Holding

Under Notification No. 1/93‑CE, exemption is denied for excisable goods bearing a brand or trade name of another person, and a registration certificate under the Trade Marks Act, even with retrospective effect, does not confer the exemption.

Summary

Meghraj Biscuits Industries Ltd. manufactured biscuits and sold them under the brand name “Meghraj” from 1991. The brand name was a registered trademark of Kay Aar Biscuits (P) Ltd., which also used it for biscuits. The Central Excise Department held that the appellant was not eligible for the Small Scale Industry (SSI) exemption under Notification No. 1/93‑CE because it was using another person’s brand name, and demanded differential duty. The appellant later obtained a registration certificate for the “Meghraj” mark in its favour, with retrospective effect from 1991, and sought rectification, which was rejected. On appeal, the Supreme Court examined whether such registration, even retrospectively, conferred the SSI exemption and whether the use of another’s brand name disqualified the appellant. The Court held that the exemption under Notification No. 1/93‑CE is unavailable for excisable goods bearing a brand or trade name (registered or not) of another person, and that a registration certificate under the Trade Marks Act does not automatically grant the exemption. The burden to prove no intention to indicate a connection with the other’s goods lies on the assessee, which the appellant failed to discharge. Consequently, the appeals were dismissed.

Issues considered

The exemption under Notification No. 1/93‑CE is available to SSI units using their own brand name, but not when they use a brand name or trade name of another person, whether registered or not.
Whether a registration certificate under the Trade Marks Act, 1999, issued with retrospective effect, confers entitlement to the SSI exemption.
Who bears the burden of proving that the use of another’s brand name does not indicate a connection with the other’s goods.
Whether the alleged abandonment of the original trademark by Kay Aar Biscuits (P) Ltd. can be presumed.
Whether the agreement between Kay Aar Biscuits (P) Ltd. and Rich Food Products establishes ownership of the trademark.

Legislation cited

Subjects

SSI exemptionbrand nametrade markCentral Exciseretrospective registrationburden of proofabandonmentNotification No. 1/93‑CETrade Marks ActSection 28

Judgment

~

. j
A
M/S. MEGHRAJ BISCUITS INDUSTRJES LTD.
v.
COMMISSIONER OF CENTRAL EXCISE, U.P.

MARCH 14, 2007 B
[S.H. KAPADIA AND B. SUDERSHAN REDDY, JJ.]
J
-'-
Central Excise Act, 1944-SSI Notification-Exemption under-
Entitlement of-Assessee-manufacturer of biscuits, selling it under Brand c
name M since 1991-Revenue's case that assessee using registered trade
mark of another manufacturer, thus, not entitled to exempiion-Held: Under
the Notification, exemption not available for excisable goods bearing brand
name, registered or not, of another persorr-Assessee did not satisfj; the
Authority that there was no intention of indicating connection with the
D
goods of other person, and that the other manufacturer had abandoned the
Trade Mark-Further, grant of registration certificate to assessee under the
.I
~ Trade Marks Act in year 2000 would not entitle him to exemption-
Retrospective effect cannot be given to issuance of registration certificate on
the principle of deemed equivalence-Thus, assessee not entitled to
exemption-Notification no. 1198 CE dated 28.2.1993 (as amended)-Trade E
Marks Act, 1999--Section 28.

Appellants-manufacture of biscuits, sold the biscuits under the brand
name M. Department issued notice to the appellants that they were not eligible
to the exemption under the SSI Notification No.1/93-CE (as amended) since
M was a registered trade mark of KAB who were using it on manufacture of F
~
biscuits themselves; and as such demanded differential duty. It was Revenue's
case that KAB and RFP entered into an agreement under which KAB gave
permission to RFP to use its trade mark for the manufacture of wafers alone
for three years from 22.11.1989. Appellants contended that they started
manufacturing biscuits in 1991 an~ sold it in wrapper mentioning Mon it G
and since then the use of brand name M was never challenged. Assistant
-f Commissioner held that the appellants were not entitled to the benefit.
Appellants-assessee filed appeals. Commis5ioner dismissed the same since
the appellants were using the brand name M of another manufactur'1 KAB
1003
H
1004 SUPREME COURT REPORTS [2007) 3 S.C.R.

A on their products (biscuits); and that the word M was printed on all the printed
.\ '
wrappers and as such was using the brand name Mon its products, thus, were
not entitled to exemption. Tribunal upheld the Orders. Thereafter, appellants
filed application for Rectification. During pendency of the Rectification
Application, the Registrar of Trade Marks issued Registration Certificate
registering the trade mark Munder Trade Marks Act, 1999 in favour of the
B appellants and the same was mentioned before the tribunal Tribunal dismissed
the Rectification Application. Hence the present appeals.

