Order 1

Order Details: Other
Pdf Text: 1 Draft N/M (Suit 1105/20)
IN THE BOMBAY CITY CIVIL COURT, AT MUMBAI
ORDER BELOW
UNREGD. / DRAFT NOTICE OF MOTION
IN
S.C. SUIT NO.1105/2020
M/s. Yashkrishni Food Science Ltd. ...Plaintiff
V/s.
1. Mrs. Neeta Vivek Rakshe
2. M/s. Om Enterprises,
3. Mr. Vivek Ramkant Rakshe
4. Mr. Prashant Rakshe,
5. Mrs. Vrushali P/. Rakshe,
6. M/s. RSR Foods Pvt. Ltd. ..Defendants
Appearance:-
Ld. Adv. Ms. Asha Bhutta i/b. Bhutta & Associates for plaintiff.
Ld. Adv. Mr Vinod Utekar i/b. Nandkumar Rajurkar for defendants no.1
to 3.
None for defendants no. 4 to 6.
CORAM : HHJ Shri V.V Vidwans.
C. R. No.03.
DATE : 22.10.2020.
ORDER
1. Perused draft Notice of Motion (N/M) supported by an
affidavit of Satish Shetty for the plaintiff and reply-cum-WS submitted
by the defendants no.1 to 3 and treated as reply to the draft N/M vide
Exh.4. I have perused the plaint and documents filed with the plaint
vide list of documents, pages 16 to 72, Annexures ‘A’ to ‘Q1’ and ‘Q2’
respectively. Initially, I had heard the submissions of the Ld Counsels
for the parties regarding ad-interim relief but subsequently as it was
found that final decision on the N/M can substantially resolve the
dispute between the parties, I had heard Ld. Counsel for the both sides
at length on merit on the N/M and the draft N/M is being disposed of
finally by the consent of the parties.
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2. Briefly stated factual matrix of the present case is that, the
plaintiff is a Private Limited Company, is registered under the trademark
and style of “Ribbons & Balloons” and engaged in the manufacturing
and marketing of confectionery foods like; cakes, pastries, breads etc.
Defendant no.1 is a proprietor of defendant no.2 and defendant no.3 is
the husband of defendant no.1. Defendant no.2 is a proprietary firm,
while defendants no. 4 and 5 along with defendants no.1 and 3 were
Directors of the defendant no.6 at the relevant time.
3. The plaintiff and the defendants were having business
relations from the year 2007 till the year 2017. So far as the main
dispute in the present Motion and the suit is concerned, it is in respect
of a Franchise Agreement dated 11.10.2017, which is relevant and
therefore, for reference filed with the plaint, vide Annexure-B. As per
pleadings in paragraph 8 onward in the plaint, the effect of the terms
and conditions of the Franchise Agreement dated 11.10.2017 was to put
restricting the conditions imposed by the plaintiff on the distributors/
franchisees so that the distributors/ franchisees shall not be entitled to
carry on similar business in the said outlet for a period of five years
from the date of termination of the Franchise Agreement. As per
transactions in the suit, vide letter dated 6/7.10.2017, the plaintiff had
requested the defendants to execute a fresh agreement because the
defendants had converted M/s. RSR Foods Pvt. Ltd, a proprietary firm,
into M/s. OM Enterprises, it was necessary to execute fresh agreement.
Accordingly, the Franchise Agreement in question dated 11.10.2017
came to be executed.
4. As per above said agreement, the defendants had handed
over 50 post-dated cheques to the plaintiff as a security and towards its
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liability under the agreement. The plaintiff had agreed to supply goods
to the defendants to be sold at MRP decided by the plaintiff. In case of
dishonour of the cheques submitted by the defendants, the plaintiff was
entitled to treat it as default and breach of terms of the agreement and
was at liberty to terminate the agreement, and also entitled to recover
the due amount from the defendants vide clause-13 of the above said
agreement. It is the case of the plaintiff that, in the month of February
2020, the defendant no.1 committed default in making the payment
and the plaintiff had communicated this fact to the defendant no.1 vide
email dated 17.3.2020 regarding pending dues of Rs.2,08,968/- due as
on 29.2.2020 and requested the defendant no.1 to make payment.
