Bombay High Court imposed cost of Rs.50,00,000/- (Rupees Fifty Lakhs Only) on Premier Stationery Industries Pvt. Ltd. & Ors. in a Contempt Petition for willful and deliberate disregard and disobedience to its Order dated 13/07/2017 in a trademark and copyright infringement Suit

On 21/04/2017, the Petitioner, Pidilite Industries Ltd. filed Suit against the Respondent-Premier Stationery Industries Pvt. Ltd. & Ors. for trademark, copyright and design infringement of their well-known mark and their rights in  FEVICOL MR Artistic Work, distinctive design  FEVICOL MR Bottle and FEVICOL Glue Pens and for tort of passing off.

By Order dated 13.07.2017, the above Suit was disposed of in terms of the consent terms and the undertaking contained therein were accepted as undertakings to the Hon’ble Court and the Respondent Nos. 1 & 2 submitted to the decree of the Court.

In or about August 2020, the Petitioner learnt that the Respondents have re-commenced use of the impugned trade dress/ label and colour scheme which was a substantial reproduction of essential features of the Petitioner’s FEVICOL MR Artistic Work and its distinctive FEVICOL MR Bottle and FEVICOL MR Glue Pens in flagrant violation of the Final Order dated 13.07.2017, Consent Terms and undertakings given to the Hon’ble High Court.

The Petitioner upon coming across of such contemptuous actions of the Respondent Nos. 1 & 2 addressed letter dated 05.08.2020 and called upon them to cease and desist from violation the Final order and Consent Terms dated 13.07.2017. The Respondent Nos. 1 & 2 replied to the said letter contending that they were not in violation of the Final Order of the Hon’ble High Court.

Pursuant to the Contempt Petition filed by the Petitioner, the Respondent Nos. 1 & 2 filed their Reply stating that they had sold their business and their asset to M/s. Premier Stationery Industries (Respondent No. 3), sole propriety firm owned by Mr. Rajinder Puri Goswami, husband of Respondent No. 2. M/s. Premier Stationery Industries and by Mr. Rajinder Puri Goswami were impleaded as Respondent Nos. 3 and 4 by way of amendment to the Contempt Petition. The Respondent Nos. 3 and 4 were not parties to the
Suit.

Petitioner’s submission

The Petitioner submitted that though Respondent Nos. 3 & 4 were not parties to the Suit, they were aiding and abetting the Respondent Nos. 1 & 2 in committing contempt of Court. The Respondent Nos. 1 & 2 attempted to circumvent the Final Order of the Hon’ble Court and continued wrongful activities through Respondent Nos. 3 & 4. It was submitted that the Respondents are jointly and severally liable for the contempt of the Court’s Order.

The Petitioner also submitted that relationship of the Respondents is conveniently suppressed in the Affidavit in Reply filed by the Respondents in the Contempt Petition with a view to mislead the Court and obstruct the administration of justice. The counsel for the Petitioner also contended that the relationship of Respondent No. 2 being wife of Respondent No. 4 is borne out from Board Resolution of the Respondent No. 1. Petitioner also argued that it is fit case to apply the doctrine of lifting the corporate veil. It was submitted that the conduct of the Respondents possess a “dual character of contempt of Court” (i) by aiding and abetting each other and especially Respondent Nos. 1 & 2         (ii) for directly being responsible for violating the Court’s Order and knowingly interfering and obstructing in the administration of justice. Reliance was placed on the Hon’ble Supreme Court decision Sita Ram v. Balbir[1] wherein the Supreme Court recognized the dual character of contempt of Court by a third party.

The Petitioner also submitted that in reply of the Respondents to the cease and desist notice is self-destructive as Respondent Nos. 1 & 2 have admitted to being responsible for the manufacture/ sale of the impugned products.

The Counsel appearing for the Petitioner also submitted that the Respondents have neither tendered apology nor unconditional apology and there is neither remorse nor regret on part of the Respondents for their wrongful acts and that strict action should be taken against the Respondents for their contumacious act.

Respondent’s Submissions

The Respondent submitted that Respondent Nos.s1 & 2 have in 2017 sold all the assets, machineries, products to a proprietary concern Respondent No. 3, M/s. Premier Stationery Industries owned by Respondent No. 4 Mr. Rajinder Puri Goswami who is husband of Respondent No. 2. It was also contented that Respondent Nos. 1 & 2 have filed on record their income tax returns for Assessment Year 2019-2020 and 2020-2021 which show that total income of Respondent No. 1 was zero. Respondents claimed that they have not committed any breach of the Consent Terms. Respondent Nos. 3 & 4 also submitted that they were not aware of the Consent Terms and as also they were not party to the Suit in which the Consent Terms was executed and, therefore are not bound by the same.

Court’s Decision

The High Court held that the contention of the Respondent Nos. 3 & 4 that they were not aware of the Consent Terms or Final Order cannot be accepted as their relationship with Respondent Nos. 1 & 2 is evidently established through documents on record. Court also noted that the Respondent Nos. 1 & 2 have made false statements on Affidavit that they have ceased their business of manufacturing and/or sale of the impugned product. Hon’ble Court also noted that the Respondents have failed to offer apology let alone an unconditional apology. The Hon’ble Court rejected the submission of the Respondents that since Respondent Nos. 3 and 4 were not parties to the Suit and the Consent Terms, they are not liable. It held that the Courts powers under Section Article 215 of the Constitution of Indian r/w Contempt of Court Act r/w Section 151 of the CPC in not only wider than but is also independent of any rights of the parties inter se in any execution proceedings. The Court held that “The Respondents have failed to offer any apology let alone an unconditional apology and which is evident from their lack of remorse or regret on their part for their wrongful acts and/or wilful disobedience of the Courts Orders.  It is well settled that the Court ought not to allow its processes to be set at naught and/or breach of its Orders by parties such as the Respondents and strict action ought to be taken against the Respondents for their malafide conduct”.

The Court held that the Respondents have committed wilful contumacious contempt of court, it would be necessary for the Respondents to purge their contempt by penalizing them. Accordingly, the court ordered that the Respondents shall jointly and/or severally pay to the Petitioner an amount of Rs.50,00,000/- (Rupees Fifty Lakhs Only) within 4 weeks and failure on part of the Respondents to comply with the order would result in Respondents being taken in custody and detained for period of two weeks in Civil Prison namely, Arthur Road Jail, Mumbai.

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