Vipin Sanghi JUDGMENT
Vipin Sanghi, J.
Brief reasons for passing the order dated 07.04.2016.
1. This order is being passed in continuation of the order dated 07.04.2016. The order dated 07.04.2016 was passed on the day the defendants put in appearance consequent to issuance of summons in the suit and notice in the interim application. In view of the urgency, interim directions were issued on 07.04.2016 and it was observed that reasons for the same shall follow.
2. The plaintiff No. 1 (Havells India Limited) and plaintiff No. 2 (M/s. QRG Enterprises Ltd.) have filed the suit with the grievance that the defendants continue to use the mark "HAVELL'S" in connection with their business enterprise, including as a part of the corporate names of defendants No. 3 & 5. It is claimed that this amounts to infringement of the plaintiffs' trademark, and passing off of the business of the defendants as that of the plaintiffs.
3. The mark "HAVELL'S", which includes the word mark, device mark and other variants of the same, is claimed to be the registered trademark of the plaintiff No. 2. Plaintiff No. 1 is its licensed user, and the said mark has earned reputation and goodwill since 1971. The plaintiffs state that the defendants have no connection with the plaintiffs' brand "HAVELL'S", and the defendants have been conducting their business in identical goods for more than 40 years under the trademark/brand "HPL". It is claimed that the retention of the mark "HAVELL'S" in the corporate names of defendants No. 3 & 5 has enabled the defendants to infringe the plaintiffs' trademark, and dishonestly take advantage of the goodwill and reputation of the plaintiffs.
4. Defendant No. 6 is a company which has come out with a Draft Red Herring Prospectus (DRHP) in respect of its proposed Initial Public Offering (IPO). The grievance of the plaintiffs is that the mark "HAVELL'S" is being prominently shown in the said DRHP and in the advertisements issued by the defendants in relation to the proposed IPO, on the premise that defendants No. 3 & 5 are amongst the promoters of the defendant No. 6. By using the names of defendants No. 3 & 5 as the co-promoters of defendant No. 6, the defendants are seeking to mislead the public at large into believing that defendant No. 6 is promoted by the plaintiffs. On that basis, the defendants are seeking to collect subscriptions from the public at large by misleading them. The defendants are seeking to ride upon the goodwill and reputation enjoyed by the plaintiffs, to fraudulently raise money to the tune of Rs. 450 Crores under the proposed IPO. The proposed IPO of defendant No. 6 would pose threat to the goodwill and reputation of plaintiff No. 1, apart from defrauding the general public and the investors.
5. The plaintiffs claim that defendant No. 3 has only income from dividends of around Rs. 1.4 Lakhs, and defendant No. 5 has turnover of about 3.90 Crores. The main business of the defendants is being carried out by defendants No. 4 & 6 under the brand "HPL".
6. The submission of the plaintiffs is that the defendants were restrained from using the mark "HAVELL'S" vide order dated 25.05.1988 passed in C.S.(O.S.) No. 1260/1988 (now re-numbered as Suit No. 929/2010). Defendant No. 3 was injuncted from passing off its goods and business as that of the plaintiffs. The submission of the plaintiffs is that a trademark is infringed not only by its unauthorized use on products, labels, advertising materials, etc., but also upon its use as part of the trade/corporate name of entities dealing with same or similar goods or services, or by use in any manner in connection with the business or enterprise of such entities. Reliance is placed on Section 29(5) of the Trademarks Act to submit that a registered trademark is infringed by a person if he uses such mark, inter alia, as his trade name, or part of his trade name, or name of his business concern, or part of the name of his business concern dealing in goods & services in respect of which the trademark is registered. The use of the mark "HAVELL'S" by defendants No. 3 & 5 as a part of their corporate name, therefore, tantamount to infringement under Section 29(5) of the Trademarks Act.
7. The case of the plaintiffs is that the penetration of Internet has resulted in wide spread dissipation of information. Earlier, the general public may not have been aware that companies bearing the corporate name "HAVELL'S" are associated with goods sold under the brand name "HPL". However, now a search on the Internet for "HPL" yields results on its corporate structure, including companies bearing the names "HAVELL'S", which suggests connection between "HPL" and "HAVELL'S" - the plaintiffs.
8. The plaintiff No. 1 is also the proprietor of the domain name www.havells.com. The plaintiffs have been vigilantly guarding and protecting their goodwill and trade name against misuse by third parties in India and in several other countries. It is claimed that the plaintiffs' mark is a well-known trademark. The plaintiffs have narrated in their plaint, the history with regard to the formation of the mark "HAVELL'S"; its use; its assignment, and; how the said mark has come to be owned by the plaintiffs. The plaintiffs have also narrated the history of litigation between the plaintiffs on the one hand, and some of the defendants on the other hand, in relation to the use of the mark "HAVELL'S" on products, and as a part of the corporate names of defendants No. 3 & 5.
9. The grievance of the plaintiffs is that the use of the mark "HAVELL'S" by the defendants in the DRHP in a prominent manner, inter alia, on its cover page as a part of the trade name of the promoters of the defendant No. 6, would mislead the public into believing that the proposed IPO is floated by the plaintiffs, or it is related to the plaintiffs. The plaintiffs, therefore, seek an injunction in respect of the proposed IPO.