Copy of said email dated 17.3.2020 is annexed with the plaint vide
Annexure-A. Subsequently, the defendant had issued a cheque bearing
no.200400 for Rs.2,21,149/- dated 20.3.2020 and another cheque
bearing no.200401 for Rs.52,353/- dated 25.5.2020 in discharge of its
liability. However, both the cheques were dishonoured as per pleadings
in paragraph 11 of the plaint.
5. It is the case of the plaintiff that, in view of dishonour of
the cheques submitted by the defendants, the plaintiff was entitled to
terminate the Franchise Agreement and the said default had also
created criminal liability against the defendants. It is submitted that,
subsequently, there was national lock-down in view of COVID-19 and
the plaintiff was unable to carry on its production and deliver the goods
to the franchisees, including the defendants. However, as soon as the
situation improved the plaintiff resumed supply of the goods. However,
the defendants no.1 and 3, in the month of June, 2020, approached the
plaintiff and expressed their desire to terminate the agreement vide
email dated 18.6.2020 and made some allegations against the plaintiff,
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which are not admitted by the plaintiff. The said email is annexed with
the plaint vide Exh.K. In response to the above, the plaintiff had decided
to terminate the agreement and communicated its intention to
defendants vide email dated 24.6.2020 and requested the defendants to
make payment of Rs.5,25,967/- outstanding against the defendants in
respect of the sale transaction from the month of February 2020 to May
2020. The above act of the plaintiff is in consonance with the terms and
conditions of clause-11 of the Franchise Agreement.
6. On the above background, it is the case of the plaintiff that,
the business relations between the plaintiff and the defendants have
come to an end in view of termination of the Agreement vide email
dated 24.6.2020. However, because of previous agreement entered into
between the plaintiff and the defendants dated 11.10.2017 the
defendants were not entitled to use the brand name “Ribbons &
Balloons”, cake shop, any more, and cannot do any act infringing the IP
rights of the plaintiff, and not entitled to indulge in the sale or business
of products directly or indirectly in the brand name and style, of which
the plaintiff is having IP rights, for a period of five years from the date
of termination of the Agreement. It is alleged that, in-spite of above
factual and legal background, the defendants are violating the terms
and conditions of the Franchise Agreement and as pleaded in
paragraphs 14 and 15 of the plaint, indulging in adverse activities
affecting the rights of the plaintiff. Therefore, the plaintiff had issued a
notice to the defendants through Advocate on 30.7.2020 vide
Annexure-M, filed with the plaint and cautioned the defendants. Inspite
of legal notice served on the defendants, they have continued to breach
the terms of the Agreement and have continued to take benefit of the
brand name of the plaintiff company by not removing or disassociating
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itself from the brand name on the social media platform like
www.google.com etc., vide Annexures- ‘N’ and ‘O’ filed with the plaint.
Similarly, visiting card, menu, bills and details of GST registration
displayed by the defendants in relation to its business run in the name
and style as ‘M/s.OM Baker’, vide Annexures-’P’,Q1 and Q2, filed with
the plaint. Hence, it is contended on behalf of the plaintiff that,
prima
facie case for grant of temporary injunction against the defendants is
made out on the basis of material on record and draft N/M to be
allowed.
7. In the course of argument, Ld. Counsel for the plaintiff
referred to reply/WS submitted on behalf of the defendants no.1 to 3
and submitted that, the defendants have admitted part of the claim of
the plaintiff vide paragraphs (p) and (t) of the WS and it is submitted
by the defendants that, they have no objection to grant the reliefs in
favour of plaintiff so far as prayers clauses (a)(c)(d) and (e) of the
plaint are concerned. Thus, the only dispute between the parties
appears to be substantially encircled around the relief claimed in prayer
clause (b) of the plaint towards damages.
8. Under the above circumstances, Ld. Counsel for the
plaintiff submitted that, in view of the admission given by the defendant
no.1 to 3 in respect of the reliefs claimed in prayers clause (a), (c), (d)
and (e) of the plaint, draft N/M deserves to be allowed.
