REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO.   9844   OF 2018 (Arising out of SLP (C) No. 9878/2018)

 WOCKHARDT LIMITED         …APPELLANT

VERSUS

TORRENT PHARMACEUTICALS LTD.  AND ANR. ...RESPONDENT

J U D G M E N T  

R.F. Nariman, J.

1) Leave granted.

2) The present  Appeal  arises  from a  Suit  that  was  filed

based on both infringement and passing off.  However, at the

time  of  the  argument  on  the  interim  injunction  before  the

learned  Single  Judge,  the  arguments  were  confined  to

passing off only.   

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3) The skeletal facts necessary to decide this Appeal are

that  the  Plaintiff/Respondent  has  a  trade  mark  called

“CHYMORAL”  and  “CHYMORAL FORTE”, which  is  a  drug

administered  post-surgically  for  swellings  that  may  arise

and/or wounds that may arise.  It is interesting to note that the

expression “CHYMO” comes from the generic  name of  the

drug  which  is  CHYMOTRYPSIN-TRYPSIN.   The  learned

Single Judge ultimately found, after a copious reference to the

facts and case law, as follows:-

“45. In the present case, I am not satisfied that any of these tests are met.  Reputation as to source is not sufficiently  demonstrated.   The  rival  products  have long co-existed and I   cannot  and will  not  presume misrepresentation  by  Wockhardt  as  to  source,  even assuming there is similarity.  There is no explanation at all for Torrent’s past conduct and the inaction with knowledge,  or  deemed  knowledge,  of  Wockhardt’s trade mark registration application, its advertisement and  subsequent  registration,  with  not  a  single objection from Torrent or is predecessor-in-title.  There is  no  answer  about  the  caveats  or  about  the  co- existence  of  other  players  in  the  market.   There  is simply  no  misrepresentation  shown  as  required  by law, at this prima facie stage.  There being no prima facie  case  made out,  I  cannot  grant  the  injunction. The balance of convenience seems to me to favour entirely  the  Defendants;  after  all,  to  the  Plaintiff’s knowledge, they have had their product in the market for a very long time, at the very least for five years, possibly more, and an injunction at this stage is far

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removed from the prima facie status quo that Wander v Antox tells us is the primary objective.  There is no injury, let alone an irreparable one, to the Plaintiff that I can tell if an injunction is refused.  It has not had one all  this  time  while  the  Defendants’   business  has grown into crores.  To grant the injunction would be unfairly monopolistic.”

4) The Division Bench, in an order of reversal, ultimately

found that each one of the triple tests for passing off had been

made  out  on  the  facts,  namely,  the  establishment  of

reputation,  misrepresentation  as  understood  in  law  and

likelihood of injury or damage caused to the Plaintiff.  On the

first  count,  the  Division  Bench  held  that  the  Plaintiff  had

obtained the mark by way of  assignment  in  the year  2014,

from one Elder and Company, which, in turn, had obtained the

said mark from one Armour Pharmaceutical Company.  The

user that is claimed on behalf of the Plaintiff is at least from

the  year  1988  as  and  when  Elder  Pharmaceuticals  Ltd.

actually sold drugs under the two trade names as aforesaid.

The Division Bench also referred to the Plaint  which, in turn,

referred to sales figures of Rs. 59 Crores and Rs. 95 Crores

for the years 2014-15 and 2015-16 respectively.  Having thus

found, the Division Bench then went on to state that it is clear

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that  reputation  has  been  established.   When  it  came  to

misrepresentation,  the  Division  Bench  found  that  confusion

was likely to ensue despite the fact that the purchasers of the

drug, which is a Schedule-H Drug, may be persons who are

Doctors and other patients who are literate.  It found that the

substitution  of   the   letter  ‘T’  for  the  letter  ‘O’  is  the  only

difference between the two trade names, and therefore, found

that,  in  law,  since  confusion  on  the  ground  of  deceptive

similarity would ensue, misrepresentation in law is also made

out.  On the third count, it said, undoubtedly, there would be

likelihood of damage to the Plaintiff.

