JUDGMENT Deb, J.

1. This income-tax reference relates to the assessment years 1960-61 and 1961-62. The assessee was the owner of 2,328 shares of <ORG>, Baroda. These shares formed part of the capital assets of the assessee and their cost of acquisition was Rs. 28,906. The said company went into liquidation on November 21, 1958, and on March 6, 1970, the assessee received from the liquidator Rs. 81,480 as dividend, which relates to the assessment year 1960-61 and Rs. 46,560 as dividend on March 15, 1961, which relates to the assessment year 1961-62. These two sums were assessed as capital gains, under Section 12B of the Indian Income-tax Act, 1922, and under Section 46(2) of the Income-tax Act of 1961, respectively, in the hands of the assessee in these two assessment years by the Income-tax Officer. The appeal filed by the assessee was dismissed by the Appellate Assistant Commissioner. The <ORG> has, however, allowed the second appeal filed by the assessee and has referred the following questions to this court :

"(1) Whether, on the facts and in the circumstances of the case, the sums of Rs. 39,519 and Rs. 46,560 were properly assessed as capital gains within the meaning of Section 12B of the Indian Income-tax Act, 1922 ?

(2) Whether, on the facts and in the circumstances of the case, the <ORG> was right in holding that the provisions of Section 46(2) of the Income-tax Act, 1961, were not applicable for the assessment year 1961-62?"

2. The submission of Mr. <NAME>, the learned counsel for the revenue, is that these receipts are capital gains in the hands of the assessee, for the liquidator has paid these sums out of the assets of the company, but there is no merit in this contention. No capital gain can arise in this case inasmuch as these shares were not sold or transferred by the assessee to the liquidator not to speak of exchanging these shares or relinquishing his interests in them in lieu of any money. The assessee was entitled to receive these sums as surplus available for distribution from the liquidator as a shareholder of the company. Hence, these receipts are not at all capital gains in his hands, in view of the decision of <ORG> in <CITATION> . and the judgment dated May 19 and 20, 1975, of this court in I.T. Ref. No. 227 of 1968 ( <CITATION> . Therefore, it must be held that these sums are not capital gains within the meaning of Section 12B of the Indian Income-tax Act, 1922.

3. The next contention of Mr. <NAME> is that the Income-tax Officer is bound to assess Rs. 46,560 under Section 46(2) read with Section 297(2)(b) of the Income-tax Act, 1961. To appreciate his contention it is necessary to state a few facts. The assessment year 1961-62 ended on March 31, 1962, and this sum was received by the assessee on March 15, 1961, that is to say, in assesssment year 19.61-62, as already stated. The Income-tax Act 'of 1961, which repealed the Indian Income-tax Act , 1922, came into operation on 1st April, 1962, and, thereafter, the assessee filed his return of income for the assessment year 1961-62. Now, Section 46(2) of the Income-tax Act, 1961, reads as follows;

"Where a shareholder on the liquidation of a company receives any money or other assets from the company, he shall be chargeable to income-tax under the head "capital gains", in respect of the money so received or the market value of the other assets on the date of distribution, as reduced by the amount assessed as dividend within the meaning of Sub-clause (c) of Clause (22) of Section 2 , and the sum so arrived at shall be deemed to be the full value of the consideration for the purposes of Section 48 ."

4. And Section 297(2)(b) of this Act provides as follows:

"Notwithstanding the repeal of the Indian Income-tax Act , 1922......

where a return of income is filed after the commencement of this Act otherwise than in pursuance of a notice under Section 34 of the repealed Act by any person for the assessment year ending on the 31st day of March, 1962, or any earlier year, the assessment of that person for that year shall be made in accordance with the procedure specified in this Act. "

5. The submission of Mr. <NAME> is that as the assessee has filed the return after the commencement of this Act, the Income-tax Officer must compute the total income in accordance with the procedure specified in this Act as enjoined by Section 297(2)(b) and while making the assessment under Section 143(3) of this Act he must treat this receipt as capital gains under Section 46(2) of the Act, though it is not a capital gain under Section 12B of the Indian Income-tax Act, 1922.

6. But there is no merit in the second limb of his contention. The charge is on the income of the previous year and the substantive law of that year must be applied, vide <CITATION> and <CITATION>  13 ITR 221 (PC). The substantive law of that year was Section 12B of the Indian Income-tax Act, 1922, and not Section 46(2) of the Income-tax Act, 1961.

7. This receipt could not be brought to tax if the return was filed before 1st April, 1962. It was not even chargeable to tax and it cannot be brought to tax merely because the return was filed after 1st April, 1962.

8. It has been rightly contended on behalf of the assessee that to accept the contention of Mr. <NAME> is to amend Section 12B of the Indian Income-tax Act, 1922, by Section 46(2) of the Income-tax Act, 1961, with retrospective effect and, therefore, we must reject the contention of Mr. <NAME>. That apart, Section 297(2)(b) is not a charging section and it does not even say that "all the provisions of this Act will apply". It is solely restricted to the procedural part of assessment. The assessee was not liable to pay capital gains under Section 12B of the repealed Act, and, therefore, by its repeal, it cannot be said that a fresh liability has been imposed on the assessee either by Section 46(2) or by Section 297(2)(b) of the Income tax Act, 1961. Moreover, the revenue had no right to tax this receipt and it cannot be said that by the repeal of the Income-tax Act , 1922, a new right has been created in its favour by these two sections of the Income-tax Act , 1961.

9. I will now discuss the cases cited by Mr. <NAME> and his learned junior, Mr. <NAME>. One of the questions involved in <CITATION> was whether the assessment already made under the Indian Income-tax Act , 1922, could be rectified under the provisions of the Income-tax Act , 1961. The assessee was a partner of a firm and before the firm filed its return he was assessed under the Indian Income-tax Act , 1922. The firm filed its return after the Income-tax Act , 1961, came into operation. Thereafter, in view of the share allocation, the rectification proceeding was started against the assessee and it was upheld by the court on the ground that the power of rectification could be exercised in these circumstances. We do not find anything in this case which can lend any assistance to the contention of Mr. <NAME>.

10. The case of <CITATION> relates to a penalty proceeding which can only be initiated after the assessment is completed and the tax officer is satisfied that the defaults have been committed by the assessee. Therefore, this case has no bearing on the question involved before us, for we are concerned with the substantive law of the year of assessment.

11. Hence, we return our answer to question No. 1 in the negative and in favour of the assessee and question No. 2 in the affirmative and in favour of the assessee.

12. Having regard to the facts and circumstances of the case, we do not propose to make any order as to costs.

Hazra, J.

13. I agree.


JUDGMENT <NAME>, J.

(1) This reference concerns the income-tax assessment year 1979-80. The <ORG> referred the following questions of law for consideration of this court :

"1. Whether, on the facts and in the circumstances of the case, <ORG> is justified in holding that the Commissioner of Income-tax (Appeals) is not correct in directing the Income-tax Officer to revalue the opening stock also consistently along with the closing stock when it wants to adopt the method known as 'works cost' method for the assessment year 1979-80 ?

2. Whether, on the facts and in the circumstances of the case, <ORG> is justified in holding that the guarantee commission constitutes revenue expenditure ?"

(2) We may dispose of the second question first, since it is represented that it is covered by the decision of this court in favour of the assessee, viz., Addl. <CITATION> . Having regard to this representation, we answer the second question in the affirmative, i.e., in favour of the assessee and against the <ORG>.

(3) So far as the first question is concerned, a few facts may be noticed : The assessee was valuing its closing stock, in the past years, by what is known as the "total cost" method. In this method, proportionate overheads for administrative expenses, selling expenses and interest in stock valuation were taken into account. While valuing the closing stock for the assessment year under consideration, the assessee found the earlier system to be somewhat unscientific and problematic and, therefore, switched on to what is recognised as the "works cost" system where administrative overheads are not taken into account. While scrutinising the accounts for the assessment year under consideration, the Income-tax Officer went into the question of the closing stock valuation and found that the assessee adopted a different method for valuation of the closing stock. The assessee explained that the change was made for bona fide purposes and it was to replace a somewhat unscientific method of valuation by a more scientific and recognised method of closing stock valuation. The Income-tax Officer did not accept the explanation of the assessee. He valued the closing stock on the basis adopted in the past year and made an addition of the difference in the value of the closing stock. On appeal, the Commissioner of Income-tax (Appeals) examined the question at considerable length and was satisfied that the change in the method of valuation of closing stock was for bona fide purposes. He called for a report from the Income-tax Officer as to whether the closing stock was strictly valued on the basis of the "works cost" method. The Income-tax Officer replied in the affirmative. While thus recording a finding that the assessee did not change its method of valuation of closing stock for any ulterior purpose or for reducing income for income-tax purposes, the Commissioner directed that the opening stock of the relevant accounting year should also be valued on the same "works cost" basis and the difference reckoned after the opening stock was revalued should be added.