9. Per contra, Ld. Counsel for the defendants no.1 to 3
submitted that, the defendant no.4 to 6 are not necessary and proper
parties to the suit and the suit claim as against them is liable to be
dismissed. Ld. Counsel for the defendant no.1 to 3 relied upon WS-cum-
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reply to the draft N/M supported by affidavit and documents filed on
record and argued that, the plaintiff's claim in the suit as well as in the
draft N/M is itself not maintainable in law as there is no contractual
obligation between the plaintiff and the defendants no.3 to 6 as there is
no privity of contract between them. In this regard, reliance was placed
on the pleadings in paragraph 2 of the reply. Ld Counsel for the
defendants no.1 to 3 has vehemently argued that, at present, there
exists no contractual obligation between the plaintiff and defendants
no.1 to 3 as Franchise Agreement entered into between the plaintiff and
defendant no.2 has been terminated/ revoked after a meeting between
Satish Shetty on behalf of the plaintiff and defendants no.1 and 2 and
subsequent communications between them.
10. It is submitted that, the decision to terminate the Franchise
Agreement dated 11.10.2017 was after deliberation between the parties
and the dispute was settled by them for Rs.5,25,967/-. On 15.8.2020,
the defendants have accepted the liability in respect of Rs.5,26,000/-
and transferred the said amount vide NFT transaction dated 27.8.2020
in the bank account of plaintiff in Parsik Janta Sahakari Bank, Mhape
Branch, bearing Account no.084011300000014. The said amount was
transferred from the account of defendant no.2 i.e. M/s. Om Enterprises
having its bank account at HDFC Bank, Thane, bearing Account
no.50200028019292. In view of the payment of the outstanding dues
by the defendant no.1 and 2 to the plaintiff, no claim of the plaintiff
remains to be satisfied and therefore, the present suit has been filed by
the plaintiff against the defendants no.1 to 3 is only to pressurize them
and it is liable to be dismissed with costs. Ld. Counsel for the
defendants no.1 to 3 specifically argued that the parties to the
Agreement dated 11.10.2017 and Agreement dated 19.9.2009 are
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different and therefore, previous agreement has been substituted by the
subsequent agreement amounts to novation of the contact and
therefore, there is no existing liability against the defendants no.1 to 3
as claimed in the draft N/M and it is liable to be dismissed.
11. After considering oral contentions and submissions made
on behalf of the plaintiff and the defendants no.1 to 3, I find substance
in the argument of Ld. Counsel for the plaintiff that the defendants in
their WS-cum-reply have admitted the relief claimed by the plaintiff in
prayer clauses (A),(C)(D)(E) vide paragraphs (p) and (t) of the reply/
WS. Prima facie, I also find that, the stipulation vide clauses-11,13 and
14 together as amended in the agreement dated 11.10.2017 are binding
on the defendants no.1 to 3 being successors in the interest of the then
existing firm M/s. RSR Foods Pvt. Ltd. (defendant no.6) and therefore,
justification given by the defendants in paragraph (p) cannot be
accepted. In the said paragraph defendants have denied the allegations
that they are running similar business in the name of Om Baker, shop
no.2, Gaganri Bldg., Defendants no.1 to 3 have denied any relation with
Om Baker or any person related to the business of the Om Baker.
Similarly, the contents of visiting card and menu are said to be
irrelevant on the above said ground, and use of GST no. is technical
mistake that is not sufficient to give any cause of action to the plaintiff
to file the suit against the defendants. These are all disputed facts which
can be considered by the court on merit during the trial and at this
stage, cannot be considered at the stage of deciding the N/M.
So far as agreement between the parties are concerned and
the aspect of privity of contract as contended by the defendants is
concerned, it can be seen that, initially, the agreement between the
parties was executed on 2.3.2007 vide Annexure “C” filed with the
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plaint. That agreement was between M/s. Yash Bakers and Vivek Rakshe
and one Nandkumar Dadarkar carrying business in the name and style
M/s. Om Bakers and had recognized the defendants no.2 and 3 as
distributors of the plaintiff. However, the partnership firm of defendant
no.2 was dissolved and thereafter, the plaintiff vide letter dated
31.8.2009 informed that, the existing agreement could not be continued
and it was terminated vide letter dated 31.8.2009. Copy of the letter is
filed with the plaint vide Annexure “E”. Thereafter, on the request of
the defendants, the plaintiff had entered into fresh Franchise Agreement
with defendant no.6 having all the defendants i.e. defendants no.1,3,4
and 5 as Directors of defendant no.6 vide agreement dated 19.9.2009,
copy of which is filed with the plaint vide Annexure “G”. This
agreement was executed between the plaintiff through his Managing
Director Satish Shetty on one hand and Vivek Rakshe, Mrs. Neeta
Rakshe, Prashant Rakshe and Vrushali Rakshe (defendants no.1, 3 to 5)
on behalf of defendant no.6, and as per clauses 10 and 13, as amended,
the defendants were agreed that brand name “Ribbons & Balloons”, a
cake shop, shall not be used by distributors for any reason on
termination of this agreement and they shall not carry on similar
business in the said outlet for the period of five years from the date of
termination of the agreement.
