ORDER
Prabir Kumar Makumdar, J.
1. This appeal is directed against the judgment and order dated 13th September, 1990, passed by a learned Judge of this Court on an application taken out by the appellant under Trade and Merchandise Marks Act, 1958 for removing 12 Trade Marks from the Register of Trade Marks and for cancellation of those Marks. The learned Judge by the said judgment and order dismissed the said application.
2. The respondents T. I. Raleigh Industries Limited and T. I. Raleigh Limited, the respondents No. 1 and 2 respectively, are the registered proprietors of these 12 Trade Marks. The Trade Marks relate to Bicycles and their components and accessories.
3. The facts of the case as set out in the judgment under appeal are shortly this. Prior to 25th April, 1977, the name of T. I. Raleigh Industries Limited (the respondent No. 1) was Raleigh Limited and the name of the respondent No. 1A T. I. Raleigh Limited was Raleigh Cycle Company Limited. They are both companies incorporated under the Companies Act of United Kingdom.
4. The said respondents were selling in India Bicycles and accessories etc. manufactured by them in England through their Distributor, namely, Sudhir Kumar Sen. They were being sold under the said Trade Marks registered in India under the Trade Marks Act 1940 and of which said Sudhir Kumar Sen wanted to manufacture bicycles, pedal cycles, tricycles, etc. in India. The said Sudhir Kumar Sen approached Raleighs, for short, the said two respondents, for technical know-how and collaboration. Said Sudhir Kumar Sen wanted to manufacture and sell bicycles under the Trade Mark of Raleighs.
5. On 3rd November, 1948, said Sudhir Kumar Sen entered into an agreement with respondent No. 1, T. I. Raleigh Industries Limited whereby the latter agreed to act as consultants and technical advisors of an Indian company to be formed in connectionwith manufacture of bicycles etc. The Indian Company was formed and named 'Sen-Raleigh Limited', for short, be referred as Sen Raleigh.
6. By an agreement dated 7th September, 1949 Sen Raleigh ratified and adopted the earlier agreement dated 3rd November, 1948. Sen Raleigh was also recorded as the registered user of the Trade Marks of Raleigh with effect from 20th April, 1954 under the relevant provisions of Trade Marks Act, 1940. Sen Raleigh started manufacturing and selling bicycles under the Trade Marks of Raleigh.
7. The Trade and Merchandise Marks Act, 1958 (hereinafter referred to as the Act) came into force in the year 1958. Section 50 of the Act provides that every registration made before commencement of the Act of a registered user shall cease to have effect after the expiration of 3 years from such commencement. In view of this statutory provision Sen Raleigh entered into new agreements with Raleighs in 1962. By virtue of these agreements Sen Raleigh was permitted to market bicycles manufactured by it in India under the concerned Trade Marks of Raleighs. On applications being made under the Act of recording Sen Raleigh as the registered user of these trade marks. Sen Raleigh was registered as such registered user and there is no dispute as to this position. It appears that Sen Raleigh was recorded as such user of these trade marks up to 1976.
8. On 1st November, 1976, Sen Raleigh entered into an agreement with Raleigh Industries Limited for collaboration and -- technical assistance in relation to manufacture of bicycles etc. We refer to this agreement as Collaboration Agreement of 1976. This 1976 Collaboration Agreement appears to contemplate new registered usership agreement to be entered into between Sen Raleigh and Raleigh and it was provided in the agreement that said Collaboration Agreement of 1976 would continue in force for a period of 5 years. As provided in the said 1976 Collaboration Agreement, Sen Raleigh and Raleighs entered into agreements dated 28th December, 1976 whereby Raleighs granted toSen Raleigh the sole and exclusive non-assignable licence to manufacture and to sell in India and the other neighbouring countries mentioned therein bicycles etc. under the concerned Trade Marks of Raleighs. These usership agreements provided that they would continue in force so long as the 1976 Collaboration Agreement would subsist.
9. In the meantime, sometime in 1975, the Government of India had taken over the management of Sen Raleigh under the Industrial Development and Regulation Act. The said 1976 Collaboration Agreement was entered into when Sen Raleigh was under the management of the Government of India.
