Konar Publications vs M/s.Madras Palaniappa Bros.


Court :
Madras high Court

Brief :
the firms were started to avoid compulsory tax audit under Income Tax Act, 1961

Citation :
not known

IN THE HIGH COURT OF JUDICATURE AT MADRAS DATE : 11.01.2008 CORAM THE HONOURABLE MR. JUSTICE S.J.MUKHOPADHAYA AND THE HONOURABLE MR. JUSTICE F.M.IBRAHIM KALIFULLA O.S.A. NOS. 402 TO 406 OF 2001 21, East Pattamar Street Madurai 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 402/01 1. 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 403/01 1. 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 404/01 1. 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 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 Chettiar 3. Ess. Orr Stationery 234, Arcot Road Vadapalani Chennai 600 025. 4. P.L.Gandhi 5. P.L.Muthu 6. V.E.Kannamma 7. AL.Solai 8. 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, passed by learned single Judge in C.S. Nos. 284 to 287 and 311 of 1997 as stated therein. For Appellants : Mr. Arvind P.Datar, SC, for M/s.P.Annal For Respondents : Mr. Sathish Parasaran COMMON JUDGMENT S.J.MUKHOPADHAYA, J. In these appeals, as common question of law involved and preferred against common judgment, they were heard together and 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 shown hereunder :- S.M.Palaniappa Chettiar, 1st plaintiff in C.S. No.311/97 commenced business sometime in 1940s of publishing Konar Notes for school students through M/s.Palaniappa Brothers, 2nd plaintiff in C.S. No.311/97, a family partnership firm, respondent herein. The author of the book was one Vidwan Ayyan Perumal Konar, a Tamil scholar, assisted by a team of scholars. The notes seems to have popularly come to be knows as Konar Tamil Urai, i.e., Konar Tamil Notes. For the present, they are publishing Konar Tamil Urai for students of classes XI and XII. M/s.Karthikeyan & Co., 1st defendant in C.S. No.284/97 was established in 1956 as a registered firm under the Indian Partnership 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 Tamil Urai for schools in Madurai. Later on, it also started publishing Konar Tamil Urai for College students. It applied for registration of trade mark Konar in 1982, which was allowed in the year 1997, followed by renewal of such registration. Another M/s.Madras Karthikeyan & Co., a partnership firm (1st defendant in C.S. No.287/97) was opened in 1991, which started 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 and started publishing school books, including Konar Tamil Urai, for students of X standard. 3. M/s.Palaniappa Brothers, which was originally established in 1940s and started publication of Konar Tamil Urai, got it registered with the Registrar of Firms under the Indian Partnership Act in 1975. In the meantime, Vidwan Ayyan Perumal Konar having died on 1st Jan., 1969, M/s.Palaniappa Brothers continued to publish the books with the help of other vidwans (scholars). 4. The appellant, Konar Publications, commenced publication of Konar Tamil Urai for school students in May, 1997. It instituted four suits, C.S. Nos. 284, 285, 286 and 287 of 1997 before the Original Side of this Court, inter alia for decree of permanent injunction to restrain the defendants of respective suits  respondents herein, from infringing the appellants registered trade mark Konar. Mr. S.M.Palaniappa Chettiar and M/s.Palaniappa Brothers, jointly instituted another suit before the Original Side of this Court in C.S. No.311/97, inter alia seeking a permanent injunction restraining the defendant  appellant herein, from infringing or passing off the defendants/appellants publication and for that of the plaintiff  respondents publication. By judgment dated 11th Jan., 2000, learned single Judge dismissed all the suits preferred by the appellant, M/s.Konar Publication, allowed the suit jointly preferred by Mr. S.M.Palaniappa Chettiar and M/s.Palaniappa Brothers and thereby decreed the suits in favour of the respondents. 5. In view of submission made by counsel for the appellant, it is desirable to notice the cause title of different suits to find out the status of one or other party as plaintiff or defendant :- S.No. Case No. Plaintiff Defendant 1 CS 284/97 M/s.Konar Publications 1. M/s.Karthikeyan & Co. 14, Peters Road Royapettah, Chennai  14. 2. Asian Printers 14, Peters Road Royapettah, Chennai  14. 2 CS 285/97 M/s.Konar Publications 1. M/s.Palaniappa Brothers 14, Peters Road Royapettah, Chennai  14. 2. Asian Printers 14, Peters Road Royapettah, Chennai  14. 3 CS 286/97 M/s.Konar Publications 1. M/s.Madras Palaniappa Brothers, 14, Peters Road Royapettah, Chennai  14. 2. Asian Printers 14, Peters Road Royapettah, Chennai  14. 4 CS 287/97 M/s.Konar Publications 1. M/s.Madras Karthikeyan & Co., 14, Peters Road Royapettah, Chennai  14. 2. Asian Printers 14, Peters Road Royapettah, Chennai  14. 5 CS 311/97 1. Mr.S.M.Palaniappa Chettiar No.2, Rutland Gate Chennai 600 006. 