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Madras High Court Says the Civil Court has no jurisdiction over a company case as per Sections 242(2)(i) and Section 430 of the Companies Act, 2013.

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TITLE:    K. Prabhu Vs.  G. Reghukumaran.

Decided On: September 11, 2023.

C.R.P.(MD)No.535 of 2014 and M.P.(MD)Nos.1 and 2 of 2014.

CORAM:  Hon’ble Mr. Justice R. Vijayakumar.

Facts:

The present Civil Revision Petition has been filed to strike off the plaint on the ground that the Civil Court has no jurisdiction to entertain a suit for recovery of money from a Managing Director on the allegation of misappropriation of funds. According to the O.S.No.32 of 2014 the plaintiff is a Public Limited Company incorporated under the provisions of the Companies Act, 2013. As per the allegations in the plaint, the first defendant, namely, K.Prabhu, had officiated as a Managing Director of the plaintiff Company between 20.09.2010 and 13.09.2011. The plaintiff has contended that the first defendant, while officiating as the Managing Director of the Company, has misappropriated the funds of the Company and helped the third defendant to get rid of the financial constraints under the guise of entertaining a fake transaction of running a mineral water plant.

Legal Analysis and Decision:

The plaintiff has contended that the Managing Director had caused a huge financial loss to the plaintiff Company, while he was dealing with the funds generated from the general public. The plaintiff Company had relied upon the auditor’s report relating to the misappropriation alleged to have been done by the first defendant. According to the plaintiff, the first defendant was actively assisted by other defendants in the misappropriation. A careful perusal of the plaint allegations would reveal that a sum of Rs.89,02,461/- is sought to be recovered only on the basis that the first defendant, while officiating as the Managing Director of the plaintiff Company, has misappropriated the Company’s funds, for which, the other defendants have assisted.

Section 242(2)(i) of the Companies Act, 2013 Company Law Tribunal has got jurisdiction to recover any undue gains made by any Managing Director during the period of appointment.

Section 430 of Companies Act, 2013 to impress upon the Court that the Civil Court shall not have any jurisdiction to entertain any matter which the Tribunal or the Appellate Tribunal is empowered to determine by or under this Act.

After a combined reading of Sections 242(2)(i) and Section 430 of the Companies Act, 2013 it clearly reveals that the present suit for recovery of money is solely based upon the allegations that the first defendant has misappropriated the funds of the plaintiff/Public Limited Company, while he was officiating as the Managing Director. Therefore, the Civil Court has no jurisdiction to entertain the said suit. In view of the said deliberations, the plaint in O.S.No.32 of 2014 on the file of the VI Additional District Court, Madurai, is hereby struck off. However, the plaintiff/Public Limited Company is at liberty to approach the appropriate forum for appropriate relief, if they are so advised. 

Conclusion:

The court concludes that after looking carefully into Sections 242(2)(i) and Section 430 of the Companies Act, 2013 says that the suit is solely related to recovery of money and the Civil Court has no jurisdiction over the issue and the company may approach the appropriate forum.

“PRIME LEGAL is a full-service law firm that has won a National Award and has more than 20 years of experience in an array of sectors and practice areas. Prime legal fall into a category of best law firm, best lawyer, best family lawyer, best divorce lawyer, best divorce law firm, best criminal lawyer, best criminal law firm, best consumer lawyer, best civil lawyer.”

JUDGEMENT REVIEWED BY JANGAM SHASHIDHAR.

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Reliance On Wrong Precedent Renders Decision ‘Erroneous’, Can’t Be Corrected Under ‘Review Jurisdiction’: Allahabad High Court

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CASE TITLE: M/S Vaid Organics and Chemical Industries Ltd. Lko. Thru. Its Director Swarn Singh v. State of U.P. Thru. Secy. Deptt. Of Industries U.P. Civil Secrt. Lko. And Others [CIVIL MISC REVIEW APPLICATION No. – 41 of 2023]

DECIDED ON: 31.07.2023

CORAM: Hon’ble Mrs. Sangeeta Chandra,J. Hon’ble Manish Kumar,J.