Dismissing the appeals, the Court ~

>·
HELD: 1.1. The object of the Notification No.1/93-CE dated 28.2.1993
c (as amended) was to help the SSI Units to survive in the market dominated by
brand name/trade name and thereby increase industrial production. Under
para '4' of the Notification, the benefit of exemption was not available for
excisable goods bearing brand name or trade name (registered or not) of
another person. The object of the exemption Notification was neither to protect
D the owners of the trade mark nor the consumers from being misled. These
are considerations which are relevant in disputes arising out of infringement/
passing of actions under the Trade Marks Act. The object of the Notification
.... _
is to grant benefits only to those industries which otherwise do not have the i
advantage of a brand name. (Paras 7 and 11) (1009-E-F; 1011-A-C)

E 1.2 It is clear that grant of registration certificate under the Trade
Marks Act will not automatically provide benefit of exemption to the SSI Unit.
(Para 121 (1011-DI

Pahwa Chemicals Pvt. Ltd. v. Commissioner of Central Excise, Delhi,
(2005) 189 EL T 257 SC, relied on.
F
2.1. There was no evidence to show as to whether KAB was an "eligible
manufacturer". No explanation was given as to why Director of KAB has not
"
been examined by the appellants. He was examined even on the question of
alleged transfer of the trade mark in favour of appellants. In the
circumstances, there is no merit in this appeal. (Para 91 (1010-D-EI
G
2.2. MY-common Director in the appellant company and KAB filed an
~
affidavit enclosing the registration certificate, but did not state as to on what
basis, in the Agreement signed by him, he had declared that KAB is the owner
of the registered trade mark M. There is no deed of assignment from KAB in
H favour of the appellants. The Department has rightly placed reliance on the
MEGHRAJ BISCUITS INDUSTRIES LTD.•• COMMNR OF CENTRAL EXGISE, !JP ] 005

... J Agreement. In the circumstances, the burden was on the appellants-assessee A
to satisfy the Adjudicating Authority that there was no intention of indicating
a connection with the goods of the assessee and such other person.
!Para 14111011-F-Gl

Commissioner of Central Excise, Chandigarh v. Bhalla Enterprises,
(2004) 173 ELT 225 SC, relied on. B

).
2.3. The submission that KAB is non-functional since 01.03.93 and,
_.,, therefore, in any event appellants were entitled to use the trade mark M is
based on the concept of abandonment cannot be accepted. Discontinuation of
business in respect of a product does not necessarily amount to abandonment.
There is no evidence from the side of the appellants indicating abandonment
c
of trade mark by KAB. Although, the Director of KAB has filed his Affidavit
enclosing the registration certificate, he has nowhere stated that KAB has
abandoned the trade mark. The burden is on the appellants to prove
abandonment of trade mark, particularly, when the Department is relying upon
the agreement between KAB and RFB. !Para 15111012-A-CI D

,-J )
3.1. The Trade Marks Act, 1999 has been enacted to amend and
consolidate the law relating to trade marks, to provide for registration and
better protection of trade marks and for prevention of the use of fraudulent
marks. Under section 28 of the Act registration gives to the registered
proprietor of the trade mark the exclusive right to the use of the trade mark E
in relation to the goods in respect of which the trade mark is registered and
to obtain relief in respect of infringement of the trade mark in the manner
provided by the Act. The Registrar, Trade Marks, can issue registration
certificate under Section 28 of the Act with retrospective effect. !Para 171
(1012-F-Gl F
f
3.2. The effect of making the registration certificate applicable from
retrospective date is based on the principle of deemed equivalence to public
user of such mark. This deeming fiction cannot be extended to the Excise
Law. It is confined to the provisions of the Trade Marks Act. Applying the
principle of deemed equivalence it is clarified that if the SSI unit wrongly G
affixes a trade mark of another person, be it registered or not, or if it uses
the trade mark of an ineligible person then such default would not be
eliminated by the principle of deemed equivalence embodied in section 28 of
the Trade Marks Act, 1999 as that principle is based on a deeming fiction

H
1006 SUPREME COURT REPORTS [2007] 3 S.C.R.
"
A which fiction is confined only to the provisions of the Trade Marks Act.
(Paras 18 and 20111014-G; 1019-El .I, .
3.3 In the instant case, where there is evidence with the Department of
the trade mark being owned by KAB and where there is evidence of the
appellants trading on the reputation of KAB which is not rebutted by the
B appellants and it is found that the appellants had wrongly used the trade mark
of KAB, issuance of registration certificate with retrospective effect from
1991 cannot confer the benefit of exemption under Excise Laws to the assessee.
(Paras 16 and 18) (1012-D-E; 1014-H) "
>-
Chemicals Pvt. Ltd. v. Commissioner of Central Excise, Delhi,
c (2005)Pahwa
189 ELT 257 SC, relied on.

Commissioner of Central Excise, Mumbai v. Bigen Industries Ltd.,
(2006) 197 EL T 305, distinguished

Sunder Parmanand Lalwani and Ors. v. Caltex (India) Ltd., AIR 1969
D Bombay 24 and Consolidated Foods Corporation v. Brandon and Co., Pvt.
Ltd., AIR (1965) Bombay 35, approved.
( ...__
CIVIL APPELLATE JURJSDICTION : Civil Appeal No. 8739-8741 of
200!.
E From the Judgment and Order dated 11.04.2000 and 08.12.2000 of the
Customs, Excise & Gold (Control) Appellate Tribunal, New Delhi in Final
Order No. 121-122/2001) in Appeal Nos. E/1796/95-D and E/1743/96-D and
Misc. Order No. M/90/2000-D in Rectification Application (ROM) No. E/Rom/
72/7200-D in Appeal Nos. E/1796/95-D and E/1743/96-D respectively.
F
S.K. Bargaria, Punit Dutt Tyagi and Ajay Chaudhary for the Appellant.

Mathai M. Paikeday, K.K. Sentilvelan and P. Parmeswaran for the
"
Respondent.

