TaxTMI 
TaxTMI 
1991 (10) TMI 321
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....s: (a) a decree of declaration be passed in favour of the plaintiffs and against the Defendants declaring that the Defendants are not entitled to use the aforesaid Foreign Brand name and/or endorsement of "W.D. & H. O. Wills and/or "wills" on the cigarettes packets and cartons manufactured sold and advertised by the Defendant No. 2 through Defendant No. 1 and/or their other Dealers, Agents etc. (b) a perpetual injunction be issued restraining the defendants their employees, servants, agents and dealers and/or assigns from producing and/or manufacturing and/or marketing and/or advertising and dealing with the cigarettes packets and cartons having an endorsement and/or brand name of "W.D. & H.O. Wills" and/or "Wills". The allegations made in the plaint for claiming these reliefs may be summarised as under: (i) The plaintiffs are the residents of Sikkim and are smokers or users of cigarettes and have knowledge and experience of various brands of cigarettes, their brand names and quality and have filed the suit as members of the public to prevent the defendants" wrongful action constituting unfair trade practice affecting a large section o....
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....se British companies. Alternatively, the endorsement made on the wills cigarette packings manufactured by ITC suggests and creates an impression upon the minds of the consumers that all the brands of wills cigarettes manufactured and sold by it are products, being sold in collaboration or association with the aforesaid foreign companies; (vi) There is a widely prevalent affinity and a desire in the general consumers in India to go for goods of foreign make or made with foreign association and as such by using the aforesaid endorsement, the members of the public such as the plaintiffs get misled, deceived and buy the products of ITC under the impression that these are the goods of foreign origin and/Or manufactured and sold in collaboration with the foreign manufacturers; (vii) The quality of the Wills brand cigarettes manufactured and sold by the defendants is not similar or comparable to the quality of the cigarettes manufactured by "W. D. and H. O. Wilts"; (viii) The activities of ITC in manufacturing, selling and advertising its products under cover of the foreign brand name is misleading, deceptive and amounts to fraud and misrepresentation with intention to dec....
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....of Civil Procedure, alleging therein that the averments made in the body of the plaint and the reliefs claimed by the plaintiffs do not disclose any cause of action and only an illusion of a cause of action has been created by making fake and untrue statements, and further that the suit is barred by law and is not maintainable. It is also stated that the Head Office of ITC is situated at 37, Chowringhee, Calcutta and it has no office establishment or representatives and does not carry on business within the State of Sikkim and the goods manufactured by it at various factories and establishments are purchased by Druk Investment Company, defendant No. 1, on a principal to principal basis, and thereafter distributed in the State of Sikkim pursuant to certain orders of the Government of Sikkim. 4. On 25-3-1991, the learned Trial Court framed the following two issues : 1. Whether the plaint discloses any cause of action, if not, whether the same is liable to be rejected? 2. Whether this Court has no jurisdiction to try and entertain the said suit, as alleged by the defendant No. 2? On that date, the learned counsel for ITC pressed for taking up the application under Order VII rule 1....
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....trict Judge had proceeded, had vitiated the injunction order from which the Misc. Appeals had arisen. It is on record that the Learned District Judge had ordered on 25-3-1991 that the two issues framed by him on that date which included the issue as to territorial jurisdiction would be heard and decided first, and, yet he proceeded to dispose of the application for injunction without deciding that issue. At no time, he had recalled that order. According to Mr. Desai, this affected the validity of the order. Affidavits and counter-affidavits were filed in this regard. Dr. Ghosh opposed Mr. Desai and pressed that the matter should be heard in continuation. However, after arguments were concluded in the Revision, I came to the conclusion that the impugned order could not be sustained. Accordingly,. I pronounced the order allowing the Revision with reasons to follow. That order is reproduced at the end of the judgment. I now proceed to record my reasons for the order. 6. Mr. Desai has urged the following points in support of the Revision: (a) The plaintiffs have not made necessary averments in the plaint to disclose cause of action on any of the various counts on which reliefs are c....
