1
pps
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
CHAMBER SUMMONS NO.1783 OF 2008
IN
SUIT NO.1729 OF 1987.
The Scotch Whisky Association ..Plaintiffs.
Vs.
Khoday India Limited
ig ..Defendants.
Dr.Virendra Tulzapurkar with Mr.Amit Jamsandekar
i/b.Sr.Counsel Little & Co. for the Plaintiffs.
Mr.F.DeVitre, Sr.Counsel a/w. Mr.Zubin Behram
Kamdin, Mr.Sagar Divekar i/b. Wadia Gandhy for the
Applicant in Chamber Summons/Defendants.
CORAM: S.J. VAZIFDAR, J.
th
DATED: 7 OCTOBER, 2009
JUDGMENT.
1. This is the defendant s chamber summons
seeking an order rejecting the plaint and dismissing
the suit as covered and concluded by the judgment of
the Supreme Court dated 27.5.2008 reported in (2008)
10 SCC 723 in an appeal filed by the defendant
against the plaintiff from the order and judgment of
the Division Bench of the Madras High Court and for
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a declaration that the above suit does not survive
in view of the said judgment.
2. This is an action for passing off. The
plaintiff filed the suit inter alia for the
following reliefs:
a) that it be declared that by using in
respect of whisky not distilled and
matured in Scotland the impugned label(being Exhibit M) and the impugned
carton (being Exhibit O) containing theword SCOT and/or the crest of a lion
rampant and the description Distilled
from the Finest Malt and Blended withthe Choicest Whiskies by Scotch Experts
under Government Supervision or the
word SCOT or the device of the lion
rampant or the said description inrespect of the defendant s whisky
manufactured in India, the defendant is
passing off its whisky as Scotch
Whisky ;
b) that the defendant by itself, its
servants and agents be restrained by a
perpetual order and injunction of this
Hon ble Court from advertising or
offering for sale or selling or
distributing in any country whisky which
is not Scotch Whisky under the word::: Downloaded on – 09/06/2013 15:09:49 :::
3SCOT or the device of the lion rampant
or the said description or with the
label (being Exhibit M) or the carton(being Exhibit O) containing the word
SCOT or the device of a lion rampant
and/or the description Distilled fromthe Finest Malt and Blended with the
Choicest Whiskies by Scotch Experts
under Government Supervision , or anyother label or carton containing any
description material or any other thing
in respect of whisky which is not ScotchWhisky by using the impugned label
(being Exhibit M) and/or the carton
(being Exhibit O) containing theimpugned material, so as to pass of or
enable to pass off its whisky as ScotchWhisky ;
C) that the defendant by itself, its
servants and agents be restrained from
exporting its said whisky to Japan or
Abu Dhabi under the mark PETER SCOT
or the device of a lion rampant or the
said description or using the impugned
label or carton being Exhibits M and
O hereto containing the word SCOT
or the device of a lion rampant or the
description Distilled from the Finest
Malt and Blended with the Choicest
Whiskies by Scotch Experts under
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Government Supervision or any other
description or device or words
suggesting Scottish origin in respect
of the defendant s Whisky or from
placing in the hands of traders or
middlemen in Japan or Abu Dhabi labels
or cartons containing the aforesaid
material so as to enable the traders
and/or middlemen in Japan or Abu Dhabi
to pass off the Defendant s whisky as
Scotch Whisky;
3. Mr. DeVitre submitted that the cause of
action in this suit does not survive in view of the
judgment of the Supreme Court. He submitted that
the cause of action, if any is barred by the
principles analogous to res judicata as the cause of
action in the suit and in the original proceedings
from which the matter reached the Supreme Court is
the same. According to him the issues of
acquiescence and waiver raised by the defendant and
the issue whether the defendants marks, devices and
labels are deceptively similar to the plaintiffs
marks or are likely to cause confusion have been
decided by the Supreme Court in the said judgment.
Thus, he submits the suit is liable to be dismissed
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on the ground of issue estoppel. The decision of
the Registrar in rectification proceedings is
binding between the parties in all proceedings
including the present suit. It is not permissible
for the parties to lead additional evidence in this
suit in view of the judgment of the Supreme Court
which was delivered in the proceeding for
rectification ig commenced before the Registrar of
Trade Marks. In the circumstances, Mr. DeVitre
submitted that the suit is liable to be rejected
under Order VII Rule 11 read with Section 151 of the
Code of Civil Procedure.
4. Considering the nature of the Chamber
Summons it is not necessary to deal with the
disputes between the parties on merits. The
question that arises is whether the suit is liable,
in effect, to be dismissed in view of the said
judgment of the Supreme Court. It is therefore
necessary to refer to the facts only in so far as
they are relevant for this purpose.
5.(A) Plaintiff No.1 is incorporated with the
object inter-alia of protecting and promoting the
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interests of the scotch whisky trade in the United
Kingdom and abroad which it does inter-alia by
prosecuting and defending legal proceedings in any
territory in the world. Plaintiff No.2, John Walker
& Sons Ltd., is a company incorporated in the United
Kingdom carrying on business as distillers, blenders
and dealers of scotch whisky. Plaintiff No.3 is a
company incorporated
ig under the laws of the
Netherland. Plaintiff Nos.2 and 3 are members of
plaintiff No.1. The scotch whisky brands of
plaintiff No.2 stand transferred to plaintiff No.3.
(B) According to the plaintiff, whisky
distilled and matured in Scotland is known
throughout the world as Scotch Whisky. The
description Scotch Whisky means whisky which is
distilled and matured in Scotland and nowhere else.
Any whisky sold under any description, name and
label, device, mark, ticket, get up or emblem which
is evocative of Scotland is likely to be taken as
Scotch Whisky by members of the trade and public.
