Ramji Lal Agarwal vs. Sourav Agarwal
Original PDF →Facts
The plaintiff, Ramji Lal Agarwal, filed an application for an interim order to restrain the defendant, Sourav Agarwal, from using the trade name 'Sindharam Sanwarmal' within a one-kilometer radius of premises No. 43/44, Cotton Street, Kolkata. The plaintiff's case is based on a Family Agreement dated January 13, 2017, executed by the heirs of Mangi Lal Agarwal, who established the business under the trade name 'Sindharam Sanwarmal'. The agreement aimed to regulate the use of the trade name and allotted specific shop rooms to different branches. The plaintiff was allotted a shop room under the name 'Sindharam Sanwarmal', while the defendant's father was allotted a shop room under the name 'Shree Hanuman Stores'. After his father's death, the defendant allegedly began operating his business from the 'Shree Hanuman Stores' premises using the name 'Sindharam Sanwaramal Mewawala', violating Clause 3 of the Family Agreement which restricted business operations within a one-kilometer radius of existing shops.
Held
The Court held that the suit filed by the plaintiff is not maintainable before the High Court. The Court found that the dispute arises from the defendant using the trademark 'Sindharam Sanwarmal Mewawala' and exclusively using the premises for business. This situation falls under Section 2(1)(c)(vii) of the Commercial Courts Act, 2015, which defines a commercial dispute as arising from agreements relating to immovable property used exclusively in trade or commerce, and Section 2(1)(c)(xvii) concerning intellectual property rights in registered and unregistered trademarks. The Court reasoned that the use of the trademark in conjunction with the business premises constitutes a commercial dispute as defined by the Act. Consequently, the High Court lacked the jurisdiction to hear the matter. The plaint was returned to the plaintiff with liberty to file it before the appropriate court. The interim application (G.A. No. 1 of 2023) was dismissed, and the application for dismissal of the suit (G.A. No. 2 of 2023) was allowed, leading to the dismissal of the suit (C.S. No. 126 of 2023).
Key Issues
1. Whether the suit, filed on the basis of a Family Agreement concerning trade names and property used for business, constitutes a "commercial dispute" as defined under Section 2(1)(c) of the Commercial Courts Act, 2015, specifically under sub-clauses (vii) relating to immovable property used exclusively in trade or commerce, and (xvii) relating to intellectual property rights in trademarks? Petitioner's Arguments: The plaintiff contended that the defendant's use of the trade name 'Sindharam Sanwarmal Mewawala' within a one-kilometer radius of the plaintiff's shop room violates Clause 3 of the Family Agreement. This clause stipulated that no business would be started within this radius using the trade name. The plaintiff sought an injunction to enforce this negative covenant. Defendant's Arguments: The defendant argued that the goodwill of the trade name 'Sindharam Sanwarmal' is a coparcenary asset, and three generations are entitled to it by survivorship. He claimed the plaintiff cannot claim exclusive rights. The defendant asserted he has been using the trade name 'Sindharam Sanwarmal Mewawala' for over five years and has obtained GST registration and a Kolkata Municipal Corporation enlistment certificate. He also argued that the Family Agreement is not binding on him as he was not a signatory and was not privy to its terms at the time of execution. Furthermore, he contended that the suit was filed at a belated stage and the plaintiff had waived his rights by permitting the defendant to carry on business.
Sections Cited
Section 2(1)(c)(vii), Section 2(1)(c)(xvii)
AI-generated summary — verify with the full judgment below
Cause title — parties, addresses and appearances
interim order.
Mr. Bachawat submits that when the agreement was entered into by arrangement as binding agreement between the several co-parceners family property. It had not been allotted the defendant’s father under the agreement. It was tenancy in the name of the defendant solely since the year, 2014. He submits that the defendant despite his right, title and interest in the aforesaid mark as well as the moveable and immovable properties acquired by exploiting such mark, was not a signatory to the alleged family agreement and was not privy to the terms thereof at the time of its execution, the agreement or the terms thereof could not be said to be binding on the defendant.
Mr. Bachawat submits that the plaint is silent as to when the cause of action arose i.e. the date when the defendant purportedly set up another shop within the radius of one kilometer of the existing shop room and when the defendant allegedly permitted third parties to use the aforesaid mark.
