Shafquat Haider & others Vs. M. Al-Amin and another, 39 DLR (AD) (1987) 103

Case No: Civil Appeal No. 38 of 1986

Judge: Shahabuddin Ahmed ,

Court: Appellate Division ,,

Advocate: Syed Ishtiaq Ahmed,Mr. Asrarul Hossain,,

Citation: 39 DLR (AD) (1987) 103

Case Year: 1987

Appellant: Shafquat Haider

Respondent: M. Al-Amin

Subject: Company Matter, Intellectual Property,

Delivery Date: 1986-8-13

 
Supreme Court
Appellate Division
(Civil)
 
Present:
Shahabuddin Ahmed J
M. H. Rahman J
A.T.M. Afzal J
 
Shafquat Haider & others
………………….....Appellants.
Vs.
M. Al-Amin and another
....................... Respondents
 
Judgment
August 13, 1986.
 
Companies Act (VII of 1913)
Section 11
This section provides that a company shall not be registered by a name identical with that by which a company in existence is already registered or so nearly resembling that name as to be calculated to deceive.  … (5)
Passing Off—
The foundation of a passing-off action is that nobody is entitled to represent his goods as the goods of somebody else, Foundation of a passing-off action is always deception or possibility of deception.    …. (6)
 
Cases Referred to-
K.M. Multani vs. Paramount Talkies AIR 1942 Bom. 241; The North Cheshire and Manchester Brewery Company Ltd. v. The Manchester Brewery Company Ltd. (1899) A.C 83; Hendriks vs. Montagu Ch. D (17), 638; National Bank of India vs. The National Bank of Indore, AIR 1923 Bom. 119; Simatul Chemical Industries Ltd. v. Cibatul Ltd. AIR 1978 Guj. 216; Exxon Corporation and others v. Exxon Insurance Consultants Inter­national Ltd. All E.R. (1981) Vol. 2 pages 495; Turton vs. Turton, 42 Ch. Divi­sion, 128; Office Clearing Services Ltd. v. Westminster Window and General Clea­ners Ltd. RPC Vol. 62-63 p. 39; K.M. Multani v. Paramount Talkies, AJR 1942 Bom. 119.
 
Lawyers Involved:
Syed Ishtiaq Ahmed, Senior Advocate instructed by Syed Sakhawat Ali, Advocate-on-Record—For the Appellants.
Asrarul Hossain, Senior Advocate instructed by Md. Aftab Hossain, Advo­cate-on-Record—For the Respondents.
 
Civil Appeal No. 38 of 1986.
(From the judgment and order dated 26-6-1986 passed by the High Court Division, Dhaka Bench, in Company Matter No. 21 of 1986.)
 
JUDGMENT
 
Shahabuddin Ahmed J.
 
That appeal by special leave calls in question an order of a learned Single Judge of the High Court Division dated 26 June 1986 refuting tempo­rary injunction to restrain the respondents' use of a trade name, “Ciproco Computers”. The learned trial Judge took the view that "there is a gulf of difference between the ''Ciproco Computer" and the "Ciproco Com­puters Ltd." which is the name of appellant No. 3, a Company, of which respondent No. 1 is the Chairman and appellant No. 1 is the Managing Director. This arises in a winding up proceeding under section 162 of the Companies Act, namely Company Matter No. 21 of 1986 pending before the High Court Division,
 
2. The application for winding-up the company was filed by respondent No. 1, M. Al-Amin, the Chairman and his mother, Dr. Jahanara Begum, a Director, they hold 50% of the total shares of the company while appellant No. 1, Shafquat Haider, Managing Director and his wife, Mrs. Haider, another Director, hold the remaining 50% shares of the company. In the application for wind­ing-up they alleged a complete dead-lock that arose in the company's business due to serious difference of opinion and mutual distrust between the Chairman and the Mana­ging Director. The company was registered under the name and style "Ciproco Computers Ltd." in June 1985. The business of the company consists in import, sale and servicing of computer machines of various kinds, manufactured by reputed Foreign Firms including Tandy and IFM and also in imparting technical education and training in computer science and technology. The company got a clientele of 300 computer systems and its customers inclu­de, among others, Banga Bhaban. Bangladesh Biman, Defence Intelligence Directorate, Po­wer Development Board, T & T Board and UNDO Dhaka. The company by rendering meritorious service to the customers already acquired considerable reputation in the field of computer business.
 
