1. The petitioner No. 1 is the manufacturer of toilet preparations and registered proprietor in India of the following Trade Marks:

“Trade Mark. Registration Number. Class Goods. WILLIAMS 517 3 Shaving Cream, Shaving powder, shaving stick and liquid soap for shampoo purposes, liquid hair dressings, shaving soap, prepara-tions for cleaning the teeth, toilet soap, cold cream, cosmetics, face power, toilet powder, toilet water and face washes. esquire 518 3 Brushless shaving cream and other shaving creams or soaps. CONTI & DESIGN 103429 3 Liquid shampoo, complexion cream and soaps, oils for the complexion. GLIDER 137240 3 Shaving cream. AQUA VELVA 137241 3 Face washes and after shaving preparations included in Class 3.”

2. On 1st January, 1964 an agreement in writing was entered into by and between the petitioners whereby the petitioner No. 1 granted to the petitioner No. 2 exclusive right and licence to manufacture, distribute and sell directly in India toilet preparations mentioned hereinbefore on certain conditions. One of those conditions was that the petitioner No. 2 would pay the petitioner No. 1 for the rights granted under the said agreement royalty on the products, on the basis of 1% of the amount of sales. In the said agreement it is provided that the petitioner No. 1 will furnish working formulae processes and methods for the manufacture of the products and shall provide such directions as to manufacture and finishing as may be necessary. The petitioner No. 2 would supply all raw materials for the manufacture of the products and all finishing materials including bottles and other containers, labels and cartons. On 19th August, 1964 both the petitioners jointly made 5 applications in the prescribed Form for registration of the petitioner No. 2 as the sole registered user under Section 49 of the Trade and Merchandise Marks Act, 1958 whereupon the Registrar of the Trade Marks issued a notice on the petitioners why the Central Government should not issue directions to refuse the said applications on the ground that “the use of foreign brand name in the field of soaps, cosmetics and toilet preparations is not being encouraged now, more, when there is foreign exchange expenditure involved in any form, as this is sure to affect the sale of indigenous brands and thus affect the growth of indigenous Industries.”

The petitioner replied to the said show cause notice and stated that the petitioners have now agreed to waive the stipulation regarding 1% royalty and as such there will be no involvement in the foreign exchange in the agreement and moreover no indigenous brands, inasmuch as, amongst other factors, the products would be manufactured in India with Indian materials. In spite of this explanation the respondent however refused to register the petitioner No. 2 as a registered user of the goods in question and thereby rejected the petitioner's application. Being aggrieved by the said order the petitioner moved this Court and obtained the present rule.

3. Mr. Das on behalf of the petitioner contended that the order or direction refusing the registration of registered user is bad in law as the respondent considered extraneous matters in giving the direction. Secondly the order is discriminatory, inasmuch as, other persons in the same trade are given the registered user. Thirdly it is argued by Mr. Das that the order is not a speaking order and no reasons were given for the refusal to grant the registration.

4. Mr. Chakravorti on behalf of the respondents on the other hand contended that the order impugned is not a quasi judicial order at all and no detailed reasons need be given but still the order of refusal contains some reasons for refusal. The reasons stated therein are not extraneous as under Sec. 49 the authorities concerned had to consider the interest of general public. The refusal was made on the basis of general policy decision which is not amenable to the jurisdiction under Article 226 of the Constitution. It is further stated that the petitioner is not an indigenous company, inasmuch as, the petitioner No. 1 is a foreign company. It is argued that there was no discrimination and everybody including the petitioner was treated equally.

5. Mr. Das contended that the grounds given are extraneous consideration and as such the order is bad and that no reasons have been given why the registration should not be allowed. Mr. Chakravorti contended that these are not quasi judicial orders and therefore detailed reasons are not called for. No appeal lies against this order and the order is in the nature of policy decision and therefore this is only executive order and no reasons need be given. Section 49 of the Trade and Merchandise Marks Act provides as follows:—

“Section 49(1). Where it is proposed that a person should be registered as a registered user of a trade mark, the registered proprietor and the proposed registered user shall jointly apply in writing to the Registrar in the prescribed manner, and every such application shall be accompanied by—

(i) the agreement in writing or a duly authenticated copy thereof, entered into between the registered proprietor and the proposed registered user with respect to the permitted use of the trade mark; and

(ii) an affidavit made by the registered proprietor or by some person authorised to the satisfaction of the Registrar to act on his behalf,—

(a) giving particulars of the relationship, existing or proposed, between the proprietor and the proposed registered user, including particulars showing the degree of control by the proprietor over the permitted use which their relationship will confer and whether it is a term of their relationship that the proposed registered user shall be the sole registered user or that there shall be any other restriction as to persons for whose registration as registered users application may be made;

(b) stating the goods in respect of which registration is proposed;

(c) stating the conditions or restrictions, if any, proposed with respect to the characteristics of the goods, to the mode or place of permitted use, or to any other matter;

(d) stating whether the permitted use is to be for a period or without limit of period, and, if for a period, the duration thereof; and

(iii) such further documents or other evidence as may be required by the Registrar or as may be prescribed.