2. M/s.Palaniappa Brothers rep. by its Partner S.M.Palaniappa Chettiar No.14, Peters Road Chennai 600 014. 1. M/s.Konar Publications 21, East Pattamar Street Madurai 625 001. 2. Ess. Orr. Stationary Stationers & Book Sellers 234, Arcot Road Vadapalani, Chennai  26. From the aforesaid cause title it will be evident that though the name of many of the partnership firms are different and printer in many of the cases are common, address of all the defendants in C.S. Nos.284 to 287 of 1997 are same, i.e., No.l4, Peters Road, Royapettah, Chennai, which is the address of the 2nd plaintiff in C.S. No.311/97. 6. Mr.Arvind P.Datar, learned senior counsel for the appellant took the following plea, apart from individual plea taken 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 Chettiar for injunction against defendant firm  appellant herein, in regard to book, which was material object No.1, but the said material object No.1 is not published by the 2nd plaintiff of C.S. No.311/97, i.e., M/s.Palaniappa Brothers, but published by M/s.Karthikeyan & Co., defendant in C.S. No.284 of 1997/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 of material object No.1, published by M/s.Karthikeyan & Co., an injunction order issued at the instance of the plaintiff, M/s.Palaniappa Brothers against defendant firm/appellant herein. c) There is no provision of permissive user under the Trade Marks Act. Therefore, the defendant/respondent, M/s.Madras Karthikeyan & Co., and M/s.Madras Palaniappa Brothers, established in the year 1991 and 1992 respectively, cannot be held to be prior users. d) High Court, in its Original Side, has no jurisdiction to decide the validity of a trade mark, which can be decided u/s 56 of the Trade Marks and Merchandise Marks Act, 1958. e) The suit, C.S. No.311/97, should have been dismissed by learned Judge because of non-disclosure of identity of rest of the firms, namely, M/s.Karthikeyan & Co., M/s.Madras Palaniappa Brothers and M/s.Madras Karthikeyan & Co., who were stated to be permissive users. No pleading was made by plaintiff No.1 in suit C.S. No.311/97 that he gave permission to others. 7. In respect of individual cases, apart from the common submission as recorded above, the following submissions were advanced :- 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 permissive user. b) A stereo-typed written statement was filed in all the three suits with plea that the three other firms were started in view of meteoric rise in volumes of business. In the cross-examination the plaintiff stated that the firms were started to avoid compulsory tax audit under Income Tax Act, 1961. c) The appellant has been registered under clause 16 for book Konar Tamil Urai, which is not restricted to school books or college books. d) The defendant, M/s.Karthikeyan & Co., being neither permitted user nor registered user, no injunction at the instance of M/s.Palaniappa Brothers could be issued with regard 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 written statement was alleged. According to counsel for the appellant, such issue on proper application could be determined u/s 56 and in such case, u/s 101, High Court has to stay the suit to enable rectification proceeding to be taken. Once such issue is raised, the High Court ought not have proceeded with the trial of the suits, but ought to have referred the matter for rectification in accordance with Section 56 read with relevant rules. In C.S. No.285/97, the first defendant, M/s.Palaniappa Brothers, having started business in 1956 and as it published books of XI and XII standards, no relief could have been granted in favour of M/s.Palaniappa Brothers in respect of school books for other standards. 9. Mr.Sathish Parasaran, learned counsel appearing on behalf of respondents in all the appeals, made the following submissions :- i) Mr.Palaniappa Chettiar, 1st plaintiff of C.S. No.311/97 is the trade mark holder, registered on 16th May, 1997. M/s.Palaniappa Brothers, 2nd plaintiff of C.S. No.311/97 and first defendant of all the rest of the suits, namely, M/s.Karthikeyan & Co., M/s.Madras Karthikeyan & Co. and M/s.Madras Palaniappa Brothers, are permissive users of Mr.Palaniappa Chettiar, limited to the extent of books for one or other classes of a school. It is an action for deceit under common law and not one under the Trade and Merchandise Marks Act, 1958. Therefore, none of the provisions dealing with registered trade mark would apply to unregistered trade mark, forming the subject matter of the action. ii) Right of an unregistered mark holder to sue for tort for 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 property under an unregistered trade mark, but only the business goodwill. Therefore, the issue raised by the appellant regarding the ownership of the unregistered trade mark, Konar Tamil Urai is irrelevant and misleading. iv) A prior registered user has a superior right to a later registered proprietor. Passing off action is maintainable in law even against a registered owner of the trade mark. v) The licence in respect of registered as well as unregistered trade mark could be made under common law. Licence to use an unregistered trade mark could be given even by way of an oral permission. vi) Group of entities using an unregistered trade mark is accepted proposition and such persons and sister concern would constitute one economic entity. vii) In the case of multiple users sharing goodwill, any one 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 be wrong. 