Adyar Gate Hotels Limited Vs. ITC Limited

Role of Delay in Grant of Ex Parte Ad Interim Injunction

Case Title: Adyar Gate Hotels Limited Vs. ITC Limited & Anr.

Date of Order: February 24, 2025

Case Number: FAO(OS) (COMM) 32/2025

Neutral Citation: 2025:DHC:1277:DB

Name of Court: High Court of Delhi at New Delhi

Name of Judges: Hon’ble Mr. Justice Navin Chawla and Hon’ble Ms. Justice Shalinder Kaur

Brief Facts of the Case:

The dispute arises from the use of the trademark “Dakshin” in the restaurant business. The appellant, Adyar Gate Hotels Limited, entered into an agreement in 1985 with ITC Limited, under which ITC operated a hotel under the name “Welcomgroup Park Sheraton.” The appellant claimed that it conceived and planned the “Dakshin” restaurant in 1989. However, after the agreement between the parties lapsed in 2015, ITC Limited filed a suit claiming exclusive rights over the “Dakshin” trademark, seeking to restrain Adyar Gate Hotels Limited from using the mark. The Single Judge passed an ex-parte ad-interim injunction in favor of ITC Limited, restraining the appellant from using the mark.

Brief Issues:

The first issue was whether the Single Judge was justified in granting an ex-parte ad-interim injunction without notice. The second issue was whether the appellant, having used the mark independently since 2015, had acquired rights to use it. The third issue was whether ITC Limited, as the registered owner of the “Dakshin” trademark, had an exclusive right over its use. The fourth issue was whether the territorial jurisdiction of Delhi courts was valid for this suit.

Reasoning of the Court:

The Division Bench observed that while a Single Judge has discretion to grant an ex-parte injunction, it must be exercised within the framework of Order XXXIX Rule 3 of the CPC, which requires that notice should generally be given unless delay would defeat the object of the injunction. The court noted that the appellant had been using the mark since 2015, including in collaboration with a competitor of ITC. It also observed that ITC had not previously challenged this usage. Additionally, the appellant had its own trademark registration, which ITC had not challenged. Furthermore, the appellant did not receive proper notice of the suit, which ITC had only sent via email, leading to an unfair ex-parte order.

The court found that the Single Judge failed to consider these crucial factors before issuing an ex-parte injunction and that the order was unjustified under the circumstances.

Decision:

The Division Bench set aside the ex-parte ad-interim injunction issued by the Single Judge and directed the appellant to file its response within one week. The court instructed that the interim injunction application be heard on its merits after due process.

Law Point Settled:

Ex-parte ad-interim injunctions should be granted only in exceptional cases where delay would defeat justice, as per Order XXXIX Rule 3 CPC. A party that has been using a trademark for a significant period should be given an opportunity to present its case before being restrained. The burden lies on the plaintiff (ITC) to justify the urgency for an ex-parte injunction rather than proceeding directly with such relief. Proper service and notice must be ensured before obtaining an injunction.