Whether Hero Electric will have the exclusive rights to use the ‘Hero’ brand name for electric vehicles? Read Delhi HC’s decision

Delhi High Court: Vibhu Bakhru, J., forms an arbitration tribunal to adjudicate the matter with regard to use the brand name/trademark “Hero”.

A petition was filed under Section 11 of the Arbitration and Conciliation Act, 1996, inter alia, praying that an arbitrator appointed on behalf of the respondents to adjudicate the disputes that arose between the parties in relation to the Family Settlement Agreement and Trade Marks and Name Agreement.

The Munjal Family is comprised of family members of four brothers (since deceased). It was stated by the petitioners that, the Munjal Brothers commenced manufacturing of key components of bicycle and established a manufacturing plant in Ludhiana.

Petitioners stated that the Munjal Group started using the name name/brand/trademark ”Hero” and its variants in connection with its businesses from 1953 onwards. In June, 1966 the Munjal Brothers, through their partnership firm, Hero Cycles Industries, applied for and obtained registration of the trademark “Hero” in Class 12. Further, Munjal Brothers also applied for registration of other trademarks containing the word “Hero” and/or its variants.

Later, in the year 1993, the Munjal Brothers established a firm, named Hero Exports. The said entity was engaged in exporting bicycles under the brand/trademark “Hero” to certain specified territories.

Thereafter, in the year 2007, members of the Munjal Family commenced the business of Electric Vehicles under the brand/trademark “Hero” and its variants through the firm Hero Exports.

On entering into the Family Settlement Agreement, four Family Groups agreed that they would separate ownership and control of the properties.

The 4 family groups agreed that the “hero” trademark and brand shall be separated. Further, Hero Cycles Limited entered into the TMNA and agreed that the ownership and use of the trademark “Hero” be divided in respect to the businesses, which were allocated to each Family Group under the FSA.

What was the Dispute?

Dispute which the petitioner sought to refer to arbitration arose between the F1 and F3.

F1 alleged that F3 have violated the terms of the FSA and TMNA as they now intend to conduct the business relating to electric/eco-friendly vehicles, including their components and related infrastructure and services, under the brand or trademark “Hero”

The petitioners claimed that under the terms of the FSA and TMNA, the F1 Family Group has the exclusive right to use the brand/trademark “Hero” for the business in certain goods being Electric Vehicles.

Grievance of the petitioner was that the respondent 2 proposes to launch Electric Vehicles and Electric Mobility Solutions under the brand name “Hero”.

The crux of the petitioner’s grievance is that the other family groups can enter into the business of Electric Vehicles, but they cannot do so under the trademark “Hero” or any variant thereof.

Petitioners aver that the acts of the respondents violated the terms of the FSA and the TMNA and accordingly, it filed a petition under Section 9 of the A&C. Further, a notice was issued under Section 21 of the A&C Act to commence arbitration.

Analysis, Law and Decision

In terms of Section 11(6) of the A&C Act, the scope of examination is confined to the existence of an arbitration agreement.

Whether the disputes are arbitrable?

It was apparent that the disputes, essentially, concern the rights of the F1 Family Group under the FSA and TMNA.

Bench noted that the claim of the petitioners that the respondents cannot use the trademark “Hero” in respect of Electric Vehicles is premised on the inter se agreement between the four Family Groups.

Generally and traditionally all disputes relating to rights in personam are considered to be amenable to arbitration; and all disputes relating to rights in rem are required to be adjudicated by courts and public tribunals, being unsuited for private arbitration.

The dispute in the present matter did not affect the rights of any third party. The petitioners were not seeking grant of registration of any trademark they also did not seek rectification of the Register of Trademarks.

High Court stated that in view of the doctrine of kompetenzkompetenz all issues including those regarding arbitrability of the disputes as well as regarding the jurisdiction of the Arbitral Tribunal, are required to be addressed by the Arbitral Tribunal in the first instance.

Further, the Court added that it not required to finally adjudicate controversies regarding the arbitrability of the disputes.

Whether the disputes sought to be raised by the petitioners are barred by limitation?

Court opined that the issue of limitation was a contentious one.

Bench observed that, issuing advertisement or showcasing a vehicle under the trademark, which includes the word mark “Hero” would amount to using the said trademark.

Prima facie, the above would not extinguish the cause of action arising from a commercial launch of vehicles under the said trademark. Hence, Court must refrain from adjudicating such issues as it is clearly beyond the standards of examination under Section 11 of the A&C Act.

Bench noted that the standards of examination under Section 11 of the A&C Act are limited and as explained by the Supreme Court, it is only in cases where there is not even a vestige of doubt that the claims are barred by limitation, that the Court could decline to refer the disputes to arbitration.

Whether showcasing of an Electric Scooter at an auto exhibition extinguishes the petitioners remedy to object to commercial exploitation of the trademarks in connection with Electric Vehicles, is a question that requires adjudication.

Conclusion

High Court opined that prima facie respondent 2 and 3 were required to be joined in the arbitral proceedings as parties, even though, they may not be signatories to the FSA or TMNA.

Bench stated that there is no agreement between the parties accepting that the arbitration must be conducted under the rules of any arbitration institution or specialized body. The parties had agreed that in terms of Clause 5.6 of the TMNA and Clause 19.5 of the FSA, the Facilitator would act as a mediator and on failure of the mediation process, the Family Groups would submit to arbitration. The arbitration would be conducted by Mr Satish Bansal (the named Facilitator) as the Presiding Arbitrator and two other arbitrators to be appointed by the four patriarchs.

High Court held that, Justice (Retired) Dipak Mishra, former Chief Justice of India; Justice (Retired) Indermeet Kaur, a former Judge of this Court; and Justice (Retired) Indu Malhotra, former Judge of the Supreme Court be appointed as the Arbitrators to constitute the Arbitral Tribunal to adjudicate the disputes in terms of the Arbitration Agreements under the FSA and TMNA.[Vijay Kumar Munjal v. Pawan Munjal, 2022 SCC OnLine Del 499, decided on 17-2-2022]


Advocates before the Court:

For the Petitioner : Mr. Gopal Subramaniam, Senior Advocate, Mr. Parag P. Tripathi, Senior Advocate with Mr. Sanjeev Kapoor, Mr. Sahil Narang, Mr. Ankur Sangal, Mr. Dhritiman Roy, Ms. Pragya Mishra, Ms. Ananya Bhat, Mr. Madhavam Sharma, Mr. Ayushman Kacker, Mr. Vishakha, Advocates.

For the Respondents : Dr. Abhishek Manu Singhvi, Senior Advocate, Mr. Rajiv Nayar, Senior Advocate, Mr. B.B. Gupta, Senior Advocate with Mr. Mahesh Agarwal, Mr. Rishi Agrawala, Mr. Karan Luthra, Mr. Ankit Banati, Ms. Manavi Agarwal, Mr. Saurabh Seth, Mr. Aman Sharma and Mr. Achal Gupta, Advocates for Respondent Nos. 1 and 3.

Mr. Mukul Rohatgi, Senior Advocate Mr. Sandeep Sethi, Senior Advocate, Mr. Akhil Sibal, Senior Advocate with Mr. Sidharth Chopra, Mr. Kanishk Kumar, Mr. Muktesh Maheshwari, Ms. Abhiti Vachher, Ms. Asavari Jain, Ms. Shriya Misra, Advocates for Respondent No. 2.

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