Delhi High Court
Baker Hughes Limited & Anr. vs Hiroo Khushalani & Anr. on 24 July, 1998
Equivalent citations: [2000]102COMPCAS203(DELHI), 74(1998)DLT715, ILR1999DELHI41
JUDGMENT Anil Dev Singh, J.
1. This is an application whereby the plaintiffs seek to restrain the defendants by means of a temporary injunction from using the trade mark and trade name BAKER or any other trade mark or trade name deceptively similar thereto as their corporate name or as a part thereof. The facts necessary for the disposal of the application are as under:
The first plaintiff Baker Hughes Limited (formerly known as Baker International Limited) is a company organized under the laws of United Kingdom. The principal place of business is located in Warwick Street, London. The second plaintiff Baker Hughes Incorporated is a company organized under the laws of Delaware, United States of America. Its principal place of business is located at Housten, Texas (hereinafter, for short, the group of 'Baker' or 'Baker Hughes' companies collectively shall be referred to as "Baker" or "Baker Hughes"). The second plaintiff is a parent company of the first plaintiff and is stated to own the trade mark BAKER.
2. The first defendant Mr. Hiroo Khushalani, is the Chief Executive Officer and Managing Director of the second defendant. The second defendant Baker Oil Tools (India) Private Limited is a company incorporated in India under a certificate of incorporation dated February 13, 1985.
3. In 1982 the first defendant had discussions with Bakerline, a Baker Oil Tools Company, Texas, USA (a division of Baker International Ltd.), for floating a joint venture company in India for the manufacture of oil field equipment and products. On May 13,1982 the first defendant wrote a letter to Bakerline, in confirmation of their discussions, in which it was stated, inter-alia, that Baker Oil Tools or any of its subsidiary companies will have 40%, equity participation in the capital structure of the joint venture company which was intended to be set up in India by the first defendant as its promoter. It was proposed that Baker Oil Tools will receive 5% royalty on the products manufactured by the joint venture company for use within India. Besides, Baker Oil Tools or any of its nominated subsidiary companies will receive a sum of US dollars 20,00,000 for the transfer of drawings and technical documentation to the Indian company. On September 20,1983, the first defendant, as the sole proprietor of Miraksha Associates, applied to the Ministry of Industry, Department of Industrial Development for permission to establish a joint venture with M/s. Bakerline for manufacturing oil field equipment. The Government of India by its letter bearing No. L-/260(84) dated April 6, 1984 (for short 'the letter of intent'), addressed to the first defendant, expressed its willingness to issue an industrial licence under the Industries (Development and Regulation) Act, 1951, to the latter for the establishment of a new industrial undertaking for the manufacture of oil field equipment, namely, Conventional Float Collars and Shoe, Differential Float Collars and Shoe, Centralizers, Scratchers. Stop Ring, Bridge Plugs, Cement Retainers, Stage Cementing Collars, Liner Hangers and Accessories and Pump Feud and Pass at Gurgaon (Haryana), subject to the following conditions amongst others:
(1) The terms of foreign collaboration (Financial and/or Technical) will be settled to the satisfaction of the Government of India.
(2) The use of foreign brand name will not be permitted for the purpose of internal sales.
By a separate letter bearing No. FC-147(83)Comp/SCS dated April 6, 1984 the Government of India, in response to the request of the first defendant dated September 20,1983, expressed its willingness to approve the terms of the collaboration with M/s. Bakerline (for short 'the letter of approval of foreign collaboration'), subsequently amended to read as Baker Oil Tools (U.K.) Limited and finally as 'Baker Oil Tools (U.K.) Division instead of M/s. Bakerline vide letter of the Government of India dated March 17, 1986 read with letter dated February 4, 1986.
4. The conditions for the permission, inter-alia, provided foreign equity participation to the extent of 40% of the paid up capital of Rs.1 crore. It also allowed the first defendant to pay a lumpsum technical know-how fee to the extent of US $ 2,50,000 to 'Baker' subject to deduction of taxes in three equal instalments. On December 21,1984, the first defendant, as the sole proprietor of Miraksha Associates and Baker International Limited, Baker Oil Tools (UK) Division entered into Articles of Agreement (for short 'Basic Agreement'). The 'Basic Agreement provided inter-alia for the incorporation of a company in India under the name 'Baker Oil Tools (India) Private Limited'' or such other name as may be decided by the parties for the purpose of establishing a new industrial undertaking at Gurgaon, Haryana, for the manufacture of the oil field equipment based on the technical know-how to be made available by Baker Oil Tools (United Kingdom) Limited. In accordance with the letter of approval of foreign collaboration, the 'Basic Agreement' fixed the shares of the first defendant and 'Baker' in the proposed Indian company, Baker Oil Tools (India) Pvt. Ltd. While the share of first defendant was fixed at 60% the share of 'Baker' was fixed at 40%. Clause 8.3 of this 'Basic Agreement provided that if the share holding of 'Baker' fell below 40%, the Indian company would not be entitled to retain the word Baker in its corporate name and the former would be entitled to revoke the permission granted to the latter to use the word Baker in its corporate name. Clause 12 of the 'Basic Agreement' postulated that the text of the agreement shall be incorporated as part of the Articles of Association of the Indian company. The said clause further provided that the Indian company shall, soon after its incorporation, adopt this 'Basic Agreement' so as to confirm that it will be bound by the provisions thereof. Clause 4.3 of the 'Basic Agreement' stipulated that a technical know-how agreement for the manufacture of products, the draft of which was attached as Annexure 'A' thereto, shall be entered into by and between Baker Oil Tools (United Kingdom) Limited and Baker Oil Tools (India) Private Limited after its was incorporation. Since by then the second defendant had not been incorporated it was agreed as per Clause 4.2 that the first defendant in his capacity as the promoter of the company in the offing shall enter into the technical know-how agreement referred to in Clause 4.3. Under Clause 4.2 of the 'Basic Agreement', the first defendant was also required to make applications to various government authorities in India for obtaining their approvals to the 'Basic Agreement' as well as the 'technical know-how agreement' and for obtaining all statutory approvals and consents required in connection with any matter pertaining to the project. Pursuant to the stipulations made in the 'Basic Agreement' two important events took place-(1) on December 21, 1984 the technical know-how agreement was executed by and between the first defendant acting in his capacity as the promoter of the proposed Indian company and Baker Oil Tools (United Kingdom) Limited, and (2) on February 13, 1985 the second defendant was incorporated with two shareholders, namely, the first defendant and Ms. Mira Khushalani, they being the only subscribers to the Memorandum and Articles of Association of the second defendant, having signed the same on January 4, 1985. Upon incorporation of the second defendant, the 'letter of intent' and the 'letter of approval of the foreign collaboration' both dated April 6, 1984 issued by the Government of India were transferred from the name of the first defendant to the name of the second defendant. On May 15, 1985, the first defendant and Baker Oil Tools (United Kingdom) Limited entered into Articles of Agreement amending various Clauses of the 'technical know-how agreement' (for short 'the first addendum ). It also deleted Clause 10 (b) of the "Technical Know-how agreement" as per the requirements of the Government of India. But on May 15,1985 itself a supplementary agreement between Baker Oil Tools (India) Private Limited and Baker Oil Tools (United Kingdom) Limited was also executed for giving effect to Clause 10(b) of the Technical Know-how Agreement, as if the Clause had not been deleted by the first addendum, to the extent possible and for reinstating the same, if lawfully feasible. Thereafter on September 30, 1985, the first defendant of the first part; Baker International Limited, Baker Oil Tools (U.K.) Division of the second part and Baker Oil Tools (United Kingdom) Limited of the third part entered into Articles of Agreement (for short 'the second addendum') whereby Baker International Ltd., Baker Oil Tools (U.K.) Division undertook to supervise the performance of obligation by Baker Oil Tools (United Kingdom) Limited under the 'Technical Know-how Agreement' as amended by the first addendum thereto. Subsequently, on November 18,1985, the first defendant, Baker International Limited, Baker Oil Tools (U.K.) Division and Baker Oil Tools (United Kingdom) Limited executed an agreement whereby Baker International Limited, Baker Oil Tools (U.K.) Division assumed the obligations of Baker Oil Tools (United Kingdom) Limited under the Technical Know-how Agreement as amended by the first addendum. By the above said agreement of novation, Baker Oil Tools (United Kingdom) Limited was relieved of the obligations under the Technical Know-how Agreement and Baker Oil Tools (U.K.) Division undertook to perform such obligations and agreed to be bound by the terms of the Technical Know-how agreement as amended by the first addendum and the second addendum.
5. On July 25, 1986 the Reserve Bank of India accorded permission to the second defendant under Section 29(1)(b) of the Foreign Exchange Regulation Act, 1973, to issue 3,09,294 equity shares of Rs.10/- each, equivalent to 40%, of its paid up equity capital to Baker International Limited, Baker Oil Tools (U.K.) Division. Pursuant to the permission of the Reserve Bank of India and in terms of the 'Basic Agreement', on August 20, 1986 Baker International Limited, Baker Oil Tools (U.K.) Division subscribed to the share capital of the second defendant to the extent of 40% of its paid up capital, thus, leaving the remaining 60% of the shareholding with the first defendant and his associates as per the following details:
1. First defendant : 10.71%
2. Mrs. Mira Khushalani : 10.71%
3. Mr. Vivek Khushalani : 10.70%
4. Ms. Raksha Khushalani : 10.70%
5. M/s. Miraksha Associates Pvt. Ltd. : 17.18%
6. 'Baker' wanted the second defendant to incorporate in its Articles of Association provisions of Clause 8.3 of the 'Basic Agreement' dated December 21, 1984 whereby it had been agreed between the parties thereto that in the event of the holding of Baker International Limited, Baker Oil Tools (U.K.) Division falling below 40% of the paid up equity capital, the second defendant would not be entitled to retain the name Baker as part of its corporate name. The question of inclusion of the provisions of Clause 8.3 of the 'Basic Agreement' into the Articles of Association of the second defendant was taken up at the extraordinary general meeting of the shareholders of the second defendant held on December 3,1993. At the said meeting the plaintiffs were represented by one Mr. Jims Smith. He voted in favour of the resolution for insertion of the contents of Clause 8.3 of the 'Basic Agreement' in the Articles of Association of the second defendant. However, the first defendant and his associates holding 60% of the shares of second defendant voted against the resolution. Thus the motion to include provisions of Clause 8.3 in the Articles of Association of the second defendant stood defeated. On February 15, 1995, the plaintiff after obtaining the permission of the Government of India sold its shares to White Horse Trading Limited, a company incorporated in Hong Kong, though the offer of the latter to buy the shares had been accepted by the former on October 17,1994. On February 15,1995 itself the first plaintiff through Baker Oil Tools Asia Pecific, a division of Baker Hughes (Singapore) Pvt. Ltd., a subsidiary of the second plaintiff, called upon the second defendant by means of a notice to alter its corporate name by omitting the word Baker therefrom. The second defendant while acknowledging the receipt of the said notice by its letter dated March 15, 1995 categorically declined to accede to the demand of the plaintiffs on the ground that it was under no legal obligation to change its name. The plaintiffs feeling aggrieved of the action of the defendants, filed the present suit seeking, inter alia, (1) a decree of permanent injunction restraining the second defendant from using the word BAKER or any other word similar thereto in its corporate name or trading style; (2) a decree of permanent injunction restraining the defendants from passing off the business, services and goods for that of the plaintiffs by the use of the word BAKER or any other word deceptively similar thereto as a trade mark or as a trading style: (3) specific performance of the agreement dated December 21,1984 by directing the defendants to perform their contractual obligations and to take necessary steps to change the corporate name of the second defendant; and (4) award of compensation in their favour and against the defendant No.2 on account of the latter's unauthorised use of the word BAKER in its corporate name. Along with the suit, the plaintiffs moved the instant application for interim relief.
7. The defendants appeared in the suit and filed their written statement and reply to the instant application taking several grounds in opposition.