Mr. Bachawat submits that it is clear from the plaint that the plaintiff is aggrieved by the alleged act of the defendant in granting franchise of the trade name to a third party. He further submits that though the agreement is named as “Family Agreement” but in Clause 8 of the agreement clearly stated that the parties thereto shall have separated in business and properties for all time to come from the date of these presents. He submits that the agreement clearly indicates that the 8
agreement was in fact a commercial agreement to divide the family business and the properties used to conduct it. He submits that the dispute raised by the plaintiff in the suit as well as in the present application is a commercial dispute covered under the provisions of Section 2(1)(c)(i), (vii), (viii) and (xvii) of the Commercial Courts Act, 2015. 20. Mr. Bachawat submits that the defendant has been using the mark “Sindharam Sanwarmal” along with the suffix “Mewawala” since 2017 paragraph of the agreement, it is categorically recorded that “which expression unless excluded by or repugnant to the context shall include his heirs, executors, administrators, legal representatives and assigns”. In paragraph 17(f) of the affidavit-in-opposition, the defendant stated that from the year 2017, the defendant started using and adopted the mark “Sindharam Sanwarmal Mewawala” to trace the goodwill of the business to his own family. It is further stated that the word “Sindharam Sanwarmal” has been used by the members of the defendant’s family for a considerable period of time and the defendant being the part of the said family is entitled to use the mark honestly and concurrently.
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Mr. Bachawat has relied upon the judgment in the case of Kalyani (Supra) and M.N. Aryamurthy (Supra). In the case Kalyani (Supra), the Hon’ble Court referred the case of M.N. Aryamurthy (Supra) wherein it is held that when one of the sons of the family is shown to have not accepted or participated in the family arrangement, the family arrangement as binding agreement between the several coparceners must fail. In the present case though the defendant has taken a specific stand that the Family Agreement is not binding upon him as he is not the signatory of the Family Agreement and at the time of execution of the Family Agreement, the defendant was a major. On the other hand, the defendant is enjoying the shop room on the ground floor at premises No. 43/44, Cotton Street, Kolkata -700 007. It is also admitted that earlier the said shop room was under the trade name of “Shree Hanuman Stores” and only in the year 2017, the defendant has started using and adopted the mark “Sindharam Sanwarmal Mewawala”. In the Fourth Schedule of the Family Agreement, the said shop room was allotted to the father of the defendant. In the written notes of arguments, the defendant has also taken the stand that the plaintiff has not handed over the possession of the properties, namely, two godowns on the ground floor of the premises at Sri Hariram Goenka Street, Kolkata - 700 007 and one room of the second floor of the premises No. 2326/1 Tilak Bazar, Gulley Hinga
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Begh, Delhi -110 006 as mentioned in the Fourth Schedule of the SCC 683, the Hon’ble Supreme Court held that law does not permit a person to both approbate and reprobate. The principle is based on the doctrine of election which postulates that no party can accept and reject the same instrument and that “a person cannot say at one time that a transaction is valid and thereby obtain some advantage, to which he could only be entitled on the footing that it is valid, and then turn round and say it is void for the purpose of securing some other advantage”. The judgments relied by the defendant are distinguishable from the facts and circumstances as in the present case, the defendant is enjoying the shop room in the ground floor which is one of the property of Fourth Schedule given to the father of the defendant and the defendant is also stated that the other godowns were not handed over to him which are also in the Fourth Schedule property.
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Considering the above, the stand taken by the defendant that the Family Agreement is not binding upon the defendant does not stand.
The second issue raised by the defendant that the reliefs claimed by the plaintiff is barred by limitation on the ground that the defendant is using and adopted the mark “Sindharam Sanwarmal Mewawala” since the year, 2017. The defendant has relied upon the License issued by the Kolkata Municipal Corporation in the month of August 2017, G.S.T. Registration Certificate, Enlistment Certificates renewed from time to time, Food License granted by the Food Standards Authority of India and Certificate of registration of the mark “Sindharam Sanwarmal Mewawala”. The defendant has also relied upon the criminal proceeding initiated by the plaintiff against the defendant under Section 144 of the Code of Criminal Procedure, 1973 with regard to the Glow Sign Board of “Sindharam Sanwarmal Mewawala”. reported in (2022) 8 SCC 401 wherein it is held that :
“29. We have denoted the ambit and conditions of Section 17(1) of the Limitation Act, which is to protect rights of a party defrauded from lapse of time till he remains in ignorance of the fraud, or with reasonable diligence could have discovered the fraud. Section 17(1) does not assist a person who merely shuts his eyes in spite of circumstances requiring him to ascertain facts on which he would have discovered the fraud. Section 17(1) of the Limitation Act saves rights of the party defrauded from lapse of time as long as the party is not at fault on his own account. In the aforesaid factual background, it is apparent that the plaintiff
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was aware and had knowledge in October 2008 about execution and transfer of the ownership rights in favour of late Tej Kaur vide sale deed dated 23-8-1969 executed by Defendant 3, Gurdev Singh Anand. Unadorned assertion in the plaint feigning ignorance as to the sale deed would not help, as in the facts as pleaded and accepted in the plaint, the plaintiff was required to state and indicate that ignorance was not due to failure to exercise reasonable diligence.