The Judgment of the Court was delivered by
G
KAPADIA, J. I. Aggrieved by the decision of Customs, Excise and Gold
Control Appellate Tribunal (CEGAT) dated 11.4.2000, the appellants (assessee) \

have come by way of civil appeals under Section 35L of the Central Excise
Act, 1944.
H
... MEGHRAJ BISCclTS INDUSTRIES LTD.,. co~"INR. OF CENTRAL EXCISE.up {KAPADIA. J) I 007

.) 2. Appellants were engaged in the manufacture of biscuits classifiable A
under Sub-Heading 1905. I 1 of the Central Excise Tariff. The biscuits were
sold under the brand name "Meghraj". Under show cause notices it was
alleged that the appellants herein (assessee) have sold the biscuits under the
brand name "Meghraj", which was a registered trade mark of Kay Aar Biscuits
(P) Ltd. who was using the said trade mark on manufacture of biscuits B
themselves, and, therefore, the appellants were not eligible to the benefit of
SS! Notification No. 1193-CE dated 28.2.1993 as amended by Notification No.591
> 94-CE dated 1.3.1994. The above show cause notices were issued by the
._ Department demanding differential duty for the period April 1994 to June 1994
amounting to Rs.3,74,9481- plus short paid duty for the period April 1995 to
May 1995 amounting to Rs.92,992. The said demand was based on an C
agreement detected by the Department. That Agreement was between Madan
Verma, Director of a company known as Mis. Kay Aar Biscuits (P) Ltd.,
Ghaziabad, and Mis. Rich Food Products (P) Ltd., Noida. Under the said
Agreement Mis. Kay Aar Biscuits (P) Ltd. was Party No.I. Under the
Agreement it was declared that Mis. Kay Aar Biscuits (P) Ltd. was the owner D
of the registered trade mark "Meghraj". Under the Agreement it was stated
that Mis. Kay Aar Biscuits (P) Ltd. was using the aforestated trade mark
"Meghraj" for the manufacture of biscuits. Under the Agreement there was
a recital under which it was stated that Mis. Rich Food Products (P) Ltd. had
put up a Unit for manufacture of wafers in Noida which it sought to manufacture E
under the b~and name "Meghraj". Under the said Agreement Mis. Kay Aar
Biscuits (P) Ltd. gave permission to Mis. Rich Food Products Pvt. Ltd. to use
its trade mark for the manufacture of wafers alone. The said agreement was
valid for three years commencing from 22.11.1989. At this stage, it may be
noted that the appellants herein claim to have started manufacture of biscuits F
in 1991. The biscuits were sold in wrapper mentioning the name of the
appellants, "Mis. Meghraj Biscuits Industries Ltd." or "Meghraj". The
Appellants claimed that it has been using the wrapper since beginning and
since 1991 the use of the trade name or brand name "Meghraj" has never been
challenged. The Assistant Commissioner, Ghaziabad, examined the printed
wrappers. He came to the conclusion vide his orders that the trade name G
"Meghraj" was in the form of a logo printed on the wrapper of the biscuits
and, therefore, the appellants were not entitled to the benefit of Notification
No.1193-CE dated 28.2.93 as amended by Notification No.59194 dated 1.3.94.
Consequently, the Adjudicating Authority called upon the appellants to pay
differential duty forthe period April 1994 to June 1994 amounting to Rs.3,74,948 H
1008 SUPREME COURT REPORTS (2007] 3 S.C.R.

A plus short paid duty for the period April 1995 to May 1995 amounting to
Rs.92,992.

3. Aggrieved by the decision of the Adjudicating Authority, the assessee
preferred appeals to the Commissioner (A). The said appeals were rejected
on the ground that the appellants were using the brand name "Meghraj" of
B another manufacturer Mis. Kay Aar Biscuits (P) Ltd. on their products
(biscuits) and, therefore, they were not entitled to the benefit of exemption
under Notification No.1193-CE, as amended. It was held that the word
"Meghraj" was printed on all the printed wrappers and, therefore, it was
wrong to say that the appellants were not using the brand name "Meghraj"
C on its products. In this connection, reliance was placed by the Commissioner
(A) on the said Agreement dated 22.11.89. Before the Commissioner (A) the
appellants herein contended that they had used the name "Mis. Meghraj
Biscuits Industries Ltd." on the wrapper and net on the product and, therefore,
they were entitled to exemption. This argument was rejected by the
D Commissioner (A) saying that the appellants were using the brand name
"Meghraj" on their products. According to the Commissioner (A), the
appellants used the trade name "Meghraj" in the form of a logo which was
printed on the wrapper. Before the Commissioner (A), it was argued in the
alternative that the logo belonged to Mis. Kay Aar Biscuits (P) Ltd.; that the
E same was registered SS! Unit; that Mis. Kay Aar Biscuits (P) Ltd. was lying
closed since 1.3.93 and, therefore, the appellants have been using that logo
of Mis. Kay Aar Biscuits (P) Ltd. who was eligible for exemption under
Notification No.1193-CE, as amended. This contention was rejected by the
Commissioner (A) on the ground that under the Notification No.1193-CE, as
amended, exemption was not available to the specified goods bearing brand
F name or trade name (registered or not) of another person. Since, the appellants
herein had used the trade name "Meghraj" on their products which trade
name was owned by Mis. Kay Aar Biscuits (P) Ltd. the appellants were not
entitled to the benefit of exemption under Notification No.1/93-CE, as amended.
Accordingly, the Commissioner (A) dismissed the appeals. The orders of the
G Commissioner (A) have been confirmed by Order dated 11.4.2000 passed by
CEGA T. Hence, these civil appeals.

