Dharampal Satyapal Sons Pvt. Ltd. v. Shree Dhanya Construction Company

**“CR”** ## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT** **THE HONOURABLE MR.JUSTICE V.G.ARUN** **WEDNESDAY, THE 25[TH] DAY OF AUGUST 2021 / 3RD BHADRA, 1943** **OP(C) NO. 780 OF 2021** ## **CS 45/2020 OF PRINCIPAL SUB COURT, THIRUVANANTHAPURAM PETITIONER/S:** DHARAMPAL SATYAPAL SONS PVT. LTD. 4828/24, PRAHLAD LANE, ANSARI ROAD, DARYAGANJ, NEW DELHI - 110 002, REPRESENTED BY ITS SR. EXECUTIVE AND AUTHORISED REPRESENTATIVE, MR. SAURABH MISHRA. BY ADVS. ANIL D. NAIR SRI.SREEJITH R.NAIR SMT.TELMA RAJU SRI.SANGEETH JOSEPH JACOB SMT.CHRISTINA ANNA PAUL ## **RESPONDENT/S:** SHREE DHANYA CONSTRUCTION COMPANY A REGISTERED PARTNERSHIP FIRM, T. C. 9/875, SASTHAMANGALAM, THIRUVANANTHAPURAM - 695 010, REPRESENTED BY ITS MANAGING PARTNER, G. CHANDRABABU, S/O. GANGADHARAN, AGE 63 YEARS, REPRESENTING AT T. C. 9/507 (1), 'SREEDHANYA', C- 4, JAWAHAR NAGAR, KOWDIAR P. O., THIRUVANANTHAPURAM. BY ADVS. SRI.NAGARAJ NARAYANAN SRI.SAIJO HASSAN SRI.BENOJ C AUGUSTIN SRI.RAFEEK. V.K. SMT.P.PARVATHY **THIS OP (CIVIL) HAVING COME UP FOR ADMISSION ON 07.07.2021, THE COURT ON 25.08.2021 DELIVERED THE FOLLOWING:** **“CR”** ## **JUDGMENT** ## **Dated this the 25[th] day of August, 2021** **The defendant in CS No.45 of 2020 on the files of the Principal Sub Court, Thiruvananthapuram has filed the original petition aggrieved by Ext.P1 order, rejecting its application under Section 10 of the Code of Civil Procedure. The petitioner had sought stay of further proceedings in the suit on the premise that it had already instituted a suit; CS(Comm) No.742 of 2017 before the Delhi High Court against the sister concern of the plaintiff/respondent and its Managing Partner, wherein also the matter in issue and parties are the same. The essential facts are as under;** **The petitioner Company is doing multifarious business under its unique, distinctive and well known trade logo. While so, the petitioner came to know that a Company by name Shree Dhanya Homes Pvt.Ltd is doing business using a deceptively** **O.P.(C) No.780 of 2021** 3 **similar logo. The illegal adoption of the petitioner’s logo by Sree Dhanya Homes Pvt.Ltd amounted to copyright infringement. Hence, the petitioner filed CS(Comm) No.742 of 2017 against M/s.Sree Dhanya Homes Pvt.Ltd and Mr.G.Chandrababu, its Managing Director, seeking an order of permanent injunction restraining the defendants, their proprietors or partners or directors as the case may be, their principal officers, servants, agents and all others acting for and on behalf of the Defendants from reproducing in any material form or using in any manner, the petitioner's logo, trademark, thereby infringing the trade mark/logo. The other prayers are for permanent injunction against copy right infringement of the trademark/log, against unfair competition, dilution of the trademark/logo, rendition of accounts and damages.** **O.P.(C) No.780 of 2021** 4 **2. While admitting the suit to its files, the High Court of Delhi granted the following ex-parte order of injunction;** _**“Considering that the plaintiff has made out a prima facie case in its favour, in case no interim relief is granted it will suffer an irreparable loss. Balance of convenience also lies in favour of the plaintiff, user of the logo by the defendant appears to be prima facie deceptive for the reason two different dates have been given in the applications and that the plaintiff is the registered owner of not only the trademark but the logo “S” within the “D” the defendants, its agents, officers, distributors etc are restrained from using the logo “D” along with its trademark, till the next date of hearing.”**_ **3. The defendants filed written statement and** **sought to vacate the interim order. The parties were referred to mediation and mediation having failed, the injunction order is continued, with the direction that neither party should precipitate matters by communicating the ex-parte order to any other person. Thereafter, Shree Dhanya Construction Company, a registered** **O.P.