(4) The assessee objected to the direction of the Commissioner of Income-tax by filing an appeal before the <ORG>, and submitted that where, on an investigation and inquiry, the <ORG> authorities are satisfied that the change in the method of valuation of closing stock is brought about for bona fide purposes, the <ORG> has no right to interfere with the valuation of the closing stock. The assessee pointed out to the detailed enquiry made by the Commissioner and to the finding recorded by him that the change effected by the assessee was for bona fide purposes. It was also pointed out that the earlier system which was not at all scientific was replaced by the present system which is recognised as acceptable in commercial and accounting circles. In these circumstances, the assessee claims that the direction of the Commissioner of Income-tax to revalue the opening stock of the relevant year also on the "works cost" method is uncalled for.

(5) The <ORG> accepted the assessee's plea and, in particular, it had taken note of the fact that any disturbance in the valuation of the opening stock would have a snowballing effect in the sense that the closing stock of the immediately preceding year would be affected and the computation of profits of that year would have to undergo a change and this process would go on for a number of years. The <ORG> felt that such an exercise is uncalled for, where the <ORG> is satisfied that the assessee has brought about the change for bona fide purposes, and all that was required, the <ORG> decided, was to satisfy that the closing stock valuation was made strictly on the basis of the "works cost" method. In view of the Income-tax Officer's report in the affirmative, the <ORG> held that the direction of the Commissioner of Income-tax to revalue the opening stock also on the same basis was uncalled for. The Commissioner felt aggrieved by the decision of the <ORG> and sought for the present reference and that is how question No. 1 was referred to this court.

(6) We have not the slightest doubt that the view of the <ORG> was correct. In the face of the finding hat the change adopted by the assessee was for bona fide purposes and was not actuated by considerations of reducing the income for income-tax purposes, the <ORG> has no right to interfere with the change in the method of valuation of the closing stock. The <ORG> had referred to a long list of cases supporting the above view and we are in entire agreement with the proposition.

(7) Having regard to the above, the answer to the first question is in the affirmative, i.e., in favour of the assessee and against the <ORG>.

(8) No costs.


JUDGMENT <NAME>, J.

(1) This is a defendants' appeal from the order of the Additional District Judge dated July 10, 1967.

(2) The plaintiffs are a partnership firm carrying on business under the name and style of M/s. Banaras'i Dass and Brothers at Chandni Chowk, Delhi since the year 1949. They are the registered proprietors of the trade mark 'ELORA' registered under number 175751 in class 14 as of the date August Ii, 1956 in respect of watches, time-pieces, clocks and their parts. The trade mark has been renewed from time to time and is subsisting. The plaintiffs have been selling clocks with the trade mark 'ELORA' since 1955.

(3) In October 1962 the plaintiffs found an advertisement issued by the defendants "<ORG>" with '<ORG>' as the trade mark for time-pieces. By a notice in writing dated December 26, 1962 the plaintiffs called upon the defendants to desist from manufacturing, using, selling or offering for sale their goods under to mark '<ORG>'. The defendants by their reply dated January 9, 1963, assured the plaintiffs that they were newcomers in the industry and did not want to quarrel over a name. They said they were prepared to stop using the name '<ORG>' and had chosen a new name for their time-pieces.

(4) But the defendants continued using business name "<ORG>". The plaintiffs again called upon the defendants to desist from infringing their trade mark 'Elora' by using the same as part of their trading style. Some correspondence was exchanged but the defendants did not give up their trading name.

(5) The defendants having refused to discontinue the use of the word 'Ellora' in their business name, the plaintiffs on December 2, 1964 commenced an action in the court of the district judge to restrain them. Two allegations were made in the suit. Firstly, that the use of the trade mark 'Elora' as the key portion of the trading style "Ellora Industries" was an infringement of the registered trade mark 'Elora' which was exclusive property of the plaintiffs, and secondly, that the use of the trade mark as a trading style was chosen deliberately and fraudulently in order to trade upon the reputation of the plaintiffs and to pass off the goods manufactured by the defendants as the goods of the plaintiffs. The plaintiffs asked for a decree for permanent Injunction to restrain the defendants from using the mark 'Elora' or any other similar mark which is an infringement of the plaintiffs' registered trade mark and to prevent them from passing off their goods as the goods of the plaintiffs. A decree for accounts of profits earned by the defendants was also sought.

(6) The defendants contested the suit. They raised a number of pleas. On merits they contended that the use of the word "<ORG>" as their trading style 'did not amount to infringement of the plaintiffs' registered trade mark, that there had been no instance of deception or confusion in the mind of the public on account of the use of the words "<ORG>" in the course of trade, that the time-pieces manufactured by the defendants were being sold under the trade mark 'Gargon' which was a distinctive and conspicuous mark of the defendants' product. The allegations with regard to the passing-off were denied.

(7) A number of issues were raised. After hearing evidence and arguments the Additional District Judge decreed the suit with costs. He granted a permanent injunction in so far as infringement of the registered trade mark was concerned. But the claim for passing off he dismissed. Nor did he grant decree for accounts. From his decision the defendants appeal to this court. The plaintiffs have filed cross-objections.

(8) The plaintiffs registered trade mark is 'Eiora'. The defendants manufacture time-pieces with their distinctive mark '<NAME>'. '<NAME>' is printed on the dial of the time-pieces. But on the card board container in which the time-piece is sold the following is printed on two sides in bold letters : "ELLORAINDUSTRIES <NAME> (PUNJAB)". On one side there is in addition, to these words a visual representation of a factoy with the words "<ORG>" written in small letters. The defendants adopted this as their trading style in 1962. (9) The plaintiffs' objection is mainly to the adoption of the word "<ORG>' by the defendants. That the defendants' business name is "<ORG>" under which they manufacture time-pieces is not denied. The word '<ORG>' is used conspicuously by them in advertisements etc. as part of their business name. (10) On the evidence produced, by the plaintiffs the learned judge came to the conclusion that the infringement of the trade mark is established. On the question of passing off he was of the view that the plaintiffs were not able to substantiate their case. (11) In the appeal and cross-objections three questions arise for decision. These are : 1. Passing off; II. Infringement of trade mark; and III. Enquiry into accounts of profits.

(12) 1. PASSING-OFF:The purpose of this tort is to protect commercial goodwill; to ensure that people's business reputations are not exploited. Since business "goodwill" is an asset, and therefore species of property, the law protects it against encroachment as such. The tort is based on economic policy, the need to encourage enterprise and to ensure commercial stability. It secures a reasonable area of monopoly to traders. It is thus complimentary to trade mark law which is founded upon statute rather than common law. But there is a difference between statute law relating to trade marks and the passing off action; for, while registration of relevant mark itself gives title to the registered owner, the onus in a passing off action lies upon the plaintiff to establish the existence of the business reputation which he seeks to protect. The asset protected is the reputation the plaintiff's business has in the relevant market. This is a complex thing. It is manifested in the various indicia which lead the client or customer to associate the business with the plaintiff; such as the name of the business, whether real or adopted, the mark, design, make-up or colour of the plaintiff's goods, the distinctive characteristics of services he supplies or the nature of his special processes. And it is around encroachments upon such indicia that passing off actions arise. What is protected is an economic asset.

(13) The plaintiff must establish that his business or goods have acquired the reputation he alleges; that, for example, "a particular name has become distinctive of his goods and that a reputation has attached to them under the name in question", and this can be done by showing that a substantial proportion of people who are likely to become purchasers of the goods of the kind in question associate the name with them. The weight of this burden must vary according to the facts.

(14) Take the present case. The words "<ORG>" which is the trading name of the dependents is likely to mislead the public as to source of manufacture and to create a likelihood that customer of the plaintiffs would be diverted to the defendants. In a passing off action all that need be proved is that the defendants goods are so marked, made up or described by them as to be calculated to mislead ordinary purchaser and to lead them to mistake the defendants' goods for those of the plaintiffs." [<NAME> v. <NAME>, (1892) 2 Q.B. 639 (644)] (2), It is the tendency to mislead or confuse that thus forms the gist of action; and the plaintiff need not establish fraud, nor that any one was actually deceived, or that he actually suffered damage. The tort is thus like libel) actionable per se. Indeed the forms of passing off, like the forms of nuisances, are infinite. As <NAME> puts it : "THEgist of the conception of passing off is that the goods are in effect telling a falsehood about themselves, are saying something about themselves which is calculated to mislead. The law on this matter is designed to protect traders against that form of unfair competition which consists in acquiring for oneself, by means of false or misleading devices, the benefit of the reputation already achieved by rival traders."

(Law of torts 17th ed. p. 401).

WINFIELDsays : "THElaw of passing off arose to prevent unfair trading and protects the property rights of a trader in his good will..." (tort 9th ed. p. 485).

(15) The basic question in this tort turns upon whether the defendant's conduct is such as to tend to mislead the public to believe that the defendant's business is the plaintiff's or to cause confusion between the business activities of the two. Whether such a tendency to mislead or confuse is established can only be decided by consideration of all the circumstances.

(16) Because the protection given is not for his reputation in general, but to the plaintiff's business goodwill, it must be established that the defendant's activities are likely to compete with the plaintiff's. Where the parties are engaged in common or "overlapping" field of activity the competition will take place. In this case this is a useful test to apply. Both the plaintiffs and the defendants have a common field of activity. They are business rivals. Plaintiffs sell clocks under their registered trade mark 'Elora'. The defendants manufacture timepieces under their trading style "<ORG>". In fact the plaintiffs say that they intend to introduce time-pieces the the market shortly. If the plaintiffs start manufacturing and marketing time-pieces under their registered trade mark 'Elora' the use of the word 'Ellora' as a trading style by the defendants is bound to introduce confusion in the trade.

