Montari Overseas Ltd. v. Montari Industries Ltd.

After reading this case analysis, the readers will learn how the Delhi High Court applied the common law principles of prior use and registration to decide the case when the defendant started its business way after the plaintiff, but under the same name.
CITATION1996 (16) PTC 142 (Del)
COURTDelhi High Court
JUDGES/CORAMJustice M. JagannadhaRao and  Justice A.D. Singh
DATE OF JUDGEMENT07.02.1995

Introduction

Intellectual Property Rights (IPR) is concerned with trademarks, copyrights, literary works, artistic works, and more. In recent times, company names have also been included in the domain of IPR. Very often large companies like Reliance, Airtel, etc. have their names being copied by new corporate houses. If the new business is small and does in no way suggest its connection to the bigger company, it is not taken to courts. But if a company so comes as to suggest its connection with a previously established and well-reputed company, it causes confusion and deception and so IPR gets involved. The present case is an example of the same.

Facts

The facts of the case are as follows: The plaintiff/respondent, M/s Montari Industries Ltd.was incorporated in 1983. The plaintiff company had several subsidiaries by the name of “Montari” and were engaged in the manufacturing of products like chemicals, agro-chemicals, paints, leather articles, coffee, etc. The defendant/appellant, on the other hand, M/s Montari Overseas Ltd. was incorporated in 1993. The dispute between the two related to the defendant using the plaintiff’s name in its business dealings.

The two-judge bench of Delhi High Court comprising Justice M. Jagannadha Rao and Justice A.D. Singh, having found no merits in the defendant’s opposition against interim injunction being granted to the plaintiff, dismissed their appeal and confirmed the lower court’s order of grant of an injunction to the plaintiff.

Issues

The main issues in the case are:

  1. Whether or not the suit against the defendant company is maintainable owing to the company’s incorporation by the Central Government under Companies Act, 1956.
  2. Whether or not the plaintiff’s reputation has been dishonestly tarnished by the defendant company by way of passing off.
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Summary of court decisions and judgment

On coming to know about the defendant and their misuse of the plaintiff’s name, the plaintiff filed a suit in 1995 for injunction and damages in the Trial Court. The learned single judge on the case passed a restraint order on the principle that copying the name of a rival is likely to cause injury to their business. The order was disputed and appealed against, by the defendant. The defendant failed to make their case before the High Court and the two-judge bench confirmed the lower court’s order after considering the aspects of prior-use and alternative remedies available to the plaintiff.

Analysis    

One of the contentions of the defendant was that the suit was not maintainable as the Central Government had allowed the incorporation of the defendant company by the name ‘Montari Industries Ltd.’ and if the plaintiff was so aggrieved, they should have utilized the remedies under the Companies Act, 1956. Sections 20 and 22 of the Act give provisions for rectification of the name of a company which is incorporated with the same name as that of a previously incorporated company. But it is a well-known principle of law that a person aggrieved of some event has remedies under many statutes and laws. It is the choice of the aggrieved person to choose which remedy he wants to pursue. In the present case, the plaintiff had two independent remedies against the defendant company: one under the Companies Act and another for applying for an injunction. Both remedies are independent as they operate under different laws. Hence, the plea of non-maintainability of suit due to the wrong course of remedy was flawed.

It is evident from the facts of the case that the plaintiff was incorporated in 1983 and the defendant was incorporated 10 years later. The period of 10 years is enough for a name to establish its reputation. Furthermore, the defendant did not have any reason for the adoption of the particular corporate name. Thus, the defendant company’s name was deliberately copied from the plaintiff’s so as to en-cash their reputation and goodwill by misleading and deceiving the customers. It is well settled that no company is entitled to carry on business in a manner so as to generate a belief that it is connected with the business of another previously incorporated company, firm, or individual. The same principle of law which applies to an action for passing off of a trademark will apply more strongly to the passing off of a trade or corporate name of one for the other. Thus the common law principle of prior-use and registration can be applied in the following case as well. The defendant acted dishonestly and maliciously to harm the plaintiff.

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Conclusion

Not every law is without gaps, and in a bid to out-do other players in the market, individuals, firms, corporates, partnerships find loopholes to abuse the process of law. The case at handset a good precedent on the fact that even a company name can be passed off and the same would come under the domain of IPR. Prior use and registration of a mark and/or a name remain a common principle being applied by courts to back their judgment.