APPLICANT: – M/S Vaid Organics and Chemical Industries Ltd. Lko. Thru. Its Director Swarn Singh

OPPOSITE PARTY: – State of U.P. Thru. Secy. Deptt. Of Industries U.P. Civil Secrt. Lko. And Others

COUNSEL FOR APPLICANT: – Piyush Kumar Agarwal,Akhilesh Kumar Kalra

COUNSEL FOR OPPOSITE PARTY: – Kartikey Dubey

INTRODUCTION:

While denying a review petition, the Allahabad High Court emphasized that a review cannot be granted solely based on the argument that the previous bench relied on an allegedly incorrect precedent from the Apex Court. The court clarified that review jurisdiction is only applicable when there is a clear and evident error on the record.

FACTS:

The Applicant received extensions to establish new industries, but they failed to meet the terms of the lease agreement. Consequently, UPSIDC terminated the lease. Subsequently, the Applicant contested the lease termination before the Allahabad High Court.

The Writ Court, basing its decision on the Supreme Court’s ruling in ITC Limited v. State of UP (2011), rejected the petition. The court observed that UPSIDC was established to promote industrialization, generate employment, and improve the economy. As the Applicant repeatedly failed to adhere to the lease agreement conditions despite receiving ample time extensions, it negatively impacted industrial development. Thus, the court upheld the validity of UPSIDC’s decision to terminate the lease.

CASE ANALYSIS AND DECISION:

The Court ruled that the Appellate Court has the authority to rectify an erroneous judgment made by the High Court. During a review, the Court’s focus is limited to identifying any evident errors present in the case record. If the Court has mistakenly based its decision on a Supreme Court judgment and committed an error in the order, such correction can be carried out in the Appellate jurisdiction rather than by a bench conducting a review of its own judgment.

Consequently, the termination of the allotment by UPSIDC was deemed valid, as the applicant held the property for seventeen years without undertaking any construction, development, or employment generation.

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Written by- Mansi Malpani

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The court has jurisdiction in letters patent since the suit is filed in the original side of the Court: Madras High Court.

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TITLE: ITC Limited Vs. Britannia Industries Ltd.

Decided On: July 14, 2023.

A.No.3314 of 2023 in C.S.(Comm Div).No.153 of 2023.

CORAM:  Hon’ble Ms. Justice P.T. Asha.

Introduction: 

The plaintiff has approached this Court with a case that the defendant who was all along wrapping a particular brand of biscuits in a different colour and get up, has now imitated the trade dress of the plaintiff’s brand of biscuits.

Facts:

The plaintiff who has approached this Court contemplating the grant of an urgent interim relief has been checkmated by the defendant, a giant in the consumer market; on a supposed plea that the suit filed requires to be rejected. The Court could apply its mind to the urgency in the application or the need for interim relief, the defendant had sought two adjournments for filing its counter and has then come forward with the application. If the defendant were keen on a settlement, they could have, on the very first hearing, expressed their desire to have the matter sent to the State Legal Services Authority for mediating the dispute. Infact, nowhere in the application has the defendant expressed their desire for settlement. On the contrary, the attempt is to try to have the plaintiff’s case dismissed at the threshold.

Legal Analysis and Decision:

The Defendant ITC Limited, appears to be engaged in marketing of the Impugned Product. The Defendant No. 1 has its office at Virginia House, 37 Jawaharlal Nehru Road Kolkata, West Bengal – 700071 and its office at Number 69, Muthuramalinga Thevar Rd, Austin Nagar, Nandanam, Chennai, Tamil Nadu. The impugned products of the Defendant are available for sale in Chennai, within the jurisdiction of this Hon’ble Court. Copies of the invoice indicating the sale of the infringing products are filed herewith in the present proceedings. The impugned products of the Defendant are also advertised on YouTube, extracts of which are filed herewith in the present proceedings. This Hon’ble Court has the necessary territorial jurisdiction to entertain and try the present action by virtue of Section 134(2) of the Trademarks Act, 1999 and Section 62(2) of the Copyright Act, as the suit is inter alia for infringement of registered trademark, trade dress and Copyright of the Plaintiff, being the registered proprietor of the trademark and as well as its copyright on the artistic work; the plaintiff’s is carrying on business within the jurisdiction of this Hon’ble Court. The Defendant is situated in Chennai and the infringing products are available for sale within the jurisdiction of this Hon’ble Court.