Accordingly, whisky which is not Scotch Whisky if
dealt with by bearing such name or description is
bound to mislead the public and members of the trade
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all over the world including India. The members of
plaintiff No.1 use words and devices evocative of
Scotland. A number of members of plaintiff no.1 use
brand names including the word SCOT , SCOTT ,
SCOTS such as Captain Scott, Golden Scot, Royal
Scot, Northern Scot, Grand Scot, Scot Royal and
Queen of Scots. Thus, the use of any such device or
description of brand names by any one in respect of
whisky so as to suggest that such whisky emanates
from Scotland, when in fact it does not, would
mislead and is likely to mislead people in general,
and in any event would put them in a state of
confusion.
(C) The details of sales of Scotch Whisky by
the members of plaintiff no.1 and the advertisements
issued by them are referred to, to indicate that
they have acquired an enormous and enviable
reputation and goodwill all over the world including
India. The plaintiffs have also furnished details
of action taken by them, including legal
proceedings, all over the world to prevent attempts
by various traders to pass off their products as
Scotch Whisky.
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(D) The plaint then refers to the device of the
Lion Rampant stating the same to be particularly
evocative of Scotland as the Lion Rampant in red as
well as the yellow background indicates the Royal
Standard of Scotland.
6. The defendant has adopted the mark PETER
SCOT and uses
ig it on its labels. Further, the
defendant has also adopted the crest of lion rampant
which is a copy of the Scottish Royal Standard. The
crest is in red and on a yellow background, the same
colours as in the standard. The label also bears
the words Distilled from Finest Malt and Blended
With the Choicest Whiskies by Scotch Experts under
Government Supervision .
7. It is averred in the plaint that the
defendant is exporting its product under the brand
name PETER SCOT to Japan where it is sometimes
sold in retail stores among Scotch Whiskies and that
by using the word SCOT , the crest of the Lion
Rampant and the descriptive words, the defendant has
committed the tort by passing off in India, which is
completed in India upon export of the said goods for
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sale in Japan. The law in Japan being a question of
fact is also set out. Similar averments are made in
respect of exports to Abu Dhabi.
8. The suit, therefore was filed inter alia on
the ground that the trade and good will of the
members of the first plaintiff including plaintiff
nos.2 and 3 are being affected by the use of the
impugned label and the impugned carton containing
the impugned mark, device and description as the
same suggest that the defendant s whisky is scotch
whisky.
9. It is important to note that the plaint
proceeds on the basis that the three factors viz.
the word mark, the crest, and the descriptive words
each independently and together are evocative of
Scotland and are therefore causing damage to the
trade and goodwill of the members of plaintiff No.1
and that the defendant is deliberately misleading
the traders and members of the public into believing
that its whisky is Scotch Whisky.
10. The plaint thereafter refers to the search
reports and information received from their trade
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mark agents. The first plaintiff admitted receipt
of notice of the advertisements of the said mark
PETER SCOT in the trade mark journal on 20.9.1974.
It is stated that regrettably no objection was
lodged by the first plaintiff through inadvertance
but that the plaintiff vigorously opposed the other
deceptive trade marks which were applied for
registration of
ig Indian distilleries including the
defendant. The action taken by the plaintiff in
respect of the defendants proposed mark HOGMANY
and OLD ANGUS is referred to.
11. According to Mr. DeVitre the entire cause
of action pleaded in the plaint has been dealt with
and decided in the rectification proceedings which
ultimately resulted in the said judgment of the
Supreme Court. It is necessary therefore to refer
to the judgment of the Supreme Court in considerable
detail. This is for the obvious reason that the
judgment is relied upon not merely as a precedent
but essentially in support of the defendant s
Chamber Summons to have the plaint rejected and the
suit dismissed under Order VII Rule 11 read with
Section 151 of the CPC on the ground that the cause
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of action in the suit does not survive.
12. Before considering the judgment of the
Supreme Court it is necessary to deal with certain
preliminary issues raised by Counsel.
13. Mr. DeVitre submitted that although the
judgment of the Supreme Court is subsequent to the
filing of this
ig suit, the application for the
dismissal thereof is maintainable under Order VII
Rule 11 read with Section 151 of the C.P.C. In
other words according to him an application of this
nature may be based on events subsequent to the
filing of the suit.
14. If indeed the judgment operates as an issue
estoppel or res judicata the fact that it was
delivered after the suit was filed would not bar the
court from granting the reliefs sought in the
Chamber Summons. Subsequent facts even in this
regard can and indeed must be considered by the
Court. This is well established by a series of
judgments. It is sufficient to refer to the
judgment of the Supreme Court in Shipping
Corporation of India v. Machado Brothers (2004)
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11 SCC 168. The Supreme Court held that by the
subsequent event if the original proceedings has
become infructuous it would be the duty of the Court
to take such action as is necessary in the interest
of justice which includes disposing off infructuous
litigations. It is further held that for this
purpose it would be open to the parties to make an
application under Section 151 of the CPC.
15. Mr. DeVitre further submitted that the
finding in a previous proceeding is conclusive in
subsequent proceedings. He relied upon the judgment
of a learned Single Judge of this Court in Rama
Maruti v. Mallappa Krishna [AIR 1942 Bom. 309]. In
this case the plaintiff filed the suit to recover
certain properties on the strength of the adoption
made by a widow to her husband Krishna who was the
owner. After her death the plaintiff s natural
mother acting as his guardian leased the land to
defendant no.3 for ten years after the adoption.
Defendant no.3 in collusion with defendant nos.1 and
2 made over possession to them alleging that he was
a tenant of defendant no.1. The plaintiff therefore
filed the suit to recover the land. Defendant no.1
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admitted that the lands belonged to the adoptive
father but disputed the plaintiffs adoption by him.
The plaintiff relied upon the decision in previous
execution proceedings which were also taken out
against defendant no.1 in which it was held that the
plaintiff had been adopted as contended. It was
held that the principal of res judicata would apply
even though ig the subject matter of the two
proceedings may be different provided the issue is
the same. It was therefore held that the defendants
contention that the plaintiff was not validly
adopted was barred by res judicata.
16. The judgment supports the submission that
for a plea of res judicata it is not necessary that
the subject matter of the two proceedings is the
same. The decision in the execution proceeding was
not merely a finding of fact in support of the
issue, but was a decision upon the issues itself.
