we hold that the provisions of Sections 36(1)(vii) and 36(1)(viia) of the Act are distinct and independent items of deduction and operate in their respective fields. The bad debts written off in debts, other than those for which the provision is made under clause (viia), will be covered under the main part of Section 36(1)(vii), while the proviso will operate in cases under clause (viia) to limit deduction to the extent of difference between the debt or part thereof written off in the previous year and credit balance in the provision for bad and doubtful debts account made under clause (viia). The proviso to Section 36(1)(vii) will relate to cases covered under Section 36(1)(viia) and has to be read with Section 36(2)(v) of the Act. Thus, the proviso would not permit benefit of double deduction, operating with reference to rural loans while under Section 36(1)(vii), the assessee would be entitled to general deduction upon an account having become bad debt and being written off as irrecoverable in the accounts of the assessee for = "(j) Whether the Full Bench of the High Court has grossly erred in reversing the finding of the earlier Division Bench that on a correct interpretation of the Proviso to clause (vii) of Section 36(1) and clause (v) to Section 36(2) is only to deny the deduction to the extent of bad debts written off in the books with respect to which provision was made under clause (viia) of the Income Tax Act? (k) Whether the Full Bench was correct in reversing the findings of the earlier Division Bench that if the bad debt written off relate to debt other than for which the provision is made under clause (viia), such debts will fall squarely within the main part of clause (vii) which is entitled to be deduction and in respect of that part of the debt with reference to which a provision is made under clause (viia), the proviso will operate to limit the deduction to the extent of the difference between that part of debt written off in the previous year and the

1 REPORTABLE IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION C IVIL APPEAL NO. 1143 OF 2011 Catholic Syrian Bank Ltd. ... Appellant Versus Commissioner of Income Tax, Thrissur ... Respondent WITH C IVIL APPEAL NO. 1147 of 2011 CIVL APPEAL NO. 1151 OF 2011 CIVIL APPEAL NO. 1155 OF 2011 CIVIL APPEAL NOS. 1156-1160 OF 2011 CIVIL APPEAL NO. 1170 OF 2011 CIVIL APPEAL NO. 1171 OF 2011 CIVIL APPEAL NO. 1172 OF 2011 CIVIL APPEAL NO. 1173 OF 2011 CIVIL APPEAL NO. 1174 OF 2011 CIVIL APPEAL NO. 1175 OF 2011 CIVIL APPEAL NO. 1176 OF 2011 CIVIL APPEAL NO. 1177 OF 2011 CIVIL APPEAL NO. 1178 OF 2011 CIVIL APPEAL NO. 1179 OF 2011 CIVIL APPEAL NO. 1180 OF 2011 CIVIL APPEAL NO. 1181 OF 2011 CIVIL APPEAL NO. 1182 OF 2011 CIVIL APPEAL NO. 1183 OF 2011 CIVIL APPEAL NO. 1184 OF 2011 CIVIL APPEAL NO. 1185 OF 2011 CIVIL APPEAL NO. 1186 OF 2011 CIVIL APPEAL NO. 1187 OF 2011 CIVIL APPEAL NO. 1188 OF 2011 CIVIL APPEAL NO. 1189 OF 2011 CIVIL APPEAL NOS. 1190-1193 OF 2011 CIVIL APPEAL NO. 1194 OF 2011 CIVIL APPEAL NO. 1396 OF 2011 CIVIL APPEAL NO. 1397 OF 2011 J U D G M E N T 2 Swatanter Kumar, J. 1. The assessee in C.A. No. 1143 of 2011, a Scheduled Bank, filed its return of income for the assessment year 2002- 2003 on 24th October, 2002, declaring total income of Rs. 61,15,610/-. The return was processed under Section 143(1) of the Income Tax Act, 1961 (for short `the Act') and eligible refund was issued in favour of the assessee. However, the assessing officer issued notice under Section 143(2) of the Act to the assessee, after which the assessment was completed. Inter alia, the assessing officer, while dealing, under Section 143(3) of the Act, with the claim of the assessee for bad debts of Rs. 12,65,95,770/-, noticed that the argument put forward on behalf of the assessee, that the deduction allowable under Section 36(1)(vii) of the Act is independent of deduction under Section 36(1)(viia) of the Act, could not be accepted. Consequently, he observed that the assessee having a provision of Rs. 15,01,29,990/- for bad and doubtful debts under Section 36(1)(viia) of the Act could not claim the amount of Rs. 12,65,95,770/- as deduction on account of bad debts because the bad debts did not exceed the credit balance in the provision for bad and doubtful debts account and also, the 3 requirements of clause (v) of Sub-section (2) of Section 36 of the Act were not satisfied. Therefore, the assessee's claim for deduction of bad debts written off from the account books was disallowed. This amount was added back to the taxable income of the assessee, for which a demand notice and challan was accordingly issued. This order of the assessing officer dated 24th January, 2005, was challenged in appeal by the assessee on various grounds. 2. The Commissioner of Income Tax (Appeals) [hereafter referred to as `the CIT(A)'], vide its order dated 7th April, 2006, partly allowed the appeal, particularly in relation to the claim of the appellant Bank for bad debts. Relying upon the judgment of a Division Bench of the Kerala High Court in the case of South Indian Bank Ltd. v. CIT [(2003) 262 ITR 579], the CIT(A) held that the claim of the appellant was fully supported by the said decision and since the entire bad debts written off by the bank under Section 36(1)(vii) were pertaining to urban branches only and not to the provision made for rural branches under Section 36(1)(viia), it was entitled to the deduction of the full claimed amount of Rs. 12,65,95,770/-. Consequently, he directed deletion of the said amount. 3. For the years of assessment in question and being 4 aggrieved from the order of the CIT(A), the Revenue as well as the assessee filed appeals before the Income Tax Appellate Tribunal, Cochin (for short, the `ITAT'). All the appeals were heard together and vide its order dated 16th April, 2007, while relying upon the judgment of the jurisdictional High Court in the case of South Indian Bank Ltd. (supra), the ITAT dismissed the appeal of the Revenue on this issue and also granted certain other benefits to the assessee in relation to other items. 4. We consider it appropriate to notice at this stage the fate of the orders passed for the previous assessment years in relation to the appellant and other banks. 5. M/s. Dhanalakshmi Bank Ltd., one of the appellants before us, had also raised the same issue before the ITAT in Income Tax Appeal Nos.602-605 (Coch.) of 1994 and 190 (Coch.) of 1995, in relation to earlier assessment years. A view had been expressed that there was no distinction made by the Legislature in the proviso to Section 36(1)(vii) between rural and non-rural advances and, therefore, its application cannot be limited to rural advances. Under clause (viia) also, a bank was held to be entitled to deduction in respect of the provisions made for rural and non-rural advances, subject to 5 limitations contained therein. Thus, the contention of the assessee in that case, for deduction of bad debts from urban branches under Section 36(1)(vii), was rejected. The earlier view taken by the Tribunal in the case of Federal Bank in ITA Nos. 505, 854(Coch.) of 1993, 376(Coch.) of 1995 and 284(Coch.) of 1995 held that the proviso to clause (vii) only bars the deduction of bad debts arising out of rural advances, the actual right to set off bad debts in respect of non-rural and urban advances cannot be controlled or restricted by application of the proviso and the same would be allowed without making adjustment vis-a-vis the provision for bad and doubtful debts. This view was obviously favourable to the assessee. Noticing these contrary views in the cases of Dhanalakshmi Bank and Federal Bank, the matter in the case of the appellant-Bank, for assessment years 1991-92 to 1993- 1994 was referred to a Special Bench of the ITAT for resolving the issue. The Special Bench, vide its judgment dated 9th August, 2002, had answered the question of law in the affirmative, holding that debts actually written off, which do not arise out of the rural advances, are not affected by the proviso to clause (vii) and that only those bad debts which arise out of rural advances are to be deducted under Section 6 36(1)(viia) in accordance with the proviso to clause (vii). Finally, the matter, in respect of the appellant-Bank, was ordered to be placed before the assessing officer and with respect to other banks, before the concerned benches of the ITAT. The order of the Special Bench of the ITAT was implemented by the Department and was never called in question. It may be noticed here that in relation to earlier assessments, i.e. right from 1985-1986 to 1987-1988 in a similar case, different banks came up for hearing in appeal before a Division Bench of the Kerala High Court in the case of South Indian Bank Ltd. (supra) wherein, as mentioned above, while discussing the scope of Section 36(1)(viia) and 36(2)(v) of the Act, the High Court set aside the order of the Tribunal in that case and held that the assessee was entitled to the deduction under clause (vii) irrespective of the difference between the credit balance in the provision account made under clause (viia) and the bad debts written off in the books of accounts in respect of bad debts relating to urban or non- rural advances. It accepted the contention of the assessee and referred the matter to the assessing officer. This judgment of the High Court is subject matter of Civil Appeal Nos. 1190- 1193 of 2011 before us. 7 6. However, the Department of Income Tax, being dissatisfied with the order of the ITAT in assessment year 2002-2003, filed an appeal before the High Court under Section 260A of the Act. 7. The Division Bench of the High Court of Kerala at Ernakulam hearing the bunch of appeals against the order of the ITAT, expressed the view that the judgment of that Court in the case of South Indian Bank (supra) was not a correct exposition of law. While dissenting therefrom, the Bench directed the matter to be placed before a Full Bench of the High Court. 8. That is how the matter came up for hearing before a Full Bench of the High Court of Kerala at Ernakulam and vide its judgment dated 16th December, 2009, the Full Bench not only answered the question of law but even decided the case on merits. While setting aside the view taken by the Division Bench in South Indian Bank (supra) and also the concurrent view taken by the CIT(A) and the ITAT, the Full Bench of the High Court held as under:- "5...What is clear from the above is that provision for bad and doubtful debts normally is not an allowable deduction and what is allowable under main clause is bad debt actually written off. 8 However, so far as Banks to which clause (viia) applies are concerned, they are entitled to claim deduction of provision under sub-clause (viia), but at the same time when bad debt written is also claimed deduction under clause (vii), the same will be allowed as a deduction only to the extent it is in excess of the provision created and allowed as a deduction under clause (viia). It is worthwhile to note that deduction under Section 36 (1)(vii) is subject to sub-section (2) of Section 36 which in clause (v) specifically states that any bad debt written off should be claimed as a deduction only after debiting it to the provision created for bad and doubtful debts. Further, in order to qualify for deduction of the bad debt written off, the requirement of section 36 (2) (v) is that such amount should be debited to the provision created under clause (viia) of claim deduction of provision under sub-clause (viia), but at the same time when bad debt is written off is also claimed deduction under clause (vii), the same will be allowed as a deduction only to the extent it is in excess of the provision created and allowed as a deduction under clause (viia). It is worthwhile to note that deduction under section 36(1) (vii) is subject to sub section (2) of section 36 which in clause (v) specifically states that any bad debt written off should be claimed as a deduction only after debiting it to the provision created for bad and doubtful debts. What is clear from the above provisions is that though Respondent-Banks are entitled to claim deduction of provision for bad and doubtful debts in terms of clause (viia), such Banks are entitled to deduction of bad debt actually written off only to the extent it is in excess of the provision created and allowed as deduction under clause (viia). Further, in order to qualify for deduction of bad debt written off, the requirement of section 36 (2) (v) is that such amount should be debited to the provision created under clause (viia) of Section 36(1). Therefore, we are of the view that the distinction drawn by the Division Bench in SOUTH INDIAN BANK'S case 9 between the bad debts written off in respect of advances made by Rural Branches and bad debts pertaining to advances made by other Branches does not exist and is not visualized under proviso to Section 36(1)(vii). We, therefore, hold that the said decision of this Court does not lay down the correct interpretation of the provisions of the Act. Admittedly all the Respondent-assesses have claimed and have been allowed deduction of provision in terms of clause (viia) of the Act. Therefore, when they claim deduction of bad debt written off in the previous year by virtue of the proviso to section 36(1)(vii), they are entitled to claim deduction of such bad debt only to the extent it exceeds the provision created and allowed as deduction under clause (viia) of the Act. 6. In the normal course we should answer the question referred to us by the Division Bench and send back the appeals for the Division Bench to decide the appeals consistent with the Full Bench decision. However, since this is the only issue that arises in the appeals, we feel it would be only an empty formality to send back the matter to the Division Bench for disposal of appeals consistent with our judgment. In order to Avoid unnecessary posting of appeals before the Division Bench, we allow the appeals by setting aside the orders of the Tribunal and by restoring the assessments confirmed in first Appeals." 9. Dissatisfied from the judgment of the Full Bench of the Kerala High Court, the assessee has filed the present appeal purely on question of law. 10. The basic question of some significance, that arises for consideration in the present appeals, is regarding the scope and ambit of the proviso to clause (vii) of sub-section (1) of 10 Section 36 of the Act. According to the contention raised on behalf of the assessee, the view taken by the Full Bench of the Kerala High Court cannot be sustained in law as there are distinct and different items of account that are maintained by the bank in the normal course of its business and it is not permissible to interchange these items in accordance with the settled standards of accountancy or even in law. As such, the claim of doubtful and bad debts could not have been added back to taxable income as it was an additional liability of the bank being shown as an independent item. 11. To put it more precisely, the contentious questions of law that have been raised in the present appeals are as follows:- "(j) Whether the Full Bench of the High Court has grossly erred in reversing the finding of the earlier Division Bench that on a correct interpretation of the Proviso to clause (vii) of Section 36(1) and clause (v) to Section 36(2) is only to deny the deduction to the extent of bad debts written off in the books with respect to which provision was made under clause (viia) of the Income Tax Act? (k) Whether the Full Bench was correct in reversing the findings of the earlier Division Bench that if the bad debt written off relate to debt other than for which the provision is made under clause (viia), such debts will fall squarely within the main part of clause (vii) which is entitled to be deduction and in respect of that part of the debt with reference to which a provision is made under clause (viia), the proviso will operate to limit the deduction to the extent of the difference between that part of debt written off in the previous year and the 11 credit balance in the provision for bad and doubtful debts account made under clause (viia)?" 12. The appellant has contended that as the similar claims had been decided in favour of the banks for the assessment years 1991-1992 to 1993-1994, by Special Bench of the ITAT, which had not been challenged by the Department. As such, the issue had attained finality and could not be disturbed in the subsequent years. 13. The above contention of the appellant banks does not impress us at all. Merely because the orders of the Special Bench of the ITAT were not assailed in appeal by the Department itself, this would not take away the right of the Revenue to question the correctness of the orders of assessment, particularly when a question of law is involved. There is no doubt that the earlier order of the CIT(A) had merged into the judgment of the Special Bench of the ITAT and attained finality for that relevant year. Equally, it is true that though the Full Bench of the Kerala High Court specifically overruled the Division Bench judgment of that very Court in the case of South Indian Bank (supra), it did not notice any of the contentions before and principles stated by the Special Bench of the ITAT in its impugned judgment. As already 12 noticed, the question raised in the present appeal go to the very root of the matter and are questions of law in relation to interpretation of Sections 36(1)(vii) and 36(1)(viia) read with Section 36(2) of the Act. Thus, without any hesitation, we reject the contention of the appellant banks that the findings recorded in the earlier assessment years 1991-1992 to 1993- 1994 would be binding on the Department for subsequent years as well. 14. Now, we would proceed to examine the provisions of Sections 36(1)(vii), 36(1)(viia) and 36(2) of the Act and their scope. It would be appropriate for this Court to notice the relevant provisions of the Sections at this stage itself. "Section 36 (1) The deductions provided for in the following clauses shall be allowed in respect of the matters dealt with therein, in computing the income referred to in section 28 - (i) to (vi)..... (vii) Subject to the provisions of sub-section (2), the amount of any bad debt or part thereof which is written off as irrecoverable in the accounts of the assessee for the previous year: Provided that in the case of an assessee to which clause (viia) applies, the amount of the deduction relating to any such debt or part thereof shall be limited to the amount by which such debt or part thereof exceeds the credit balance in the provision for bad and doubtful debts account made under that clause; Explanation - For the purposes of this clause, any 13 bad debt or part thereof written off as irrecoverable in the accounts of the assess shall not include any provision for bad and doubtful debts made in the accounts of the assessee. (viia) In respect of any provision for bad and doubtful debts made by - (a) A scheduled bank not being a bank incorporated by or under the laws of a country outside India or a non-scheduled bank, an amount not exceeding five per cent of the total income (computed before making any deduction under this clause and Chapter VI-A) and an amount not exceeding ten per cent of the aggregate average advances made by the rural branches of such bank computed in the prescribed manner; Provided that a scheduled bank or a non- scheduled bank referred to in this sub-clause shall, at its option, be allowed in any of the relevant assessment years, deduction in respect of any provision made by it for any assets classified by the Reserve Bank of India as doubtful assets or loss assets in accordance with the guidelines issued by it in this behalf, for an amount not exceeding five per cent. of the amount of such assets shown in the books of account of the bank on the last day of the previous year. Provided further that for the relevant assessment years commencing on or after the 1st day of April, 2003 and ending before the 1st day of April, 2005, the provisions of the first proviso shall have effect as if for the words "five per cent", the words "ten per cent" had been substituted : Provided also that a scheduled bank or a non- scheduled bank referred to in this sub-clause shall, at its option, be allowed a further deduction in excess of the limits specified in the foregoing provisions, for an amount not exceeding the income derived from redemption of securities in accordance with a scheme framed by the Central Government. 