TaxTMI 
TaxTMI 
2003 (4) TMI 613
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....issolution. The plaintiff also seeks an injunction restraining the defendants from infringing the registered trade mark "Postman" of the partnership firm, M/s. Ahmed Oomerbhoy (hereinafter referred to as the "partnership firm") by the use of the trade mark "Postiano" and for an injunction restraining the defendants from manufacturing and selling edible oil under the trade mark "Postiano" so as to pass off their goods as the edible oil being sold under the trade mark "Postman". 2. The suit is instituted by the Court Receiver who has been appointed as Receiver of the assets of the partnership firm in Suit No. 4913 of 2000 filed by the defendant No. 2 against the defendant Nos. 3 to 7 for dissolution of the firm. IN that suit, this Court by an order dated 6.10.2000 appointed the Court Receiver as Receiver of the partnership business and assets. By order dated 30.7.2001 this Court recorded the agreement of the parties that the assets of the firm are to be sold by inviting bids as under:- "19. It is also agreed that the partners of the suit firm shall not carry on any business on the basis of the trade marks of the suit firm. The Court Receiver shall however be entitled to t....
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....the registered proprietor of a trade mark exclusive right to the use of the trade mark in relation to the goods in respect of which the trade mark is registered. It also confers on him the right to obtain relief in respect of infringement of the trade mark in the manner provided by the Act. Section 28(1) reads as follows:- "28. Rights conferred by registration.-- (1) Subject to the other provisions of this Act, the registration of a trade mark in Part A or Part B of the register shall, if valid, give to the registered proprietor of the trade mark the exclusive right to the use of the trade mark in relation to the goods in respect of which the trade mark is registered and to obtain relief in respect of infringement of the trade mark in the manner provided by this Act." Clause (q) of Section 2 defines "registered proprietor" as follows:- "(q) "Registered proprietor", in relation to a trade mark, means the persons for the time being entered in the register as proprietor of the trade mark." Clause (b) of Section 2 defines "associated trade marks" as follows: "(b) "associated trade marks" means trade marks deemed to be, or required to be registe....
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.... question. Therefore, though the mark may have been property in the hands of the registered proprietors, it is not property in the hands of the Receiver. She is not a registered proprietor of the mark in question and, therefore, cannot maintain an action for infringement. This submission of the defendant No. 1 cannot be accepted as long as it cannot be disputed that the trade mark is a property. There is no doubt that the trade marks in question have all the characteristics of trade marks. They stand registered in the name of the partnership firm. the registration is valid and subsisting. It is not possible to hold that the property in them has in any way diminished because the firm has stopped manufacturing upon dissolution. A mere cessation of manufacture cannot result in the destruction or even diminishing the property in the mark where the registration of the mark subsists. The mark and the property in its must be taken to exist. Therefore, even if the Receiver has no connection in the course of trade with the goods it can be said that there is no property in the marks. The question is whether a Receiver can bring such a suit as the present one? A Receiver is appointed by this ....
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....ent of the trade mark in the manner provided by the Trade and Merchandise Marks Act, 1958. Indeed this must be so. Otherwise, the Receiver would be incapacitated and would not be able to exercise the powers specifically conferred upon him by Order 40 i.e. to bring and defend suits for protection, preservation and improvement of the property which the owner imposes. 7. Therefore, even if it is true that it is essential for the existence of the trade mark that there should be some connection between the registered owner and the mark and that the connection is essential, it does not follow that the Receiver cannot bring the suit for protection of the trade mark in the absence of the such a personal connection with the trade mark because the property in the registered trade mark subsists. In law and for all practical purposes, the Receiver stands in the shoes of the owner and must be held entitled to do all such acts necessary for the preservation and protection of the property, including trade marks, for which he is appointed a Receiver. 8. It is also not possible to accept the contention that apart from the owner only a person in whom the property vests by operation of law can ....
