Madras High Court
Manipal Housing Finance Syndicate Ltd. ... vs Manipal Stock And Share Brokers Ltd. And ... on 6 December, 1996
Equivalent citations: [1999]98COMPCAS432(MAD)
JUDGMENT Jayasimha Babu, J.
1. Common plaintiffs 10 in number have filed these three suits, C.S. Nos. 19, 20 and 21 of 1996, wherein the reliefs sought are also common, defendants Nos. 2 to 4 are common in all these suits. In C.S. No. 19 of 1996, the first defendant is Manipal Stock and Share Brokers Limited, Chitrakala, Manipal. In C.S. 20 of 1996, the first defendant is Manipal Home Finance Limited, Chitrakala, Manipal. In C.S. No. 21 of 1996, the first defendant is Manipal Motors (P.) Ltd., Chitrakala Manipal. The registered offices. of all these aforementioned companies are at Chitrakala, Manipal. The plaintiffs are (1) Manipal Housing Finance Syndicate Limited, Manipal; (2) Manipal Investments Limited, Manipal; (3) Manipal industries Limited, Manipal (4) Manipal Finance Corporation Ltd., Manipal; (5) Manipal Sowbhaghya Nidhi Limited, Manipal; (6) Manipal Prakashana (P.) Ltd. R. Manipal; (7) Manipal Printers and Publishers (P.) Ltd., Manipal; (8) Manipal Hotels Limited, Madras; (9) Manipal Fibres Limited, Madras, and (10) Industrial Credit and Development Syndicate Ltd., Manipal.
2. Defendant No. 2 in all these suits is T. Ramesh Pai, defendant No. 3, is T. Sudhakar Pai and defendant No. 4 is T. Shantharam Pai.
3. The reliefs sought in these suits are : (1) for a permanent injunction restraining defendant No. 1 by themselves their servants, agents or any one claiming through them from passing off their business as the business of the plaintiffs by using the expression "Manipal" phonetically or deceptively similar to it either as part of their corporate name or using the same otherwise in the course of their business or any advertisement effected by them in any media; (2) for a permanent injunction restraining defendants Nos. 2 to 4 by themselves, their servants, agents or any one claiming through them from announcing and publicising themselves and their companies and concerns as part of the Manipal group of companies and thus pass off their business as that of the plaintiffs and (3) for a direction to the defendants to pay a sum of Rs. 10 lakhs towards loss suffered by them on account of the activities of the defendants.
4. Interim injunction in respect of reliefs Nos. 1 and 2 sought in the plaint have been sought in these applications.
5. All the plaintiffs are represented by a common power of attorney holder and counsel and all the defendants are represented by a common counsel. The plaintiffs have averred that plaintiffs Nos. 1 to 10 were registered on January 5, 1986; August 18, 1981; September 23, 1981; March 29, 1984; October 29, 1987; November 25, 1980; December 2, 1948; April 23, 1988; April 5, 1991, and October 21, 1971, respectively. The oldest company in the plaintiffs' group is "Manipal Printers and Publishers (P.) Ltd" which was incorporated on December 2, 1948.
6. The first defendant in C.S. No. 19 of 1996 was incorporated on April 28, 1995; the first defendant in C.S. No. 20 of 1996 was incorporated on December 6, 1994, and the first defendant in C.S. No. 21 of 1996 was incorporated on June 20, 1995.
7. The founders of all these companies are members of the Pal family hailing from Manipal. The plaintiffs have set out the history of this family in the plaint. The founding family was that of Tonse Anant Pai (1872-1909) who hailed from Bhrahmavar, a village in Udupi Taluk in the present Karnataka State. He had four sons, P. Pai (1892-1942); Upendra Pai (1895-1956); Mahadeva Pai (1898-1979) and T. R. A. Pai (1907). The third son, Madhava Pai, became a graduate in medicine from the Madras University and established a prosperous practice at Udupi and in the course of years along with his brothers brought into existence a number of finance companies, insurance companies, educational institutions, medical colleges, hospitals, mostly in and around the neighbourhood now known as "Manipal" close to Udupi. The institutions so established had brought great prominence to Manipal as a centre of industry, finance, education and medical service.
8. The plaintiffs have set out the description of "Manipal" given by the author Selden Manefee, in his book titled Pais of Manipal. As gathered from the said book and as set out in the plaint, Manipal is situate about 6 kms. north west of Udupi. The lands on which it is situate were acquired by the company founded by Dr. T. M. A. Pai in 1930's, namely, Canara Land Investments Limited, which bought 107 acres. Another 13 acres was acquired by Dr. T. M. A. Pai and it is now the town centre. The first building constructed thereon was a Tuberculosis Sanatorium, established by Dr. Pai. A factory was put up in 1935, and in the course of the succeeding decades, it became a centre of industry, finance, education and medical service. The plaintiffs have given a list of fifteen commercial concerns established by the Pai family. Of the fifteen, nine companies have the name "Manipal" as part of their corporate name. The other six bear such names as Industrial Credit and Development Syndicate Bank Ltd.; Maharashtra Apex Corporation Ltd.; Canara Steels Limited; Karnataka Consumer Products; Chitrakala Investments, and Searock Investment. A list of six firms belonging to the family has also been set. The firms have "Manipal" as part of their firm name. A large number of education and medical colleges have also been established by the family or by the trust founded by the family. A list of twelve educational institutions have been set out and they include the Kasthurba Medical College, Dental, Pharmaceutical and Nursing Colleges, Manipal Institute of Technology and Manipal Institute of Printing and Technology.
9. The oldest of the companies established by the Pai family as set out in the plaint is Maharashtra Apex Corporation Limited started in the year 1943. That company along with the Industrial Credit and Development Syndicate Limited started in the year 1971, have been described in the plaint as "two largest financial concerns, considered to be flagships of the "Pai Enterprises". Both are engaged in the business of hire purchase, leasing, deposits and deposit loans".
10. The genealogy of the Pai family has been set out in para. 6 of the plaint. Defendant No. 2 Ramesh Pai is the son of Tonse Upendra Pai, the younger brother of T. Madhava Pai. The elder brother of second defendant was late T. A. Pai who had served as Finance Minister of the Union of India for sometime and who had also served as the Chairman of Syndicate Bank, which has been described in the plaint at para. 8 as one of the notable institutions started by the Pai family. That bank was founded in the year 1925. After nationalisation of the said bank, compensation allotted by the Government of India of Rs. 1.65 crores was utilised to start the Industrial Credit and Development Syndicate Limited in 1971.
