RAVINDBA BAL KISHAN CHIVATE Vs. MOHAN NARAYAN ACHARYA

JUDGEMENT

(1.) This writ application raises a very short but very important question about the effect of vesting of management of a textile undertaking-in the Central Government on the trade marks registered in its name in terms of section 3 of the Textile undertaking (Taking. over of Management) Act, 1983. The companies or Textile Undertakings which were intended to be covered by the said Act have been mentioned in the 1st schedule to the said Act and "Finlay Mills" is one of such undertakings. It appears that the "Finlay Mills" was the registered proprietor of several trade marks, which were used to be affixed to the textile piece goods dealt with by the taken over undertaking-goods included goods manufactured by such undertaking as also manufactured by others but dealt with by the undertaking. The present writ petitioner is a sales representative of one M/s. Subhas Enterprises, carrying on business in Textile in the State of Maharashtra, which manufactured textile goods for and on behalf of Finlay Mills Limited and whereupon the trade marks belonging to the Finlay Mills Limited had been affixed, for indicating the quality of the goods, under an agreement. It appears that a complaint had been lodged by respondent No. 1, who is the Senior Manager (Administration) of National Textile Corporation (South Maharashtra), which was appointed as Additional Custodian on taking over of the textile undertaking of Finlay Mills Limited, inter alia, to the effect that identical and/or similar and/or deceptively similar trade marks, trade names and trade descriptions had been affixed to certain textile piece goods not manufactured by the additional custodian on the basis of which case being numbered G. R. 3698 of 1988 of the Court of the Chief Metropolitan Magistrate at Calcutta had arisen. The offences which were said to have been committed, were under section 78/79 of the Trade and the Merchandise Marks Act and sections 420/120B of the Indian Penal Code. The textile goods sought to be sold by the petitioner's employers in Calcutta had been seized by the police. The present writ application has been filed with prayers for quashing of the said criminal proceeding as also the complaint giving rise to the same on the ground that the investigation directed to be carried on in pursuance of the said complaint is mala fide.

(2.) In the background of the aforesaid facts the point which this Court is required to consider has already been indicated hereinabove. To appreciate the legal implication of the said point it is necessary to bestow very careful and indepth consideration on some of the provisions, in particular, section 3(2) of the Textile Undertakings (Taking over of Management). Act, 1983 (hereinafter referred to as the "said Act") and sections 78 and 79 of the Trade and Merchandise Marks Act, section 78 provides for punishment of a person, who falsifies any trade mark, falsely applies to goods a trade mark, applies any false trade descriptions to goods whereas Section 79 provides for penalty of a person, who sales or exposes for sale or has in his possession for sale any goods or things to which any false trade mark or false trade description is applied. It becomes necessary to find out as to what is exactly meant by falsification of any trade mark, false application of a trade mark to goods or application of false trade description to goods; For the said purpose section 77 becomes relevant. According to section 77 Trade and Merchandise Marks Act, a person shall be deemed to falsify trade mark, who without the assent of the proprietor makes that trade mark or deceptively similar mark or falsified any genuine trade mark by alteration, addition, effacement or otherwise. A person again shall be deemed to falsely apply a trade mark, who without the assent of the proprietor of the trade mark, applies the same or deceptively similar mark to goods or any package containing goods or uses any package bearing such marks for the purpose of packing, filling or wrapping any goods of the proprietor of the trade mark.

(3.) Section 3(1) of the Textile Undertaking (Taking over of Management) Act, 1983 provides for vesting of management of a Textile undertaking in the Central government or the custodian appointed for the purpose. Sub-section (2) of the said section 3 embodies an inclusive definition of the undertaking, inter alia, specifically mentioning all movable and immovable properties, assets, rights, powers, privileges of the textile company in relation to the said textile undertaking. Sub-section (1) of section 4 of the said Act empowers the Central Government to appoint a custodian for the purpose of carrying on the management of such undertaking and sub-section (2) of the said section 4 lays down that on appointment of such a custodian, the management of the textile undertaking shall vest in such custodian and all persons in charge of the management of such undertaking shall cease to be in charge thereof and shall be bound to deliver such management to the custodian. On a glance at the section it can be safely said without fear of controversy that what vests in terms of the provisions of the said Act is not the undertaking itself but the management thereof. The ownership of the undertaking remains minus the right of the owner to manage such undertaking. The Counsel of the contesting parties have endeavored to analyse the relevant sections there above to highlight their respective contentions about assets affected by such vesting of management and the extent thereof. In view of the nature of the present dispute the effectiveness of such vesting has to be found out taking into consideration the character and type of a particular asset forming a part of the undertaking. Management of a Plant and Machinery or a real estate owned by the undertaking may be visibly and tangibly effective but in case of trademark or the like the portion is different. The first category of assets is squarely covered by the ratio of the decision in the case of N.T.C. vs. Sitaram Mills Ltd., reported in AIR 986 SC 1234 but the main decision does not apply as far as the second category as referred to above is concerned. This approach distinguishes the other decisions cited on behalf of the Respondents and serves as complete answer to their submission founded in section 7 of the said Act. In the instant case, the subject matters or assets, management of which is claimed to have vested in terms of the provisions of the said Act, are registered trade marks of the company, which is the registered proprietor thereof. The complaint, which is sought to be quashed, has been filed on behalf of the custodian namely, National Textile Corporation Limited, inter alia, alleges that the management of the undertaking having vested, the trade marks of the Company also became usable only by the additional custodian but now are being used with regard to the goods not manufactured by such additional custodian amounting to commission of offences under sections 78 and 79 of the Trade and Merchandise Marks Act along with ounces punishable under sections 420 and 120B of the Indian Penal Code. I have already analysed the provisions of the said two sections of the Trade and Merchandise Marks Act. An in-depth and careful consideration of the said provisions, along with sections 28, 30 and 84 of the Trade and Merchandise Marks Act, clearly indicates that so long one's name remains registered as a proprietor of a trade mark, he cannot be said to be guilty of offences under sections 78 and 79 of the Trade and Merchandise Marks Act, as no other person except the registered proprietor or one duly authorised by him in terms of the relative statutory provisions can use a trade mark. There is no provision, notwithstanding section 7 and stretching its operation to the maximum for automatic transmission of ownership of such trade mark in the Trade and Merchandise Marks Act or in the other Act under considerations and there being no dispute that the ownership of the trade marks still remains with the company, in the light of the above analysis, the alleged complaint is on the face of it untenable in law. The basic ingredients of offences under the two Sections of the Trade and Merchandise Marks Act are not satisfied arid consequently, the question of commission of offenses under the Penal Code as mentioned also cannot and does not arise. For the foregoing reasons it must be held that the complaint does not disclose any of the aforesaid offences.