14 Explanation. - For the purposes of this sub-clause, "relevant assessment years" means the five consecutive assessment years commencing on or after the 1st day of April, 2000 and ending before the 1st day of April, 2005. Section 36 (2) In making any deduction for a bad debt or part thereof, the following provisions shall apply - (i) No such deduction shall be allowed unless such debt or part thereof has been taken into account in computing the income of the assessee of the previous year in which the amount of such debt or part thereof is written off or of an earlier previous year, or represents money lent in the ordinary course of the business of banking or money- lending which is carried on by the assessee; (ii) If the amount ultimately recovered on any such debt or part of debt is less than the difference between the debt or part and the amount so deducted, the deficiency shall be deductible in the previous year in which the ultimate recovery is made; (iii) Any such debt or part of debt may be deducted if it has already been written off as irrecoverable in the accounts of an earlier previous year (being a previous year relevant to the assessment year commencing on the 1st day of April, 1988, or any earlier assessment year), but the Assessing Officer had not allowed it to be deducted on the ground that it had not been established to have become a bad debt in that year; (iv) Where any such debt or part of debt is written off as irrecoverable in the accounts of the previous year (being a previous year relevant to the assessment year commencing on the 1st day of April, 1988, or any earlier assessment year) and the Assessing Officer is satisfied that such debt or 15 part became a bad debt in any earlier previous year not falling beyond a period of four previous years immediately preceding the previous year in which such debt or part is written off, provisions of sub-section (6) of section 155 shall apply; (v) Where such debt or part of debt relates to advances made by an assessee to which clause (viia) of sub-section (1) applies, no such deduction shall be allowed unless the assessee has debited the amount of such debt or part of debt in that previous year to the provision for bad and doubtful debts account made under that clause." 15. The income of an assessee carrying on a business or profession has to be assessed in accordance with the scheme contained in Part `D' of Chapter IV dealing with heads of income. Section 28 of the Act deals with the chargeability of income to tax under the head `profits and gains of business or profession'. All `other deductions' available to an assessee under this head of income are dealt with under Section 36 of the Act which opens with the words `the deduction provided for in the following clauses shall be allowed in respect of matters dealt with therein, in computing the income referred to in Section 28'. In other words for the purposes of computing the income chargeable to tax, beside specific deductions, `other deductions' postulated in different clauses of Section 36 are to be allowed by the assessing officer, in accordance with law. 16. Sections 36(1)(vii) and 36(1)(viia) provide for such 16 deductions, which are to be permitted, in accordance with the language of these provisions. A bare reading of these provisions show that Sections 36(1)(vii) and 36(1)(viia) are separate items of deduction. These are independent provisions and, therefore, cannot be intermingled or read into each other. It is a settled canon of interpretation of fiscal statutes that they need to be construed strictly and on their plain reading. 17. The provisions of Section 36(1)(vii) would come into play in the grant of deductions, subject to the limitation contained in Section 36(2) of the Act. Any bad debt or part thereof, which is written off as irrecoverable in the accounts of the assessee for the previous year is the deduction which the assessee would be entitled to get, provided he satisfies the requirements of Section 36(2) of the Act. Allowing of deduction of bad debts is controlled by the provisions of Section 36(2). The argument advanced on behalf of the Revenue is that it would amount to allowing a double deduction if the provisions of Sections 36(1)(vii) and 36(1)(viia) are permitted to operate independently. There is no doubt that a statute is normally not construed to provide for a double 17 benefit unless it is specifically so stipulated or is clear from the scheme of the Act. As far as the question of double benefit is concerned, the Legislature in its wisdom introduced Section 36(2)(v) by the Finance Act, 1985 with effect from 01.04.1985. Section 36(2)(v) concerns itself as a check for claim of any double deduction and has to be read in conjunction with Section 36(1)(viia) of the Act. It requires the assessee to debit the amount of such debt or part thereof in the previous year to the provision made for that purpose. Effect of Circulars 18. Now, we shall proceed to examine the effect of the circulars which are in force and are issued by the Central Board of Direct Taxes (for short, `the Board') in exercise of the power vested in it under Section 119 of the Act. Circulars can be issued by the Board to explain or tone down the rigours of law and to ensure fair enforcement of its provisions. These circulars have the force of law and are binding on the income tax authorities, though they cannot be enforced adversely against the assessee. Normally, these circulars cannot be ignored. A circular may not override or detract from the provisions of the Act but it can seek to mitigate the rigour of a particular provision for the benefit of the assessee in certain 18 specified circumstances. So long as the circular is in force, it aids the uniform and proper administration and application of the provisions of the Act. {Refer to UCO Bank, Calcutta v. Commissioner of Income Tax, W.B. (1999) 4 SCC 599]}. 19. In the present case, after introduction of Section 36(1)(viia) by the Finance Act, 1979, [(1981) 131 ITR (St.) 88], with effect from 1st April, 1980, Circular No. 258 dated 14th June, 1979 was issued by the Board to clarify the application of the new provisions. The provisions were introduced in order to promote rural banking and assist the scheduled commercial banks in making adequate provision from their current profits to provide for risks in relation to their rural advances. The deductions were to be limited as specified in the Section. A `rural branch' for the purpose of the Act had meant a branch of a scheduled bank, situated in a place with a population not exceeding 10,000, according to the last preceding census of which the relevant figures have been published. Under clause 13.3, the Circular found it relevant to mention that the provisions of new clause (viia) of Section 36(1), relating to the deduction on account of provisions for bad and doubtful debts, is distinct and independent of the provisions of Section 19 36(1)(vii) relating to allowance of deduction of the bad debts. In other words, the scheduled commercial banks would continue to get the benefit of the write-off of the irrecoverable debts under Section 36(1)(vii) in addition to the benefit of deduction of the provision for bad and doubtful debts under Section 36(1)(viia). 20. The Finance Act, 1985, which was given effect from 1st April, 1985, added the proviso to Section 36(1)(vii), amended Section 36(1)(viia) and also introduced clause (v) to Section 36(2) of the Act. To complete the history of amendments to these clauses, we may also notice that proviso to Section 36(1)(viia)(a) was introduced by Finance Act, 1999 with effect from 1st April, 2000 and explanation to Section 36(1)(vii) was introduced by Finance Act, 2001 with effect from 1st April, 2001. 21. A Circular No.421 dated 12th June, 1985 [(1985) 156 ITR (St.) 130] attempted to explain the amendments made to Section 36 and also explained the provisions of clause (viia) of Section 36(1). It reads as under : "Deduction in respect of provisions made by banking companies for bad and doubtful debts. 17.1 Section 36(1)(vii) of the Income-tax Act provides for a deduction in the computation of 20 taxable profits of the amount of any debt or part thereof which is established to have become a bad debt in the previous year. This allowance is subject to the fulfilment of the conditions specified in sub-section (2) of section 36. 17.2 Section 36(1)(viia) of the Income-tax Act provides for a deduction in respect of any provision for bad and doubtful debts made by a scheduled bank or a non-scheduled bank in relation to advances made by its rural branches, of any amount not exceeding 1= per cent of the aggregate average advances made by such branches. 17.3 Having regard to the increasing social commitments of banks, section 36(1)(viia) has been amended to provide that in respect of any provision for bad and doubtful debts made by a scheduled bank [not being a bank approved by the Central Government for the purposes of section 36(1)(viiia) or a bank incorporated by or under the laws of a country outside India] or a non- scheduled bank, an amount not exceeding ten per cent of the total income (computed before making any deduction under the proposed new provision) or two per cent of the aggregate average advances made by rural branches of such banks, whichever is higher, shall be allowed as a deduction in computing the taxable profits. 17.4 Section 36(1)(vii) of the Act has also been amended to provide that in the case of a bank to which section 36(1)(viia) applies, the amount of bad and doubtful debts shall be debited to the provision for bad and doubtful debts account and that the deduction admissible under section 36(1)(vii) shall be limited to the amount by which such debt or part thereof exceeds the credit balance in the provision for bad and doubtful debts account. 17.5 Section 36(2) has been amended by insertion of a new clause (v) to provide that where a debt or 21 a part of a debt considered bad or doubtful relates to advances made by a bank to which section 36(1)(viia) applies, no such deduction shall be allowed unless the bank has debited the amount of such debt or part of debt in that previous year to the provision for bad and doubtful debt account made under clause (viia) of section 36(1)." 22. Still another circular being Circular No.464, dated 18th July, 1986 [(1986) 161 ITR(St.) 66] was issued with the intention to explain the amendments made by the Income Tax (Amendment) Act, 1986. Clause 5 of the Circular dealt with the modifications introduced in respect of the deductions on provisions for bad and doubtful debts made by the banks and it stated as follows : "5. Modification in respect of deduction on provisions for bad and doubtful debts made by the banks 5.1 Under the existing provisions of clause (viia) of sub-section (1) of section 36 of the Income-tax Act inserted by the Finance Act, 1979, provision for bad and doubtful debts made by scheduled or a non-scheduled Indian bank is allowed as deduction within the prescribed limits. The limit prescribed is 10% of the total income or 2% of the aggregate average advances made by the rural branches of such banks, whichever is higher. It had been represented to the Government that the foreign banks were not entitled to any deduction under this provision and to that extent, they were being discriminated against. Further, it was felt that the existing ceiling in this regard, i.e., 10% of the total income or 2% of the aggregate average advances made by the rural branches of Indian banks, whichever is higher, should be modified. 22 Accordingly, by the Amending Act, the deduction presently available under clause (viia) of sub- section (1) of section 36 of the Income-tax Act has been split into two separate provisions. One of these limits the deduction to an amount not exceeding 2% of the aggregate average advances made by the rural branches of the banks concerned. It may be clarified that foreign banks do not have rural branches and hence this amendment will not be relevant in the case of the foreign banks. The other provisions secure that a further deduction shall be allowed in respect of the provision for bad and doubtful debts made by all banks, not just the banks incorporated in India, limited to 5% of the total income (computed before making any deduction under this clause and Chapter VI-A). This will imply that all scheduled or non-scheduled banks having rural branches would be allowed the deduction up to 2% of the aggregate average advances made by such branches and a further deduction up to 5% of their total income in respect of provision for bad and doubtful debts." 23. Reference usefully can also be made to the Statement of Objects and Reasons for the Finance Act, 1986, wherein, inter alia, it was stated that the amendments were intended to provide a deduction on the provisions for bad debts made by all banks upto 5 per cent of their total income and an additional 2 per cent of the aggregate average advances made by the rural branches of the banks. These percentages stood altered by subsequent amendments in 1993 and 2001. 24. Clear legislative intent of the relevant provisions and unambiguous language of the circulars with reference to the 23 amendments to Section 36 of the Act demonstrate that the deduction on account of provisions for bad and doubtful debts under Section 36(1)(viia) is distinct and independent of the provisions of Section 36(1)(vii) relating to allowance of the bad debts. The legislative intent was to encourage rural advances and the making of provisions for bad debts in relation to such rural branches. Another material aspect of the functioning of such banks is that their rural branches were practically treated as a distinct business, though ultimately these advances would form part of the books of accounts of the principal or head office branch. Thus, this Court would be more inclined to give an interpretation to these provisions which would serve the legislative object and intent, rather than to subvert the same. The Circulars in question show a trend of encouraging rural business and for providing greater deductions. The purpose of granting such deductions would stand frustrated if these deductions are implicitly neutralized against other independent deductions specifically provided under the provisions of the Act. To put it simply, the deductions permissible under Section 36(1)(vii) should not be negated by reading into this provision, limitations of Section 36(1)(viia) on the reasoning that it will form a check against 24 double deduction. To our mind, such approach would be erroneous and not applicable on the facts of the case in hand. Interpretation and Construction of Relevant Sections 25. The language of Section 36(1)(vii) of the Act is unambiguous and does not admit of two interpretations. It applies to all banks, commercial or rural, scheduled or unscheduled. It gives a benefit to the assessee to claim a deduction on any bad debt or part thereof, which is written off as irrecoverable in the accounts of the assessee for the previous year. This benefit is subject only to Section 36(2) of the Act. It is obligatory upon the assessee to prove to the assessing officer that the case satisfies the ingredients of Section 36(1)(vii) on the one hand and that it satisfies the requirements stated in Section 36(2) of the Act on the other. The proviso to Section 36(1)(vii) does not, in absolute terms, control the application of this provision as it comes into operation only when the case of the assessee is one which falls squarely under Section 36(1)(viia) of the Act. We may also notice that the explanation to Section 36(1)(vii), introduced by the Finance Act, 2001, has to be examined in conjunction with the principal section. The explanation specifically excluded any provision for bad and doubtful debts made in the account 25 of the assessee from the ambit and scope of `any bad debt, or part thereof, written off as irrecoverable in the accounts of the assessee'. Thus, the concept of making a provision for bad and doubtful debts will fall outside the scope of Section 36(1)(vii) simplicitor. The proviso, as already noticed, will have to be read with the provisions of Section 36(1)(viia) of the Act. Once the bad debt is actually written off as irrecoverable and the requirements of Section 36(2) satisfied, then, it will not be permissible to deny such deduction on the apprehension of double deduction under the provisions of Section 36(1)(viia) and proviso to Section 36(1)(vii). This does not appear to be the intention of the framers of law. The scheduled and non-scheduled commercial banks would continue to get the full benefit of write off of the irrecoverable debts under Section 36(1)(vii) in addition to the benefit of deduction of bad and doubtful debts under Section 36(1)(viia). Mere provision for bad and doubtful debts may not be allowable, but in the case of a rural advance, the same, in terms of Section 36(1)(viia)(a), may be allowable without insisting on an actual write off. 26. The Special Bench of the ITAT had rejected the contention of the Revenue that proviso to Section 36(1)(vii) 26 applies to all banks and with reference to the circulars issued by the Board, held that a bank would be entitled to both deductions, one under clause (vii) of Section 36(1) of the Act on the basis of actual write off and the other on the basis of clause (viia) of Section 36(1) of the Act on the mere making of provision for bad debts. This, according to the Revenue, would lead to double deduction and the proviso to Section 36(1)(vii) was introduced with the intention to prevent this mischief. The contention of the Revenue, in our opinion, was rightly rejected by the Special Bench of the ITAT and it correctly held that the Board itself had recognized the position that a bank would be entitled to both the deductions. Further, it concluded that the proviso had been introduced to protect the Revenue, but it would be meaningless to invoke the same where there was no threat of double deduction. 27. As per this proviso to clause (vii), the deduction on account of the actual write off of bad debts would be limited to excess of the amount written off over the amount of the provision which had already been allowed under clause (viia). The proviso by and large protects the interests of the Revenue. In case of rural advances which are covered by clause (viia), there would be no such double deduction. The proviso, in its 27 terms, limits its application to the case of a bank to which clause (viia) applies. Indisputably, clause (viia)(a) applies only to rural advances. 