In view of the aforesaid facts and position of law, we dismiss this appeal and uphold the judgment of the Single Judge and the Division Bench of the High Court dismissing the suit as being barred by limitation. We also affirm the judgment of the Single Judge and the Division Bench with regard to the dismissal of two applications filed by the plaintiff for amendment of pleadings under Order 6 Rule 17 of the Code, namely, IAs Nos. 17994 of 2012 and 7590 of 2014 on the ground that when the suit itself has been barred by limitation, amendments to such a suit will be unnecessary.”
The judgment relied by the defendant is of two Judge’s Bench of the Hon’ble Supreme Court and both the Judges have expressed difference of opinion by two separate judgments and matter is referred to the Hon’ble Chief Justice of India for appropriate orders/ direction.
The Hon’ble second Judge in her separate judgment held that:
“53. From the aforestated decisions of this Court, there remains no shadow of doubt that a plea of limitation cannot be decided as an abstract principle of law divorced from the facts as in every case the starting point of limitation has to be ascertained which is entirely a question of fact. A plea of limitation being mixed question of law and fact cannot be decided as a preliminary issue under Order 14 Rule 2(2).”
14 reported in 1935 SCC OnLine Cal 16 wherein the Hon’ble Division Bench of this Court held that:
“6. He held however that Article 32 would apply where the defendant, while perverting joint property from its specific common purpose, admits the plaintiffs' right to share the perverted user. But that is not the case here. It was held that in suits between co-owners inter se where the title of one is denied by the other, Article 144 or Article 120 would apply according as the relief claimed is one for possession or injunction. That was a case in which the defendants encroached upon common land by cultivating it as part of their holding so that the plaintiff co-owner was prevented from exercising a common right of way in the land. Article 120, Limitation Act, was held to apply. In that case there was no reference to Section 23 of the Limitation Act, which lays down that: “In the case of a continuing breach of contract and in the case of a continuing wrong independent of contract, a fresh period of limitation begins to run at every moment of the time during which the breach or the wrong, as the case may be, continues.”
Section 3 of the Limitation Act, makes the provisions of Sch. 1, Limitation Act, subject to the provisions contained in S. 23, so that, if it can be shown that in this case there is a continuing wrong, a fresh period of limitation begins to run at every moment during which the wrong continues.
It has been established that the plaintiff in this case has a right to use the land on which those sheds have been erected as a passage and that those sheds are obstructing-his passage way. The learned Judge has held that in these circumstances there was a continuing wrong and in this he appears to be correct. If authority is needed it is to be found in the case referred to by the learned Judge, 1923 Cal. 356 , a case similar to the 15
present case in which land reserved as a common passage by long usage and agreement was obstructed by the erection of a verandah to a house. Such an obstruction, was found to be a continuing nuisance relying on the principle on which the Privy Council acted in 6 Cal. 394. Other cases which have been referred to are (1) the case of 1916 Cal. 733 in which it was held that obstructions which interfere with a right of way are in the nature of continuing nuisance as to which cause of action is renewed de die in them so long as the obstructions causing such interference are allowed to continue; (2) the case of 1919 Cal. 807, in which it was held that Section 23 of the Limitation Act, had no application in case of a Bowak or platform built over municipal land inasmuch as the injury was complete in the erection of the wall and the mere fact that the effect continued could not extend the time of limitation. But the real reason of the decision appears to have been that the Bowak having been in existence for 50 years the municipality had lost their right to the land on which it stood and there was therefore no continuing wrong; (3) another case referred to is the Full Bench case of 25 Bom. 644 , in which it was held that a suit for restitution of conjugal rights under Act 15 of 1865 was barred under Article 35, Limitation Act, and Article 23 had no application. Jenkins, C.J., held that even if the conduct of the husband be regarded as a continuing cause of action since Article 23 is general in its terms, whereas Article 35 provides a special remedy and where there is a repugnancy the special provision should prevail. With all due respect to the learned Chief Justice he appears to have left out of account Section 3 of the Limitation Act, by which all the Articles of Sch. 1, Limitation Act, are subject to the provisions of S.