10. There was an ordinance called Hind Cycle Limited and Sen Raleigh Limited (Nationalisation) Ordinance 1980, where-under the undertaking of Sen Raleigh was nationalised and by virtue of notifications issued under the said Nationalisation Act, the undertaking of Sen Raleigh stood transferred to and vested in C.C.I.L. (the appellant) with effect from 25th October, 1980. Under and in terms of the provisions of the said Nationalisation Act, the appellant ratified in writing the said 1976 Collaboration Agreement and the usership agreements. On and from 25th October, 1980 Raleighs allowed and permitted the appellant to manufacture bicycles etc. according to its specifications and sell the same throughout India and the neighbouring countries mentioned in 1976 Collaboration Agreement under the trade marks of Raleighs.
11. It appears that applications in proper forms were filed by the appellant for registration of said 1976 usership agreement but these applications were abandoned in the year 1984 or were allowed to lapse for non-payment of official fees.
12. In the meantime, the said Collaboration Agreement and the registered usership agreements expired and stood terminated with effect from 31st October, 1981. The Raleighs alleged that after the expiry of these agreements they permitted the appellant to manufacture bicycles and etc. according to their specifications and sell the same underthe concerned trade marks of Raleighs until March, 1982 to enable the parties to enter into new agreements with. Raleighs to manufacture as well as user of trade marks. The parties, however, were unable to conclude-any such agreement, but the appellant continued to use the specifications and technical know how of Raleighs in manufacturing bicycles and selling the same under the registered trade marks of Raleighs. As the said agreement expired, the Raleighs wrote a letter dated 5th March, 1982 to the appellant informing the appellant and they had instructed their lawyer to take out an application for injunction preventing the appellant from using the trade marks. The appellant made the present application on 24th March, 1982 out of which the appeal arises and Raleighes in their turn have filed a suit in this Court on 2nd August, 1982 being Suit No. 650 of 1982 against the appellant for infringement and passing off. The suit is still pending.
13. This is in short the background of the case. The appellant inter alia, took the following grounds in the application, namely.
14. First, Raleighs failed to provide technical know how by not passing on technical data to Sen Raleigh after 1st November, 1976 as a result whereof Sen Raleigh had been producing bicycles etc. of designs developed on their own and marketed them under the concerned trade marks.
15. Second, the 1976 Collaboration Agreement did not become effective as Raleigh Industries Limited did not obtain permission of the Reserve Bank of India 'to licence the subject trade marks' under Section 28(1)(c) of the Foreign Exchange Regulation Act, 1973.
16. Third, Sen Raleigh and thereafter the appellant have not in fact been registered users of the concerned trade marks from 1st November, 1976 and as such not covered by Section 48(2) of the Trade and Marchandise Marks Act, 1958.
17. Fourth, failure by Raleighs to exercise quality control over the products which were sold by Sen Raleigh and thereafter by the appellant under the concerned trademarks resulted in the use of the concerned trade marks by Sen Raleigh or the appellant not enuring to the benefits of the Raleighs for the purpose of Section 48(2) of the said Act.
18. Fifth, up to the date of one month before the date of filing of this petition, continuous period of five years no longer had elapsed during which the concerned trade marks were registered and during which there had been no bona fide use thereof in relation to the goods in respect of which they were registered by Raleighs and as such the concerned trade marks are liable to be removed from the Register under Section 46 of the said Act.
19. Sixth, having regard to the extent and nature of the use of the concerned trade marks at least after 1st Nov. 1976 any further use by Raleighs of the concerned trade marks was likely to deceive and cause confusion in the trade and public in India.
20. Last, the concerned trade marks are distinctive of the goods of the appellant and of none else in India and, therefore, their continuance in the name of Raleigher Trade Marks, an entry which is wrongly remaining in the Regists' within the meaning of Section 56 of the said Act.
21. In this appeal Mr. P.K. Das learned senior Counsel for the appellant has submitted that his client's case is an on the ground of non-user as contemplated in S. 46(1)(b) of the said Act and he does not press the grounds contemplated in Section 46(1)(a) of the Act. Mr. Das submits that the said registered trade marks was not in use one month before the date of the application and for a continuous period of five years as contemplated in Section 46(1)(b) of the said Act. Mr. Das tries to submit that since there was no registration of any usership agreement after 1976, the user of the concerned trade marks by Sen Raleigh and thereafter by the appellant would not enure to the benefit of Raleighs. In other words, such user cannot be deemed to be user by Raleighs in terms of Section 48(2) of the said Act. Mr. Das Graws our attention to Section 2(a) of the said Act, which defines 'permitted use'. It means the use of a trade mark-
(1) by a registered user of the trade mark in relation to goods:
(a) with which he is connected in the course of trade;
(b) in respect of which the trade mark remains registered for the time being;
(c) for which he is registered as registered user.