28. As far as foreign banks are concerned, under Section 36(1)(viia)(b) and as far as public financial institutions or State financial corporations or State industrial investment corporations are concerned, under Section 36(1)(viia)(c), they do not have rural branches. Thus, it can safely be inferred that the proviso is self indicative that its application is to bad debts arising out of rural advances. 29. In a recent judgment of this Court, in Southern Technologies Ltd. v. Joint Commissioner of Income Tax, Coimbatore [(2010) 2 SCC 548] (authored by one of us, Kapadia, J., as he then was), both Sections 36(1)(vii) and 36(1)(viia) were discussed. Then, this Court went on to state how these provisions operate in the case of a Non Banking Financial Corporations (NBFC) vis-`-vis bank covered under Section 36(1)(viia). The Court held as under: "37. To understand the above dichotomy, one must understand "how to write off". If an assessee debits an amount of doubtful debt to the P&L account and credits the asset account like sundry debtor's account, it would constitute a write-off of an actual debt. However, if an assessee debits "provision for doubtful debt" to the P&L account and makes a corresponding 28 credit to the "current liabilities and provisions" on the liabilities side of the balance sheet, then it would constitute a provision for doubtful debt. In the latter case, the assessee would not be entitled to deduction after 1-4-1989. XXX XXX XXX 58. Section 36(1)(vii) provides for a deduction in the computation of taxable profits for the debt established to be a bad debt. Section 36(1)(vii-a) provides for a deduction in respect of any provision for bad and doubtful debt made by a scheduled bank or non- scheduled bank in relation to advances made by its rural branches, of a sum not exceeding a specified percentage of the aggregate average advances by such branches. 59. Having regard to the increasing social commitment, Section 36(1)(vii-a) has been amended to provide that in respect of provision for bad and doubtful debt made by a scheduled bank or a non-scheduled bank, an amount not exceeding a specified per cent of the total income or a specified per cent of the aggregate average advances made by rural branches, whichever is higher, shall be allowed as deduction in computing the taxable profits. Even Section 36(1)(vii) has been amended to provide that in the case of a bank to which Section 36(1)(vii-a) applies, the amount of bad and doubtful debt shall be debited to the provision for bad and doubtful debt account and that the deduction shall be limited to the amount by which such debt exceeds the credit balance in the provision for bad and doubtful debt account. 60. The point to be highlighted is that in case of banks, by way of incentive, a provision for bad and doubtful debt is given the benefit of deduction, however, subject to the ceiling prescribed as stated above. Lastly, the provision for NPA created by a scheduled bank is added back and only thereafter deduction is made permissible under Section 36(1)(vii-a) as claimed." 29 30. The scope of the proviso to clause (vii) of Section 36(1) has to be ascertained from a cumulative reading of the provisions of clauses (vii), (viia) of Section 36(1) and clause (v) of Section 36(2) and only shows that a double benefit in respect of the same debt is not given to a scheduled bank. A scheduled bank may have both urban and rural branches. It may give advances from both branches with separate provision accounts for each. 31. It was neither in dispute earlier, nor dispute before us, that the assessee bank is maintaining two separate accounts, one being a provision for bad and doubtful debts other than provisions for bad debts in rural branches and another provision account for bad debts in rural branches for which separate accounts are maintained. This fact is evinced by the entries in the profit and loss account, balance sheet and break up details. We need not deliberate this aspect with reference to records at any greater length as this is not a matter in issue before us. It was contended on behalf of the Revenue that the Revenue is only concerned with the assessee as a single unit and not with how many separate accounts are being maintained by the assessee and under what items. The 30 Department, therefore, would assess an assessee with reference to a single account maintained in the head office of the concerned bank. This, according to the learned counsel appearing for the Department, would further substantiate the argument of the Department that the interpretation given by the Full Bench of the High Court is the correct interpretation of Section 36(1)(vii). This argument has to be rejected, being without merit. 32. In the normal course of its business, an assessee bank is to maintain different accounts for the rural debts for non- rural/urban debts. It is obvious that the branches in the rural areas would primarily be dealing with rural debts while the urban branches would deal with commercial debts. Maintenance of such separate accounts would not only be a matter of mere convenience but would be the requirement of accounting standards. 33. It is contended, and rightly so, on behalf of the assessee bank that under law, it is obliged to maintain accounts which would correctly depict its statement of affairs. This obligation arises implicitly from the requirements of the Act and certainly under the mandate of accounting standards. 34. Inter alia, following are the reasons that would fully 31 support the view that a bank should maintain the accounts with separate items for actual bad and irrecoverable debts as well as provision for such debts. It could, for valid reasons, have rural accounts more distinct from the urban, commercial accounts. (a) It is obligatory upon each bank to ensure that the accounts represent the correct statement of affairs of the bank. (b) Maintaining the common account may result in over stating the profits or the profits will shoot up which would result in accruing of liabilities not due. (c) Accounting Standard (AS) 29, issued in 2003, which concerns treatment of `provisions, contingent liabilities and contingent assets'. Under the head `Use of Provisions', clauses 53 and 54 state as under:- "53. A provision should be used only for expenditures for which the provision was originally recognised. 54. Only expenditures that relate to the original provision are adjusted against it. Adjusting expenditures against a provision that was originally recognised for another purpose would conceal the impact of two different events." 35. The above clauses justify maintenance of distinct and 32 different accounts. 36. Merely because the Department has some apprehension of the possibility of double benefit to the assessee, this would not by itself be a sufficient ground for accepting its interpretation. Furthermore, the provisions of a section have to be interpreted on their plain language and could not be interpreted on the basis of apprehension of the Department. This Court, in the case of Vijaya Bank v. Commissioner of Income Tax & Anr. [(2010) 5 SCC 416], held that under the accounting practice, the accounts of the rural branches have to tally with the accounts of the head office. If the repaid amount in subsequent years is not credited to the profit and loss account of the head office, which is what ultimately matters, then there would be a mismatch between the rural branch accounts and the head office accounts. Therefore, in order to prevent such mismatch and to be in conformity with the accounting practice, the banks should maintain separate accounts. Of course, all accounts would ultimately get merged into the account of the head office, which will ultimately reflect one account (balance sheet), though containing different items. 37. Another example that would support this view is that, a bank can write off a loan against the account of `A' alone where 33 it has advanced the loan to party `A'. It cannot write off such loan against the account of `B'. Similarly, a loan advanced under the rural schemes cannot be written off against an urban or a commercial loan by the bank in the normal course of its business. 38. The Full Bench of the Kerala High Court expressed the view that the Legislature did not make any distinction between provisions created in respect of advances by rural branches and advances by other branches of the bank. It also returned a finding while placing emphasis on the proviso to Section 36(1)(vii), read with clause (v) of Section 36(2) of the Act that the interpretation given by a Division Bench of that Courts in the case of South Indian Bank (supra) was not a correct enunciation of law, inasmuch as the same would lead to double deduction. It took the view that in a claim of deduction of bad debts written off in non-rural/urban branches in the previous year, by virtue of proviso to Section 36(1)(vii), the banks are entitled to claim deduction of such bad debts only to the extent it exceeds the provision created for bad or doubtful rural advances under clause (viia) of Section 36(1) of the Act. We are unable to persuade ourselves to contribute to this reasoning and statement of law. 34 39. Firstly, the Full Bench ignored the significant expression appearing in both the proviso to Section 36(1)(vii) and clause (v) of Section 36(2), i.e., `assessee to which clause (viia) of sub- section (1) applies'. In other words, if the case of the assessee does not fall under Section 36(1)(viia), the proviso/limitation would not come into play. 40. It is useful to notice that in the proviso to Section 36(1)(vii), the explanation to that Section, Section 36(1)(viia) and 36(2)(v), the words used are `provision for bad and doubtful debts' while in the main part of Section 36(1)(vii), the Legislature has intentionally not used such language. The proviso to Section 36(1)(vii) and Sections 36(1)(viia) and 36(2)(v) have to be read and construed together. They form a complete scheme for deductions and prescribe the extent to which such deductions are available to a scheduled bank in relation to rural loans etc., whereas Section 36(1)(vii) deals with general deductions available to a bank and even non- banking businesses upon their showing that an account had become bad and written off as irrecoverable in the accounts of the assessee for the previous year, satisfying the requirements contemplated in that behalf under Section 36(2). The provisions of Section 36(1)(vii) operate in their own field and 35 are not restricted by the limitations of Section 36(1)(viia) of the Act. In addition to the reasons afore-stated, we also approve the view taken by the Special Bench of ITAT and the Division Bench of the Kerala High Court in the case of South Indian Bank (supra). 41. To conclude, we hold that the provisions of Sections 36(1)(vii) and 36(1)(viia) of the Act are distinct and independent items of deduction and operate in their respective fields. The bad debts written off in debts, other than those for which the provision is made under clause (viia), will be covered under the main part of Section 36(1)(vii), while the proviso will operate in cases under clause (viia) to limit deduction to the extent of difference between the debt or part thereof written off in the previous year and credit balance in the provision for bad and doubtful debts account made under clause (viia). The proviso to Section 36(1)(vii) will relate to cases covered under Section 36(1)(viia) and has to be read with Section 36(2)(v) of the Act. Thus, the proviso would not permit benefit of double deduction, operating with reference to rural loans while under Section 36(1)(vii), the assessee would be entitled to general deduction upon an account having become bad debt and being written off as irrecoverable in the accounts of the assessee for 36 the previous year. This, obviously, would be subject to satisfaction of the requirements contemplated under Section 36(2). 42. Consequently, while answering the question in favour of the assessee, we allow the appeals of the assessees and dismiss the appeals preferred by the Revenue. Further, we direct that all matters be remanded to the assessing officer for computation in accordance with law, in light of the law enunciated in this judgment. ...................................J. (A.K. Patnaik) ...................................J. (Swatanter Kumar) New Delhi; February 17, 2012 37 IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION CIVIL APPEAL NO. 1143 OF 2011 Catholic Syrian Bank Ltd. ...Appellant(s) Versus Commissioner of Income Tax, Thrissur ...Respondent(s) with Civil Appeal Nos. 1147/11, 1151/11, 1155/11, 1156- 1160/11, 1170/11, 1171/11, 1172/11, 1173/11, 1174/11, 1175/11, 1176/11, 1177/11, 1178/11, 1179/11, 1180/11, 1181/11, 1182/11, 1183/11, 1184/11, 1185/11, 1186/11, 1187/11, 1188/11, 1189/11, 1190-1193/11, 1194/11, 1396/11, and 1397/11. J U D G M E N T S. H. KAPADIA, CJI 1. I have gone through the judgment of my esteemed brother Swatanter Kumar, J. and I agree with the conclusions contained therein. However, I would like to give my own reasons. The question for our consideration is - whether on the facts and circumstances of the case, the assessee(s) is eligible for deduction of the bad and doubtful debts actually written off in view of Section 36(1)(vii) which limits the deduction allowable under the proviso to 38 the excess over the credit balance made under clause (viia) of Section 36(1) of Income Tax Act, 1961 ("ITA" for short)? 2. Under Section 36(1)(vii) of the ITA 1961, the tax payer carrying on business is entitled to a deduction, in the computation of taxable profits, of the amount of any debt which is established to have become a bad debt during the previous year, subject to certain conditions. However, a mere provision for bad and doubtful debt(s) is not allowed as a deduction in the computation of taxable profits. In order to promote rural banking and in order to assist the scheduled commercial banks in making adequate provisions from their current profits to provide for risks in relation to their rural advances, the Finance Act, inserted clause (viia) in sub- section (1) of Section 36 to provide for a deduction, in the computation of taxable profits of all scheduled commercial banks, in respect of provisions made by them for bad and doubtful debt(s) relating to advances made by their rural branches. The deduction is limited to a specified percentage of the aggregate average advances made by the rural branches computed in the manner prescribed by the IT Rules, 1962. Thus, the provisions of clause (viia) of Section 36(1) relating to 39 the deduction on account of the provision for bad and doubtful debt(s) is distinct and independent of the provisions of Section 36(1)(vii) relating to allowance of the bad debt(s). In other words, the scheduled commercial banks would continue to get the full benefit of the write off of the irrecoverable debt(s) under Section 36(1)(vii) in addition to the benefit of deduction for the provision made for bad and doubtful debt(s) under Section 36(1)(viia). A reading of the Circulars issued by CBDT indicates that normally a deduction for bad debt(s) can be allowed only if the debt is written off in the books as bad debt(s). No deduction is allowable in respect of a mere provision for bad and doubtful debt(s). But in the case of rural advances, a deduction would be allowed even in respect of a mere provision without insisting on an actual write off. However, this may result in double allowance in the sense that in respect of same rural advance the bank may get allowance on the basis of clause (viia) and also on the basis of actual write off under clause (vii). This situation is taken care of by the proviso to clause (vii) which limits the allowance on the basis of the actual write off to the excess, if any, of the write off over the amount standing to the credit of the account created under clause (viia). However, the Revenue disputes the 40 position that the proviso to clause (vii) refers only to rural advances. It says that there are no such words in the proviso which indicates that the proviso apply only to rural advances. We find no merit in the objection raised by the Revenue. Firstly, CBDT itself has recognized the position that a bank would be entitled to both the deduction, one under clause (vii) on the basis of actual write off and another, on the basis of clause (viia) in respect of a mere provision. Further, to prevent double deduction, the proviso to clause (vii) was inserted which says that in respect of bad debt(s) arising out of rural advances, the deduction on account of actual write off would be limited to the excess of the amount written off over the amount of the provision allowed under clause (viia). Thus, the proviso to clause (vii) stood introduced in order to protect the Revenue. It would be meaningless to invoke the said proviso where there is no threat of double deduction. In case of rural advances, which are covered by the provisions of clause (viia), there would be no such double deduction. The proviso limits its application to the case of a bank to which clause (viia) applies. Clause (viia) applies only to rural advances. This has been explained by the Circulars issued by CBDT. Thus, the proviso indicates that it is limited in its application to bad 41 debt(s) arising out of rural advances of a bank. It follows that if the amount of bad debt(s) actually written off in the accounts of the bank represents only debt(s) arising out of urban advances, the allowance thereof in the assessment is not affected, controlled or limited in any way by the proviso to clause (vii). 3. Accordingly, the above question is answered in the affirmative, i.e., in favour of the assessee(s). For the above reasons, I agree that the appeals filed by the assessees stand allowed and the appeals filed by the Revenue stand dismissed with no order as to costs. ..........................C.J.I. (S.H. Kapadia) New Delhi; February 17, 2012

CODE OF CRIMINAL PROCEDURE, 1973: ss. 482 and 397 - Petition seeking to quash order of Judicial Magistrate issuing summons - Dismissed by High Court holding that remedy u/s 397 could be availed of - HELD: Issuance of summons is not an interlocutory order within the meaning of s.397 - Only because a revision petition is maintainable, it would not constitute a bar to entertain an application u/s 482 - Matter remitted to High Court for decision afresh - Alternative remedy - Interlocutory order. A criminal complaint was filed against appellant no. 1, its Chairman and the Managing Director, namely, appellants no. 2 and 3, on the allegations that the 'Gutkha' manufactured by the company was found to be adulterated in terms of r.62(1) of the Prevention of Food Adulteration Rules, 1955. The Judicial Magistrate took cognizance and issued summons. The petition filed by the appellants u/s 482 of the Code of Criminal Procedure, 1973 seeking to quash the criminal proceedings was dismissed by the High Court holding that revisional jurisdiction u/s 397 of the Code could be availed of. In the appeal filed by the accused, the question for consideration before the Supreme Court was: Whether an application u/s 482 of the Code of Criminal Procedure, 1973 can be dismissed only on the premise that an alternative remedy of filing a revision application u/s 397 of the Code was available?