11. The firms using the name "Manipal" are the firms in which the descendants of Dr. T. M. A. Pai and/or their spouses are partners.
12. The plaintiffs have averred that the word "Manipal" in the course of years has become distinctive of the companies and firms started by the Pai family. The plaintiffs have also averred that the commercial companies have acquired considerable goodwill and has been built around the name "Manipal". The word "Manipal" has become a symbol of excellence and trust in business, banking, insurance, education and such like activities all over India and beyond the boundaries of India. The plaintiffs have also averred that the commercial goodwill attached to the name "Manipal" came to be property of each company and firm in its own right with respect to the specific goods produced by them and specific services rendered by them, and even if the members of the Pai family cease to be directors and shareholders of the Pai companies, these companies continue to be entitled to the exclusive use of the word "Manipal". The plaintiffs have also averred that the name "Manipal" has acquired secondary meaning in the law of passing off.
13. After the demise of Dr. T. Madhava Pai, the mantle of leadership of the companies, firms and institutions fell on T. A. Pai, the elder brother of the second defendant, who was the head of many institutions. After the demise of T. A. Pai in the year 1981, the leadership was shared by T. Mohandass Pai, the eldest son of Dr. T. Madhava Pai and by the second defendant.
14. In the course of years, friction had developed between the two cousins and their branches and being unwilling to go to a court to have the disputes, settled, they sought the intervention of common friends for advice, guidance and arbitration. Such common friends were Mr. Virendra Heggade, Dharmadhikari of Dharmashala, a respected religious leader, Mr. Dhirubai Ambani of the Reliance group of companies, an eminent industrialist and C. Subramaniam, former Union Minister of Union of India and the Governor of Maharashtra.
15. The parties reached an understanding at the instance of Dhirubai Ambani, on November 4, 1993. A press release was made under the signatures of the second defendant on behalf of his group and by three of the five sons of the late Dr. T. M. A. Pai. The understanding so reached has been described as the Ambani accord. The accord is between the T. Ramesh Pai group and the Mohanadas Pai (Dr. Ramdas Pai and T. Satish Pai) group. After that accord was reached on November 4, 1993, in the press release it was stated that the parties have resolved their differences and as per the understanding, the Investment Credit and Development Syndicate Limited (ICDS) and it subsidiaries and the Manipal group of finance companies would continue with the Mohandas Pai group and Maharashtra Apex Credit Limited, its subsidiaries and Canara Steel Ltd., would remain with the Ramesh Pai Group.
16. The educational and medical institutions were to continue to be run by the family as before. The Manipal group of finance companies referred to in the press release are said to comprise plaintiffs Nos. 1, 3, 4 and 5. Under the accord, the other companies which fell to the Mohandass Pai group were plaintiffs Nos. 6, 7 and 10 and Manipal Investments. The companies which fell to the Ramesh Pai group were Maharashtra Apex Corporation Limited, Canara Steel Limited, Karnataka Consumer Products Limited, and Sea Rock Investments.
17. The plaintiffs have relied upon the fact that all the companies established by the Pai family incorporating "Manipal" in their names were allotted to the Mohan Das Pai group and that no company or firms with "Manipal" as part of its name was allotted to the Ramesh Pai group. The plaintiffs have alleged that the Ramesh Pai group did not act strictly in accordance with the understanding reached.
18. The plaintiffs have alleged that they were shocked to learn from the newspapers on September 29, 1995, about the formation of Manipal Shares and Stock Brokers Limited, and Manipal Motors Limited both companies having been established by defendants Nos. 2 to 4; Manipal Home Finance Limited was also set up by defendants Nos. 2 to 4. Manipal Motors is a dealer for Cielo cars. The plaintiffs have stated that they were unaware of the existence of the three companies till then, as the defendants had deliberately suppressed the formation of those three companies which were formed on December 6, 1994, April 29, 1995, and June 20, 1995. The plaintiffs have alleged that these companies have been formed with a view to pose themselves as being part of the group now controlled by the Mohandas Pai group and to pirate the commercial goodwill built up for "Manipal" by the companies and firms under the control of the Mohandas Pai group.
19. The defendants, it is alleged, are also claiming to be the "Manipal group". The defendants have described these three companies along with the companies which were allotted to them under the Ambani accord as forming part of the "Manipal group of companies" in the invitation issued by them to celebrate the birth centenary of the father of the second defendant. The plaintiffs have averred that in the Indian Express, Bangalore edition, a new item was published at the instance of the second defendant, stating that Maharashtra Apex Corporation Limited and the Manipal group had received clearance from the Securities, and Exchange Board of India for starting mutual fund operations through an asset management arm. The group chief is referred to as T. Ramesh Pai. The plaintiffs have alleged that it is this circumstance which has prompted and made it absolutely necessary for the plaintiffs to approach the court for relief against the grave adverse consequences of the conduct of the defendants on the commercial rights of the plaintiffs.
20. The plaintiffs have averred that the plaintiffs' have acquired enormous goodwill over many long years, and that they have successfully built up their respective businesses. The details of the turnover and capital of these companies have also been furnished by the plaintiffs. The plaintiffs have averred that the group of nine plaintiffs companies using the name "Manipal" accounts for a total authorised capital of about Rs. 70 crores; paid-up capital of about Rs. 17 crores and annual turnover of over Rs. 170 crores. The total assets of these companies are in the region of Rs. 430 crores. Barring one-fifth of the shares held by the members of the Pai family, the rest of the shares are held by the public. The shares of three of the plaintiff-companies are listed on the stock exchange.
21. The plaintiffs have averred that the business to be carried on by the three companies now incorporated by the defendants with the name "Manipal" are in competition with the business being carried on by some of the plaintiffs companies which have "Manipal" as part of their name, and, therefore, the use of the name "Manipal" by the defendants would cause confusion, mislead the public and have the effect of diverting the business of the plaintiff-companies to the defendants' companies.
