The Supreme Court stated last week that a company cannot claim the right to a trade mark if it registers the name but does not use it for a long time. It would be assumed that the company, by its lethargic conduct, had abandoned its right. In this case, Neon Laboratories Ltd vs Medical Technologies Ltd, two pharma companies were disputing over the trade mark of similar sounding brand names. Medical Technologies argued that its product named Profol for the compound Propofol was being confused with that of Neon’s Rofol. Therefore it filed a suit alleging ‘passing off’. The trial court and the Gujarat High Court passed injunctions in its favour. Therefore, Neon approached Supreme Court. It dismissed the appeal stating that Neon had registered the name in 1992 but started marketing its brand only in 2004, much after the rival company launched its product in the market. The judgment stated that “t he Trade Marks Act does not permit the hoarding of or appropriation without utilisation of a trade mark.” Neon even allowed or acquiesced in the marketing of the rival product for several years. “The legislative intent is to ordain that an applicant of a trade mark does not have a permanent right by virtue of its application alone,” the court declared and added: “Such a right is lost if it is not exercised within a reasonable time.”
Toll on bad road cut by half
The Supreme Court has directed a road construction company to transfer the toll collected by it and kept in a bank to the Central government so that the road could be repaired with that fund. In this case, DSC Ventures Ltd vs Lal Manohar, the latter moved the Chhattisgarh High Court complaining that parts of the Raipur-Durg road built by the company was in great disrepair and still it was collecting toll at the rate of 40 per cent from the users. The high court asked the company to repair the road in two weeks or deposit the toll in a bank till the legal issues are settled. The company took the second choice and went in for arbitration demanding Rs 37 crore for loss. Further, it appealed to Supreme Court. It appointed a commission which confirmed the bad state of the road, which required Rs 19 crore for repairs. The court asked the state government to get a new contractor and monitor its performance. It also cut the 40 per cent toll to 20 per cent. “If the maintenance of the road is absent or significantly poor, recovery of toll at the stipulated rate would be rendered unfair and unjustified,” the order said.
Bank merger not end of proceedings
Disciplinary proceedings against a manager can be continued even if the bank in which he was working amalgamated with another, the Supreme Court stated in its judgment last week in the appeal, Jagdish Lal vs Punjab National Bank (PNB). This assistant general manager was working in the Hindustan Commercial Bank Ltd. It was merged with Punjab National Bank. During his tenure in the earlier bank, the manager was facing disciplinary proceedings for flouting lending norms. In spite of that PNB absorbed him because the Supreme Court had passed an order that transferee banks are obliged to take in managers of merged banks. PNB, however, revived the charge-sheet against the manager. He challenged it on several grounds. Primarily he argued that the proceedings against him cannot be revived merely because he is under a new employer. He also contended that he was holding a higher rank in the old bank, while a lower ranking manager issued the fresh charge-sheet. The court rejected all such arguments and stated that under the amalgamation scheme, the new employer was entitled to resume the proceedings. Though he was holding a higher rank earlier, that was a smaller bank and the officer in the larger bank, PNB, had the power to issue the charge-sheet.
Counting broken liquor bottles
A distillery which transports liquor in glass bottles cannot predict how many will break during transit. Since the damage is uncertain, it is contingent in nature and cannot be allowed deduction while computing the total income of the company, the Delhi High Court stated last week in the case, Seagram Distilleries (now Pernod Ricard India Ltd) vs Commissioner of Income Tax. The company, while dispatching the goods made a provision for breakages on the basis of the past history of the region to which the goods are transported. Once the goods reached the destination the company reversed the provision and debited the actual breakages to the profit and loss account. At the close of the accounting year it made a similar provision for all goods under dispatch and debited the same to the P&L account. However, such provision is reversed on the first day of the following financial year and only actual breakages are debited to the P&L account in the succeeding year as and when the goods reach the destination. The court decided that the provision for transit breakages has no scientific basis and is contingent in nature, while dismissing five appeals of the distillery. “The actual transit breakages as and when they occur are allowable as revenue expenditure in the accounting year in which such breakages occur,” the judgment clarified.
Court receivers deserve better
L &T Finance Ltd received caustic comments from the Bombay High Court last week and barely escaped an order of exemplary costs for denying commission to the court receiver who recovered property for the firm from a borrower. The finance company lent money to a transport firm for buying two trucks. Disputes arose between them and the high court appointed a receiver to take possession of the vehicles. He travelled to Chandrapur where the vehicles were kept and hung boards stating that they were taken over by him. Ultimately, the disputes were resolved through arbitration. Then the receiver demanded Rs 24,276 as one per cent commission from L & T according to the high court rules. This was denied by the company arguing that the receiver had not taken actual possession of the vehicle and no valuation was done. The high court rejected these arguments and dismissed its appeal. It pointed out that the receiver had travelled to Chandrapur and took great pains to recover the vehicles. “We are surprised at the approach of L&T,” the judgment said. Court receivers face serious situation as the borrowers have control over the location where they are residing. “Many incidents have taken place where representatives of the court receiver have even been attacked by hirelings… We are surprised that L & T, which is one of the leading finance companies, should make a grievance of this nature and that too after availing the services of the court receiver.”