Allowing the appeal, the Court HELD: Issuance of summons is not an interlocutory order within the meaning of s. 397 of the Code of Criminal Procedure, 1973. Only because a revision petition is maintainable, the same by itself would not constitute a bar for entertaining an application under s. 482 of the Code. The power of the High Court can be exercised not only in terms of s. 482 but also in terms of s. 483 of the Code. Inherent power of the High Court is not conferred by statute but has merely been saved thereunder. Thus, it cannot be said that the jurisdiction of the High Court would be held to be barred only because the revisional jurisdiction could also be availed of. The judgment of the High Court is set aside. It would consider the matter afresh on merits. [Para 8, 10 and 16] [848-C-D; 849-A; 854-C-D] R.P. Kapur v. State of Punjab AIR 1960 SC 866; Som Mittal v. Govt. of Karnataka (2008) 3 SCC 574; Surya Dev Rai v. Ram Chander Rai and others (2003) 6 SCC 675; Krishnan and another v. Krishnaveni and another (1997) 4 SCC 241; Adalat Prasad v. Rooplal Jindal and others (2004) 7 SCC 338 and Amar Nath and others v. State of Haryana and others AIR 1977 SC 2185, relied on. G. Sagar Suri v. State of U.P. (2000) 2 SCC 636 and Central Bureau of Investigation v. Ravi Shankar Srivastava (2006) 7 SCC 188, referred to. Vishwanaath Ramkrishna Patil and another v. Ashok Murlidhar Sonar and Anr. 2006 (5) Mh.L.J. 671 and Keki Bomi Dadiseth and others v. State of Maharashtra 2002 (3) Mh.L.J.246, approved. V.K. Jain and others v. Pratap V. Padode and Anr. 2005 (30) Mh.L.J. 778, overruled. Case Law Reference: 2005 (30) Mh.L.J. 778 overruled para 6 AIR 1960 SC 866 relied on para 8 (2008) 3 SCC 574 relied on para 8 (2003) 6 SCC 675 relied on para 8 (1997) 4 SCC 241 relied on para 10 (2004) 7 SCC 338 relied on para 10 AIR 1977 SC 2185 relied on para 11 (2000) 2 SCC 636 referred to para 12 (2006) 7 SCC 188 referred to para 13 CRIMINAL APPELLATE JURISDICTION : Criminal Appeal No. 2055 of 2008. From the Judgment & Order dated 21.12.2006 of the High Court Bombay at Mumbai in Criminal Application No. 7220 of 2005. Siddharth Dave, Neil Hildreth, Praveen Kumar and Tarun Gulati for the Appellants. Madhavi Diwan and Ravindra Keshavrao Adsure for the Respondents. REPORTABLE IN THE SUPREME COURT OF INDIA CRIMINAL APPELALTE JURISDICTION CRIMINAL APPEAL NO. 2055 OF 2007 (Arising out of SLP (Crl.) No. 2272 of 2007) Dhariwal Tobaco Products Ltd. and others .... Appellants Versus Sate of Maharashtra and another .... Respondents JUDGMENT S.B. SINHA, J. 1. Leave granted. 2. Whether an application under Section 482 of the Code of Criminal Procedure, 1973, (for short `the Code') can be dismissed only on the premise that an alternative remedy of filing a revision application under Section 397 of the Code is available, is the question involved herein. 1 3. First Appellant is a company incorporated and registered under the Companies Act, 1956 and is engaged in the business of manufacturing Gutkha. Appellant Nos. 2 and 3 are the Chairman and Managing Director of the company. It is said to be a large organization. It has multi-locational manufacturing units and each of them is said to be headed by senior officials of the company, who were responsible for the conduct of its business. Inter alia on the premise that the samples collected from the manufacturing unit of appellants at Solapur were found to be adulterated in terms of Rule 62(1) of the Prevention of Food Adulteration Rules, 1955 (in short `1955 Rules) providing for restriction on the use of anti-caking agents, a criminal complaint was filed in the Court of the Judicial Magistrate, First Class at Akkalkot, Solapur. Cognizance was taken thereof and summons were issued to the appellants. 4. They filed an application under Section 482 of the Code, which by reason of the impugned judgment and order dated 21st December, 2006 has been dismissed, stating :- "2. The jurisdiction under section 482 of the said Code has to be exercised sparingly and only in exceptional cases. As held by this Court in the case of V.K. Jain and others (Supra) the 2 jurisdiction under section 482 of the said Code will not be exercised if recourse can be taken by the Applicants to the remedy of filing a Revision Application under Section 397 of the said Code. In this view of the matter, the Application is rejected. Notwithstanding the rejection of this Application, it will be open for the Applicants to take out appropriate proceedings before the appropriate court. All contentions on merits are kept open." 5. By an order dated 30th April, 2007 a limited notice was issued. It reads :- " Issue notice limited to the question as to whether the matter should be directed to be considered afresh by the High Court keeping in view the fact that other matters wherein similar contentions have been raised are pending before the High Court. Dasti service, in addition is permitted. Liberty to mention after service is complete." 6. Mr. Siddhartha Dave, learned counsel appearing on behalf of appellants would urge that the High Court committed a serious error in rejecting the application filed by appellants under Section 482 of the Code 3 without entering into the merit of the matter. It was urged that reliance placed by the High Court on its earlier judgment in V.K. Jain and others v. Pratap V. Padode and another, [2005 (30) Mh.L.J. 778] rendered by the learned Single Judge of that Court is contrary to various other decisions of the same Court inter alia in Vishwanaath Ramkrishna Patil and another v. Ashok Murlidhar Sonar and another, [ 2006 (5) Mh.L.J. 671 ] and Keki Bomi Dadiseth and others v. State of Maharashtra, [ 2002 (3) Mh.L.J. 246]. 7. Ms. Madhavi Diwan, learned counsel appearing on behalf of the respondents, on the other hand, contended that having regard to the conduct of appellants, this Court should not exercise its extra-ordinary jurisdiction under Article 136 of the Constitution of India, particularly when the power under Section 482 of the Code should not be used mechanically or routinely. 8. Indisputably issuance of summons is not an interlocutory order within the meaning of Section 397 of the Code. This Court in a large number of decisions beginning from R.P. Kapur v. State of Punjab, AIR 1960 SC 866 to Som Mittal v. Govt. of Karnataka , [ (2008) 3 SCC 574 ] has laid down 4 the criterion for entertaining an application under Section 482. Only because a revision petition is maintainable, the same by itself, in our considered opinion, would not constitute a bar for entertaining an application under Section 482 of the Code. Even where a revision application is barred, as for example the remedy by way of Section 115 of the Code of Civil Procedure, 1908 this Court has held that the remedies under Articles 226/227 of the Constitution of India would be available. (See Surya Dev Rai v. Ram Chander Rai and others, [ (2003) 6 SCC 675 ] ). . Even in cases where a second revision before the High Court after dismissal of the first one by the Court of Sessions is barred under Section 397 (2) of the Code, the inherent power of the Court has been held to be available. 9. The power of the High Court can be exercised not only in terms of Section 482 of the Code but also in terms of Section 483 thereof. The said provision reads thus :- "483. Duty of High Court to exercise continuous superintendence over Courts of Judicial 5 Magistrates:- Every High Court shall so exercise its superintendence over the Courts of Judicial Magistrates subordinate to it as to ensure that there is an expeditious and proper disposal of cases by such Magistrates." 10. Inherent power of the High Court is not conferred by statute but has merely been saved thereunder. It is, thus, difficult to conceive that the jurisdiction of the High Court would be held to be barred only because the revisional jurisdiction could also be availed of. (See Krishnan and another v. Krishnaveni and another, [ (1997) 4 SCC 241 ] ). In fact in Adalat Prasad v. Rooplal Jindal and others, [ (2004) (7) SCC 338) ] to which reference has been made by the learned Single Judge of the Bombay High Court in V.K. Jain and others (supra) this Court has clearly opined that when a process is issued, the provisions of Section 482 of the Code can be resorted to. 11. It may be true, as has been noticed by the High Court that thereunder availability of appellate or revisional jurisdiction of the High Court did not 6 fall for its consideration but in our considered opinion it is wholly preposterous to hold that Adalaat Prasad (supra), so far as it related to invoking the inherent jurisdiction of the High Court is concerned, did not lay down good law. The High Court in saying so did not only read the said judgment in its proper perspective; it misdirected itself in saying so as it did not pose unto itself a correct question. In Amar Nath and others v. State of Haryana and others, [ AIR 1977 SC 2185 ] it was opined :- "....It was only with the passing of the impugned order that the proceedings started and the question of the appellants being put up for trial arose for the first time. This was undoubtedly a valuable right which the appellants possessed and which was being denied to them by the impugned order. It cannot, therefore, be said that the appellants were not at all prejudiced, or that any right of their's was not involved by the impugned order. It is difficult to hold that the impugned order summoning the appellants straightaway was merely an interlocutory order which could not be revised by the High Court under sub-sections (1) and (2) of Section 397 of the 1973 Code. The order of the Judicial Magistrate summoning the appellants in the circumstances of the present case, particularly having regard to what had preceded, was undoubtedly a matter of moment, and a valuable right of the appellants had been taken away by the Magistrate in passing an order prima facie in sheer mechanical fashion without applying his mind. We are, therefore, satisfied that the order impugned was one which was a matter of moment and which did involve a decision regarding the rights of the appellants. If the appellants were not summoned, then they could not have faced the 7 trial at all, but by compelling the appellants to face a trial without proper application of mind cannot be held to be an interlocutory matter but one which decided a serious question as to the rights of the appellants to be put on trial." 12. We may notice that in G. Sagar Suri v. State of U.P., [ (2000) 2 SCC 636 ] this Court has held :- "7. It was submitted by Mr Lalit, learned counsel for the second respondent that the appellants have already filed an application in the Court of Additional Judicial Magistrate for their discharge and that this Court should not interfere in the criminal proceedings which are at the threshold. We do not think that on filing of any application for discharge, the High Court cannot exercise its jurisdiction under Section 482 of the Code. In this connection, reference may be made to two decisions of this Court in Pepsi Foods Ltd. v. Special Judicial Magistrate and Ashok Chaturvedi v. Shitul H. Chanchani wherein it has been specifically held that though the Magistrate trying a case has jurisdiction to discharge the accused at any stage of the trial if he considers the charge to be groundless but that does not mean that the accused cannot approach the High Court under Section 482 of the Code or Article 227 of the Constitution to have the proceeding quashed against them when no offence has been made out against them and still why must they undergo the agony of a criminal trial. 8. Jurisdiction under Section 482 of the Code has to be exercised with great care. In exercise of its jurisdiction the High Court is not to examine the matter superficially. It is to be seen if a matter, which is essentially of a civil nature, has been given a cloak of criminal offence. Criminal proceedings are not a short cut of other remedies available in law. Before issuing process a criminal court has to exercise a great deal of caution. For the accused it is a serious matter. This Court has laid certain principles on the basis of which the High Court is to exercise its jurisdiction under 8 Section 482 of the Code. Jurisdiction under this section has to be exercised to prevent abuse of the process of any court or otherwise to secure the ends of justice." This Court therein noticed a large number of decisions to opine that whenever the High Court comes to the conclusion that allowing the proceeding to continue would be an abuse of the process of court and that the ends of justice require that the proceedings should be quashed, it would not hesitate to do so. 13. We may furthermore notice that in Central Bureau of Investigation v. Ravi Shankar Srivastava, [ (2006) 7 SCC 188 ] this Court while opining that the High Court in exercise of its jurisdiction under Section 482 of the Code does not function either as a court of appeal or revision, held :- "7. Exercise of power under Section 482 of the Code in a case of this nature is the exception and not the rule. The section does not confer any new powers on the High Court. It only saves the inherent power which the Court possessed before the enactment of the Code. It envisages three circumstances under which the inherent jurisdiction may be exercised, namely, (i) to give effect to an order under the Code, (ii) to prevent abuse of the process of court, and (iii) to otherwise secure the ends of justice. It is neither possible nor desirable to lay down any inflexible rule which would govern the exercise of inherent jurisdiction. No legislative enactment dealing with procedure can provide for all cases that may possibly arise. The courts, therefore, have inherent powers apart from express provisions of law which are necessary for proper discharge of functions and 9 duties imposed upon them by law. That is the doctrine which finds expression in the section which merely recognises and preserves inherent powers of the High Courts. All courts, whether civil or criminal possess, in the absence of any express provision, as inherent in their constitution, all such powers as are necessary to do the right and to undo a wrong in the course of administration of justice on the principle "quando lex aliquid alicui concedit, concedere videtur et id sine quo res ipsae esse non potest" (when the law gives a person anything it gives him that without which it cannot exist). While exercising powers under the section, the court does not function as a court of appeal or revision. Inherent jurisdiction under the section though wide has to be exercised sparingly, carefully and with caution and only when such exercise is justified by the tests specifically laid down in the section itself. It is to be exercised ex debito justitiae to do real and substantial justice for the administration of which alone the courts exist. Authority of the court exists for advancement of justice and if any attempt is made to abuse that authority so as to produce injustice, the court has power to prevent abuse. It would be an abuse of the process of the court to allow any action which would result in injustice and prevent promotion of justice. In exercise of the powers the court would be justified to quash any proceeding if it finds that initiation/continuance of it amounts to abuse of the process of court or quashing of these proceedings would otherwise serve the ends of justice. When no offence is disclosed by the complaint, the court may examine the question of fact. When a complaint is sought to be quashed, it is permissible to look into the materials to assess what the complainant has alleged and whether any offence is made out even if the allegations are accepted in toto." 14. It is interesting to note that the Bombay High Court itself has taken a different view. In a decision rendered by the Aurangabad Bench of the 10 Bombay High Court, a learned Single Judge in Vishwanath Ramkrishna Patil (supra), where a similar question was raised, opined as under :- "It is difficult to curtail this remedy merely because there is a revisional remedy available. The alternate remedy is no bar to invoke power under Article 227. What is required as to see the facts and circumstances of the case while entertaining such petition under Article 227 of the Constitution and/or under Section 482 of Criminal Procedure Code. The view therefore, as taken in both the cases V.K. Jain and Saket Gore, no way expressed total bar. If no case is made out by the petitioner or the party to invoke the inherent power as contemplated under Section 482 of Criminal Procedure Code and/or the discretionary or the supervisory power under Article 227 of the Constitution of India they may approach to the revisional Court, against the order of issuance of process. 11. Taking into consideration the facts and circumstances of those cases, the learned Judge has observed in V.K. Jain and Saket Gore (supra) that it would be appropriate for the parties to file revision application against the order of issuance of process. There is nothing mentioned and/or even observed that there is total bar to file petition under Section 482 of Criminal Procedure Code and/or petition under Article 227 of the Constitution of India. 12. The Apex Court's decision already referred above, nowhere prohibited or expressly barred to invoke Section 482 of Criminal Procedure Code or Article 227 of the Constitution of India against the order of issuance of process." 11 In Keki Bomi Dadiseth (supra), another learned Single Judge of the Nagpur Bench of the Bombay High Court entertained an application under Section 482 of the Code, where summons have been served for commission of offence under the Prevention of Food Adulteration Act, 1954, holding:- "33. In view of the ratio laid down by the Apex Court in the above referred cases, it is well settled that inherent power under Section 482 can be invoked by the accused in the appropriate case irrespective of other factors and this Court can exercise the same in a deserving case within parametres of law and, therefore, the contentions canvassed by the learned Additional Public Prosecutor in this regard are misconceived and same are rejected." 15. In our considered opinion V.K. Jain (supra) does not lay down a good law. It is over-ruled accordingly. 16. For the reasons aforementioned the impugned judgment cannot be sustained which is set aside accordingly. The High Court is directed to consider the matter afresh on merits. The appeal is allowed. ............................J. 12 [ S.B. Sinha ] ............................J. [ Cyriac Joseph ] New Delhi December 17, 2008 13

United Kingdom Supreme Court=This case is about the employment status of individuals who are resident in Great Britain and are employed by a British company but who travel to and from home to work overseas. Halliburton Manufacturing & Services Ltd ("the appellant") is a UK company which is based at Dyce, near Aberdeen. It is one of about 70 subsidiary or associated companies of Halliburton Inc, which is a US corporation. It supplies tools, services and personnel to the oil industry. The employee, Ismail Ravat ("the respondent"), lives in Preston, Lancashire and is a British citizen. He was employed by the appellant from 2 April 1990 as an accounts manager until he was dismissed with effect from 17 May 2006. The reason for his dismissal was redundancy. The respondent complains that he was unfairly dismissed. The complication in his case is that at the time of his dismissal he was working in Libya. The question is whether the employment tribunal has jurisdiction to consider his complaint. An employment tribunal sitting in Aberdeen (Mr RG Christie, sitting alone) held on 23 November 2007 that it had jurisdiction. That decision was set aside by the Employment Appeal Tribunal (Lady Smith, sitting alone) in a judgment which was given on 14 November 2008. The respondent appealed under section 37(1) of the Employment Tribunals Act 1996 to the Inner House of the Court of Session. On 22 June 2010 an Extra Division (Lord Osborne and Lord Carloway, Lord Brodie dissenting) allowed his appeal: 2011 SLT 44. The appellant now appeals to this court. The question whether the respondent's complaint of unfair dismissal can be heard in Scotland is, as the decisions below show, not an easy one to answer. Section 94(1) of the Employment Rights Act 1996 provides: "An employee has the right not to be unfairly dismissed." Section 230(1) of that Act provides that "employee" means an individual who has entered into or works under (or, where the employment has ceased, worked under) a contract of employment. Neither of these provisions contains any geographical limitation. Nor is any such limitation to be found anywhere else in the Act. As Lord Hoffmann observed in Lawson v Serco Ltd [2006] UKHL 3, [2006] ICR 250, para 1, the statement in section 244(1) that the Act extends to England and Wales and Scotland means only that it forms part of the law of Great Britain and does not form part of the law of any other territory, such as Northern Ireland (to which the subsection states the Act does not apply), for which Parliament could have legislated. Yet it is plain that some limitation must be implied. As Lady Hale noted in Duncombe v Secretary of State for Children, Schools and Families (No 2) [2011] UKSC 36, [2011] ICR 1312, para 5, it was agreed in that case that section 94(1) could not apply to all employment anywhere in the world. That must indeed be so: see also Lawson, para 6, where Lord Hoffmann said that all the parties in that case were agreed that the scope of section 94(1) must have some territorial limits. But this does not solve the problem as to where the line is to be drawn between those cases to which section 94(1) applies and those to which it does not. It is not straightforward. As Louise Merrett, The Extra-Territorial Reach of Employment Legislation (2010) 39 Industrial Law Journal 355, has pointed out, increasing labour mobility together with the proliferation of multinational companies and groups of companies has made the international aspects of employment law important in an ever-growing number of cases. The present case is an illustration of the problems that this gives rise to.

