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TMI Blog1985 (6) TMI 197X X X X Extracts X X X X X X X X Extracts X X X X ..... complete. Considerable arguments were addressed by both the parties, on the application which I am now to decide. (3) The case of the plaintiff is that it is a pioneer in the field of air compressors industry in India and is a company of rational and international repute and standard. It came into existence in 1945 and in time grew into a dynamic group of diversified companies and this group is now registered under the Monopolies and Restrictive Trade Practices Act. Four companies are named in the plaint which are stated to be registered under the Mrtp Act and are known in the capital market as 'Khosia Group of Companies'. The names of these companies are : 1. K. G. Khosla Compressors Ltd 2. Khosla Foundry Limited. 3. Khosia Indair Limited. 4. Prashant Khosla Pneumatics Ltd." It is stated that the value of gross assets of this group is around ₹ 38 crores. Gross profits are stated to be over ₹ 2.69 crores and profits after tax are over Rs. I crore. Branches of the plaintiff are stated to be located all over the important cities in India. It is then stated that the plaintiff is the only comply with the word 'KHOSLA' in its name and by this name it is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 1 has been formed using the word 'Khosla' primarily with the intention to sell and encash from the name. and reputation of the plaintiff in the capial market. It is stated that there were three promoters of defendant No. I and' except for defendant No. 3 who was having the surname 'Khosla', the other promoters were having different surnames. It is, therefore, alleged that there is no justification whatsoever to use the word 'Khosla' in the name of defendant No. 1 and that this was done only for the purpose of causing deception. I may note at this stage that in the written statement of the defendants, it has been stated that defendant No. 3 is the Chairman of M/s New Delhi Equipment Leasing Co. Ltd. and of Modern Photo Labs. Pvt. Ltd. (5) The plaintiff then claims that in September 1984, certain. advertisements and statements appeared in several newspapers which came to its knowledge which announced that defendant No. 1 was to enter capital market. The plaintiff was flooded with inquiries from the members of the public under the belief that defendant No. 1 was one of the group companies of the plaintiff. It also came to the knowledge! of the plaintiff ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entral Government. However, defendants Nos. 1 and 2 filed a writ petition in the High Court of Delhi challenging the aforesaid order dated 1-2-1985 of the Regional Director, it being W.P. No. 605185. After certain preliminary hearings, the Regional Director decided to withdraw the order of 1-2-1985 saying that the matter would be considered afresh if required. It was stated that this was so done on technical grounds as the file of the Regional Director did not show that there was any application of mind before issue of the show cause notice under S. 22 of the Act. It is then complained that the Regional Director is not taking any action on the complaint of the plaintiff. Lastly it is again asserted in the plaint that by use of the word 'Khosla' in the name of defendant No. 1 a great deal of irreparable loss and injury has been caused to the good name, reputation and goodwill of the plaintiff and that the plaintiff has suffered huge losses and damages. It is stated that unless injunction is granted, the plaintiff and its other associates sister concerns would by very adversely affected' in the capital market and in case of failure of defendant No. 1, the shareholders wou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er S. 22 of the Act could not file this suit as the present proceedings will be barred by the doctrine of election. Reference is also made to W.P. No. 605185 filed in this court wherein counsel for the Union of India had made statement that the Government had decided to withdraw the notice and directions issued to defendant No. 1 under S. 22 of the Act. It was stated that there is no cause of action to file the present suit as defendant No. 1 is duly registered under the Act and cannot be restrained in any way. It is stated that the validity and correctness of registration accorded to defendant No. 1 by the Central Government under the Act was subject-matter of dispute before this court in the aforesaid Writ petition and that the suit on the same subject was not maintainable. In passing, it is also mentioned that this court has no jurisdiction to entertain and decide the present suit. It is stated that by filing this suit the plaintiff's effort is to harass the defendants and' create troubles in implementation of their project. The defendants also filed a list of companies which had been registered with the name 'Khosla'. Some of these were registered even prior to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r issued a show cause notice on 13-12-1984 to defendant No. 1 calling upon it to explain as to why direction under S. 22 of the Act for change of its name be not issued. After the reply of defendant No. 1 was submitted, the Regional Director by his