TaxTMI 
TaxTMI 
1992 (7) TMI 343
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....ing and/or passing of these 1st defendants' goods as and for the goods of the plaintiffs by the use of the word "Bedrock" in connection with or in respect of goods manufactured by them; (b) that, pending the hearing and final disposal of the suit, the defendants No. 1 by themselves, their servants and agents be ordered and directed to deliver up for destruction all their letter heads, invoices, price lists, cash memos, brochures, advertisements, etc. articles and effects bearing the impugned word "Bedrock";" 2. This notice of motion illustrates the homely truth that greater the consanguinity between parties, more bitter is the litigation between them, fraternal feuds being the fiercest. 3. The plaintiffs are a company incorporated under the Companies Act, and carry on, inter alia, business of manufacture of rubber tubes and tyres. The plaintiff-company was originally incorporated as a private limited company on 13th February, 1981, but became a "deemed public company", within the meaning of Section 43-A of the Companies Act, in or about June, 1988, as a result of increase in turnover. The plaintiffs claim to be leading manufacturers of rubber tyres and tubes with....
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....The plaintiffs have also applied for registration of two trade marks, which contain the word 'Bedrock', and the said applications are pending. 7. The first defendant-company was incorporated on or about 3rd May, 1991, and has as its aims and objects the carrying on of business, inter alia, of manufacturing as well as dealing in rubber tyres and tubes. A comparison of the objects of the plaintiff-company, as reproduced in paragraph 4, with those of the first defendants, as reproduced in paragraph 5 of the plaint, would show that the defendants are in the same line of business and have the potential to be a trade rival to the plaintiffs. It might incidentally be mentioned here that Directors of the plaintiff-company and the first defendant-company are brothers, who were carrying on the family businesses of the "Poddar Group", till they fell out, presently pursuing their litigations in various Courts with greater zeal than shown towards their respective businesses. 8. The plaintiffs, apart from the large turnover of Rs. 3 crores, also claim to have spent large sums in excess of Rs. 23 lacs by way of advertisement expenses, for popularizing the trade marks, which prominen....
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....orporation Limited 54, Free Press Building (5th Floor) 215, Nariman Point, Bombay-400 021. "Shree Durga Textiles 401, Kakad Market (4th Floor), 306, Kalbadevi Road, Bombay-400 002." The names of "Santosh Kumar Poddar" and "Vimal Kumar Poddar" are printed at the right bottom corner. Though I shall have occasion to deal with the contention of the first defendants with regard to this Greetings card, a prima facie reading of this Diwali card and the envelope, in which it was sent (Exhibit 'O'), gives an impression that there is a "Bedrock Group" of companies, of which the companies indicated on the card, viz., "Matushree Textiles Limited", "Bedrock Ltd.", "Poddar Tyres Ltd." (Plaintiffs), "Bedrock Sales Corporation Limited" (First defendants) and "Shree Durga Textiles", are members. 12. The plaintiffs have also produced a xerox copy of the Invoice of sale dated 1st January, 1992 (Exhibit 'P'), showing sale of tubes by the first defendants to one of the customers. The document at Exhibit 'P', without doubt, shows that the first defendants have been selling Bedrock cycle tubes to different custom....
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....alid and subsisting, and, therefore, there was neither infringement, nor passing off, by the first defendants. Though a more detailed reply was promised, presumably, in view of the fact that the suit itself had been filed and moved for ad interim order, none came. 16. The plaintiffs contend that the adoption of the word "Bedrock" as a part of the corporate name of the first defendants is deliberate, mala fide and intended to cash in on the reputation and good will of the plaintiffs' products sold under their registered trade marks, which the plaintiffs had assiduously built up over years. The first defendants dishonestly intended to cash in on the good wilt and reputation enjoyed by the "Bedrock" goods by suggesting some kind of intimate connection between the first defendants' goods and/or business with those of the plaintiffs. The plaintiffs, as the proprietors of the registered trade marks, are entitled to bring an action for infringement of their trade marks by the first defendants in adopting a corporate name, incorporating the registered trade marks of the plaintiffs. 17. Apart from infringement, it is contended that the trade marks being identical, there is imm....