It is sufficient if the issue is the same. The
question therefore before me is whether the issues
raised in the present suit were decided by the
Supreme Court in the said judgment.
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17. Mr. DeVitre submitted that even if the
causes of action are different, if the issue is the
same the finding in a previous proceeding will
constitute an issue estoppel in subsequent
proceedings. He submitted therefore that although
the causes of action in the proceeding before the
Registrar of Trade Marks which ultimately reached
the Supreme Court may be different from the causes
of action in the present suit, the finding regarding
acquiescence and waiver as well as whether the
defendants use of the three factors are deceptive or
likely to cause confusion in those proceedings bar
the present suit on the principle of issue estoppel.
He submitted that the evidence and the case in the
present matter is identical to the evidence,
pleadings and the case in its entirety in the
rectification proceedings.
18. The submission on the point of laws is well
founded and finds support in the judgment of a
Division Bench of this Court in Chiranjilal vs. L.I.
Corporation [AIR 1959 Bom 396]. It was held:
(7) But the real and substantial point
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that has been urged by Mr. Laud is that the
cause of action in Suit No.438 of 1934 and
in the present suit are different and
therefore S.11 of the Civil Procedure Code
has no application. Now, what S. 11
requires is not that the causes of action in
the two suits must be identical, but that
the matter directly and substantially in
issued in the subsequent suit should also be
directly and substantially in issue in the
former suit
ig It will be noticed that under
S.11, not only the suit itself may be barred
but also an issue, and therefore what we
have to consider is whether a particular
issue which the plaintiffs seek to be tried
in the suit was directly and substantially
the same in the earlier suit, and in this
connect what is said is that in the present
suit the plaintiffs are seeking a relief on
the basis of a customary right enjoyed by
the Hindu community and it is pointed out
that in the earlier suit the claim was made
on the basis of a dedication made by
Putlibai and therefore it is said that the
metters in issue in the two suits were
different and the decision in the earlier
suit cannot operate as res judicata. When
one analyses the matter a little more
closely it becomes clear that the rights
that the plaintiffs were claiming on behalf
of the Hindu Community in Suit No.438 of
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1984 were the same as are now being claimed
in the present suit. It is true that there
was a contention in the earlier suit that
there was a public charitable trust. There
had to be such a contention because the suit
was under S.92. It is also true that
reliance was placed upon a dedication by
Putlibai. But what is significant is that
the plaintiffs in the suit did not rely upon
any written trust. What they relied upon
was a long and continuous user of certain
rights by members of the Hindu Community and
what was in issue in that suit was whether
the members of the Hindu community had used
as a matter of right the property in suit
for the purpose of religious ceremonies.
Now, that is the exact issue which arises in
the present suit. What is in the present
suit is whether the Hindu community had
performed these religious ceremonies for a
long and continuous period so that they have
become entitled to these rights as customary
rights. In our opinion, what we have to
look at is not the legal for which is given
to the right claimed by the plaintiffs, but
what is the real and substantial right
claimed. Whether a dedication in law can be
inferred from a long and continuous user by
the Hindu community or a customary right can
be inferred; the real matter in issue was
the user by the members of the Hindu
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community. That is what the plaintiffs
contended and that is what the defendants
disputed, and the result was a compromise.
In the present suit the plaintiffs are
putting forward the same contention and the
defendants are contesting the plaintiff s
claim. Therefore, in our opinion, there is
no substance in the contention that the
matters in issue in the two suits are not
the same.
–
Mr. DeVitre
submitted that although it was not
necessary for the Supreme Court to decide the issues
that arise in this suit, the Supreme Court did deal
with and answer the same. I do not agree. I have
come to the conclusion that the judgment of the
Supreme Court did not decide the issues which arise
in the suit for reasons I will indicate later while
analysing the judgment.
19. Mr. DeVitre submitted that these principles
would apply although the reliefs claimed in the two
proceedings may be different so long as the issue
was the same. The submission finds support from the
judgment of the Supreme Court in case of Pandit
Ishwardas vs. State of M.P. (1979) 4 SCC 163. In
para 7 the Supreme Court held as under:
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7. The plaintiff in both the suits was the
same. The contesting defendant was also the
same, namely the State of Madhya Pradesh. In
the present suit Melaram and the Chief
Conservator of Forests were also im-pleaded
as parties whereas in the other suit some
other person was a party. We do not see that
it makes any difference. In order to sustain
the plea of res judicata it is not necessary
that all the parties to the two litigations
must be common. All that is necessary is
that the issue should be between the same
parties or between parties under whom they
or any of them claim. The issue in the
present suit and the issue in the Dewas suit
were between the same parties namely the
appellant and the State of Madhya Pradesh.
The submission that the subject-matters of
the two suits were different because the
present suit was for a declaration and the
other suit was for damages is equally
without substance since the issue between
the parties was identical in both the suits.
The question at issue in both the suits was
whether the agreement between Melaram and
the Government and the surety bond executed
by the plaintiff were not enforceable
because of the failure to comply with
Article 299 of the Constitution. The ground
on which the agreement and the surety bond
were sustained in the Dewas suit was that
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the Raj Pramukh had ratified the same. The
fact that the ratification by the Raj
Pramukh was not expressly mentioned in the
present suit does not make any difference to
the plea of res judicata. Once the questions
at issue in the two suits are found to be
the same, the fact that the material which
led to the decision in the earlier suit was
not again placed before the Court in the
second suit cannot make the slightest
sustained
difference. The plea of res judicata may be
without anything more, if the
questions at issue and the parties are the
same, subject of course to the other
conditions prescribed by Section 11 Civil
Procedure Code. The submission of the
learned counsel that the decision of the
Dewas Court and the High Court in the other
suit were non est because they upheld an
illegal contract has only to be noticed to
be rejected.
20. Dr. Tulzapurkar submitted that the 1958 and
the 1999 Act specifically preserved and recognized
the right to pursue the common law remedy of passing
off. He submitted therefore that any decision in a
rectification proceeding which is adopted under the
Act cannot affect the right to pursue a passing off
action. To hold otherwise according to him would
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negate the right under Section 27(2).
