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CASE NO.:

Appeal (civil) 8266-8267 of 2001

PETITIONER:

LAXMIKANT V.PATEL

Vs.

RESPONDENT:

CHETANBHAT SHAH & ANR.

DATE OF JUDGMENT: 04/12/2001

BENCH:

R.C. Lahoti & K.G. Balakrishnan

JUDGMENT:

R.C. Lahoti, J.

The plaintiff, feeling aggrieved by the orders of the learned

Trial Judge and the High Court of Gujarat, refusing his prayer for

the grant of ad-interim injunction has filed these special leave

petitions.

Leave granted.

According to the plaintiff, he started the business of colour

lab and studio in the year 1982 in Ahmedabad, in the name and

style of Muktajivan Colour Lab and Studio and is using the name

since 1982 openly, extensively and to the knowledge of

everyone concerned. The high quality of services rendered by

the plaintiff to his customers has earned a reputation and

developed a goodwill associated with the trade name Muktajivan

Colour Lab. In order to develop his business the plaintiff has

promoted his wife Radhaben to open a new colour lab in the

name and style of Muktajivan Colour Studio at two other

localities of Ahmedabad one, at H.J. House, next to Maninagar,

and two, at Nandanbaug Shopping Centre, Nava Vadaj. At the

latter place the business is being run in the partnership of

Radhaben, the wife of the plaintiff and her brother, Karsan Manji

Bhutia. The plaintiff has expanded his business by incurring

substantial expenditure on advertisement and by incorporating

the word Muktajivan in all stationery materials, letter-heads,

invoices, albums, hoardings, sign-boards etc. The defendant

no.1 who was carrying on his similar business in the name and

style of Gokul Studio is intending to commence business

through his wife, the defendant no.2 by adopting the name and

style of Muktajivan Colour Lab and Studio.

On 12.5.1997 the passing off action was initiated by the

plaintiff by filing a suit in the District Court of Ahmedabad

seeking issuance of permanent preventive injunction against the

defendants restraining them from passing off their business,

services and goods as of and for the business, services and

goods of the plaintiff. An application seeking an ad-interim

injunction, on identical facts, was also filed. On the same day

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the learned Trial Judge passed an ex-parte order of injunction

directing the defendants to maintain status quo in respect of

Muktajivan Colour Lab and Studio if the business is not yet

started in the name and style of Muktajivan Colour Lab and

Studio till the next date. The defendants made appearance and

submitted that their business in the name of Muktajivan Colour

Lab and Studio had started before the filing of the suit. It was

further submitted that the plaintiff was earlier carrying on

business in the name of M.J. and it was in the year 1995 that

the plaintiff substituted Muktajivan in place of M.J. Secondly,

the plaintiffs business name was QSS- Muktajivan Colour Lab

since 1995 and therefore it was not correct that the plaintiffs

trade name was Muktajivan Colour Lab since 1982 as alleged by

him. It was admitted that the defendant no.1 was carrying on

the business in the name of Gokul Studio but there was nothing

wrong in the defendants starting or continuing their business in

the name and style of Muktajivan Colour Lab which will not be

identical with the business of the plaintiff and therefore would

not amount to committing the wrong of passing off. It was also

submitted that the locality where the defendants had started

their business was away from the area where the plaintiff was

carrying on his business and as the two localities were away

from each other, the plaintiff could not have any cause of action.

Both the parties adduced evidence on affidavits.

Substantial documents were filed enabling the Court forming an

opinion on the issue relevant for decision at the stage of grant of

temporary injunction. Vide order dated 9.9.1997 the Trial Court

directed the application filed by the plaintiff to be dismissed

although the Trial Court had found that the plaintiff was carrying

on his business in the trade name of Muktajivan Colour Lab since

1995 and the defendant who had recently adopted the word

Muktajivan in his business name had so done on or about the

date of the institution of the suit. The Trial Court observed that

the defendants studios name was somewhat identical with the

trade name of the plaintiff. In spite of these findings the learned

Trial Judge refused the prayer for the grant of injunction mainly

on the ground that although the businesses of the plaintiff and

the defendants were situated in Ahmedabad but the business of

the defendants was in the outer periphery of the city of

Ahmedabad, at a distance of about 4 to 5 kms. from the place

where the plaintiff was carrying on his business which was

mainly in the city area, and therefore, a case for restraining the

defendants from doing the business in the name and style of

Muktajivan Colour Lab and Studio did not arise.