(C) No.780 of 2021** 5 **partnership firm and sister concern of M/s.Shree** **Dhanya Homes Pvt.Ltd, filed an Original Suit before the District Court, Thiruvananthapuram seeking the following reliefs against the** ## **petitioner;** _**“a) To pass a decree of permanent prohibitory injunction restraining the defendant, its servants, agents, representatives and/or all person claiming under it or acting in concert with it or otherwise from using the plaint “B” schedule trade mark or any other trade mark identical with or deceptively similar thereto and in any manner passing off or enabling others to pass off the defendant's business as that of the plaintiff by the use of Plaint “B” Schedule trade mark or in any other similar trademarks inclusive of the 'C' schedule trademark.**_ _**b) Decree in favour of the plaintiff directing the defendant to render accounts of profits made by him using its present plaint 'C' schedule trade mark and a final decree in favour of the plaintiff for the amount of profits found to have been made by the defendant after the later have rendered accounts.**_ _**c) A decree allowing the plaintiff to realize the amount of**_ **O.P.(C) No.780 of 2021** 6 _**Rs.50,00,000/- towards damages from the defendant which is the estimated loss of revenue by the plaintiff as also for the loss of reputation and goodwill.**_ _**d) The plaintiff may be allowed cost and to recover the same from the defendant and his assets.”**_ **4. The court granted an interim injunction in that suit, restraining the petitioner from using the trade logo or deceptively similar logo of the plaintiff. The suit was thereafter transferred to the Commercial Court and renumbered as CS No.45 of 2020.** **5. On receipt of summons, the petitioner appeared and filed the application under Section 10 CPC, seeking stay of further proceedings in the suit. The application having been dismissed vide Ext. P1, the original petition is filed seeking the following reliefs;** _**“1. Set aside/quash the order dated 25[th] January 2021 and stay further proceedings in the suit bearing O.S.No.1/2020 presently being**_ **O.P.(C) No.780 of 2021** 7 _**C.S.No.45/2020 and allow the application being I.A.No.6/2020 filed by the petitioner under Section 10 of the Code of Civil Procedure and stay further proceedings in C.S.45/2020.**_ _**2. Such other appropriate order or direction sought for in the course of the proceedings.”**_ **6. Heard Sri.Deepak Dhingra, learned Senior Counsel appearing for the petitioner and Sri.Nagaraj Narayan, learned Counsel for the respondent.** **7. Learned Senior Counsel put forth the** ## **following contentions;** **The impugned order is passed without appreciating the facts and the mischief perpetuated by the respondent by filing the suit at Thiruvananthapuram. In the written statement filed before the High Court of Delhi, as also in the plaint in C.S.No.45 of 2020, it is admitted that Shree Dhanya Homes Pvt.Ltd and M/s.Shree Dhanya Construction Company are sister concerns with the same Directors and partners. Moreover,** **O.P.(C) No.780 of 2021** 8 **Mr.G.Chandra Babu, the first defendant in CS (Comm) No.742 of 2017 is representing the plaintiff, M/s. Shree Dhanya Construction Company, in CS No.45 of 2020 in his capacity, as Managing Partner. The matter in issue in both suits is the use of similar trade logos by the parties. In CS No.45 of 2020, the respondent obtained the injunction order claiming to be the first user of the logo. The respondent has averred that the logo is registered in the name of its sister concern, Shree Dhanya Homes Pvt.Ltd. The Directors of Shree Dhanya Homes Pvt.Ltd, and the partners of M/s. Shree Dhanya Construction Company are the same. The specific pleading being that M/s. Shree Dhanya Construction Company has perfected its title over the trade logo by long and prior use and the trade logo is registered in the name of Shree Dhanya Homes Pvt Ltd, the court below ought to have found** **O.P.