4. To complete the chronology of events, it may be pointed out that
after the impugned decision of the Tribunal dated 11.4.2000, the appellants
herein moved an Application for Rectification on 12.5.2000 (ROM No.7212000).
H In that application it was urged on behalf of the appellants herein that the
)
MEGHRAJ BISCUITS INDUSTRIESL TD."· COMMNR. OF CENTRAL EXCISE.UP. [KAPADIA.J.J] 009

• J said brand name "Meghraj" did not belong to M/s. Kay Aar Biscuits (P) Ltd.; A
that the Department has failed to discharge its burden to prove that the trade
name "Meghraj" belonged to Mis. Kay Aar Biscuits (P) Ltd.; that a mere
Agreement between Mis. Kay Aar Biscuits (P) Ltd. and M/s. Rich Food
Products (P) Ltd. would not be sufficient to prove that Mis. Kay Aar Biscuits
(P) Ltd. was the lawful owner of the brand name "Meghraj". In the
Rectification Application it was further pointed out that in fact the appellants B
had applied for ownership of the brand name "Meghraj" vide application
dated 30.9.91 to the Registrar, Trade Marks under the Trade Marks Act and
that the said application for registration was pending before the competent
authority and since the above arguments were not recorded in the impugned
Order of the CEGAT dated 11.4.2000 the same warranted rectification. C
5. By Order dated 8.12.2000, CEGA T rejected the above Rectification
Application made by the Appellants.

6. One more fact needs to be mentioned that on 30.6.2000 the Registrar
of Trade Marks appears to have issued Registration Certificate on 30.6.2000 D
registering the trade mark "Meghraj" in favour of the appellants with effect
form 30.9.91. It appears that issuance of this certificate was mentioned before
the CEGAT which rejected the Rectification Application on 8.12.2000.

7. Notification No.1/93-CE dated 28.2.93 was issued to help the SS!
Units to survive in the market dominated by brand name/trade name. The E
object of the Notification, therefore, was to help the SS! Units and thereby
increased industrial production. Under para '4' of the said Notification, the
benefit of exemption was not available for excisable goods bearing brand
name or trade name (registered or not) of another person. Explanation IX
defined the word "brand name" or "trade name". The same is quoted F
hereinbelow:

"Explanation IX - "Brand name" or "trade name" shall mean a brand
name or trade name, whether registered or not, that is to say a name
or a mark, such as symbol, monogram, label, signature or invented
word or writing which is used in relation to such specified goods for G
the purpose of indicating, or so as to indicate a connection in the
course of trade between such specified goods and some person using
such name or mark with or without any indication of the identity of
that person."

8. Notification No.1/93-CE dated 28.2.1993 was subsequently amended H
JOJO SUPREME COURT REPORTS [2007] 3 S.C.R.

A by Notification No.59194 dated 1.3.94. Para '7' of Notification No.1193-CE as
amended read as under:
. '

"Para-7 The exemption contained in this Notification shall not apply
to the specified goods where a manufacturer affixes the specified
goods with a brand name or trade name (registered or not) of another
B person, -who is not eligible for the grant of exemption under this
Notification."

9. In the present case, as stated above Mis. Kay Aar Biscuits (P) Ltd
entered into an agreement on 22.11.89 with Mis. Rich Food Products (P) Ltd.
Under that Agreement the Director of Mis. Kay Aar Biscuits (P) Ltd. declared
C that his company was the owner of the registered trade mark "Meghraj". The
name of that Director is Madan Verma. He is the Director of the appellants
(company) also . Further there is no evidence to show as to whether Mis. Kay
Aar Biscuits (P) Ltd. was an "eligible manufacturer". This aspect is important
since one of the arguments advanced by the appellants herein before the
D Commissioner (A) was that the trade mark belonged to Mis. Kay Aar Biscuits
(P) Ltd., which was registered SS! Unit lying closed since 1.3.1993. No
explanation has been given as to why Madan Verma has not been examined
by the appellants. He has not been examined even on the question of alleged
transfer of the trade mark in favour of the appellants. In the circumstances,
we do not find any merit in this appeal.
E
10. On behalf of the appellants it has been vehemently argued that
Mis. Kay Aar Biscuits (P) Ltd. was never the registered owner of the trade
mark "Meghraj". It was urged that merely because an Agreement stood
entered into on 22.11.89 between Mis. Kay Aar Biscuits (P) Ltd. and Mis.
F Rich Food Products (P) Ltd., the Department had erred in alleging that the
trade mark belonged to Mis. Kay Aar Biscuits (P) Ltd. It was urged that Ml
s. Kay Aar Biscuits (P) Ltd. had never got the trade mark registered under
the Trade Marks Act. It was urged that a false declaration was made by Ml
s. Kay Aar Biscuits (P) Ltd. under the above Agreement on 22.11.89. It was
urged that a mere agreement between two parties cannot constitute ownership
G of the trade mark in favour of Mis. Kay Aar Biscuits (P) Ltd. It was urged
that in any event Mis. Kay Aar Biscuits (P) Ltd. had stopped its production
in 1993; that the company had become defunct; that the appellants herein had
applied to the Registrar of Trade Marks for registration of the mark "Meghraj"
and vide registration certificate dated 30.6.2000 the Registrar has recognized
the appellants as owner of the trade mark with effect from 30.9.91. In the
H
MEGHRAJ BISCUITS INDUSTRIES LTD ,. COMMNR OF CENTRAL EXCISE.up [KAPADIA, J J] 011

circumstances, the appellants submitted that the demand for differential duty A
was unwarranted.

