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Neev Investment v. Sasia Express Couriers Pvt. Ltd

Delhi High Court

May 11, 1993

Judgment

Subsequent
References

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Factual and Procedural Background

M/s Neev Investment & Trading Pvt. Ltd. (the plaintiff/applicant) is a company which, among other activities, carried on courier business through a division called "SASIA EXPRESS". In the first week of August 1991 the plaintiff entered into a Memorandum of Understanding with M/s Sasia Express Ltd, U.K. to collaborate in the courier business.

The plaintiff averred that Mr. L.R. Sridhar (defendant/respondent No. 2), who had been in charge of its Delhi office and operations for about two years, resigned on 29 March 1993 and (according to the plaintiff) he and others started a courier business by incorporating a new company named "SASIA EXPRESS COURIERS PRIVATE LIMITED", allegedly deceiving the public into believing that the new company was promoted or set up by the plaintiff. The plaintiff asserted that "SASIA EXPRESS" is its trade name/trademark and a valuable goodwill.

The plaintiff filed a suit for permanent injunction to restrain the defendants from using the name "SASIA EXPRESS" and, in the same suit, applied for an ad interim injunction.

Defendant/respondent No. 1 appeared and contested the application; it denied awareness of the plaintiff's prior use and stated that its company was incorporated as "SASIA EXPRESS COURIERS PVT LTD" on 19.11.1992 after checking relevant papers. Defendant/respondent No. 2 admitted his prior employment and resignation, denied involvement with defendant No. 1, and denied allegations of flotation of any company to deceive the public or of misappropriation/use of plaintiff's clients.

Legal Issues Presented

Whether an ad interim injunction should be granted restraining the defendants, their agents and servants from using, promoting, trading and carrying on courier business under the name and style "SASIA EXPRESS".
Whether the defendants' use of the name "SASIA EXPRESS" as part of "SASIA EXPRESS COURIERS PVT LTD" amounts, on prima facie grounds, to deceptive similarity/passing off and an invasion of the plaintiff's goodwill.
Whether the defendant/respondent No. 1 can rely on the contention that it is entitled to use its own registered company name (and thus cannot be restrained), including the relevance of Section 34 of the Trade and Merchandise Marks Act (protection of bona fide use of one's own name).

Arguments of the Parties

Plaintiff's Arguments

The plaintiff submitted that it had been carrying on courier business under the trade name/trademark "SASIA EXPRESS" for about two years and had earned goodwill and reputation in that name.
The plaintiff alleged that defendant No. 1 deliberately and fraudulently adopted the name "SASIA EXPRESS COURIERS PVT LTD" with a similar logo to take unethical and undue advantage of the plaintiff's goodwill, thereby invading the plaintiff's proprietary rights and misleading the public into believing an association.
The plaintiff sought injunction relief to protect its goodwill and prevent confusion in the trade and among customers; counsel relied on earlier decisions of the Delhi High Court (K.G. Khosla Compressors Ltd. v. Khosla Extraktions Ltd. and Bhandari Homoeopathic Laboratories v. L.R. Bhandari) to support the contention that a civil court has jurisdiction to grant such injunctions.

Defendants' Arguments

Defendant/respondent No. 1 argued that it is entitled to carry on business in its own registered name "SASIA EXPRESS COURIERS PVT LTD" and that using "SASIA EXPRESS" as the prominent part of its name cannot be said to be unlawful.
Defendant No. 1 denied any misrepresentation in registering the company name and stated that it registered in 1992 after verifying papers; it denied that its use would cause the plaintiff immense harm.
Defendant/respondent No. 2 admitted his prior employment and resignation, but denied having floated any company to deceive the public, denied involvement in defendant No. 1's affairs, and denied misappropriation or attempting to contact plaintiff's clients to encash on plaintiff's popularity.
Defendants also stressed that the plaintiff's corporate name is "M/s Neev Investment and Trading Pvt. Ltd." and that the plaintiff had not registered "SASIA EXPRESS" as a company name (i.e., the name used by the plaintiff was not the company's registered name).

