Advertisement to Misleading Advertisement | Horlicks Ltd. v. Zydus Wellness Products

Introduction

In a largely capitalistic economy, advertisements are one of the most important sources of creating awareness about various products. We may have shifted our reliance from advertisements in print media and televisions to advertisements on social media, however, advertisements continue to remain the largest creator of demand among consumers. Companies continue to employ the most innovative techniques to woo their customers and boost sales. While attempting to do so, corporates often tend to promote their brand as being superior to their competitor’s.

Over the course of this article, we examine the recent decision of the Delhi High Court (“the High Court”) in Horlicks Limited  v. Zydus Wellness Products Limited[1]  (“Horlicks case”), where the High Court has dealt with the law relating to misleading advertisements and disparagement.

Article 19 and Commercial Speech

Article 19(1)(a) of the Constitution guarantees the right to freedom of speech and expression to all citizens of India, and the essential corollary to the same is the right to be informed and access to information. In  Romesh Thappar v. State of Madras[2], the Supreme Court held that Article 19(1)(a) includes the freedom of press, however, it was in Indian Express Newspaper v. Union of India[3] that the  Supreme Court  held that commercial speech is protected under the ambit of free speech and expression under Article 19 and  the Supreme Court  observed that “We are of the view that all commercial advertisements cannot be denied the protection of Article 19(1)(a) of the Constitution merely because they are issued by businessmen and its true character is detected by the object for the promotion of which it is employed.”

The above position was elaborated upon in Tata Press Ltd v. Mahanagar Telephone Nigam Ltd.[4]  (“Tata Press”), wherein the Supreme Court observed the right of the consumer as a recipient of commercial speech by stating, “An advertisement giving information regarding a life-saving drug may be of much more importance to the general public than to the advertiser who may be having purely a trade consideration. Article 19(1)(a) not only guarantees freedom of speech and expression, it also protects the rights of individuals to listen, read and receive the said speech.” Further, the  Supreme Court  also held that misleading and deceptive advertising would not fall within the protection of Article 19.

The law relating to misleading advertisement

 As evident from the name, a misleading advertisement is one that deceives, manipulates or is likely to deceive or manipulate the consumer. These advertisements have the ability to cause serious damage to the consumers, as well as competitors and hence are required to be restrained. The courts, while deciding various cases, have tried to strike a balance between protecting the right to commercial speech and the interest of consumers and competitors.

In the recent Horlicks case[5], the High Court passed an interim order restraining Zydus from telecasting its advertisement comparing Complan to Horlicks on the grounds that the same was misleading and disparaging.

 Horlicks Limited  v. Zydus Wellness Products Limited

Horlicks Limited (“Horlicks”) approached the Delhi High Court, seeking a permanent injunction restraining Zydus Wellness Products (“Zydus”) from telecasting its advertisement, which showed that one glass of Complan (a Zydus Product) is equivalent to two glasses of Horlicks. The advertisement in contention was being telecast on multiple channels in English, Bengali and Tamil. Aggrieved by the advertisement, Horlicks approached the High Court on the ground that the advertisement was misleading and amounted to disparagement.

Zydus, on the other hand contended that the advertisement was not misleading as the information provided was accurate and was subject to the recommended serving size of both the drinks. A suit on similar grounds was filed by Horlicks for an advertisement published by Zydus in print media. The High Court had granted an interim injunction, restraining Zydus from publishing the advertisement, however, the injunction was vacated, when Zydus, voluntarily modified the advertisement, by including the disclaimer about the serving size and undertook to only publish the modified advertisement.

While arriving at a decision on the interim relief, the High Court analysed and relied upon the plethora of judgments on misleading advertisements, disparagement and law governing publication of advertisements on television, including:

(i) Reckitt & Colman of India Ltd. v. M.P. Ramchandran[6], wherein the Calcutta High Court held that a seller is allowed to declare that his goods are the best or better than that of his competitor’s, despite the said declaration being false. While making such declaration, he may also compare the advantages and disadvantages of his products and that of the competitors; however, the seller is not permitted to defame the goods of his competitors and if there is no defamation, the competitor will have no cause of action to file a case of misleading advertisement and disparagement.

(ii) Dabur India v. Colortek Meghalaya Pvt. Ltd. [7] (“Dabur India”), wherein the Delhi High Court laid down the following guiding principles while dealing with the issue of misleading advertisements:

  • Advertisements are protected under Article 19(1)(a) as commercial speech;
  • An advertisement must not be false, misleading or deceptive;
  • However, there are certain cases where the advertisement must not be taken as false, but as a glorious representation of one’s own product; and
  • Only when the impugned advertisement goes beyond glorifying its product, and is deceptive and misleading, the protection under Article 19(1)(a) would not be available.

