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2019 Supreme(Cal) 212
IN THE HIGH COURT OF CALCUTTA
Soumen Sen, J.
Unilever Industries Private Limited & Anr. - Appellants
Vs.
Kwality Limited - Respondent
General Application No. 942 of 2018, Civil Suit No. 73 of 2018
Decided On : 30-01-2019
S.N. Mookherjee, Adv., Ratnanko Banerji, Adv., Arunabha Deb, Adv., Soumabho Ghosh, Adv., Deepan Sarkar, Adv., Subhradip Roy, Adv., Arti Bhattacharyya, Adv., Jayanta Kr Mitra, Adv., Ranjan Bachawat, Adv., Debnath Ghosh, Adv., Sayan Roy Chowdhury, Adv., Victor Dutta, Adv., Monosij Mukherjee, Adv., Mitul Dasgupta, Adv.
The main legal point established is that suits and proceedings cannot proceed against the corporate debtor during the insolvency resolution process if they may affect the assets of the corporate debtor.
Headnote:
Trademark - Insolvency and Bankruptcy Code - Section 14(1)(a) - 14
Fact of the Case:
The plaintiffs filed a suit against the defendant for passing off the trademark 'Kwality' or any deceptively similar trademark. The defendant contended that the suit cannot proceed during the moratorium period under the Insolvency and Bankruptcy Code (IBC).
Finding of the Court:
The court found that the suit and interlocutory proceedings cannot proceed against the corporate debtor during the insolvency resolution process as it may affect the assets of the corporate debtor.
Issues: The main issue was whether the suit for passing off would embrace a suit under Section 14(1)(a) of the Insolvency and Bankruptcy Code, 2016.
Ratio Decidendi: The court analyzed the purpose of moratorium under Section 14 of the IBC, which aims to keep the corporate debtor's assets together during the insolvency resolution process and prevent immediate collapse of the corporate debtor.
Final Decision: The court accepted the preliminary objection and stayed the proceedings in the suit and the interlocutory proceedings until the end of the insolvency resolution process.
Soumen Sen, J.
The preliminary objection raised by the defendant as to the continuance of the suit and interlocutory proceeding during the moratorium period is considered before deciding the matter on merits.
2. Sworn of details, the plaintiffs filed a suit against the defendant praying, inter alia, for passing off the trademark 'Kwality' or 'KDIL's Kwality' trade mark or any other trademark containing the word 'Kwality' or any other trade mark deceptively similar to the plaintiffs' well-known trademark 'Kwality' so as to pass off or enable others to pass off the respondent's goods as and for the plaintiffs' goods. The plaintiffs claimed that the plaintiff No.1 is the assignee of 'Kwality' trade from the original proprietor.
3. The petitioner contended that under a Strategic Alliance Agreement between Kwality Ice Creams (India) Limited and Brooke Bond Lipton India Limited, it was agreed that the use of the 'Kwality/sub-Zero' name in the corporate name shall be subject to the condition that Kwality Dairy India Limited, which was a subsidiary of Kwality Ice Creams (India) Limited and described in the Strategic Alliance Agreement as K (East), shall at all times hold 1/3rd of the voting capital in Kwality Ice Creams (India) Limited and Kwality Processed Foods Service & Equipment (Private) Limited and 1/6th of such capital in Kwality Dairy India Limited and Sub-Zero Ice Creams (Private) Limited which includes Kwality Dairy India Limited and since K (East) is no more holding 1/6th of share capital in Kwality Dairy India Limited since 2002-2003, the use of "Kwality/sub-Zero" name in the corporate name by the defendant is unauthorized.
4. The petitioner No.2 claimed that due to continuous and extensive use of the KWALITY WALL'S since 1995 in respect of Ice-cream/frozen desert large sales of the said goods bearing the said trade mark, wide publicity given to the said goods bearing the said trade mark and 5 superior quality and taste of the said goods, the trade mark KWALITY-WALLS and the said goods bearing the said trade mark have acquired wide, immense enviable reputation and goodwill. The petitioners claimed that the said goods bearing the said trademark are so widely and immensely popular that any use of the trade mark "Kwality", which is the leading and essential feature of the petitioners' trademark in respect of same or similar goods is bound to mislead the consumers to believe that the other goods bearing the trade mark "Kwality" are originating from petitioners or are in some way associated with the petitioners. The grievance of the petitioner is that the respondent was using until recently the trade name 'Dairy Best' and has recently switched over to 'Kwality' with a view to create confusion in the mind of the public. The defendant has no right, proprietary or otherwise over the said trademark or any use of the trademark without the permission of the plaintiffs is unauthorized. The respondent, on the other hand, has contended that the respondent was incorporated in the 1980s and they have been using the said trademark 'Kwality' in relation to dairy products since long without any interruption. The respondent alleged that they have been using the word 'Kwality' as its corporate name openly since 1980s. The plaintiffs were aware of the fact that the defendant was using the word 'Kwality' at least since 2002. The defendant has registration of the label mark 'KDIL KWALITY DAIRY (INDIA) LIMITED' dated 5th July, 2010, 'KDIL'S Kwality' dated 26th June, 2012, 'KDIL's KWALITY' dated 27th September, 2016 and 'KDIL QUALITY' dated 1st April, 2017 respectively and is entitled to use such mark in relation to its business.
5. The respondent has also applied for registration of trademark 'Kwality' in class 29. The said registration is pending.
6. On the basis of the aforesaid registrations, the respondent in the interlocutory proceeding has contended that the respondent has a right to use the word 'Kwality'.
7. On the narration of the afor