11. We do not find any merit in the above arguments. In the case of
Pahwa Chemicals Pvt. ltd. v. Commissioner of Central Excise, Delhi, (2005)
189 EL T 257 SC this Court has held that the object of the exemption Notification
was neither to protect the owners of the trade mark nor the consumers from B
being misled. These are considerations which are relevant in disputes arising
out of infringement/passing of actions under the Trade Marks Act. The
object of the Notification is to grant benefits only to those industries which
otherwise do not have the advantage of a brand name [See: para '3 '].

12. Applying the ratio of the above judgment to the present case, it is
c
clear that grant of registration certificate under the Trade Marks Act will not
automatically provide benefit of exemption to the SS! Unit.

13. In the case of Commissioner of Central Excise, Chandigarh v.
Bhalla Enterprises, (2004) 173 EL T 225 SC, this Court held that the assessee D
will not be entitled to the benefit of exemption if it uses on goods in question,
same/similar brand name with intention of indicating a connection with the
goods of the assessee and such other person or uses the name in such
manner that it would indicate such connection. It was further held that the
burden is on the assessee to satisfy the Adjudicating Authority that there
was no such intention [See: paras 6 and 7]. E
14. Applying the above test to the facts of the present case, Madan
Verma is a common Director in the two companies. He has filed an affidavit
enclosing the registration certificate dated 30.6.2000. However, in that Affidavit
he has not stated as to on what basis, in the Agreement of 23.11.89 signed
by him, he had declared that Mis. Kay Aar Biscuits (P) Ltd. is the owner of F
the registered trade mark "Meghraj" .. There is no deed of assignment from
M/s. Kay Aar Biscuits (P) Ltd. in favour of the appellants herein. The
Department has rightly placed reliance on the Agreement of 23.11.89. In the
circumstances, the burden was on the assessee (appellants herein) to satisfy
the Adjudicating Authority that there was no intention of indicating a G
connection with the goods of the assessee and such other person.
;
15. Before us it has been urged that M/s. Kay Aar Biscuits (P) Ltd. is
non-functional since 1.3.93 and, therefore, in any event appellants were entitled
to use the trade mark "Meghraj". This argument is based on the concept of
H
1012 SUPREME COURT REPORTS [2007] 3 S.C.R.

A abandonment. We do not find any merit in this argument. Discontinuation I. •
of business in respect of a product does not necessarily amount to
abandonment. In the present case, there is no evidence from the side of the
appellants indicating abandonment of the trade mark by M/s. Kay Aar Biscuits
(P) Ltd. Although, Madan Verma, the Director of Mis. Kay Aar Biscuits (P)
B Ltd., has filed his Affidavit enclosing the registration certificate, he has
nowhere stated that M/s. Kay Aar Biscuits (P) Ltd. has abandoned the trade
mark. In the circumstances, the Department was right in rejecting the above
contention. Abandonment of the trade mark has to be proved by the appellants
in the present case. The burden is on the appellants, particularly, when the
Department is relying upon the agreement dated 23.11.89 between M/s. Kay
C Aar Biscuits (P) Ltd. and M/s. Rich Food Products (P) Ltd.

16. Lastly, we are required to examine the retrospective effect of the
registration certificate dated 30.6.2000 with effect from 30.9.91. At the outset,
we may reiterate that the object of the exemption Notification was neither to
protect the owners of the trade mark nor the consumers from being misled.
D These are considerations which are relevant in disputes arising under the
Trade Marks Act. The object of the exemption Notification No.1/93-CE was
to grant benefits to those industries which do not have the advantage of a
brand name. However, since retrospective nature of the registration certificate
dated 30.6.2000 is repeatedly being raised in this Court we would like to
•
E examine the case law in this regard.

17. The Trade Marks Act, 1999 has been enacted to amend and
consolidate the law relating to trade marks, to provide for registration and
better protection of trade marks and for prevention of the use of fraudulent
marks. Under Section 28 of the Trade Marks Act, 1999, registration gives to
p the registered proprietor of the trade mark the exclusive right to the use of
the trade mark in relation to the goods in respect of which the trade mark is
registered and to obtain relief in respect of infringement of the trade mark in
the manner provided by the Trade Marks Act. It is correct to say that the
Registrar, Trade Marks, can issue registration certificate under Section 28 of

