PETITIONER: POWER CONTROL APPLIANCES Vs. RESPONDENT: SUMEET MACHINES PVT. LTD DATE OF JUDGMENT08/02/1994 BENCH: <NAME>, S. (J) BENCH: <NAME>, S. (J) VENKATACHALLIAH, M.N.(CJ) CITATION: 1994 SCR (1) 708 1994 SCC (2) 448 JT 1994 (2) 70 1994 SCALE (1)446 ACT: HEADNOTE: JUDGMENT:

The Judgment of the Court was delivered by <NAME>, J.- All these appeals can be dealt with under a common judgment. The Civil Appeal Nos. 2551-52 of 1993 are by the first plaintiff while Civil Appeal No. 2553 of 1993 by the second plaintiff.

2.The plaintiffs filed three suits on the file of <ORG> (i) C.S. No. 343 of 1992 complaining of infringement of the copyright of the first plaintiff (<ORG>);

(ii)C.S. No. 431 of 1992 alleging the violation of the registered trade mark 'Sumeet' No. 263836 in Part-A in Class 7 for machines (electric) for kitchen use;

(iii)C.S. No. 432 of 1992 claiming the design registration in the 'Whipper Blade' of the power operated mixies.

3.Pending these suits, four application Nos. 226, 227, 271 and 272 of 1992 were taken out, two in <ORG> of 1992 and one each in C.S. Nos. 431 and 432 of 1992 respectively.

4.The facts are common to all the suits and the applications. In C.S. No. 343 of1992 in the Application Nos. 226 & 227 of 1992, the plaintiffs prayed for aninterim injunction to restrain the respondents (defendants) from using, distributing, printing or causing to be printed the work as contained in Document Nos. (1) receipt and instruction manual, (2) guarantee card and (3) outer carton and the work as found in Document Nos. 4, 5 and 6. In C.S. No. 431 of 1992 in Application No. 271 of 1992 an interim injunction was sought to restrain the respondents from using the registered trade mark. In C.S. No. 432 of 1992 in Application No. 272 of 1992 the injunction was sought to restrain the respondents from using the design registration in manufacturing the mixies.

5.Admittedly, Mrs <NAME> is the sole proprietrix of <ORG> <ORG>. She started manufacturing power operated kitchen mixies for domestic use since 1963. They are marketed since 1964 under the brand name of 'Sumeet'. The mixy was packed in a cardboard box and at the top the pictorial and photograph display of the appliance in different colours showing the different purposes for which the mixy could be used was shown. A booklet was enclosed bearing the title "Sumeet Domestic Mixer-Operating Instructions and Recipe Book". That consisted of 80 pages bound spirally in hard art paper cover. A guarantee card was also issued. All these were devised, conceived and made by the first plaintiff in 1982 with the assistance of artists, photographers, printers and executives employed by the first plaintiff for valuable considerations fully paid. As such the first plaintiff is the owner of copyright with respect of all the above items in terms of Section 17 of the Copyright Act, 1957. 'Sumeet' mixy came to be in great demand in India and abroad. The business expanded. To cope up with the demand, the first plaintiff had to float three more concerns for the manufacturing of the same appliances. The companies are:

(i) <ORG>

(iii)Mathur <ORG>

(iii)Power Control Appliances (<ORG>).

All these concerns except <ORG> buy electric motors for their mixies from the second plaintiff <ORG>. That is deemed to be public limited company. Mrs <NAME> is the Chairman and Director. She holds 59.25% shares.

6.The artistic manner in which the word 'Sumeet' is written was conceived and published by the first plaintiff. It was registered trade mark with effect from April 18, 1970. This trade mark was assigned to the second plaintiff on January 1, 1981. The second appellant is the owner of the copyright.

7.The first defendant was incorporated in 1984. It has been manufacturing and selling mainly washing machines and vacuum cleaners from September/October 1991. It has started manufacturing domestic mixies exactly similar to plaintiffs' mixer with identical specifications except for power rating. The package and the pictorial display are identical. Even the booklet is pagewise reproduction including an error with respect to Design No. 146781, a design number not belonging to the plaintiffs. The contents of the guarantee card are also identical. The first defendant is affixing in each of the appliances the registered trade mark 'Sumeet' belonging to the second plaintiff in the same artistic manner in which it is registered. On these allegations, it was urged that the first defendant had committed infringement of the exclusive copyright of the first plaintiff in the artistic material and trade literature displayed on the cardboard box. Similarly, the operating instructions and recipe book and the guarantee card issued by them.

8.With regard to the four components of the mixer, Mrs <NAME> had obtained registration of their design under Part-11 of the Designs Act, 191 1. Those components are:

(ii) Whipper blade,

(iii)Polycarbonate dome,

(iv) Stainless steel jar with rim.

9.Each one of them has a specific registration number. Though the statutory period of 15 years or the validity of the copyright had elapsed on May 23, 1992 concerning items

(i), (ii) and (iv), as regards whipper blade the validity of registration is up to April 5, 1994. Therefore, it is not open to anyone to infringe the same. Thus, the applications on the grounds came to be preferred.

10.The first defendant did not file the written statement. However, he filed his counter-affidavit. The stand taken by him is that he (<NAME>) is the eldest son of Mrs <NAME>. On his return from United States, the family business, mainly kitchen appliances and mixer machines under the trade name of '<ORG>' had picked up by the innovative ideas and dynamic marketing strategies evolved by him. The family of <NAME> included the plaintiffs, the first defendant and others. The family was selling <ORG> mixies since 1963. It is true that three other companies were floated. In fact, he was the Director of <ORG> until recently. Because of inter se disputes, he was obliged to leave the said company.

11.The first defendant company was incorporated in 1984 as <ORG> for the purpose of manufacture of market kitchen appliances under the trade name of '<ORG>' and other products such as washing machines. The said company itself was incorporated with the knowledge and approval of the plaintiffs-applicants. When <ORG> was sought to be registered before <ORG>, Maharashtra, a letter of no objection from the owners of the trade mark '<ORG>' had to be produced. The first defendant obtained letters both from the first and second plaintiffs on May 7, 1984. It was only on this the company came to be registered on September 5, 1984. As a matter of fact, Mrs <NAME> is a shareholder in first defendant, she having been allotted 5000 shares. Likewise, the father of first defendant also owns 5000 shares.

12.Since 1986, the first defendant has been manufacturing and marketing mixies under the trade name of '<ORG>'. This was done with the knowledge and consent of the plaintiffs openly and concurrently. Further, Mrs <NAME> and the father of first defendant have signed and given personal guarantees to <ORG> on behalf of the first defendant. The loans were secured on that basis. In short, the reply of the first defendant is that the copyright trade mark and the copyright design is that of the first defendant which was conceived as a family concern. The word '<ORG>' was given with the blessings and consent of <NAME> and <NAME>. Therefore, he has been an honest and concurrent user. In any event, the plaintiffs' applications were not entitled to the reliefs on the ground of acquiescence.

13.The learned Single Judge as seen from the report of decision in <CITATION> held that the copyright with respect to operative instructions and recipe book, guarantee card and the outer carton of the <ORG> Kitchen Mixies vested in <ORG> represented by the Sole Proprietrix Mrs <NAME>. Equally, the copyright in the Design Registration No. 148246 in relation to 'whipper blade' was also accepted as belonging to the plaintiff. The trade mark in the name of '<ORG>' with the particular artistic design is registered in the name of <ORG> Research and Holdings Limited was accepted as claimed by the plaintiffs. Notwithstanding, all these, the relief of injunction was not granted in view of acquiescence by the plaintiffs in the honest and concurrent user of the first defendant. Against this judgment, OSA Nos. 144-46 of 1992 came to be preferred.

14.The Division Bench by the impugned judgment dated February 26, 1993 held that the learned Single Judge was not wrong in holding that the plaintiffs have acquiesced in the use of the trade literature and the trade mark by the first defendant. The relief in equity of injunction, if granted, will affect the interest of not only <NAME> but also other members of the family who are shareholders of the first defendant's company. Accordingly the appeals were dismissed. It is under these circumstances, these civil appeals have been preferred; Civil Appeal No. 2551 of 1993 against Application Nos. 226 & 227 of 1992 in CS No. 343 of 1992, Civil Appeal No. 2552 of 1993 against Application No. 271 of 1992 in CS No. 432 of 1992 and Civil Appeal No. 2553 of 1993 against Application No. 272 of 1992 in CS No. 431 of 1992.

15.Mr <NAME>, learned counsel for the appellants submits that both the courts below having held in favour of the appellants herein that there is an infringement of the trade mark, the copyright and the design should not have dismissed the application for injunction solely on the ground of honest and concurrent user and on the plea of acquiescence. On the contrary the evidence in this case discloses that the first defendant was only marketing (but never manufacturing) from 1986. Therefore, merely because he was marketing, that cannot amount to honest and concurrent user. It was only in September-October 1991 he started infringing the trade mark, copyright and the design. Therefore, when the suit came to be filed immediately, no question of acquiescence would ever arise. It is only on 28th of October, 1991 the first defendant invited applications for distribution.

