In a recent decision dated 18 December 2023[1], the Division Bench (Two-Judge Bench) of the Madhya Pradesh High Court, while adjudicating a petition under Article 227 of the Constitution of India, set aside the order dated 28 October 2021 passed by the Commercial District Court, Indore and held that a suit for infringement of Geographical Indication tags is maintainable by the Registered Proprietor of the GI tag, even if the Authorised User of the same GI tag is not impleaded as a party.
Facts
A suit for infringement of rights under the Geographical Indications of Goods (Registration and Protection) Act, 1999 (‘GI Act’) was filed before the Commercial District Court, Indore by the Scotch Whisky Association (SWA), a company incorporated under laws of the United Kingdom with its registered office at Scotland, UK. The SWA is an association of 56 distillers, producers, dealers, blenders, owners of proprietary brand or brands, brokers, or exporters of Scotch Whisky, which is manufactured in the United Kingdom, especially Scotland. SWA filed a GI Application no. 151 for a grant of GI for Scotch Whisky on 5 January 2009, which came to be issued on 23 September 2010.
SWA instituted the suit against J.K. Enterprises, its partners (head office in Indore) and other entities (based in MP) seeking to restrain them or any of their agents from manufacturing, bottling, selling or in any manner marketing any Whisky which is not Scotch Whisky, under the mark ‘London Pride’ or any other words, names, business names, etc. It was further prayed in the original suit that the defendants be restrained from manufacturing, importing, exporting, stocking, or dealing in any manner with any whisky being not Scotch Whisky by using the device of Union Jack or any such other image/impression.
The Defendants filed an application under Order VII Rule 11 of the Code of Civil Procedure, 1908 (CPC), for rejection of the plaint on the ground of non-joinder of the ‘Authorised User’ of the GI as per Section 21 of the GI Act, as a necessary/proper party to the suit. The District Court by order dated 28th October 2021 (impugned order), partly allowed the said application holding that the suit is maintainable only after the impleadment of the ‘Authorised User’.
SWA assailed the impugned order by way of a petition under Article 227 of the Constitution of India, on the grounds that SWA by virtue of being the registered proprietor of the GI for Scotch Whisky can maintain a suit and that the District Court was incorrect in holding that the suit is maintainable only after the impleadment of the registered ‘Authorised User’ of the Scotch Whisky GI under the GI Act.
Issues framed in the present matter
1. Whether in an application under Order VII Rule 11, can the Civil Court hold non-joinder of a party to be fatal to the suit or direct for impleadment of any party as a necessary/proper party to the suit?
2. Whether under Section 21(1), Registered Proprietor can bring the suit for infringement in its own capacity or must join Authorised User to make the suit maintainable. How should the word ‘and’ occurring under Section 21(1) be read; conjuctively or disjunctively, as specifying two classes simpliciter, who can institute the suit for infringement of geographical indication?
3. Whether the complaint disclosed a cause of action under Order VII Rule 11 for it to be maintainable?
Contentions raised by the parties
SWA contented by referring to various provisions, specifically Sections 2(b) and 2(n), 6, 12, 17 of the GI Act and the Geographical Indications of Goods (Registration and Protection) Rules, 2002 (‘GI Rules’), that a Registered Proprietor and an Authorised User are two different entities envisaged under the GI Act and Parliament intended them to be separately and independently treated in their status. It was also asserted by SWA that under an application under Order VII Rule 11 of the CPC, the Trial Court could not have directed the impleadment of the Authorised User as a necessary party, because the appropriate stage for this assessment was yet to come and could have been done at a later stage. It was also asserted that the direction for impleadment of any party as necessary/proper party is not a ground specified under Order VII Rule 11 of the CPC.
The Defendants on the other hand, by referring to the provisions of GI Act and the GI Rules, 2013, specifically Section 17, 20, 22 and Rule 56, argued that it is the only the Authorised User who can institute the suit because no other entity under the GI Act is authorised to use the GI tag. It was also asserted that the Registered Proprietor can only go ‘piggyback’ on Authorised User considering Section 21 of the GI Act, because the Registered Proprietor would have no independent entitlement or ‘right to sue’ for infringement of GI tag.
