IN THE HIGH COURT OF GUJARAT AT AHMEDABAD APPEAL FROM ORDER No 127 of 2003 WITH CIVIL APPLICATION No 2615 of 2003 For Approval and Signature: HON'BLE MR.JUSTICE K.A.PUJ ============================================================ 1. Whether Reporters of Local Papers may be allowed : YES to see the judgements? 2. To be referred to the Reporter or not? : YES 3. Whether Their Lordships wish to see the fair copy : NO of the judgement? 4. Whether this case involves a substantial question : NO of law as to the interpretation of the Constitution of India, 1950 of any Order made thereunder? 5. Whether it is to be circulated to the concerned : NO Magistrate/Magistrates,Judge/Judges,Tribunal/Tribunals? -------------------------------------------------------------- SHREE SAINATH INDUSTRIES Versus SAINATH AUTO INDUSTRIES -------------------------------------------------------------- Appearance: 1. Appeal from Order No. 127 of 2003 MR RR SHAH for Petitioner No. 1 MS JENICE T JHALA for Petitioner No. 1 MR YJ TRIVEDI for Respondent No. 1 -------------------------------------------------------------- CORAM : HON'BLE MR.JUSTICE K.A.PUJ Date of decision: 25/03/2004 CAV JUDGEMENT This Appeal From Order is filed against the order passed by the leaned City Civil Judge below notice of motion application Exh. 6 in R.C.S. No. 5492 of 2000 on 10.03.2003 whereby the interim injunction sought for in the said application was refused. 2. The Appeal From Order was admitted by this Court on 26.09.2003 and rule was issued in Civil Application praying for quashing and setting aside the impugned order and further praying for interim injunction restraining the respondent from using the trade name "SAINATH" in their trade style. 3. It is the case of the appellant / applicant original plaintiff that appellant has filed R.C.S. No. 5492 of 2000 in the City Civil Court at Ahmedabad against the respondent - original defendant for injunction claiming passing off action and also moved notice of motion at Exh. 6 seeking interim injunction restraining the respondent from using the appellant's trade name "SAINATH" or any other similar name. 4. The appellant is a Regd. Partnership Firm carrying on business of manufacturing and marketing of Lubricating Oil Pumps, Water Pumps for diesel and petrol vehicles and parts and accessories thereof etc. at Ahmedabad. The appellant is also manufacturer of and merchant carrying on business, interalia in wide range of Lubricant Oil Pumps, Water Pumps for diesel and petrol vehicles for the last more than 15 years. The respondent is also carrying on the business under the name and style of 'SAINATH AUTO INDUSTRIES" at Hatkanangala, Dist. Kolhapur. The respondent is also manufacturer and merchant in Lubricating Oil Pumps and Water Pumps for diesel and petrol vehicles. The respondent has chosen the identical and/or deceptively similar trade name and trade mark with an intention to pass off its business and goods as and for the business and goods of the appellant. It is the say of the appellant that the business activities carried on by the respondent are unlawful and without consent or license of the appellant. The appellant is having an effective sales network and market set up throughout the country and exports and sale all its goods under the trade name "SHREE SAINATH" for the last 15 years. By virtue of this continuous use of the word "SAINATH", it assumed great significance and importance for the appellant. This word has acquired great popularity and also got its recognition in the public. It is also the say of the appellant that one of the partners of the respondent earlier firm i.e. Shri Sainath Industries, namely, Mr. Santosh P. Naik, son of Mr. U.P. Nayak was in the employment/service in the appellant's firm for a considerable time from 01.04.1994 to 31.03.1999 and his father, namely, Shri U.P. Nayak was a partner of the appellant firm till he retired on 31.12.1998. The respondent was knowing fully the reputation and goodwill enjoyed by the respondent in respect of the brand trade name/trading style and with a view to trade upon the appellant's tremendous reputation and valuable goodwill, the respondent has chosen the identical and/or deceptively similar trade name and trade mark with an intention to pass off its business and goods as and for the business and goods of the appellant. 