(C) No.780 of 2021** 9 **that the respondent is litigating under the same title in both suits. The finding in the impugned order is that an individual can have more than one personality in the eye of law, like a partner of a firm, Director of a Company, Managing Committee, member of a Co-operative Society etc, and when such a person becomes party to a suit in any such status, the findings in that suit will not bind him in a different suit, wherein he is arrayed as party under a different status, is entered without understanding the scope and objective of Section 10 CPC. Further proceedings in the subsequent suit is liable to be stayed in exercise of the power under Section 10 CPC, if the following conditions are satisfied;** **(a) the matter in issue in the second suit is also directly and substantially in issue in the first suit.** 10 ## **O.P.(C) No.780 of 2021** **(b) the parties in the second suit are the same or parties under whom they or any of them claim litigating under the same title.** **(c) the court in which the first suit is instituted is competent to grant the relief claimed in the subsequent suit.** **(d) the previously instituted suit is pending in the same court in which the subsequent suit is brought or in any court in India, or in any courts beyond the limits of India established or continued by the Central Government or before the Supreme Court.** **All the aforementioned conditions having been satisfied, the court below has committed a patent illegality by dismissing the application.** **8. In support of his contentions, learned Senior Counsel placed reliance on the following decisions;** **O.P.(C) No.780 of 2021** 11 _**National Institute of Mental Health and Neuro Sciences v. C.Parameshwara [(2005) 2 SCC 256], Aspi Jal and others v. Khushroo Rustom Dadyburjor [(2013) 4 SCC 333], Chitivalasa Jute Mills v. Jaypee Rewa Cement [(2004) 3 SCC 85] and Gupte Cardiac Care Center and Hospital v. Olympic Pharma Care Pvt. Ltd [(2004) 6 SCC 756]**_ **9. Per contra, the learned Counsel for the respondent supported the impugned order, raising the following contentions;** **Shree Dhanya Homes Pvt.Ltd, and M/s. Shree Dhanya Construction Company being separate entities, Section 10 CPC has no application. The essential consideration under Section 10 is whether the decision in one suit will act as** _**res judicat**_ **a in the other. While exercising the power under Section 10 CPC, the court is not expected to pierce the corporate veil identifying the** **O.P.(C) No.780 of 2021** 12 **Directors of the Company. Even in cases where Section 10 applies, only trial of the suit can be stayed. The petitioner's application under Section 10 is premature, since the respondent's suit is only at a preliminary stage. The attempt of the petitioner is to nullify the effect of the injunction order issued in the respondent's suit. Section 10 does not take away the Court’s power to grant interim relief and to continue the proceedings up to the trial stage. Support for the contentions is sought to be garnered with the aid of the decisions in** _**Balwant Rai Saluja v. Air India Ltd and others [(2014) 9 SCC 407], Indian - Bank v. Maharashtra State Co operative Marketing Federation Ltd [(1998) 5 SCC 69] and Pukhraj D.Jain and others v. G.Gopalakrishna [(2004) 7 SCC 251],**_ **10. Section 10 of CPC, the applicability of** **O.P.(C) No.780 of 2021** 13 ## **which is the bone of contention, reads as under:** _**“10. Stay of suit.—No Court shall proceed with the trial of any suit in which the matter in issue is also directly and substantially in issue in a previously instituted suit between the same parties, or between parties under whom they or any of them claim litigating under the same title where such suit is pending in the same or any other Court in India have jurisdiction to grant the relief claimed, or in any Court beyond the limits of India established or continued by 7[the Central Government and having like jurisdiction, or before the Supreme Court.”