Case BriefsHigh Courts

Delhi High Court: In a matter wherein Starbucks trademark ‘frappuccino’ was being infringed, Jyoti Singh, J., while observing that, FRAPPUCCINO trademarks have acquired formidable reputation and goodwill in India, awarded Starbuck Rupees 2 lakhs damages and 9 lakh costs.

Instant suit had been filed to seek a decree of permanent injunction restraining the defendants, their partners, etc. from infringing the plaintiff’s trademark “FRAPPUCCINO” either alone or with any prefix or suffix or any other confusing and deceptively similar trademark in relation to their goods, services and business as well as passing off.

Plaintiff also sought an award for damages and a decree for rendition of accounts of profits earned by the defendants by using the FRAPPUCCINO marks was sought.

In 2019, this Court had granted an ex parte and interim injunction in favour of the plaintiff and against the defendants.

Factual Matrix


It was averred that the plaintiff uses the trademark FRAPPUCCINO and variations thereof for its widely popular hand crafted blended cold beverages and the said mark has been registered in over 185 countries and territories.

To the above, it was added that the plaintiff had obtained top-level domain name frappuccino.com in the year 1987, which was redirected to the parent website of the plaintiff and has been a prominent part.

Further, it was stated that, FRAPPUCCINO marks constitute an invaluable intellectual property of the Plaintiff and Plaintiff has been vigilant in protecting its property rights not only through registrations but enforcement actions, ranging from opposing the trademark applications to legal actions in Courts, wherein positive decisions have been given both by the Foreign Courts as well as Indian Courts.

What was the trigger?

The plaintiff had received information that defendant 2 was operating a café/restaurant wherein defendant 1 was selling/serving beverages under the name ‘BUTTER SCOTCH FRAPPUCCINO’ and ‘HAZEL NUT FRAPPUCCINO’, without Plaintiff’s permission, authorization or license.

References to the trademark FRAPPUCCINO were prominently made on the printed menu card as well as on the electronic menu card of the Defendants’ Cafe/restaurant and latter was uploaded on third-party listing portal www.zomato.com for promotion, advertisement and generating business.

Even after sending a cease-and-desist notice, the defendants continued to sell the impugned products, hence the present suit was filed.

Analysis and Decision


High Court expressed that the plaintiff’s FRAPPUCCINO trademarks have acquired a formidable reputation and goodwill in India and the defendants have used identical marks with respect to similar goods and the trade channels and the customer base are also common.

In view of the above, the triple identity test was also satisfied.

Therefore, the plaintiff proved that the use of the impugned marks by the defendants amounted to infringement of Plaintiff’s FRAPPUCCINO trademarks. It was also proved that the defendant’s intent was to pass off their goods as that of the plaintiff and a case of passing off was also established.

The claim for damages was based on presumptions that the defendants would have sold 400 beverages, but in Court’s opinion, the same was based on conjectures and surmises and no evidence had been led to support the claim of damages.

Court added that, the defendants were guilty of infringement and notional damages could be granted in terms of the decision in Indian Performing Right Society v. Debashis Patnaik, 2007 (34) PTC 201 Del.

Therefore, damages to the tune of Rs 2,00,000 were awarded in favour of the plaintiff and a Cost of Rs 9,60,100 was awarded in favour of the Plaintiff and against the Defendants.[Starbucks Corpn. v. Teaquila A Fashion Café, 2022 SCC OnLine Del 1381, decided on 6-5-2022]


Advocates before the Court:

For the plaintiff:

Ms. Priya Adlakha and Ms. Rima Majumdar, Advocates.

For the defendants: Defendants are ex parte

Case BriefsHigh Courts

Delhi High Court: Asha Menon, J., is considering a very interesting case where the dispute between the parties is regarding the ownership of a YouTube channel. The Court has found a prima facie case in favour of the plaintiff and issued certain directions.

Plaintiff was a part of a Group Company division, ‘Frankfinn Institute of Air Hostess Training’, which was a reputed organization, engaged in the field of imparting training in the field of Aviation, Hospitality, Travel Management and Customer Services. It has also entered the arena of music and had its first home entertainment release. It has also produced a movie named, “SAT SRI AKAL”

Senior Counsel for the plaintiff submitted that defendant 2 through its proprietor Kanwal Deep Kohli, created a YouTube channel, initially called ‘Divine Amrit Bani’ for and on behalf of the plaintiff. The content for uploading on the said channel was provided solely by the plaintiff.  The YouTube channel was renamed “Shabad Kirtan Gurbani – Divine Amrit Bani” having the URL:  http://www.youtube.com/user/divineamritbani and was available on the platform of the defendant 3/Google LLC.

Defendant 2 used to manage the Suit Channel for the plaintiff and there was no doubt about the ownership of the channel vesting with the plaintiff. However, defendant 1 started unlawfully asserting ownership rights in respect of the Suit Channel, on the basis of some arrangement with defendant 2, which was only to manage the Suit channel.

Crux of the Matter

Ownership of the Suit channel

The applicant stated that it is a necessary party to this suit as, on the determination of the ownership, the Suit Channel would become their asset, whereas the plaintiff asserted that the Suit Channel was created for it and was initially managed by Kanwal Deep Kohli, proprietor of defendant 2 who, later on, engaged the services of the defendant 1 to manage the Suit Channel and for that purpose, created a JVA.

Kanwal Deep Kohli took the stand that he had created the Suit Channel.

Analysis and Discussion

Applicant claimed that the assets of Kanwal Deep Kohli in his proprietorship firm, namely defendant 2/Indya Records, had been transferred to it under the JVA. However, there was absolutely no document that set out the Suit Channel as an asset of defendant 2 or Kanwal Deep Kohli’s own assets and which stood transferred to the applicant when it was created through the JVA.

Moreover, there was not a whisper of any money coming to the share of the JVA entity or it’s having asserted any such claim since it came into existence seven years ago.

In the JVA ‘content’ had been defined, but there was no reference whatsoever to a ‘YouTube channel’. Prima Facie, therefore, it was clear that the Suit Channel was not part of the JVA.

It was also noted that the Suit Channel stood created in the year 2012 while the JVA was entered into in 2013, hence it was reasonable to assume that had the Suit channel been part of the assets of defendant 2, which merged with applicant/entity pursuant to the JVA, there would have been no reason why it would not have found mention in the document.

As per the Agreement, it was recorded that the company was to “acquire content” and then license it to the defendant 1 for commercial exploitation on a revenue-sharing basis. There was a reference to platform owners, but not a whisper on the Suit Channel, or any YouTube channel for that matter.

In Court’s opinion, the applicant failed to disclose any right or interest that would make it a proper or necessary party to this suit.

Defendant 1 had not been transferred any ownership rights by Mr Kanwal Deep Kohli, who created the Suit Channel by registering the domain name.

Furthermore, in lieu of services, revenue was shared between the plaintiff and the defendant 1 i.e., 70% going to the plaintiff and 30% going to the defendant 1 as per the agreements between them.

