Judgment

RAMASWAMI, J.:- This appeal is brought by special leave from the judgment of the Allahabad High Court dated November 23, 1965 in First Appeal No. 208 of 1958.

2. The appellant is a limited liability company incorporated under the English Companies Act with its registered office at Lincoln, England. It carries on business in the manufacture and sale of diesel internal combustion engines and their parts and accessories. Ruston Hornsby (India) Ltd., a company registered in India under the Companies Act, 1956 is a subsidiary of the appellant. The respondent is a firm carrying on business in the manufacture and sale of diesel internal combustion engines and their parts. The appellant was a registered proprietor of the registered trade mark Ruston being registration No. 5120 in Class 7 in respect of internal combustion engines. Ruston and Hornsby (India) Ltd., is the registered user of the said trade mark and manufactures in India and sells in India internal combustion engines under the trade mark "RUSTON". Sometime in June, 1955 the appellant came to learn that the respondent was manufacturing and selling diesel internal combustion engines under the trade mark "RUSTAM". On July 8, 1955 the appellant wrote through its attorneys a letter to the respondent and called upon it to desist from using the trade mark "RUSTAM" on its engines as it was an infringement of the registered trade mark "RUSTON". The dependent replied that "RUSTAM" was not an infringement of "RUSTON" as the words "RUSTAM INDIA" was used. On February 17, 1956 the appellant instituted a suit praying for a permanent injunction restraining the respondent and its agents from infringing the trade mark "RUSTOM". On January 3, 1958 the Additional District Judge, Meerut, dismissed the suit holding that there was no visual or phonetic similarity between "RUSTON" and "RUSTAM". The appellant took the matter in appeal in the Allahabad High Court. By its judgment dated November 23, 1965 the High Court held that the use of the word RUSTAM by the respondent constituted infringement of the appellant s trade mark "RUSTON" and the respondent should be prohibited from using the trade mark "RUSTAM". But the High Court proceeded to hold that the use of the words "RUSTAM INDIA" was not an infringement because the plaintiff s engines were manufactured in England and the defendant s engines were manufactured in India. The suffix "India" would be a sufficient warning that the engine sold was not a "RUSTON" engine manufactured in England and the respondent may be permitted to use the combination "RUSTAM INDIA".

3. Section 21 of the Trade Marks Act, 1940 states:

"Subject to the provisions of Sections 22, 25 and 26 the registration of a person in the register as proprietor of a trade mark in respect of any goods shall, give to the person the exclusive right to the use of the Trade mark in relation to those goods and, without prejudice to the generality of the foregoing provision, that right shall be deemed to be infringed by any person who, not being the proprietor of the trade mark or a registered user thereof using by way of the permitted use, uses a mark identical with it or so nearly resembling it as to be likely to deceive or cause confusion, in the course of trade, in relation to any goods in respect of which it is registered, and in such manner as to render the use of the mark likely to be taken either-

(a) as being used as a trade mark; or

(b) to import a reference to some person having the right either as a proprietor or as registered user to use the trade mark or to goods with which such a person as aforesaid is connected in the course of trade."

4. The distinction between an infringement action and a passing off action is important. Apart from the question as to the nature of trade mark the issue in an infringement action is quite different from the issue in a passing off action. In a passing off action the issue is as follows:

"Is the defendant selling goods so marked as to be desig