H.C.L. Ltd. vs I.T. & T. Pvt. Ltd.
1998 Latest Caselaw 105 Del

JUDGMENT

S.N. Kapoor, J.

1. The plaintiff, a public limited Company, has filed a suit seeking permanent injunction restraining the defendants from making any representation which may amount to claiming any association, licence, sponsorship or authority from the plaintiff and from using the trade mark/name HCL in relation to the business of the defendant and/or the consumable and spares being marketed by the defendant and for rendition of accounts. The plaintiff claims to have been using the words HCL as a trade mark in unique and artistic script within the meaning of Section 2(c) of the Indian Copyright Act, 1957 and the plaintiff has been extensively advertising its trade mark HCL, through printed and audio-visual media and it has acquired a unique reputation and goodwill. The plaintiff is one of the market leaders in the field of photocopiers. It has set up a smooth and efficient network for after sales support service and in order to provide effective service and genuine spares/consumables for the machines sold by the plaintiff, the plaintiff has adopted the practice of selling the spares for the machines manufactured by the plaintiff exclusively through the authorized dealers of spares and consumables. They are also the authorized service centers. The defendant, a private limited company, is apparently engaged in servicing and maintenance of plain paper photocopiers. Wing Commander A.K. Verma (Retd.) an ex-employee of the plaintiff as the Vice President of the reprographic division, is having a business interest in and is closely associated with the defendant company. The defendant has been making a deceptive representation to the purchasers/users of HCL photocopiers whereby it is directly or indirectly related to the organisation of the plaintiff and/or defendant is the authorized agent of the plaintiff for HCL photocopiers and is stocking and supplying HCL genuine spares/consumables for HCL photocopiers. The defendant also mailed an introductory letters of the defendant and the subject of the said letters reads as "annual maintenance contract for your HCL Finesse range of plain paper copiers" suggesting that the defendant has some kind of authorization from the plaintiff to market/sell the original spares of HCL photocopiers and also to undertake the annual maintenance contract for the HCL machines. The plaintiff has never appointed defendant either as dealer or service agent. The plaintiff believes that the defendant is in fact marketing or selling spurious/duplicate spares claiming them to be manufactured/marketed and advertised by the HCL. The representation made by the defendant is likely to cause confusion in the minds of the unwary consumers/users of HCL photocopiers who are induced into believing that the defendant is an extension or is an approved or sponsored or is associated with the business of the plaintiff. The defendant has no justification for adopting the impugned trade mark/name or to make dubious representations in relation to the goods/consumables/spares being marketed by the defendant except to trade upon the goodwill and reputation of the plaintiff. The plaintiff sent notice dated 25th July, 1994 to the defendant calling upon the defendant to stop making false representation. In reply sent by the defendant, the defendant categorically denied the affirmation that the defendant is making representation to the user of HCL copiers to the effect that the defendant has right to maintain HCL copiers and the defendant has HCL original consumables/spares to maintain HCL copiers. However, the defendant has its own workshop and is engaged in the business of maintaining computers and photocopiers of all types and makes. The contention is bellied by the written representation made by the defendant.

2. In this very connection this IA No. 1355/94 was moved seeking ad interim injunction restraining the defendant from using the trade mark HCL in relation to the business of the defendant and consumables/spares being marketed by the defendant in any manner whatsoever.

3. This application is hotly contested by the defendant on various grounds, including that the plaintiff has no cause of action. The plaint has not been duly verified nor filed by the duly authorised person in accordance with law. It is denied that the defendant is deliberately making false information to the user of HCL photocopiers and that is likely to lead to deception by misleading the consumers into believing that the defendant is related/associated with the plaintiff and the consumables/spares being marketed by the defendant are those manufactured and marketed by the plaintiff. The allegations of causing any loss etc. are denied. It is also stated that without prejudice to his rights and contentions as stated herein the defendant undertakes not to make any representation. The defendant cannot be restrained from stocking original land genuine spares of HCL, for such a restriction would be contrary to the provisions of the Monopolies and Restrictive Trade Practices Act (hereinafter called "the MRTP Act" for short), which is tantamount to restricting flow of trade. It is also contented that neither the plaint discloses the period of use, the basis of reputation, the alleged turnover of the photocopiers nor the claim is supported by documents. The plaintiff has a very bad reputation in the market in terms of the quality of work and service provided by the plaintiff. The plaintiff spares are not readily available in the market under oral instructions of the plaintiff to create a artificial scarcity and the spares are being sold in a clandestine manner by the dealers who have been orally directed not to make the spares available in the market and thereby violating the provisions of the MRTP Act. The suit is also an attempt in that direction.

4.1. It may be mentioned that the business of the defendant appears to be maintenance and repair of photocopiers, including HCL photocopiers amongst others. It is also apparent that for maintenance and repair spare parts are certainly needed. It is evident that the defendant is neither running the authorised service center of the plaintiff nor in any manner related or associated with the plaintiff. They are taking up the maintenance of computers, copiers, digital scanners-cum-printer. The defendant has issued circular for "Annual Maintenance Contract for your HCL FINESSE RANGE OF PLANE PAPER COPIERS to enable the customers" to select a service organization for your copiers. The circular also indicates that" IT & T has enough HCL ORIGINAL consumables and spares to look after your machines. You will get all spares within 24 hours of your call". The circular does not indicate that it is authorised service center or authorised dealer in spare parts in any manner. The learned Counsel for the defendant is justified in his submissions that so long as defendant is storing and using HCL's original consumables and spares in maintenance and repairs, without making any representation that the defendant is authorised dealer of consumables and spares of HCL or running service centers having been authorised by the plaintiff, it would neither amount to infringement of trade mark nor passing off.

