Absolute Property Of Class-I Legal Heirs Would Not Devolve Upon Their Sons U/s. 8 Of HSA - Delhi HC In TM Infringement Case

Delhi High Court in a trademark infringement suit has held that property which devolved upon Class-I legal heirs under Section 8 of HSA will constitute absolute properties of such Class-I heirs and their sons would not have any right by birth in such properties.

In this context, the Bench opined -

"Therefore, defendant No.1, not being a Class-I heir would not get any interest by birth in the property of late Sh. Kundan Lal Gujral. In view of the above, there is no merit in the submission of the defendant that the trademarks were held in trust for him by his father as he was a minor when Sh. Kundan Lal Gujral died."

A bench of Justice Amit Bansal was hearing an application under Order XXXIX, rules 1 and 2 of CPC for grant of the interim injunction pending the disposal of the suit and the application filed on behalf of Defendant No 1 under Order XXXIX Rule 4 of the CPC seeking vacation of the ex parte interim injunction granted on 16th December 2021, in favor of the Plaintiffs.

Mr. Kundan Lal Gujral coined the term MOTI MAHAL and started a restaurant in 1920 in Peshawar and later shifted to Delhi in 1947. The mark" MOTI MAHAL" was registered in August 1992. Mr. Nand Lal Gujral died Intestate on 18th December 1997. Mr. Kishan Lal Gujral, Son of Mr. Kundan Lal Gujral predeceased him in 1990. Plaintiffs No 1 and 2 are grandsons of Mr. Kundan Lal and Plaintiff no 3 is her daughter-in-law. Defendant No 1, is the great-grandson of Mr. Kundan Lal, Defendant no 2 is a company in which he is the director.

Plaintiffs, after the demise of Mr. Kunda LaL Gujral, were accorded the rights over the wordmark "MOTI MAHAL". They exponentially expanded the business in 25 years and acquired goodwill and have over 100 franchises. Defendant no 1 was initiated in the family business by Plaintiff no 1 by way of a partnership firm, in which both Plaintiff No1 and Defendant no1 were partners. The firm gave franchises in favor of third parties in respect of the restaurants bearing the name 'MOTI MAHAL' and its variation.

The dispute arose when Defendant No1 started giving out franchises in the name of "Moti Mahal" from the Partnership Firm to Defendant No.2 company without the permission of any of the Plaintiffs. A suit was filed by Plaintiff before the High Court. The suit came up for hearing before the Court on 16th December 2021, when, finding a prima facie case in favor of the Plaintiffs, the High Court passed an ex parte ad interim injunction order restraining the Defendants from using the trademarks MOTI MAHAL', 'MOTI MAHAL DELUX', 'MOTI MAHAL CAFÉ' and MOTI MAHAL (stylized), formative marks or any other marks deceptively similar to the Plaintiff's registered marks. Thereafter Defendant No.1 filed an application under Order XXXIX Rule 4 of the CPC seeking vacation of the ex parte ad interim injunction granted on 16th December 2021, in favor of Plaintiff and the Plaintiff filed an application under Order XXXIX seeking a permanent injunction against the Defendants.

Mr. Chander M. Lall, Senior Counsel appearing on behalf of the Plaintiffs contended that upon the death of Sh. Kundan Lal Gujral, the trademark 'MOTI MAHAL' devolved upon the plaintiffs, being the only Class I legal heirs of late Sh. Kundan Lal Gujral, as his son had predeceased him. He further contended that the Plaintiffs were absolute owners of the trademark and their children would have no right in it by birth. He also submitted that Defendants No.1 and 2 started giving out franchises in respect of the marks 'MOTI MAHAL and 'MOTI MAHAL DELUX' and a defendant No.2 when they had no right over the property. He placed reliance on Sections 8 and 9 of the Hindu Succession Act, 1956 to contend that the intellectual property inherited by the Plaintiffs was acquired as a self-acquired property of the deceased Sh. Kundan Lal Gujral and not a coparcenary property and therefore, Defendant No.1 cannot have any rights as to the same.

Mr. Arvind K Nigam, Senior Counsel appearing on behalf of the Defendants placed reliance on Section 10 (Rule 3) and Sections 19 read with section 6 of the Hindu Succession Act, 1956 (Old Act) to contend that the marks in question devolved on all the legal heirs in the branch of the pre-deceased son of late Sh. Kundan Lal Gujral jointly. He further placed reliance on Section 100 of the Trademarks Act, 1958 (Old Act), the corresponding provision to which is Section 133 in the trademark Act, 1999, (New Act) read with Rule 64 of the trademarks Rules, 1965 (Old Rules), the corresponding provision which is Rule 55 in the Trade and Merchandise Marks Rules, 2017(New Rules), to contend that the Trademarks Laws also recognize the same principle of successorship as envisaged in the Hindu Succession Act, 1956.

The issue which was dealt with by the Court was whether Defendant No.1 was entitled to any rights over the trademark 'MOTI MAHAL' on account of him being a great-grandson of late Kundan Lal Gujral.

The Court placed reliance on section 8 of the Hindu Succession Act to rule that Defendant would not fall under the category of Class I Heir.

The Court then placed reliance on Section 9 and Section 10, Rule 3 to decide that the Plaintiffs would equally inherit the properties of Late Shri Kundan Lal Gujral including the trademark 'MOTI MAHAL', to the exclusion of Defendant no. 1. The Court concluded that Plaintiffs No.1 to 3 are the sole registered owners of the wordmark 'MOTI MAHAL' and observed:

"Any unauthorized use of the aforesaid mark by defendants in respect of similar services of running restaurants/cafes and granting franchises in respect of restaurants/cafes would cause the public to believe that the same is connected with the plaintiff".

On the fact pointed out by the Defendants that Plaintiff no 1 is himself is a 50% shareholder in Defendant No.2 company. The Bench observed -

"That may be so, but just because plaintiff No.1 is a 50% shareholder in Defendant No.2 would not entitle Defendant No.2 to use the trademarks that are registered in the name of Plaintiff No.1 unless Plaintiff No.1 has authorized or permitted the defendant No.2 to do so. The aforesaid argument of Defendant No.1 is in the teeth of the basic principles of corporate law that a company has an existence independent of its shareholders".

The Bench finally observed -

"I am of the opinion that a prima facie case of infringement of trademarks and passing off is made out in favor of the plaintiffs and the balance of convenience also is in favor of the plaintiffs and against the defendant. Further, irreparable harm and injury would be caused to the plaintiffs if interim injunction restraining the defendants from using the registered trademarks of the plaintiffs is not passed".

Accordingly, the order dated 16th December, granting injunction was confirmed and interim application preferred by Plaintiffs under Order XXXIX Rules 1 and 2 of the CPC was allowed, and Interim application preferred by the Defendants under Order XXXIX Rule 4 of the CPC was dismissed.

Click here to read/download the Judgment