The plaintiff preferred an appeal in the High Court. The

High Court dismissed the appeal mainly for two reasons. Firstly,

the High Court held that the defendants business had already

come into existence on the date of the institution of the suit and

therefore could not be restrained by issuance of a preventive

injunction. Secondly, the High Court opined that other than the

plaintiffs own business of Muktajivan Colour Lab and Studio at

Narangpura locality of Ahmedabad which was his sole

proprietary business he had no such interest in the business run

at H.J. House Maninagar and Nandanbaug Shopping Centre,

Nava Vadaj localities which were partnership concerns wherein

the plaintiff himself was not a party. The High Court went on to

observe that there were no pleadings to suggest that the other

two businesses using Muktajivan as part of their trade names

were so using the name under the authority and licence of the

plaintiff and therefore the plaintiff was not entitled to the grant

of an injunction restraining only the defendant from using

Muktajivan. The appeal was therefore directed to be dismissed.

An interim order of injunction which was granted earlier by the

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High Court was also directed to be vacated.

Though there is overwhelming documentary evidence filed

by the plaintiff in support of his plea that he has been carrying

on his business in the name and style of Muktajivan Colour Lab

since long we would, for the purpose of this appeal, proceed on

the finding of fact arrived at by the Trial Court and not dislodged

by the High Court, also not seriously disputed before this Court

that the plaintiff has been doing so at least since 1995. Without

entering into controversy whether the defendants had already

started using the word Muktajivan as a part of their trade name

on the date of the institution of the suit we would assume that

such business of the defendants had come into existence on or a

little before the institution of the suit as contended by the

defendants. The principal issue determinative of the grant of

temporary injunction would be whether the business of the

plaintiff run in a trade name of which Muktajivan is a part had

come into existence prior to commencement of its user by the

defendants and whether it had acquired a goodwill creating a

property in the plaintiff so as to restrain the use of word

Muktajivan in the business name of a similar trade by a

competitor, i.e., the defendants.

It is common in the trade and business for a trader or a

businessman to adopt a name and/or mark under which he

would carry on his trade or business. According to Kerly (Law of

Trade Marks and Trade Names, Twelfth Edition, para 16.49), the

name under which a business trades will almost always be a

trade mark (or if the business provides services, a service mark,

or both). Independently of questions of trade or service mark,

however, the name of a business (a trading business or any

other) will normally have attached to it a goodwill that the courts

will protect. An action for passing-off will then lie wherever the

defendant companys name, or its intended name, is calculated

to deceive, and so to divert business from the plaintiff, or to

occasion a confusion between the two businesses. If this is not

made out there is no case. The ground is not to be limited to

the date of the proceedings; the court will have regard to the

way in which the business may be carried on in the future, and

to its not being carried on precisely as carried on at the date of

the proceedings. Where there is probability of confusion in

business, an injunction will be granted even though the

defendants adopted the name innocently.

It will be useful to have a general view of certain statutory

definitions as incorporated in the Trade Marks Act, 1999. The

definition of trade mark is very wide and means, inter alia, a

mark capable of being represented graphically and which is

capable of distinguishing the goods or services of one person

from those of others. Mark includes amongst other things name

or word also. Name includes any abbreviation of a name.

A person may sell his goods or deliver his services such as

in case of a profession under a trading name or style. With the

lapse of time such business or services associated with a person

acquire a reputation or goodwill which becomes a property which

is protected by courts. A competitor initiating sale of goods or

services in the same name or by imitating that name results in

injury to the business of one who has the property in that name.

The law does not permit any one to carry on his business in such

a way as would persuade the customers or clients in believing

that the goods or services belonging to someone else are his or

are associated therewith. It does not matter whether the latter

person does so fraudulently or otherwise. The reasons are two.

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Firstly, honesty and fair play are, and ought to be, the basic

policies in the world of business. Secondly, when a person

adopts or intends to adopt a name in connection with his

business or services which already belongs to someone else it

results in confusion and has propensity of diverting the

customers and clients of someone else to himself and thereby

resulting in injury.

Salmond & Heuston in Law of Torts (Twentieth Edition, at

p.395) call this form of injury as injurious falsehood and

observe the same having been awkwardly termed as passing

off and state:-

The legal and economic basis of this tort

is to provide protection for the right of

property which exists not in a particular

name, mark or style but in an

established business, commercial or

professional reputation or goodwill. So

to sell merchandise or carry on business

under such a name, mark, description, or

otherwise in such a manner as to mislead

the public into believing that the

merchandise or business is that of

another person is a wrong actionable at

the suit of that other person. This form

of injury is commonly, though

awkwardly, termed that of passing off

ones goods or business as the goods or

business of another and is the most

important example of the wrong of

injurious falsehood. The gist of the

conception of passing off is that the

goods are in effect telling a falsehood

about themselves, are saying something

about themselves which is calculated to

mislead. The law on this matter is

designed to protect traders against that

form of unfair competition which consists

in acquiring for oneself, by means of

false or misleading devices, the benefit

of the reputation already achieved by

rival traders.