4.2. According to the plaintiff, these consumables and spare parts are supplied to authorised service centers only and not to unauthorised service centers. Consequently, it is apprehended that defendant could not have the original spare parts and in the name of original and genuine spare parts the defendant could pass off something else as the product of HCL. This belief does not appear to be based on any instance or any proper affidavit/evidence to indicate that any fake or duplicate consumable or spare part has been sold in the name of the original and genuine spare parts manufactured by HCL.

4.3. According to the defendant, the plaintiff has a very bad reputation in the market in terms of its product and after sale service. Dissatisfied customers are seeking remedial measures from alternative sources to get their machines repaired. The plaintiffs spares are not readily available in the market under oral instructions from the plaintiff to create artificial scarcity. But the spares are being sold in a clandestine manner by its dealers thereby creating a false scarcity. The restriction not to supply original and genuine spare parts in the market, excepting its own authorised service center amounts to restricting flow of trade and is in contravention of the MRTP Act.

4.4. "Could the defendant without having been authorised by the plaintiff to run the authorised service center use the same?" is the question which is further required to be examined in the light of the submission relating to violation of MRTP Act. The term "restrictive trade practice" is defined in Section 2(o) of the MRTP Act, which reads as under:

"2(o). "restrictive trade practices" means a trade practice which has, or may have, the effect of preventing, distorting or restricting competition in any manner and in particular,--

(i) which tends to obstruct the flow of capital or resources into the stream of production, or

(ii) which tends to bring about manipulation of prices, or conditions of delivery or to effect the flow of supplies in the market relating to goods or services in such manner as to impose on the consumers unjustified costs or restrictions."

5. In terms of the definition of "restrictive trade practice" given in Section 2(o)(ii) of the MRTP Act, it would appear that the matter may be covered by the provisions of Section 2(p)(ii), for it tends to bring about manipulation of prices or conditions by affecting the flow of prices in the market relating to spare parts and services. It amounts to imposing on the consumers unjustified costs or restrictions of taking the photocopiers only to authorised service stations of HCL photocopiers irrespective of the fact whether charges arc unjustified or not.

6. It is also required to be seen whether restraint is such as regulates and thereby promotes competition or whether it is such as may suppress or even destroy a competition. To determine this question, three matters are to be considered. First, what facts are peculiar to the business to which restraint is applied. Second, what was the condition before and after the restraint is imposed. Third, what is the nature of the restraint and what is its actual and probable effect. (See Tata Engineering and Locomotives Co. Ltd. v. Registrar, Restrictive Trade Agreement, ). It is only where trade practice has the effect, actual or probable, of restricting, lessening or destroying competition that is liable to be regarded as a restrictive trade practice.

7. Here it would be useful to refer to the definition of the term "service" in Section 2(r) and it reads as under :

"2(r) "service" means service which is made available to potential users and includes the provision of facilities in connection with banking, financing, insurance, chit fund, real estate, transport, processing, supply of electrical or other energy, board or loading or both, entertainment, amusement or the purveying of news or other information, but does not include the rendering of any service free of charge or under a contract of personal service.

Explanation--For the removal of doubts, it is hereby declared that any dealings in real estate shall be included and shall be deemed always to have been included within the definition of "service".

8. In view of the above, it is evident that repairing a photocopier and its maintenance etc. fall within the definition of the term "service" also. Consequently, it will certainly amount to restrictive trade practice on the face of it.

9. In all these consumer protection laws, protection of interest of the consumer is one common cord. The interest of the consumer/public in general could not be ignored while granting or refusing injunction. Since it is evident that while the plaintiff is not directly supplying spare parts to the defendant, the defendant claimed that they have ample stock of HCL spare parts, by not allowing the spares to reach market and service centers like that of the defendant, the defendant would certainly be indulging in restrictive trade practice by throttling scope of competition between unauthorised service centers and authorised service centers of the photocopiers. It may be stated again that using genuine original spare parts for repairs would neither amount to infringement of trade mark nor passing off. Firstly, it would increase plaintiffs own market; secondly, the plaintiff would be avoiding aforesaid violations of MRTP Act, and thirdly, users of HCL photocopiers would be having a choice of getting their photocopiers.

10. For the foregoing reasons, I feel that following directions are necessary to protect interest of both the parties:

(i) The defendant shall neither represent that they are the authorised dealers in consumables and spare parts produced by HCL Limited i.e. the plaintiff nor that they are running an authorised service center having been authorised by the plaintiff in any manner.

(ii) The defendants shall further undertake to use only genuine original consumables and spare parts of the plaintiff in maintenance and servicing.

(iii) The defendants shall specifically state in every circular, brochure and advertisement relating to maintenance and contract for HCL products including HCL finesse range of plain papers and copiers that the defendant is neither authorised dealer of consumables and spare parts of HCL nor running an authorised service center of HCL, in capital letters of ordinary size.

(iv) The defendants shall maintain fortnightly accounts indicating the number of the service and repair agreements undertaken by the defendant, material used in repairs and the repair and maintenance charges recovered and shall file such statements every quarterly.

(v) The defendants shall give an undertaking that in case the suit is ultimately decreed against the defendant that they will pay back the amount received in connection with the service and maintenance charges after deducting the cost of the spares and consumables and labour charges and shall reimburse the plaintiff.

11. This application is disposed of accordingly.