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.... by the Custodian. This case does not help the defendant No. 1. It was found there that in pursuance of Section 3 of the Take-over Act, only the management of a textile undertaking vested in the Custodian appointed under the Act. The ownership of the trade mark remained with the company i.e. Finlay Mills Ltd. which continued to be the registered owners of the trade mark. The Act did not divest the company of any right as registered proprietor of the mark. Obviously, this case cannot support the contention that the Receiver cannot institute this suit. The Receiver stands in the shoes of the registered proprietor and the ownership does not rest in any one else. 10. Mr. Kadam, learned counsel for the defendant No. 2, relied upon the decisions in Kurapati Venkata mallayya v. Thondepu Ramaswami: AIR 1964 SC 818, Koppathodi Moidin Kutty v. A.K. Doraiswami Aiyar: AIR 1952 Mad 51 :Chaturbhuj Durgadas Factory v. Damodar Jamnadas Zawar: A.I.R. 1960 Bom. 424: and William Robert Fink v. Mohanraj Bahadur Singh ILR(1998) 25 Cal. 642, in support of the proposition that a Receiver can certainly maintain a suit in respect of the property. In Kurapati Venkata Mallayya's case (supra), the Supr....
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....f all concerned, he is the representative of the Court, and of all parties interested in the litigation, wherein he is appointed. He is the right arm of the Court in exercising the jurisdiction invoked in such cases for administering the property: the Court can only administer through a receiver. For this reason, all suits to collect or obtain possession of the property must be prosecuted by the receiver, and the proceeds received and controlled by him alone. If the suit has to be nominally prosecuted in the name of the true owners of the property, it is an inconvenient as well as useless form inconvenient, because in many cases, the title of the owners may be the subject- matter of the limitation in which the receiver has been appointed- useless, because the true owners have no discretion as to the institution of the suit, no control over its management, and no right to the possession of the proceeds." (pp. 316-317). Later the learned Judges pointed out, that for the time being and for the purpose of administration of the assets the real party interested in the litigation is the Receiver and, therefore, there is no reason why the suit could not be instituted in his own name. Th....
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....: A.I.R. 1960 Bom 424, a Division Bench of this Court observed as follows:- "In respect, therefore, of a Receiver appointed in a suit for dissolution of partnership with powers invested in him under Order 40 Rule 1(d), the word "owner" in that clause will refer to the partnership itself and not only to a partner. And the Receiver so appointed by the Court will have all the powers of the partnership itself, subject to the superintendence of the Court." It is clear that in the present case, the Receiver has the power of the partnership in respect of the property of which he has been appointed as Receiver. Having found that the suit by the Receiver is competent and tenable, it is not necessary to consider the contention raised by the learned counsel for the plaintiff and the defendant No. 2 that the defendant No. 1 was a party to the orders of this Court wherein this Court directed the Receiver to file the suit and, therefore, cannot object to the maintainability of this suit. 12. The next important question that arises is whether the plaintiff can seek an injunction against passing-off by the defendant No. 1 in view of the admitted fact that the partnership firm has la....
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....ong reasons for preferring the latter view." Romer L.J. in Samuelson v. Producers" Distributing Co. Ltd. (1931) All E.R. 74 observed:- "In passing-off cases, however, the true basis of the action is that the passing- off by the defendant of his goods as the goods of the plaintiff injures the right of property in the plaintiff, that right of property being his right to the goodwill of his business." Therefore, the important question is whether there is any subsisting goodwill in the business capable of being injured by passing off, Mr. Kane, the learned counsel for the plaintiff, submitted that the cessation of manufacture and sale of s=edible oil by the partnership firm is only due to the dissolution and the order dated 6.12.2000 in the suit by which the Court Receiver has been appointed as Receiver of the business and assets of the partnership firm. By an order dated 30.7.2002 the Court Receiver has been appointed as Receiver of all assets of the erstwhile firm. The cessation of business of the partnership firm is because of the dissolution of the firm. As regards the stage of the dissolution of the Firm, there is no dispute about the fact that the assets have been ....