order dated 1-2-1985 issued directions to defendant No. 1 to change its name by an ordinary' resolution with the previous approval of the Central Government. As noted above, the validity of this order was challenged in this court in W.P. No. 605185. On a statement being made on 29-3-1985 that the Central Government had decided to withdraw the show cause notice dated 13-12-84 as well as directions dated 1-2-1985, the writ petition was disposed of as having become infructuous. It was stated by the Central Government Standing Counsel that the matter would be considered afresh, if so required. Thereafter, the present suit was filed by the plaintiff on 15-4-1985. (9) Mr. Anil Dewan, Sr. Advocate, who appeared for the plaintiff, submitted that it was a clear case of deceit and passing off. He submitted that he had no remedy under the Act and that it was only the civil court which had jurisdiction in the matter inasmuch as he had also come ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n that through the intervention of the appropriate government, of course not directly. a very extensive machinery has been provided for settlement and adjudication of industrial disputes.' But since an individual aggrieved cannot approach the Tribunal or the Labour Court directly for the redress of his grievance without the intervention of the government, it is legitimate! to take the view that the remedy provided under the Act is not such as to completely oust the jurisdiction of the Civil Court for trial of industrial disputes. If the dispute is not an industrial dispute within the meaning of Section 2(k) or within the meaning of Section 2A of the Act. it is obvious that there; is no provision for adjudication of such disputes under the Act. Civil Courts will be the proper forum. But where the industrial dispute is for the purpose of enforcing any right, obligation or liability under the general law or the common law and not a right, obligation or liability created under the Act, then alternative forums arc there giving an elevation to the suitor to choose his remedy of either moving the machinery under the Act or to approach the Civil Court. It is plain that he cannot have b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t no restraint could be placed on the name in which a person would carry on his business if the name of the business happened to be that of the person carrying it. Mr. Sanghi stressed his various pleas raised in the written statement. He submitted that defendant No. I had completed all the formalities and reached an advance stage of public issue. He submitted that the letters which have been filed by the plaintiff purporting to raise queries regarding defendant No. I could not be genuine and were rather inspired. I may note that during the hearing of this case. an affidavit was filed by defendant No. 1 which was sworn by A.K Gurnani who claims to be the Assistant Secretary of defendant No. 1. He states that he is acquainted with the fact of the case and then goes on to state that the Khosla family is the sole promoter family of defendant No. 1 and that forefathers of S. K. Khoslia, promotor of defendant No. 1, had been in business, trade and industry from time immemorial while the company was only an employee in a Chemical factory. Gurnani father of the Chairman and Managing Director of the plaintiff further states that it is wrong that Khosla Family of defendant No. 1 does not hav ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cluded from considering whether, on a balance of convenience, an interlocutory injunction should be granted unless the plaintiff succeeded in establishing a prima facie case or a probability that he would be successful at the trial of the action. All that was necessary was that the Court should be satisfied that the claim was not frivolous or vexatious, i.e. that there was a serious question to be tried." He, therefore, submitted that it was not at all necessary for the plaintiff to show existence of a prima facie case when in fact, according to the learned counsel, the plaintiff had a strong prima facie case. Mr. Veda Vyasa also referred to the background of defendant No. 3. He also referred to a writ petition No, 1030181 filed by defendant No. 3 against the Food Corporation of India challenging his termination of services by the Food Corporation of India. It appears that defendant No. 3 was in the employment of the Food Corporation of India since 4-10-73. His services were terminated by letter dated 19-3-1981. Reference was made to the counter affidavit filed by the Food (corporation of India in that writ petition to show that defendant No. 3 had no scruples. Without informi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s or obligations of defendant No. I or any other agreement that it might have entered earlier to the change of name. (13) Before proceeding further, it will be appropriate to set out Ss. 20 and 22 of the Act : "S. 20. Companies not to be registered with undesirable names. (1)No company shall be registered by a name which, in the opinion of the Central Government, is undesirable. (2)Without prejudice to the generality of the foregoing power, a name which is identical with, or too nearly resembles, the name by which a company in existence has been