal,Chennai. The learned Senior Counsel also took us through the earlier orderof this court dated 16.7.2004 rejecting the similar prayer sought by theappellant in O.A.Nos.360 and 361 of 2004 in C.S.No.361 of 2004, which wasconfirmed in appeal as per judgment dated 1.12.2004 in O.S.A.Nos.267 to270 of 2004.18. The action for infringement is a remedy provided by the statuteon a registered holder of the trade mark in case of any violation of hisright to use his trade mark exclusively for his goods. Therefore when theplaintiff comes to the court with a complaint of infringement by thedefendant and if it is found that the defendant is using the plaintiff'strade mark, an injunction will be issued in favour of the plaintiff https://hcservices.ecourts.gov.in/hcservices/ restraining the defendant from using the trade mark. However Section 34is an exception to this, inasmuch as registration of trade mark cannot beused against a trader taking shelter under the concept of prior user. Ofcourse prior user must be continuous or not intermittent or seasonal.Therefore prior user assumes significance in an action for infringement.19. However disposal of suit for injunction often takes time, giventhe pendency of cases in courts and as such the suit for permanentinjunction in respect of infringement of trade mark invariably accompaniedby an application for temporary injunction pending disposal of the mainsuit. The grant of injunction being an equitable remedy provided under theSpecific Relief Act is governed by the principles of prima facie case,balance of convenience and irreparable injury.20. In the case of SEEMA ARSHAD ZAHEER & ORS v. MUNICIPAL CORPORATIONOF GREATER MUMBARI & ORS. (2006(5) Scale 263) the Apex Court laid down thesalient principles governing the grant of injunction thus:-"The discretion of the court is exercised togrant a temporary injunction only when the followingrequirements are made out by the plaintiff: (i)existence of a prima facie case as pleaded,necessitating protection of plaintiff's rights byissue of a temporary injunction; (ii) when the needfor protection of plaintiff's right is compared withor weighed against the need for protection ofdefendant's right or likely infringement ofdefendant's rights, the balance of conveniencetilting in favour of plaintiff; and (iii) clearpossibility of irreparable injury being caused toplaintiff if the temporary injunction is not granted.In addition, temporary injunction being an equitablerelief, the discretion to grant such relief will beexercised only when the plaintiff's conduct is freefrom blame and he approaches the court with cleanhands."21. In the case of RAMDEV FOOD PRODUCTS PVT. LTD. v. ARVINDBHAIRAMBHAI PATEL & OTHERS (2006(8) Scale 631), the Apex Court considered thequestion of prima facie case and balance of convenience and held asfollows:-"116. Registration of a trade mark and userthereof per se may lead to the conclusion that theplaintiff has a prima facie case, however,existence thereof would also depend upon thedetermination of the defences raised on behalf ofthe respondents. The appellant has raised atriable issue. The same by itself although may notbe sufficient to establish a prima facie case but https://hcservices.ecourts.gov.in/hcservices/ in view of our findings aforementioned, we aresatisfied that the appellant has been able toestablish existence of a legal right in itself andviolation of the registered trade mark on the partof the respondents. We have also considered thecomparable strength of the cases of the partiesand are of the opinion that the case of theplaintiff-appellant stands on a better footingthan the defendants-respondents.117. A question as regards the matterrelating to grant of injunction has been dealt inS.M.Dvechem Ltd.v. Cadbury (India) Ltd. 2000(5)SCC 573) wherein upon noticing a large number ofdecisions including Colgate Palmolive (India) Ltd.v. Hindustan Lever Limited ((1999) 7 S.C.C. 1) asalso the subsequent distinction made in respect ofthe decision of the House of Lords in AmericanCyanamid v. Ethicon Ltd. ((1975 1 ALL ER 853), itwas stated:"....Therefore, in trademark matters, it isnow necessary to go into the question of"comparable strength" of the cases of eitherparty, apart from balance of convenience.118. In M/s Transmission Corporation ofA.P.Ltd., v. M/s. Lanco Kondapalli Power Pvt.Ltd.