21. There is no dispute that the Act preserves
the common law remedy of passing off. It does not
follow however that the rule of issue estoppel or
res judicata do not apply to a passing off action
qua a decision in a rectification proceeding. I
find nothing in the language of the Act or the
C.P.C. in
general and in sections 27 and 11
thereof respectively in particular which excludes
the operation of the principles in a passing off
action qua other actions. If the issue of passing
off is decided the judgment would operate as an
issue estoppel or as res judicata in subsequent
proceedings. Whether the issue of passing off is
decided or not is a different matter altogether.
That necessarily must be examined when an action is
sought to be defended on the principles of res
judicata and issue estoppel.
22. In Indo-Pharma Pharmaceutical Works Pvt.
Ltd. vs. Pharmaceuticals Company of India [1977 BLR
73], a learned Single Judge of this Court applied
the principle of issue estopped in proceedings under
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the said Act. It is important to note that the
learned Judge followed the judgment of the High
Court of Mysore in K.R. Chinnakrishna Shetty vs.
Ambalal & Company [AIR 1973 Mysore 74]. The learned
Judge applied the principles in a case under the Act
in a passing off action. After referring to the
commentaries and judgments on issue estoppel and res
judicata andig principles analogous thereto, the
learned judge observed as under:
The third decision is of the High Court of
Mysore viz. K. R. Chinnakrishna Setty v.
Ambal & Co. [(1973) A.I.R. Mys. 74]. Thiswas also a trade mark action in which it was
held that the decision given in the earlier
proceedings between the same parties with
regard to registration of the trade markoperated as res judicata in a proceeding
under s. 105. The plaintiffs in the appeal
before the Mysore High Court were Sri Ambal& Co., Madras, a registered firm carrying on
business in manufacture and sale of snuff.
The suit was instituted by the plaintiffs
against the defendants under s. 105 of the
said Act for an injunction restraining the
defendants from using, exhibiting or
advertising by themselves or through their
servants or agents or others the offending
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trade mark Sri Andal Snuff or Sri Andal
Officers Snuff or any other colourable
imitation of the plaintiffs registered
trade mark Sri Andal Snuff: and from
trading under the name and style of Sri
Andal & Co. or any other name and style
which was a colourable imitation of the
plaintiffs trading style Sri Ambal & Co.
Earlier defendants No.1 had filed an
application before the Registrar of Trade
Andal
Marks for registration of their mark
and the Assistant Registrar
Sri
had
allowed the said application holding that
the mark Sri Andal was not deceptively
similar to the plaintiffs trade mark Sri
Ambal and therefore s. 12(l) of the said
Act was not contravened. The objections of
the plaintiffs in the notice of opposition
to the application had been over-ruled by
the Assistant Registrar. Aggrieved by the
said order of the Assistant Registrar, the
plaintiffs had filed the appeal, which was
allowed by a single Judge and the decision
of the single Judge confirmed in the Letters
Patent Appeal by a division Bench and
subsequently by the Supreme Court. In the
suit counsel for the defendants tried to
urge the contentions which are indicated in
para 6 of the report. The Court held that
the decision in the matter of the trade mark
application and the plaintiffs opposition
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would govern the rights of the parties in
the suit also observing that if a mark
cannot be registered on the ground that it
contravenes s. 12(l), then it follows that
the user of the said mark will have to be
restrained also in the suit filed under s.
105 (see para. 9 of the report). According
to the Mysore High Court, the decision given
in the earlier proceedings must operate as
res judicata at the subsequent stage when a
suit is filed and it sought support for the
view in decision of the Supreme Court in Raj
Lakshmi Dasi vs. Banamali Sen [(1953)
A.I.R.S.C.33]. Thus the principle was
applied although the earlier decision was
not one in a suit and, therefore, the same
could not be brought within the four corners
of s.11 of the Code of Civil Procedure.
23. Dr. Tulzapurkar submitted that the courts
are reluctant to apply the principle of issue
estoppel in passing off cases on the basis of a
decision rendered in proceeding under the Act such
as for rectification. Dr. Tulzapurkar relied upon
the commentary in Narayana Trade Marks and Passing
Off, 3rd Edition page 712 para 1489 and the judgment
of a learned Single Judge of the Delhi High Court in
the case of Hindustan Pencils Pvt. Ltd. vs.
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Premchand Gupta, [1985 PTC 33] to contend that there
are difficulties in the application of the doctrine
of res judicata on various grounds including that
issues which have to be determined at one time may
cease to operate at another time.
24. That there may be difficulties in applying
the principles of res judicata and issue estoppe1 in
a passing off action does not preclude the operation
of the principles. It is one thing to say that
there may be difficulties in a given case in the
application of these principles to a passing off
action and it is another thing to say that the
principles do not apply to passing off actions.
Neither the commentary nor the judgment suggests
that the principles of resjudicate and passing off
do not apply to passing off actions. They merely
express difficulties in the application of these
principles.
