Full Judgment Text
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REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. 3594 OF 2005
Kali Aerated Water Works, Salem Appellant(s)
VERSUS
Commnr. Of Central Excise, Madurai Respondent(s)
WITH
CIVIL APPEAL NO. 3611 AND 4387-4392 OF 2005
J U D G M E N T
A.K.SIKRI,J.
It is not in dispute that the appellant herein is a
Small Scale Industrial Unit (hereinafter referred to SSI
Unit) and is manufacturing Aerated Water under various brand
names using the trade mark with the “Kalimark” / M/s.Kali
JUDGMENT
Aerated Water Works” It sought exemption from payment of
excise duty in terms of Notification 1/93-CE dated 28.2.1993
(as amended vide Notification No.59/94-CE dated 1.3.1994)
for the aforesaid goods manufactured in its factory. This
has, however, been denied to the assessee by the Department
on the ground that the brand name “Kalimark” has been used
on the goods which belong to M/s. Shri K.P.R.Shakthivel and
since the assessee is using the aforesaid brand name of the
third party, by virtue of para 4 of the aforesaid
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Notification the exemption would not be allowed to the
respondent. This stand taken by the respondent department
has been accepted by the CESTAT in its impugned judgment.
The Tribunal has noted the fact that business of
manufacture and sale of Aerated water was started in the
name of `Kalimark Aerated Water Works' by the HUF of which
M/s. Shri P.V.S. K.Palaniappa Nadar was the Karta. Later on
it was converted into a joint family business of Sh.
Palaniappa Nadar and his three sons and a daughter. At some
point of time the parties/partners fell apart and entered
into a family settlement which is contained in Deed of
Mutual Agreement dated 12.3.1993. The Tribunal has recorded
that in terms of this Mutual Agreement signed between the
parties the ownership of the aforesaid trademark/brand name
`Kalimark' no longer remained with the appellant assessee
and it belongs to the other party. On this basis it arrived
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at the finding that the appellant has been using the trade
mark/brand name of the third party.
We find that the aforesaid observation is against the
record and contrary to the Deed of Mutual Agreement which
has been entered into between the earstwhile partners. Para
9 of the recital to this family arrangement is as under:
“Since all the parties herein have
mutually intend to carry forward the
reputation and well established Trade Mark
`KALI MARK' in future also thus carrying
out to the future generations, a meeting
was held among the parties herein, who are
the direct male lineal decedents and users
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of established abovesaid Trade marks and
who at present have interest in various
factories being run in the name of Kali
Aerated Water Works in various parts of
Tamil Nadu and discussed the pros and cons
and also to preserve the established Trade
Name and Trade Marks throughout the future
generation and agreed on certain terms and
conditions and all the parties herein have
agreed to abide by them and hence this
Deed of Mutual Agreement.
Thereafter, this aspect is dealt with in Paras L.M. and N
thereof, which read as under:
L) If any party comes to know about any
infringement and passing of use of any
deceptively similar mark on any imitation
by any person in the market, then the party
in whose area the said imitation,
infringement or passing off takes place
shall take immediate legal steps against
such erring persons at his cost, under the
provisions of Trade and Merchandise Mark
Act, 1958 or any other common law in which
suitable an effective remedies are
provided.
M) In any party falls to initiate legal
action against such erring persons in order
to protect the Trade Mark and Trade name,
then any other party can take action
against such defaulting parties as well as
against the person committing such
infringement, passing off or imitation for
suitable remedy.
JUDGMENT
N) For removal of doubts, it is clarified
specifically that the right to use the
Trade name M/s. Kali Aerated Water Works
and Trade Marks mentioned above are solely
vested with the parties 2 to 10 herein who
are the direct male lineal descendents and
subject to clause `G' herein the parties
herein cannot and shall not permit or give
their existing rights to any female
descendents or any third person, nor the
parties 2 to 10 herein have right to
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transfer/sell for consideration or without
consideration to third parties. If any
party herein or their respective male
descendents wants to close down the
business they shall have to either sell
their rights of Trade name and Trade Marks
to other remaining parties or to their male
lineal descendents only. Such parties
shall acquire the rights subject to the
terms and conditions of this Agreement and
are liable to exercise their rights within
the terms of this Mutual Agreement.
