Case Note & Summary
The dispute traces back to a family-run jewellery business started in 1869 by C.Krishnaiah Chetty at No.35, Commercial Street, Bangalore. Over generations, the business was carried on by his son and grandson. In 1958, a partnership firm was formed between C.V.Hayagriv and C.V.Narayana (through his mother as guardian) with equal profit sharing. The appellant company, C.Krishniah Chetty & Sons Private Limited, was incorporated in 1979 by both families, and in 1980, the partnership was dissolved, with the company taking over all assets, including the trademarks. The two branches of the family each held 50% equity shares. Later, C.V.Hayagriv's family allegedly diverted business to a new company, leading to discord. A family settlement agreement was signed on 09.01.2014 to amicably divide the business. Despite this, allegations of oppression and mismanagement continued, and respondent No.3 filed a company petition before the Company Law Board (later transferred to NCLT), which was dismissed in 2019. Appeals are pending before NCLAT. Meanwhile, respondent No.1 company (Deepali Company Private Limited, engaged in gems and jewellery) applied for registration of trademarks identical to those of the appellant. The appellant filed rectification proceedings before the IPAB, which granted an interim stay on the respondent's trademarks on 19.01.2021. The appellant then filed Commercial O.S.No.306/2020 on 02.11.2020 for perpetual injunction against the respondents (respondent No.1 company and its directors) for trademark infringement and passing off, seeking interim injunctions. The respondents contested, arguing that the suit was not maintainable as it was filed without a board resolution authorizing the CFO to institute it. The trial court, by order dated 20.02.2021, rejected the interim injunction applications, observing that the suit was not maintainable without a board resolution. Aggrieved, the appellant filed the present commercial appeal under Section 13(1A) of the Commercial Courts Act, 2015, along with interim applications. The respondents raised a preliminary objection to the maintainability of the appeal on the same ground of lack of board resolution. The High Court heard arguments and reserved judgment on 23.04.2021, with the judgment pronounced on 27.05.2021.
Headnote
A) Civil Procedure - Institution of Suit by Company - Requirement of Board Resolution - Companies Act, 1956; Code of Civil Procedure, 1908, Order 29 Rule 1 - The trial court observed that the suit was not maintainable without a resolution of the Board of Directors delegating authority to file the suit. The respondent-defendants raised a preliminary objection to the maintainability of the appeal on the same ground. The High Court took note of this objection and reserved judgment on it. (Paras 15-16) B) Commercial Courts - Appeals - Maintainability - Commercial Courts Act, 2015, Section 13(1A) - The appeal under Section 13(1A) against an order rejecting interim injunctions was challenged on the ground that the signatory to the appeal (CFO) lacked board authorization. The court considered the preliminary objection regarding the maintainability of the appeal. (Para 16)
Issue of Consideration
Whether the suit and appeal filed by the company are maintainable without a board resolution authorizing the person who signed the pleadings/instituted the proceedings; and whether the trial court was justified in rejecting the interim injunctions on that ground.
Law Points
- Requirement of board resolution for company to institute suit
- trademark infringement
- passing off
- interim injunction
- maintainability of suit
- Commercial Courts Act
- 2015
- Order 43 Rule 1(r) CPC
- prima facie case
- balance of convenience
- irreparable injury
