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arbitration and conciliation act = In our view, this is not a case where money can be an adequate compensation, since the Appellant has apparently acquired a 50% interest in the Trade Mark in question, together with the goodwill of the business in relation to the products in which the Trade Mark is used. 39. We are, therefore, of the view that the High Court erred in reversing the order passed by the District Judge in ARBP No.576 of 2007 filed by the Appellant, under which the status-quo would have been maintained till the dispute was settled in arbitration. 40. We, accordingly, allow the Appeals, set aside the impugned judgment and order of the learned Single Judge

English: Orissa High Court at Cuttack

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REPORTABLE

 

IN THE SUPREME COURT OF INDIA

 

CIVIL APPELLATE JURISDICTION

 

CIVIL APPEAL NOS.10434-10435 OF 2011

(Arising out of SLP(C)Nos.3391-3392 of 2011)

 

 

SURESH DHANUKA … APPELLANT

 

 

Vs.

 

 

SUNITA MOHAPATRA … RESPONDENT

 

 

J U D G M E N T

 

 

ALTAMAS KABIR, J.

 

 

1. Leave granted.

 

 

2. These appeals arising out of SLP(C)Nos.3391-3392 of

 

2011, are directed against the judgment and order dated
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27th October, 2008, passed by the Orissa High Court in

 

ARBA No.17 of 2008 and the order dated 28th September,

 

2010, passed on the Review Application No.21 of 2008.

 

 

3. The Appellant herein, Suresh Dhanuka, filed an

 

application before the learned District Judge, Khurda,

 

being ARB (P) No.576 of 2007, under Section 9 of the

 

Arbitration and Conciliation Act, 1996, hereinafter

 

referred to as the “1996 Act”.

 

 

4. The facts leading to the filing of the said

 

application reveal that on 1st April, 1999, Suresh

 

Dhanuka, the Appellant herein, and Sunita Mahapatra,

 

the Respondent herein, entered into an Agreement,

 

whereby they agreed to jointly carry on business in the

 

name and style of “Abhilasha“. Sunita Mahapatra was

 

carrying on business in the name and style of “M/s.

 

Nature Probiocare Inc.”, as the sole proprietress

 

thereof. The said Agreement was for a period of five
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years from 1st April, 1999 to 31st March, 2004, which was

 

subsequently extended till 31st March, 2009. On 4th

 

October, 1999, the Respondent herein applied to the

 

Registrar of Trade Marks, Kolkata, in Form No.TM-1

 

under the Trade and Merchandise Marks Act, 1958, for

 

registration of the Trade Mark “Naturoma Herbal”, under

 

Application No.879695.

 

 

5. During the first five-year period of the original

 

Agreement dated 1st April, 1999, the Respondent, Sunita

 

Mahapatra, executed a Deed of Assignment on 1st October,

 

2000, assigning 50% of her right, title and interest in

 

the said Trade Mark “Naturoma Herbal”, with

 

proportional goodwill of the business concerned in the

 

goods in respect of which the Mark was permanently

 

used, interalia, on the following terms and conditions,

 

namely,
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(a) All goods manufactured by the Respondent

 

under the said Trade Mark would be

 

marketed solely by the Appellant herein;

 

 

(b) On the termination of the Joint Venture,

 

neither the assignor nor the assignee

 

would be entitled to use or register the

 

Mark in its own name or jointly with some

 

other party;

 

 

(c) The existing goodwill and further goodwill

 

would vest in the owner and the assignee.

 

 

Soon thereafter, on 28th February, 2001, M/s. S.

 

Majumdar & Co., the authorized Trade Mark agent of the

 

Respondent, filed an application in Form No.TM-16,

 

along with the Deed of Assignment, with the Trade Mark

 

authorities, together with the fee of Rs.20/- for

 

recording the name of the Appellant as the Joint

 

Proprietor of the Trade Mark. The application for
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registration of the Trade Mark was advertised in the

 

Trade Mark Journal on 13th November, 2003. While the

 

same was pending, the Agreement dated 1st April, 1999,

 

was extended by mutual consent till 31st March, 2009.

 

It appears that during the period 2003-2007, the sale

 

of the product increased from Rs.19,99,808/- to

 

Rs.1,88,70,143/-. Meanwhile, the Agreement dated 1st

 

April, 1999, was extended by mutual consent till 31st

 

March, 2009, as indicated hereinbefore.

 

 

6. It appears that on 19th July, 2004, one Food

 

Ingredients Specialties S.A. filed an opposition

 

No.KOL-167256 to the Trade Mark application of the

 

Respondent wherein a joint reply was filed, which was

 

affirmed by both the parties. It is alleged that,

 

thereafter, in 2006, the Appellant and his son floated

 

a company by the name of “Naturoma Herbal (P) Ltd.”.

