1. KHILJI ARIF HUSSAIN, J.---The appellants have impugned the order dated 16-9-2002, passed by the learned Single Judge granting application under Order XXXIX, rules 1 and 2, C.P.C.. filed by respondent No.1 in Suit No.1452 of 2001 and dismissing injunction application filed by appellant In Suit No.1454 of 2004 by these two High Court Appeals. and we intend to decide the same by this common order as questions of law and facts are same.
2. Brief facts, for the purpose of deciding these High Court appeals, arise out of the Interlocutory Orders passed by the learned Single Judge, are that on 1-11-1997 respondent No.1, Messrs Stafford Miller Limited, a company incorporated in United Kingdom and appellant entered into two Agreements being Agreement to manufacture and distribute under Licence (hereinafter referred to as the License Agreement) and Trade Mark User Agreement (hereinafter referred to as the User Agreement). By these Agreements appellant was permitted to manufacture "Sensodyne Tooth Paste" and use the registered Trade Mark of "Sensodyne" , registered in Pakistan, apparently. in the name of respondent No.2. The respondent No.1, vide its letter dated 27-7-2001, informed the appellant that in pursuance to clauses (17) and (10) Agreement of manufacturing and distributing and User of Trade Mark respectively shall stand terminated w.e.f. 31st October, 2001. We would like to mention here that these notices were signed by one Ejaz Ahmed, alleging himself as authorized signatory. The appellant after receiving the said 2 letters of termination by its letter dated 15th August, 2001, requested respondent No.1, Messrs Stafford Miller Limited, that the letter of termination neither disclosed the reason for termination of Agreements nor mentioned authority of person issued the same. Respondent No.1 vide its letter dated 21st September, 2001 replied as under:-- "Dealing firstly with the "authority" question raised in your letter please note that Stafford Miller Limited, a wholly owned subsidiary of Block Drug Inc. is now by virtue of the acquisition by Glaxo Smith Kline of the entire issued share capital of Block Drug Inc. a member of the Glaxo Smith Kline group of companies. As you would expect the incorporation of Stafford Miller Limited into the Glaxo Smith Kline group resulted in a number of changes being made in the arrangements relating to the manufacture, distribution and marketing of Block Drug Inc. products around the world. In Pakistan one consequence of the merger is that upon entering into new agreements your future relationship will not be with Beecham Pakistan (Pvt.) Limited rather than with Stafford Miller. Accordingly, I should be grateful if you would address all future correspondence to Sheikh Muhammad Ajaz and Shahid Qureshi, with whom you have already been liaising regarding the proposed toll manufacturing agreement."
2. It was further stated in the said letter that termination letter was properly executed on behalf of respondent No.1 by Sheikh Muhammad Ajaz, who, by virtue of Power Attorney dated 23rd May. 2001 is authorized signatory. The appellant by its letter dated 4th September, 2001 and 20th September.
3. 2001 addressed to respondent No. 1. called upon him for negotiation. Some correspondence were also exchanged between appellant and respondent No.4 (Beecham Pakistan Ltd.) in this regard.