22. The claim made by the plaintiffs' right to the exclusive use of the word "Manipal" as part of their corporate name has been disputed by the defendants on whose behalf a counter-affidavit has been filed by the second defendants Ramesh Pai. It is the case of the defendants that the plaintiffs are not entitled to any such monopoly, that the defendants are as much a part of the Pai family as the members of the Mohan Dass Pai group; that the word "Manipal" being the name of a town and a geographical one, cannot be the monopoly of the plaintiffs; that no exclusive right was conferred on the plaintiffs for using the name "Manipal" nor were the defendants denied the right to use the same either in the award made by Mr. Ambani and accepted by the parties or in the award as subsequently supplemented by an award made by C. Subramaniam in the year 1994. It is pointed out that the right to use the word "Manipal" as part of the corporate name had Rot even been claimed by the plaintiffs as their exclusive right before Mr. Ambani or C. Subramaniam and that the defendants had not been denied the right to use the same. That question in fact has not been referred to anywhere in the award either by Mr. Ambani or by C. Subramaniam. It is also pointed out that none of the three jewels in the crown which made the name of the Pais famous ICDS Limited, Dr. T. M. A. Pai Foundation and Academy of General Education had the prefix "Manipal". Even according to the plaintiffs, the flagship companies of the group were of ICDS Limited and Maharashtra Apex Corporation Limited, both of which do not carry the word "Manipal" as part of their corporate name. The deponent of the affidavit has claimed that he has contributed a great deal to the development of the companies presently in the Mohandas Pai group. It is also the case of the defendants that the companies under the control of the second defendant, Ramesh Pai, were called "the Manipal group" even before the disputes arose and the three companies, Manipal Housing Finance Syndicate, Manipal Finance Corporation Limited and Manipal Sowbhagya Nidhi Limited, were described as the Manipal Finance group. It is only the Manipal Finance group which is now under the control of the Mohandas Pai group. ICDS it is stated by the defendants was never described or called as part of the Manipal group but was described as the ICDS group. The defendants have stated that the plaintiffs' claim that their group was known as the Manipal group is factually incorrect. It is also pointed out by the defendant that one of the institutions which remains under the control of the defendants is the Manipal Institute of Technology which bears the prefix "Manipal". It is averred by the defendants that merely because certain companies with the prefix "Manipal" had been allotted to the Mohandas Pai group, it would not mean that the Manipal group is constituted because all the companies have the word "Manipal" in them. The allotment, it is stated, was based upon cross-holdings and not on the basis that all the companies having "Manipal" as part of their corporate name should be allotted to the Mohandas Pai group.
23. It is also the case of the defendants that Manipal is the name of what was a village and it is now a major finance industrial and educational centre; that it is not an invented word; that no one has a right to claim any exclusive privilege for using the word. It is also pointed out that in "Manipal" itself, there are many hoardings of business establishments which use the word "Manipal". The defendants have also denied that there is any attempt to pass off their companies as those of the plaintiffs; or to pirate the goodwill of the plaintiffs companies. The defendants have denied that there is any scope for confusion by reason of these defendants companies using the word "Manipal". It is further pointed out that the names of the companies are not identical. Manipal Stock and Share Brokers Limited, it is stated, is a company recognised by the National Stock Exchange and no reasonable person dealing with the company can confuse it with Manipal Investments Limited. It is also averred that none of the companies of the plaintiffs are engaged in that activity. Manipal Home Finance Limited is a finance company and as a finance company, when it solicits deposits, all the details including the composition of the board of directors, the complete balance-sheet of the company and its activities are disclosed to the prospective depositors as it is a mandatory requirement. It is also averred that if the names of the companies of the plaintiffs are considered, disjunctively, from the word "Manipal", it would show that none of the companies which are the defendants have any identical name, with that of any of the plaintiffs. The names of cities, towns or villages cannot become the proprietary word for any particular family or individual or group.
24. It is also the case of the defendants that the earliest company founded by the Pai family, namely, Maharashtra Apex Corporation Limited, which is allotted to the Ramesh Pai group had also been described throughout as a company belonging to the Manipal group. The deponent of the counter-affidavit Mr. Ramesh Pai has averred that he has been active in both business and social work including education for well over a period of 40 years and has been a director of several well known business enterprises and voluntary associations. He has averred that in view of his standing, the public at large have welcomed the establishment of these companies and there is no confusion in the minds of the public. He has also denied the allegation that he started new companies with intent to create confusion or chaos of identities and to divert the business of the plaintiffs. He has asserted that what was being done by the defendants is only starting or continuing legitimate business activities. He has also asserted that he being a member of the Manipal group, it cannot be denied by any one and that most of the companies which he was controlling before the Ambani and C. Subramaniam awards were made, were described as the Manipal group companies and that many of the companies which do not have the prefix "Manipal" were also described as part of the Manipal group for instance Maharashtra Apex Corporation Limited.
25. U. N. R. Rao, learned senior counsel for the plaintiffs, contended that the plaintiffs have successfully established a strong prima facie case inasmuch as the name "Manipal" was an integral part of the corporate name of the plaintiffs; that the plaintiffs had been in business for several decades; that they had built up enormous commercial goodwill with the name "Manipal" which had always been associated with the Pai family, which had established and built up that town; that on account of the business activities of the companies for over a longer period, the companies had acquired commercial goodwill to such an extent that the word "Manipal" had acquired a secondary meaning, although "Manipal" was a name of a town; that all the companies that included "Manipal" in their corporate name and in the control of the Pai family were allotted to the Mohandas Pai group under the award of Mr. Ambani with the necessary implication that the defendants would not have any right to use the name "Manipal" for their business; that the defendants had flagrantly and deliberately with intent to capitalise on the goodwill earned by the plaintiffs companies, now established new entities with the name "Manipal" and are proclaiming to be the Manipal group which has resulted in misleading the public and confusing them into thinking that the plaintiff-companies are also part of the Manipal group and that the new companies having "Manipal" as part of their name are associated companies of the plaintiffs. Counsel therefore urged that temporary injunction as prayed for should be granted.