It is clear from the above that the trade name
`Kalimark Aerated Water Works' and trade mark mentioned in
the said agreement would remain vested in all the parties
including the appellant and the appellant was also allowed
to use the same. The agreement further provides that the
user of this trade mark, therefore, shall not make any
payment of royalty or remuneration to any other party. This
very fact was correctly appreciated by the Commissioner who
decided the appeal in favour of the appellant. The
discussion in the order of the Commissioner, on this aspect,
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reads as under:
23: During the personal hearing Shri Rathina
Asohan drew my attention to the certificates
issued by the Trade Mark Registry from the
year 1948 to 1985 which were filed before the
lower authority. I find the Appellant's name
also figures in the certificates issued in
the year 1962 and 1970 when he became one of
the partner of the erstwhile HUF Firm. The
appellant have been marketing his products
only within his own marketing area. It is not
the case of the Revenue that any other person
is using the same Brand names in the same
area. Similarly the appellant is not selling
his goods outside his marketing area. So far
his business is concerned the appellant
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appears to be the only legal owner of the
Trade Mark within his marketing area. This
has been clearly brought out in the Mutual
Agreement dated 12.3.1993 which has been duly
presented on 12.3.1993 itself for
registration whereas the impugned
Notification No.59/94 came into effect only
from 1.4.1994 and hence no motive can be
attributed against the appellant in respect
of the Mutual Agreement. I have read the
entie contents of Mutual Agreement. I find
that Mr. K.P.R. Sakthivel is also a party to
the said Mutual Agreement and no royalty is
also payable to the said K.P.R. Sakthivel.
Even Mr. K.P.R.Sakthivel has specifically
agreed that he cannot use the brand name in
the marketing area of the appellant. Thus
there seems to be recognition of individual
proprietary rights over the brand names
within the respective specified marketing
area. The nature of succession of the
proprietary rights of the brand names have
also been clearly dealt with. It clearly
establishes that the appellant and the male
descendants are alone are entitled to succeed
over the ownership of the brand name within
their marketing area. It is not the case of
the Revenue that the appellant is marketing
his products outside his marketing area.
24. I find that the appellant is the legal
owner of the trade Marks used in his product
in his own marketing area, the Trade Mark
certificates produced before me clearly
establish that the appellant had been having
the right of ownership over the Brand names
in the year 1962 itself when he became the
coparcener in the HUF firm. The appellant has
had his exclusive ownership rights even prior
to the said impugned notification. Hence the
subsequent notification cannot take away the
ownership right of the appellant over the
brand names 'KaliMark' `Bovonto' and
`Frutang' and other brand names and applying
the same to the specified goods manufactured
by the appellant and marketing the same
within his own marketing area in exclusion of
others. On perusing the trade mark
certificates, Decree of the Civil Court,
Mutual Agreement dated 12.3.1993 and also
considering the above contentions, I find
that the appellant is the legal owner of the
brand names within his marketing area.”
JUDGMENT
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It is thus manifest that the appellant has been using
its own brand name `Kalimark' and it belongs to the
appellant. In view thereof, the case of the appellant is
squarely covered in its favour by the judgment of this Court
in Civil Appeal No.9157 of 2003 titled CCE, Hyderabad IV vs.
Stangen Immuno Diagnostics decided on 19.3.2015.
All the appeals are disposed of accordingly.
….....................J.
(A.K.SIKRI)
…......................J.
(ROHINTON FALI NARIMAN)
New Delhi;
Date: 13.5.2015.
JUDGMENT
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