TaxTMI 
TaxTMI 
1992 (7) TMI 343
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....dants' 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 a share of 1....
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....in the word "Bedrock", which are valid and subsisting. 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 ₹ 3 crores, also claim to have spent large sums in excess of ₹ 23 lacs by ....
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....Marine Lines, Bombay-400 020. "Bedrock Sales Corporation 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 doub....
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.... selling the products manufactured by Nippon Rubber and Nissan Rubber, both of whom had permitted user agreements with the plaintiffs which were valid 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 ....
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....d Vimal Kumar, being members of the plaintiff-company, must be treated as its partners; that every partner has a right in the assets of the partnership, 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....
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....d by the plaintiffs, the second defendants or any other permitted users of the said trade mark. This declaration should, in any event, be sufficient to allay the apprehensions of the plaintiffs on the first facet 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 ....
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.... not in India and the suffix of the word "India" constituted a sufficient distinguishing factor. The Supreme Court, white upholding the first part of the High Court Judgment and reversing the second part, held that an infringement of a registered trade mark lakes place not merely by exact 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 foun....
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....n the business activities of the two. Whether such a tendency to mislead or confuse is established, can only be decided by consideration of all the circumstances." The learned Judge further pointed out that, where the parties are engaged in "common or overlapping fields of activity", competition will take place between them, and, in such 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 registere....
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....the plaintiffs can claim no exclusive right to the registered trade mark. It is contended that the plaintiffs, though carrying on business in corporate name and style, are really a glorified partnership of the members of the Poddar Family; that both Vimal Kumar Poddar and Santosh Kumar Poddar, who are Promoters and Directors of the second defendants, are themselves 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 matt....
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....mber, 1991. They then made enquiries and learnt about the incorporation, objects and trading activity of the first defendant-corporation and then issued their Advocate's Notice dated 18th January, 1992. The suit was filed on 24th January 1992, and ad interim relief was prayed for in this notice of motion, but was not granted. In these circumstances, it is not possible 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 ac....
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.... of India on cigarettes, for which the plaintiffs could not be blamed. Reiterating the test laid down in its earlier judgment in Wearwell Cycle Co. (India) Ltd. v. Wearwell Industries, MANU/DE/0182/1968MANU/DE/0182/1968 : 5(1969)DLT469 , the High Court pointed out that the question of balance of convenience was relevant only when, at least prima facie, "the two parties were 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 c....
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....', either as a branch, agency or otherwise. There is also the danger, as rightly emphasized by the plaintiffs, that any act or omission of the first defendants would have deleterious repercussion on the credit, reputation and goodwill of the plaintiffs themselves. For example, if the first defendants were to commit an act of insolvency or do any act which tarnishes their reputation in the market, there is 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 si....
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.... name bona fide and honestly. The material on record lead me to this conclusion. The Diwali Greetings card at Exhibit 'O' of the plaint (which was admittedly sent as a part of maintaining business relations) was sent under the name "Bedrock Group". On the card the names of all companies, including those of the plaintiffs and the first defendants, were put in close juxtaposition. In my view, this was done deliberately with an intention to produce an impression upon 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 wi....
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.... as a part of the name of the first defendant-company, but was merely an attempt to throw dust into the eyes of the Registrar of Companies. 39. In this connection, my attention was invited to the guiding instructions incorporated in the circulars, issued by the relevant Department of the Government of India, for the information and guidance of the Company Registrar on the subject (see pp. 184 to 187 of Ramaiya's Guide to the Companies Act, Twelfth Edition, 1992). Guideline (12) provides that, if the proposed name includes the name of a registered trade mark, then, such a name should not be permitted to 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 candou....
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....s the plaintiffs from exercising the statutory rights under the Trade Marks Act or from seeking interim reliefs based thereupon. 42. Mr. Rahimtoola relics on a judgment delivered by me in Alkam Laboratories Pvt. Ltd. v. Alchem (India) Ltd. (Judgment dated 27th November, 1990, in Notice of Motion No. 3028 of 1988 in Suit No. 3198 of 1988). With the help of Mr. Rahimtoola, I have carefully read this judgment, and I do not think that this judgment, in any way, helps the first defendants. This was a case where, despite similarity of registered trade mark and corporate name, the products to be said by the two companies, type of customers, trade channels 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., ....
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....se under S. 34 of the Trade and Merchandise Marks Act so as to be entitled to the benefit of the exception contained therein. 45. It is urged that, if the plaintiffs are aggrieved by the first defendants adopting the word "Bedrock" as part of their corporate name, and, if the act of the Registrar in permitting them to adopt the name "Bedrock Sales Corporation Ltd." was erroneous, then the remedy lay elsewhere, and not by way of an injunction in an infringement action or passing off action. As has been rightly pointed out by the Delhi High Court in K. G. Khosla Compressors Ltd. v. Khosla Extraktions Ltd., MANU/DE/0219/1985MANU/DE/0219/1985 : AIR1986Delhi181 , the aggrieved plaintiffs have two remedies, 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,....