TaxTMI 
TaxTMI 
1990 (11) TMI 432
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....he existing Trade and Merchandise Marks Act, 1958 can in law be said to have been transmitted to the Custodian as a consequence of such take-over? B) Whether the Custodian, after such takeover, can be categorised only as the permitted user, or whether the proprietorship of the trade marks can be said to have been transmitted to the Custodian thereby extinguishing the rights of the company that earlier vested in it? C) Whether, after such take-over, the registered owners of the trade marks can be prosecuted for offences involving illegal or unauthorised user of these trade marks without the knowledge and consent of the Custodian? D) Whether, in the face of such a prosecution, it is open to the registered owners to move the High Court by way of a petition u/S. 482 of the Code of Criminal Procedure read with Art. 227 of the Constitution of India for the purposes of quashing of the criminal proceedings? E) Whether it is at all permissible to prosecute the registered proprietor of a trade mark for an offence of unauthorised user of his own trade mark under these circumstances? 2. The brief facts giving rise to the present petitions are as follows :....
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....ors and representatives alleging that the user on their part of the trade marks in question constituted offences punishable u/ Ss. 78 and 79 of the Trade and Merchandise Marks Act, 1958. In view of the fact that some of the products manufactured by the Finlay Mills Ltd. and the National Textile Corporation, which has now taken over the unit, are extremely well-known in the market in different parts of the country, such prosecutions were instituted not only in the city of Bombay but in Calcutta and elsewhere. The accused moved the Calcutta High Court by way of a Petition No. C.O. 15611 (W) of 1988, which petition came to be decided by the learned single Judge through his judgment and order dated 12-11-1990. The learned single Judge upheld the position that the accused cannot in law be prosecuted for the user of the trade marks in question and that consequently the criminal prosecutions were liable to be quashed. 4. The present two petitions are directed against the criminal complaints pending in the city of Bombay. Criminal writ petition No. 814 of 1989 is directed against Criminal Cases Nos. 16 and 17 I & R of 1989 filed before the learned Metropolitan Magistrate, 14th Court, Gi....
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....l Textile Corporation, and a certain quantum of the goods were manufactured by other parties under an agreement with the Finlay Mills Ltd. and that the petitioners were responsible for the quality of those goods which were also marketed under the same trade marks. It is, therefore, their case that there existed two separate and distinct lots of goods, both of which emanated from the two different streams of sources in respect of which the same sets of trade marks were used by them. These averments made by the petitioners in the present Petitions have not been disputed by the Respondents, either through an affidavit or in the course of the hearing. It, therefore, follows that the petitioners were all along using the trade marks on two independently distinct sets of goods, the second category of which they continued to market even after the take-over of this unit. It is further relevant to record that this is a distinguishing feature as far as the present set of petitions is concerned, because even in the suit filed by the present petitioners before the Original Side of the High Court, in which proceedings the Division Bench had occasion to deliver the judgment and order dated 12-6-1....
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.... Constitution cannot be invoked. 7. As against this, Mr. Chitnis, learned counsel appearing on behalf of the petitioners, has drawn my attention to a Division Bench judgment of the Nagpur Bench of this Court in the case of Shyamrani v. State of Mah. 1990 M LJ 975. In that judgment, the High Court was called upon to decide as to whether the powers u/ S. 482 of the Code of Criminal Procedure independently or read with An. 227 of the Constitution or independently under Art. 227 of the Constitution could be invoked at the instance of a party who has already availed of a remedy of revision u/S. 397 of the Code of Criminal Procedure. The Division Bench answered the question in the affirmative. In that case, while dealing with the jurisdiction of the High Court under Art. 227 of the Constitution, the Division Bench summarised the position by stating that no statute can bar the constitutional remedy provided for under Art. 227 of the Constitution. We are not immediately required to go into this aspect of the matter in any depth, because the present case stands on a much stronger footing in so far as the petitioners have not availed of any revisional remedy. The petitioners in this case ....
