The case involves two defendants, M/s Haldiram Bhujiawala and Shri Ashok Kumar, appealing against a judgement from the Delhi High Court.
The plaintiffs filed a suit against the defendants seeking a permanent injunction, damages, and destruction of materials based on trademark infringement.
The plaintiffs claimed ownership of the trademark "HALDIRAM BHUJIAWALA" and alleged that the defendants infringed on this trademark.
The dispute revolves around the registration of the trademark and the rights derived from it, including its history and devolution through a dissolution deed.
ISSUE
Whether Section 69(2) of the Partnership Act bars a suit by an unregistered firm when statutory or common law rights are being enforced.
The interpretation of the phrase "arising from a contract" in Section 69(2) and its application to the facts of the case.
JUDGEMENT
The court held that Section 69(2) does not bar a suit by an unregistered firm when statutory or common law rights are being enforced.
The court interpreted "arising from a contract" to refer to contracts entered into by the unregistered firm with third-party defendants in the course of business transactions.
The court concluded that since the suit was based on infringement of statutory rights under the Trade Marks Act and common law principles of tort applicable to passing-off actions, it was not barred by Section 69(2).
LEGAL ANALYSIS
Section 69(2) of the Indian Partnership Act imposes a restriction on unregistered firms, stating that they cannot enforce any rights "arising from a contract" in a civil court. The key phrase under consideration is "arising from a contract," which needs to be interpreted to determine the scope of its application.
The court delves into the historical context of the Partnership Act and refers to the Report of the Special Committee that examined the Draft Bill. The Committee's intention was to create a mechanism where registration was optional but carried certain advantages.
The court emphasised that Section 69(2) applies only to contracts entered into by the unregistered firm with third-party defendants in the course of business transactions.
Virendra Dresses v. Varinder Garments case is referred to support the argument that Section 69(2) does not apply to a passing-off action as it is based on tort, not on contract.
Since the suit was based on statutory and common law rights and not on contractual rights with the defendants, Section 69(2) did not apply, and the suit was not barred.
COMMENTARIES RATIO
Where a firm complains of infringement of its trade mark, such proceedings initiated by firm cannot be considered as being under the domain of contracts but is a statutorily enforceable right and does not barred as it would be based on common law and such statutory right are does not hit by rigour of section