The argument of the defendant that since the suit is not filed under Clause 12 of the Letters Patent, this Court has no jurisdiction has to be repelled on the ground that the original side rules of this Court has been formulated only on the basis of the Letters Patent which has conferred jurisdiction on this High Court. Clause 11 confers the local limits of the ordinary original jurisdiction of the High Court and Clause 12 confers the Court with original jurisdiction as to the suits. The suit is filed under Order IV Rule 1 of the Original Side Rules which emanates from the Letters Pattent.

The below are the grounds on which the suit is challenged.

  • Failure to comply the pre-mediation settlement contemplated under Section 12 A of the Act.
  • Suit not instituted by a competent person.
  • Lack of Jurisdiction.

It is crystal clear that the defendant’s are carrying on business within the jurisdiction of this Court. This coupled with the averments contained in the paragraphs of the plaint extracted supra clearly brings out the plaintiff has pleaded that the defendant is carrying on business within the Jurisdiction of this Court. Therefore, taking note of the fact that the suit is one filed in the original side of this Chartered High Court, which has been conferred with the power under Letters Patent, the argument of the defendant that the suit is not maintainable as it has not been filed invoking the provisions of Clause 12 is not maintainable and has to necessarily be rejected.

Conclusion:

Since the plaintiff has pleaded that the defendant is carrying on business within the Jurisdiction of the court. Therefore, taking note of the fact that the suit is one filed in the original side of this Chartered High Court, which has been conferred with the power under Letters Patent, So the argument of the defendant that the suit is not maintainable as it has not been filed invoking the provisions of Clause 12 is not maintainable and it is rejected.

“PRIME LEGAL is a full-service law firm that has won a National Award and has more than 20 years of experience in an array of sectors and practice areas. Prime legal fall into a category of best law firm, best lawyer, best family lawyer, best divorce lawyer, best divorce law firm, best criminal lawyer, best criminal law firm, best consumer lawyer, best civil lawyer.”

 JUDGEMENT REVIEWED BY JANGAM SHASHIDHAR.

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Delhi High court Dismissed the petition filed by TV 18 Broadcast, seeking Interim injunction.

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Title: TV 18 BROADCAST LTD. Vs BENNETT, COLEMAN AND COMPANY LIMITED

Judgement Delivered: 04.07.23

+ CS(COMM) 279/2022

CORAM: HON’BLE MR. JUSTICE AMIT BANSAL

Introduction

Delhi High Court dismissed the petition filed by TV 18 Broadcast, seeking interim injunction on the use of term “Bhaiyaji” under class 41.

Facts of the case

The plaintiff is a member of the largest media and entertainment conglomerate in India, the Network18 group. The plaintiff’s business operations include managing a number of television networks in India, including CNBC-TV18, CNN News18, and News18, which broadcast in fifteen different languages and 26 states across the nation. Additionally, the company operates entertainment and informational media channels as Colours, Nickelodeon, MTV, and History TV18. In addition of creating TV shows, the plaintiff is also involved in creating TV programme and one such program is named as “Bhaiyaji Kahin” and they adopted the device mark for the same with effect from 29th December 2016 under classes 38 and 41, Since then the show aired 1200 episodes and generated a revenue of Rs.16,26,42,000 alone in the year 2021-22.

The defendants used the trademark to launch “Bhaiya Ji Superhit” in January 2022, which was intended to use comedy and satire to highlight newsworthy topics. Due to the resemblance of the two parties’ trademarks and the nature of their respective shows, the plaintiff sent the defendant with a cease-and-desist letter dated January 10, 2022, ordering them to stop using the contested mark “Bhaiya Ji Superhit” among other things.

However, the defendant asked the plaintiff to drop the stop and desist letter, pointing out that there was no similarity between the defendant’s programme format and the plaintiff’s, nor was there any chance that the impugned mark and the plaintiff’s trademark would be confused.

Reiterating the arguments made in its initial cease and desist letter, the plaintiff once more sent the defendant a legal notice on February 24, 2022. The accusations mentioned in the notifications, however, were disputed by the defendant.

In order to prevent the defendant from violating the plaintiff’s trademarks, passing off, and other ancillary reliefs, the plaintiff brought the current lawsuit.

