JUDGMENT
S.N. Kapoor, J.
1. This order shall dispose of an application under Order XXII Rule X
read with Section 151 of the CPC filed in a suit for permanent injunction restraining passing off and infringement of copyright, rendition of accounts or profits and delivery etc.
2. The plaintiffs S/Sh.P.L. Lamba and Sunil Lamba claimed to be joint proprietors of the trademark “KWALITY” under registration Nos.435340,435341 and 435342 in class…..According to the claim of the applicants, on 14th October,1994, the trademark “KWALITY” under the said three registrations had been assigned, transferred and sold by the plaintiffs to M/s. Digital Securities Pvt. Ltd.,135, Netaji Subhash Road, Bombay. On 15th November, 1994 the assignee applied on Form TM-24 to have the assignment recorded before the Registrar of Trademarks, which was allowed vide order dated 6th August, 1997. Accordingly, the name of the subsequent proprietor had also been advertised in the Trademark Journal dated 1st November, 1997. The plaintiffs have also obtained certificates for use in legal proceedings in respect of trademark Nos. 435340,435341 and 435342. M/s. Brooke Bond Lipton India Limited, Calcutta has been appointed licensed user of the trademark
by M/s. Digital Securities Pvt. Ltd. vide agreement dated 31st December, 1994 vide Annexure-2. Hence, prayer for substituting M/s. Digital Securities Pvt. Ltd. as plaintiff No.1 in place of plaintiff Nos.1 and 2 as the new proprietor of the trademark “KWALITY” and M/s. Brooke Bond Lipton India Ltd. as plaintiff No. 2.
3. The application is being opposed on the ground that there was no completed assignment in favour of the alleged assignee as much as no such assignment has been recorded in the trademarks register under the provisions of Trade and Merchandise Marks Act (hereinafter called the “Act” for short) and the Rules framed thereunder. There was no valid trademark. The assignment is subject to rectification application Nos. DEL-635, 636 and 637 filed by M/s. Ghai Ice Cream (Pvt). Ltd., which are pending before the Registrar of Trademarks. The assignment deed was based on fraudulent settlement. It is further contended by the defendants that the suit has been filed after the rectification applications have been filed against the plaintiffs by suppressing the material facts of filing rectification applications by making specific averment that no rectification application is pending. This fact was suppressed in view of the earlier split ssignment. The assignment amounts to trafficking in trademark and is against public interest in terms of Sections 38, 39 and 40 of the Act. Provisions of Order XXII, Rule X, CPC are not applicable and only provisions under Order I, Rule X, CPC could apply at the most. The assignment being per se illegal, the plaintiffs could not be substituted at all, for Section 44(2) of the Act clearly stipulates not to record assignment of disputed trademark. The facts of this case relevant for passing the order under Order XXII, Rule X,
CPC are different from the facts of Suit No. 633/94. Since the rectification proceedings are pending, no benefit can be taken by relying on the order passed in Suit No. 633/94. Complete details of the assignment deed have not been given, for strategic alliance agreement has not been filed. The assignment deed is neither properly stamped in view of the consideration of Rs. 3.70 crores nor it is signed by the alleged assignee nor it discloses proper verification thereof. Though the alleged assignment took place on 14th October, 1994, but substitution application has been filed in April, 1996 after a long delay. On the aforesaid grounds it is submitted that the application as such is liable to be rejected.
4. I have heard Learned Counsel for the parties and gone through the record.
5. In so far as the delay is concerned, there is no doubt about the fact that if the assignment took place as early as on 14th October, 1994 in ordinary course such an application for substitution should have been moved in the year 1994 itself. But it also appears from the provisions of Section 44(2) of the Act that”…a document or instruction in respect of which no entry has been made in the register in accordance with Sub-section (1), shall not be admitted in evidence by the Registrar or any Court in proof of title to the trademark by assignment or transmission unless the egistrar
or the Court, as the case may be, otherwise directs,” It appears, therefore, that so long the assignment was not entered in the register of trade marks in accordance with Section 44(1), the application could not have been maintained. Consequently, such an application for substitution on the ground of assignment could be made only after 6th August, 1997 when T.M. 24 was allowed. As such, the plea regarding delay of the assignment does not have much force for the time till 6th August, 1997 has to be excluded.
6. Insofar as the question of rectification proceedings is concerned,
filling of the rectification proceedings itself does not debar the filing or pursuing with the suit. However, insofar as the objection relating to trafficking in the trademark by assignment is concerned, in the light of the provisions of Sections 38, 39 and 40 of the Act, it would be appropriate that these objections should be allowed to be raised by the defendantsafter substitution of M/s. Digital Securities Pvt. Ltd.
7. As regards the substitution of M/s. Brooke Bond Lipton India Ltd. is concerned, it does not appear that at any stage they have been recorded as registered users under section 48. The simple licence would not create any right in their favour, for it is just a permissible use and not an assignment of the trademark. Consequently, the matter would not be covered under Order XXII, Rule X, CPC. However, it may be desirable to implead them under Order I, Rule X, CPC, for the licensee company shall be the sole licence user of the said trademark during specified time and area as the licensee
company has a licence to use the said trademark as mentioned in Clause (1) of the licence deed. Since some right would accrue in favour of this company also during the pendency of the suit, accordingly I feel that the prayer to implead M/s. Brooke Bond Lipton India Ltd. should also be allowed.
8. Ld. Counsel for the defendant relies upon Allah Jawaya Vs. Lajpat Rai, AIR 1925 Lahore 574 and submits that in this case also the assignment is disputed and the application has been made years after the assignment. In that case, assignment did not relate to trade mark and the Court was not debarred from taking note of such an assignment as has been provided by Section 44(2) of the Act. Besides, a imilar application IA No. 10020/95 in S. No. 633/94 between the same parties has been allowed and no appeal appears to have been filed against that order. Therefore, this objection has no force.
9. For the aforesaid reasons, IA No. 3227/96 is allowed accordingly without any prejudice to the rights of the defendants. The defendants are at liberty to take all connected objections. The plaintiffs are directed to file amended plaint incorporating all the facts relating to the substitution within four weeks. On filing the amended plaint, the defendants shall file amended written statement within four weeks thereafter.
10. List the matter on 14 July, 1999 before the regular Bench as per the roster.