Adaab Hotels Ltd. & Ors. vs Star Restaurant Pvt. Ltd.
2012 Latest Caselaw 7031 Del

       *      IN THE HIGH COURT OF DELHI AT NEW DELHI
%                              Judgment reserved on: 06.12.2012
                               Judgment pronounced on: 10.12.2012

+      CS(OS) No. 1638/2012
       STAR RESTAURANT PVT. LTD.                                         ..... Plaintiff
                            Through:             Mr. Sandeep Sethi, Sr. Adv. with Ms.
                                                 Tara Ganju, Ms. Prachi Vashist, Ms.
                                                 Preeti Gupta and Ms. Etti Sharma,
                                                 Advs.
                            versus

       ADAAB HOTELS LTD. & ORS.                                     ..... Defendants
                         Through:                Mr.    Abhinav    Vasisht,     Senior
                                                 Advocate with Mr. Vikrant Rana, Ms.
                                                 Priya Adlakha and Mr. Varun Sharma,
                                                 Advs.

                                           AND
       CS(OS) No. 3230/2012
       ADAAB HOTELS LTD. & ORS.                                    ..... Plaintiff s
                            Through:             Mr.    Abhinav     Vasisht,       Senior
                                                 Advocate with Mr. Vikrant Rana, Ms.
                                                 Priya Adlakha and Mr. Varun Sharma,
                                                 Advs.
                                     Vs.

       STAR RESTAURANT PVT. LTD.                                   ..... Defendant
                        Through:                 Mr. Sandeep Sethi, Sr. Adv. with Ms.
                                                 Tara Ganju, Ms. Prachi Vashist, Ms.
                                                 Preeti Gupta and Ms. Etti Sharma,
                                                 Advs.
CORAM:
HON'BLE MR. JUSTICE V.K.JAIN
V.K. JAIN, J.

IA No.16041/2012 (under Order 39 Rule 1&2 CPC), IA No.11565/2012 (under Section 151 CPC) &IA No.11566/2012 (under Order 39 Rule 4 CPC) in CS(OS) No.1638/2012

And

IA No.20272/2012 (under Order 39 Rule 1&2 CPC) in CS(OS) No.3230/2012

1. Adaab Hotels Ltd. (hereinafter referred to as "Adaab"), plaintiff in CS(OS)

No.3230/2012 and defendant No.1 in CS(OS) No. 1638/2012, which was in

possession of the premises situated at 81, Adchini, Sri Aurobindo Marg, New

Delhi-110 017, entered into an agreement dated 1.5.1997 with a partnership firm

namely M/s Concept One, for running a Specialty Chinese and Oriental Food

Restaurant on a management contract basis, for an initial period of nine years from

the date of the opening of the Restaurant. It was agreed between them that the

project would be segregated into two phases; first Phase comprising only of a

Eating House and the Second Phase comprising of „Eating House as well as for

selling of liquor. It was further agreed that „Adaab‟ would be entitled to a minimum

guarantee @ Rs.50/- per sq. ft. for the ground floor and Rs.30/- per sq. ft. for the

basement or 20% on the sale of food and beverage, whichever be higher, for Phase-

I of the project. „Adaab‟ was to get similar minimum guarantee or 25% on food and

beverages, whichever was higher, for the second phase. Pursuant to the said

agreement, a Restaurant under the name "Turquoise Cottage from the Orient"

started functioning in the premises of „Adaab‟. Since the liquor license had been

issued in the name of „Adaab‟, all alcohol bills were issued on the invoices bearing

its name and it was getting license fee in terms of the agreement with M/s Concept

One. The agreement dated 1.5.1997 was followed by an agreement dated 16.8.2003

between M/s Star Restaurant Pvt. Ltd. (hereinafter referred to as „Star‟), the

plaintiff in CS(OS) No.1638/2012 and defendant in CS(OS) No 3230/2012 and

„Adaab‟. (plaintiff in CS(OS) No.3230/2012 and defendant in CS(OS)