10. Learned senior counsel for the plaintiffs submits that the plaintiff No. 1 has grown more than a thousand times in the last 20 years. Its market capitalization presently is to the tune of Rs. 19,000 Crores. The sales of the plaintiffs under the brand "HAVELL'S" have consistently been rising since 2000-01, and in the year 2014-15, the sales were to the tune of Rs. 5,557.79 Crores. The plaintiffs have been investing very large amounts in sales promotions, and in 2014-15, the plaintiffs incurred expenditure of Rs. 154.99 Crores for promotion of their brand "HAVELL'S".
11. It is pointed out that defendant No. 3 had a turnover of Rs. 2 Lakhs, Rs. 6 Lakhs and Rs. 1 Lakh in the year ending on 31.03.2013, 31.03.2014 & 31.03.2015 respectively, with profits of Rs. 2 Lakhs, Rs. 4 Lakhs and loss of Rs. 11 Lakhs respectively in the said years. Similarly, defendant No. 5 had a turnover of Rs. 766 Lakhs, Rs. 453 Lakhs and Rs. 391 Lakhs in the years ending on 31.03.2013, 31.03.2014 & 31.03.2015 respectively with profits of Rs. 3.8 Lakhs, loss of Rs. 338 Lakhs, and loss of Rs. 0.006 Lakhs in the said three years respectively. Thus, defendants No. 3 & 5 are very small entities with insignificant resources. They are financially not sound to promote a company which is planning to raise capital from the market to the tune of Rs. 450 Crores. The submission is that despite the fact that the defendants No. 3 & 5 are practically defunct companies, they have been shown as the promoter of defendant No. 6 only with a view to capitalize on their corporate name, which contains the plaintiffs mark "HAVELL'S", so that the public may be unwittingly misled into subscribing to the IPO by assuming a connection between the plaintiffs and the IPO of defendant No. 6.
12. The submission of the plaintiffs is that the defendants have not disclosed in the DRHP the order dated 25.05.1988 passed in Suit No. 1260/1988 (now re-numbered as Suit No. 929/2010). The defendants were bound to disclose the same, as the promoters are obliged to disclose all material litigations involving them.
13. Learned senior counsel for the plaintiffs submits that as per the DRHP, the percentage of equity shares held by defendants No. 3 & 5 in defendant No. 6 is only to the tune of 6.12% and 25.10%, whereas "HPL India Limited" and Mr. Lalit Seth, i.e. defendants No. 4 and defendant No. 2 respectively hold 25.28% and 16.59% shareholding in defendant No. 6. This itself shows that the names of defendants No. 3 & 5 have been included as "promoters of defendant No. 6" only with a view to exploit their corporate name to mislead the public at large into believing that defendant No. 6 has connection with the plaintiffs.
14. Mr. Sibal submits that lay persons respond to IPOs floated in the capital market. Even if some of them may be informed customers/investors, the likelihood of them being misled into believing that the proposed IPO of defendant No. 6 has connection with the plaintiffs cannot be ruled out. Reliance is placed on the decision of this Court in Baker Hughes Limited & Another v. Mr. Hiroo Khushalani & Another, MANU/DE/0411/1998 : ILR (1999) I Delhi 41, wherein this Court dispelled the notion that merely because the customers are sophisticated, knowledgeable and discriminating, that does not rule out the element of confusion if the trade marks/trade names/corporate names of two companies are identical, or if the similarity between them is profound. Mr. Sibal submits that the investors in an IPO are lay persons, who invest their hard earned savings in the hope of getting handsome returns, and they are not likely to read the RHP minutely, particularly when the disclaimer incorporated in the RHP, or in the advertisements issued by the company in relation to the proposed IPO are printed in an insignificant and innocuous manner. Reliance is placed on paragraph 54 and 59 of this decision, which read as follows:
"54. I have given my anxious consideration to the submissions of the learned counsel for the defendants on this aspect of the matter. There can be an informed class of purchasers who have a degree of knowledge and a sense of discrimination more substantial than that of an ordinary purchaser, but the mere fact that the customers are sophisticated, knowledgeable and discriminating does not rule out the element of confusion if the trade marks/trade names/corporate names of two companies are identical or if the similarity between them is profound. In several cases it has been held that initial confusion is likely to arise even amongst sophisticated and knowledgeable purchasers under a mistaken belief that the two companies using the same corporate name, trading name or style are interrelated. It is the awakened consumers who are more aware of the modern business trends such as trade mark licensing, mergers, franchising, etc. It is this class of buyers who are likely to think that there is some sort of association between the products of two different companies when they come across common or similar trade names or corporate names or trading styles used by them. The sophistication of a buyer is no guarantee against likely confusion. In some case, however, it is also possible that such a purchaser after having been misled into an initial interest in a product manufactured by an imitator discovers his folly, but this initial interest being based on confusion and deception can give rise to a cause of action for the tort of passing off as the purchaser has been made to think that there is some connection or nexus between the products and business of two disparate companies. This view finds support from various decisions gathered in Section 20.12 of the Filing Instructions 1988, Fall Cumulative Supplement from Callmann 'Unfair Competition, Trademarks and Monopolies'. This Section reads as under:--
"But even apart from the doctrine of greater care, if the manner of purchasing becomes routine, the possibility of confusion can arise notwithstanding the expertise of the purchasers (Layne-Western Co. v. Fry. (14) 174 F Supp 621 (CCPA 1960). The mere fact that all the customers are discriminating technicians does not by itself insure against confusion; being skilled in the relevant art does not necessarily preclude confusion if the similarity between the marks is great (Wincharger Corpn. v. Rinco. Inc., (15) 297 F2d 261 (CCPA 1962). "The words 'sophisticated' and 'knowledgeable' are not talismans which, when invoked, act magically to dissipate a likelihood of confusion. It must also be shown how the purchasers react to trademarks, how observant and discriminating they are in practice, or that the decision to purchase involves such careful consideration over such a long period of time that even subtle differences are likely to result in a recognition that different marks are involved before an irrevocable decision is made" (Refreshment Mach., Inc. v. Read Industries. Inc., (16) 196 USPQ 840 (TTAB 1977)."