In Oertli Vs. Bowman (1957) RPC 388, (at page 397) the

gist of passing off action was defined by stating that it was

essential to the success of any claim to passing off based on the

use of given mark or get-up that the plaintiff should be able to

show that the disputed mark or get-up has become by user in

the country distinctive of the plaintiffs goods so that the use in

relation to any goods of the kind dealt in by the plaintiff of that

mark or get up will be understood by the trade and the public in

that country as meaning that the goods are the plaintiffs goods.

It is in the nature of acquisition of a quasi-proprietary right to

the exclusive use of the mark or get-up in relation to goods of

that kind because of the plaintiff having used or made it known

that the mark or get-up has relation to his goods. Such right is

invaded by anyone using the same or some deceptively similar

mark, get-up or name in relation to goods not of plaintiff. The

three elements of passing off action are the reputation of goods,

possibility of deception and likelihood of damages to the plaintiff.

In our opinion, the same principle, which applies to trade mark,

is applicable to trade name.

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In an action for passing off it is usual, rather essential, to

seek an injunction temporary or ad-interim. The principles for

the grant of such injunction are the same as in the case of any

other action against injury complained of. The plaintiff must

prove a prima facie case, availability of balance of convenience

in his favour and his suffering an irreparable injury in the

absence of grant of injunction. According to Kerly (ibid, para

16.16) passing off cases are often cases of deliberate and

intentional misrepresentation, but it is well-settled that fraud is

not a necessary element of the right of action, and the absence

of an intention to deceive is not a defence though proof of

fraudulent intention may materially assist a plaintiff in

establishing probability of deception. Christopher Wadlow in

Law of Passing Off (1995 Edition, at p.3.06) states that the

plaintiff does not have to prove actual damage in order to

succeed in an action for passing off. Likelihood of damage is

sufficient. The same learned author states that the defendants

state of mind is wholly irrelevant to the existence of the cause of

action for passing off (ibid, paras 4.20 and 7.15). As to how the

injunction granted by the Court would shape depends on the

facts and circumstances of each case. Where a defendant has

imitated or adopted the plaintiffs distinctive trade mark or

business name, the order may be an absolute injunction that he

would not use or carry on business under that name. (Kerly,

ibid, para 16.97).

In the present case the plaintiff claims to have been

running his business in the name and style of Muktajivan Colour

Lab and Studio since 1982. He has produced material enabling

a finding being arrived at in that regard. However, the trial

court has found him using Muktajivan as part of his business

name at least since 1995. The plaintiff is expanding his business

and exploiting the reputation and goodwill associated with

Muktajivan in the business of Colour Lab and Photo by expanding

the business through his wife and brother-in-law. On or about

the date of the institution of the suit the defendant was about to

commence or had just commenced an identical business by

adopting word Muktajivan as a part of his business name

although till then his business was being run in the name and

style of Gokul Studio. The intention of the defendant to make

use of business name of the plaintiff so as to divert his business

or customers to himself is apparent. It is not the case of the

defendant that he was not aware of the word Muktajivan being

the property of the plaintiff or the plaintiff running his business

in that name though such a plea could only have indicated the

innocence of the defendant and yet no difference would have

resulted in the matter of grant of relief to the plaintiff because

the likelihood of injury to the plaintiff was writ large. It is

difficult to subscribe to the logic adopted by the Trial Court, as

also the High Court, behind reasoning that the defendants

business was situated at a distance of 4 or 5 Kms. from the

plaintiffs business and therefore the plaintiff could not have

sought for an injunction. In a city a difference of 4 or 5 Kms.

does not matter much. In the event of the plaintiff having

acquired a goodwill as to the quality of services being rendered

by him a resident of Ahmedabad city would not mind travelling a

distance of a few kilometers for the purpose of availing a better

quality of services. Once a case of passing off is made out the

practice is generally to grant a prompt ex-parte injunction

followed by appointment of local Commissioner, if necessary. In

our opinion the trial court was fully justified in granting the ex-

parte injunction to the plaintiff based on the material made

available by him to the court. The Trial Court fell in error in

vacating the injunction and similar error has crept in the order of

the High Court. The reasons assigned by the Trial Court as also

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by the High Court for refusing the relief of injunction to the

plaintiff are wholly unsustainable.