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....ss similar to that of the firm within a specified period or within specified local limits, and, notwithstanding anything contained in Section 27 of the Indian Contract Act, 1872 such agreement shall be valid if the restrictions are reasonable." It is, therefore, clear from the above provisions, it is clear that the goodwill of a firm and the dissolution does not disappear upon dissolution, but survives and can be sold for the benefit of the partners. This is a settled position in law. Lindley on the Law of Partnership. Fifteen Edition, puts it thus:- "Assuming that the goodwill to be an asset of the firm, then the following consequences ensue: (1) If the firm is dissolved, and there is no agreement, either express or implied, to the contrary, the goodwill must be sold for the benefit of all the partners, if any of them insist on such sale: (2) So far as it possible, having regard to the right of ever partner to carry on business himself, the court will, on dissolution, interfere to protect and preserve the goodwill until it can be sold; (3) If a partner has himself obtained the benefit of the goodwill, he can be compelled to account for its va....
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...., had no goods in the market. He relied on what an English Court in Pink v. J.A. Sharwood & Co. Ltd., reported in Vol. 30 The Illustrated Official journal (Patents) p. 725 stated viz: "the outstanding fact is tat there are no goods of the Plaintiff for which the goods of the Defendants can be mistaken, and there were none when the action was launched." According to the learned counsel, this fact is sufficient to dispose of what has been referred to as the passing-off of this action. The learned counsel for the Defendant No. 2 relied on the statement of the plaintiff in the plaint:- "......the business of the said partnership has been closed down and hence the products of the said partnership firm are no longer readily available in the market, for a side by side comparison." Relying on statement coupled with the fact that there is no statement in the plaint tat the partnership firm is going to resume business, it was contended that the plaintiff is disentitled for an injunction since there is no chance of the defendants passing-off their goods as those of the plaintiff which are non-existent. In support of this proposition, he relied on the decision of the English Court ....
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....ts. Therefore, according to the learned counsel, along with the business ceased, goodwill has also ceased with possibility of there being no resumption of business and, therefore, there can be no injunction for passing-off. It is not possible to accept this submission. Where the business is ceased on account of dissolution of the firm as is obvious from the provisions of the Indian Partnership Act, 1932, cessation of the business does not result in extinction of the goodwill. On the other hand, the law entitles a partner of a dissolved firm to seek an injunction restraining any other partner from carrying on a similar business in the firm until the affairs of the firm has been completely wound up, provided, however, that such an injunction cannot be sought against a partner who has got the goodwill of the firm vide Section 53. Section 55 of the Partnership Act reproduced earlier, in fact, provides that in settling the accounts of a firm after dissolution, the goodwill shall, subject to the contract between the partners, be included in the assets, and it may be sold either separately or along with other property of the firm. What must be inferred from the above is that even after th....
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....ed by Scrutton L.J. are still around when a firm is dissolved. Till its assets are distributed, particularly in a case as the present one where the trade marks have been successfully used for over half a century, it must be held that the goodwill survives upon dissolution. In any case, the Partnership Act deems the existence of the goodwill even after dissolution of the firm. Though it was suggested by Dr. Tulzapurkar, learned counsel for the defendant No. 1, that the action for infringement of the trade mark would also not be tenable it goodwill is found to have become non-existence, it appears that there is no support whatsoever for this proposition since the right to sue for infringement of a trade mark is a statutory right and in the present case, there is no dispute that the mark is on the register and no proceedings for removal of the mark have been initiated. The application for injunction must, therefore, be held to be perfectly tenable both on the ground of passing-off as well as on the ground of infringement of the trade mark. Therefore, the goodwill of a firm which is deemed to be the property of the firm clearly survives after the dissolution. Dr. Tulzapurkar relies on ....
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....he simpler case concerns businesses which have ceased to trade without their goodwill being extinguished. It is well established that a passing-off action may succeed if the goodwill of the former business still exists, even if the business itself ceased several years ago. It is not even essential that there should be definite plans to recommence it. Subsisting goodwill arising from a formerly subsisting business is therefore a sufficient basis for a passing-off action." The learned author further states as follows:- "The goodwill in a business is not necessarily extinguished immediately if the owner ceases to trade. This has been recognised by the Privy Council, and there are numerous cases of plaintiffs succeeding in passing-off actions even though they may have been out of business for several years. In an early trade mark case it was suggested by analogy with the law of easements that an intention to abandon goodwill was essential if it was to be extinguished, but this has subsequently been denied." It is, therefore, clear that irrespective of the provisions of the Indian Partnership Act, it cannot be the law that an action for passing-off cannot be main....