(JT 2005(10) SC 542), it was held:"The interim direction ordinarily wouldprecede finding of a prima facie case. Whenexistence of a prima facie case is established,the Court shall consider the other relevantfactors, namely, balance of convenience andirreparable injuries. The High Court in itsimpugned judgment although not directly butindirectly has considered this aspect of thematter when on merit it noticed that the Appellanthas raised a dispute as regard payment of anexcess amount of Rs.35 crores although accordingto the Respondent a sum of Rs.132 crores is due toit from the Appellant and the Appellant had beenpaying the amount for the last two years as perthe contract.Conduct of the parties is also a relevant factor.If the parties had been acting in a particularmanner for a long time upon interpreting the termsand conditions of the contract, if pendingdetermination of the lis, an order is passed thatthe parties would continue to do so, the same https://hcservices.ecourts.gov.in/hcservices/ would not render the decision as an arbitrary one,as was contended by Mr.Rao. Even the Appellant hadprayed for adjudication at the hands of theCommission in the same manner. Thus, it itselfthought that the final relief would be grantedonly by the Arbitrator."121. Relief by way of interlocutoryinjunction would be material in a suit forinfringement of trade mark. Balance ofconvenience, however would have a vital role toplay.123. Kerly's Law of Trade Marks and TradeNames, Thirteenth Edition states as under aboutthe general test for grant of an interiminjunction."In trade-mark infringement causesirreparable damage, in this sense, is relativelyeasily shown, since infringement may easilydestroy the value of a mark or at least nullifyexpensive advertising in a way that is hard toquantify for the purposes of an inquiry intodamages. This has more recently come to bereferred to, in cases where the defendant'sconduct is not directly damaging but merelyreduces the distinctive character of theclaimant's mark, as "dilution".........In particular, although it is usuallyneither necessary nor appropriate to assess thedegree of probability of success which theclaimant's action has (provided that it isarguable, and subject to the principle of AmericanCyanamid that the merits may be resorted to as a'tie-breaker' if the balance of convenience isvery even) in trade mark and passing off cases, itis very hard to avoid doing so, since the betterthe claimant's case on the likelihood of deception(frequently the major issue) the greater the harmwhich he is likely to suffer. Accordingly, inappropriate cases, where the state of the evidencepermits it, the court may seek to weigh up themerits in deciding whether to grant interimrelief."124. Thus, when a prima facie case is madeout and balance of convenience is in favour of theappellant, it may not be necessary to show morethan loss of goodwill and reputation to fulfil thecondition of irreparable injury. In fact, if the https://hcservices.ecourts.gov.in/hcservices/ first two pre-requisites are fulfilled, in trademark actions irreparable loss can be presumed tohave taken place.125. The expression "irreparable injury" isthat sense would have established injury which theplaintiff is likely to suffer."22. Keeping in view the principles laid down by the Supreme Court inthe matter of temporary injunction by exercise of discretion we haveperused the order of the learned Single Judge impugned in these appeals.23. The learned single Judge negatived the prayer for injunctionmainly on the following reasons:-"(a) As per agreement dated 1.11.1996 the appellantwas granted permission only to manufacture breads.Therefore the appellant is not right in their contentionthat they are manufacturing cakes also from the year 1997.(b) The registration now obtained by the appellantdoes not enable the appellant to get over the inhibitionthat were pointed out in the earlier orders of this courtin C.S.No.361 of 2004 and O.S.A.Nos.267 to 270 of 2004.(c) In the copy right registration application thereis an indication that both the companies namely, appellantand first respondent are one and the same and as such thevery registration is tainted with malafides.(d) When the sale deed of unregistered trade markexecuted by Mr.V.M.Joseph in favour of the appellant on30.11.2000 is considered in the face of the agreementdated 1.11.1996 between the appellant and the firstrespondent, serious doubt exist about the agreement dated30.11.2000. 24. In view of the rival submissions at the Bar, the only questionthat falls for our consideration is whether the learned single Judgeexercised the discretion properly and in accordance with the principlesgoverning the grant of interlocutory injunction.25. It is an admitted case of the parties that in the year 1989Mr.V.M.Joseph established the company by name "Pioneer Bakeries PrivateLimited" in association with the second respondent, Mr.A.Arumugam and twoothers. In the year 1996, the appellant company was formed byMr.V.M.Joseph along with Mr.Raja, the Managing Director of the AppellantCompany and three others. Similarly in the year 1997 "Milka NutrimentsPrivate Limited was also established. https://hcservices.ecourts.gov.in/hcservices/