(17) The element of confusion is essential. As <NAME> said in <NAME> v. <ORG>, (1947), 2 All E.R. 845 (3) (851) : "Iam satisfied that 'there is discoverable in all those cases in which the court has intervened the factor that there was a "common field of activity in which, however, remotely. both the plaintiff and the defendant were engaged and that it was the presence of that factor that grounded the jurisdiction of the court."

(18) The principal question revolves round the twin notions (1)that the defendants misstatement must be one that would be taken as a reference to the plaintiff, and (2) that the plaintiff must be likely to suffer in consequence. As to the first of these conditions the misstatement does not have to make out more than that the plaintiff has some connection with the defendant's goods or business. And it is accepted that a reference to the plaintiff as a trade source may be inferred in some circumstances where he is not known by the name, as for instance where it is his trade mark that is known. If the customer is misled into thinking about the trade origin or source of the goods it is a case of passing off. The second condition is fulfillled by showing that direct competition will damage the plaintiffs goodwill by losing his customers. Loss of sales is not the only form of probable injury that will suffice, loss of reputation among distributors has been accepted as sufficient.

(19) Where the plaintiff and the defendant are engaged in a common field of activity the probability of damage is great. There is risk of confusion because they occupy same areas of the trade in question, e.g. watches, as in this case. This is what was held in <NAME> v. <NAME> (supra). I am aware that this case was not approved of in Australia : <NAME> says: "TOdemand a 'common field of activity' would not only be incompatible with the growing trend towards diversification in business, but also foist an unwarranted limitation on a tort based simply on the prejudice to goodwill from practices that are actually calculated to confuse."

(FLEMINGThe Law of torts 5th ed. p. 702-703).

(20) On the question whether there can be passing off if the fields of activity are different, opinions differ. But everybody is agreed that if the line of business is same or allied there is an immense potential for confusion, deception and temporal harm. The test of common field of activity comes handy. Both parties are in the same trade. The plaintiffs sell clocks. The defendants sell time-pieces. And a time-piece is a portable clock, after all.

(21) Another reason for injuncting the defendants in their use of the word 'Ellora' in business name is that the plaintiffs in their evidence said they wanted to introduce time-pieces. In ("Kodak" for cycles), one reason given for protection was that the plaintiff company might want subsequently to extend their business into the defendant's field. Same is the case here.

(22) The present case is one of 'cashing in' of the trade reputation of the plaintiffs. It is an attempt to climb on another's goodwill. Goodwill is the result of a person's own labour and merit. One trader should not be allowed to usurp the fruits of a competitor's labour. Law will protect against intrusion by the rival upon the goodwill and other business values of another. This is "reaping without sowing". The court will issue injunction in cases where the reaping without sowing element is most brazen and damaging. One trader should not be expected to stand by and watch another reap the benefit of goodwill that he has built up or expenditure that he has made. It takes years (sometimes generations) of patient and self-abnegating toil and investment to develop and gain the advantage of goodwill. It is the invasion of this property right of goodwill that constitutes passing off. The true basis of the action is that the passing off injures the right of property in the plaintiff and that right of property being his right to the goodwill of his business.

(23) In recent times there have been extensions of passing off. It is an expanding business tort. The courts have developed the concept of misappropriation. Law has thrown protection around all intangible elements of value. The view of <NAME> and <NAME> were indeed minority opinions in which <ORG> laid foundations for a general tort of misappropriation of trade values. These are "property rights" and injunction can be issued against the infringer. Predatory business practices and piracy of business rights are denounced by commercial morality. So does law. Confusing customers as to source, as in this case, is an invasion of another's property rights. The unfairness arises from the fact that the purchasing public are likely to be misled. The protection is afforded not for the deceived customer but the rival trader. It is to prevent "dishonest trading", to use a phrase of <ORG> The Australian court in <NAME>'s case recognised a form of wrongful appropriation of a "trade value". <ORG> and <ORG> said : "THEwrongful appropriation of another's professional or business reputation is an injury in itself."

(24) In England <ORG> in the "Spanish Champagne" case opened new horizons for the common law. <CITATION> . is a most forward looking case in recent times where <ORG> expanded the tort to protect misappropriation of business values. The champagne producers of France sought an injunction to prevent the defendants from marketing their sparkling wine under the name "Spanish Champagne". <ORG> granted an injunction. Such a description as "Spanish Champagne" could not be expected to deceive the connoisseurs or "lovers of wine" but it was found that there were many potential customers who were much vague about what champagne was, some knowing it only as "the wine with the great reputation". What they would want was the "real thing" without knowing whether that meant the produce of a particular trade source or one having particular qualities. Champagne properly means French Champagne, which is associated with being "drunk at the gayest parties and in distinguished circles" and it was. therefore, wrong for the defendant to market his produce under the name "Spanish Champagne".

(25) The case related to the protection of a reputation which the word Champagne suggested. It is a word that was valuable to a group of traders to preserve. It was held that the traders engaged in a field of business activity had locus standi to obtain an injunction to restrain a competitive producer from making deceptive statements as to the place of origin or similar falsehood.

(26) <ORG> decision in <NAME>'s case was applied in ("Sherry" case) and (Scotch Whisky). In the later "Sherry" case <ORG> said of the "champagne" case, "In truth the decision went beyond the well-trodden paths of passing off in the unmapped area of 'unfair trading' or 'unlawful competition' ".

(27) In the present case the fact that the plaintiffs and the defendants are direct competitors is the most obvious reason for inferring likelihood of injury. '<ORG>' as a business name suggests associations with the plaintiff's registered trade mark. It is suggestive of the fact that goods come from the same source. It imports a reference to its 'origin' a trade connection with the registered proprietor '<ORG>'. This is an untrue statement. It is a false statement that is likely to mislead the public as to the origin of the goods. It is a commercial benefit which is derived from usurpation of the fruits of a competitor's labour. The present case illustrates the misuse of business names. It is an action against an imitator who is "reaping without sowing". See the illuminating discussion in the article by <NAME> "Unfair Competition, A Progress Report" Vol. Xii, 1972-73 <ORG> p. 126 (28) The plaintiffs have produced watch dealers in evidence. They have also produced one <NAME> who purchased a time-piece manufactured by the defendants under the impression that it was a product of the plaintiffs. The dealers have deposed that though (here is no confusion in their minds about the clocks of the plaintiffs and the time-pieces of the defendants the ordinary customer does enquire from them if the time-pieces complained of are manufactured by the same people who manufacture <ORG> clocks.

(29) Counsel for the defendants argued that there was no confusion amongst the dealers in the market as the evidence shows and, therefore, no case of passing off is made out. I do not agree. The mischief done by the misleading designation adopted by the defendants is not merely that it is calculated to deceive immediate purchasers from (he infringers, but that it puts "a weapon calculated to be fraudulently used by the middlemen" into their hands, by which they may, intentionally or not, deceive the ultimate purchasers. The dealers may not themselves be deceived but they can certainly use the instrument of deception to create confusion in the trade or to mislead the purchasers. The representation need not deceive immediate purchasers ; the test is the likely impact on those members of the public who ultimately become purchasers.

(30) There is a misrepresentation for business purpose as to the origin of goods which the defendants manufacture in the course of their business. This is passing off. The defendants have no right to represent their business as the business of the plaintiffs.

(31) Lord <NAME> defined the tort of passing off in <NAME> v. <NAME>, 1896 A.C. 199(13). He said that the defendant shall not represent his goods or his business as the goods or business of the plaintiff. How do we apply this principle here ? The plaintiffs do not manufacture time-pieces though they are registered for them. This is an admitted case. How it is not always necessary that there must be in existence goods of that other man with which the defendant seeks to confuse his own. As Lord Greene M.R. said : "PASSINGoff may occur in cases where the Plaintiffs do not in fact deal in the offending goods".

(PROPERTYin this context has received an extensive denotation. Thus it includes not only property in the strict sense but also name, per <ORG> ; trade reputation, at 86-87, per <ORG>.; and, not merely the exclusive right which in some cases the law may cc-nfer to engage in some further activity associated with one's present activity, , but also the potential capacity which one may have, although as yet unrealised, to engage in the future activities sufficiently closely associated and connected with those at present carried on, <ORG>. Alternatively these last mentioned cases may be viewed as cases in which the plaintiff's proprietory right to his name and trade reputation is invaded by conduct of the defendant which anticipates the plaintiff's exercise of that right in a field of activity which is sufficiently close to the plaintiff's present activities and which he may wish at some future time to enter; here there are both a common field of activity and a real and tangible risk of damage.

(32) In Farewell <NAME> said : "THEREmust be evidence either of damage already committed, or the circumstances must be such as that the court can properly come to the conclusion that there is a serious risk, a real tangible risk, of damage in the future."

