9911796707
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Issues Involved:
1. Permanent injunction against the defendants from using the name "M/s Khosla Extraktions Ltd." 2. Allegation of passing off and misrepresentation by the defendants. 3. Jurisdiction of the Civil Court versus the jurisdiction of the Central Government under the Companies Act. 4. Doctrine of election and its applicability. 5. Bona fide use of a personal name in business. 6. Balance of convenience and irreparable harm. Detailed Analysis: 1. Permanent Injunction Against the Defendants from Using the Name "M/s Khosla Extraktions Ltd." The plaintiff, a public limited company, sought a decree of permanent injunction to restrain the defendants from using the name "M/s Khosla Extraktions Ltd." and from entering the capital market under this name. The plaintiff claimed that the defendants, who were former employees, adopted the name to deceive the public and encash the plaintiff's reputation and goodwill. The plaintiff argued that the use of "Khosla" by the defendants was in violation of Section 20 of the Companies Act and caused confusion in the capital market, leading to irreparable loss and damage to the plaintiff's reputation. 2. Allegation of Passing Off and Misrepresentation by the Defendants The plaintiff alleged that the defendants' use of the name "Khosla Extraktions Ltd." constituted passing off and misrepresentation. The plaintiff provided evidence of advertisements and pamphlets by the defendants that suggested an association with the plaintiff's well-known "Khosla Group of Companies." The court found that the defendants' actions were likely to deceive the public into believing that there was a connection between the two entities, thereby causing damage to the plaintiff's goodwill and reputation. 3. Jurisdiction of the Civil Court Versus the Jurisdiction of the Central Government Under the Companies Act The defendants argued that the plaintiff, having approached the Regional Director under Section 22 of the Companies Act, could not file the present suit due to the doctrine of election. However, the court held that the jurisdiction of the Central Government and the civil court operate in different fields. While the Central Government can issue directions under Sections 20 and 22 of the Companies Act, it cannot grant an injunction as sought in the present suit. The civil court's jurisdiction is not ousted by the plaintiff's prior approach to the Central Government. 4. Doctrine of Election and Its Applicability The defendants contended that the suit was barred by the doctrine of election, as the plaintiff had already sought a remedy under Section 22 of the Companies Act. The court rejected this argument, stating that the plaintiff's cause of action for passing off was distinct and could be pursued in a civil court. The court emphasized that the plaintiff had no effective remedy under the Act, especially after the Central Government withdrew its directions for technical reasons. 5. Bona Fide Use of a Personal Name in Business The defendants argued that they were entitled to use the name "Khosla" as it was the surname of one of the promoters. The court, however, held that the right to incorporate a company in a particular name is a statutory right, and no person is entitled as of right to have a company registered in their name if it causes confusion or deception. The court found that the defendants' use of "Khosla" was not bona fide but was intended to exploit the plaintiff's established reputation. 6. Balance of Convenience and Irreparable Harm The court found that the balance of convenience was in favor of the plaintiff. The plaintiff demonstrated a prima facie case of passing off and misrepresentation, and the court agreed that the public was likely to be misled by the defendants' use of the name "Khosla Extraktions Ltd." The court noted that any failure of the defendants' company would rebound on the plaintiff, causing irreparable harm to its reputation and goodwill. Therefore, the court granted an injunction restraining the defendants from entering the capital market and making a public issue under the name "M/s Khosla Extraktions Ltd." Conclusion: The court allowed the plaintiff's application for an injunction, restraining the defendants from using the name "M/s Khosla Extraktions Ltd." in the capital market. The plaintiff was awarded costs, with counsel's fee set at Rs. 1000.
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