16.The conclusions of <ORG> lead to strange results. Notwithstanding the finding of the court that the appellants' copyrights, registered trade mark and registered design having been occupied totally consciously and deliberately without any alteration and thereby infringed by the defendant to deny injunction in equity cannot be supported. After all the plaintiff Mrs <NAME> as an individual has 3.3 per cent of the shareholding in the first defendant-company.

17.To hold that the first defendant was using the registered trade mark from 1984 is wrong when admittedly the first defendant-company came into existence only in 1984.

18.Under Sections 19 and 54 of the Copyright Act reproduction of the copyright itself is infringement unless there is specific assignment in writing by the proprietor. In this case, there is not even a plea that Mrs <NAME> assigned the copyright in the outer carton handbook and guarantee card. The concept of honest and concurrent user found in Section 12(3) of the 1958 Act for securing concurrent registration is totally irrelevant as defence in a suit for infringement and copyright arising out of a different Act, namely, 1957 Act. Therefore, there can be no honest and concurrent user of one's copyright by another. After 1958 Act, the plea of acquiescence is not available at all. Even assuming that the first defendant was manufacturing between June 1989 and October 1991 he cannot have the benefit of Section 30(1)(b) of the 1958 Act*. This Act creates offences for such infringement under Sections 78 and

29. Section 96 also speaks of implied warranty. These provisions were not found in the 1940 Act. <CITATION> .2 this Court had occasion to point out the distinction between the infringement and passing off. :On this basis it is submitted all that has to be proved by the plaintiff is that she is the registered owner of the trade mark. If there is an infringement, injunction must follow. Section 12(3) of the 1958 Act talks of special circumstances in relation to honest and concurrent user. In such a case the defences available are as laid down in Sections 30 , 34 and 35 of that Act. Such defences are not available in the instant case. In this case, factually there is no acquiescence.

19.In support of these submissions; learned counsel relies on <CITATION> and particularly the passage occurring at page 497 to show in what case the plea of acquiescence could ever be made. Equally, in <ORG> v. <ORG> it was held that the court is bound to grant an injunction if the legal right is established. In the case on hand it has been so established. In <ORG> v. <ORG> as to when the plea of acquiescence could be upheld, is stated. In Bostitch Trade Mark6 the plea of acquiescence has been dealt with. Judged in the light of these rulings, the finding relating acquiescence cannot at all be upheld.

20.Mr <NAME>, learned Senior Counsel for the respondent submits that it is a clear case in which there are various acts, collectively pointing out to implied consent to the use of plaintiff's trade mark. They establish, at least prima facie, the acquiescence on the part of the appellant. They would disentitle it to the interim relief of injunction. The acts are as under:

(1)The letter dated May 7, 1984 to <NAME> regarding the allocation of the name <NAME>.

(2)The encouragement of production of new electronic food preparation machine. (3)No objection whatsoever by the plaintiff or any other related companies or even by Mr or Mrs <NAME> to the manufacture and sale by this respondent till the issue of notice dated November 18, 1991.

There is also evidence in this case to show that the first respondent has been manufacturing mixing machines from July 1987. There is also a clear * The Trade and Merchandise Marks Act , 1958 + The Trade Marks Act , 1940 2 (1 969) 2 SCC 727 : (1970) 2 SCR 222, 224 3 (1963) 2 SCR 484: AIR 1963 SC 449 4 (1948) 55 RPC 329, 338 5 1954 RPC 23, 34 6 1963 RPC 183, 202 admission on the part of the plaintiff that the first respondent was manufacturing his products under the trade name of <ORG> at least since June 1989. This is evident from the following:

(i)Criminal complaint dated April 6, 1992 mentions the manufacture of washing machines, vacuum cleaners and industrial mixies from 1984 and the manufacture of kitchen machines from 1989-90.

(ii)The affidavit filed on behalf of the appellants mentions about the manufacture since June 1989. There is a similar admission in paragraph II of the plaint. The export of these domestic mixies as Sumeet 842 INT is done by the first respondent. All these point out to acquiescence which would be a good ground for denying the interim relief of injunction.

21.The appellant has disentitled itself from the grant of equitable relief of injunction by reason of unexplained delay and suppression of material facts. The balance of convenience is also overwhelmingly in favour of this respondent in view of the facts stated above that the first respondent has been manufacturing and marketing productions with the trade name of <ORG> since 1989.

22.It is not correct to contend that once the trade mark is infringed the plaintiff would be entitled to injunction. Section 30(b) is still applicable and it is open to this respondent to show that there had been an implied consent to the use of the trade mark. In support of this submission learned counsel places reliance on <CITATION> .7

23.As regards the principles in relation to the grant of interim injunction the law has been laid down in <NAME> v. <NAME>. Similar principles are stated in <ORG> v. <ORG>

24.In dealing with this case we would like to keep this in the back of our mind that we are concerned with an interim application for injunction in relation to the violation of copyright, trade mark and the design. <ORG> observed in paragraph 8 as follows:

"The learned Single Judge, while disposing of the applications, has in the impugned judgment, accepted the copyright with respect to operating instructions and recipe book, guarantee card and the outer carton of the <ORG> kitchen mixies in <ORG> represented by the Sole Proprietrix Mrs <NAME>, as well as the copyright in the Design Registration No. 148246 for 'whipper blade' for which there is validity till April 5, 1994. He has also accepted the plaintiffs' case that the trade mark in the name '<ORG>' with the particular artistic design is registered in the name of <ORG> Research and Holdings Limited. He has, however, declined to grant any injunction, for in his opinion the doctrine of acquiescence and honest and concurrent user will be attracted."

8 (1957) 2 MLJ 573 9 (1 975) 1 All ER 504, 511 : (1975) AC 396

25.If there is an infringement of the same whether the appellant would be entitled to interim injunction at this stage is the important question for determination. For such a determination, we refrain from going into the details relating to evidence as that will prejudice the parties in the suits. Section 30(1)(b) of the 1958 Act says: "30. Acts not constituting infringment.-(1) Notwithstanding anything contained in this Act, the following acts do not constitute an infringement of the right to the use of a registered trade mark---

(a * * *

(b)the use by a person of a trade mark in relation to goods connected in the course of trade with the proprietor or a registered user of the trade mark if, as to those goods or a bulk of which they form part, the registered proprietor or the registered user conforming to the permitted use has applied the trade mark and has not subsequently removed or obliterated it, or has at any time expressly or impliedly consented to the use of the trade mark."

Therefore, acquiescence is one of the defences still available to the first respondent. Of course, it is a different issue whether the plea of acquiescence has been made out in this case. That will be examined for a limited purpose after setting out the law on this aspect.

26.Acquiescence is sitting by, when another is invading the rights and spending money on it. It is a course of conduct inconsistent with the claim for exclusive rights in a trade mark, trade name etc. It implies positive acts; not merely silence or inaction such as is involved in laches. In <NAME> v. <NAME> Sr. <NAME> said: "It is important to distinguish mere negligence and acquiescence." Therefore, acquiescence is one facet of delay. If the plaintiff stood by knowingly and let the defendants build up an important trade until it had become necessary to crush it, then the plaintiffs would be stopped by their acquiescence. If the acquiescence in the infringement amounts to consent, it will be a complete defence as was laid down in <ORG> & Co. v. <NAME>". The acquiescence must be such as to lead to the inference of a licence sufficient to create a new right in the defendant as was laid down in <NAME> v. <NAME>.

27.The law of acquiescence is stated by <NAME>, <NAME> in Pro tor v. <NAME> as under:

"It is necessary that the person who alleges this lying by should have been acting in ignorance of the title of the other man, and that the other man should have known that ignorance and not mentioned his own title." In the same case <NAME>, <NAME> said:

10 (1860) 28 Beav 303 :54 ER 382 11 (1884)26ChD406 12 (1847) 2 De GM&G 614: 22 LJ KCH 404 13 (1887) 36 Ch D 740 "In order to make out such acquiescence it is necessary to establish that the plaintiff stood by and knowingly allowed the defendants to proceed and to expend money in ignorance of the fact that he had rights and means to assert such rights."

28. In Devidoss and Co.7 at pages 33 and 34 the law is stated thus:

"To support a plea of acquiescence in a trade mark case it must be shown that the plaintiff has stood by for a substantial period and thus encouraged the defendant to expend money in building up a business associated with the mark. In <NAME> v. <NAME> <NAME> observed:

'If the plaintiff really does stand by and allow a man to carry on business in the manner complained of to acquire a reputation and to expend money he cannot then after a long lapse of time, turn round and say that the business ought to be stopped."' In the same case, but on appeal Lord <NAME>, C.J. said' 5 at p. 43:

"Is the plaintiff disentitled to relief under that head by injunction because of acquiescence? Of course it is involved in the consideration of that that the plaintiff has a right against the defendant and that the defendant has done him a wrong and the question is whether the plaintiff has so acted as to disentitle him from asserting his right and from seeking redress from the wrong which has been done to him. Cases may occasionally lay down principles and so forth which are a guide to the court, but each case depends upon its own circumstances.