22. Before the trial Court as also beforethis Court the provisions contained in Section48(2) as also Section 49 in the context ofSection 46 of the said Act are sought to beinterpreted by the appellant in this way thatthe expression 'by any proprietor thereof' inSection 46(1)(b) must be restricted to theappellant itself or a registered user by reasonof deeming provision of Section 48(2) andcannot be extended to any other user. Thelearned trial Judge, however, found it difficultto accept such interpretation and the learnedtrial Judge observed that the provisionsrelating to registration of registered usercontained in the Act were enacted to protectboth the proprietor and the user of the markand Section 48(2) of the said Act is an instanceof such protection, so far as the proprietor isconcerned by the mechanism of a fiction. Thefiction is that although the mark is actuallybeing used by a registered user, the lawconsiders it to be user by the proprietor. Thelearned Judge also observed that it could notbe said that by allowing somebody else to usethe mark he had ceased to use the markhimself. The learned Judge relying on thedecision of the House of Lords in AmericanGreetings Corporation's Application (1984) 1All ER 426 and also Bostish Trade Marks(1963) RFC 183 observed that there was nospecific bar to be an unregistered licensee solong as there is connection in the course oftrade between a licensor and licensee's goods.We agree with this observation of the learnedTrial Judge in the context of the facts of thecase.
23. Mr. Das has also argued that from the definition of permitted user and also registered user in the Act, Sen Raleigh an Indian Company cannot be the registered user of the marks belonging to the Raleighs, an Englishcompany. Therefore, according to Mr. Das use by Indian Company of the mark of English company is not the use of marks by the English company. Mr. Das in this connection has relied on a decision of the Supreme Court in American Home Products Corporation v. Mac. Laboratories Private Limited, : AIR1986SC137 . It is held by the Supreme Court that not only non-user of trade mark for requisite period but also absence of bona fide intention to use, at the time of application for registration has to be proved and this is to be proved by the applicant. It is also observed that where non-user is for a period of less than five years, the person seeking to remove the trade mark from the Register has not only to prove the non-user for the requisite period but also has to prove that the applicant for registration of the trade mark had no bona fide intention to use the trade mark when the application for registration was made. We do not know how Mr. Das could derive any assistance from this decision relied on by him. The appellant has not been able to prove before the trial Court that there has been non-user for a continuous period of five years or longer or there has been no bona fide intention to use the trade mark in relation to those goods in respect of which it is registered by any proprietor thereof for the time being. The Supreme Court in this case has drawn a distinction between clause (a) and clause (b) of Section 46 of the Act by saying that if the period specified in Clause (b) has elapsed and during that period there has been no bona fide use of the trade mark, the fact that the registered proprietor had a bona fide intention to use the trade mark at the date of the application becomes immaterial and the trade mark is liable to be removed from the register unless his case falls under Section 46(3), while under Clause (a) where there had been a bona fide intention to use the trademark in respect of which registration was made, merely because the trade mark had not been used for a period shorter than five years, from the date of its registration will not entitled any person to have that trade mark taken off the Register. As stated above, we have to confine ourselves to the case coming under the Section 46(1)(b) of the Act as Mr. Das at the outset submitted that his client does not rests its case on Section 46(1)(a) of the Act.
24. In dealing with the scope of Section 46 of the said Act it was argued on behalf of the respondents, both before the trial Court as also before us that removal of a mark is highly prejudicial consequence on the registered proprietor. There is no dispute that Raleighs are the registered proprietor. Mr. Chakraborty, the learned Senior Counsel for the respondents submits that the expression 'by any proprietor thereof' should not be restricted to the user by the proprietor himself or any registered user but should also take in its sweep a bona fide authorised user. The learned trial Judge accepted this submission as well founded to which we agree. We also agree with the learned trial Judge when he says that removal of trade marks amount to depriving the registered proprietor of the benefit of registration and prejudicially affects his proprietary rights, in effect he is deprived of his property in the mark. The learned Judge also proceeded to observe that Legislature did not intend the owner to be deprived of his property at the instance of a person who has been authorised to use the mark by the owner himself merely because the user is not registered. We agree with this observation of the learned trial Judge. In our view the said expression 'by any proprietor thereof should not be restricted to the user by the proprietor himself or any registered user, but it should also be taken into account if it is used by bona fide authorised user.