 

It is the case of the Appellant that the Appellant and

 

his son floated the company with the name of “Naturoma
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Herbal (P) Ltd.”. According to the Appellant, his son

 

floated the company with the consent of the Respondent,

 

who, subsequently, declined to participate in the

 

management thereof. On 31st August, 2006, the Appellant

 

resigned from the company despite the fact that the

 

company had not started manufacturing activities until

 

then, as was certified by the Chartered Accountant. On

 

21st August, 2007, the Respondent herein filed a Suit,

 

being CS No.26 of 2007, before the District Judge at

 

Khurda, under Sections 134 and 135 of the Trade Marks

 

Act, 1999. The learned District Judge, by an ex-parte

 

order dated 29th August, 2007, restrained the Appellant

 

and the company from selling, distributing,

 

manufacturing and marketing any of the products in the

 

name of “Naturoma” or “Naturoma Herbal”. At this

 

stage, on 4th September, 2007, the Respondent filed an

 

application under Section 9 of the 1996 Act, also

 

before the District Judge at Khurda.
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7. On 12th September, 2007, the Appellant came to learn

 

from the market that in breach of the Agreements

 

entered into by the parties, the Respondent was

 

approaching the Dealers and Distributors of the

 

Appellant to take direct supplies from the Respondent

 

on a higher discount. This led to the filing of the

 

application under Section 9 of the 1996 Act by the

 

Appellant before the District Judge, Alipore, Kolkata.

 

Thereafter, on 25th September, 2007, the Respondent

 

cancelled the Agreement dated 1st April, 1999 and also

 

revoked the Deed of Assignment dated 1st October, 2000.

 

The Appellant’s application under Section 9 of the 1996

 

Act was dismissed on 26th November, 2007, on account of

 

the earlier application filed under Section 9 of the

 

above Act, by the Respondent before the District Judge

 

at Khurda. Thereafter, on 19th December, 2007, the

 

Appellant filed a fresh application under Section 9 of

 

the 1996 Act, before the learned District Judge,
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Khurda. On 27th December, 2007, the learned District

 

Judge passed an interim order restraining the

 

Respondent from selling the products in question by

 

herself or by any other person, save and except through

 

the Appellant. The said interim order was made

 

absolute on 22nd May, 2008.

 

 

8. On 1st July, 2008, a corrigendum was made by the

 

Trade Mark Registrar in the Trade Mark Journal, showing

 

the Appellant as the joint proprietor of the Trade Mark

 

“Naturoma Herbal”.

 

 

9. The Respondent herein preferred an appeal before

 

the Orissa High Court on 8th July, 2008, which was heard

 

on 18th September, 2008 and judgment was reserved.

 

While the matter was pending, the Respondent filed a

 

letter with the Trade Mark Authority at Mumbai on 25th

 

September, 2008, praying for cancellation of the order

 

allowing the request of the Appellant in January, 2001,
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resulting in issuance of the Corrigendum in the Trade

 

Mark Journal on 16th September, 2008. As would appear

 

from the materials on record, the Assistant Registrar

 

of Trade Marks, Mumbai, cancelled the Corrigendum dated

 

1st July, 2008 on 26th September, 2008, without notice to

 

the Appellant and such cancellation was published in

 

the Trade Mark Journal on 29th September, 2008. On 30th

 

September, 2008, the Respondent filed an affidavit to

 

bring on record the said cancellation of the

 

Corrigendum and, though, the same was relied upon by

 

the High Court in its judgment dated 27th October, 2008,

 

the Appellant was not given an opportunity to deal with

 

the same. The High Court, by its aforesaid judgment,

 

allowed the appeal filed by the Respondent. The Review

 

Application filed by the Appellant on 28th January,

 

2009, against the judgment and order dated 27th October,

 

2008, was ultimately rejected by the High Court on 28th

 

September, 2010, resulting in the filing of the Special
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Leave Petitions on 7th January, 2011, in which notice

 

was issued and a limited interim order was made.

 

 

10. Appearing for the Appellant, Mr. P.K. Ghosh,

 

learned Senior Advocate, submitted that since the

 

Respondent’s establishment was basically a production

 

unit and did not possess any experience and/or

 

expertise in the field of marketing, promotion,

 

distribution and management of its manufactured goods,

 

she entered into an Agreement with the Appellant to

 

market and distribute her products for a period of 5

 

years from 1st April, 1999, as indicated hereinbefore.