Had the Suit Channel been the exclusive property of the defendant 1, there was no logic in taking the smaller share as the Agreements were with the plaintiff on a “non-exclusive basis‟, whereas the Suit Channel was to be “exclusively” used for the plaintiff’s content.

Further, so long as the Suit channel was earning revenue, defendant 1 was obligated to disclose the revenues to the plaintiff and could not have staked claim to the entire revenue as it had done. Unfortunately, despite the directions of this Court to defendant 1 to file the complete accounts with the plaintiff, defendant 1 did not comply with the same. Hence, defendant 3/Google LLC will have to be directed to file before the Court the earnings of the Suit Channel from 16-4-2021 till date.

Plaintiff disclosed a prima facie case in its favour as the Suit channel was created for uploading only its contents.

With respect to the question of “irreparable loss and injury”, the impact on viewership, the loss of goodwill and viewer satisfaction cannot be measured only in monetary terms.

High Court gave the following directions:

(a) The application being I.A.7062/2021, filed by defendant 1 under Order XXXIX Rule 4 CPC seeking setting aside/modification of the ex parte ad interim injunction granted by this court vide order dated 20th April, 2021, is dismissed.

(b) I.A. 6086/2021 and I.A.7691/2021, both filed by the plaintiff under Order XXXIX Rule 2A CPC, are disposed of requiring the defendant 1 to file an affidavit, (i) disclosing the restoration of the entire content of the plaintiff in the Suit Channel, (ii) affirming that the Username, Password and other details of the Suit Channel have been handed over to the plaintiff.

The affidavit be filed within a week of this order, failing which further action, as contemplated under law and Order XXXIX Rule 2A CPC, will be initiated against defendant No.1 through its Directors/Officers responsible for compliance of this order.

(c) I.A.5727/2021 filed by the plaintiff under Order XXXIX Rules 1 & 2 CPC is disposed of, further restraining defendant 1, its directors, promoters, as the case may be, servants, agents, franchisees or anyone acting for and, on its behalf, from removing, copying, destroying, transferring, or deleting the plaintiff’s content on the Suit Channel or uploading third party videos on the Suit Channel.

(d) Defendant 1 shall also disclose on an affidavit the revenues earned since the year 2015 till date. Defendant 1 shall further disclose on an affidavit the revenue that has been transferred by it to the plaintiff till date, including after the expiry of the Agreement between the two and shall continue to disclose on an affidavit the up-to- date revenue collected from the Suit Channel.

If within one week of this order, defendant 1 fails to disclose these revenue details, the defendant No.3/Google LLC, on being informed by the plaintiff about the same, shall do so within a week thereafter.

(e) The participation of the applicant/Indya Records and Films Private Limited in the suit neither appears to be proper nor necessary for the just disposal of the suit. Accordingly, I.A. 6250/2021 filed by the applicant under Order I Rule 10 CPC for its impleadment is dismissed.

[Frankfinn Entertainment Company (P) Ltd. v. Unisys Infosolutions (P) Ltd., 2022 SCC OnLine Del 657, decided on 2-3-2022]


Advocates before the Court:

For the Plaintiff:

Mr. Sanjeev Sindhwani, Senior Advocate with Mr. Kapil Midha, Ms. Pritika Juneja and Ms. Versha Singh, Advocates

For the Defendants:

Mr. Asutosh Lohia, Mr. Rohan Dewan and Ms.Shraddha Bhargava, Advocates for D-1

Mr. Arjun Natarajan, Mr. Mayank Sapra and Ms. Lakshmi Kant Srivastava, Advocates for D-2

Mr. Aditya Gupta and Ms.Aishwarya Kane and Mr. Raunaq Kamath, Advocates for D-3

Mr. Sagar Chandra, Ms. Sakshi Pande and Ms. Urvashi Garg, Advocates for applicant/proposed D-4 in I.A. 6250/2021

Case Briefs

Patiala House Courts: Preeti Parewa, SCJ/CCJ/ARC, NDD, while addressing the alleged case of sexual harassment against the CEO of ScoopWhoop, wherein it sought an interim injunction, Court expressed that,

Expression of a victim’s trauma or experience is his / her fundamental right which can only be curtained it is falls under four broad categories i.e. “libel, slander, defamation”, “contempt of court”, “offends against decency or morality” and “undermines the security or tends to overthrow the State”. 

In the present matter, the plaintiff company submitted that defendant 1 was an employee/consultant in “UNSCRIPTED” with his last contract ending on 30-9-2021. Further, it was stated that defendant 2 was an employee of the company and Chief Executive Officer of “ScoopWhoop Media Private Limited” and its Director and Founding Member.

A sexual harassment complaint was filed by defendant 1 against defendant 2 and his wife, which was sub0judice before the Grievance Committee constituted under the POSH Act.

Adding to the above, it was noted that defendant 1 had published/circulated regarding the allegations of sexual harassment through Instagram posts and YouTube which may damage the reputation of the plaintiff company and hamper the fair enquiry.

Plaintiff company, as an interim relief sought grant of temporary injunction in favour of the plaintiff and against the defendants restraining their associates, agents, representatives, correspondents, officers, employees or any other person, entity, in print or electronics media or on social media or via internet otherwise from writing, speaking, content creation, publishing, republishing, circulating, carrying out any reports or articles or posts or reporting of any kind, directly or indirectly or in any manner pertaining to the allegations against each other and/or any other person/plaintiff’s organization pertaining to pending complaint and allegations by the defendant 1 qua alleged incident on intervening night till pendency of suit.

In view of the present application, a notice was issued to both the defendants.

Challenging the application, defendant 1 submitted that the complaint was filed before the Internal Complaints Committee of ScoopWhoop wherein no action had been taken without any consent of defendant 1, the complaint was transferred to the plaintiff company.

It was also submitted that the plaintiff could not prima facie establish that there was a loss of subscribers or goodwill or reputation of the plaintiff company which was formed 4 months and had hardly been able to generate reputation in its favour. Further, it was added that the balance of convenience did not lie in favour of the plaintiff company which was a separate entity and the sexual harassment complaint had not been made to the said company.

Analysis, Law and Decision

Court firstly mentioned the three main principles that govern the grant/refusal of injunction:

(a) prima facie case;

(b) balance of convenience; and

(c) irreparable injury;

Elaborating further, in light of the background of the present case, Bench found that the plaintiff company was in no way injured with the acts of defendant 1 since the complaint was not filed before the plaintiff company nor was defendant 1 employed with the plaintiff company.

Prima facie the alleged posts/contents/video in question did not mention the name of the plaintiff company nor were obscene/derogatory/ defamatory.

Court did not find that the alleged posts fell under the category of libel, slander, defamation, contempt of court, offends against decency or morality and undermines the security or tends to overthrow the State.

Hence, no relief was granted to the plaintiff company and the application was dismissed. [WhoopScoop (P) Ltd. v. Samdish Bhatia, CS SCJ 100/22, decided on 14-2-2022]

Case BriefsHigh Courts

Delhi High Court: While addressing a trademark dispute between Rooh Afza and Dil Afza manufacturers, Asha Menon, J., expressed that, buying a bottle of sharbat may involve emotions, but not deep to the extent hoped for by the plaintiffs’ counsel (Rooh Afza manufacturers).