Hilary Term [2012] UKSC 1 On appeal from: [2010] CSIH 52 JUDGMENT Ravat (Respondent) v Halliburton Manufacturing and Services Ltd (Appellant) (Scotland) before Lord Hope, Deputy President Lady Hale Lord Brown Lord Mance Lord Kerr JUDGMENT GIVEN ON 8 February 2012 Heard on 22 November 2011 Appellant Respondent John Cavanagh QC Aidan O’Neill QC Christine McCrossan (Instructed by Paull & Williamsons) (Instructed by Lefevre Litigation) Page 2 LORD HOPE, with whom Lady Hale, Lord Brown, Lord Mance and Lord Kerr agree 1. This case is about the employment status of individuals who are resident in Great Britain and are employed by a British company but who travel to and from home to work overseas. Halliburton Manufacturing & Services Ltd (“the appellant”) is a UK company which is based at Dyce, near Aberdeen. It is one of about 70 subsidiary or associated companies of Halliburton Inc, which is a US corporation. It supplies tools, services and personnel to the oil industry. The employee, Ismail Ravat (“the respondent”), lives in Preston, Lancashire and is a British citizen. He was employed by the appellant from 2 April 1990 as an accounts manager until he was dismissed with effect from 17 May 2006. The reason for his dismissal was redundancy. The respondent complains that he was unfairly dismissed. The complication in his case is that at the time of his dismissal he was working in Libya. The question is whether the employment tribunal has jurisdiction to consider his complaint. 2. An employment tribunal sitting in Aberdeen (Mr RG Christie, sitting alone) held on 23 November 2007 that it had jurisdiction. That decision was set aside by the Employment Appeal Tribunal (Lady Smith, sitting alone) in a judgment which was given on 14 November 2008. The respondent appealed under section 37(1) of the Employment Tribunals Act 1996 to the Inner House of the Court of Session. On 22 June 2010 an Extra Division (Lord Osborne and Lord Carloway, Lord Brodie dissenting) allowed his appeal: 2011 SLT 44. The appellant now appeals to this court. 3. The question whether the respondent’s complaint of unfair dismissal can be heard in Scotland is, as the decisions below show, not an easy one to answer. Section 94(1) of the Employment Rights Act 1996 provides: “An employee has the right not to be unfairly dismissed.” Section 230(1) of that Act provides that “employee” means an individual who has entered into or works under (or, where the employment has ceased, worked under) a contract of employment. Neither of these provisions contains any geographical limitation. Nor is any such limitation to be found anywhere else in the Act. As Lord Hoffmann observed in Lawson v Serco Ltd [2006] UKHL 3, [2006] ICR 250, para 1, the statement in section 244(1) that the Act extends to England and Wales and Scotland means only that it forms part of the law of Great Britain and does not form part of the law of any other territory, such as Northern Ireland (to which the subsection states the Act does not apply), for which Parliament could have legislated. Page 3 4. Yet it is plain that some limitation must be implied. As Lady Hale noted in Duncombe v Secretary of State for Children, Schools and Families (No 2) [2011] UKSC 36, [2011] ICR 1312, para 5, it was agreed in that case that section 94(1) could not apply to all employment anywhere in the world. That must indeed be so: see also Lawson, para 6, where Lord Hoffmann said that all the parties in that case were agreed that the scope of section 94(1) must have some territorial limits. But this does not solve the problem as to where the line is to be drawn between those cases to which section 94(1) applies and those to which it does not. It is not straightforward. As Louise Merrett, The Extra-Territorial Reach of Employment Legislation (2010) 39 Industrial Law Journal 355, has pointed out, increasing labour mobility together with the proliferation of multinational companies and groups of companies has made the international aspects of employment law important in an ever-growing number of cases. The present case is an illustration of the problems that this gives rise to. The facts 5. As I have already said, the respondent was working in Libya when his employment was terminated. From 1990 to 1995 he worked for the appellant in London. For the remainder of the period that he was employed by it he worked overseas, initially in Algeria. In March 2003 he was offered and accepted a transfer to Libya. The arrangement was on what was known as a commuter or rotational basis: employment tribunal’s judgment, para 5. The appellant described the respondent’s status in documentation attached to his employment contract as that of a UK commuter. This was because he continued to live in Great Britain and travelled to and from his home to work for short periods overseas. He worked for 28 consecutive days in Libya, followed by 28 consecutive days at home in Preston. In effect he was job sharing, working back-to-back with another employee. During the 28 days when he was at home the work was done in his place by another employee on the same arrangement. His rotational work pattern was in accordance with the appellant’s international commuter assignment policy. Some of its overseas employees were accorded expatriate status. But that was not done in the respondent’s case because he did not live abroad full-time. His travel arrangements and costs for commuting between his home in Preston and his workplace in Libya were paid for by the appellant. 6. The work that the respondent carried out in Libya was for the benefit of Halliburton Co Germany GmbH, which was another subsidiary or associated company of Halliburton Inc. The German company was charged by the appellant for the respondent’s services. His duties included dealing with statutory compliance in relation to tax, audits and financial control and ensuring that all day to day transactions were reported to the German company in Germany. He reported on a daily basis to an operations manager based in Libya, but on policy and compliance issues he reported to an African Region Finance Manager, Mr Page 4 Strachan, who was employed by another UK Halliburton subsidiary, Halliburton Management Ltd, based in Cairo. On human resources his contact was with the appellant’s human resources department in Aberdeen and with another of its employees who was its human resources representative in Libya. 7. The respondent had little by way of day to day contact with the Aberdeen office while he was in Libya, and he had no formal obligation to do any work during the 28 days while he was at home. Any duties that he performed in Great Britain, such as responding while at home to emails, were incidental to that overseas employment. A feature of the appellant’s commuter policy was that while he was working on a foreign assignment the employee’s terms were such as to preserve the benefits, such as pay structure and pensions, for which he would normally be eligible had he been working in his home country other than those which were purely local such as a car allowance: employment tribunal’s judgment, para 6. The respondent was remunerated on the normal UK pay and pension structure that applied to the appellant’s home-based employees. He was paid in Sterling into a UK bank account, and he paid UK income tax and national insurance on the PAYE basis. 8. In 2003, when he started work in Libya, the respondent was concerned to know whether his employment contract would remain governed by UK employment law: employment tribunal’s judgment, para 13. He asked his manager there what his position was and was assured that he would continue to have the full protection of UK law while he worked abroad. He was given a copy of a document in which overseas managers were told to contact the appellant’s human resources team in Aberdeen when they were considering action in relation to poor performance, misconduct, dismissal or redundancy. The decision to dismiss him was taken by Mr Strachan of Halliburton Management Ltd under guidance from the Aberdeen human resources department. The respondent then invoked the appellant’s UK grievance procedure, as he was advised that he was entitled to do by the human resources department. The grievance hearing, the redundancy consultations and the respondent’s appeal against his dismissal all took place in the appellant’s offices in Aberdeen. The respondent received a redundancy payment from the appellant. It was stated to have been paid to him in accordance with the Employment Rights Act 1996: see section 135, which confers the right to a redundancy payment to an employee who is dismissed by the employer by reason of redundancy. The implied limitation 9. The question as to what connection between Great Britain and the employment relationship was required to confer rights on employees working abroad was considered in Lawson v Serco Ltd [2006] UKHL 3, [2006] ICR 250. Page 5 Three appeals were heard together in that case, as illustrations of the situations in which the question of territorial scope might arise. Mr Lawson was employed as a security adviser at the British RAF base on Ascension Island. Mr Botham was employed as a youth worker at various Ministry of Defence establishments in Germany. Mr Crofts was a pilot employed by a Hong Kong airline but was based at Heathrow. Having been presented with these examples, the appellate committee sought to identify the principles which should be applied to give effect to what Parliament might reasonably be supposed to have intended and attributing to Parliament a rational scheme: para 23, per Lord Hoffmann. As Lord Hoffmann, with whom all the other members of the committee agreed, observed in the final sentence of that paragraph, that involved the application of principles, not supplementary rules. 10. Lord Hoffmann took first what Parliament must have intended as the standard, normal or paradigm case: the employee who was working in Great Britain at the time of his dismissal: paras 25, 27. Then there were peripatetic employees. The former rule, which was introduced by section 22 of the Industrial Relations Act 1971, was that the right not to be unfairly dismissed did not apply to an employment where under his contract of employment the employee “ordinarily works outside Great Britain”. The solution that was adopted in the application of that formula to peripatetic employees was to ask where the employee was based: Wilson v Maynard Shipbuilding Consultants AB [1978] QB 665, per Megaw LJ; Todd v British Midland Airways Ltd [1978] ICR 959, 964, per Lord Denning MR. Adopting this approach, Lord Hoffmann said that the common sense of treating the base of a peripatetic employee as, for the purposes of the statute, his place of employment remained valid: para 29. That dealt with the case of Mr Croft, the airline pilot, who was based at Heathrow. 11. This left the cases of Mr Lawson and Mr Botham, neither of whom was working in Great Britain at the time when he was dismissed. Lord Hoffmann called them expatriate employees, and he acknowledged that the problem in their case was more difficult: para 35. He recognised that the circumstances would have to be unusual for an employee “who works and is based abroad” to come within the scope of British labour legislation. But he thought there were some who did, and that one should go further and try, without drafting a definition, to identify “the characteristics which such exceptional cases will ordinarily have”: para 36. He then mentioned a number of characteristics which should be regarded as sufficient to take such cases out of the general rule that the place of employment is decisive. It would be very unlikely that someone working abroad would be within the scope of section 94(1) unless he was working for an employer based in Great Britain. But that would not be enough. Something more was necessary: para 37. 12. He went on in paras 38-39 to give examples of cases in which section 94(1) might apply to an expatriate employee: the employee posted abroad to work for a Page 6 business conducted in Great Britain, and the employee working in a political or social British enclave abroad, which were sufficient to cover the cases of Mr Lawson and Mr Botham. In para 40 he added this comment: “I do not say that there may not be others, but I have not been able to think of any and they would have to have equally strong connections with Great Britain and British employment law.” 13. Pausing there, it is plain that it would be difficult to fit the respondent’s case into any of the categories identified by Lord Hoffmann in Lawson. He was not working in Great Britain at the time of his dismissal. He was not a peripatetic employee. He was not working abroad as an expatriate in a political or social British enclave. Nor had he been posted abroad to work for a business conducted in Great Britain, as he was commuting from his home in Preston and the company for whose benefit he was working in Libya was a German company. But in Duncombe v Secretary of State for Children, Schools and Families (No 2) [2011] ICR 1312, para 8 Lady Hale sounded a salutary warning against that approach to the problem. After summarising the principles that were to be derived from Lawson, she said: “It is therefore clear that the right will only exceptionally cover employees who are working or based abroad. The principle appears to be that the employment must have much stronger connections both with Great Britain and with British employment law than with any other system of law. There is no hard and fast rule and it is mistake to try and torture the circumstances of one employment to make it fit one of the examples given, for they are merely examples of the application of the general principle.” 14. One has to search quite carefully through Lord Hoffmann’s speech for statements of general principle. But they are there. In para 1 he said: “Putting the question in the traditional terms of the conflict of laws, what connection between Great Britain and the employment relationship is required to make section 94(1) the appropriate choice of law in deciding whether and in what circumstances an employee can complain that his dismissal was unfair? The answer to this question will also determine the question of jurisdiction, since the employment tribunal will have jurisdiction to decide upon the unfairness of the dismissal if (but only if) section 94(1) is the appropriate choice of law.” Page 7 In para 36, having said that the circumstances would have to be “unusual” for an employee who works and is based abroad to come within the scope of British labour legislation but that he thought that there were some who do, he said: “I hesitate to describe such cases as coming within an exception or exceptions to the general rule [that section 94(1) applies to persons employed in Great Britain] because that suggests a definition more precise than can be imposed upon the many possible combinations of factors, some of which may be unforeseen. Mr Crow submitted that in principle the test was whether, despite the workplace being abroad, there are other relevant factors so powerful that the employment relationship has a closer connection with Great Britain than with the foreign country where the employee works.” 15. The response that Lord Hoffmann then gave to that submission needs to be carefully noted: “This may well be a correct description of the cases in which section 94(1) can exceptionally apply to an employee who works outside Great Britain, but like many accurate statements, it is framed in terms too general to be of practical help. I would also not wish to burden tribunals with inquiry into the systems of labour law of other countries. In my view one should go further and try, without drafting a definition, to identify the characteristics which such exceptional cases will ordinarily have.” 16. Lord Hoffmann was dealing in that passage with those whom he had called expatriate employees. Mr Crow appeared for the Secretary of State for Foreign and Commonwealth Affairs and the Ministry of Defence, whose interest was to argue that the employment tribunal did not have jurisdiction to hear Mr Botham’s claim for unfair dismissal. Lord Hoffmann’s rejection of Mr Crow’s test as too general to be of practical help in that context, where it was possible to identify the guiding characteristics more precisely, is understandable. But it is important not to lose sight of the fact that he acknowledged that the principle that Mr Crow had identified might well be a correct description of the cases in which section 94(1) could exceptionally apply to an employee who works outside Great Britain. He also described it as an accurate statement. His reasons for declining to adopt it in the case of the expatriate employees were (1) that it was framed in terms that were too general to be of practical help in their case and (2) that tribunals should not be burdened with inquiry into the systems of labour law of other countries. But I do Page 8 not see these as reasons for rejecting it in a case such as this which cannot readily be fitted into one or other of Lord Hoffmann’s three categories. 17. Neither of the specific examples of expatriate employees given by Lord Hoffmann in Lawson applied to the employees in Duncombe. They were teachers employed by the British Government to work in European schools abroad. They were employed in an international enclave, not a British enclave. But their employment had no connection with the country where they happened to work. Also discussed in Duncombe were the cases of Wallis and Grocott, who were employed by the British government in NATO establishments in Europe where their servicemen husbands were working (Ministry of Defence v Wallis [2011] ICR 617). The Secretary of State’s argument that their cases did not come within the scope of section 94(1) because they fell within neither of the cases identified as exceptional in Lawson was rejected. In para 16 of Duncombe Lady Hale, delivering the judgment of the court, said: “In our view, these cases do form another example of an exceptional case where the employment has such an overwhelmingly closer connection with Britain and with British employment law than with any other system of law that it is right to conclude that Parliament must have intended that the employees should enjoy protection from unfair dismissal.” She went on to identify what in para 17 she referred to as a very special combination of factors on which that conclusion depended. They included the fact that the teachers and the wives were employed under contracts governed by English law, which she said must be relevant to the expectation of each party as to the protection which the employees would enjoy. 18. The respondent’s case does not fall within the further example of the expatriate employee within the scope of section 94(1) provided by Duncombe. But Lady Hale’s remark in para 8 that it is a mistake to try and torture the circumstances of one employment to make it fit one of the examples given, for they are merely examples of the application of the general principle, is directly in point. The judgment in that case was delivered on 15 July 2011, just over a year after the date when the judges of the Extra Division delivered their opinions. Their reasoning and that of Mr Christie in the employment tribunal and Lady Smith in the Employment Appeal Tribunal was based entirely on the guidance that they took from Lord Hoffmann’s speech in Lawson. They did not have the advantage of reading Lady Hale’s judgment in Duncombe. Page 9 The decisions below 19. The differences of opinion in the employment tribunal, the EAT and the Extra Division are striking. On the one hand, the respondent’s case was seen as that of an expatriate employee whose case could not be brought within Lord Hoffmann’s examples of cases falling within that category. On the other, it was seen as a case which could be resolved in the respondent’s favour by applying principles that can be derived from his analysis. 