26. The first respondent herein applied for the trademark "MILKA"under No.513603B in respect of bread in class 30 and obtained the sameunder the provisions of the Trade and Merchandise Marks Act, 1958.Similarly the first respondent also obtained the registration of copyrights in the artistic work in the wrapper as per NO.5212 of 1992 inaccordance with the provisions of the Copy Rights Act,1957. While so thefirst respondent found that M/s.New Star Food Products, Kerala weremanufacturing and selling bakery products under the trade mark "MILKA".Therefore they filed C.S.No.891 of 1998 before this court against M/s.NewStar Food Products for injunction. In the plaint in C.S.No.891 of 1998,the first respondent has stated that they are manufacturing breads underthe trade mark "MILKA" and registered the trade mark "MILKA" in respect ofbread in class 30. No where it is stated in the plaint that theregistration of trade mark "MILKA" as per class 30 for bread covers cakesor other bakery products evident thereby that the first respondent hasbeen manufacturing only breads and their registration was only in respectof breads.27. The appellant also filed a suit against M/s New Star FoodProducts in C.S.No.896 of 1998 before this court and in the plaint thereis a clear recital that the appellant conceived and adopted the trade mark"MILKA WONDER CAKE" in the year 1989 and they have been using the saidtrade mark continuously, openly and without any interruption ever since1989. It is also stated in the plaint that the appellant had applied forregistration of the trade mark "WONDER CAKE" and the same is pendingbefore the trade marks Registrar. Both the suits viz., C.S.NO.891 of 1998and 896 of 1998 were filed by Mr.V.M.Joseph in his capacity as theManaging Director of both the companies. In both the suits injunctionwas granted as per dated 17.08.1989. The averments in C.S.NO.891 of 1998and 896 of 1998 prima facie discloses that the appellant has beenmanufacturing cakes under the trade name "MILKA WONDER CAKE" and therespondents have been manufacturing breads and as such the appellant isthe prior user in respect of cakes. As per sale deed of unregisteredtrade mark and copy right dated 30.11.2000 Mr.V.M.Joseph applied fortrade marks "MILKA","MILKA WONDER CAKE" and "WONDER" as per applicationnumbers 759880,732507 and 759879 dated 08.07.1997,30.12.1996 and08.07.1997 respectively and assigned the said unregistered trade marks infavour of the appellant for consideration and in the said agreement thesecond respondent admittedly signed as an attesting witness. Such anagreement is legally valid in view of Sec 39 of the Trade Marks Act 1939.28. Mr.P.S.Raman, learned Senior Counsel argued that the agreementwas attested by the second respondent at the instance of Mr.V.M.Joseph andhe signed the same without knowing the contents of the document and assuch, the learned Senior Counsel contended that the second respondent isnot in the know of things so far as the agreement dated 30.11.2000 isconcerned. https://hcservices.ecourts.gov.in/hcservices/

29. Admittedly the second respondent is also a person involved in theMILKA venture and as all the companies were functioning smoothly, itcannot be said atleast on a prima facie view that the second respondenthas signed the document without knowing the contents. The circumstancesunder which the second respondent signed the document are all matters forevidence during trial but prima facie it has to be accepted that theagreement was executed with the knowledge of the second respondent.30. Based on the agreement dated 30.11.2000 the appellant obtainedregistration of the trade marks "MILKA and "WONDER CAKE" in numbers 732507and 1242328 both in class 30. Under Section 31 of the Trade Marks Act1999 in all legal proceedings relating to a trade mark registered underthis act, the original registration of trade mark and all subsequentassignments and transmissions of the trademark shall be prima facieevidence of the validity thereof. Therefore the registration of trademarks "MILKA" and "WONDER CAKE" in the name of appellant are prima facieevidence of the valid trade marks and the legal presumption could berebutted only in a proceeding for rectification. We are informed by thelearned Senior Counsel for the respondents that they have alreadyinitiated proceedings for rectification and the same is now pending. Ofcourse exclusive right obtained by registration cannot operate against theprior