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"In some cases it has been held that a different type of confusion, referred to as "initial confusion," is likely to arise even among sophisticated purchasers. As one court has said; "by intentionally copying the trademark of another more established company, one company attempts to attract potential customers based on the reputation and name built up by the first user; the older company. The danger here is not that the sophisticated purchaser [in the oil trading market] will actually purchase from Pegasus Petroleum believing that he has purchased from Mobil [Oil Co.], the danger is that the purchaser will be misled into an initial interest in Pegasus Petroleum based on a mistaken belief as to the two companies' inter-relationships [Mobil Oil Corp. v. Pegasus Petroleum Corp., 229 USPQ 890] (17)
(Emphasis supplied).
It has also been suggested that sophisticated consumers, being more aware of such modem business trends as trademark licensing and conglomerate mergers, are more rather than less likely to suspect some association between disparate companies or products when they see what appears to be one company's mark on another's product [Lois Sportswear, USA, (18) Inc. v. Levi Straus & Co., 230 USPQ 831, 837 (CA2, 1986)]."
55. x x x x x x x x x
56. x x x x x x x x x
57. x x x x x x x x x
58. x x x x x x x x x
59. Again in Grotrian, helfferich, Schulz. Th. Steinweg Machf, a corporation, v. Steinway & Sons, a corporation, 365 F. Supp. 707 (1973)(20), striking a similar note the court held as under:--
Plaintiff argues that purchaser will not be confused because of the degree of their sophistication and the price (B & L Sales Associates v. H. Daroff & Sons, Inc, supra, 421 F.2d at 354) (21). It is true that deliberate buyers of expensive pianos are not as vulnerable to confusion as to products as hasty buyers of inexpensive merchandise at a newsstand or drug store [Callmann, Unfair Competition-Trademarks and Monopolies, (3 ded. 1971(22)]. The sophistication of buyers, however, does not always assure the absence of confusion [Communication Satellite Corp. v. Comcet. Inc., 429 F.2d at 1252 (23)]. It is the subliminal confusion apparent in the record as to the relationship, past and present, between the corporate entities and the products that can transcend the competence of even the most sophisticated consumer.
Misled into an initial interest, a potential Steinway buyer may satisfy himself that the less expensive Grotrian-Steinweg is at least as good, if not better, than a Steinway, Deception and confusion thus work to appropriate defendant's goodwill. This confusion, or mistaken beliefs as to the companies' inter-relationships, can destroy the value of the trademark which is intended to point to only one company [American Drill Busing Co. v. Rockwell Mfg. Co., 342 F.2d 1992, 52 CCPA 1173 (1965)(24)]. Thus, the mere fact that purchasers may be sophisticated or discriminating is not sufficient to preclude the likelihood of confusion. "Being skilled in their own art does not necessarily preclude their mistaking one trademark for another when the marks are as similar as those here in issue, and cover merchandise in the same general field" [Id].
Having regard to the above discussion prima facie I am of the opinion that the word Baker occurring in the corporate name of the second defendant suggests its connection or nexus with 'Baker', which depicts a wrong picture as from February 1995 'Baker' has terminated its relation with the defendants. The continuance of the word Baker as part of the corporate name of the second defendant is likely to cause deception and confusion in the mind of the customers. There would be no justification for the second defendant to use the word Baker as part of its corporate name after the ties between the first plaintiff and the second defendant have ceased to exist."
