Transfer may be the Right of Employers

but

it Causes Bickering Among Employees

by H.L. Kumar, Advocate

A transfer may be defined as a change in the job within the organisation where the new job is substantially equal to the old in terms of pay, status and responsibilities. Transfers are possible from one department to the other or from one plant to the other. A transfer implies a lateral movement of an employee in the hierarchy of positions with a similar salary or pay and status. An employer has a right to transfer an employee for administrative reasons or according to the service rules as it is an incidence of service. Transferring from one place to other is necessary for the interest of the organisation and to make maximum use of the efficiency of the employee. In fact, the transfer is considered to be a mild form of punishment most of the time. It is used due to poor performance or the erratic behaviour of an employee. An employer can transfer the services of such an employee to a remote or inconvenient place. If an employee fails to comply with or disobeys the order of transfer/posting, he does so at his own peril. Ordinarily, the Court does not interfere with the employer’s prerogative to transfer and post an employee from one place or station to the other unless it is established that the action of the employer is contrary to the statutory provisions or is vitiated due to patent arbitrariness or mala fides.

It is a process of placing employees in positions where they are likely to be more effective or where they are likely to get more job satisfaction this transfer is a process of employee adjustment to the work, time and place. Sometimes, in transfers, there is a change in responsibility designation experienced and trained in promotion sales. Many times, the transfer is made as disciplinary action also. In some organisations, it is a usual practice to transfer and pay, etc. For example, if the marketing manager finds the sales of the north zone falling continuously, he may transfer some salesmen from other zones to the north zone in order to improve the situation as those salesmen are considered to be more employees from one zone to another zone due to administrative reasons as in government services.

A transfer may be the horizontal or lateral movement of an employee from one job to another. As a result of a change in job, pay, status and job conditions of a new position or job are almost the same as that of the old. In the case of promotion, the new position has higher pay, status and job conditions as compared with the old. It may be associated with higher pay, but it is counterbalanced by changes in other conditions. For instance, a person may be transferred to a hilly area and may be offered a hill allowance. Sometimes transfers are effectuated by the management to avoid favouritism, nepotism and egocentrism are also done to avoid monotony in the work of an employee. Make him accountable for his work. Sometimes transfers are made to increase production but many times it is made to penalise the employees.

Objectives of a Transfer

Placing the required employee in the right place, correcting incompatibilities of employees as to suit the age and health of an employee, providing creative opportunities to deserving employees, training the employees for later advancement and promotion because it involves job rotation, correcting erroneous placement, to place the employee in another department where he would be more suitable. Transfer of the employee increases motivation and productivity through avoidance of monotony, improves supervisor-employee relations, develops the employees for future promotions, increases the productivity and effectiveness of the organization overall, improves the skills of the existing employees, provides greater job satisfaction to the existing employees, helps to stabilize fluctuating work requirements, remedies faulty placements. It also helps meet the exigencies of the company’s business. Sometimes it is done at the request of the employee and to correct the incompatibilities of the employee. It is not that transfers are made for retaliations only; it provides creative opportunities to deserving employees.

Disadvantages of Job Transfer

It creates adjustment problems for the employee to the new job, place, environment, superior, and colleagues, transfers from one place to another cause much inconvenience and cost to the employee and his family members relating to housing, education to children, etc., transfers from one place to another result in the loss of many days, company-initiated transfers result in a reduction in employee contribution, discriminatory transfers affect employee morale, job satisfaction, commitment, and contribution. Transfers from one place to another are caused much inconvenience and cost to the employee and his family members, particularly to aged parents relating to housing, education of children, etc. Company-initiated transfers result in a reduction in employee contribution. Apart from it, discriminatory transfers affect employee morale, job satisfaction, commitment and contribution.

Main Objectives of Transfer  

A company may transfer employees due to changes in the volume of production, technology, production schedule, the product line in organisation structure, market conditions, etc., filling in the vacancies which may occur because of separations or because of the need for suitable adjustments in business operations. In short, the purpose of transfers is to stabilise employment in the organisation. An employee may be transferred because the management feels that he is not performing satisfactorily and adequately and when the management feels that he may be more useful or suitable elsewhere, where his capacities would be better utilised. The employees may be transferred to different jobs to widen their knowledge and skills. In some companies, transfers are made as a matter of policy after an employee has stayed on a job for a specified period. Such rotation from one job to another serves as a tool for developing versatile workers.

Email: info@labourlawreporter.com

Indian Law of Trusts Does Not Accept Salmond, as to Dual Ownership

(By Saji Koduvath, Advocate, Kottayam) *

Introduction

Under English law of trusts, there is ‘dual ownership’ over the trust property.

●    First is the ‘legal ownership’. It is vested with trustees.

●    The other is the ‘equitable or beneficial ownership’. It is vested with the beneficiaries.

Indian law on trusts differs from EnglishTrust Law on the doctrine of ‘dual ownership’. Because, under Indian law:

●    Trustee is the ‘sole’ (legal) owner of the trust property.

●    Beneficiaries do not have ‘beneficial ownership’; they have only ‘beneficial interest’.

●    Trustees only ‘hold’ the trust property, and it is for mere administration.

●    Trustees hold the trust property for the ‘benefit of the beneficiaries’; not ‘on their behalf’.

●    Since the trustees only ‘hold’ the properties for the beneficiaries, no legal ‘title’ vests with the trustees, though they have legal ‘ownership’.

Salmond Propounds doctrine of ‘Dual Ownership’

Under English law, when the author of the trust creates a trust, by the dedication of the endowed property, he transfers the ‘legal ownership’ on the trust-property to the trustees and ‘beneficial ownership’ to the beneficiaries. Salmond on Jurisprudence_¹  refers these propositions as under:

● “A trustee is the legal owner of the property, the actual owner thereof having lost title thereto by the creation of a trust. The equitable ownership in the trust property vests in the beneficiaries. The trust is thus an incident of dual ownership in which the creator of the trust no longer figures.”

Doctrine of ‘Dual Ownership’has no Universal Acceptance

Doctrine of dual-ownership on trust property is peculiar to English law. It has no universal acceptance. 

InThe I Congresso Del Partido _²   the Queen’s Bench Division (Admiralty Court) pointed out that the trust-concept ‘involving a dichotomy between legal and equitable ownership is unknown to some, and perhaps most, other jurisdictions’._³

Definition of Trust in the Indian Trusts Act, 1882

Section 3 of the Indian Trusts Act, 1882 defines trust as under:

● “Trust: A ‘trust’ is an obligation annexed to the ownership of property, and arising out of a confidence reposed in and accepted by the owner, or declared and accepted by him, for the benefit of another, or of another and the owner:

From the definition it is clear that ‘Trust’, in law, holds the following conceptions:

●    Trust is ‘an obligation’ upon the trustee.

●    It is to administer the endowed property.

●    The administration must be done by the trustee as if he is the owner.

●    It must be done by him accepting the desire of the author.

●    And, the same must be for the benefit of the beneficiaries.

‘Trustee’ is the Sole ‘Owner’ According to  the Definition of ‘Trust’

From the definition of ‘trust’ in the Indian Trusts Act, 1882 it is clear that the Act does not recognise ‘beneficial ownership’ in the beneficiaries. It recognises ‘ownership in trustee’ alone. The definition of trust in S.3 can be analysed as under:

(i) A ‘trust’ is an obligation-

●    annexed to the ownership of property (to administer), and

●    (i) arising out of a confidence reposed in (trustee, by the author) and accepted by the owner (that is, trustee, the legal owner), or(ii) declared and accepted by him,#

●    for the benefit of another, or of another and the owner (that is, trustee, the legal owner).