Factual Background

Plaintiff 1 is Hamdard National Foundation (India) and plaintiff 2 is Hamdard Dawakhana also trading as Hamdard Laboratories (India) which is a business held in trust, earlier trading as Hamdard Dawakhana. The Plaintiffs are engaged in the business of manufacturing and selling inter alia, Unani and Ayurvedic medicines, oils, syrups and non-alcoholic beverages for over 100 years.

Defendant company since the year 1949, was engaged in the business of manufacturing Unani medicines, syrups and botanical products.

Why was the present matter filed?

Present matter was filed on the ground that the defendant was not only infringing the well-known trademark of the plaintiffs in ‘Hamdard’ and ‘Rooh Afza’ but was also passing off its products as those of the plaintiffs by using the name ‘Dil Afza’.

The plaintiffs claimed that they had acquired immense reputation and goodwill in relation to ‘Rooh Afza’.

Further, it was claimed that the word ‘Rooh Afza’ was used in several products of the plaintiffs. The product/sharbat of the plaintiffs sold under the trademark ‘Rooh Afza’ in bottles, has a unique combination, layout, get-up and arrangement of features, particularly, a unique and distinct floral arrangement.

In March, 2020 plaintiffs came to know that the defendant had issued an advertisement launching its syrup/sharbat, bearing the mark ‘Dil Afza’ in deceptively similar ringlet bottles as that of the ‘Rooh Afza’ bottle.

The defendant had with mala fide intention, also adopted a deceptively similar mark, unique get-up, and design for its product. An application for registration of the mark ‘Sharbat Dil Afza’ in the name of the defendant seemed to have been filed on 10th June, 2018 on the basis of ‘proposed to be used’. Another application was filed on 4th July, 2018, claiming ‘user’ since 1949.

The plaintiffs claimed that it was due to oversight that the above application could not be opposed by the plaintiffs and therefore, the defendant had been granted registrations in respect of the mark ‘Sharbat Dil Afza’.

Analysis and Discussion

High Court noted that the mark of the plaintiffs and the mark of the defendant were both registered.

Under Section 28 of the Trade Marks Act, 1999, a validly registered trademark gives to the registered proprietor the exclusive right to use that trademark, except that where two persons are registered proprietors of trademarks that are identical or nearly resemble each other, their exclusive right to use any of those trademarks cannot be enforced against each other.

Whether this Court issue any directions under Section 124(5) of the Trade Marks Act, 1999?

Whether the use of defendant’s trademark for similar products would result in confusion?

Court denied accepting the contention of the defendant’s counsel that the trademark of the plaintiffs namely ‘Rooh Afza’ was not a well-known mark, cannot be accepted in view of the observations of the Lahore High Court in Unani Dawakhana v. Hamdard, 1930 SCC OnLine Lah 300.

On a prima facie view, the plaintiffs’ claim of having built a vast reputation and goodwill in respect of their trademark ‘Rooh Afza’, cannot be rejected.

Determination of Confusion

The standard to be adopted while determining confusion arising in the mind is of a consumer of imperfect memory or recollection and of ordinary sensibilities. It would be taking an extreme position, even if the consumers were connoisseurs, to believe that the use of the word ‘Rooh’ and ‘Dil’ would cause confusion because they connote deep emotion.

Buying a bottle of sharbat may involve emotions, but not deep to the extent hoped for by the learned counsel for the plaintiffs. In any case, those who appreciate this deep emotion would be the first to be able to distinguish between ‘Rooh’ and ‘Dil’.

In Court’s opinion there cannot be any confusion with regard to the use of words, ‘Dil’ and ‘Rooh’ as they do not denote the same thing.

Word ‘Afza’

Bench referred to the decision of this Court in Cadila Laboratories Ltd. v. Dabur India Ltd., 1997 SCC OnLine Del 360 and Vardhman Buildtech Pvt. Ltd. v. Vardhman Properties Ltd.2016 SCC OnLine Del 4738

Plaintiffs in the present matter do not state that they had applied for and obtained registration for the exclusive use of the word ‘Afza’. Hence it was clear that the exclusivity that the plaintiffs can claim is to the complete name ‘Rooh Afza’ and not to either of the two words that constitute the trademark.

The Court opined that, while ‘Rooh Afza’, that is the complete word, may have acquired a secondary meaning, indicative of sharbat produced by the plaintiffs, ‘Afza’ by itself does not appear to be of that category.

Whether the simultaneous use of ‘Dil Afza’ would prejudice the plaintiffs’ business?

In Class-5, relating to Unani/Ayurvedic medicines, the defendant had been using ‘Dil Afza’. Even if it is considered to have been in the market only since 1976, even then, for such a long time in the field of a more sensitive market of medicine, apparently, there has been peaceful co-existence with no confusion arising in the minds of the consumers.

Even if the sharbat has been produced only since 2020, no case has been made out to restrain the defendant from marketing its sharbat under the name ‘Dil Afza’.

 Decision

In view of the above discussion, the application was dismissed with a direction to the defendant to maintain a true account of sales of ‘Dil Afza’ syrup/sharbat during the pendency of the present suit and to submit to the court, a quarterly report and account, till the disposal of the suit.

High Court in light of Section 124(1)(b)(i) of the Trade Marks Act, 1999, the suit is stayed pending the final disposal of the rectification application filed by the plaintiffs. Conclusion of those proceedings, either side may move an application for listing of the suit before the court. [Hamdard National Foundation (India), Sadar Laboratories (P) Ltd., 2022 SCC OnLine Del 39, decided on 6-1-2022]


Advocates before the Court:

For the Plaintiffs:

S.P. Singh and Sunil Mishra, Advocates

For the Defendant:

N.K. Kantawala and Prakhar Sharma, Advocates

Case BriefsCOVID 19High Courts

Bombay High Court: The Division Bench of Nitin Jamdar and C.V Bhadang, JJ., upheld the order of the District Court refusing to pass injunction against the use of the name “Covishield” by Serum Institute of India for its COVID-19 vaccine.

What is the subject matter of the instant appeal?

Instant appeal is with regard to the trademark ‘Covishield’.

Factual Matrix

Appellant and Respondent applied for registering the above-stated trademark and their application have been pending.

In the present suit, Cutis Biotech sought an interim injunction to restrain Serum Institute from using the trademark ‘Covishield’ and maintain the accounts regarding the sale.

The above stated interim application was rejected by the District Judge/Commercial Court, therefore, Cutis Biotech filed an appeal before this Court under Section 13 of the Commercial Court Act, 2015.

On 29th April, 2020 Cutis Biotech had filed an application for the registration of trademark ‘COVISHIELD’ under Class-5 and the same is pending and in June, 2020 the Serum Institute applied for the registration of trademark ‘Covishield’.

While rejecting the interim application, District Court held that:

The District Court considered the law on the subject and the tests required for grant of injunction in case of passing off. The District Court held that Cutis Biotech had earned no goodwill in a short time. There was no dishonest deception by Serum Institute for passing off or to divert the business of Cutis Biotech.

