Dabur India Ltd v. M/s Colortek Meghalaya Pvt. Ltd

RAJIV SHAKDHER, J.

IA No. 13875/2009 (O. 39 R. 1&2 of CPC by pltf.)

1. The plaintiff’s application under Order 39 Rule 1 & 2 of the Code of Civil Procedure, 1908 (hereinafter referred to as the “CPC”) seeks order of an ad-interim injunction against the defendants, their Directors, agents and assigns in respect of telecast of their advertisement. “Good Knight Naturals Mosquito Repellant Cream”. The short ground for seeking an injunction is that the impugned advertisement disparages plaintiff’s mosquito repellant cream, marketed under the brand name “ODOMOS”.

2. The impugned story board being pertinent is extracted herein below:-

3. The plaintiff which is as per its own averments in the plaint is the manufacturer of the pharmaceutical products, toiletries, ayurvedic and other edificial preparations, acquired the business of mosquito repellant cream only on amalgamation of M/s Balsara Hygiene Products Ltd along with two other companies; namely, M/s Balsara Home Products Ltd. and M/s Besta Cosmetic Ltd in September, 2006. The plaintiff claims that its product ODOMOS is an extremely popular brand which enjoyed 86.5% of market share in the year 2007-08 and 84.4% in the year 2008-09. The annual sales figure and the amount spent on advertising its products “ODOMOS” as set out in the plaint is as follows:-

4. It is further averred that the impugned advertisement was aired on the Zee News Channel on 8.10.2009 and hence, the necessity to institute the present action.

5. Mr. Neeraj Kaul, Sr. Advocate in support of the plaintiff’s case, submitted as follows:-

(i) given the fact that the plaintiff enjoys 84-86% of the market share of the mosquito repellant cream business – the impugned advertisement is targeted towards the plaintiff;

(ii) it makes no difference that the advertisement makes no direct reference to the plaintiff’s product as disparagement can be both “overt” and “covert”;

(iii) it is well settled that an injunction will be granted even where disparagement is generic in nature, that is, where goods are slandered as a class;

(iv) the impugned advertisement has the effect of denigrating the plaintiff’s product, in as much as, it insinuates that it causes rashes and allergies; 5.1 In order to make good his submissions Mr. Neeraj Kaul relied upon the following judgments:-

Eureka Forbes Ltd. Vs. Pentair Water India Pvt. Ltd. 2007 (35) PTC 556 (Karn.); Karamchand Appliances Pvt. Ltd. Vs. Sh. Adhikari Brothers & Ors. 2005 (31) PTC 1(Del.) [LQ/DelHC/2005/1004] ; Dabur India Ltd. Vs. Colgate Palmolive India Ltd. 2004 (29) PTC 401(Del.) [LQ/DelHC/2004/969] ; Dabur India Ltd. Vs. Emami Ltd. 2004 (29) PTC 1 (Del.) [LQ/DelHC/2004/608] Dabur India Ltd. Vs. Wipro Ltd FAO(OS) 204/2006 dated 31.05.2006 and Dabur India Ltd. Vs. Wipro Ltd. FAO(OS) 204/2006 dated 29.01.2007

6. The defendant on the other hand in its reply to the captioned application has broadly averred that both the suit and interlocutory application ought to be dismissed on the ground of :-

(i) lack of cause of action;

(ii) the advertisement only adverts to a statement of fact;

(iii) there is neither any intent nor is there any disparagement in point of fact;

(iv) after extensive research it has manufactured a mosquito repellant cream – sold under the brand name “Good Night Naturals” which mitigates chances of getting rashes or allergy;

(v) there is no comparison made in the impugned advertisement with the plaintiff’s product or for that matter any reference to the plaintiff’s product;

(vi) Lastly, the fact that advertisement seeks to bring to fore the advantages of a mosquito repellant cream comprising of natural additives as against the mosquito repellant cream which does not have such additives cannot be termed as one disparaging the product of the plaintiff.