26. Mr. Mohan Parasaran, learned counsel appearing for the defendants, submitted that no case has been made out for grant of any interim relief as the claim made in the suit was wholly untenable; that "Manipal" being the name of a well known town in the district of Dakshina Kannada in Karnataka no company or business can appropriate to itself the name of the town and prevent others from using the same; that it is well-settled that geographical names cannot be appropriated in the manner now sought to be done by the plaintiffs; that as a matter of fact, defendant No. 2 had contributed a great deal to the establishment and development of the companies, being at present the seniormost member of the Pai family; that he had a close and intimate link with the family which established these companies and also with the town in which they were established; that he had a right to incorporate new companies under names which included the name of the town "Manipal"; that there was no scope for confusion as the activities of the new companies are not identical to those of the plaintiff-companies and even if there be any overlapping, it would not justify the grant of any injunction. Counsel also pointed out that the two companies of the Pai family, ICDS and Maharashtra Apex Corporation Limited do not include the name "Manipal" and they in fact carry on business which is similar and that did not come in the way of both companies growing and flourishing. It was submitted that the defendants have not traded upon the goodwill of the plaintiffs and the fact that the companies have the name "Manipal" by itself would not mislead a prospective customer into mistaking one company for the other.
27. Learned counsel for the plaintiffs relied upon the following decisions in support of his submission :
(a) Ewing v. Buttercup Margarine Co. Ltd. [1917] 2 Ch. 1 (CA). The Court of Appeal in that case held that when a limited company is incorporated under a name colourably resembling that in which an existing trader is carrying on business, the court has jurisdiction to restrain the company from using or carrying on business under the name, however innocently adopted, if of opinion, that the name is calculated to divert customers of the established business to the new company, or to cause confusion by leading members of the public to suppose that the new company is connected with or a branch of the existing trader's business.
(b) K. M. Multani v. Paramount Talkies of India Ltd., AIR 1942 Bom 241; [1943] 13 Comp Cas 90. A Division Bench of the Bombay High Court, in that case, inter alia, held that under the common law, both English and Indian, a company by registering its name gains a monopoly of the use of that name. Even if the company is not registered, the court will restrain the registration under the Act of a projected new company which was intended to carry on the same business as the unregistered company and to bear the name so similar to that of the unregistered company as to be calculated to deceive the public.
(c) U. Srinivas Malliah v. Krishna Kumar Chatterjee, . Bose J. in that case, which arose out of an application made by the defendants therein to the Registrar of joint Stock Companies to register an association under the name and style of Indian National Congress, as a society under the Societies Registration Act, 1860, held, inter alia, thus (headnote) :
"It is true that apart from certain special statutes which entitle companies or persons to the exclusive use of a name or a mark, such as the Companies Act or the Trade Marks Act, a man has no exclusive proprietary rights in a fancy name or title and normally and principally it is in relation to the user of a name associated with a certain business or trading concern or some profession that the court affords protection and grants an injunction restraining the adoption and use of such a name by another, when the court is satisfied that damage has been caused or there is a tangible risk or possibility of a damage resulting from confusion caused in the public mind or in other words by reason of the public being deceived by the use of such name."
(d) Nilgiris Dairy Farm v. S. A. Rathnasabapathy [1975] 2 Kar LJ 505. A Division Bench of the Karnataka High Court in that case which arose out of the use by the defendants of an identical firm name used by the plaintiff in relation to identical business, held that though the word "Nilgiris" was a geographical name, as the name, "Nilgiris Dairy Farm" had become a trade name to the extent necessary to maintain an action for passing off, and as the plaintiff had acquired a valuable reputation, the court would restrain the unauthorised use of that name and mark in a manner calculated to deceive the public and cause damage to the plaintiff.
(e) Ellora Industries v. Banarasi Dass Goela, . A learned single judge of the High Court at Delhi held in that case (headnote) :
"The purpose of tort of passing off is to protect commercial goodwill; to ensure that people's business reputations are not exploited ... It is thus complementary to trade mark law which is founded upon statute rather than common law ... the onus in a passing off action lies upon the plaintiff to establish the existence of the business reputation which he seeks to protect. The asset protected is the reputation the plaintiff's business has in the relevant market. This is a complex thing. It is manifested in the various indicia which lead the client or customer to associate the business with the plaintiff; such as the name of the business, whether real or adopted, the mark, design, make up, or colour of the plaintiff's goods, the distinctive characteristics of services he supplies or the nature of his special processes."
(f) Khosla (K.G.) Compressors Ltd. v. Khosla Extraktions Ltd., . In that case, D. P. Wadhwa J. held that (headnote) :
"There is nothing in section 20 which shows that whenever a person applies for registration of a company, in his name or in the name of his family members, it must be registered. A person is not entitled as of right to have a company registered in a name which happened to be his own name. The right to incorporate a company in a particular name is a statutory right. Section 20 of the Act prescribes that no company shall be registered by a name, which in the opinion of the Central Government is undesirable. Sub-section (2) of section 20 says that if a name which is identical with or too nearly resembles the name by which a company in existence has been previously registered it may be deemed to be undesirable. Further passing off action need not merely relate to the goods but it relates to name also."
(g) In the case of Exxon Corporation v. Exxon Insurance Consultants International Ltd. [1981] 2 All ER 495 (Ch D), the defendant-company which had no connection with the plaintiff had adopted the word "Exxon" as part of its corporate name. The plaintiff sought an injunction to restrain the defendant from passing off its goods as the plaintiffs' goods by using the word "Exxon". The court issued an injunction restraining the continued used of Exxon as part of the defendant's corporate name.
(h) A learned single judge R. C. Lahoti J. in the case of Montari Industries Ltd. v. Montari Overseas Ltd. , held for the plaintiff and restrained the use of the word "Montari" as the corporate name of the defendant, as the defendant which had nothing to do with the plaintiff had unlawfully adopted the plaintiff's name as a part of its corporate name.
(i) Montari Overseas Ltd. v. Montari Industries Ltd. [1996] PTC 16, in which a Division Bench on an appeal from the judgment of the learned single judge, while affirming the injunction, noticed the following passage in the case of Guardian Fire and Life Assurance Co. v. Guardian and General Insurance Co. Ltd. [1880] 50 LJ Ch. 253, wherein Sir George Jessel observed : "The public are careless and it is no use supposing that if they paid a very moderate attention to names they would see they were not the same but only similar". The court rejected the submission on that because of the word "overseas" is also a part of the corporate name in addition to Montari, the names of two companies are not identical.