●    # Note: The obligation that is declared and accepted by the same person. This situation comes-up when the author himself declares to act as trustee. See notes below under the head: ‘Obligation … Declared and Accepted by Him’.

(ii) Confidence is ‘Reposed’ by the Author

Trust is defined to be an obligation arising out of a confidence ‘reposed in ’(the owner/trustee).When the ‘author of the trust’ is defined, it is stated:

●    “The person who reposes or declares the confidence is called the ‘author of the trust’.”

Therefore, it is definite that the words, ‘confidence reposed in the owner’, denote the confidence that is ‘reposed’ by the author _⁴ ‘in the owner’.

(iii)The ‘Owner’ in whom the Confidence is ‘Reposed’, is Trustee.

As stated above,it is the author who ‘reposes’ the confidence;  and the confidence is ‘reposed in’ the ‘owner‘. Then, who is the ‘owner’?

● It istrustee._⁵

The nexus between owner and trustee is clear from the definitions of ‘trust’ and ‘trustee’.

● When ‘trust’ is defined, it is stated -the confidence is ‘accepted by the owner’;

● When ‘trustee’ is defined, it is stated -the confidence is ‘accepted by the trustee’.

According to the definition of trust, the ‘obligation’ stands ‘annexed to the ownership’ of the trust-property. S.6 of the Trusts Act makes it clear that ‘a trust is created when the author of the trust transfers the trust property to the trustee’. Therefore, the ‘obligation’ upon the trustee casts a duty upon him to administer the trust-property as if he is its ‘owner’.

(iv) The definition of Trust can be explained as under:

Indian Law Recognises ‘Legal Ownership‘ on Trustees; Not ‘Title’

The Indian Law of Trust does not recognise legal and equitable estates (‘ownerships’).The Privy Council, in Chhatra Kumari Devi v. Mohan Bikram Shah (1931),_⁹ held as under:

● “The Indian Law does not recognise legal and equitable estates. By that law, therefore, there can be but one owner; and where the property is vested in a trustee, the owner must, their Lordship think, be the trustee. This is the view embodied in the Indian Trusts Act: See Section 3, 55, 56, etc. …” _¹⁰

Inasmuch as Indian Law does not recognise legal and equitable estates (‘ownerships’) and trustee alone has ownership (legal ownership), this ‘ownership’ of trustees is not the ‘legal (or trust) ownership’ that is understood in English law.

In English law, when ‘legal ownership’ is referred to, it denotes ‘legal estate’. It is one component of the dual-ownership. It confers a ‘title’ upon the trustee. But, in Indian Law, the trust properties ‘vest’ in the trustees for the limited purpose of administration or management; and the trustees only ‘hold’ the properties._¹¹

Indian Law Does Not Recognise Equitable Ownership (Estate) of Beneficiaries

Similarly, the Indian Trusts Act does not refer to ‘beneficial ownership’; it refers merely to ‘interest’ or ‘beneficial interest’ of the beneficiary._¹² It is clear from the following affirmations in the definition of ‘trust’ in Section 3 of the Indian Trusts Act, 1882:

●    (i) “A ‘trust’ is an obligation … arising out of a confidence reposed in and
accepted by the owner… for the benefit of another….”

●    (ii) “(T)he ‘beneficial interest’… is his (beneficiary’s) right against the trustee as owner of the trust property.”

In English law, when ‘beneficial interest’ is referred to, it denotes – ‘beneficial ownership’ or ‘beneficial estate’, the second component among the dual ownership.

The courts in India have followed the principles in Trusts Act, as to legal ownership of trustees and beneficial interest of the beneficiaries, in Common Law of Trust; and disfavoured doctrine of ‘dual ownership’._¹³ Thus, under the Law of Trust in India, trustee holds the trust property as its sole (legal) owner, subject to the obligation to use this ownership for the benefit of the beneficiaries._¹⁴

The legal entitlement of beneficiaries in a trust (that is, beneficial interest) is legibly laid down in The Province of Bihar v. FR Hayes15  by Fazl Ali, CJ (as he then was) while interpreting Bihar Agricultural Income Tax Act, 1938, referring the definition of trust in the Indian Trusts Act, as under:

● “The framers of the Act must be assumed to have known the accepted legal meaning of the expression and also known that the term ‘beneficiary’ in law is not generally used with reference to a full legal owner but with reference to a person who has ‘beneficial interest’ in some property which is usually in the possession and control of another person. The distinction between beneficial interest and legal ownership is one of the most notable features of a trust and in my judgment ‘beneficiaries’ referred to in Section 11 are those persons who have merely beneficial interest in a property while the legal ownership of the property vests in a person or persons who hold the property for their benefit.”

Trustee Holds ‘For the Benefit Of’; Not ‘On Behalf Of’ the Beneficiaries

The Indian Trusts Act, 1882 repeatedly sets down – trustees are ‘holding’ trust property (S.10, 29 and Chap. IX: S.80 onwards). It is subject to the obligation to use his ownership ‘for the benefit of’ the beneficiaries.

Section 10 of the Indian Trust Act, 1882 reads:

● 10. Who may be trustee - Every person capable of holding property may be a trustee; but, where the trust involves the exercise of discretion, he cannot execute it unless he is competent to contract.

Section 29 of the Indian Trust Act, 1882 reads:

● 29. Liability of trustee where beneficiary’s interest is forfeited to Government -- When the beneficiary’s interest is forfeited or awarded by legal adjudication to the Government
the trustee is bound to hold the trust property to the extent of such interest for the benefit
of such person in such manner as the State Government may direct in this behalf.

In WO Holdsworth  v. State of Uttar Pradesh_¹⁶ it is laid down by our Apex Court as under:

● “23. Whatever be the position in English Law, the Indian Trusts Act, 1882 (2 of 1882)
is clear and categoric on this point. … These definitions emphasise that the trustee is the owner of the trust property and the beneficiary only has a right against the trustee as owner of the trust property. The trustee is thus, the legal owner of the trust property and the property vests in him as such. He, no doubt, holds the trust property for the benefit of the beneficiaries but he does not hold it on their behalf. The expressions ‘for the benefit of’ and ‘on behalf of’ are not synonymous with each other. They convey different meanings.”

Our Apex Court observed inComm.Wealth Tax v. Kirpashanker Dayashankar _¹⁷ that the trustee holds the trust property ‘on his own right’ and not ‘on behalf of’ someone else though he holds it ‘for the benefit of’ the beneficiaries.

Obligations are casted upon trustees, only to manage the trust property for the benefit of the beneficiaries_¹⁸  It is beyond doubt that the trustee has no ‘proprietary interest’ in as much as the beneficial interest is ‘carved out’_¹⁹  in the property itself._²⁰  In dealings with the world at large, the trustee personates or represents as the owner of the property._²¹

*Phone No.9400230025. E-mail: sajikoduvath@gmail.com

 Foot Notes

1. 12th Edition, page 256.

2. (1977) 1 Lloyd’s Rep. 536.

3.   Referred to in: Owners and Parties Interested in the Vessel M.V. “Dong Do” v. Ramesh Kumar, 1999 (3) KLT OnLine 1160 (Cal.)

4. Canara Bank v. State of Kerala (1981 KLT OnLine 1106 (F.B.).

     Allahabad Bank v. IT Commr. (1953 KLT OnLine 939 (SC).