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....ties have produced oral and documentary evidence, the Court, on consideration of the entire material on record, comes to the conclusion that there was no cause of action for the suit. In the latter case, obviously the plaint cannot be rejected under Order VII, Rule 11, C.P.C. The question whether the plaint does not disclose cause of action, has to be determined from the pleadings of the plaintiff alone. If the plaint is vague, the Court should clear, the vagueness by examining the plaintiff under Order X, Rule 2, C.P.C. As pointed out by the Privy Council in Mohammad Khalil Khan v. Mahbub Ali Mian, AIR 1949 PC 78, the phrase "cause of action" has not been defined in any enactment, but the meaning of it has been judicially considered in various decisions. 'Cause of action' means the whole bundle of material facts which are necessary for the plaintiff to prove, if traversed, in order to support his right to the judgment of the court. Therefore, where the defendant claims that the plaint does not disclose cause of action, it is necessary for the court to scrutinise the plaint in order to find whether the plaintiff has averred all the necessary allegations which, if ....
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....ould lie only in the civil Court and not in the revenue Court" and held that the civil Court had the jurisdiction. It is in the light of this legal position that the plaint has to be scrutinised to find whether the plaintiffs have pleaded all the material allegations which it was necessary for them to prove, if traversed, in order to entitle them to any of the reliefs claimed. 10. One of the causes of action on which the plaintiffs claim relief is deceit. As per Halsbury's Laws of England, fourth edition (volume 31), an action of deceit is maintainable at the suit of the representee for damages in respect of fraudulent misrepresentation and is founded in tort. In such an action, the burden is on the representee of alleging and proving the following matters: (1) that the alleged representation consisted of something said, written or done which amounts in law to a representation; (2) that the defendant was the representator; (3) that the plaintiff was the representee; (4) that the representation was false; (5) inducement and materiality; (6) alteration of position; (7) fraud; and (8) damage. The only damage which the law recognises is actual and temporal injury, t....
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....n damages, on the ground that there was no proof that the error was fraudulent." This authority emphasises that no action will lie for a false statement unless the plaintiff did in fact rely and act upon it. 12. Thus, in an action of deceit, the plaintiff must allege the following facts: 1. The defendant made a false representation; 2. The defendant made it fraudulently, that is, knowing it to be false or not knowing it to be true; 3. The defendant made it with the intent that the plaintiff should act on it; 4. The plaintiff acted on it; and 5. The plaintiff by acting on it, sustained damage. Misrepresentation and fraud are the two essential ingredients of an action of deceit. Order VI, Rule 4 of the Code of Civil Procedure says that in all cases in which the party pleading relies on any misrepresentation, fraud, breach of trust, wilful default, or undue influence, and in all other cases in which particulars may be necessary, particulars (with dates and items if necessary) shall be stated in the pleading. In the House of Lords' decision in Dow Hager Lawrance v. Lord Norreys, (1890) 15 App Cas 210, Lord Watson referred to the observations of Earl Selborne in Wallingf....
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....and blatantly misleading the general, public by creating a false impression that the cigarettes manufactured and sold by it are either of foreign make or are manufactured and sold in collaboration with the foreign companies. No particulars about advertising campaign have been given to indicate how the misrepresentation has been made and how it is fraudulent. Misrepresentation and fraud are alleged by the use by ITC of the aforesaid brand name on the packets of the cigarettes manufactured by it in the circumstances "mentioned above. Even about the effect of the alleged misrepresentation on the minds of the public, the plaintiffs are not precise, as instead of being categorical, they have alleged that the impression created is either that they are of foreign make or that they are manufactured and sold in collaboration with the foreign companies. The plaintiffs have annexed a photostat copy of some of the packets of cigarettes manufactured by ITC as annexure "II". A bare perusal of the packets shows that they do not carry any misrepresentation of the kind alleged by. them. Each of the packets contains an endorsement "MADE IN INDIA" and either a legend "A ....
