1. Suit for trademark infringement and passing off dismissed on the ground that the registered proprietor's name was not updated following company conversion and name change. (Para 1 , 2 , 3 )
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1963 Supreme(SC) 76
SUPREME COURT OF INDIA
K. S. HEGDE AND T. K. TUKOL, JJ.
Hindustan Lever Ltd. a company by Shamdas Hassomal Gursahani a Principal Officer, Plaintiffs-Appellants
Versus
Bombay Soda Factory by R. K. and others, Defendants-Respondents.
Regular Appeal No. 145 of 1958, D/-15-3-1963, against decree of Dist. J., Bellary, D/-31-3-1958.
Advocates appeared
U. Subramaniyam and P. Kham Bhatta, for Appellants; D. Venugopalachari and K. R. Gopivallabha Iyengar, for Respondents.
Conversion of a private company to a public company does not alter its legal personality. In trademark law, registration of the proprietor's name is evidence of title, not the source of it; thus, updated registration is not a condition precedent for filing an infringement suit.
Headnote:(A) Indian Companies Act, 1956 - Sections 3, 31, 38 and 44 - Trade Marks Act, 1940 - Sections 35 and 47 - Conversion of a private company into a public company - Legal personality - Alteration of articles of association does not result in the cessation of the existing company nor the creation of a new legal entity; the company continues to be the same legal person. (Paras 4, 5, 6 and 7)
(B) Trade Marks Act, 1940 - Registration of proprietor - Registration of the name of the proprietor does not confer title but serves as evidence of title - A suit for infringement is maintainable even if the change in the name of the registered proprietor is not recorded in the register on the date of the suit, provided the title exists. (Para 9)
Facts of the case:
A company, which had registered a trademark, converted from a private company to a public company and changed its name. A suit for trademark infringement and passing off was filed. The application to record the change of name in the trademark register was made after the suit was filed and effected during its pendency. The trial court dismissed the suit on the ground that the plaintiff was not the registered proprietor on the date of the suit and that the conversion had created a different legal entity.
Findings of Court:
The conversion of a private company to a public company through the alteration of its articles does not change its legal personality. Consequently, there was no requirement to apply for a transmission of title. Furthermore, since registration is merely evidence of title and not the source of it, the failure to update the register before filing the suit does not affect the maintainability of the action.
Issues: Whether the conversion of a private company to a public company changes its legal personality and whether the non-registration of the change of name of the proprietor at the time of filing a suit for trademark infringement renders the suit non-maintainable.
Ratio Decidendi: The court held that under the Companies Act, the alteration of articles to convert a private company to a public company does not affect the legal personality of the company. Regarding the Trade Marks Act, the court ruled that registration is evidence of title, not the conferment of title; thus, the actual owner is entitled to sue for infringement regardless of whether the register reflects the current name at the time of filing.
Result: Appeal allowed.
Legal Category Hierarchy
Table of Contents
2. Whether conversion of a private company to a public company creates a new legal entity requiring registration of title under Section 35, Trade Marks Act. (Para 3 , 10 , 12 )
3. Conversion via alteration of articles does not change legal personality; registration of a proprietor's name is evidence of title, not the source of title itself. (Para 4 , 5 , 6 , 7 , 8 , 9 )
4. Alteration of articles for company conversion preserves legal personality; registration of a trademark proprietor's name is evidence of title, not a condition precedent to suing. (Para 4 , 8 , 9 )
5. Appeal allowed, trial court order set aside, and case remanded for decision on remaining issues. (Para 13 , 14 )
6. Does the conversion of a private company into a public company change its legal personality?
No. Conversion involves an alteration of the articles of association under the Companies Act, which does not cause the company to cease to exist or a new company to be created; the legal personality remains the same. (Para 4 , 5 , 6 , 7 , 8 )
7. Is registration of the proprietor's name under the Trade Marks Act a condition precedent to filing an infringement suit?