G
the Trade Marks Act with retrospective effect. The question before us is :
what is the effect of issuance of registration certificate with retrospective
effect. This question has been decided by the Bombay High Court in the case
of Sunder Parmanand Lalwani and Ors. v. Caltex (India) Ltd., AIR (1969)
Bombay 24 in which it has been held vide paras '32' and '38' as follows:
'
-
H
MEGHRAJ BISCUITS INDUSTRIES LTD " C0\1\1,R OF CENTRAL EXCISE, C.P. (KAPADIA, J.JJ 0J 3
"32. A proprietary right in a mark can be obtained in a number of A
J
"' ways. The mark can be originated by a person, or it can be
subsequently acquired by him from somebody else. Our Trade Marks
law is based on the English Trade Marks law and the English Acts.
The first Trade Marks Act in England was passed in 1875. Even prior
thereto, it was firmly established in England that a trader acquired a
right of property in a distinctive mark merely by using .it upon or in
B
connection with goods irrespective of the length of such user and the
).
extent of his trade, and that he was entitled to protect such right of
property by appropriate proceedings by way of injunction in a Court
" of law. Then came the English Trade Marks Act of 1875, which was
substituted later by later Acts. The English Acts enabled registration c
of a new mark not till then used with the like consequences which a
distinctive mark had prior to the passing of the Acts. The effect of the
relevant provision of the English Acts was that registration of a
trade mark would be deemed to be equivalent to public user of such
mark Prior to the Acts, one cou Id become a proprietor of a trade mark D
only by user, but after the passing of the Act of 1875, one could
become a proprietor either by user or by registering the mark even
'l prior to its user. He could do the latter after complying with the other
requirements of the Act, including the filing of a declaration of his
intention to use such mark. See observations of Llyod Jacob J. in 1956
RPC I. In the matter of Vitamins Ltd's Application for Trade Mark at E
p.12, and particularly the following:

"A proprietary right .in a mark sought to be registered can be
obtained in a number of ways. The mark can be originated by
a person or can be acquired, but in all cases it is necessary that
F
the person putting forward the application should be in
:~ possession of some proprietary right which, if questioned, can
be substantiated".

Law in India under our present Act is similar.

38. A person may become a proprietor of a trade mark in diverse G
ways. The particular mode of acquisition of proprietorship relied
upon by the applicant in this case is of his user for the first time in
India in connection with watches and allied goods mentioned by him
of the mark "Caltex", which at the material time was a foreign mark
belonging to Degoumois & Co. of Switzerland and used by them in H
1014 SUPREME COURT REPORTS [2007] 3 S.C.R.

A respect of watches in Switzerland. Before the Deputy Registrar and l ..
before Mr. Justice Shah, proprietorship was claimed on the basis that
the applicant was entitled to it as an importer's mark. Several authorities
were cited and were considered and principles deduced and relied
upon in that behalf. In our opinion, it is not necessary in this case
to go into details about facts in the various decided cases dealing
B
with importer's marks. In many of those cases, the dispute was between
a foreign trader using a foreign mark in a foreign country on goods
which were subsequently imported by Indian importers and sold by
them in this country under that very mark. In short it was a competition ,•
between a foreign trader and the Indian importer for the proprietorship
c of that mark in this country. We have already reached a conclusion
that so far as this country is concerned, Degoumois & Co. have
totally disclaimed any interest in the proprietorship of that mark for
watches etc. In India, the mark "Caltex" was a totally new mark for
watches and allied goods. The applicant was the originator of that
D mark so far as that class of goods is concerned, and so far as this
country is concerned. He in fact used it in respect of watches. There
is no evidence that that mark was used by anyone else in this country
before the applicant, in connection with that class of goods.
Unquestionably, the applicant's user was not large, but that fact
makes no difference, because so far as this country is concerned, the
E inark was a new mark in respect of the class of goods in respect of
which the applicant used it. We therefore, hold that the applicant is
the proprietor of that mark."

[emphasis supplied]
F 18. On reading the above quoted paragraphs from the above judgment,
with which we agree, it is clear that the effect of making the registration
certificate applicable from· retrospective date is based on the principle of
deemed equivalence to public user of such mark. This deeming fiction
cannot be extended to the Excise Law. It is confined to the provisions of
G the Trade Marks Act. In a given case like the present case where there is
evidence with the Department of the trade mark being owned by M/s. Kay
Aar Biscuits (P) Ltd. and where there is evidence of the appellants trading
....
on the reputation of M/s. Kay Aar Biscuits (P) Ltd. which is not rebutted by
the appellants (assessee), issuance of registration certificate with retrospective
H effect cannot confer the benefit of exemption Notification to the assessee. In
MF.GHRAJ BISCVITS INOVSTRIF.S LTD."· CO~l\1NR. OF CENTRAi, EXCISE, up (KAPADIA, J.) I015
the present case, issuance of registration certificate with retrospective effect A
... J
from 30.9.91 will not tantamount to conferment of exemption benefit under the
Excise Law once it is found that the appellants had wrongly used the trade
mark of Mis. Kay Aar Biscuits (P) Ltd.