25. Also from the factual context as found by the learned trial Judge, to which we agree, it is not in dispute that after entering into the said usership agreement, an application was filed in the appropriate form before the Registrar for registration of Sen Raleigh as a registered user bused on the usership agreement dated 20th December, 1976. It also appears from the records that these applications were not proceeded further because of non-payment of official fees in the year 1984. Therefore, non-registration of Sen Raleigh or the appellant as user under the Act was caused by the default of Sen Raleigh or the appellant. It also appears and there is no dispute that they did not pursue the application for registered user and continued to use the trade marks. Now, they cannot take thestand arising out of their own wrong that non-registration would go against the interest of the respondent Raleighs. There is also another feature in the case as has been found by the learned Trial Judge that the appellant has not taken any steps to withdraw the said application filed for registered user which application is still pending. During the pendency or such application it appears strange that the appellant has also applied to this Court to strike out the same. The learned Trial Judge held that the appellant being the petitioner before the Trial Court should not be permitted to take such contradictory stand and in our view the learned Trial Judge was right in saying so.
26. Mr. Das has also argued on behalf of the appellant, which argument was also made before the Trial Court that the Raleighs Trade mark was used with the word 'Assansol' instead of the words 'Nottingham' and 'England' appearing in the marks as registered. The learned Judge held that these two expressions 'Nottingham' and 'England' are just geographical words not -- constituting essential features of Raleighs mark. We also hold this view.
27. The learned Counsel for the respondents. Mr. Chakraborty has placed reliance on Bostitish Trade Marks (1963) RFC 183. This decision also placed before the learned Trial Judge and the learned Judge has dealt with this decision elaborately in his judgment. In Bostitish's case it appears that the owner of the Trade Mark 'Bostitish' was United States concern and the authorised user of the trade mark in Britain was the proprietor' British X distributor who was also allowed to apply the registered mark 'Bostitish' to the British made goods. There was no registration of the British company at user. After this situation had continued for some 15 years the proprietor determined the agreement between the parties. The British company continued to use the mark after such determination. The proprietor filed an action for infringement of the mark and a motion to expunge it from the Register on the ground that the mark by then had become distinctive of the British Company's goods and continued registration ofthe mark was consequently deceptive. It was held that the reputation in the mark remained with its American Proprietor and that there was by the use of the proprietor's design and know-how a sufficient connection was there in the course of trade between the British Company's goods and the proprietor for that use not to be deceptive.
28. The facts of this case come close to the facts of the instant case. Here also the said usership agreement was determined. Sen Raleigh and thereafter the appellant continued to use the mark and the Raleighs have instituted a suit praying, inter alia, for injunction restraining the appellant from using the mark.
29. On the question of non-user we agree with the finding of the learned Judge and the conclusion arrived at by the learned Judge and we have no doubt that the onus is heavily with the appellant and which the appellant failed to establish before the Trial Court.
30. Mr. Chakraborty, learned counsel for the respondents has submitted in the alternative that even if there is a non-user, there are special circumstances within the meaning of Section 46(3) which prevented the direct user of the marks by the Raleighs in India.
31. It is submitted by Mr. Chakraborty on behalf of the respondent Raleighs that import restrictions constitute special circumstances in the trade preventing use of a trade mark. Mr. Chakraborty placed reliance in Ball's case (1966) RFC 387. It was held in this case that import restrictions constitute special circumstances preventing use of a trade mark. Mr. Chakraborty submits that the principles laid down in Bali's case were followed in Plaza Chemical Industries v. Kohinoor Chemical Company, : AIR1973Bom191 and in Philip Morris Belgium S. A. v. Golden Tobacco Co. Ltd. AIR 1986 Delhi 145. Mr. Chakraborty has-also relied on a decision of this Court in Express Bottlers Service Pvt. Ltd. v. Pepsi Co., (1988) 1 Cal LJ 337.