5. Mr. R.R. Shah, learned advocate appearing for the appellant submits that the appellant is in this style of business since 1984 and its goods are valuable having the word "SAINATH" printed thereon as a house mark. He has further submitted that as per the Dissolution Deed, Mr. U.P. Naik, the father of Mr. Santosh Naik was not supposed to use the trade name/trade mark, logo of the appellant. In fragrant violation of this understanding and the provisions contained in the Dissolution Deed, the respondent has started using the name "SAINATH" and that has caused confusion amongst all the reputed clients and the customers as well as in the mind of the public at large. He has further submitted that by virtue of using such name, there are all chances of deception and confusion in the trade and it has already caused damage to the appellant and is likely to cause further damage unless the respayment is restrained by a perpetual injunction from using the word "SAINATH" in its trading style/trade name. The appellant has produced the voluminous record to the trial court showing its exclusive use of the word "SAINATH" in all its dealings with its customers and clients and on all its invoices, letter heads, bills, correspondence etc. which have unequivocally proved that the appellant was in prior use of the word "SAINATH". 6. Despite this fact, the learned City Civil Judge has observed that the appellant has failed to prove prima facie case and that the appellant could not claim any exclusive right that except itself nobody should run business under the trade name "SAINATH". The learned City Civil Judge has also committed an error in observing that the appellant has failed to prove that the respondent is selling its goods by making false representation that the goods sold by it are the goods manufactured by the appellant. There was no iota of evidence or any basis for the learned City Civil Judge to come to a conclusion that the respondent was selling its goods by its clear identity and on the strength of quality of goods. He has further submitted that various authorities relied upon by the appellant before the Trial Court were not considered in their proper perspective and the observations made and conclusion drawn as well as finding given by the learned City Civil Judge are contrary to the facts found and evidence adduced on record as well as the settled legal propositions propounded by this Court as well as by the Hon'ble Supreme Court. The order passed by the learned City Civil Judge therefore, calls for an interference by this Court while exercising the appellate powers and the said order is required to be quashed and set aside and injunction prayed for is required to be granted. 7. In support of his submission, Mr. Shah relied on the decision of this Court in the case of BHARAT TILES AND MARBLE PRIVATE LTD. V/S. BHARAT TILES MANUFACTURING COMPANY, 19 G.L.R. 518. It was observed by this Court in para 12 of its judgment that "the principles are well known and settled by the authorities. The name under which a business trades will almost always be a trade mark and it is also considered difficult, if not impossible, to distinguish between the trading business and a trade name. The Court has further observed that it is no doubt true that where the trade name of an individual business name is geographically descriptive, trade name would not by itself establish a cause for the relief in a passing off action. The aggrieved party has to prove that the use by the rival party of his trading style is calculated to lead to the belief that the business of the rival party is the business of the aggrieved party. The Court has also observed that it is equally significant to note that the name of a business will acquire a goodwill in course of time and the Courts always protect them. The passing off action would certainly lie at the instance of a business man, if his rival carries on his business in the name which is calculated to deceive or which may divert the business from the plaintiff to the defendant or it may occasion a confusion between the two businesses. The Court has therefore paused a precise question by observing that the crux of the problem in passing off action of business or goods is that : "Is a name so nearly resembling the name of another firm as to be likely to deceive?". And that question is to be determined by the Court." 