In APPEAL FROM ORDER (STAMP) NO.3938 OF 2020 -BOM HC-Trade Marks Act does not provide for any ‘oral assignment’: Bombay High Court Justice A.S. Gadkari [06-06-2022]

Read Order: CHITALI BOTTLING LIMITED VS. BRIHAN KARAN SUGAR SYNDICATE PRIVATE LIMITED AND ORS.

Mansimran Kaur

Mumbai, June 7, 2022: While dismissing an appeal under Order 43 Rule 1 of the Code of Civil Procedure, 1908 assailing the impugned order passed by the Civil Judge whereby the application filed under Order 39 Rule 1 and Rule 2 by the appellant for temporary injunction was rejected, the Bombay High Court has observed that in the presence of written license agreement, there cannot be any oral license even as per the general law. 

Observing that the plea of Appellant of ‘Oral License’ was a sham plea adopted as an afterthought and referring to the Trade Marks Act, the Bench of Justice A.S. Gadkari affirmed, “Section 25 of the said Act mentions that, the registration of a trade mark, after the commencement of the said Act, shall be for a period of ten years, but may be renewed from time to time in accordance with the provisions of the said Section. The Trade Marks Act does not provide for any ‘oral assignment’ and therefore, there cannot be any perpetual license or assignment/vesting of the said trade marks with the Appellant.”

In this case, the appellant (original plaintiff) instituted a suit for declaration that the appellant’s company had the right to manufacture, supply and sell the three liquor products namely Sakhu Santra Tango Premium, Tango Punch and Tango Punch Santra. It was the case of the appellant that it was involved in the business of liquor in Maharashtra since 2010. It was further stated that the first respondent, who was the owner, manufacturer and promoter of those three liquor products, approached the appellant and an oral agreement termed as share purchase agreement was executed through which 33.4% shares of the appellant’s company were sold in the favor of the second respondent. 

Subsequently, in 2014, the Commissioner and the State Excise Department granted approval to the Country Liquor label marks along with maximum label price for those three liquor products, in the name of appellant’s  company and a License Agreement was executed on December 6, 2014. The appellant however, alleged that the respondents were withdrawing huge sums of money from the appellant’s company for one or other thing. 

The cause of dispute arose when the respondents asked for increasing share in profit and the same was resisted by the appellant on the ground that the respondents had already withdrawn about 78.33 % of total profits in the last 5 years. However, the respondents opposed the same by sending a letter stating that the license agreement dated December 6, 2014 stood expired and the appellant shall not manufacture the said three products. Hence, the appellant filed an application for temporary injunction.  The Trial Court through its impugned order rejected the application filed by the appellant. Hence, the present appeal. 

The High Court noted that in the Share Purchase Agreement there was no clause or covenant in the entire agreement permitting the appellant to use the said three thread marks and copyrights of the said three labels which were admittedly owned by the respondents. It was also noted that the document which gave the right to the appellant to use the said three trademarks and labels owned by the respondents was the License Agreement. Considering the fact that the Appellant had claimed perpetual right to manufacture and use the trade marks and labels in question, upon a ‘verbal assignment’, the Court noted that no case for ‘oral license’ was pleaded in the plaint earlier and it was for the first time the case of ‘oral license’ was pleaded orally before this Court only to overcome the disability in the pleadings in the plaint before the Trial Court, in defence to the Suit filed by the Respondents and to defeat the arguments of Respondents herein and none else.

Additionally, the Court noted that the License Agreement specifically provided for termination of the non-exclusive license at the behest of Respondents without assigning any reasons thereof. However, according to the Bench,  the perusal of pleadings clearly indicated that the respondents gave a valid but genuine reason of production of inferior quality of goods by the appellant, for termination of said Agreement. Thus, the said agreement was a determinable contract and therefore Section 14(d) of the Specific Relief Act was  squarely applicable. Reliance was also placed on the judgments of the Supreme Court in Tamil Nadu Electricity Board & Anr. Vs. N. Raju Reddiar & Anr,  Mumbai International Airport Private Limited Vs. Golden Chariot Airport & Anr and  Dwijendra Narain Roy v. Joges Chandra Dey .

Coming back to the facts of the present case, the Court held that conduct of the appellant in view of its inconsistent pleas before the Trial Court and before this Court was far from satisfactory and the said pleas were inconsistent, contrary to each other and to the detriment of its opponent, the Court noted.  In light of the aforesaid observations, the appeal was dismissed on account of being meritless.