M/S Gujarat Bottling Co.Ltd. & Ors vs The Coca Cola Co. & Ors, 1995 AIR 2372
FACTS:
Gujarat’s Ahmedabad and Rajkot, both had bottling facilities for the petitioner, Gujarat Bottling Company Ltd. (GBC).
As part of its agreement with the respondent, GBC was granted permission to make, bottle, market, and distribute beverages using the “Thums-Up,” “Limca,” “Gold Spot,” “Maaza,” “Citra,” “Rim Zim,” and “Bisleri” club soda trademarks.
Coca-Cola had purchased the rights to these trademarks. In 1993, GBC and Coca-Cola agreed into a deal under which Coca-Cola granted GBC permission to use, bottle, sell, and distribute the beverages that bear the trademarks. This arrangement was intended to last until 1998.
In 1994, Coca-Cola and GBC signed a new contract under which GBC was granted a non-exclusive licence to use the trademarks. The agreement included the registration process as well as other Trademarks Act requirements.
Due to disagreements among the stakeholders, Pepsi came to possess control over GBC in 1995. Following this, GBC told Coca-Cola that the 1993 contract should be replaced with the 1994 one and that, in accordance with the 1994 contract, the notice period to cancel the contract had been shortened to 90 days.
Coca-Cola sued and asked for temporary relief. Despite the relief, the judgement prohibited GBC from producing, bottling, selling, or otherwise dealing in goods bearing any brands or trade names owned by the respondents.
ISSUE:
Whether the 1994 agreement superseded the existing 1993 agreement?
Whether the 1993 agreement was in restraint of trade under section 27 of the Indian Contract Act, 1872?
HELD:
The 1994 and 1993 agreements were deemed to be distinctive by the Supreme Court. The goal of the 1993 agreement was to grant Gujarat Bottling Company a licence to trade in Coca-Cola goods, while the purpose of the 1994 agreement was to register a user agreement.
Both of the agreements had a different function and varied in their applicability. A preexisting agreement cannot be replaced under section 62 of the Indian Contract Act without the assent of the contracting parties or without the desire to replace, which was absent in this instance.
Therefore, it was determined that GBC was held accountable for the violation since it did not comply with the provisions of the contract that bound both parties.
Furthermore, it was determined that the 1993 Agreement’s Paragraph 14 did not impede trade because it only applied during the term of the Agreement and not later. It was also a mutually beneficial agreement between the parties for the promotion of Coca-Cola products, so it is exempt from trade restraint laws.
It was further argued that the interim injunction granted to the petitioner was compliant with the terms of the negative covenant of the 1993 contract and prohibited GBC and numerous other parties involved in the proper manufacture and dealings of Coca-Cola products from entering into any such contract with any other business or trademark for a period of one year following the date of termination notice, which was 25 January 1996.
The petitioner’s argument was rejected for the aforementioned reasons.