TMI Blog1995 (12) TMI 268X X X X Extracts X X X X X X X X Extracts X X X X ..... ls, agro-chemicals, paints, cosmetics, pharmaceuticals, leather articles, tea, coffee, clothing, carpets, inks, food articles, etc. The respondent also claims to have a turnover of Rs. 90 crores. The appellant, on the other hand, Montari Overseas Ltd. was incorporated on 21 -4-1993. It is claimed that the fields of operation of the appellant and the respondent-companies are different as the latter is involved in production of worsted yarn and sale and purchase of blends, acrylic and hosiery. It is not disputed that the factory of the appellant was under construction when the suit was filed and had not been completed when the impugned order was passed by the learned single Judge. The appellant came out with public issue which opened on 10-1-1995 and closed on 20-1-1995. On coming to know of the existence of the appellant on its entry in the capital market, the respondent instituted a suit (being Suit No. 43 of 1995) on 4-1-1995 for permanent and mandatory injunction and damages. The respondent also moved an application (LA. 129 of 1995) praying for injunctive relief. In that application a composite prayer seeking an ad interim ex parte injunction restraining the defendant from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... counsel but we have not been persuaded to accept the same. Section 20 provides that no company will be registered by a name which is similar or identical or too nearly resembles the name by which a company in existence has been previously registered. In case where a company has been incorporated with a name which is identical or too nearly resembles the name of a company which has been previously incorporated, section 22 makes a provision for getting the name of the former altered. No doubt, section 22 makes provision for rectification of the name of a company which has been registered with undesirable name but that does not mean that the common law remedy available to an aggrieved party stands superseded. The plaintiff will have two independent rights of action against the defendant who may be using the corporate name of a previously incorporated company, one under section 22 and the other for injunction restraining the defendant from using the corporate name of the plaintiff or from using a name bearing a close resemblance which may cause or which is likely to cause confusion in the minds of the customers or general public in view of the similarity of names. Both the remedies, on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The learned counsel for the appellant then submitted that the learned single Judge was not right in passing an order restraining the use of the word 'MONTARI' in its corporate name. The learned counsel submitted that adoption of that name by the appellant was not due to lack of bona fides on its part. He contended that the respondent has not produced any evidence to show that any confusion has been created in the minds of the customers or any member of the public by the use of the word 'MONTARI' by the appellant in its corporate name nor is there any evidence to show that the business of the respondent has been diverted by the appellant. He submitted that there was no question of any confusion as the appellant was dealing with items which were different from the items in which the respondent was trading. The learned counsel also referred to the fact that in the prospectus, advertisements and press reports of the company, it was pointed out that the appellant has nothing to do with the respondent company. As a sequitor, he submitted that there was no intention on the part of the appellant to draw any undue benefit or identify itself with the respondent-company. 9 .On the other ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as a right too to protect the same. A competitor cannot usurp the goodwill and reputation of another. One of the pernicious effects of adopting the corporate name of another is that it can inj ure the reputation and business of that person. 11. .In the present case, there are certain striking features which have to be taken note of in arriving at a decision whether the appellant in adopting the word 'MONTARI' as a part of its corporate name is likely to deceive or cause confusion in the minds of the public. It is not disputed that the appellant was incorporated on 21-4-1993 after about a decade of the incorporation of the respondent. From the record of the trial Court it appears that the respondent and its other group of Montari companies has an established business. On the other hand, the appellant has entered the capital market very recently. It was noticed by the learned single Judge that the factory of the appellant was in the process of completion and its products have not entered market. It was not claimed, either before us or in the memo of appeal, that the products of the appellant are now being marketed. The respondent has explained as to why the word 'MONTARI' was sel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... i group of companies and annual reports of Montari Industries Ltd., that Montari group of industries have large operations and some of them have been in business for a long time. The members of the public are likely to mistakenly infer from the appellant's use of the name which is sufficiently close to the respondent's name that the business of the appellant's company is from the same source, or the two companies are connected together. 12. The question to consider in a case of similarity in trade names is whether ordinary person or public at large will mistake one company for the other. Relying on the observation of Sir George Jessel in Guardian Fire Life Assurance Co. v. Guardian General Insurance Co. Ltd. (8) (1880) 50 L.J. Ch. 253 to Bombay High Court in National Bank of lndia v . National Bank of Indore AIR 1923 Bom. 119 observed as follows: "... But the question in this class of cases is not whether the intelligent section of the public is likely to be deceived but whether the public at large is likely to be deceived. Further, as observed by Sir George Jessele in Guardian Fire Life Assurance Co. v. Guardian General Insurance Co. Ltd. (1880) 50 LJ. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is business from that of the plaintiff. In my opinion, one of the few distinctions between the principles applicable to this class of case and cases relating to trade marks is that the rule as to anything being common to the trade does not apply to the former class of case, except when it claimed that the business name or part of it connotes the plaintiff's goods or work ..." "There are two distinct classes of rights in respect of the name of a business : one only arises when that name or some part of its, whether it be what is known as a fancy word, an ordinary word or a geographical name, has come to mean the goods of, or to connote the skill, probity or excellence of the particular business. The other class of right is to a distinct name, that is the right to prevent others from adopting a name which is likely to lead the public to mistake another new business for the plaintiff's business.. ."(p. 113) 15. In Kala Niketan v. Kala Niketan AIR 1983 Delhi 161, the plaintiff, who was carrying on business under the name and style of 'Kala Niketan', institute a suit against the defendant for permanent injunction restraining the defendant from carrying on business in Sarees ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g a representation that the appellant is associated with the defendant. The appellant cannot be permitted to appropriate the reputation and goodwill of the respondent to promote its business interests. 2O. Regard must also be had to the fact that the expansion of business by the appellant and respondents in future may bring the parties into competition (See Dunlop Pneumatic Tyre Co. Ltd. v. DunlopLubricant Co. 1899 (XVI) RPC12 at page 15 and Crystalate Gramophone Record Mfg. Co. Ltd v. British Crystalite Co. Ltd 1934 (51) RPC 315 at page 322. 21 . The quality of goods and services and kind of business which a new company undertakes and the credit which it enjoys may injure the reputation of the existing company due to adoption of a name by the former which is similar to the name of latter as they may be assumed to be connected with each other [See Ewing v . Buttercup Margarine Co. Ltd 1917 (II) Ch.D. 1 at page 3 and Ewing Trading as the Buttercup Dairy Co. v. Buttercup Margarine Co. Ltd. 1917 (34) RPC 232 at page 239]. 22. There is another aspect of the matter. Section 20 treats a name of the company to be undesirable if it is identical with or too nearly ..... X X X X Extracts X X X X X X X X Extracts X X X X
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