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....cted on the representation and while so acting must have suffered harm in consequence. A mere attempt to deceive is not actionable. In the present case, the plaintiffs have not claimed any damages for any damage having been suffered by them. They profess to have filed the suit in order to prevent ITC from practising deceit in the name of public interest. It is clear that the plaintiffs are aware at least now of the true factual position that the product of ITC bearing the aforesaid brand name is neither of foreign origin nor is being manufactured with any foreign collaboration. The same must also be true about those for whose alleged benefit, they have brought the suit, for the alleged beneficiaries cannot, obviously, be presumed to be in dark. That is apart from the fact that no suit in the nature of public interest litigation, except as provided for specifically in Section 91 and Order 1, Rule 8, CPC, if the procedure prescribed there can be said in any sense, to provide for litigation of that kind is permissible. Where the allegations made in the plaint do not constitute cause of action, the mere allegation that they have purported to bring the suit in public interest, does not ....
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....en in equity, and now it is generally accepted that it is not necessary in an action for passing off to prove an intent to deceive." In the High Court of Justice-Chancery Division case in Derek McCulloch v. Lewis A. May (Produce Distributors) Ltd. (Vol. LXV) 42 R.P.C. 58, observation was made at page 64 - It is of the essence of an action for passing off to show, first, that there has been an invasion by the defendant of a proprietary right of the plaintiff, in respect of which the plaintiff is entitled to protection, and, secondly, that such invasion has resulted in damage or that it creates a real and tangible risk that damage will ensue. Again in Erven Warnink B. V. v. J. Townend & Sons (Hull) Ltd., 1980 RPC 31 : (1979 (2) All ER 927), which was the House of Lord's decision, Lord Diplock identified at page 93, five characteristics which must be present in order to create a valid cause of action for passing off (at pp. 932-33 of All ER): 1) a misrepresentation, (2) made by a trader in the course of trade, (3) to prospective customers of his or ultimate consumers of goods or services supplied by him, (4) which is calculated to injure the business or goodwill of anoth....
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....nd this right has been violated by ITC by the use of the mark which is likely to deceive or confuse the public that the products bearing the mark are the products of the foreign companies that own the mark. In this connection, he has referred to S. 11(1) of the Trade & Merchandise Marks Act, 1958, which prohibits the registration as trade mark of a mark the use of which would be likely to deceive or cause confusion. Reference is also been made to Section 12(1) of the same Act which says that save as provided in sub-section (3), no trade mark shall be registered in respect of any goods or description of goods which is identical with or deceptively similar to a trade mark which is already registered in the name of a different proprietor in respect of the same goods or description of goods. Reference is also made to the commentary of Dr. Venkateswaran in support of his contention where it is stated that Section 11 exists not merely for the benefit of other traders but for the benefit of the public at large. The interests of the public are of greater importance than the relative rights of the parties with the result" that although the opponent might be estopped by his conduct from....
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....ose contemplated therein has to be served in the manner prescribed for the enforcement of the provisions of the Act. They do not seek to create any right in a general sense. Confusion or likelihood of confusion does not by itself constitute a cause of action for a suit for declaration or injunction. If it were otherwise, the tort or deceit would be otiose, for, no one would like to prefer a cause calling for a higher burden of proof and promising an inferior remedy. Confusion is not a tort unless it amounts to deceit. It is one of the several ingredients for a 'passing off action. When the relief of declaration or injunction is not available to a plaintiff on a cause of action of deceit, it would be wholly irrational to say that such a relief would be available on the allegation of confusion or likelihood of confusion, which may be occasioned even without the presence of the element of fraud, even of misrepresentation which must be present in deceit. If a plaintiff is confused without a misrepresentation by the defendant, it is a sign of plaintiffs weakness and there is no reason why the defendant should suffer for the weakness of the plaintiff. However, the matter is different....