user in view of Section 34 of the Trade Marks Act.31. In the case of Ruston & Hornsby Ltd. v. Zamindara EngineeringCo. (AIR 1970 Supreme Court 1649) the Apex Court observed that the actionfor infringement is a statutory right and it is dependent upon thevalidity of the registration and subject to other restrictions laid downin Sections 30, 34 and 35 of the Trade Marks Act. 32. In the present suit Mr.V.M.Joseph the former Managing Director ofthe first respondent company had sworn to an affidavit where in he hadnarrated the working arrangement adopted in the respondent's company andin the sister companies and according to the said affidavit the appellantwas permitted to manufacture cakes. The affidavit of another director ofthe first respondent company by name Mr.A.Arumugam having 18% of the sharein the company is also on record. According to Mr.A. Arumugam there is noBoard resolution of the first respondent company permitting manufactureof cakes. The said deponent also do not support the case of therespondents. Though the second respondent attributed malafides againstMr.V.M.Joseph, nothing is stated about Mr.A.Arumugam and as such primafacie the affidavit of Mr.A. Arumugam has to be taken as correct. 33. In the common counter affidavit filed by the respondents thereis a clear admission in para 8 to the effect that though the appellant wasgranted limited license to use the artistic work "MILKA" in its productsviz., bread only, but he was using the same for cakes also. Therespondents have also stated in para 30 of the counter that they arehaving the licence to manufacture cakes with effect from 2004, which isalso a pointer to show that the appellant is the prior user of "MILKA" for https://hcservices.ecourts.gov.in/hcservices/ cakes as evident by the Certificate of Registration as well as theaverments in the earlier suit. The main ground of attack of therespondents relates to the so called fraud played by the appellant ingetting the registration as according to the respondents, it is only bymisrepresenting the fact that the appellant and the first respondent areone and the same, they obtained the registration. However on a perusal ofthe said communication of the Assistant Registrar of trade mark revealsthat the application referred to in the said proceedings relates toNo.732507 which was assigned by Mr.V.M.Joseph to the appellants as peragreement dated 30.11.2000 and No.513603 relates to the respondent'scompany. Prima facie we are satisfied that the appellant is not guilty offalse representation since earlier both the companies were managed by thesame set of Directors.34. The Observations as contained in O.A.Nos.360 and 361 of 2004 andO.S.A.Nos.267 to 270 of 2004 were only for deciding the injunctionpetition and in the judgement in the appeal preferred against the order ofthe learned Single Judge, the Division Bench in para 7 of the judgment hasobserved that the finding in the order of the learned single judge is onlyfor the purpose of disposal of the application for the interim prayer andas such the same cannot be relied on in any other proceedings against theappellant. Therefore in view of the judgment dated 1.12.2004 inO.S.A.Nos.267 to 270 of 2004 the finding of learned judge to the effectthat the registration now obtained by the appellant does not enable themto get over the inhibition they have pointed out in the earlier orders inthe suits filed by the appellant, is clearly unsustainable.35. In the earlier suits filed by both the parties herein againsteach other, there is no injunction in favour of either party and thosesuits are now reported to be posted for trial. 36. The appellant having obtained registration of trade mark, got astatutory right for manufacturing cakes by using the trade mark "MILKA".Therefore prima facie the use of trade mark "MILKA" by the respondents forthe manufacture of cakes amounts to infringement. Prima facie we are alsosatisfied that the marks involved and goods involved are identical. 37. Prima facie case in favour of the appellant as indicated aboveappears to have been overlooked while exercising the discretion in thematter of interlocutory injunction.38. We are conscious of the legal position that the appellate courtnormally will not interfere with the discretionary order of the trialcourt unless such orders are made totally disregarding the salientprinciples governing the law of injunction. 