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....rtnership, and, therefore, Arun Kumar Poddar, who has filed the suit on behalf of the plaintiffs, can assert no exclusive proprietary right in the registered trade mark, which is really the asset of the plaintiffs, which is a glorified partnership. (v) There has been unreasonable delay on the part of the plaintiffs in seeking the equitable remedy of injunction, disentitling them to the reliefs. (vi) The plaintiffs have, under registered user agreements, permitted the registered users to use the trade mark "Bedrock" on goods manufactured by persons other than the plaintiffs, and, therefore, the plaintiffs must be deemed to have acquiesced in use of the said trade marks "Bedrock" by persons other than themselves or the registered users; that the first defendants were incorporated for the purpose of selling "Bedrock" goods, as dealers for the said "Bedrock" goods manufactured by Nippon Rubber and Nissan Rubber, which are the two concerns, which were the registered users of the "Bedrock" trade mark; since the first defendant-company is going to deal only in "Bedrock" goods, the name adopted was neither dishonest, nor mala fide, as it merely suggested truly the connect....
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.... of the infringement action. 22. The second facet of the infringement action, relating to the corporate name of the first defendants, requires elaborate discussion, as the first defendants have strenuously opposed granting of any relief on that count. 23. Mr. Chagla, learned counsel for the plaintiffs, strongly relies on S. 28 of the Trade and Merchandise Marks Act, 1958, and contends that, as long as the plaintiffs are registered proprietors of a trade mark, the Act confers upon them the exclusive right to use the said trade mark in relation to goods, in respect of which the trade mark is registered, and the right to obtain relief in respect of infringement of the trade mark. The only exception, which was understandably pressed into service by the first defendants is the one contained in S. 34 of the Act, which provides that nothing in the Act shall entitle a trader or a registered user of a registered trade mark "to interfere with any bona fide user by a person of his own name....." It is submitted on behalf of the plaintiffs that S. 34 would operate as an exception to the general rule postulated in S. 28, if and only if the first defendants are carrying on business, (a) in....
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....act imitation but by the use of a mark so nearly resembling the registered mark as to be likely to deceive. The Supreme Court observed (Para 7): "In an action for infringement where the defendant's trade mark is identical with the plaintiff's mark, the Court will not inquire whether the infringement is such as is likely to deceive or cause confusion. But where the alleged infringement consists of using not the exact mark on the Register, but something similar to it, the test of infringement is the same as in an action for passing-off." 26. Reference was made to the celebrated judgment of the English High Court of Justice -- Chancery Division, in what is popularly known as "the Kodak Case", The Eastman Photographic Materials Company, Ltd. v. The John Griffiths Cycle Corporation Ltd. and the Kodak Cycle Company Ltd. (1898) 15 RPC 105. In this case, the Court found that the defendant-company had no valid explanation for adopting the name "Kodak" as a part of its corporate name while doing business of manufacture and sale of cycles; that, though the Eastman Photographic Materials Company, Ltd. did not carry on business in the manufacture and sale of bicycles, it had....
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....h an event, there is inherent probability of confusion or deception. In an infringement or a passing-off action, protection is afforded not for the deceived customer, but the rival trader, which is to prevent "dishonest trading", to use the felicitous phrase coined by Danckwerts J. in J. Bollinger v. Costa Brava Wine Co. Ltd., MANU/DE/0174/1979MANU/DE/0174/1979 : AIR1980Delhi254 refers with approval to the proposition adopted in Henderson v. Radio Corporation Pty. Ltd. 1969 RPC 218, viz., "The wrongful appropriation of honest professional or business reputation is an injury in itself. In fact, in Henderson's case, the view taken by the Australian Court was that, even a common activity was not a sine quo non. Ultimately, in Ellora, the Delhi High Court took the view that the defendant was both infringing the registered trade mark of the plaintiffs and also passing off his business as that of the plaintiffs. Injunction was granted on both counts against the defendant. 29. The plaintiffs contend that, in a situation where a rival trader bodily lifts a substantial portion of the registered trade mark of the plaintiffs and uses it as a part of his trading style or corporate name,....