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.... seizure of their goods and stoppage of their business, and it is further demonstrated that the Accused who are petitioners before this Court have virtually no remedy which they can legitimately avail themselves of before the trial Court, then the exercise of the inherent powers of the High Court in such a case would, to my mind, be justified. 9. 1 shall presently deal with the relevant case law u/S. 482 of the Code of Criminal Procedure at the appropriate part of this judgment, but suffice it to say that on the facts of the present case and on the points of law that are canvassed in this case, the preliminary objection of Mr. Thakore that the present petitions ought not to be entertained, cannot, to my mind, be accepted. 10. The first point canvassed by Mr. Chitnis is a mixed question of fact and law. He has placed reliance on the averments made in the petitions and on the undisputed factual position as emerges from the pleadings in the civil proceedings between the parties. He has stated that the present case presents certain unique facts which would perhaps not be present in other similar cases. Those facts have already been set out by me, namely, that the present petition....
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....ks Act, 1958. He has referred to the definition of the term "registered trade mark" in S. 2(r) of the Act, which defines the "registered trade mark" as a trade mark which is actually on the register. S. 2(o) of the Act defines "register" as being the Register of Trade Marks referred to the S. 6. S. 6 of the Act, in turn, refers to the Register of Trade Marks maintained by the Trade Marks Registry. S. 2(s) of the Act defines "registered user" as a person who is for the time being registered as such u/S. 49 of the Act. S. 49 of the Act, in turn, prescribes the manner in which the Registry can entertain an application from a registered user of a trade mark. It is relevant at this stage to point out that the Act itself contemplated a situation whereby the registered proprietor in relation to the trade mark and the registered user can be two different parties. It is significant to record that even though Mr. Thakore has pointed out that the officers of the National Textile Corporation did approach the Trade Marks Registry orally with the request that they be registered as users of the trade mark, admittedly, they did not prefer any application, nor have they been registered as the users....
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....the registered proprietors of the trade marks in question, there cannot be any question of the institution of a prosecution against the petitioners for infringement of their own trade marks. Dealing with the provisions of the take-over Act, Mr. Chitnis submitted that a reference to the statement of objects and reasons will indicate that the Government initially promulgated an Ordinance which came to be replaced by this Act, which was essentially a stop-gap arrangement directed towards the ultimate objective of nationalisation of the undertakings in question. It is stated in the statements of objects and reasons as follows:-- "Once the basic decision of nationalisation was taken, a genuine apprehension arose in the Government's mind that unless the management of the concerned undertakings was taken over on an immediate basis there might be large-scale frittering away of assets which would be detrimental to the public interest. It thus became urgently necessary for Government to take over the management of the undertakings in the public interest." Section 3 of the Take-over Act, with which we are immediately concerned, and in particular sub-sees. (1) and (2) of that S....
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....appears in column (2) and it is the management of this unit that is vested in the Central Government on and from 18-3-1983. The name of the owner appears in column (3) and that is the Finlay Mills Ltd., which is the body corporate, and it is, in fact, a separate and distinct juridical person which has been separated from the unit or undertaking as set out in column (2). The Finlay Mills Ltd. remains untouched and unaffected save and except to the extent that the management and control over the unit, which originally vested in the limited Company, has now been transferred on and from 18-3-1983 to the National Textile Corporation. Though the Take-over Act does not define the term "management", it would be useful to refer to the definition of the term "management" as is set out in Balck's Law Dictionary, Fifth Edition, page 865, which is as follows :-- "Management -- Government, control, superintendence, physical or manual handling or guidance, act of managing by direction or regulation, or administration, as management of family, or of household, or of servants, or of great enterprises, or of great affairs." 16. Dealing with the term "management" in Words and Phrases ....