25. Dr. Tulzapurkar then relied upon the
judgment of the Supreme Court in National Sewing
Thread Co. v. James Chadwick & Bros [(1953) SCR
1028]. The respondent in that case started the
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passing off action in the District Court which
failed on the ground that the evidence offered on
their behalf was meager and they failed in proving
that there was any probability of purchasers
exercising ordinary caution being deceived in buying
the defendants goods under the impression that they
were the plaintiffs goods. The appellants made an
application to the Registrar of Trade Marks for the
registration of their mark in respect whereof the
passing off action had been filed. The respondents
opposed the same. The Registrar came to the
conclusion that the appellant s mark was likely to
deceive and cause confusion. The appellants
preferred an appeal against the order of this Court
which allowed the appeal. In the respondent s
Letters Patent Appeal the Division Bench of this
Court set aside the judgment and restored the order
of the Registrar. The Supreme Court dismissed the
appeal holding that the appellants had failed to
discharge the onus that rested heavily on them to
prove that the trade mark which they wanted the
Registrar to register was not likely to deceive or
cause confusion. In paragraph 24 the Supreme Court
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held as under:
24. The learned counsel for the appellants
contended that the question whether his
clients trade mark was likely to deceive or
cause confusion had been concluded by the
earlier judgment of the Madras High Court in
the passing off action and already referredto in an early part of the judgment. It is
quite clear that the onus in a passing off
action rests on a plaintiff to prove whether
there is likelihood of the defendant s goods
being passed off as the goods of the
plaintiffs. It was not denied that thegeneral get up of the appellants trade mark
is different from the general get up of the
respondents trade mark. That being so, itwas held by the Madras High Court in the
passing off action that on the meagre
material placed on record by the plaintiffsthey had failed to prove that the
defendants goods could be passed off as the
goods of the plaintiffs. The considerations
relevant in a passing off action are
somewhat different than they are on an
application made for registration of a markunder the Trade Marks Act and that being so
the decision of the Madras High Court
referred to above could not be considered asrelevant on the questions that the Registrar
had to decide under the provisions of the
Act.
26. The Supreme Court did not apply the
principles in the facts of that case. However, the
judgment does not hold that the principles of res
judicata and issue estoppel are inapplicable to
passing off actions. Nor do I read the judgment as
having impliedly overruled the judgment of this
Court in Indo Pharmaceutical Works Pvt. Ltd.
27. Dr. Tulzapurkar submitted that passing off
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27
is a continuous cause of action. The judgment in a
previous proceeding therefore would not operate as
res-judicata in subsequent proceedings. Nor would
the principle of issue estoppel be applicable
thereto.
28. I am unable to accept these propositions
stated so broadly. That would depend upon the facts
and circumstances of the case.
ig If for instance,the
facts in the subsequent proceeding are the same or
no more than the facts in the proceeding in which
the judgment has been delivered and the issue of
passing off has been considered therein, I see no
reason why the principles of res judicata and issue
estoppel cannot apply merely because the decision is
in respect of a cause of action which is of a
continuing nature. The mere fact that the cause of
action is a continuous one would not be
determinative of the question. This would depend on
the facts of each case. Thus, Dr. Tulzapurkar s
reliance upon the judgment of the Supreme Court in
Bengal Waterproofing Ltd. vs. Bombay Waterproofing
Mfg. Co. [1997(1) SCC 99] in support of his
submission that passing off furnishes a continuous
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28
cause of action is of no assistance in this regard.
29. This brings me to the said judgment of the
Supreme Court in Khoday Distilleries Ltd. vs. Scotch
Whisky Association & Ors. [(2008) 10 SCC 723 = 2008
(37) PTC 413] on the basis of which this Chamber
Summons has been taken out.
30. I will refer to the facts leading to the
filing of the appeal before the Supreme Court from
the judgment itself, for Mr. DeVitre submitted that
the Supreme Court had itself noticed certain facts
and that the decision ultimately must be seen in the
light thereof.
(A) Plaintiff no.1 and the defendant in this
suit were the respondent and the appellant
respectively before the Supreme Court. I will
however refer to the parties as they are arrayed in
this suit. The defendant filed an application for
registration of its mark PETER SCOT before the
Registrar of Trade Marks, who was the third
respondent in the appeal before the Supreme Court.
The application was accepted and the defendant was
allowed to proceed with the advertisement subject to
the condition that the mark would be treated as
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29
associated with another mark. No opposition was
filed by the plaintiff in the proceeding initiated
by the defendant for registration of the trade mark.
The defendant s trade mark was registered. The
plaintiffs came to know of the same on 20.9.1974.
The plaintiffs however filed application for
rectification on 21.4.1986. The Supreme Court noted
the fact that the present suit had been filed for
passing off and that the same was pending. The
defendant showed cause to the application for
rectification.
(B) The following issues framed by the third
respondent were noted by the Supreme Court:
Several issues were framed by the 3rd
respondent in the said proceedings which wereas under:
(1) Whether the applicants are persons
aggrieved under Section 56?
(2) Whether the application for rectification
is not maintainable due to any misjoinder
of the applicants?
(3) Whether the impugned mark was not
distinctive of the goods of the registered
proprietors at the commencement of the
rectification proceedings?
(4) Whether the impugned registration
contravenes Section 11 at the commencement
of rectification proceedings? And(5) Whether the mark is liable to be rectified
and if so, in what manner?
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30
It is pertinent to note that the Supreme
Court in paragraph 20 of the Judgement noted that in
support of their application the plaintiffs had
raised before the third respondent the following
grounds:
(1) The mark is not distinctive.
(2) It was not capable of distinguishing
itself as the goods of the appellant.
(3) The use of the mark is likely to deceive
or confuse.
(4) Non-user of the mark.
The plaintiffs succeeded only on the third ground.
(C) The learned Judges noted that they were
primarily concerned with issue no.4 above, which was
dealt with by the third respondent in detail. The
third respondent held that the mark had been used
deceptively for a long time and although there was
an unexplained and inexcusable delay on the part of
the plaintiff in filing the rectification
application, the defendant had failed to establish
its plea of acquiescence/delay and the plea of
deceptive element in the impugned mark had not been
displaced or rebutted by evidence of the defendant.
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31
(D) Mr. DeVitre placed strong reliance upon
paragraph 10 of the judgment which quotes the
finding of the third respondent regarding the
plaintiff s plea that the impugned registration is
contrary to Section 11 of the Trade & Merchandise
Marks Act, 1958. He relied upon the same for the
reason that the quotation refers to two factors,
namely the
presence of the word SCOT in the
defendants mark PETER SCOT and the presence of the
slogan/descriptive words namely Distilled from the
Finest Malt and Blended with the Choicest Whiskies
by the Scotch Experts under Government Supervision .