(2) When the requirements of sub-section (1) have been complied with to his satisfaction, the Registrar shall forward the application together with his report and all the relevant documents to the Central Government.

(3) On receipt of an application under sub-section (2), the Central Government, having regard to all the circumstances of the case and to the interests of the general public, and the development of any industry, trade or commerce in India, may direct the Registrar—

(a) to refuse the application; or

(b) to accept the application either absolutely or subject to any conditions, restrictions or limitations which the Central Government may think proper to impose:

Provided that no direction for refusing the application or for its acceptance conditionally shall be made unless the applicant has been given an opportunity of being heard.

(4) The Registrar shall dispose of the application in accordance with the directions issued by the Central Government under subsection (3).

(5) The Central Government and the Registrar shall, if so requested by the applicant, take steps for securing that information given for the purposes of an application under this section (other than matters entered in the register) is not disclosed to rivals in trade.

(6) The Registrar shall issue notice in the prescribed manner of the registration of a person as a registered user, to other registered users of the trade mark, if any.”

6. The rules have been framed under the Act and for our purpose Rules 85 and 86 are relevant which are as follows:

“85. Consideration by the Central Government.— The Central Government, on receipt of an application for registration as registered user forwarded to it by the Registrar under sub-section (2) of S. 49, shall, if satisfied that the application and the accompanying documents comply with the provisions of the Act and the rules, consider whether the application should be allowed having regard to the matters specified in sub-section (3) of that section, and in doing so may take into account all or any of the following matters:

(1) whether the permitted use if allowed would contravene the policy of the Act which is to prevent trafficking in trade marks;

(2) whether the registered proprietor has registered the trade mark without any bona fide intention to use it in relation to his goods in the course of trade or solely or mainly for the purpose of permitting others to use it under agreements for registered user: and

(3) whether the registered proprietor has acquired title to the trade mark by assignment without any bona fide intention to use it in relation to his goods in the course of trade or solely or mainly for the purpose of permitting others to use it under agreements for registered user.

Explanation I.—For considering the bona fides of the registration of the trade mark under clause (2) regard shall be had inter alia to—

(a) whether the goods for which the trade mark is registered are similar to or are different from the goods in which the registered proprietor has been trading or dealing before the registration of the mark;

(b) whether the registered proprietor has ever used the mark in question in relation to his goods in the course of trade before the date of the agreement for registered user, and if so, the amount and duration of such user;

(c) whether the terms as to royalty and other remuneration payable by the proposed registered user are reasonable taking into account the expenses which the registered proprietor is likely to incur in exercising control over the permitted use.

Explanation II.— For considering the bona fides of the acquisition of title under clause (3) regard shall be had. besides the matters set out in Explanation I, to the following further matter, namely, whether the registered proprietor has obtained assignment of other registered trade marks and if so, whether he has dealt with such other marks by way of assignment or registered user.

86. Hearing before issuing directions to refuse an application or to accept it conditionally—

(1) Before the Central Government decides to direct the Registrar to refuse an application for registration as registered user or to accept the application subject to any conditions, restrictions or limitations it shall give notice thereof in writing to the applicants through the Registrar. The notice shall state the grounds on which the Central Government proposes to issue such direction and shall inform the applicants that they are entitled to be heard.

(2) Unless within two months from the receipt of the notice mentioned in sub-r. (1) the registered proprietor and the proposed registered user apply for a hearing through the Registrar, the Central Government may direct the Registrar to refuse the application or to accept it conditionally, as the case may be.

(3) If the registered proprietor and the proposed registered user apply for a hearing. the Central Government shall appoint a time for the hearing and shall give them not less than a month's notice of the time so appointed.

(4) After hearing the registered proprietor and the proposed registered user, the Central Government shall decide whether to give direction to the Registrar to accept the application or to refuse it or to accept it conditionally.