3. Immediately after the proceeding for winding-up was started, appellants filed an ap­plication seeking injunction against the Chair­man-respondent alleging that at about the time the application for winding-up of the company was filed, the Chairman surreptitiously and fraudulently procured a trade licence in the name of "Ciproco Computers" and started a private business under that name as Pro­prietor and alto made correspondence with the company's customers falsely representing that the company's business ceased to exist and that in its place his private firm, Ciproco Computers, was doing the business and further that he advised those customers to cancel their existing orders with the com­pany and place fresh orders to his new firm. It was further alleged in the application for injunction that respondent No. 1 wrote to the Petrol Station, where the Company's cars used to be serviced on credit basis, to discontinue the credit facilities, that the Bangladesh Biman which had placed an order for supply of Computer Machines worth several lacs of taka with the company to cancel the order. It was alleged that respondent No.1 by prac­tising deception and creating confusion by this close similarity between the two names and also by misrepresentation already enticed away the company's Customers while the applica­tion for winding-up is pending. In these circumstances, they soughs temporary injunction to restrains the respondents from using the Trade name, "Ciproco Computers" which is so similar to the company's name “Ciproco Computers Ltd.” that the public, particularly the customers, are being deceived and misled causing great damage to the company's busi­ness.
 
4. The application for injunction was resisted by the respondents. They denied   that their business under the name “Ciproco Computers” was a new one, but asserted that it had been in existence long before the com­pany was incorporated. The name "Ciproco Computer", it was alleged, was a trade mark registered in January 1984, in the name of respondent No.1, under the Trade Marks Act. Respondent No.1 claimed to be a graduate in Computers Science having a decree from an English University and that he was the pioneer in this special field of Computer business.  He further claimed that he had been doing the business from 1981 under the name "Ciproco" that it is he who promoted the formation of the company and took appellant No. 1 as Managing Director. He alleged that respondant No.1 had not she required quali­fication but was refused admission into the Business Administration Course of the Dhaka University on his filing false  documents  of Admission- qualification, his relation with  the appellant started to deteriorate. He further alleged that appellant No.1 suddenly submitted resignation from the office of Mana­ging Director and thereby created dead-lock in the business and affairs of the company since affairs of the company were so distributed between the Chairman and the Managing Director, other two Directors being silent Directors that without their mutual co-opera­tion the company would collapse. The Chair­man alleged that he had disclosed in a meeting held on 26 April 1965 that he would resume his private business under his own trade mark "Ciproco Computer". He explained that the Trade licence in the name of ''Ciproco Compulsory" taken in May 1986 was a mere formality, that it was not taken frau­dulently or surreptitiously but as a matter of course in that he had already got his name registered as owner of the Trademark "Ciproco". He denied having practised any deception or got any fraudulent intention in resuming his own business and as such there was no ground for restraining the use of the Trade mark in his name. It was con­tended that appellants No.1 and 2 got no right to speak or do anything on behalf of the company,
 
5. The learned Single Judge, as already stated, refused injunction observing, among other things, that no prima facie case was made out for an injunction and that the two names were not similar so as to create any confusion in the public mind. Mr. Ishtiaq Ahmed, learned Advocate for the appellant, has seriously challenged this observation of the learned trial Judge and has contended that in view of the facts disclosed in the evidences adduced it in a clear case of "passing-off" in that not only the two names, Ciproco Computers an Ciproco Computers Ltd., are almost exactly similar, very likely to deceive the public, but also respondent No. 1 by specific action diverted away the company' customers mis-representing that the company is no longer in the business and that in its place his firm has been doing the same business. Mr. Asrerul Hossain, lear­ned Counsel for the respondents has on the other hand, contended that the company's business is not the "existing business,' but it is the respondents' business which is In fact, the existing business as it has been in existence from before, that is, since 1981, whereas the company was incorporated in 1984. In support of this contention he has referred to a number of documents, particularly Annexures ‘I’ 'J 'K and ‘L’, of the Affidavit-in Opposition about the business carried on by respondent No.1. Al-Amin. Prior to the incorporation of the company. But hardly anything has been mentioned either in the appellants' application or in the docu­ments filed by the respondents as to on what consideration respondent No.1 formed the company discontinuing or temporarily suspen­ding his own business, or whether, with the incorporation of the company he reserved any right to do private business of simi­lar nature. No paper regarding the form­ation of the company, such as Memorandum of Articles of Association have been produced before us by either party. Section 11 of the Com­panies Act provides that a company shall not be registered by a name identical with that by which a company in existence is already regi­stered or so nearly resembling that name as to be calculated to deceive. The Trade mark registered on 5-1-84 in the name of respondent No.1 under the Trade Marks Act, 1940, shows that the Trade Mark is "Ciproco Computers Co." But other documents which are copies of correspondence made by Al-Amin, President of "Ciproco Computers Company", show that this company was variously referred to at different times, such as Ciproco Business Computers Service Ltd. Ciproco Ltd., 'Ciproco Corpora­tion. In these different names respondent No.1 had carried on business, as appears from these correspondences, from 1981 to 1983 but there is no paper to show that he carried on any business under those names after the incorporation of the Company In June, 1984. To be precise there is no evidence to show that respondent No. 1 carried on business in the name of, "Ciproco Computers' from the time of incorporation of the Com­pany till the application for winding-up was filed. This is all the more evident from the fact that the disputed Trade licence was obtained from the Dhaka Municipal Corpora­tion on 28 May 1986 that is about a fortnight before the filing of the application for win-ding-up the company. On these materials we are in a position to hold that though respon­dent No.1 had carried on business in compu­ters under the general name of 'Ciproco" prior to the Incorporation of the company, but since then he did not carry on any such private business and that whatever he did, as chairman of the company. It is he who is seeking winding-up of the company, but the matter is still pending. Now the question is whether during the pendency of the procee­ding for winding-up he is entitled to do any business of his own under a trade name which, because of its close similarity with that if the company, is calculated or likely to deceive the public, particularly the customers into the belief that they are doing business with the company, though in fact they are doing busi­ness with respondent No.1.
 