15. Mr. Sibal has also placed reliance on Baker Hughes Limited (supra) to submit that the use of the mark "HAVELL'S" by defendants No. 3 & 5 would dilute the plaintiffs trademark through loss of exclusive use of the said mark by the plaintiffs. Reliance is placed on paragraph 62 of Baker Hughes Limited (supra), which reads as follows:
"62. Reverting to the case in hand, it can be readily inferred that when a purchaser of the oil field equipment comes to know that the name Baker is no longer the sole preserve of the plaintiffs and can be used even by a company which is not associated with the plaintiffs, his confidence in the products of the plaintiffs is likely to receive a set back. A buyer who was being attracted to the products of the plaintiffs for the exclusivity of the name Baker may turn away from them. The value and the strength of the goodwill attached to the word Baker which hitherto was the exclusive and the sole preserve of the plaintiffs is likely to depreciate. That apart the use of the word Baker as part of the corporate name of the second defendant will put the reputation of the plaintiffs in the hands of the second defendant over whom they have no control, being immune from their direction and command. The dilution of the trade mark or corporate name of the plaintiffs by the use of the word baker by the defendants after the plaintiffs have ceased to have any association or relationship with the defendants, will adversely affect the business interests of the plaintiffs. I am supported in this view by the following observations of Neville, J. in Warwick Tyre Co. v. New Motor and General Rubber Co., (25) (1910) 1 Chancery Division 248 (at page 255):--
"Practically the sole asset possessed by the plaintiff is the goodwill which attaches to the name of Warwick in the tyre market, and I think the evidence shows that the goodwill is an asset of great value. It would not be doubted that the value of the trade name Warwick in the tyre market would be considerably lessened by the fact that there was another person in the market who was entitled to deal in tyres in connection with the name Warwick. In the first place it would limit the right of the owner of the name Warwick in the tyre market, to the use of his name in respect of those articles-only those actual articles-on which he had used it hitherto, and in the second place, it puts the reputation of the plaintiffs in the hands of persons over whom they have no control whatever."
16. Mr. Sibal submits that merely because the Regulations of the Securities and Exchange Board of India (SEBI) require disclosure of the names of the promoters of defendant No. 6 in the Red Herring Prospectus (RHP) and advertisements, the same cannot be permitted, as it would allow posing of the proposed IPO of the defendant No. 6 as that of the plaintiffs.
17. Mr. Sibal submits that in the DRHP, the earlier litigation between the parties has been disclosed at page 318 thereof.
18. He submits that the said disclosure is wholly meaningless as the same is not even likely to be read by an unwary investor. It is like finding a needle in a hay stack. He submits that, in contrast, the names of defendants No. 3 & 5 are prominently displayed as promoters of defendant No. 6 in the DRHP on the cover page, as well as in the advertisements being issued by them.
19. In Bloomberg Finance LP v. Prafull Saklecha, MANU/DE/3673/2013 : (2014) 207 DLT 35, this Court held that the offer made by the defendants to carry a prominent disclaimer - that they are not associated with the plaintiffs, is not likely to diminish the possible confusion in the minds of the public, as the names of the defendant companies all begin with "BLOOMBERG". It was held that the said name would be a prominent feature displayed on advertisement hoardings and other publicity material.
20. Reliance is also placed by Mr. Sibal on M/s. K.G. Khosla Compressors Ltd. v. M/s. Khosla Extrakting Ltd. & Others, MANU/DE/0219/1985 : ILR (1985) II Delhi 416. In this case, the plaintiff had filed the suit for seeking perpetual injunction restraining the defendants from using and carrying on business in the name of M/s. Khosla Extrakting Ltd. or making a public issue under the said name. The Court relied on Joseph Rodgers & Sons Ltd. v. W.N. Rodgers & Co., 1924 (41 RPC) 277 (9), and observed:
"25. ... ... ... Romer, J. observed that there are two propositions: (i) No man is entitled to carry on his business in such a way as to represent that it is the business of another, Or is in any way connected with the business of another; and (ii) No man is entitled so to describe or mark his goods as to represent that the goods are the goods of another. It was observed that to the first proposition there was an exception: a man, in my opinion, is entitled to carry on his business in his own name so long as he does not do any thing more than that to cause confusion with the business of another, and so longs 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 does nothing at all in any way to try and represent that he is that better-known and successful manufacturer."
21. Mr. Sibal submits that in M/s. K.G. Khosla Compressors Ltd. (supra), the defendant made an offer to give a disclaimer by putting an advertisement that defendant No. 1 "belongs to S.K. Khosla Group of Companies and has nothing to do with K.G. Khosla Group of Companies". The Court rejected the said offer made by the defendant and observed as follows:
"I think, this type of offer cannot improve the matter and rather it will cause worse type of confusion in the mind of the public. For one thing there is nothing on the record to show that there is any group known as "S.K. Khosla Group of Companies" in the business circles. To my mind, serious questions are to be tried in the present suit. Prima facie, the suit is maintainable. There is also a prime facie case. Defendant No. 1 is threatening to go for public issue of capital to which the plaintiff objects. I think, the apprehension of the plaintiff is well-founded. There is a third unseen party in the present case which is the investing public. The public is bound to be misled by the name of defendant No. 1 as the company belonging to the plaintiff group of companies. The defendants cannot be permitted to cash on the name of the plaintiff. If ultimately defendant No. 1 fails it will rebound on the plaintiff and its group causing misery to the shareholders of the plaintiff and its group of companies. All this will bring these companies into disrepute. There would certainly be no measure of damages that the plaintiff might suffer. The balance of convenience is obviously in favour of the plaintiff."