Dealing with the question of standing by in Codes v. Addis and Son16 at P. 142, Eve, <NAME> said:

'For the purpose of determining this issue I must assume that the plaintiffs are traders who have started in this more or less small way in this country, and have been continuously carrying on this business. But I must assume also that they have not, during that period, been adopting a sort of <NAME> policy of going to sleep and not watching what their rivals and competitors in the same line of business were doing. I accept the evidence of any gentleman who comes into the box and gives his evidence in a way which satisfies me that he is speaking the truth when he says that he individually did not know of the existence of a particular element or a particular factor in the goods marketed by his opponents. But the question is a wider question than that : ought not he to have known : is he entitled to shut his eyes to everything that is going on around him, and then when his rivals have perhaps built a very important trade by the user of indicia which he might have prevented their using had he moved in time, come to the <ORG> and say : "Now stop them from doing it further, because a moment of time has arrived 14 (1896) 13 RPC 464 15 Rowland v. <NAME>, (1 897) 14 RPC 37, 43 16 (1923) 40 RPC 130, 142 when I have awakened to the fact that this is calculated to infringe my rights." Certainly not. He is bound, like everybody else who wishes to stop that which he says is an invasion of his rights, to adopt a position of aggression at once, and insist, as soon as the matter is brought to <ORG>, it ought to have come to his attention, to take steps to prevent its continuance; it would be an insufferable injustice were the <ORG> to allow a man to lie by while his competitors are building up an important industry and then to come forward, so soon as the importance of the industry has been brought home to his mind, and endeavour to take from them that of which they had legitimately made use; every day when they used it satisfying them more and more that there was no one who either could or would complain of their so doing. The position might be altogether altered had the user of the factor or the element in question been of a secretive or surreptitious nature;

but when a man is openly using, as part of his business, names and phrases, or other elements, which persons in the same trade would be entitled, if they took steps, to stop him from using, he gets in time a right to sue them which prevents those who could have stopped him at one time from asserting at a later stage their right to an injunction.' In <ORG> v. <ORG> acquiescence for four years was held to be sufficient to preclude the plaintiff from succeeding. In 1897 the plaintiffs in that case registered the word 'glacier' as a trade mark in respect of transparent paper as a substitute for stained glass. As the result of user the word had become identified with the plaintiffs' goods. In 1900 the defendants commenced to sell similar goods under the name 'glazine. In 1905 the plaintiffs commenced an action for infringement. The defendants denied that the use of the word 'glazine' was calculated to deceive and also pleaded acquiescence. A director of the plaintiff company admitted that he had known of the use of the word 'glazine' by the defendants for four years he would not say it was not five years. It was held that the plaintiffs failed on the merits and by reason of their delay in bringing the action.

Delay simpliciter may be no defence to a suit for infringement of a trade mark, but the decisions to which I have referred to clearly indicate that where a trader allows a rival trader to expend money over a considerable period in the building up of a business with the aid of a mark similar to his own he will not be allowed to stop his rival's business. If he were permitted to do so great loss would be caused not only to the rival trader but to those who depend on his business for their livelihood. A village may develop into a large town as the result of the building up of a business and most of the inhabitants may be dependent on the business. No hard and fast rule can be laid down for deciding when a person has, as the result of inaction, lost the right of stopping 17 (1960) 23 RPC 1 another using his mark. As pointed out in <NAME> v. <NAME> each case must depend on its own circumstances, but obviously a person cannot be allowed to stand by indefinitely without suffering the consequence."

29. This is the legal position. Again in Halsbury's Laws of England, Fourth Edn., Vol. 24 at paragraph 943 it is stated thus:

"943. Acquiescence.- An injunction may be refused on the ground of the plaintiff's acquiescence in the defendant's infringement of his right. The principles on which the court will refuse interlocutory or final relief on this ground are the same, but a stronger case is required to support a refusal to grant final relief at the hearing. [.Patching v. <NAME>; <NAME> v. <NAME>; <NAME> v. Wyatt2O; <NAME> v. <NAME> 21; <NAME> v. <NAME>; <NAME> v. <NAME> and <ORG>] The reason is that at the hearing of the cause it is the court's duty to decide upon the rights of the parties, and the dismissal of the action on the ground of acquiescence amounts to a decision that a right which once existed is absolutely and for ever lost: <NAME> v. Wyatt2O at 25; and see <NAME> v. <NAME> and <ORG> Co.24 per Lord Langdale MR.')

30.In <ORG> v. <ORG>, LD.4 at pp. 338-39 it was held thus: "Apart from this point the case of <NAME> v. <NAME>25 shows that the injunction in a passing-off case is an injunction sought in aid of a legal right, and that the <ORG> is bound to grant it if the legal right be established unless the delay be such that the Statute of Limitations would be a bar. That case apparently concerned some predecessors of the defendants. The delay was one of rather under two years and the relief sought was an injunction to restrain the use by the defendants of cards and wrappers calculated to induce the belief that his business was connected with the plaintiff. <ORG>, in the course of his judgment said this:

" Now, assuming, as I will, for the purpose "of my decision, that in the early part of 1875 the plaintiff knew of all the material facts" which have been brought before me today, he commenced his action in November 1876. "In my opinion that delay, and it is simply delay, is not sufficient to deprive the plaintiff of' his rights. The right asserted by the plaintiff in this action is a legal right. He is, in 18 (1853) Kay 1 : 69 ER 1 19 (1 854) 5 De GM&G 739: 43 ER 1057 20 (1863) 2 De GJ&Sm 18: 46 ER 281 21 (1865) 34 Beav 390: 55 ER 685 22 (1874) LR 18 Eq 444 23 (1 884) 50 LT 787 24 (1 842) 5 Beav 229, 233 : 49 ER 565 25 (1878) 9 Ch D 176: 47 LJ Ch 459 "effect, asserting that the defendants are liable to an action for deceit". It is not suggested in the defence that the delay here involves a question under or analogous to the period under the Statute. The defendants did suggest that there had been something more than mere delay on the part of the plaintiffs, and that the plaintiffs had lain by and allowed the goodwill which the plaintiffs now propose to acquire, but this point was not seriously pressed. It was suggested that Mr <NAME>, the plaintiffs' solicitor, knew from 1941 onwards what the defendants were doing, but it is impossible to impute to a busy solicitor a knowledge which he could only acquire by seeing advertisements in local or farming papers advertising the defendants' activities. No direct information was afforded to him; on the contrary it will be remembered that when in 1942 he made enquiries on behalf of his clients information was studiously withheld from him. I conclude therefore that there has been no acquiescence to disentitle the plaintiff to relief."' 31 In <ORG> v. <ORG> at pp. 32 and 33 it was held thus:

"I now pass to the second question, that of acquiescence, and I confess at once that upon this matter I have felt no little sympathy for the defendants, and have been not a little envious of the good fortune which has attended the plaintiffs, though no doubt they may justly attribute it to the astuteness of their advisers; but, as has already been said, the defendants have traded openly and (as the Judge found) honestly, beyond any question, in the ordinary course and substantially under this name '<ORG>' for a very long period of time, since early 1930's. During that time, they have built up (I doubt not) a valuable goodwill associated with that name. If the possibility that the mark 'Electrolux' was infringed is out of the way, and if I disregard for the moment (as I do) the point taken by Mr <NAME> that in any event for use of 'Electrolux' was a sufficient use for the purpose of Section 26(1) of 'Electnix' (seeing that the two marks were associated). I have no doubt that if the plaintiff had challenged in the courts the right of the defendants to use '<ORG>' before they have effect to their decision to apply the word 'Electrux' to their cheaper model in lieu of 'Electrolux', they would in all probability have failed, because the defendants' motion to strike the word 'Electrux' off the Register would have succeeded, but the fact is that when the battle was joined, 'Electrux' was no longer vulnerable on that account, unless the defendants can establish that the use was not bona fide, a matter to which I shall come presently. It is, however, said that by the defendants that the plaintiffs have deprived themselves of their legal right or, at least, of any right to the equitable remedy of injunction.

Upon this matter, a great deal of learning has been referred to, and we have also had our attention drawn to a number of cases. The latter include the well-known statement in <NAME> v. <NAME> by <NAME>, J. (as he then was) at p. 105. He said this: 'It has been said that the acquiescence which' will deprive a man of his legal rights must amount to fraud, and in my view that is an abbreviated statement of a very true proposition. A man is not to be deprived of his legal rights unless he has acted in such a way as would 'make it fraudulent for him to set up those rights'. Let me pause here to say that I do not understand that, by the word 'fraudulent', the learned Judge was thereby indicating conduct which would amount to a common law tort of deceit. 'What, then, are the elements or requisites necessary to constitute fraud of that description?' In the first place 'the plaintiff must have made a mistake as to his legal rights'. Secondly, the plaintiff must 'have expended some money or must have done some act (not necessarily upon the defendant's land) on the faith of his mistaken belief. Thirdly, the defendant, the possessor of 'the legal right, must know of the existence of his own right which is inconsistent with 'the legal right, must know of the existence of his own right which is inconsistent with' the right claimed by the plaintiff. If he does not know of it he is in the same position 'as the plaintiff, and the doctrine of acquiescence is founded upon conduct with a knowledge' of your legal rights. Fourthly, the defendant, the possessor of the legal right, must know 'of the plaintiff's mistaken belief of his rights. If he does not, there is nothing which' calls upon him to assert his own rights. Lastly, the defendant, the possessor of the legal 'right, must have encouraged the plaintiff in his expenditure of money or in the other acts which he has done, either directly or by abstaining from asserting his legal right'. In reading that passage, it is perhaps necessary to note (because it makes it at first sight a little more difficult to follow) that the positions of plaintiff and defendant as they are usually met with are there transposed, and that one of the parties who is there spoken of as the plaintiff corresponds with the present case with the defendants, and vice versa."