(j) Kirloskar Diesel Recon. Pvt. Ltd. v. Kirloskar Proprietary Ltd., , that was a case where the defendant in the suit had registered companies with the name of Kirloskar and asserted a right to do so on the ground that his name was Kirloskar. The learned single judge, finding for the plaintiff, held that the "incorporation" of the defendant's companies with the word "Kirloskar" was very recent, whereas the existence of the plaintiff's business belonging to the Kirloskar group of companies had been for over a period of 50 years and the name Kirloskar had acquired commercial goodwill, and had been registered as the trade mark of the plaintiff's companies. It was held that the defendant had through out been aware of the business reputation of the plaintiff. The court further held that the Trade and Merchandise Marks Act, 1958, covers all passing off actions whether based on trade marks or trade names or business names, as the very definition of trade mark includes the mark and the definition of mark includes the name. The court further observed (headnote) : "the focus is shifted from the external objective test of making comparison of activities of parties to the state of mind of public deciding whether it will be confused".
The court also observed (headnote) : "In a passing off action the plaintiffs are not required to establish fraudulent intention on the part of the defendant and as such, it was not necessary for the respondents to establish fraudulent intention on the part of the appellants in incorporating the word 'Kirloskar' as part of corporate names ... It was even not necessary for the respondents to prove causing of actual confusion amongst the customers or public at large by the appellants."
(k) Counsel also relied on the definition of "goodwill" in The Law Lexicon by justice T. P. Mukkerjee - more particularly on the following passages therein :
"What is 'goodwill' ? It is a thing very easy to describe but very difficult to define. 'Goodwill' of a business depends upon a variety of circumstances or a combination of them. The location, the service the standing of the business, the honesty of those who run it, and the lack of competition and many other factors go individually or together to make up the 'goodwill' though locality always plays a considerable part. Shift the locality and the goodwill may be lost".
(l) S. C. Cambatta and Co. P. Ltd. v. Commissioner of Excess Profits Tax . the goodwill of a business is inclusive of positive advantages such as carrying on the commercial undertaking at a particular place and in a particular name, and also its business connections, its business prestige and several other intangible advantages which a business may acquire - NGC Mills Ltd. v. Labour Appellate Tribunal, AIR 1959 Bom 111, 115.
(m) Counsel then referred to the following passage from Halsbury's Laws of England, 4th edition, volume 48 at para. 159 :
"159. Shared reputations. - In order to maintain an action for passing off a plaintiff need not be the only person entitled to make use of a particular mark or name. Thus, where the goodwill connected with the use of a trade name originally used in a single business is divided between different persons, each of those persons has an independent right to sue a third person for passing off by use of the trade name."
28. Learned counsel for the defendants relied upon the following decisions :
(a) Asiatic Government Security Life Assurance Co. Ltd. v. New Asiatic Insurance Co. Ltd. [1939] 9 Comp Cas 208; AIR 1939 Mad 555, wherein a learned single judge of this court held that the use of the defendant's name was not calculated to deceive and to divert business from plaintiffs to defendants or to cause confusion between the two companies and the plaintiffs were not entitled to an injunction, as it is not sufficient to show that there is similarity of names but it must also be shown that there is a reasonable probability that the use of the name would result in the defendant appropriating the material advantage of the plaintiff's business. Before the injunction can be granted by the court, a high standard of affirmative proof is required to establish the plaintiff's case.
(b) K. M. Multani v. Paramount Talkies of India Ltd., AIR 1942 Bom 241; [1943] 13 Comp Cas 90. In that case, the Division Bench held that the court would restrain the registration under the Act of a projected new company which was intended to carry on the same business as the unregistered company and to bear a name so similar to that of the unregistered company as to be calculated to deceive the public. B. J. Wadia, J. who decided the case along with Beaumont, C. J., further held that the tendency of the courts at that point of time was to restrict the monopoly of the use of geographical names as business or trade names.
(c) Rolls Razor Ltd. v. Rolls Lighters Ltd. 66 Reports of Patent, Design and Trade Mark Cases No. 12, at page 299, the Court of Appeal in that case held that the goods manufactured by the defendants, namely, lighters was not the same as the goods manufactured by the plaintiff namely razors. No passing off had occurred and the action will not lie.
(d) K. S. Mohammed Abubacher v. Nanikaram Maherchand [1957] 72 MLJ 573 wherein the principles governing the grant of injunction were discussed and it was observed : that the court would exercise such power only in strong cases and that the court would not ordinarily grant a temporary injunction if a large amount of evidence is necessary to support the plaintiff's case. It was also observed that it was for the court to decide whether injunction should be granted or undertaking to keep accounts on the part of the defendants.
(e) Bristol Myers Co. v. Bristol Pharmaceutical Co. Ltd. [1968] Reports of Patent, Design and Trade Mark Cases No. 9, page 259 a decision of the Chancery Division. In that case, the plaintiff had alleged infringement of their trade mark "Pristacin" by the use of the name "Bristacyn" by the defendants for the products manufactured by the plaintiff as also the defendant. It was also alleged that the name used by the defendant amounted to passing off as the plaintiff were marketing the product under the name "Pristacin".
It was held by Plowman J. that the plaintiffs had a heavy onus to discharge when they claim monopoly in the use of the word "Bristol" in relation to pharmaceutical goods and that the had failed to discharge that onus. It was, however, found that the name used by the defendant amounted to infringement of the registered trade mark "Pristacin".
The learned judge in the course of the judgment observed that they have to establish of course that "Bristol" which is a name and not a surname, but also better known as the name of a large city in this country, has acquired a secondary meaning so that, when applied to pharmaceutical products, it denotes those of plaintiffs. There is clearly in such a case a very heavy onus of proof on the plaintiffs who seek to establish the secondary meaning.
(f) Unitex Limited v. Union Texturing Co. Ltd. [1973] 6 RPC 119 a decision of the court of appeal. The court held that "looking at the case as a whole, it does not seem to me at this stage that on the evidence before me there is any real tangible risk of damage by the use of the mark 'Unitex' by the defendant who was a sub-contractor of the plaintiff".