32. Mr. P. K. Das learned Counsel for the appellant had, however, submitted that unless there is a total import restriction, any suchrestriction would not constitute special circumstances within the meaning of Section 46(3) of the said Act. Mr. Das has relied on an un-reported judgment dated 4th July, 1990 in Rardy Trading Limited v. Audition Paints and Chemicals Limited, which judgment was rendered by one of us (P. K. Majumdar, J.) Mr. Das relying on this decision submitted that unless there is complete ban of the goods 'in the trade' there cannot be any special circumstances as contemplated by Section 46(3) of the said Act. Mr. Das has also relied on a Bench decision of this Court in J. N. Micholes Vipto v. Rose and Thisel, : AIR1994Cal43 .
33. Whether there is any special circumstances or not that would depend on the facts of the case and simply there is a ban on imports would not necessarily lead to a conclusion that this might constitute a special circumstances. In Rardy's case, there was no evidence on record to indicate that there was total prohibition of imports of the goods during the period relevant for consideration of the question of non-use. In this case the import of paints and allied products were permitted under the relevant trade control policy and the court held that unless there was any ban upon import of paints and lacquers etc. during the relevant period there could not be any case for special circumstances. In J. N. Nichole's case : AIR1994Cal43 , the Division Bench observed that import ban should not be a deterrent factor when other similar products were manufactured and freely sold and the Division Bench in J. N. Nichole's case also found that whether there was any special circumstances, the onus is on the person seeking to establish special circumstances by way of defence and such onus in the said case was not discharged to the satisfaction of the Court. In the present case, however, there is clear admission by the appellant in Paragraph 17 of the petition, which was to the extent that under the Rules and Regulations applicable to India, India does not permit import of bicycle from abroad. In view of such admission and also on the facts of the case the Raleighs could successfully take up the defence of special circumstances as has such been taken by them before the TrialCourt. Therefore, the objection on behalf of the appellant in this regard has no substance.
34. There is no dispute that the power conferred under Section 46 is discretionary. The Court should also take into account the conduct of the person seeking removal of the mark by an order for rectification. In the instant Case it appears that the petitioner made an application for using the mark of the Raleighs but the petitioner (the appellant) has allowed that application to be abandoned by non-payment of nominal official fees. It also appears that the appellant did not proceed with such application and instead made the present application for removal of the mark. It also appears that the petitioner on its predecessor-in-intererst duly acknowleged in the said agreement dated 20th December, 1976 that the respondent Nos. 1 and 1A were the sole and original owners of the trade mark and the appellant had no right, title and interest in respect thereof. It is not in dispute that the appellant accepted the said agreement and the said agreement was ratified after Nationalisation in 1980. It will also appear as noted above that the appellant had been using such mark even after determination of the said usership agreement and compelled the Raleighs to institute a suit for permanent injunction restraining the appellant from using the same. As stated above, the appellant had also made an application for permitted user of the said mark and during the pendency of such application has come up with the present application for removal of the mark of the Raleighs from the Register. It seems that the appellants is taking advantage of its own wrong.
35. At the last stage, the learned Counsel for the appellants had made a faint attempt to challenge the said agreement that there has been violation of provisions of Section 28(1)(c) of Foreign Exchange Regulations Act, 1973 by the respondents Nos. 1 and 1A in respect of the said usership agreement dated 20th December, 1976. It has been contended on behalf of the respondents and in our view rightly that there is no violation of any of the provisions of the Foreign Exchange Regulation Act, as the said Section 28(1)(c) refers todirect or indirect payments of royalty in respect of use of the trade marks. It appears under the trade mark user agreement dated 20th December, 1978 no remuneration, whether by way of royalty or otherwise shall be payable by the users to the proprietors in respect of the use of the trade marks. Therefore, the provisions of Section 28(1)(c) of the Foreign Exchange Regulation Act are not applicable to the instant case as there was no royalty payable for use of the trade marks.
36. All the contentions raised by the appellant as noted above fail. It may be mentioned that the appellant has not pressed other points taken in the petition before the trial Court except the points as discussed above. This appeal is dismissed. Interim order, if any, is vacated.
37. There will be no order as to costs.
38. Learned Counsel for the appellant prays for stay of operation of this judgment and order. Such prayer is refused.
Samaresh Banerjee, J.
39. I agree.
40. Order accordingly.