(33) The action of passing off is essentially a cause of action arising out of confusion. The plaintiff is identified by his personal name or some trade name or mark. If a person minded to obtain vendible goods which are identified in his mind with certain definite commercial source is led by the false statement to accept goods coming from a different commercial source the tort is established , Prof. <NAME> points out that the origin of passing off is lost in obscurity and that it is uncertain whether it had its origin as an action for deceit or as an action for defamation. However, the action came to be regarded as an action for deceit, although it was a variety of deceit in which the action was not by the person who was deceived but by the person whose mark was used to deceive. (See W. B. <NAME> Unfair Competition and "Passing-Off" (1956) 2 Sydney Law Review 50).

(34) In the present case there is an untrue representation. The plaintiffs' complaint in substance is that the supposition that the defendants are connected with the plaintiffs will injure the reputation of the plaintiffs in a way calculated to cause them financial loss. The purchasers are likely to think that the time-pieces come from the same source or through the same channel as docks and wrist watches. The purchasers are likely to be misled in thinking that the defendants' firm has an "intimate connection" with the plaintiffs or that the defendants' business is a branch of the plaintiffs or "somehow mixed up" with the plaintiffs' business. Even "any connection" with the plaintiffs is misrepresentation sufficient to constitute the tort. (See <ORG>, (supra),. The present case is an illustration of business misrepresentation and "unfair trading", to use an expression of <ORG>

(35) A typical commercial situation of business misrepresentation is neatly illustrated by <NAME> v. <NAME>, Air 1932 Sind 222 (25), where it was held that the defendant represented his business as that of the plaintiff.

(36) On passing off my conclusion is that the use of the word 'Ellora' by the defendants is indicative of a warm intimacy with the plaintiffs. There is trustworthy evidence that the registered trade mark 'Elora' of the plaintiffs is known to the trade and the word 'Elora' lurks and lingers in the mind of the customers minded to obtain goods of clause 14. A word appeals to the ear more than the eye. There is a real and tangible risk of damage, the field of activity being common. The wrongful appropriation of trade reputation is an injury to the plaintiffs. That injury and the acknowledged intention to continue to inflict it, is ample justification for the injunction which was granted.

(37) II. Infringement Of Registered Trade Mark :A trade mark is the most obvious means of referring to a trader's products. Trade mark registration is povided to simplify and enhance common law protection against deception as to trade source. The registered proprietor has the "exclusive right" to use the trade mark in relation the goods in respect of which it is registered. (S. 28 of the Trade and Merchandise Marks Act 1958 (the Act).

(38) It is unnecessary to prove an intention to deceive, at least to obtain an injunction. The representation must be calculated to deceive, though no deception need actually have taken place, because "the very life of a trade-mark depends upon the promptitude with which it is vindicated". It is worth noting that words can be protected without proof of their distinctiveness if they have been registered as trade marks under s. 9 of the Act (39) A mark is infringed by another trader if, even without using the whole of it upon or in connection with his goods, he uses one or more of its essential features. Thus it has long been accepted that if a word forming part of a mark has come in trade to be used to identify the goods of the owner of the mark, it is an infringement of the mark itself to use that word as the mark or part of the mark of another trader, for confusion is likely to result.

(40) The most common cases are those in which the defendant uses or imitates a trade mark under which the plaintiff's goods have become known to the public. If the trade mark is registered for the goods concerned, any passing off is likely to involve infringement of the rights given by registration also. Both the statute law and the common law employ a common conceptual device. The device is to find a "property right" in the plaintiff which has been infringed. In this case the trade mark is registered for time-pieces also. It is a dear case of infringement.

(41) The "exclusive right" is given by s. 28 of the Act. S. 29 is an appendage to s. 28 , its function being to widen the definition of infringement. The expression 'use of a mark in relation to goods' is defined in s. 2(2)(b) . It includes the following types of cases: (1) use of the mark upon the goods, (2) use of the mark in other physical relation to the goods, such as, use on a container, tin or wrapper or ticket attached to the goods.

(42) The defendants have caused a part of the plaintiffs reputation to be filched. They have annexed to their business name what is another men's property. The plaintiffs' trade mark 'Elora' is the core or the essential part of the defendants' trading style, "<ORG>".

(43) One of the most common ways of unfair appropriation of the plaintiff's goodwill is by the imitation of the plaintiff's trade mark to such an extent that the public is deceived thereby. The interest in the "exclusive right" and use of trade marks is recognised by the law on grounds that are in part akin to the prevention of fraud and in part the protection of property right. The law has provided for registration of trade marks and such registration is conclusive as to priority of use.

(44) The function of the trade marks is to identify the source of manufacture of goods. It is an indicia of origin. With the expansion of markets and the development of large scale advertising, trade marks began to perform the additional function of an advertising and selling device. In the market the chief value of the trade-mark is its power to stimulate sales. In law, the fundamental theory upon which the interest in the trade mark is protected is that a trade mark identifies the goods coming from a particular source, and that an infringing designation tends to divert customer from that source by falsely representing that other goods come from it. This at any rate is the theory of sections 28 and 29 of the Act. Thus "<ORG>" is an 'infringing designation', a misleading name and its use must be restrained by injunction so that the competitor is prohibited from gaining an unfair advantage by confusing potential customers. "The tendency of the law, both legislative and common, has been in the direction of enforcing increasingly higher standards of fairness or commercial morality in trade."

(45) The appropriation of the plaintiffs' trade mark by the defendants as their own badge is as much a violation of the "exclusive right" of the rival trader as the actual copy of his device. It is a misleading designation. It creates a confusion as to source in the mind of the purchasing public. The words in the defendants' trading style convey a misrepresentation that materially injures the registered proprietor of the trade mark. Many and insidious are the ways of infringement. Sometimes "the falsehood is a little more subtle, the injury a little more indirect", than in ordinary cases. [<ORG> v. <ORG> (supra) per <NAME> J.].

(46) On this part of the case I endorse the finding of the learned judge.

(47) III. Accounts Of Profits :Counsel for the plaintiffs relies on s. 106 of the Act and claims that at their option the plaintiffs have chosen to demand an enquiry into profits. I do not think I should grant this relief to the plaintiffs. My reasons are these.

(48) In the first place the plaintiffs have not so far manufactured time-pieces. They have confined themselves to clocks and wrist watches.

(49) Secondly, the defendants' time-pieces are manufactured under the mark 'Gurgon' which is distinctly and conspicuously printed on the dial as well as the carton.

(50) Thirdly, the courts order an account of profits on the theory that the defendant was constructively an agent of the plaintiff in disposing of goods in a manner infringing the plaintiff's rights [Snell Principles of Equity (24th ed. 1954) p. 574]. The principle upon which the court grants an account of profits is that where one party owes a duty to another, the person to whom the duty is owed is entitled to recover from the other party every benefit which that other party has received by virtue of his fiduciary position if in fact he has obtained it without the knowledge or consent of the party to whom he owed the duty (<NAME> Marks 10th ed. p. 344). This principle does not apply here because the plaintiffs were not manufacturing time-pieces.

(51) Fourthly, there is no reasonable prospect that the inquiry would reach a positive result. <NAME> says that account of profits is an equitable remedy and the court has a discretion whether or not to grant it. Only in certain cases will the court grant an account of profits. I do not think this is one of those cases where I ought to order an inquiry into profits.

(52) At the fag end of the case before me the defendants made an application (CM 962 of 1979) for additional evidence. I do not think there is any ground to allow the application as none of the conditions of 0.41 rule 27, Code of Civil Procedure is satisfied. The application, is accordingly dismissed.

(53) For these reasons the appeal is dismissed. Cross-objections are allowed to this extent that it is held that the defendants-appellants, in addition to infringement of registered trade mark, are also guilty of the tort of passing-off. Cross-objections are dismissed in so far as the claim for accounts of profits is concerned. The decree for injunction passed by the trial court is affirmed. The defendants are ordered to deliver up the offending boxes, wrappers, letters heads for destruction. The defendants shall pay the costs of the suit and the appeal. On the cross objections I make no order as to costs.


ORDER

1. The Plaintiff has filed this suit against the Defendant for permanent injunction restraining the Defendant by itself, its servants, agents, distributors and representatives from infringing the Plaintiff's trade mark 'Betaloc' registered under No. 326230 dated June 16, 1977 in Class 5 in respect of Pharmaceutical preparation by use of the impugned trade mark 'Betalong' or any other trade mark deceptively similar to Plaintiff's said registered trade mark 'Bctaloc' in relation to pharmaceutical preparalions and from manufacturing, selling, offering for sale or otherwise dealing in pharmaceutical preparations bearing the trade mark 'Betalong' or any other mark deceptively simitar to Plaintiffs trade mark 'Betaloc' so as to pass off the Defendants goods as and for the goods of the Plaintiff or in any other manner whatsoever and for damages, costs and other reliefs as prayed for in the Plaint filed. The Plaintiff has taken out the present Notice of Motion for interim injunction in terms of permanent injunction prayed for in the Plaint filed.

