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SUPREME COURT OF INDIA
S.C. AGRAWAL AND S. SAGHIR AHMAD, JJ.
M/s. Gujarat Bottling Co. Ltd., and other, Appellants
Versus
Coca Cola Company and others, Respondents.
Civil Appeals Nos. 6839-6840 of 1995, (arising out of S.L.P. (civil) Nos. 8800-01 of 1995)
Decided on 4-8-1995.
Trade Marks Registration Act, 1875 - Sections 48 to 54 - Contract Act - Section 27 - Trade and Marchandise Marks Rules, 1959 - Legally claim - Pay amount - Protection and advancement of their economic interests - Things have changed now international order envisaged by Charter of United Nations war is no longer an instrument of State policy - Now-a-days there are wars between corporations more particularly corporations having multi-national operations for protection and advancement of their economic interests - These wars are fought on the economic plane but some of the battles spill over to Courts of law present case is one such legal battle combatants are two American multinational corporations dominating the soft drinks market having operations in a number of countries - On one side Coca Cola Company respondent hereinafter referred as Coca Cola and on other side PEPSICO INC and its subsidiaries and subsidiaries of subsidiaries which are direct or indirect control of Pepsi - There is a long history of trade rivalry between these two multi-national corporations –Held, GBC in light of above principles will be seen that GBC who was a party Agreement has not acted in conformity with terms set out in said agreement - It was itself prima facie responsible for breach agreement as would be evident from set out earlier - Neither Coca Cola was obtained for transfer of shares of GBC nor was Coca Cola informed of names of persons whom the shares were proposed to be transferred -Coca Cola therefore had right terminate agreement but it did not do so - On contrary GBC itself issued the notice for terminating the agreements by giving three months notice GBC having itself acted in violation of the terms of agreement and having breached contract cannot legally claim that order of injunction be vacated particularly as GBC itself is primarily responsible for having brought about the State of things complained of by it - Since GBC has acted unfair and inequitable manner in its dealing with Coca Cola there was hardly any occasion to vacant injunction order and the order passed by Bombay High Court cannot interfered with not even on the ground of closure factory as party responsible prima facie for breach of contract cannot be permitted raise grievance Court very wide terms because not only GBC but also those whom shares have been sold and also subsequent transferees their servants agents nominees employees subsidiary companies controlled companies affiliates or associate companies or any person acting for and on their behalf are restrained by the interim injunction from using the plants of GBC -It no doubt true interim injunction is widely worded to cover the persons aforementioned but in its operation the order only restrains them from using plants of GBC and Rajkot for manufacturing, bottling or selling or dealing with or concerning in any manner whatsoever with the beverages of any person expiry of the period of one year from of notice interim injunction is thus confined to use of plants and Rajkot by any these persons and it consonance with the negative stipulation contained in paragraph agreement - Appeals dismissed
Key Points: - The Court held that the negative stipulation in paragraph 14 of the 1993 Agreement is not void under Section 27 because it operates only during the subsistence of the agreement. (!) (!) - The Court found that the 1994 Agreement cannot be construed as superseding the 1993 Agreement, and the 1993 Agreement subsists; the termination period remains one year under paragraph 21 of the 1993 Agreement. (!) (!) - The 1994 Agreement is to be treated as a registered-user agreement under the Trade Marks Act, while the 1993 Agreement contains broader franchise-like terms not wiped out by the 1994 Agreement. (!) (!) - The interim injunction enforcing the negative covenant was warranted given the parties’ conduct and the resulting risk to Coca Cola’s goodwill and market share after Pepsi's takeover of GBC. (!) (!) - The balance of convenience favored maintaining the injunction to prevent irreparable loss to Coca Cola’s market position and goodwill, with damages as a possible remedy for GBC. (!) (!) - Clause (b) of paragraph 19, regarding transfer of GBC shares and control, was interpreted as binding between Coca Cola and GBC only, not as a restraint on shareholders’ transfer rights. (!) (!)
JUDGMENT
S. C. AGRAWAL. J. :—Special leave granted.
2. In the past nations often went to war for the protection and advancement of their economic interests. Things have changed now. Under the international order envisaged by the Charter of the United Nations war is no longer an instrument of State policy. Now-a-days there are wars between corporations, more particularly corporations having multi-national operations, for the protection and advancement of their economic interests. These wars are fought on the economic plane but some of the battles spill over to Courts of law. The present case is one such legal battle. The combatants are two American multi national corporations dominating the soft drinks market having operations in a number of countries. On the one side is Coca Cola Company (respondent No. 1), hereinafter referred to as "Coca Cola," and on the other side is PEPSICO INC.(for short "Pepsi"), and its subsidiaries and subsidiaries of the subsidiaries which are under, direct or indirect, control of Pepsi. There is a long history of trade rivalry between these two multi-national corporations.
3. Coca Cola had been operating in this country till 1977 when on account of change of policy of the new Government Coca Cola had to close its operations in India. After the departure of Coca Cola the products of the domestic manufactures filled the vacuum. A substantial share of the market came to be controlled by the Parle group of companies owned and controlled by Mr. Ramesh Chauhan and Mr. Prakash Chauhan, respondents Nos. 3 and 4. The said group was manufacturing under trade marks bearing the names "Gold Spot," "Thums Up," "Limca", "Maaza," "Rim Zim" and "Citra" as well as "Bisleri" club soda. They had arrangements with bottlers in different parts of the country whereunder the bottlers prepared beverages from the essence/syrup supplied by the Parle group and after bottling the same the beverages were sold under the names for which trade marks were held by the Parle group. In late 1980s Pepsi started operations in India and introduced beverages under their trade marks. Coca Cola followed suit thereafter. Under the Deed of Assignment dated November 12, 1993, the Parle group assigned their trade marks in the beverages bearing the names "Gold Spot," "Thums Up," "Limca," "Maaza," "Rim Zim" and "Citra" to Coca Cola. On January 6, 1994, Coca Cola applied to the Registrar of Trade Marks for being recorded as subsequent proprietor of the trade marks which had been assigned to it by the various Parle entities.
4. Gujarat Bottling Company Ltd., appellant No. 1,(hereinafter referred to as GBC) is a company incorporated under the Companies Act, 1956. 21 of its shares are held by Ahmedabad Advertising and Marketing Consultants Ltd., Respondent No. 7. The remaining 79 of share were held by Mr. Pinakin K. Shah, respondent No. 2 and his family members and business associates and respondents Nos. 3 and 4 and their family members and associates in the ratio of 78 and 22 respectively. The shares of respondent No. 7 were also held by respondent No. 2 and his family members and associates and respondent Nos. 3 and 4 and their family members and associates in the same ratio of 78 and 22 respectively. GBC has bottling plants at Ahmedabad and Rajkot in Gujarat. GBC was having an arrangement with respondents Nos. 3 and 4 whereunder licence had been given to GBC to prepare, bottle, sell and distribute beverages under the trade marks "Thums Up," "Limca," "Gold Spot," "Maaza," "Citra," "Rim Zim," and "Bisleri" club soda. In anticipation of the assignment of the rights in trade marks by Parle group in its favour, Coca Cola, on September 20, 1993, entered into an agreement (hereinafter referred to as the "1993 Agreement") with GBC whereby Coca Cola permitted and authorised GBC, upon the terms contained in the said agreement, to bottle, sell and distribute the beverages known and sold under the trade marks "Gold Spot," "Thums Up," "Limca," "Maaza," and
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