    Dinshaw Rusi Mehta v. State of Maharashtra (2017 (2) KLT OnLine 2045 (SC).

5. Trustee is the owner.

     Chhatra Kumari Devi v. Mohan Bikram Shah (AIR 1931 PC 196).

     WO Holdsworth v. The State of Uttar Pradesh (1957 KLT OnLine 1407 (SC).

     Chockalinga Sethurayar v. Arumanayakain (1968 KLT OnLine 1186 (SC).

      Chikkamuniyappa Reddy v. State of Karnataka (1997 (1) KLT OnLine 1137 (Karnt.).

6.   Paru v. Chiruthai (1985 KLT 563).

      Reserve Bank of India v. Jayantilal N. Mistry (2016 (1) KLT OnLine 2776 (SC).

7.   Dinshaw Rusi Mehta v. State of Maharashtra (2017 (2) KLT OnLine 2045 (SC).

8.   Heeralal v. Firm Ratanlal Mahavir Prasad (1963 KLT OnLine 131 (Raj.).

9.   AIR 1931 PC 196.

10.Quoted in Special Secy. Govt. of W.B. v. State Bank of India (1988 (1) KLT OnLine 1058 (Cal.).

      Sardarilal v. Shrimati Shakuntla Devi (1960 KLT OnLine 1471 (P.  & H.).

11.Thiagesar Dharma Vanikam v. Comner. IT, Madras(1962 KLT OnLine 1182 (Mad.).

12.See: Ram Bharose Sharma v. Mahant Ram Swaroop  (2001 (1) KLT OnLine 1095 (SC). 

  Purshottam v. Kanhaiyalal (1964 KLT OnLine 1318 (Raj.).

13.Chhatra Kumari Devi v. Mohan Bikram Shah  (AIR 1931 PC 196);

  WO Holdsworth v. The State of Uttar Pradesh (1957 KLT OnLine 1407 (SC).

  Bai Dosabai v. Mathuradas (1980 KLT OnLine 1116 (SC).

14. Kansara Abdulrehman Sadruddin v. Trustees, Maniar Jamat (1967 KLT OnLine 1283 (Guj.).

15.1946-14 ITR 326 (Patna).

16.1957 KLT OnLine 1407 (SC).

  See also: Ramabai Govind v. Raghunath Vasudevo (1951 KLT OnLine 838 (Bom.).

17.1971 KLT OnLine 1094 (SC).

18. Kansara Abdulrehman Sadruddin v. Trustees Maniar (1967 KLT OnLine 1283 (Guj.).

19. Ramabai Govind v. Raghunath Vasudevo (1951 KLT OnLine 828 (Bom.).

  Special Secy. Govt. of W.B. v. State Bank of India (1988 (1) KLT OnLine 1058 (Cal.).

20. It is not a mere ‘right’ similar to ‘right of easement’ for the dominant owner; but, it is an ‘interest’.

21. Govardhandhari Devsthan v. Collector of Ahmednagar (1982 KLT OnLine 1073 (Bom.).

From Appellations of Origin and Indications of Source to Transborder

Geographical Indications : The Saga of an Intellectual Property Right

(By Dr.Raju Narayana Swamy, IAS) *

The Background

A geographical indication(GI) is a sign used on goods that have a specific geographical origin and possess qualities, reputation or characteristics that are essentially attributable to that place of origin ₁. To put it a bit differently, GI is a category of IPRs with collective ownership. The special characteristics, quality or reputation may be due to natural factors (raw material, soil, regional climate, temperature, moisture etc.) or the method of manufacture or preparation of the product (such as traditional production methods) or other human factors (such as concentration of similar business in the same region). Aranmula Kannadi ₂, Kancheepuram Silk Saree, Pochampally Ikat, Darjeeling Tea and Balaramapuram Handloom are classic examples. Varanasi, it must be mentioned here,has emerged as a confluence of products protected by GIs with five GI registrations assigned to this region alone ₃, the most important of which is Banarasi silk sarees. However, Surat made synthetic sarees and Chinese made sarees are regularly passed off as Banarasi products in different markets across India, much to the chagrin of the genuine Banarasi saree producers.

In the ‘natural chaos’ of a symmetrical information, GIs can help restore the symmetry thereof by offering consumers additional information on the product’s quality and reputation so that they are not adversely placed against the producers ₄. In his model on reputation, Shapiro suggested that reputation operates as a signalling device which transmits information about a certain quality to the consumers thereby reducing the consumer’s search costs₅. The operation of GIs is quite similar. In fact, surveys conducted by UNCTAD among EU consumers show that for GI-registered agricultural products, consumers are willing to pay a premium of upto 10 to 15% whereas for non-agricultural products, the premium could range between 5 to 10 percent ₆.

Appellations of origin and indications of source

Prior to the conclusion of the TRIPS Agreement, products having a link to their place of origin were known by different terminologies such as appellations of origin, indications of source and designations of geographical origin. Appellations of origin, for instance, have been defined in the Lisbon Agreement (Article 2(1)) to mean:

“the geographical denomination of a country, region or locality which serves to designate a product originating therein, the quality or characteristics of which are due exclusively or essentially to the geographical environment, including natural and human factors”.

Thus an appellation of origin is a special category of GIs₇. The basic difference between the two terminologies is that appellation of origin implies a stronger link with the place of origin. Examples of appellations of origin are Champagne and Tequila. The former indicates a special kind of sparkling wine originating in Champagne region of France. As regards the latter, which owes its origin to Mexico, there are federal regulations in place  which governs specific details before it can be labelled as Tequila ₈.

As regards indication of source, WIPO defines it as

“an indication referring to a country (or to a place in that country) as being the country or place of origin of a product”.

Unlike GI, an indication of source does not imply the presence of any special quality, reputation or characteristic of the product essentially attributable to its place of origin.  

GI Protection under TRIPS

Article 22 of the TRIPs Agreement provides a definition of GIs. Article 22.2 provides that WTO members “shall provide the legal means for interested parties to prevent

a.    The use of any means in the designation or presentation of a good that indicates or suggests that the good in question originates in a geographical area other than the true place of origin in a manner which misleads the public as to the geographical origin of the good.

b.    any use which constitutes an act of unfair competition…”.

Thus the use of a GI which does not mislead the public as to its true origin is not an infringement of the TRIPS Agreement. This is one of the key differences between the TRIPS protection given to all goods and the special protection given to wines and spirits. In fact, Articles  23 & 24 provide broader protection for GIs for wines and spirits than for other products. Special mention must be made here of the TRIPS requirement of home protection (Art. 24.9) which categorically states that

“there shall be no obligation under this Agreement to protect GIs which are not or cease to be protected in their country of origin or which have fallen into disuse in that country”.

It is worth mentioning here that the TRIPS-mandated GI regime suffers from some inherent limitations including the extended protection for only selected GIs and difficulties of obtaining protection in foreign jurisdictions ₉.

The Indian Scenario

In India, GI protection is available through a sui generis system operationalized through the Geographical Indications of Goods (Registration and Protection) Act of 1999 (which came into force on 15th September 2003) and the Geographical Indications of Goods (Registration and Protection) Rules of 2002. The Intellectual Property Office in Chennai is in charge of GI Registry in India.