6. Mr. Ishtiaq Ahmed contends that use of the name''Ciproco Computers" is clearly Intended to pass off the respondents, business as that of the appellant-company and as such. It is a clear case of 'passing-off'. In support of this contention he has relied upon a number of decisions. Before we consider them we pro­pose to see what is meant by "passing off" which Is rather a technical trade term The foundation of a passing off action is that nobody is entitled to represent his goods of somebody else. Foundation of a passing-off action is always deception or possibility of de­ception, Beaumont, C. J. has elucidated the principle of pasting-off in his decision in the case of K.M. Multani vs. Paramount Talkies AIR 1942 Bom. 241 in the following words 'In a passing-off action it is never the plain­tiff's case that he has been himself decei­ved by the action of the defendant. His case is that other people, the public, have been deceived, or are likely to be deceived. Two issues must always arise in a passing-off action: First has the name or description of make up or whatever it maybe, of the wrongful user of which the plaintiff complains, come to be associated in the public mind with the goods, business, or works of the plaintiff; secondly, is the defendant so describing, or getting as to up, his goods or whatever it may be, be likely to mislead the public into believing that they are acquiring the plaintiff's goods when in fact they are acquiring the de­fendant's goods. Referring to Lord Halsbury in (1896) A.C 199, the learned Judge further observed: “There is of course, a great variety in the nature of passing-off actions. Sometimes the plaintiff's goods are described by purely fancy names, sometimes by names which are descriptive of their nature or they may be refe­rred to merely by the name of the plaintiff and sometimes the defendant may bear the same name. The issues in each case have to be fram­ed with reference to the facts of that case but in my judgment the plaintiff has always to succeed substantially on two issues of the na­ture mentioned above the...first funding the plaintiff's right to sue, the second the defenders liability to be sued." In that Bombay case, injunction was however refused though two Films (motion pictures) got the same name, 'Virginia'. The ground for refusal was that there were two producers in two countries, one in India and the other in United States of America; the Indian film was in Urdu with Indian cast in black end white, depicting an imaginary story between the Greek & the Romans about 4000 B. C; the other film was in English produced in America with foreign cast in technicolour depicting modern American life; the Indian film was given the came Virginia after the name of its heroine, but the Amer­ican film was given the name Virginia because of its setting in the state of Virginia, USA; production and exhibition of the two films were contemporaneous just by mere co-incid­ence without having any knowledge about each other.
 
7. In the instant case the trade mark is directly involved, but it is the name of the appellant-company vis-a-vis that of the respondents' private business which is involved. The company is named Ciproco Computers Ltd." and respondent No.1 has started busi­ness of his own firm under the name "Ciproco Computers". If there is any similarity between the names which is likely to create conf­usion in the minds of the public that while they are doing business with the Company they are in fact doing the busi­ness with respondents No. 1, then this case comes within the ambit of passing-off as has been explained above. Mr. Ishtiaq Ahmed has referred to the case of The North Cheshire and Manchester Brewery Company Ltd. v. The Manchester Brewery Company Ltd. (1899) A.C 83. There the Manc­hester Brewery Company Ltd. had carried on business under that name for years. The ap­pellant bought an old business called "the North Cheshire Brewery Company Ltd." and then got this incorporated and registered under the name "The North Cheshire and Manches­ter Brewery Company Ltd.". In an action brought by the respondent it was held upon evidence that as a matter of fact the name of the appellants company was calculated to deceive and that the appellant must therefore be restrained by injunction.
 