previously registered, may be deemed to be undesirable by the Central Government within the meaning of sub-section (1)S. 22 Rectification of name of company. (1) If, through inadvertence, or otherwise, a company on its first registration or on its registration by a new name, is registered by a name which, in the opinion of the Central Government, is identical with, or too nearly resembles, the name by which a company in existence has been previously registered, whether under this Act or any previous companies law, the first mentioned company (A)may, by ordinary resolution and with the previous approval of the Central Government in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to suggest that the defendant-company has some connection with, or is a subsidiary of, the plaintiffs and in particular the parent corporation. This I think must be so: and I have already indicated in argument, and 1 now confirm, that the plaintiffs are, in my judgment. entitled to an injunction and ancillary relief to restrain such passing off by continued use by the defendants of the word Exxon." (15) The facts in the case Sturtevant Engineering Co. Ltd. v.Sturtevant Mill Co. of U.S.A. Ltd., (1936)3 All England Reports, 137 (Ch. D) (4) may be taken from the. head note of the Report. "An English Company, the Sturtivant Engineering Company Ltd (herein referred to as the plaintiff company), had turn a number of years carried on business in England as manufacturers of and dealers in general engineering machinery. An American Company, the Sturtivant Mill Co., carried on a similar business in America and was the sole owner of certain patents which were protected in both America and England. The American Company desired to introduce their patented machinery into England, and for that purpose entered into an agreement with the plaintiff company whereby the latter was granted f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o protection for its goodwill and I cannot entitled to refuse that protection because the American Company has acquired a similar kind of goodwill in America. It is said that a man is entitled to trade under his own name although by so doing he may cause damage and confusion to an already existing Company, and prima fade the law of this country does not prevent his doing it. Further, if a man so trading liked to turn his business into a limited Company, he is entitled prima facie to use as part of the name of the Company the name he has been using, and here it is said I ought to treat this as being on that footing, the English Company being entitled to use the word Sturtivant because it is closely connected with the American Company which, holding the larger number of shares in the English Company, controls it. That seems to me not to be a sound contention. So far as this country is concerned there never has been any engineering business of this load carried on under the name Sturtivant and there is no question of carrying on some existing business under the form of a limited Company which has been carried on by a private persons. So far as this country is concerned, I am bound to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ich an injunction is issued by the Court have been set out in Buckley on the Companies Act thirteenth Addition. at page 48 "The jurisdiction in these cases rests either upon fraud or upon property; not that there is property in the name. but that the use of a name closely resembling that in which another carries on business is calculated to deceive or cause confusion between the two businesses and to affect property by diverting customers to the person taking, the name, or by affecting the credit or goodwill of the person whose name is taken (a), where this is not the case there is; no jurisdiction (b)." (18) It was also held that if the defendant-company had been got registered by stranger, the common Jaw right to get on injunction to restrain the deception to the public resulting from such registration would exist. Though in this case it was also observed that the right to claim the injunction was enhanced by the fact that the first defendant wanted to carry on exactly the same or' similar business as that of one of the plaintiffs. (19) In Nestle's Products Ltd. and others v. M/s. Milk made Corporation and another, , the defendants dealt in biscuits and toffee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Co. Ltd. v. The Dunlop Lubricant Co., it was found that the plaintiff-company and their predecessor in title used the name "Dunlop" in connection with the goods of their manufacture. Such goods consisted of Pneumatic tyres for cycles and other accessories such as pumps, inflators etc. The name Dunlop had become identified with the goods of the plaintiff. One Joseph Peter Font started business as the Dunlop Lubricant Co. with the defendant to deal in oils and lubricants for cycle and other cycle accessories and in the same class of accessories as the plaintiffs Company. The word "Dunlop" was prominently used on all the goods of the defendant. The plaintiff, therefore, brought an action to restrain the defendant from so trading. It was held that there was evidence that Font was using the word '"Dunlep" because it suggested the plaintiff-company and that the plaintiff was entitled