Delhi High Court
Philips India Pvt. Ltd. vs Shree Sant Kripa Appliances Pvt. Ltd. on 19 January, 2015
Author: Rajiv Shakdher
Bench: Rajiv Shakdher
* THE HIGH COURT OF DELHI AT NEW DELHI
Judgment Reserved on: 30.10.2014
% Judgment delivered on: 19.01.2015
+ CS(OS) No.1913/2014
PHILIPS INDIA PVT. LTD. ....PLAINTIFF
VERSUS
SHREE SANT KRIPA APPLIANCES PVT. LTD. .....DEFENDANT
ADVOCATES WHO APPEARED IN THIS CASE:
For the Petitioner : Mr. Anish Kapur and Mr. Mohit Mathur, Advs.
For the Respondents : Mr. Shailen Bhatia and Ms. Priti, Advs.
CORAM :-
HON'BLE MR JUSTICE RAJIV SHAKDHER
RAJIV SHAKDHER, J
IA No.11819/2014 (u/O 39 R1 & 2 r/w S.151 CPC for stay)
1. The present suit has been filed to seek a decree of permanent injunction
qua the defendant against what the plaintiff construes as false, misleading
and disparaging representations. The representations, according to the
plaintiff, are essentially in the form of advertisements/internet
representations. The captioned application, which is what I am concerned
with presently, is filed in aid of the reliefs claimed in the suit.
1.1 The suit, as framed, is in the nature of trade libel, which is also
interchangeably, referred to as an action for injurious falsehood or, more
appropriately, an action for malicious falsehood.
CS(OS) No.1913/2014 Page 1 of 16
1.2 The peculiarity of the present action is that the impugned advertisements
are generic in nature which, while comparing two rival products do not
specifically name the plaintiff. The two rival products being Light Emitting
Diode (hereafter referred to as LED bulbs) and Compact Florescent Lamps
(hereafter referred to as the CFL bulbs).
1.3 This aspect becomes even more involved by virtue of the fact that the
advertisements issued by the defendant, which extols the virtues of LED
bulbs over those of CFL bulbs; is a product, which is also manufactured by
the plaintiff. There is, however, no averment in the plaint with regard to the
fact that the plaintiff is also in the business of manufacturing LED bulbs.
On the other hand, the plaintiff, which apart from LED bulbs also
manufactures CFL bulbs, has approached the court for grant of injunction
against the defendant on the ground that the representations made qua CFL
bulbs in the impugned advertisement, are false and misleading.
1.4 It is in this context that the plaintiff claims that the impugned
advertisements, though generic in nature, affects its goodwill and market
reputation. In support of this assertion, the plaintiff has made the following
averments that:
(i) It is the largest manufacturer of the CFL bulbs having, approximately,
30% of the market share.
(ii) It is the only player in the business with direct reach in 1000 semi-urban
markets and has, therefore, invested large sums of money to support
conventional lighting distribution in these markets.
(iii) Nearly 13% of the plaintiff's annual turnover comprises of CFL bulbs.
CS(OS) No.1913/2014 Page 2 of 16
(iv) The plaintiff has the biggest CFL manufacturing unit; which is located
at Mohali and is capable of producing nearly six (6) million CFL bulbs per
month. Towards this end, it has engaged two thousand (2000) permanent
and temporary employees, which is supported by a full-fledged quality and
development department.
2. The plaintiff is, as indicated above, essentially, aggrieved by the
following impugned advertisement dated 19.5.2014, published in Dainik
Bhaskar:
2.1 This apart the plaintiff is also aggrieved, as stated above, by what it
claims are a false and misleading averments made by the defendants on its
website: http://syskaledlights.com.
2.2 According to the plaintiff, the aforementioned advertisement issued by
the defendant makes the following false and/or misleading representations,
CS(OS) No.1913/2014 Page 3 of 16
while extolling the virtues of the LED bulbs manufactured and sold by it
under the brand name: "SYSKA":
(i) 5 watt SYSKA LED is equal to any 15 watt CFL bulb.