8. Mr. Shah has further relied on the decision of this Court in the case of CIBATUL CHEMICAL INDUSTRIES PVT. LTD. V/S. CIBATUL LIMITED, 19 G.L.R. 315 wherein this Court has taken the view that "question as regards similarity and likelihood of confusion will have in substance to be decided by the Court on its own assessment as regards similarity and likelihood of confusion. The test to be applied is test of an average person with imperfect recollection. One has to visualize a customer or a tradesman or a citizen who may happen to have dealings with the Company concerned or who may happen to want to purchase the goods manufactured by company concerned. The Court has further observed that when a consumer or customer effects a purchase, he is entitled to be assured of the fact that he is purchasing the very goods that he wants and the goods manufactured by a concern in which he has confidence and not goods manufactured by another concern whom the consumer or the customer does not know and that too by reason of the fact that he is deceived into believing that the product is manufactured by the former, though it is in fact manufactured by the later. Even if, therefore, the defendant company had innocently selected a fancing which is deceptively similar to the name of the plaintiff company, the Court would issue an injunction restraining the defendant company from carrying on its business in the said name." 9. Mr. Shah has relied on the decision of the Delhi High Court in the case of CENTURY TRADERS V/S. ROSHAN LAL DUGGAR AND COMPANY AND OTHERS, A.I.R. 1978 DELHI 250 wherein it is held that "In an action for passing off in order to succeed in getting an interim injunction the plaintiff has to establish user of the mark prior in point of time than the impugned user by the defendants. The Court has further observed that proof of actual damage or fraud is unnecessary in a passing off action whether the relief asked for is injunction alone or injunction, accounts and damages. If there is a likelihood of the offending trade mark invading the proprietary right, a case for injunction is made out." 10. Mr. Shah has further relied on the decision of the Hon'ble Supreme Court in the case of LAXMIKANT V. PATEL V/S. CHETANBHAI SHAH AND ANOTHER, AIR 2002 SUPREME COURT 275 wherein the Hon'ble Supreme Court has observed that "A person may sell his goods or deliver his services such as in case of a profession under a trading name or style. With the lapse of time such business or services associated with a person acquired a reputation or goodwill which becomes a property which is protected by Courts. A competitor initiating sale of goods or services in the same name or by imitating that name results in injury to the business of one who has the property in that name. The law does not permit any one to carry on his business in such a way as would persuade the customers or clients in believing that the goods or services belonging to someone else are his or are associated therewith. It does not matter whether the latter person does so fraudulently or otherwise. The reasons are two. Firstly, honesty and fair play are and ought to be, the basic policies in the world of business. Secondly, when a person adopts or intends to adopt a name in connection with his business or services which already belongs to someone else it results in confusion and has propensity of diverting the customers and clients of someone else to himself and thereby resulting in injury. The three elements of passing off action are the reputation of goods, possibility of deception and likelihood of damages to the plaintiff. The same principle, which applies to trade mark, is applicable to trade name. Passing off cases are often cases of deliberate and intentional misrepresentation, but it is well-settled that fraud is not a necessary element of the right of action, and the absence of an intention to deceive is not a defence though proof of fraudulent intention may materially assist a plaintiff in establishing probability of deception." The Court has further observed that "In such a situation, on the plaintiff succeeding in making out a prima facie case, the Court shall have to concentrate on the likelihood of injury which would be caused to the plaintiff in future and simply because the business under the offending name had already commenced before the filing of the written statement or even shortly before the institution of the suit would not make any difference and certainly not disentitle the plaintiff to the grant of ad-interim injunction." The Hon'ble Supreme Court has further observed that the discretion exercised by the Trial Court and the High Court against the plaintiff, is neither reasonable nor judicious. The grant of interlocutory injunction to the plaintiff could not have been refused and after interfering with the discretionary orders passed by the Trial Court and High Court, the Hon'ble Supreme Court has granted interim relief to the plaintiff in that case. 11. Mr. Shah has further relied on the decision of the Bombay High Court in the case of M/s. SIA GEMS AND JEWELLERY PVT. LTD., MUMBAI V/S. SIA FASHION, MUMBAI, AIR 2004 BOMBAY 10 wherein it is held that a suit filed by plaintiff for an injunction restraining the defendant from passing off