1. This appeal has been Sled by the plaintiffs against an order of the Additional District Judge, Ludhiana, dated July 25, 1979.
2. Briefly, the case of the plaintiff appellants is that Parveen Chander plaintiff No. 1 entered into partnership with defendant No, 1 vide partnership deed dated February 5, 1974 and started a firm in the name and style of Shiva Forging for manufacturing Drop Forged Hand Tools. It is stated that the firm manufactured and sold Tools under the trade mark of Shiva. It is further aver red that the firm spent huge amount in giving publicity. The said firm was dissolved on September 7, 1878, vide dissolution deed of even date. It is alleged that defendant No. 1 transferred a1P rights in the partnership including assets, liabilities, good will, trade mark et cetera to plaintiff No. 1.
3. It is next averred that defendant No. 1 after retirement from the said partnership-started a firm in the name and style of Shiva Forgings for manufacturing Drop Forge Hand Tools et cetera, and started its business is Ludhiana, it is then stated that he is illegally using the name of Shiva with the sole object of passing at his goods as the goods of the plaintiff. Consequent)y, he (plaintiff No. 1) and his firm filed a suit for permanent injunction praying that defendant No. 1 along with defendant No. 2 be restrained to use the name of his firm as Shiva Forgings, passing off his goods as such and for rendition of accounts.
4. During the pendency of the suit, the plaintiffs filed an application on the aforesaid allegations and played that during the pendency of the suit defendants be injuncted to work under the name and style of Shiva Forgings and pass off their goods as those of the plaintiffs, The application was dismissed by the learned Additional District Judge on the ground that the balance of convenience lay in not stopping the business of the defendants during the pendency of the suit but putting them to terms. He therefore, directed the defendants to furnish security in the sum of Rupees 30,000/- for payment of profits made by them in case the plaintiffs ultimately succeeded in the suit. He also directed the defendants to maintain true accounts of the business. The plaintiffs have come up in appeal against that order to this Court.
5. It is contended by the learned counsel for the appellants that the partnership between the parties had been dissolved by a dissolution deed dated September 7, 1978 and appellant No. 1 was given all the assets, liabilities, goodwill et cetera by virtue of that document. It is further stated that respondent No. 1 was paid Rs. 1,82,000/- and one Premier President Car, of his share in the partnership business and goodwill. He argues that sometime thereafter the respondent started the same business which was being carried on by the plaintiff, in the same name i. e., Shiva Forgings, in which the appellant was carrying of his business, According to the learned counsel after the sale of the goodwill by the respondent in favour of the appellant, he could not carry on the business in that name. He has also submitted that the appellant had filed an application for registration of the trade name and after the decision (filing?) of the appeal the trade name has been registered. In the circumstances, he urges that the balance of conveniences is in granting the temporary injunction in favour o! the appellant.
6. On the other hand, the learned counsel for the respondents has forcefully argued that in addition to Rupees 1,82,000/- and one Premier President Car, the appellant had agreed to give Rs. 78,000/- to respondent No. 1 as his share of the partnership firm. He argues that the appellant did not like to pay that amount and entered into a fresh agreement with the respondent, where by he allowed him to carry on the business in the name of Shiva Forgings. He has also referred to a letter dated September 8, 1978, alleged to have been given by the appellant to the respondent stating that he could start his business in the trade name and style of Shiva Forgings.
7. I have given s thoughtful consideration to the arguments of the learned counsel. It is not disputed that the partnership firm was dissolved by a dissolution deed dated September 7, 1978. In the dissolution deed it is specifically stated that the accounts of the assets and liabilities of the partnership had been determined and that the plaintiff had taken the business of the said partnership including the assets lia6ilities and goodwill and he would pay to the retiring partner i. e., defendant No. 1 e sum of Rs. 1,82,000/- and a Premier President Car. It is further stated that the aforesaid amount would be paid within one month from the date of the dissolution i. e., upto Oct. 7, 1978. The amount was paid in accordance with terms of the agreement on October 6, 1978, vide receipt of even date, Photostat copy of the receipt has been attached. The plaintiff also delivered a Fiat Car and transferred the same in the name of defendant No. 1. From the aforesaid documents and conduct of the appellant it is evident that he had purchased the goodwill of the partnership between the parties. Thereafter, respondent No. 1 could not start a similar business in the name of Shiva Forgings. He, however, immediately thereafter started that business. The appellant had no other alternatives but to institute a suit against him for injunction, which he filed without delay in the first weeks of March, 1979.
