Brief case: Test for foreign trademarks, Tisco claims river water, and more

Territorial test for foreign trademarks

A foreign company suing an Indian firm for violating its trademark by “passing off” goods in  the domestic market must prove that it had sufficient goodwill, reputation and market here. This is called the territorial principle accepted globally, and the Supreme Court also adopted it in its judgment, Toyota Jidosha vs Prius Auto Industries. The Japanese car manufacturer claimed that its hybrid commercial vehicle called Prius was launched in that country in 1997 and in India in 2009. The Indian company, which manufactures spare parts for vehicles, registered the name Prius in 2002-03. Toyota sought permanent injunction against the Indian company, claiming it was the prior user. Though the trial court granted it, the division bench of the Delhi High Court set aside the order and dismissed the Toyota appeal. Its second appeal to the Supreme Court was also dismissed. The court said that though the vehicle was available in India since 2009, it had not acquired substantial goodwill in the domestic market. Significant sections of the population had no knowledge of the vehicle and goodwill had not spilled over to this country. Trans-border reputation must be proved and it was not been done in this case. Therefore, the court followed the prevailing judicial and academic opinion, which was in favour of the territorial principle.

Tisco claims river water as its own 

Much water has flowed under the bridge since 1993, but litigation over the claim of the Tata Iron and Steel Company (Tisco) on the water of the Subarnarekha is still caught in a legal whirlpool. The Supreme Court has remitted the dispute to the Jharkhand High Court, as the judgment of the high court had left out certain crucial factors. Tisco was drawing water from the river, which passed through Jamshedpur, since 1912. The Bihar government built a dam upstream and also demanded Rs 31 million from the company for use of water. Tisco claimed that the river was passing through its land and therefore it had no liability to fulfil the demand and it had riparian rights. The high court in its judgment against Tisco did not determine whether the demand was a tax or a fee. It also left out other points of law. Moreover, the state raised new arguments in the Supreme Court. The court chided the Chhattisgarh government for doing so and commented sarcastically that “We are sorry to note that all sorts of questions of both fact as well as law are sought to be raised for the first time in this court though no effort was made to raise such arguments in the courts below. There appears to be some magic in Bhagwan Das Road!”  (the Supreme Court’s address in New Delhi). 

SC orders probe into favouritism at IOC

The Supreme Court (SC) has made stinging remarks against Indian Oil Corporation (IOC) for “deliberate defaults and casual regard to binding judgments” while renewing the dealership of a woman who got it from the discretionary quota of a central government department. Though the Delhi High Court had cancelled all such allotments in 1997 for “uncontrolled display of favouritism”, the allottee, Shashi Prabha, was given extension of the dealership on a plot in Basti district of UP.  The long judgment described the extent of “nepotism and favouritism” while ordering an in-house probe within the public sector company to nail the guilty. The court wanted to see the report. In many critical passages, the court remarked: “Facts do project a distressing state of affairs in the matter of distribution of state largesse.”

Company judge can’t stop IBC process 

The Bombay High Court has ruled that a company court has no power to stop proceedings before the National Company Law Tribunal (NCLT) in pending winding-up petitions. The Insolvency and Bankruptcy Code (IBC) is the successor to the Sick Industrial Companies Act, repealed in 2003. The bar against injunction will continue under the new regime. In this case, PSL Ltd vs Jotun India Ltd, the company judge had stayed the proceedings of the NCLT in Ahmedabad. The high court set aside that order and allowed the tribunal to proceed with the case. Proceedings under the repealed Act were pending when the new code came into existence. Therefore, the proceedings were moved before the NCLT. But, the company court stayed it. The judgment pointed out that there is an express bar in IBC (Section 64) which prevents any court, tribunal or authority from granting any injunction in respect of any action taken by the NCLT. The high court added that the Companies Act also did not confer power on any court to stop proceedings before the NCLT.

Tata Steel challenge to royalty dismissed

A full Bench of the Jharkhand High Court last week dismissed a challenge made by Tata Steel to two provisions of the Mineral Concession Rules. The company argued that charging of royalty on “processed mineral" as contemplated by Rule 64-B was beyond the ambit of Section 9 of the Mines and Minerals (Development & Regulation) Act and unenforceable. It further contended that charging of royalty on "sale of processed mineral" as contemplated by Rule 64-C was also beyond the purview of the Act. According to the company, selecting coal alone for the demand of royalty was discriminatory and therefore violation of the constitutional guarantee of equality. The high court rejected the contention and held that the collieries and the royalty payers engaged in mining of coal formed a distinct class and therefore the classification was not arbitrary. Regarding the process of mining inviting a demand for royalty, the judgment clarified that lifting of even the slurry from a washery was a mining process as the washery itself was a mine. 

 FIR not basis for accident compensation 

While dealing with a motor accident claim, it is not the First Information Report (FIR) that is relevant but the evidence before the tribunal, the Supreme Court stated in its judgment, Halappa vs Malik Sab. In this case, the tribunal awarded Rs 9 lakh to a youth who suffered 100 per cent disability in an accident. The insurance company appealed to the Karnataka High Court, quoting the FIR which said that the victim was sitting on the mudguard of the vehicle when the mishap took place. Since it was violation of the insurance term, the insurance company was not liable to pay compensation. The high court accepted the argument and set aside the tribunal’s order. The accident victim appealed to the Supreme Court. It stated that the high court was wrong in relying on the FIR version while ignoring the evidence before the tribunal. It recalculated the compensation and enhanced it by Rs 3 lakh.