Obiter Dictum of Full Bench of High Court is not binding on Single Judge of same High Court: Delhi High Court

Introduction: Delhi High Court through recent Judgement pronounced on 27.03.2025 in CM(M)-IPD 5/2025 ,Neutral Citation: 2025:DHC:2322,titled as  Balar Marketing Pvt. Ltd. Vs. Lakha Ram Sharma addressed the question of judicial precedent which involved binding authority of Division Bench obiter dicta even if they lacked supporting rationale on single judge of same High Court.

Procedural Background: Balar Marketing Pvt. Ltd. through its predecessor-in-interest began manufacturing electrical goods under "KUNDAN" and "KUNDAN CAB" trademarks since 1975. Lakha Ram Sharma trading as Kundan Cable India sells comparable electrical goods under the trademarks "KUNDAN" and "KUNDAN CABLE."

Multiple Suit proceeding: A prolonged series of trademark disputes between Balar Marketing Pvt. Ltd. and Lakha Ram Sharma, trading as Kundan Cable India, spanning from the 1990s included multiple suits for trademark infringement and passing off incidents and also copyright infringement claims consisting of TM Nos. 968/2016, 971/2016, 1030/2016, 932/2016 and 931/2016 which underwent consolidation for trial proceedings.

Trademark Cancellation Proceeding and continuance of passing off action in view of of judicial precedents from Puma Stationer Pvt. Ltd. & Anr. v. Hindustan Pencils Ltd., 2010 (43) PTC 479 (Del) (DB): In the meanwhile cancellation petition was filed against Registered Trademark of Lakha Ram before High Court of Delhi, hence under Section 124 of Trademarks Act 1999, trial in both passing off action and Infringement action was sought to be stayed. Through its May 30th 2022 order the Trial Court elected to let the passing off suits continue but kept all infringement proceedings on hold as Trademark rectification petition was pending in Delhi High Court. This order because of judicial precedents from Puma Stationer Pvt. Ltd. & Anr. v. Hindustan Pencils Ltd., 2010 (43) PTC 479 (Del) (DB) and J.K. Oil Industries v. Adani Wilmar Ltd., 2007 (75) PTC 44 (Del), which says that during pending of Trademark rectification petition, only infringement remedy has to be stayed and not passing off.

Stay of Passing off and Infringement in view of Later Amrish Aggarwal Trading as Mahalaxmi Product v. Venus Home Appliances, 2024 SCC OnLine Del 3652 Judgement: Lakharam Sharma again made an application in January 2025 under Section 124 of the Trade Marks Act, 1999 asking for stay of all proceedings including passing off claims because of a single reference to passing off in paragraph 44 of Amrish Aggarwal Trading as Mahalaxmi Product v. Venus Home Appliances, 2024 SCC OnLine Del 3652, Delhi High Court. The Division Bench Judgement observed that under Section 124 of Trademarks Act 1999, infringement and passing claim has to await decision in cancellation petition. In view of the above ,the Trial Court suspended infringement and passing off action both, except the Copyright Act case, as Trademark rectification petition was pending in Delhi High Court. Following this order, the subject matter Revision Petition was filed.

Rival Contention in Court: The petitioner argued that the "passing off" terminology in Amrish Aggarwal lacked binding authority because it was without supporting reasoning and hence being Obiter Dictum, not binding on Single Judge. Section 124 of the Trade Marks Act applies strictly to trademark infringement cases whereas passing off claims proceed through common law channels without any association to registered trademarks.

The Petitioner used decisions like Mohinder Singh Gill & Anr. v. Chief Election Commissioner, New Delhi & Ors., (1978) 1 SCC 405 and State of Orissa v. Sudhansu Sekhar Misra & Ors., Air 1968 SC 647 along with Gudri v. Ram Kishun, Air 1984 All 5 to support his case that Judicial comments in passing that were made in cases where issues remained un raised or undetermined lack the legal binding power or that Obiter Dictum of Full Bench of High Court is not binding on Single Judge of same High Court.

While respondent argued that Division Bench's decision in Amrish Aggarwal specifically identified infringement and passing both off claims as subject to stay so the Trial Court properly relied on it through paragraph 34 and 44. The respondent used Naseemunisa Begum v Shaikh Abdul Rehman (2002 (2) Mah LJ 115) and Crocs Inc. USA v Aqualite India Ltd. (2019 SCC OnLine Del 11957) to support their argument that smaller benches have an obligation to follow observations made by larger benches..

Judicial Analysis and Reasoning: The Single Judge clarified that  main dispute in Amrish Aggarwal DB was about continuance of suit and  rectification proceedings in same High Court after IPAB dissolution. The DB issued a verdict in this context. While doing so, a single mention of “passing off” appeared during paragraph 44 of the judgement without providing any assessment or analytical discussion of that point. The Single Judge considered this matter against the precedent set by earlier Puma Stationer  DB in which the Division Bench observed explicitly that infringement suits need temporary stays yet passing off claims should carry forward. The Single Judge , in this case clarified that the trial court wrongly did not implement the ruling of earlier Puma Stationer DB because later Amrish Aggarwal DB. The Single Judge noticed that passing-off comment from Amrish Aggarwal DB lacked proper legal reasoning and hence finding of DB was regarded as mere obiter dictum, having no binding effect.

The Single Judge relied upon State of Orissa v. Sudhansu Sekhar Misra judgement  established that only planned statements or practical comments found in judicial rulings create binding authority. The judgment in Gudri v. A reference to Gudri v. Ram Kishun illustrated that larger bench observations without direct adjudication of an issue remain non-binding for later benches required to address the matter independently.

Decision: The Delhi High Court approved the petition while reversing the Trial Court decision from 18 January 2025 that ceased all pending proceedings including those about passing off. The Court has directed infringement and passing off action, both to continue .The Single Judge further observe that  reference to passing off in Amrish Aggarwal DB occurred unintentionally yet lacked any force for binding decisions. The Court ordered proceeding of consolidated suits especially those concerning passing off to start without unnecessary delay. This Single Judge followed earlier Puma Stationer Pvt. Ltd DB, which ordered for continuance of passing off action, while adjudicating Section 124 of Trademarks Act 1999 objection.

Principles Laid Down in this case: The Single Judge  made it clear that Section 124 of the Trade Marks Act 1999 merely affects infringement suits without interfering with passing off trials. The decision confirms that passing off functions as an unregistered common law remedy. The ruling defines a crucial principle about obiter dicta of Division Bench of a High Court , lacks binding authority on Single Bench of Same High Court.

Advocate Ajay Amitabh Suman, Patent and Trademark Attorney, Delhi High Court