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FAKE GOLD COINS AND A FORGOTTEN BRAND: CAN A DISUSED TRADEMARK STILL PROTECT? An Analysis of State of U.P. vs. Ram Nath, Partner, Panna Lal Durga Prasad, Kanpur Written By: Advocate Ajay Amitabh Suman, IP Adjutor [Patent and Trademark Attorney], High Court of Delhi
Introduction
What happens when a famous brand stops selling its product, but someone else starts copying its trademark to pass off inferior goods as genuine? Does the law still protect a mark that its owner has apparently abandoned? And can a criminal prosecution be launched for such copying, or must the aggrieved party limit itself to a civil lawsuit? These are the profound questions that the Supreme Court of India addressed in its judgment dated 24th November 1971 in State of U.P. vs. Ram Nath, Partner, Panna Lal Durga Prasad, Kanpur, reported as MANU/SC/0489/1971 : AIR1972SC232 : (1972) 1 SCC 130.
The case arose from an unusual set of facts involving gold coins, a legendary banking brand, and a bullion merchant in Kanpur who was minting and selling coins bearing a mark strikingly similar to that of a famous foreign bank. The Supreme Court, through Justice D.G. Palekar and Justice P. Jaganmohan Reddy, laid down important principles about the criminal dimension of trademark law — specifically, that criminal liability for trademark infringement does not evaporate merely because the owner of the mark has stopped using it, and that the police and magistracy have a valid role to play in enforcing trademark rights even without a direct complaint from the trademark owner.
Factual and Procedural Background
Habib Bank Ltd., Bombay — then described as one of the foremost refiners of gold in the country — had for many years been producing and selling gold coins and pieces of various shapes and sizes under a distinctive and highly recognizable trademark. This trademark was commonly known among the public as 'Habib Ka Sona' and 'Sher Chap Pansa'. The most striking feature of the trademark was a device depicting a lion holding a sword with his forearm, set against the background of a rising sun. On the face of the coin, the lion device appeared with the words 'Habib Bank Ltd.' inscribed above it and the word 'Shuddha Sonu' written below it in Gujarati script, with a dotted circle along the border. On the reverse face, there was a wreath along the border, with the words 'Habib Bank Ltd.' in the upper half and 'Pure Gold' in the lower half in English script, along with the description of weight and quality.
Over decades of use, this trademark had acquired enormous goodwill and distinctiveness. The people of the region, particularly in rural areas, had developed a great affinity for Habib Bank gold coins on account of their fineness — trusted for making ornaments and as a safe investment for savings, making the coins highly popular both in rural communities and in the bullion trade.
M/s. Pannalal Durga Prasad, a firm of bullion merchants operating out of Nayaganj, Kanpur, had been producing similar gold coins and applying to them a trademark deceptively similar to the registered trademark of Habib Bank Ltd. The principal difference was that instead of 'Habib Bank Ltd.' in Gujarati and English script, the coins bore the words 'Habib quality', and the words 'pure gold' in English were preceded by the letters 'P & D'. The coins otherwise replicated the famous lion device and overall appearance of genuine Habib Bank coins. It was alleged this imitation was designed to deceive even reasonably careful purchasers. The Trade Marks Registry had earlier written to the firm asking it to disclose how long it had been using the mark, but the firm chose not to reply — a fact that would later reflect adversely on their conduct.
On 24th October 1962, the Inspector of Trade Marks, on behalf of the Director of Industries, wrote a letter to the Additional City Magistrate I, Kanpur, bringing to his notice the alleged commission of offences under Sections 78 and 79 of the Trade and Merchandise Marks Act, 1958. He also named a goldsmith, Shri Pyarelal, operating in Nayaganj market, who was allegedly applying the registered trademark falsely and possessing dies for doing so. The Magistrate on the very same day directed the police to register a case and investigate.
The Sub-Inspector of Police, finding insufficient time to obtain a formal search warrant, conducted a search of the premises. Ram Nath, son of Durga Prasad and one of the firm's partners, was present. Dies for manufacturing coins and gold bars were found. In the presence of witnesses, coins of one tola and half tola were manufactured as specimen coins from the gold bar, seized, and preserved after obtaining Ram Nath's seal. A formal police report was submitted to the Magistrate.
The Magistrate adopted the procedure under Section 251-A of the Code of Criminal Procedure, examined each of the respondents, and framed criminal charges. On 1st May 1964, one Wadia — Senior Attorney Clerk of Habib Bank Ltd., Bombay — was examined as the first prosecution witness. His evidence revealed that Habib Bank had stopped dealing in gold and had not manufactured gold coins since 1954, and had even destroyed its dies. The accused filed an application on 29th May 1964, arguing the trademark had become ineffective and the matter was fit only for a civil court. The Magistrate rejected this application, noting that Habib Bank's trademark registration was valid and current until 1967, and that the abandonment argument under Section 46 could not defeat a criminal charge under Sections 78 and 79.