(ii) The price of 5 watt SYSKA LED is equal to any 15 watt CFL bulb.
(iii) SYSKA 5 watt LED lasts up to 50,000 hours.
(iv) "It's game over for CLF"
3. In order to demonstrate the falsity of the defendant's claim, the
following assertions are made by the plaintiff:
(i) The defendant's 5 watt LED bulb is almost five (5) times the cost of a 15
watt CFL bulb sold by various other manufacturers in India and is seven (7)
times the cost of a 14 watt CFL bulb manufactured by the plaintiff. It is
stated that the plaintiff manufactures only fourteen (14) watt CFL bulbs and
not fifteen (15) watt bulbs. The price of defendant's five (5) watt LED bulb
is Rs.700/- as opposed to the price range of a 14/15 watt CFL bulb which,
ranges between Rs.150/- and Rs.175/-.
(ii) The defendant's claim in the impugned advertisement that the LED bulb
manufactured by it lasts nearly 50,000 hours is false as the packaging in
which the defendant sells its five (5) watt LED bulbs is clearly indicative of
the fact that LED bulbs manufactured by it last for "more than 30,000
hours". Therefore, according to the plaintiff, the defendant has employed
deception in making the said statement in the impugned advertisement.
(iii) As regards the defendant's claim that its five (5) watt LED bulb can be
used in place of any fifteen (15) watt CFL bulb, the plaintiff avers, that this
CS(OS) No.1913/2014 Page 4 of 16
statement, is also false, as the packaging of the defendant's product itself
indicates that defendant's five (5) watt LED bulb is equivalent to a ten (10)
watt CFL bulb.
3.1 The plaintiff has also relied upon a report of an expert, namely, one
TUV Rheinland India Private Ltd. (in short TUV), to demonstrate, that the,
defendant's five (5) watt LED bulb emits light, which is, only 33.93% of the
light that is emitted by a fourteen (14) watt CFL bulb manufactured by it.
3.2 The plaintiff avers that the defendant by making the aforementioned
false representations and, in particular, making a representation that it is,
"game over for CFL bulbs", has disparaged the plaintiff's product, resulting
in, dilution of goodwill and reputation.
3.3 The plaintiff asserts that the impugned advertisement deludes the general
public into believing that the defendant's five (5) watt LED bulb is superior
to a fifteen (15) watt CFL bulb, as a class. Since, the plaintiff's product falls
in the class of products (i.e. CFL bulbs) which are disparaged by false and
misleading advertisements, it is entitled to bring this action and claim
interim protection, as sought in the captioned application.
4. The defendant, on the other hand, relies upon the advertising material of
the plaintiff to demonstrate that, even according to the plaintiff, the LED
bulb as a product is much superior to a CFL bulb. Parts of the plaintiff's
advertising material have been extracted in the written statement in the form
of a chart which compares a ten (10) watt LED bulb with a fifteen (15) watt
CFL bulb and a sixty (60) watt ordinary bulb. The chart shows that not only
the life in hours of a ten (10) watt LED bulb is higher, but that, the total
electricity cost and the total cost of ownership of a ten (10) watt LED bulb
CS(OS) No.1913/2014 Page 5 of 16
is, much lower, when compared to a fifteen (15) watt CFL bulb and a sixty
(60) watt, ordinary bulb. Based on this, comparative chart and other
assertions made in the advertisement issued by the plaintiff, it is averred by
the defendant that even according to the plaintiff the following comes
through when an LED bulb is compared with a CFL bulb:
(i) LED bulb is far more efficient energy-wise when compared to CFL bulb.
(ii) The brightness (which is measured in lumensis) of a LED bulb, is greater
than that of a CFL bulb.
(iii) Though, the initial cost of a LED bulb is higher than that of CFL bulb,
since, the former lasts longer and saves nearly 50% more electricity, than a
CFL bulb, it turns out to be cheaper, in the long run.