Analysis, Law and Decision

Bench noted that neither Cutis Biotech nor Serum Institute have a registration for the trademark ‘Covishield’, but as per Section 27(1) of the Trade Marks Act, 1999 it is mandated that no person shall be entitled to institute any proceeding to prevent or recover damages for the infringement of an unregistered trademark. Though sub-section 2 of the above provision, reserves the right to take action against any person for passing off his goods or services as the goods and services of the applicant and preserves the remedies to prevent passing off actions.

Hence in the instant case, Cutis Biotech has based its case on the action of passing off.

Ingredients to grant an injunction 

While granting an injunction in the case of passing off, both ingredients of injunction i.e. prima facie case and balance of convenience should exist in favour of the applicant.

Court must be satisfied that there are serious questions to be tried at the suit, irreparable damage will be caused to the applicant and hardship would be more to the applicant, and therefore an interim injunction is necessary.

Bench remarked that,

“foundation of passing off action is the existence of goodwill. Further as to who conceived and adopted the mark earlier is also relevant.”

 High Court found no prima facie case to be established by Cutis Biotech with respect to the prior user.

On evaluating the evidence on record, Court found that Serum Institute had coined the word ‘Covishield’ and took substantial steps towards its development and manufacture. Thus, the evidence demonstrates the prior adoption of the mark by Serum Institute. Hence, no perversity was found with the finding that Cutis Biotech cannot claim to be a prior user of ‘Covishield’.

Likelihood of deception and Whether the products of Cutis Biotech and Serum Institute are in the common field

To establish the above-stated point, actual confusion is not required to be established and a likelihood of confusion is enough to establish the ingredients of passing off.

In the present matter, a common-sense approach will have to be adopted to find out whether Serum Institute’s conduct was calculated to pass off its goods as that of the Cutis Biotech’s or at least create confusion in the mind of the customers leading to the Serum Institute benefiting at the expense of the Cutis Biotech.

Bench expressed that the vaccine ‘Covishield’ produced by Serum Institute is not available across the counter and is being administered through Government agencies. The buyer of the product ‘Covishield’ of Serum Institute is the Government of India. The administration of the vaccine is through an injection. The sale of disinfectant or hand sanitiser, though it may relate to the same field, that, health care products, cannot be said to cause confusion in the mind of average consumers.

Court remarked that, it would be too farfetched to hold that there will be confusion in the average consumers’ minds between the use of a trademark in a Government administered vaccine at designated places and over the counter sanitizer products.

Adding to the decision, Bench held that Cutis’s contention that people may buy its products of thinking they are protected against coronavirus because of the use of mark ‘Covishield’ is self-destructive and against the concept of passing off.

Cutis Biotech through its submissions could not establish a case of passing off action, whereas the High Court observed that Serum Institute claimed the ingredients of passing off action, yet it had not moved any cause for restraining Cutis Biotech for passing off action.

Regarding maintaining accounts, a direction to maintain accounts is not a routine order and cannot be issued when there is no prima facie case made out by Cutis Biotech.

Balance of Convenience

Vaccine ‘Covishield’ of Serum Institute had started being administrated from 16 January 2021. The Government of India rolled out an extensive vaccine administration programme and identified almost 300 million people for the vaccine in the first round, and the first order for 11 million doses for the ‘Covishield’ vaccine was placed. The second dose would be administered after the stipulated weeks. On 1 March 2021, a vaccination drive for those above the age of sixty and the age of forty-five years with comorbidities was launched. ‘Covishield’ vaccine of Serum Institute was supplied through the States and Union Territories.

Serum Institute has also placed on record that it has spent Rs 28 crore on the development, research and is expected to spend a further Rs 20 crore. With these facts, the balance of convenience is not in favour of Cutis Biotech.

A temporary injunction directing Serum Institute to discontinue the use of mark ‘Covishield’ for its vaccine will cause confusion and disruption in the Vaccine administration programme of the State.

 Hence, grant of an injunction would have large scale ramification traversing beyond the parties to the suit.

Scope of an Appeal

High Court observed that appellate court doesn’t generally interfere if the conclusion arrived at by the trial court is reasonably possible.

A total deference to the discretion by the trial court is not expected from the appellate court if the order is arbitrary or perverse.

 Bench held that, in the present case, discretion used by District Judge in refusing to grant an injunction was not arbitrary or perverse.[Cutis Biotech v. Serum Institute of India (P) Ltd., 2021 SCC OnLine Bom 616, decided on 20-04-2021]


Advocates before the Court:

Mr Abhinav Chandrachud and Mr Aditya Soni with Chetan Alai, Shriniwas Bade and Mr Swaraj Jadhav i/b. White & Brief Advocates & Solicitors for the Appellant.

Dr Birendra Saraf, Senior Advocate with Mr Rohan Savant, Mr Hitesh Jain, Ms Pooja Tidke, Ms Monisha Mane Bhangale and Ms Warisha Parkar i/b. Parinam Law Associates for the Respondent.

Op EdsOP. ED.

Background

Section 27 of the Contract Act, 18721 (ICA) dealing with agreement in restraint of trade states as under:

(1) Every agreement by which any one is restrained from exercising a lawful profession, trade or business of any kind, is to that extent void.

Exception 1.― Saving of agreement not to carry on business of which goodwill is sold–

One who sells the goodwill of a business may agree with the buyer to refrain from carrying on a similar business, within specified local limits; so long as the buyer, or any person deriving title to the goodwill from him, carries on a like business therein:

Provided that such limits appear to the Court reasonable, regard being had to the nature of the business.

It thus provides that an agreement restraining a person from carrying on a lawful profession, trade or business is void to that extent. However, an agreement not to carry on within specified local limits, a business similar to the business of which goodwill is sold, can be enforced, provided the limits of restraint are reasonable.

The provision regarding restraint of trade has been lifted from David D. Field’s Draft Code for New York which was based upon the old English doctrine of restraint of trade, as prevailing in ancient times. While construing the provisions of Section 27, the High Courts in India have held that neither the test of reasonableness nor the principle that the restraint being partial or reasonable are applicable to a case governed by Section 27 of the Contract Act, unless it falls within the exception.

The original draft of the Law Commission did not contain any provision regarding restraint of trade. But the provision of Section 27 was introduced afterwards at the time of enactment, the main object being to protect trade in India. The Law Commission in its Thirteenth Report2 had recommended that the provision should be suitably amended to allow such restrictions and all contracts in restraint of trade, general or partial, as were reasonable, in the interest of the parties as well as of the public. However, no action had been taken on the said recommendation.

Scope

The section is general in nature, and declares all agreements in restraint of trade void, pro tanto, except in the case specified in the exception. The section lays down a very rigid rule invalidating restraints, not only general restraints but also partial ones, and also restricts the exception of narrow local limits.

Broadly, agreements in restraint of trade are those in which one or both parties limit their freedom to work or carry on their profession or business in some way. Such agreements are often criticised because they conflict with public interest, and because they are unfair in unduly restricting personal freedom.