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....Take-over Act read with S. 7 of the Act, this Court must hold that whatever rights the petitioners originally possessed stand extinguished as far as the trade marks are concerned. S. 7 of the Takeover Act reads as follows:-- "7. Act to have overriding effect.- The provisions of this Act or any notification, order or rule made thereunder shall have effect notwithstanding anything inconsistent therewith contained in any law (other than this Act) or in any instrument having effect by virtue of any law other than this Act or in any decree or order of any Court." It is the submission of Mr. Thakore that by virtue of the provisions of S. 7 of the Takeover Act, which have an overriding effect as far as the provisions contained in any other law which are inconsistent with the provisions of this Act are concerned, that by necessary implication, the rights, if any, created under the provisions of the Trade and Merchandise Marks Act, 1958 stand automatically extinguished. I am unable to accept this submission canvassed by Mr. Thakore for the reason that, as pointed out by me earlier, the present Act does not make any reference specifically or even indirectly to the exting....
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....e Corporation. Mr. Thakore placed heavy reliance on the definition of the term "transmission" appearing in Section 2(w) of the Trade & Merchandise Marks Act, 1958, which reads as follows:-- "2(w) 'transmission' means transmission by operation of law, devolution on the personal representative of a deceased person and any other mode of transfer, not being assignment;" It is the submission of Mr. Thakore that the act of vesting of the management as contemplated in the Take-over Act presupposes that the trade marks have been transmitted to the National Textile Corporation by operation of law. 20. It is necessary to refer to the definition of the term "transmission" as appears in Black's Law Dictionary, Fifth Edition, Page 1344, which reads as follows:-- "Transmission. In the civil law, the right which heirs or legatees may have of passing to their successors the inheritance or legacy to which they were entitled, if they happen to die without having exercised their rights." It is very clear from this definition that the term "transmission" by operation of law presupposes the class of cases as are set out in the definition, namely, that as a result ....
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....oviso to that Section, where the validity of an assignment or transmission is disputed, the Registrar may refuse registration and until the rights of the parties have been determined by competent Court, no such registration shall take place. By necessary implication, it follows that without registration of the assignment or transmission no rights can be pleaded on the ground that the trade marks have been assigned or transmitted. Admittedly, in the present case, the civil suit filed by the Petitioners is pending decision before this Court and under the provisions of the interim orders the Court has clearly empowered the National Textile Corporation to use the trade marks in question. The Court was also conscious while making that order of the fact that the present petitioners are manufacturing the same goods and that they are using the trade marks and the Court has not made any observation in its order to the effect that such user was either impermissible or that the same did not have legal sanction. In the circumstances, Mr. Chitnis's reliance on the provisions of Sec. 44 of the Trade & Merchandise Marks Act, 1958 is justified and it will have to be held that the present petit....
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....tion originally in France and which continued to market the same product, sought to bring an injunction against the product marketed by the monks from Spain which, in fact, was the original product. The House of Lords, following the decision of the French Court, took the view that no such injunction was permissible in so far as the monks, who were the original owners and rightful manufacturers of the product, could not be slopped from marketing it. The reason behind it was that as far as the customers or consumers were concerned, they had every right to go by the name or the trade mark which, in turn, signified to them the guarantee that the product had emanated from the source, namely, the owners of that trade mark and that consequently they were getting the type of quality and product which was associated with that source. On the basis of this decision, Mr. Chitnis has contended that it will have to be held that the present petitioners, who are the registered owners and original manufacturers of the textiles in question, must be said to possess the legal right to continue with the user of the trade marks in dispute. As indicated by me earlier, if the rights of the petitioners hav....
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....cutta High Court in similar dispute between these very parties. The learned single Judge in that case had considered the ambit and scope of sub-section (1) of Section 3 of the Take-over Act and has, in the very first instance, recorded the finding that it is only the management of the textile undertaking and nothing else that has been taken over. The learned Judge has drawn a distinction between a trade mark and between the management of plant and machinery or real estate, etc. and observed that it is the second category of property that is squarely covered by the decision in the case of N.T. Corpn. Ltd. v. Sitaram Mills Ltd. The learned Judge has further observed that as long as the proprietorship and ownership of the trade marks continue to remain with the petitioners no prosecution is maintainable against them. The learned Judge has also observed that there is no automatic transmission of the ownership of the trade marks to the National Textile Corporation by virtue of the provisions of the Act. I am fully in agreement with the view taken by the learned single Judge of the Calcutta High Court as far as these aspects of the case are concerned. 25. The learned single Judge has ....