8. Mr. Arun Jaitley, learned Senior Counsel appearing for the plaintiffs, in support of the application submitted that the plaintiffs have a proprietory right in the trade name Baker. They have extensive business world wide and have incorporated several companies under the said trade name throughout the world. The plaintiffs are world leaders in the oil field equipment, products and services. Learned Counsel invited my attention to Volume 3, pages 069 to 0621, of the Court record to show that the plaintiffs had been selling their products in India and else where, in different parts of the world. The plaintiffs have acquired a trans-boarder reputation in the trade name Baker. It was canvassed that the second defendant cannot use the word Baker as part of its corporate name after the first plaintiff sold its entire share holding in the second defendant. The second defendant does not have any proprietory right in the name Baker as it was allowed only a permissive and licensed use of the same. The permission to use the name Baker having been revoked by the plaintiffs and notice to this effect having been served on the defendants, the right to use the name Baker by the second defendant came to an end. The second defendant cannot be allowed to pass off its goods as the goods of the plaintiffs by retaining the word Baker as part of its corporate name.
9. Mr. J.M. Mukhi, learned Counsel for the defendants, on the other hand, vehemently argued that the second defendant has a right to use the word Baker as part of its corporate name. He also pointed out that the second defendant has been using the said name for more than a decade. The learned Counsel highlighted the fact that the 'Technical Know-how Agreement' overrides all other agreements by virtue of Clause 21 thereof which declares that the 'Technical Know-how Agreement' shall constitute the only valid and binding agreement between the parties. Thus it was argued that the 'Basic Agreement' is a dead letter and Clause 8.3 thereof is of no avail to the plaintiffs for urging that the second defendant has lost the right to use the word Baker in its corporate name. It was further submitted that the 'Basic Agreement' was not furnished to the first defendant by the first plaintiff and consequently the same was not sent to the Government of India for approval as required by law. The only agreement which was approved by the Government of India was the 'Technical Know-how Agreement' which did not contain a provision like Clause 8.3 of the 'Basic Agreement'. It was also pointed out that the Government of India in its "letter of approval of the foreign collaboration" had laid down certain conditions and the approval for the joint venture was subject to the same. One of the conditions contained in para 4(f) of the said letter interdicted the use of a foreign brand name for the purposes of internal sales by the joint venture. It was contended that Section 28 of the Foreign Exchange Regulation Act, 1973 expressly forbids a foreign company to permit an Indian company to use its brand name without the approval of the Reserve Bank of India. It was argued that the brand name Baker in India could only be treated as an Indian brand name. The first plaintiff had agreed that the Indian company would use the name Baker in its own right and as an Indian brand name. The first plaintiff had transferred its business to the second defendant alongwith right to use the name Baker in its (second defendant's) corporate name.
10. Learned Counsel for the defendants accused the plaintiffs of supressing the 'Technical Know-how Agreement' inasmuch as the same was not alluded to either in the plaint or in the instant application. The learned Counsel submitted that since the plaintiffs were guilty of suppressio veri no equitable relief could be granted to them. They had also not made any reference to the letter of the Government of India dated April 6,1984 according approval to the proposal of the first defendant for foreign collaboration subject to certain conditions. They also withheld the fact that the 'Basic Agreement' of December 21, 1984 was not submitted for the approval of the Government of India. It was also not disclosed by the plaintiffs that they were no longer manufacturing the items which were being manufactured by the second defendant. Since the plaintiffs have not come to the Court with clean hands no relief by way of interim injunction can be granted to them. Learned Counsel also canvassed that the 'Basic Agreement' including Clause 8.3 thereof could not bind the second defendant as the second defendant was incorporated much after the execution of the 'Basic Agreement'. Learned Counsel further contended that the Articles and Memorandum of Association of the second defendant were drafted in England at the instructions of the first plaintiff by its solicitors and in order to conform to the conditions of approval of the Government of India for the joint venture, the contents of Clause 8.3 were not incorporated therein. He invited my attention to the affidavits of Thomas Maccormack and James D. Green, former employees of the plaintiffs, to show that the plaintiffs appointed Grindlays Bank Limited to prepare the Memorandum and Articles of Association of the second defendant. It was also submitted that the plaintiffs have no proprietary right in the word Baker and there are hardly any purchasers in India for the items manufactured by the plaintiffs. According to the learned Counsel, in India the word Baker is being associated with the products of the second defendant, an Indian company and not with the products of the plaintiffs. He also disputed the contention of the learned Counsel for the plaintiffs that the plaintiffs have acquired trans-border reputation. Learned Counsel for the defendants contended that no interim mandatory injunction can be granted to the plaintiffs as they have not established any prima facie case and even the balance of convenience does not lie in their favour. Besides, the plaintiffs will not suffer any damage, much less an irreparable one, on refusal to grant the injunction.
11. I have considered the submissions of the learned Counsel for the parties. At the threshold, it will be necessary to consider the scope of the 'Basic Agreement' vis-a-vis the 'Technical Know-how Agreement' as it was argued by the learned Counsel for the defendants that the 'Basic Agreement' has been displaced by the 'Technical Know-how Agreement' and that being so Clause 8.3 of the former agreement, requiring the second defendant to alter its corporate name to a name not including the word Baker or any similar name, ceases to be in operation. In this regard learned Counsel referred to Clause 21 of the 'Technical Know-how Agreement'. This Clause reads as follows:
"Agreement to constitute the only valid and binding document; this agreement as signed and executed, shall constitute the only valid and binding agreement between the parties hereto in relation to the subject matter hereof and all previous understanding or arrangements whether written or oral shall stand expressly cancelled and superseded by this agreement."
Heavily relying on the above Clause, it was contended by the learned Counsel for the defendants that it is only the 'Technical Know-how Agreement' which is binding on the parties and the 'Basic Agreement' being a previous arrangement stands expressly cancelled and superseded by this agreement. The words "subject matter hereof" occurring in the above said Clause are of great significance. In the context of these words the Clause merely means that the 'Technical Know-how Agreement' is the only binding agreement between the parties in relation to the matters covered by the subject with which the agreement deals, namely, technical know-how. If a question relating to a matter of technical know-how arises this agreement will be the only agreement which would be binding and the question must be determined in accordance therewith. This agreement postulates that upon the formation of the Indian company, it is to adopt this agreement and 'Baker' is to supply and transfer the technical know-how to the Indian company. It is not disputed that the second defendant after its incorporation has adopted the 'Technical Know-how Agreement' and the first plaintiff has carried out its obligations under the same. Clause 1 of the 'Technical Know-how Agreement' deals with the meaning of the expressions "know-how" or "technical know-how". This Clause reads as follows:
"1. In this Agreement, unless the text otherwise requires and if written in capital letters or with initial capital letters, the following expressions shall have the meanings ascribed to them hereunder, namely:
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(b) "KNOW-HOW" or "TECHNICAL KNOW-HOW" shall mean the technical information, data, drawings, specification, designs, revisions and documentation relating to the PRODUCTS that may be in Baker's possession or under BAKER'S control on the EFFECTIVE DATE. This shall also include secret and non-secret know-how, technical data, drawings, documentation, designs, revisions and other particulars and information relating to the production and manufacture of PRODUCTS all provided that such know-how is possessed and /or controlled by BAKER on the EFFECTIVE DATE of this Agreement, and which is more particularly described in Schedule 2 hereunder written.
(c) "KNOW-HOW DOCUMENTS" shall mean data, drawings, technical manuals, designs, revisions and such other information or know how as may be in writing or in visual form required in connection with the TECHNICAL KNOW-HOW.
xx xx xx ' Clause 2 of the agreement relates to know-how and its scope. This Clause reads as follows:
"2. Know-how and its Scope:
(A) 'BAKER' hereby agrees with HK to transfer, assign and supply to the Indian Company and make available at its plant in the city of Aberdeen, Scotland, U.K., the TECHNICAL KNOW-HOW necessary to enable the India Company.... non-exclusive right over use of the TECHNICAL KNOW-HOW for manufacturing the PRODUCTS in India.
(B) The scope of the Know-how, including the drawings, specifications and documents to be provided by 'BAKER' are specified in Schedule II hereunder written.
(C) The aforesaid technical documentation shall be in the English language and in the imperial systems of weights and measures and shall be in one reproducible and four copies."
12. Clause 4 of the 'Technical Know-how Agreement' provides that 'Baker' shall deliver and give possession of the 'know-how documents' for the products and its plant in the city of Aberdeen, Scotland, U.K., to the Indian company in the manner laid down in the agreement. Clause 5 of the agreement also makes a provision for training of the personnel of the Indian company at Aberdeen or such other places outside India as 'Baker' shall deem fit. Clause 7 makes provision for compensation and lays down the terms of payment by the Indian company to 'Baker' in consideration of 'Baker' supplying, transferring and assigning to the Indian company 'know-how' and all other rights, title and interest in respect thereof for the manufacture of products as provided in Schedule I to the agreement. The Indian company according to the above said Clause were to pay compensation to 'Baker' in the following manner:
1. Dollars 83,333 within 30 days after incorporation of the Indian company, or such other period as may be extended by Baker provided the letter of credit as stipulated in Clause 7(b) has been received by Baker.
2. US $ 83,333 upon or within 10 days after receipt of the technical know-how documents from Baker in Aberdeen.
3. US $ 88,334 within 10 days after the commencement of production at the Indian company's plant at Gurgaon (Haryana).
13. Clause 7(A)(Il) of the agreement makes provisions for payment of royalty by the Indian company. The other Clauses of the 'Technical Know-how Agreement', inter-alia, deal with guarantee for know-how, taxes, period for which technical assistance is to be extended to the Indian company by 'Baker', stipulation of the Indian company that it shall keep the technical know-how a secret and will not disclose the same to any person other than its employee or licensee or sub-licensee or employee of the sub-licensee, the sale of the products, force majeure, assignability and termination of the agreement and the terms of the agreement governing law of conciliation and arbitration, and modification of the agreement, etc. The agreement also declares that the arrangements made under it shall not constitute a partnership or a joint venture between the Indian company and 'Baker'. Besides, a specific reference needs to be made to Clauses 21 and 24 of the 'Technical Know-how Agreement'. Clause 21 provides that failure of either party to the agreement at any time to enforce any other terms, provisions and conditions of this agreement shall not be construed as a waiver of the same or of the rights of either party to enforce the same on any subsequent occasion. Clause 24 of the agreement declares that the agreement will ensure for the benefit of the Indian company when formed. Thus this agreement deals with financial and technical matters.
14. As against the terms of the above said 'Technical Know-how Agreement', the 'Basic Agreement' which was executed by and between the first defendant and the Baker Oil Tools (U.K.) Division deals mainly with the matters relating to permission and formation of the Indian company. The agreement mentions that the first defendant had obtained a letter of intent on December 6, 1984 from the Government of India for the establishment of a new industrial undertaking at Gurgaon (Haryana) for the manufacture of items of oil field equipment, particulars whereof have been specified in Schedule I to the agreement. The agreement also recites the resolve of the first defendant to promote and form a private company by the name Baker Oil Tools (India) Private Ltd . The agreement records the offer of the first plaintiff to become a shareholder of the said company by contributing to its share capital. The agreement deals with the matters relating to the formation of the said company including the share capital of the company, the main objects of the company, details of the cost of the project namely, preliminary and pre-operative expenses, land and development, civil construction including factory and other buildings, plant and machinery, margin of working capital, contingencies, authorised capital of the company, provision to rescind the agreement, the obligations of the first defendant before the incorporation of the company, duty of the first defendant upon the formation of the company to transfer to the company such of his obligations, as may be possible for the said company to carry out, the understanding between the parties that the terms and conditions of the 'Technical Know-how Agreement' are to be substantially as per the draft given in Annexure 'A' to the agreement, the time limit within which the first plaintiff and the Indian company on its incorporation is to enter into an agreement, disposal of shares held by the parties at any time before and after the termination of the agreement, management of the Indian company including constitution of its Board, accounts and appointment of the auditors of the company, nature of rights and obligations of the parties, effective date of its coming into operation, default or breach of the terms thereof, governing law and settlement of disputes, and provision for incorporating the text of this agreement in the Articles of Association of the company and notices. Moreover it contains Clause 8.3 which is subject of much controversy between the parties. This Clause reads as follows:
"In the event of Baker holding less than 40%, of the paid up equity capital of the said Company, if the word "Baker" is part of the name of the said Company, the said Company shall not be entitled to retain the said word as part of its name; the intention being that the said word shall be used as part of the name of the said Company by virtue of the permission of Baker and that the said Company shall have no property interest in the said word; and if Baker so requires the said Company shall change its name to a name not including the word "Baker" or any similar word. If Baker so desires, the parties shall ensure that Baker and the said Company shall enter into an agreement in a form and substance satisfactory to Baker so as to ensure observance and implementation of this condition by the said Company."