4. The appellant filed Suit No.1457 of 2001 for declaration and injunction and in the alternative for compensation and damages against respondent No. 1. Stafford Miller. respondent No.2. Messrs Block Drug Company, respondent No.3. Messrs laxo Smith Kline Pakistan Ltd. and respondent No.4, Messrs Beecham Pakistan Ltd. The appellant also joined Registrar, Trade Marks as one of the defendants. In the said suit the appellant prayed that the Agreements dated 1-11-1997. Licence Agreement and Trademark User Agreement entered into between the appellant/plaintiff and respondents Nos.1 and 2 cannot be terminated, cancelled or revoked and as such termination is illegal and of no legal force. In the alternate the appellant prayed that the said agreements between the appellant and respondents Nos.1 and 2 are irrevocable and as the appellant acting upon the licence have incurred expenses and made structure of permanent character in the shape of installation manufacturing plant and machinery and factory for the manufacture, sale and distribution of the product under the brand/Trade Mark. "Sensodyne" and "Sensodyne-F" acquired interest in the agreement. The appellant while asking for mandatory injunction restraining the respondents Nos.1 and 2 and to terminate, cancel or revoke the Licence Agreement dated 1-11- 1997 further requested that respondent No.5 Trade Mark Registry be restrained from entertaining any application from respondents Nos.1 and 2 for de-registration or deleting the entries in the Trade Mark Registry in favour of respondents - Nos.3 and 4 in respect of trade mark/brand products having been given to respondents Nos.1 and 2. The appellant further claims damages amounting to Rs.200,000,000 with interest at bank rate being the loss valued on termination and licence. It was alleged by the appellant that respondent No.2's representative approached the appellant and offered an exclusive right for import, sale and distribution of the r entire products. with Trade Mark "Sensodyne" and entered into an agreement on 1-12-1969. The appellant thereafter get the "Sensodyne" tooth-paste registered with Ministry of Health for import of the same. In 1985 an agreement for technical assistance was entered into between the respondent No.2 and the appellant by which exclusive rights of import, manufacture and distributing respondent No.2's products including Mythol, Tegrim. Sensodyne. Sensodyne-F, etc. was given to him in consideration of technical assistance fee equivalent to 2% of the net sales of the products. The supply contract dated 8-5-1985 was also entered into between the appellant and respondent No.2 to import and purchase of raw material from respondent No.2. The aforesaid agreement was initially for a fixed period of five years. The Trade Mark "Sensodyne" was registered with the Registrar of the Trademarks in Pakistan on 16-1-1986 vide Registration No. 88987 in the name of respondent No.2.
5. User Agreement of the said Trade Marks "Sensodyne" dated 11-8-1987 between the appellant and defendant No.2 was also registered with the Registrar of Trade Marks. The Agreement was valid for a period of five years. The Technical Assistance Agreement was replaced by a new Agreement of Manufacturing and Distribution executed between the appellant and respondent No.1 a wholly owned subsidiary of respondent No.2 likewise trade mark User Agreement was also replaced by an agreement executed between the appellant and respondent No.1 on same date for a period of three years. In terms of the said agreement the appellant was required to pay licence fee at the rate of US$ 1.25/Kg. of the bulk products.
6. In November, 1997, the earlier agreements executed between the appellant and respondent No.2 were replaced by new agreements of manufacturing and distributing under licence and trade marks user agreement executed between the appellant and respondent No.1 (a wholly owned subsidiary of respondent No.2) giving rights to appellant to use Trade Marks "Sensodyne" of the respondents for a fixed period of three years. It was alleged that appellant invested huge amounts to introduce Sensodyne produced in the market through advertisements, seminars, etc. in the market as well as established a factory to manufacture the products with Trade Mark "Sensodyne" as per formula after investing huge amounts and accordingly agreement executed between the appellant and respondent No.1 became irrevocable agreements coupled with the interest.
7. Heard Mr. Afzal Siddiqui and Ms. Naveen S. Merchant, learned counsel for the appellant, and Mr. Qazi Faez Essa, learned counsel for the respondents.
8. The learned counsel for the appellant first argued about the maintainability of Suit No.1424 of 2001 filed by respondent No.1 on the ground that the suit has been filed by an unauthorized person without any resolution passed by Board of Directors of Company. After arguing a great length of time, however, he requested that the order of dismissal of application under Order VII. rule 11. C.P.C. has been questioned by the appellant by way of filing of High Court Appeal No.244 of 2002, which has been adjourned at his request he will submit further arguments in this regard at the time of hearing of said appeal. We are not dealing with the said objections and confine ourselves only to the extent whether the appellant was entitled for grant of injunctions as prayed and or whether the respondent No.l was entitled for grant of injunction or not.