10. We have heard the learned counsel for the parties, noticed the rival submissions as also the judgments referred to by them. 11. It is not in dispute and there is evidence to show that Palaniappa Chettiar originally started M/s.Palaniappa Brothers as a proprietary concern sometime in 1940s. It commenced business of publishing Konar Notes as early as 1946 when it was not registered and registration was done later, in between 1960s and 1970s. It was S.M.Palaniappa Chettiar, 1st plaintiff in C.S. No.311/97, who was the founder and patron of M/s.Palaniappa Brothers and though he may not be a partner in one or other publishing house, namely, M/s.Madras Palaniappa Brothers, M/s.Karthikeyan and Co. and M/s.Madras Karthikeyan & Co., there is evidence on record to show that he patronaged all those firms and they are even now managed by Palaniappa Chettiar only. Mr.Palaniappa Chettiar has also given reasons for starting four concerns as sister concerns, because of high turn over of his business. P.W.5, Palaniappa Chettiar has stated that any firm having a turn over of more than 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 patronage, the other four concerns came into existence. All of them are sister concerns and are controlled by Mr.Palaniappa Chettiar even today and the partners of all those firms are family members of Palaniappa Chettiar and they are not strangers. 12. From the evidence it appears that even Konar Publications (appellant herein - 1st defendant in C.S. No.311/97) was originally started as a proprietary concern by Srinivasa Konar, brother-in-law of Vidwan Ayyan Perumal Konar. Later on, he took his sons as partners and, subsequently, they also got registered. Palaniappa Chettiar also never assigned his rights in favour of the said firm and, therefore, there was no question of assignment of trade mark rights by Palaniappa Chettiar in favour of the said concern. 13. There may be different firms separately carrying on business, but they may do similar business under the same name, if there is no objection of the prior user. In the case of George V.Records, SARL  Vs  Kiran Jogani reported in 2004 (28) PTC 347 (DEL),, Delhi High Court, while observed that passing off is an action of deceit where the defendant attempts to pass off his goods as those of plaintiff, and that in order to succeed, the plaintiff must establish prior adoption and use of the mark and on account of user the mark has acquired a reputation and goodwill and become a distinctive of the plaintiffs goods in the country of origin. It noticed that the plaintiff of the said case and its sister concerns constitute one economic entity, which is a well-known international practice for companies trading in multiple jurisdiction to work with affiliated organisations, which have been treated as one economic entity for the purpose of proprietary rights by courts. 14. In the present case, as noticed from the evidence, Palaniappa Chettiar was the proprietor of M/s.Palaniappa Brothers was patronising all the firms as referred to above, has allowed those firms to use the trade name Konar Tamil Urai in their publication as also the trade mark, we are of the opinion that M/s.Madras Palaniappa Brothers and M/s.Madras Karthikeyan & Co., 1st defendant in C.S. Nos.286 and 287 of 1997, for all purposes are like sister concerns of M/s.Palaniappa Brothers. 15. M/s.Palaniappa Brothers, which commenced business sometime in 1940s was publishing Konar Tamil Urai since 1946 for school students. It did not stop publishing the said book under the trade name Konar Tamil Urai after the death of Ayyan Perumal Konar in 1969 and continued to publish the same. At present, they are publishing Konar Tamil urai for students of class XI and XII. M/s.Karthikeyan & Co., was established in 1956 as a registered firm and started publishing school books, including Konar Tamil Urai for III to VIII standard. Konar Publications, appellant herein, was established in 1956. It was acting as sole selling agent/distributor of Konar Tamil Urai for Schools in Madurai. Later on, in 1974, it also started publishing Konar Tamil Urai for college students only, which was not objected by S.M.Palaniappa Chettiar or M/s.Palaniappa Brothers. It applied for registration of trade mark Konar in 1982, which was allowed in 1997, and at a much later stage, in 1997, started publishing Konar Tamil Urai for schools, which gave rise to the suit, C.S. No.311/97 preferred by S.M.Palaniappa Chettiar and M/s.Palaniappa Brothers. Thereby, it is clear that M/s.Palaniappa Brothers and M/s.Karthikeyan & Co. are prior users vis-a-vis Konar Tamil Urai so far as schools is concerned. 