(5) The Registrar shall, on receipt of the directions of the Central Government, communicate in writing his order on the application to the applicants and to other registered users of the mark, if any.”

7. Section 48 provides that a person other than the registered proprietor of a trade mark may be registered as the registered user thereof in respect of any or all of the goods in respect of which the trade mark is registered otherwise than as a defensive trade mark. The said section provides that no application for registration of a registered user shall be entertained unless the agreement between the parties complies with the conditions laid down in the rules for preventing trafficking in trade marks. In the present case there is no dispute that the petitioner No. 1 is a registered proprietor of the trade mark for which the petitioners are asking for registration of petitioner No. 2 as registered user. The petitioners entered into an agreement and they made an application under Section 49 of the Trade and Merchandise Marks Act read with Rule 85 before the authorities concerned, but their application was rejected on the ground that such application involved (1) foreign exchange secondly (2) that the policy of this Government is not now encouraging the use of foreign brand named in the field of Soap and Cosmetics as it affects the growth of indigenous industries.

8. In view of the aforesaid facts, it does not appear to me that no ground or reason for the rejection was given. In my opinion, Mr. Chakraborti is not correct in his submission that being an administrative order no reason for rejection need be given. The administrative order under Section 49 of the Act must be given within the four corners of Section 49 of the Act and the Registrar must dispose of the application in accordance with the direction given by the Central Government and the Central Government must consider the circumstances of the case, the interest of the general public and the development of any industry trade or commerce in India. If it is found that unless some indication is given how the administrative order is to be made, it cannot be considered whether the order is made in accordance with Section 49(3) of the Trade and Merchandise Marks Act, 1958 (sic). It appears to me that the Central Government under Section 49(2) and (3) of the Act has a power to refuse an application if the condition precedent for the exercise of power is satisfied. If it is found that the Central Government in considering an application made under Section 49(1) of the Act did not advert to the circumstances of the case and to the interests of the general public and as also the development of any industry, trade or commerce in India, no order passed under Section 49(3) of the Act can be upheld. If it is found that the Central Government has passed the order under Section 49(3) of the Act in taking into consideration the extraneous matter, then the order cannot be sustained. In my opinion, though I agree with Mr. Chakraborti's contention, the direction of the Central Government can be given under Section 49(3) of the Act to the Registrar and the Registrar must follow the condition laid down in Section 49(3) of the Act before refusing the application or accepting the application.

9. The next contention of Mr. Das is that the order itself considered the matters which are extraneous for the purpose of the decision of this case. Mr. Das contended that the consideration of foreign exchange is irrelevant for the purpose of Trade and Merchandise Marks Act, 1958. Mr. Das further contended that the Trade and Merchandise Marks Act, 1958 was enacted to provide for the registration and better protection of trade marks and for the prevention of the use of fraudulent marks on merchandise and for that purpose and purpose alone it is argued that the consideration of foreign exchange is not at all germane. Mr. Chakraborti however contended that within the meaning of the words, “general interest of the public”, the Central Government can consider the foreign exchange liability for the purpose of registration of trade marks and the words “general interest of the public” is a matter for the policy of the Government and the Court will not go into the question of policy. Mr. Chakraborti referred to the cases reported in AIR 1961 SC 1514, (Glass Chatons Importers and Users Association v. Union of India); AIR 1962 SC 1796, (Daya v. Joint Chief Controller of Imports and Exports) and (1972) 3 SCC 324 : AIR 1972 SC 935, (Deputy Asst. Iron and Steel Controller v. L. Manick Chand Proprietor). In AIR 1961 SC 1514 the case is under the Imports and Exports (Control) Act, 1947 and Imports (Control) Order, 1955. The Supreme Court held in paragraph 6 of the said judgment as follows:—