9. Mr. Afzal Siddiqui, learned counsel for the appellant questioned the impugned order and mainly argued that the termination letter dated 27-7-2001, issued for and on behalf of respondent No.1, has been issued without any lawful authority and the person, who signed the said letter, has no lawful authority to issue the same. It was further contended that the appellant has invested huge amounts in introducing respondent's products in market and apart from that also established a factory with building structure on it by investing billions of rupees accordingly the agency agreement executed between the appellant and respondent No.1 became irrevocable agreement, coupled with interest and in case injunction, as prayed, is not granted the entire set up, which he built up after investment of billions of rupees in last 35 years and acquired reputation in the market will be ruined.
10. On the other hand, Mr. Qazi Faez Essa, learned counsel for the respondents, argued that the appellant's Suit No.1454 of 2001 has been filed as a counter blast to earlier suit filed by respondent No.1 seeking declaration that the said agreement executed between the appellant and the respondent No.1 is irrevocable agreements by itself sufficient to establish that the right, which the appellant is claiming in the products in question, is based upon the agreement executed between the appellant and respondent No. 1. It was further contended that the respondent No.2 is registered proprietor of trademark in question, duly registered with the Registrar of Trademarks in Pakistan and further that .the respondent No.2 is a wholly owned subsidiary company of the respondent No.1, with whom the appellant had entered into agreement as registered user of the trademark as well as licence for manufacturing the products in question with the Trade Mark Sensodyne or for a particular period of time. It was contended by the learned counsel that any investment made by the appellant by advertisement of the product in question is for his own benefit and factory has been established Is for manufacturing his own tooth-paste with the Trade Name "Protect" and such investment, even otherwise, by itself does not constitute or create any interest in the agreement executed for a fixed period of time between the appellant and the respondents.
11. We have taken into consideration respective arguments of the learned counsel for the parties.
12. From the respective pleadings of the parties on record it appears that the respondent No.2 Is the registered proprietor of Trade Mark "Sensodyne" vide Registration No.88987 on' 16-1-1986 in Class III.
13. The said registration was renewed in favour of respondent No.2 for another 15 years from 16- 1-1993.
14. Agreement for user of trademark as well as licence for manufacturing and distribution was initially entered into between the appellant and respondent No.2 for a fixed period of time, however, same were replaced by agreements dated 1-11-1997, executed between the appellant and respondent No. 1. In the said agreement appellant has categorically admitted respondent No.1 as proprietor of Trade Mark "Sensodyne". The agreement entered into between the parties was for a fixed period of three years. Clause 17 of the Licence Agreement and clause 10 of the Trade Mark User Agreement clearly provided that the agreement shall remain valid, binding and enforced for a period of three years from the first day of November, 1997 and shall continue thereafter unless the agreement is terminated by either party giving to either party not less than three months' notice in writing which notice shall expire at the end of such period. It was further provided that the agreement can be terminated at any time pursuant to clause 19 of the Agreement of Manufacture and Distribution.
15. Clause 19 of the Agreement provides that in case Receiver is appointed on any part of the assets/property of the manufacturer/appellant or respondent No.1 for any reason ceases to manufacture the goods or where the control of the appellant was handed over to a person other than Mr. Ishtiaq A. Roomi or a Member of his immediate family.
16. Be that as it may, it has not been disputed by the appellant that respondent No.1 or 2 is not the proprietor of Trade Mark "Sensodyne". In the user agreement dated 1-11-1997, the appellant admitted and acknowledged that the respondent No.1 is the owner as registered proprietor of the trademark in question and that the appellant was allowed by the respondent No.1 to use the said trademark for a fixed period of time and further undertook that at no point of time he would claim or challenge trade mark or proprietorship and exclusive right in it, nor claim any title in the said trademark. The appellant undertook in the agreement that on the termination of trade mark user agreement he will join the proprietors in an application to have the entry of user as registered cancelled at the trade mark office in the territory and for this purpose undertook to do such acts or sign such papers or documents as may be requested to his end and in case of failure he authorized the respondent No.1 to sign all documents as an attorney of the appellant in this regard.
17. From the facts of the case as pleaded by the appellant himself, it is evident that the appellant is not claiming any interest or proprietary right in the trade mark itself and stated that the respondent No.2 is the proprietor of said trade mark with whom at initial stage he entered into an agreement of User and thereafter these agreements were replaced by agreements entered into between the appellant and respondent No.1 on 1-11-1997.
