Konar Publications v. M/s.Madras Palaniappa Bros.

IN THE HIGH COURT OF JUDICATURE AT MADRAS DATE : 11.01.2008CORAMTHE HONOURABLE MR. JUSTICE S.J.MUKHOPADHAYAANDTHE HONOURABLE MR. JUSTICE F.M.IBRAHIM KALIFULLAO.S.A. NOS. 402 TO 406 OF 2001 Konar Publications21, East Pattamar StreetMadurai 625 001... Appellant in all the appeals- Vs -1. M/s.Madras Palaniappa Bros. 14, Peters Road, Royapettah Chennai 600 014.2. M/s.Asian Printers 14, Peters Road, Royapettah Chennai 600 014... Respondents in OSA 402/011. M/s.Palaniappa Bros. 14, Peters Road, Royapettah Chennai 600 014.2. M/s.Asian Printers 14, Peters Road, Royapettah Chennai 600 014... Respondents in OSA 403/011. M/s. Karthikeyan & Co. 14, Peters Road, Royapettah Chennai 600 014.2. M/s.Asian Printers 14, Peters Road, Royapettah Chennai 600 014... Respondents in OSA 404/011. M/s.Madras Karthikeyan & Co. 14, Peters Road, Royapettah Chennai 600 014.2. M/s.Asian Printers 14, Peters Road, Royapettah Chennai 600 014... Respondents in OSA 405/01 https://hcservices.ecourts.gov.in/hcservices/

1. S.M.Palaniappa Chettiar (Decd.)2. M/s.Palaniappa Bros. 14, Peters Road, Royapettah Chennai 600 014, rep. by its Partner, S.M.Palaniappa Chettiar3. Ess. Orr Stationery 234, Arcot Road Vadapalani Chennai 600 025.4. P.L.Gandhi5. P.L.Muthu6. V.E.Kannamma7. AL.Solai8. P.Chellappan.. Respondents in OSA 406/01 (RR4-8 impleaded as LRs of deceased R-1 vide order of court dt. 18.10.05, made in CMP No.16559/05)Appeals filed against the order dated 11.04.2000, passedby learned single Judge in C.S. Nos. 284 to 287 and 311 of1997 as stated therein.For Appellants : Mr. Arvind P.Datar, SC, for M/s.P.AnnalFor Respondents : Mr. Sathish ParasaranCOMMON JUDGMENTS.J.MUKHOPADHAYA, J.In these appeals, as common question of law involved andpreferred against common judgment, they were heard togetherand disposed of by this common judgment.2. Before deciding individual claim and counter claim,including the pleading as was set forth in different plaints,it is desirable to note certain undisputed facts, as shownhereunder :-S.M.Palaniappa Chettiar, 1st plaintiff in C.S. No.311/97commenced business sometime in 1940's of publishing 'KonarNotes' for school students through M/s.Palaniappa Brothers, 2ndplaintiff in C.S. No.311/97, a family partnership firm,respondent herein. The author of the book was one VidwanAyyan Perumal Konar, a Tamil scholar, assisted by a team ofscholars. The notes seems to have popularly come to be knowNas "Konar Tamil Urai", i.e., Konar Tamil Notes. For thepresent, they are publishing "Konar Tamil Urai" for studentsof classes XI and XII. https://hcservices.ecourts.gov.in/hcservices/ M/s.Karthikeyan & Co., 1st defendant in C.S. No.284/97 wasestablished in 1956 as a registered firm under the IndianPartnership Act. It started publishing school books,including 'Konar Tamil Urai' for III to VIII standards.Konar Publications, plaintiff in C.S. Nos. 284, 285, 286& 287 of 1997, (appellant herein), was established in 1956.It acted as sole selling agent/distributor of 'Konar TamilUrai' for schools in Madurai. Later on, it also startedpublishing 'Konar Tamil Urai' for College students. Itapplied for registration of trade mark "Konar" in 1982, whichwas allowed in the year 1997, followed by renewal of suchregistration.Another M/s.Madras Karthikeyan & Co., a partnership firm(1st defendant in C.S. No.287/97) was opened in 1991, whichstarted publishing school books, including 'Konar Tamil Urai'for the students of IX standard.M/s.Madras Palaniappa Brothers, another partnership firm(1st defendant in C.S. No.286/97), was started in 1992 andstarted publishing school books, including 'Konar Tamil Urai',for students of X standard.3. M/s.Palaniappa Brothers, which was originallyestablished in 1940's and started publication of 'Konar TamilUrai', got it registered with the Registrar of Firms under theIndian Partnership Act in 1975. In the meantime, Vidwan AyyanPerumal Konar having died on 1st Jan., 1969, M/s.PalaniappaBrothers continued to publish the books with the help of othervidwans (scholars).4. The appellant, Konar Publications, commencedpublication of 'Konar Tamil Urai' for school students in May,1997. It instituted four suits, C.S. Nos. 284, 285, 286 and287 of 1997 before the Original Side of this Court, inter aliafor decree of permanent injunction to restrain the defendantsof respective suits – respondents herein, from infringing theappellant's registered trade mark "Konar". Mr. S.M.PalaniappaChettiar and M/s.Palaniappa Brothers, jointly institutedanother suit before the Original Side of this Court in C.S.No.311/97, inter alia seeking a permanent injunctionrestraining the defendant – appellant herein, from infringingor passing off the defendants/appellants publication and forthat of the plaintiff – respondent's publication. By judgmentdated 11th Jan., 2000, learned single Judge dismissed all thesuits preferred by the appellant, M/s.Konar Publication,allowed the suit jointly preferred by Mr. S.M.PalaniappaChettiar and M/s.Palaniappa Brothers and thereby decreed thesuits in favour of the respondents.5. In view of submission made by counsel for theappellant, it is desirable to notice the cause title of https://hcservices.ecourts.gov.in/hcservices/ different suits to find out the status of one or other partyas plaintiff or defendant :-S.No.CaseNo.PlaintiffDefendant1CS284/97M/s.KonarPublications1. M/s.Karthikeyan& Co.14, PetersRoad Royapettah,Chennai – 14.2. Asian Printers14, Peters RoadRoyapettah,Chennai – 14.2CS285/97M/s.KonarPublications1. M/s.PalaniappaBrothers 14,PetersRoad Royapettah,Chennai – 14.2. Asian Printers14, Peters RoadRoyapettah,Chennai – 14.3CS286/97M/s.KonarPublications1.M/s.MadrasPalaniappaBrothers,14,Peters RoadRoyapettah,Chennai – 14.2. Asian Printers14, Peters RoadRoyapettah,Chennai – 14.4CS287/97M/s.KonarPublications1.M/s.MadrasKarthikeyan& Co., 14, PetersRoad Royapettah,Chennai – 14.2. Asian Printers14, Peters RoadRoyapettah,Chennai – 14. https://hcservices.ecourts.gov.in/hcservices/ 5CS311/971.Mr.S.M.PalaniappaChettiar No.2,Rutland GateChennai 600 006.2.M/s.PalaniappaBrothers rep. byits Partner S.M.PalaniappaChettiar No.14,Peters RoadChennai 600 014.1.M/s.KonarPublications21, East PattamarStreet Madurai 625001.2.Ess.Orr.StationaryStationers & BookSellers234, Arcot RoadVadapalani,Chennai – 26.From the aforesaid cause title it will be evident thatthough the name of many of the partnership firms are differentand printer in many of the cases are common, address of allthe defendants in C.S. Nos.284 to 287 of 1997 are same, i.e.,No.l4, Peters Road, Royapettah, Chennai, which is the addressof the 2nd plaintiff in C.S. No.311/97.6. Mr.Arvind P.Datar, learned senior counsel for theappellant took the following plea, apart from individual pleataken in respect of each of the suits :-a) The suit, C.S. No.311/97 was filed by only one firm,M/s.Palaniappa Brothers along with Mr.s.M.Palaniappa Chettiarfor injunction against defendant firm – appellant herein, inregard to book, which was material object No.1, but the saidmaterial object No.1 is not published by the 2nd plaintiff ofC.S. No.311/97, i.e., M/s.Palaniappa Brothers, but publishedby M/s.Karthikeyan & Co., defendant in C.S. No.284 of1997/respondent herein.b) Though one of the issue, i.e., issue No.2 in C.S.No.311/97 was framed by learned single Judge in this regard,but it has not been answered and merely on the basis ofmaterial object No.1, published by M/s.Karthikeyan & Co., aninjunction order issued at the instance of the plaintiff,M/s.Palaniappa Brothers against defendant firm/appellantherein.c) There is no provision of permissive user under theTrade Marks Act. Therefore, the defendant/respondent,M/s.Madras Karthikeyan & Co., and M/s.Madras PalaniappaBrothers, established in the year 1991 and 1992 respectively,cannot be held to be prior users.d) High Court, in its Original Side, has no jurisdictionto decide the validity of a trade mark, which can be decidedu/s 56 of the Trade Marks and Merchandise Marks Act, 1958. e) The suit, C.S. No.311/97, should have been dismissedby learned Judge because of non-disclosure of identity of restof the firms, namely, M/s.Karthikeyan & Co., M/s.MadrasPalaniappa Brothers and M/s.Madras Karthikeyan & Co., who were https://hcservices.ecourts.gov.in/hcservices/ stated to be permissive users. No pleading was made byplaintiff No.1 in suit C.S. No.311/97 that he gave permissionto others.7. In respect of individual cases, apart from the commonsubmission as recorded above, the following submissions wereadvanced :-a) The respondent/defendant, M/s.Karthikeyan & Co.,having started its business in 1956, M/s.Palaniappa Brothers,2nd plaintiff of C.S. No.311/97 cannot claim to be permissiveuser.b) A stereo-typed