 

The same was extended for a further period of 5 years

 

on 1st April, 2004 by mutual consent. Mr. Ghosh

 

submitted that the Appellant incurred huge promotional

 

expenses between 1999 and 2007 assessed at about Rs.72

 

lakhs and it was only after such promotional schemes

 

that there was a substantial increase in the sale of

 

the product with the Trade Mark “Naturoma Herbal”. Mr.
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Ghosh submitted that the sales figures from the

 

accounting year 2003-04 to the accounting year 2006-07

 

showed an increase of almost 1 crore 60 lakhs rupees.

 

 

11. Mr. Ghosh submitted that the Respondent even went

 

so far as to sell its goods by using the Trade Mark

 

“Naturoma Herbal” and deleting the name “Abhilasha”

 

from the packaging of the products. Mr. Ghosh

 

contended that suppressing all the above facts, the

 

opposite party filed a suit, being C.S. No.26 of 2007,

 

under Sections 134 and 135 of the Trade Marks Act,

 

1999, before the District Judge, Khurda, inter alia,

 

praying for an order of injunction to restrain the

 

Appellant from using the Mark “Naturoma Herbal” and

 

obtained an ex-parte order of injunction to the above

 

effect.

 

 

12. Having obtained an interim order in the aforesaid

 

suit, the Respondent terminated the Agreement dated
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1st April, 1999, and also revoked the Deed of Assignment

 

dated 1st October, 2000, unilaterally. The Appellant

 

thereupon moved the learned District Judge, Alipore, by

 

way of an application under Section 9 of the 1996 Act,

 

but the same had to be dropped on account of lack of

 

jurisdiction. The Appellant, thereafter, filed another

 

application under Section 9 of the above Act, being

 

ARBP No.576 of 2007, before the Court of District

 

Judge, Khurda, in which initially on 22nd December,

 

2007, an interim protection was given directing the

 

Respondent not to sell, market, distribute, advertise

 

its products under the Trade Mark “Naturoma Herbal”, by

 

herself or through any other person save and except the

 

Appellant herein. The said order was subsequently

 

confirmed on 22nd May, 2008.

 

 

13. Mr. Ghosh submitted that the Respondent had no

 

authority to terminate the Agreement dated 1st April,

 

1999, on the ground that the same had been misused by
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the Appellant. Learned counsel submitted that even if

 

it be accepted that the Appellant was a Director of the

 

Naturoma Herbals Pvt. Ltd., between June, 2005, to

 

August, 2006, then there was no substance in the

 

applications made against the Appellant as the said

 

Company had not conducted any business within that

 

period and, in any event, its product was sold under

 

different designs containing the word “SAFFIRE” in bold

 

and prominent fonts.

 

 

14. Mr. Ghosh submitted that the Respondent did not

 

also have any right to revoke the Deed of Assignment

 

whereby 50% of the right, title and interest in the

 

Trade Mark “Natural Herbal” had been assigned to the

 

Appellant to be held by him absolutely and forever.

 

Mr. Ghosh urged that the Deed of Assignment did not

 

contain any clause for revocation of the right and

 

ownership of the Trade Mark to the extent of 50% and
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such revocation was made with the intention to defraud

 

the Appellant and to grab the market created by him.

 

 

15. Mr. Ghosh reiterated the conditions contained in

 

the Deed of Assignment dated 1st October, 2000, whereby

 

50% of the right, title and interest in the Trade Mark

 

“Naturoma Herbal” with proportional goodwill of the

 

business concerned in the said goods in respect of

 

which the Mark was used, stood assigned to the

 

Appellant absolutely and forever. Mr. Ghosh submitted

 

that it was not within the powers of the Respondent to

 

terminate the Deed of Assignment, even if the joint

 

venture for marketing of the goods manufactured by the

 

Respondent under the name of “Abhilasha”, was

 

discontinued. Mr. Ghosh reiterated that all goods

 

manufactured by the Respondent under the aforesaid

 

Trade Mark would have to be marketed solely by the

 

Appellant and on termination of the joint venture,

 

neither the assignor nor the assignee would be entitled
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to use or register (emphasis added) the Mark on its own

 

name or jointly with some other party. Mr. Ghosh

 

contended that the said condition amounted to a

 

negative covenant which could be enforced under Section

 

42 of the Specific Relief Act, 1963. Learned counsel

 

urged that while Section 41 of the aforesaid Act

 

indicates the circumstances in which an injunction

 

cannot be granted to prevent the breach of a contract,

 

the performance of which could not specifically be

 

enforced, Section 42, on the other hand, specifically

 

provides that notwithstanding anything contained in

 

Clause (e) of Section 41, where a contract comprises an

 

affirmative agreement to do a certain act, coupled with

 

a negative agreement, express or implied, not to do a

 

certain act, the Court while not being in a position to

 

compel specific performance of the affirmative

 

agreement, would not be precluded from granting an

 

injunction to perform the negative covenant, if the
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plaintiff had not failed to perform the contract so far

 

as it was binding on him. Mr. Ghosh urged that in the

 

instant case, the conditions in the Deed of Assignment

 

made it very clear that except for the Appellant, no

 

other person would be entitled to market, sell,

 

distribute and advertise the goods manufactured by the

 

manufacturer under the Trade Mark “Naturoma Herbal”.