Indian GI Act specifies the goods to be either agricultural goods or natural goods or manufactured goods that can qualify as a GI. Further in the Indian Act if a producer applies for a GI for a manufactured good, he/she must make sure that at least one of the activities of production, processing or preparation of the good must take place in the territory. In that sense, the GI Act is more restrictive than the TRIPS definition. But under the Act, names that do not denote the name of a country or region or locality can still be considered for registration as long as they relate to a specific geographical area and are used in relation to goods originating from that region, providing a leeway for extending protection to Alphonso mangoes and Basmati rice.

Various stages of filing and granting of GIs have been prescribed by the Registry. In the first step, the producers’ organization or a collective body of producers (like the Tea Board of India) has to file an application in the prescribed form. The details that need to be provided in the application include: the class of goods, the territory (including certified copies of the map thereof), particulars of appearance, details of producers, affidavit of how the applicant claims to represent the interest, special human skill involved if any, number of producers and particulars of inspection structure to regulate the use of GI.

The application will be examined by experts appointed by the GI Registry. If accepted, the application will be advertised in the GI journal for public scrutiny. But if the application is objected to by experts, a hearing will take place. After advertisement in the GI journal, if no objections are received from any public organization or individual, then it is deemed as accepted to be awarded GI certification. However, if any individual or producer organization or NGO objects the validity and genuiness of the GI, a hearing takes place and if allowed, the application goes for acceptance and registration certificate is issued. It also needs to be mentioned here that the Indian GI Act (Section 32) specifically bars the jurisdiction of civil courts in this regard.

The Pakistani and Bangladeshi Scenarios

Pakistan has afforded protection of GIs through trade mark law -- namely, Trade Mark Ordinance 2001 implemented through Trade Mark Rules 2004. In fact, the definition of GI of Pakistan is in confirmity with TRIPS and could designate goods and services. The Trade Mark Ordinance of Pakistan defines goods broadly to include anything subject to trade, manufacture or commerce. However, the Pakistanian legal regime is silent on protection of homonymous indications (those which may be similar in terms of spelling or pronunciation but differ in their meaning and designate goods originating from different countries). This is in contrast with the Indian Act which under Section 10 deals with registration of homonymous GIs and stipulates to consider the practical question to differentiate them to ensure equitable treatment of producers of the goods concerned and avoiding confusion in the market.

In Pakistan, the application for registration of GIs is to be filed with the Registrar of Trademarks along with the regulations governing the use of the mark, specifying the persons authorized to use the mark, conditions for membership of the association, conditions for use of the mark and any sanctions against misuse in the case of a collective mark. The regulations are to be approved by the Registrar taking into account compliance with the requirements to be furnished along with the application and that they are not contrary to public policy or morality. If all the requirements are met, the application would be accepted.

Bangladesh, by contrast, has enacted a sui generis GI legislation namely the Geographical Indications of Goods (Registration and Protection) Act 2013 which provides a registration system for some of its reputed local and indigenous products. However, GI registration is not compulsory. The Bangladeshi GI Act also provides equal protection for foreign GIs which are designated as such in the official notifications by the Government. The Act recognizes the concept of homonymous GIs. Section 28(d) also provides that “a registered GI shall be infringed by a person if he, not being an authorized user thereof…. uses any other GI to such goods not originating in the place indicated by such other GI or uses other GI to such goods even indicating the true origin of such goods or uses of other GI to such goods in translation of the true origin or accompanied by expressions such as kind, style, imitation or the like…”. Section 21 of the Act specifies that registration of trademarks can be opposed if it can be shown that the trade mark contains or consists of a GI.

Cross Border GIs

Cross Border GI (also called trans-border GI) has been defined as “a GI which originates from an area that covers regions, territory or locality of two or more countries where a given quality, reputation or other characteristic of the good is essentially attributable to its geographical origin extending over those countries10”. Though the majority of GIs are essentially located within the territory of a state, there are also a number of GI products across the world that have originated from the territory of two or more countries. A classic instance is Basmati rice - a product originating from both India and Pakistan. There are other examples too - for instance Irish Whiskey and Ouzo. The latter, it needs to be mentioned here, comes from both Greece and Cyprus. Needless to say, the recognition and enforcement of shared GIs across borders should claim more attention due to its economic attractions in a multilateral trading system.

TRIPS and Cross-Border GIs

TRIPS does not explicitly prohibit the protection of cross-border GIs. But it remains silent as to the way out for the determination of the precise geographical origin of a GI where two or more countries have competing claims. In such a situation, member countries may depend on historical and geographical evidence, objective legal requirements and shared cultural understandings to substantiate their claims over GIs across borders₁₁. Further, except for a few legislative provisions in the EU to protect cross border GIs which provide for transborder GI registration for agricultural products, foodstuffs and wines (but not for spirits), international practices in this regard are quite heterogeneous. Classic examples of first EU legislations are Regulation 1151/12 of the European Parliament and of the Council of 21st November 2012 on Quality Schemes for Agricultural Products and Foodstuffs as well as Regulation 479/2008 of the European Parliament and of the Council of 29th April 2008 on the Common Organization of the Market in Wine. In the EU case several groups within different territories may lodge a joint application within the EU centralized system.

Mention must also be made here of Art.24.1 of the Swakopmund Protocol on the Protection of Traditional Knowledge and Expressions of Folklore within the Framework of the ARIPO (African Regional Intellectual Property Organization) adopted by the Diplomatic Conference at Swakopmund (Namibia) which read as follows: “Eligible foreign holders of traditional knowledge and expressions of folklore shall enjoy benefits of protection to the same level as holders of traditional knowledge and expressions of folklore who are the nationals of the country of protection”. This Article can no doubt be extended to trans-border GI protection.

The manner in which WOOLMARK is protected can also be a leading light in this regard. The said mark is a certification mark collectively shared by the Wool Boards of Australia, New Zealand, South Africa and Uruguay. These respective Boards have set up a common Secretariat called the International Wool Secretariat which in turn has established a company called IWS Nominee Company Ltd which is responsible for protection of the WOOLMARK name and logo against all acts of infringement. Nevertheless, while drawing lessons from this example, one must not forget the basic and fundamental differences between a private right (certification mark) and the public element (rights of a GI).

The Geneva Act of the Lisbon Agreement on Appellations of Origin and GIs which was adopted in 2015 extends the Lisbon system of appellations of origin to GIs and such protection extends further over transborder geographical areas of origin. Article 5.4 of the Act lays down the procedure for joint application in the case of a trans-border geographical area. This paves the way for a single registration of cross-border GI. But it is only a humble beginning.

Cross-Border Protection of GIs and the GI- Trademark Imbrogilo

Ensuring cross-border protection of GIs in countries where the same GI is protected as a trademark poses insurmountable difficulties. This is amply born out from the Canadian case of Scotch Whisky Association v. Glenora Distillers International Ltd. ((2008) 65CPR (4th) 441) where the Scotch Whisky Association filed a statement of opposition against the application by Glenora Distillers to register the trade mark GLEN BRETON for single malt whisky in Canada, contending that the word GLEN is of Scottish origin and when used with whisky would connote the Scotch Whisky- a registered GI in Canada. On appeal to the Federal Court, the opposition to the registration succeeded. In the light of the above jurisprudence, resolution of conflicts between trademark protection and GI protection in the cross border market place is crucial ₁₂.

