2012 (7) TMI 1046 - HC - Companies Law

Summary

Issues Involved:
1. Suppression of Material Facts
2. Disparagement of Plaintiff's Product
3. Comparative Advertising and Free Speech
4. Injunction and Equitable Relief

Summary:

1. Suppression of Material Facts:
The defendants argued that the plaintiffs suppressed material facts, specifically that the advertisements were aired on multiple channels and that the plaintiffs also had a product with a predominantly white label. The court found no suppression, stating that the plaintiffs mentioned seeing the advertisement on a Malayalam channel and had disclosed their product with a white label. Thus, the contention of suppression was rejected.

2. Disparagement of Plaintiff's Product:
The plaintiffs contended that the defendants' advertisements disparaged their mosquito repellent product by showing a bottle with a label similar to the plaintiffs' and depicting it as ineffective. The court noted that the advertisements showed a man struggling with mosquitoes despite using a liquid vaporizer with a label resembling the plaintiffs' product. The court held that the advertisements were capable of giving an impression to an ordinary person that the plaintiffs' product was being disparaged, thus constituting actionable disparagement.

3. Comparative Advertising and Free Speech:
The defendants argued that the advertisements were protected u/s Article 19(1)(a) of the Constitution as commercial speech. The court acknowledged that while a tradesman can claim his goods to be the best or better than competitors', he cannot disparage competitors' goods. The court referenced several judgments, including those from the Delhi High Court and Calcutta High Court, to establish that comparative advertising is permissible as long as it does not defame or disparage the competitor's product.

4. Injunction and Equitable Relief:
The court found that the plaintiffs had made a prima facie case for an injunction. The balance of convenience and irreparable injury tests also favored the plaintiffs. The court granted an ad-interim injunction, restraining the defendants from using the impugned advertisements with the label similar to the plaintiffs'. However, the defendants were allowed to continue the advertisements if they removed the red label with silver lining from the bottle shown in the advertisements. The court granted a stay on the order for four weeks.

Conclusion:
The court concluded that the defendants' advertisements disparaged the plaintiffs' product by showing a label similar to the plaintiffs' and depicting it as ineffective. An ad-interim injunction was granted, allowing the advertisements to continue only if the label resembling the plaintiffs' was removed.