7. Mr. Dushyant Dave, learned senior Advocate buttressed the grounds of opposition taken in the reply with the following:-

(i) the plaint does not disclose a prima facie case of disparagement;

(ii) Disparagement is, in sum and substance a tort of slander of goods. In order that an action is brought home successfully the plaintiff will have to at least make an averment that firstly, the impugned statement in the form an advertisement is false; secondly, there is a clear intent to harm the defendant; and lastly, there is damage caused by such slanderous action of the defendant;

(iii) there is no concept in law of generic disparagement A legislative indicator of the same is Section 36A(x) of the Monopolies Restrictive Trade Practices, 1969 (MRTP)—which speaks of disparagement of specific goods;

(iv) the plaint is not accompanied by even a single affidavit of a consumer to demonstrate effect of the impugned advertisement on him;

(v) Advertising is a form of commercial speech which is protected by the provisions of Article 19(1)(a) of the Constitution of India. No injunction can issue unless a clear case of disparagement of the plaintiff’s goods is set up; and

(vi) Lastly, the impugned advertisement runs for 30 seconds- if a case of disparagement has to be made out by a process of reasoning- it is not a case of disparagement.

7.1 In support of his submissions Mr. Dushyant Dave relied upon the following:-

Clerk and Lindsell on Torts, 16th Edition, Chapter 20-

“Malicious Falsehood, Slander of Title, Slander of Goods and other Varieties; Halsbury’s Law of England, 4th Edition, Volume 28- “Malicious Falsehood”; Ratanlal Dhirajlal’s The Law of Torts, Ratanlal Ranchhoddas and Dhirajlal Keshavlal Thakore, 23rd Edition, 1997; The law of unfair Competition, Trademarks and Monopolies, Rudolf Callman, 4th Edition, Vol 2; Tata Press Ltd vs Mahanagar Telephone Nigam Limited, AIR 1995 SC 2438 [LQ/SC/1995/754] ; Colgate Palmolive vs Hindustan Lever Limited, (1999) 7 SCC 1 [LQ/SC/1999/758] ; Godfrey Phillips India vs Ajay Kumar, (2008) 4 SCC 504 [LQ/SC/2008/820] ; M. Balasundram vs Jyothi Laboratories and Anr., (1995) 82 Comp Cases 830; Reckitt and Coleman India Ltd vs Jyothi Laboratories Ltd, 1999 CTJ 107 (MRTPC); Pepsi Foods Ltd & Ors vs Bharat Coca Cola Pvt Ltd, (1999) 81 DLT 122; Reckitt Benckiser (India) Ltd vs Naga Ltd & Ors 104 (2003) DLT 490 [LQ/DelHC/2003/54] ; Godrej Sara Lee Ltd vs Reckitt Benckiser (i) Ltd, 128 (2006) DLT 81 [LQ/DelHC/2006/519] ; Dabur India Ltd vs Wipro Ltd 129 (2006) DLT 265 [LQ/DelHC/2006/724] ; White vs Mellin (1895) AC 154 HL; Reckitt & Colman of India ltd vs Kiwi T.T.K. Ltd, 1996 PTC (16) 393 (Del); Reckitt & Colman of India ltd vs M.P. Ramachandran & Anr, 1999 PTC (19) 741 (Cal)

REASONS

8. The law on the subject of disparagement atleast in this court has obtained certain defined contours. Therefore, what is to be essentially seen in the light of principles enunciated in these judgments is whether the defendant in issuing the impugned advertisement has, at least prima facie, committed a tort of slander of plaintiff’s goods. Broadly, the principles being :-

(i) Puffery is permissible eventhough it results in extolling the virtues of ones own goods- which may not be quite in accord with reality. A trader cannot most certainly denigrate a rival trader’s goods. [See Reckitt & Colman of India ltd vs M.P. Ramachandran & Anr, 1999 PTC (19) 741 (Cal)]

(ii) comparative advertisement is permissible as long as it does not attain negative overtones; [see Godrej Sara Lee Ltd vs Reckitt Benckiser (I) Ltd, 128 (2006) DLT 81 [LQ/DelHC/2006/519] and Dabur India Ltd vs Wipro Ltd 129 (2006) DLT 265 [LQ/DelHC/2006/724] ]

(iii) Generic disparagement being tortious, it makes no difference whether it is “overt” or “covert” for it to be held as tortious. In that sense, generic disparagement falls foul of the law and can be injuncted. [See Dabur India Ltd. Vs. Colgate Palmolive India Ltd. 2004 (29) PTC 401(Del.) [LQ/DelHC/2004/969] , Dabur India Ltd. Vs. Emami Ltd. 2004 (29) PTC 1 (Del.) [LQ/DelHC/2004/608] and Karamchand Appliances Pvt. Ltd. vs Sri Adhikari Bros. & Ors. 2005 (31) PTC 1 (Del)] [LQ/DelHC/2005/1004]