22. Mr. Dave, learned senior counsel for the defendants has opposed the grant of any orders of injunction. He submits that the defendants are entitled to file their written statement, reply and documents and the applications be listed for hearing after the defendants have had an opportunity to meet all the applications made by the plaintiffs.
23. He further submits that the defendants have complied with the SEBI Regulations. "HAVELL'S" is a part of the corporate name of defendants No. 3 & 5 since 1956 and 1974 and earlier attempts to injunct the said defendants from using "HAVELL'S" as a part of the corporate names of defendants No. 3 & 5 has failed, with the refusal of injunction by the learned Single Judge of this Court; the affirmation of the said order by the Division Bench; and, the dismissal of the Special Leave Petition.
24. Mr. Dave submits that the use of their corporate name, which contains "HAVELL'S" by defendants No. 3 & 5 was complained of by the plaintiffs in the earlier proceedings, including in C.S.(O.S.) No. 1333/2004. The continued use of the same does not give a fresh cause of action to the plaintiffs, merely because defendants No. 3 & 5 are coming out with the IPO in respect of their promoted company defendant No. 6.
25. Mr. Dave submits that in C.S.(O.S.) No. 1333/2004, the plaintiffs obtained an ex-parte ad interim order of injunction on 25.11.2004, restraining the use of the trade/corporate name Havells Electronics Pvt. Ltd. or any other similar name by the defendants. However, after contest by the defendants, the said injunction was vacated by the learned Single Judge vide a detailed order dated 26.04.2005 passed in I.A. Nos. 7880/2004 & 75/2005 in C.S.(O.S.) No. 1333/2004. The Court, after noticing the history with regard to the incorporation of Havells Pvt. Ltd. and Havells Electronics Pvt. Ltd., i.e. defendants No. 3 & 5 in the years 1956 and 1974, as also the assignments claimed in their favour by the plaintiffs, dismissed I.A. No. 7880/2004 preferred by the plaintiff under Order XXXIX Rules 1 & 2 CPC and vacated the ex-parte injunction dated 25.11.2004. Simultaneously, the Court allowed defendant's application under Order XXXIX Rule 4 CPC, i.e. I.A. No. 75/2005.
26. In appeal, the Division Bench, vide its decision dated 12.09.2007 reported as QRG Enterprises & Another v. Surendra Electricals & Others, MANU/DE/2489/2007 : 2007 (98) DRJ 499 (DB), while dismissing the appeal of the plaintiffs herein, observed as follows:
"We think it imperative to clarify that the Defendants/Respondents are not entitled or authorised to employ their trade name on their products with such prominence or ubiquity as to transform it into a trade mark, since it will then confuse a customer possessing a modicum of intelligence into purchasing the Defendants/Respondents products believing them to be that of the Plaintiffs/Appellants. Needless to say the views expressed herein, as is the opinion of the learned Single Judge, are only prima facie in nature."
27. On further appeal to the Supreme Court, the Supreme Court upheld the decision of the Division Bench by observing as follows:
"Pending hearing and final disposal of the suit on the Original Side of the Delhi High Court, bearing No. 1333/2004, the defendants would not be entitled/authorized to employ their trade name on their products with such prominence or ubiquity as to transform it into a trade mark. With the above clarification, rest of the impugned judgment is maintained."
28. Mr. Dave submits that the plaintiffs are merely seeking to use the occasion of the defendants proposing to come out with their IPO in the name of defendant No. 6, to have another shot at obtaining an injunction against defendants No. 3 & 5 from using their corporate names, merely because they contains "HAVELL'S" as parts thereof. Mr. Dave submits that the substantial grievance of the plaintiffs in the present suit remains the same as that already raised in the earlier suits, which are pending. He submits that the plaintiffs are conscious of this situation and have, therefore, made an incorrect averment in paragraph 18 of the plaint by claiming that the matters in issue in the present suit are neither directly, nor substantially, in issue in the previously instituted suits pending between the plaintiffs and some of the defendants.
29. He has also drawn attention of the Court to the SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2009, and in particular to Regulation 2(za), which defines "promoter", and Regulation 2(zb), which defines "promoter group", and Regulations 4, 6 & 9. He submits that no IPO can be offered without complying with the said Regulations, which enable the filing of objections to the DRHP by the public. Thus, the plaintiffs have no right to approach this Court as the contents of the RHP would be finalized by the SEBI.
30. He submits that the DRHP was published on 25.02.2016, whereas the suit has been filed only on 05.04.2016. He submits that under the regulations, it is mandatory that the cover page contains, inter alia, the names of the promoters of the issuer. Mr. Dave submits that no injunction can be granted against compliance of a statutory regulation, which spells out obligations to be undertaken by the issuer. In this regard, he placed reliance on the judgment of the Supreme Court in A.P. Christians Medical Educational Society v. Government of Andhra Pradesh, MANU/SC/0046/1986 : 1986 Law Suit (SC) 138 : (1986) 2 SCC 667. The Supreme Court observed in this decision, inter alia, as follows:
"10. ... ... ... Any direction of the nature sought by Shri Venugopal would be in clear transgression of the provisions of the University Act and the regulations of the University. We cannot by our flat direct the University to disobey the statute to which it owes its existence and the regulations made by the University itself. We cannot imagine anything more destructive of the rule of law than a direction by the court to disobey the laws."