It was asserted that the word ‘and’ occurring under Section 21 (1) (a)[2] of the GI Act must be read ‘conjunctively’ and not ‘disjunctively’, mandating the requirement of both Authorised user and Registered Proprietor to be impleaded as necessary party as Plaintiff in a suit for infringement of GI. It was asserted that the District Court committed no error in directing the impleadment of the Authorised User for maintaining the suit and that such a direction was well within the inherent powers of the Court under Order VII Rule 11 of the CPC.
Analysis and findings of the court
On the first issue, referring to the various precedents, especially Babu Lal v. Smt. Unati, CR no. 30/14 dated 26 August 2014, the Bench held that non-joinder/joinder of necessary parties cannot be devised as a ground for rejection or return of plaint by the Trial Court, as it is not a ground under Order VII Rule 11 of the CPC. Therefore, it was held that the non-joinder of a necessary party, cannot lead to the immediate rejection of the plaint. The Bench further went on to explain that the necessity of joinder of any necessary party or implication of non-joinder of any such party on the maintainability of the suit can be examined by the Trial Court at the stage of framing of issues ahead of trial.
While addressing the second issue, the Bench extensively discussed the obligations of the member nations to the TRIPS Agreement, to enact a full-fledged legislative mechanism for the protection of geographical indication. It was in pursuance of this obligation that the GI Act was enacted. The Bench affirmed that the interpretation of any provision of the GI Act must be in tune with the objectives and commitments made under the TRIPS Agreement by India at the International Fora. The Bench further referred to the judgement passed by the Apex Court in National Legal Services Authority v. Union of India, (2014) 5 SCC 438 and Githa Hariharan v. RBI, (1999) 2 SCC 228, and re-emphasized the purposive interpretation of the legislations enacted in pursuance of international treaties and conventions, and that such interpretation to be in sync with the advancement and furtherance of the commitments made by the sovereign of India at the international fora.
After analyzing the provisions of the GI Act and Rules, the Bench summarized the provisions stipulating the role of the Registered Proprietor or the Authorised User of the GI. The Bench held that the application for grant of GI status can be filed by an applicant, who is a producer, or any person entrusted as the Registered Proprietor. Only based on such application by the Registered Proprietor, the GI tag comes into existence. The Bench reasoned that even in the absence of an Authorised User, under various provisions of the GI Act, a Registered Proprietor can institute an action or proceeding in his own right, one of them being a renewal of GI or for grant of additional protection. Further, a Registered Proprietor needs to be informed and updated whenever any new Authorised User is added to the GI register.
Therefore, the Registered Proprietor can be treated as an independent entity under the provisions of the GI Act for the purposes of obtaining or continuing with the GI tag.
The Bench also noted that the GI Act makes specific mention in instances such as Section 68, mandating compulsory impleadment of Authorised User along with Registered Proprietor or any other party when disputes under the provisions specified therein are involved. It was also observed based on the scheme of the GI Act and Rules, specifically Section 17 of the GI Act; that an Authorised User has a right to get himself registered separately and claim protection of GI independently. However, the mere existence or registration of an Authorised User cannot operate to the complete exclusion of the Registered Proprietor to dislodge and displace him from claiming the protection of any GI or standing against infringement thereof.
The Bench held that Section 21 has also to be viewed in the larger scheme of the GI Act. Section 20 preceding Section 21 placed under the same Chapter titled ‘EFFECT OF REGISTRATION’ in a negatively worded covenant, such that it debars any person from instituting any proceeding pertaining to the infringement of unregistered GI. It was observed that the title of Section 21 indicates the end purpose and intent behind its enactment, which is the right arising out of an incident to registration. The Bench reasoned that when registration can be applied for by both Registered Proprietor or Authorised User, then both entities shall equally be entitled to the rights flowing out of the same as its consequence thereof.
The Bench also noted that in the absence of the Registered Proprietor, many procedures and processes relating to GI tag would not occur. Accordingly, the registration of GI gives equal recognition and rights to the Registered Proprietor as well as the Authorised User of obtaining the ‘right to obtain relief’ in the event of infringement of GI by any person.