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....mselves members of the plaintiff-company; that, by applying the principle of Partnership Law, no partner can appropriate to himself exclusively or claim exclusive right in partnership assets, which must enure for the benefit of all partners. Ergo, both Santosh Kumar and Vimal Kumar have an equal proprietary interest in the registered trade mark, which the plaintiffs claim exclusively theirs. It is not possible to accept this contention for more than one reason. First, ever since the judgment in the case of Salomon v. Salomon (1897) AC 22 it has accepted principle of law that an incorporated entity is distinct from its constituent members. It is, doubtless, true that certain exceptions have been engrafted upon this principle under the doctrine of lifting the veil of incorporation .But these exceptions are confined to limited matters such as trading with enemies, tax matters, and, at least in India, in labour matters. It is neither prudent, nor pragmatic, to so widen the scope of an exception as to raise it to the status of the rule itself. Mr. Rahimtoola contends that, at least for the purpose of S. 433 of the Companies Act, while entertaining a winding-up petition under the "just a....
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....ssible to accept the contention that there is such delay as to refuse interim relief. 34. Mr. Rahimtoola then contended that the balance of convenience is in favour of refusing interim relief. He relied on a judgment of the Division Bench of this Court in Express Bottlers Services Pvt. Ltd. v. Pepsico Inc. (Appeal No. 436 of 1989 in Notice of Motion No. 1920 of 1988 in Suit No. 2903 of 1986, decided per Bharucha (as he then was) and Srikrishna, JJ., dated 8th February, 1991). A careful perusal of this judgment would show that the Appeal Bench has not endorsed the proposition canvassed by learned counsel. The facts of that case were that the respondents were registered proprietors of a well-known trade mark 'PEPSICO', which, though registered in India, in respect of bottled drinks, had not been used by them on account of Government policy for quite some time. The appellants moved an application before the Calcutta High Court for rectification of the register and striking off the said trade mark for non-use. The Calcutta High Court issued an ad interim injunction against the respondents from using the trade mark pending hearing of the rectification application. When the re....
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....e on the same level and their rights were about equal". In my view, neither are there any special circumstances, nor are the parties in a situation of being near-equal, so as to invoke consideration of balance of convenience in the present case. 36. The next contention urged by the learned counsel for the first defendants is, perhaps, the main plank of his arguments. He placed strong reliance on the Agreement dated 22nd August, 1986, between the plaintiffs and Shivaram Ratanlal Garodia. Under this and similar agreements, Garodia were given the right of permitted user of the trade mark registered in Clause 12 of the Fourth Schedule to the Trade and Merchandise Rules, 1959, in respect of, inter alia, rubber tubes for cycle tyres, without any limit as to the period of time, but subject to the termination clause. Clause 21 of the Agreement provides that the user shall be entitled to use the said trade mark on the said goods "through a firm wherein he is a partner and the term 'user' herein shall apply mutatis mutandis to the firm in which the user is a partner". The execution of such agreement by the plaintiffs is not denied by them. It is also not disputed that the persons,....
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....imminent likelihood of people jumping into the confused conclusion that the plaintiffs had committed an act of insolvency or that they had done something objectionable. I am, therefore, unable to accept the contention of the first defendant that, by their purportedly selling exclusively "Bedrock" goods, they are entitled to adopt the word "Bedrock" as a part of their company name or trading style. That they have done so is not really disputed. In my view, therefore, there is both infringement and passing off action, prima facie. 37. Though Mr. Rahimtoola cited the authority of the English Court in Baume and Co. Ltd. v. A. H. Moore Ld. 1957 RPC 459, as having accepted and laid down the proposition so strenuously contended by him, this judgment of learned single Judge was expressly overruled by the Appeal Court in its judgment reported in (1958) 9 RPC 226. The Appeal Court affirmed the finding of the trial Judge that there was no infringement within the meaning of the Trade Marks Act, but reversed the finding on the issue of passing off. Mr. Rahimtoola emphasized the observation of the Appeal Court also on the issue of infringement. He points out that S. 8(a) of the English Act is....