32 <ORG> pharmacy v. <NAME> is case where <ORG> was quoted with approval. However, on the facts of that case it was held that the plea of acquiescence had not been made, out.

33.Now, we come to the principles in relation to the grant of interim injunction. The case in <NAME> v. <NAME> makes a reference to the case-law and holds at pages 574-75 as under:

" The principles which should govern the <ORG> in granting or withholding a temporary injunction in trade mark infringement actions are well-settled : See recent decision <ORG> v. <ORG> As a temporary injunction is merely of a provisional nature and does not conclude the rights of the parties in any way, the 26 (1880) 15 Ch D 96: 43 LT 95 27 (1951) 68 RPC 47 <ORG> will exercise its discretion in favour of the applicant only in strong cases. The plaintiff must make out a prima facie case in support of his application for the ad interim injunction and must satisfy the <ORG> that his legal right has been infringed and in all probability will succeed ultimately in the action. This does not mean, however, that the <ORG> should examine in detail the facts of the case and anticipate or prejudice the verdict which might be pronounced after the hearing of the suit or that the plaintiff should make out a case which would entitle him at all events to relief at the hearing. Colman v. <ORG>, <ORG>, <ORG> v. <ORG>, <ORG> v. <NAME>. In fact the <ORG> will not ordinarily grant an interlocutory injunction if a large amount of evidence is necessary to support the plaintiff s case. The proper course in such a case is to ask for the trial of the action. The injury must be actual or imminent. <ORG> v. <ORG> Where the defendant disputes the plaintiff's title to the mark or contends that the plaintiff is not entitled to relief by reason of the acquiescence or delay or other estoppel or of the defendant's concurrent rights, the <ORG> will be guided by the balance of inconvenience which may arise from granting or withholding the injunction as well as the justice of the cause after considering all the circumstances in the suit. In other words, where the plaintiff s title is disputed or the fact of infringement or misrepresentation amounting to a bar to the action or some other defence is plausibly alleged upon the interlocutory motion, the <ORG> in granting or refusing the interim injunction is guided principally by the balance of convenience that is by the relative amount of damage which seems likely to result if the injunction is granted and the plaintiff untimately fails or if it is refused and he ultimately succeeds; <ORG> v. <NAME> and Co.33, <NAME> v. <ORG> ... It is necessary that an application for interlocutory injunction should be made immediately after the plaintiff becomes aware of the infringement of the mark. Improper and unexplained delay is fatal to an application for interlocutory injunction. The interim injunction will not be granted if the plaintiff has delayed interfering until the defendant has built up a large trade in which he has notoriously used the mark. <ORG> v. <ORG>, <ORG> v. <ORG> 28 (1898) 15 RPC 198 29 (1936) 53 RPC 399 30 (1890) 7 RPC 183 31 (1906) 23 RPC 337 32 (1895) 14 RPC 933 33 (1 881) 45 LT 54 34 (1903) 20 RPC 801 35 (1 894) 12 RPC 17 <ORG>, <ORG> v. <NAME>, <ORG> v. <ORG>, <ORG> v. <ORG>"

34. In <ORG> it is held at page 511 as under:

"Where other factors appear to be evenly balanced it is a counsel of prudence to take such measures as are calculated to preserve the status quo. If the defendant is enjoined temporarily from doing something that he has not done before, the only effect of the interlocutory injunction in the event of his succeeding at the trial is to postpone the date at which he is able to embark on a course of action which he has not previously found it necessary to undertake; whereas to interrupt him in the conduct of an established enterprise would cause much greater inconvenience to him since he would have to start again to establish it in the event of his succeeding at the trial.

The factors which he took into consideration, and in my view properly, were that <ORG>'s sutures XLG were not yet on the market; so that had no business which would be brought to a stop by the injunction; no factories would be closed and no work people would be thrown out of work. They held a dominant position in the United Kingdom market of absorbable surgical sutures and adopted an aggressive sales policy."

35.Again in <CITATION> .40 at page 731 to which decision one of us (<NAME>, J., as he then was) was a party it was stated thus: (SCC pp. 731- 32, para 9) "Usually, the prayer for grant of an interlocutory injunction is at a stage when the existence of the legal right asserted by the plaintiff and its alleged violation are both contested and uncertain and remain uncertain till they are established at the trial on evidence. The court, at this stage, acts on certain well settled principles of administration of this form of interlocutory remedy which is both temporary and discretionary. The object of the interlocutory injunction, it is stated: '... is to protect the plaintiff against injury by violation of his rights for which he could not adequately be compensated in damages recoverable in the action if the uncertainty were resolved in his favour at the trial. The need for such protection must be weighed against the corresponding need of the defendant to be protected against injury resulting from his having been prevented from exercising his own legal rights for which he could not be adequately 36 (1902) 19 RPC 574 37 (1909) 26 RPC 89 3 8 (1902) 19 RPC 422 39 (1908) 25 RPC 245 40 1990 Supp SCC 726: 1991 SCC (Cri) 145 ((<NAME>, J.) 465 compensated. The court must weigh one need against another and determine where the "balance of convenience" lies.' The interlocutory remedy is intended to preserve in status quo, the rights of parties which may appear on a prima facie case. The court also, in restraining a defendant from exercising what he considers his legal right but what the plaintiff would like to be prevented, puts into the scales, as a relevant consideration whether the defendant has yet to commence his enterprise or whether he has already been doing so in which latter case considerations somewhat different from those that apply to a case where the defendant is yet to commence his enterprise, are attracted."

36.In this case we will briefly analyse the materials on record as they now exist to decide the plea of honest and concurrent user of acquiescence. The learned Single Judge in paragraph 18 of his judgment at p. 1271 observes:

"A careful perusal of the above referred documents in particular along with the other voluminous documents, clinch the fact that <NAME>, the mother of the deponents in the affidavits filed in support of the applications, as well as the counter- affidavit, got the trade mark '<ORG>' registered long back as early as 1964 and that by the very strenuous efforts, hard work, skill, exertion, devised so many designs and improved the appliances on par with the modem technology and along with other members of the family, viz., husband, sons and daughters were able to start different business concerns as specifically pleaded in the affidavit and reply affidavit and by entering into various agreements among themselves and by remaining as shareholders and Directors in the companies engaged in manufacturing the various domestic power-operated machines like mixies, washing machines and so on by using the trade name and marketed <ORG> mixies in various categories and numbers. It has to be seen that during the said sojourn, <NAME>, the present Managing Director of the first respondent was also the Director of the plaintiff's company previously and still continuing as shareholder and that during 1984, the first defendant company was incorporated as private limited company under the Companies Act and in adopting the name '<ORG>', his mother <NAME> as well as his father gave written consent to the authority constituted under the Companies Act and that the several number of documents produced on behalf of the applicant as well as the respondents, clearly demonstrate the fact that <NAME>'s family including her husband, daughter, two sons and the other family members were all directly concerned and involved in all of their sister concerns including the first respondent company and have been engaged in manufacturing the various types of <ORG> home appliances and power operation machines and being marketed through a common distributor, viz., <ORG> and Engineers, Madras and all of their accounts were being audited by one and the same auditors concerned and that even to provide the working capital to the first respondent company being run by <NAME> it appears that in the company of the first respondent, both the mother and the father stood guarantee for a sum of Rs 2,00,00,000 in <ORG>. All virtually go to show that each and everyone in the family of <NAME> having involved in almost all the companies incorporated in the Companies Act by entering into agreement or otherwise and having the directorship and shares in almost all the companies and deeply involved in manufacturing either the components, motors and other accessories for their companies' products under the registered trade name and mark, <ORG> and that accordingly, they are being marketed the same through the company (sic common) distributor."

37.In paragraphs 19 and 20 of the impugned judgment the learned Judge refers to the documents filed by the respondent. None of these documents throw any light as to the manufacture. It might be that the first respondent was marketing, having regard to the close relationship as mother and son between the plaintiff and the first defendant. This was why <ORG> remarked: "There is some evidence showing that the first defendant has been at least marketing domestic mixers allegedly manufactured by <ORG> since its incorporation. Whether it actually manufactured before September 1991, however, is not possible to answer without proper evidence as to the actual manufacturing of the kitchen mixers by the first defendant." (emphasis supplied)

38.So, as such there is no evidence of manufacture. As rightly contended by Mr <NAME>, learned counsel, marketing may not advance the case of the first defendant- respondent. We do not think, as is urged by Mr <NAME>, learned counsel, either the criminal complaint or the averment in the plaint would amount to implied consent, more so, when no oral evidence has been let in, the parties having chosen to proceed on affidavit and counter-affidavit.