(iv) Truth is a complete defence to a charge of tort of defamation or slander of goods;

(v) Advertising is a form a commercial speech and hence, protected under the provisions of Article 19(1) (a) of the Constitution; which will have to adhere reasonable restrictions. (See Tata Press Ltd vs Mahanagar Telephone Nigam Limited, AIR 1995 SC 2438 [LQ/SC/1995/754] )

8.1 As an adjunct to the above, it may not be out of place to bear in mind that the actions, like the present kind, are in the nature of “trade libel”. The tort of the trade libel is variedly referred to as slander of goods, malicious falsehood or even injurious falsehood. It appears that in recent times courts have been using the expression of -malicious falsehood- to describe a tort of the kind involved in the present case. The reason perhaps is that the expression of “slander goods” or “trade libel” presents a narrower scope of the tort which essentially is tailored to protect the financial interest generally and not commercial interest. For a plaintiff to succeed in an action based on malicious falsehood, the necessary ingredients are:

(i) a false statement is made which is calculated to cause financial damage;

(ii) The statement is made maliciously with an intent to cause injury;

(iii) The impugned statement has resulted in a special damage unlike in defamation in which the falsehood of the statement is presumed, and it is for the defendant to prove that the statement is true.

8.2 Given the ingredients, a plaintiff can succeed in an action only if he is able to prove malice; the burden of which is on him.

8.3 Therefore, the court is required to do a balancing act, in as much as, while every attempt is made to safeguard the financial interest of the plaintiff the interests of the defendant/trader are also borne in mind so that he is in a position to inform the public at large that his goods are available in the market which have certain advantages over the goods of the plaintiff/trader. Essentially the courts are guided by the fact that competition is good, and healthy competition enures in the favour of the public, i.e., consumer. It is this underlying philosophy, which motivates the courts to zealously protect commercial speech as a fundamental right under Article 19(1) (a) of the Constitution. (See Kerly’s Law of Trade Marks and Trade Names 14th Edition pages 613-615)

8.4 Recent trends have shown that the articles even in science journals commenting on the efficacy of goods manufactured by large multinational companies are sought to be shut out through medium of courts. While an aggrieved party’s right to seek recourse to law cannot be questioned, interest of the consumers to know must be guarded - even if the dissemination of information is by way of an advertisement which exaggerates the virtues of the traders goods. Public debate is good. The only caution that the defendant-trader has to bear in mind is that his advertisement does fall within the four corners of what constitutes in law malicious falsehood. Consequently, the courts are slow to grant interim relief if the defendant has set up an arguable case that the impugned statement is true. The courts are not ordinarily a forum which should determine as to whether the plaintiff’s or the defendant’s goods or services are better.

8.5 The three English cases cited before me; White vs Mellin (1895) AC 154 HL, The Royal Baking Powder Company vs Wright Crosssley & Co. (1901) 18 R.P.C. 95 and De Beers Abrasive Products Ltd. & Ors. Vs International General Electric Co. of New York Ltd. (1975) 2 ALL ER 599, seem to in nut shell lay down the following principles: (i) Trader is entitled to say his goods are best in the world. In doing so, he can compare his goods with another. (ii) While saying that his goods are better than those of the rival traders he can say that his goods are better “in this or that or other respect”. (iii) Whether the impugned statements made to disparage the rival trader’s goods, is one which would be taken “seriously” by a “reasonable man”. A possible alternative to this test would be whether the defendant has pointed out the specific defect or demerit in the plaintiff’s goods. (iv) A statement by the defendant puffing his own goods is not actionable.

8.6 In so far as the third (iii) conclusion is concerned the judgments of this court on the issue of specific defect or demerit is at variance. Therefore, this aspect I need not touch upon further as I am bound by those judgments. Suffice it to say a similar issue arose in Schulke and Mayr U.K.Ltd. Vs. Alkapharm U.K.Ltd. (1999) F.S.R. 161 wherein the court refused an injunction since there was no reference to the plaintiff’s goods in the impugned statement.