written statement was filed in all thethree suits with plea that the three other firms were startedin view of meteoric rise in volumes of business. In thecross-examination the plaintiff stated that the firms werestarted to avoid compulsory tax audit under Income Tax Act,1961.c) The appellant has been registered under clause 16 forbook "Konar Tamil Urai", which is not restricted to schoolbooks or college books. d) The defendant, M/s.Karthikeyan & Co., being neitherpermitted user nor registered user, no injunction at theinstance of M/s.Palaniappa Brothers could be issued withregard to the books M/s.Karthikeyan & Co., which is publishing'Konar Tamil Urai' for the students of III to VIII standards.8. In C.S. No.284/97, allegation of fraud in a writtenstatement was alleged. According to counsel for theappellant, such issue on proper application could bedetermined u/s 56 and in such case, u/s 101, High Court hasto stay the suit to enable rectification proceeding to betaken. Once such issue is raised, the High Court ought nothave proceeded with the trial of the suits, but ought to havereferred the matter for rectification in accordance withSection 56 read with relevant rules. In C.S. No.285/97, the first defendant, M/s.PalaniappaBrothers, having started business in 1956 and as it publishedbooks of XI and XII standards, no relief could have beengranted in favour of M/s.Palaniappa Brothers in respect ofschool books for other standards.9. Mr.Sathish Parasaran, learned counsel appearing onbehalf of respondents in all the appeals, made the followingsubmissions :-i) Mr.Palaniappa Chettiar, 1st plaintiff of C.S. No.311/97is the trade mark holder, registered on 16th May, 1997.M/s.Palaniappa Brothers, 2nd plaintiff of C.S. No.311/97 andfirst defendant of all the rest of the suits, namely,M/s.Karthikeyan & Co., M/s.Madras Karthikeyan & Co. andM/s.Madras Palaniappa Brothers, are permissive users ofMr.Palaniappa Chettiar, limited to the extent of books for oneor other classes of a school. It is an action for deceit https://hcservices.ecourts.gov.in/hcservices/ under common law and not one under the Trade and MerchandiseMarks Act, 1958. Therefore, none of the provisions dealingwith registered trade mark would apply to unregistered trademark, forming the subject matter of the action.ii) Right of an unregistered mark holder to sue for tortfor passing off under common law is preserved by Section 27(2) of the Trade and Merchandise Marks Act, 1958.iii) Under common law, there is no right to propertyunder an unregistered trade mark, but only the businessgoodwill. Therefore, the issue raised by the appellantregarding the ownership of the unregistered trade mark, "KonarTamil Urai" is irrelevant and misleading.iv) A prior registered user has a superior right to alater registered proprietor. Passing off action ismaintainable in law even against a registered owner of thetrade mark.v) The licence in respect of registered as well asunregistered trade mark could be made under common law.Licence to use an unregistered trade mark could be given evenby way of an oral permission.vi) Group of entities using an unregistered trade mark isaccepted proposition and such persons and sister concern wouldconstitute one economic entity.vii) In the case of multiple users sharing goodwill, anyone of them can maintain an action for passing off.viii) According to the counsel for the respondent,appellate court should interfere with the judgment in appeal,not because it is not right, but only if it is shown to bewrong.10. We have heard the learned counsel for the parties,noticed the rival submissions as also the judgments referredto by them.11. It is not in dispute and there is evidence to showthat Palaniappa Chettiar originally started M/s.PalaniappaBrothers as a proprietary concern sometime in 1940's. Itcommenced business of publishing "Konar Notes" as early as1946 when it was not registered and registration was donelater, in between 1960's and 1970's. It was S.M.PalaniappaChettiar, 1st plaintiff in C.S. No.311/97, who was the founderand patron of M/s.Palaniappa Brothers and though he may not bea partner in one or other publishing house, namely, M/s.MadrasPalaniappa Brothers, M/s.Karthikeyan and Co. and M/s.MadrasKarthikeyan & Co., there is evidence on record to show that hepatronaged all those firms and they are even now managed byPalaniappa Chettiar