In fact these two factors as well as the third
factor, namely the box or carton used by the
defendant containing the emblem of the Rampant Lion
is referred to more than once in the judgment. It is
sufficient in this regard to refer to paragraph 18
of the judgment which reads as under:
18. It is not in dispute that the
appellant manufactures whisky under the
brand name Peter Scot . The box of the
carton contains the emblem of Rampant
Lion . It is a malt whisky. On one side
of the box it is stated PRIDE OF
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32
INDIA and on the other Khoday
Distilleries Private Limited . Apart
from the said information on the right
hand side of the label it is stated
Distilled from the Finest Malt and
Blended with the Choicest Whiskies by
Scotch Experts under Government
Supervision .
(E). The application for rectification was
allowed.
The defendant s appeal under Section 109
of the Act was dismissed by the learned Single
Judge. The Supreme Court has quoted the observation
of the learned Single Judge rejecting the
defendant s contention based on the plaintiff s
acquiescence, the absence of any evidence having
being led by the defendant and its not having cross-
examined the plaintiff s witness who had filed the
affidavit in support of the application for
rectification and the finding that the trade mark
had been adopted to take advantage of the goodwill
developed by the members of the plaintiff. The
Supreme Court also noted the observation of the
learned Judge criticising the affidavits filed on
behalf of the plaintiff but holding that the same
did not help the defendant to avoid rectification.
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33
(F) The judgment then refers to certain
observations of the Division Bench of the Madras
High Court dismissing the defendant s appeal against
the order and judgment of the learned Single Judge.
Mr.DeVitre placed reliance on the quotation from the
judgment of the Madras High Court in paragraph 13 of
the judgment. Paragraph 13 of the judgment of the
Supreme Court reads as under:
Feeling aggrieved, an intra-court appeal
was preferred thereagainst by the
appellant. A Division Bench of the High
Court, as noticed hereinbefore, dismissed
the said appeal. The Division Bench noticed
at some length the submissions made by the
parties to inter alia hold:
We have carefully considered the abovesaid
submissions made by the counsel on eitherside. In our considered view, the use of
the device Lion Rampant and the abovesaid
description especially the description
Distilled from the Finest Malt and Blended
with the Choicest Whiskies by ScotchExperts under Government Supervision is
definitely intended to lead the consumers
to believe that the whisky manufactured by
the appellant is Scotch whisky. Though
specific averments as abovesaid have been
made in the affidavit on Ian Barclay, the
same have not been rebutted by theappellant by adducing rebuttal evidence.
The appellant has also not chosen to cross-
examine Ian Barclay on the averments
contained in the affidavit. Therefore, we
are of the considered view that both the
third respondent and the learned Single
Judge have considered all the relevant
materials available on record and have
exercised their discretion properly and as
such we do not find any reason to interfere
with the judgment of the learned Single
Judge.
(G). The judgment then proceeds to record the
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34
submissions on behalf of the learned Counsel
appearing before the Supreme Court. As Mr. DeVitre
placed considerable reliance upon the submissions of
the counsel both on behalf of the appellant and the
respondent in support of his contention that the
issues raised in the suit were raised before the
Supreme Court and decided by the Supreme Court, it
is necessary to set the same out.
14. Mr R.F. Nariman, learned Senior
Counsel appearing on behalf of the
appellant, submitted:
1. Respondent 3 as also the High Court
committed a serious error insofar as they
failed to take into consideration that in
view of the statement made in the affidavit
affirmed by Ian Barclay that the
respondents were aware of infringement of
the mark as far back in 1974 but as no
action was taken in relation thereto till
1986, the application for rectification was
barred under the principles of waiver and
acquiescence.
2. Long delay of 14 years caused in
filing the said application for
rectification should have been held to be
fatal having regard to the fact that the
same caused immense prejudice to the
appellant as in the meantime, the sale of
the appellant had gone many folds.
3. Acquiescence on the part of the
respondents would amount to waiver, if not
abandonment, of their right as any order
passed for rectification of the mark being
unconscionable and inequitable, the same
should not have been allowed.
4. The word Peter Scot allegedly being
evolved of Scotland cannot be held to be a
subject-matter of passing off as:
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35
(a) Purchasers of the same are discerning;
(b) They are aware of the brand which they
would be purchasing;
(c) Rich and wealthy people would only
ordinarily purchase goods like Scotch
whisky and they being literate cannot
possibly be pulled by the word Scot
knowing that they are purchasing Scotch
whisky, particularly in view of the
fact that on the label as also on the
box, it has categorically been
mentioned that the product is a PRIDE
OF INDIA and is manufactured at
Bangalore in India.
5. The Division Bench committed a serious
error insofar as it failed to take into
consideration the aforementioned arguments
of the appellant, although categorically
noticed by it, so far as if the label is to
be looked at in its entirety, the emblem of
Rampant Lion with the words Distilled from
the Finest Malt and Blended with the
Choicest Whiskies by Scotch Experts under
Government Supervision must be read with
the word PRIDE OF INDIA and the names of
the appellant and the fact that it was
manufactured at Bangalore.
6. The Division Bench of the High Court
committed a serious error insofar as it
failed to take into consideration that
having regard to the provisions contained
in Section 26 of the Geographical
Indications of Goods (Regulation and
Protection) Act, 1999 (for short the 1999
Act ), the rights of trade marks which had
been acquired through use in good faith
were protected and thereby committed a
serious error in not allowing the appellant
to raise the said contention, on the
premise that the same was being raised for
the first time before it.
15. Mr Ashok H. Desai, learned Senior
Counsel appearing on behalf of Respondents
1 and 2, on the other hand submitted:
(i) The findings of fact arrived at by
Respondent 3 and as affirmed by the learned
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36
Single Judge and the Division Bench of the
High Court should not be interfered with as
they cannot be characterised as extraneous
or perverse being based on no evidence.
(ii) An application for rectification is
the only remedy in respect of a registered
trade mark which is likely to deceive or
cause confusion for the purpose of
maintaining the purity of register of trade
marks wherefor the extended concept of
passing-off action should be recognised.
(iii) The basic distinction between the
trade mark infringement and passing-off
action is that whereas the former flows
from a statutory right, the latter is
action in tort being in the realm of unfair
competition.