 

It was further stipulated that if the joint venture

 

agreement was to be terminated at any point of time,

 

neither the assignor nor the assignee would be entitled

 

to use or register the Mark in its own name or in the

 

name of some other party.

 

 

16. It was submitted by Mr. Ghosh that the corrigendum

 

which had been published by the Registrar of Trade

 

Marks in the Trade Mark Journal on 1st July, 2008,

 

showing the Appellant as the joint proprietor of the

 

Trade Mark “Naturoma Herbal” was cancelled on 25th

 

September, 2008, on the basis of a letter written by
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the Respondent to the Trade Mark Authority at Mumbai,

 

seeking cancellation of the order, without any

 

opportunity being given to the Appellant who had been

 

shown as the joint proprietor of the Trade Mark in

 

question. Mr. Ghosh submitted that what is more

 

interesting is the fact that such letter seeking

 

cancellation of the order by which the name of the

 

Appellant was shown as the Joint Proprietor of the

 

Trade Mark was written at a time when the Respondent’s

 

appeal against the order of the Registrar of the Trade

 

Marks was pending before the Orissa High Court. In

 

fact, after the hearing of the appeal was concluded and

 

judgment was reserved, the Respondent filed an

 

affidavit before the High Court to bring on record the

 

cancellation of the corrigendum published on 1st July,

 

2008 and, although, the same was relied upon by the

 

High Court, no opportunity was given to the Appellant

 

to deal with the said document or to make any
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submissions in respect thereof. Mr. Ghosh submitted

 

that the appeal was ultimately allowed by the High

 

Court on the basis of documents submitted on behalf of

 

the Respondent after the judgment had been reserved in

 

the appeal.

 

 

17. Mr. Ghosh also submitted that the review

 

application filed by the Appellant on the ground that

 

the affidavit filed by the Respondent was taken on

 

record without any opportunity to the Appellant to meet

 

the same, was also rejected on 20th September, 2010, on

 

the basis of an order of the Registrar of Trade Marks

 

which was not on record at the time when the hearing of

 

the appeal was concluded and judgment was reserved.

 

Mr. Ghosh submitted that the manner in which the entire

 

proceedings had been conducted clearly indicates that

 

the High Court had not applied its judicial mind in

 

allowing the appeal filed by the Respondent against the

 

orders passed on the Appellant’s application under
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Section 9 of the Arbitration and Conciliation Act,

 

1996, before the District Judge at Khurda.

 

 

 

18. Mr. Ghosh lastly contended that on the application

 

made by the Respondent to the Registrar of Trade Marks

 

for registration of the Trade Mark “Naturoma”, certain

 

objections had been filed in her counter statement. In

 

such objection, it had been clearly indicated that with

 

a view to effectively market the products under the

 

Trade Mark “Naturoma”, the Respondent joined hands with

 

the Appellant by a Deed of Assignment dated 1st October,

 

2000, whereby she had transferred 50% of her right,

 

title and interest in favour of the Appellant and

 

pursuant to such assignment, the Trade Mark application

 

was now jointly held by Nature Pro Biocare Inc. and

 

Abhilasha. Mr. Ghosh submitted that the Respondent had

 

at all times in no uncertain terms reiterated the

 

assignment effected in favour of the Appellant with
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regard to the Trade Mark and the goodwill of the

 

Company. Learned counsel submitted that having done

 

so, there was no reason for the Registrar of Trade

 

Marks to cancel the corrigendum by which the name of

 

the Appellant had been brought on the Trade Mark

 

Journal as joint owner of the Trade Mark “Naturoma

 

Herbal” and that too not by any order of cancellation,

 

but merely by a notification which was issued without

 

any foundation, since the judgment in the appeal

 

preferred by the Respondent had not yet been delivered.

 

Mr. Ghosh submitted that the order of the High Court

 

and that of the Registrar of Trade Marks canceling the

 

corrigendum issued by the Registrar of Trade Marks in

 

favour of the Appellant, were liable to be set aside.

 

 

19. On behalf of the Respondent, Mr. Shambhu Prasad

 

Singh, learned Senior Advocate, submitted that since

 

the arbitral proceeding was at its last stages and the

 

Appellant could be adequately compensated in terms of
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money, the prayer for injunction made on behalf of the

 

Appellant was liable to be rejected.