Thus, this Clause stipulates that in case the holding of the first plaintiff falls below 40% of the paid-up equity capital of the Indian company, the latter shall not be entitled to retain the word Baker as part of its name.
15. Thus a comparison of the 'Basic Agreement' and the 'Technical Know-how Agreement' clearly reveals their nature and scope. The two agreements operate in different and separate fields. While the 'Basic Agreement' primarily deals with incorporation of the Indian company, the 'Technical Know-how Agreement' relates to the transfer of the technical know-how by the first plaintiff to the Indian company for a price. The distinction between the two agreements is also exhibited in the subsequent three agreements executed by the parties. The first addendum to the 'Technical Know-how Agreement' dated May 15, 1985 recites that the first defendant and Baker Oil Tools (United Kingdom) Limited entered into articles of agreement relating to supply and transfer by 'Baker' of technical know-how to the Indian company in accordance with the provisions of the 'letter of intent' of the Government of India dated April 6,1984. This recital defines the scope of the 'Technical Know-how Agreement'. The parties themselves describe this agreement as one for supply and transfer of the technical know-how by 'Baker' to the Indian company. The distinction between the 'basic agreement and the 'Technical Know-how Agreement' has been brought out more pointedly in the second addendum dated September 30, 1985 to the 'Technical Know-how Agreement'. The recitals 'A' and ' B' of the Second Addendum along with the relevant Clause dealing with its purpose read as follows:
"(A) On the 21st day of December 1984 HK [Hiroo Khushalani] and BAKER [Baker international Limited, Baker Oil Tools (U.K.) Division] entered into Articles of Agreement relating to the incorporation in India of a company to be named Baker Oil Tools (India) Private Limited (such Articles of Agreement being hereinafter referred to as "the Articles of Agreement") (B) On the 21st day of December, 1984 HK and BOT UK [Baker Oil Tools (United Kingdom) Limited] entered into Articles of Agreement relating to the transfer of technical know-how by BOT UK to the said Baker Oil Tools (India) Private Limited (such Articles of Agreement being hereinafter referred to as "the Technical Know-how Agreement")"
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1. BAKER agrees with HK that BAKER will supervise the performance by BOT UK of the obligation of BOT UK under the Technical Know-how Agreement as amended by the First Addendum to Technical Know-how Agreement and will procure that BOT UK will fully comply with such obligations.
xx xx xx Thus, while the 'Basic Agreement' (referred to in Clause '(A)' above) deals with the subject of incorporation of the Indian company, the 'Technical Know-how Agreement' (referred to in Clause '(B)' above) concerns the transfer of technical know-how by 'Baker' to the Indian company.
Subsequent to the second addendum, the first defendant; Baker Oil Tools (United Kingdom) Limited; and Baker International Limited, Baker Oil Tools (U.K.) Division entered into an agreement dated November 18,1985 (called 'Novation Agreement') whereby Baker International Ltd., Baker Oil Tools (U.K.) Division under took to perform the obligations of Baker Oil Tools (United Kingdom) Limited under the 'Technical Know-how Agreement' as amended by the first addendum and the second addendum. This agreement also highlights the difference and distinction between the 'Basic Agreement' and the 'Technical Know-how Agreement' just in the same manner as is done in the second addendum to the 'Technical Know-how Agreement'.
16. When Clause 21 of the 'Technical Know-how Agreement' speaks of the 'Technical Know-how Agreement' to be the only valid and binding agreement between the parties, the stipulation must be confined and limited to the previous understandings or arrangements relating to the same subject matter as is covered by the 'Technical Know-how Agreement'. The 'Basic Agreement' does not fall within the scope and ambit of Clause 21 of the 'Technical Know-how Agreement'. This being the position, Clause 21 cannot extinguish, cancel or supersede the 'Basic Agreement' which is outside its purview.
17. The learned Counsel for the defendants next submitted that the 'Basic Agreement' was not binding on the second defendant as it was not a party to the same. It was emphasised that when the 'Basic Agreement' was executed between the first defendant and Baker International Limited, Baker Oil Tools (U.K.) Division, the second defendant was not in existence. Learned Counsel also submitted that the 'Basic Agreement' was required to be placed before the Government of India for its consideration and approval. Since the 'Basic Agreement' was a dead letter the same was not even furnished to the first defendant. This being so it could not be placed before the Government of India. It was contended that the 'Basic Agreement' not having been placed before the Government of India for approval has no existence in the eye of law and is therefore illegal and unlawful. Consequently Clause 8.3 thereof would also not be in existence. The learned Counsel challenged the validity of the 'Basic Agreement'. He referred to the provisions of the Foreign Exchange Regulations Act, 1973, in support of his submission. He also submitted that the first plaintiff assigned and transferred the goodwill of business attached to the trade name Baker to the second defendant for consideration. Besides he invited my attention to Clause 12 of the annexure to the 'letter of approval for the foreign collaboration' dated April 6, 1984 and submitted that in case the word Baker is to be considered as a foreign brand name belonging to the plaintiffs, then its use in respect of the products of the Indian company is prohibited by the Government of India.
18. Insofar as the submission of the learned Counsel for the defendants that the 'Basic Agreement' including Clause 8.3 thereof has no existence in the eye of law as the 'Basic Agreement' was not placed before the Government of India for its approval is concerned, it is significant to note that Clause 4.2 of the same agreement required the first defendant to apply to various government authorities in this country for obtaining their approvals in respect of this agreement as well as the 'Technical Know-how Agreement' and for obtaining all statutory approvals and consents required in connection with any matter pertaining to the project. This plea of the defendants, which is based on the alleged lapse of the first defendant in carrying out his obligations under Clause 4.2 of the 'basic agreement', is being used as a shield to ward of the effect of Clause 8.3 thereof. Thus, the first defendant is taking advantage of his own wrong which cannot be countenanced in law and must be disapproved.
19. As regards the submission of the defendants that the 'Basic Agreement' being a dead letter was not furnished to the defendants by the plaintiffs, it seems to me that the submission is not well founded. In case the agreement was not furnished to the defendants or the same was a dead letter there would have been no need to refer to the agreement in addendum I, addendum II and the Novation Agreement. Moreover, it should not be forgotten that the 'Basic Agreement' and the 'Technical Know-how Agreement' were executed simultaneously on the same day. Therefore, it is not logical to contend that the 'Technical Know-how Agreement' was intended to cancel and supersede the 'Basic Agreement'. If the 'Basic Agreement' was to be shot down by the 'Technical Know-how Agreement' then there was no point in executing the 'Basic Agreement' in the first instance. Having executed the 'Basic Agreement' there was no reason to rescind or supersede the same on that very day. It is also not the case of the defendants that they at any point of time asked the plaintiffs to furnish the 'Basic Agreement' or that they had protested that it was no longer in existence having been superseded by the 'Technical Know-how Agreement'.
20. The question whether the 'Basic Agreement' was produced before the Government of India for its approval is a question of fact. The plaintiffs referred to the letter of the Under Secretary to the Government of India, Ministry of Industry, Department of Industrial Development, dated February 7, 1986, which states that the foreign collaboration agreement' has been taken on record. As per the plaintiffs the 'Basic Agreement' provided for the collaboration between 'Baker' and the Indian company and it was this agreement which was taken on record by the Government of India.
21. The defendants, however, submitted that the Government by mentioning the 'foreign collaboration agreement' in the above letter was actually referring to the 'Technical Know-how Agreement'. He invited my attention to the letter of the Government of India dated April 6, 1993 and stated that even in this letter the Government of India had while referring to the 'Technical Know-how Agreement' called the same as the collaboration agreement and mentioned that it had a life of ten years. He pointed out that it was the 'Technical Know-how Agreement' that provided for a term of ten years as its validity period and no such time imperative was mentioned in the 'Basic Agreement'. It was, therefore, surmised by the defendants that the Government of India was actually calling the 'Technical Know-how Agreement' as the 'Collaboration Agreement' and it was the 'Technical Know-how Agreement' which was taken on record and not the 'Basic Agreement'.
22. The final determination of the question whether the 'Basic Agreement' was produced before the Government of India by the first defendant will depend upon the evidence which the parties will lead at the trial, but one thing is clear that the Articles of Agreement between the parties dated November 18, 1985 (Novation Agreement), whereby Baker International Limited, Baker Oil Tools (U.K.) Division assumed the responsibility for financial equity participation and technology transfer to the second defendant, not only alluded to the factum of the execution of the 'Technical Know-how Agreement' but also specifically referred to the execution of the 'Basic Agreement'. Relevant portion of the 'Novation Agreement' along with Clause 1 thereof, under which Baker Oil Tools (UK) Division took over the obligations of Baker Oil Tools (UK) Limited under the 'Technical Know-how Agreement', is extracted below:
(A) On the 21st day of December, 1984 HK [Hiroo Khushalani] and BAKER [Baker International Limited, Baker Oil Tools (U.K.) Division] entered into Articles of Agreement relating to the incorporation in India of a company to be named Baker Oil Tools (India) Private Limited (such Articles of Agreement being hereinafter referred to as "the Articles of Agreement") (B) On the 21st day of December, 1984 HK and BOT UK [Baker Oil Tools (United Kingdom) Limited] entered into Articles of Agreement relating to the transfer of technical know-how by BOT UK to the said Baker Oil Tools (India) Private Limited (such Articles of Agreement being hereinafter referred to as "the Technical Know-how Agreement") xx xx xx
1. BAKER undertakes to perform the obligations of BOT UK under the Technical Know-how Agreement as amended by the First Addendum and the Second Addendum and be bound by the terms thereof in every way as if BAKER were named therein as a party thereto in lieu of BOT UK at the date of signature thereof.
xx xx xx"
The above said supplementary (novation) agreement was transmitted to the Government of India by the first defendant by his letter dated November 25,1985. This letter has been placed on record by the plaintiffs and has not been denied by the defendants. The letter reads as follows:
"November 25, 1985 The Joint Secretary to the (Government of India, Department of Heavy Industry, Ministry of Industry & Company Affairs, Udyog Bhavan, New Delhi 110011.
ATTN: MR S.C. DHINGRA Dear Sir, COMPOSITE PROPOSAL FOR OF OIL FIELD EQUIPMENTS;.
"Further to our letter of September 19,1985, we are pleased to enclose original and sixteen copies of an Amendment to the Original Agreement whereby Baker International Limited-Baker Oil Tools (UK) Division assumes complete responsibility for financial equity participation and technology transfer to the Joint Venture Indian Company Baker Oil Tools India Private Limited.
We will be grateful if you will kindly accord your approval for having this Agreement taken on record as soon as possible. We take this opportunity of placing on record that the factory construction is substantially advanced and several of the machine tools have already arrived at the factory site and subject to Government's approval, we propose to commence production during the first quarter of 1986.
Thanking you, Yours faithfully, For MIRAKSHA ASSOCIATES, Sd/ (H.L.KHUSHALANI) CHIEF EXECUTIVE."
The Government of India in its letter dated February 7, 1986 acknowledged the receipt of the letter of the first defendant dated November 25,1985. This letter runs thus:
"I am directed to refer to your letter dated 26.12.1984 forwarding therewith copies of foreign collaboration agreement on the above subject and to say that the same along with the supplementary agreements forwarded under cover of your letter dated 20.5.1985 and 25.11.85 respectively have been taken on record in terms of Deptt. of Industrial Development,SIA letter No. FC:147(83)/ Comp/SCS dated 6.4.1984, as amended vide letter No. FC:147(83)/Comp/ SCS dated 4.2.1986.
2. This issues with the concurrence of Ministry of Finance (Deptt. of Economic Affiars) vide their U.O. No. 122/85-Fl&T dated 4.2.1985.
