HIROO KHUSHALANI Vs. BAKER HUGHES LTD

JUDGEMENT

(1.) This appeal is directed against the order dated 24th July, 1998 passed by learned Single Judge of this Court, granting interim mandatory injunction of favour of respondents (plaintiffs), directing the second appellant (defendant No. 2), to stop using the word 'Baker' in its corporate name and to approach the Registrar of Companies, for deletion of the word 'Baker' from its corporate name, within two months.

(2.) Facts in brief are: that the respondents (hereinafter, the plaintiffs), filed a suit seeking decree for permanent injunction and damages against the appellants (hereinafter, the defendants), alleging therein that the first plaintiff, M/s, Baker Hughes Limited (formerly-M/s. Baker International Limited, U.K.), was a subsidiary of the second plaintiff-M/s. Baker Hughes Incorporated, USA; the plaintiffs and their subsidiary Companies have been doing business and using the trade name 'Baker'. They enjoyed reputation for possessing technology and producing oil field quality equipments all over the world including India; that the trade mark / name 'Baker' was invaluable property for the Baker Group of Companies; that in 1984, the first defendant (sole proprietor of M/s. Miraksha Associates), got in touch with the first plaintiff and they agreed to a business arrangement between them. On 6th April, 1984, the first defendant informed them that Ministry of Industry, Government of India, granted the Letter of Intent for establishment of a new industrial undertaking at Gurgaon, Haryana and Letter of Approval containing conditions on which such foreign collaboration (for short letter of approval) would be permitted. This letter of approval was partially modified/amended on 4th February, 1986 and the name of the foreign collaborator was firstly changed form Bakerline USA to Baker Oil Tools, UK Limited and on 17th March, 1986 this was changed to Baker International Limited, U.K. (the former name of first plaintiff); on 21st December, 1984 the first defendant entered into a promotion agreement (hereinafter, referred to as impugned agreement) with the first plaintiff; inter alia agreeing that a new Company under the name of M/s. Baker Oil Tools (I) Pvt. Limited (second defendant) be incorporated and got registered in India under the Companies Act, 1956, this agreement also provided for their respective shares and responsibilities in the company. Clause 8.3 of the agreement provided that in the event of the equity share holding of the Baker Oil falling less than' 40% the company shall not be entitled to retain the word 'Baker' as part of this corporate name. Clause 12 of this agreement required that its contents would be incorporated as a part of the articles of association of the second defendant. After the company was incorporated the said Letter of Intent and the Letter of Approval of foreign collaboration were got transferred from the name of the first defendant to the name of the second defendant. On 25th July, 1986 Reserve Bank of India also granted permission to the second defendant to issue shares to the first plaintiff equivalent to its 40% of the paid up capital. It was further averred that on 3rd December, 1993 in the general body meeting of the company, plaintiffs attempted to get Clause 8.3 of the impugned agreement, which provided that in case the equity share-holding of the first plaintiff in the second defendant was reduced to less than 40% then it would stop using the name Baker in its corporate name, included in the articles of association of the second defendant but they did not succeed. Thereafter on 15.2.1995 plaintiffs sold their shares to M/s. Whitehorse, Hongkong and thus their shareholding in the company stood reduced to less than 40%. The first plaintiff through Baker Oil Tools Asia Pacific, a subsidiary company of the second plaintiff served a notice calling upon the second defendant to drop the word 'Baker' from its corporate name, as per the terms of Clause 8.3 of impugned agreement. It was also pleaded that the first defendant had earlier acknowledged on several occasions that Clause 8.3 of the impugned agreement was inadvertently left out from the articles of association of the second defendant but the omission did not alter the obligations of the parties and failure to comply with the request amounted to a breach of impugned agreement.

(3.) It was alleged that the second defendant was selling the goods in India and other countries under the name 'Baker' by misleading customers regarding their relationship; the defendants' equipment does not meet the quality standard of the plaintiffs thus their reputation was being damaged; the defendants were guilty of 'passing of their business and goods as those of the plaintiffs' by using of 'Baker' as a part of their corporate name; that in the absence of a technical or financial collaboration between the plaintiffs and the defendants the use of the trade mark and trade name 'Baker' by the defendants was causing confusion in the mind of the members of the public and thus the defendants were acting with dishonest and mala fide intentions by using plaintiffs' trade name, mark and goodwill. Plaintiffs also moved an application seeking interim injunction against the second defendant from using the name/mark 'Baker' till the disposal of the suit (I.A. No. 3824/95).