**_ **Dilating on the objective and scope of Section 10, the Honourable Supreme Court in** _**National Institute of Mental Health and Neurosciences**_ **(supra) has held as under:** _**“8. The object underlying Section 10 is to prevent courts of concurrent jurisdiction from simultaneously trying two parallel suits in respect of the same matter in issue. The object underlying Section 10 is to avoid two parallel trials on the same issue by two courts and to avoid recording of conflicting findings on issues which are directly and substantially in issue in previously instituted suit. The language of Section 10 suggests that it is referable to a suit instituted in the civil court and it cannot apply to proceedings of other nature instituted under any other statute. The**_ **O.P.(C) No.780 of 2021** 14 _**object of Section 10 is to prevent courts of concurrent jurisdiction from simultaneously trying two parallel suits between the same parties in respect of the same matter in issue. The fundamental test to attract Section 10 is, whether on final decision being reached in the previous suit, such decision would operate as res judicata in the subsequent suit. Section 10 applies only in cases where the whole of the subject-matter in both the suits is identical. The key words in Section 10 are “the matter in issue is directly and substantially in issue” in the previous instituted suit. The words “directly and substantially in issue” are used in contradistinction to the words “incidentally or collaterally in issue”. Therefore, Section 10 would apply only if there is identity of the matter in issue in both the suits, meaning thereby, that the whole of the subject-matter in both the proceedings is identical.”**_ ## **11. In** _**Aspi Jal,**_ **the legal position was** ## **clarified as under;** _**“11. In the present case, the parties in all the three suits are one and the same and the court in which the first two suits have been instituted is competent to grant the relief claimed in the third suit. The only question which invites our adjudication is as to whether “the matter in issue is also directly and substantially in issue in previously instituted suits”. The key words in Section 10 are “the matter in issue is directly and substantially in issue in a previously instituted suit”. The test for**_ **O.P.(C) No.780 of 2021** 15 _**applicability of Section 10 of the Code is whether on a final decision being reached in the previously instituted suit, such decision would operate as res judicata in the subsequent suit. To put it differently one may ask, can the plaintiff get the same relief in the subsequent suit, if the earlier suit has been dismissed? In our opinion, if the answer is in the affirmative, the subsequent suit is not fit to be stayed. However, we hasten to add that when the matter in controversy is the same, it is immaterial what further relief is claimed in the subsequent suit.”**_ **Here, the matter in issue is the right to use the trade logo. It is the admitted case of the respondent that the firm as well as the company are using the same trade logo and that the logo is registered in the company's name. Being so, merely for the reason that some of the Directors of the Company and the partners of the firm are different, the court cannot refrain from exercising the power under Section 10. In this regard, it may be appropriate to refer the decision of the Honourable Supreme Court in** _**Chitivalasa Jute Mills**_ **(supra). Therein, 'Jaypee** **O.P.(C) No.780 of 2021** 16 **Rewa', a cement manufacturing Company, had purchased jute bags from Chitivalasa Jute Mills, the jute division of a Company named Willard India Ltd. Alleging that Jaypee Rewa had failed to pay the price of the goods supplied, Willard India filed a suit against Jaypee Rewa. Later, Jaypee Rewa filed a suit against Chitivalasa Jute Mills alleging that, after effecting payments for the jute bags supplied, some of the bags were found to be defective and hence, the price of those bags ought to be refunded. On being served with summons in the suit filed by Jaypee Rewa, Chitivalasa Jute Mills filed an application under Section 10 CPC, which the trial court rejected holding that the parties are different, one being Willard India and the other Chitivalasa Jute Mills. The revision filed against that order was dismissed on the ground of delay. Thereupon, Chitivalasa Jute Mills** **O.P.