The India-Bangladesh Trans-Border GI Issues:

From Jamdani Sarees to Nakshkantha Quilt

Bangladesh feels that some of its GI products which they assert are culturally and geographically associated with that country are exclusively claimed by India through registering them under the Indian sui generis system. Jamdani sarees, Fazil mangoes and Nakshkantha (embroidered quilt) are classic examples. Jamdani, it must be mentioned here, is the first ever GI product registered in Bangladesh₁₃. The ire of Bangladesh is that due to its sui generis registration system being in a nascent stage as well as due to the absence of a universal policy regime to ensure trans-border GI protection, the trading interests of that LDC (Least Developed Country) are being seriously undermined. In fact the procedure prescribed at present (i.e.) separate registration in both countries under respective domestic law resulting in separate GIs -- Indian Jamdani and Bangladeshi Jamdani for instance- is cumbersome and may make the GI product semi generic in other counties leading to losing protection in those countries14. The situation is all the more complicated as the laws of both India and Bangladesh recognize the concept of homonymous GIs.

The Indo-Pak Issues: Basmati and Beyond

The trans-border GI issues between India and Pakistan largely revolve around Basmati whose regulatory landscape is incidentally complicated by patents, trademarks and brands. Both India and Pakistan have been aware of the need for joint registration of Basmati rice to protect it from foreign conglomerates, but to date they have failed to arrive at any consensus in this regard. Basmati, it needs to be mentioned here, is distinguished by the grain’s tall and slender shape, tapering at both ends but not bulging at the belly and its distinct aroma, which is said to be a complex effect of over 40 compounds and not only 2-acetyl-pyrolline. The chalkiness of the grain is also a distinguishing characteristic, as its elongation on cooking to almost double its length, with the width remaining the same. The traditional Basmati growing areas in India are in the sub-Himalayas and particular tracts of the Indo-Gangetic plain in the States of Haryana, Punjab, Uttar Pradesh and Uttarkhand and the Union Territory of J. & K. In terms of area, Haryana is leading accounting for 44% of the area under Basmati followed by UP (28%), Punjab (22%), J. & K. (5%) and Uttarkhand (under 1%). Two-thirds of the annual production is exported.

The Indo-Pak joint efforts vis-à-vis Basmati date back to 2005 when the Indian Minister for Commerce and Industry wrote to his counterpart in Pakistan proposing mechanisms to hold consultations. In 2006, a joint study group was constituted and meetings between representative trade bodies from both the countries took place. In the November 2008 meeting in Islamabad both groups agreed to deem 2009 as Year of Basmati as a means to emphasize efforts towards joint registration. However, there have been contrasting movements too-namely efforts to acquire independent rights. Thus in India in 2004, a NGO filed an application at the GI Registry whereas in Pakistan an application was filed in December 2005 by the Basmati Growers Association. APEDA (which has now been empowered to register Basmati as a GI) filed opposition proceedings in Pakistan’s Sindh High Court.

Suggestions have been galore -- from forming a company with participation from Indian and Pakistani entities to a Joint Commission of India and Pakistan on Basmati₁₅. Mention must also be made here of the basic differences between the Indian legal regime and the Pakistani framework. In India, any association of persons or producers or any organization or authority established by any law which represents the interest of the producers of the concerned goods can apply for GI registration. By contrast, Pakistan follows the trademark route and hence private entities can acquire rights in Basmati in that country leading to a tussle between different representative bodies. What is needed is going beyond these two frameworks and empowering the farmers who toil and moil in the field. Add to these the complications of generating the technical content of the GI or as Vidal terms creating a “Basmatisthan”₁₆and the complexities of an exercise that involves negotiating multitude of interests, nay drawing out shared understandings on attributes, specifications and geography of cultivation amidst the politics of a trans-border reality will unfold.

Conclusion

Cross-border GI protection requires maintaining an appropriate balance between national sovereignty-based policy considerations and a non-discriminatory approach with regard to foreign right holders. It also needs amendment of the domestic legislation and a more uniform, consistent and flexible enforcement system. We have miles to go towards such a framework which can only be achieved through shared understanding between neighbouring countries, mutual consultation and consensus to enable maximum protection for GIs across borders. To put it a bit differently, we have to tide over the legal vacuum in trans-border GI protection through bilateral, plurilateral or regional arrangements, nay inter-governmental bodies or joint commissions which can only be arrived at through political initiatives accompanied by the administrative will to execute. Till then, cross-border GI protection will at best remain to be a premise on paper.

* Phone No. 9447010602. E-mail: narayan5@ias.nic.in

References

1. Raustiala, Kal & Stephen R. Munzer (2007), ‘The Global Struggle over Geographic Indications’, European Journal of International Law, Vol 18(2).

2. Munzimger, Peter (2012), ‘Blue Jeans and Other GIs: An Overview of Protection Systems for Geographical Indications’, Journal of Intellectual Property Law and Practice, Vol.7(4).

3. Mukherjee, Ulstav (2017), ‘A study of the Basmati Case (India US Basmati Rice Dispute): The Geographical Indications Perspective’,  Available at http://dx.doi.org/10.2139/ssrn.1143209

4. Karim, Mohammad Ataul (2016), ‘Indian Claims over Geographical Indications of Bangladesh: Sustainability under Intellectual Property Regime’, Queen Mary Journal of Intellectual Property, Vol. 6(1).

5. Karim, Mohammad Ataul & Mohammad Ershadul Karim (2017), ‘Protection of Handicraft as Geographical Indications under Municipal Law, TRIPS and BTAs vis-à-vis CETA: Bangladeshi Jamdani A Case Study’, Queen Mary Journal of Intellectual Property, Vol. 7(1).

6. Josling, Tim (2005), ‘What’s in a Name? The Economics, Law and Politics of Geographical Indications for Foods and Beverages’, IIIS, Discussion Paper No. 109, Trinity College, Dublin.

7.  Islam, Mohammad Towhidul (2014), ‘Protecting Jamdani with Geographical Indications’, The Daily Star, Dacca, 6thNov.

8. Islam, Mohammad Towhidul & Md. Ahsan Habib (2013), ‘Introducing Geographical Indications in Bangladesh’, Dhaka University Law Journal, Vol.24(1).

9.Cerkia, Bramley (2011), ‘A Review of the Socio-economic Impact of Geographical Indications: Considerations for the Developing World’, WIPO Worldwide Symposium on Geographical Indications.

10. Blakeney, Michael (2012), ‘Geographical Indications and TRIPS’, University of Western Australia, Faculty of Law.

End Notes

1   http://www.wipo.int/geo-indications/en/Accessed on 1st June 2020.

2   A peculiar type of metal (combination of tin and copper) mirror. The high quality of the mirror makes it different from ordinary mirrors.

3   Binay, Singh (2015), ‘Varanasi Emerges as a Hub of GI Products’, Times of India, April 17th.

4   Yogesh, Pai & Tania Singla, ‘Vanity GIs: India’s Legislation on Geographical Indications and the Missing Regulatory Framework’, https://www.cambridge.org/core

5   Carl, Shapiro (1983),’Premiums to High Quality Products as Returns to Reputation’, 98 The QJ Econ.

6   Shashikant, B. Bagde & Deven B. Mehta (2014), ‘Geographical Indications in India: Hitherto and Challenges’, 5 RES J PHARM, BIOLOGICAL & CHEM SCIS, www.rjpbcs.com/pdf/2014- 

     5%282%29/146.pdf

7   http://www.fao.org/fileadmin/templates/est/COMM-MARKETS-MONITORING/Tea/Documents/Wipo-FAO-IGGtea-GI-AO-mg-10-05-13.pdf

8   http://www.wipo.int/wipo_magazine/en/2008/06/article_0009.html

9   Islam, Mohammad Towhidul & Ansari, Masrur, Cross-Border GI protection: Challenges and Ramifications for Bangladesh (2017), WIPO-WTO Colloquium Papers.

