State of Uttar Pradesh vs Hafiz Mohammad Ismail and Hafiz Jawed Ali

Rewritten Version Notice: This is a rewritten version of the original judgment.

Court: Supreme Court of India

Case Number: Criminal Appeal Nos. 129-130 of 57

Decision Date: 9 February 1960

Coram: K.N. Wanchoo, Syed Jaffer Imam, J.C. Shah

The case was styled State of Uttar Pradesh versus Hafiz Mohammad Ismail and Hafiz Jawed Ali and was decided on the ninth day of February in the year 1960 by the Supreme Court of India. The judgment was authored by Justice K.N. Wanchoo, who was joined on the bench by Justice Syed Jaffer Imam and Justice J.C. Shah. The official citation of the decision appears as 1960 AIR 669 and 1960 SCR (2) 911. The matter concerned the application of sections 28 and 486 of the Indian Penal Code, 1860, in relation to a criminal trial involving alleged counter‑feiting of trade‑marks through the use of wrappers and labels on soap products that were purported to resemble those of another established soap brand. The petitioner in the proceedings was the State of Uttar Pradesh, while the respondents were Hafiz Mohammad Ismail and Hafiz Jawed Ali. The appeal arose by special leave from a judgment and order dated 13 July 1956 delivered by the Allahabad High Court, Lucknow bench, in Criminal Revisions Nos. 118 and 119 of 1955. The appeal also challenged the judgment and order dated 31 March 1959 of the Second Civil and Sessions Judge, Lucknow, in Criminal Appeals Nos. 511 and 512 of 1954. Counsel appearing for the appellant included the Additional Solicitor‑General of India, H.N. Sanyal, together with G.C. Mathur and C.P. Lal. Representing the respondents were Nuruddin Ahmad and Naunit Lal. The judgment delivered by Justice Wanchoo addressed these two connected appeals by special leave against the decision of the Allahabad High Court.

The headnote of the report recorded that the respondents had been found selling soap that was presented as counterfeit Sunlight and Lifebuoy, and that they were prosecuted under section 486 of the Indian Penal Code. The trial magistrate had observed that the similarity between the wrappers and labels used by the respondents and those of the genuine soaps was such that a purchaser could be deceived, and consequently had convicted the respondents. An appeal to the Sessions Judge was dismissed. On revision, the Allahabad High Court held that although the wrappers and labels were colourable imitations of the genuine trade‑marks, they did not constitute counter‑feiting and therefore acquitted the respondents. The Supreme Court, however, held that the wrappers and labels were indeed counterfeit versions of the genuine Sunlight and Lifebuoy packaging. To determine whether the wrappers and labels fell within the meaning of section 28 of the Indian Penal Code read with Explanation 2, the Court examined two points: first, whether the wrappers and labels placed on the soaps sold by the respondents were manufactured to resemble those of the genuine Sunlight and Lifebuoy soaps; and second, whether such resemblance was of a degree that might deceive an ordinary purchaser. The Court noted that it was unnecessary to insert the expression “colourable imitation” into the provision of section 28, because Explanation 1 to that section expressly provides that an imitation need not be exact to constitute counter‑feiting. The Court concluded that the High Court had erred in failing to consider whether the resemblance was capable of deceiving a person, despite the differences in detail between the two sets of wrappers and labels. Consequently, the Supreme Court affirmed the conviction of the respondents for counter‑feiting under the applicable provisions of the Penal Code.

The facts essential for resolving the appeals were as follows. Bhagwan Swarup Saxena, who was employed as a Trade Marks Investigator for Lever Brothers Limited India, was assigned to conduct investigations in Lucknow on behalf of the company. During the course of his duties he learned that counterfeit Sunlight and Lifebuoy soaps were being produced and sold in large quantities in Yahiaganj and other locations in Lucknow. He investigated the matter on behalf of the company, which was the genuine manufacturer of Sunlight and Lifebuoy soaps. The investigation revealed that two soap factories in Lucknow were engaged in the manufacture of counterfeit Sunlight and Lifebuoy soaps. It also disclosed that the respondents, Hafiz Mohammad Ismail and Hafiz Jawed Ali, were operating shops in Yahiaganj where they sold these counterfeit soaps. Consequently, with the assistance of the police, a raid was carried out on the two shops on 19 May 1953. During the raid a large quantity of soaps was seized; the seized items were wrapped in labels that were designed to imitate the genuine Sunlight and Lifebuoy labels used by the company. On the basis of this seizure the respondents were prosecuted under sections 482 and 486 of the Indian Penal Code. The magistrate found the evidence sufficient, held that the labels used by the respondents were counterfeit copies of the genuine Sunlight and Lifebuoy labels, and convicted them under both sections 482 and 486. The respondents appealed the conviction to the Sessions Judge, but the Sessions Judge dismissed the appeals. They then filed revisions before the Allahabad High Court. The High Court held that the offences did not fall within the ambit of section 482 and therefore acquitted the respondents of that charge. Regarding section 486, the High Court concluded that although the wrappers and labels were colourable imitations of the genuine trademarks, they could not be described as counterfeit copies, and consequently acquitted the respondents on that ground as well, without addressing the other points raised by them. The State of Uttar Pradesh applied for a certificate to appeal to this Court, which was rejected, and then sought special leave to appeal, which was granted. The learned Additional Solicitor General, appearing for the State, did not press the issue of the acquittal under section 482, and therefore that acquittal remains operative. He, however, vigorously contended that the High Court’s view that the wrappers and labels were merely colourable imitations and not counterfeit was erroneous. He argued that the High Court had failed to give full effect to the language of section 486 and to the definition of “counterfeit” contained in section 28 of the Indian Penal Code.