18. When appellant was contradicted with his own pleading the learned Advocate for the appellant has no reply and except that suit was filed by the appellant within a short span of time after receiving notice/summon of the suit filed by respondent No.1, and such plea of proprietorship of trademark of respondent No.2 and right claiming through him has not been specifically pleaded.
19. We are afraid to accept the plea now taken that appellant is claiming, right of user and right of manufacturing from respondent No.2 at this stage, for more than one reason. First because same is in contradiction to pleading wherein appellant is claiming declaration that agreements dated 1-11- 1997 executed with respondent No.1 are irrevocable agreements and secondly, suit was filed in the month of October, 2001 and till date no application for amendment of pleadings has been filed.
20. In respect of trademark, there can be only one mark, one source and one proprietor and cannot have two origins. A registered trade mark can be assigned with or without goodwill of the business concerned while the unregistered trademark cannot be assigned except along with the goodwill of the business concerned. In the instant case appellant's case is not assignment of trademark to him nor he is claiming any right in it by way of its user from last many years, but his claim is based upon the agreement of user, which in any event cannot be said or termed as assignment of mark to him. Admittedly appellant had licence to manufacture and sale of product of the registered trade mark of the respondent. The agreement of user of trade mark executed pursuant to license to manufacture and sale, as per appellant own showing was not registered as required under section 39 of Trade Mark Act, 1940 he cannot be said as registered user of the marks. Even if such agreement of user was registered with the Registrar of Trademark, such registration was for a specified period of time, and appellant could not be allowed to use the same without the consent of proprietor of trademark either expressly or impliedly thereafter. Any use of such trademark after the expiry of period of user, without the consent of proprietor of the-trade mark would make a case of passing off or infringement against the user of it as the case may be.
21. As regards the question whether the respondent No.1 can terminate agreement dated 1-11-1997 or whether respondent No.1 has any right or interest in the trade mark in question, suffice to say that the appellant himself is claiming right of user for the said trade mark and right to manufacture it through respondent No.1, paying licence fee to him. Now it does not lie at this stage to deny the right claimed by the respondent No.1 in respect of the Trade Mark "Sensodyne". As far as proprietorship of the trade mark is concerned, same is admittedly owned by respondent No.2 and in the written statement jointly filed by the respondents Nos..1 and 2, respondent No.2 has not called in question authority of respondent No.1 to enter into the agreement of user of trade mark and agreement of manufacture dated 1-11-1997 executed by respondent No.1, which are subject-matter of disputes between the parties. Accordingly we are of the tentative view that the appellant has failed to establish any right to use the trade mark and or manufacture the products under the Trade Mark "Sensodyne" in the absence of a valid agreements of user and Manufacture either with respondent No.1 and or with respondent No.2. To allow to use the same tantamount to allow use of. property owned by someone else without any lawful jurisdiction.
22. Coming to the question whether the agreement dated 1-11-1997 can be said to be an agreement, which by the passage of time has become irrevocable agreement due to investment of the huge funds.
23. From perusal of paragraphs 28 to 33 of Memo. of plaint of Suit No.1457 of 2001 filed by appellant it appears that the appellant is not claiming any interest in the Trade Mark "Sensodyne" itself and/or right to manufacture it, but claiming interest on account of his alleged investment made in establishing business, which contention by itself is contrary to the terms and conditions of the agreement. The Agreement executed between the parties specifically provides that the said agreements were for a fixed period of time, to come to an end on expiry of such period. The agreement further gives rights of termination of it by giving notice of three months by either party to agreement. Reliance has been. placed upon section 202 of Contract Act, which. in our opinion. has no application to the facts of the present case for more than one reason. The Agreement dated 1-11-1997 provided stipulation for the cancellation and termination of it. The phrase "in the absence of any express contract" used in section 202 of the Contract Act has a great significance and even If an agency due to any reason creates an interest in the property which forms the subject-matter of agency: if agreement itself provided for termination and cancellation of such Agreement of Agency then section 202 of the Contract Act cannot be invoked. Section 205 of the Contract Act further stipulated that even where there is an agency for any period of time and if it is terminated before the expiry of the period so stipulated in the Agreement, compensation is to be paid for the loss suffered, if any, by him due to such termination by the principal or agent, as the case may be if such termination was without sufficient cause.