On analyzing the difference in wording of Section 21(1)(a) and Section 21(1)(b) of the GI Act, the Bench held that the legislature could not have been presumed to have conferred exclusive rights on the Authorised User to the exclusion of the Registered Proprietor itself, the originator of the very existence of a right. On the principles of ubi jus ibi remedium, viz., if there is a right, there is a remedy; therefore, the Registered Proprietor would also have a right to file a suit for grant of injunction against any unauthorised user of a GI tag.
The Bench held that the word ‘and’ used under Section 21(1)(a) of the GI Act has to be treated as ‘or’, as otherwise the status of a Registered Proprietor would be reduced to one below that of an Authorised User. The Bench relied on the well-settled interpretation of ‘and’ as ‘or’ or ‘or’ as ‘and’, discussed in various judicial precedents[3].
On the third issue, the Bench noted that an application under Order VII Rule 11(a) of the CPC provides for rejection of plaint where it fails to disclose a cause of action. The Bench acknowledged that the remedy under this provision is an independent, special remedy of terminating the suit at a threshold and therefore for the summary dismissal of the same, the power must be exercised sparingly.
The Bench on perusing the facts of the matter held that the cause of action in the suit has been made out. The Bench noted that the plaint asserted with extensive materials, documents and evidence that Scotch Whiskey is a special good originating in Scotland, UK and has gained a special brand, name, goodwill, reputation, being prepared after a specially prescribed process. The plaint also contended, based on the Scotch Whiskey Regulations framed by the Government of UK, that if any whiskey is titled as ‘London Pride’ or uses ‘UK Flag’ as its label on the bottle, then it implies that it is referring to whiskey made in UK, which sends a general impression that it is a Scotch Whiskey or whiskey made in Scotland. It was contended that for SWA, in such a scenario, there exists sufficient basis to fear loss of goodwill, trade and business.
The Bench acknowledged that Scotch Whisky is internationally renowned as a whisky pertaining to the Scottish province of UK and has been recognised with a special GI tag across the world. The possibility of loss of business and damage to goodwill arising out of the use or misuse of brand of Scotch Whisky, as per the Court cannot be ruled out, if during the trial later, it is established by SWA that the Defendants are infringing upon the registered GI of petitioner. The Bench remarked that whether the infringement has happened or not; whether there is loss of business or damages as averred in the suit, is all a matter of trial, yet to be tested through evidence, exchange of pleadings and examination of witnesses. The Bench held that based on the plaint, it cannot be said that SWA fails to disclose a ‘cause of action’. Accordingly, the Bench held that the application under Order VII Rule 11 of the CPC is liable to be rejected.
The Bench set aside the order of the District Court and directed the District Court to proceed with the suit, in accordance with the law. The Bench also noted that any observations made by the Bench shall not affect the adjudication of various issues to be decided during the course of trial before the District Court.
Conclusion
This decision of the Madhya Pradesh High Court reaffirms that Non-Joinder/Joinder of necessary parties cannot be devised as a ground for rejection or return of plaint, and therefore, cannot lead to immediate rejection of the plaint. This judgment is significant as it provides a purposive interpretation of Section 21(1) of the GI Act, given India’s obligations under the TRIPS Agreement and thereby elucidating the rights of the Registered Proprietor and Authorised User of the GI tag under the GI Act.
[The authors are Associate and Partner, respectively, in IPR practice of Lakshmikumaran & Sridharan]
[1] Scotch Whisky Association v. J.K. Enterprises, 2023 SCC OnLine MP 5352
[2] Section 21. Rights conferred by registration.
(1) Subject to the other provisions of this Act, the registration of a geographical indication shall, if valid, give,--
(a) to the registered proprietor of the geographical indication and the authorised user or users thereof the right to obtain relief in respect of infringement of the geographical indication in the manner provided by this Act;
[3] Gujarat Urja Vikas Nigam Ltd. v. Essar Power Ltd., (2008) 4 SCC 755; Alka v. Abhinish Chandra Sharma, 1991 MPLJ 625; Godavat Pan Masala Products I.P. v. UOI, (2004) 7 SCC 68
