M/S. GUJARAT BOTTLING COMPANY LTD. AND ORS. versus THE COCA COLA CO. AND ORS.

Citation: [1995] SUPP. 2 S.C.R. 514 · Decided: 04-08-1995 · Supreme Court of India · Bench: S.C. AGRAWAL · Disposal: Dismissed

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Judgment (excerpt)

A 
MIS. GUJARAT BOTTLING COMPANY LTD. AND ORS. 
v. 
THE COCA COLA CO. AND ORS. 
AUGUST 4, 1995 
B 
[S.C. AGRAWAL ANDS. SAGHIR AHMAD, JJ.] 
Trade and Merchandise Marks Act/Trade and Merchandise Marks 
Rules 1958-Section 49/Rule 83-Trade Mark-Registration ofuser-Statut01y 
requirement~Implications of Common law-Licensing-Restriction on 
C 
usage. 
Indian Contract Act, Section 27-Restraint of trade-Doctrine of-Test 
of reasonablenes~ommercial agreement~Applicability to-Condition 
restricting the 1ight of the franchisee to deal with competing goods-To 
facilitate distribution of goods of the franchisee-Held, cannot be regarded as 
D restraint of trade. 
Specific Relief Act, 1963-Sections 4l(e) & 42-lnjunction-Grant 
of-Enforcement of negafive covenant-Held, relief discretionary-Plea of 
burdensome contract-Not valid defence. 
E 
Civil Procedure Code. 1908-0rder 39 Rules I and 2-Principles of 
grant of injunction-Held, conduct of parties a relevant consideration-Parties 
to show that they are not fault as relief is equitable. 
Interlocutory Injunction-Discretionary remed;-Tests for grant of 
F 
The Appellant Company (GBC) fully owned and controlled by 
respondents nos. 2-4 and 7 and their respective family members and 
situated in Ahmedabad and Rajkot in Gujarat were engaged in the 
preparation bottling, sale and distribution of beverages registered under 
the trade marks "Thoms Up" "Limca", "Gold Spot", "Maaza", "Citra", "Rim 
G Zim" and "Bislerie Club Soda" under Iic~nse from the Parle group of 
companies, the registered owners of the said trade marks. The Parle group 
of companies was owned and controlled by Respondent Nos. 3 and 4. 
Coca Cola company (respondent No.1) in anticipation of an assign· 
ment of rights in the trade marks for the aforesaid beverages by the 
H registered owners viz., Parle group, executed an agreement on 20.9.93 with 
514 
GUJ. BOTILING CO.LTD. v. COCA COLA CO. 
515 
GBC agreeing to grant a license to GBC for the use of the trade marks in A 
respect of the beverages mentioned above. The agreement provided for the 
use of the said trademarks by GBC to ensure that such of the trademark 
was strictly in accordance with the common law governing user of trade 
mark. This agreement permitted and authorized GBC to bottle, sell and 
distribute the said beverages under the aforesaid trademarks inter alia on 
the following terms: a) GBC will not sell, assign, transfer, pledge, 
mortgage, lease, license or in any other way or manner encumber, dispose 
of, in whole or in part, the agreement of any interest therein, either directly 
or indirectly, not to pass by operation of or in any other manner without 
Coca Cola's prior written consent; b) the agreement may be terminated by 
either side on giving one year's written notice which period may be reduced 
by mutual consent in writing between Coca Cola and GBC; It contained a 
negative stipulation that GBC will not manufacture, bottle, sell, deal or 
otherwise be concerned with the products, beverages of any other brands 
B 
c 
or trade marks/trade names during the subsistence of the agreement 
including the period of one year's notice as contemplated in the agreement. D 
The 1993 Agreement came into force on 12.11.93 when the trade marks 
were assigned and transferred to Coca Cola. The agreement was to operate 
for five years unless terminated earlier. Further under cl.(19) the transfer 
of stock, share or interest or other indica of ownership of GBC resulting 
in effective transfer of control without the prior express written consent of 
Coca Cola was restrained. 
E 
On 30.4.94 a second agreement was executed between the same 
parties wherein Coca Cola was described as a Licenser and GBC as the 
Licensee inter alia on the following terms : a) both the parties shaU make 
an application to the Registrar of Trade marks under the Trade & Mer-
F 
chandise Marks Act, 1958 or any statutory modification thereto or thereof 
for the time being in force to procure the registration of the licensee (GBC) 
as a registered user of the said trade marks as aforesaid as soon as the 
said trade marks are registered and shall sign and execute all such 
documents as are reasonably proper and necessary to secure registration 
and for any change thereof in the future; b) the agreement shall continue G 
in force without limit of any period but may be terminated at any time by 
either party upon giving 90 days notice in writing to the other by mutual 
consent. But in the event of

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