Khadi & Village Industries Commission Vs Shri Jaishukh N. Bhuta

The Khadi and Village Industries Commission filed court proceedings against the Mumbai Khadi and Village Industries Association and its trustees, alleging that they violated a previous court injunction. The earlier order had prohibited the association from using the name Khadi or its associated spinning wheel logo for selling or promoting goods. The commission pointed out three alleged violations: hosting a joint trade fair called Khadi Mahotsav at the association's premises, executing a land sale agreement using its original organizational name, and remaining listed under its original name in third-party business directories. The association argued that it was unaware of the event details, that the land deal did not involve selling goods, and that it had requested online platforms to remove the listings. The High Court determined that hosting the trade fair under the association's name on its own premises was a clear violation of the injunction. However, it ruled that the land sale and directory listings did not amount to contempt because they were unrelated to selling trademarked products. Clarifying that the rule for enforcing temporary orders is meant to secure compliance rather than act as an automatic punishment, the court decided not to send the trustees to prison or attach their property since no further violations had occurred. Instead, the court ordered the association to pay litigation costs to the commission, prohibited them from hosting future Khadi events, and directed them to file affidavits detailing the trade fair's finances and their compliance efforts.

Khadi & Village Industries Commission v. Shri Jaishukh N. Bhuta and Others, August 7, 2026, Interim Application No. 5867 of 2025 in Commercial IP Suit No. 580 of 2022 with Contempt Petition No. 13 of 2026, Neutral Citation: 2026:BHC-OS:12048 (implied by file structure), High Court of Judicature at Bombay (Ordinary Original Civil Jurisdiction in its Commercial Division), Somasekhar Sundaresan J.

[Disclaimer: Donot treat this as substitute for legal advise as it may contain subjective errors.] Tags: Civil Procedure, Trademark Infringement, Order XXXIX Rule 2A, Contempt of Court, Injunction Enforcement, Khadi Trademark, High Court of Bombay

Introduction

Enforcing temporary injunctions in intellectual property disputes often raises practical questions regarding the legal standards used to determine non-compliance. A key issue is whether civil courts must apply strict criminal standards of proof when handling applications under Order XXXIX Rule 2A of the Code of Civil Procedure, 1908 (CPC).

In this judgment, the High Court addressed the operational boundaries between civil enforcement powers under Order XXXIX Rule 2A of the CPC and the statutory contempt jurisdiction under the Contempt of Courts Act, 1971. By clarifying the purpose of these measures, the decision highlights how courts can ensure compliance with interim orders without resorting to heavy-handed punitive sanctions when remedial steps suffice.

Factual and Procedural Background

The statutory body created under the Khadi and Village Industries Commission Act, 1956, holds registered trademarks for the word mark "KHADI" and its accompanying Charkha (spinning wheel) logo. The association operating in Mumbai had historically utilized the "Khadi" mark. However, following the withdrawal and suspension of its Khadi certification due to non-compliance with statutory quality standards, prior litigation ensued between the parties. An earlier lawsuit (Suit No. 213 of 2021) was withdrawn after the association gave an undertaking to the court that it would not sell products labelled or described as "Khadi" without proper certification.

Despite this undertaking, the statutory commission discovered ongoing sales of uncertified garments labeled as "Khadi" and filed a commercial intellectual property suit (Commercial IP Suit No. 580 of 2022). On December 14, 2022, a single-judge bench issued an injunction restraining the association, its partners, agents, and representatives from manufacturing, selling, advertising, or promoting any goods or services under the mark "KHADI" or using deceptively similar variants, including within its business/trade name.

In 2025 and 2026, the statutory commission initiated enforcement proceedings alleging three distinct instances of non-compliance and contempt:

1. Khadi Mahotsav 2.0 (May 2023): The association co-hosted a three-day trade event under its joint aegis at its own premises to promote and sell Khadi products.
2. Execution of Land Agreement (March 30, 2025): The association executed a registered Agreement for Sale with a property developer to transfer its immovable property, using its registered institutional name containing the word "Khadi".
3. Digital Directory Listings: The association's original entity name continued to appear on third-party commercial web directories as a Khadi garment retailer.

Dispute Before the Court

The core legal questions before the court involved:

• Whether co-hosting a trade fair carrying the "Khadi" banner on the association's premises constituted a direct or indirect violation of the injunction order.
• Whether utilizing the registered institutional name in an immovable property transaction and the existence of passive third-party internet listings triggered civil contempt.
• The precise evidentiary threshold required to establish a violation under Order XXXIX Rule 2A of the CPC—specifically whether it requires proof "beyond reasonable doubt" (akin to criminal contempt) or a civil standard of "preponderance of probabilities".
• The primary scope and objective of Order XXXIX Rule 2A of the CPC regarding whether detention in civil prison and attachment of property are mandatory sanctions or discretionary coercive tools to secure compliance.

The statutory commission argued that the association's repeated disregard of court orders warranted strict punitive measures, including the attachment of assets and civil imprisonment of its board of trustees. Conversely, the association contended that it had no active role or knowledge regarding the trade fair held on its premises, that a land sale did not involve trademarked commercial goods, and that digital listings were managed by third parties without its instruction.

