2001 (12) TMI 839 - SC - Companies Law

Grant of ad-interim injunction refused Held that - A refusal to grant an injunction in spite of the availability of facts, which are prima facie established by overwhelming evidence and material available on record justifying the grant thereof, occasion a failure of justice and such injury to the plaintiff as would not be capable of being undone at a latter stage. The discretion exercised by the Trial Court and the High Court against the plaintiff, is neither reasonable nor judicious. The grant of interlocutory injunction to the plaintiff could not have been refused, therefore, it becomes obligatory on the part of this Court to interfere. For the foregoing reasons these appeals are allowed. An ad-interim injunction under Rules 1 and 2 of Order 39 of the CPC shall issue in favour of the plaintiff-appellant restraining the defendant-respondents from using directly or indirectly the word Muktajivan in their trade name associated with the business and services of colour lab and studio and any other similar word or name which may be identical or deceptively similar to the plaintiffs trade name. The plaintiff-appellant shall be entitled to costs throughout incurred upto this stage.

Issues Involved:
1. Grant of ad-interim injunction.
2. Passing off action.
3. Prima facie case, balance of convenience, and irreparable injury.
4. Discretion of the courts in granting temporary injunctions.

Issue-wise Detailed Analysis:

1. Grant of Ad-interim Injunction:
The plaintiff sought an ad-interim injunction to prevent the defendants from using the trade name "Muktajivan Colour Lab and Studio." The Trial Court initially granted an ex-parte order of injunction but later dismissed the application, reasoning that the defendants' business was situated 4-5 km away from the plaintiff's business, thus not warranting an injunction. The High Court upheld this dismissal, stating the defendants' business had already commenced before the suit and the plaintiff lacked interest in the partnership businesses using the name "Muktajivan."

2. Passing Off Action:
The plaintiff initiated a passing off action, claiming that his business had been using the name "Muktajivan Colour Lab" since 1982, creating goodwill and reputation. The defendants, who were previously operating under "Gokul Studio," adopted the name "Muktajivan Colour Lab and Studio," which the plaintiff argued would deceive customers and divert business. The courts recognized that the plaintiff had been using the name since at least 1995, but the Trial Court and High Court dismissed the injunction request, citing the distance between the businesses and the timing of the defendants' business commencement.

3. Prima Facie Case, Balance of Convenience, and Irreparable Injury:
The Supreme Court emphasized that in passing off actions, the plaintiff must establish a prima facie case, balance of convenience, and potential irreparable injury. The plaintiff had produced substantial evidence of using "Muktajivan" since 1995, and the likelihood of confusion and injury was evident. The Supreme Court found that the Trial Court and High Court had erred in their reasoning, as the distance within a city like Ahmedabad was irrelevant, and the likelihood of injury to the plaintiff was significant.

4. Discretion of the Courts in Granting Temporary Injunctions:
The Supreme Court noted that while it generally does not interfere with the discretion of lower courts in granting temporary injunctions, it would do so if the discretion was exercised arbitrarily, capriciously, or perversely. In this case, the lower courts had ignored settled principles of law regarding interlocutory injunctions in trade name disputes. The refusal to grant an injunction despite overwhelming evidence of the plaintiff's established use and goodwill constituted a failure of justice.

Conclusion:
The Supreme Court allowed the appeals, issuing an ad-interim injunction restraining the defendants from using "Muktajivan" in their trade name. The Court emphasized that this decision was interlocutory and should not influence the final trial on merits. The plaintiff was entitled to costs incurred up to this stage.

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