19. In the case of Consolidated Foods Corporation v. Brandon and
Co., Pvt. Ltd, AIR (1965) Bombay 35, it has been held vide paras '27' and '30' B
that the Trade Marks Act merely facilitates the mode of proof. Instead of
compelling the holder of a trade mark in every case to prove his proprietary
~
right, the Act provides a procedure whereby on registration the owner gets
... certain facilities in the mode of proving his title. We quote hereinbelow paras
'27' and '30' of the said judgment which read as follows: c
"(27) At any rate, it must be remembered that in this case I am not
dealing with a passing-off action or an action for infringement of a
trade mark which is alleged to be common property. The case put up
by the petitioner corporation that it was the first to use the mark
"Monarch" in this country on its food products and that, in as much D
as the mark "Monarch" was admittedly a distinctive mark, it had
acquired the right to get the mark registered in its name and also the
right to oppose the application of any other trader in this country
seeking to get that mark registered in his name in respect of the food
products manufactured or sold by him. Apparently, in such a case E
there is no question of infringement of any right of property in a trade
mark for which any relief is sought, nor is there any question of
passing-off, so that it might be necessary to enter into questions of
nicety as regards whether there could or could not be any property
in a trade mark. As already stated by me while referring to the
observations of Sir John Romily, it is not really necessary for me to F
~
decide in this case as to whether there could or could not be any
property in a trade mark for the purpose of deciding this case. Even
if it is found to be necessary to decide this question as to property
in a trade mark, I have already pointed out that the Courts of Equity
in England granted relief in cases of infringement of trade marks on G
the basis of infringement of the right of property in the trade mark.
There was no other basis on which those Courts could give any relief
to the plaintiffs in such cases and for the purpose of such relief the
Courts of Equity did not require the plaintiff to prove that his mark
by any length of user was associated in the minds of the public with
H
1016 SUPREME COURT REPORTS (2007) 3 S.C.R.

A his goods. All that was necessary for the plaintiff to prove was that l l
he had used that mark in respect of his particular type of goods. That
was enough in the eyes of the Courts of Equity to entitle him to a
relief by way of an injunction in case of an infringement of his mark
by some other trader. I have also pointed out that the statute which
came to be enacted in England in 1875 and the subsequent statutes
B
did nothing more than to embody the rights in relation to trade marks
which were already laid down by the Courts of Equity. As a matter
of fact, the statute enabled a person to have registered a mark not ....
only which he had been using but also a mark which he proposed to ;r
use. The latter type of mark would evidently refer to a distinctive
c mark, a mark which does not directly describe the nature or quality of
the goods to which it is attached. In cases of such marks, whereas
the Courts of Equity did require some slight user before the proprietor
thereof could institute an action for infringement thereof, the statute
enabled the registration of such mark without any user at all, because
D such mark being distinctive per se it was not necessary for the person
applying for its registration to show that mark had acquired a reputation
in the market, so that it could be associated only with his goods and
(
of nobody else. Even so far as this country is concerned, the Trade
Marks Act of 1940 does not seem to have made any change in the
legal rights of the owner of a trade mark as established by the Courts
E of Chancery in England. In In re Century Spinning and Manufacturing
Co. Ltd, 49 Born LR 52: (AIR 1947 Born 445), Chagla, J. (as he then
was) observed in this connection (at page 59 of Born LR : (at p. 449
of AIR)) as follows :

"The question is whether in India the Trade Marks Act of 1940
F has made any change in the legal rights of the owner of a trade ~

mark. To my mind it is clear that even prior to the passing of this
Act the owner of a trade mark could maintain an action for the
infringement of a trade mark and that action could only be
maintained on the assumption that he was the owner of the trade
G mark and he had a proprietary right in the trade mark. Sub-clause )

(I) of Section 20 of the Trade Marks Act itself assumes and
implies that such a right existed in the owner of a trade mark '·
because it says that the unregistered holder of a trade mark can
maintain a suit for the infringement of a trade mark provided that
the trade mark was in use before February 25, 1937, and an
H
7
MEGHRAJ BISCUITS INDUSTRIES LTD.,. COMMNR. OF CENTRAL EXCISE, UP [KAPADIA. J J ] QJ

J. .J
application for registration had been made and refused." A
As regards the question whether there could be any property in a
trade mark, the learned Judge further observed (on the same page) as
follows:

"Again, turning to S. 54 of the Specific Relief Act, which deals B
with cases when a perpetual injunction may be granted the
Explanation to that section lays down that for the purpose of
/. that section a trade mark is property. Therefore, if a person
-< invaded or threatened to invade the other's right to, or enjoyment
of, property, the Court under Section 54 had the discretion to
grant a perpetual injunction, and trade mark was as much property
c
for the purpose of S. 54 as any other kind of property.
I, therefore, agree with the learned Advocate General that all that
the Trade Marks Act has done is to facilitate the mode of proof.
Instead of compelling the holder of a trade mark in every case D
to prove his proprietary right before he could ask the Court to
grant him an injunction, the Trade Marks Act provides a
) procedure whereby by registering his trade mark the owner gets
certain facilities in the mode of proving his title. For instance,
under S.23 of the Trade Marks Act registration is to be prima
facie evidence of the validity of the trade mark." E

This was precisely the view which was expressed by Lord Justice
Romer in (1905) I KB 592.to which I have already referred in the earlier
part of the judgment. To summarise, therefore, a trader acquires a
right of property in a distinctive mark merely by using it upon or in F
connection with his goods irrespective of the length of such user and
_, the extent of his trade. The trader who adopts such a mark is entitled
to protection directly the article having assumed a vendible character
is launched upon the market. As between two competitors who are
each desirous of adopting such a mark, "it is, to use familiar language,
entirely a question of who gets there first." Gaw Kan Lye v. Saw G
Kyone Saing, AIR (1939) Rang 343 (FB). Registration under the
statute does not confer any new right to the mark claimed or any
' greater right than what already existed at common law and at equity
without registration. It does, however, facilitate a remedy which may
be enforced and obtained throughout the State and it established H
1018 SUPREME COURT REPORTS [2007] 3 S.C.R.
the record offacts affecting the right to the mark. Registration itself
A ...
does not create a trade mark. The trade mark exists independently of •
the registration which merely affords further protection under the
statute. Common law rights are left wholly unaffected. Priority in
adoption and use of a trade mark is superior to priority in registration."