Analysis and Decision of the Court

The High Court held that, the “Bhaiyaji Kahin” mark used by the plaintiff is registered under classes 38 and 41. In contrast to the registration under class 38, the registration under class 41 contains a disclaimer about the term “Bhaiyaji”. There is no question in my opinion after reading the aforementioned classification that television shows, particularly those relating to news, belong in class 41 and not class 38. In reality, there is a blatant exclusion for television broadcasts in class 38. Telecommunication services, such as television transmission, are also included in class 38.

Therefore, names of television stations like Times Now, CNN News18, News18, and similar ones will be included in class 38. The subject of class 41 would be the titles of the shows that are shown on these networks. Therefore, class 41 would be the applicable class for finding infringement.

The name “Bhaiyaji” is the only commonality between the plaintiff’s and defendant’s marks. The terms “Kahin” used by the plaintiff and “Superhit” used by the defendant are not interchangeable. The plaintiff cannot prevent the defendant from using the term “Bhaiyaji” due to the disclaimer about the term under class 41. This is also made explicit by Section 28(2) of the Trade Marks Act, which states that all restrictions and conditions that are a part of the registration granted apply to the exclusive right to use a trademark.

In spite of this, the term “Bhaiyaji” is a well-known pronoun in several Indian states, such as Uttar Pradesh and Bihar, and it literally means “brother”; as a result, it lacks distinction. The defendant has also provided enough evidence to the court to demonstrate that the term “Bhaiyaji” is commonly used in trade in India and is used in a number of radio and television broadcasts. Thus, in my initial assessment, “Bhaiyaji” is a generic phrase that is in common usage, and nobody has the exclusive right to use such generic words. According to Section 17 of the Trade Marks Act, 1999, the plaintiff is not entitled to exclusive rights over the mark “Bhaiyaji” in light of the aforementioned.

Attention has also been brought to the Plaintiff’s response to the examination report of the registry where they had applied for registration of the mark “Bhaiyaji Kahin” under class 41, while distinguishing it from “Bhaiya Aisa Kyun”, the Plaintiff has clearly taken a stand that their mark is not similar to the said mark and it is to be compared as a whole and cannot be dissected thus they cannot take contrary view on using of term “Bhaiyaji” by the defendant, it is not permissible to approbate and reprobate.

Plaintiff has placed reliance on Shree Nath Heritage Liquor Pvt. Ltd. v. M/s. Allied Blender & Distillers Pvt. Ltd., 2015 OnLine Del 10164,  wherein the court upheld the interim order of the division bench in respect of the defendant using the mark “Collector’s Choice” as against the plaintiff’s registered mark of “Officer’s Choice” in respect of alcoholic beverages, but this reliance is flawed as the dominant word was officer and their was no disclaimer but in the present case the dominant word is “Bhaiyaji” and there is a disclaimer present thus the aforesaid judgement does not advance the case of the plaintiff. Aditya Birla Fashion & Retail Ltd. v. Under Armour, Inc., 2023 SCC OnLine Del 2269, there was no disclaimer included in the registration issued in favour of the plaintiff as there is in the current case. as a result, the abovementioned judgement does not strengthen the plaintiff’s case.

Also, regarding the format of the show, the shows are quite different from each other both in terms of nature as well as the format. Therefore, in my prima facie view there is no likelihood of confusion between the two television shows. In view of the discussion above, the plaintiff has failed to make out a prima facie case for grant of interim injunction. Accordingly, the application is dismissed.

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Written By – Shreyanshu Gupta

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Delhi High court rejected the Review petition filed by Statesman Limited seeks to review the judgement passed by the high court.

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Title: The StatesMan Limited vs Govt. of NCT of Delhi & Ors.

Decision: 04.07.23

+ REVIEW PET. 516/2019 and CM APPL. 53531/2019, CM APPL. 12275/2022 in W.P.(C) 9497/2015

CORAM: HON’BLE MR. JUSTICE C. HARI SHANKAR

Introduction

The Delhi High court rejected the Review petition filed by Statesman Limited seeks to review the judgement passed by the high court dated 18.11.19 on the grounds that it does not address the issue of jurisdiction of the Authority under the Working Journalists and Other Newspaper Employees (Conditions of Service) and Miscellaneous Provisions Act, 1955, (“the Working Journalists Act”) to pass the order dated 21 July 2015 forming subject matter of challenge in WP (C) 9497/2015.