In a sense, every promise relating to business dealings operates as a restraint of trade, because it restricts the promisor’s future liability. It is the restraint which is “unreasonably detrimental to a freely competitive private economy”. (Farnsworth, Contracts, 3rd edn., p. 331). Further Lord Birkenhead laid down two tests to decide whether an agreement is in restraint of trade. They are:

(a) Whether it is reasonable as between parties.

(b) Whether it is consistent with the intent of public.

The Delhi High Court in Modicare Ltd. v. Gautam Bali2, has explained the validity of Section 27 of ICA as:

  1. Section 27 of the Contract Act makes void i.e. unenforceable, every agreement by which anyone is restrained from exercising a lawful profession, trade or business of any kind. Thus, even if the defendants or any of them, under their agreement with the plaintiff, had undertaken not to carry on or be involved in any capacity in any business competing with the business of the plaintiff, even after leaving employment with/association of the plaintiff, the said agreement, owing to Section 27 supra, would be void and unenforceable and the plaintiff on the basis thereof could not have restrained any of the defendants from carrying on any business or vocation, even if the one which the defendant had agreed not to carry on. I find it incongruous that the law, on the one hand would disable a plaintiff from enforcing a contract where the defendant had voluntarily agreed not to do something, by going to the extent of declaring such contract void, but on the other hand, enable the same plaintiff to the same relief under the law of tort. To hold so, would make the law look like an ass.
  2. Section 27, contained in a legislation of the year 1872, on promulgation of the Constitution of India in the year 1950, conferring the right to practice any profession or to carry on any occupation, trade or business, the status of a fundamental right, under Article 19(1)(g) thereof, today has a different connotation. Article 19(6) only clarifies that nothing contained in clause (g) shall affect the operation of any existing law or prevent the State from making any law, imposing in the interest of general public, reasonable restrictions on the exercise of right conferred by the said clause. Thus, restrictions, in the interest of general public and if reasonable, to the fundamental right to practice any profession or to carry on any occupation, trade or business, can be imposed only by law. The law of tort of unreasonable interference in carrying on business, in view of Section 27 of the Contract Act in force since 1872, was not the existing law within the meaning of Article 19(6) of the Constitution.

 Restrictive nature of covenants in the agreement

A contract may have several covenants, which may be positive, negative, general or partial. In contacts containing negative obligations, the restraint is direct. When a positive obligation limits freedom, it imposes an indirect restraint and can be equally restrictive or unreasonable as a negative obligation.

The principle of restraint of trade and restrictive nature of covenants in agreements have been elucidated by several courts in a plethora of judgments. In Navigators Logistics Ltd. v. Kashif Qureshi3, the Delhi High Court has explained the validity of Section 27, ICA as:

  1. Section 27 of the Contract Act is as under:

* * *

  1. The interpretation of Section 27 of the Contract Act is not res integra.

56. Applying the aforesaid law to the facts of the present case, it is found that as per the plaintiff also, there was no fixed term for which either of Defendants 1 to 8 had agreed to serve the plaintiff. The clause in the employment contract claimed by the plaintiff also is to the effect that Defendants 1 to 8, for a period of one year after ceasing to be the employee of the plaintiff, to not compete with the plaintiff. Such a clause in the employment contract, as per the judgments aforesaid of the Supreme Court, is void under Section 27 of the Contract Act. Once the clause is void, there can be no injunction or damages in lieu of injunction on the basis thereof.

The High Court of Delhi in Arvinder Singh v. Lal Pathlabs (P) Ltd.4, has explained the principle of Section 27, ICA as under:

  1. As per Section 27 of the Contract Act every agreement by which any one is restrained from exercising a lawful profession, trade or business of any kind is to that extend void. It is the exception which protects from being void such an agreement provided the conditions envisaged by the exceptions are satisfied. The condition for the exception is that if the goodwill of a business has been sold, an agreement to refrain from carrying on similar business, if it appears to the Court to be reasonable, would be protected and would be enforced.
  1. The words “profession” “trade” and “business” used in Section 27 are specific words and we see no scope to give meaning to the word profession applying the rule of noscitur a sociis.
  1.  The reasoning of the learned Single Judge is obviously on the basis that the activity of a profession is akin to that of a business, for if this was not the reasoning, the exception to Section 27 of the Contract Act would not even apply. Such agreements not to carry on business if goodwill of a business is sold, subject to the restriction being reasonable, are alone carved out from the general embargo embossed by Section 27 of the Contract Act.
  1. The sweep of the span of the injunction to prohibit the appellants to carry on their profession as pathologist or radiologist in any manner whatsoever would render the appellants incapable of working as a pathologist or radiologist in any capacity whatsoever, and this would be contrary to Section 27 of the Contract Act.

In Percept D’Mark (India) (P) Ltd. v. Zaheer Khan5, the Supreme Court explained the provisions of Section 27, ICA as under:

  1. If the negative covenant or obligation under Clause 31(b) is sought to be enforced beyond the term i.e. if it is enforced as against a contract entered into on 20-11-2003 which came into effect on 1-12-2003, then it constitutes an unlawful restriction on Respondent 1’s freedom to enter into fiduciary relationships with persons of his choice, and a compulsion on him to forcibly enter into a fresh contract with the appellant even though he has fully performed the previous contract, and is, therefore, a restraint of trade which is void under Section 27 of the Contract Act.
  2. Under Section 27 of the Contract Act: (a) a restrictive covenant extending beyond the term of the contract is void and not enforceable; (b) the doctrine of restraint of trade does not apply during the continuance of the contract for employment and it applies only when the contract comes to an end; and (c) As held by this Court in Gujarat Bottling Co. Ltd. v. Coca Cola Co.6, this doctrine is not confined only to contracts of employment, but is also applicable to all other contracts.

Construing the section in its literal terms, the section only deals with agreements which operate as a total bar to the exercise of a lawful business, and does not cover agreements which merely restrain freedom of action in actual exercise of a lawful business. The above principle was emphasised by the Supreme Court in Gujarat Bottling Co. Ltd. v. Coca Cola Co.7, as:

  1. There is a growing trend to regulate distribution of goods and services through franchise agreements providing for grant of franchise by the franchiser on certain terms and conditions to the franchisee. Such agreements often incorporate a condition that the franchisee shall not deal with competing goods. Such a condition restricting the right of the franchisee to deal with competing goods is for facilitating the distribution of the goods of the franchiser and it cannot be regarded as in restraint of trade.
  1. If the negative stipulation contained in paragraph 14 of the 1993 Agreement is considered in the light of the observations in Esso Petroleum Co. Ltd. v. Harper’s Garage (Stourport) Ltd.8, it will be found that the 1993 Agreement is an agreement for grant of franchise by Coca Cola to GBC to manufacture, bottle, sell and distribute the various beverages for which the trade marks were acquired by Coca Cola. The 1993 Agreement is thus a commercial agreement whereunder both the parties have undertaken obligations for promoting the trade in beverages for their mutual benefit. The purpose underlying paragraph 14 of the said agreement is to promote the trade and the negative stipulation under challenge seeks to achieve the said purpose by requiring GBC to wholeheartedly apply to promoting the sale of the products of Coca Cola. In that context, it is also relevant to mention that the said negative stipulation operates only during the period the agreement is in operation because of the express use of the words “during the subsistence of this agreement including the period of one year as contemplated in paragraph 21” in paragraph 14. Except in cases where the contract is wholly one sided, normally the doctrine of restraint of trade is not attracted in cases where the restriction is to operate during the period the contract is subsisting and it applies in respect of a restriction which operates after the termination of the contract.
  1. Shri Shanti Bhushan has submitted that these observations must be confined only to contracts of employment and that this principle does not apply to other contracts. We are unable to agree. We find no rational basis for confining this principle to a contract for employment and excluding its application to other contracts. The underlying principle governing contracts in restraint of trade is the same and as a matter of fact that courts take a more restricted and less favourable view in respect of a covenant entered into between an employer and an employee as compared to a covenant between a vendor and a purchaser or partnership agreements. 
  1. Since the negative stipulation in paragraph 14 of the 1993 Agreement is confined in its application to the period of subsistence of the agreement and the restriction imposed therein is operative only during the period the 1993 Agreement is subsisting, the said stipulation cannot be held to be in restraint of trade so as to attract the bar of Section 27 of the Contract Act. We are, therefore, unable to uphold the contention of Shri Shanti Bhushan that the negative stipulation contained in paragraph 14 of the 1993 Agreement, being in restraint of trade, is void under Section 27 of the Contract Act.

In Niranjan Shankar Golikari v. Century Spg. and Mfg. Co. Ltd.9, the Supreme Court held that restraint of trade may be good if shown to be reasonably necessary for freedom of trade. The Court has held thus:

  1. As to what constitutes restraint of trade is summarised in Halsbury’s Laws of England (3rd edn.), Vol. 38, at p. 15 and onwards. It is a general principle of the common law that a person is entitled to exercise his lawful trade or calling as and when he wills and the law has always regarded jealously any interference with trade, even at the risk of interference with freedom of contract as it is public policy to oppose all restraints upon liberty of individual action which are injurious to the interests of the State. This principle is not confined to restraint of trade in the ordinary meaning of the word “trade” and includes restraints on the right of being employed …The rule now is that restraints whether general or partial may be good if they are reasonable. A restraint upon freedom of contract must be shown to be reasonably necessary for the purpose of freedom of trade. A restraint reasonably necessary for the protection of the covenantee must prevail unless some specific ground of public policy can be clearly established against it … A person may be restrained from carrying on his trade by reason of an agreement voluntarily entered into by him with that object. In such a case the general principle of freedom of trade must be applied with due regard to the principle that public policy requires for men of full age and understanding the utmost freedom of contract and that it is public policy to allow a trader to dispose of his business to successor by whom it may be efficiently carried on and to afford to an employer an unrestricted choice of able assistants and the opportunity to instruct them in his trade and its secrets without fear of their becoming his competitors (Fitch Dewes10). Where an agreement is challenged on the ground of its being a restraint of trade the onus is upon the party supporting the contract to show that the restraint is reasonably necessary to protect his interests. Once, this onus is discharged, the onus of showing that the restraint is nevertheless injurious to the public is upon the party attacking the contract.

 Recently, the Delhi High Court in Aakash Educational Services Ltd. v. Sahib Sital Singh Bajwa11, reiterated the position of law on the scope of enforceability of negative covenants in a commercial contract, holding that once a contract is terminated, a negative covenant thereunder to restrict the trade, business or profession of any party is hit by Section 27 of ICA. The court also held that while such negative covenants may be legal during the subsistence or currency of the contract, however, post termination of the contract, barring exceptional cases, they will be unenforceable.

Partnership contracts 

A number of exceptions to Section 27, ICA have been incorporated in the Partnership Act 1932 (IPA), keeping in view the overall importance of the common partnership business. Such exceptions pertain to agreements between partners in four situations:

(a) during continuance of business;

(b) at the time of any partner ceasing to be a partner;

(c) at time of dissolution of the firm; and

(d) on sale of goodwill of the firm.

Section 11 of IPA authorises the partners to determine their mutual rights and duties themselves trough a mutual agreement, which may be express or implied. The section further explains that an agreement, whereby it is agreed that a partner shall not carry-on business other than that of the firm while he is a partner, is valid.

As per Section 36, IPA, when a partner ceases to be a partner in the firm and his accounts are settled, he may be required to make an agreement that after he ceases to be a partner, he shall not carry on any business similar to that of the firm within a specified period or within specified local limits. Such an agreement tends to protect the interest of partners still continuing the business, and therefore held to be valid.

Section 54 of IPA states that on dissolution of the firm, some of the partners may procure an agreement from other partner(s), the latter agreeing not to carry on business similar to that of a firm. Such an agreement shall also be valid provided the local limits or the limit of time in respect of which the restrictions are imposed, are reasonable.

As per Section 55, on the sale of goodwill there may be an agreement between the partners and the buyer of goodwill, that the partners shall not carry on any business similar to that of the firm within a specified period or within specified local limits. Such an agreement has been held to be valid.

In Hukmi Chand v. Jaipur Ice & Oil Mills Co.12, the Jaipur Bench of Rajasthan High Court has upheld the validity of the agreement entered into between a retiring partner and the other partners, wherein the former sold his share of goodwill and agreed not to carry on similar business on the adjoining plot of land, which came to his share. The Court further held that the burden of proof that the restrictions imposed in any agreement of restraint of trade are reasonable, is on the party which pleads them as reasonable. 

Contracts of service

There are also several cases where restraints are placed on personal service during the subsistence of personal service contract, and it has held that such restraint would be reasonable only during the period of such contacts and not beyond that.

 The Delhi High Court in K.D. Campus (P) Ltd. v. Metis Eduventures (P) Ltd. India13, has held that once the employer has treated the employment contract of the employee as terminated, then he cannot proceed to enforce any negative covenant as against the employee. The Court held as under:

  1. In the present case the contract of employment has admittedly been prematurely terminated. According to the plaintiff, unilaterally and illegally by the defendants No. 2 to 8. It is not the case of the plaintiff that the plaintiff, notwithstanding such unilateral and illegal termination of the contract of employment by the defendants No. 2 to 8, is continuing to treat the defendants No. 2 to 8 as in the employment of the plaintiff or is continuing to pay the emoluments which the plaintiff under the contract had agreed to pay to the defendants No. 2 to 8. Rather, it is the plea of the defendants No. 2 to 8 that their past emoluments, for the period for which they served the plaintiff, were also not paid and which compelled them to look for employment elsewhere. Once the plaintiff itself is treating the contract of employment with each of the defendants No. 2 to 8 as terminated and has stopped performing his obligations under the said contract to the defendants No 2 to 8, in my view the present case would fall in the genre of employer seeking to enforce the negative covenant after the termination of service and which is not permissible in law. 
  1. In my opinion, it is only during the period for which the employee continues to serve the employer and receives emoluments from the employer can the employer enforce the negative covenant unless it is shown that the enforcement of negative covenant beyond the period of wrongful repudiation of the contract is necessary to protect the interest of the employer. However, such restraint can be to protect any proprietary right of the employer and not to prevent competition. 
  1. The plaintiff in the present case has indeed not shown any proprietary right which may be infringed by Defendants 2 to 8 joining employment elsewhere or by indulging in the activity of teaching. Moreover, Defendants 2 to 6 who are teachers cannot be expected to teach any subject other than that in which they are qualified to teach and it is also not the plea that they are capable of getting employment elsewhere in any other capacity. We are today living in an age where employment avenues are scarce and if Defendants 2 to 8 are restrained as sought, they would necessarily be driven to idleness and a state of penury.