B (30) It was next contended by Mr. Shavaksha that the respondent
company had itself shown Kipre and Co. Private Ltd., as the proprietors
of the mark on the labels bearing the mark "Monarch" on the different
kinds of its food products and, therefore, the respondent company ...
had no right to apply for registration in its favours as if it was the r

c proprietor thereof. It was conceded by Mr. Shah that the labels which
were used on the food products manufactured by Kipre and Co.
Private Ltd, did bear the name ofKipre and Co. Private Ltd. immediately
below the mark "Monarch" and that the respondent company's name
was printed below it as sole distributors. Mr. Shah, however, contended
that by an agreement Ex. F. made between the respondent company
D and Kipre and Co. Private Ltd. in 1951 it was clearly provided that the
mark "Monarch" belonged to the respondent company, that Kipre and
Co. Private Ltd. were only to manufacture the food products as ordered
-(
by the respondent company and that the food products so
manufactured were to be bottled and packed by them for its use and
E benefit and that, therefore, in spite of Ki pre and Co.'s name appearing
on the labels, the respondent company was the true proprietor of the
mark "Monarch" and that, therefore, it was entitled to apply for its
registration as proprietor thereof. Now, once again turning to the
I
provisions of section 18 sub-section (I), it is clear that only a person
F claiming to be the proprietor of a trade mark used by him or proposed
to be used by him could make an application to the Registrar for the
registration thereof. According to this provision, not only a person
should claim to be the proprietor of a trade mark but he should prove
~
--
that he had used it as such proprietor on his goods. Then turning to
G the label as it stood at the date of the application, two names appeared
on the label, one of Kipre and Co. and the other of the respondent
company. If these two names had stood by themselves without any
further description of either of them, it could be said that both Kipre
and Co. and the respondent company were jointly the owners of the
mark as well as the owners of the goods to which the label was
H
MEGHR." BISCUITS INDUSTRIES LTD ,. C0\"1NR. OF CENTRAL EXCISE.UP [KAPADIA. J JI Q19

affixed. But, that is not the case. The respondent company is described A
as the sole distributors on the label. The reasonable inference that
could be drawn from this description surely is that the goods were the
property of Kipre and Co. and so also the mark. If the respondent
company was really the proprietor of the mark and also the owner of
the goods one would expect some such words as "Manufactured by
Kipre and Co. for Brandon and Co., Private Ltd." In the absence of B
any such words, a person buying any of these goods on reading the
label would naturally believe that what he was buying was the property
ofKipre and Co. which was selling its goods under the mark "Monarch".
It is true, as contended by Mr. Shah, that even distributors and sellers
may have marks of their own, but then, there are ways and ways of C
indicating on the label itself that the mark embodied therein is the
mark belonging to such distributor or seller. Obviously, therefore, on
the label as it stood, it could not be said that the respondent company
was the propr.ietor of the mark "Monarch" nor could it be said that
the mark was used by the respondent company as proprietor thereof."
D
(emphasis supplied)

20. Applying the principle of deemed equivalence we may clarify that
if the SS! unit wrongly affixes a trade mark of another person, be it registered
or not, or if it uses the trade mark of an ineligible person then such default
would not be eliminated by the above principle of deemed equivalence E
embodied in Section 28 of the Trade Marks Act, 1999 as that principle is
based on a deeming fiction which fiction is confined only to the provisions
of the Trade Marks Act.

21. Before concluding we may refer to the Judgment of this Court in the F
case of Commissioner of Central Excise, Mumbai v. Bigen Industries Ltd.
(2006) 197 EL T 305. In that matter a show cause notice was issued calling
upon the assessee to show cause why the exemption be not denied to the
assessee. In para '19' of the show cause notice the authority accepted the
existence of a deed of assignment. However, the show cause notice denied
the exemption on the ground that Notification No.140183-CE did not make any G
distinction between a brand name owned by a person in India or abroad. In
the present case, the facts are entirely different. In the present case, there
is no deed or assignment from Mis. Kay Aar Biscuits (P) Ltd. to the Mis.
Meghraj Biscuits Industries Ltd. (appellants herein). As stated above, there
is no proof of acquisition on payment or consideration by the appellants to
H
1020 SUPREME COURT REPORTS [2007] 3 S.C.R.

A Mis Kay Aar Biscuits (P) Ltd. In the present case, there is no evidence of \. ,
assignment or licence from Mis. Kay Aar Biscuits (P) ltd. to the appellants.
In the present case, we are concerned with the retrospective effect of the
certificate issued by the Registrar of Trade Marks on 30.6.2000 with effect
from 30.9.91. In the circumstances, the judgment of this Court in the case of
B Bigen Industries (Supra) has no application.

22. For the aforestated reasons, we do not find any merit in these civil
appeals. Before concluding we may point out that we do not wish to express
any opinion on the subsequent events which have taken place in this case.
Our judgment is confined only to the period in question under the impugned
C show cause notices.

23. Accordingly, the civil appeals stand dismissed with no order as to
costs.

N.J. Appeals dismissed.