3. Kindly acknowledge receipt.
Yours faithfully, Sd/ (R.L. Sidhu) Under Secretary to the Government of India"
23. From this letter it is apparent that the Government of India was apprised not only of the technical know-how agreement but was also made aware of the 'Basic Agreement'. It is not the case of the second defendant that the Government of India raised any objection to the effect that the 'Basic Agreement' was not presented before it or the same was not approved by it and, therefore, was illegal and not operative between the parties, being contrary to the provisions of FERA and to the conditions laid down in its letters of April 6, 1984. It appears to me that the only Clause in the 'Basic Agreement' which could attract the provisions of FERA is Clause 5.1, as it allowed the first plaintiff to acquire 40% of the shareholding of the second defendant. Therefore, except Clause 5.1 of the 'Basic Agreement', rest of the Clauses did not require the approval of the Government of India and therefore they would be operative even without the approval of the Government of India. This, however, is not to suggest that the Government of India had disapproved the 'Basic Agreement'. It is important to note that for the acquisition of the equity by the first plaintiff approval of the Government of India was required for this could involve in flow of foreign exchange. Since the Government of India did approve the equity participation of Baker Oil Tools (U.K.) Division to the extent of 40% of the paid up equity capital of the second defendant, it was not necessary for the Government of India to accord a formal approval to Clause 5.1 of the 'Basic Agreement', providing for equity participation of Baker International Ltd, Baker Oil Tools (U.K.) Division, as it was not contrary to the FERA or to the terms of the approval laid down by the Government in its 'letter of intent' and 'letter of approval of foreign collaboration', both dated April 6,1984. None of these letters provide for any consequences, penal or otherwise, for not presenting any of the agreements before Government of India for its approval. After the receipt of the novation agreement the knowledge of the Government of India regarding the execution of the 'Basic Agreement' is not in doubt. In case the 'Basic Agreement' was compulsorily required to be produced before the Government of India and was not so produced for approval, or any of the mandatory conditions subject to which the 'letter of intent' and the 'letter of approval of foreign collaboration' were issued, were not carried out by the parties, the Government of India would have cancelled the letters or would have taken some punitive action against the parties. This was not done by the Government of India. The 'Basic Agreement', therefore, was not unlawful or violative of the provisions of FERA.
24. Learned Counsel for the defendants relied upon various decisions in support of his submission that it is not permissible to any person to rely upon a contract the making of which the law prohibits. It is unnecessary to burden the judgment by making reference to them as it appears to me that the 'Basic Agreement' is not unlawful.
25. From the conduct of the second defendant, it appears to me that the 'Basic Agreement' was adopted and acted upon by the second defendant. The second defendant having taken the benefit of the 'Basic Agreement' cannot be heard to say that the same was not adopted by it. If the same was not adopted by the second defendant, the question that arises is as to how it was using the trade name Baker as part of its corporate name. Prima facie it appears to me that the trade name Baker belongs to the plaintiffs which fact would be evident from the further analysis of the matter detailed in the latter part of the judgment. Obviously the permission to the second defendant to use the trade name Baker as part of its corporate name flowed from the 'Basic Agreement'. The allotment of shares of the second defendant to the first plaintiff is also as per the 'Basic Agreement'.
26. There is also nothing to show that the first defendant paid any consideration in the form of money to the first plaintiff for reaching an agreement, incorporated in Clause 8.3 of the 'Basic Agreement', permitting the Indian Company on its incorporation to use the word 'Baker' as part of its corporate name till such time the shareholding of the first plaintiff does not fall below 40% of the paid up equity capital of the latter. The Foreign Exchange Regulation Act is meant to prevent unauthorised inflow and outflow of foreign exchange into and out of the country. Therefore, no permission of the Government of India or the Reserve Bank of India would have been necessary for such an agreement permitting the use of the word 'Baker' in the corporate name of the second defendant. Under Section 28(1)(c) of the Foreign Exchange Regulation Act, as it existed at the relevant time, the permission of the Reserve Bank of India for the use of the foreign trade mark or brand name by a company would be necessary in case any consideration was paid or promised to be paid for it. Where, however, no element of consideration is involved no permission would be required by the user of the foreign trade mark as Section 28(1)(c) of the FERA will not be attracted. Therefore, Clause 8.3 of the 'Basic Agreement' allowing the second defendant to use the name Baker as part of its corporate name upto the time the first plaintiff holds 40% of its equity capital and interdicting the use of the name Baker as part of its corporate name in case the shareholding of the first plaintiff drops below 40% is not illegal, unlawful or void. The above view finds support from a decision of this Court in Pioneer Hybrid International Inc. USA Vs. Pioneer Seed Company Ltd., AIR 1989 NOC 120 (Delhi), B.N. Kirpal, J., (as his Lordship then was) held as follows:
"The Registered User Agreement was not void for not obtaining permission of Reserve Bank of India under Sec. 28 of the Foreign Exchange Regulation Act as the Registered User Agreement does not provide for any consideration in the form of money being paid by the defendant to the plaintiff for the use of the said trade mark.The Foreign Exchange Regulation Act is directly concerned with the inflow and outflow of the foreign exchange into and out of the contry and it is for this reason that Sec. 28 required the permission of the Reserve Bank before any permission could be granted for the use of the trade mark for any "direct or indirect consideration". It is only that consideration which would affect the inflow and outflow of the foreign exchange into or out of the country, whether directly or indirectly, which is contemplated by Sec. 28(1)(c). Any promise made by the user of the trade mark to the owner thereof which would affect or concern the flow of foreign exchange would be regarded a consideration under Sec. 28(1)(c) for the use of the trade mark. Where, however, permission has been granted by the owner to a registered user for the use of the trade mark and the said permission does not require the registered user to do anything which affects the inflow or outflow of the foreign exchange, then such an agreement or ar rangement would not come within the purview of Sec. 28(1)(c) of the Act."
27. Learned Counsel for the defendants, however, submitted that the defendants not only paid royalty to the plaintiffs for acquiring the right to manufacture certain items of oil field equipment and to trade in them, but the royalty also included payment for acquiring the right to use the goodwill associated with the mark and name Baker. To substantiate the argument he placed reliance on the letter of Baker Hughes (Singapore) Pvt. Ltd. dated October 27, 1994 addressed to the second defendant, and Clauses 7(A), 2(A), 2(B) and 4(A) of the 'Technical Know-how Agreement'. On going through the letter of Baker Hughes Ltd. dated October 27, 1994 and the various Clauses of the 'Technical Know-how Agreement' I am unable to accept the contention raised on behalf of the defendants. The letter of Baker Hughes Limited dated October 27,1994 addressed to the second defendant merely acknowledges the receipt of all the three instalments of the technology fee as approved by the Ministry of Industry by their letter dated April 6,1984. This letter does not talk of receipt of any money for permitting the second defendant to use the mark and name Baker. None of the Clauses of the 'Technical Know-how Agreement' including Clauses 2(A), 2(B), 4(A) and 7(A) speak of payment of any consideration by the second defendant for acquiring the permission of the first plaintiff to use the mark or name Baker. Clauses 2(A) and 2(B) of the 'Technical Know-how Agreement' record the agreement of 'Baker' with the first defendant to transfer, assign and supply to the Indian company the technical know-how described in Schedule II thereto. Schedule II specifies the scope of the know-how. Clause 4(A) of the 'Technical Know-how Agreement' makes provisions for transfer and supply of technical know-how from the first plaintiff to the Indian company. Clause 7(A) makes provision for payment of consideration by the defendants to 'Baker' for supply, transfer and assignment to the Indian company of technical know-how and all other rights, title and interest in respect of the technical know-how for manufacture of products specified in the agreement. The transfer of all rights, title and interest from 'Baker' to the second defendant is in respect of the technical know-how. Keeping in view the context in which the expression "all other rights, title and interest" has been used in Clause 7(A) it cannot be held that payment for all other rights, title and interest include payment for use of trade mark and trade name Baker by the second defendant. It is significant to note that the sweep and the meaning of the words "all other rights, title and interest" is controlled by the words following them, namely, "in respect of the technical know-how for manufacture of the products specified in the agreement."
28. Learned Counsel for the defendants was not able to point out any Clause even in the 'Basic Agreement' indicating any payment, direct or indirect, by the defendants to the plaintiffs for acquisition of the permission to use the trade mark 'Baker' or for any promise on the part of the defendants to do or abstain from doing anything with reference to the adoption of the word Baker in the corporate name of the Indian company affecting the foreign exchange resources of the country. Thus, no case has been made out for the application of section 28(1)(c) of the FERA as it existed on the relevant date.
29. Even Clause 12 of the annexure to the "letter of approval of foreign collaboration" dated April 6, 1984 does not render Clause 8.3 of the 'basic agreement' a nullity. Clause 12 of the said annexure reads as follows:
"Foreign trade names will not ordinarily be allowed for use on the products for internal sales although there is no objection to their use on products to the exporters."
Strictly speaking the above Clause deals with the use of foreign trade names on the products and not with the use of foreign trade names as part of the corporate names of the Indian companies. As the Clause suggests ordinarily the Government of India will not allow foreign trade names to be used on the products for internal sales. But there is no embargo on the use thereof if the Government of India permits such a user.
30. Neither the Government of India nor the Reserve Bank of India objected to the use of the word Baker by the second defendant as part of its corporate name at any point of time. The Registrar of Companies while granting the certificate of incorporation dated February 13, 1985 to the second defendant did not take any exception to the use of the word Baker by it as part of its corporate name. The Government of India on February 7, 1986 while taking one of the above-said agreements between the first defendant and 'Baker' on record at the request of the second defendant did not object to the word Baker occurring in its corporate name though the word forms part of the name of the foreign company. It has rightly not been argued by the learned Counsel for the defendants that the Government of India did not know that the word Baker was being used by the foreign company as part of its corporate name. The knowledge of the Government of India that the word Baker was part of the corporate name of the foreign company 'Bakerline' is exhibited by its letter of April 6,1984 as it expressed its willingness to approve the terms of the collaboration of the first defendant with Bakerine, USA, for manufacture of oil field equipment. Even in a subsequent letter dated April 6, 1993 the Government of India did not express any misgivings in regard to the word Baker being used by the second defendant as part of its corporate name. The Reserve Bank of India while allowing the second defendant to issue 309294 equity shares to M/s. Baker International Limited, Baker Oil Tools (U.K.) Division did not ask the second defendant to drop the word Baker from its corporate name though the word was being used by the foreign collaborator as part of its corporate name. Obviously the Government of India or R.B.I. will not permit the use of a foreign trade name or trade mark in India without there being a user agreement whereby the proprietor of the foreign trade name or trade mark permits the use of that name/mark on the products of its Indian licensee, assignee, etc. The Government of India is not expected to permit the use of a foreign trade mark/trade name by a pirator or an imitator of the same on its products or as part of its corporate name. It also cannot be attributed to the Government of India that it would be a party to the infringement of a foreign trade mark/trade name by allowing the Indian party to the use thereof without the requisite permission from its owner. The Government of India before allowing an Indian party to use the foreign trade mark/trade name will certainly satisfy itself about the existence of a user agreement. It would be unreasonable to hold that when a foreign trade name/trade mark is being used by an Indian company without the permission of the one to whom such trade mark/trade name belongs, it can be treated as an Indian trade name or trade mark and it cannot be assumed that the Government of India gave permission to the use thereof treating it as an Indian trade name or trade mark. In the instant case Clause 8.3 of the 'Basic Agreement' permitted the use of the name 'Baker' to the second defendant but permissive use thereof could continue as long as the share holding of the first plaintiff was not reduced below 40% of the share capital of the second defendant. The Clause mandates that once the share holding of the first plaintiff dips below 40%, the second defendant would be precluded from using the name Baker as part of its corporate name. It prima facie appears to me that the Government of India would have been aware of user agreement and therefore permitted the second defendant to the use of the trade mark trade name Baker. As without the user agreement the Government of India would not have allowed the adoption of the word Baker as part of the corporate name of the second defendant. It needs to be noticed that the 'Basic Agreement' was entered into by and between the parties thereto in the year 1984. The second defendant owes its existence to the said agreement as it was pursuant to that agreement that the second defendant was incorporated and it was able to secure the collaboration with 'Baker' for its project. It was also because of the 'Basic Agreement' that 'Baker' participated in the equity of the second defendant and gave permission to the second defendant to use the name 'Baker' in its corporate name till the happening of the specified contingency. The second defendant has clearly taken benefit of the 'Basic Agreement' and this could only be possible by adopting the 'Basic Agreement'.