31. Reference is also made by Mr. Dave to the advertisement issued by the defendants to submit that in the public advertisement, the trademark and logo of HPL has been prominently displayed and the names of the promoters, including the names of defendants No. 3 & 5 have been printed with much lesser prominence, in compliance of the statutory requirement. He submits that the DRHP refers to and deals with the "HPL" brand, and it does not referred to, and deal with the brand of the plaintiffs, viz. "HAVELL'S". He submits that defendant No. 6 is a large corporation in its own right. The total revenues of defendant HPL India Limited for the year ending on 31.03.2015 was Rs. 10,498.32 Million, i.e. over 1,000 Crores. He submits that the DRHP under the heading "Our promoter in group companies", while speaking about defendants No. 3 & 5, a clear statement - disclosing that defendants No. 3 & 5 have no concern with the plaintiffs, or the trademark "HAVELL'S" has been incorporated. Therefore, Mr. Dave submits that there is absolutely no ground made out, and there is no justification for grant of any orders of injunction at this stage.
32. Mr. Sandeep Sethi, learned senior counsel for the defendants has also advanced his submissions. He submits that when the plaintiffs filed the first suit, i.e. C.S.(O.S.) No. 1260/1988 (now re-numbered as Suit No. 929/2010), no relief was sought by the plaintiffs to seek a restraint against the use of the name "HAVELL'S" by the defendant Havells Pvt. Ltd. (defendant No. 3) as a part of its corporate name. The only injunction sought was against user of the mark "HAVELL'S" in respect of manufacturing, selling, offering for sale, advertising, directly or indirectly dealing in goods bearing the trademark "HAVELL'S". He submits that the plaintiffs were conscious of the fact that the defendants No. 3 & 5 were entitled to use "HAVELL'S" as a part of their corporate name, and that is why the relief was limited in the said suit, as aforesaid.
33. Similarly, in the interim injunction application filed in the said suit, the plaintiff had sought an injunction against use of the mark "HAVELL'S" on electrical goods, and no injunction was sought in relation to the use of the corporate name of defendant No. 3. Mr. Sethi submits that the injunction granted by the Court on the said interim application was also restricted to use of the mark "HAVELL'S" on electrical goods. In this regard, he has referred to the order dated 25.05.1988 passed by the Court.
34. Mr. Sethi submits that in the second suit, i.e. Suit No. 2290/1990 (renumbered as C.S.(O.S.) No. 928/2010), the plaintiff for the first time raised the plea that the defendants are not entitled to continue using "HAVELL'S", either as a trademark or as a part of its corporate name. Pertinently, the plaintiffs stated in paragraph 29 of the said plaint as follows:
"29. Furthermore, it is imperative that a permanent injunction be granted restraining all the companies of Mr. Lalit Seth from using HAVELL'S in any fashion and manner whatsoever whether as a trade mark or as a part of its corporate business name. The plaintiff is not praying for an interim injunction against Havell's Private or Havell's Electronics Private Limited from using HAVELL'S as a part of their corporate name on account of the fact that time has elapsed from the date of adoption to the date of institution of the suit. However, the plaintiff presses its relief for permanent injunction on the grounds that:
x x x x x x x x x x
d) that a wrong legal advice given to the plaintiff led to inaction on its part but at no time did the plaintiff permit or consent to the defendant's use of the word HAVELL'S as a part of its corporate name and the fact that the plaintiff was under a wrong impression cannot take away its right for permanent injunction against the defendants; ... ... ..."
35. Mr. Sethi submits that no injunction was granted by the Court in favour of the plaintiffs in the said suit. Mr. Sethi has also referred to the order dated 26.04.2005 passed in I.A. Nos. 7880/2004 & 75/2005 in C.S.(O.S.) No. 1333/2004, taken note of hereinabove. He has specifically referred to paragraph 37 of the said order, which takes note of the admitted documents relevant to the case.
36. Mr. Sethi points out that in Baker Hughes Limited (supra), the defendants were using the mark "BAKER" as a part of their corporate name, despite the relationship between the plaintiff and the defendant - under which the said mark was used by the defendant, having come to an end. However, in the present case, the defendants No. 3 & 5 have been using "HAVELL'S" as a part of their corporate name for decades in their own right, and not with the permission of the plaintiffs, and the injunction sought by the plaintiffs in earlier litigation against the use thereof as a part of the corporate name of defendants No. 3 & 5 was rejected by the learned Single Judge of this Court, upheld in first appeal, and also the Special Leave Petition before the Supreme Court was rejected. Thus, the decision in Baker Hughes Limited (supra) has no application in the facts of the present case.
37. Regarding Bloomberg Finance (supra), the submission of Mr. Sethi is that in the said case, the defendant had no right to use the mark "BLOOMBERG", which is not the position in the present case, as the defendants No. 3 & 5 are entitled to independently use "HAVELL'S" as a part of their corporate name. He also submits that there is no possibility of confusion, as alleged by the plaintiffs, and the said submission has already been rejected by this Court while dealing with the injunction applications in the earlier suit.