8. The respondents have produced e letter dated September 8, 1978, alleged to have been given by the appellants to respondent No. 1, the said letter has been denied by the appellants. It is stated in the letter that in case respondent No. 1 started his business in the came and style of Shiva Forgings, or with any addition or change, alone or along with any other person, he could do so. The dissolution between plaintiff and respondent No. 1 took place on September 7, 1978. This letter is alleged to have been written on September 8, 1978. By that date the appellants had not paid the amount of Rs. 1,82,000/- to respondent No. 1, as was agreed to be paid by them to respondent No, 1. That amount was paid through a separate receipt on Oct, 6, 1978, as already stated above. In that receipt, there is no mention about the execution of the letter dated September 8, 1978. In case such a letter had been issued, the respondent would have insisted about mentioning of that letter in it, An argument has been raised by the counsel for the respondents that Rs. 78,000/- was to be paid by the appellants to respondent No. 1 in addition to Rs. 1,82,000/-: There is, however, no mention about that amount in the dissolution deed. In case there was any such settlement it would have found place in that document. A plea was taken by respondent No. 1 in the written statement that the appellant had issued pay orders for payment of Rs. 78,000/- on October 7, 1978 which he got prepared in order to make the payment to him from Syndicate Bank, Ludhiana In replication the appellant has stated that respondent No. 1 was desirous of giving up his rights in Shed No. E-67 along with electric and mechanical fittings and also in Car No. ADR 3999 against a sum of Rs. 88,000/-. That offer was accepted by him and he got prepared pay orders in the amount of Rs. 1,90,000/-. He further says that one day before the date fixed for payment the said respondent refused to part with the Shed No. E-67 and the Car and to accept the pay order of Rs. 88,000/- and consequently, he got the pay orders for Rs. 88,000/- cancelled. Without going into the merits of the pleas in details at this stage, it is sufficient to say that the version of the appellants appears to be more probable. Moreover, the amount of pay orders was Rs. 88,000/- whereas respondent No. 1 stated it to be Rs. 78,000/-. That further falsifies the version of respondent No. 1.
9. No doubt granting of ad interim injunction is discretionary but the discretion has to be exercised on sound judicial principles. In case it is established: that the plaintiff has prima facie case that he is likely to suffer irreparable injury before his legal right can be established and that the mischief done to him by withholding the injunction as greater than that which is likely to arise from granting it, then Courts grant ad interim injunctions. In the present case, in my view, the plaintiffs have got a prima facie case as defendant No, 1 hag charged the price of the goodwill from them. Later he started business in the same name in which it is carried on by plaintiffs No 1. It may also be pointed out that the trade name in which appellant Number 1 is carrying on business has been registered, though subsequent to filing of the suit. The firm of plaintiff No. 1 is an old firm and the said plaintiff is likely to suffer an irreparable injury in case respondent No. 1 carries on the business in the name of respondent No. 2 as many of the customers of the plaintiffs may become customers of the defendants and it may be impossi6le for the plaintiffs to have them back later on. Thus, it ad interim injunction is withhold great damage will be caused to the goodwill and business of the plaintiffs. The conduct of defendant No. 1 is not above board as he' backed out of the conditions given in the deed of dissolution. It is further worth mentioning that the plaintiffs have come to the Court without delay. Thus, the balance of convenience is in favour of plaintiffs. The counsel for the respondents has sought to argue that the defendants are preparing the Drop Forged Hand Tools in the trade name of Liberty, Handa, Dragon, etc, and the appellants are doing so in the name of Shiva, Diamond etc. He submits that in the aforesaid situation, the customers cannot be misled. I am not convinced with this contention of the counsel. The name and style in which a person carries on business is an important factor when a customer purchases goods. In most of the cases the customer only looks to the name of the firm by whom the goods are manufactured and not the trade name of the goods. From the above discussion, it is evident that the plaintiffs have satisfied all the conditions, which are necessary to grant ad interim injunctions.
10. 1n the aforesaid view I am fortified by the observations in Ishar Das v. (Firm) Bhaion Ki Dokan, AIR 1940 Lah 39 and M/s. National Carbon Co. (India) Ltd. v. Raj Kumar, AIR 1954 All 218. In Isher Das's Case (supra) the plaintiff was carrying on the business in the name of Bhaion Ki Dokan. The defendant started business in the name of Punjabi Bhaion Ki Dokan. The plaintiff instituted a suit for injunction wherein ad interim injunction was claimed and granted by the trial Court. Affirming that Order, the High Court observed that where the names of one particular individual or firm has gained universal reputation in connexion with a particular class of goods and a second person enters the trade under a name which is the same or similar and which is likely to cause confusion in the minds of the intending purchasers and the harm thus caused is prima facie such as no compensation would be enough to counter balance it, Court can restrain that person from trading under a name which is similar by granting injunction.
11. In National Carbon Company's Case (supra) after coming to the conclusion that the balance of convenience was in favour of the plaintiff, the Court held that the mere tact that the defendant undertakes to keep account would be no safeguard against possible injury to plaintiff's trade. In that case, the trial court had not granted injunction to the plaintiff. On appeal, the finding was reversed and a temporary injunction was granted.
12. The learned counsel for the respondents made reference to Prabhu Das Suri v, Law Reporters, Ltd. AIR 1933 Lah 448, Hari Chand Anand & Co v Singer Manufacturing Co., AIR 1933 Lah 1046, Firm Gaylord v. Kwality Restaurant, 1962 Cur LJ 517 and Prem Singh v. Gram Panchayat Phararu, 1976 Punj LJ 297, Suffice it to say that the aforesaid cases are distinguishable. It will also be relevant to point out that Prabhu Das Suri's case and Hari Chand Anand & Company's case (supra) have been noticed by the learned Judge it Isher Das's case (supra).
13. For the aforesaid reasons, I accept the appeal and grant ad interim injunction as prayed for. Respondents are, however, granted 13 days' time comply with the order. No order as to cost.
14. Appeal allowed.