31. The defendants while questioning the validity of the 'Basic Agreement' have overlooked the fact that in case the 'Basic Agreement' is not binding on the second defendant then in that event the use of the word Baker by the second defendant as part of its corporate name would have been without the permission of the plaintiffs. The following observations of B.N. Kirpal, J., in Pioneer Hy-Bred International Inc., USA Vs. Pioneer Seed Company Ltd. and Another (supra) support the view which I have taken:
"... The injury which is complained of in the present case is to the improper use of the trade mark belonging to the plaintiff. The plaintiff is the owner of the trade mark "PIONEER" and, if the Registered User Agreement is not valid, the defendant is using the said trade mark against the wishes and without a valid permission of the owner. Trade mark is a valuable right which vests in its owner, and an injunction under Order 39, Rule 2, C.P.C. can be issued to prevent injury to such a right. "
32. Another case in point is Synthes AG Chur Vs. Rob Mathys India (P) Ltd., 1996 PTC (16) 401. The facts of the case were thus : The first plaintiff, a company incorporated in Switzerland, was the proprietor of trade mark AO/ASIF. The trade mark AO was being used world wide in relation to the orthopedic implants and instruments including screws, plates, wires, etc., and was being used in India since 1979. The first plaintiff licenced the second plaintiff to use the trade mark AO/ASIF in relation to the above said goods in this country. In 1977 a 'collaboration agreement' was executed between the plaintiffs, being represented by Dr. Robert Mathys and Reinhold Mathys on the one hand and defendant being represented by S/Shri M.P. Dhawan and S.M. Dhawan on the other. Pursuant to the collaboration agreement the defendant company was incorporated. Under the collaboration agreement the defendant was permitted to use the trade mark AO/ASIF in relation to the above said products which were being supplied by the plaintiffs. By letter dated June 24,1992 the plaintiffs revoked the 'collaboration agreement' with the defendant. The plaintiffs issued a notice to the defendant requesting it not to use the trade mark of the plaintiffs. The defendant did not desist from using the trade mark. The plaintiffs thereupon filed a suit for passing off against the defendant and also moved an application for interim relief. This Court while accepting the application of the plaintiffs for interim relief observed that once the collaboration agreement was cancelled the defendant would cease to have any right to use the mark. In this regard the Court observed as follows:
".... Once the agreement dated 15.4.77 was cancelled the defendant would cease to have any right at all to use the marks. The argument by the learned Senior Counsel that such a thing is within the contemplation of common law and not the Trade Mark Law is not at all tenable. Therefore, having regard to the facts and circumstances, I have no hesitation in coming to the conclusion that the plaintiffs have made out a prima facie strong case for the grant of injunction."
It is noteworthy that in the above case the defendant did not raise the plea that the agreement was not binding on it as the same was executed between the plaintiffs on the one hand and the promoters of the defendant on the other. But that will not matter as the net effect of the plea, if accepted, would mean that the agreement was not binding on the defendant, and if the agreement did not bind the defendant he would have no right to use the trade mark of the plaintiffs as it was by virtue of the 'basic agreement' that the defendant was given a right to use the same.
33. It was pointed out by the learned Counsel for the plaintiff that the 'Basic Agreement' was executed by the first defendant who was the promoter of the second defendant and the moving spirit behind its incorporation. It was because of him that the motion to include the contents of Clause 8.3 into the Articles of Association of the second defendant was defeated. It was further contended that the corporate veil of the second defendant company should be lifted to see the real person behind its facade. On the other hand, learned Counsel for the defendants, contended that the Memorandum and Articles of Association were drafted in England by the Solicitors and the bankers of the plaintiffs, and at that stage they did not think it appropriate to include the contents of Clause 8.3 of the 'Basic Agreement' in the Articles and Memorandum of Association of the second defendant as the inclusion of the Clause would have violated the provisions of Section 28 of the FERA. It was further canvassed that the Memorandum and Articles of Association of a company override any prior agreement between the promoters of the company and the same will not survive after the incorporation of the company. Learned Counsel in support of his submission relied upon a decision of the Supreme Court in V. B. Rangaraj Vs. V. B. Gopalakrishnan and Others, (1992) 73 Company Cases 201. He also submitted that the corporate veil of the company can only be lifted where the company is a party to the fraud or where it has evaded taxes. Since no case of fraud or loss to the revenue has been made out by the plaintiffs the principle of lifting of corporate veil cannot be invoked by them.
It is not necessary to consider the question whether a case has been made out for lifting of the corporate veil of the second defendant as, for the reasons already stated in the earlier part of the judgment, I am prima facie of the opinion that the second defendant had adopted the 'Basic Agreement' and had acted upon it.
34. Even if the contents of Clause 8.3 of the 'Basic Agreement' have not been incorporated in the articles of association, it does not in any manner affect the right of the plaintiffs to ask the second defendant to stop the use of the name Baker by deleting the same from its corporate name as with the name Baker is attached the goodwill of the business belonging to the plaintiffs. I fail to see how the decision of the Supreme Court in V.B. Rangaraj Vs. V.B. Gopalakrishnan and Others, [1992] 73 Company Cases 201, on which reliance was placed by the learned Counsel for the defendants, helps the defendants. The question that fell for consideration was whether the shareholders can among themselves enter into an agreement in respect of transfer of shares which is contrary to or inconsistent with the Articles of Association of the company. The question was answered by the Supreme Court in the light of Section 82 of the Companies Act, 1956 (which defines the nature of shares and states that the shares or other interests of any member in a company shall be movable property transferable in the manner provided by the Articles of Association of the company) and Sections 28, 31, 36 and 39 thereof and Article 13 of the Articles of Association of the company thus:
"These provisions of the Act make it clear that the Articles of Association are the regulations of the company binding on the company and on its shareholders and that the shares are movable property and their transfer is regulated by the Articles of Association of the company.
Whether under the Companies Act or the Transfer of Property Act, the shares are, therefore, transferable like any other movable property. The only restriction on the transfer of the shares of a company is as laid down in its articles, if any. A restriction which is not specified in the articles is, therefore, not binding either on the company or on the shareholders.....
xx xx xx Hence, the private agreement which is relied upon by the plaintiff, whereunder there is a restriction on a living member to transfer his shareholding only to the branch of family to which he belongs in terms imposes two restrictions which are not stipulated in the article. Firstly, it imposes a restriction on a living member to transfer the shares only to the existing members and secondly the transfer has to be only to a member belonging to the same branch of family. The agreement obviously, therefore, imposes additional restrictions on the member's right to transfer his shares which are contrary to the provisions of Article 13. They are, therefore, not binding either on the shareholders or on the company...."
Thus, it is obvious that the Supreme Court was dealing with a case in which the private agreement provided for restrictions on the transfer of the shares which were not specified in the Articles of Association of the company. The private agreement between the shareholders imposing restrictions on the transfer of shares was clearly contrary to the Articles of Association of the company which placed no restriction on their transfer. Under Section 82 of the Companies Act the transfer of shares is left to be governed by the Articles of Association of the company. In these circumstances the Supreme Court held that the private agreement was not binding on the shareholders and the company. In the instant case the private agreement is not contrary to the Articles of Association of the company. The Articles of Association of the company do not at all deal with the subject of grant of permission by the first plaintiff to the second defendant for use by the second defendant of the name Baker in its corporate name and the matters connected therewith. The Articles of Association are silent on the subject. Therefore, Clause 8.3 of the 'basic agreement' remains unaffected by the Memorandum and Articles of Association of the company. Even Section 36 of the Companies Act would not be available to the defendants for being pressed into service as it binds the company and the members thereof. The first plaintiff had divested itself of its shareholding on February 15, 1995 with the permission of the Government of India and after ceasing to be a shareholder it asked the second defendant to discontinue the use of the word Baker in terms of the 'Basic Agreement'.
35. Learned Counsel for the defendants also urged that the first plaintiff had transferred its business to the second defendant which carried with it the right to use the goodwill of the business including the name Baker. This argument of the defendants is not well founded. The mere transfer of technical know-how by the first plaintiff to the second defendant to manufacture certain items of oil field equipments does not amount to transfer of business carried on by the plaintiffs to the defendants, and therefore, the further argument that transfer of business carries with it the right to use the name and the mark Baker is not available to the defendants. Since prima facie it appears to me that the second defendant has not purchased the business of the plaintiffs and the right to use of the name Baker, the authorities cited on behalf of the defendants to the effect that the transfer of business carries with it the right to use the name and mark of that business do not advance the case of the defendants. Learned Counsel for the defendant placed much reliance on the following passages from 'The Law of Passing Off' by Christopher Wadlow, 2nd Edition, 1995:
"Goodwill is personal property and can pass by voluntary assignment, under a Will or intestacy, or by operation of law....2.66.
.... The most important restriction is that goodwill cannot be assigned or otherwise dealt with in gross, but must remain in the same ownership as the business to which it relates....
..... An assignment of goodwill does not have to be in writing or in any particular form and need not mention goodwill by name. A transaction intended to assign a business as a whole necessarily passed the goodwill to the assignee.....
.... Between the parties to an assignment of the goodwill in a business, the effect is to confer on the assignee the exclusive right to carry on the business assigned and to represent himself as carrying on that business. Consequently the assignee has the right to sue the assignor for damages and an injunction if he infringes the rights assigned 2.69.
.... Once the plaintiff's business has been discontinued then, even though he may intend to resume it sometime, it is a matter of fact and degree at what point he should be treated as no longer having any goodwill in that business or in respect of any name attached to it....2.89
36. The above would show that assignment of goodwill in a business in favour of the assignee can take place by conferring on the assignee exclusive and total right to carry on the business belonging to the assignor. In the instant case I have not been persuaded to hold that there is a prima facie evidence to show that the second defendant acquired exclusive and total right to carry on the business as a whole belonging to the plaintiff. The transaction did not constitute a transfer of the business or goodwill of the first plaintiff to the second defendant, rather it was only a transaction in the nature of a transfer of technical know-how from the first plaintiff to the second defendant with permission from the former to the latter to use Baker as part of its corporate name till the happening of a particular event. As already seen, Clause 8.3 of the 'Basic Agreement' stipulates that in case the holding of the first plaintiff falls below 40% of the paid-up equity capital of the Indian company, the latter shall not be entitled to retain the word Baker as part of its name, the intention being that the said word shall be used as part of the name of the Indian company by virtue of the permission of 'Baker' and the Indian company shall have no property interest in the said word; and if 'Baker' so requires the Indian company shall change its name to a name not including the word Baker or any similar word, meaning thereby that as long as the shareholding of the first plaintiff does not fall below 40% of the paid up capital of the second defendant, the latter will have the permission of the former to adopt and use the word Baker as part of its corporate name. Such a permission did not constitute assignment of the mark Baker in favour of the second defendant. This being so the second defendant cannot claim that the right to use Baker as part of its corporate name was assigned to it by the first plaintiff.
37. Learned Counsel for the defendants also relied upon the principle stated in Drysdale and Sylverleaf's Passing Off, Law and Practice, 2nd Edition, which can be encapsulated thus:
The transfer of a goodwill in a business normally carries with it the right to use the name and get-up used in that business and the name and get-up cannot be assigned separately from the goodwill in the business in which it is used.
The above principle does not advance the case of the defendants as it does not apply to the facts of the instant case.
In Thorneloe Vs. Hill, (1891-4) AllER Rep.1263, which was cited by the defendants, it was held that a purchaser of a business, if he continues it, has the right to use the trade name and trade mark of the business in any way he pleases which is not calculated to deceive. In the case in hand the second defendant cannot be said to have purchased the business of the plaintiffs. Therefore, this decision also does not take the second defendant any further.