2. As averred in the Plaint, the Plaintiff, a public limited company duly incorporated and registered under the provisions of the Companies Act , 1956, is carrying on business of manufacture and sale of pharmaceutical and medicinal products. The Plaintiff is proprietor of trade mark '<ORG>' which is registered under No. 326230 dated June 16, 1977, in Class 5 in respect of the pharmaccu-ticals preparation. According to the plaintiff, by virtue of registration of the trade mark '<ORG>' under the Trade and Merchandise Marks Act , 1958, (hereinafter referred to as 'the said Act"), and its long, extensive and continuous use and reputation, the Plaintiff has acquired proprietary rights in the said trade mark '<ORG>' and is entitled to its exclusive use in respect of all kinds of pharmaceutical preparations in Class 5 under the said Act and the Rules made thereunder. The Defendant is also a limited company duly incorporated and registered under the provisions of the Companies Act , 1956. The Defendant is also carrying on similar business in manufacture and sale of pharmaceutical and medicinal products. It is the case of the Plaintiff that in or about the month of November 1987, the Plaintiff became aware of the manufacture and sale of pharmaceutical product under the trade name 'Betalong' by the Defendant. The Plaintiff has been using the said trade mark '<ORG>' in respect of drug for the treatment of hyper tension, angina pectoris, arrythanias, etc. The Defendant's product is also for the treatment of hyper tension, angina pectoris, arrythanias, etc. On acquiring the knowledge about the Defendant's said product, the Plaintiff realised that its rights were being impaired by the Defendant and as such the Plaintiff through its trade mark attorneys served a cease and desist notice dated November 18, 1987 upon the Defendant. The'said letter was replied by the Defendant vide its letter dated December 28, 1987. The Defendant refused to comply with the requisitions made by the Plaintiff in the said cease and desist notice- According to the Plaintiff, despite the said cease and desist notice the Defendant has been continuing the use of the trade mark 'Betalong' with a view to trade upon and benefit from the reputation and goodwill enjoyed by the plaintiff's trade mark '<ORG>'. The Plaintiff has averred that the trade and public in normal course are likely to believe that the Defendant's goods also emanates from the Plainiff. It is the case of the Plaintiff that the Defendant has adopted the trade mark 'Betalong' with dishonest intention and the Defendant has committed acts of infringement in adopting and using the similar trade mark 'Betalong' in respect of the similar goods. According to the Plaintiff, the said goods of the Defendant bearing the trade mark 'Betalong' are being passed off and are likely to be passed off as and for the well-known goods of the Plaintiff sold under the trade mark '<ORG>'.

3. According to the Defendant, in the year 1986, the Defendant decided to manufacture and launch a new product for controlling hyper tension and treatment of angina pectoris and arrythanias. For that product the Defendant coined and selected the trade mark 'Betalong' and in the month of March 1986 the Defendant applied for registration of that trade mark under the said Act. The application of the Defendant is filed under No. 451743 on March 31, 1986 and is still pending. The new product of the Defendant was marketed and sold under the trade mark 'Betalong' and the first sale thereof took place on December 29, 1986. According to the Defendant, during the period between December 29, 1986 to May 31, 1987, the Defendant has sold the said product under the trade name 'Betalong' of the aggregate value of Rs. 2,90,265-64 and during the period from June 1, 1987 to May 31, 1988, the Defendant has sold the said product under the said trade mark 'Betalong' of the aggregate value of Rs. 3,57,994-30. During the period commencing from June 1, 1988 to November 18, 1988, the Defendant had sold the said products under the said trade mark 'Betalong' of the aggregate value of Rs. 1,31,407-92 ps. Since November 18, 1988, in view of the ad interim order of injunction passed by this Court has withheld the sale of the said product under the trade mark 'Betalong'. It is the case of the Defendant that the said product 'Betalong' has been continuously marketed and sold all over India till November 18, 1988 and that the said proudct has been identified with the Defendant and has acquired good reputation and goodwill. It is the case of the Defendant that the said product 'Betalong' is a drug which falls under Schedule 'H' to the Drugs and Cosmetics Rules and as such can be sold only by a chemist holding appropriate licence under the said Rules and that too on the prescription of a registered medical practitioner. The Plaintiff's product 'Betaloc' is also a drug falling under Schedule 'H' to the said rules and as such the plaintiffs product 'Betaloc' can only be sold by a chemist holding appropriate licence under the said Rules and that too on the prescription of a registered medical practitioner.

4. According to the Defendant, the human heart allows blood vessles (arteries) as Beta Receptors. Catecholomines which are a type of hormones act on these beta receptors and bring about a reaction which causes abnormal constriction of the heart as well as of the blood vessles resulting in hyper tension. the Defendant's said product taken in appropriate doses blocks the said action of Catecholomines on beta receptors and keeps the heart and the blood vessles in normal condition. This blocking effect of the Defendant's product is of a longer duration. The Defendant, therefore, in coining the word trade mark for is said product took therword 'Beta' as representing 'beta receptors' and coined it with the word 'long' representing the longer duration for which it blocks or controls the action of the said harmones of beta receptors. It is the case of the Defendant that the said trade mark 'Betaiong' was coined and adopted by the Defendant for its said product without reference to the Plaintiffs alleged trade mark 'Betaloc'. The Defendant was not aware of the Plaintiff's alleged trade mark 'Betaloc'. The Defendant's product is in the form of sustained release capsules which means that the requisite quantity of the drug in requisite doses is released into the system over a period of 24 hours so as to ensure longer protection. This distinguishing feature of the Defendant's product is well appreciated by the medical practitioner and as such the medical practitioner are not likely to be confused or deceived in selecting the right product by reason of the alleged similarity of the Plaintiff's mark with that of the Defendant's said mark. It is further the case of the Defendant that there are a number of similar products in the market which are sold under the trade marks beginning which the word 'Beta'. Some of these trade marks are 'Betabloc', 'Betadure', 'Betanole', 'Betacard', 'Betaspar' and 'Betazin'. The Defendant has denied that by virtue'Of long, exclusive and continuous use the Plaintiffs trade mark 'Betaloc' is distinctive of or is exclusively identified with the Plaintiffs goods. Although according to the Plaintiff the annual sales of its product sold under the trade mark 'Betaloc' for the period from July 1, 1987, to June 30, 1988, aggregated to Rs. 1,72,26,000/-, the Defendant has denied the correctness of the said annual sales figures of the Plaintiff. According to the Defendant, its trade mark 'Betalong' is not similar to the Plaintiff's trade mark 'Bealoc' and the 'Beta' being common in the trade, the Plaintiff cannot have any monopoly or exclusive right to the use of 'Beta' or the right to prevent others from using that word. It is the case of the Defendant that the letters 'loc' which form the other part of the Plaintiff's trade mark 'Betaloc' do not convey any idea nor do they have any meaning in the English language. The pronunciation of the three letters 'loc' taken together is short and terse and the sound thereof is soft. As against these features of the Plaintiff's trade mark, the word 'long' which is the second part of the Defendant's trade mark has a specific connotation, lengthy duration and the pronunciation of the word 'long' is lengthened and not terse. Thus, according to the Defendant, taking Defendant's trade mark as a whole, its prominent feature phonetically is the lengthy pronunciation with nasal sound having twang and connotation of a duration opposed to short ways and prominent feature phonetically of Plaintiffs trade mark taken as a whole is the short and terse pronunciation lacking nasal sound with no connotation. Hence, according to the Defendant, the two trade marks can by no means be called similar or deceptively or confusingly similar and as such the Plaintiff cannot in law have any grievance against or objection to the use by the Defendant of its trade mark 'Betalong'.

5. Section 2(d) of the said Act reads as under:--

"2. Definition and interpretation:--

(d) "deceptively similar" - A mark shall be deemed to be deceptively similar to 'another mark if it so nearly resembles that other mark as to be likely to deceive or cause confusion."

6. Mr. <NAME>, the learned Counsel for the Plaintiff, has submitted that for deciding the question of deceptive similarity, the <ORG> have laid down that the following factors should be taken into consideration.

"(a) The nature of the marks i.e. whether the marks are word marks or label marks or composite marks i.e. both word and label marks;

(b) The degree of resemblance between the marks phonetically, visually as well as similarity in idea;

(c) The nature of the goods in respect of which they are used as trade marks;

(d) The similarity in the nature, character and purpose of the goods of the rival traders;

(e) The class of purchasers who are likely to buy the goods bearing the marks, thier level of education and intelligence and the degree of care they are likely to exercise in purchasing the goods;

(f) The mode of purchasing the goods or placing orders for the goods; and

(g) Any other surrounding circumstances."

