The case of K.G. Khosla Compressors Ltd. vs. Khosla Extrakting Ltd. & Ors., decided by the Delhi High Court on June 19, 1985, dealt with an important question of trademark and business name protection. The plaintiff, K.G. Khosla Compressors Ltd., sought a permanent injunction restraining the defendants from using the name "Khosla" in their business entity, arguing that it caused deception and unfairly leveraged their established goodwill. The case revolved around the issues of passing off, corporate misrepresentation, and whether the defendants' use of the name "Khosla" was legitimate or an attempt to mislead investors.

• Factual Background:
  • K.G. Khosla Compressors Ltd. was a well-established company manufacturing air compressors in India.
  • It was part of the Khosla Group, which was recognized in the capital market.
  • The plaintiff claimed exclusive association of the word "Khosla" with their business as a trademark.
  • Defendants, former employees, formed Khosla Extrakting Ltd. in 1984 and attempted to launch a public issue under this name.
  • The plaintiff alleged misrepresentation and misleading investors to capitalize on their goodwill.
  • The plaintiff sought an injunction against the defendants.
• Procedural Background:
  • The plaintiff approached the Regional Director of the Company Law Board under Section 22 of the Companies Act, 1956.
  • The Regional Director directed the defendants to change their company name.
  • The defendants challenged the order in the Delhi High Court.
  • The order was withdrawn due to technical objections.
  • The plaintiff filed a suit in the Delhi High Court for a permanent injunction.
  • The court considered an application for interim relief under Order 39, Rules 1 and 2 of CPC.
• Issues Involved in the Case:
  • Whether the defendants’ use of "Khosla" amounted to passing off and created confusion?
  • Whether the plaintiff had exclusive rights over the name "Khosla"?
  • Whether the defendants had a legitimate basis for using the name?
  • Whether the civil suit was maintainable despite the plaintiff’s prior approach to the Company Law Board?
• Submissions of Parties:
  • Plaintiff:
    • Claimed exclusive association of "Khosla" with their business.
    • Alleged that defendants misled the public and investors.
    • Argued that defendants acted in bad faith to exploit goodwill.
  • Defendants:
    • Argued that one of their directors bore the surname "Khosla."
    • Denied passing off and misleading investors.
    • Pointed out the existence of other companies with "Khosla" in their names.
    • Claimed the plaintiff sought to eliminate competition.
• Discussion on Judgments Cited:
  • Exxon Corporation v. Exxon Insurance Consultants International Ltd. (1981) – Protection of well-known corporate names.
  • Joseph Rodgers & Sons Ltd. v. W.N. Rodgers & Co. (1924) – Restriction on using one’s surname to create confusion.
  • Simatul Chemical Industries Pvt. Ltd. v. Cibatul Ltd. – Preventing deceptive use of company names.
• Reasoning and Analysis of the Judge:
  • Justice D.P. Wadhwa found a prima facie case for injunction.
  • Held that defendants deliberately used "Khosla" to mislead investors.
  • Rejected defendants’ argument that surname usage was legitimate.
  • Ruled that the civil suit was maintainable despite prior Company Law Board proceedings.
• Final Decision:
  • Delhi High Court granted an injunction restraining the defendants from using "Khosla."
  • Defendants were prohibited from entering the capital market under "Khosla Extrakting Ltd."
  • Court found that continued use would harm the plaintiff’s reputation.
• Law Settled in this Case:
  • A company cannot use a deceptively similar name if it creates market confusion.
  • Personal surnames cannot justify misleading branding.
  • Civil courts have jurisdiction over passing-off claims despite Company Law Board proceedings.

Case Title: K.G. Khosla Compressors Ltd. vs. Khosla Extrakting Ltd. & Ors.
Date of Order: June 19, 1985
Neutral Citation: AIR 1986 DELHI 181, ILR (1985) 2 DELHI 416
Court: Delhi High Court
Judge: Hon’ble Mr. Justice D.P. Wadhwa

Disclaimer: The information shared here is intended to serve the public interest by offering insights and perspectives. However, readers are advised to exercise their own discretion when interpreting and applying this information. The content herein is subjective and may contain errors in perception, interpretation, and presentation.

Written By: Advocate Ajay Amitabh Suman, IP Adjutor - Patent and Trademark Attorney
Email: ajayamitabhsuman@gmail.com, Ph no: 9990389539