only. Mr.Palaniappa Chettiar has alsogiven reasons for starting four concerns as sister concerns,because of high turn over of his business. P.W.5, PalaniappaChettiar has stated that any firm having a turn over of morethan Rs.40 lakhs must have a statutory auditing and,therefore, when the business turn over exceeded Rs.40 lakhs,he started other sister concerns and that is how on his https://hcservices.ecourts.gov.in/hcservices/ patronage, the other four concerns came into existence. Allof them are sister concerns and are controlled byMr.Palaniappa Chettiar even today and the partners of allthose firms are family members of Palaniappa Chettiar and theyare not strangers.12. From the evidence it appears that even KonarPublications (appellant herein - 1st defendant in C.S.No.311/97) was originally started as a proprietary concern bySrinivasa Konar, brother-in-law of Vidwan Ayyan Perumal Konar.Later on, he took his sons as partners and, subsequently, theyalso got registered. Palaniappa Chettiar also never assignedhis rights in favour of the said firm and, therefore, therewas no question of assignment of trade mark rights byPalaniappa Chettiar in favour of the said concern.13. There may be different firms separately carrying onbusiness, but they may do similar business under the samename, if there is no objection of the prior user. In the caseof George V.Records, SARL – Vs – Kiran Jogani reported in2004 (28) PTC 347 (DEL),, Delhi High Court, while observedthat passing off is an action of deceit where the defendantattempts to pass off his goods as those of plaintiff, and thatin order to succeed, the plaintiff must establish prioradoption and use of the mark and on account of user the markhas acquired a reputation and goodwill and become adistinctive of the plaintiff's goods in the country of origin.It noticed that the plaintiff of the said case and its sisterconcerns constitute one economic entity, which is a well-knowninternational practice for companies trading in multiplejurisdiction to work with affiliated organisations, which havebeen treated as one economic entity for the purpose ofproprietary rights by courts.14. In the present case, as noticed from the evidence,Palaniappa Chettiar was the proprietor of M/s.PalaniappaBrothers was patronising all the firms as referred to above,has allowed those firms to use the trade name "Konar TamilUrai" in their publication as also the trade mark, we are ofthe opinion that M/s.Madras Palaniappa Brothers and M/s.MadrasKarthikeyan & Co., 1st defendant in C.S. Nos.286 and 287 of1997, for all purposes are like sister concerns ofM/s.Palaniappa Brothers.15. M/s.Palaniappa Brothers, which commenced businesssometime in 1940's was publishing 'Konar Tamil Urai' since1946 for school students. It did not stop publishing the saidbook under the trade name 'Konar Tamil Urai' after the deathof Ayyan Perumal Konar in 1969 and continued to publish thesame. At present, they are publishing 'Konar Tamil urai' forstudents of class XI and XII. M/s.Karthikeyan & Co., wasestablished in 1956 as a registered firm and started https://hcservices.ecourts.gov.in/hcservices/ publishing school books, including 'Konar Tamil Urai' for IIIto VIII standard.Konar Publications, appellant herein, was established in1956. It was acting as sole selling agent/distributor ofKonar Tamil Urai for Schools in Madurai. Later on, in 1974,it also started publishing 'Konar Tamil Urai' for collegestudents only, which was not objected by S.M.PalaniappaChettiar or M/s.Palaniappa Brothers. It applied forregistration of trade mark "Konar" in 1982, which was allowedin 1997, and at a much later stage, in 1997, startedpublishing 'Konar Tamil Urai' for schools, which gave rise tothe suit, C.S. No.311/97 preferred by S.M.Palaniappa Chettiarand M/s.Palaniappa Brothers. Thereby, it is clear thatM/s.Palaniappa Brothers and M/s.Karthikeyan & Co. are priorusers vis-a-vis 'Konar Tamil Urai' so far as schools isconcerned.16. We have already held that M/s.Madras Karthikeyan &Co. and M/s.Madras Palaniappa Brothers are sister concerns ofM/s.Palaniappa Brothers. S.M.Palaniappa Chettiar, 1stplaintiff in C.S. No.311/97 was patronising those firms andallowed to use the trade name 'Konar Tamil Urai' in theirpublication for standards IX and X. In this background, whileM/s.Madras Karthikeyan & Co. and M/s.Madras PalaniappaBrothers cannot claim to be