5. In other words, it is contended that the assertions made in the impugned
advertisement that it is game over for the CFL bulb is no different than what
is stated in more explicit terms in the plaintiff's own advertising material
which is kept-back from the court. The defendant has compared this
statement with the plaintiff's own advertisement which reads as follows:
"Phillips LED gives 50% savings over CFL."
5.1 The defendant thus avers that the plaintiff has not only compared the
attributes of an LED bulb as against a CFL bulb, but in a different form and,
words, conveyed the message that the former is superior to the latter.
5.2 Furthermore, the defendant avers that insofar as the consumer is
concerned, it cannot be misled in view of extensive dissemination of the
attributes of the two rival products (i.e. LED and CFL bulb) on the internet.
CS(OS) No.1913/2014 Page 6 of 16
It is the defendant's stand that in fact it is also now a Government policy to
promote the usage of LED bulbs over CFL bulbs.
5.3 As regards the inconsistency in defendant's stand with regard to period
for which an LED bulb would last, it is averred that the plaintiff has in one
advertisement taken the stand that its LED bulb has a life of fifteen (15)
years whereas the life expectancy of an LED bulb manufactured by it has
been claimed in other advertisements as ten (10) years.
SUBMISSIONS MADE BY COUNSELS
6. In the background of the aforesaid facts, submissions have been
advanced by counsels for parties herein.
6.1 On behalf of the plaintiff, submissions have been advanced by Mr. Anish
Kapur, while on behalf of the defendant, arguments have been made by
Mr.Shailen Bhatia.
6.2 Mr. Kapur's submissions can be broadly paraphrased as follows:-
(i) The plaintiff is a leading manufacturer of CFL bulbs having
approximately 30% of the market share. Insofar as the LED bulbs are
concerned, it has a market share of 34%.
(ii) The turnover of the plaintiff for the calendar year 2012-2013 qua CFL
bulb was a sum of Rs.714.10 crores, while during the same period vis-à-vis
LED bulbs, it achieved a turnover of Rs.74.36 crores. Similarly, for the
period March 2014 to September 2014 the plaintiff had achieved a turnover
of Rs.490.53 crores in respect of CFL bulbs and a turnover of Rs.1103.40
crores via-a-vis LED bulbs.
CS(OS) No.1913/2014 Page 7 of 16
(iii) The misleading statements/representations made by the defendant which
disparage the CFL bulb as a class includes the plaintiff.
(iv)While, the defendant, is entitled to extol the virtues of its product, it
cannot disparage rival products even as a class by use of deceptive,
misleading and/or false representations. In support of this submission,
reliance was placed on the representations made by the defendant in the
impugned advertisement which, as indicated above, according to the
plaintiff are false and misleading. In support of the aforesaid submission,
reliance was placed on the following judgments: Tata Press ltd. v. MTNL,
(1995) 5 SCC 139; Dabur India v. Colortek Meghalaya Pvt. Ltd. and
Godrej Sara-Lee, 167 (2010) DLT 278 (DB); and Colgate Palmolive
(India) Ltd. v. Hindustan Lever Ltd., (1999) 7 SCC 1.
(v). As regards the stand of the defendant that the plaintiff had withheld a
material fact, which was that, it was in the business of manufacturing LED
bulbs - it was contended that the said aspect would have no bearing on the
decision to be rendered by this court for the following reasons:
(v)(a) Firstly, the aspect, of which disclosure is insisted upon, has to
pertain to a fact, which is not known. The fact that plaintiff is in the
business of manufacturing LED bulbs is in the public domain and, therefore,
could not amount to suppression or concealment of a material fact.
Secondly, the non-disclosure of a particular aspect should pertain to a
material fact which, if disclosed, would disentitle the plaintiff to the reliefs
claimed by it. The fact that the plaintiff manufactures LED bulbs cannot
disentitle the plaintiff to claim the reliefs that are sought for in the present
action.