39. In the case of Wander Ltd. v. Antox India (P) Ltd., (1990 (Supp)SCC 727) the Supreme Court in para 14 of the judgement observed thus: https://hcservices.ecourts.gov.in/hcservices/ "14. The appeals before the DivisionBench were against the exercise ofdiscretion by the Single Judge. In suchappeals, the appellate court will notinterfere with the exercise of discretion ofthe court of first instance and substituteits own discretion except where thediscretion has been shown to have beenexercised arbitrarily, or capriciously orperversely or where the court had ignoredthe settled principles of law regulatinggrant or refusal of interlocutoryinjunctions. An appeal against exercise ofdiscretion is said to be an appeal onprinciple. Appellate court will not reassessthe material and seek to reach a conclusiondifferent from the one reached by the courtbelow if the one reached by that court wasreasonably possible on the material. Theappellate court would normally not bejustified in interfering with the exerciseof discretion under appeal solely on theground that if it had considered the matterat the trial stage it would have come to acontrary conclusion. If the discretion ha sbeen exercised by the trial court reasonablyand in a judicial manner the fact that theappellate court would have taken a differentview may not justify interference with thetrial court’s exercise of discretion. Afterreferring to these principlesGajendragadkar, J. in Printers (Mysore)Private Ltd. v. Pothan Joseph 1 : (SCR 721) “... These principles are well established,but as has been observed by Viscount Simonin Charles Osenton & Co. v. Jhanaton 2‘...the law as to the reversal by a court ofappeal of an order made by a judge below inthe exercise of his discretion is wellestablished, and any difficulty that arisesis due only to the application of wellsettled principles in an individual case’.” The appellate judgment does not seem todefer to this principle." 40. In the case of RAMDEV FOOD PRODUCTS v. ARVINDBHAI RAMBHAI PATEL(2006 (8) scale 631) the Apex Court considered the issue regarding theappellate court's jurisdiction to interfere with the discretionary orderof the trial Judge and held thus:- https://hcservices.ecourts.gov.in/hcservices/ "127. We are not oblivious that normally theappellate court would be slow to interfere with thediscretionary jurisdiction of the trial court.128. The grant of an interlocutory injunction is inexercise of discretionary power and hence, the appellatecourts will usually not interfere with it. Howeverappellate courts will substitute their discretion ifthey find that discretion has been exercisedarbitrarily, capriciously, perversely, or where thecourt has ignored settled principles of law regulatingthe grant or refusal of interlocutory injunctions. Thisprinciple has been stated by this court time and timeagain.(see for example Wander Ltd. v. Antox India P.Ltd.(1990 Supp.SCC 727, Lakshmikant v. Patel V.Chetan BhaiShah (2202) 2 SCC 65 and Seema Arshad Zaheer v. MC ofGreater Mumbai 2006(5) SCALE 263)129. The appellate court may not reassess thematerial and seek to reach a conclusion different fromthe one reached by the court below if the one reached bythat court was reasonably possible on the material. Theappellate court would normally not be justified ininterfering with the exercise of discretion under appealsolely on the ground that if it had considered thematter at the trial stage it would have come to acontrary conclusion.130. However, in this case the courts belowproceeded on a prima facie misconstruction of documents.They adopted and applied wrong standards. We,therefore, are of the opinion that a case frointerference has been made out."41. In 2006(5) Scale 263 cited supra the Apex Court pointed out theinstances where the Appellate Court would be justified in interfering withthe discretionary order of the trial Judge and held as follows:-"31. Where the lower court acts arbitrarily,capriciously or perversely in the exercise of itsdiscretion, the appellate court will interfere.Exercise of discretion by granting a temporaryinjunction where there is "no material", or refusingto grant a temporary injunction by ignoring therelevant documents produced, are instances of actionwhich are termed as arbitrary, capricious or perverse.When we refer to acting on "no material" (similar to"no evidence)", we refer not only to cases where there https://hcservices.ecourts.gov.in/hcservices/ are total dearth of material, but also to cases wherethere is no relevant material or where the material,taken as a whole, is not reasonably capable ofsupporting the exercise of discretion. In this case,there was "no material" to make out a prima facie caseand therefore, the High Court in its appellatejurisdiction, was justified in interfering in thematter and vacating the temporary injunction grantedby the trial court."42. Having considered the pleadings and documents on record and therespective contentions of the parties, we are convinced that the trialcourt failed to consider the pleadings and documents in their properperspective and as such there was an improper exercise of discretionwarranting interference in these appeals.43. We venture to point out the materials produced by the appellantto show the prima facie case in their favour."