IN THE SUPREME COURT OF INDIA

                        CIVIL APPELLATE JURISDICTION

                      CIVIL APPEAL NO. 3594    OF 2005

Kali Aerated Water Works, Salem                   Appellant(s)

                                  VERSUS

Commnr. Of Central Excise, Madurai                Respondent(s)

                                    WITH

                CIVIL APPEAL NO. 3611  AND 4387-4392  OF 2005

                               J U D G M E N T

A.K.SIKRI,J.

            It is not in dispute that the appellant herein is a Small  Scale

Industrial Unit (hereinafter referred to  SSI  Unit)  and  is  manufacturing

Aerated Water under various brand  names  using  the  trade  mark  with  the

“Kalimark” /  M/s.Kali  Aerated  Water  Works”   It  sought  exemption  from

payment of excise duty in terms of Notification 1/93-CE dated 28.2.1993  (as

amended vide Notification No.59/94-CE  dated  1.3.1994)  for  the  aforesaid

goods manufactured in its factory.  This has, however, been  denied  to  the

assessee by the Department on the ground that the brand name “Kalimark”  has

been used on the goods which  belong  to  M/s.  Shri  K.P.R.Shakthivel   and

since the assessee is using the aforesaid brand name of the third party,  by

virtue of para 4 of the aforesaid Notification the exemption  would  not  be

allowed to the respondent. This stand taken  by  the  respondent  department

has been accepted by the CESTAT in its impugned judgment.

            The Tribunal has noted the fact  that  business  of  manufacture

and sale of Aerated water was started  in  the  name  of  `Kalimark  Aerated

Water Works' by the HUF of which M/s. Shri  P.V.S.  K.Palaniappa  Nadar  was

the Karta.  Later on it was converted into a joint family  business  of  Sh.

Palaniappa Nadar and his three sons and a daughter.  At some point  of  time

the parties/partners fell apart and entered into a family  settlement  which

is contained in Deed of Mutual Agreement dated 12.3.1993. The  Tribunal  has

recorded that in terms of this Mutual Agreement signed between  the  parties

the ownership of the aforesaid trademark/brand name  `Kalimark'   no  longer

remained with the appellant assessee and it belongs to the other  party.  On

this basis it arrived at the finding that the appellant has been  using  the

trade mark/brand name of the third party.

            We find that the aforesaid observation  is  against  the  record

and contrary to  the Deed of Mutual Agreement which has  been  entered  into

between the earstwhile partners. Para  9  of  the  recital  to  this  family

arrangement is as under:

            “Since all the parties herein  have  mutually  intend  to  carry

forward the reputation and  well  established  Trade  Mark  `KALI  MARK'  in

future also thus carrying out to the future generations, a meeting was  held

among the parties herein, who are  the  direct  male  lineal  decedents  and

users of established abovesaid Trade marks and who at present have  interest

in various factories being run in the name of Kali Aerated  Water  Works  in

various parts of Tamil Nadu and discussed the pros  and  cons  and  also  to

preserve the established Trade Name and Trade Marks  throughout  the  future

generation and agreed on certain terms and conditions and  all  the  parties

herein have  agreed  to  abide  by  them  and  hence  this  Deed  of  Mutual

Agreement.

Thereafter, this aspect is dealt with  in      Paras  L.M.  and  N  thereof,

which read as under:

L) If any party comes to know about any infringement and passing of  use  of

any deceptively similar mark on any imitation by any person in  the  market,

then the party in whose area the said  imitation,  infringement  or  passing

off takes place  shall  take  immediate  legal  steps  against  such  erring

persons at his cost, under the provisions  of  Trade  and  Merchandise  Mark

Act, 1958 or any other common law in which suitable  an  effective  remedies

are provided.

M) In any party falls to initiate legal action against such  erring  persons

in order to protect the Trade Mark and Trade name,  then   any  other  party

can take action against such defaulting  parties  as  well  as  against  the

person committing such infringement, passing off or imitation  for  suitable

remedy.