Facts of the case

The application made under Section 17(1) of the Working Journalists Act by a few members of the Statesman Mazdoor Union is resolved by the order dated July 21, 2015. The stated applicants requested payment of arrears in accordance with the Majithia Wage Board’s recommendations. The petitioner-Statesman disputed their obligation to pay the applicants in accordance with the Wage Board’s recommendations on the grounds that they had incurred significant cash losses three years prior to the implementation of those recommendations, exempting them from the requirement to pay arrears. The Court has carefully considered the applicants’ case and rejected the petitioner’s argument that it was not the petitioner’s responsibility to pay the applicants as recommended by the wage board.

The petitioner conceded to the Authority’s authority and objected to its need to compensate the applicants-workers on a merits-based basis. After losing before the Authority, the petitioner used the current writ petition to appeal to this Court.

Analysis and Decision of the court

The Delhi High Court held that Even in the current writ suit, there is not even the slightest hint of a challenge to the Authority’s authority to hear the workmen’s claims and issue the ruling of July 21, 2015. Instead, extensive and numerous submissions have been made in an effort to prove that the petitioner was, in fact, experiencing significant losses three years prior to the Wage Board’s recommendations and was not, therefore, required to pay the applicants-workmen in accordance with those recommendations. The petitioner submitted a response to the writ petition after the respondents submitted a counter affidavit. There isn’t even a claim that the Authority lacked the authority to decide the applications of the journalists in the response. Instead, the response outlines how the petitioner believes the Authority should have resolved the aforementioned arguments.

The order dated July 21, 2015 lists the errors under the heading “Grounds for Setting Aside Impugned Order” in paragraph 11 of that document. In the aforementioned paragraph, the petitioner first explains why, in its opinion, it had actually experienced losses for three years; second, it explains why the petitioner’s net current assets could not be taken into account when determining whether the losses suffered by the petitioner were heavy; and third, it makes reference to Supreme Court decisions that, in the petitioner’s opinion, established the guidelines for identifying “heavy losses.”

Therefore, the written submissions do not only fail to raise any objections to the Authority’s competence or jurisdiction. decision on the petitions submitted by the applicant-journalists, but they also go so far as to assert that the Authority should have handled the cases differently than how it did. Therefore, there is a favourable claim regarding the Authority’s ability and authority to rule on the journalists’ application.

The petitioner also had approached the hon’ble SC with an SLP (C) 36133/2015 The Supreme Court did not interfere with the direction, of the learned Division Bench, to decide the writ petition expeditiously, and merely modified the order of pre-deposit by reducing it to ₹ 30 lakhs. This indicates that the argument of want of jurisdiction of the Authority to adjudicate on the claims of the respondent-workmen was not canvassed either before the Division Bench or even before the Supreme Court.

Even after reserving the judgement in 2018, the petitioner failed to file any written submission when given opportunity for the same. As a result, there was no challenge made to the Authority’s competence or jurisdiction to decide on the claims of the respondent-workmen in the writ petition’s only written submission.

Thus, neither the writ petition nor the response nor the written representations submitted by the petitioner contested the Authority’s competence or authority to decide on the claims of the respondent-journalists. In contrast, the petitioner made specific allegations in the written submissions it submitted to this court about how it believed the Authority should have handled the situation, even going so far as to request a remand to make sure the Authority handled the situation again properly. These allegations cannot be reconciled with the claim that the Authority lacked the authority to determine the respondents’ petitions; in fact, they are diametrically opposed to one another. It was in these circumstances that, in the judgment under review, this Court did not return any findings regarding the competence of the Authority to pass the order dated 21 July 2015.

In light of the above, this Court conducted a merits review of the case and determined that the defence of three years of continuous loss as a justification for not adhering to the Majithia Wage Board’s Award was inadmissible.

Ultimately, the Delhi High Court dismissed the petition and miscellaneous applications were disposed of accordingly.

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Written By – Shreyanshu Gupta

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