Delhi High Court
Havells India Limited & Another vs Mr. Vivek Kumar & Others on 30 April, 2016
Author: Vipin Sanghi
Bench: Vipin Sanghi
$~25.
* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ Date of Decision: 30.04.2016
% CS(OS) No. 164/2016 & I.A. No. 4346/2016
HAVELLS INDIA LIMITED & ANOTHER ..... Plaintiffs
Through: Mr. Kapil Sibal, Mr. Rajiv Nayar,
Ms.Pratibha M. Singh, Senior
Advocates along with Mr. Ajay
Bhargava, Ms. Vanita Bhargava,
Mr.Ankur Sangal and Ms. Sucheta
Roy, Advocates.
versus
MR VIVEK KUMAR & OTHERS ..... Defendants
Through: Mr. Dushyant Dave, Mr. Sandeep
Sethi, Mr. Sanjeev Sindhwani, Senior
Advocates with Mr. Shally Bhasin,
Mr. Karan Luthra & Mr. Mahesh
Agarwal, Advocates.
CORAM:
HON'BLE MR. JUSTICE VIPIN SANGHI
VIPIN SANGHI, J. (OPEN COURT)
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
CS(OS) 164/2016 Page 1 of 28
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
CS(OS) 164/2016 Page 2 of 28
(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
CS(OS) 164/2016 Page 3 of 28
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
CS(OS) 164/2016 Page 4 of 28
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 respectivelys with profits
of Rs.3.8 Lakhs, loss of Rs.338 Lakhs, and loss of Rs.0.006 Lakhs in the
CS(OS) 164/2016 Page 5 of 28
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
CS(OS) 164/2016 Page 6 of 28
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 Vs. Mr. Hiroo Khushalani & Another, 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 inter-
related. It is the awakened consumers who are more aware of
CS(OS) 164/2016 Page 7 of 28
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
gurantee 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 Cummulative 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 relevent 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
CS(OS) 164/2016 Page 8 of 28
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)."
******
"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
CS(OS) 164/2016 Page 9 of 28
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 prodcts as hasty buyers of
inexpensive merchandise at a newsstand or drug
store [Callmann, Unfair Competition-Trademarks
and Monopolies, (3ded. 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
CS(OS) 164/2016 Page 10 of 28
(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
CS(OS) 164/2016 Page 11 of 28
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.
CS(OS) 164/2016 Page 12 of 28
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 Vs. Prafull Saklecha, 2013 SCC OnLine
Del 4159 : (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. Vs. M/s Khosla Extrakting Ltd. & Others, 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. Vs. 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
CS(OS) 164/2016 Page 13 of 28
insuch 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
CS(OS) 164/2016 Page 14 of 28
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.
CS(OS) 164/2016 Page 15 of 28
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 Vs. Surendra Electricals &
Others, 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."
CS(OS) 164/2016 Page 16 of 28
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
CS(OS) 164/2016 Page 17 of 28
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 Vs. Government of Andhra Pradesh, 1986 LawSuit
(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.
CS(OS) 164/2016 Page 18 of 28
"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
CS(OS) 164/2016 Page 19 of 28
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 (re-
numbered 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
CS(OS) 164/2016 Page 20 of 28
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
CS(OS) 164/2016 Page 21 of 28
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 Vs. Crest Pharma Pvt. Ltd. and Another, 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 vs. Roshan Lal Duggar & Co.,
AIR 1978 (Del) 250."
39. He has also placed reliance on Bengal Waterproof Limited Vs.
Bombay Waterproof Manufacturing Company & Another, (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
CS(OS) 164/2016 Page 22 of 28
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. Vs. Arun
Kumar Bansal, (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 profix, 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 (supre) ingredients (a) to (g) have been
made out for a strong prima facie case for grant of injunction
CS(OS) 164/2016 Page 23 of 28
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 openingon 28th February, 1995. "
41. For the same purpose, reliance is placed on Polson Ltd. Vs. Polson
Dairy Ltd. & Others, 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
CS(OS) 164/2016 Page 24 of 28
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
CS(OS) 164/2016 Page 25 of 28
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,
CS(OS) 164/2016 Page 26 of 28
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
CS(OS) 164/2016 Page 27 of 28
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.
VIPIN SANGHI, J.
APRIL 30, 2016 B.S. Rohella/sr CS(OS) 164/2016 Page 28 of 28