 

 

20. Apart from the above, Mr. Singh submitted that

 

although a Deed of Assignment had been executed on 1st

 

October, 2010, the same had never been acted upon, but

 

the Appellant sought to take shelter under Clause 19 of

 

the said Deed after having acted contrary thereto by

 

forming a Company in the name of “Naturoma Herbals

 

Private Limited” and applying for registration of the

 

Respondent’s Trade Mark “Naturoma” in his newly-formed

 

Company’s name. Referring to the Certificate of

 

Incorporation and Memorandum of Association of the said

 

Company, Mr. Singh pointed out that the name of the

 

Appellant was shown in the Subscribers’ List at Serial

 

No.1 holding 5000 shares, while his son, Rahul Dhanuka,

 

was shown to be holding the remaining 5000 shares.
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21. On the question of grant of injunction to implement

 

a negative covenant, as envisaged in Section 42 of the

 

Specific Relief Act, 1963, Mr. Singh urged that the

 

covenant contained in the Deed of Assignment, which had

 

not been acted upon, was contrary to the provisions of

 

Section 27 of the Indian Contract Act, 1872, and was,

 

therefore, void.

 

 

22. Mr. Singh submitted that prior to the Agreement

 

entered into between the parties on 1st April, 1999,

 

regarding marketing and distribution of the goods

 

manufactured by the Respondent, the Respondent had

 

obtained Drug Licence on 2nd May, 1997, and Sales Tax

 

Licence on 13th September, 1997, for marketing and

 

selling “Naturoma Herbals”. Mr. Singh urged that even

 

eight years after the Assignment Deed was signed by the

 

parties, the Respondent’s name continued to be shown in

 

the Trade Mark Journal as the proprietor of the

 

aforesaid Trade Mark. Learned counsel submitted that
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as per the prayer of the Respondent in the application

 

before the District Judge, Khurda, under Section 9 of

 

the Arbitration and Conciliation Act, 1996, the Court

 

had initially passed an interim order dated 29th August,

 

2007, whereby the Appellant and others were restrained

 

from selling, distributing, manufacturing and marketing

 

any product in the name of “Naturoma Herbals” or

 

“Naturoma” or in any other name similar or identical to

 

the said name. The said ad-interim order was made

 

absolute on 25th January, 2008, till the disposal of the

 

suit. The appeal preferred from the said order was

 

dismissed by the High Court. The review petition filed

 

thereafter was also dismissed.

 

 

23. Mr. Singh then submitted that in addition to the

 

aforesaid proceeding before the District Judge, Khurda,

 

the Appellant had also filed an application before the

 

learned Arbitrator under Section 17 of the Arbitration

 

and Conciliation Act, 1996, for the self-same reliefs.
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24. On the question of enforcement of a negative

 

covenant, Mr. Singh submitted that even in such a case,

 

the balance of convenience and inconvenience would have

 

to be taken into consideration. In this regard,

 

reference was made to the decision of this Court in (i)

 

Gujarat Bottling Co. Ltd. vs. Coca Cola Company [(1995)

 

5 SCC 545], (ii) Percept D’Mark (India) (P) Ltd. vs.

 

Zaheer Khan [(2006) 4 SCC 227] and (iii)K.T. Plantation

 

Ltd. vs. State of Karnataka [(2007) 7 SCC 125].

 

 

25. Mr. Singh urged that the impugned decision of the

 

High Court was without any illegality or irregularity

 

and no interference was called for therewith.

 

 

26. In a short reply, Mr. Pradip Ghosh submitted that

 

in the instant case there was no violation of Section

 

27 of the Indian Contract Act, 1872, as the injunction

 

sought for was not on trade or business but in respect

 

of use of the Trade Mark.
25

 

 

27. From the submissions made on behalf of the

 

respective parties and the materials on record, it is

 

clear that the Respondent who was a manufacturer of

 

herbal products entered into an Agreement with the

 

Appellant resulting in the formation of a Joint Venture

 

Company under the name and style of “Abhilasha”. The

 

said Agreement was initially for a period of 5 years

 

from 1st April, 1999, and, thereafter, extended till 31st

 

March, 2009. There is also no dispute that a Deed of

 

Assignment was executed by the Respondent in favour of

 

the Appellant on 1st October, 2010, assigning 50% of the

 

right, title and interest in the Trade Mark “Naturoma

 

Herbal” registered in the name of the Respondent, with

 

proportional goodwill of the business concerned in the

 

goods in respect of which the Mark is permanently used,

 

on certain conditions which have been extracted

 

hereinbefore. It is also on record that an application

 

was filed with the Trade Mark authorities for bringing
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on record the name of the Appellant as the Joint

 

Proprietor of the Trade Mark and objections filed

 

thereto were jointly resisted by the Appellant and the

 