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...., it would lead the unwary, which most customers would be, to confuse them with the device of the former "Mastaan" which is not on the shelf than does. 23. Apart from these similarities in the word and the device, the get-up is strikingly similar. The shape of the bottles is identical. In fact, even the dimples on the bottle and other marks on the bottle are not different. The colour scheme is similar, Dr. Tulzapurkar, learned counsel for the defendant No. 1, submitted that the word "Mastaan" is originated by the defendant No. 1 simply because what is sold word is mustard oil. It is different to accept this submission. There is an obvious intention to simulate the effect of the plaintiff's mark, device and get-up in their product "Mastaan". I, therefore, hold that the marks must be held to be deceptively similar. "POSTMAN" & "POSTIANO": 24. Now, as regards "Postman", the firm has been manufacturing refined groundnut oil under the trade name "Postman" since 1949. Refined groundnut oil manufactured by the firm is having a distinctive design, shape, colour scheme, lay-out, get-up and appearance as would be apparent from the photographs at exhibits I-1 to I-4. The trade na....
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....n the Postman bottle. The appearance of similarity is the same when one sees the plastic container. 26. Dr. Tulzapurkar, learned counsel for the defendant No. 1, submitted that "Postiano" is not the word for "Postman" in Italian and is the name of a town. The learned counsel pointed out that the word for "Postman" in Italian is "Post+aeon". He, therefore, submitted that the adoption of "Postiano" by the defendant has no connection whatsoever with "Postman". This argument cannot be accepted. There is no reason why a party would adopt the name of a town in Italy for selling groundnut oil in India. Prima facie, it is obvious that "Postman" was adopted because it has some resemblance to "Postman" which was already used for the sale of groundnut oil and which had acquired a reputation. Having regard to the fact that the defendant No. 1 is a company controlled by the defendant No. 3 and his family members and the fact that the defendant No. 3 was a partner of the firm under dissolution. I have no doubt prima facie that "Postiano" was adopted because it would resemble "Postman". Thus, having regard to these similarities. I am of view that taking the two products and the words as a whol....
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....de out a case for infringement of their registered trade mark and is, as such, entitled to an injunction on the ground of infringement also. 29. Dr. Tulzapurkar, learned counsel for the defendant No. 1, however, submitted that the plaintiff is not entitled to an injunction in respect of the marks "Mastaan" and "Postman" because the registration of the marks by the partnership firm has become vulnerable. These marks have, according to the learned counsel, become vulnerable because Section 24 of the Trade Marks Act requires the marks to be used by partners and use by anyone else would not be used by the registered proprietor. It is urged that on the plaintiff's own showing, there has been no use of any registered trade mark and there is no intention to use the same. Therefore, according to the learned counsel, there ought not be an injunction. In support of the contention, the learned counsel relied on the decision of the Delhi High Court in R.J. Reynolds Tobacco Co. v. I.T.C. Limited 1990 IPLR 785. It is not possible to apply the decision of the Delhi High Court refusing injunction to the present case. The injunction was refused on the overall facts and circumstances of the c....
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....n of its business. In the first place, it is not possible to accept the contention that there is no likelihood of damage. The circumstances of the case clearly suggests that the plaintiffs marks which have acquired reputation for over 50 years would be greatly diminished in value by such deceptive similarity. I am, therefore, of view that the plaintiff must be taken as likely to suffer substantial damage to the property in the mark. Having regard to the entire purpose for protecting the marks, viz., in order to ensure that they can be sold in the process to winding up without being appreciably diminished in value by their infringement, it is difficult to withhold the injunction on the ground of alleged balance of convenience. Things have no doubt not moved with desired speed in the matter of sale of the assets which includes the trade mark. However, admittedly, a Division Bench of this Court has on 25.4.2003 passed an order directing the Receiver to explore the possibility of the sale of the business as a going concern along with the trade mark. Merely because it has not been done till date, it is no reason to allow a further erosion of the value of the mark. There is no notable fe....