5) The Division Bench interfered with the conclusion of the

learned Single Judge by ultimately finding that wrong tests had

been applied in law as a result  of  which the judgment was

“vitiated by errors of law apparent on the face of the record”.  It

further went on to hold as follows:-   

“102. After referring to the order of the learned single Judge,  in  the  backdrop  of  the  settled principles, we are of the view that it is vitiated by errors of  law apparent on the face of  the record.   The  impugned  order  is,  ex-facie,

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erroneous  and  illegal.   It  ignores  admitted factual  materials  and  settled  tests  while denying  relief  to  the  appellant-plaintiff.   For these reasons,  it  is  unsustainable  and  we have no alternative, but to quash and set aside the same.  It is, accordingly, quashed and set aside.”

It, therefore, upset the judgment of the learned Single Judge

and granted the temporary injunction asked for.  It went on to

stay the order for a period of 12 weeks, which stay has been

continued by this Court till date.  

6) Mr.  Guru  Krishna  Kumar,  learned  Senior  Counsel

appearing  on  behalf  of  the  appellant,  has  vehemently

contended that the Division Bench judgment should be set

aside as it has disregarded this Court’s judgment in Wander

Limited And Another vs.  Antox India P. Ltd. 1990 (Supp)

SCC  727,  in  particular,  para  14  thereon,  which  reads  as

under:-

“14. The appeals before the Division Bench were against  the  exercise  of  discretion  by  the  Single Judge. In such appeals, the Appellate Court will not interfere with the exercise of discretion of the court of first instance and substitute its own discretion except where the discretion has been shown to have been exercised arbitrarily, or capriciously or perversely or

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where the court had ignored the settled principles of law  regulating  grant  or  refusal  of  interlocutory injunctions. An appeal against exercise of discretion is said to be an appeal on principle. Appellate Court will  not reassess the material  and seek to reach a conclusion  different  from  the  one  reached  by  the court  below  if  the  one  reached  by  that  court  was reasonably possible  on the material.  The appellate court  would  normally  not  be  justified  in  interfering with the exercise of discretion under appeal solely on the ground that if it had considered the matter at the trial  stage  it  would  have  come  to  a  contrary conclusion. If  the discretion has been exercised by the trial court reasonably and in a judicial manner the fact  that  the  appellate  court  would  have  taken  a different  view  may  not  justify  interference  with  the trial  court's exercise of discretion.  After referring to these  principles  Gajendragadkar,  J.  in  Printers (Mysore)  Private  Limited  vs.  Pothan Joseph,  1963 SCR 713 at 721:  

“...  These  principles  are  well established,  but  as  has  been observed  by  Viscount  Simon  in Charles Osenton & Co. v. Jhanaton, 1942 AC 130, ‘…... the law as to the reversal  by  a court  of  appeal  of  an order made by a judge below in the exercise  of  his  discretion  is  well established,  and  any  difficulty  that arises is due only to the application of well settled principles in an individual case.’

The appellate judgment does not seem to defer to  this principle.”  

According  to  learned  Senior  Counsel,  the  Single  Judge

Bench summation at para 45 could not have been interfered

with by the Division Bench because the law had been looked

at threadbare, and ultimately it was found that not only had

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none of  the  three  tests  being  satisfied  but  that  there  was

clearly  a  case  of  acquiescence  made  out,  for  which  the

Plaintiff has to be denied interim relief.  He referred to several

judgments to buttress his submissions.   

