New Delhi | March 27, 2025 — In a
significant reaffirmation of judicial discipline and statutory interpretation,
the Delhi High Court has held that obiter dicta of a High Court, especially
when not supported by reasoned analysis, cannot bind a coordinate or
subordinate bench. The ruling came in the matter of Balar Marketing Pvt.
Ltd. v. Lakha Ram Sharma, CM(M)-IPD 5/2025, decided on 27 March 2025 by the
High Court of Delhi, Neutral Citation: 2025:DHC:2322. The case, while rooted in
a trademark dispute, evolved into a wider pronouncement on the limits of
judicial precedent and the correct application of Section 124 of the Trade
Marks Act, 1999.
Trademark
Clash and Background
The petitioner, Balar
Marketing Pvt. Ltd., has been manufacturing electrical goods under the
trademarks “KUNDAN” and “KUNDAN CAB” since 1975. The respondent, Lakha Ram
Sharma, operating as Kundan Cable India, also uses similar marks—“KUNDAN” and
“KUNDAN CABLE”—for related products. This overlapping use led to a longstanding
legal tussle between the two parties, dating back to the 1990s.
The suits—TM Nos. 968/2016,
971/2016, 1030/2016, 932/2016, and 931/2016—were consolidated for trial. In
2018, the Trial Court declined interim relief to the petitioner. However, by an
order dated 30 May 2022, it permitted trial to proceed on the issue of passing
off, while staying the trademark infringement claims. The court relied on 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).
The 2025
Dispute Over Obiter Dicta
In January 2025, the
respondent applied to stay all suits, including those for passing off, citing
paragraph 44 of the Division Bench judgment in Amrish Aggarwal Trading as
Mahalaxmi Product v. Venus Home Appliances, 2024 SCC OnLine Del 3652. That
paragraph made a reference to staying proceedings involving both “infringement
or passing off” in the context of pending rectification petitions under Section
124 of the Trade Marks Act, 1999. The Trial Court accepted this argument and
stayed all suits except the one solely under the Copyright Act.
Balar Marketing challenged the
order before the Delhi High Court, contending that the reference in Amrish
Aggarwal was an obiter dicta and lacked binding authority.
The Legal
Debate: Precedent vs. Passing Observation
The petitioner argued that the
reference to “passing off” in Amrish Aggarwal was not backed by any
reasoning and therefore could not override earlier binding precedent. It was
submitted that Section 124 of the Trade Marks Act, 1999 applies only to
infringement actions, and that passing off, being a common law remedy, operates
independently of trademark registration status.
To support the proposition
that obiter dicta are not binding, the petitioner relied on authoritative
decisions including Mohinder Singh Gill & Anr. v. Chief Election
Commissioner, (1978) 1 SCC 405, State of Orissa v. Sudhansu Sekhar Misra,
AIR 1968 SC 647, and Gudri v. Ram Kishun, 1983 SCC OnLine All 415: AIR
1984 All 5.
The respondent, in contrast, defended
the Trial Court’s reliance on the Division Bench judgment. It was argued that
the observations in Amrish Aggarwal should be treated as binding, even
if made without elaboration. Reference was made to 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 assert that larger bench
observations warrant judicial adherence.
The Court's
Reasoning: Drawing the Line Between Ratio and Obiter
The Delhi High Court, examining
the issue in depth, observed that the core question in Amrish Aggarwal
pertained solely to infringement proceedings during pendency of rectification
applications after abolition of the Intellectual Property Appellate Board under
the Tribunals Reforms Act, 2021. The casual mention of “passing off” in
paragraph 44 was not part of the issue framed or adjudicated and thus did not
form part of the ratio decidendi.
In reaffirming Puma
Stationer Pvt. Ltd., the Court clarified that while infringement
proceedings are stayed pending rectification, passing off claims may continue
since they do not depend on the validity of trademark registration. The Court
also highlighted Section 27(2) of the Trade Marks Act, 1999, which expressly
preserves the right to bring a passing off claim regardless of registration.
The High Court further
emphasized that judicial precedent is confined to what is expressly decided.
Citing Mohinder Singh Gill and Sudhansu Sekhar Misra, the Court
reinforced that stray observations or general remarks lacking legal reasoning
do not constitute binding law. It held that Crocs Inc. and Naseemunisa
Begum were distinguishable, as those cases involved direct adjudication of
the legal issue concerned.
Decision and
Directions
The Delhi High Court allowed the
petition and set aside the Trial Court’s order dated 18 January 2025. It held
that the reference to passing off in Amrish Aggarwal was an inadvertent
obiter dicta that could not serve as a legal basis for staying the suits. The
Court directed that all consolidated suits, particularly those concerning
passing off, proceed to trial without delay.
Legal
Position Reaffirmed
The judgment in Balar
Marketing Pvt. Ltd. v. Lakha Ram Sharma, CM(M)-IPD 5/2025, 2025:DHC:2322,
firmly establishes that Section 124 of the Trade Marks Act, 1999 does not
extend to passing off actions. It reiterates that passing off is a distinct and
independent common law remedy that continues irrespective of
registration-related disputes. Above all, it reinforces the principle that only
the ratio decidendi of a decision has binding force—obiter dicta, however
notable, cannot override statutory interpretation or precedent.
Advocate Ajay Amitabh Suman, Patent and Trademark Attorney, Delhi High Court