39.In 1984 the first defendant-company came to be incorporated. This was for the purpose of diversifying the industrial activity of the family group for manufacturing other technical appliances like washing machines, vacuum cleaners etc. But there is nothing on record to show that the first defendant was manufacturing earlier than the alleged violation of trade mark, copyright and design, as stated in the plaint.

40.We find considerable difficulty in appreciating the conclusion of <ORG> which had failed to note that the proprietor of the trade mark is <ORG> Again, the complaint of infringement of trade mark is not against <NAME> but against <ORG> and <ORG>.

41.It is a settled principle of law relating to trade mark that there can be only one mark, one source and one proprietor. It cannot have two origins. Where, therefore, the first defendant-respondent has proclaimed himself as a rival of the plaintiffs and as joint owner it is impermissible in law. Even then. the joint proprietors must use the trade mark jointly for the benefit of all. It cannot be used in rivalry and in competition with each other.

42.The plea of quasi-partnership was never urged in the pleading. As regardscopyright there is no plea of assignment. <ORG> had failed to notethe plea of honest and concurrent user as stated in Section 12(3) of 1958 Act for securing the concurrent registration is not a valid defence for the infringement of copyright. For all these reasons we are unable to support the judgments of <ORG> under appeal. We reiterate that on the material on record as is available at present the denial of injunction, once the infringement of trade mark, copyright and design is established, cannot be supported. Pending suit, there will be an injunction in favour of the appellants (the plaintiffs). All the civil appeals will stand allowed. No cost.

43. We request <ORG> to try the suits with utmost expedition.

44. We make it clear that whatever we have observed herein will have absolutely no bearing in the trial of the suits which have to be decided independently on their respective merits.


JUDGMENT <NAME>, <NAME>

1. This is an appeal by <ORG> against the order passed by <ORG> at Calcutta against the appellant under Section 23 of the Industrial Disputes (Appellate Tribunal) Act, 1950.

2. The respondents were the employees of the appellant. By their application, they complained that the appellant had illegally and unjustifiably dismissed them during the pendency of Appeal No. Cal. 167/53 before <ORG> at Calcutta without obtaining the express permission in writing of <ORG> as required by Section 22 of the Act. The case of the respondents was that they had been victimised by the appellant for their trade union activities. On the other hand, the appellant alleged that the dismissal of the respondents was fully justified under Section 27 (5) of the Certified Standing Orders of the Colliery. Before the respondents were dismissed from service as from March 11, 1954, Mr. <NAME>, Group Personnel Officer of the appellant had held a regular enquiry into the matter after supplying the formal charge-sheet to both the respondents. This enquiry was held in the presence of the respondents and full opportunity was given to them to cross-examine the witnesses who gave evidence against them and to lead their own evidence if they so desired. The enquiring officer was satisfied that the charges of riotous and disorderly behavior and of assault framed against the respondents were fully established. The appellant denied that there was any victimisation against the respondents or that they had been punished for their trade union activities. It appears that the incidents which gave rise to the charge-sheet against the respondents and the enquiry held by the appellant against them subsequently became the subject-matter of criminal proceedings; and in those proceedings the two respondents have been convicted under Section 147 of the Indian Penal Code and sentenced to undergo rigorous imprisonment for two months each and to pay a fine of Rs. 20 each, in default to undergo a further rigorous imprisonment of one month each. In regard to the contravention of the provisions of Section 22 , the appellant pleaded that the said alleged contravention was purely technical and it did not justify any claim for compensation made by the respondents under Section 23 of the Act. <ORG> has found that the domestic enquiry conducted by the appellant was fair and satisfactory and that 'it could not be said that the view taken by the enquiring officer was "an impossible view." Nevertheless, since the appellant had not obtained the requisite permission under Section 22 of the Act, <ORG> held that the respondents were entitled to compensation. In the result, he directed the appellant to pay to each of the two respondents the 2/3rd of his basic wages and dear-ness allowance for the entire period, from the date of his dismissal up to the date when the order would become enforceable and also directed that the respondents should get everything that they were entitled to at the date on which they were dismissed by way of provident fund, gratuity, etc. It is this order which is challenged before us by the appellant in the present appeal.

3. Mr. <NAME>, for the appellant, has not disputed the fact that the appellant failed to obtain the requisite permission in writing of <ORG> before dismissing the respondents. He, however, contends that the failure to obtain the requisite permission amounts to no more than a technical breach of Section 22 in the circumstances of the present case and his argument is that the respondents are entitled to no relief Under Section 23 of the Act. A declaration may be granted in favour of the respondents that there has been a technical breach of Section 22 on the part of the appellant; but no other consequential order can be passed in favour of the respondents and against the appellant in the present proceedings. If at all proceedings may be taken against the appellant under Section 29 of the Act; that, however, would not justify the award of compensation made by <ORG> in favour of the respondents.

4. The scope and effect of the provisions of Sections 22 and 23 of the Act have been considered by this Court in <CITATION> , . "The object of Section 22 ," observes <NAME>, J., as he then was, in his judgment, "like that of Section 33 of the 1917 Act as amended is to protect the workmen concerned in disputes which form the subject-matter of pending proceedings against victimisation by the employer on account of their having raised industrial disputes or :their continuing the pending proceedings."

As the judgment points out, the grievance made by the employee under this section is two-fold. In the first place his grievance is that the employer has taken action against him without complying with Section 22 ; and in the second place he has also the grievance on merits "which may be of much more seriousness and gravity for him" viz., that in point of fact he has been unfairly dealt with and his interest has really been prejudicially affected by the high-handed act of the employer. The right given to the workman to move the authority by lodging a complaint in this case is a distinct benefit given to him. Under the ordinary law of master and servant, a master would be entitled to dispense with the services of his servant without having to obtain permission in that behalf from any statutory authority. Section 22 of the Act, however, introduces restrictions on the master's right. So long as an industrial dispute is pending between the employer and his employees, the employer cannot discharge or punish, whether by dismissal or otherwise any of his employees concerned in the said dispute, without the requisite permission from <ORG>. If the employer contravenes the provisions of Section 22 , the employee is entitled to make a complaint in writing in the prescribed manner to <ORG> and, on receiving such complaint, <ORG> has to decide the complaint as if it is an appeal pending before it. The breach of the provisions or Section 22 by the employer is in a sense a condition precedent for the exercise of the jurisdiction conferred on <ORG> by Section 23 . As soon as this condition precedent is satisfied the employee is given an additional right of making the employer's conduct the subject-matter of an industrial dispute without having to follow the normal procedure laid down in the Industrial Disputes Act . In an enquiry held under Section 23 , two questions fall to be considered : Is the fact of contravention by the employer of the provisions of Section 22 proved ? If yes, is the order passed by the employer against the employee justified on the merits ? If both these questions are answered in favour of the employee, <ORG> would no doubt be entitled to pass an appropriate order in favour of the employee. It the first point is answered in favour of the employee, but on the second point the finding is that, on the merits, the order passed by the employer against the employee is justified, then the breach of Section 22 proved against the employer may ordinarily be regarded as a technical breach and it may not, unless there are compelling facts in favour of the employee, justify any substantial order of compensation in favour of the employee. It is unnecessary to add that, if the first issue is answered against the employee, nothing further can be done under Section 23 . What orders would meet the ends of justice in case of a technical breach of Section 22 would necessarily be a question of fact to be determined in the light of the circumstances of each case. In view of the decision of this Court in , it would be impossible to accept Mr. <NAME>'s argument that the only order which can be passed in proceedings under Section 23 is to grant a declaration that the employer has committed a breach of the provisions of Section 22 . <CITATION> , , this Court has expressed a similar view in regard to the provisions of Section 23 of the Act.

5. In the present case we do not think that <ORG> was justified in passing an order of compensation in favour of respondents. On the findings made by <ORG>, it is clear that a proper enquiry was held by the appellant and, as the judgment of <ORG> shows, the view taken by the enquiring officer and ultimately accepted by the appellant cannot be regarded as an unreasonable view. The conduct of the respondents which was held proved by the enquiring officer would undoubtedly justify their dismissal. Having regard to the facts of this case, therefore, we hold that the order of compensation passed by <ORG> must be reversed. Mr. <NAME> has fairly and, in our opinion, rightly not challenged the order passed by <ORG> in respect of provident fund, gratuity, etc., to which the respondents were entitled at the date of their dismissal. This order would, therefore, be confirmed. The result is that the appeal is partly allowed to the extent indicated. In the circumstances of this case we direct that the parties should bear their own costs throughout.


<NAME>, J.

1. For the facts relevant to this appeal their Lordships refer to the judgment which was delivered in July last in <CITATION> (1932) 35 Bom. L.R. 312, P.C. The re-argument, therein foreshadowed, of the appeal No. 86 of 1930, has taken place, and their Lordships now proceed to consider whether all or any of the three sums in question in that appeal (viz., Rs. 27,000, Rs. 35,000 and Rs. 7,703-13-0) are or is recoverable.