9. Let me now examine the facts of the present case in the light of the principles enunciated by the judgments cited before me. Both the plaintiff and the defendant manufacture a mosquito repellant cream. The active ingredient in both the plaintiff well as the defendant’s product is “N, N-Diethyl benzamide” – a chemical synthetic. In the course of submission it also came through that both the plaintiff’s product “ODOMOS” and the defendant’s product “Good Night Naturals” contains an ingredient known as “Oil of Citronella”- which is a pesticide used as an animal or insect repellant. Material filed with reply and handed over in court seems to suggest that it causes allergy and rashes. Similarly, at least two laboratory reports produced by the plaintiff suggest that the plaintiff’s product is safe for human use on an “acute basis”. The point of difference in the two products according to the defendant is that since its product is milk protein based, the likelihood of rashes and allergy is greatly diminished- a virtue it seeks to extol. The defendant cannot obviously disparage mosquito repellant creams generally because what is produced by it is also a mosquito repellant cream- the difference is, according to the defendant, in the additives. This is quite clear from the following utterances of the model where she says that “if you apply them (reference is to mosquito repellant creams) it’s a problem and if you don’t even then it is problem”. (emphasis is mine). Thus, there is an attempt on the part of the defendant to persuade the consumers to buy its mosquito repellant cream with its proclaimed additives to avoid risk of allergies and rashes.

9.1 The statement made by the defendant may be an idle boast or puffery but it certainly does not constitute disparagement. The defendant cannot generally be seen to disparage mosquito repellant creams because it manufactures the same as well. There is another way of looking at it. Suppose the defendant were to say that Good Night Naturals is a milk protein based product which does not cause allergy and rashes, would that amount to disparagement The answer would be a clear no. If that be so, merely because it says the same thing in a more round about manner- which is “if you apply you get rashes, there is a risk of allergy and top of that it is sticky and if you don”t then it is fun time for mosquitoes…….”- is not in my view a statement which disparages the rival’s product.

10. In an action for malicious falsehood the plaintiff must necessarily plead and prove the ingredients of malicious falsehood, which are:

(i) that the impugned statement is untrue;

(ii) the statement is made maliciously, that is, without just cause or excuse;

(iii) The plaintiffs have suffered special damage thereby. [See Royal Baking Powder Company (supra)]

10.1 Mr. Dave, learned senior counsel for the defendant is perhaps right in submitting upon a perusal of that the pleadings it does appear that there are no pleadings with respect to the impugned advertisement having been taken out by the defendant with a malicious intent to cause injury and/or damage to the plaintiff. It is trite law that every disparagement of a rival trader’s goods is not actionable in law. However, that is not the scope of captioned application. This aspect of the matter will be dealt with in appropriate proceedings. 10.2 The other submission of Mr. Dave that the plaintiff is not entitled to relief sought for: on account of the fact that no evidence has been filed by the plaintiff in the form of an affidavit of the consumer(s) or a survey report of the consumer(s) generally to demonstrate prima facie the impact of the impugned advertisement on them; I am of the view that the said submission of the learned counsel for the defendant cannot be accepted at this stage for disposal of a motion for interlocutory relief. At the trial the plaintiff will be entitled to submit requisite evidence provided as observed above, it is so pleaded. At this stage the best course open would be for the court to step into the shoes of a “reasonable- and “prudent man” and assess for itself the impact of the impugned advertisement. This is not to say that where evidence of a consumer(s) is filed, that the court gives up this role. The court’s intercession at every stage is crucial, more so, at the interlocutory stage.

10.3 Therefore, in coming to the conclusion, which I have, I have examined the impugned advertisement and the result is that I am of the view that impugned advertisement does not fall prima facie within the tort of “malicious falsehood”. The defendant has set up an arguable case. There is a possibility that the submission which is even if it is assumed is directed towards the plaintiff, is true. This is apart from my reasoning hereinabove that I am not persuaded to hold that the impugned advertisement is directed against the plaintiff.

11. For the reasons given above, the application is dismissed.

CS (OS) 2029/2009

12. The defendant shall file the written statement within two weeks. Replication, if any, be filed before the next date.

13. List before the it. Registrar on 27.04.2010 for completion of pleadings, filing of original documents and admission/denial, thereof.