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....he Broadcasting Authority owed to the general public, regarding which no remedy had been provided. The corresponding right created was the right created in favour of the general public. The other case is Attorney-General v. Shrewsbury (Kingsland) Bridge Company decided by the Chancery Division on June 17, (1882) 21 Ch D 752. In that case, the defendant company had without any power (for their powers had come to an end) thought fit to do certain acts which undoubtedly tended in their nature to interfere with public rights, and so tended to injure the public. The question was whether, under such circumstances, the Attorney-General was justified in interfering, though there was no evidence of actual injury to the public. Fry, J. held that he was entitled to do so. The other case is the decision of the Queen's Bench Division in the Attorney-General on the Relation of the Warwickshire County Council v. The London and North Western Railway Company decided in November 10, 1898, 1 QB 72. In that case, the railway-company, under a particular statute, had the power to cross a level crossing at a speed not greater than four miles an hour, but they constantly drove their trains at a speed ....
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...., or annoyance to persons who may have occasion to use any public right. Undoubtedly, injury, damage or annoyance contemplated in S. 268 does not comprehend the injury, damage or annoyance which may result from smoking, smoking being regarded as injurious to health. Even though smoking is injurious, neither its manufacture, nor its sale, nor its advertisement, nor its consumption is prohibited. Therefore, the use of the mark which results in an increase in the sale of cigarettes does not give a cause of action for an action of public nuisance. Nor does that act amounts to any other wrongful act. It will be profitable to bear in mind that Section 91 does not create any new legal right. It only provides for the procedure in cases of public nuisances and other wrongful acts affecting the public, where no special damage has been caused to such persons by reason of such public nuisance or other wrongful act. There are many forms of harm of which the law takes no account. Damage so done and suffered is called damnum sine injuria. Undoubtedly, such a harm is not comprehended within the expression, 'other wrongful act' affecting the public, occurring in Section 91. Thus the allegat....
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....delines are such as an entrepreneur is required to take note of in negotiating proposals for foreign collaboration so as to ensure that such proposals conform to the policy of the government, and one of the guidelines is that the "use of foreign brand names will not be permitted for internal sales." There is no dispute that the guidelines were published much after ITC started using the aforesaid brand name. Furthermore, the guidelines do not create any legal right or legal obligations. As such the allegations regarding guidelines also do not constitute any cause of action. 25. During arguments, reference was made to the Supreme Court decisions in Fertiliser Corporation Kamagar Union v. Union of India, AIR 1981 SC 344, S. P. Gupta v. President of India, AIR 1982 SC 149 D. S. Nakara v. Union of India, AIR 1983 SC 130 and Bandhua Mukti Morcha v. Union of India, AIR 1984 SC 802 on the question whether the plaintiffs have the locus standi to bring the suit as public interest litigation. Since the plaint does not disclose any cause of action, the question as to the locus standi of the plaintiffs to bring the suit does not survive. As observed in S. P. Gupta v. President of Ind....
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.... is satisfactorily reached, only if it be supported by the most cogent reasons that suggest themselves to the Judge; a mere order deciding the matter in dispute not supported by reasons is not judgment at all. Recording of reasons in support of a decision of a disputed claim serves more purposes than one, It is intended to ensure that the decision is not the result of whim or fancy, but of a judicial approach to the matter in contest : it is also intended to ensure adjudication of the matter according to law and the procedure established by law. A party to the dispute is ordinarily entitled to know the grounds on which the Court has decided against him, and more so, when the judgment is subject to appeal" or revision. The appellate or a revision Court "will then have adequate material on which it may determine whether the facts are properly ascertained, the law has been correctly applied and the resultant decision is just". 29. Mr. Desai went through substantially the whole of the impugned judgment making comments to make his point. After a careful consideration of the entire matter, I find myself with no choice except to agree with him. The learned District Judge h....
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....1, C.P.C. taking care to see that the ground mentioned therein is fulfilled After referring to the head note, he commented that the authority was on entirely different set of facts in which repeated suits had been filed by the petitioner only to prevent the execution of a decree of ejectment. This comment amounts to no reason for not following the law clarified by the Supreme Court, which was undoubtedly binding on him that, if the plaint does not disclose a clear right to sue, the Trial Court should exercise its power of rejecting the plaint under Order VII rule 11, CPC. Law is clear even on a reading of the bare provision. The fact that the decision had been rendered in a case where repeated suits had been filed to prevent the execution of a decree of ejectment does not in any manner make inapplicable to the present case the legal principle that the Court has to reject the plaint under Order VII rule 11, CPC, where the plaint does not disclose any cause of action. 30. Paragraph 20 of the judgment runs as under: 20. In the instant case the plaintiffs case has been that the defendants' have been selling their products with the trade mark which is identical with the registere....