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....ry which is a procedure parallel to a proceeding commenced on a Police complaint. Mr. Chitnis has placed reliance on one more decision of the Supreme Court in the case of State of U.P. v. R.K. Srivastav 1989 CriLJ 2301. While dealing with the powers of the High Court under Section 482 of the Code of Criminal Procedure, the Supreme Court has observed that where the First Information Report on its face value does not make out any offence, the criminal proceeding instituted on its basis is liable to be quashed. In this particular case, the State Bank of India had lodged a First Information Report alleging certain offence and it was the contention of the accused that the facts of the case did not make out the necessary in- gradients that are required for the institution of a criminal prosecution. Even though the investigation was at a preliminary stage, the Supreme Court quashed the First Information Report in this case. It necessarily follows that the submission advanced by Mr. Thakore that this Court in exercise of its powers under Section 482 of the Code of Criminal Procedure cannot quash a criminal proceeding, which is at the enquiry/ investigation stage, deserves to be rejected. ....
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....s indicated earlier, the officers of the National Textile Corporation, who are the prosecuting authority, acting under the assumption that they are in law entitled to stop the use of the trade marks in question by other parties, which included the registered owners, instituted the present prosecutions. They also instituted similar prosecutions in other parts of the country on the same ground. The commencement of further prosecutions would have been inevitable because every time the petitioners marked their goods with the trade marks on them, the officers of the National Textile Corporation, when it came to their notice, would have proceeded. The inevitable result would have been that the petitioners would have to stop their business until the respective rights of the parties were determined by the first of the criminal Courts which took up the cases for hearing. The issue as to whether the registered proprietor of a trade mark can be prosecuted for the infringement of his own trade marks in the facts and circumstances of this case is not something that is a matter of evidence. The relevant provisions of the law and the accompanying facts were all before the trial Court and they are....
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....ings on the appreciation of evidence. All that the High Court is permitted to do is to examine as to whether the offence is spelt out or not. In those cases only where the ingredients of the offence are not made out is the High Court permitted to quash the proceedings. Mr. Thakore relied heavily on the observations in this decision and contended that it was premature for the petitioners to contend that they can or cannot be convicted, that they will have to wait until the enquiry is concluded and that it is open to them to raise all their submissions before the trial Court either at the stage of issuance of process or in the course of the trial. 29. I am not in agreement with the submissions advanced by Mr. Thakore because on the peculiar facts of the present case, the position that emerges Sri law is that the prosecution is misconceived in so far as the present accused cannot be convicted of the offences with which they stand charged in the special facts and circumstances of this case. In actual fact, having regard to their statuses being the registered proprietors of the trade marks and the fact that their rights are not extinguished ,it cannot even be contended at the very in....
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....cross cases involving infringement of trade marks, affecting thereby its business, it would require, as of necessity, that its officers adopt all legal proceedings that were open to them and that there is no warrant to allege any mala fides. Mr. Thakore is fully justified in his submission as far as this aspect of the case is concerned. It is necessary also to add that on the facts of the present case, and in particular on the basis of the observations of the Division Bench, the officers of the National Textile Corporation may have bona fide believed that the trade marks had vested exclusively in them and that consequently they were of the view that they were entitled to stop others from using them and were required to take necessary legal steps to prevent what they understood to be infringement or misuse. If, under such belief, the present prosecution were commenced, they could not be characterised as a mala fide exercise. However, in the light of the fact that on true and proper construction oi' the facts and law, since no infringements under the Trade and Merchandise Marks Act can be alleged against the present petitioners in respect of the disputed set of trade marks, the p....