India: Ajanta Manufacturing Allowed To Go Ahead With Public Issue

Last Updated: 6 November 2008

In relation to floating an Initial Public Offer, the case between Ajanta Manufacturing Ltd. & Ors v. Ajanta India Ltd. 2008 (38) PTC 83 (Del.) dealt with the declaration of an injunction order and viability of using a trademark in respect of certain products. The present suit is an appeal to a matter between brothers associated with the 1971 established M/s. Ajanta Transistor Clock Manufacturing Company. Established as a partnership firm, by Mr. Odhavjibhai Patel the firm was jointly owned by him, his brothers and their children. This firm got the mark AJANTA registered and has been using the same to sell its products in India and abroad.

M/s. Ajanta Manufacturing Ltd., was established in 1992 as under the name of M/s. Ajanta Electronics Incorporated and later on incorporated itself into a private limited company in November, 1994. On its incorporation as a company, the name of the company was changed to M/s. Ajanta Electronics Pvt. Ltd. Due to disinterest of some family members in the family business, the constitution of the partnership firm and the shareholders of the incorporated company kept dwindling from time to time.

A Deed of Assignment had been executed between some of the Appellant parties and M/s. Ajanta India Ltd. By virtue of this assignment Ajanta Manufacturing had transferred, sold and assigned the trade mark Ajanta registered under various classes except in respect of clocks and
time pieces, for a consideration of Rs. 34, 00,000. It was in 2004 that M/s. Ajanta Electronics Pvt. Ltd. had been renamed as M/s Ajanta Manufacturing Ltd. The Court noted that records for 203-04 revealed them to have a huge manufacturing plant in Kutch. Further, it was found that during 2005-06 they commenced manufacturing CFLs as also began installation of a vitrified tiles plant, while in 2007-08 they started manufacturing E-bikes. These products although were being sold under the trade name OREVA, a mention of the same being a product from Ajanta
Manufacturing Ltd was made. This had lead Ajanta India to file a civil suit, to which an ex-parte injunction order restraining Ajanta Manufacturing from using the trade mark / trade name AJANTA except to the extent of use for clocks and time pieces had been ordered.

Ajanta Manufacturing averred that a bare reading of the Agreement clarified that they had retained the right to use the mark AJANTA as their corporate name. He further submitted that since this Agreement had been suppressed by the Ajanta India at the ex-parte stage, the injunction deserved to be vacated on that ground alone. On the other hand, Ajanta India asserted that vide the Assignment Deed Ajanta Manufacturing could manufacture only two products under the mark AJANTA. The deed was said to have been violated by expanding production to other items. They also submitted that despite the injunction order being
unequivocal, that Ajanta Manufacturing had not only gone ahead with its public issue but
had further not disclosed the injunction granted by this Court in their red herring prospectus. Relying on Section 2 (m) of The Trade Marks Act, 1999 and the definition of 'word mark' therein, they contended that the same included a corporate name. With respect to S. 29(5) it was submitted that use of a registered trade mark as part of the trade name or business name constituted infringement. Rebutting to the arguments, counsel for Ajanta Manufacturing stated that they were entitled to manufacture a number of products, including CFLs, tiles and E-bikes. Further he also asserted that the red herring prospectus referred to by the opposing party was a draft and that they were willing to refer to the injunction order in their red herring prospectus.

The Court stated that the Assignment Deed had to be read harmoniously in conjunction with the Agreement. It was stated that on doing so, it became apparent that both the family factions were entitled to use the mark AJANTA as their corporate name. This was not disputed by the Counsel for Ajanta India, however he did vouch that Ajanta Manufacturing could not manufacture more than two products namely wall clocks and time pieces.

The court disagreeing with this submission stated that they were entitled to manufacture more products, however, the same could not be sold as AJANTA and stated that in view of Ajanta Manufacturing' undertaking that they would not use the mark AJANTA in any of its new products, the Court opined that the grievance no longer survived.

The Court also opined that the aspect of being a concurrent user and acquiescence could constitute a legitimate defence to Section 29 (5) of the Trade Marks Act, 1999, but elaborated no more on the same. Ajanta Manufacturing was allowed to go ahead with its public offer on the following conditions:

  1. The injunction order be dated 8th October be disclosed in the Red Herring Prospectus.
  2. All products manufactured by it except walls clocks and time pieces do not contain the mark Ajanta. Only where a statute casts an obligation/duty to disclose the name of a manufacturing company, shall Ajanta Manufacturing mention its name on the packaging, while ensuring that the trademark OREVA be displayed prominently and contradistinction to the Corporate name so that the public at large knows that it trades under OREVA
  3. Ajanta Manufacturing also to provide a disclaimer in all its literature and advertisements in connection with its IPO stating that they are not connected to M/s Ajanta India Ltd. owners of trade mark AJANTA for all goods and services except clocks and time pieces.

© Lex Orbis 2008

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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