Respondent, accepting the fact that the Appellant was

 

the owner of 50% of the Trade Mark and all rights,

 

title and interest accrued therefrom. However, in

 

2006, it came to light that the Appellant had floated a

 

Company by the name of “Naturoma Herbals (P) Ltd.” and

 

it had also applied for registration of the Trade Mark

 

in the name of that Company. It is at that stage that

 

the Respondent filed a Suit on 21st August, 2007, under

 

Sections 134 and 135 of the Trade Marks Act, 1999,

 

being C.S. No.26 of 2007, in which an ex-parte interim

 

order was passed on 29th August, 2007, restraining the

 

Appellant and the Company from selling, distributing,

 

manufacturing and marketing any of the products in the

 

name of “Naturoma” or “Naturoma Herbal”. The said ad-

 

interim order was made absolute on 25th January, 2008,
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till the disposal of the suit.

 

 

28. Thereafter, on 25th September, 2007, the Respondent

 

cancelled the Agreement dated 1st April, 1999 and also

 

revoked the Deed of Assignment dated 1st October, 2000.

 

Immediately thereafter, on 19th December, 2007, the

 

Appellant filed a fresh application under Section 9 of

 

the Arbitration and Conciliation Act, 1996, before the

 

District Judge, Khurda, who on 27th December, 2007,

 

passed an ad-interim order restraining the Respondent

 

from selling her products by herself or by any other

 

person, save and except through the Appellant. The

 

said interim order was made absolute on 22nd May, 2008.

 

 

29. At this point of time, there were two apparently

 

conflicting orders in existence; one by the District

 

Judge, Khurda, in the Suit filed by the Respondent

 

restraining the Appellant from selling, distributing,

 

manufacturing or marketing any of the products in the
28

 

 

name of “Naturoma” or “Naturoma Herbal”, and on the

 

other the District Judge passed an order under Section

 

9 of the Arbitration and Conciliation Act, 1996,

 

restraining the Respondent from selling her products by

 

herself or by any other person, save and except through

 

the Appellant.

 

 

30. The corrigendum by which the Trade Mark Registrar

 

had on 1st July, 2008, altered the entries in the Trade

 

Mark Journal, showing the Appellant as the Joint

 

Proprietor of the Trade Mark “Naturoma Herbal”, was

 

cancelled on 26th September, 2008, without notice to the

 

Appellant. After the interim order passed on 27th

 

December, 2007, on the application filed by the

 

Appellant under Section 9 of the Arbitration and

 

Conciliation Act, 1996, and the same was made absolute

 

on 22nd May, 2008, the Respondent preferred an appeal

 

before the Orissa High Court on 8th July, 2008, being

 

Arb. A. No.17 of 2008. The same was heard on 18th
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September, 2008, and judgment was reserved. After

 

reserving judgment, the High Court allowed the

 

Respondent to file an affidavit to bring on record

 

subsequent events which did not form part of the

 

records, without giving the Appellant an opportunity of

 

dealing with the same. What is also relevant is the

 

fact that the said affidavit was relied upon by the

 

High Court while allowing the Appeal filed by the

 

Respondent herein. The questions which, therefore,

 

arise for determination are :

 

 

(i) Whether the High Court was justified in

 

interfering with the order passed by the

 

District Judge, Khurda in Arb.(P) No.576

 

of 2007, on account whereof pending

 

arbitration, the Respondent was restrained

 

from marketing the products manufactured

 

by her under the Trade Mark “Naturoma

 

Herbal” or “Naturoma” by herself or
30

 

 

through anyone, except through the

 

Appellant?

 

 

(ii) Whether, pending arbitration proceedings,

 

an order could have been passed by which

 

the right acquired by the Appellant under

 

the Deed of Assignment of 50% of the

 

right, title and interest in the Trade

 

Mark “Naturoma Herbal”, could have been

 

suspended and he could have been

 

restrained from objecting to the use of

 

the said Mark by the Respondent?

 

 

(iii) Whether the High Court was justified in

 

relying upon an affidavit filed on behalf

 

of the Respondent after hearing had been

 

concluded and judgment had been reserved

 

in the appeal, without giving the
31

 

 

Appellant an opportunity of dealing with

 

the same?

 

 

(iv) Whether the invocation of Section 42 of

 

the Specific Relief Act, 1963, to enforce

 

the negative covenant contained in the

 

Deed of Assignment, was contrary to the

 

provisions of Section 27 of the Indian

 

Contract Act, 1872 and was, therefore,

 

void?