The accused then filed a revision before the Sessions Judge of Kanpur, who made a reference to the Allahabad High Court recommending quashing of charges on the basis of the abandonment principle under Section 46. The Allahabad High Court, by its Judgment dated 6th September 1967 in Criminal Reference No. 265 of 1965, though it did not fully agree with the Sessions Judge on Section 46, nonetheless quashed the criminal proceedings on different grounds. The State of Uttar Pradesh then appealed to the Supreme Court in Criminal Appeal No. 41 of 1969.
The Core Dispute
The central question before the Supreme Court was whether the Allahabad High Court was right in quashing the criminal charges under Sections 78 and 79. The High Court had accepted three grounds for doing so. First, since Habib Bank Ltd. had been declared a foreign bank in 1960 by the Reserve Bank of India — on the basis that it had become a citizen of Pakistan — it had no proprietary rights in India, raising doubt about whether the trademark could be protected. Second, the Trade Marks Inspector had no right to initiate a complaint under Sections 78 and 79, rendering the prosecution invalid. Third, questions of abandonment and implied consent of a trademark owner are complicated civil law matters that cannot be tried in a criminal court.
The State of Uttar Pradesh challenged all three grounds. The accused respondents defended the High Court's reasoning. The Supreme Court had to determine whether any of these grounds was legally sound.
Reasoning and Analysis of the Court Including Judgments Referred
The Supreme Court carefully examined the structure and language of the Trade and Merchandise Marks Act, 1958 — in particular the definition of 'trade mark' under Section 2(1)(v) and the criminal offence provisions under Sections 78 and 79 in Chapter X of the Act.
Section 78 makes it a criminal offence to falsify a trade mark, to falsely apply a trade mark to goods, to manufacture, dispose of or possess any die, block, machine, plate or other instrument for falsifying a trade mark, or to apply any false trade description to goods. The punishment is imprisonment up to two years, or fine, or both, unless the accused proves he acted without intent to defraud. Section 79 similarly punishes the sale, exposure for sale, or possession for trade or manufacture of goods to which a false trade description has been applied.
The definition of 'trade mark' in Section 2(1)(v) for the purposes of Chapter X is deliberately broad. It means either a registered trade mark or a mark used in relation to goods to indicate a connection in the course of trade between the goods and a person having the right as proprietor to use the mark. This definition covers both registered and unregistered marks.
The High Court had held that since Habib Bank stopped dealing in gold since 1954 and had even destroyed its dies, the trademark was effectively abandoned and could not any longer form the basis of a criminal prosecution. The Supreme Court firmly disagreed. It held that even if a registered trademark has been abandoned — meaning it has not been used for a period — the only legal consequence is that an interested person may apply to the Registrar under Section 46 to have the mark removed from the register. Abandonment does not give anyone else the right to use or falsify that mark. More importantly, abandonment does not extinguish criminal liability for a person who copies the mark. The criminal offence under Sections 78 and 79 consists in the deception itself — the act of presenting copied goods as if they were the genuine article associated with the original mark. The fact that Habib Bank had stopped manufacturing coins does not mean the public had stopped associating the lion-and-sun device with Habib Bank gold. The accused had themselves chosen to copy this specific mark precisely because it still commanded trust and recognition among consumers. Permitting such conduct to escape criminal sanction would be antithetical to the protective purpose of the law.
On the question of who could initiate proceedings, the Supreme Court closely analyzed Section 89 of the Act. Section 89(1) requires a written complaint from the Registrar or an officer authorized by him only for offences under the specifically enumerated Sections 81, 82, and 83. Offences under Sections 78 and 79 are not mentioned in Section 89(1) and are therefore governed by the ordinary procedure of the Code of Criminal Procedure. Since those offences carry a maximum of two years' imprisonment, they are non-cognizable under the applicable schedule to the Code. Under Section 155 of the Code of Criminal Procedure, information about a non-cognizable offence is entered in the station diary and the informant is referred to the Magistrate. The police cannot investigate without a Magistrate's order, but once the Magistrate so directs, the police may proceed with the same powers as in a cognizable case (barring arrest without warrant). Upon receiving the police report under Section 173 of the Code, the Magistrate may proceed under Section 251-A. The Magistrate in this case had followed exactly this procedure — he received the Trade Marks Inspector's letter, directed the police to register and investigate, received the report, examined the accused under Section 251-A, and framed charges on being satisfied that a prima facie case existed. The Supreme Court described this procedure as entirely unexceptionable.
On the citizenship argument — that Habib Bank, being a Pakistani entity, lacked proprietary rights in India — the Supreme Court was swift and decisive. This question was simply irrelevant to the criminal proceedings. The criminal charges were about the conduct of the accused, not about the nationality or citizenship of the entity whose mark was being falsified. Whether Habib Bank could enforce civil rights in India was an entirely separate question. It had no bearing on whether M/s. Pannalal Durga Prasad had committed criminal offences by deceiving the public.