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....ed and as such the contention of the defendant No. 2 to say that the plaint does not disclose any cause of action is not sustainable. Thus, after referring to the various submissions made by the learned counsel, the learned 'District Judge said that on a meaningful reading of the plaint he was of the view that there was a serious question to be tried and as such the contention of ITC that the plaint does not disclose any cause of action is not sustainable. Instead of saying how the plaint discloses cause of action, it has been said that, the contention that the plaint does not disclose cause of action is not sustainable. It was essential to specify with precision how the plaint disclosed cause of action, if the contention of ITC, was not found sustainable but this was not done, and instead, it was said that there was a serious question to be tried. Even that serious question was not specified. That might mean the plaintiffs allegation that they were confused and deceived. For deciding an application under Order VII, Rule 11, it is not necessary to decide whether the question is serious or not. It is enough, if there is a question which calls for decision. That would be so, if ....
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....extent and why. This is so even when the plea was not taken in the plaint. In paragraph 18 of the judgment, the learned District Judge has again mentioned that the allegations made in the plaint are of serious nature and the learned counsel for the plaintiffs had urged that the suit had been filed in the nature of public interest litigation to stop the perpetuation of fraud and misrepresentation committed by the defendants and said, "To accept the contention of the defendant No. 2 that since the plaintiffs did not claim any damage in terms of money the suit in its present form cannot be sustained, as correct, it would lead to an absurd situation. If the plaintiffs could show during the trial that their allegations are well founded or substantiated by sufficient materials the Court cannot remain a silent spectator because the Courts always got to have the interest of the public in mind while deciding such a serious conflict between the parties. It is highly undesirable that in the wake of such serious allegations the public should be put in a position where they are likely to be deceived or confused". Thus the learned District Judge was prolific in irrelevancies and avoide....
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.... further orders that might be made by the trial Court. On 6-2-1991, the learned Additional District Judge disposed of the application under Order 39, Rule 4 and vacated the ex parte injunction order passed by the District Judge on 21-1-1991. In paragraph 17 of the impugned judgment, the learned District Judge has stated that in the Special Leave Petition, ITC had challenged the grant of the ad interim injunction order on the grounds that the injunction order was without jurisdiction, that the plaint did not disclose cause of action and that the application under Order 39, Rules I and 2 CPC did not disclose any ground for any ex parte injunction and the fact that even then the Hon'ble Supreme Court, after hearing the learned counsel for both the parties, had been pleased only to modify the injunction order permitting the production and manufacture and limiting the injunction to marketing only subject to further orders that might be made by the trial Court, showed that the Hon'ble Supreme Court was not convinced with the grounds as stated above by ITC. The learned District Judge has further stated that if the Hon'ble Supreme Court was convinced that the impugned order had....
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....issue: whether the plaint discloses all the material allegations necessary to constitute a cause of action. The judgment is not based on consideration of the allegations made in the plaint in the light of the relevant law. Arguments advanced on behalf of the parties have also not been considered. There are no intelligible reasons to support the judgment and the judgment is not a judgment in the eye of law. 33. Thus, the learned District Judge has acted in the exercise of his jurisdiction illegally. For this reason, and also because on a consideration of the facts and the relevant law, I have come to the conclusion that the plaint does not disclose any cause of action, and so is liable to be rejected. 34. As regards costs, the general rule is that the costs should follow the event. The object of awarding costs is to indemnify a party against the expense of successfully vindicating his rights in Court. The quantum of costs that the Court awards has relation to the valuation of the suit. In the present case, the plaintiffs and ITC secured the services of more than one lawyer from outside, besides local counsel. Expenses in terms of fees, transport, boarding and lodging must be so en....