to an injunction. This is how Romer. J. observed. "It appears to me that the plaintiffs are entitled to say that the word (Dunlop) ought not to be allowed to be used under those circumstances with those object by the defendant; that it would injure them in their busines ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that this has been done fraudulently and purposefully with a deliberate view to secure unethical and undue advantage of the goodwill earned by the similar name used by it in respect of its well known products and that it was done by way of invasion of the plaintiff-company's proprietory right in its goodwill. It is complained that this was done with a view to create an impression amongst the trade and the persons dealing with the defendant-Company that they were dealing with the plaintiff-company". (23) In Wright, Layman & Umney Ltd. v. Wright (1949) 66 Rpc, 149 (CA)(8), it was observed that if a man used his own name and used it honestly and fairly, and was doing nothing more he could not be restrained, even if confusion results. It was, however, observed that once he over-stepped the line and confusion resulted or was calculated to result,.the fact that he was using something.approaching his name would be of no justification. In this case the plaintiff who had a reputation under the name 'Wrights' in certain goods filed an injunction against the defendant W.F.T. Wright trading as Wrights Chemical Company and who had caused his goods to be passed off as . the pl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing more than that to cause confusion .with the business of another, and so long as he does it honestly. To the second rule it was observed that there was no exception at all; that is that a man is not entitled so to describe his goods as to lead to the believe that they are the goods of somebody else. Romer, J. also referred to the following observation of Lord Justice Cotton in the well known case of Turten v. Turten 1889. Lr 42 Cd 128(10), where it was said "In my opinion, the Court cannot stop a man from carrying on his business in his own name, although it may be the name of a better -known manufacturer, when he docs nothing at all in any way to try and represent that he is that better- known and successful manufacturer." (25) The following observation of Romer, J. to my mind will also be relevant : - "The exception to the first rule is, however, an exception made in the interests of honest trading; again, it is an exception which only authorises the use by a man of his own name; it is not an exception which, even in an honest case, entitles a man to use something that is not his own name; that is to say, it does not entitle him to use his name in combination w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re & Manchester Brewery Company Limited v. The Manchester Brewery Company Ltd. 1899(AC) 83(12), as would appear from the head note. The Manchester Brewery Company Limited, had carried on business under that name for years. The appellants bought an old business called "The North Cheshire Brewery Company Limited", and then (without intending to deceive) got themselves incorporated and registered under the name, "The North Cheshire and Manchester Brewery Company, Limited"; it was held that upon the evidence that as a matter of fact the name of the appellant company was calculated to deceive and that the appellants must, therefore, be restrained by injunction in the usual way. (29) In this case also both the Companies were dealing in the same type of goods. (30) It is not disputed and may it could not be disputed that civil court has jurisdiction in the suit. If any authority is needed reference may be made to a decision of this court in Bhandari Homeopathic Laboratories (supra). The Central Government has certainly no power to grant any injunction as prayed for in the present suit though a person disobeying the directions issued under sub-s. (1) of S. 22 of the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... how that defendant No. I belongs or could belong to "famous Khosia Family of New Delhi". No particulars of the business or other manufacturing activity carried on by .the father of defendant No. 3 are mentioned anywhere. There are only vague averments. Then the averments made in the written statements certainly do not make defendant No. 1 as having been promoted by the "famous Khosla Family of New Delhi" as advertisements published by defendant No. 1 would show. Similarly, the statement that defendant No. 1 is promoted by the Khosia Group would also not be Correct. It is on record that earlier two companies were started -of which defendant No. 3 is the Chairman and Managing Director. None of these companies has the word "Khosla" in its name. If defendant No. 3 was so sentimental about the name of his father he could have got the company incorporated in the name of his father and not as 'Khosla Extractions Ltd.' which might be taken as the company belonging to the plaintiff group. Defendant No. 3 could have the name of the company in his own name as well. No importance can be attached to the statement of the defendants that they had in mind to s ..... X X X X Extracts X X X X X X X X Extracts X X X X
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