(a) C.S.No.896 of 1998 was filed by the appellantthrough the then Managing Director Mr.V.M.Joseph. Inthe plaint in C.S.No.896 of 1998 it is clearly statedthat the appellant is manufacturing cakes from 1997using the trade name "MILKA". Similarly in C.S.No.891of 1998 filed by the first respondent, the contentionis that the said respondent is manufacturing onlybread. It is to be noted here that at that point oftime there were no disputes between the parties andthey were fighting against the common enemy. The abovereferred to plaint averments shows that the appellanthas been manufacturing cakes under the trade name"MILKA" from 1997.(b) The then Managing Director of the appellantas well as the first respondent company Mr.Joseph madeapplications under Nos.759880, 759879 and 732507 forregistration of trade marks "MILKA", "WONDER" and"MILKA WONDER CAKE" respectively. The saidapplications were subsequently assigned to theappellant as per document dated 30.11.2000 and theattesting witness to the said document is none otherthan the second respondent/the managing director of thefirst respondent company. The said assignment ispermitted in law in view of Section 39 of the TradeMarks Act.(c) Based on the applications for registration oftrade mark applied by Mr.Joseph and the subsequentassignment in favour of the appellant as per agreementdated 30.11.2000, the appellant obtained the https://hcservices.ecourts.gov.in/hcservices/ registration of trade marks and the registration soobtained is prima facie evidence of its validity asprovided under Section 28 of the Trade Marks Act.(d) The registration of the trade mark produced bythe respondents under class 30 as per No.513602Brelates to bread only.(e) In the affidavit filed by Mr.Arumugam, who isstated to be holding 18% of the shares in the firstrespondent company, it is stated that the appellanthas been using the trade mark "MILKA" and "MILKA WONDERCAKE" in respect of cakes since 1997; that in 2003 therespondents started manufacturing cakes which wassubsequently discontinued and again in February, 2007the respondent started manufacturing cakes using thetrade mark "MILKA" and that there is no BoardResolution of the first respondent company for thepurpose of manufacturing cakes and majority of theshare holders have not approved such an act on the partof the second respondent. The respondents have notcountered the said averments as contained in theaffidavit of Mr.Arumugam and as such, prima facie thesaid affidavit has to be taken to decide the issuerelating to temporary injunction.(f) The respondents themselves admitted in para 18of the counter about the factum of manufacturing cakesby the appellant using the trade mark "MILKA".(g) The finding of the learned Single Judge in theinterlocutory application in the suit filed by theappellant herein cannot be relied on now, in view ofthe observations of the Division Bench in O.S.A.Nos.266to 270 of 2007 to the effect that those observationsare only for the purpose of deciding the interlocutoryapplication and the same cannot be relied onsubsequently for any purpose.44. The learned Single Judge rejected the prayer for injunctionmainly on two grounds."(a) The appellant was permitted to manufactureonly breads under the artistic work "MILKA" as peragreement dated 1.11.1996.(b) The artistic work Milka Wonder Cake wrapperwas registered in the name of the appellant byobtaining no objection certificate from the Registrarof Trade Marks falsely representing that both the https://hcservices.ecourts.gov.in/hcservices/ appellant and the first respondent are one and thesame."45. Prima facie, the reasoning given by the learned single Judgewhile answering the two points referred to above appears to be factuallyincorrect. The licence agreement dated 1.11.1996 was confined to breadalone. The said agreement produced in page 41 of the paper book in volume3 shows that the agreement was only for copy right for the artistic work"MILKA" for breads and the agreement is silent with regard to copy rightfor the word "MILKA" for cakes. Trade mark "MILKA" was not the subjectmatter of the said agreement. Similarly the said agreement do not makemention of cakes.46. The other contention with regard to misrepresentation made beforethe Registrar of Trade Marks by using alias name loses it significance forthe reason that both the companies were managed by Mr.V.M.Joseph duringthe material time. The application made by both the appellant as well asfirst respondent finds place in the said certificate dated 2.9.1997 whichis evident from the registration of trade mark obtained by both theappellant and the first respondent.47. 