CS(OS) No.1913/2014 Page 8 of 16
6.3 Mr. Bhatia, on the other hand, relied, largely, upon the stand taken in
the pleadings to demonstrate the following:
(i) The plaintiff itself has been comparing in the advertisement material
published or circulated by it, the advantages of a LED bulb over that of a
CFL bulb. The comparisons, according to the learned counsel, pertain to
attributes such as energy efficiency, cost and luminosity. It is this material,
which, according to Mr. Bhatia, the plaintiff chose not to file and, thus, in a
sense, kept-back material from court, which would ultimately be crucial in
deciding the fate of the action.
(ii) Learned counsel also drew my attention to the advertising material of
the plaintiff, which was brought on record by the defendant, to demonstrate
the alleged inconsistency in the plaintiff's representation to its own
consumers. By way of example, Mr. Bhatia referred me to the advertisement
material of the plaintiff which showed different percentages of energy
saving achieved when a LED bulb was used say in an office or, a retail shop
or, for street lighting as against a single page advertisement which showed a
saving in energy up to 50%, without such like classification.
(ii)(a) According to Mr. Bhatia, this itself was a misleading statement
preferred by the plaintiff.
(ii)(b) Another example which was cited by Mr. Bhatia was pertaining to
the price of the bulb which was shown as Rs.150/- while the carton indicated
that there was a saving of Rs.700/-.
(iii) It was Mr. Bhatia's contention that the fact the plaintiff kept-back such
material from the court, should itself, result in the dismissal of the suit.
CS(OS) No.1913/2014 Page 9 of 16
(iv) In support of his submissions, Mr. Bhatia relied upon the judgments in
the cases of Godrej Sara Lee Ltd. v. Reckitt Benckiser (I) Ltd, 128 (2006)
DLT 81; Reckitt Benckiser (India) Ltd. v. Naga Limited & Ors., 104(2003)
DLT 490; and Dabur India Ltd. vs. Colortek Meghalaya Pvt. Ltd., 2010
(42) PTC 88 (Del.).
(v) Mr. Bhatia thus contended that since it was in the interest of the public,
to know and be educated about the advantages of a LED bulb over that of a
CFL bulb, no injunction could follow. For this submission, Mr. Bhatia
relied upon the judgment of this court in Mother Diary Foods & Processing
Ltd. v. Zee Telefilms Ltd., 2005(30) PTC (Del.).
(vi) Lastly, Mr. Bhatia submitted that in order to succeed in its action the
plaintiff would have to demonstrate that the issuance of the advertisement
was motivated by malice. Learned counsel submitted that there is no
allegation of malice in the plaint qua the defendant and, therefore, no case
for injunction was made out. In support of this submission learned counsel
relied upon the judgment in the case of Dabar India Ltd. v. Colortek
Meghalaya Pvt. Ltd., 2010 (42) PTC 88 (Del.)
REASONS
7. Having heard the counsels for the parties and perused the record, what
necessarily emerges is as follows:
(i) The defendant in the impugned advertisement has made representations
which extol the virtues of a LED bulb over that of a CFL bulb.
CS(OS) No.1913/2014 Page 10 of 16
(ii) In extolling the virtues of a LED bulb over that of a CFL bulb, the
defendant has taken recourse to attributes such as luminosity, price and the
lifespan of the two rival products.
(iii) In doing so, the defendant has displayed, to say the least, inconsistency.
The comparison of a LED bulb with that of a CFL bulb is generic in nature.
There is no specific mention of the plaintiff's product.
(iv) The plaintiff, on the other hand, claims a 30% market share qua the
CFL bulbs. There is, therefore, a sizeable majority apart from the plaintiff,
which deals in CFL bulbs.
(v) The plaintiff is, undoubtedly, also in the business of manufacture and
sale of LED bulbs and towards that end has published and circulated
advertisements which demonstrate the comparative advantage of a LED bulb
over that of a CFL bulb.