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
K.G. Khosla Compressors Ltd. v. Khosla Extraktions Ltd and Others (AIR 1986 Delhi 181)	Cited by the plaintiff to support the proposition that a Civil Court has jurisdiction to grant injunctions in cases of this nature.	The court noted the plaintiff's reliance on this decision as authority for the jurisdictional proposition; it formed part of the plaintiff's support for seeking injunctive relief.
Bhandari Homoeopathic Laboratories v. L.R. Bhandari (Homoeopaths) Pvt Ltd [1976 T.L.R 1382 {Delhi}]	Relied upon by the plaintiff as supporting authority (no more specific principle is stated in the opinion text).	The court recorded that the plaintiff relied on this decision in support of its contentions; the opinion does not elaborate further on its distinct doctrinal contribution.
Simatul Chemical Industries Pvt Ltd v. Cibatul Ltd (AIR 1978 Guj 216)	Used as an illustrative authority on deceptive similarity where a subsequently adopted name was held likely to deceive the public and be restrained to protect goodwill.	The court relied on the facts and principle in Simatul to explain that where a subsequently incorporated company's name is deceptively similar to an existing trade name used in the same line of business, the existing user may obtain an injunction; the court applied that principle on prima facie grounds to the facts before it.

Court's Reasoning and Analysis

The court's analysis proceeded on the following points, based on the material before it (prima facie):

Prior Use: It was not disputed that the plaintiff had been carrying on the courier business under the trade name/trademark "SASIA EXPRESS" for about two years and that this name formed part of the plaintiff's logo. This use preceded the incorporation of defendant No. 1, which was registered on 19.11.1992.
Section 34 Limitation: The court observed that Section 34 of the Trade and Merchandise Marks Act protects a person in the bona fide use of his own name. However, the court treated that provision as a limited protection and indicated that using a company name will not be protected where adoption is not bona fide and is calculated to take unfair advantage of another's goodwill.
Prima Facie Passing Off and Intention: The court found, on prima facie view, that defendant No. 1 had adopted the name "SASIA EXPRESS COURIERS PVT LTD" deliberately to cash in on the plaintiff's goodwill in the same courier business. The use of the same or a similar logo and the prominent use of "SASIA EXPRESS" suggested a deliberate attempt to create the impression that the defendant's business was that of the plaintiff.
Comparative Authority: The court drew on Simatul Chemical Industries v. Cibatul Ltd to explain the principle that where a later-incorporated company uses a name deceptively similar to an established trade name in the same line of business, confusion among consumers is likely and an injunction restraining the later user is appropriate on prima facie grounds.
Rejection of Defendants' Primary Contentions: Having considered the defendants' contention that they were entitled to use their registered company name and that the plaintiff's use was not a registered corporate name, the court rejected the argument that such use could not be restrained where there was prima facie evidence of an intention to trade on the plaintiff's goodwill.
Relief Appropriate on Prima Facie Grounds: On the basis of these considerations, the court concluded that the plaintiff was entitled to an ad interim injunction restraining the defendants (and persons claiming under them) from using, promoting, trading and carrying on courier business under the name and style "SASIA EXPRESS". The court also restrained defendant No. 2 from approaching the plaintiff's clients/customers to claim outstanding payments.

The court expressly qualified its order as being made on a prima facie view and cautioned that it should not be construed as an expression of opinion on the merits of the case.

Holding and Implications

Holding: The court granted an ad interim injunction in favour of the plaintiff.

Direct Effect on the Parties:

The defendants, their agents, servants and anyone claiming under them were restrained from using, promoting, trading and carrying on courier business under the name and style "SASIA EXPRESS".
Defendant No. 2 (Mr. L.R. Sridhar) was restrained from approaching the plaintiff's clients/customers to demand any outstanding dues allegedly payable to the plaintiff.

Broader Implications and Precedential Effect:

The order was expressly given on prima facie grounds and the court stated it should not be taken as an expression of opinion on the ultimate merits; therefore the decision does not purport to lay down a final precedent beyond the interim relief granted.
No wider declaratory pronouncement of law beyond the grant of interim relief was made; the immediate consequence is the restraining order described above pending further adjudication in the suit.

Show all summary ...