20. In the employment tribunal Mr Christie said in para 39 of his judgment that, having regard to what he took to be the general principle to be applied in the case of employees working outside Great Britain, it did not seem to him to be necessary as a first step to place any particular claimant into one or other of Lord Hoffmann’s categories: “Nothing which he says suggests that that is an essential. It seems perfectly conceivable that an employee may have his place of work in another country abroad, but carries it out in a manner or in circumstances where he cannot properly be described as peripatetic or expatriate, and yet be operating in an employment relationship which has a substantial connection with the UK. Prior to coming to this particular case, I have had in mind a British citizen who, for example, works abroad on what is often referred to as a ‘rotational system’ of working, say, four weeks in Africa followed by three weeks on leave at home with his family in, say, Edinburgh – and so on, following the pattern.” He referred in the next paragraph, by way of analogy, to the oil rig worker who was flown out to the Continental Shelf to work for two weeks and was then flown back to stay at home in, say, Dundee for the next two weeks. He did not become peripatetic merely because the rig he might be transferred to was in the Norwegian sector or was off the coast of West Africa. Having examined all the circumstances peculiar to this case, he concluded in para 54 of his judgment that there remained a sufficiently substantial connection between the employment relationship and Great Britain to enable him to hold that the tribunal had jurisdiction. 21. In the Employment Appeal Tribunal Lady Smith said in para 14 of her judgment that she took from Lord Hoffmann’s judgment that the fact that an employee was recruited by a British company in Great Britain to work for it abroad would not, in itself, be enough for jurisdiction. She referred to the principle identified by him in para 1 of his speech for the appropriateness of recognising jurisdiction in each case (see para 14, above). She then examined what she referred Page 10 to as his discussion of the different categories into which a person’s employment could fall in a case where the jurisdiction question arises. In para 18 she noted that in his discussion of the expatriate category Lord Hoffmann did not approve of a test of substantial connection. On the contrary, he was saying that it was not enough. In para 35 she said that she was satisfied that the tribunal erred in law: “It applied a test of ‘substantial connection’ with Great Britain and should not have done so. A test of ‘substantial connection’ falls far short of the criteria inherent in the principles identified by Lord Hoffmann, to which principles I have already referred. It also took account of the proper law of the parties’ contract and the reassurances given to the claimant by the respondents about the availability to him of UK employment law, neither of which was relevant.” In paras 37-38 she said that the respondent fell plainly within Lord Hoffmann’s third category – the expatriate category, and that, far from there being something more to show that it was appropriate that there should be jurisdiction, there was something less. The respondent was not working for the appellant’s business at home, but was working in the operation of a German company and was dismissed by an employee who had his work base in Cairo. 22. In the Extra Division Lord Osborne said in para 15 that he took from Lord Hoffmann’s reference to “an employee who works and is based abroad” when dealing with what he termed expatriate employees that he meant someone whose place of work and base, which included his place of residence, was situated in a foreign country. Referring to the passage in para 40 of Lord Hoffmann’s speech, where he said that he could not think of any other examples of expatriate employees to whom section 94(1) might apply but that they would have to have equally strong connections with Great Britain and with British employment law (see para 12, above), he said: “Since, in my view, the respondent cannot properly be seen as an expatriate employee, this particular observation is not of direct relevance to his situation. However, I consider that what is said comes, perhaps, as close as anything in this judgment to an indication of the kind of connection with Great Britain and British employment law that an employee would require to show to be able to invoke successfully the jurisdiction of an employment tribunal in connection with a claim based upon section 94(1). Thus, the reference to ‘strong connections with Great Britain and British employment law’ seems to me to be important.” Page 11 23. In para 16 of his opinion Lord Osborne said that it was not necessary for a claimant to demonstrate that he might properly be placed in one of the categories considered in detail by Lord Hoffmann. An employee might have a place of work in a foreign country but carry it out in a manner and in circumstances in which he could not properly be described as peripatetic or expatriate. In para 19 he said that it was not possible, without qualification, to affirm the decision of the employment tribunal as words used by the chairman suggested that he considered that the task that he was undertaking was the exercise of a discretion. Lord Hoffmann had made it clear in para 24 of his speech in Lawson that it was a question of law, although involving judgment in the application of the law to the facts. But Lord Osborne concluded in para 20 that the tribunal ultimately reached a correct conclusion on the facts. 24. Lord Carloway said in para 27 that, as he read Lord Hoffmann’s speech, he was setting out three definitive categories of employment, “into which every person is capable of being squeezed.” In para 29 he said that an expatriate employee is one who lives and works abroad. That did not apply to the respondent, who had his home in England. In para 30 he indicated that he saw the respondent as more peripatetic than expatriate, as these words were used by Lord Hoffmann. But he went on to ask himself a broader question. This was whether, notwithstanding the foreign elements, Parliament intended section 94(1) to apply to someone in the respondent’s circumstances whose employer did not regard him as an expatriate but as a commuter and dealt with all his contractual entitlements in Dyce. He answered that question in the affirmative. Lord Brodie, who dissented, said in paras 54-55 that in his opinion there was no question but that the respondent fell into Lord Hoffmann’s expatriate employee category, that living arrangements did not comprise a necessary element in any of them and that he did not see the respondent as falling within the exceptional cases of persons working abroad that he had identified. Discussion 25. I have set out the reasoning in the judgments below at some length because it shows that, as Mr Christie observed in para 38 of his judgment in the employment tribunal, Lord Hoffmann’s analysis in Lawson did not have the effect of eliminating uncertainty and that those who have been looking to it for guidance have found it difficult to apply. Mr Christie’s complaint was that it seemed to remain a very open question as to what exactly amounts to a sufficient or sufficiently substantial connection with Great Britain, and that there was little by way of guidance which employment tribunals might grasp to assist in what test they are to apply or how to go about their task. Lady Hale’s comment in Duncombe, para 8, that there is no hard and fast rule and that it is a mistake to try and torture the circumstances of one employment to make it fit one of the examples given, for they are merely examples of the application of the general Page 12 principle, will have gone a long way to address this problem. But Mr Cavanagh QC for the appellant described this case as much more mainstream because it will cover a much larger class of employees than any one of Lord Hoffmann’s categories. The problem that it raises must be resolved by applying the relevant guiding principles to the facts described in the employment tribunal’s judgment. 26. As I have already indicated (see para 14, above), it is possible on a careful reading of Lord Hoffmann’s speech in Lawson to find what he saw as the guiding principles. The question in each case is whether section 94(1) applies to the particular case, notwithstanding its foreign elements. Parliament cannot be taken to have intended to confer rights on employees having no connection with Great Britain at all. The paradigm case for the application of the subsection is, of course, the employee who was working in Great Britain. But there is some scope for a wider interpretation, as the language of section 94(1) does not confine its application to employment in Great Britain. The constraints imposed by the previous legislation, by which it was declared that the right not to be unfairly dismissed did not apply to any employment where under his contract of employment the employee ordinarily worked outside Great Britain, have been removed. It is not for the courts to lay down a series of fixed rules where Parliament has decided, when consolidating with amendments the previous legislation, not to do so. They have a different task. It is to give effect to what Parliament may reasonably be taken to have intended by identifying, and applying, the relevant principles. 27. Mr Cavanagh drew attention to Lord Hoffmann’s comment in Lawson, para 37, that the fact that the relationship was “rooted and forged” in Great Britain because the respondent happened to be British and he was recruited in Great Britain by a British company ought not to be sufficient in itself to take the case out of the general rule. Those factors will never be unimportant, but I agree that the starting point needs to be more precisely identified. It is that the employment relationship must have a stronger connection with Great Britain than with the foreign country where the employee works. The general rule is that the place of employment is decisive. But it is not an absolute rule. The open-ended language of section 94(1) leaves room for some exceptions where the connection with Great Britain is sufficiently strong to show that this can be justified. The case of the peripatetic employee who was based in Great Britain is one example. The expatriate employee, all of whose services were performed abroad but who had nevertheless very close connections with Great Britain because of the nature and circumstances of employment, is another. 28. The reason why an exception can be made in those cases is that the connection between Great Britain and the employment relationship is sufficiently strong to enable it to be presumed that, although they were working abroad, Parliament must have intended that section 94(1) should apply to them. The Page 13 expatriate cases that Lord Hoffmann identified as falling within its scope were referred to by him as exceptional cases: para 36. This was because, as he said in para 36, the circumstances would have to be unusual for an employee who works and is based abroad to come within the scope of British labour legislation. It will always be a question of fact and degree as to whether the connection is sufficiently strong to overcome the general rule that the place of employment is decisive. The case of those who are truly expatriate because they not only work but also live outside Great Britain requires an especially strong connection with Great Britain and British employment law before an exception can be made for them. 29. But it does not follow that the connection that must be shown in the case of those who are not truly expatriate, because they were not both working and living overseas, must achieve the high standard that would enable one to say that their case was exceptional. The question whether, on given facts, a case falls within the scope of section 94(1) is a question of law, but it is also a question of degree. The fact that the commuter has his home in Great Britain, with all the consequences that flow from this for the terms and conditions of his employment, makes the burden in his case of showing that there was a sufficient connection less onerous. Mr Cavanagh said that a rigorous standard should be applied, but I would not express the test in those terms. The question of law is whether section 94 (1) applies to this particular employment. The question of fact is whether the connection between the circumstances of the employment and Great Britain and with British employment law was sufficiently strong to enable it to be said that it would be appropriate for the employee to have a claim for unfair dismissal in Great Britain. The respondent's case 30. It is true that at the time of his dismissal the respondent was working in Libya and that the operations that were being conducted there and in which he worked were those of a different Halliburton associated company which was incorporated and based in Germany. It is true also that the decision to dismiss him was taken by Mr Strachan who was based in Cairo. But I would not attach as much importance to these details as I would have done if the company for which the respondent was working in Libya was not another associated Halliburton company. The vehicles which a multinational corporation uses to conduct its business across international boundaries depend on a variety of factors which may deflect attention from the reality of the situation in which the employee finds himself. As Mr Christie said in the employment tribunal, it is notorious that the employees of one company within the group may waft to another without alteration to their essential function in pursuit of the common corporate purpose: para 53. All the other factors point towards Great Britain as the place with which, in comparison with any other, the respondent’s employment had the closer connection. Page 14 31. The appellant’s business was based in Great Britain. It was to provide tools, services and personnel to the oil industry. That was why it sent the respondent to Libya, even though the actual work itself was in the furtherance of the business of another Halliburton subsidiary or associate company: see the employment tribunal’s judgment, para 53. It chose to treat him as a commuter for this purpose, with a rotational working pattern familiar to workers elsewhere in the oil industry which enables them to spend an equivalent amount of time at home in Great Britain as that spent offshore or overseas. In the respondent’s case this meant that all the benefits for which he would have been eligible had he been working in Great Britain were preserved for him. 32. Lady Smith said in the EAT that the employment tribunal was wrong to take account of the proper law of the parties’ contract and the reassurance given to the respondent by the appellant about the availability to him of UK employment law, as neither of them were relevant. The better view, I think, is that, while neither of these things can be regarded as determinative, they are nevertheless relevant. Of course, it was not open to the parties to contract in to the jurisdiction of the employment tribunal. As Mr Cavanagh put it, the parties cannot alter the statutory reach of section 94(1) by an estoppel based on what they agreed to. The question whether the tribunal has jurisdiction will always depend on whether it can be held that Parliament can reasonably be taken to have intended that an employee in the claimant’s position should have the right to take his claim to an employment tribunal. But, as this is a question of fact and degree, factors such as any assurance that the employer may have given to the employee and the way the employment relationship is then handled in practice must play a part in the assessment. 33. The assurances that were given in the respondent’s case were made in response to his understandable concern that his position under British employment law might be compromised by his assignment to Libya. The documentation he was given indicated that it was the appellant’s intention that the relationship should be governed by British employment law. This was borne out in practice, as matters relating to the termination of his employment were handled by the appellant’s human resources department in Aberdeen. This all fits into a pattern, which points quite strongly to British employment law as the system with which his employment had the closest connection. 34. Mr Cavanagh submitted that the fact that the respondent’s home was in Great Britain was of no relevance. Why, he said, should the place where you are living when you are not working be relevant at all? All that mattered was the place where he was working. His place of residence did not matter, and it should be left out of account. It is true that his place of work was in Libya and not in Preston. But the fact that his home was in Great Britain cannot be dismissed as irrelevant. It was the reason why he was given the status of a commuter, with all the benefits that were attached to it which, as he made clear, he did not want to be prejudiced Page 15 by his assignment. Here too the fact that his home was in Preston fits in to a pattern which had a very real bearing on the parties’ employment relationship. 35. As the question is ultimately one of degree, considerable respect must be given to the decision of the employment tribunal as the primary fact-finder. Mr Christie said in para 54 of his judgment that his conclusion that the balance was in favour of the respondent fell within the band of reasonable responses available to a reasonable chairman of employment tribunals. This remark was seen by both Lady Smith in para 36 of her judgment in the EAT and by Lord Osborne in the Extra Division, 2011 SLT 44, para 19 as an indication that he considered the task that he was undertaking as the exercise of a discretion. His remark was perhaps not very well chosen, but I do not think that his judgment when read as a whole is open to this criticism. The test which he applied was whether there was a substantial connection with Great Britain: see paras 39 and 47. It would have been better if he had asked himself whether the connection was sufficiently strong to enable it to be said that Parliament would have regarded it as appropriate for the tribunal to deal with the claim: see para 29, above. But I think that it is plain from his reasoning that he would have reached the same conclusion if he had applied that test. Lord Osborne said in para 20 of his opinion that the tribunal reached a conclusion that it was entitled to reach and that it was a correct conclusion. I agree with that assessment. So I too would hold that section 94(1) must be interpreted as applying to the respondent’s employment, and that the employment tribunal has jurisdiction to hear his claim. Conclusion 36. I would dismiss the appeal. I would also affirm the Extra Division’s interlocutor, the effect of which is that the case will be remitted to the employment tribunal to deal with the merits of the respondent’s claim that he was dismissed unfairly.