10  Ibid.

11  Ibid.

12  Ibid.

13  GI Journal No. 01, March 2016, Government of Bangladesh.

14  Dwijen, Rangnekar & Sanjay Kumar (2010), ‘Another Look at Basmati: Genericity and the Problems of a Transborder GI, The Journal of World Intellectual Property, Vol3(2).

15  Ibid.

16  Vidal, D.(2005) ‘In Search of ‘Basmatisthan’: Agro Nationalism and Globalization’, in J. Assayag& C.J. Fuller (eds.), Globalizing India: Perspectives from Below, Anthem, London.

The Dilemma of the Competent Authority to Refer or not to Refer

under Section 3H(4) of the National Highways Act

(By Rassal Janardhanan A.& Thareeq Anver K.₁, Advocates, High Court of Kerala*)

Whenever there is an acquisition of private land for the purpose of construction or widening of National Highway, the Competent Authority for Land Acquisition (hereinafter referred to as the “CALA” for brevity) is to decide a number of complex questions regarding the ownership of the said land being acquired for determining the persons entitled to receive the compensation for the same.

If a dispute arises regarding how the compensation has to be shared among the parties claiming ownership of the property or who all are the actual owners of the land being acquired and if the CALA is not in a position to determine the same, he is empowered to refer the same to the decision of the principal civil court of original jurisdiction within the limits of whose jurisdiction the land is situated as per Section 3H(4) of the National Highways Act, 1956.

Here the primary question to be determined is that when does a ‘dispute arise’?

The Hon’ble Kerala High Court, in Kaprat Family Trust and Ors. v. Union of India and Ors.₂  have addressed this question and has held that:

“………it is not enough that someone approaches the CALA and asserts that he has a dispute with respect to the entitlement of the owner of the property to receive the eligible compensation, but it is imperative for him to establish that said imputation given rise to a valid dispute. Thus a mere trifle allegation would be not sufficient, but it will have to be supported by some cogent evidence or material.”

From the above dictum, it emerges that the CALA cannot mechanically refer a matter to the competent civil court on the sole reason that someone else has put up a claim over the property being acquired. The trigger point for making a valid reference is the production of sound evidence to support the claim which creates an arguable case and requires the application of judicial mind to decide the same.

The Hon’ble Madras High Court in Padmavathi v. National Highways Authority of India and Ors.₃have considered a situation where there was already a suit pending regarding the ownership of the property subjected to compulsory acquisition. The challenge in the case was against the decision of CALA to keep the compensation amount in deposit till the suit is finally disposed of and the rights of the parties are determined by the Civil Court but not to refer the dispute which has arisen to the competent civil court under Section 3H(4). It was held that the civil suit pending to determine the owner of the property concerned and the decision to waiting for the result of the said suit cannot be considered as a substitute for referring a dispute under Section 3H(4) of National Highways Act, 1956. Thus, the action of the CALA in not referring the matter was found to be erroneous.

Now the crucial question to be addressed is “Can the CALA make a reference to the competent civil court, if he had already passed an Order determining the compensation in favour of a person under Section 3G and another person approaches him with some evidence to claim that he is the actual owner of the land acquired or that he is also eligible for a share and will the same results in the arising of a dispute?” 

The Hon’ble Kerala High Court in Usman Arif and Ors. v. The Project Director, National Highway Authority of India, Kozhikode and Ors.₄  has held that:

“It is thus incontestable that upon the CALA determining the amount under Section 3G of the Act and issuing the resultant Award, he is rendered functus officio and cannot, thereafter, assume any further statutory jurisdiction with respect to the same. The CALA can, at the best, correct patent typographical or clerical errors, but is proscribed from dealing with the published Award on its merits, in any manner, thereafter. Therefore, by no means can the CALA modify his earlier Award or attempt to do so and any step in such direction by it will have to be declared as being without legal competence.”

Even prior to the aforesaid judgment, the Hon’ble Bombay High Court⁵, in 2019, considered this question in depth and concluded in the same line as the Hon’ble Kerala High Court. However, the Hon’ble Bombay High Court has gone one step further and have said that after passing the Order, the CALA is not having the power to even correct the typographical errors made in the order.

Thus, from an analysis of the two dictums, it can be well concluded that the scheme of National Highways Act, 1956 makes the CALA ‘functus officio’ i.e., once a power under any of the provisions of the Act has been exercised, the act so done cannot be undone. Therefore, it can be undoubtedly said that if a person comes with a claim after passing of order in favour of another, the CALA cannot refer the same to the competent civil court even if there is evidence to support the new claim. In other words, the CALA enjoys his power to refer a dispute to the competent civil court only until he makes an order under Section 3H(3).

If the acquisition proceedings do not pertain to National Highway development, the procedure contemplated under the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 would alone be applicable for determination and payment of compensation. Section 76 of the 2013 Act empowers the Collector to refer the dispute as to apportionment of or entitlement to the compensation to the authority (usually a District Judge). The Collector has no power to decide as to who is entitled to the amount of compensation or the portion of the amount to be paid to each of claimants when a dispute arises between many persons. However, when the acquisition is under the NH Act, the Competant Authority is empowered under Section 3H(3) of NH Act to decide as to who is entitled to receive the amount of compensation and the portion of compensation to be paid to each of them. Only if the claims of all the persons interested in the compensation are supported by materials to prima facie give rise to a dispute, the reference u/S.3H(4) has to be resorted to.

In both of the above dictums, the High Courts have not directly decided the above question but it is only through an extended reasoning a conclusion can be reached.

In Surya Kuer v.The State of Bihar and Ors.,₆ a Division Bench of the Hon’ble Patna High Court has addressed this question specifically to the point. It was a case where after passing the order in favour of a person, another person came before the CALA with certain evidence claiming ownership of the acquired land.

The stand taken by the Hon’ble Patna High Court on this issue was that a person who did not raise any dispute at the time of determination of the amount when a notice was published inviting all interested persons to state the nature of their respective interest on such land cannot be permitted to raise an objection at a belated stage i.e., after passing the order because after passing the order, he cannot be taken to mean “any person to whom the same or any part thereof is payable” as envisaged under sub-section (4) of Section 3-H of the Act.

The decision of the Hon’ble Patna High Court was sought to be assailed by a Special Leave Petition at the instance of the unsuccessful party. However, the Hon’ble Apex Court dismissed the same at the threshold refusing leave.₇  As per the dictum laid down in Khoday Distilleries Ltd. and Ors. v. Sri Mahadeshwara Sahakara Sakkare Karkhane Ltd.,₈
 dismissal of an SLP without granting leave does not result in merger. However, as the Hon’ble Supreme Court has not expressed any opinion to the contrary, the principles relied upon by the Hon’ble Patna High Court still governs the field.

The maxim Vigilantibus Non Dormientibus Jura Subveniunt has been ingrained in the provisions of the National Highways Act which provides a summary procedure for emergency acquisition of land in the interest of public. The Hon’ble Patna High Court has rendered its decision in Surya Kuer’s case in keeping with the scheme and object of the National Highways Act to prevent hardships to those who are in possession of valid documents to prove their entitlement before CALA who is given the necessary powers of a Civil Court.

*Phone No.9446125525.

E-mail: rassaljanardhanan@gmail.com, advthareeqanver@gmail.com

Notes

1. The authors are highly indebted to Adv. Ashwin Sathyanath for the successful completion of this Article.

2.  2022 (2) KLT OnLine 1220 = MANU/KE/1313/2022.