52. As observed by the Apex Court in the judgment reported in2002(3) S.C.C. 65 ( Laxmikant V. Patel v. Chetanbhai Shah,).Refusal togrant injunction in spite of the availability of facts, which are primafacie established by overwhelming evidence and material available onrecord justifying the grant thereof, occasion a failure of justice andsuch injury to the plaintiff would not be capable of being undone at alater stage. 48. We do not wish to comment more about the validity of theappellant's trade mark in the present appeals as it would have a bearingon the same issue, which is stated to be pending before the IntellectualBoard in the proceedings initiated by the respondents for rectification.49. While considering the question of balance of convenience, thepossible confusion that may cause in the mind of an ordinary person ofaverage memory and imperfect recollection along with the possibility ofdifficulties and loss that may be caused to a party complaininginfringement, has to be taken note of. In the case on hand, the productis cake and it will not be possible for an ordinary person to identify aparticular product as both the products are found to be more or lessidentical. Therefore it would definitely cause confusion among thecustomers. The appellant has stated in so many words about the investmentand the amount spent by him for sales promotion. Considering the primafacie evidence produced by the appellant and the balance of convenience,we are convinced that the appellant is entitled for an order of injunctionpending disposal of the suit. https://hcservices.ecourts.gov.in/hcservices/

50. In view of the reasons given above, we are of the considered viewthat the learned Single Judge over looked the relevant documents producedin the matter with regard to the prayer for injunction and as such failedto exercise the discretion in accordance with the principles regulatingthe grant of injunction by way of interlocutory injunction, pendingdisposal of the suit. Therefore a case for our interference is made out inthe matter and as such the appeals deserve to be allowed.51. We are concerned with the interest of both parties during theinterlocutory stage pending disposal of the main suit. Therefore whilegranting the relief of injunction in favour of the appellant as prayed forin their applications for interlocutory injunction, we direct theappellant to deposit a sum of Rs.20 lakhs every year to the credit of thesuit in C.S.No.504 of 2007 and the first of such deposit has to be madeon or before 15.2.2008. If for any reason the suit is pending beyond 2008,the appellant shall deposit at the rate of Rs.20 lakhs on or before 15thFebruary every year and such amount has to be deposited in Fixed Depositin Indian Bank High Court Branch initially for a period of three years.The appellant shall also maintain true and correct accounts of thetransactions in respect of their sale of cakes and such accounts shall beproduced once in three months before the trial court.52. We are also informed that the earlier suits filed by both theparties are now ripe for trial. It is in the interest of both the partiesthat the present suit also to be tagged with the earlier suits and to betried by the learned Single Judge to avoid any conflicting decisions inthe matter. We request the learned single Judge to dispose the suits asexpeditiously as possible and preferably by the end of December, 2008.53. We make it clear that the finding given on facts as above, areonly for the purpose of deciding the issue regarding grant ofinterlocutory injunction and those findings will not come in the way ofthe learned Single Judge to decide the suit along with the two earliersuits on its own merits without in any way being influenced by theobservations made above.54. In the result, all the appeals are allowed by setting aside theorder dated 7.9.2007 of the learned Single Judge and consequentlyO.A.Nos.708 to 710 of 2007 in C.S.No.504 of 2007 are allowed as prayed forsubject to the above observations. No costs.Tr/Sd/-Asst.Registrar/true copy/ Sub Asst.Registrar https://hcservices.ecourts.gov.in/hcservices/ To,1. The Sub Assistant Registrar, Original Side, High Court, Madras.2. The Section Officer, Accounts Section, High Court, Madras.+1 cc to Mr.P.H.Arvind Pandian, Advocate Sr.No.75889.+2 ccs to Mr.A.A.Mohan,Advocate Sr.No.76034.VC(CO)dcp/3.1 O.S.A.Nos.266 to 268 of 2007