7.1 Therefore, having regard to the above, the grievance gets narrowed
down to not the comparison per se made by the defendant but to the alleged
falsehood with regard to the attributes brought into play by the defendant in
comparing the two products. The question really boils down to the degree
of truth contained in the representations made by the defendant. The
plaintiff has sought to demonstrate falsehood in the defendant's statement.
Therefore, before I proceed further, in fitness of things, it may be relevant to
bear in mind the principles elucidated by various judgments of this court and
that of the Supreme Court, and other texts, and judgments of English courts
with regard to the tort of disparagement or trade libel or malicious
falsehood, as it is inter-changeably known.
CS(OS) No.1913/2014 Page 11 of 16
7.2 An actionable disparagement is a statement made about a competitor's
goods which is untrue or misleading and which is made to influence or tends
to influence the consumer to not buy the goods. While one is allowed to
boast about the virtues of one's own goods, it is not permissible to disparage
or denigrate a rival's product. In other words, where words go beyond mere
puffery, it is actionable. Claiming superiority of one's product over the
product manufactured by a rival without negative connotations does not
constitute a tort of malicious falsehood. (see Words and Phrases permanent
Edition Vol. 12B page 325 and Dabur India Limited v. Colortek
Meghalaya Pvt. Ltd.,167 (2010) DLT 278 (DB) ).
7.3 For an action of malicious falsehood to succeed, the plaintiff is required
to plead and prove the following:
(i) Firstly, that the impugned statement/representation is untrue;
(ii) Secondly, that the impugned statement/representation is made
maliciously, that is, without just cause or excuse; and
(iii) Lastly, the plaintiff has suffered special damage by virtue of the
impugned statement/representation. In common law, pleading and proving
special damages is essential for institution of an action of malicious
falsehood. There are, however, some jurisdictions where, by statute it is not
necessary to allege or prove special damage in certain cases. [See
Defamation Act, 1952 of United Kingdom]. Even where plaintiff intends to
rely upon statutory exceptions, it is still required to give details of the
alleged probable damage on which he seeks to place reliance, unless, it can
be ascertained from the factum of the publication alone.
CS(OS) No.1913/2014 Page 12 of 16
[See Royal Baking Powder Co. v. Wright Crosslay & Co., 1901 (18) RPC
95; Ucan v. Hilti, (1968) F.S.R. 248 and Halsbury Laws of England, Vol.
32, P. 493 para 778 & 780].
7.4 It will have to be borne in mind that where there is a generic
disparagement of a product as a class without naming or specifying a
particular manufacturer, dealer or seller, disparagement is difficult to
establish, at least at the interlocutory stage unless the entity against whom
the disparaging representation is directed is the only rival in the trade.
7.5 Similarly, where the defendant is a competitor, malice is difficult to
prove as it could be argued that the impugned representations were directed
only to further the defendant's business by extolling the virtues of its
product and not to tear down the plaintiff's product. In the case of an
uninterested defendant such as a dissatisfied customer or say a newspaper it
may be easier to establish malice.
7.6 Insofar as special damage is concerned, it could be established by
pleading and proving a general decline in business evidenced by record
maintained in the usual and normal course of business. Decline in business
should be attributable to the impugned representations and not on account of
general economic regression in the concerned industry or otherwise. (See :
Villanova Law Review, Vol.7, 1962, Article 5, pages 271 and 273)
7.7 While dealing with an action for malicious falsehood, one would also
have to bear in mind that advertisement is a form of commercial free speech
which is protected by Article 19(1)(a) of the Constitution. Having said so,
free speech is not an absolute right, it is counter-balanced by an equally
forceful right which is the right to conduct business. An entity cannot
indulge in commercial free speech which tends to maliciously injure a
CS(OS) No.1913/2014 Page 13 of 16
rival/competitor. While the advertisement cannot make false, misleading,
unfair or deceptive representations, everything stated in the advertisement
need not be taken as a serious representation of a fact. [See Division Bench
judgment in Dabur India Ltd. (supra)]. This is especially so in the case of
a comparative advertisement. In deciding, whether the derogatory statements
made by a trader against his rival (which is made in a form of a comparative
advertisement), is actionable, what has to be borne in mind is, whether or
not a reasonable person would take the claim made, seriously. [See De
Beers Abrasive Products Ltd. vs International General Electric Co. of New
York Ltd., (1975) 2 All ER 599 at 605; Vodafone Group Plc vs Orange
Personal Communications Services Ltd., (1997) EMLR 84; DSG Retail
Ltd. v Comet Group Plc, (2002) All ER (D) 112 (Feb.); and Colgate
Palmolive Company & Anr. vs Hindustan Unilever Ltd., 206 (2014) DLT
329]
7.8 Dabur India Ltd. (supra) is a case in point where the appellant before
the Division Bench claimed that it was in the business of manufacturing a
popular mosquito repellent cream which had been allegedly disparaged by
the respondent by issuance of an advertisement which sought to bring out,
albeit falsely, the fact, that it caused "rashes", "allergy" and, was "sticky", in
nature. This was also a case of alleged disparagement, by an innuendo.