The High Court while dealing with the principles on law of disparagement laid down in Pepsi Co. Inc. v. Hindustan Coca Cola Ltd. [8], held that:

(1) The intent of the advertisement – this can be understood from its story line and the message sought to be conveyed. (2) The overall effect of the advertisement – does it promote the advertiser’s product or does it disparage or denigrate a rival product? In this context, it must be kept in mind that while promoting its product, the advertiser may, while comparing it with a rival or a competing product, make an unfavourable comparison, but that might not necessarily affect the story line and message of the advertised product or have that as its overall effect. (3) The manner of advertising – is the comparison by and large truthful or does it falsely denigrate or disparage a rival product? While truthful disparagement is permissible, untruthful disparagement is not permissible.”

(iii) In Havells India Ltd. v. Amritanshu Khaitan[9] the Delhi High Court clarified the difference between comparative advertising and misleading advertising and disparagement. It observed that comparative advertising is healthy and encouraged in the spirit of competition, however, disparagement is not; and a cause of action shall arise in case of a misleading advertisement.

(iv) In Gillette India Limited v. Reckitt Benckiser (India) Private Limited[10], the Madras High Court noted the difference between electronic media and print media, while deciding cases of disparagement. In doing so, it observed that electronic media has greater power to leave a lasting impression in the minds of the viewers as compared to print media and held that, “catchy phrase, a well enacted skit or story line, or even distinctive sounds or distinctive collocation of colours make a lasting impact and more so, when viewed repeatedly.

The High Court while relying on the abovementioned cases held that the impugned advertisement was misleading and disparaging, even though the disclaimer was provided in the advertisement, the same was not clear and the advertisement created an impression that one cup of Complan was equal to two cups of Horlicks, without considering the serve size. The High Court, based on the above observation, held that the balance of convenience was in favour of Horlicks, who would suffer an irreparable injury if telecast of the impugned advertisement was not restrained and hence, granted the relief of interim injunction.

Conclusion

The law on misleading advertisement is ever evolving and the HC judgement in  Horlicks case[11] is an addition to the long list of judgements on misleading advertisement. It is interesting to note that the High Court allowed the circulation of the same advertisement in print media, however, restrained the telecast of the same. We understand that the differentiation between print media and electronic media lies in their impact on the audience. Since electronic media uses a combination of audio-visual techniques, it is more likely to influence its audiences and hence requires stricter regulations. Hence, the same advertisement was allowed to be published in print media, however, restrained from being telecast on television.

Additionally, an analysis of the case laws referred above shows that the law relating to misleading advertisements is extremely subjective and a small alteration in the fact may affect the outcome. It appears that while it is not disparaging and misleading for a seller to compare his products with his competitor’s and even claim that his product is better than those of his competitor’s, it may be disparaging and misleading if the competitor’s goods are shown to be inferior to the seller’s.


*Partner, Cyril Amarchand Mangaldas, Advocates & Solicitors

**Associate, Cyril Amarchand Mangaldas, Advocates & Solicitors

***Associate, Cyril Amarchand Mangaldas, Advocates & Solicitors

[1] Horlicks Limited  v. Zydus Wellness Products Limited, CS (Comm) 464 of 2019, decided on 20-5-2020.

[2] Romesh Thappar v.  State of Madras, 1950 SCR 594

[3] Indian Express Newspapers (Bombay) (P) Ltd. v. Union of India,  (1985) 1 SCC 641

[4] Tata Press Ltd v. Mahanagar Telephone Nigam Ltd, (1995) 5 SCC 139.

[5] Horlicks Limited v Zydus Wellness Products Limited, CS (Comm) 464 of 2019, decided on 20-5-2020

[6] Reckitt & Colman of India Ltd. v. M.P. Ramchandran , 1998 SCC OnLine Cal 422

[7] Dabur India v. Colortek Meghalaya Pvt. Ltd. , 2010 SCC OnLine Del 391

[8] Pepsi Co. Inc.  v. Hindustan Coca Cola Ltd. , 2003 SCC OnLine Del 802 the Court laid the following principles:

  • Intent of the advertisement;
  • Manner; and
  • Story line and the message sought to be conveyed.

[9] Havells India Ltd. v. Amritanshu Khaitan , 2015 SCC OnLine Del 8115

[10] Gillette India Limited v. Reckitt Benckiser (India) Private Limited, 2017 SCC Online Bom 207

[11] Horlicks Limited  v. Zydus Wellness Products Limited, CS (Comm) 464 of 2019, decided on 20-5-2020

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