Crux:
Granting interim injunction is at the discretion of the Court
Coram:
J. S Agrawal
J. Ahmad Saghir
Parties:
Appellant-M/S Gujarat Bottling
Respondent- Coca Cola Co. & Ors.
Subject
The Appellants filed a suit against the judgment of the High Court. The High Court’s order included an interim injunction preventing the appellants from getting involved in manufacturing or dealing of Coca-Cola, and other company’s products, for a period of one year.
Overview
- The appellant, Gujarat Bottling Company Ltd. (GBC) has bottling plants at Ahmedabad and Rajkot in Gujarat. They had an arrangement with the respondent, which gave GBC a licence to prepare, bottle, sell and distribute beverages under the trademarks "Thums-Up", "Limca", "Gold Spot", "Maaza", "Citra", "Rim Zim", and "Bisleri" club soda.
- The trademarks for these were acquired by Coca-Cola. GBC entered into a contract in 1993 whereby Coca-Cola had authorised GBC to use, bottle, sell and distribute the beverages known and sold under the trademarks. This agreement was to operate till 1998.
- Subsequently, Coca-Cola and GBC entered into another agreement in 1994, where GBC had a non-exclusive licence to use the trademarks. The contract addressed the registration, and other specifications to be followed under the Trademarks Act.
- In 1995, some internal issues within the stakeholders led to Pepsi acquiring control over GBC. After this, GBC notified Coca-Cola that the 1993 agreement should be replaced by the 1994 one, and the notice period to terminate the contract has been reduced to 90 days as per the 1994 contract.
- Coca-Cola filed a suit, and sought interim relief. Although the relief, the judge restrained GBC from manufacturing, bottling or selling or dealing with the products, beverages of any brand or trade mark owned by the respondents.
Relevant Provisions
Section 42 Specific Relief Act, 1963- Where a contract comprises an affirmative agreement to do a certain act, coupled with a negative agreement, express or implied, not to do a certain act, in such a case, if the court is unable to compel specific performance of the affirmative agreement, it will not prevent it from granting an injunction to perform the negative agreement.
Issues
- Whether the 1994 agreement superseded the existing 1993 agreement?
Analysis
- The court referring to the issue of trademarks reiterated that the proprietor of the trade mark can permit another person to use their registered trade mark.
- Evaluating the two agreements, the court stated that the 1993 agreement was an agreement to grant a licence to GBC for the use of trademarks acquired by Coca Cola. This agreement can be considered an agreement for grant of a franchisee. It is does not restraint trade as its application is restricted andit was for the mutual benefit of the parties.
- With regard to the 1994 agreement, it was made with a view to comply with the requirements of the Trade & Merchandise Marks Act and the Trade and Merchandise Marks Rules, 1959 for the registration of GBC as the registered user of the trademarks. The 1993 agreement has wider amplitude, and the 1994 agreement cannot be said to supersede the former contract.
- When addressing injunction, the court used the Specific Relief Act. Section 42 of the Act provides mechanism to grant injunction to perform negative agreement. Applying this provision, the court found no issue with the interim order of the High Court. The court is of the view that granting interim injunction is at the discretion of the court. The court applies several tests before granting the injunction. The aim of giving such relief is to “to mitigate the risk of injustice to the plaintiff during the period before that uncertainty could be resolved”.
Conclusion
The case is famous for the rivalry between the two beverage powerhouses. Here, a case has arisen between Coca-Cola and GBC, as Pepsi, gained control of the bottling plant used by Coca-Cola. The High Court granted an injunction preventing GBC from carrying out any contract with Coca-Cola or any such other party, for one year. GBC had argued against the injunction given by the High Court, but the Supreme Court’s analysis shows that despite the negative covenant of the 1993 contract, the Specific Relief Act allowed for an injunction to be granted.
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