12. Thus, it is clear that though there is a novation of contract
between the parties, the proprietor of the successor of the original
distributor remains same and the terms and conditions of the clause 10
read with clause 13 are applicable and binding on the defendants.
Therefore, I hold that, the plaintiff has made out a prima facie case for
grant of protection during the pendency of the suit.
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13. Ld Counsel for the plaintiff has placed reliance on the
authority and decision of Hon'ble Delhi High Court reported in the case
of Ozone Spa Pvt. Ltd V/s. Pure Fitness & Ors., decided on 29.7.2015
(Indian Kanoon- http://indiankanoon.org/doc/50131131/), paragraph
(u), paragraphs 50,51 and 52. In the above said decision, Hon'ble Delhi
High Court has held that, it is a settled law that competition must
remain free but law will restrain a competitor from using the same
trade-name and prohibition order can be passed by courts for unlawful
activities. Trading must not only be honest but must not even
unintentionally be unfair. It was case of the passing off in the form of
the misrepresentation in the course of the trade and damage by taking
unfair advantage of goodwill of the plaintiff. The ground of suppression
of fact by the plaintiff was not considered by Hon'ble Delhi High Court
to deny relief to the plaintiff and therefore, plaintiff's claim for
injunction against the defendant was granted.
14. So far as facts of the present case are concerned, I find that,
they are somewhat different. Present case is being considered by this
court at interim stage i.e. at the stage of deciding draft N/M while the
said decision of the Hon'ble Delhi High Court was after full-fledged trial.
However, considering the facts and circumstances of the case, I am of
the view that, except prayer clause(B) in the plaint, the relief of
monetary claim, there is no substantial dispute between the parties and
said dispute can be resolved by Ld. Counsels for the both the sides using
their good office and also by taking recourse to the mediation by
consent of the parties. Therefore, both the plaintiff and the defendants
no.1 to 3 are advised to consider this aspect of going to mediation, if so
desired. With the above observation, I hold that, the plaintiff has made
out a case for grant of partial relief as prayed in the draft N/M. Hence,
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prayer clauses (A) and (B) of the draft N/M deserve to be allowed, as
per following order:-
ORDER
1.
The prayer clauses (A) and (B) of the draft Notice of
Motion is partly allowed in the following terms:-
The defendants no. 1 to 3 are hereby restrained by
order of temporary injunction from indulging in the
same business in the name and style run by the plaintiff
during the pendancy of the suit. It is made clear that the
defendant no. 1 to 3 are entitled to run their own and
independent business, without affecting the rights of the
plaintiff, as agreed.
2. The defendant no. 1 to 3 are further directed to
disassociate themselves from using the plaintiff's trade
name/symbol etc. on or through social media platforms.
3. Draft N/M is disposed of accordingly.
The draft N/M be registered for statistical purpose.
(V.V. Vidwans)
Date: 22.10.2020 Judge, City Civil Court,
Gr. Bombay (C.R. 03)
Dictated on : 22 and 23.10.2020
Transcribed on : 23 & 26.10.2020.
Signed by HHJ on : 28.10.2020.
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“CERTIFIED TO BE TRUE AND CORRECT COPY OF THE ORIGINAL SIGNED JUDGMENT/ ORDER.
UPLOADED ON : 7.11.2020
TIME: 1 pm (NITIN V. UBALE)
SELECTION GR. STENOGRAPHER.
Name of the judge (with Court Room No.) Shri V.V. Vidwans, Judge (C.R. 03)
Date of pronouncement of Judgment/ Order 22.10.2020
Judgment/ order signed by P.O on 28.10.2020
Judgment/ order uploaded on 7.11.2020
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