7. Mr. <NAME> has further submitted that weightage to be given to each of the aforesaid factors depends on facts of each case and the same weightage cannot be given to each factor in every case. In support of his submission, Mr. <NAME> has relied upon the case of <ORG> v. <NAME>, , where it has been held that the said Act does not lay down any criteria for determining what is likely to deceive or cause confusion within the meaning of Section 8(a) and Section 10(1) and therefore evey case must depend on its own particular facts and the value of the authority lies not so much in the actual decision as in the tests applied for determining what is likely to deceive or cause confusion. In the case before <ORG> an application for registration of trade name 'Lakshamandhara' in respect of medicinal preparation for the alleviation of various ailments was opposed by the proprietors of the trade name 'Amritdhara' which was already registered as trade name in respect of similar medicinal preparation of the opponents. On the question whether the trade name 'Laxmandhara' was likely to deceive the public or cause confusion to trade, it was held that the question had to be approached from the point of view of a man -of average intelligence and imperfect recollection. To such a man, overall structural and phonetic similarity of the two names 'Amritdhara' and 'Laxmandbara' was likely to deceive or cause confusion. It was further held that the over all similarity of the composile words 'Amritdhara' and 'Laxmandhara' had to be considered having regard to the circumstance that the goods bearing the two names are medicinal preparation of the same description. After considering various authorities cited before <ORG>, <ORG> has held as under :--

"(9) We agree that the use of the word, 'dhara' which literally means 'current or stream' is not by itself decisive of the matter. What we have to consider here is the overall similarity of the composite words having regard to the circumstance that the goods bearing the two names are medicinal preparations of the same description. We are aware that the admission of a mark is not to be refused, because unusually stupid people, "fools or idiots", may be deceived. A critical comparison of the two names may disclose some points of difference but an unwary purchaser of average intelligence and imperfect recollection would be deceived by the overall similarity of the two names having regard to the nature of the medicine he is looking for with a somewhat vague recollection that he had purchased a similar medicine on a previous occasion with a similar name. The trade mark is the whole thing -- the whole word has to be considered. In the case of the application to register 'Erectiks' (opposed by the proprietors of the trade mark 'Erector') Farwell, J. said in <ORG> Application, (1935) 52 RFC 136 :

"I do not think it is right to take a part of the word and compare it with a part of the other word, one word must be. Considered as a whole and compared with the other word as a whole....I think it is dangerous method to adopt to device the word up and seek to distinguish a portion of it from a portion of the other word." Mr. <NAME> has also relied upon the case of <CITATION> where it has been held as under:--

"In deciding the question of similarity of two marks, the following well established principles are to be observed :-- (i) marks are remembered by general impressions or by some significant detail rather than by a photographic recollection of the whole, (ii) overall similarity is the touchstone, (in) marks must be looked at from the first impression of a person of average intelligence and imperfect recollection; (iv) overall structure, phonetic similarity and similarity of idea arc important and both visual and phonetic tests must be applied, (v) marks must be compared as a whole, microscopic examination being impermissible, and (vi) the broad and salient features must be considered for which the marks must not be placed side by side to find out differences in design. In addition, the nature of the commodity, the class of purchasers, the mode of purchase and other surrounding circumstances must also be taken into consideration."

8. Reliance has also been placed on behalf of the plaintiff on the case of <CITATION> ., reported in ATR 1960 SC 142. In this case it has been held that in deciding a question of similarity between the two marks the marks have to be considered as a whole. <ORG> has further held that in deciding the question of similarity between the two marks, the Court has to approach it from the point of view of a man of average intelligence and of imperfect recollection. To such a man the overall structural and phonetic similarity and the similarity of the idea in the two marks is reasonably likely to cause a confusion between them. <ORG> has further held that the absolute identity of the two competitive marks or their close resemblance is only one of the tests for determining the question of likelihood of deception or confusion. Trade connection between different goods is another such test. In the case before the <ORG> respondent had applied for registration of the mark 'Gluvita' used with reference to biscuits manufactured by it. The appellant, who had been using the registered mark 'Glucovita' with reference to his glucose with vitamins opposed the application under S. 8(a) of the said Act. It was established tha the applicant's trade mark had acquired a reputation amongst the buying public. Applying the said test the <ORG> held that the com-modites concerned were so connected as to make confusion or deception likely in view of the similarity of the two trade marks. It was further held that apart from the syllable 'co'in the appellant's marks, the marks were identical, that syllable was not such as would enable the buyers in our country to distinguish the one mark from the other. Hence, the respondent's mark could not be registered. It is also held by the <ORG> that mere existence of series of marks registered or unregistered having a common feature or a common syllable is by itself not sufficient. The applicant is required to prove that these series of marks have acquired a reputation by user in the market. The onus of proving such user is of course on the applicant who wants to rely on those marks. In the instant case, apart from the syllabic 'ng' in the Defendant's mark, the two marks are identical. That syllable is not such as would enable the buyers in our country to distinguish the one mark from the other. Further, although the Defendant has stated that there are many marks with prefix 'Beta' in existence and has also relied upon Indian Pharmaceutical Guide 1977 as also on Indian Pharmaceutical Guide 1990, the Defendant has not been able (o prove that the said marks are in use. The -Defendant has also not established that 'Beta' in common to trade. No instance of the other marks being in use has been given by the defendant nor any invoice pertaining to availability of the product in the market has been relied upon by the Defendant.

9. Mr. <NAME> has next relied upon the case, viz. In the matter of an application by <ORG> reported in (1922) 39 RPC 155. In this case an application was made to register the mark "Egall". The said application was opposed by the prorietors of a trade mark "Egrol". The <ORG> having refused the application, the applicants appealed to <ORG> which was decided by Sargent J. In this case it has been held that in cases of alleged confusion. the interest of the public was more important consideration than the relevant rights of the parties. On the fads of that case, it was held that the first syllable 'Eg' could not be disregarded because it had some relation to the nature of the goods but that in such cases the totality of the two marks must be considered, that "Egall" was so similar to "Egrol" as to make confusion likely. The appeal was thus dismissed.

10. Mr. <NAME> has rightly submitted that the question of likelihood of confusion had to be decided by comparison of marks as a whole. In support of his submission, Mr. <NAME> had relied upon the case of <CITATION> . re-ported'in MR 1970 SC 2062. In that case the appellants had applied for registration of the trade mark "Protovit". The application was granted and the appellants mark was registered in Class V in respect of pharmaceutical preparation for human use and for veterinary use, infants' and invalids' foods. The appellants thereafter used that mark on multi-vitamin preparations in liquid and tablet forms and their goods were sold under that mark since the year 1951. In January 1957, the respondents therein applied for registration of their mark 'Dropovit' in respect of medicinal and pharmaceutical preparations and substances. The application was registered and since the advertisement of the respondents' application escaped the notice of the appellants, the appellants did not oppose the registration. Thereafter, the appellants applied for rectification of the Register by removal therefrom of the respondents' trade mark. The ground urged in support of the application was that the respondents' mark so nearly resembled the appellants' mark as to be likely to deceive ot cause confusion. The appellants thereafter applied for amendment of the application and an additional ground was taken that 'Dropovit' was not an invented word. The application for amendment was allowed by the Registrar. The amended application was opposed by the respondents. The Joint Registrar rejected the application for rectification holding that 'Dropovit' was not deceptively similar to 'Protovit' and that the word 'Dropovit' considered as a whole was not deceptive. The matter was taken in appeal to this Court. The appeal was dismissed. The appellants then preferred an appeal under Letters Patent but the appeal was dismissed by <ORG> of this Court. Before <ORG>, the appeal was brought by certificate from the judgment of this Court in the appeal. While considering the test for comparison of the two words marks for-mualted by Lord <NAME> in <ORG> application (1908) 23 RPC 774, <ORG> has held as under (at p. 2065 of AIR):

"It is also important that the marks must be compared as a whole It is not right to take a portion of the word and say that because that portion of the word differs from the corresponding portion of the word in the other case there is no sufficient similarity to cause confusion. The true test is whether the totality of the proposed trade mark is such that it is likely to cause deception or confusion or mistake in the minds of persons accustomed to the existing trade mark."

11. Mr. <NAME> has also relied upon the case of "<ORG>" trade mark, reported in 1966 RPC 152. In that case an application to register the word '<ORG>' in respect of clocks and watches was opposed by the registered proprietors of the marks 'Accurist' registered in respect of wrist watches, and 'Accularm' registered in respect of alarm clocks. The Registrar found that although the marks viewed side by side or compared phonetically were not confusingly similar, nevertheless there was a reasonable probability of confusion taking into_account imperfect recollection, and the fact that both the applicants' and the opponents' marks would be used in very small letters on the faces of watches. Accordingly he refused registration. On appeal to <ORG> the applicants contended that the opponents could not obtain any monopoly in the word 'accurate' by means of their registration, and therefore distinctiveness of the opponents marks had to be found other than in first letters 'accu'. <ORG> held:

i) that as the mark applied for and the opponents' marks were invented words, it was not proper to disregard such elements of the words which were deceptive and therefore the question of likelihood of confusion had to be decided by a comparison of the marks as a whole;

ii) that on comparison of the marks it appeared that there was a likelihood of confusion which the applicants who had not used their mark, had been able to dispel by evidence. The application was therefore rightly dismissed."

12. In this connection, Mr. <NAME>, the learned Counsel appearing for the Defendant, has submitted that where there are several marks with common prefix proper attention should be given to the termination of the marks. In support of his submission, Mr. <NAME> has relied upon the case reported in (1978) RPC 406- In that case, the applicant sought to register "Rheumation" in class 1 in Part A of the register in respect of diagnostic laboratory reagents. Opponents objected on the ground that the mark did not meet the requirements of Ss. 9 and 10 of Trade Marks Act , 1938 and that the mark conflicted with their mark "Rheumanosticon" registered in classes 1 and 5. It was, inter alia, held in that case that despite common prefix "Rheuma" there were special factors in that case winch ruled out any likelihood of confusion, in particular the attention which laboratory staff would be likely to pay to the terminations of the marks when ordering diagnostic preparations.