INTELLECTUAL PROPERTY APPELLATE BOARD=This is an appeal under section 91 of the Trade Marks Act, 1999 (hereinafter referred to as the Act) directed against the order dated 1.5.2006 passed by the Senior Examiner of Trade Marks whereby the application for registration of Trade Mark “OFLEX” has been refused.=After having perused the documents, we are in agreement with the observation made by the Senior Examiner of Trade Marks that the opponents and applicant both have filed half hearted evidences not bothering seriously, the concern. But certainly the onus is more upon applicants to show that they have right of registration and hence applicants stand to loose if evidence of applicant does not over weigh against evidence of opponents, the registered owner of conflicting mark. The appellant has failed to establish it use of the mark since 4.1.2000. The appellant has on the basis of available documents on our record has proved the user only since 9.4.2002. We, therefore, see no reason to interfere with the conclusion arrived at by the Senior Examiner of Trade Marks.

Mr. Vikash Rajgarhia v. Aristo Pharmaceuticals Limited - OA/51/2006/TM/AMD [2008] INIPAB 2 (19 March 2008) INTELLECTUAL PROPERTY APPELLATE BOARD Guna Complex, Annexe-1, 2nd Floor, 443 Anna Salai, Teynampet, Chennai – 600018 (Circuit Bench at Ahmedabad) OA/51/2006/TM/AMD WEDNESDAY, THIS THE 19TH DAY OF MARCH, 2008 Hon’ble Shri Z.S. Negi … Vice-Chairman Hon’ble Shri Syed Obaidur Rahaman … Technical Member Mr. Vikash Rajgarhia, Trading as the Proprietor in the name and style of Finecure Pharmaceuticals, 34, Nautan Cloth Market, outside Raipur Gate, Ahmedabad – 380 001 … Appellant (By Advocate – None) Vs. 1. Aristo Pharmaceuticals Limited, Having its registered office at Mercantile Chambers, 3rd Floor, 12, J.N. Heredia Marg, Ballard Estate, Mumbai – 400 037. 2. The Senior Examiner of Trade Marks, Trade Marks Registry, 15/27 National Chambers, 1st Floor, Ashram Road, Ahmedabad – 380 009. … Respondents (By Senior Advocate Shri R. R. Shah for R1) ORDER(No.51/2008) Hon’ble Shri Z.S. Negi, Vice-Chairman: This is an appeal under section 91 of the Trade Marks Act, 1999 (hereinafter referred to as the Act) directed against the order dated 1.5.2006 passed by the Senior Examiner of Trade Marks whereby the application for registration of Trade Mark “OFLEX” has been refused. 2. The brief facts giving rise to the appeal is that the appellant Mr. Vikash Rajgarhia is trading as a proprietor in the name and style of Finecure Pharmaceuticals. The appellant on 6.9.2000 coined the word ‘OFLEX’ by combining letters ‘OFL’ of the generic molecule ‘Ofloxacin’ with the letters ‘EX’ of the word ‘excipients’ and adopted the said word as the trade mark and obtained permission from the concerned authority to manufacture pharmaceutical preparation. An application No.1057263 in Class-5 in respect of Pharmaceutical and Medicinal preparations was filed on 7.11.2001 seeking registration of the trade mark ‘OFLEX’ claiming user since 4.1.2000 and the said application was advertised before acceptance in the Trade Marks Journal Mega 6 dated 25.11.2003. The said application for registration was opposed by the respondent No.1, a company engaged in the business of manufacturing and/or marketing and/or dealing in similar goods that is to say medicinal and pharmaceutical preparations, by filing opposition No. AMD-174953 on the grounds, inter alia, that in or about 2000 it originally conceived the trade mark ‘OFLER’ and finally adopted the same by filing application No. 948619 (proposing to be used) in class 5 in respect of its goods; that after obtaining Drug Licence it commenced actual commercial use of mark by manufacturing and/or marketing its goods in or about January, 2001; that it is the proprietor and prior user of the trade mark ‘OFLER’ in respect of aforementioned goods and the appellant’s application was subsequent to the respondent No.1’s prior application No. 948619 filed on 18.8.2000; that it is the prior adopter and user of the trade mark since 31.1.2001 and has launched the medicine prior to the appellant; that it is the registered owner of the trade mark ‘OFLER-TZ’ under No. 1093769 as of 9.4.2002 and that the use of mark ‘OFLER’ or any similar mark with or without variation by another person in respect of the same or similar goods is likely to deceive the public and cause confusion among the trade. After receiving evidence from both parties the matter was posted for hearing 31.3.2006. The Senior Examiner of Trade Marks after hearing the parties has refused the application for registration concluding as under:- “ It is a hard case where marks are deceptive, that too pharmaceuticals having same ingredients, adoption hardly few months gap and use also few months away. One earlier application to support the case of opponents is as ’proposed to be used’ and withdrawn without coming up for reasons to withdraw, insertion of use in regd. application also at later stage. Opponents and applicant both have filed half hearted evidences not bothering seriously, the concern. But certainly the onus is more upon applicants to show that they have right of registration an hence applicants stand to loose if evidence of applicant does not over weigh against evidence of opponents, the regd. owner of conflicting mark. The applicants have not been able to discharge the onus. In view of the above the registration of mark of applicants is refused.” 3. Aggrieved by the impugned order dated 1.5.2006, the appellant has preferred this appeal on the grounds, inter alia, that the appellant is prior in adoption of the said coined word, used the same for almost one year and thereafter applied for registration shows that appellant is lawfully the first and rightful proprietor of the mark ‘OFLEX’ under section 18(1) and has a right to registration absolutely under section 18(4) of the Act; that the appellant having earned the dual priority on the impugned mark can neither have caused confusion or deception to the consumers of anti-bacterial pharmaceutical preparations nor have passed off its goods as goods of the respondent No.1 in contravention of sub-sections (1) and (3), respectively, of section 11 of the Act; that having regard to the said dual priority, the trade mark ‘OFLEX’ be granted registration under clause (a) of section 34 of the Act and that the appellant craves leave to file Form TM-16 to correct/amend under section 22 of the Act the correct date of user which is 28.11.2000. 4. The respondent No.1 filed the counter-statement on 4th December, 2006 denying the material averments made in the appeal and the appellant filed on 14th December, 2006 the reply to the counter-statement. The appeal was fixed for hearing on 20.2.2008 before the Circuit Bench sitting at Ahmedabad when Shri R.R. Shah, Advocate appeared on behalf of the respondent No.1 but none appeared on behalf of the appellant. The appellant did not appear before the Circuit Bench despite service of hearing notice, the arguments of learned counsel for the respondent No.1 was heard. After conclusion of the hearing, the appellant has sent an affidavit annexing therewith documents which the appellant intended to rely upon. As the affidavit and documents were filed after conclusion of the hearing of the appeal and the same were filed without leave of this Appellate Board, the same for obvious reasons cannot be taken into consideration by this Appellate Board at this stage. 5. Shri Shah, learned counsel for the respondent No.1, contended that the claim of the appellant that it is prior user of mark is false and cannot be accepted. He pointed out that the copies of invoices and consignment notes adduced in evidence of user are not acceptable as there is not a iota of proof to show that excise duty were paid on the goods inter-transferred by Finecure Pharmaceuticals, Ahmedabad to Finecure Pharmaceuticals, Muzaffarpur, Bihar and there are no gate passes produced to show actual inter-transfer of goods. Since the appellant could not show its actual commercial use prior to 9.4.2002, it resorted to manipulate to create document by inter-transfer dated 17.11.2000 which is not actual commercial use of the mark. The copies of invoices at pages 131 to 139 show that the goods were consigned to only one party, namely, Pharma Distributors, Muzaffarpur.by the appellant’s office at Muzaffarpur through hand delivery. He further contended that appellant in its application dated 7.11.2001 for registration has with deliberate and malafide intention refrained from making any definite claim of user such as whether the mark has been used previously/is being used or is proposed to be used. When the applicant does not claim to be the proprietor of a trade mark used or proposed to be used by him he cannot be desirous of registering it under section 18(1) of the Act. 6. After having heard the learned counsel for the respondent No.1 and going through the pleadings, the main question that emerged for our decision is who is the first adopter and user of the competing marks. The appellant has claimed that it coined the mark ‘OFLEX’ and is using the same since 4.1.2000. The evidence produced in support of claim of user are invoices and Consignment Notes of which the first Consignment Note is dated 17.11.2000 (though not legible) is inter-transfer to consignee’s office at Muzaffarpur but without any evidence to prove the genuineness of the document as the respondent No.1 has disputed its genuineness. Even when the appellant was know of that the respondent No.1 in its counter-statement has disputed the genuineness of the same, the appellant has not attempted to prove its genuineness and hence it is difficult for us to take it into account as an evidence of user of mark in the year 2000. Again, the copies of invoices at pages 131 to 139, the Consignee is same in all the cases (Pharma Distributors, Muzaffarpur) and the Consignor is Finecure Pharmaceuticals, Muzaffarpur. There is no explanation as to whether the Pharma Distributors is the sole distributor appointed by the Finecure Phamaceuticals, if so, the areas falling under its distributorship. There are no other invoices in the years 2000 and 2001 issued in the name of any other person and such invoices give rise to doubt about the genuineness thereof. The other invoice of the appellant are at pp. 89 to 113 and out of those the first invoice is at p. 89 dated 9.4.2002. On the other hand the respondent No.1 claimed its user to be since January, 2001 and it is the owner of registered trade mark ‘OFLER-TZ’. The first invoice adduced by the respondent No.1 at page 78 is invoice No.84-2554 dated 24.1.2001and the other invoices are at pp.28 to 77. There is no doubt that the marks ‘OFLEX’ and ‘OFLER’ are deceptively similar to each other phonetically as well as structurally. Since goods covered by both the marks are medicinal preparations, we have to adopt a stricter approach while applying the test to judge the possibility of confusion of one medicinal product with another by the consumer. This Appellate Board had occasion to consider whether the second respondent’s disputed mark ‘STEMIZ’ is similar to that of the appellant’s mark ‘STMIN’ and the same would cause confusion in the trade. It was observed by this Appellate Board as under:- “ The appellant’s mark is ‘STEMIN’ and the second respondent’s mark is ’STEMIZ’. Except the last letter ’Z’ in the disputed mark, the other letters are same. If we have a look at both the marks, it is (sic) unable to differentiate to distinguish the second respondent’s impugned mark from that of the appellant’s mark. As already stated, except the last letter, the totality of the name is same. Phonetically, visually and also in writing nature, the impugned mark is identical with that the appellant’s mark. Both the marks being used in respect of medicinal products, no confusion or deception can be allowed however negligible it may be. The medicinal products being used for human beings in respect of their health , even the slightest confusion may become hazardous to one’s life and as such, the danger is much more to human life. Both the marks are identical and hence the impugned mark of the second respondent cannot be registered.” 7. After having perused the documents, we are in agreement with the observation made by the Senior Examiner of Trade Marks that the opponents and applicant both have filed half hearted evidences not bothering seriously, the concern. But certainly the onus is more upon applicants to show that they have right of registration and hence applicants stand to loose if evidence of applicant does not over weigh against evidence of opponents, the registered owner of conflicting mark. The appellant has failed to establish it use of the mark since 4.1.2000. The appellant has on the basis of available documents on our record has proved the user only since 9.4.2002. We, therefore, see no reason to interfere with the conclusion arrived at by the Senior Examiner of Trade Marks. 8. In view of the above, we dismiss the appeal. There shall be no order as to costs. (Syed Obaidur Rahaman) (Z. S. Negi) Technical Member Vice-Chairman Vvrk Disclaimer: This order is being published for present information and should not be taken as a certified copy issued by the Board.

INTELLECTUAL PROPERTY APPELLATE BOARD=the word polo is a dictionary word meaning a game of eastern origin with rules similar to hokey played on horse back with a long handled mallet and polo shirt meaning a casual short sleeved cotton shirt with a collar and several buttons at the neck. As such the claim of the appellant for proprietary right over the word POLO is untenable in the eyes of law and incapable of getting a well-known mark status as per the plethora of cases.