(g) Teju Singh v. Shanta Devi, , a decision of the Division Bench of the Andhra High Court. The court held that the same principles which are applied in the case of an action for passing off of goods are to be applied in an action for passing off in the business name.
The court declined to grant injunction in favour of the plaintiff who was carrying on business under the name "One Day Electric Dry Cleaners" to restrain the defendant who is carrying on similar business in the name of "Only One day Electric Dry-Clearners". The court found that their sign boards were totally different in their design and the common man was not likely to be deceived. It was also held that the words do not indicate any special skill and, therefore, the names are only of a descriptive nature and not distinctive so as to sustain the passing off action.
(h) Computervision Corporation v. Computervision Ltd. [1975] 7 RPC 171, that was an action for passing off where the products sold by the plaintiff bore the trade mark Computervision which was the corporate title of the defendant which also intended to sell products under that name. The plaintiff accepted that the defendants product would not be in competition with theirs but contended that the defendants' products and business would be taken to be connected with their own goods and names. The court held that on evidence before it, that wide diversification in the electronics field was common place, there was sufficient overlap in the plaintiffs' and the defendants' fields of activity for the purpose of passing off, and that although the words "computer" and "vision" were in common use, the evidence showed that they had never been used together as the name of a company or to describe a product. Therefore, Computer Vision was not a descriptive title. The court also held that the use of the word "limited" at the end of the defendants' name as compared with the plaintiffs' use of the word "corporation" was not a sufficient distinction but would lead members of the public to think that the defendants were an English subsidiary of the plaintiffs.
(i) American Cyanamid Co. v. Ethicon Ltd. [1975] 1 All ER 504 (HL). The House of Lords in that case laid down the principles governing the grant of interlocutory injunction. The court observed that if there were serious questions to be decided, it is open to the court to grant interim injunction if the claim was not frivolous or vexatious and if the balance of convenience is in favour of the plaintiff. The matters to be considered by the court in determining the balance of convenience were also stated.
(j) Simuatul Chemical Industries Pvt. Ltd. v. Cibatul Ltd., . A Division Bench of the Gujarat High Court in that case held that "where a company (manufacturer) complains that its customers are likely to be confused by similarities in the name of his company and another company that has started production subsequently, it is not necessary for the plaintiff to show that the words in the names of rival companies are identical. The plaintiff does not set out to establish that it is a question of the user of an identical name. The plaintiff simply undertakes to show that the two names are so deceptively similar that there is a likelihood of confusion amongst the persons dealing with two companies."
(k) R. S. K. V. Raghavan Trading as R. S. Krishna and Co., Mayuram v. G. R. Gopal and Co., . Ramanujam J. who decided that case had held that the use of the name of the word "Thennamarakudi" by than applicant for its medicinal oil, would not entitle to it to seek rectification of the respondent's registered trade mark which contains the word "Thennamarakudi Oil" as "Thennamarakudi" was a place and the use of that name for the oil manufacturers had become public juris. It was held that "Thennamarakudi" being a geographical name the applicant could claim a trade mark in that name only if he establishes that the geographical name has acquired a distinctive character and has been associated with his goods and, therefore, is a distinctive mark for his goods. The court found in that case that when several merchants were manufacturing similar medicinal oil preparation called "Thennamarakudi Oil" and the preparation itself took its name from the village "Thennamarakudi" in Nannilam Taluk, the applicant could not claim exclusive right to the use of those words in his registered label.
(l) Victory Transport Co. Pvt. Ltd. v. District Judge [1982] 11 Patent and Trade Marks Cases Volume 11, page 1. In that case, the plaintiff had sought injunction to restrain the defendants from carrying on business under the name of Victory Goods Transport Company. The court held that no case of passing off had been made out.
(m) Habib Bank Ltd. v. Habib Bank A. G. Zurich [1983] PTC 181, a decision of the Court of Appeal in U.K. In that case, the defendant-bank had been incorporated in Switzerland on the instigation of the plaintiff-bank as an independent company. After the nationalisation of the Pakistani banks the plaintiff tried to obtain the effective management of the defendants and being unsuccessful the plaintiff sought relief on the grounds that the defendants were passing off their business as that of the plaintiff.
It was held by the court that there was no misrepresentation on the part of the defendants and there could be no passing off particularly when there was no damage of any significance over the whole period since nationalisation. It was also held that there was no evidence of confusion except in one case of press report. The court found that the plaintiffs had failed to establish any substantial damage or probability of damage and there was no mala fides alleged against the defendant whose trading name, style and objects were assumed with the consent of the plaintiff's predecessors and not the slightest objection was raised as to the user of its name, the plaintiffs were not entitled to the relief sought. In that case, the court also held that the estoppel by conduct would disentitle the plaintiffs to the equitable remedy of injunction and that it would be unconscionable for a party to be permitted to deny that knowingly or unknowingly he has allowed or encouraged another to do that against which the plaintiff subsequently complains.
(n) Mohan Lak Khatri v. Khati Bidi Works [1984] PTC 226, the learned single judge held that as the plaintiff and defendant were the descendants of the common ancestor and the defendants were found to have been selling the bidis under an assumed trade mark since 1966, it was not a fit case for granting interim injunction.
(o) Moorgate Tobacco Co. Ltd. v. Philip Morries Ltd. [1985] RPC No. 10, page 219 a decision of the High Court of Australia at Canberra. The issue in that case was the right of the prior user of the word "Kent Golden Lights" as trade mark in relation to cigarettes. The court found therein that there had been no general tort known to the law of Australia. The fact that it was not sufficient to disentitle the rival applicant from registering the trade mark in Australia. It was also stated therein that in Australian law, there is no tort of unfair competition.
(p) S. K. G. Khosla Compressors Ltd. v. Khosla Extraktions Ltd. [1983] PTC 211. It was held in that case that the action for passing off would lie in respect of the name of the company deceptively similar to that of the plaintiff notwithstanding the provisions of section 22 of the Companies Act, which empowers the Central Government to refuse registration if the name is considered to be undesirable or too closely resembles that of an existing company.
(q) Associated Newspapers Group Plc. v. Insert Media Ltd. [1988] 2 All ER 420 (Ch D). Hoffmann J. of the Chancery Division of the High Court in the U.K. held that no injunction could be granted to the acts likely to cause damage but which were not in any other respect unlawful. Merely characterising an act as unfair was not sufficient to make it actionable and when the person who seeks injunction to restrain damage to his property or goodwill must first establish a cause of action.