2. The principal and most difficult points turn upon the true construction and effect of the Indian Limitation Act , 1908, because their Lordships are of opinion that, apart from any questions of limitation, the three sums in question are all recoverable by the liquidators.

3. This is obviously so as regards the Rs. 7,703-13-0. As regards the other two sums, it was contended by the appellants that these were not recoverable upon the ground that in each case the sum was paid as a deposit or earnest to secure the due fulfilment of a contract, and that since the company in each case made default and failed to carry out the contract, the executors were entitled to retain the moneys. Their Lordships are unable to accept this contention, which depends upon a true view of the construction of the respective contracts. Suffice it to say that, having heard the arguments adduced, aad having considered the relevant documents, their Lordships are of opinion that the sums of Rs. 27,000 and Rs. 35,000 were not, nor was either of them, paid as a deposit or earnest money. They were payments in advance or anticipatory payments, and nothing else.

4. Their Lordships now proceed to consider the questions of limitation, the solution of which depends, in their view, upon the true construction and effect of the Indian Limitation Act , 1908, alone. Decisions in relation to English statutes do not appear to be of assistance.

5. The material section of the Indian Act is Section 3 which runs thus :-

Subject to the provisions contained in Sections 4 to 25 (inclusive), every suit instituted, appeal preferred, and application made, after the period of limitation prescribed therefor by the first schedule shall be dismissed, although limitation has not been set up as a defence.

Explanation.-A suit is instituted, in ordinary cases, when the plaint is presented to the proper officer ; in the case of a pauper, when his application for leave to sue as a paupar is made ; and, in the case of a claim against a company which is being wound up by the <ORG>, when the claimant first sends in his claim to the official liquidator,

6. Unless the application which the liquidators made on March 26, 1928, was a "suit instituted" or an "application made," for which a period of limitation is prescribed by the first schedule, no question of limitation in regard thereto can arise.

7. There is no definition of suit in the Act, beyond the provision, contained in Section 2 , that unless there is anything repugnant in the subject or context, "suit" does not include an appeal or an application. The word "suit" ordinarily means, and apart from some context must be taken to mean, a civil proceeding instituted by the presentation of a plaint. The application of the liquidators would not be a suit within Section 3 , if that section stood alone, unaccompanied by the Explaination. An argument, however, was addressed to their Lordships, founded upon the Explanation, to this effect: That the Explanation shows by its concluding sentence that a claim against a company in compulsory liquidation (even though made by a proceeding not instituted by the presentation of a plaint) is considered to be a "suit instituted" within the se words in Section 3 , and that a claim similarly made by or on behalf of such a company must necessarily, or may similarly, be treated as a "suit instituted" within the section. Their Lordships are unable to accede to this contention. Even if such a claim against such a company could be held by virtue of the Explanation to be a "suit instituted" within Section 3 , there is nothing in the Explanation to justify a similar holding in regard to a claim by such a company. But their Lordships do not accept the view that a claim against such a company (not made by a proceeding instituted by the presentation of a plaint) is by virtue of the Explanation to be considered to be a "suit instituted" within the section. The Explanation is not concerned with the question of what is a suit, or is to be considered a suit, within Section 3 . It is addressed to quite a different subject matter. It assumes the existence of a suit which has been instituted by the presentation of a plaint, and is concerned only with the point of time at which that suit is for the purpose of Section 3 to be treated as being instituted. The ordinary rule is stated by the Explanation to be that the suit is instituted when the plaint is presented; but to this two exceptions are prescribed, viz., (1) in the case of a suit by a pauper, the time at which that suit is (for the purposes of Section 3 ) instituted, is to be taken as an earlier date, viz., the date when the application for leave to sue as a pauper was made ; and (2) in the case of a suit against a company which is being wound up by the <ORG>, the institution of the suit is (for the purposes of Section 3 ) advanced also to an earlier date, viz., the date when the claim was first sent in to the official liquidator. Their Lordships are unable to find in an Explanation, which on its face only deals with the point of time at which suits are instituted within the meaning of Section 3 , any sufficient justification for extending the meaning of the word 'suit' in that section.

8. The application by the liquidators cannot, therefore, be dismissed as being a "suit instituted" after the prescribed period of limitation.

9. The application of the liquidators must, therefore, be treated as an "application made" under Section 3 ; and the next enquiry must be whether any period of limitation is "prescribed therefor by the first schedule" to the Indian Limitation Act . It is common ground that the only Article in that schedule which could apply to such an application is Article 181: but a series of authorities commencing with <NAME> v. <NAME> (1880) I.L.R. 7 Bom. 213 has taken the view that Article 181 only relates to applications under the Code of Civil Procedure, in which case no period of limitation has been prescribed for the application. But even if Article 181 does apply to it, the period of limitation prescribed by that Article is three years from the time when the right to apply accrued, which time would be not earlier than the date of the winding up order, March 26, 1926. The application of the liquidators was made on March 26, 1928, well within the three years. The result is that from either point of view the application by the liquidators, if otherwise properly made under and within the provisions of Section 186 of the Indian Companies Act is not one which must be dismissed by reason of Section 3 of the Indian Limitation Act. It is either an application made within time, or it is an application made for which no period of limitation is prescribed. The case may be a casus omissus. If it be so, then it is for others than their Lordships to remedy the defect.

10. There is, however, another aspect of the case in which the last-mentioned Act plays a most important part, and that is in considering whether the three sums which the liquidators seek by their application to recover from the appellants were at the date of that application "money due" within the meaning of Section 186 . If they were not, then the section had no application and the <ORG> would have had no power to make the order which it made.

11. From this point of view it is necessary to treat the three items separately, for the purpose of seeing whether if on March 26, 1928, the liquidators acting under the powers conferred upon them by Section 179 (a) of the Indian Companies Act had in the name of the company instituted a suit against the testator's executors for the recovery of any of those items, that suit would of necessity have been dismissed by reason of the Indian Limitation Act .

12. As regards the Rs. 35,000, this sum, whether paid under a void agreement with the company, or paid without the company's knowledge or authority, was (subject to a point to be mentioned later), immediately after payment, recoverable by the company as money had, and received. In other words, it was repayable on September 13, 1922. The period within which a suit by the company to recover the amount would have to be instituted is, under Article 62 of the first schedule, three years. The debt was accordingly time-barred both before the date of the winding-up order March 26, 1926, and before March 26, 1928.

13. In regard to the item Rs. 27,000, the company could hare recovered this by a suit instituted before the expiry of the period of three years named in Article 51 in the first schedule, a period which in their Lordships' view began to run on July 1, 1923, when the second shipment of goods fell to be delivered under the relevant contract. This debt was accordingly not time-barred by suit at the date of the winding-up order but was so time-barred when the liquidators made their application under Section 186 .

14. In regard to the item Rs, 7,703-13-10, balance of account, a suit by the company to recover it would fall within Article 85 of the first schedule and would have to be dismissed if not instituted within three years of March 31, 1924, being the end of the last accounting year on which the last item admitted or proved was entered in the account. This item is in the same situation for the matter now under consideration as is the second item. The important feature for this purpose is the fact that all three items were statute-barred by suit when the liquidators made their application under Section 186 . If on March 26, 1928, the liquidators, instead of proceeding in their own name as applicants under Section 186 , had in pursuance of their powers under Section 179 (a) already referred to instituted a suit in the name of the company by the presentation of a plaint, the <ORG> must of necessity have dismissed that suit under the Indian Limitation Act .

15. Now, in considering the meaning and effect of Section 186 it is impossible to overlook the fact that it is verbatim identical with the corresponding section in the legislation of this country, a section which dates back some seventy years to 1862, and which has appeared in our company legislation ever since. It is, therefore, a section with an ancestral history. Three features of the section call for notice: (1) It is concerned only with moneys due from a contributory, other than money payable by virtue of a call in pursuance of the Act. A debtor who is not a contributory is untouched by it. Moneys due from him are recoverable only by suit in the company's name. (2) It is a section which creates a special procedure for obtaining payment of moneys ; it is not a section which purports to create a foundation upon which to base a claim for payment. It creates no new rights. (3) The power of the <ORG> to order payment is discretionary. It may refuse to act under the section, leaving the liquidator to sue in the name of the company, and it will readily take that course in any case in which it is made apparent that the respondent under this procedure, if continued, would be deprived of some defence or answer open to him in a suit for the same moneys.

16. The old Section 101 of the English Act of 1862 has ever since 1866 been judicially interpreted and administered in accordance with the views expressed in Stringer's Case (1869) 4 Ch. App. 475 viz., that the section is one which provides summary proceedings against debtor-contributories to avoid proceedings in different <ORG> and to permit a single proceeding in the winding-up <ORG>-but "in those summary proceedings every objection is just as open to the person sought to be charged as it would have been if a bill had been filed." (p. 484.)

17. In this country it is difficult to conceive a case in which, so far as limitation is concerned, the section should so operate as to deprive a man of a defence to a claim made by the liquidator which would have been effective against the same claim if brought against him by an action in the company's name.