There was in the impugned advertisement, no specific reference to the
appellant. Furthermore, the appellant had claimed that it enjoyed in certain
parts of the country 80% of the market share, while in others it had a near
monopoly. The suggestion was that, the impugned advertisement, could
have only been directed against it, given its expansive market share.
CS(OS) No.1913/2014 Page 14 of 16
7.9 The injunction was refused in the first instance, inter alia, on the ground
that the appellant had failed to prima facie establish that a tort of malicious
falsehood had committed. The plaintiff carried the matter in appeal to the
Division Bench, which dismissed the appeal. The Special Leave Petition
filed against the Division Bench judgment was also dismissed.
8. In the given case, while there may be merit in the plaintiff's submission
that the defendants assertions with regard to the price, the energy efficiency
and the luminosity of the rival product (i.e. CFL bulb) is not accurate, it does
not still, at least at this stage, establish the fact, that the impugned
representations were made with the intent to injure the plaintiff's business in
CFL bulbs. The fact that the defendant seeks to extol the virtues of LED
bulbs over that of CFL bulbs is quite clear but what is not presently
established is that it was done with a malicious intent to injure plaintiff's
product. The plaintiff cannot but accept the fact (in the instant case) that
even from its point of view a LED bulb is technologically superior to a CFL
bulb. The only question is one of degrees. The plaintiff, therefore, has
sought to pin down the defendant qua its representations based on the
alleged inconsistencies in its own statements with regard to price, energy
efficiency and luminosity. In my view, these inconsistencies in the
defendant's statement would not be sufficient to grant an injunction as the
other ingredients of the action are not even prima facie established at this
stage. There is no material on record to show injury or sufferance of special
damages which can be said to be attributable to the impugned advertisement/
representation. In a sense, the plaintiff stands to profit, at least partially, if
the sale of LED bulbs gains momentum in the market.
CS(OS) No.1913/2014 Page 15 of 16
9. There is another aspect of the matter, which is that, the action which
purports to be in the nature of a tortious claim of disparagement or malicious
falsehood stops short of a claim for damages. The only relief sought is of
permanent injunction. I would be chary of granting interim injunction
based on an allegation of a civil wrong said to have been committed by the
defendant, which stops short of pleading particulars and laying a claim for
damages. Bald pleadings which allude to degradation of reputation and loss
would not suffice. The suit as framed, and material placed on record, shows
that there is a slim likelihood of the plaintiff succeeding. Trial may perhaps
reveal more.
10. Having regard to the aforesaid discussion, in my view, no case is made
out for grant of injunction, as prayed. Accordingly, IA No.11819/2014 is
dismissed.
10.1 Needless to say, any observation made by me hereinabove will have no
bearing on the final merits of the case.
CS(OS) No.1913/2014
11 List before the roster Bench on 23.01.2015.
RAJIV SHAKDHER, J.
JANUARY 19, 2015 s.pal CS(OS) No.1913/2014 Page 16 of 16