The observation of the Trial Court that the business name

sought to be adopted by the defendants was somewhat similar

to that of the plaintiffs was immaterial and irrelevant. This

observation, the Trial Court was probably persuaded to make, in

the background that the business name sometimes adopted by

the plaintiff used QSS as prefixed to Muktajivan Colour Lab or

as part of the full name and that made the difference. The

learned counsel for the plaintiff-appellant has pointed out that

QSS is an abbreviation, the elongated or full form whereof is

Quick Service Station and that was merely an adjective prefixed

to the name. We find merit in the submission. It is the word

Muktajivan the employment of which makes distinctive the

business name of the plaintiff and it is the continued use of

Muktajivan in the business name of the plaintiff which has

created a property therein linked with the plaintiff. We are,

therefore, unhesitatingly of the opinion that a clear case for the

grant of ad interim injunction prayed for by the plaintiff was

made out and the trial court and the High court both fell in an

error in not granting the same.

There was no delay in filing the suit by the plaintiff. The

plaintiff filed the suit with an averment that the defendants were

about to commit an injury to the plaintiff. The defendants took a

plea that they had already commenced the business with the

offending trade name without specifying actually since when

they had commenced such business. This has to be seen in the

background that the defendants business earlier was admittedly

being carried on in the name and style of Gokul Studio. The

commencement of such business by the defendants could

therefore have been subsequent to the institution of the suit by

the plaintiff and before the filing of the written statement by the

defendants. In such a situation, on the plaintiff succeeding in

making out a prima facie case, the court shall have to

concentrate on the likelihood of injury which would be caused to

the plaintiff in future and simply because the business under the

offending name had already commenced before the filing of the

written statement or even shortly before the institution of the

suit would not make any difference and certainly not disentitle

the plaintiff to the grant of ad-interim injunction.

We are conscious of the law that this Court would not

ordinarily interfere with the exercise of discretion in the matter

of grant of temporary injunction by the High Court and the Trial

Court and substitute its own discretion therefor except where the

discretion has been shown to have been exercised arbitrarily or

capriciously or perversely or where the order of the Court under

scrutiny ignores the settled principles of law regulating grant or

refusal of interlocutory injunction. An appeal against exercise of

discretion is said to be an appeal on principle. Appellate court

will not reassess the material and seek to reach a conclusion

different from the one reached by the court below solely on the

ground that if it had considered the matter at the trial stage it

would have come to a contrary conclusion. If the discretion has

been exercised by the trial court reasonably and in a judicial

manner the fact that the appellate court would have taken a

different view may not justify interference with the trial courts

exercise of discretion [(see Wander Ltd. v. Antox India P.Ltd :

1990 (Supp) SCC 727 and N.R. Dongre v. Whirpool Corporation

and another: (1996) 5 SCC 714)]. However, the present one is

a case falling within the well accepted exceptions. Neither the

Trial Court nor the High Court have kept in view and applied

their mind to the relevant settled principles of law governing the

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grant or refusal of interlocutory injunction in trade mark and

trade name disputes. A refusal to grant an injunction in spite of

the availability of facts, which are prima facie established by

overwhelming evidence and material available on record

justifying the grant thereof, occasion a failure of justice and such

injury to the plaintiff as would not be capable of being undone at

a latter stage. The discretion exercised by the Trial Court and

the High Court against the plaintiff, is neither reasonable nor

judicious. The grant of interlocutory injunction to the plaintiff

could not have been refused, therefore, it becomes obligatory on

the part of this Court to interfere.

For the foregoing reasons these appeals are allowed. An

ad-interim injunction under Rules 1 and 2 of Order 39 of the CPC

shall issue in favour of the plaintiff-appellant restraining the

defendant-respondents from using directly or indirectly the word

Muktajivan in their trade name associated with the business

and services of colour lab and studio and any other similar word

or name which may be identical or deceptively similar to the

plaintiffs trade name. The plaintiff-appellant shall be entitled to

costs throughout incurred upto this stage.

Before parting we would like to make it clear that this

order is being passed at an interlocutory stage, and therefore,

any observation made by this Court touching the facts, and any

factual finding arrived at this stage would not come in the way of

the Trial Court or Appellate Court in arriving at a final decision at

variance therewith on trial of the issues on merits after recording

the evidence.

........J

( R.C. LAHOTI )

..J

(K.G.BALAKRISHNAN)

December 4, 2001

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