No doubt the effect of this appears to be to nullify certain provisions of the Limitation Act, but we have to take the law as it stands and the learned Judges who concurred with the decision recognized the difficulty caused by the application of S. 23 of the Act.
Inasmuch as it was held that Section 23 of the Limitation Act, Applies in this case, there is no need to consider the Question of onus arising as to the proof of the elapse of the full period of six years under Article 120, Limitation act. We find that the 16
suit is net barred by Limitation and this appeal must be dismissed with costs.”
The plaintiff relying upon the Family Agreement dated 13th January, 2017, specifically Clause 3 of the said agreement wherein it clarified that only the second party and fourth party can start only one shop room each using trade name “Sindharam Sanwarmal” with some prefix and suffix but no business shall be started with these names within one kilometer of the existing shop room. The defendant admittedly started using and adopted the mark “Sindharam Sanwarmal Mewawala” within the radius of one kilometer from the existing shop of the plaintiff. The issue raised by the defendant with regard to limitation whether the defendant is using and adopted the mark “Sindharam Sanwarmal Mewawala” in the year 2017 and the same was within the knowledge of the plaintiff and the plaintiff allowed the defendant to use the same without any objection in the matter of fact and the same cannot be decided in the summary proceeding. The point of limitation can be arises during the trial of the suit.
The defendant has raised an issue that the plaintiff himself breached the Family Agreement dated 13th January, 2017 and thus, the plaintiff cannot seek enforcement of negative covenant. It is the case of the defendant that as per Clause 1 of the Family Agreement, the parties agree and undertake that if necessary the party will register all necessary documents, papers and deeds by giving effect to the allotment in terms of the agreement but the same has not been done.
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As per Clause 2, the concerned original deeds and papers of the respective shares has not been handed over to the respective parties. It is also the case of the defendant’s, the plaintiff has not handed over the possession of the properties i.e. two godowns on the ground floor of the premises at Sri Hariram Goenka Street, Kolkata – 700 007 and one room on the second floor of the premises No. 2326/1, Tilak Bazar, Gulley Hinga Begh, Delhi - 110006 in terms of the Fourth Schedule to the defendant.
Section 42 of the Specific Relief Act, 1963 reads as follows:
“42. Injunction to perform negative agreement.— Notwithstanding anything contained in clause (e) of section 41, where a contract comprises an affirmative agreement to do a certain act, coupled with a negative agreement, express or implied, not to do a certain act, the circumstances that the court is unable to compel specific performance of the affirmative agreement shall not preclude it from granting an injunction to perform the negative agreement: Provided that the plaintiff has not failed to perform the contract so far as it is binding on him.” held as follows:
“22. It is apparent from the plain language of the aforesaid section that it is only an enabling provision, which enables a court at its discretion to grant an injunction to enforce a negative covenant even in cases where an agreement cannot be specifically enforced; however, an injunction can
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only be granted where the petitioner has established a good prima facie case and the balance of convenience is also in his favour. Further, in terms of the proviso to section 42, the said section is applicable only when the plaintiff is not in breach. In the present case, it is difficult to accept that the petitioner was not in breach of the Agreement since admittedly, the petitioner had failed to pay for the goods supplied by the respondent. Plainly, payment for goods is an implicit obligation of a purchaser in a contract for sale and purchase of goods, which is the substratal subject of the Agreement. As indicated above, the petitioner has not been able to establish a prima facie case that the termination of the Agreement was wrongful.” the Coordinate Bench of this Court held that:
“19. Besides, relief at the interlocutory stage would require a petitioner to establish a prima-facie case and show that the balance of convenience is in its favour and that irretrievable injury would be caused to the petitioner if injunction is not granted. Moreover, since accounts are being filed by the respondent, the invasion is not such that compensation in money would not afford adequate relief to the petitioner.” Cola Co. and Others reported in (1995) 5 SCC 545, the Hon’ble Supreme Court held that where a contract comprises an affirmative agreement to do a certain act, coupled with a negative agreement, express or implied, not to do a certain act, the circumstance that the Court is unable to compel specific performance of the affirmative agreement shall not preclude it from granting an injunction to perform
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the negative agreement. This is the subject to proviso that the plaintiff has failed to perform the contract so far as it is binding on him. The Court is, however, not bound to grant an injunction in every case and an injunction to enforce a negative covenant would be refused if it would indirectly compel the employee either to idleness or to serve the employer.