In Superintendence Co. of India (P) Ltd. v. Krishan Murgai14, the Supreme Court has also affirmed that any negative covenant beyond the termination of the service is void. The Court has held as under:

  1. Under Section 27 of the Contract Act, a service covenant extended beyond the termination of the service is void. Not a single Indian decision has been brought to our notice where an injunction has been granted against an employee after the termination of his employment.
  2. On a true construction of Clause 10 of the agreement, the negative covenant not to serve elsewhere or enter into a competitive business does not, in my view, arise when the employee does not leave the services but is dismissed from service. Wrongful dismissal is a repudiation of contract of service which relieves the employee of the restrictive covenant.

 Protection of trade secrets and confidential information

 In an employment contract, the employer has trade secrets and business connections, worthy of protection. In case of restraints in contracts of employment, it is necessary to show that employee has entered into a contract with a customer, or has trade secrets of the employer. An employer can lawfully prohibit his employee from accepting any position, after determination of his employment, where the employee is likely to utilise the information of trade secrets acquired by him. 

Trade combinations

 Agreements between traders to combine and regulate their business for the purpose of promoting their common interest are not considered to be against public policy and consequently not in restraint of trade. The main objective of making such agreement is to avoid competition between themselves by mechanism such as fixing minimum process, pooling their resources, regulating supply of goods and services, pooling profits and distributing the same as per some agreed formula. Similarly, if two or more persons agree to jointly carry on their business and avoid competition among themselves or even to monopolise the trade, is nothing but doing lawful act of promoting their commercial interest, and the same is valid.

Though an agreement between persons to regulate their own trade is valid, a bare agreement in restraint of competition is void. Such an agreement would be valid if it is ancillary to their commercial interest and is also consistent to public interest.

 Solus agreements

 There may be agreements where one party is to deal exclusively with the product of a particular producer or manufacturer and not to deal with any other person. Such agreements are called solus or exclusive dealing agreements. For example, a buyer of a certain commodity may agree that he will purchase all his requirements from a particular manufacturer only, or vice-versa. The validity of such agreements depends on the object of the parties. Such a type of agreement would be valid if it is reasonable for benefiting the parties to the agreement, and if such agreement aims at putting undue restrictions by one party on the other with an objective to monopolise trade, then such an agreement is void.

Exception – Sale of goodwill

Regarding the exception to the section relating to sale of goodwill, when a person sells the goodwill of his business, he may give an undertaking to the buyer of the goodwill that he will not carry on that kind of business of which the goodwill is being sold. Such an agreement puts a restraint on the seller of the goodwill, but the same is valid for the purpose of protection of interest of the buyer of goodwill, for which he has paid the consideration. When there is no sale of goodwill of a business, an agreement not to carry on such business would be against public policy and therefore void. Therefore, the scope of exception to Section 27 is limited. Further it would operate only so long as the buyer or a person deriving title from him carries on a business for lifetime. Further, the restrictive covenant would strand extinguished when the goodwill comes to an end.


  Advocate and a qualified Chartered Accountant, presently practising at Supreme Court and Delhi High Court.

1 <http://www.scconline.com/DocumentLink/47U3hio9>.

2 <http://www.scconline.com/DocumentLink/PAfjro2g>.

2 2019 SCC OnLine Del 10511

3 2018 SCC OnLine Del 11321.

4 2015 SCC OnLine Del 8337

5 (2006) 4 SCC 227.

6 (1995) 5 SCC 545

7 (1995) 5 SCC 545

8 1968 AC 269 : (1967) 2 WLR 871.

9 (1967) 2 SCR 378

10 (1921) 2 AC 158.

11 2020 SCC OnLine Del 1719

12 1980 SCC OnLine Raj 58

13 2018 SCC OnLine Del 13366

14 (1981) 2 SCC 246.

Case BriefsHigh Courts

Bombay High Court: G.S. Patel, J., disposed of an interim application with respect to the suit for trade mark and copyright infringement, while holding that ‘Copyright registration is not mandatory under the Copyright Act, 1957.”

Trade Mark in question is a label mark, not  a word or a device mark.

Plaintiff claimed copyright in the artistic work comprised in the label.

It has been stated that Narayani Trading’s Label uses very nearly – or indistinguishably the same – principal background colour.

Counsel Mr Burad for Narayani Trading submitted that the two labels are entirely distinct and no one will mistake one for another. Court rejected the same and elaborated that the key features, integers, or elements that have been described by the Bench in Sanjay Soya’s Label all find place in Narayani’s Trading Label with only minor variations.

Factual Matrix

Sanjay Soya has been manufacturing and selling edible oils of various kinds, including soyabean oil, for many years. Narayani Trading is a sole proprietorship. Sanjay Soya claimed to have the necessary ISO certifications for quality and other certifications. Sanjay Soya stated that it is the successor-in-title of one SK Oil Industries, in May 2003 SK Oil adopted the label, mark and artistic work in relation to edible oil which has distinctive get up, layout and schematic arrangements.

Recital (2) of the Deed of Assignment stated that SK Oil conceived, created, designed and developed a SOYA DROP label and that is the artwork that is the issue of concern in the present matter.

Counsel Mr Khandekar for Sanjay Soya submitted that the label is an original artistic work within the meaning of Section 2(c) of the Copyright Act. Further, it was added that, Sanjay Soya has used the mark, with some variants, openly and continuously since adoption.

In brief, Sanjay Soya’s Argument:

Sanjay Soya claimed that Narayani Trading has entirely lifted and unauthorisedly and illicitly copied Sanjay Soya’s registered label mark and the copyright-protected artistic work in the label. It says that Narayani Trading’s label is a reproduction and an illicit copy of a substantial part of Sanjay Soya’s original and distinctive artwork.

Piggyback on Sanjay Soya’s reputation?

Narayani Trading’s adoption of the label mark is dishonest, not bona fide, with an ulterior motive and intended to trade upon and encash the goodwill, recognition and reputation of Sanjay Soya’s business.

The Court noted that earlier decision of the Court in Dhiraj Dharamdas Dewani v. Sonal Info Systems (P) Ltd., 2012 (3) Mh LJ 888 held that registration under the Copyright Act is mandatory before a plaintiff can claim relief. So also, the decision in Gulfam Exports v. Sayed Hamid, 2000 (20) PTC 496 Bom says that registration is required. Noting the settled law, the present Bench held that these two decisions are per incuriam on the question of compulsory registration under the Copyright Act.

