Sunday, June 10, 2012

Points to remember before purchasing a Re-Sale property

A resale property:

Who does not wish to live in a house of their own? Buying a new flat will take a long time, so some of us may wish to settle for buying a resale property.  However buying a resale property could involve many legal and other procedural requirements. It is prudent to first understand the various procedures and safety measures for buying resale property to avoid hassles in future. 

Buying Resale Property –A Guide

Consult Experts:

It may be ideal to engage a good real estate agent to locate a resale property. He would be in a position to locate sellers as well as guide you regarding the price of such properties in different localities. They would also be in a position to tell you about the seller of the property. Most real estate agents charge a fee and also help with registration, payment of stamp duty and other paper work involved in the purchase of resale property. In addition, taking the help of a good lawyer would also help to make sure that things are clear legally also.

Title of the property:

It will help engaging experts like real estate agents and lawyers to help you, but it is always better to be well-informed yourself when entering into deals for buying resale property. The first step in this regard would be to establish the title of the seller; whether he is the real owner of the property or has been given the power of attorney to transact the deal. All the documents with regard to the property need to be clear. In addition you need to make sure that all the original documents with regard to the property that were given by the builder or original developer are in order.


Buying resale property seems great, but it could become a big problem if the documents regarding the original purchase and subsequent transfer of title are not properly stamped. Firstly it could pose great problems especially if you want to apply for a loan for purchase of the resale property. Subsequently it could prove to be unacceptable in case you wish to transact further on the property.

Existing Loan:

It is also necessary to make sure that the property documents are not lying mortgaged in the bank’s custody against a loan taken by the seller. The bank will consider a loan only once the loan taken by the seller is repaid and the documents released.  

Loan Eligibility:

Buying a resale property would definitely provide you with a bigger space in case of older properties. However it is best to note that some banks may not lend money on buildings older than 10 years. This may be due to the reason that they may not want to take the risk of the price of the property going down. Banks also make sure to ensure that the bank’s outstanding loan should always be lower than the value of the property in the market.

Property Valuation:

Next it is imperative to note that the loan amount is highly dependent on the cost of the property. Technical experts would evaluate the property. However it would be useful to yourself avail the services of a property valuer at a small fee before approaching the banks. The bank’s property valuer may valuate the property at a much lower rate. They would also like to safeguard their interests against the fall in the price of the property in future.

More Down Payment:

Most banks wish to make sure that you be responsible for the maintenance and good upkeep of the resale property. So banks would expect you as the purchaser of the resale property to pay a certain percentage of the price as down payment. You may have to pay about 20% of the price as down payment; property of 50 lakhs requires 10 lakh as down payment.

Age of the property:

This down payment could be more in case of older properties. In addition, banks usually lend only on properties that are unto 50 years old. The tenure of the loan also decreases with the age of the property.

Flat Society:

The bank may grant the loan and you may make the down payment, but there could be another problem. It arises out of the need for some Flat societies that require the payment of a heavy price for change of ownership. It is best to consider this cost also when coming to a conclusion while purchasing resale property in cooperative and other societies.


Buying resale property would give you a chance to settle in your own house fast and save you of high rents paid and the need to frequently shift your place of living. Taking a loan from the bank could give you tax deductions on the interest paid soon. You would not have to wait till the possession as in the case of new flats. It is always prudent to be well   informed about the various details of the resale property. 

Delhi HC judgment in Lt Foods Ltd v. Sunstar Overseas Ltd &Anr.

The Delhi HC, in Lt Foods Ltd v. Sunstar Overseas Ltd &Anr., decided on a bunch of interim applications filed by the parties in the cross-suits, seeking injunction against each other. The parties, in the instant case, claimed ownership rights over the mark “HERITAGE” used in respect of rice. While plaintiff claimed to be the user of the mark since 1997, the defendant claimed to be the user from 1985.The parties did not dispute that the marks used by them viz., “HERITAGE” by plaintiff (Registration no. 799246) and “INDIAN HERITAGE” & “INDIAN HERITAGE SELECT” (Registration no. 1149872) by defendants were deceptively similar.