13. Mr. <NAME> also relied upon the case of Aquasoutum v. <ORG>, reported in (1909) 26 RPC 651. In that case, the plaintiffs who used "Acquasontum" as the name of garments sold by them, brought an action to restrain the Defendants from passing off garments not of the plaintiffs' manufacture as and for garments of such manufacture. The plaintiffs therein complained to the use of the name "Aquatite" by the defendants. Holding that what the defendants therein was doing was not, having regard to the surrounding circumstances calculated to deceive, the action of the plaintiffs therein was dismissed with costs.

14. Mr. <NAME> has also relied upon the case in the matter of the application of <ORG> for the registration of a trade mark reported in (1955) 72 RPC 151. In that case <ORG> had applied to register the word "Dustic" for adhesives for industrial purposes. The said application was opposed by <ORG> on the grounds (inter alia) that the word "Dustic" was not an invented word, being merely a misspelling of "Does stick"; that the word had direct reference to the character or quality of the goods; and that it was liable to be confused with other registered marks and in particular with the mark "Bostik" registered by the opponents therein for certain classes of adhesives. It was stated by the applicants therein and admitted by the opponents therein that the word "Dustic"was derived from the first two letters of <ORG> and the termination 'stic' or 'stik' commonly used in names of adhesives. The <ORG>. Comptroller held that :

i) the word 'Dustic' was an invented word and has no reference to the character or to the quality of the goods;

ii) it was not liable to be confused with opponents' mark 'Bostik' regard being had to the number of marks for adhesives ending in 'stic' or a like termination;

iii) that registration of the mark applied for should be allowed.

The opponents in that case appealed to the <ORG> and Justice <NAME>-<NAME>, held that :

i) "Dustic" was an invented word;

ii)'the decision of the Asstt. Comptroller to the effect that it was not liable to cause confusion was correct;

iii) the appeal was dismissed.

15. Mr. <NAME> has further submitted that visually also the mark 'Betalong' is different from the mark 'Betaloc'. He has further submitted (hat the syllable 'g' in the mark 'Betalong' trailed below and as such the mark 'Betalong' is visually different than the mark 'Betaloc'.

16. As held in the case (Supra) the totality of the mark is required to be considered to hold as to whether or not the mark is deceptively similar.

17. In the instant case in deciding whether the word 'Betalong' is deceptively similar to the word 'Betaloc', each of the two words must, therefore, be taken as a whole word. The words are so similar that there is reasonable probability of confusion between the words both from the visual and phonetic point of view. It is not a matter for microscopic inspection, but to be taken from the general and even casual point of view of a customer walking into a shop. As observed above in the instant case, apart from the syllable 'ng' in defendants' mark, the two marks are identical. Even if proper attention is paid to the termination of the marks, the likelihood of confusion being caused cannot be ruled out. The mark 'Betaloc' is too near and so similar to the mark 'Betalong' as to make the confusion likely. In my view, Mr. <NAME> has rightly placed reliance upon the case of <CITATION> . decided by <NAME> on July 22, 1988 in I. A. No. 8916/87 in suit No. 2614/87 in <ORG> in support of his submission that even phonetically the two marks 'Betaloc' and 'Betalong' are similar. In that case, the plaintiffs who were registered proprietors of the trade mark. 'Calmpose' for medicinal preparation filed a suit for infringment and passing off against the defendants therein who commenced manufacturing and marketing a single medicinal preparation under the trade mark 'Calmprose' and applied for an ex parte ad interim injunction. In its reply the defendants therein contended that the two trade marks 'Calmpose' and Calmprose' were phonetically different and that in any case since the medicine could be sold by chemists only on the written prescription of a registered medical practitioner, there could be little likelihood of deception or confusion arising by the use of the marks. While making absolute the ad interim injunction, <ORG> held that the marks 'Calmpose' and 'Calmprose' were phonetically similar. According to Mr. <NAME>, the said decision has no applicability to the facts of the present case. I see no reason why the said decision has no applicability to the facts of the present case.

18. In my view in the instant case, phonetically visually and structurally both the marks are similar. Actual deception is not necessary to be proved. What is material in the circumstances is likelihood of deception.

19. Mr. <NAME> has submitted that since medicines could be sold by the chemists only on written prescription of a registered medical practitioner, there is no likelihood of confusion or deception by use of both the said marks. In support of his submission, Mr. <NAME> has relied upon an unreported decision of this <ORG> in the case of <ORG> v. <ORG> in Suit No. 749/71 delivered by <NAME> on July 13, 1972. In that case a notice of motion was taken out by the plaintiffs who are a very wellknown company manufacturing drugs for an injunction restraining the defendants therein pending the hearing and final disposal of the suit, from using in relation to certain pharmaceutical and medicinal preparations labels and cartons deceptively similar to the articles and cartons of the plaintiffs so as to pass off the defendants' goods and products as and for the goods and products of the plaintiffs, as well as for an interlocutory injunction restraining the defendants from printing and using the said labels and cartons so as to constitute an infringement of the plaintiffs' copyright in the artistic work contained in their correspondence. Mr, <NAME> has then submitted that the class of persons to use the goods and the nature of goods as also the mode of purchase are the factors which are to be taken into consideration in deciding as to likelihood of confusion or deception being caused by the use of the marks. He has further submitted that from the nature of the goods, both being medicines for Ireatment of heart ailment it is likely that customers would obtain prescription from a doctor and show it to the chemist before the purchase. In such a case, in the submission of Mr. <NAME> the chance of confusion is remote. In support of his this submission, Mr. <NAME> has put reliance on the case of <ORG> (supra).

20. Mr. <NAME> has also placed reliance on the case of <CITATION> . , where the question of mode of purchase has been considered for deciding as to likelihood of causing confusion by use of the marks. In that case, the trade mark 'Complamina' of <ORG> was registered for a medicinal and pharmaceutical preparation and was sold in the form of ampoules and tablets for the treatment of vascular disorders. M<ORG> and Pharmaceutical Laboratories Ltd. who were carrying on like business filed an application for registration their name the mark 'Ciplamina' proposed to be used by them in respect of pharmaceulical and medicinal preparatio ,. The said application was opposed on the ground that the proposed mark was deceptively similar to the said registered mark. On the facts of the said case it was held that there was no deceptive similarity between the said two marks. No person, be he a layman of average intelligence and imperfect recollection or a medical practitioner, is likely to confuse one for the other. The visual impression of the two words is not conducive to any such confusion. It was also held in that case tha! there was phonetic dissimilarity between the two words. So far as the instant case is concerned, as observed hereinabove, phonetically, visually and structurally both the marks are similar.

21. While putting reliance on the case of <ORG> in 1979 RPC 481, Mr. <NAME> submitted that doctors and pharmacists were trained to take very great care in their work and if in doubt, to check before acting and since the medicines are to be dispensed on medical preparations, there is no likelihood of any confusion being caused. In the <ORG>'s case the likelihood of confusion being caused was held not to be there in relation to the two products as them marketed, viz., 'Danol' (for suppression of menstrual cycle in capsul form) and 'De-noP (for ulcer in liquid form). When the defendants in that case wished to introduce a solid presentation of 'De-nol', the plaintiffs therein having become aware of the defendants' intention sought an injunction to restrain passing off on a quia timet basis. It was urged that if 'De-nol' was sold in a solid form there would be substantial likelihood of confusion with plaintiffs' products 'Danol'. The defendants therein while admitting the likelihood of confusion and deception sought analogus injunctive relief against the plaintiffs. It was held :

i) that in relation fo the two products as presently marketed there had been no actual confusion and there was no likelihood of confusion as doctors and pharmacists were trained to take very great care in their work and if in doubt to check before acting;

ii) that a real likelihood of confusion would only arise if the defendants produced and marketed a solid formulation of their product;

iii) that the defendants might produce a solid formulation of 'De-nol' was, when the plaintiff's introduced their products, no more than a limited possibility. The plaintiffs' course of action with regard to choice of mark had therefore been reasonable.

iv) Accordingly the plaintiffs were entitled to judgment, but, since there was no immediate market threat, (his was an inappropriate case for injunctive relief.