(iv) Courts in India and abroad having
consistently protected Scotch whisky, any
mark carrying words such as Scot, Glen and
Highland should not be allowed to continue.
The appellant by using its product as Peter
Scot, which is an Indian whisky, intended
to be seen as a manufacturer of Scotch
whisky, as would be evident from the
affidavit of Mr Peter J. Warren.
(v) If there is a fraud at inception in
adoption of the name, the court should
discourage such fraud in sternest way. It
is not correct to contend that the delay,
if any, on the part of the respondents
would amount to acquiescence or waiver as
the purpose of filing an application for
rectification is to maintain the purity of
register and public interest.
(vi) There is significant evidence in the
present case as regards confusion
concerning whisky bearing the name of Peter
Scot which having not been controverted or
rebutted would clearly go to show that any
ordinary consumer would tend to believe
that Peter Scot is a Scotch and not an
Indian whisky.
(vii) The label used by the appellant
clearly suggests that it is a Scotch whisky
and not of Indian origin.
(viii) The provisions of the 1999 Act are
not applicable to the facts and
circumstances of the present case.
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37
31. At the outset of the consideration of the
question as to whether the issues in this suit have
been so decided in the judgment of the Supreme
Court, as to result in the dismissal of the suit, it
is necessary to consider what the Supreme Court in
fact held. That the judgment noted the various
submissions advanced on behalf of the parties is not
relevant.
What is relevant is what was in fact
decided.
32. I do not find anything in the judgment that
leads to the conclusion that the case of passing off
in the present suit was in fact decided against the
plaintiff.
It is important to note that after
referring to the submissions of the learned Counsel
the Supreme Court in paragraph 17 observed that
although a large number of issues had been raised by
the learned Counsel the principal issues which arose
for their consideration were only two. Paragraph 17
of the judgment reads thus:
17. Although a large number of issues have
been raised by the learned counsel for the
parties, we are of the opinion that the
principal issues which arise for our::: Downloaded on – 09/06/2013 15:09:50 :::
38consideration are:
(i) Whether the delay on the part of
Respondents 1 and 2 in filing the
application for rectification would amountto acquiescence and/or waiver?
(ii) Whether Respondent 3 as also the
learned Single Judge and the Division Benchof the High Court have failed to apply the
correct tests and, thus, misdirected
themselves in law?
After setting out the fact of the case, the
observations of respondent no.3, the learned Single
Judge and the Division Bench of Madras High Court
and the submissions of Counsel, the Supreme Court in
paragraph 21 crystalised the question for its
decision as under:
21. The principal question which arises for
consideration is as to whether the term
Scot would itself be a sufficient ground
to opine that the mark Peter Scot isdeceptive or confusing. Indisputably the
onus of proof would be upon the respondents.
The question arises is as to whether they
have discharged the same or not. (emphasis
applied)
In this paragraph the Supreme Court
confined the consideration whether the term SCOT
would itself be a sufficient ground to opine that
the defendant s mark PETER SCOT is deceptive or
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39
confusing. In other words, in this paragraph the
Supreme Court did not frame the question as to
whether the other two factors or the three factors
together viz. the mark PETER SCOT , the device of
the Rampant Lion and the descriptive words
constitute passing off / are likely to deceive or
confuse.
33. Mr.
DeVitre however submitted that the
Supreme Court while narrating the facts having noted
all three factors must be presumed to have
considered whether the combination thereof is likely
to deceive or confuse.
34. I do not agree. Firstly, the judgment must
be read for what it states and not what may
logically follow from it. In fact, as noted above
after setting out the submissions of Counsel, the
Supreme Court expressedly observed that it was of
the opinion that the principal issues for their
consideration were only two and specified the same.
In paragraph 59 the Supreme Court framed the
question again as follows:
59. Another principal question which
arises for consideration is as to whether::: Downloaded on – 09/06/2013 15:09:50 :::
40the use of the term Scot would itself be
a sufficient ground to form an opinion that
the mark Peter Scot is deceptive or
confusing. Indisputably, the onus of proof
therefor would be on the respondents.
Whether they have discharged the said onus
is the question?
Thus, once again the Supreme Court did not state
that it would decide the question of the three
factors taken together being deceptive or confusing.
35.
Mr. DeVitre however submitted that I ought
to presume that the Supreme Court intended to and
infact did hold that the three factors viz. the mark
PETER SCOT , the label with the device of the
Rampant Lion and the legend taken independently or
together would be deceptive or confusing. He said
this was clear from a combined reading of paragraph
63, 77, 80 (part) and 82. As strong reliance was
placed on these paragraphs, I will set them out in
their entirety.
63. The law in this regard has been
specifically stated in Kerly s Law of Trade
Marks and Trade Names, 13th Edn., p.
600 in the following terms:
(3) If the goods are expensive or
important to the purchasers and not of a
kind usually selected without deliberation,
and the customers generally educated
persons, these are all matters to be
considered.
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41
77. Where the class of buyers, as noticed
hereinbefore, is quite educated and rich,
the test to be applied is different from
the one where the product would be
purchased by the villagers, illiterate and
poor. Ordinarily, again they, like tobacco,
would purchase alcoholic beverages by their
brand name. When, however, the product is
to be purchased both by villagers and town
people, the test of a prudent man would
necessarily be applied. It may be true that
the tests which are to be applied in a
country like India may be different from
the tests either in a country of England,
the United States of America or Australia.
80. Referring to Kerly on Trade Marks,
which we have referred to hereinbefore, the
learned Judge said: [Bollinger (No. 2)
case848, All ER p. 566 E-F]
And it has been said that regard should not
be had to unusually stupid people, fools
or idiots . Moreover, if the goods are
expensive and not of a kind usually
selected without deliberation and the
customers generally educated persons these
are all matters to be considered . (That is
also a quotation from the same book.)
Various other judicial statements are
collected in the judgment of the Assistant-
Registrar in George Angus & Co. s
Application, Re49, RPC at pp. 31-32, to
which I was referred.