Section 28 of the Indian Penal Code defines “counterfeit” as a person who causes one thing to resemble another thing with the intention of practising deception, or who knows that deception is likely to be practised by such resemblance. Explanation 1 clarifies that an exact imitation is not a requirement for an act to constitute counterfeiting. Explanation 2 states that when a person causes one thing to resemble another and the resemblance is such that a person might be deceived, the law presumes, until the contrary is proved, that the person intended to practise deception by means of that resemblance or knew that deception was likely to result.

The relevant portion of Section 486 reads that whoever sells, exposes, or possesses for sale or for any trade or manufacturing purpose any goods or things bearing a counterfeit trade mark or property mark affixed to or impressed upon them, or upon any case, package or other receptacle containing such goods, shall, unless he proves the circumstances specified in clauses (a), (b) or (c), be punished with imprisonment which may extend to one year, or with fine, or with both.

The appellants contend that the High Court’s finding that the labels and wrappers involved in this case were merely “colourable imitations” of the genuine trade‑mark labels and wrappers, and therefore not counterfeit, failed to consider the language of Section 28 and its two explanations. They point out that the expression “colourable imitation” does not appear in Section 28, which defines “counterfeit.” Consequently, they argue that the High Court misdirected itself by classifying the wrappers and labels as colourable imitations rather than as counterfeit within the meaning of Section 28.

According to Section 28, the essential elements of counterfeiting are: (i) causing one thing to resemble another; (ii) intending by that resemblance to practise deception; or (iii) knowing that deception is likely to be practised. Thus, if a thing is made to resemble another and the actor either intends deception or is aware that deception is likely, the act constitutes counterfeiting. Explanation 1 reinforces that an exact replica is not necessary; the law allows for counterfeiting even when the imitation differs in detail, provided the resemblance is sufficiently close to permit deception. Explanation 2 adds that when the resemblance is such that a person might be deceived, a presumption arises that the actor intended deception or knew deception was likely, unless the opposite is proved.

In the explanation to section 28, a presumption arose that when a resemblance was such that a person might be deceived, the law presumed, until the contrary was proved, that the person who caused one thing to resemble another either intended to practise deception by means of that resemblance or knew that deception was likely to result. This provision created a rebuttable presumption whenever the resemblance was capable of deceiving a person; the intention or knowledge was therefore deemed present unless evidence to the contrary was produced. The Court observed that the analysis of section 28 did not require the use of expressions such as “colourable imitation.” To apply the provision, the Court needed first to determine whether one object had been made to resemble another. If that requirement was satisfied, the next step was to assess whether the resemblance was sufficient to deceive an ordinary person. Should the Court conclude that the resemblance could indeed deceive, the presumption of the requisite intention or knowledge would arise, and the act would constitute counterfeiting. Accordingly, the matters for determination in the present case were twofold: firstly, whether the labels and wrappers affixed to the soaps sold by the respondents were fashioned to resemble the labels and wrappers of the genuine Sunlight and Lifebuoy soaps; and secondly, assuming such resemblance existed, whether that resemblance was of a nature that might mislead a consumer. If both conditions were met, the labels and wrappers would be deemed counterfeit, and the intention or knowledge necessary for counterfeiting would be presumed unless disproved. The Magistrate and the Sessions Judge examined the disputed wrappers and labels, compared them with the authentic Sunlight and Lifebuoy packaging, and concluded that a resemblance existed and that the similarity was close enough to potentially deceive a person. On the basis of that finding, they held the wrappers and labels to be counterfeit, noting that no evidence to the contrary had been presented. The High Court did not reject the existence of a resemblance; its description of the wrappers and labels as “colourable imitations” acknowledged a likeness. Although the High Court emphasized differences in detail between the two sets of packaging, it appeared to overlook the first explanation to section 28, which permits a finding of counterfeiting even where the imitation is not exact, provided the resemblance is likely to deceive.

In this case, the Court considered the provision of section 28 which provides that an imitation does not have to be exact in order to constitute counterfeiting, even though the High Court had quoted the first Explanation of that provision in its judgment. The question before the High Court was whether, despite the detailed differences that had also been observed by the Magistrate and the Sessions Judge, a person might be deceived by the wrappers and labels recovered from the respondents’ shops. The High Court did not address this question; instead it contented itself with describing the wrappers and labels as colourable imitations of the genuine trademarks. The Court held that such a statement did not resolve the issue under section 28, because the statute required a finding on whether the resemblance was likely to deceive a purchaser. The High Court had before it the opinions of the Magistrate and the Sessions Judge, both of whom had concluded that the resemblance was of a kind that could deceive a person and that the minor differences in detail did not diminish that effect. The Court observed that the High Court had failed to consider this essential aspect when it concluded that the labels and wrappers found with the soaps in the respondents’ shops were not counterfeit. After examining the wrappers and labels themselves and comparing them with the genuine Sunlight and Lifebuoy soap packaging, the Court agreed with the Magistrate and the Sessions Judge that the resemblance was sufficient to mislead a consumer. Accordingly, the Court applied the second Explanation to section 28, held that the required intention or knowledge was presumed because the contrary had not been proved, and declared the wrappers and labels to be counterfeit copies of the genuine Sunlight and Lifebuoy packaging. The Court therefore allowed the appeals, set aside the acquittal of the respondents under section 486 of the Indian Penal Code, and ordered that the matters be remanded to the High Court for determination of the issues relating to jurisdiction, limitation, and the respondents’ protection under clause (a) and clause (b) or (c) of section 486.