22. Mr. <NAME> has submitted that although the medicines are dispensed on medical prescription the marks being visually, phonetically and structurally similar, the likelihood of confusion being caused is greater. In support of his/this submission, Mr. <NAME> has rightly relied upon the case of <ORG> v.<NAME> and <ORG> reported in (1989) 14 (2) IPLR 60. In that case the plaintiffs were the proprietors of the trade mark 'Septran' registered in 1969 and in continuous use since 1974 for a medicinal preparation in liquid and tablet form for treatment of respiratory and urinary ailments. The plaintiffs were selling 'Septran' tablets in strips packing and these strips were in turn packed in cartons. The plaintiffs claimed to be the owners of copyright in 'Septran' strips and 'Septran' cartons as original artistic works and had obtained registration of the artistic work on cartons under the Copyright Act in the year 1974. The defendant No. 1. was carrying on business in the name and style of <ORG> at Kandivli, Bombay and also at Kota, Rajasthan. Defendant No. 2 <ORG> was a firm carrying on manufacture and business of medical preparations at Kota Rajasthan with an office in Kandivali. Bombay. The plaintiffs found that the defendants were selling tablets under the mark 'Celran' in strips and cartons identical with those of the plaintiffs. The suit was therefore filed by the plaintiffs for infringement and application for ad-interim injunction was therein made which was granted. The Court, inter alia, held that :

i) the defendants' mark was deceptively similar to plaintiffs' registered trade mark and the get-up, colour scheme, etc. of the rival strips and cartons were identical;

ii) that the defendants were using the infringing mark and deceptive cartons with a view to trading on the plaintiffs' reputation and their contention that there could not be any deception since the medicines needed doctor's prescription was not acceptable as the defendants' mark and phonetically similar to the plaintiffs' mark.

23. Mr. <NAME> also relied upon the case of <ORG> (<ORG>). In that case <ORG> while holding that the marks 'Calmpose' and 'Calmprose' were phonetically similar also held that it was not unknown that the medicines were also available across the counter in the shops of various chemists and that the test to be adopted is not only of the doctor who is giving the prescription but was whether an unwary customer who went to purchase the medicine could make a mistake. In my view, in the present circumstances, doctor's prescription factor has lost its importance since the reality of the situation cannot be ignored. In India scheduled drugs which are to be sold under doctor's prescriplion are even sold without production of doctor's prescription and as such reduces the weightage that can be given to this aspect of the matter while considering the question of deceptive similarity. The <ORG> cannot close its eyes to the existing circumstances and judicial notice of the factual aspects in existence has to be taken. In case where the fact of the medicines being sold on doctror's prescription has been taken into consideration for deciding the there was no likelihood of confusion being created, the marks were not visually, phonetically and structurally similar. In the instant case the two marks 'Betaloc' and 'Betalong' being visually, phonetically and structurally similar and so close to each other that it outweighs the weightage to be given to the factor that the goods are scheduled drugs. The two marks are to be compared as a whole and the prefix 'Beta' cannot be ignored in the matter of such comparison.

24. Mr. <NAME> has then submitted that even if the defence of the medicines being available on doctor's prescription is ignored, the two marks are not similar. Mr. <NAME> has put reliance in the matter of application by <ORG> and In the matter of opposition by <ORG> reported in (1947) 64 RPC 125. In that case an application to register 'Diasil' for pharmaceutical preparations for internal and external use was opposed by the proprietors of marks 'Alasil' registered in respect of same description of goods. On the facts of that case, <ORG> held that the likelihood of confusion between the marks if the applicants' marks were registered and used in respect of sulpha-diazine preparations was too remote to justify refusing the registration. The possibility of a person confusing the opponents' and applicants' preparations on his own medicine table rested on the assumption of a number of coinciding circumstances, all of which were unlikely to occur simultaneously. In that case on the facts thereof, the <ORG> took the view that neither of the initial syllable 'Di' or 'A1' has any characteristic or distinctive feature, anyting forcefully or emphatically that will leave such an impression on the hearer's mind as will entirely outweigh the fact that the last two syllables of the words are identical and will enable it to remember the one word so clearly and distinctively that he would not be likely to confuse it with the other word. As observed earlier, in the instant case, the two marks are so close and so nearer and visually and phonetically and structurally similar that the likelihood of confusion is greater.

25. Mr. <NAME> has also relied upon the case of <ORG> v. <ORG> in Misc. Petn. No. 159 of 1987 decided on March 22, 1990 by <NAME> of this Court. The petitioners in that case have been manufacturers and dealers in medicinal and pharmaceutical preparations and registered owners of trade mark 'Pilex'. The said mark is used in respect of ayurvedic preparation for treatment of piles in the form of ointments and tablets. The 1st respondent filed an application for registration of the trade mark consisting of the word 'Prilex' in class 5 in respect of antibiotic medicinal preparations. The petitioners opposed the said application. The Registrar ordered registration of 1st respondent's trade mark 'Prilex' and being aggrieved from the said order the said Misc. Petition by way of appeal was filed by the petitioners. In that case the registration of the trade mark 'Prilex' was allowed since the petitioners' product 'Pilex' is an ayurvedic product and the 1st respondents' products 'Prilex' is an allopathic product and that the 1st respondents' product being schedule-H drug could only be available against prescription under the Drugs Rules, In the circumstances of the case it was held that there was no possibility of confusion and/or deception.

26. Mr. <NAME> has then submitted that the mark 'Betalong' has been honestly adopted by the defendants and as such there is no question of defendants being injuncted.from using the said mark. Mr. <NAME> has submitted that the alleged honesty in adoption of the mark 'Betalong' by the Defendants is irrelevant in an action for infringement and passing off and the absence of an intention to deceive is not a defence. In this respect Mr. <NAME> has relied upon para 16-16 at page 357 of Rerly's Law of Trade Marks and Trade Names (12th Edition), which reads as under:--

"Passing-off cases are often cases of deliberate and intentional misrepresentation, but it is well settled that fraud is not a necessary element of the right of action, and the absence of an intention to deceive is not a defence. Moreover, literal truth is not necessarily innocent of misrepresentation.

If a man makes a statement which is true, but which carried with it a false representation and induces the belief that his goods are the plaintiff's goods, he will be restrained by injunction. He cannot rely on the fact that his statement is literally and accurately true if, notwithstanding the truth, it carries with it a false representation.

Proof of fraudulent intention may, however, materially assist a plaintiff in establishing probability of deception."

27. Mr. <NAME> has then submitted that the totality of factors should be looked into arid if the plaintiff has reasonable chance of success in the suit at the final hearing, then only the plaintiff should be granted the relief in the present Notice of Motion. In support of his/ this submission Mr. <NAME> has put reliance on the case of <ORG> v. <ORG> in Appeal 244 of 1989 decided by this Court on March 15, 1989, (<NAME> and <NAME> JJ). In that case the appellants sought an injunction to restrain the respondents from using the trade mark 'Slimex'. The appellant's trade mark is 'Slimerax'. The appellants' products consisted of tablets used for the purpose of reducing obesity. The respondents' product is a homeopathic medicine which is available in liquid form. It is available in bottles. On the facts of that case it was held that the two trade marks 'Slimex' and 'Slimerax' did not appear to be deceptively similar and as such certain conditions like filing accounts every six months by the respondents were imposed since it was doubtful as to whether the appellants had reasonable chance of succeeding in the suit at the final hearing. So far as the facts of the instant case are concerned, as observed here-inabove, the two marks are visually, phonetically and structurally similar and the impugned mark of the Defendant is so near and close to the registered mark of the Plaintiff that it is likely to cause confusion if the Defendant is permitted to use the said mark 'Betalong'. On the facts of the case and looking to the totality of factors, I am satisfied that the plaintiff has reasonable chance of success in the suit at its final hearing.

28. Applying the three-fold tests of phonetic, visual and structural similarity and considering the various authorities cited and referred hereinabove, I am of the opinion that the Plaintiff has made out a very strong prima facie case for grant of interlocutory reliefs as prayed for in the Notice of Motion.

29. Mr. <NAME> has lastly submitted that the Defendant is in the market since the year 1986 and the suit has been filed by the Plaintiff on September 30, 1988 and as such, the Plaintiff is guilty of gross delay in approaching this Court and therefore not entitled to any interim relief from this Court. According to Mr. <NAME>, the Plaintiff is not guilty of any delay in approaching this Court. Immediately on acquiring knowledge of the Defendant marketing its product 'Betalong', the Plaintiff had served notice upon the Defendant on November 18, 1987 which was replied by the Defendant on January 4, 1988 to which a rejoinder was given by the Plaintiff on January 28, 1988. Since there was no compliance by the Defendant, a further notice by way of reminder was served upon the Defendant on March 17, 1988 and the suit was thereafter filed. Accordingly there is no delay on the part of the Plaintiff in approaching this Court. Even assuming that there has been some delay on the part of the Plaintiff in approaching this Court as contended by the Defendant, firstly the question of delay has to be balanced against the likelihood of the Plaintiff's ultimately succeeding in the action and where the strength of the Plaintiffs prima facie case is very strong, the Plaintiff's delay in filing the action would not disentitle the Plaintiff to relief and it would be right to grant rather than to withhold the interlocutory injunction prayed for. As stated above, in my opinion, the Plaintiff has made out a very strong prima facie case for grant of interlocutory relief and under the circumstances I hold that delay, if any, on the part of the Plaintiff in filing the suit does not disentitle it to interlocutory relief on this Motion. Moreover, as held by <ORG> at Delhi in the case of <CITATION> . , even where there is an honest concurrent user by the Defendant then inordinate delay or laches may defeat the claim of damages or rendition of accounts but the relief of injunction should not be refused. This is so because it is in the interest of general public, which is the third party in such cases, which has to be kept in mind.

30. In the circumstances the Notice of Motion is made absolute in terms of prayers (a) and (b). The defendant is directed to pay the cqsts of the Notice of Motion to the Plaintiff.

31. Order accordingly.