&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&
82. But then we are concerned with the
class of buyer who is supposed to know the
value of money, the quality and content of
Scotch whisky. They are supposed to be
aware of the difference of the process of
manufacture, the place of manufacture and
its origin. Respondent 3, the learned
Single Judge as also the Division Bench of
the High Court, therefore, failed to notice
the distinction, which is real and
otherwise borne out from the precedents
operating in the field. (See Kerly s Law of
Trade Marks and Trade Names, 13th Edn., p.
600.)
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42
36. I do not see how these observations support
such a wide proposition. I do not read the
commentary from Kerly s Law of Trade Marks and Trade
Names cited in paragraph 63 as suggesting that there
can be no passing off in respect of goods that are
expensive or important to the purchasers. There is
no absolute proposition to this effect. They are,
as noted in
ig the commentary, matters to be
considered. These matters however are not decisive.
37. Nor does the observation of the Supreme
Court in paragraph 77 support such a wide
proposition. The tests to be applied have been held
to be different. I do not however read the judgment
as having held as an absolute proposition that
passing off can never occur in respect of products,
including Scotch Whisky, purchased by people who are
educated and rich. These again are but factors,
important factors to be taken into consideration
alongwith all other facts. To hold otherwise would
lead to the absurd result that people at large are
entitled to infringe and pass off marks used in
relation to goods which are used in respect of
products purchased by the educated and well to do.
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43
38. The observations in paragraphs 80 and 82
were relied upon by Mr. DeVitre to suggest that the
Supreme Court has held that there can never be a
case of passing off in respect of Scotch Whisky
irrespective of the manner in which the marks,
labels and devices are used.
39.
The error in this submission arises from
selecting portions of the judgment and reading them
out of context. The observations must be read in
the context in which they are made. The Supreme
Court in terms stated that the question that fell
for their consideration was whether the use of the
term SCOT would itself be sufficient ground to
form the opinion that the mark PETER SCOT is
deceptive or confusing. Nowhere in this judgment
has the Supreme Court even considered whether the
combination of the three factors is deceptive or
confusing. On the other hand this is one of the
main questions in the suit.
40. In the circumstances Mr. DeVitre s
submission that the judgment of the Supreme Court
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44
decides the issues raised in the present suit on the
question of passing off is rejected.
41. The defendant has raised the issue of
acquiescence in the present suit in respect of the
plaintiffs case of passing off. Mr. DeVitre
submitted that the Supreme Court also considered the
issues of acquiescence qua passing off alleged by
the plaintiff.
42. The submission is not well founded. I have
already held that the Supreme Court did not consider
the question regarding the combined effect of the
three factors on the question of passing off. If
that be so the finding of the Supreme Court of
delay, acquiescence and waiver must also be confined
to the application for rectification on the basis of
the use of the word mark PETER SCOT in so far as
it includes the word SCOT . This is in fact clear
from the observations of the Supreme Court I
referred to while dealing with the previous issue.
43. The Supreme Court has undoubtedly held that
it would not be correct to contend that under no
circumstances can the principles of delay or
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45
acquiescence or waiver be held to apply to
rectification proceedings. For instance in
paragraph 32 the Supreme Court has held that the
power of the Registrar under Section 56 of the Act
is wide, it enables the tribunal to make such order
as it may think fit and that when the discretionary
jurisdiction has been conferred on a statutory
authority, the same although would be required to be
considered on objective criteria but as a legal
principal it cannot be said that the delay leading
to acquiescence or waiver or abandonment will have
no role to play. What is important to note however
is that the Supreme Court considered the question of
delay qua the rectification application which was
the original proceeding itself. Even on the
question of delay per se the Supreme Court observed
that whereas action had been taken by the plaintiff
against various others all over the world including
in India, who had used the word SCOT , no action
had been taken against the defendant for the same.
In paragraph 36 it was noted that if the plaintiff
had opposed the registration of the defendant s mark
earlier, then the defendant would have known where
::: Downloaded on – 09/06/2013 15:09:50 :::
46
it stood, and would have withdrawn its application
and started manufacturing whisky of the same quality
with a different brand name. Thus the principles of
acquiescence, waiver and abandonment were considered
in the context of the rectification application and
not in the context of this passing off action. I am
conscious of the fact that in paragraph 43 the
Supreme Court has observed that the rule of waiver
of right is expressly provided for in case of
passing off. What is important however is that the
question of acquiescence or waiver or abandonment
was not decided qua passing off actions per se. The
Supreme Court applied the principles of acquiescence
waiver and abandonment in respect of the application
for rectification which was based inter alia upon
the defendants mark being deceptive or causing
confusion. The conclusion of the Supreme Court in
paragraph 57:
We, therefore in the peculiar facts and
circumstances of this case, are of the
opinion that the action of the respondents
is barred under the principles of
acquiescence and/or waiveris in the context of the rectification application.
44. The judgment of the Supreme Court may apply
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47
to this passing off action as a precedent. That
however is an entirely different thing from saying
that it operates as res judicata or as issue
estoppel. There is a fundamental difference of a
very vital nature between a judgment operating as
res judicata or as an issue estoppel in respect of
another proceeding and the judgment operating as a
precedent. In the former case the cause of action
itself would not survive or be extinguished by
virtue of the judgment. In the latter case the
cause of action survives but the issue of law
decided by the Court operates as a precedent against
the party.
45. The consequences of the two situations are
also different and of a vital nature. Where the
judgment operates as a precedent, the avenues of
appeal are always open on the merits of the case as
well as on the law applicable thereto. This is so
even if it is a judgment of the Supreme Court, for
while the judgment would be binding on the lower
courts as well as on a bench of equal strength of
the Supreme Court, theoretically it is always
possible for a larger bench of the Supreme Court to
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48
take a different view. However, where a judgment
operates as res judicata or issue estoppel this
avenue would not be open on the merits of the case
and the issues therein.
46. The submissions that the issue of
acquiescence decided by the Supreme Court operates
as res judicata or issue estoppel in this suit is
therefore rejected.
47. In the circumstances the Chamber Summons is
dismissed.
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