prior users in their independentcapacity, but being the sister concern of M/s.PalaniappaBrothers and having permitted by the 1st plaintiff, PalaniappaChettiar for using the trade name of 'Konar Tamil Urai' intheir publication for standards IX and X of the school, theyare also permissive prior users.So far as the appellant, Konar Publications is concerned,it was publishing 'Konar Tamil Urai' for colleges since 1974,but had started such publication for schools only in 1997.For the reason aforesaid, it cannot be said to be prior usersso far as it relates to 'Konar Tamil Urai' for schools isconcerned.17. In the case of Gujarat Bottling Co. Ltd. & Ors. - Vs– Coca Cola Co. & Ors. reported in 1995 (5) SCC 545, theSupreme Court having noticed different provisions of the TradeMarks Act, 1940, now repealed vide Trade and Merchandise MarksAct, held that "the registration as a registered user enablesthe use of trade mark by the registered user as being treatedas used by the proprietor of the trade mark and enables theregistered user to take proceedings in his name to preventinfringement of the trade mark". In the said case, SupremeCourt further held as follows :-"13. Apart from the said provisions relatingto registered users, it is permissible for theregistered proprietor of a trade mark to https://hcservices.ecourts.gov.in/hcservices/ permit a person to use his registered trademark. Such licensing of trade mark isgoverned by common law and is permissibleprovided (i) the licensing does not result incausing confusion or deception among thepublic; (ii) it does not destroy thedistinctiveness of the trade mark, that is tosay, the trade mark, before the public eye,continues to distinguish the goods connectedwith the proprietor of the mark from thoseconnected with others; and (iii) a connectionin the course of trade consistent with thedefinition of trade mark continues to existbetween the goods and the proprietor of themark. (See. P.Narayanan – Law of Trade Marksand Passing-Off, 4th Edn., paragraph 20.16,p.335.) It would thus appear that use of aregistered trade mark can be permitted to aregistered user in accordance with provisionsof the Act and for that purpose the registeredproprietor has to enter into an agreement withthe proposed registered user. The use of thetrade mark can also be permitted dehors theprovisions of the Act by grant of licence bythe registered proprietor to the proposeduser. Such a licence is governed by commonlaw."From the aforesaid finding of the Supreme Court inGujarat Bottling Co. Ltd. (supra), it will be evident :-i) that a registered user can take proceeding in hisknown name to prevent infringement of trade mark;ii) the use of trade mark can also be permitted dehorsthe provisions of the Act by grant of licence by registeredproprietor to the proposed user; andiii) such licence is governed by common law.In view of the aforesaid finding of the Supreme Court, wehold that at the instance of Palaniappa Chettiar, registeredproprietor, the suit C.S. No.311/97 was maintainable againstthe appellant, Konar Publications, on his behalf and on behalfof the 2nd plaintiff, M/s.Palaniappa Brothers and the sisterconcerns to prevent infringement of trade mark. We furtherhold that the said suit is otherwise maintainable under thecommon law.18. Learned Judge has noticed that even though KonarPublications had made the application, Ex.A-26 forregistration and though they may claim that they had beenusing the trade name, 'Konar Tamil Urai', since 1974, theyfailed to show that 'Konar Tamil Urai' for school students waspublished by Konar Publications prior to 1997.In this background, it is not necessary to discuss alarge number of judgments, as referred to by learned Judge in https://hcservices.ecourts.gov.in/hcservices/ the impugned judgment dated 11th April, 2000, to come to adefinite conclusion that Palaniappa Chettiar is entitled touse 'Konar Tamil Urai' as trade name in view of theregistration obtained by them only in respect of books for theschools.19. We find no merits in all these appeals. They are,accordingly, dismissed. Parties will bear their respectivecosts.Sd/Asst.Registrar/true copy/Sub Asst.RegistrarGLNToThe sub Assistant Registrar,Original Side, High Court, Madras.104.Five ccs to M/s.P.Annal, Advocate SR.No.1528Four ccs to Mr.Satish Parasaran, advocate SR.No.1720 O.S.A. NOS.402 TO 406 OF 2001 sky/29/1