(r) Anderson and Lembke Ltd. v. Anderson and Lembke Inc. [1989] RPC 124 which case was also decided by Hoffmann J. It was held that where there was no misrepresentation by the defendant, the defendant could not be restrained by injunction on the basis of a covenant obtained from a foreign company to which the defendant was not a party.
(s) Gold Seal Engineering Products Pvt. Ltd. v. Hindustan Manufacturers [1992] 12 Patent and Trade Marks Cases, Volume XII, Page 1 a learned single judge of the Bombay High Court held that without first obtaining leave under clause 14 of the Letters Patent, the plaintiff could not combine the causes of action under the Copyright Act and that those for trademark and passing off.
It also held in that case that unless the goods were sold on commercial scale, within the jurisdiction of the court, no action for passing off would lie.
(t) Wander Ltd. v. Antox India Ltd. [1990] Suppl. SCC 727. The apex court held that injunction is a discretionary and equitable remedy and is intended to be preserved status quo, the rights of the parties as it may appear on prima facie case. The fact that the defendant has yet to commence its enterprise would be a relevant factor in deciding the question of balance of convenience.
(u) J. R. O. Kapoor v. Micronix India [1994] PTC 260. The court held that the trade mark "Micronix" with logo consisting of letters M and P used by the defendants were not deceptively similar to the trade mark "Microtel" logo consisting of letter "M" used by the plaintiff. The court observed that the word "Micro" is a common and general name descriptive of the products which are sold or of the technology by which the products are manufactured and as such the users of the products are not likely to be misguided or confused in view of the facts that the words "tel" and "nix" in the trade names of the appellant and respondents are phonetically totally dissimilar.
(v) First Computers formerly known as Brilliant's Computers Centre, Madras v. A. Guruprasad [1995] 2 LW 486. A Division Bench of this court held that the word "first computer" is a common property of all and the user of the word "first computer" by the appellant in his business did not amount to passing off which business is similar to that of the respondent who was trading in computers.
(w) Payton and Co. Ltd. v. Snelling Lampared and Co. Ltd. 17 Reports of Patent Design and Trade Mark Cases 628. The House of Lords in that case declined to grant injunction in favour of the trader who sold their coffee in circular tins surrounded by paper labels in red and blue. The label on the plaintiff's tins contain the brand "royal" while that of the defendant's also with the same colour used the brand name in black.
(x) Burberrys v. J.C. Cording and Co. Ltd. 26 Reports of Patent, Design, and Trade Mark Cases No. 25 page 693. The court therein negatived the claim of the plaintiff that the words "slip on" had acquired secondary meaning denoting the case of the plaintiff and the use of that word by the defendant for coats amounted to passing off. The court held on evidence that there was no reasonable probability of deception from the use made by the defendants of the word. The court found that the word had been used long prior to the plaintiff adopting the same as a mark for his products.
(y) British Vacuum Cleaner Co. Ltd. v. New Vacuum Cleaner Co. Ltd. 24 No. 28 Reports of Patent Design and Trade Mark Cases 641. The court in that case held that the action to restrain the use of the word vacuum cleaner as part of the name of the defendant-company was liable to be dismissed as vacuum cleaner was a class of machine used by the plaintiffs and defendants and the plaintiffs had failed to establish a secondary meaning. The court held that the words objected to were descriptive of the class of machine and process used both by themselves and the plaintiffs and that the words had not acquired any secondary meaning as referring to the plaintiffs' machine, process or business, and that, used in conjunction with the word "new" they were not calculated to deceive.
29. Counsel also referred to several other decisions laying down the same principles as laid down in the decisions referred to above.
30. The issue that arises for consideration is as to whether the plaintiffs can claim exclusive right to use the name "Manipal" which is admittedly the name of a fairly well known town in South India and as to whether the plaintiffs have the exclusive right to describe themselves as "Manipal group".
31. The commercial use of geographical names is universally well known. People and business enterprises identify themselves with the place from which they hail, live in or carry on business. Many a business enterprise uses the name of the city, town, region, or country as part of its business or corporate name. Monopoly over the use of geographical name is not the rule, but a rare exception to the rule.
32. In any large city are to be found more than one business establishment whether or not carrying on the same trade, using the name of the town or city as part of its business name. In a large city like Madras, there are several large companies - well known nationally - who use the name of the city as part of their corporate name. Geographical names are invariably and subject to rare exceptions public juris - are in the public realm available for use by any one choosing to adopt it as part of the name of the business enterprise.
33. Any exception to this rule must truly be an exception. It is only in a rare case where the name has been used very extensively for a long period, is so well known in the market as to be identified in the public mind with the product or service rendered by the business enterprise, that the court may consider granting injunctive relief to a plaintiff.
34. The case pleaded by the plaintiffs even when considered de hors the case pleaded by the defendants, does not warrant the grant of any injunctive relief to the plaintiffs.
35. "Manipal" is the name, according to the plaintiffs of a well known town which is an industrial, commercial, educational and financial centre, and is located in the State of Karnataka in South India. The town has a large number of educational institutions and is known internationally for their quality, particularly in the field of medicine. What was a village in the 1930's gradually developed into the present town of "Manipal" by the efforts made by Dr. T. Madhava Pai, his brothers and their families. The Pai family established several businesses particularly in the financial sector - the Syndicate Bank in 1925, the Maharashtra Apex Corporation Limited in the year 1940, and Industrial Development and Banking Syndicate in the year 1971. The latter two have been described by the plaintiffs as the "flagship companies" of the family. It is significant to note that the business carried on by the Maharashtra Apex Corporation Ltd., and ICDS are similar and yet both companies have flourished.
36. "Manipal" was used for the first time as part of a corporate name of a company promoted by the family, only in the year 1948. In later years, several other companies and firms were started with "Manipal" as part of their name. No item of manufacture is sold under the name "Manipal" by any of these firms or companies. "Manipal" is not a registered trade mark.