7) On  the  other  hand,  Dr.  A.M.  Singhvi,  learned  Senior

Counsel  appearing  on  behalf  of  the  respondents,  has

supported the judgment passed by the Division Bench, also,

by copiously  referring to  various judgments  and by stating

that the Division Bench judgment, in fact, upset the learned

Single  Judge  because  of  errors  of  law  and,  therefore,

interfered on principle and not on fact.  He was at pains to

point out that reputation had been established by the sales

figures  from  1988  onwards;  “misrepresentation”  had  been

made out in the said sense understood in law, that is,  that

absence of an intention to deceive is not a defence in law,

and that the defendant’s state of mind is wholly irrelevant to

the  existence  of  the  cause  of  action  in  passing  off.   He

stressed the fact that as reputation had been made out, and

as the learned Single Judge himself had said that  “confusion”

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had been made out,  the learned Single Judge was wholly

wrong in stating that  a further requirement was necessary,

namely,  fraud  or  deceit.   On  the  third  aspect,  it  was  also

pointed out that it is obvious that there would be likelihood of

damage to the Plaintiff.  Assuming that there was no damage

caused to the general  public,  because the drug being sold

unlike  in  Cadila  Health  Care  Ltd.  vs.  Cadila

Pharmaceuticals  Ltd.  (2001)  5  SCC  73 consisted  of  the

same formulation, yet this would not deny them the right to

interim relief, and that is only a further factor that needs to be

taken into account , also to combat the plea of acquiescence.

8) Having heard learned Senior Counsel for some time, we

may point out that the learned Single Judge, after referring to

the case law, pointed out in para 27 as follows:- “I think I must

accept Mr.  Dwarkadas’s submission that  confusion may be

assumed,  but  not  deceit  or  deception.”.   In  para  45,  the

learned  Single  Judge  went  on  to  state  that  he  would  not

presume misrepresentation by Wockhardt as to source, even

assuming there is similarity.

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9) We  may  indicate,  at  this  juncture,  that  insofar  as  the

second  test  is  concerned,  this  Court  has  in  a  plethora  of

judgments  held  that  though passing  off  is,  in  essence,  an

action based on deceit, fraud is not a necessary element of a

right of action, and that the defendant’s state of mind is wholly

irrelevant to the existence of a cause of action for passing off,

if  otherwise  the  defendant  has  imitated  or  adopted  the

Plaintiff’s mark.  We need only state the law from one of our

judgments, namely,  in  Laxmikant V. Patel  vs.  Chetanbhai

Shah   and  Another,  (2002)  3  SCC  65,  which  reads  as

under:-

“13 In  an  action  for  passing-off  it  is  usual,  rather essential,  to  seek  an  injunction,  temporary  or  ad- interim. The principles for the grant of such injunction are  the  same  as  in  the  case  of  any  other  action against injury complained of. The plaintiff must prove a  prima  facie case,  availability  of  balance  of convenience  in  his  favour  and  his  suffering  an irreparable  injury  in  the  absence  of  grant  of injunction.  According  to  Kerly  (ibid,  para  16.16) passing-off cases are often cases of deliberate and intentional  misrepresentation,  but  it  is  well-settled that fraud is not a necessary element of the right of action, and the absence of an intention to deceive is not  a  defence,  though proof  of  fraudulent  intention may  materially  assist  a  plaintiff  in  establishing probability of deception. Christopher Wadlow in Law of Passing-Off  (1995 Edition,  at  p.3.06)  states that the plaintiff does not have to prove actual damage in order  to  succeed  in  an  action  for  passing-off.

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Likelihood of damage is sufficient. The same learned author  states  that  the defendant’s  state of  mind is wholly  irrelevant  to  the  existence  of  the  cause  of action for passing-off (ibid, paras 4.20 and 7.15). As to  how  the  injunction  granted  by  the  Court  would shape depends on the  facts  and circumstances of each  case.  Where  a  defendant  has  imitated  or adopted  the  plaintiff’s  distinctive  trade  mark  or business  name,  the  order  may  be  an  absolute injunction that he would not use or carry on business under that name. (Kerly, ibid, para 16.97).”  

This judgment has been followed in S. Syed Mohideen vs. P.