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....the readers that the first defendants belong to a group of companies called "Bedrock Group". This, at least, appears to be the discernible intention of the persons, who sent the Diwali Greetings card. It is not disputed that the Diwali Greetings cards were sent by Vimal Kumar and Santosh Kumar Poddar, two of the Promoters and Directors of the first defendant-company. At this stage at least, the intention was to hold themselves out as a part of the "Bedrock Group". 38. The conduct of the first defendants when they came to adopting the corporate name by applying to the Registrar of Companies, also does not show bona fides. Exhibit 'A' is the original of the Form No. IA filed with the Registrar of Companies, Maharashtra, dated 1st April, 1991. Against Column 2, it is indicated that the proposed name of the company would be "Bedrock Sales Corporation Ltd.". Against Column 5, it is indicated that the main objects of the proposed company would be "to carry on business of marketing, distribution, sales of goods and merchandise" -- a description, which is delightfully vague. Against Column 7, which requires information on "particulars of the names and situations of the registere....
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....o be registered as the name of a company "unless the consent of the owner of the trade mark has been produced by the promoters". Guideline (13) provides that, if a name is identical with or too nearly resembles, the name of which a company in existence has been previously registered, then also, such name ought not to be permitted. Column 7 of the Form is, therefore, so designed as to elicit information from an applicant on this vital aspect of the matter. I am afraid that, in the present case, the conduct of the first defendants in filling up Form IA shows neither candour, nor bona fides. 40. There is no rationally acceptable explanation forthcoming from the first defendants as to why they decided to adopt the word "Bedrock" as a part of their corporate name. The only explanation, which has been oft-repeated, is that the first defendants have been doing and intend to do, business only in "Bedrock" goods, bearing the trade mark "Bedrock", and, therefore, they bona fide thought that they were entitled to adopt the said trade mark as a part of their corporate name. Per se, the explanation does not jell; taken in conjunction with the surrounding circumstances, the explanation does n....
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.... of distribution were so desperate that the Court took the view that there was no likelihood of confusion at all. I am prima facie satisfied that the material on record, does indicate that there is such likelihood of deception and/or confusion. 43. Finally, Mr. Rahimtoola relies upon the judgment of the Punjab and Haryana High Court in M/s. Raj Sons v. M/s. Bombay Dyeing and Manufacturing Co. Ltd., MANU/PH/0066/1973MANU/PH/0066/1973. This was case of a dealer exclusively dealing in the goods of Bombay Dyeing and Manufacturing Co. Ltd., who put up pointed sign boards containing the words "Bombay Dyeing" largely on the premises, on his letterheads, cash memos and other business documents. On a suit filed by the Bombay Dyeing and Manufacturing Co. Ltd. to restrain him on the ground of passing off, the trial Court accepted the Commissioner's report that the trader had indulged in a kaleidoscopic display of different types of sign boards at different times of the day on the different business premises, like the shop or godown, and that some of these sign boards had been painted on cloth and were used to cover up the regular sign boards more prominently installed on the establishm....
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.... which are alternative and not mutually exclusive. It is open to the plaintiffs to move under the provisions of the Companies Act for cancelling the name of the first defendants, if so advised, but that, by itself, docs not preclude the plaintiffs from bringing an action for infringement of their registered trade mark and/or passing off. 46. In the result, I hold that the first defendants, by adopting the word "Bedrock" as a part of their corporate name, have infringed the registered trade marks, of which the plaintiffs are the registered proprietors. 1 also hold that the said action of the first defendants amounts to passing-off of the first defendants' business or trade as that of the plaintiffs' business or trade. The plaintiffs are entitled to interim reliefs. 47. Mr. Chagla, learned counsel appearing for the plaintiffs, criticizes the undertaking dated 20th July, 1992, given by Santosh Kumar Poddar, a Director of the first defendants, as wholly insufficient and liable to be rejected. He points out that this is not an undertaking on behalf of the first defendants, in that it is not backed by any resolution of the Board of Directors of the first defendants. It is a....