“Paragraph 6. A policy as regards imports forms an integral part of the general economic policy of a country which is to have due regard not only to its impact on the internal or international trade of the country but also on monetary policy, the development of agriculture and industries and even on the political policies of the country involving questions of friendship neutrality or hostility with other countries. It may be difficult for any Court to have adequate materials to come to a proper decision whether a particular policy as regards imports is, on a consideration of all the various factors involved, in the general interests of the public. Even if the necessary materials were available it is possible that in many cases more than one view can be taken whether a particular policy as regards imports whether one of heavy customs barrier or of total prohibition or of entrustment of imports to selected agencies or channels is in the general interest of the public. In this state of things the burden on the person challenging that the Government of the country is not right in its estimate of the effects of a policy as regards imports in the general interests of the public will be very heavy indeed and when the Government decides in respect of any particular commodity that its import should be by a selected channel or through selected agencies the Court would proceed on the assumption that that decision is in the interest of the general public unless the contrary is clearly shown. Consequently, we are unable to accept the argument that a decision that imports shall be canalised, is per se not a reasonable restriction in the interests of the general public. We wish to make it clear that while the decision that import of a particular commodity will be canalised may be difficult to challenge, the selection of the particular channel or agency decided upon in implementing the decision of canalisation may well be challenged on the ground that it infringes Article 14 of the Constitution or some other fundamental rights. No such question has however been raised in the present case. The attack on the validity of Para 6(h) of the Imports Control Order, 1955, therefore, fails. The contention that Section 3 of the Imports and Exports (Control) Act, 1947, is bad to the extent that it permits the Government to make an order as in Para 6(h) of the Imports Control Order, 1955, consequently also fails.”

10. It will therefore appear that the Supreme Court held that the Import policy is an integral part of the general economic policy of a country and it is difficult for the Court to have adequate materials to come to a proper decision whether a particular policy as regards imports is, on consideration of all the various factors, involved, in the general interests of the public. In AIR 1962 SC 1796 also a case of Imports and Exports Control Act, 1947 the Supreme Court held that in the matter of policy decision in respect of imports the Government is the sole Judge and the Court will not interfere in those policy decisions. In (1972) 3 SCC 324 : AIR 1972 SC 935 it is also a case of Imports Control Act, 1947. It has been held by the Supreme Court that an applicant has no absolute vested right to an import licence and they have also reaffirmed the Supreme Court's decision reported in AIR 1961 SC 1514. As I pointed out that all these decisions were considering the provisions of Imports Control Act, 1947 and as it has been held by the Supreme Court in the case reported in AIR 1961 SC 1514 that the policy of Imports forms an integral part of the general economic policy of a country and the principles laid down in those cases cannot be applied in a case coming within the mischief of the Trade and Merchandise Marks Act, 1958. The interest of the general public in the present case must be limited to the relation or for the purpose for which the Trade and Merchandise Marks Act was promulgated. It will be found that the Trade and Merchandise Marks Act was promulgated in order to provide for the registration and better protection of trade marks and for the prevention of the use of fraudulent marks on merchandise as stated in the preamble of the Act. It will further appear from the Statements of objects and reasons of the Act in respect of the Bill under the Trade and Merchandise Marks Act, 1958 as follows:—

“Statement of objects and reasons.— The object of the Bill (No. 31 of 1958 which culminated in the Act of 1958 (43 of 1958)) was to provide for more effective protection of trade marks and better facilities for registration in the distant parts of the country, to enlarge the field of registrability, to combine the Patent Office and the Trade Marks Registry to secure better co-ordination of the administration of the different laws relating to industrial property, to remove the uncertainties as to the jurisdiction of the High Courts, to strengthen the penal law relating to trade marks, particularly in respect of drugs and articles of food, and consolidate the law relating to trade and merchandise marks in India.”

11. In the matter of consideration of the trade marks, the Public interests should be limited to the object and reason or for the purpose for which the Act was promulgated or in other words for the registration and better protection of/trade marks and for the prevention of the use of fraudulent marks on merchandise. The interest of the general public cannot be enlarged to any public interest under the sun in which the general public may be interested. In the application which was filed there was an involvement of the foreign exchange but the petitioner made it clear before the matter was disposed of, to delete from that clause regarding foreign exchange the involvement. The respondent contended that the petitioner No. 2 is not an Indian Company and the registration of the trade marks in respect of the registered user will be against the interest of the general public.

12. It appears to me from the records that the petitioner No. 2 company was incorporated in India and some of the Directors and shareholders of the company are Indians. Moreover under Section 591 of the Companies Act it has been provided that the foreign companies are companies which are incorporated outside India but has established a place of business within India and the companies incorporated outside India before the commencement of this Act established a place of business within India and continue to have an established place within India at the commencement of this Act.

13. It cannot be said that as some of the Directors of the company were foreigners, the company itself is a foreign company and if it is found that the company was incorporated in India it cannot be said that the company is a foreign company and on that ground it cannot be argued that registering the petitioner No. 2 as registered user will affect the sale of indigenous brands and] that affects the growth of indigenous industry. In that view of the aforesaid fact it does not appear to me that the impugned order is sustainable.

14. The Rule is, therefore, made absolute.

15. The impugned order is quashed.

16. Order accordingly.