8. Next case relied upon by Mr. Ishtiaq Ah­med is Hendriks vs. Montagu Ch. D (17), 638. In that case an existing company—Universal Life Assurance Society-was granted an injunction restraining the defendant from obtaining re­gistration of another company to be called "Universe Life Assurance Association." The plaintiff company, namely the Universal Life Assurance Society, was formed in 1834 and acquired a large business in Life Assurance Association' stating that  this Association was formed to transact the business of life Insura­nce, the same business as the plaintiff had been doing from the fame place. It was held that the names were' so similar that it was calcul­ated to deceive the public. Another case relied upon by Mr. Ishtiaq Ahmed is the National Bank of India vs. The National Bank of Indore, AIR 1923 Bom. 119 and the questions there were whether there was any close similarity between the names of the two banking companies and whether the ordinary public would mistake one for another. The questions were answered in the affirmative and it was observed that "a person shall not trade under a name so clo­sely resembling that of the plaintiff as to be mistaken for use by the public and that the plaintiff to such an action need not show that the defendant in adopting such a name complained of by the plaintiff has any fraudulent inten­tion". The next case referred to by Mr. Ishtiaq Ahmed' is Simatul Chemical Industries Ltd. v. Cibatul Ltd. AIR 1978 Guj. 216. In that case the plaintiff, a manufacturing company, com­plained that the likely customers of its goods were apt to be confused by the similarity between its name and that of the defendant's company which subsequently started produc­tion of same goods. Plaintiff- company was ori­ginally named as Atul Products Ltd. engaged in the manufacture of dyes and chemicals of various kinds since 1947. It then collaborated with a reputed Swiss Company. CIBA, and got registered under the name "Cibatul Ltd." which signified participation of both the com­panies and under that name this company was carrying on manufacturing business with considerable success. In 1974 the defendant company was formed for the purpose of manufacturing same kinds of goods and it adopted the name "Simatul" Chemical Industries. The plaintiff company brought an action to res­train the defendant from using the name ‘Simatul’ which, because of its close similarly was   calculated to deceive the public, and it was held that the name 'Simatul' was so deceptively similar to the name of the plaintiff’s names "Cibatul" that the public at large and the consumers in particular 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. The last case referred to by Mr. Ishtiaq Ahmed is Exxon Corporation and others v. Exxon Insurance Consultants Inter­national Ltd. All E.R. (1981) Vol. 2 pages 495. There the plaintiff company dealt in petroleum and similar products is decided to devise a new corporate name and was looking for an invented name which should be short and distinctive, capable of being easily memorised. After spending considerable time and efforts the word Exxon' was invented and it was Died as a part of the corporate name of the company which was "Exxon Corporation". The defendant company after some time adopted the same word 'Exxon' as part of its corporate name which thus came to be Exxon Insurance Consultants International Ltd. The plaintiff company brought an action against the defendant claiming injunction to restrain the Infringement of Its ‘copy right’ in the name of Exxon on the ground that this word was an "original literary work" within section 2(5) of the Copy-rights Act, 1956. The plaintiff also sought an injunction to restrain the defendant from passing-off its goods as that of the plaintiff by using the word Exxon. Injunc­tion was refused on the first count on the ground the word ‘Exxon' was not an 'original literary work" since it got no meaning or significance in itself; but injunction was granted on the second count, that is, the plaintiff were held entitled to the auxiliary relief restraining the passing-off by the defen­dant by its use of the word ‘Exxon'.
 