S.C JAIN, J.:— The facts giving rise to this application are that M/s Neev Investment & Trading Pvt. Ltd (hereinafter referredto as the plaintiff/applicant) is a company incorporated under the Companies Act, 1956 and among other businesses, it carries on the business of couriers through its division ‘SASIA EXPRESS’. It is averred that in the first week of August, 1991 the plaintiff/applicant and one M/s Sasia Express Ltd, U.K, entered into a Memorandum of Understanding and agreed to collaborate with each other in respect of rier service all over the world upon the terms and conditions agreed to by and between them. As per the averments made by the plaintiff/applicant, Mr. L.R Sridhar, defendant/respondent No. 2 was an employee of the plaintiff/applicant company and he was in charge of it's office and operations at Delhi for the last about 2 years. On 29th March, 1993 he submitted his resignation and according to the plaintiff/applicant, he along with others started the couriers business by floating a new company named ‘SASIA EXPRESS COURIERS PRIVATE LIMITED’ and deceived the general public into believing that the said company has been promoted or set up by the plaintiff/applicant. Using the words ‘SASIA EXPRESS’ as a part of its name is just to confuse the public mind that this business is being run by the plaintiff/applicant. This name ‘SASIA EXPRESS’ is the trade mark of the plaintiff/applicant for the ‘last about 2 years and that this name is a valuable goodwill for the plaintiff/applicant.

2. A Suit for permanent injunction for restraining the defendants from making the use of the name ‘SASIA EXPRESS’ has been filed and in this Suit this application for ad interim injunction has been filed.

3. The defendant/respondent No. 1 made appearance. It has contested this application and filed a written reply. Defendant/Respondent No. 2, Mr. L.R Sridhar also made appearance through counsel and filed a separate reply in which it has been admitted that the plaintiff/applicant is carrying on the business of couriers under the name and style of ‘SASIA EXPRESS’, but however, the principal company is M/s Neev Investment and Trading Pvt Ltd. He has also admitted that he was working with the plaintiff company and he tendered his resignation and his resignation has since been accepted. He has denied that he has anything to do with the affairs of defendant/respondent No. 1 company. He has denied floating any company to deceive and mislead the public. He has denied that he has misappropriated any fund, as alleged by the plaintiff/applicant and that he has been contacting various clients of the plaintiff/applicant to recover money from them to encash on the popularity of the plaintiff/applicant company.

4. The defendant/respondent No. 1 company in its reply has stated that it is not aware that the plaintiff/applicant is carrying on the business of counrier under its trade name/trade mark ‘SASIA EXPRESS’ for the last about 2 years. It got the company company registered in the name of ‘SASIA EXPRESS COURIERS PVT LTD’. It has been denied that any misrepresentation was made in getting this company registered in this name. It is stated that this company was incorporated in the year 1992 after going through the papers and after verifying the other facts. It is denied that the defendant/respondent No. 1 by carrying its business under the name and style of ‘SASIA EXPRESS COURIERS PVT. LTD’ is likely to cause immense harm and injury to the plaintiff/applicant.

5. As far as the facts are concerned, it is not in dispute that the plaintiff/applicant has been carrying on the business of couriers under the trade name/trade mark ‘SASIA EXPRESS’ for the last about 2 years. The trade name/trademark ‘SASIA EXPRESS’ also forms part of the logo of the plaintiff/applicant. This use ofthe name ‘SASIA EXPRESS’ is prior to the incorporation of the defendant/respondent No. 1 company under the name of ‘SASIA EXPRESS COURIERS PVT LTD’ which was registered on 19.11.1992 The main stress of the arguments of the learned counsel of the defendant/respondent is that using the name ‘SASIA EXPRESS’ which is forming part of their name ‘SASIA EXPRESS COURIERS PVT LTD’ cannot be said to be unlawful, and that no injunction can be granted against the defendant/respondent restraining it from using this name ‘SASIA EXPRESS’, which forms the dominant part of the name of the company, namely, ‘SASIA EXPRESS COURIERS PVT LTD’. He also argued that defendant No. 2 has nothing to do with defendant/resdpondent No. 1 which is a registered private limited company. Stress has also been laid on the point that the name used by the plaintiff/applicant is not a registered name and the name of the plaintiff company is M/s Neev Investment and Trading Pvt. Ltd.