(C) No.780 of 2021** 17 **filed a petition under Section 25 CPC before the Honourable Supreme Court seeking transfer of the suits to one court. The Apex Court found that the parties are substantially the same, Chitivalasa Jute Mills being a division of Willard India Ltd. The court also found that the issue arising for decision would be substantially common and almost the same set of oral and documentary evidence will have to be adduced for determining the issues of facts and law arising for decision in the suits. Accordingly, the prayer for transfer was allowed.** **12.** _**Balwant Rai Saluja**_ **is cited in support of the argument that the principle of lifting the corporate veil applies only in scenarios wherein it is evident that the company was a mere camouflage or sham, deliberately created by the persons exercising control over the said company for avoiding their liability. The principle has no** **O.P.(C) No.780 of 2021** 18 **application as far as the instant case is concerned, since suit which is sought to be stayed is filed by a partnership firm. It is settled law that unlike a company registered under the Companies Act, a partnership firm is not a distinct legal entity and is only a compendium of its partners. Even registration of a firm does not convert it into a distinct legal entity like a company. Partners of a firm are co-owners of its property, unlike shareholders in a company who are not co-owners of the Company's property. Under the Partnership Act, a partner represents the firm and has an implied authority in terms of Section 19. Thus, any action taken by a partner of a firm visa-vis the firm, unless otherwise specified, binds the firm itself. The legal position being such, the decision in the first suit will bind not only Mr.G.Chandrababu, but the partnership, M/s.Shree** **O.P.(C) No.780 of 2021** 19 ## **Dhanya Construction Company, as well.** **13. The principle of** _**res judicata**_ **prevents courts from trying any suit or issue in which the matter directly and substantially in issue has been directly and substantially in issue in a former suit between the same parties or between parties under whom they or any of them claim, litigating under the same title. On careful scrutiny, it is evident that the parties in both suits are substantially the same, are litigating under the same title and that the matter issue in the suit before the High Court of Delhi is directly and substantially in issue in the suit before the Court at Thiruvanathapuram. Being so, the decision in one suit will also act as** _**res judicata**_ **in the other.** **14. The next question to be considered is whether under Section 10 CPC, the further** **O.P.(C) No.780 of 2021** 20 **proceedings in the subsequent suit is liable to be stayed at the preliminary stage itself. On a plain reading of Section 10 of CPC, it is evident that the court before which the subsequent suit is pending is precluded only from proceeding with the trial of the suit. This position has been succinctly laid down by the Honourable Supreme Court in** _**Indian Bank**_ **(Supra) as under:** _**“7. Section 10 of the Code prohibits the court from proceeding with the trial of any suit in which the matter in issue is also directly and substantially in issue in a previously instituted suit provided other conditions mentioned in the section are also satisfied. The word “trial” is no doubt of a very wide import as pointed out by the High Court. In legal parlance it means a judicial examination and determination of the issue in civil or criminal court by a competent Tribunal. According to Webster's Comprehensive Dictionary, International Edition, it means the examination, before a tribunal having assigned jurisdiction, of the facts or law involved in an issue in order to determine that issue. According to Stroud's Judicial Dictionary (5th Edn.), a “trial” is the conclusion, by a competent tribunal, of questions in issue in legal proceedings, whether civil or criminal. Thus in its widest sense it would include all the proceedings right from the stage of**_ **O.P.