Rakesh Kumar Aggarwal vs. Lock & Locking Devices

Facts

The appellant, Rakesh Kumar Aggarwal, was involved in a dispute concerning goods bearing an impugned mark. The respondent had obtained an injunction against the appellant. The appellant stated that stocks with the impugned mark were seized by the police from his premises at the respondent's instance. However, the appellant had sold goods to his distributor, M/s. Vijayan Lock Industries, between April and July 2018. Invoices showed IGST paid on these sales, indicating inter-State sales. The appellant's counsel clarified that the transaction was a sale, not on a sale or return basis, and that the property in goods had transferred. It was later revealed that the distributor, M/s. Vijayan Lock Industries, was the sole proprietorship of the appellant's son, Ankit Aggarwal. The Court noted this non-disclosure as mala fide and an attempt to overreach the Court.

Held

The Court held that the appellant's conduct in not disclosing that his distributor was his son's sole proprietorship was a clear attempt to overreach the Court and interfere with the administration of justice. The Court found this act to be mala fide. Consequently, the Court directed that all goods, as per the particulars provided in the appellant's affidavit, were liable to be delivered by the appellant to the respondent. If not delivered, they were liable to be seized from the premises of M/s. Vijayan Lock Industries. The appellant, present in court, gave an undertaking to deliver all goods to the respondent within one week and also undertook to pay Rs. 1 lakh as damages to the respondent for his misconduct. Both undertakings were accepted by the Court, and the appellant was explained the consequences of breaching them. The application was dismissed. The respondent was given liberty to take appropriate action, including involving the police for seizure of goods, if the appellant violated the undertakings.

Key Issues

1. Whether the appellant's non-disclosure to the Court that his distributor, M/s. Vijayan Lock Industries, was the alter ego of the appellant (being his son's sole proprietorship) constituted mala fide conduct and an attempt to overreach the Court, thereby warranting action against the appellant? (Mixed question of law and fact, concerning the conduct of a party before the Court and the implications of non-disclosure). Contentions: Petitioner/Appellant: The appellant's counsel apologized for the non-disclosure and stated the appellant would make amends by delivering all goods to the respondent within one week and paying damages of Rs. 1 lakh as a penalty for the misconduct. The appellant was willing to provide undertakings to this effect. Revenue/State: Not applicable as this is a civil dispute between private parties, not involving the revenue or state in a GST context.