in the course of trade their goods as those of the plaintiffs by use of the trade name SIA is maintainable even though the word SIA is a name by which goddess Sita is known and is a common name in India. The trade mark SIA is distinctive for the purpose of passing off action, though it may not have been adopted to distinguish. The Court has further observed that it cannot be said that the word SIA which is a common name cannot be registered under Section 9 of the Trade Marks Act. There is no doubt that under Section 9 a proper name can be registered as a trade mark except or unless the name or one of the names is such as specified under the Emblems and Names (Prevention of Improper Use) Act, 1950. 12. Mr. Shah has further relied on the decision of this Court in the case of DUNCANS AGRO INDUSTRIES LIMITED V/S. SOMABHAI TEA PROCESSORS (P.) LTD., 36 (1) G.L.R. 380 wherein it is held that "A trader who first goes to the market with his product under a particular trade mark or trade name as a distinctive mark, gets the proprietary right to use the mark, to the exclusion of others, irrespective of the length of user or extent of his business." Mr. Shah has further relied on an unreported judgment of this Court delivered on 18.01.1974 in Appeal From Order No. 84 of 1973 wherein it is held that even if the plaintiff's user was only few months prior to that of the defendant, the plaintiff would be entitled to an injunction restraining the defendant from using that mark or a similar mark. 13. Mr. Shah has further relied on the decision of the Delhi High Court in the case of PRAKASH METAL WORKS V/S. SQUARE AUTOMATION (P) LTD., 1991 (2) ARB.L.R. 421 wherein it is held that "in an action for passing off one has to establish the prior user of the trade mark in point of time and that because of the similar and deceptively similar goods being sold under the same trade name, the plaintiff has suffered loss or it has caused damage to his reputation and goodwill. He need not prove actual damage in a passing off action or the actual amount spent for advertisement or on building the reputation and goodwill. The balance of convenience is in favour of the plaintiff. The defendant is restrained from using manufacturing and selling his product under the trade mark 'HOT FLO'." 14. Mr. Shah has further relied on the decision of the Delhi High Court in the case of ROOPAK STORES V/S. RUPAK DEPARTMENTAL STORE, 1999 (2) ARB.L.R. 285 wherein the plaintiff was carrying on its business in the name and style of M/s Roopak Stores. The plaintiff has acquired goodwill and reputation under the said trading style Roopak Stores. The defendant started business much later in point of time compared to the plaintiff. The word 'Rupak' used as part of the trading style "Rupak Departmental Store" by the defendant is phonetically similar to the word 'Roopak' which is the principal part of the trading style of "Roopak Stores" of the plaintiff-firm. The Court has taken the view that there was a prima facie case to grant the injunction in favour of the plaintiff and that the balance of convenience was also in favour of the plaintiff. 15. Mr. Shah has further relied on the decision of the Hon'ble Supreme Court in the case of WANDER LIMITED AND ANOTHER V/S. ANTOX INDIA P. LTD., 1990 (Supp) S.C.C. 727 for the proposition that "in a passing-off action, the plaintiff's right is independent of such a statutory right to a trade mark and is against the conduct of the defendant which leads to or is intended or calculated to lead to deception. Passing-off is said to be a species of unfair trade competition or of actionable unfair trading by which one person, through deception, attempts to obtain an economic benefit of the reputation which another has established for himself in a particular trade or business. The action is regarded as an action for deceit. The tort of passing-off involves a misrepresentation made by a trader to his prospective customers calculated to injure, as a reasonably forseeable consequence, the business or goodwill of another which actually or probably, causes damage to the business of good of the other trader." 