38. The use of the name Baker as part of its corporate name by the second defendant was permissive in nature and once the plaintiffs disassociated themselves from the second defendant the use of the word Baker in the corporate name of the second defendant becomes highly improper, and it impinges upon the right of the plaintiffs to use the same exclusively. Learned Counsel for the plaintiffs submitted that assuming without admitting that the 'Basic Agreement' was not binding on the second defendant even then the plaintiffs will be entitled to interim injunction as the second defendant is passing off its goods and business as that of the plaintiffs by using the word Baker in its corporate name despite the fact that the plaintiffs have proprietory right over the name Baker and the goodwill attached thereto. It was pointed out that the word Baker is being used by the plaintiffs and its associate companies all over the world for a long time. The second defendant was not entitled to use the word Baker in its corporate name after the first plaintiff had sold its share in the second defendant. Once the first plaintiff snapped its ties with the second defendant the continued use of the word Baker in the corporate name of the second defendant cannot be permitted. On the other hand, learned Counsel for the defendants contended that in this part of the world the plaintiffs have not earned any goodwill or reputation associated with the word Baker. The plaintiffs do not have any proprietory right in India in the trade name or trade mark Baker. The name/mark Baker is not distinctive of their goods and the relevant members of the public in India do not associate the same with the goods manufactured by them. Rather it is the second defendant who has established the goodwill and reputation in respect of oil field equipment manufactured in India under the name Baker. The buyers identify the name and mark Baker with the goods of the second defendant and not with the goods of the plaintiffs who do not have a trans-border reputation in India.
39. I have considered the submissions of the learned Counsel for the parties. Prima facie, there cannot be any genuine controversy with regard to the goodwill and trans-border extra territorial reputation of 'Baker' or 'Baker Hughes' (plaintiffs) in this country. Goodwill and trans-border reputation of 'Baker' is a fact which has even been conceded by the first defendant in its letter dated September 20,1983 addressed to the Secretariat for Industrial Approval, Foreign Collaboration Unit, Ministry of Industry, Department of Industrial Development. In this letter while seeking approval for collaboration with M/s. Bakerline, a division of Baker International Limited, the first defendant pointed out that M/s. Bakerline had been regularly supplying equipment to ONGC and Oil India for the past decade and the imports from the company added upto several million dollars over the period. It was also pointed out that 'Baker' had a turnover of two billion US dollars per annum. Highlighting the achievements of 'Baker', the first defendant in the said letter pointed out that 'Baker' was a leading manufacturer of oil-field drilling and exploration equipment with manufacturing units in several parts of the world. Thus, on the own showing of the first defendant, 'Baker' is: (1) a leading manufacturer of oil-field drilling and exploration equipment, (2) having existence in several parts of the world, and (3) known in India since it was supplying oil field equipment to ONGC and Oil India. It was for these reasons that the first defendant selected the said company for collaboration to manufacture oil field equipment in India. Therefore, it is not correct, at this stage, to say that the plaintiffs did not have any goodwill in this country. The plaintiffs were not only known in this part of the world but their products were also being used by the various oil companies in India. The second defendant had adopted the word Baker in its corporate name to show that it was a 'Baker' Group of Companies and this was done to cash on the goodwill associated with 'Baker'. The trade name Baker is distinctive of the plaintiffs and the second defendant has no right to continue the use of the same after the termination of the licence created by Clause 8.3 of the collaboration agreement. There is good authority for the proposition that after the licensor has terminated the licence of the licensee to use its trade name, the licensee has no right to continue the use thereof.
40. In the issue of October 1995 of 'Fortune', a magazine having circulation in this part of the world, the following observations were made with regard to 'Baker Hughes':
"This oil-field well equipment and services company holds number one and number two market share position in almost everything it does including oil field drilling and drill-bit production."
41. The fact that 'Baker' is known in this sub-continent is apparent from the various purchase orders and agreements of sale between various divisions of 'Baker', on the one hand, and companies transacting business in oil field equipment, on the other. Such purchase orders and agreements exist at pages 3.019, 3.104, 3.130, 3.154, 3.413, 3.419 and 3.427 of the Court record. That apart, at pages 3.323 to 3.326 of the Court record the plaintiffs have produced copies of index of Composite Catalog of Oil-Field Equipment And Services 1984-85 where the name of Baker International Corporation and Baker Oil Tools Inc. figures.
42. Over looking what was stated in its letter dated September 20,1983, learned Counsel for the defendants submitted that "in this part of the word plaintiffs have acquired no reputation as there are hardly two or three companies in India which are buying oil-field equipment". The submission fails to recognise the fact that it is not the number of companies buying the oil-field equipment which is material, but what is material is whether 'Baker' is known in India as a leading manufacturer of oil-field equipment. In view of the material on record the answer obviously has to be in the affirmative. The name Baker, as already seen above, is associated exclusively with plaintiff and its trans-border reputation extends to India.
43. The fact that Baker was the leader in the manufacture of oil-field equipment was sufficiently known to the first defendant several years back as is reflected by his letter dated September 20,1983, and therefore he applied to the Government of India for permission to establish a joint venture with Bakerline. The international borders are quite porous in so faras the dissemination of the information regarding products and manufacturers and their trade names/trade marks/corporate names are concerned. The said information along with the goodwill and the business can reach a geographical area even before the products have hit its markets. Goodwill or reputation of a business does not wholly or solely depend upon the availability of the product or upon the number of customers buying the same.
44. A Division Bench of this Court in N.R. Dongre Vs. Whirlpool Corporation, 1996 (16) PTC 476, held that the knowledge and awareness of a trade mark in respect of the goods of a trader is not necessarily restricted only to the people of the country where such goods are freely available, but the knowledge and awareness of the same can reach even the shores of those countries where the goods have not been marketed. It was further observed that the product and its name transcends the physical boundaries of a geographical region and acquires a transborder or overseas or extra territorial reputation not only through import of goods but also through dissemination of information about them. It is also recognised that the information of the goods of a foreign trader and its trade mark can be available at a place where goods are not marketed and consequently not being used. A trade mark of a foreign trader in respect of a prdouct need not be associated with the actual use of the product in order to establish reputation. The principle laid down in this case was upheld by the Supreme Court in appeal against the above decision of the Division Bench of this Court [See N.R. Dongre Vs. M/s. Whirlpool Corporation Limited, ]. While upholding the decision of the Division Bench of this Court, the Supreme Court held as follows:
"The mark/name 'WHIRLPOOL' is associated for long, much prior to the defendants' application in 1986 with the Whirlpool Corporation-plaintiff No. 1. In view of the prior user of the mark by plaintiff No. 1 and its trans-border reputation extending to india, the trade mark 'WHIRLPOOL' gives an indication of the origin of the goods as emanating from or relating to the Whirl pool Corporation - plaintiff No. 1."
45. Again in Daimler Benz Aktiegesellschaft and Another Vs. Hybo Hindustan, , a learned Single Judge of this Court, while commenting upon the trans-border reputation of trade name 'Benz', held as follows:
"In my view, the Trade Mark law is not intended to protect a person who deliberately sets out to take the benefit of somebody else's reputation with reference to goods, especially so when the reputation extends world wide. By no stretch of imagination can it be said that use for any length of time of the name "Benz" should be not objected to."
46. In Apple Computer Inc. Vs. Apple Leasing and lndustries, (I.A. No. 7678 of 1989 in Suit No. 2751 of 1989, decided on May 10,1991) it was held by this Court that in order to prove a prima facie case for grant of interim injunction it was not necessary for the plaintiff in a passing off action to prove that it was carrying on business in India. For the grant of interim injunction it was enough that the plaintiff had a reputation in India. In that case the principle laid down in Budweiser's case (1984) FSR 413, namely, that unless there was a business activity in the place where passing off was alleged to have taken place, action for passing off could not be maintained, was departed from. It was also recognised that there was a strong trend to prevent deception of the public, whether it was deliberate or innocent. This principle is more relevant to India because there is a greater need to catch up with the more advanced countries in the matter of business enterprises including manufacture of products and services. This can only be possible when a foreign trader has the confidence that its trade mark/name will be safe and will not be imitated. Transfer of technology and collaboration will get a big boost if unfair competition is avoided and nobody is allowed to thrive at somebody else's reputation and goodwill.
The Madras High Court in Haw Par Bros. International Ltd. Vs. Tiger Balm Co. (P) Ltd. and Others, 1996 PTC (16) (DB) 311, on review of several decisions of the various Courts agreed with the view taken by this Court on the question of trans-border reputation. In Kamal Trading Co. Vs. Gillette UK Ltd., Middle Sex, England, (1988) 1 Patent Law Reports 135, the principle laid down by the Budweiser's case was not accepted by a Division Bench of the Bombay High Court. The Bombay High Court expressing its view held as follows:
"It is necessary to note that the goodwill is not limited to a particular country because in the present days, the trade is spread all over the world and the goods are transported from one country to another very rapidly and on extensive scale. The goodwill acquired by the manufacturer is not necessarily limited to the country where the goods are freely available because the goods though not available are widely advertised in newspapers, periodicals, magazines and in other medias. The result is that though the goods are not available in the country, the goods and the mark under which they are sold acquires wide reputation. Take for example, the televisions, and Video Cassette Recorder manufactured by National, Sony or other well known Japanese concerns. These televisions and V.C.Rs. are not imported in India and sold in open market because of trade restrictions, but is it possible even to suggest that the word 'National' or 'Sony' has not acquired reputation in this country. In our judgment, the goodwill or reputation of goods or marks does not depend upon its availability in a particular country. "
47. Learned Counsel for the defendants pointed out that in this country only three customers, namely, ONGC, Oil India and Essar are buying oilfield equipment and there is no likelihood of their being deceived into buying the products manufactured by the second defendant by mistaking them to be manufactured by the plaintiffs. He emphasised that the purchasers have sophisticated knowledge of the oil field equipment and the companies manufacturing the same, and in such circumstances the action for passing off is not maintainable. The learned Counsel for the defendants contended that in ascertaining the possibility of deception or confusion it is important to identify the class of likely consumers in each case and in a speialised limited market consumers are not likely to be confused especially where they buy goods directly from the manufacturer. The learned Counsel referred to passages from 'Passing Off Law and Practice' by John Drysdale and Michael Silverleaf, Second Edition (Butterworths,1995), para 4.03; 'Law of Passing Off by Christopher Wadlow, Second Edition 1995, and the decision rendered in John Hayter Motor Undertaking Agencies Ltd. Vs. RBHS Agencies Limited and Another, [1977] 2 Lloyds Rep. 105; [1977] Fleet Street Patent Law Reports 285.
48. 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 the modern business trends such as trade mark licensing, mergers, franchising, etc. It is this class of buyers who are likely to think that there is some sort of association between the products of two different companies when they come across common or similar trade names or corporate names or trading styles used by them. The sophistication of a buyer is no guarantee against likely confusion. In some cases, however, it is also possible that such a purchaser after having been misled into an initial interest in a product manufactured by an imitator discovers his folly, but this initial interest being based on confusion and deception can give rise to a cause of action for the tort of passing off as the purchaser has been made to think that there is some connection or nexus between the products and business of two disparate companies. This view finds support from various decisions gathered in Section 20.12 of the Filing Instructions 1988, Fall Cumulative Supplement from Callmann 'Unfair Competition, Trademarks and Monopolies'. This section reads as under:
"But even apart from the doctrine of greater care, if the manner of purchasing becomes routine, the possibility of confusion can arise notwithstanding the expertise of the purchasers (Layne-Western Co. Vs. Fry, 174 F Supp 621 (CCPA 1960). The mere fact that all the customers are discriminating technicians does not by itself insure against confusion; being skilled in the relevant art does not necessarily preclude confusion if the similarity between the marks is great (Wincharger Corpn. Vs. Rinco, Inc., 297 F2d 261 (CCPA 1962). "The words 'sophisticated' and 'knowledgeable' are not talismans which, when invoked, act magically to dissipate a likelihood of confusion. It must also be shown how the purchasers react to trademarks, how observant and discriminating they are in practice, or that the decision to purchase involves such careful consideration over such a long period of time that even subtle differences are likely to result in a recognition that different marks are involved before an irrevocable decision is made" (Refreshment Mach., Inc. Vs. Reed Industries, Inc.,196 USPQ 840 (TTAB 1977)."
xx xx xx "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 trade mark 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. Vs. Pegasus Petroleum Corp., 229 USPQ 890].
It has also been suggested that sophisticated consumers, being more aware of such modern 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, Inc. Vs. Levi Straus & Co., 230 USPQ 831, 837 (CA2, 1986)]."
In John Hayter's case (supra) the Court failed to notice the principle that even the informed, sophisticated and knowledgeable customers suffer from initial confusion where the corporate names, trade names or trade marks of two different companies are the same or similar to each other. Therefore, the view expressed in the case does not commend to me and compels me to respectfully depart from the same.