Sulochana  Bai,  (2016)  2  SCC 683  at  699-700.   Also,  in

Satyam  Infoway  Ltd. vs.  Siffynet  Solutions  Pvt.  Ltd.,

(2004) 6 SCC 145, this Court held:-

“14 The second element that must be established by a plaintiff in a passing-off action is misrepresentation by  the  defendant  to  the  public.   The  word misrepresentation  does  not  mean  that  the  plaintiff has to prove any mala fide intention on the part of the defendant.   Of  course,  if  the  misrepresentation  is intentional,  it  might  lead  to  an  inference  that  the reputation of the plaintiff is such that it is worth the defendant’s  while  to  cash  in  on  it.   An  innocent misrepresentation  would  be  relevant  only  on  the question of the ultimate relief which would be granted to the plaintiff [Cadbury Schweppes  v. Pub Squash, 1981 RPC 429 : (1981) 1 AllER 213 : (1981) 1 WLR 193 (PC); Erven Warnink v. Townend, 1980 RPC 31 : (1979) 2 AllER 927 : 1979 AC 731 (HL)]…..”  

10) The  Division  Bench  essentially  interfered  with  the

judgment of the learned Single Judge on this score and also

found that the learned Single Judge was incorrect in stating

that “reputation as to source is not sufficiently demonstrated”.

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It  found  that  reputation  was  established  from  the  sales

figures, and the fact that the Plaintiff was clearly a prior user

would make it clear that the first pre-requisite for the action in

passing off was made out.  Where the Division Bench and the

learned Single Judge really locked horns was on the point of

acquiescence.  The learned Single Judge found that not only

was there a lying by for  a long period,  but  that  there was

positive  action  on  the  part  of  the  Plaintiff  in  leading  the

defendant to believe that he could build up his business, at

which point the Plaintiff  swooped in to interdict and throttle

that business as it was rising just as sales were rising.  On

this  count,  the  Division  Bench  interfered  with  the  learned

Single Judge as follows:-

“89. The  learned  Judge  then  attributes acquiescence  to  the  plaintiff.   The  plaintiff’s predecessor in title did not object to the trademark registration application.  It allowed others to do so and  it  is  the  plaintiff’s  failure  to  bring  a  suit  on service of a caveat.  Thus, there is no objection from the  plaintiff.   It  only  means  that  the  plaintiff  kept quiet when the application for registration was made by  the  defendant.   They  failed  to  object  to  the advertisement  of  the  defendant’s  application  or when the defendant  brought  its  project  in market. They did not object to other entities introducing their products  in  the  market  either.  This  is  enough  to

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assume acquiescence.  We do not think this to be the  position  on  facts  and  in  law.   A  plea  of acquiescence  to  be  raised  in  defence  so  as  to succeed ought to be supported by weighty materials to that effect.  Since the learned single Judge has referred  to  the  judgment  of  the  Hon’ble  Supreme Court  in  the  case  of  M/s  Power  Control Appliances and Ors.  vs.  Sumeet Machines Pvt. Ltd.,  (1994)  2  SCC 448,  we  would  refer  to  it  in some details.  Paras 4, 5, 7, 11, 12, 13, 14, 15 and 16 of this judgment were heavily relied upon by Mr. Tulzapurkar.  In that, the facts and the submissions are summarised. Then, in para 20, the argument of the respondents before the Hon’ble Supreme Court was set out.  In paras 27, 28, 29 and 30, the English judgments  were  noted  and  up  to  para  31. Thereafter,  the decisions rendered by our Hon’ble Supreme Court and other courts have been noted.

90. We are in agreement with Mr. Tulzapurkar that  even  at  this  prima  facie stage,  there  is  no positive act which can be attributed to the plaintiff so as  to  deny  the  relief.  There  is  no  acquiescence which can be culled out.  Beyond referring to some general  principles,  we  do  not  find  any  material placed before the learned single Judge from which an inference of acquiescence can be drawn.  Mr. Dwarkadas has,  on this  point,  relied upon certain judgments  and  even  in  the  written  submissions, there is reference to general principles.  All that the first defendant says is as under:-

“(ii) The defence of the acquiescence is available to Respondent No. 1 since the plaintiff was aware of its right and the defendant was ignorant of its own right and despite the same, the plaintiff assents to or lays by in relation to the acts of the defendant and in view  of  the  same,  it  would  be  unjust  in  all circumstances to grant the relief of injunction to the plaintiff.  It is submitted that the requirements stand