18. Whether, in view of the particular terms of the Indian Limitation Act already referred to, such a case could happen in India depends upon the meaning to be attributed to the words in the section "any money due from him or from the estate of the person whom he represents to the company." And their Lordships are satisfied that the position in this respect is, in India, the same as in this country, for the reason that in view of the place and context in which these words are found, they must be confined in their Lordships' judgment to money due and recoverable in a suit by the company, and they do not include any moneys which at the date of the application under the section could not have been so recovered.

19. Their Lordships are glad to find that this view has already prevailed in India, In the case of <CITATION> (1022) I.L.R. 4 Lah. 109, it was held that a debt time-barred (and therefore unenforceable in a suit) could not be enforced by a summary order under Section 186 , on the ground that the section does not create new liabilities or confer new rights, but merely creates a summary procedure for enforcing existing liabilities. It is true that so far as can be gathered from the report it would seem probable that the debt there in question had become time-barred before the liquidation began, but the decision is not based upon that fact, but upon a view of the section coinciding with the views expressed long ago in <NAME>'s Case.

20. The learned Judges, in the present case, took the erroneous view that once the winding-up commenced there could be no further application of the rule of limitation in regard to any debt due to the company and not then already time-barred. Their Lordships know of no justification for this view. In this respect there is no analogy between the position of a debtor to, and a creditor of, a company in liquidation.

21. The learned Judges also considered that the Lahore case was in conflict with a decision in <ORG>, <CITATION> (1916) I.L.R. 38 All. 347. This, however, is a misconception. The last-mentioned case had no relation to Section 186 . It was a ease relating to money due on shares in the company which was in liquidation, the liability for which on a winding-up became a statutory liability under Section 156 of the Indian Companies Act, 1918.

22. In their Lordships' opinion the case of <CITATION> was rightly decided and accordingly there was no power in the Court under Section 186 to order payment to the liquidators of any of the three items in question.

23. The liquidators made a new submission upon the occasion of the reargument in regard to the sum of Rs. 35,000. They claimed that under Section 65 of the Indian Contract Act (IX of 1872) they only became entitled to recover the Rs. 35,000 when the agreement under which it was paid was discovered to be void, and that this discovery was not made until the litigation which culminated in the judgment of May 14, 1929, so that this right never became time-barred. Their Lordships cannot accede to this contention. In the absence of special circumstances (and none exist here) the time at which an agreement is discovered to be void within the meaning of Section 65 is the date of the agreement, viz., September 13, 1922 (see <CITATION> (1)

24. Their Lordships are of opinion that this appeal should be allowed and that the decree of May 14, 1929, should be set aside and that in lieu thereof a decree should be made dismissing the application of the liquidators with costs; and they will humbly advise His Majesty accordingly. The respondents must pay the appellants' costs of this appeal.


PETITIONER: STATE OF BIHAR & ORS. Vs. RESPONDENT: <NAME> & ORS. DATE OF JUDGMENT: 26/02/1996 BENCH: RAMASWAMY, K. BENCH: RAMASWAMY, K. G.B. PATTANAIK (J) CITATION: 1996 SCC (2) 493 JT 1996 (3) 336 1996 SCALE (2)768 ACT: HEADNOTE: JUDGMENT:

O R D E R Leave granted.

We have heard the counsel on both sides.

The admitted facts are that <ORG>, Sukhsan was taken over by the State Government on January 13, 1981, as a consequence of the recommendation made by the Committee constituted under Section 3(4) of the Bihar Non-Government Primary School (taking over control) Act, 1576 (for short, the `Act'). As on that date there were seven persons, who were teachers and other employees to whom grand-in-aid was given. Two candidates, namely, the respondents <NAME> and <NAME> were untrained teachers appointed after 1.1.1971. They filed the writ petition in <ORG> for a direction to regularise their services on the premise that they had completed the training subsequently and that, therefore, they are entitled to be deemed Government servants from 1.1.1971. <ORG> in CWJC No.1963/95, dated July 27, 1993 allowed the writ petition following its earlier judgment holding that they must be deemed to have been appointed as on 1.1.1971 and by the date of their taking over, namely, January 13, 1981, they have already completed that training and that, therefore, they shall be regularised as Government servants. Calling that order in question, this appeal by special leave has been filed.

<NAME>, the learned counsel for the appellant contended that though an appeal against the earlier order of <ORG> has not been filed, since larger public interest is involved in the interpretation given by <ORG> following its earlier judgment, the matter requires consideration by this <ORG>. We find force in this contention. In the similar circumstances, this <ORG> in <CITATION> [] and [] and in <CITATION> [(1991) supp. 1 SCC 138] had held that though an appeal was not filed against an earlier order, when public interest is involved in interpretation of law, the <ORG> is entitled to go into the question.

It is then contended that Section 3(2) and (3) make distinction between the employees covered by those provisions and the employees of the aided schools taken over under Section 3(2). Until the taking over by operation of Section 3(4) recommendation is complete, they do not become the employees of the <ORG> under Section 4 of the Act. The <ORG> in exercise of the power under Section 8 constituted a committee and directed to enquire and recommend the feasibility to take over the schools. On the recommendation made by them, the <ORG> have taken decision on January 13, 1981 by which date the respondents were not duly appointed as the employees of the taken over institution. Therefore, <ORG> cannot issue a mandamus directing the <ORG> to act in violation of law.

On the other hand, <NAME>, learned counsel for the respondents contended that though they were temporarily appointed after 1.1.1971, the respondent having been given training at the <ORG> expense and completed training, they must be deemed to have been taken over and became the <ORG> servants w.e.f 1.1.1971. Section 4 of the Act does not make any distinction between employees regularly appointed or employees irregularly appointed and that, therefore, the view taken by <ORG> is correct in law.

Having given due consideration to the respective contention, we find that there is force in the contention of Shri <NAME>. It is seen that by operation of Section 1(3) read with Section 3(2) and (3), the employees of the erstwhile schools managed by the district Board, <ORG>, <ORG>, <ORG> became the Government employees w.e.f. 1.1.1971. Similarly, the schools managed by the public or private undertakings taken over by the State Government also became the Government servants w.e.f. the said date.

Under Section 3(2) read with Section 3(4), the operation of taking over all the aided elementary schools by the private management committees and handed over voluntarily to the control of the <ORG> would be operative only on the recommendation made by the committee constituted under sub-section (4) of Section 3. Consequentially, only on acceptance of recommendation by the <ORG>, taking over of the school becomes complete and it becomes operative. It would be clear from the language that it is not incumbent upon the <ORG> to either take over the school until it decided to do so, and <ORG> is not bound to accept all the recommendations. As seen the <ORG> exercising the power under Section 8 removing the difficulties have issued orders on May 2, 1980 constituting the committees. In para 2 thereof, the competent persons and in para 7 clause (d) it says that "if any untrained teacher has been appointed in the said school after 1.1.1971, the services of such teacher will not be taken over. It would be the responsibility of the Secretary of <ORG> to terminate the services of such teacher prior to the said date". Consequentially, the operation of the Act, namely, Section 3(2) read with 3(4) will be functional only after the report submitted by the <ORG> and accepted by the State <ORG>. In terms of the aforesaid orders, any untrained teachers existing prior to the take over are not eligible to be taken over. Section 4 would operate only in respect of the employees qualified and working prior to the taking over. Consequently, the view of <ORG> is clearly illegal.

It is equally settled law by decisions of this Court in of this Court in <CITATION> . [ = (1994) 3 SCALE 597] that no mandamus would be issued directing the Government to disobey the law.

In view of the above interpretation, the view of <ORG>, therefore, is clearly illegal and cannot be implemented.

<NAME> appeal is accordingly allowed. The order of <ORG> is set aside. Consequently, the Writ Petition stands dismissed. No costs.


CASE NO.: Appeal (civil) 431-446 of 1988 PETITIONER: UNION OF INDIA Vs. RESPONDENT: BHAGWATI PRASAD (DEAD) & <NAME>. DATE OF JUDGMENT: 07/03/2002 BENCH: G.B. Pattanaik, S.N. Phukan & S.N. Variava JUDGMENT:

PATTANAIK,J.

<ORG> through General Manager, <ORG> is in appeal against the Revisional order of <ORG>. By the impugned order, <ORG> has upheld the order of <ORG> on preliminary issue as to whether <ORG> has jurisdiction to entertain claim for compensation against <ORG>, in the event it is held that for the accident in question there was no negligence on the part of the <ORG>. A taxi came in collision with Allahabad-Saharanpur Passenger Train as a result of which passengers died and some sustained bodily injuries. For sustaining such bodily injuries arising out of the accident, applications were filed claiming compensation under Section 110-A of the Motor Vehicles Act, 1939 (hereinafter referred to as ' The Act '), against the insurer of the taxi as well as against the <ORG>. It was alleged that the accident occurred due to the negligence of the employees of the <ORG> staff at the railway crossing, the railway crossing having been kept open for the high-way traffic at a time the train was to pass through the point. The <ORG> filed written statement taking the plea that application for compensation under the Motor Vehicles Act can be filed against the insurer, owner or driver of the Motor Vehicle and the <ORG> has no jurisdiction to entertain the claim against the <ORG>. In view of the aforesaid stand, a preliminary issue was framed by the <ORG> and the <ORG> held that if claimants have sustained injuries in an accident arising out of the use of a Motor Vehicle then the <ORG> will have the jurisdiction to entertain application for claim not only against the owner or insurer of the vehicle but also against any other vehicle which came in collision, and in the case in hand, against the <ORG>. Against the aforesaid order of the <ORG> Revision having been filed a learned Single Judge of <ORG> referred the matter to <ORG> and by the impugned judgment <ORG> having upheld the order of the <ORG>, the present appeals have been preferred by the grant of Special Leave. When these appeals were taken up for hearing on 14th February, 2002 before a Bench of two learned Judges of this <ORG>, the decision of this <ORG> in the case of <CITATION> (1997) 8 <ORG> Cases 683, was placed before the <ORG>. The conclusion of the <ORG> recorded in paragraph 41 of the aforesaid judgment did not find favour with the two learned Judges who were hearing the matter and accordingly it was directed that the matter be referred to a larger Bench and that is how it has come before us.