3.   2007 (1) KLT OnLine 1202 (Mad.) = MANU/TN/7946/2007.

4.  2022 (1) KLT 35.

5.  Bhupendrasingh v. The Competent Authority for National Highway No.6 and Ors. (2019 (4) KLT OnLine 3316 (Bom.) = 2020 (2) ABR 645).

6. 2018 (1) KLT OnLine 3196 (Pat,) = AIR 2018 Pat 102.

7. Ineshwar Tiwary v.  Surya  Kuer  and Ors. (MANU/SCOR) 41663 (2018).

8.   2019 (1) KLT OnLine 3301.

Comparative Advertisement and its Crossing Lines

Legal Framework in India

(By Keerthi S.Nair, Advocate, High Court of Kerala)¹

“Comparative advertising can be a formidable weapon in the hands of a trained marksman. But if you don’t involve the reader in your claims of superiority, you may be shooting yourself in the foot.”                                               –Herschell Gordon Lewis ²

It is the recent commercial for the popular brand, ‘Domex’ which contrasts it with its rival, ‘Harpic,’ is what triggered a larger controversy in the business world. This practice was seriously condemned by Delhi High Court in its recent judgment. The relevant question that arises here is why business companies are resorting to ‘unprincipled’ practises in the disguise of promotional activities. As we all know, advertising is a critical marketing tool capable of determining a product’s success or failure. ‘Comparative advertisement’ is a strategy often used by companies as part of their promotional tactics, where one product of a trader is compared with the product of a competitor. Either explicitly or impliedly is possible.However, ‘comparative advertisement’ is not defined under any Indian statute.

When we look back to history of comparative advertisement, the 1960s and 1970s are especially important, as U.S. advertisers began naming competitors and comparative advertising. The 1960s to 1970s are also important because they include the industry’s much vaunted “Creative Revolution.” Prior research also shows that problems with comparative advertising began attracting the attention of advertisers, media executives and managers, and federal regulators during the 1930s. On August 13, 1979, the FTC published a definitive restatement of its comparative advertising policy, declaring beyond question that trade association codes, media clearance policies, and advertising self-regulatory rules restricting comparative advertising would not be tolerated. This event likely contributed substantially to what appears to be the more widespread use of explicit comparative advertising among mainstream advertisers since then³.

It is pertinent to note that, the very purpose of this tool is to explain to its customers why they should choose this product over one from a rival. This is not the first time; this has been adopted by companies.Leading companies like Samsung, Apple, Dove, BMW and others have done this in the past to advertise their products. Previously, when ‘Mac’ tried to picturize itself with other PCs as two humans in its advertisement, it depicted ‘PCs’ as a person who blows his nose, sneezes, and eventually passes out after a virus attack, whereas ‘Mac’ remains healthy and immune to virus attack. So, here comes another significant question, whether highlighting a competitor’s flaws in comparison to one’s own goods constitutes “disparaging” or “puffery” in such commercials?

Indian Judicial Approach

Under Indian law, at present, there is no specific provision or a statute defines ‘comparative advertisement’ and its boundaries. The short question here is whether it qualifies as a ‘trade practice.’ A trade practice means any practice relating to the carrying on of any trade. It also includes the following:

1)   Anything done by any person which controls or affects the price charged by, or the method of trading of, any trader or any class of traders;

2)   A single or isolated action of any person in relation to any trade ⁴.

As per S.2(1) of the Consumer Protection Act, 2019, defines “advertisement” as

“a means any audio or visual publicity, representation, endorsement or pronouncement made by means of light, sound, smoke, gas, print, electronic media, internet or website and includes any notice, circular, label, wrapper, invoice or such other documents.”

If ‘Comparative Advertisement’ can be treated as a trade practice, then it can very well be booked under S.2(47)(j) of the Consumer Protection Act, 2019, if it is used to the extent of disparaging or defaming competitor’s product,.

“Section 2(47) “unfair trade practice” means a trade practice which, for the purpose of promoting the sale, use or supply of any goods or for the provision of any service, adopts any unfair method or unfair or deceptive practice including any of the following practices, namely: —

...

(j) gives false or misleading facts disparaging the goods, services or trade of another person.”

In the recent decision, Delhi High Court openly criticized the advertisement of the brand ‘Domex’ which disparaged its competitor ⁵. In that decision, the following observations of the Court found to be rife with the concept of ‘ethical advertisement’ and the idea that advertiser cannot disparage or defame the competitor’s goods while he undertakes comparative advertisement;

“24. In a comparative advertisement, it is open for an advertiser to embellish the qualities of its products and its claims but it is not open for him to claim that the goods of his competitors are bad, undesirable or inferior. As an illustration, in a comparative advertisement, it is open for an advertiser to say his goods are of a good quality but it is not open for an advertiser to send a message that the quality of the goods of his competitor is bad………it is open for a person to claim that he is the best seller in the world or a best seller in the street but it is not open for him to denigrate the services of another. Thus, it is not open for an advertiser to say “my goods are better than X’s, because X’s are absolutely rubbish”. Puffery and Hyperbole to some extent have an element of untruthfulness.”

Under the Trade Marks Act, 1999, Section 29 deals with infringement of registered trademarks. This provision also deals with the infringement of trademark by means of spoken use of words in the registered trademark and its visual representation. Such infringement can be through any advertisement, as stipulated under sub-section (8) of S.29. Similarly, S.30(1) of the Trademarks Act, 1999 also prevents dishonest practices in industrial and commercial matters and, those activities which gives unfair advantage or detrimental to the distinctive character or reputation of a trademark.

As held by the Delhi High Court in Havells India Ltd. & Anr. v. Amritanshu Khaitan & Ors.⁶ the primary objective of Sections 29(8) and 30(1) of the Act, 1999, is to allow comparative advertising as long as the use of a competitor’s mark is honest. The test of ‘honest use’ is an objective test which depends on whether the use is considered honest by members of a reasonable audience.

In short, those advertising practices which disrepute competitor or infringes its trademark, in the garb of comparative advertisement cannot be encouraged. Moreover, the Code of Self-Regulation issued by Advertising Standards Council of India (ASCI), advertisements must be truthful. Advertisers and advertising agencies are required to produce such substantiation as and when called upon to do so by The Advertising Standards Council of India and any reference to such person, firm or institution which confers an unjustified advantage on the product advertised or tends to bring the person, firm or institution into ridicule or disrepute. The Chapter IV also lays down that advertisements containing comparisons with other manufacturers or suppliers or with other products including those where a competitor is named, are permissible in the interest of vigorous competition and public enlightenment provided:

(a) It is clear what aspects of the advertiser’s product are being compared with what aspects of the competitor’s product.

(b) The subject matter of comparison is not chosen in such a way as to confer an artificial advantage upon the advertiser or so as to suggest that a better bargain is offered than is truly the case.

(c) The comparison are factual, accurate and capable of substantiation.

(d) There is no likelihood of the consumer being misled as a result of the comparison, whether about the product advertised or that with which is compared.

(e) The advertisement does not unfairly denigrate, attack or discredit other products, advertisers or advertisements directly or by implication.”

Article 2(2a) of the Advertising Directive of EEC defines comparative advertising as “any advertising which explicitly or by implication identifies a competitor or goods or services offered by a competitor.”