9. Mr. Asrarul Hossain, on the other hand has referred to certain decisions in which in spite of some similarity between the names of companies injunction was refused. One such case is Turton vs. Turton, 42 Ch. Divi­sion, 128. There the plaintiff had many years carried on the business of steel manufacturers under the name of Thomas Turton & Sons. The defendant, John Turton, had also for many years earned on a similar business in tile same town, first as ''John Turton" then as John Turton and Co. In 1888 he took his two sons into partnership and carried on the same business as ‘John Turton & Sons'. There was no evidence that the defendants imitated the trade marks or labels of the plaintiff or otherwise intended to deceive the public; it was held that although there was some probability that the public would be occasionally misled by the similarity of the names the plaintiffs were not entitled to an injunction restraining the defen­dants from the use of the name "John Turton & Sons”. The ground given for this view was that "John Turton" is actually the Christian name of the defendant as "Thomas Turton" was the Christian name of the plaintiff and that John Turton honestly used the name John Turton & Sons just to show that his sons were brought into partnership. Further it wan observed that the defendant could not be restrained from using his own name or from bringing his sons into partnership and thereupon modifying the former name to as to signify the par­ticipation of his sons in the business. Next case referred to by Mr. Asrarul Hossain is Office Clearing Services Ltd. v. Westminster Window and General Clea­ners Ltd. RPC Vol. 62-63 p. 39—a case finally decided by the House of Lords confirming the decision of the Court of Appeals which was reported in RPC Vol. 60-61, page 133. There the plaintiff and the defendant both carried on business of Office Cleaners, the plaintiffs having traded under the style "Office Cleaning Services" since heir incorporation in 1930, the defendants having traded under the style "Westminister Office Cleaning." The plaintiffs brought this action to restrain the defendants from trading under this name and style which, they contended was likely to cause the business of the defendants to be confused with their business. They admitted that they had no monopoly in the two words ‘Office Cleaning’ and also that these words had not acquired a secondary meaning so as to be distinctive of their firm. The trial Court (Mortou, J.) gave judgment for the plaintiffs' but he did not hold that fraud by the defen­dants was proved. The decision was rever­ted in appeal and the appellate decision was affirmed by the House of Lords which observed that the differentiation between the two names was sufficient to avert any confusion which might otherwise arise from the use of two ordinary descriptive words "Office Cleaning": that where a trader adopts a trading name containing words in common use some risk of conclusion may be inevita­ble, but that risk must be run unless the first trader is allowed an unfair monopoly, and in such cases the court will accept comparative; small differences as sufficient lo avert confusion.
 
10. And it appears clearly from the deci­sions discussed above, in some cases injunction was granted and in some others it was refu­sed. Issues were framed and decision taken on the basis of facts of the respective cases the broad question being there was whether the similarity of name or mark was such as to create confusion or deceive the public in the instant case there is close similarity between the names ‘Ciproco Computers Ltd,' and "Ciproco Computers." We are unable to agree with the learned Single Judge that "there is a gulf of difference between the two names." Even Mr. Asrarul Hossain does not strongly support the view that there is "a gulf of difference' between the two names, but the whole of his argument is based on the claim that respondent No.1, Al-Amin, was already in the field having done business in the name of Ciproco and having got his Trade mark registered, whereas it is the appellant-company which was subsequently formed at the initiative of Al-Amin with this name, also suggested by Al-Amin himself. But after the company was formed, we find, respondent No.1 did not do any business in the name of his former proprietorship firm or at least no evidence has been led in support of any such separate business during this period. In the circumstances, when he himself sought for the winding-up he should wait for the court's decision on the question. The action taken by him particularly in gett­ing the existing orders of the company for supply of goods  and machine to different customers  cancelled on the representation that the company is no longer in the business  cannot be approved. Here we find not only the case of close similarity between the two names likely to create confusion in the minds of the customers, both existing and intending, but also we find that respondent No. 1 took definite steps to entice away the customers, from the company to his private business. In the circumstance, respondent No. 1 should be restrained from doing so. Mr. Asrarul Hossain contends that the court may, instead of restraining the respondent from using the disputed name, grant relief by way of damage. In support of this contention he has referred to an observation in the case of K.M. Multani v. Paramount Talkies, AJR 1942 Bom. 119 as already referred to above. The learned Judge there observed that "in a suit for injunction the court can grant relief in the alternative by way of damages even if the plaintiff has not alleged loss or damage." This may be possible in appropriate cases, but in the case before us we do not find any rea­son for granting the alternative relief by way of damage. Mr. Asrarul Hossain lastly contends that the ad interim injunction issued while granting leave to this appeal is likely to restrain respondent No. 1 from functioning as Chairman of the company. We do not see any reason for such an apprehension, for by the ad interim order of injunction only the use of the disputed Trade licence dated 28 May 1986 has been restrained.
 
11. In the result, the appeal is allowed and the impugned order of the High Court Divison is set aside. The application for in­junction is allowed and respondent No.1 is restrained from using the trade name 'Ciproco Computers’ till disposal of the winding-up petition. This order, however, does not restrain respondent No.1 from discharging his duties as Chairman of the company. The winding-up matter should be disposed of expeditiously. No order as to costs.
 
Ed.