In the case of Mr. Amrish Aggarwal, trading as M/s Mahalaxmi Product v. M/s Venus Home Appliances Pvt. Ltd. & Anr., brought before the Division Bench of the Delhi High Court, the question by the Ld. Single Judge that whether “after the abolition of the Intellectual Property Appellate Board (IPAB), there is no requirement of staying a civil suit during pendency of a rectification petition, even where the rectification petition is instituted under Section 124 of the Trade Marks Act,1999, could be sustained, in view of Section 124 (2)?” was framed for consideration of the Court, while doubting the correctness of its views expressed in Sana Herbals Pvt. Ltd. vs. Mohsin Dehlvi (Sana Herbals).
Section 124 of the Trade Marks Act, 1999 (the Act) envisages that proceedings in a suit for infringement or passing off being stayed if it be found that proceedings for rectification of the trademark have been initiated or were pending on the date when the suit comes to be instituted. Thus, the section contemplates situations where either the defendant or the plaintiff were to raise an issue of invalidity of a mark and envisions a plurality of contingencies dependent upon whether a rectification action had already been initiated on the date when the suit proceedings commenced or were to be raised in the course thereof. In all such eventualities, the statute contemplates the suit proceedings being placed in abeyance.
The Single Judge had prima facie found the view laid down in Sana Herbals case, as untenable, which was that since both the rectification application as well as the suit would come to be tried by the High Court, after the abolition of IPAB, the possibility of any conflict would stand obviated and thus there would be no requirement of staying the suit proceedings until disposition of the rectification petition.
The court observed that the view laid down in Sana Herbals was not only untenable but also contrary to the judgements relied upon by it in coming to its conclusion in the present case, i.e. Elofic Industries (India) v. Steel Bird Industries, further affirmed in Puma Stationer P. Ltd and Anr vs. Hindustan Pencils Ltd., as well as in Patel Field Marshal Agencies v. P.M. Diesels.
To summarise the facts of the matter, the Respondent/Plaintiff (Venus Home Appliances Private Limited) had instituted an action for infringement and passing off against the Petitioner/Defendant (Mahalaxmi Products) before the Additional District Judge (the authority exercising the powers of the designated Commercial Court), wherein it was alleged that the Petitioner was infringing the “Venus” mark of the Respondent. While filing its written submissions and during the pendency of the suit, the Petitioner challenged the validity of the asserted “Venus” mark and instituted an application under Section 124(1) of the Trade Marks Act 1999 (the Act) for framing of an issue regarding invalidity of the “Venus” mark and for adjournment of the proceedings by three months in order to enable the Petitioner to file a rectification petition. Even while the said application was pending, and even before the Commercial Court could render an opinion on prima facie tenability, the Petitioner moved the High Court to file the present rectification petition.
The first issue before the Court was ‘whether such a rectification petition could be filed at all, even before the Commercial Court had satisfied itself as to the prima facie tenability of the challenge which was raised.’
In this the Court noted that while the Petitioner had pre-emptively filed the rectification proceedings, the same cannot be dismissed as ‘not maintainable’ merely because it has been filed in advance of any issue being framed by the learned Commercial Court acting on the tenability or framing of an issue, during the ongoing suit proceedings.
The Court relied upon Elofic, wherein a rectification petition was filed simultaneously with the filing of a written statement. At the time when the matter arose, the applicable provision in law was Section 111 of the Trade and Merchandise Act, 1958 (TMAA 1958). Paras 10 and 42 of the judgement in Supreme Court in Patel Field Marshal vs. PM Diesels Ltd recognises that Section 111 of the TMAA 1958 is in pari materia with Section 124 of the Act, 1999, and the same law would apply mutatis mutandis to Section 124 of the present Trademarks Act, 1999.
Further, the Division Bench in Puma Stationer, also approvingly cited Elofic, and stated that the rectification cannot be dismissed as not maintainable merely because it has been filed in advance of an issue being framed by the learned Commercial Court.
The second issue, and also the main question which had resulted in doubting the correctness of the view laid down in Sana Herbals case, was ‘if the rectification petition could be filed during the pendency of a suit or before an issue could be framed by the Court as to the tenability of the rectification petition, whether the same would ipso facto result in a stay of the suit proceedings?’
It is imperative to note that the Court in the Sana Herbals case justified its decision on the premise that with the abolition of the Intellectual Property Appellate Board (IPAB), rectification proceedings are also to be decided by the High Court and in a way effectively held Section 124 (2) of the Act to be no longer applicable, and hence no need of staying the suit proceedings in case of a rectification petition being framed.
In concluding the above view as laid down in Sana Herbals to being contrary to the plain text of the statute, the Court relied upon the plain language of Section 124(2) of the Act, which envisages an order providing for stay of suit proceedings as a necessary corollary to the filing of the rectification proceedings and in this the statute does not even confer any discretion in a court to stay suit proceedings or refusing to place its proceedings in abeyance. In other words, Section 124(2) of the Act considers the stay of the suit proceedings to be, in fact, an ‘inexorable legislative consequence’ to the filing of a rectification petition.
The Court also noted as below:
- The conscious decision of the Legislation to retain Section 124(2) in the Act cannot be overlooked, as the same cannot be an incidence of legislative oversight.
- Section 124(2) clearly envisages stay of the suit, pending disposal of the rectification proceedings, even where the rectification proceedings are instituted by the High Court.
- No requirement of any orders being passed by the Court for the suit to be stayed.
- Any decision of the Court that there is no requirement to stay the suit would be directly contrary to Section 124 (2). Thus, conclusively, it is obvious that the order in Sana Herbals is contrary to the law as laid down under Section 124(2) of the Act.
The Court, in fact, believed Sana Herbals as contrary to the judgement in Puma Stationer, which dealt with an identically worded Section 124. In the Puma Stationer decision, it was held that ‘once a rectification petition is filed, stay of the pending suit, at least qua infringement is mandatory though the suit can proceed so far as passing off is concerned’.
The Court concluded that the obligation to stay proceedings in contingencies spoken of in Section 124 (1) of the Act does not stand obviated consequent to the abolition of the IPAB and in so far as once a plea of invalidity is raised, either by a plaintiff or a defendant, proceedings in the suit must necessarily be placed in abeyance awaiting the outcome of the rectification petition.
Further, the statute laid down in Section 124 (2) of the Act, combined with a plain reading of sub-sections (i) and (ii) of Section 124 (1) of the Act, establishes a legislative mandate operating upon the suit court to stay its hands and place proceedings in abeyance, if it be informed of the institution of a rectification petition and until its final disposition. The only additional factor is the prima facie tenability of the rectification petition. Also, it held that the view in Sana Herbals, that after the abolition of IPAB, both the suit and rectification petition would come to be tried by the High Court and always before the same bench of the High Court, is highly presumptuous and incorrect in law.
In delivering its final verdict, the Court thus set aside the decision in Sana Herbals and held that the stay proceedings are to be necessarily set aside while awaiting the outcome of a rectification petition and considered the views of the senior counsel that Section 124 of the Act is essentially structured to avoid spectre of conflicting decisions and multiplicity of proceedings and the obligation to stay proceedings is manifest in the Legislature having consciously used the expression “shall stand stayed until final disposition of rectification proceedings”.