(C) No.780 of 2021** 21 _**institution of a plaint in a civil case to the stage of final determination by a judgment and decree of the court. Whether the widest meaning should be given to the word “trial” or that it should be construed narrowly must necessarily depend upon the nature and object of the provision and the context in which it is used. 8. Therefore, the word “trial” in Section 10 will have to be interpreted and construed keeping in mind the object and nature of that provision and the prohibition to “proceed with the trial of any suit in which the matter in issue is also directly and substantially in issue in a previously instituted suit”. The object of the prohibition contained in Section 10 is to prevent the courts of concurrent jurisdiction from simultaneously trying two parallel suits and also to avoid inconsistent findings on the matters in issue. The provision is in the nature of a rule of procedure and does not affect the jurisdiction of the court to entertain and deal with the latter suit nor does it create any substantive right in the matters. It is not a bar to the institution of a suit. It has been construed by the courts as not a bar to the passing of interlocutory orders such as an order for consolidation of the latter suit with the earlier suit, or appointment of a receiver or an injunction or attachment before judgment. The course of action which the court has to follow according to Section 10 is not to proceed with the “trial” of the suit but that does not mean that it cannot deal with the subsequent suit any more or for any other purpose. In view of the object and nature of the provision and the fairly settled legal position with respect to passing of interlocutory orders it has to be stated that the word “trial” in Section 10 is**_ **O.P.(C) No.780 of 2021** 22 ## _**not used in its widest sense.**_ **Hence, there is merit in the contention of the learned Counsel for the respondent that only trial of the subsequent suit is liable to be stayed.** **15. The above discussion leads to the conclusion of the impugned order being unsustainable and the trial and further proceedings in the subsequent suit (C.S.No.45/2020), liable to be stayed.** **In the result, Ext.P1 order is set aside. I.A.No.6 of 2020 is allowed. The trial and further proceedings in C.S No.45 of 2020 shall stand stayed till the disposal of CS(Comm) No.742 of 2017 pending on the files of the High Court of Delhi.** ## **Sd/-** **V.G.ARUN JUDGE** **Scl/** **O.P.(C) No.780 of 2021** 23 ## **APPENDIX OF OP(C) 780/2021** ## PETITIONER EXHIBITS |EXHIBIT P1|TRUE COPY OF THE ORDER OF THE PRINCIPAL| |---|---| ||SUB-JUDGE, THIRUVANANTHAPURAM DATED| ||25.01.2021 IN I.A.6/2020.| |EXHIBIT P2|TRUE COPY OF THE PLAINT FILED BY THE| ||PETITIONER BEFORE THE HON'BLE HIGH COURT| ||OF DELHI IN C.S.(COMM) NO.742/2017.| |EXHIBIT P3|TRUE COPY OF THE ORDER DATED 01.11.2017| ||ISSUED BY THE HON'BLE HIGH COURT OF| ||DELHI IN C.S.(COMM) NO.742/2017.| |EXHIBIT P3(a)|TRUE COPY OF THE ORDER DATED 28.11.2017| ||ISSUED BY THE HON'BLE HIGH COURT OF| ||DELHI IN C.S.(COMM) NO.742/2017.| |EXHIBIT P3(b)|TRUE COPY OF THE ORDER DATED 11.12.2017| ||ISSUED BY THE HON'BLE HIGH COURT OF| ||DELHI IN C.S.(COMM) NO.742/2017.| |EXHIBIT P4|TRUE COPY OF THE ORDER DATED 27.04.2018| ||ISSUED BY THE HON'BLE HIGH COURT OF| ||DELHI IN C.S.(COMM) NO.742/2017.| |EXHIBIT P5|TRUE COPY OF THE AFFIDAVIT DATED| ||23.11.2017 FILED BY MR.G.CHANDRA BABU| ||BEFORE THE HON'BLE HIGH COURT OF DELHI| ||IN C.S.(COMM) NO.742/2017.| |EXHIBIT P6|TRUE COPY OF THE APPLICATION FILED BY| ||MR.DHANYA BABU BEFORE THE HON'BLE HIGH| ||COURT OF DELHI IN I.A.NO.14068/2017 IN| ||C.S.(COMM) NO.742/2017.| |EXHIBIT P7|TRUE COPY OF THE JOINT WRITTEN STATEMENT| ||FILED ON BEHALF OF MR.G.CHANDRA BABU AND| ||MR.CHANDRA BABU IN C.S.(COMM)| ||NO.742/2017.| |EXHIBIT P8|TRUE COPY OF THE PLAINT FILED BY THE| ||RESPONDENT BEFORE THE HON'BLE DISTRICT| ||COURT THIRUVANANTHAPURAM BEING| ||O.S.NO.1/2020 ALONG WITH THE TRUE COPY| ||OF THE ORDER DATED 20.02.2020.| |EXHIBIT P9|TRUE COPY OF THE APPLICATION (WITHOUT| 24 ## **O.P.(C) No.780 of 2021** EXHIBITS) UNDER S.10 OF THE CODE OF CIVIL PROCEDURE 1908 BY THE PETITIONER IN O.S.NO.1/2020. EXHIBIT P10 TRUE COPY OF THE OBJECTION FILED BY MR.G.CHANDRA BABU IN I.A.NO.6/2020 IN O.S.NO.1/2020.