The plaintiff, in March 2009, came to know that the defendant exported rice under the mark “INDIAN HERITAGE”. The plaintiff, along with an interim application, filed the first suit (CS (OS) No. 612/2009) for permanent injunction restraining the infringement of trademark, passing off, rendition of accounts of profits/damages etc. against the defendants. The defendants filed a separate suit against the plaintiff (CS (OS) No. 639/2009) for permanent injunction restraining the infringement of trademark, passing off, rendition of profits etc. The plaintiff filed its second suit (CS(OS) No. 653/2009) wherein it made additional statements based on subsequent events. The plaintiff, in the aforesaid suit, argued that the invoices adduced by the defendant were dubious and fabricated and did not establish any substantial, continuous and genuine commercial use of the mark “INDIAN HERITAGE SELECT”. The instant judgment, discussed in this post, decided upon a bunch of interim applications filed by the parties in the above mentioned cross-suits, seeking injunctions against each other.


Considering Section 28(3) of Trade Marks Act, 1999, the Court held that the suits filed by them against each other for infringement of trademark were not maintainable. [ Section 28(3): Where two or more persons are registered proprietors of trademarks, which are identical with or nearly resemble each other, the exclusive right to the use of any of those trademarks shall not (except so far as their respective rights are subject to any conditions or limitations entered on the register) be deemed to have been acquired by any one of those persons as against any other of those persons merely by registration of the trademarks but each of those persons has otherwise the same rights as against other persons (not being registered users using by way of permitted use) as he would have if he were the sole registered proprietor.] However, suit for passing off was held to be maintainable.

The Court, in this context, examined the evidence adduced by parties for determining the prior user of the mark in question. The Court appointed Local Commissioners to verify the copies of invoices presented before the Court by the plaintiff and the defendant. On perusing the evidence produced by the plaintiff (application for registration dated 20.04.1998 in class 30, statement of total annual sales during the period 1998 – 2009 & invoices during the period 1998 – 2009), the Court prima facie determined that the plaintiff was using the mark continuously since 1998.

The Court, however, dismissed the documents filed by defendants as “not genuine”. Considering the report of Local Commissioner which stated that the defendant did not use the mark “HERITAGE” in any of the exports as evidenced by the shipping bills and supporting documents made available by the customs department, it was held that the defendants argued their case based on documents which were prima facie forged and fabricated. The report of the Local Commissioner noted that the defendants interpolated the mark “HERITAGE SELECT”by replacing the words “SUPER” or “KITCHEN KING” marks in the invoices produced before the Court.

The judgment noted that there was not any clear and cogent evidence available on record to show use of mark prior to 11.11.2002 (date of application filed by defendant) by the defendant. It was noted that the defendant did not furnish sales figures for any financial year. It was also noted that the defendants did not produce and furnish the originals in spite of being given ample opportunities. The Court applied the principle of adverse presumption viz., the Court can draw an adverse presumption against the party if the party withholds a document or evidence knowing that the said document will operate to his disadvantage and held that Court would not assist a party whose case was founded on falsehood. The Court accordingly dismissed the interim applications filed by the defendant. The defendants, their licensees and franchisees were restrained from selling, exporting or dealing in rice under the impugned marks “INDIAN HERITAGE SELECT”/ “HERITAGE SELECT” or any other mark which might be deceptively similar to the mark “HERITAGE” of the plaintiff till the disposal of the suit. Further, the defendant was asked to deposit INR 50,000 with the Prime Minister’s Relief Fund for wasting the time of the Court.


The conduct of defendant prima facie did give an impression that the case was built on forged and fabricated documents. It will be highly unfortunate (both legally and ethically) if it is conclusively determined in the final judgment. Further, the judgment is a warning to those who fail to adduce originals as and when they are required to be produced before the Court- especially in a suit for passing off as it is imperative to produce clear and cogent evidence in such a suit. Passing off protects a mark only if goodwill and reputation are effectively demonstrated. The burden is upon the aggrieved to gather survey evidence for demonstrating the possibility or existence of confusion.

