Incorporation Under the Companies Act Does Not Confer Immunity Against an Action in Passing Off: Madras HC

In a recent judgement, the Madras High Court delivered a significant ruling in the domain of passing off law, confirming a permanent injunction restraining a private limited company from using the name "Kovai Heart Foundation Private Limited" — a name the court found was deceptively identical to that of a prior-user charitable trust operating in the same city and the same field of cardiac care. J

ustice Dr. A.D. Maria Clete dismissed the appeal preferred by Dr. V. Rajendran and M/s. Kovai Heart Foundation Private Limited, confirming the decree of the Principal District Judge, Coimbatore, in its entirety.

The court examined whether corporate incorporation under the Companies Act bars a passing off suit; whether a charitable trust has the legal standing to maintain such an action; whether the plaintiffs established prior user and goodwill; whether the composite name "Kovai Heart Foundation" was distinctive enough to merit protection; and whether the defendants' adoption of the same name in the same field and city constituted actionable passing off.

Corporate Incorporation Is No Shield Against Passing Off

The defendants' central defence was that since M/s. Kovai Heart Foundation Private Limited was a duly incorporated company under the Companies Act, 1956, the plaintiffs' remedy lay only before the authority concerned with company names and not before a civil court. The High Court emphatically rejected this contention.

"The suit, properly understood, is not one for rectification of the register of companies, nor is it founded upon statutory trade mark rights. It is, in substance, a common law action in passing off. The absence of trade mark registration is, therefore, not decisive."

The court relied on the Supreme Court's ruling in N.R. Dongre v. Whirlpool Corporation (1996) 5 SCC 714 for the proposition that goodwill founded upon prior use is protectable, and on Cadila Health Care Ltd. v. Cadila Pharmaceuticals Ltd. (2001) 5 SCC 73 for the principle that the enquiry in passing off is directed to deceptive similarity and likelihood of confusion. The recently decided In re Pernod Ricard India Private Limited v. Karanveer Singh Chhabra, 2025 INSC 981, was also relied upon as reiterating that the basic purpose of a passing off action is to protect goodwill earned by prior use.

"The Civil Court Is Not Sitting in Appeal Over the Act of Incorporation"

The court drew a crisp distinction that is of considerable doctrinal importance for intellectual property practitioners. It held: "Incorporation under the Companies Act does not, by itself, confer immunity against an action in passing off if the corporate name adopted is otherwise likely to invade the goodwill of a prior user. The civil court is not, in such a suit, sitting in appeal over the act of incorporation; it is examining whether the subsequent use of the corporate name constitutes actionable misrepresentation in the law of passing off."

This holding decisively forecloses the argument — frequently raised by defendants in corporate name disputes — that a company's incorporation itself legitimises the use of a name against which a passing off claim lies.

Charitable Trust Has Full Standing to Sue

On the question of maintainability, the defendants contended that a trust cannot claim any right in a name. The court rejected this as well. It clarified that the plaintiffs' case was not that the trust enjoys a statutory monopoly over the expression in question. "Their case is that charitable and related activities were carried on under a particular name and that goodwill became attached to that name. Such a claim can certainly be enforced through those competent to represent the trust, namely its trustees." The suit instituted by the trust represented by its trustees was held to be fully maintainable.

Prior User and Goodwill Firmly Established

The court upheld the trial court's finding that the plaintiffs had established continuous use of the name "Kovai Heart Foundation" from the early 1990s through trust records, communications, pamphlets, and allied materials. The defendants' challenge to Exhibits A13 and A14 — FCRA communications — on the ground that they did not prove the plaintiffs were running a hospital, was dismissed as inconsequential. The court held that in a passing off action, "the decisive question is not whether the plaintiffs had infrastructure or facilities identical to those of the defendants. The real question is whether the name in question had, by use in relation to the plaintiffs' activities, acquired goodwill and public association." Goodwill may attach to charitable and medical activities regardless of institutional scale, the court held.

"Private Limited" Suffix Does Not Save the Defendants

On the test of confusion, the court applied the well-established standard of the impression left on a person of average intelligence and imperfect recollection. It found that the dominant and essential part of the defendants' name was identical to that of the plaintiffs.

"The addition of the corporate suffix 'Private Limited' does not materially distinguish the defendants' name from that of the plaintiffs. In ordinary use and recollection, the public is likely to identify the defendants by the same principal expression."

The likelihood of confusion was found to be accentuated by two facts: both parties operated in the field of cardiac care, and both operated in the same city, Coimbatore. "In such a setting, an ordinary member of the public may reasonably assume a connection, association, sponsorship or continuity between the defendants' establishment and the plaintiffs' organisation. That is sufficient in law."

Personal Reputation of Defendant-Doctor Is Irrelevant

The first defendant laid considerable emphasis on his standing as a reputed cardiologist, arguing that patients approached his hospital because of his personal professional reputation and not out of any confusion with the plaintiffs' trust. The court brushed aside this contention with precision: "That circumstance may explain why patients approach the second defendant hospital. But it does not answer the legal objection arising from adoption of a name already associated, according to the plaintiffs, with their prior activities. The question is not whether the defendants are professionally competent or reputed; it is whether the name adopted by them is likely to mislead as to source, connection or association."

Composite Name Protected Despite Geographical Component

The defendants' argument that "Kovai" being a geographical expression referring to Coimbatore could not be exclusively claimed by anyone was equally dismissed. The court clarified that the plaintiffs were not seeking an abstract monopoly over a geographical word. "The dispute here is not with respect to the word 'Kovai' alone. The relevant expression is the composite name 'Kovai Heart Foundation'. Distinctiveness in passing off law may reside in the totality of the expression and in the goodwill which that expression has come to denote in the minds of the public."

Delay and Acquiescence — Plea Rejected

The defendants also pleaded delay in filing the suit and acquiescence by the plaintiffs. The court rejected both limbs. "Mere delay in approaching the Court does not by itself defeat a claim for injunction where the complained-of use is continuing and the likelihood of deception persists. Acquiescence, in law, requires something more than delay; it requires conduct amounting to encouragement or assent. No such case has been established."

Date of Decision: March 13, 2026