 

 

31. As far as the first two questions are concerned,

 

the terms of the Deed of Assignment clearly indicate

 

that the Respondent had of her own volition parted with

 

50% of her right, title and interest in the Trade Mark

 

“Naturoma Herbal” with proportional goodwill of the

 

business concerning the goods in respect of which the

 

Mark was used, absolutely and forever, from the date of

 

the Deed, namely, 1st October, 2000. It is no doubt
32

 

 

true that on behalf of the Respondent it has been

 

claimed that the Deed of Assignment had never been

 

acted upon and that, in any event, the same had been

 

revoked on 25th September, 2007, when the Agreement

 

dated 1st April, 1999, was cancelled. However, in view

 

of the provisions of the Deed of Assignment, it is yet

 

to be adjudicated upon and decided as to whether by

 

virtue of the revocation of the Deed of Assignment by

 

the Respondent, the Appellant was no longer entitled to

 

the benefits of the Trade Mark which had been

 

transferred to him to the extent of 50% absolutely and

 

forever. In such circumstances, the order passed by the

 

District Judge, Khurda, in ARBP No.576 of 2007,

 

restraining the Respondent from marketing her products

 

through any person, other than the Appellant, was more

 

apposite in the facts of the case, as the rights of

 

both the parties stood protected till such time as a

 

final decision could be taken in arbitral proceedings,
33

 

 

which, in effect, is the object and intention of

 

Section 9 of the Arbitration and Conciliation Act,

 

1996.

 

 

32. As far as the third question is concerned, it was

 

inappropriate on the part of the High Court to allow

 

the Respondent to file an affidavit, on which reliance

 

was placed, after the hearing had been concluded and

 

judgment had been reserved, without giving the

 

Appellant an opportunity of dealing with the same.

 

However innocuous the additional affidavit may have

 

been, once the hearing was concluded and judgment was

 

reserved, it would have been prudent on the part of the

 

High Court to have given an opportunity to the

 

Appellant to deal with the same before allowing it to

 

be taken on record. It has been submitted that the

 

additional affidavit which was filed on behalf of the

 

Respondent after the judgment had been reserved by the

 

Appeal Court, only sought to bring on record the
34

 

 

proceedings whereby the corrigendum which had been

 

issued by the Trade Mark Registrar on 1st July, 2008,

 

showing the Appellant as the Joint Proprietor of the

 

Trade Mark “Naturoma Herbal”, had been subsequently

 

cancelled on 26th September, 2008. Since what was

 

produced was a record of the official proceedings, the

 

Appellant could not have been prejudiced since he

 

himself had knowledge of the same.

 

 

33. Coming to the last question, as to whether the

 

invocation of Section 42 of the Specific Relief Act,

 

1963, to enforce the negative covenant contained in the

 

Deed of Assignment, was contrary to the provisions of

 

Section 27 of the Indian Contract Act, 1872, or not, we

 

are inclined to accept Mr. Ghosh’s submissions that the

 

injunction sought for by the Appellant was not to

 

restrain the Respondent from carrying on trade or

 

business, but from using the Trade Mark which was the

 

subject matter of dispute. Accordingly, the provisions
35

 

 

of Section 27 of the Indian Contract Act, 1872, would

 

not be attracted to the facts in this case. For the

 

sake of reference, Section 27 of the above Act is

 

reproduced hereinbelow :-

 

27. Agreement in restraint of trade, void.-

Every agreement by which any one is restrained

from exercising a lawful profession, trade or

business of any kind, is to that extent void.

 

Exception 1.- Saving of agreement not to carry

on business of which goodwill is sold.- One who

sells the goodwill of a business may agree with

the buyer to refrain from carrying on a similar

business, within specified local limits, so

long as the buyer, or any person deriving title

to the goodwill from him, carries on a like

business therein, provided that such limits

appear to the Court reasonable, regard being

had to the nature of the business.”

 

 

It is obvious that what is declared to be void by

 

virtue of Section 27 is any Agreement to restrain any

 

person from exercising his right to carry on a

 

profession or trade or business and any restraint

 

thereupon by an Agreement would be void.
36

 

 

34. As will be seen from the materials on record, the

 

Appellant did not ask for any injunction against the

 

Respondent from carrying on any trade or business, but

 

he objected to the use by the Respondent of the Trade

 

Mark, in which he had acquired a 50% interest, while

 

selling her products.

 

 

35. The conditions in the Deed of Assignment clearly

 

stipulate that all the goods manufactured by the

 

Respondent under the Trade Mark “Naturoma” would be

 

marketed solely by the Appellant. It was also

 

submitted that the said Trade Mark would be used only

 

in relation to goods connected in the course of trade

 

with both the parties. One of the other conditions of

 

the Deed of Assignment was that both the parties would

 

be entitled to assign their respective shares in the

 

Trade Mark subject to prior written consent of the

 

other party, which presupposes that the parties were

 

the absolute owners of their respective shares in the
37

 

 

Trade Mark and even on termination of the joint

 

venture, as has been done in the instant case, neither

 

of the parties would be entitled to use or register the

 

Mark in their own names or jointly with some other

 

party.