16. Mr. Shah has relied on the decision of the Allahabad High Court in the case of VICTORY TRANSPORT CO. PVT. LTD. V/S. THE DISTRICT JUDGE AND OTHERS, 1981 PTC 1 wherein the plaintiff was doing the transport business under the name and style of "Victory Transport Company (Pvt.) Limited". The defendant had started transport business in the name of "Victory Goods Transport Company". The Court has taken the view that the defendant's name is deceptively similar and likely to cause confusion and hence, the plaintiff was entitled to an interim injunction on the ground that the action was that of infringement and passing off. 17. Mr. Shah has further relied on the decision of this Court in the case of MAHENDRA AND MAHENDRA SEEDS PVT. LTD. V/S. MAHINDRA & MAHINDRA LTD., 2003 (26) PTC 434 (GUJARAT) wherein the plaintiff Company was in diverse business comprising manufacturing of motor vehicles, chemicals, computer software, exports, etc. for more than five decades under the registered trade name MAHINDRA AND MAHINDRA. The defendant has adopted MAHENDRA AND MAHENDRA PAPER MILLS LIMITED as its name. The words are phonetically and visually and structurally almost identical. The Court has taken the view that the plaintiff's name was not merely descriptive but has become distinctive or acquired secondary meaning in common with its business. The use of those words in the trade name adopted by defendant likely to deceive or confuse the public. There was a prima facie case and balance of convenience was in favour of the plaintiff and if the injunction was not granted, irreparable injury will be caused to the plaintiff. The Court has also taken the view that for maintaining passing off action common field of activity is not a sine qua non. 18. Mr. Shah has further relied on the decision of the Delhi High Court in the case of CIBA GEIGY LTD. V/S. CROSSLANDS RESEARCH LABORATORIES LTD., 1996 PTC 16 for the proposition that it is the duty of the Court to compare the words as a whole and considering the question of similarity in the context of the practice in the trade in question. 19. Mr. Shah has further relied on the decision of the Hon'ble Supreme Court in the case of MIDAS HYGIENE INDUSTRIES P. LTD. AND ANOTHER V/S. SUDHIR BHATIA AND OTHERS, 2004 (28) PTC 121 wherein it was an admitted position that the respondents used to work with the appellants. The advertisements which had been issued by the appellants in the year 1991 at least from that year they were using the Mark LAXMAN REKHA on their products. Not only that but the appellants have had a Copyright in the Marks KRAZY LINES and LAXMAN REKHA with effect from 19.11.1991. The Copyright had been renewed on 23.04.1999. A glance at the cartons used by both the parties shows that in 1992 when the respondent first started he used the mark LAXMAN REKHA in cartons containing colours red, white and blue. No explanation could be given as to why that carton had to be changed to look almost identical to that of the appellant at a subsequent stage. On these facts, the Court had taken the view that this prima facie indicates the dishonest intention to pass off his goods as those of the appellants. The Court has further observed that in the cases of infringement either of Trade Mark or of Copyright normally an injunction must follow. Mere delay in bringing action is not sufficient to defeat grant of injunction in such cases. The grant of injunction also becomes necessary if it prima facie appears that the adoption of the Mark was itself dishonest. 20. Mr. Shah has further relied on the decision of the Kerala High Court in the case of NATIONAL GARMENTS, KALOOR V/S. NATIONAL APPARELS, ERNAKULAM, COCHIN, AIR 1990 KERALA 119 wherein it is held that "while considering an application for prohibitory injunction in an action for passing off, the principle applicable for granting interlocutory injunction is slightly different from the principle applicable in ordinary cases. For a temporary order in an action for passing off, the plaintiff need not in general show a strong prima facie case. However the prima facie case that is required to be shown must be something more than a case that will avoid the action being struck out as frivolous or vexatious. Generally stated "even if the chance of success at the trial are only 20 percent" the interim relief sought for is required to be granted. There is another reason for the grant of the interlocutory injunction under such circumstances. Such an order would stop the infringement without delay. Not only that from experience it is clear that a successful motion for interlocutory injunction "normally puts an end to the litigation and the infringement, with a great saving in expense compared with a full trial" and that is the reason why the law insists upon a hearing of such a motion in every case." 21. Lastly, Mr. Shah relied on the decision of Hon'ble Supreme Court in the case of CADILA HEALTH CARE LTD. V/S. CADILA PHARMACEUTICALS LIMITED, 2001 PTC 541 (S.C.) for the proposition that "passing-off action depends upon the principle that nobody has a right to represent his goods as the goods of somebody. In other words a man is not to sell his goods or services under