Polo/Lauren Company, L.P. v. Royal Classic Mills Private Limited - ORA/118/2007/TM/CH [2008] INIPAB 1 (19 March 2008) INTELLECTUAL PROPERTY APPELLATE BOARD Guna Complex Annexe-I, 2nd Floor, 443, Anna Salai, Teynampet, Chennai-600018 M.P.Nos.102 & 103/2007 in OA/44/2006/TM/CH And OA/44/2006/TM/CH WEDNESDAY, THIS THE 19TH DAY OF MARCH, 2008 Hon’ble Shri Z. S. Negi Vice-Chairman Hon’ble Shri Syed Obaidur Rahaman Technical Member Polo/Lauren Company, L.P. Appellant a limited partnership organized and existing under the laws of the State of New York, United States of America of 650, Madison Avenue, New York, New York 10022, United States of America. Address for Service in India: Remfry & Sagar, Remfry House at the Millennium Plaza, Sector 27, Gurgaon-122 002, NCR. (By Senior Advocate Shri R. Gandhi and Advocate Shri G. K. Muthukumar) Vs. 1.Royal Classic Mills Private Limited, No. 31, Puliyamara Thottam, Mangalam Road, Tirupur-641 604. Address for Service: Surana & Surana International Attorneys, International Law Centre, 224, N.S.C.Bose Road, Chennai-600 041. 2. The Assistant Registrar of Trade Marks, I.P.Building, G. S. T. Road, Guindy, Chennai- 600 032. Respondents (By Senior Advocate Shri N.R.Chandran and Advocates Shri Deepak Vaid & Ms. S. Nithya for R1) ORDER(No.45/2008) Hon’ble Shri Z. S. Negi, Vice-Chairman: This is an appeal under section 91 of the Trade Marks Act, 1999 (hereinafter referred to as the Act) directed against the order dated 1. 6. 2006 passed by the Assistant Registrar of Trade Marks, Chennai whereby she has disallowed the opposition No. MAS-111156 and allowed the application No. 889702 to proceed for registration. The appellant has along with the appeal filed an application being M.P.No. 93/2006 for staying the operation of the impugned order till the disposal of the appeal and this Appellate Board by its order dated 5.3.2007 restrained the Registrar from issuing certificate of registration until further orders. 2. It is stated that the first respondent herein has filed an application No.889702 on 3.12.1999 for registration of trade mark ‘C&C CLASSIC POLO’ (label) in class 25 in respect of readymade garments and all kinds of hosiery goods for sale in the States of Tamil Nadu, Karnataka, Andhra Pradesh and Kerala. The trademark applied for was proposed to be used and the said application was advertised in the Trade Marks Journal No.1291 (Supplementary III) dated 28.3.2003 at page 267 with the condition that “Registration of this Trade Mark shall give no right to the exclusive use of the C&C and the word Classic”. In view of the disclaimer, the word POLO is the only prominent and distinguishing feature of the impugned mark. The appellant herein filed opposition being No MAS-111156 opposing the registration on the grounds that they have an established international business as manufacturers and merchants of high quality men’s, women’s and children’s clothing and variety of consumer merchandise marketed and sold under the well-known trade mark POLO world wide and in India including but not limited to POLO, POLO PLAYER SYMBOL, POLO SPORT, POLO JEANS, POLO BY RALPH LAUREN, etc.; that the mark POLO was designed, adopted and used by Ralph Lauren in 1967; that the appellant owns and uses a number of trade marks consisting of or containing POLO several of which are registered or pending registration in several classes in many countries of the world including India; that the trade mark POLO has been in use in India at least from June 1999 in relation to clothing items manufactured and exported from India to other countries which constitutes use of that trade mark in India for the purposes of the Act, therefore, others do not have any right to adopt the same as their trade mark; that it is a globally well-known mark of Ralph Lauren and would qualify for protection under Article 6 bis of the Paris Convention which has been adapted into sections 11 (2-10) of the Act; that the mark applied for registration by the applicant/first respondent is neither adapted to distinguish nor capable of distinguishing its goods; that the application of the first respondent for registration is on the basis of proposed to be used, therefore, subsequent use or goodwill cannot be considered in favour of the first respondent and in such circumstances the proposed registration would be contrary to the provisions of sections 9, 11 (a), (b) & (e) and 18 (1) of the Trade and Merchandise Marks Act, 1958. 3. On completion of the procedural requirements, the matter was set down for hearing and the impugned order was passed on 1.6.2006 after hearing both the parties. Aggrieved by the impugned order, the appellant has challenged the impugned order on various grounds, inter alia, that the determination as to distinctiveness of the mark under section 9(1)(a) and likelihood of deception and confusion/deceptive similarity under sections 9 (2) (a) and 11 of the Act are erroneous; that the findings given or observation made in the impugned order regarding non-use of the appellant’s mark in India is incorrect; that the first respondent has failed to prove its claim of ownership and entitlement to registration of the impugned mark; that the interpretation given in the impugned order to the concept of well-known mark is absolutely wrong and that the determination of proprietorship in favour of the first respondent under section 18 of the Act is wrong. 4. On 2.4.2007 the counter-statement along with list of enclosures was filed on behalf of the first respondent and thereafter the appellant on 20.7.2007 filed the reply to counter-statement along with an interlocutory petition being M.P.No.102/2007 for taking on record the Annexure A-1 to A-14 of the said petition. The first respondent has also on 5.9.2007 filed an interlocutory petition being No. 103/2007 for taking on record the affidavit of Mr. Shivaram along with the exhibits thereof. On the day of hearing, the interlocutory petitions were taken up first, when Shri R. Gandhi Senior Advocate raised objection that the first respondent has filed certain documents without supporting affidavit, whereupon Shri N.R. Chandran Senior Advocate undertook to file the desired affidavit within a week’s time. Ultimately, both learned senior counsel agreed that both the interlocutory petitions should be taken on record and accordingly both the interlocutory petitions were allowed and documents taken on record. Thereafter, the appeal was taken up for final arguments when both the parties have submitted their written arguments also. 5. At the outset, learned Senior Advocate Shri R. Gandhi, appearing for the appellant assailed the conclusion arrived at by the second respondent as to the distinctiveness or distinctive character of the impugned mark under section 9(1) (a) of the Act on various grounds. The grounds were mainly, inter alia, that the impugned mark was not capable of distinguishing the goods of the first respondent from that of the goods of the appellant specially when the impugned mark has no user prior to the making the application for registration to show acquisition of distinctive character. The application was made on the proposed to be used basis, therefore, as on the date of application the proposed mark had no distinctiveness, either inherent or acquired and the evidence relevant for taking into consideration should be the evidence as at the date of application not subsequent to the date of application as has erroneously been taken into account the subsequent evidence of the first respondent by the second respondent in the present case. Reliance in support of his argument was placed on the judicial pronouncement in the case of E. G. Hughes Ltd. v. Vick Chemical Co., AIR 1959 Cal. 654 wherein it was held that in case of all applications for registration of the trade marks, including opposed applications, the right of the parties are to be determined as at the date of the application for registration. That the second respondent has erroneously relied on the submission that the mark POLO is a common dictionary word for which exclusive proprietary right cannot be claimed by the appellant, without appreciating that the existence of appellant’s registration of the mark POLO in class 25 in diverse countries clearly establish the trade mark significance of POLO and the appellant’s exclusive proprietary right therein. That apart, many dictionary words /surnames/geographical names have been held to acquire great trade mark value and secondary meaning by virtue of use and publicity and reputation accrued there from. That the second respondent has allowed herself to be guided by extraneous submissions and materials, such as the plea that the mark POLO is generic word, which did not form part of the pleadings/counter-statement in Form TM-6. This plea of POLO being a generic word had suddenly been raised by the appellant at the time of hearing and such plea ought not to have been taken into consideration. The Apex Court has in its decision reported in [1963] INSC 100; AIR 1964 SC 1680 at p. 1686[1964] INSC 269; , AIR 1965 SC 1167 and [1978] INSC 254; AIR 1979 SC 621 at para 5 has held that a ground not specifically pleaded cannot be the subject of adjudication. He asserted that in the case on hand, the impugned order which was adjudicated on the new plea of POLO being a generic word in the absence of the specific plea contained in the counter-statement of the first respondent is bad in law which ought not to have been considered and further, if the word POLO is generic then the first respondent is also not entitled to claim exclusive right of registration, therefore, the application for registration should have been refused on this inconsistent and self defeating ground itself. It was also argued that it is an undisputed fact that there is a disclaimer for the right to the exclusive use of ‘C & C’ and the word ‘CLASSIC’- implying thereby that only essential and prominent feature left to be considered for registration was POLO- but this fact was totally overlooked by the second respondent. 6. Shri Gandhi submitted that the appellant is using the trade mark in India within the meaning of the expression ‘and any other act done in India’ employed in sub-section (1) of section 56 of the Act which means that if goods are manufactured in India for and on behalf of a trader outside India and the goods so manufactured are exported outside India on the request of such trader then that will constitute use under that sub-section. He pointed out that the documents filed by the appellant under Annexure A-4, A-6 and A-7 in M.P.No.102/2007, containing copies of bills, trade invoice raised on POLO garments manufactured by Indian licensee for export, samples manufactured by the Indian licensee, copies of invoices and other documents showing shipments of POLO products from India are proof of his submission and as such the appellant is entitled to the benefit of provision of sub-section (1) of section 56 of the Act. 7. Learned Senior counsel Shri Gandhi contended that the principle of law in the case of likelihood of confusion and deception is that the onus to prove that there is no likelihood of confusion is on the first respondent herein but the said respondent has failed to discharge the same. In support of his contention, the learned sr. counsel placed reliance upon the judgment in Raj Lakshmi Knitting Company v. Ascot (S&F) International Ltd. & Ors., 2007 (37) PTC 147 (IPAB), Cadila Health Care Ltd. V. Cadila Pharmaceuticals Ltd., 2001 PTC 300 (SC), N.R.Dongre v. Whirlpool Corporation, 1996 (16) PTC 476), Corn Products P. Ltd. v. Shagrila Food Products Ltd., AIR 1960 SC 142 and Parle Products P. Ltd. V. J.P.and Co. Mysore, [1972] INSC 30; AIR 1972 SC 1359. He contended that since the world famous POLO brand owned by the appellant has created a land mark in the minds of the people in the garment sector throughout the world associating with the appellant only and none else, as such if the first respondent’s impugned trademark is used, the public will think that the brand comes from the house of appellant and thus it will cause confusion among the public. The High Court of Calcutta in the case of E. Griffiths Hughes Ltd. (supra) held at page 19 thus: ‘If however the proviso to sub-s.(3) is applicable to the case then the question whether the trade mark is adapted to distinguish or not become immaterial and the Registrar can direct registration solely on the evidence of acquired distinctiveness. In other words if the proviso is attracted then the “acquired distinctiveness” is conclusive and entitles the mark to be registered. But if the proviso does not apply then the “acquired distinctiveness” is not conclusive, and the Registrar has to find that adaptability to distinguish is present in the trademark proposed to be registered.’ 8. Shri Gandhi submitted that POLO trademark of the appellant is well-known and enjoys transborder reputation since Ralph Lauren is widely recognised world over for excellence in creation of contemporary clothing designs and has in this field received several awards such as Coty Award for Menswear, Menswear Fashion Award, American Fashion Award, Coty Hall of Fame Award for Menswear, Council of Fashion Designs of America Designer of the Year Awards for both Menswear and Womenswear, GQ Manstyle Award, The Cutty Sark Men’s Fashion Award for Special Achievement, and The Council of Fashion Designers of America Lifetime Achievement Award. Due to extensive use worldwide, publicity globally and registration/protection in various countries for clothing, garment and allied goods and for other goods, the POLO has earned enormous reputation and goodwill as a mark of the appellant. Apart from several trade marks registration containing the word POLO, POLO word mark per se in India, the appellant has registrations in various countries for these marks. The word POLO forming a predominant feature is used as a trade mark, corporate name and as a trading style of the appellant. The goods of appellant bearing POLO mark have been widely advertised in the reputed magazines like Voge, Variety Fair, Esquire, Sports Illustrated, Rolling Stone, Time, Elle, Forbes and Newsweek. Placing his reliance heavily upon the decision in N.R. Dongre vs. Whirlpool Corporation, 1996 PTC (16) 476, the learned Senior Counsel submitted that in today’s world it cannot be said that a product and the trade mark under which it is sold abroad does not have reputation or goodwill in countries where it is not available as dissemination of knowledge about a trade mark in respect of product through advertisement in media amounts to use of trade mark whether or not such advertisement is coupled with the actual existence of product in the market. Learned counsel, relying upon the decision of Division Bench Of Calcutta High Court in J.N. Nichols (Vimto) Limited vs. Rose and Thistle & Anr., 1994 PTC 83, submitted that mere advertisement without having even the physical existence of the goods in the market can be said to be a use of the mark and this decision was relied upon by the High Court of Delhi in the case of N.R. Dongre (supra). He pointed out that Annexure A-1 to A-14 of the M.P. No. 102/ 2007 prove the global reputation and goodwill of POLO mark and the fact that of its being a well know mark of the appellant. 9. Countering the ground of argument of the first respondent that the word POLO is used by other traders like LEVIS, WRANGLER, etc. as shown in the documents filed as Annexure-B of the M.P. No.103/2007, the learned Senior counsel submitted that the applicant’s mark POLO is distinguishable on the grounds that those traders use the word in descriptive form and not in the trade sense as a trade mark, that they do not give prominence to word POLO and do not use it in their invoices, purchase bills or advertising on their trade mark, that they have not applied for registration so as to obtain exclusive right over POLO and the customers are unlikely to get influenced by the use of the word POLO by these traders as the circumstances under which they use it are different in a descriptive sense and not in a trade sense. Such argument will not provide any shelter to the first respondent. Regarding Annexure-D to the M.P. No.103/2007 of the first respondent, the learned senior counsel submitted that the appellant has been always vigilant and active in protecting its proprietary right in POLO. Pages 137 to 145 along with the Memorandum of Appeal are testimony to this which contains copy of interim injunction issued by the High Court of Delhi against the infringing of mark POLO. Similarly, Annexure-A to the written arguments contains the list of oppositions filed by the appellant against application for registration of the POLO mark. It was further submitted that in the first respondent’s application, other words having been disclaimed, POLO is the essential element with full emphasis thereon. The first respondent is trying to confuse this Appellate Board with the meaning of the word POLO and POLO SHIRT by making submission at para 3 of the written arguments that the Polo shirt means a casual short sleeved cotton shirt with a collar and several buttons at the neck. 10. Shri Gandhi contended that the adoption of mark by the first respondent was dishonest and malafide. The first respondent did not apply to the Registrar for conducting official search before making application for registration. It is not the case of first respondent either that it was not aware of the existence and in use of appellant’s mark POLO at the time of making its impugned application. Relying upon the decision of this Appellate Board in Needle Industries (India) Ltd. V. Super Thread Industries & Ors., 2007 (34) PTC 614 (IPAB) and the High Court of Delhi in Cadbury India Limited & Ors. Vs. Neeraj Food Products, 2007 (35) PTC 95 (Del), learned counsel contended that the first respondent has not explained the reason or justification for the adoption of the mark POLO and in the absence of any explanation therefore the only inevitable conclusion is that the first respondent wanted to cash upon the goodwill and enormous reputation attached to the appellant’s mark. In support of the above contention he further relied upon the judgment of Division Bench of Madras High Court in Needle Industries (India) Ltd., Chennai v. Sanjay Jaiswal & Ors., 2002 (24) PTC 646. 11. Shri Gandhi submitted that the first respondent in para 2 of its written submissions stated that the appellant had failed to prove its claim of ownership of the POLO mark. The law is well settled that the onus of proof is on the applicant for registration (first respondent herein) to prove its claim of ownership and entitlement to the impugned mark. While this is so, the first respondent having failed to prove honest adoption and distinctiveness of the impugned mark cannot claim that the appellant has failed to prove ownership. Irrespective of this, the documents before the Registrar and the Appellate Board along with M.P.No.102/2007 in this appeal go to prove the appellant’s ownership to the mark and as such the first respondent’s submission to stated effect are only to divert the attention of the Appellate Board from the main issue to trivial issues. 12. Learned Senior counsel Shri Chandran appearing for the first respondent submitted that the appellant has failed to prove its claim of ownership of the mark POLO as all the proofs submitted by the appellant are the word POLO in combination with other words or device such as POLO PLAYER SYMBOL, POLO BY RALPH LAUREN, etc. which are absolutely insignificant to this case because when it is compared with the first respondent’s composite mark C&C CLASSIC POLO (label), including other features, is totally different by visually, phonetically, layout and getup. 13. Shri Chandran submitted that the word polo is a dictionary word meaning a game of eastern origin with rules similar to hokey played on horse back with a long handled mallet and polo shirt meaning a casual short sleeved cotton shirt with a collar and several buttons at the neck. As such the claim of the appellant for proprietary right over the word POLO is untenable in the eyes of law and incapable of getting a well-known mark status as per the plethora of cases. He further submitted that the appellant in its own submission at para 3(b) of the reply to M.P.No.103/2007 admitted that the word POLO is descriptive and generic term as to the specification of goods in class 25. The learned counsel after narrating the history of Polo T Shirts, submitted that the all prominent players in textile sector world wide manufacture their POLO Shirts that have gained popularity over the years as a formal casual wear and submitted that Lacoste, POLO HERZ, Wear Guard, Sports “R” Us, Passport International, Online Sports, Skate America, etc. are some of the prominent international companies in this range. Since all textile players produce POLO Shirts and the word denotes a particular category of garments in textiles, there is no doubt that the word POLO is a generic word. By referring to Mc Carthy on Trade Marks and Unfair Competition (3rd Edn. Vol.2) that “A generic name of a product can never function as a trademark to indicate origin. The terms ‘generic’ and ‘trademark’ are mutually exclusive. Thus if, in fact a given term is generic, it can never function as a mark to identify and distinguish the products of one seller”, the learned Sr. counsel submitted that in the present situation the appellant's argument that it maintains monopoly over the use of the word POLO is unsustainable in law since POLO is undoubtedly a generic word. He submitted that it is worth referring that in Novartis AG vs. Wanbury, 121 (2005) DLT 316, the Delhi High Court has held that the generic word 'MINIC' was a part of the trade name of various drugs used as a suffix to other alphabets and an exclusive right could not be claimed over the word. Along the same lines the word POLO is also used in textile trade by many players and no one entity can claim an exclusive right over it. Learned counsel cited the judicial pronouncement in SBL Ltd. vs. Himalaya Drug Co., AIR 1998 Delhi 126, Astrazeneca UK Limited vs. Orchid Chemicals 2007 (34) PTC 469 (Del), Indo-Pharma Pharmaceutical Works Ltd. vs. Citadel Fine Pharmaceuticals Ltd., (1998) 3 MLJ 214, Asian Paints Limited vs. Home Solutions Retail (India) Limited, 2007 (35) PTC 697 (Bom), Rich Products Corporation and Anr. vs. Indo Nippon Foods Limited, MIPR 2007 (2) 316 and PEPSI-COLA Co. of CANADA, Ltd. vs. COCA-COLA Co. of CANADA, Ltd., (1940) S.C.R. 17 in support of his submissions. Reliance was also placed upon the decision of the Singapore Court of Appeal in The Polo/Lauren Co, LP vs. Shop In Department Stores Pte Ltd [2006] SGCA 14 where the Court, while dismissing the plaintiff’s claim of infringement and for breach of the undertaking, held that the POLO word mark was always used in conjunction with the other trade marks of the appellant, therefore, the Court felt that the distinctiveness of the mark was diminished and, the Court expressed its doubt that any average consumer will be confused.