6. Learned counsel for the plaintiff/applicant argued that the defendant/respondent No. 1 fraudulently and purposefully with a deliberate view to securing unethical and undue advantage of the goodwill earned by the name ‘SASIA EXPRESS’ used by the plaintiff/applicant in respect of its courier service had started using the name ‘SASIA EXPRESS COURIERS PVT LTD’ with a similar logo in the same courier business, after a considerable long time when the plaintiff/applicant started its courier business and earned a good name. According to the learned counsel it was done by invasion of the plaintiff/applicant company's proprietary right in its good will. This was done with a view to create an impression amongst the trade and the persons dealing with the defendant/respondent No. 1 company that they were dealing with the plaintiff/applicant company. He relied upon adecision of this Court in K.G Khosla Compressors Ltd. v. Khosla Extraktions Ltd and Others (AIR 1986 Delhi 181) in support ofhis contention that a Civil Court has got jurisdiction to grant i njunction in such like cases. He also relied upon a decision of this Court in Bhandari Homoeopathic Laboratories v. L.R Bhandari (Homoeopaths) Pvt Ltd [1976 T.L.R 1382 {Delhi}].

7. I am not in a position to accept the argument of the learned counsel for defendant/respondent No. 1 that it is entitled to carry on business in its own name i.e ‘SASIA EXPRESS COURIERS PVT LTD’ and by using the name ‘SASIA EXPRESS’ as the prominent name of its service and there cannot be any restraint on that. Section 34 of the Trade and Merchandise Marks Act only protects a person of the bona fide use of his own name. Passing off action need not merely relate to the goods. On prima facie ground, it is apparent that the defendant No. 1 had adopted this name, ‘SASIA EXPRESS COURIERS PVTLTD’ deliberately to cash on the goodwill and reputation of the plaintiff/applicant in the same business, i.e courier service. Using of the same logo ‘SASIA EXPRESS’ in the same style by the defendant/respondent No. 1 shows the deliberate attempt on its part that it wants to give an impression to the general public that the said business is being as that of the plaintiff.

8. In the case of Simatul Chemical Industries Pvt Ltd v. Cibatul Ltd (AIR 1978 Guj 216), Cibatul Ltd filed a suit against the other company (Simatul Chemical Industries Pvt Ltd) on the ground rhat the name under which Simatul was doing business was so deceptively similar to the name of Cibatul that the public at large and the consumers were likely to be deceived into believing that they were dealing with the same company or companies having some connection or association with each other and that in order to protect Cibatul from its goodwill being invaded and in order to prevent confusion among the public at large and consumers, it was felt necessary to restrain Simatul from carrying on business under that name or under any such similar name or style. It appeared that both these companies were manufacturing goods of similar nature. In this case the name ‘SASIA EXPRESS’ is the trade name of the plaintiff/applicant's couriers business and it also forms part of the logo of the plaintiff/applicant company. The plaintiff/applicant is using this trade name ‘SASIA EXPRESS’ for the last about 2 years and has also entered into a Memorandum of Understanding with a company outside India for carrying on the courier business under this trade name. The name adopted by the defendant/respondent No. 1 as ‘SASIA EXPRESS COURIERS PVT LTD’ dealing in the courier business is so similar that confusion is likely to be created in the minds of all those who are dealing with the plaintiff/applicant company that they were dealing with the plaintiff/applicant company. Where the name of the company incorporated subsequently would be deceptively similar to that of an existing trade name, the latter is entitled to restrain the former by injunction from carrying on its business with such a deceptively similar name.

9. In this case on prima facie ground it is apparent that the defendant/respondent No. 1 in order to secure unethical and undue advantage of the goodwill earned by the plaintiff/applicant company has adopted the same name ‘SASIA EXPRESS’ in the same business, i.e of courier service by way of invasion of the plaintiff/applicant company's proprietary right in its good will. It appears to have been done with a view to creating an impression amongst the trade and the persons dealing with the defendent/respondent company that they were dealing with the plaintiff/applicant company.

10. I am, therefore, of the prima facie view that the plaintiff/applicant is entitled to an ad interim injunction restraining the defendants, their agents, servants and/or anyone claiming under them using, promoting, trading and carrying on their courier business under the name and style ‘SASIA EXPRESS’. Defendant No. 2, who was admittedly working with the plaintiff/applicant company and dealing with the courier division, and who has now resigned from the plaintiff/applicant company is also restrained from approaching the clients/customers of the plaintiff company to demand any outstandings due and payable by them to the plaintiff company. Ordered accordingly.

11. As this order has been passed on prima facie view of the matter, it should not be construed as an expression of opinion on the merits of the case.