38. In his submissions in rejoinder, Mr. Sibal has argued that the question that this Court should examine as to whether the proposed IPO is likely to cause confusion amongst the innocent public on account of the fact that defendants No. 3 & 5 are prominently displaying their names as promoters of defendant No. 6. He submits that even if the defendants are merely complying with the requirements of SEBI in displaying names of defendants No. 3 & 5 as the promoters of defendant No. 6, the same does not take away from the fact that there is likelihood of confusion. He has placed reliance on Novarties AG v. Crest Pharma Pvt. Ltd. and Another, MANU/DE/1587/2009 : 2010 (2) R.A.J. 327 (Del), wherein the Court observed that:
"23. ... ... ... As per well settled law, the actual confusion and deception is not required in order to prove the case of passing off even if the defendant has adopted the mark innocently and the court comes to the conclusion that the two trade marks are deceptively similar, injunction under the said circumstances has to be granted. Actual deception is not required in an action of passing off. Century Traders v. Roshan Lal Duggar & Co., MANU/DE/0153/1977 : AIR 1978 (Del) 250."
39. He has also placed reliance on Bengal Waterproof Limited v. Bombay Waterproof Manufacturing Company & Another, MANU/SC/0327/1997 : (1997) 1 SCC 99, to submit that the proposed IPO and the publication of the public notice/advertisement in respect thereof by the defendants gives a fresh cause of action to the plaintiffs. In this decision, the Supreme Court observed:
"10. ... ... ... Wherever and whenever fresh deceitful act is committed the person deceived would naturally have a fresh cause of action in his favour. Thus every time when a person passes off his goods as those of another he commits the act of such deceit. Similarly whenever and wherever a person commits breach of a registered trade mark of another he commits a recurring act of breach or infringement of such trade mark giving a recurring and fresh cause of action at each time of such infringement to the party aggrieved. It is difficult to agree how in such a case when in the historical past earlier suit was disposed of as technically not maintainable in absence of proper reliefs, for all times to come in future defendant of such a suit should be armed with a licence to go on committing fresh acts of infringement and passing off with impunity without being subjected to any legal action against such future acts."
40. Reliance is also placed on Dolphin Laboratories Ltd. v. Arun Kumar Bansal, MANU/DE/0223/1995 : (1995) 2 Arb LR 21. In this case, the plaintiff filed the suit for injunction praying for an injunction against defendant from using the word "DOLPHIN" as a part of its corporate/trade name, and to restrain the defendant from collecting money from the public under its corporate name "DOLPHIN". The Court while granting injunction in favour of the plaintiff against use of the name "DOLPHIN" by the defendants, inter alia, as a part of its corporate name to raise monies from the public, observed as follows:
"16. The very fact that defendant intends to come out with a public issue under its corporate name which has a word "Dolphin" as profit, and is a prominent part of the defendant's corporate name, the same is likely to create a confusion in the mind of general public. The investors are likely to be misled in subscribing to the defendants share. Since it is a question of public at large and also infringements of plaintiff's registered trade mark, in case injunction is not granted, the plaintiff is likely to suffer irreparable loss and injury. In the larger public interest, balance of convenience also lies in favour of the grant of injunction. Inconvenience, if any, likely to be caused to the defendants can well be compensated against the plaintiff in these proceedings, in case ultimately the plaintiff would remain unsuccessful In the light of what has been noticed above and in view of the principles reiterated in the case of Hindustan Radiators Co.'s case (supra) ingredients (a) to (g) have been made out for a strong prima facie case for grant of injunction and for that reason plaintiff's applications are liable to be allowed, which are allowed and defendants are restrained from using the word Dolphin" or, any other word deceptively/confusingly similar thereto as a part of the trade or corporate name of defendant No. 4 and from raising money from public under the impugned corporate name through the proposed publication opening on 28th February, 1995. "
41. For the same purpose, reliance is placed on Polson Ltd. v. Polson Dairy Ltd. & Others, MANU/DE/0647/1994 : 1994 (31) DRJ 220, where the defendant adopted "POLSON" as a part of its corporate name and proposed to come out with a public issue. The Court, while granting the injunction, observed as follows:
"39. So, it is evident that defendant is trying to prima facie take benefit of the reputation which the trade mark 'Polson' enjoyed in order to deceive the general public that defendant company is successor-in-interest of the old company for reviving the business of dairy product for having the same high quality of products as used to be marketed by the plaintiff or plaintiff's predecessor a few decades ago. Even adoption of the name 'Polson' in the name of the defendant company is, prima facie, illegal because two companies having same type of names cannot be registered under the Indian Companies Act. Be as it may, keeping in view all these facts I find that there exists prima facie case in favour of the plaintiff and the balance of convenience is also in favour of the plaintiff because the defendant is yet to come into production and the evil is sought to be nipped at the bud by the plaintiff filing the suit in right earnest because the defendant company has attempted to go for public issue."