High Court observed that Copyright and Trade Mark operate in different spheres, though in some cases – as in the present one – these may overlap or intersect.

Copyright is a recognition of originality, granting rights of commercialisation and exclusivity in that commercialisation to the author of a work, a person who, by sweat of his brow, has brought into being the original expression or realisation of an idea. The emphasise is on originality, labour and skill in expression and realisation. 

Section 51 of the Copyright Act does not per se, demand prior registration. The said provision is to be read with Section 45(1) which states that the owner of copyright may apply for registration.

Importantly, copyright infringement lies in the unlicensed use of original works, in which the author has a spectrum of exclusive rights.

Essence of Copyright Protection

There is always the slight escape of the fair use doctrine, but the underlying principle is that no author may claim as his or her own the original authorship work of another. That is the essence of copyright protection.

The Supreme Court decision in Engineering Analysis Centre of Excellence (P) Ltd. v. Commissioner of Income Tax, Civil Appeal Nos 8733-8734 of 2018, authored by Rohinton Fali Nariman, J., explained the nature of copyright.

Registered proprietor of a mark or the owner (not registrant) of copyright may have recourse to the jurisdictional venues in Section 134 or Section 62, in addition to those under CPC Section 20.

The owner of a copyright has a panoply of jurisdictional choices, including one that is available only to him (and not to an ordinary plaintiff in a regular civil suit).

Rationale behind allowing a trade mark registrant or a copyright owner additional jurisdictional choice is that the right claimed is in rem, against the world at large. The infringement thus takes place where the proprietor of the trade mark or the owner of copyright resides or works. This is, therefore, no ground to hold that copyright registration is mandatory.

There is no law or precedent that requires that a declaration that a decision is rendered per incuriam be made only by a hierarchically superior court. 

Bench while expressing its observations, stated that it is impossible to believe, given Sanjay Soya’s prima facie established product popularity and reputation, that Narayani Trading was unaware of Sanjay Soya’s market presence, also it Narayani Trading does not show that the artistic work and label was in use before Sanjay Soya or SK Oil began using it.

Sanjay Soya v. Narayani Trading | Label Mark 

Bench held that knowing of Sanjay Soya’ s presence in the market, of its label and of its artistic work, Narayani Trading illicitly and without bona fide intent adopted a label that is confusingly, deceptively and strikingly similar to that of Sanjay Soya; and in doing so, copied substantially, if not wholly, the artistic work comprised in Sanjay Soya’s trade dress and packaging, and of which copyright Sanjay Soya through its predecessor-in-title is indeed the owner.

Cause of Action in ‘Passing Off’ || Classic Trinity

 High Court expressed that in 1978–79, Diplock LJ set out five guidelines for ‘passing off’ actions in Erven Warnink v. Townend & Sons Ltd.  [1979] AC 731, 742 (HL), this is the famous ‘Advocaat’ case. Oliver LJ in Reckitt & Colman Products Ltd v. Borden Inc., [1990] 1 All ER 873 distilled these into the three probanda in the tortious actions in passing off that we now know as the ‘Classic Trinity’:

  • goodwill owned by a claimant;
  • (ii) misrepresentation; and
  • (iii) damage to that goodwill.

Classic Trinity places on a plaintiff the burden of proving goodwill in its goods or services, trade dress, brand mark or even the thing itself.

In view of the above, Bench stated that Sanjay Soya prima facie did prove the above.

Further, the plaintiff needs to show the false representation to the public that leads it to believe that the goods or services of the defendant are those of the plaintiff. Fraud is not necessary.

The above, was also achieved by Sanjay Soya.

“Test of deception or its likelihood is that of the common person.”

A plaintiff need not prove actual or special damage; a reasonably foreseeable probability is sufficient.

“…in the case of beauty, similarity and its extent are matters that lie in the eyes of the beholder, and in all intellectual property matters, the beholder is, perhaps unfortunately, in the first instance always the judge tasked with deciding the dispute.”

Lastly, while concluding the matter, Bench expressed that looking at the two packets of which the images have been rendered at the start, all that the Court can say is “which is whose? I cannot tell.”

Finding the defence of Narayani Trading to be utterly frivolous and possibly moonshine, Court imposed costs on them. [Sanjay Soya (P) Ltd. v. Narayani Trading Company,  2021 SCC OnLine Bom 407, decided on 09-03-2021]


Advocates before the Court:

For the Plaintiff: Mr Rashmin Khandekar, with Ms Janhvi Chadha and Mr Hardik Sampat, i/ b Krishna and Saurasri Associates LLP.

For the Defendant: Mr Pritesh Burad, with Ms Amruta Patil & Mr Mitesh Visaria, i/ b Pritesh Burad Associates.

Case BriefsHigh Courts

Punjab and Haryana High Court: Arun Monga, J. allowed the petition where the petitioner prayed that the respondents must blur the name of the bank in their movie, as they had already done for the sponsored bank i.e. Punjab National Bank.

The petitioner, a Regional Rural Bank sponsored by Punjab National Bank, with 35% stakes therein, issued a writ of mandamus commanding the respondents to not release a Punjabi Movie named “Daaka”. The ground on which they were seeking this relief was that the petitioner Bank was depicted in a poor and shabby condition which led to the plot of committing a robbery in the Bank in the movie.

The petitioner submitted that the material used in the film i.e. banners/posters/calendars were a verbatim copy of the originals which were actually used by the Bank. Even the uniform of the Security Guard shown in the movie was exactly the same. The name of the sponsored bank i.e. Punjab National Bank also finds mention below the name of the petitioner bank but that was intentionally blurred in the scenes. Whereas, the petitioner Bank which is an independent entity and has a reputation of its own and is operating through many as 416 branches in State of Punjab, would be adversarially effected qua its image with the rural population which has faith in the banking services being offered by it, in case its name is not blurred as has been done for Punjab National Bank. Blurring the name of Punjab National Bank was a clear pointer that the respondents were conscious that the actual name was not to be mentioned.

The Court stated that in the ordinary course, no interference would have been warranted in extraordinary writ jurisdiction vested under Article 226 of the Constitution of India. However, the respondents did not take permission from the Bank before actually displaying the name, logo, banners, and calendars in the movie. The Court relied on the Judgment rendered by Delhi High Court in ICICI Bank Ltd. v. Ashok Thakeria, 2013 (43) RCR (Civil) 828 where the Court observed that commercial disparagement of the services of an entity which adversely affects and tarnishes their goodwill, reputation and brand equity associated with the plaintiff’s well-known trademark should not be allowed.

In the present case, the name of the bank is exactly the same as in the movie and has been purportedly shown in a bad light in the movie. Therefore, the Court held that it would be equitable and in the interest of justice to direct the respondents herein to blur the name of the petitioner bank, as has been already done for the sponsored bank. [Punjab Gramin Bank v. Union of India,  2019 SCC OnLine P&H 2107, decided on 28-10-2019]