It is the case of the defendant that the defendant is using the word “Sindharam Sanwarmal” because he is entitled to use such mark as he is also the party of family. It is the case of the defendant that the plaintiff is in collusion with other parties i.e. second and fifth party not only siting on a larger share of the coparcenary property but the plaintiff sought for only to enforce a portion of the purported family settlement agreement which is beneficial to the plaintiff.
The plaintiff has filed the suit for mandatory injunction, perpetual injunction and damages against the defendant. The plaintiff has filed the suit on the basis of the Family Agreement dated 13th January, 2017. In the Family Agreement, altogether particulars of 26 properties have been described. Five Scheduled properties have been mentioned by allocating the shares of each party. The plaintiff is in the present suit only concern with the Clause-3 of the Family Agreement. The plaintiff has neither prayed for specific performance of the Family Agreement nor has prayed for partition of the property. The plaintiff has also not made all the parties to the agreement as party in the suit.
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The plaintiff has filed the suit for mandatory injunction against the defendant to perform the negative agreement in terms of Clause 3 of the Family Agreement dated 13th January, 2017. Clause 3 of the Agreement is in connection with three shop rooms either under the tradename “Sindharam Sanwarmal” or with some suffix which has been allotted to the first party, third party and fifth party and only the second party and the fourth party can start only one shop room each using tradename “Sindharam Sanwarmal” with some prefix or suffix. However, no business shall be started with these names within one kilometer of the existing shop room. It is the specific case of the plaintiff that the defendant has been using the shop room on the ground floor at the premises no. 43/44, Cotton Street, Kolkata – 700 007 in the name and style of “Sindharam Sanwarmal Mewawala” by violating the terms and conditions of Clause 3 of the Family Agreement.
The defendant has received the advantage of benefit of using the mark and the shop room which is the part of Agreement. The defendant has also made allegation that the plaintiff, Binod Kumar Agarwal, “second party” and Gopal Agarwal, “fifth party” have not complied with their obligation in terms of the Agreement. The defendant is using and adopted the mark since 2017 within the radius of one kilometer from the shop of the plaintiff. Before using the said name by the defendant, the name of the business of the defendant was “Shree Hanuman Stores”, thus considering all the aspects, it is prima facie ground that the defendant is running his business in the premises under the name
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and style of “Sindharam Sanwarmal Mewawala” in violation of Clause - 3 of the Family Agreement.
Section 2(1)(c)(vii) and (xvii) of the Commercial Courts Act, 2015 reads as follows. “2.(1) In this Act, unless the context otherwise requires,-
(c) “commercial dispute” means a dispute arising out of––
(vii) agreements relating to immovable property used exclusively in trade or commerce;
(xvii) intellectual property rights relating to registered and unregistered trademarks, copyright, patent, design, domain names, geographical indications and semiconductor integrated circuits.”
The defendant is running the business in the premises in question under the name and style of “Sindharam Sanwarmal Mewawala”. The only question raised by the plaintiff that the defendant cannot run the business under the name and style of “Sindharam Sanwarmal Mewawala” in the said place in terms of Clause 3 of the Family Agreement. In the case of Ambalal Sarabhai Enterprises Limited vs. K.S. Infraspace LLP & Anr. reported in (2020) 15 SCC 585 the Hon’ble Supreme Court held as follows:
“37. A dispute relating to immovable property per se may not be a commercial dispute. But it becomes a commercial dispute, if it falls under sub- clause (vii) of Section 2(1)(c) of the Act viz. “the agreements relating to immovable property used
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exclusively in trade or commerce”. The words “used exclusively in trade or commerce” are to be interpreted purposefully. The word “used” denotes “actually used” and it cannot be either “ready for use” or “likely to be used” or “to be used”. It should be “actually used”. Such a wide interpretation would defeat the objects of the Act and the fast tracking procedure discussed above.”
In the present case also the defendant is using the trademark “Sindharam Sanwarmal Mewawala” and is exclusively using the said premises for the purpose of business, thus, the case is totally covered in Clause (vii) and (xvii) of Section 2(1)(c) of the Commercial Courts Act, 2015. 32. In view of the above, this Court finds that the suit filed by the plaintiff is not maintainable before this Court. Accordingly, the plaint is returned to the plaintiff with the liberty to file the same before the appropriate court.
GA No. 1 of 2023 is dismissed. GA No. 2 of 2023 is allowed. Consequently, CS No. 126 of 2023 is dismissed.
(Krishna Rao, J.)
Reproduced from the public record of the Calcutta High Court. Verify against the court's own copy before relying on it. Income tax judgments are on bharattax.net.