37. None of the plaintiff-companies using "Manipal" as part of their name have acquired such reputation in the country as to be identified with any particular service or product. Several of these companies carry on business in financial services in which the two "flagship companies" are engaged. The figures regarding the plaintiffs' turnover, deposits, capital, etc., after excluding the figures for ICDS, the 10th plaintiff, is not so large as to indicate a very large volume of business or network of customers.
38. The success to the extent achieved by the plaintiffs is not directly relatable to the name "Manipal". The "flagship" company, the 10th plaintiff which is the largest among the plaintiffs does not use "Manipal" as part of its name. That company was incorporated in 1971, long after the incorporation in 1948 of the first of the family companies with "Manipal" as part of its corporate name. It is evident that "Manipal" even in the perception of the plaintiffs as also of defendants Nos. 2 to 4 had not acquired such goodwill or secondary meaning as to make it worthwhile for the family to use it as a part of the name of the largest of the companies in the group, even 23 years after the family had commenced using "Manipal" as part of a corporate name.
39. The largest of the family enterprises prior to 1971, was a company which did not even remotely indicate its links with "Manipal" or even the region in which that town is situated. The name of that company "Maharashtra Apex Corporation Limited" indicated possible links with the region of Maharashtra and the Marathi language and did not indicate any association with the city of "Manipal" or the language spoken in that region.
40. The plaintiffs have failed to make out a prima facie case that "Manipal" as part of the corporate names of plaintiffs Nos. 1 to 6 had acquired extensive goodwill and had acquired a secondary meaning as referring exclusively to the plaintiff companies.
41. The defendants have also shown that "Manipal" has been used as part of the name of more than one business enterprise in Manipal. The fact that those enterprises are proprietary or partnership firms is not of significance while considering the plaintiff's claim to exclusive commercial user of that name. Merely by using "Manipal" as part of the corporate name of the companies incorporated by defendants, the names of those companies cannot be said to be identical or so closely resembling the name of plaintiffs Nos. 1 to 9, as to mislead, cause confusion, or result in unfair exploitation of the goodwill earned by plaintiffs companies.
42. By adopting the name of the town "Manipal" as part of their corporate name, the plaintiffs undertook the risk of having to compete with other business enterprises - those in existence at that time, as also those that may be formed subsequently - using "Manipal" as part of the name of the business or company. The plaintiffs cannot now complain about the competition that they will have to face from other companies also using the name of the town "Manipal".
43. Prior user of the city name as part of their corporate name by itself does not confer any monopoly in favour of the plaintiffs. What is in the public domain cannot be appropriated and made one's own merely by being the first to use it as part of the corporate name. The right to such user of the city's name is available to others in the same measure as it is available to the plaintiffs. Neither the plaintiffs nor the defendants can claim exclusive right to the commercial use of the name "Manipal".
44. The likelihood of the defendants' offering stiff competition to the plaintiffs does not result in invasion of any right of the plaintiffs. The defendants when they exercise their right to engage in business and incorporate companies for that purpose are merely doing what the plaintiffs have done. Both are entitled to compete in the open market.
45. The allotment of companies with "Manipal" as part of the corporate name, to the Mohan Das Pai group, under the Ambani award does not have the effect of creating a monopoly over the commercial use of the name "Manipal". That family settlement did not also debar the defendants from incorporating companies with "Manipal" as part of their corporate name. According to the defendants, the allotment was on the basis of cross-holdings and not on the basis of the names of companies. The award in any event is a private family settlement and cannot have the effect of creating any special rights in favour of the plaintiffs regarding the city's name "Manipal".
46. In the perception of the plaintiffs, the defendants may appear to have acted unfairly, and breached what they may have thought to be an unwritten understanding that the defendants will not use "Manipal" as part of the name of any of their companies. Any breach by the defendants of moral commitment, if any, and the resultant indignation of the groups controlling the plaintiffs, cannot constitute the foundation for a passing off action. Breach of contract if any can in the circumstances only give rise to a claim for damages.
47. "Manipal" has been associated even in the perception of the plaintiffs more with the Pai family, than to any particular corporate entity. Mohan Das Pai as also Ramesh Pai when they issued a press release after the Ambani accord, on November 4, 1993, described it as having been issued by the "Pais of Manipal". The first sentence of that press release was : "In public perception the Manipal Pais are regarded not merely as a business family but also as trustees of a great heritage". The statement signed by the heads of the two groups repeatedly refers to "Manipal Pais" and "Pais of Manipal". The award of Sri C. Subramaniam refers to "Manipal Pais" dispute and "Manipal Pai family". The Manipal group, prior to the split referred to all companies and firms founded by the Manipal Pai family, and not exclusively to the plaintiff companies.
48. "The Manipal Finance Group" as distinct from the "Manipal group" referred to three of the plaintiffs and was allotted to the Mohandas Pai group under the Ambani accord. They had been described and referred to, even prior to the division only as Manipal Finance group and not as Manipal group.
49. The plaintiffs cannot claim any exclusive goodwill in, or a secondary meaning in "Manipal group" as referring only to the plaintiff companies. The plaintiff companies were only a part of the group of firms and companies founded by the Pai family of Manipal. The "Manipal group" indicated the association of the Pai family with the enterprises described as part of the group, and no more. It was never a description of the companies and firms using the name "Manipal". As averred by the plaintiffs, the flagship companies of the family, Maharashtra Apex Corporation Limited, and ICDS Limited, were part of the Manipal group, and yet "Manipal" was not part of their name. So also other entities such as Canara Steels Limited, Karnataka Consumer Products, Canara Land Investments Limited, Canara Wire and Wire Products Limited, though part of the "Manipal group" did not have "Manipal" as part of their corporate name. The Manipal group was the group of businesses of the Pais of Manipal and not the group of businesses with "Manipal" as part of their names.
50. Defendants Nos. 2 to 4 are as much "Pais of Manipal" as are the members of the families of the Mohandas Pai group. Even as submitted by counsel for plaintiffs, on the division of a business which had acquired goodwill, each of the successor entities are entitled to share in that goodwill. The Mohandas Pai group as also the Ramesh Pai group each of which now controls some of the enterprises of the erstwhile Manipal group, may, if they choose to describe themselves as "Manipal group".
51. The plaintiffs have failed to show prima facie that "Manipal group" has acquired a secondary meaning as referring to and comprising exclusively the plaintiff companies.
52. The applications for injunction are dismissed.