The goal of the Code for Self-Regulation, is to manage the content of advertisements, not to hamper the sale of products which may be found offensive, for whatever reason, by some people. Therefore, as per the terms of this Code,if certain advertisements for such products are not themselves offensive, there will normally be no ground for objection to them. Further specifies that the Code’s rules serve as the foundation for adjudication, whenever there may be conflicting views about the acceptability of an advertisement, whether it is challenged from within or from outside the advertising business. The general public and an advertiser’s rivals have an equal right to expect the content of advertisements to be presented fairly, intelligibly and responsibly. The said Code applies to advertisers, advertising agencies and media.⁷

Further in Reckitt Benckiser India Private Limited v. Hindustan Unilever Limited ⁸; the High Court highlighted that one cannot glorify its own product by defaming its rival. The court observations are as follows;

“21. ……………If advertisement extends beyond the grey areas and becomes false, misleading, unfair, or deceptive advertisement, it would not be entitled the benefit of any protection. In comparative advertising, the comparing of one’s goods with that of the other and establishing the superiority of one’s goods over the other is permissible. However, one cannot make a statement that a good is bad, inferior, or undesirable as that would lead to denigrating or defaming the goods of the other.”

In its another landmark judgment, the Apex Court in Pepsi Co., Inc. v. Hindustan Coca Cola Ltd.⁹., made following noteworthy observations with respect to disparagement and factors to be considered by the Courts while deciding a question on it;

“11.What is disparagement. The New International Websters’ Comprehensive Dictionary defines disparage/disparagement to mean, “to speak of slightingly, undervalue, to bring discredit or dishonour upon, the act of depreciating, derogation, a condition of low estimation or valuation, a reproach, disgrace, an unjust classing or comparison with that which is of less worth, and degradation.” The Concise Oxford Dictionary defines disparage as under, to bring dis-credit on, slightingly of and depreciate.”

“12.In the electronic media the disparaging message is conveyed to the viewer by repeatedly showing the commercial everyday thereby ensuring that the viewers get clear message as the said commercial leaves an indelible impression in their mind. To decide the question of disparagement we have to keep the following factors in mind namely; (1) Intent of commercial (ii) Manner of the commercial (iii) Story line of the commercial and the message sought to be conveyed by the commercial. Out of the above, “manner of the commercial”, is very important. If the manner is ridiculing or the condemning product of the competitor then it amounts to disparaging but if the manner is only to show one’s product better or best without derogating other’s product then that is not actionable.”

Likewise, in Reckitt & Colman of India Ltd. v. M.P.Ramchandran¹⁰, the Supreme Court
has laid down the following permissible limits, a tradesman can go for promoting his products through advertisement.

“11.From the law discussed above it appears to me that the law on subject is as follows:

I)    A tradesman is entitled to declare his goods to be best in the world, even though the declaration is untrue.

II)   He can also say that his goods are better than his competitors’, even though such statement is untrue.

III)  For the purpose of saying that his goods are the best in the world or his goods are better than his competitors, he can even compare the advantages of his goods over the goods of others.

IV)He however, cannot, while saying that his goods are better than his competitors’, say that his competitors’ goods are bad. If he says so, he really slanders the goods of his competitors. In other words, he defames his competitors and their goods, which is not permissible.

V)  If there is no defamation to the goods or to the manufacturer of such goods no action lies, but if there is such defamation an action lies and if an action lies for recovery of damages for defamation, then the Court is also competent to grant an order of injunction restraining repetition of such defamation.”

InDabur India Ltd. v. Emami Ltd.¹¹ ; the Delhi High Court has laid down the conditions to be satisfied by the advertisers while resorting to ‘Comparative Advertisement’.

36. The Court also has to recognize that the framework of the advertisements is designed with the objective to sway the consumers and coax them to buying a particular product or service…………………..Some leeway has always to be given to the advertiser, but at the same time right to free speech cannot be stretched to allow them to become defamatory, disparaging or denigrating. One cannot ignore the fundamental characteristic of comparative advertisements is appraisal by contrasting the products. There will often be an element of negative or adversarial comparison. The intent behind the comparative advertisements will invariably be to persuade the consumers to give preference to one of the competing products. Such advertisements either expressly or subtly make a claim that the product of the advertiser is a better choice. This is permissible in law………………..The comparative advertising campaign should thus be ‘comparison positive’. Advertisements often contain valuable information for the consumers and can promote healthy competition in the market. If this is the message conveyed, the courts would be resilient and allow the negative derivatives of comparison.”

In countries like UK, Comparative Advertising Directive, (EU directive), Business Protections from Misleading Marketing Regulations 2008 (BPRs) and UCP Directive (Unfair Commercial Practices Directive) are the major regulations and directives that governs comparative advertising. Truly, these regulatory frameworks not only protect traders, but also the consumers from misleading advertisement and unfair trade practices.

Conclusion

It is possible to conclude that there is absolutely no harm in comparing one’s product with another. It genuinely aids in raising customer awareness of numerous market goods. Given the increased risks involved in comparative advertisement, its high time to incorporate a specific legal provision in the existing and concerned legal statutes of India in this regard,in the light of remarkable observations of Courts in India. Hopefully, it would restrain the advertisers from using nefarious statements or comments couched as ‘comparison’ against the competitor’s product¹² . Such illegal comparative advertisements frequently led to numerous Intellectual Property (IP) issues between the rival corporations as well. In India, there are no specific regulations administering comparative advertisement, unlike UK. But we have laws like the Competition Act, 2002, the Trade Marks Act, 1999, Code of Self-Regulation issued by the Advertising Standards Council of India and Consumer Protection Act, 2019, which can generally regulate unhealthy comparisons. In fact, the advertisers need to draw a line between ‘healthy comparison’ and ‘unhealthy comparison.’ Without a doubt, unhealthy comparisons among products would lead to unethical marketing practices or immoral advertisement. It is also to be noted that mere puffing of goods is not actionable. Tradesman can say his goods are best or better. But by comparison the tradesman cannot slander nor defame the goods of the competitor nor can call it bad or inferior.¹³

Foot Notes:

1.^.      Adv. Keerthi S.Nair, BBA; LL.B (Hons.), LLM, Research Assistant, High Court of Kerala, can be reached at keerthisnair123@gmail.com.

2.   Ruth Corin, Rebecca N. Bleibaum, Tom Jirgal, David Mallen, Christine A.Van Dongen, “Practical guide to Comparative Advertising, Dare to Compare; Elevier Academic Press, London, United Kingdom, 2019, p.27.

3.   Fred K.Beard, “A history of Comparative Advertising in United States”; Journalism & Communication Monographs, 15(3) 114–216, 2013.

4.   P.K.Majumdar, ‘Law of Consumer Protection in India’, Orient Publishing Co., New Delhi, 5th edition, 2008, p.548.

5.   Reckitt Benckiser (India) v. Hindustan Unilever Ltd. (2022 (5) KLT OnLine 1095 (Del.).

6.   2015 (1) KLT OnLine 1151 (Del.).

7.   See, https://ascionline.in/images/pdf/code_book.pdf.; visited on 20.11.2022.

8.   2021 (6) KLT OnLine 1250 (Del.).

9.   2003 (3) KLT OnLine 1294 (Del.)

10.  1998 (2) KLT OnLine 1276 (Cal.).

11.   2019(3) KLT OnLine 3230 (Del.).

12.   Havells India Ltd. & Anr. v. Amritanshu Khaitan & Ors. (2015 (1) KLT OnLine 1151 (Del.).

13.  2003 (3) KLT OnLine 1294 (Del.).