In Mobil Oil Corp. Vs. Pegasus Petroleum Corp., 229 USPQ 890, the Court while dealing with the question of 'initial confusion' held as follows:
".... In short, the harm to Mobil is the likelihood that potential purchasers will think that there is some connection or nexus between the products and business of Pegasus Petroleum and that of Mobil. "Such initial confusion works an injury to (Mobil)." See Grotrian-Steinweg, supra, 523 F.2d at 1342,186 USPQ at 445."
In Lois Sportswear, USA, Inc. et al Vs. Levi Straus & Co., 230 USPQ 831, the Court of Appeal, Second Circuit, held as follows:
"The eighth and final factor _the sophistication of relevant buyers does not, under the circumstances of this case, favour appellants. The District Court found, and the parties do not dispute, that the typical buyer of "designer" jeans is sophisticated with respect to jeans buying. Appellants argue that this sophistication prevents these consumers from becoming confused by nearly identical back packet stitching patterns. On the contrary, we believe that it is a sophisticated jeans consumer who is most likely to assume that the presence of appellee's trademark stitching pattern on appellants' jeans indicates some sort of association between the two manufacturers. Presumably it is these sophisticated jeans buyers who pay the most attention to back pocket stitching patterns and their "meanings". Cf Steinway, supra, 523 F.2d at 1341-42, 186 USPQ at 444-45 (buyers of quality pianos, being sophisticated, are more likely mistakenly to associate piano manufacturers using similar trade names).Likewise, in the post-sale context, the sophisticated buyer is more likely to be affected by the sight of appellee's stitching pattern on appellants' jeans and, consequently, to transfer goodwill. Finally, to the extent the sophisticated buyer is attracted to appellee's jeans because of the exclusiveness of its stitching pattern, appellee's sales will be affected adversely by these buyers' ultimatum realisation that the pattern is no longer exclusive."
In Wincharger Corporation Vs. Rinco, Inc. 297 F2d 261 (1962), it was observed as follows:
"It is true that in most instances technicians would use the products of either party and they are a discriminating group of people but that does not eliminate the likelihood of purchaser confusion here. 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."
Again in Grotrian, Helfferich, Schulz, Th. Steinweg Nachf, A Corporation Vs. Steinway & Sons, A corporation, 365 F.Supp. 707 (1973), 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 Vs. H. Daroff & Sons, Inc., supra, 421 F.2d at 354). It is true that deliberate buyers of expensive pianos are not as vulnerable to confusion as to products as hasty buyers of inexpensive merchandise at a newsstand or drug store [Callmann, Unfair Competition Trademarks and Monopolies, (3d ed. 1971)]. The sophistication of buyers, however, does not always assure the absence of confusion [Communications Satellite Corp. Vs. Comcet, Inc., 429 F.2d at 1252]. 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 good will. This confusion, or mistaken beliefs as to the companies' inerrelationships, can destroy the value of the trademark which is intended to point to only one company [American Drill Busing Co. Vs. Rockwell Mfg. Co., 342 F.2d 1922, 52 CCPA 1173 (1965)]. 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 mer-chandise in the same general field" [Id].
49. 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.
50. Learned Counsel for the defendants contended that 'Baker' has sent letters to the consumers apprising them of the fact that the first plaintiff has terminated its relationship with the second defendant company. It has also published the information in the trade journal which has world wide circulation. It is submitted that in view of this clarification there is hardly any chance of confusion persisting in the minds of the consumers with regard to the real state of affairs. The defendants in making this submission have missed the fact that due to globalisation of trade a large number of buyers have world wide presence. They are maintaining offices having different departments and levels. They are also working through their representatives in various countries and cities. It is difficult for a manufacturer and seller to reach the information to all concerned at all levels. Even an advertisement or notice inserted in a publication having wide circulation may not fulfill the desired objective. In India there may be only three consumers of oil field equipment but they cannot be the only ones in the world market.
51. Learned Counsel for the defendants referred to para 4.03 of "Passing Off Law and Practice" by John Drysdale and Michael Silverleaf, Second Edition (1995) published by Butterworths. But for a complete understanding of the state of law a reference to para 5.04 thereof is also necessary. It may be noted that in para 4.03 it is pointed out that some cases of passing off arise in relation to the goods or services of which there is a specialised limited market, and the customers in such cases are often better informed about the products and services they are buying than members of the general public. Such customers may not be likely to be confused and in limited cases it may never be possible for the defendant to pass off his goods as the plaintiff's because all potential customers of those goods buy them only directly from the plaintiff. At the same time while noticing the judicial decisions it has been observed that if the defendant is in direct competition with the plaintiff, the Court will readily infer the likelihood of the damage to the plaintiff's goodwill not only through loss of sales but also through loss of exclusive use of his name or mark in relation to the particular goods or business. In para 5.04 it is observed as follows:
"5.04. If a defendant is in direct competition with the plaintiff, the Court will readily infer the likelihood of damage to the plaintiff's goodwill, not merely through loss of sales but also through loss of the exclusive use of his name or mark in relation to the particular goods or business concerned, on evidence of the plaintiff's reputation in the goods or business and a relevant misrepresentation by the defendant in relation to the same or similar goods or the same or a similar business."
52. Reverting to the case in hand, it can be readily inferred that when a purchaser of the oil field equipment comes to know that the name Baker is no longer the sole preserve of the plaintiffs and can be used even by a company which is not associated with the plaintiffs, his confidence in the products of the plaintiffs is likely to receive a set back. A buyer who was being attracted to the products of the plaintiffs for the exclusivity of the name Baker may turn away from them. The value and the strength of the goodwill attached to the word Baker which hitherto was the exclusive and the sole preserve of the plaintiffs is likely to depreciate. That a part 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. Vs. New Motor and General Rubber Co., [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."
53. Again in American Drill Busing Co. Vs. Rockwell Mfg. Co., 342 F.2d 1922, 52 CCPA 1173 (1965), it was held that the confusion or mistaken beliefs as to the companies' inter-relationships, can destroy the value of the trade mark which is intended to point to only one company.
54. Neither the receipt of ISO 9002 Certification by the second defendant nor the plea that the types of items being manufactured by the second defendant are not being manufactured by the first plaintiff can dissipate the likelihood of confusion. Since the second defendant undoubtedly had a strong relationship with 'Baker' in the past, that knowledge of the buyers can affect their judgment and competence leading to varying degrees of confusion - initial, partial or total. Even a discerning consumer could fall prey to confusion. A situation cannot be legitimised where a company which extends its technical know-how to another company is made to lose its corporate name to the company to which technical know-how is extended. A licensee permitted to use the trade name of the licensor on its goods cannot claim to continue the use of the same even after the cancellation of its licence by the licensor. In the event of a contrary view the international trade and commerce will receive a set back and will undermine the faith of the trading community in the country where such acts are condoned.
55. It was also contended by the learned Counsel for the defendants that after the establishment of the second defendant there is hardly any sale of the products of the plaintiffs in this country. The learned Counsel urged that since the plaintiffs are not carrying on business in India, they cannot bring an action for passing off. The argument is not well founded. In Calvin Klein Inc. Vs. International Apparel Syndicate, 1996 PTC (16) 293, a Single Judge of the Calcutta High Court, on the basis of judicial dicta including the decision of the Supreme Court in Rustom and Hornby Ltd. Vs. Zamindars Engineering Co., , held that it was not necessary that the plaintiff must carry on business in India before bringing an action for passing off if he otherwise proves that he has established a reputation in this country.
56. Learned Counsel for the defendants placed reliance on the decision in Star Industrial Company Limited Vs. Yap Kwee Kor (trading as New Start Industrial Company), [1976] FSR 256, in support of the proposition that if no business is transacted in a country by the plaintiff, though it has business elsewhere, it will not acquire any goodwill in that country. With respect I cannot subscribe to this view. The grafting of the concept of user to the requirement of reputation in the definition of the tort of passing off cannot be accepted in view of the decisions of the Supreme Court in Ruston and Hornby Ltd. Vs. Zamindars Engineering Co. (supra) and N.R. Dongre Vs. M/s. Whirlpool Corporation Limited (supra).
57. As already pointed out while dealing with the issue of trans-border reputation, the plaintiffs have prima facie established their reputation and goodwill in this country. This is not to suggest that the goodwill and reputation was established merely by dissemination of information in this country relating to the products of the plaintiffs, its corporate name, trade mark and trade name and not by the actual sale of its products.
58. In order to determine whether the plaintiffs have established the ingredients for successfully bringing an action for passing off it will be appropriate to advert to the broad principles of the law of passing off. In 'Kerly's Law of Trade Marks and Trade Names'-Supplement-pages 42 and 43, paragraph 16-02, the concept of passing off is stated thus:
"The law of passing-off can be summarised in one short general proposition -no man may pass off his goods as those of another. More specifically, it may be expressed in terms of the elements which the plaintiff in such an action has to prove in order to succeed. These are three in number.
Firstly, he must establish a goodwill or reputation attached to the goods or services which he supplies in the mind of the purchasing public by association with the identifying 'get-up' (whether it consists simply of a brand name or a trade description,or the individual features of labelling or packaging) under which his particular goods or services are offered to the public, such that the get-up is recognised by the public as distinctive specifically of the plaintiff's goods or services.
Secondly, he must demonstrate a misrepresentation by the defendant to the public (whether or not intentional) leading or likely to lead the public to belief that the goods or services offered by him are the goods or services of the plaintiff.
Thirdly, he must demonstrate that he suffers or, in a quick time action, that he is likely to suffer damage by reason of the erroneous belief engendered by the defendant's misrepresentation that the source of the defendant's goods or service is the same as the source of those offered by the plaintiff..."
59. In Kaviraj Pandit Durga Dutt Sharma Vs. Navartna Pharmaceutical Laboratories, , the Supreme Court commenting on the characteristics of an action for passing off observed that the action for passing off is a common law remedy and in substance an action for deceit where a person passes off his own goods as those of another.
60. In 'Passing Off Law and Practice' by John Drysdale and Michael Silverleaf, 2nd Edition, the tort of 'passing off' has been described as follows:
"4.01. At the heart of every case of passing off is the act committed by the defendant which is alleged to constitute the misrepresentation that the defendant's goods or business are in fact the plaintiff's. As has been seen, the nature of the reputation which the plaintiff's entitled to protect can take many forms. The same is also true of the act of misrepresentation committed by the defendant. Additionally, the use by a trader of names, marks, or get-up which would by themselves be confusingly similar to those of another trader, so as to give rise to an improper misrepresentation, may be offset by combination with other material which distinguishes the goods or business of the one from those of the other. Thus, it is always necessary in a case of potential passing off to consider the totality of what the defendant is doing in order to determine whether or not there is a likelihood of confusion."
61. 'The Law of Passing-Off' by Christopher Wadlow, Second Edition, alludes to the tort of passing off thus:
"..... None of the numerous authorities cited at the bar by the appellants' Counsel carry the exclusive right of a trader to a particular name, beyond that limit. There is no authority, and, in my opinion, no principle for giving the trader any higher right. If he cannot allege and prove that the public are deceived, or that there is a reasonable probability of deception, he has no right to interfere with the use of his name by others.
xx xx xx 4.03. In Spalding Vs. Gamage, (1915) 32 R.P.C. 273 (H.L..), Lord Parker said that it would be impossible to enumerate or classify all the possible ways in which a man might make the false representation relied on. It is clear that the class of misrepresentation is wide, but not unlimited. Misrepresentations which have been recognised as actionable in passing-off are categorised and described in detail in the next chapter, and an attempt is made to deduce a general rule. What follows is a summary of some of the forms of misrepresentation which are most often encountered or are particularly valuable in illustrating the boundaries of the tort. It is assumed that all the other elements of the tort are present, and in particular, that the plaintiff is really likely to suffer substantial damage to his business or be useful to summarise and dismiss some of the most persistent. Most importantly, the misrepresentation in passing off need not be made fraudulently or with any intention to deceive; "calculated" in Lord Diplock's speech in Advocate [Erven Warnink B.U. Vs. J. Townend & Sons (Hull) Ltd., (1979) A.C.731] means likely rather than intended. The only continuing importance of fraud is for its evidential value.