 

 

36. Accordingly, having regard to the arbitration

 

clause, which is Condition No.10 of the terms and

 

conditions of the Deed of Assignment, the interim order

 

passed on the application under Section 9 of the

 

Arbitration and Conciliation Act, 1996, filed by the

 

Appellant in keeping with the terms and conditions

 

agreed upon between the parties, was justified and

 

within the jurisdiction of the District Judge, Khurda.

 

As we have mentioned hereinbefore, the interim order

 

passed by the learned District Judge, Khurda,

 

restraining the Respondent from selling her products by

 

herself or by any other person, save and except through

 

the Appellant, was apposite to the circumstances. The
38

 

 

said order took into consideration the interests of

 

both the parties flowing from the Agreement and the

 

Deed of Assignment, pending decision by an Arbitral

 

Tribunal. The cause of action for the suit filed by

 

the Respondent before the District Judge, Khurda was

 

the incorporation of a Company by the Appellant with

 

his son under the name and style of “Naturoma Herbals

 

(P) Ltd.” and the subsequent application made before

 

the Registrar of Trade Marks to register “Naturoma

 

Herbal” in the name of the said Company. It is in that

 

context that the interim order was passed restraining

 

the Appellant from distributing, manufacturing or

 

marketing any of the products in the name of “Naturoma”

 

or Trade Mark “Naturoma Herbal”. The said order of

 

injunction did not permit the Respondent to manufacture

 

and market the goods under the said Trade Mark in

 

violation of the provisions of the Deed of Assignment

 

referred to hereinabove.
39

 

 

37. The learned Single Judge of the High Court, while

 

referring to some of the provisions of the Agreement

 

between the parties, apparently overlooked the

 

provisions relating to the use of the Trade Mark

 

contained in the Deed of Assignment. Although,

 

reference was made to Clause 19 of the Agreement, the

 

High Court failed to notice that the same was not

 

contained in the Deed of Assignment, whereby 50% of the

 

right, title and interest of the Respondent in the

 

Trade Mark “Naturoma Herbal” was assigned in favour of

 

the Appellant absolutely and forever. As has been

 

emphasized hereinbefore, even upon termination of the

 

joint venture under the Agreement between the parties,

 

neither the Appellant nor the Respondent would be

 

entitled to use or register the Mark in their own names

 

or jointly with some other party. In fact, the

 

relevant terms and conditions of the Deed of Assignment

 

had been extracted by the learned Single Judge in the
40

 

 

impugned judgment, but the same appear to have been

 

lost sight of while considering the terms and

 

conditions of the Agreement executed between the

 

parties.

 

 

38. In our view, this is not a case where money can be

 

an adequate compensation, since the Appellant has

 

apparently acquired a 50% interest in the Trade Mark in

 

question, together with the goodwill of the business in

 

relation to the products in which the Trade Mark is

 

used.

 

 

39. We are, therefore, of the view that the High Court

 

erred in reversing the order passed by the District

 

Judge in ARBP No.576 of 2007 filed by the Appellant,

 

under which the status-quo would have been maintained

 

till the dispute was settled in arbitration.

 

 

40. We, accordingly, allow the Appeals, set aside the

 

impugned judgment and order of the learned Single Judge
41

 

 

of the High Court impugned in the Appeals and restore

 

that of the District Judge, Khurda in ARBP No.576 of

 

2007.

 

 

41. However, before parting with the matter, we have to

 

refer to the order passed by us on 28th January, 2011,

 

whereby the Respondent had been allowed to continue

 

with the running of the business, but she was directed

 

to maintain a separate account in respect of the

 

transaction and to place the same before us at the time

 

of hearing of the matter. Such account does not appear

 

to have been filed, but since we are disposing of the

 

matter by restoring the order of the District Judge,

 

Khurda, in ARBP No.576 of 2007, we further direct the

 

Respondent, as and when arbitral proceedings may be

 

taken, to furnish such account upto this day before the

 

learned Arbitrator so that the claims of the parties

 

can be fully decided by the learned Arbitrator.
42

 

 

42. Having regard to the facts of the case, the parties

 

will bear their own costs in these appeals all

 

throughout.

 

 

……………………………………………………J.

(ALTAMAS KABIR)

 

 

……………………………………………………J.

(SURINDER SINGH NIJJAR)

 

 

……………………………………………………J.

(GYAN SUDHA MISRA)

 

New Delhi

Dated: 02.12.2011

 

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