Mrs. <NAME>, learned counsel appearing for the appellant <ORG> contends that in respect of an application for compensation filed under Section 110-A of the Act, the <ORG> constituted under sub- section (1) of Section 110 can pass an award under Section 110-A against the insurer or owner or driver of the vehicle involved or by all or any of them, as the case may be. A passenger train not being a Motor Vehicle, no application for claim of compensation against <ORG> could be entertained by the Claims <ORG> constituted under sub- section (1) of Section 110 if the death or injury has occurred on account of a collision between a Motor Vehicle and a Passenger Train. The impugned judgment of <ORG>, therefore, according to the learned counsel is unsustainable in law. In support of this contention reliance has been placed on the decision of the <ORG> in the case of <CITATION> (supra). It is contended on behalf of the respondent, however, that on account of a collision between a Motor Vehicle and a Train if death or injury is resulted to several passengers then the accident must be held to have arisen out of the use of Motor Vehicle. In such a case, therefore, the jurisdiction of the <ORG> cannot be said to be ousted merely because the collision took place between a Motor Vehicle and a Passenger Train. It is further contended that the <ORG> cannot be absolved of its liability on the plea that the employees of the train were not negligent.

On account of the rapid development of road transport and increase in number of Motor Vehicles on the road the incidence of road accidents by Motor Vehicles having increased enormously the Motor Vehicles Act enacted by the <ORG> was amended and the provisions were inserted for payment of compensation in certain cases of accidents without proof or fault or negligence on the part of the driver of the vehicle. The claim for compensation in respect of the accidents involving death or bodily injury to persons arising out of the use of Motor Vehicles as well as the insurance of the Motor Vehicles against the third party risk and the liability of the insurer are contained in Chapter VIII of the Motor Vehicles Act. <ORG> has been empowered under Section 110(1) of the Act to constitute one or more <ORG> by notification in the Official Gazette. Section 110-A provides for filing an application for compensation and Section 110-B is the power of <ORG> to pass an award on receiving an application for compensation made under sub-section (A) of Section 110 . The procedure and powers of <ORG> are enumerated in Section 110-C of the Act. It is not necessary for adjudicating the point in issue to examine and notice any other provision of the Act. In the case of <CITATION> (supra) applications for compensation had been filed either by the injured passengers or the dependant of the deceased passengers travelling in the ill- fated Motor Vehicle both against the insurer of the Motor Vehicle as well as against <ORG> and one of the contention which had been raised before this <ORG> by <ORG> was whether a claim for compensation would at all be maintainable before the <ORG> against other persons or agencies which are held to be guilty of composite negligence or are joint tortfeasors, and if the same arose out of the use of the Motor Vehicle. On consideration of different provisions of the Motor Vehicles Act this <ORG> ultimately came to hold that , "We hold that the claim for compensation is maintainable before the <ORG> against other persons or agencies which are held to be guilty of composite negligence or are joint tortfeasors, and if arising out of use of the motor vehicle. We hold that the <ORG> and <ORG> were right in holding that an award could be passed against the <ORG> if its negligence in relation to the same accident was also proved." The <ORG> also came to hold that the views expressed by Gauhati, Orissa, and Madras <ORG> to the effect that no award can be passed against others except the owner/driver or insurer of the motor vehicle are not correct, and on the other hand the view taken by the Allahabad, Punjab and Haryana, Gujarat, Kerala and Rajasthan <ORG> to the effect that the claim lies before the <ORG> even against another joint tortfeasor connected with the same accident or against whom composite negligence is alleged. We are in respectful agreement with the aforesaid conclusion of the <ORG> in the aforesaid case. Having said so it was further held that if it is ultimately found that there is no negligence on the part of the driver of the vehicle or there is no defect in the vehicle but the accident is only due to the sole negligence of other parties/agencies then on that finding the claim would go out of Section 110 of the Act because the case would become exclusive negligence of <ORG> and again if the accident had arisen only on account of the negligence of persons other than the driver/ owner of the motor vehicle the claim would not be maintainable before the <ORG>. It is this observation of the <ORG> in the aforesaid case which is strongly relied upon by Mrs. <NAME> , the learned counsel appearing for <ORG> and it is this observation with which the two learned Judges hearing the appeal did not prima facie agree with for which the reference has been made to this larger Bench. The question that arises for consideration, therefore, is whether an application filed before a Claims <ORG> for compensation in respect of accidents involving the death or bodily injury to persons arising out of the use of Motor Vehicle and the claim is made both against the insurer, owner and driver of the motor vehicle as well as the other joint tortfeasors, if a finding on hearing is reached that it is solely the negligence of the joint tortfeasor and not the driver of the Motor Vehicle then would the <ORG> loose the jurisdiction to award compensation against the joint tortfeasor. It is not disputed, and as has been already held by this court in the case of <CITATION> .(supra) that a claim for compensation on account of the accident arising out of the use of a Motor Vehicle could be filed before a <ORG> constituted under the Motor Vehicles Act not only against the owner or insurer of the Motor Vehicle but also against another joint tortfeasor connected with the accident or against whom composite negligence is alleged. A combined reading of Section 110 , 110-A , which deal with the Constitution of one or more Motor Accidents Claims <ORG> and application for compensation arising out of an accident, as specified in sub-section (1) of Section 110 unequivocally indicates that Claims <ORG> would have the jurisdiction to entertain application for compensation both by the persons injured or legal representatives of the deceased when the accident arose out of the use of Motor Vehicle. The crucial expression conferring jurisdiction upon <ORG> constituted under the Motor Vehicles Act is the accident arising out of use of Motor Vehicle, and therefore, if there has been a collision between the Motor Vehicle and Railway train then all those persons injured or died could make application for compensation before <ORG> not only against the owner, driver or insurer of the Motor Vehicle but also against <ORG>. Once such an application is held to be maintainable and the <ORG> entertains such an application, if in course of enquiry the <ORG> comes to a finding that it is the other joint tortfeasor connected with the accident who was responsible and not the owner or driver of the Motor Vehicle then the <ORG> cannot be held to be denuded of its jurisdiction which it had initially. In other words, in such a case also the Motor Vehicle Claims <ORG> would be entitled to award compensation against the other joint tortfeasor, and in the case in hand, it would be fully justified to award compensation against <ORG> if ultimately it is held that it was the sole negligence on the part of <ORG>. To denude the <ORG> of its jurisdiction on a finding that the driver of the Motor Vehicle was not negligent, would cause undue hardship to every claimant and we see no justification to interpret the provisions of the Act in that manner. The jurisdiction of the <ORG> to entertain application for compensation flows from the provisions contained in Section 110-A read with sub-section (1) of Section 110 . Once the jurisdiction is invoked and is exercised the said jurisdiction cannot be divested of on any subsequent finding about the negligence of the tortfeasor concerned. It would be immaterial if the finding is arrived at that it is only other joint tortfeasor who was negligent in causing accident and not the driver of the Motor Vehicle. In our considered opinion the jurisdiction of the <ORG> to entertain application for claim of compensation in respect of an accident arising out of the use of Motor Vehicle depends essentially on the fact whether there had been any use of Motor Vehicle and once that is established the <ORG>'s jurisdiction cannot be held to be ousted on a finding being arrived at at a later point of time that it is the negligence of the other joint tortfeasor and not the negligence of the Motor Vehicle in question. We are therefore, of the considered opinion that the conclusion of the <ORG> in the case of <CITATION> . (supra) to the effect "It is ultimately found that there is no negligence on the part of the driver of the vehicle or there is no defect in the vehicle but the accident is only due to the sole negligence of the other parties/agenncies, then on that finding, the claim would go out of Section 110(1) of the Act because the case would then become one of the exclusive negligence of <ORG>. Again if the accident had arisen only on account of the negligence of persons other than the driver/owner of the motor vehicle, the claim would not be maintainable before the <ORG>" is not correct in law and to that extent the aforesaid decision must be held to have not been correctly decided.

In the aforesaid premises, we do not find any infirmity with the impugned judgment of <ORG> of <ORG> requiring interference of this Court. These appeals fail and are dismissed.

................J.

(G.B. PATTANAIK) ................J.

(S.N. PHUKAN) .J.

(S.N. VARIAVA) March 07, 2002.