1990 (11) TMI 432 - HC - Indian Laws

Trademark Rights Retained by Finlay Mills; National Textile Corporation Only a Permitted User, Not Proprietor. Proceedings Quashed.

The Court determined that the management takeover by the Central Government under the Textile Undertakings Act, 1983, did not automatically transfer trade ... - 1. ISSUES PRESENTED and CONSIDEREDThe Court considered several core legal questions in this judgment:A) The rights vested in the Custodian under the Textile Undertakings (Taking Over of Management) Act, 1983, and whether the proprietorship of the existing Trade and Merchandise Marks Act, 1958 can be said to have been transmitted to the Custodian.B) Whether the Custodian can be categorized as a permitted user or if the proprietorship of the trade marks has been transmitted to the Custodian, thereby extinguishing the rights of the company.C) Whether the registered owners of the trade marks can be prosecuted for unauthorized use of these trade marks without the knowledge and consent of the Custodian.D) Whether it is permissible for the registered owners to move the High Court under Section 482 of the Code of Criminal Procedure read with Article 227 of the Constitution of India to quash the criminal proceedings.E) Whether the registered proprietor of a trade mark can be prosecuted for unauthorized use of his own trade mark under these circumstances.2. ISSUE-WISE DETAILED ANALYSISA) Rights vested in the Custodian:- Relevant legal framework and precedents: The Textile Undertakings (Taking Over of Management) Act, 1983, and the Trade and Merchandise Marks Act, 1958.- Court's interpretation and reasoning: The Court held that the management of the textile undertaking was vested in the Central Government, but this did not automatically transmit the proprietorship of trade marks to the Custodian.- Key evidence and findings: The Court noted that the Finlay Mills Ltd. remained the registered proprietor of the trade marks, and there was no evidence of any steps taken by the National Textile Corporation to register themselves as proprietors.- Application of law to facts: The Court applied the provisions of the Trade and Merchandise Marks Act, 1958, to conclude that the Finlay Mills Ltd. continued to have rights as the registered proprietors.- Treatment of competing arguments: The Court rejected the argument that the rights under the Trade and Merchandise Marks Act were extinguished by the Take-over Act.- Conclusions: The Court concluded that the rights of the registered proprietors were not extinguished by the Custodian's management takeover.B) Custodian as permitted user:- Relevant legal framework and precedents: The Trade and Merchandise Marks Act, 1958, and relevant definitions of 'permitted use' and 'registered user.'- Court's interpretation and reasoning: The Court found that the National Textile Corporation was a permitted user of the trade marks but not the proprietor.- Key evidence and findings: The Court noted that the National Textile Corporation did not register as a user of the trade marks.- Application of law to facts: The Court held that the National Textile Corporation could use the trade marks but did not have exclusive rights.- Treatment of competing arguments: The Court dismissed the argument that the takeover resulted in the transmission of trade mark ownership.- Conclusions: The National Textile Corporation was a permitted user, not the proprietor of the trade marks.C) Prosecution of registered owners:- Relevant legal framework and precedents: Sections 78 and 79 of the Trade and Merchandise Marks Act, 1958.- Court's interpretation and reasoning: The Court held that the registered proprietors could not be prosecuted for using their own trade marks.- Key evidence and findings: The Court emphasized the continued registration of the trade marks under the Finlay Mills Ltd.- Application of law to facts: The Court applied the law to conclude that the prosecutions were not maintainable.- Treatment of competing arguments: The Court rejected the argument that the prosecutions were justified due to the Custodian's rights.- Conclusions: The prosecutions against the registered proprietors were not legally sustainable.D) High Court's jurisdiction under Section 482 and Article 227:- Relevant legal framework and precedents: Section 482 of the Code of Criminal Procedure and Article 227 of the Constitution of India.- Court's interpretation and reasoning: The Court found that it was appropriate to exercise its jurisdiction to quash the proceedings.- Key evidence and findings: The Court noted the lack of any alternative remedy for the petitioners.- Application of law to facts: The Court applied its inherent powers to quash the proceedings.- Treatment of competing arguments: The Court dismissed the preliminary objections regarding the maintainability of the petitions.- Conclusions: The High Court had jurisdiction to quash the proceedings under Section 482 and Article 227.E) Permissibility of prosecuting the registered proprietor:- Relevant legal framework and precedents: Sections 78 and 79 of the Trade and Merchandise Marks Act, 1958.- Court's interpretation and reasoning: The Court held that the registered proprietors could not be prosecuted for using their own trade marks.- Key evidence and findings: The Court emphasized the continued registration of the trade marks under the Finlay Mills Ltd.- Application of law to facts: The Court applied the law to conclude that the prosecutions were not maintainable.- Treatment of competing arguments: The Court rejected the argument that the prosecutions were justified due to the Custodian's rights.- Conclusions: The prosecutions against the registered proprietors were not legally sustainable.3. SIGNIFICANT HOLDINGS- The Court held that the management of the textile undertaking was vested in the Central Government, but this did not automatically transmit the proprietorship of trade marks to the Custodian.- The Court found that the National Textile Corporation was a permitted user of the trade marks but not the proprietor.- The Court held that the registered proprietors could not be prosecuted for using their own trade marks.- The Court exercised its jurisdiction under Section 482 and Article 227 to quash the proceedings.- The Court concluded that the prosecutions against the registered proprietors were not legally sustainable.