The Madras High Court has found Golden Tobacco Limited guilty of contempt of court and directed four of its directors to undergo simple imprisonment for a period of two weeks in a civil prison. The court imposed lesser punishment since the directors A.K. Joshi, Jaskaran S. Khurana, Bharat B. Merchant and Kokila Panchal were aged.
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A Division Bench of Justices S.S. Sundar and P.B. Balaji delivered the verdict on a contempt of court petition moved by ITC Limited in 2019 accusing Golden Tobacco and its four directors of continuing to imitate the trade mark ‘Gold Flake’ for their cigarettes despite an interim injunction granted against it by the High Court on July 26, 2018.
The Bench, however, made it clear that its order imposing punishment would come into force only with effect from July 15, 2023 in order to enable the directors of the company to prefer an appeal before the Supreme Court.
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Authoring the verdict, Justice Sundar said, ITC Limited had been in the cigarette business for decades and was the owner of trade marks such as Gold Flake, Classic and India Kings. The company’s annual turnover in 2014-15 was ₹49,965 crore and the gross sales of cigarettes using the Gold Flake trademark alone was ₹11,946 crores in 2015-2016.
On the other hand, Golden Tobacco was the manufacturer of cigarettes with the brand names Panama, Flair and Chancellor. Though Golden Tobacco too had also obtained registration of the trademark Gold Flake with different features, ITC had been complaining of deceptive use of its trademark since 1979.
A suit was filed against Golden Tobacco before the Calcutta High Court in 1979 and it was disposed of pursuant to a settlement. Again in 1990, ITC filed two suits before the Madras High Court alleging infringement of its labels and those two suits were decreed on July 18, 2003 on the basis of a memoranda of compromise.
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As per the compromise, Golden Tobacco was allowed to use the words Golden’s Gold Flake around a roundel with a lion inside on their cigarette packets. However, in 2015, ITC moved the Madras High Court again complaining infringement of trade mark and a Division Bench granted an interim injunction on July 26, 2018.
Though Golden Tobacco took the matter on appeal to the Supreme Court, the latter refused to interfere with the High Court’s order. Despite such categorical judicial orders, Golden Tobacco continued to use the deceptive mark forcing ITC to move the present contempt of court petition, the latter’s senior counsel C. Manishankar told the court.
In its defence, Golden Tobacco contended it could not strictly adhere to the compromise reached in 2003 since the laws related to packaging had undergone a change and now the government had made it mandatory to print anti-tobacco warning on 85% of the cigarette packet and had allowed brand names to be printed on the rest of 15%
The explanation did not cut ice with the judges who wrote: “Merely because of subsequent statutory requirement as indicated by the learned counsel on either side, this court is unable to hold in favour of respondent/company and its directors. As a result, this court finds that there is willful disobedience of the order of injunction granted by this court.”