No. Registration of the name of the proprietor is merely evidence of title and does not confer title. The right to sue for infringement depends on ownership of the trademark, not the current state of the register. (Para 9 )
8. Which provision of the Trade Marks Act applies when a registered proprietor changes its name without a change in legal personality?
When there is a change in the name of the registered proprietor without a change in legal personality, an application under Section 47 of the Trade Marks Act is used to enter the change in the register. (Para 8 )
9. What is the effect of a merger on the legal personality of the surviving company?
In a merger, the merging companies lose their identity and become one with the surviving company, but the legal personality of the surviving company continues, regardless of changes in assets and liabilities. (Para 12 )
K. S. HEGDE, J.:
The appellants were the plaintiffs in Original Suit No. 4 of 1957 on the file of the learned District Judge, Bellary. They sought injunctions restraining the defendants from infringing their trade mark detailed in the plaint and from passing off their goods as those of the plaintiffs. They also sued for damages for infringement of their rights. Their suit was dismissed on the preliminary ground that the plaintiffs were not entitled to the trade mark on the date of the suit and hence the suit was not maintainable. The trial Court did not go into the merits of the case and therefore, the only question for decision is whether the Court below was right in holding that the suit is not maintainable.
(2) In order to appreciate the riyal contentions advanced at the hearing, it is necessary to set out the history of the right claimed in the suit. Lever Brothers (India) Limited, has been a leading soap manufacturing firm in India for the last several years. One of the soaps manufactured by that Company is the "Sunlight" soap That soap is packed in a waxed paper wrapper carrying a three colour label with a distinctive panelling ink and colour arrangement. The said Company had registered its distinctive label of the "Sunlight" soap under the Trade Marks Act, 1940 . On 8-10-1956, the Hindustan Vanaspathi Manufacturing Co., Private Limited, William Gassage and Sons (India) Private Limited and Joseph Crosfield and Sons (India) Private Limited, merged in Lever Brothers (India) Private Limited as seen from Ex. P-63, the Order of the High Court of Judicature at Bombay. Thereafter, Lever Brothers (India) Private Limited was converted into a "Public Company" on 27-10-1956, as could be gathered from Ex. P-18. Immediately, thereafter the Company changed its name to Hindustan Lever Limited. This change in the name was also effected on 27-10-1956. The present suit was filed on 18-2-1957. On 22-4-1957, Lever Brothers (India) Limited applied to the Registrar of Trade Marks, Bombay, under S. 47 of the Trade Marks Act, 1940 , to enter the change in the name of the registered proprietor of the trade mark referred to above. The change prayed for was effected on 2-8-1957, as could be seen from Ex. P-24. In other words, the change in the name of the registered proprietor of the suit trade mark was effected during the pendency of the suit.
(3) The trial Court came to the conclusion that Lever Brothers (India) Limited is a different legal entity from Lever Brotheres (India) Private Limited; hence, when the right of the Lever Brothers (India) Private Limited was transmitted to the Lever Brothers (India) Limited on 22-7-1956, the registered proprietor, i.e. Lever Brothers (India) Private Limited should have applied to the Registrar under S. 35 of the Trade Marks Act for a change in the name of the registered proprietor; that not having been done, Lever Brothers (India) Limited did not become the owners of the trade mark in question; consequently the plaintiffs did not become the owners of that trade mark; at any rate the plaintiffs were not the owners of the trade mark on the date of the suit. In that view, it dismissed the plaintiffs suit as not being maintainable.
(4) Quite clearly, the Court below has taken an erroneous view of the law. When a "Private Company" is converted into a "Public Company", there is no change in the legal personality of the Company in question. "Private Company" is defined in section 3(iii) of the Indian Companies Act, 1956, as follows:
" Private Company means a company which, by its articles,
(a) restricts the right to transfer its shares, if any;
(b) limits the number of its members to fifty not including
(i) persons who are in the employment of the company, and
(ii) persons who, having been formerly in the employment of the company, were members ot the company while in that employment and have continued to be members after the employment ceased; and
(c) prohibits any invitation to the public to subscribe for any share i