The judgment also highlighted the law of adverse presumption by referring to the Supreme Court judgment in Pradip Buragohain v. Pranati Phukan (2010 (11) SCC 108): “We may in this regard refer to illustration (g) to Section 114 of the Evidence Act which permits the Court to draw an adverse presumption against the party in default to the effect that evidence which could be but is not produced would, if produced, have been unfavourable to the person who withholds it. The rule is contained in the well-known maxim: omniapraesumuntur contra spoliatorem. If a man wrongfully withholds evidence, every presumption to his disadvantage consistent with the facts admitted or proved will be adopted.”

Passing Off Action by Mid-Size Foreign Companies Having Unregistered Marks in India

There are often cases that we undertake for representation, wherein the cases relate to enforcement of trademarks by/of mid-sized foreign corporations that have not been filed and/or used in India against Indian companies that have deceptively used their marks thereby constituting misrepresentation, which might amount to passing off. Rupkatha and Poorva, interns at Khurana & Khurana, look at some of these cases and try to identify certain parameters based on which the mid-sized foreign companies can protect their interest.

Perry v. Truefitt[1], the English case where the tort of passing off was first articulated had clearly pointed out that “a man is not to sell his own goods under the pretence that they are the goods of another trader.” The House of Lords further laid down the essential elements of passing off in Reckitt & Colman Ltd v Borden Inc [2] as:

  • The existence of claimant’s goodwill
  • Misrepresentation
  • Damage or likely damage

Section 27(2) of the Trade Marks Act, 1999 authorizes any trader to institute passing off action against another in spite of the fact that his mark is unregistered. The Hon’ble Supreme Court of India has laid down three elements that need to be fulfilled in order to institute a passing off action by the plaintiff in Satyam Infoway Ltd. v. Sifynet Solutions Pvt. Ltd.[3]:

  • The defendant must have sold its goods or offered its services in a manner which has deceived or would be likely to deceive the public into thinking that the defendant’s goods or services are the plaintiffs.
  • The likelihood of confusion in the minds of the public that the goods or services offered by the defendant are the goods or the services of the plaintiff.
  • The likelihood of confusion in the minds of the public that the goods or services offered by the defendant are the goods or the services of the plaintiff.

Unregistered Marks of Foreign Companies

Section 18 of the Act allows foreign nationals to register their mark in India. Once a mark is registered, the company can take action for infringement against any person who tries to do so. The problem arises when the mark is unregistered. Is there any remedy for the company in such a situation? Or will it remain at the receiving end?

The Indian judiciary has played its role of filling up the gap in the law in such situations. Time and again it has granted relief to foreign companies who are yet to register their marks in India even though the defendant had registered its mark. In N.R Dongre v. Whirlpool Corporation[4], injunction was granted in favour of Whirlpool Corporation based on the fact that although their mark was not renewed, they had gained enough goodwill and reputation in the Indian market which was being wrongly used by the defendant.

The general trend has been to grant relief only to multinational corporations who have a good market in India or who are big names in the international arena. The Hon’ble Bombay High Court in Centrol Industrial Alliance Ltd. versus Gillette U.K. Ltd.[5], the Hon’ble Delhi High Court in Jolen Inc. vs Doctor & Company[6] and Indian Shaving Products Ltd. v. Gift Pack[7] and several other High Courts have held that in order to get injunction in favour of a foreign company with an un-registered trademark, goodwill in the Indian market is an essential pre-requisite.

The problem then arises with the mid-sized companies. There are about 40 marks in the latest trademark journal published by the Controller General of Patents, Designs and Trademark which are deceptively similar or rather have been ‘copied’ from the trademark of some foreign company, big or small. Till now, the trend has been to provide no relief to companies having without any trans-border reputation. The Intellectual Property Appellate Board rejected the opposition posed by the appellant in Kraft Jacobs Sucharc Ltd. v. Government of India by Secretary[8] on the ground that the opponent did not have any presence in the Indian market and did not intend to come to do business here in the near future.