The Court referred to Koran Singh v. Mohan Lal, 1964 ALJ 653, which the Allahabad High Court had relied upon, and which had itself followed the Full Bench decision of the Calcutta High Court in Ashutosh Das v. Keshav Chandra Ghosh, MANU/WB/0214/1936 : AIR1936Cal488. Those cases had held that questions of abandonment and implied consent of the trademark owner are complex civil questions for civil courts. The Supreme Court distinguished those cases and found them inapplicable. The criminal proceedings were not about who owned the trademark or whether there was implied consent to use it — they were about specific criminal acts of falsification and deceptive application committed by the accused for financial gain at the cost of public trust.
The ratio decidendi that emerged from the judgment is powerful and enduring: "Frivolous and baseless objections on orders passed by statutory authorities shall misdirect justice." The Magistrate had proceeded with perfect correctness and care. Allowing the accused to escape criminal prosecution by raising irrelevant technical arguments — about the foreign bank's citizenship, about the Inspector's authority, about civil court jurisdiction — would have defeated justice entirely.
Final Decision of the Court
The Supreme Court allowed the appeal filed by the State of Uttar Pradesh. The Allahabad High Court's judgment dated 6th September 1967, quashing the criminal proceedings, was set aside in its entirety. The Supreme Court directed the Magistrate to proceed with the case against the accused in accordance with law.
Point of Law Settled in the Case
This judgment settled several significant principles at the intersection of criminal law and trademark law in India. Abandonment or non-use of a registered trademark does not extinguish criminal liability under Sections 78 and 79 of the Trade and Merchandise Marks Act, 1958. Non-use may give an interested party the right to apply for removal of the mark under Section 46 but does not entitle anyone to copy or falsify the mark in the meantime. The special restriction on cognizance under Section 89(1) requiring the Registrar's written complaint applies only to offences under Sections 81, 82, and 83 — not to offences under Sections 78 and 79, which are governed by the ordinary Code of Criminal Procedure procedure. A Trade Marks Inspector's letter to the Magistrate is valid information enabling police investigation and subsequent proceedings under Section 251-A CrPC. For Chapter X purposes, 'trade mark' under Section 2(1)(v) covers both registered and unregistered marks. The citizenship or nationality of the trademark owner is irrelevant to the criminal guilt of the person who falsifies or deceptively applies the mark.
Case Details
Title: State of U.P. Vs. Ram Nath, Partner, Panna Lal Durga Prasad, Kanpur Date of Order: 24th November 1971 Case Number: Criminal Appeal No. 41 of 1969 Neutral Citation: MANU/SC/0489/1971 Equivalent Citations: AIR1972SC232, (1972) 42 AWR 199, 1972CriLJ52, (1972) 1 SCC 130, (1972) SCC (Cri) 74, [1972] 2 SCR 572, 1972 (4) UJ 267 Name of Court: Supreme Court of India Hon'ble Judges: Justice D.G. Palekar and Justice P. Jaganmohan Reddy
Disclaimer: Readers are advised not to treat this as substitute for legal advise as it may contain errors in perception, interpretation, and presentation
Written By: Advocate Ajay Amitabh Suman, IP Adjutor [Patent and Trademark Attorney], High Court of Delhi
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Headnote
Trade and Merchandise Marks Act, 1958 – Sections 78 and 79 – Criminal Liability – Trademark Abandonment – Non-Use – Cognizance – Held: Abandonment or non-use of a registered trademark does not extinguish criminal liability under Sections 78 and 79 of the Act. The criminal offences consist in the deception of the public by falsely applying a mark that signifies a particular source or quality of goods; the offence is committed by the accused's deceptive conduct and does not depend upon the continued commercial use or active registration of the mark by its owner. Non-use may furnish grounds for removal under Section 46 upon an application by an interested person, but does not entitle any person to freely use or falsify the mark in the meantime. The restriction on cognizance under Section 89(1) requiring the Registrar's written complaint applies only to offences under Sections 81, 82, and 83; it does not apply to offences under Sections 78 and 79, for which the ordinary procedure of the Code of Criminal Procedure governs. A Trade Marks Inspector's letter to the Magistrate constitutes valid information enabling the Magistrate to direct police investigation under Section 155 CrPC and thereafter proceed under Section 251-A CrPC. For purposes of Chapter X of the Act, 'trade mark' under Section 2(1)(v) encompasses both registered and unregistered marks. The citizenship or nationality of the trademark owner is irrelevant to the validity of criminal proceedings against a person accused of falsifying the mark. High Court order quashing charges set aside. Koran Singh v. Mohan Lal, 1964 ALJ 653, and Ashutosh Das v. Keshav Chandra Ghosh, MANU/WB/0214/1936 : AIR1936Cal488 – Distinguished. Appeal allowed.
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