Reasoning and Analysis of the Court

The court conducted a detailed analysis of the statutory framework and precedent regarding procedural non-compliance:

Distinguishing Order XXXIX Rule 2A from Contempt Jurisdiction

The court emphasized that while powers under Order XXXIX Rule 2A of the CPC are often described as "akin" to civil contempt, the two mechanisms serve distinct procedural roles. Contempt proceedings under the Contempt of Courts Act, 1971, are designed primarily to punish contemptuous conduct impacting the administration of justice. In contrast, Order XXXIX Rule 2A functions similarly to Order XXI Rule 32 of the CPC (execution of decrees). Its statutory purpose is to provide civil courts with coercive powers—such as property attachment or civil detention—to secure compliance with temporary injunctions rather than serving as a purely punitive end.

┌────────────────────────────────────────────────────────────────────────┐
│                      REMEDIAL vs. PUNITIVE FRAMEWORK                   │
├───────────────────────────────────┬────────────────────────────────────┤
│   Order XXXIX Rule 2A (CPC)       │    Contempt of Courts Act, 1971    │
├───────────────────────────────────┼────────────────────────────────────┤
│ • Objective: Secure compliance    │ • Objective: Punish contemnors     │
│ • Standard: High preponderance    │ • Standard: Beyond reasonable doubt│
│ • Discretion: Remedial measures   │ • Discretion: Fines/Imprisonment   │
└───────────────────────────────────┴────────────────────────────────────┘

Standard of Proof and Evidentiary Evaluation

Addressing prior judicial observations in Food Corporation of India v. Sukh Deo Prasad [(2009) 5 SCC 665] and U.C. Surendranath v. Mambally's Bakery [(2019) 20 SCC 666], the court noted that the statutory language of Order XXXIX Rule 2A does not contain the word "wilful". The court referred to Amazon.com NV Investment Holdings LLC v. Future Retail Ltd. [(2022) 1 SCC 209] to highlight that applying an absolute criminal standard of proof ("beyond reasonable doubt") to every civil injunction breach would defeat the purpose of interim relief.

Instead, the applicable standard for Order XXXIX Rule 2A is a high degree of preponderance of probabilities, calibrated to the seriousness of court order violations.

Applying these principles to the facts:

• The Trade Fair: The court rejected the association's claim of ignorance regarding an event held on its own premises over three days. Given the promotional materials listing the association as a joint organizer, the court held that the high civil standard—and even the reasonable doubt standard—was met, establishing a clear breach of the injunction.
• The Land Transaction: The court dismissed the contempt allegations regarding the land sale agreement. It reasoned that the injunction restricted using the mark in relation to manufacturing, selling, advertising, or promoting goods and services. A bipartite real estate transaction had no nexus to trade in trademarked products.
• Digital Listings: Passive, pre-existing online directory entries managed by third parties—where no new post-injunction listings or active trade were proved—did not justify invoking contempt powers.

Final Decision of the Court

The court disposed of both the Interim Application and the Contempt Petition with the following operative directions:

1. Refusal of Prison/Attachment: Because the association had ceased holding trade fairs and achieved ongoing compliance, the court declined to order civil imprisonment or attachment of property, noting these measures are coercive tools to ensure compliance rather than ends in themselves.
2. Litigation Costs: Invoking inherent powers under Section 151 of the CPC, the court ordered the association to pay litigation costs of ₹2,50,000 to the statutory commission within four weeks.
3. Prohibitory Injunction on Events: The board of trustees was expressly prohibited from hosting or facilitating any Khadi-related promotional events on its premises or elsewhere.
4. Disposal of Contempt Petition: The Contempt Petition regarding the property sale and digital directory listings was dismissed.
5. Mandatory Affidavits: The trustees were directed to file an affidavit within four weeks containing audited accounts of the trade fair and outlining internal compliance mechanisms, as well as updating the court on steps taken to remove third-party online listings.

Point of Law Settled

This judgment clarifies the procedural enforcement of interim injunctions under Indian civil jurisprudence:

1. Remedial Focus of Order XXXIX Rule 2A: The powers of property attachment and civil imprisonment under Order XXXIX Rule 2A of the CPC are designed to enforce compliance rather than act as mandatory punitive sanctions. Where compliance has been achieved, courts may exercise discretion under Section 151 of the CPC to apply remedial measures—such as costs or directions—instead of imprisonment or asset attachment.
2. Applicable Evidentiary Standard: Establishing a breach under Order XXXIX Rule 2A requires a high degree of preponderance of probabilities rather than the strict criminal threshold of proof beyond every possible doubt.
3. Scope of Trade Mark Restraints: An injunction prohibiting the commercial use of a trademarked corporate name in selling goods and services does not automatically bar the legal entity from using its registered institutional name in non-commercial transactions (such as real estate conveyances) or historical court records.

Khadi & Village Industries Commission Vs Shri Jaishukh N. Bhuta and Others, August 7, 2026, Interim Application No. 5867 of 2025 in Commercial IP Suit No. 580 of 2022 with Contempt Petition No. 13 of 2026, Neutral Citation: 2026:BHC-OS:12048, High Court of Judicature at Bombay, Somasekhar Sundaresan J.