The road ahead

The Court has definitely observed in the Jolen Inc. case[9] “even if it is assumed that such advertisements or marks do not travel beyond the borders of the countries where the plaintiff has the business, still it has a right to protect its reputation and goodwill. It is more so where the trade name has been pirated in totality and not by way of having deceptive or confusing similarity.” The Supreme Court in Milment Oftho Industries & Ors. v. Allergan Inc.[10] held that non-use in India would be irrelevant if the plaintiff was the first in the world market. However, the decision carried a word of caution that foreign brand owners who have no intention of coming to or introducing their product in India will not be allowed to stifle an Indian company by not permitting it to sell a product in India, if the Indian company has genuinely adopted the mark.

Therefore, if it can be shown that the defendant had adopted the complete mark knowing very well that another company of some other country has already adopted that mark, then mala fide on part of the Indian company can be argued.

Now, the Indian courts have been conservative in their approach and constantly relied upon the circulation of magazines, journals and extent of Indian travellers going abroad while deciding these types of cases. This approach is outdated in the light of modern means of exchanging information. The internet, for example, provides a global forum for any product manufactured in one country. Thus, when an Indian company launches a website bearing the trademark of some foreign company, it becomes easier to hold it liable. The Internet Corporation for Assigned Names and Numbers (ICANN) manages the top-level development and architecture of the internet domain name space. It authorizes domain name registrars through which domain names can be registered and re-assigned. Thus, any person who seeks to register a domain name is informed about the availability of that domain name. Rule 2 of the Uniform Domain Name Dispute Resolution Policy[11] requires an applicant to determine that the domain name for which registration is sought does not infringe or violate another’s rights. Thus, if the proposed domain name violates another person’s trademark rights, it will violate Rule 2 of the policy. In such eventuality, the registrar can refuse to register the domain name. Thus, a domain name that is properly registered under international requirements is still subject to the Trademarks Act if a rights owner successfully proves that it has rights flowing from the act.

It was held in the celebrated UK case of Marks and Spencer’s v. One in a Million[12] that any person who deliberately registers a domain name on account of its similarity to the name, brand name or trademark of an unconnected commercial organization must expect to find himself on the receiving end of an injunction to restrain the threat of passing off. This was reiterated by the Delhi High Court in Yahoo!, Inc. v. Akash Arora[13]. After the celebrated case of Satyam Infoway Ltd. v. Sifynet Solutions Pvt. Ltd.[14], there is no doubt that internet domain names are subject to the legal norms applicable to trademarks.


A person who has directly copied the trademark of a foreign company having a proper accessible website and trading in the same goods and services, cannot take the plea that he was not aware of his opponent’s presence in the market. Further, it is strongly recommended that the plight of the mid-sized companies be addressed soon and internet as an advertising and communicating forum gets acknowledged. After all, this is a wrong committed by the Indian company and thus a remedy must be sort out.

[1] (1842) 6 Beav. 66

[2] [1990] 1 All E.R. 873

[3] 2004(6) SCC 145

[4] 1996(5) SCC 714

[5] 1998 PTC (18) (DB)

[6] 2002 (25) PTC 29 (Del.)

[7] [1998] PTC 698 (Del)

[8] 2004 (29) PTC 376 IPAB

[9] Supra n6

[10] 2004 (28) PTC 585 (SC)

[11] It is a process established by ICANN for the resolution of disputes regarding the registration of internet domain names. It currently applies to all .aero, .asia, .biz, .cat, .com, .coop, .info, .jobs, .mobi, .museum, .name, .net,.org, .pro, .tel and .travel top-level domains,and some country code top-level domains. Refer to

[12] 1998 FSR 265

[13] 78 (1999) DLT 285

[14] AIR 2004 SC 3540