N) For removal of doubts, it is clarified specifically  that  the  right  to

use the Trade name M/s. Kali Aerated Water Works and Trade  Marks  mentioned

above are solely vested with the parties 2 to 10 herein who are  the  direct

male lineal descendents and subject to clause `G' herein the parties  herein

cannot and shall not permit or give their  existing  rights  to  any  female

descendents or any third person, nor the parties 2 to 10 herein  have  right

to  transfer/sell  for  consideration  or  without  consideration  to  third

parties. If any party herein or their respective male descendents  wants  to

close down the business they shall have  to  either  sell  their  rights  of

Trade name and Trade Marks to other  remaining  parties  or  to  their  male

lineal descendents only.   Such parties shall acquire the rights subject  to

the terms and conditions of this Agreement and are liable to exercise  their

rights within the terms of this Mutual Agreement.

            It is clear  from  the  above  that  the  trade  name  `Kalimark

Aerated Water Works' and trade mark mentioned in the  said  agreement  would

remain vested in all the parties including the appellant and  the  appellant

was also allowed to use the same.  The agreement further provides  that  the

user of this trade mark, therefore, shall not make any  payment  of  royalty

or  remuneration  to  any  other  party.  This  very  fact   was   correctly

appreciated by the Commissioner who decided the  appeal  in  favour  of  the

appellant. The discussion in the order of the Commissioner, on this  aspect,

reads as under:

23: During the personal hearing Shri Rathina Asohan  drew  my  attention  to

the certificates issued by the Trade Mark Registry from  the  year  1948  to

1985 which were filed before the lower authority.  I  find  the  Appellant's

name also figures in the certificates issued in the year 1962 and 1970  when

he became one of the partner of the erstwhile HUF Firm.  The appellant  have

been marketing his products only within his own marketing area.  It  is  not

the case of the Revenue that any other person is using the same Brand  names

in the same area. Similarly the appellant is not selling his  goods  outside

his marketing area. So far his business is concerned the  appellant  appears

to be the only legal owner of the Trade  Mark  within  his  marketing  area.

This has been clearly brought out in the Mutual  Agreement  dated  12.3.1993

which has been duly presented on 12.3.1993 itself for  registration  whereas

the impugned Notification No.59/94 came into effect only from  1.4.1994  and

hence no motive can be attributed against the appellant in  respect  of  the

Mutual Agreement.  I have read the entie contents of  Mutual  Agreement.   I

find that Mr. K.P.R. Sakthivel is also a party to the said Mutual  Agreement

and no royalty is also payable  to  the  said  K.P.R.  Sakthivel.  Even  Mr.

K.P.R.Sakthivel has specifically agreed that he cannot use  the  brand  name

in the marketing area of the appellant. Thus there seems to  be  recognition

of individual proprietary rights over the brand names within the  respective

specified marketing area.  The  nature  of  succession  of  the  proprietary

rights of the brand names have also been clearly  dealt  with.   It  clearly

establishes that the appellant  and  the  male  descendants  are  alone  are

entitled to succeed over the  ownership  of  the  brand  name  within  their

marketing area.  It is not the case of the Revenue  that  the  appellant  is

marketing his products outside his marketing area.

24. I find that the appellant is the legal owner of the trade Marks used  in

his product in his own marketing area, the Trade Mark certificates  produced

before me clearly establish that the appellant had been having the right  of

ownership over the Brand names in the year 1962 itself when  he  became  the

coparcener in the HUF firm. The appellant has

had  his  exclusive  ownership  rights  even  prior  to  the  said  impugned

notification.  Hence  the  subsequent  notification  cannot  take  away  the

ownership right of the appellant over the brand names  'KaliMark'  `Bovonto'

and `Frutang' and other brand names and applying the same to  the  specified

goods manufactured by the appellant and marketing the same  within  his  own

marketing  area  in  exclusion  of  others.   On  perusing  the  trade  mark

certificates, Decree of the Civil Court, Mutual  Agreement  dated  12.3.1993

and also considering the above contentions, I find  that  the  appellant  is

the legal owner of the brand names within his marketing area.”

            It is thus manifest that the appellant has been  using  its  own

brand name `Kalimark' and it belongs to the appellant. In view thereof,  the

case of the appellant is squarely covered in its favour by the  judgment  of

this Court in Civil Appeal No.9157 of 2003  titled  CCE,  Hyderabad  IV  vs.

Stangen Immuno Diagnostics decided on 19.3.2015.

            All the appeals are disposed of accordingly.

                                  ….....................J.

                                  (A.K.SIKRI)

                                  …......................J.

                                  (ROHINTON FALI NARIMAN)

      New Delhi;

      Date: 13.5.2015.