24. In the case of Messrs Burnis Computing International (Pvt.) Ltd. v. IBM World Trade Corporation 1997 CLC 1908 one of us (namely Sabihuddin Ahmed, J.) while dealing with the question of agency coupled with interest, held that making of substantial investments in business of agency does not make the agency irrevocable and reproduce the passage from the case of World Wide Trading Company v. Sanio Trading Company PLD 1986 Karachi 234 that interest of the agent, forming subject-matter of the agency, is to be some sort of an adverse nature qua the principal.
25. In the recent case of Bolan Beverages (Private) Limited v. Pepsicola 2004 CLD 1530 = PLD 2004 SC 860 Honourable Supreme Court held that section 202 of the Contract Act split up into two parts.
26. The first portion of the section is clearly indicative of the fact that either the agent must have an interest pre-existing in the property or creation of such interest should be the direct result of the agreement itself and any interest either not pre-existing or not forming subject-matter of the agreement but created subsequent to the agreement In any matter, would not be called as the creation of interest of the agent. It was further held by the Honourable Supreme Court that only that agency is irrevocable which is created with adequate consideration and Is designed to serve as security for some interest of the agent. Any expenditure in setting up office and necessary infrastructure for carrying on business of agency does not tantamount to the creation of interest of agent in the subject-matter.
27. Now coming to last contention of the learned Advocate for the appellant about the satisfaction of precondition for grant of injunction. We are of the view for the reasons stated herein above that appellant has failed to establish prima facie case in his favour. It is correct as argued by learned Advocate for the appellant that mandatory injunction at an interlocutory stage is issued in very rare cases and normally Court passes order to maintain status quo in respect of the subject- matter, does not mean that in appropriate cases Court cannot grant injunction in mandatory form.
28. Admittedly, agreements of manufacturing of tooth-paste and "Sensodyne" user of trade mark has been revoked on behalf of the respondent No. 1. The respondent has alleged that appellant in violation of terms of agreement, has engaged in a business rival to his business and promoting his business against him made the case of respondent that balance of convenience lies in his favour and further grant of injunction will result in depriving him to use his own property which will cause irreparable loss and injury to him.
29. Usually the prayer for grant of interlocutory injunction at a stage when existing of the legal right asserted by one party and its violation by them contest and remained uncertain till they are established at the trial on evidence. The Court at this stage acts on well-settled principle of administration on this form of interlocutory remedy which is both temporary and discretionary.
30. However, once such discretion has been exercised by the trial Court the Appellate Court normally will not interfere with the exercise of discretion of Court of first instance and substitute its own discretion except where the discretion has been shown to have been exercised arbitrarily or capriciously or perversely or where the Court has ignored certain principles regulating grant or refusal of interlocutory injunction. The Appellate Court is not required to reassess the material and seek to reach a conclusion different from one reached by the Court below solely on the ground that if it had considered the material at the trial stage it would have come to a contrary conclusion.
31. If the discretion has been exercised by the trial Court reasonably and in a judicial manner, same should not be interfered in exercise of appellate jurisdiction. The practice of filing of appeals against interlocutory orders is increasing day by day which resulted in delaying the decision of matters pending before the trial Court and such practice should not be appreciated. In the instant case suit was filed in the year 2001 and interlocutory application was decided on 18-3-2002 which has been impugned through these High Court appeals. No progress thereafter has been made in the trial of the suit is pending since last about five years.
32. For the foregoing reasons the appeals have no merits and are accordingly dismissed by our short order dated 18-4-2005, which reads as under: Since we are examining the matter against the order passed on interlocutory application. none of the observations contained in our order shall affect the final decision of the suit on the merit after evidence.