The misrepresentation need not be to the effect that the defendant's goods or business are those of the plaintiff; and as two partial corollaries of this, passing-off is not confined to misrepresentations in the nature of trade mark infringement, and the misrepresentation may be such as to be actionable by a potentially large but determinate class of plaintiffs. Finally, the oddly durable fallacy that the plaintiff and defendant must in some sense share a common field of activity may be regarded as obsolete. The presence or absence of a common field is no more than a matter of degree and inference."
62. In Erven Warnink BV and Others Vs. J. Townend & Sons (Hull) Ltd. and Others, [1979] 2 All ER 927 (HL), Lord Diplock identified five characteristics which must be present in order to create a valid cause of action for passing off: "(1) a misrepresentation, (2) made by a trader in the course of trade, (3) to prospective customers of his or ultimate consumers of goods or services supplied by him, (4) which is calculated to injure the business or goodwill of another trader (in the sense that this is a reasonably foreseeable consequence), and (5) which causes actual damage to a business or goodwill of the trader by whom the action is brought or in a quia timet action will probably do so". In the same decision, Lord Fraser of Tullybelton also identified five ingredients, not being identical to the ones stated by Lord Diplock, for invoking the tort of passing off, namely-
(1) that his business consists of or includes, selling in England a class of goods to which the particular trade name applies;
(2) that the class of goods is clearly defined, and that in the minds of the public, or a section of the public, in England, the trade name distinguishes that class from other similar goods;
(3) that because of the reputation of the goods there is goodwill attached to the name;
(4) that he, the plaintiff, as a member of the class of those who sell the goods, is the owner of goodwill in England which is of substantial value;
(5) that he has suffered, or is really likely to suffer, substantial damage to his property in the goodwill by reason of the defendants selling goods which are falsely described by the trade name to which the goodwill is attached".
63. In Consorzio Del Prosciutto Di Parma Vs. Marks & Spencer Plc and Others, [1991] RPC (15) 351 (at pages 368-369), Nourse, L.J., took into account the dicta of the Courts, including the speeches of Lord Diplock and Lord Fraser of Tullybelton in Warnink Vs. Townend (supra), in each of which five ingredients for invoking the tort of passing off are identified, the ingredients not being the same in each case. However, Nourse, L.J . was of the opinion that five ingredients given by each of the two law lords do not give the same degree of assistance in analysis and decision as the classical trinity of elements to prove the tort of passing off, namely, (1) a reputation of goodwill acquired by the plaintiff in his goods, name, mark, etc., (2) a misrepresentation by the defendant leading to the confusion, or deception (3) causing damage to the plaintiff.
64. In Reckitt & Colman Products Ltd. Vs. Borden Inc and Others, [1990] 1 All ER 873, the trinity of characteristics for invoking the remedy for tort of passing off was applied. In this case the respondent had been manufacturing and supplying domestic products including preserved lemon juice. The respondent marketed the lemon juice in plastic squeeze containers under the brand name "Jif" in the United Kingdom. Until the 1970s the respondents were substantially the only supplier in the United Kingdom of lemon juice packed in squeeze bottles. The appellants (Borden Inc) were carrying on business in the USA for manufacturing food products including preserved lemon juice. In the U.S. market the juice was being marketed under the brand name 'Rea Lemon'. The mark was registered in the U.S. This was also marketed in plastic squeeze containers of lemon colour but of a shape resembling the familiar (Mills) hand grenade. Subsequently, the appellants Borden Inc decided to market the juice in U.K. in lemon shaped plastic squeeze containers. It was the contention of the respondents that this was done by the appellants to pass off their goods as the goods of the respondent. The Court of original jurisdiction granted the injunction sought by the respondents who were the plaintiffs before it. This decision was upheld by the Court of appeal. The House of Lords dismissing the appeal held that a plaintiff has to prove three elements in order to succeed in an action for passing off. These three elements as laid down by the House of Lords are : "(1) the plaintiff must establish a goodwill or reputation attached to the goods or services in the mind of the purchasing public by association with the identifying get up (whether it consists simply of a brand name or a trade description, or the individual features of labelling or packaging) under which his particular goods or services are offered to the public, such that the get-up is recognised by the public as distinctive specifically of the plaintiff's goods or services; (2) the plaintiff must demonstrate a misrepresentation by the defendant to the public (whether or not intentional) leading or likely to lead the public to believe that goods or services offered by him are the goods or services of the plaintiff, whether the public is aware of the plaintiff's identity as the manufacturer or supplier of the goods or services is immaterial as long as they are identified with a particular source which is in fact the plaintiff. For example, if the public is accustomed to rely on a particular brand name in purchasing goods of a particular description, it matters not at all that there is little or no public awareness of the identify of the proprietor of the brand name; (3) he must demonstrate that he suffers or, in a quia timet action, that he is likely to suffer damage by reason of the erroneous belief engendered by the defendant's misrepresentation that the source of the defendant's goods or services is the same as the source of those offered by the plaintiff".
65. It is not necessary to multiply authorities to show as to what must be established by a plaintiff in order to bring an action for passing off.
66. From the analysis of the above decisions it is apparent that a plaintiff in an action for passing off must establish the following elements:
1. The plaintiff has acquired a reputation or goodwill in his goods, name or mark;
2. A misrepresentation, whether intentional or unintentional, which proceeds from the defendant by the use of the name or mark of the plaintiff or by any other method or means and which leads or is likely to lead the purchaser into believing that the goods or services offered by the defendant are the goods and services of the plaintiff, or that the goods and services offered by the defendant are the result of its association with the plaintiff;
3. The plaintiff has suffered or is likely to suffer damage due to the belief engendered by the defendant's representation.
Prima facie the plaintiffs have been able to establish the above ingredients.
67. As already pointed out, the plaintiffs have acquired goodwill attached to the name Baker which is part of the corporate name of the plaintiffs and its associate companies. Thus, prima facie, the first ingredient for invoking the action for passing off is satisfied . In so far as the second ingredient is concerned, ex facie the same also stands established. After the first plaintiff had sold its shares in the second defendant company, it ceased to have any relationship with the latter. The continued use of the word Baker by the second defendant is likely to engender the belief in the purchasers that the second defendant is associated with the plaintiffs and the goods and services offered by the defendants are the outcome of its association with the plaintiffs. The use of the name Baker thus amounts to misrepresentation by the second defendant. As regards the third element, the continued use of the word Baker in the corporate name of the second defendant is likely to injure and damage the business, goodwill and reputation of the plaintiffs.
68. Learned Counsel for the defendants next submitted that the plaintiffs have not come to the Court with clean hands and, therefore, a Court of equity will not exercise its discretion to give relief to the plaintiffs by way of interim injunction. In support of his submission learned Counsel referred to the following decisions:
1. Anand Swarup Vs. M.C.D., .
2. J.N. Bhambhani Vs. Indian Overseas Bank, AIR 1979 (NOC) 106 Delhi.
3. Padmanabhan Vs. Thomas, .
4. Penguin Books Ltd. Vs. India Book Distributors, (I.As. No.2286 and 2287 in Suit No. 726/83 decided on 2.8.1983 by a learned Single Judge of this Court).
He also referred to Halsbury's Laws of England, Fourth Edition, Vol.16, pages 685887, para 751; Halsbury's Laws of England, Fourth Edition, Vol.24, pages 448-455, Para 857; Snell's Equity, 29th Edition, 1990, pages 660 to 666; and Hanbury and Maudsley, Modern Equity, 13th Edition, 1989, pages 676 to 680. Elaborating his argument learned Counsel submitted that the plaintiffs had suppressed the technical know-how agreement and had not referred to the same in the plaint. He also pointed out that the plaintiffs concealed the fact that the Memorandum and Articles of Association of the second defendant were drafted in England by the Solicitors of the first plaintiff.
69. Insofar as the allegation that the technical know-how agreement was concealed by the plaintiffs from this Court is concerned, it has already been pointed out that the scope of the 'Technical Know-how Agreement' was different from the scope of the 'Basic Agreement'. It has also been found that the 'Technical Know-how Agreement' did not supersede the 'Basic Agreement'. Therefore, for the purposes of the plea of the plaintiffs that the defendants were not entitled to use the word Baker in its corporate name after the first plaintiff had sold its shareholding in the second defendant to White Horse Trading Limited, it was the 'Basic Agreement' which was relevant and not the 'Technical Know-how Agreement'. In any event there was no question of suppression of 'Technical Know-how Agreement' as the 'Basic Agreement' at various places speaks of the 'Technical Know-how Agreement'. Therefore, the defendants are not right in their submission that the plaintiffs had suppressed the 'Technical Know-how Agreement'.
70. As regards the submission of the learned Counsel for the defendants that the plaintiffs concealed the fact that the Memorandum and Articles of Association of the second defendant were drafted at England under their (plaintiffs') instructions and this was done to cover up the fact that they were themselves instrumental in not incorporating the contents of Clause 8.3 of the 'Basic Agreement' in the Articles of Association so as to prevent the 'Basic Agreement' from falling foul of the provisions of the FERA and the 'letter of intent' and the 'letter of approval of the foreign collaboration', I am of the opinion that the submission does not advance the case of the defendants as Clause 8.3 of the 'Basic Agreement' does not violate any of the provisions of FERA or any of the mandatory terms of the letter of intent or letter of approval of foreign collaboration. Therefore, it appears to me that that could not have been the reason for not incorporating the contents of Clause 8.3 initially. It will be seen that when the second defendant was incorporated there were only two shareholders, namely, the first defendant and Mira Khushalani. Baker International (U.K.) Division was not a shareholder. If the contents of Clause 8.3 had been included in the Articles of Association of the second defendant, as one of the Articles thereof subscribed by the above said two shareholders, then the same would have been binding on them and the company as per Section 36 of the Companies Act, 1956. This would have disentitled the second defendant to utilise the name Baker as part of its corporate name since the requirement of the said Clause would not have been satisfied, the first plaintiff's share holding being nil at the time of incorporation of the company. Therefore, no capital can be made out of the fact that the plaintiffs had not included the contents of Clause 8.3 in the Articles of Association of the second defendant company or that they had failed to disclose in that plaint that the Articles of Association were drafted at their instance.
71. Besides, the above said alleged concealments, the defendants also accused the plaintiffs to have concealed several other facts, but none of these are material for the controversy between the parties. Some of the alleged concealments could have been of some consequence if the second plaintiff had transferred and assigned its business as a whole to the second defendant thereby in the process transferring its name or mark. The defendants have also accused the plaintiffs to have made misrepresentations. These allegations are made on the basis of conclusions drawn from set of facts as perceived by the defendants. Similarly, the representations which the plaintiffs made were based on how they saw the facts. While the plaintiffs said that the 'Basic Agreement' was subsisting and binding on the second defendant, the latter considered the same to have been superseded and not subsisting, besides being violative of FERA. It cannot be said that while making these submissions either the defendants or the plaintiffs made misrepresentations. The same would apply to the other points of view which the parties hold. Unless a set of facts point towards one and only one direction, they are at liberty to make submissions and statements according to their own lights. Therefore, I find no substance in the said allegations of the defendants. Since I am of the opinion that the plaintiffs had not concealed any material facts, therefore, the authorities cited by the defendants are of no avail to them.
72. Having regard to the above discussion I am of the view that the plaintiffs have established a strong prima facie case for grant of interim relief. The balance of convenience also lies in their favour. In case the interim injunction is refused to the plaintiffs they are likely to suffer damage to their goodwill and award of compensation in the circumstances of the case will not be an adequate relief to them.
73. It was also contended on behalf of the defendants that the plaintiffs are guilty of acquiescence and laches, and therefore, no relief should be granted to them. I am unable to agree with the submission of learned Counsel for the defendants. The plaintiffs moved the instant suit immediately after it had disinvested its shareholding in the second defendant company in February, 1995 and a notice was given to the second defendant to cease and desist from using the name Baker in its corporate name. Therefore, the plaintiffs cannot be accused of acquiescence and laches.
74. In view of the above survey of facts and law I consider it appropriate to pass an ad interim mandatory injunction against the second defendant. Therefore, it is ordered as follows:
75. The second defendant shall stop using the word BAKER in its corporate name from the expiry of three months from today. The second defendant shall approach the Registrar of Companies with an application in accordance with law for deletion of the word 'BAKER' from its corporate name within two months from today. The Registrar of Companies will proceed to dispose of the application in accordance with law within one month from the date of making of the application. These directions will enure till the disposal of the suit.
The I.A. is disposed of.