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duly fulfilled and on the above set  of  facts  where from  2009/11,  the  Appellant/its  predecessors  are duly aware of  Respondent  No. 1’s  trademark;  the use of Respondent No. 1’s mark openly and on an extensive scale; and at no point for over 7 years did the appellant or its predecessors contest the same. On the contrary, the appellant’s 2014 acquisition of the trademark is with full notice of the adoption and use  and  registration  of  Respondent  No.  1’s trademark. As  such, the principles of acquiescence and waiver apply with full vigour.

(iii)  Acquiescence  is  a  species  of  estoppel  and therefore  both  a  rule  of  evidence  and  a  rule  in equity.  It is an estoppel in pais: a party is prevented by his  own conduct  from enforcing  a  right  to  the detriment of another who justifiably acted on such conduct.

(iv) The ‘positive act’ as referred to in the decision of the  Hon’ble  Apex  Court  in  M/s  Power  Control Appliances and Ors. vs.  Sumeet Machines Pvt. Ltd. reported in (1994) 2 SCC 448 (relied upon by the appellant) cannot mean that the plaintiff ‘green lighting’ the defendant’s action only to later complain of it.  The ‘positive act’ is the ‘sitting by’ or ‘laying by’ i.e.,  not  mere  silence or  inaction  but  a  refusal  or failure  to  act  despite  knowledge  of  invasion  and opportunity  to  stop  it.   In  the  present  case,  from 2009,  the  appellant  and/or  its  predecessors  have been at notice of Respondent No. 1’s adoption, use and registration  of  its  trademark  and  against  that there has been a complete failure to  register  any protest or objection.  In 2014, the appellant acquired the trademark with full notice of Respondent No. 1’s registration and use of the trademark “CHYMTRAL”. This qualifies for  both acquiescence and estoppel defences.”

91.  Thus,  the  attempt  is  to  equate  delay  with acquiescence and which is not correct.  We do not

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think  that  because  the  appellants  stepped  in  the year  2014  with  notice  of  the  first  respondent’s registration  and  use  of  the  mark  that  means  the appellant-plaintiff has acquiesced in the same.  That is not a positive act and which is required to deny the relief on the ground of acquiescence.”

11) We are of the view that this is not a case where Wander

Ltd.  (supra)  has  not  been  heeded.   On  the  contrary,  the

Division  Bench  has  interfered  on  a  matter  of  principle,

pointing out errors of law by the learned Single Judge.  We

may also point out one other significant fact that has occurred

in the meanwhile.  After 17.11.2017, despite the fact that the

Division Bench of the High Court stayed its own order, which

stay was continued by this Court till date, the Appellant has

started to sell  the same product under a new trade name,

namely, ‘Chymowok’.  We have been shown sales figures in

the last 10 months of sales made by the Appellant under this

new trade name which amounts to a figure of Rs. 2.71 Crores

from 17.12.2017 till 18.08.2018.   

12) We may also state, that this trade name was registered

in the name of the Appellant way back on 14.11.2009 with

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effect from a date in 2008, but had not been utilized till the

Division Bench judgment was passed against the Appellant.

We are  also told  that  the remaining  stock of  material  has

been disposed of under the trade name “CHYMTRAL”,  and

that material manufactured after the Division Bench judgment

is not being sold under the said trade name despite the stay

granted in favour of the Appellant.  Seeing the sales figures of

‘Chymowok’ from December, 2017 till August, 2018 and the

fact that the Appellant’s sales under the “new” trade name are

substantial,  we  do  not  think  that  we  should  exercise  our

discretionary jurisdiction under Article 136 of the Constitution

of India in favour of the Appellant, seeing that the balance of

convenience is  well  served by the judgment  under appeal.

The Appeal is, therefore, rejected.

…………………………......J. (R.F. Nariman)

…………………………......J. (Indu Malhotra)

New Delhi; September 12, 2018.

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