42. My order dated 07.04.2016 already contains the crux of my reasoning for granting the limited relief in the plaintiffs application. I am, prima facie, of the view that the plaintiffs are not barred from filing the present suit merely because the earlier suits are pending wherein the plaintiffs have sought injunction against the defendant Nos. 3 and 5 from using HAVELLS as a part of their corporate name. The latest development of defendant No. 6 proposing to come out with their IPO, of which defendant Nos. 3 and 5 are also promoters does give a fresh cause of action to the plaintiffs as the plaintiffs are entitled to protect their name and reputation as well as the interest of their customers and shareholders, apart from the interest of the investing public to ensure that they are not misled into believing that the proposed IPO of defendant No. 6 has any connection with the plaintiffs.
43. Thus, prima facie, I am of the view that the suit cannot be held to be barred on account of lack of fresh cause of action as urged by the defendants. The earlier attempts of the plaintiffs to seek a restraint against the use of HAVELLS by defendant Nos. 3 and 5 as a part of their corporate name has failed at the interim stage. The detailed order dated 26.04.2005 passed by the learned Single Judge dismissing the plaintiffs application under Order 39 Rule 1 & 2 CPC, and refusing to grant injunction against the use of the mark HAVELLS by the defendants was upheld by the Division Bench in its decision dated 12.09.2007, except clarifying that the defendants would not be entitled to or authorized to employ their trade name on their products with prominence or ubiquity so as to transform it into a trademark. However, no injunction was granted against defendant Nos. 3 and 5 from retaining and using their corporate name, or from carrying on their business with their existing corporate names. The Supreme Court upheld the decision of the Division Bench.
44. In view of the aforesaid position, the plaintiffs cannot seek a restraint against the defendant Nos. 3 and 5 from carrying on their business with their present corporate name. To grant an injunction against defendant No. 6 from coming out with its proposed IPO, or to prevent defendant Nos. 3 and 5 from acting as promoters of defendant No. 6 in the proposed IPO would tantamount to restraining the defendant Nos. 3, 5 and 6 from carrying on their business, for which there is no justification. The situation as it existed in 2005, when the plaintiffs interim application was dismissed by the learned Single Judge in C.S.(O.S.) No. 1334/2004, has not undergone a material change so as to justify the grant of the injunction which was then refused to the plaintiffs. Even otherwise, there appears to be little justification for the same at this stage.
45. Even though defendant Nos. 3 and 5 may not be financially as strong as the plaintiffs, that does not debar them from carrying on their business, while complying with the conditions laid down by this Court in earlier litigation between the parties. Defendant Nos. 3 and 5 are not seeking to use their corporate name/trade name on their products with prominence or with ubiquity so as to transform it into a trademark by seeking to float the proposed IPO as promoters of defendant No. 6.
46. Prima facie, it appears to me that since defendant Nos. 3 and 5 are promoters of defendant No. 6, their names are obliged to be disclosed in the RHP and in the advertisements that may be issued by defendant No. 6 in relation to the proposed IPO. Thus, there could be no injunction, at this stage, to restrain defendant Nos. 3, 5 and 6 from floating the proposed IPO, or from displaying the names of defendant Nos. 3 and 5 as the promoters of defendant No. 6 - which they appear to be. No injunction can be granted by the Court, the result whereof would be to breach the statutory regulations, such as SEBI (Issue of Capital and Disclosure Requirements) Rules, 2009.
47. Baker Hughes Limited (supra); Bloomberg Finance (supra); K.G. Khosla (supra); Novarties AG (supra); and Dolphin Laboratories Ltd. (supra), no doubt, advance the submissions of the plaintiff that the IPO proposed by the defendants in relation to defendant No. 6 should not be so advertised, either in the RHP or in the advertisements issued for that purpose by the defendants, such that the investing public are misled into believing a connection between the proposed IPO of defendant No. 6 and the plaintiffs.
48. As indicated in the order dated 07.04.2016, the concern of the Court is to ensure that the investing public is not misled into believing that the promoter companies, namely, defendant Nos. 3 and 5 (who have promoted defendant No. 6) have concern or connection with the plaintiff. Since the defendants have incorporated in the DRHP a disclaimer to say that the trademark HAVELL'S is the property of the plaintiffs and that the promoters of defendant No. 6, and the members of the promoter group are not associated in any manner with the plaintiffs or its promoters, I am of the view that the concern of the plaintiffs and the rights of the defendants can be balanced by requiring the defendants to incorporate the said disclaimer at all places where the names of the promoters of defendant No. 6, i.e. defendant Nos. 3 and 5 are displayed, immediately below such names and with equal prominence and in the same font. This will ensure that any person who comes across the RHP or the advertisements issued by defendant No. 6 in relation to the proposed IPO, while reading the names of defendant Nos. 3 and 5 as the promoters of defendant No. 6, would there and then also notice the fact that the defendant Nos. 3, 5 and 6 have no connection with the plaintiffs. The plaintiffs may also issue a clarificatory communication and advertisements as and when the public issue of defendant No. 6 is about to open and when it opens, to educate the public at large of its disassociation with defendant Nos. 3, 5 and 6.
49. Counsel for the parties be informed by the Court Master of the aforesaid reasons being recorded.
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