16. We have already held that M/s.Madras Karthikeyan & Co. and M/s.Madras Palaniappa Brothers are sister concerns of M/s.Palaniappa Brothers. S.M.Palaniappa Chettiar, 1st plaintiff in C.S. No.311/97 was patronising those firms and allowed to use the trade name Konar Tamil Urai in their publication for standards IX and X. In this background, while M/s.Madras Karthikeyan & Co. and M/s.Madras Palaniappa Brothers cannot claim to be prior users in their independent capacity, but being the sister concern of M/s.Palaniappa Brothers and having permitted by the 1st plaintiff, Palaniappa Chettiar for using the trade name of Konar Tamil Urai in their publication for standards IX and X of the school, they are 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 users so far as it relates to Konar Tamil Urai for schools is concerned. 17. In the case of Gujarat Bottling Co. Ltd. & Ors. - Vs  Coca Cola Co. & Ors. reported in 1995 (5) SCC 545, the Supreme Court having noticed different provisions of the Trade Marks Act, 1940, now repealed vide Trade and Merchandise Marks Act, held that the registration as a registered user enables the use of trade mark by the registered user as being treated as used by the proprietor of the trade mark and enables the registered user to take proceedings in his name to prevent infringement of the trade mark. In the said case, Supreme Court further held as follows :- 13. Apart from the said provisions relating to registered users, it is permissible for the registered proprietor of a trade mark to permit a person to use his registered trade mark. Such licensing of trade mark is governed by common law and is permissible provided (i) the licensing does not result in causing confusion or deception among the public; (ii) it does not destroy the distinctiveness of the trade mark, that is to say, the trade mark, before the public eye, continues to distinguish the goods connected with the proprietor of the mark from those connected with others; and (iii) a connection in the course of trade consistent with the definition of trade mark continues to exist between the goods and the proprietor of the mark. (See. P.Narayanan  Law of Trade Marks and Passing-Off, 4th Edn., paragraph 20.16, p.335.) It would thus appear that use of a registered trade mark can be permitted to a registered user in accordance with provisions of the Act and for that purpose the registered proprietor has to enter into an agreement with the proposed registered user. The use of the trade mark can also be permitted dehors the provisions of the Act by grant of licence by the registered proprietor to the proposed user. Such a licence is governed by common law. From the aforesaid finding of the Supreme Court in Gujarat Bottling Co. Ltd. (supra), it will be evident :- i) that a registered user can take proceeding in his known name to prevent infringement of trade mark; ii) the use of trade mark can also be permitted dehors the provisions of the Act by grant of licence by registered proprietor to the proposed user; and iii) such licence is governed by common law. In view of the aforesaid finding of the Supreme Court, we hold that at the instance of Palaniappa Chettiar, registered proprietor, the suit C.S. No.311/97 was maintainable against the appellant, Konar Publications, on his behalf and on behalf of the 2nd plaintiff, M/s.Palaniappa Brothers and the sister concerns to prevent infringement of trade mark. We further hold that the said suit is otherwise maintainable under the common law. 18. Learned Judge has noticed that even though Konar Publications had made the application, Ex.A-26 for registration and though they may claim that they had been using the trade name, Konar Tamil Urai, since 1974, they failed to show that Konar Tamil Urai for school students was published by Konar Publications prior to 1997. In this background, it is not necessary to discuss a large number of judgments, as referred to by learned Judge in the impugned judgment dated 11th April, 2000, to come to a definite conclusion that Palaniappa Chettiar is entitled to use Konar Tamil Urai as trade name in view of the registration obtained by them only in respect of books for the schools. 19. We find no merits in all these appeals. They are, accordingly, dismissed. Parties will bear their respective costs. (S.J.M.J.) (F.M.I.K.J.) 11.01.2008 Index : Yes Internet : Yes GLN S.J. MUKHOPADHAYA, J. AND F.M.IBRAHIM KALIFULLA, J. GLN Pre-Delivery Judgment in O.S.A. NOS.402 TO 406 OF 2001 Pronounced on 11.01.2008
 

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on 24 September 2008
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