No.1638/2012). It was mentioned in the preamble to the said agreement that „Star‟

was desirous of running a Chinese and oriental restaurant under the name and style

"Turquoise Cottage from the Orient" in Adchini premises and „Adaab‟ had agreed

to grant leave and licence to it, for use of its premises to run the restaurant for a

period of three years from 16.8.2003. This agreement stipulated payment of costs

of liquor consumption, costs of bar, license fees, discount rate on credit card

collection and commission at specified rate on the total sale bills on both the

counters, which meant restaurant and bar, or Rs.3,50,000/- per month, whichever

was higher to „Adaab‟. The amount was to increase to 12% and 13% of the sales in

the second and third year respectively with a minimum of Rs.3,71,000/- and

Rs.3,96,970/- per month respectively, whichever be higher. It was further agreed

that „Adaab‟ would deduct the costs of liquor consumption, costs of bar, license

fees, discount on credit card collection, sales tax payable and commission in terms

of the said agreement from the liquor collection and pay the balance to „Star‟

subject to TDS. It was also agreed that „Adaab‟ will have no right or interest in the

goodwill of the business carried under the name and style of "Turquoise Cottage

from the Orient". It was further agreed during the course of the agreement and after

its termination, „Adaab‟ shall not claim any right on the name "Turquoise Cottage

from the Orient" or any other brand name registered in the name of „Star‟ nor

would „Star‟ have any right on the brand/name „Adaab Hotel Limited‟. It was also

agreed that after termination of the agreement, „Adaab‟ could open any restaurant

provided it did not use the name/ brand "Turquoise Cottage from the Orient" which

was the sole property of „Star‟. „Adaab‟ entered into another agreement dated

1.4.2004 with „Star‟ whereby „Star‟ was to run a Chinese and Oriental Restaurant

under the name "Turquoise Cottage from the Orient" in the very same premises.

This time, the license to run the restaurant was granted for two years and four and a

half month from 1.4.2004. It was agreed that „Star‟ will make separate bills for

food and liquor on separate invoices. „Star‟ was to raise bills on its invoices only

for sale of food and soft drinks, whereas liquor was to be sold on the invoices of

„Adaab‟. The Accountant of „Adaab‟ was to make daily report for sale of food and

liquor and handover the same along with cash sale and credit card slips in relation

to liquor sales to the accountant of „Star‟. The sale and purchase of the liquor was

to be done in the name of „Adaab‟ and the stock was to remain under its

possession. „Star‟ was made solely responsible for making salary payment to the

members of the staff. „Star‟ was responsible for printing of all the stationary

required for invoices and other purposes. „Star‟ was, however, entitled to claim

reimbursement of salary for the managerial staff required for the purpose of bar

operations. This time also, „Adaab‟ was to deduct costs of liquor, costs of bar,

license fee, sales tax and the specified percentage of liquor sale or Rs.3,50,000/-

per month, which ever be higher, from the liquor sale and pay the balance to „Star‟.

The minimum guarantee amount was to increase to Rs.3,71,000/- per month with

effect from 16.8.2004 and Rs.3,96,970/- per month with effect from 16.8.2005. It

was also agreed that after adjustment of the payments mentioned at S.No.1 to 5 of

the agreement, from total sale of liquor, the balance amount would be paid by

„Adaab‟ to „Star‟ as service income. The credit sale of liquor was to be at the

discretion of „Star‟ and collection of credit bills was to be its sole responsibility.

This time also, the parties agreed that „Adaab‟ will have no right or interest in the

goodwill of the business carried under the name and style of "Turquoise Cottage

from the Orient". It was further agreed that during the course of the agreement and

after its termination, „Adaab‟ shall not be entitled to claim any right on the name

"Turquoise Cottage from the Orient" or any other trademark/brand-name registered

in the name of „Star‟. Similarly, „Star‟ was not to have any right either on the

premises or on the brand name „Adaab Hotel Limited‟. It was further agreed that

„Star‟ shall not open any restaurant under the name "Turquoise Cottage from the

Orient" in Delhi and NCR without prior consent of „Adaab‟ till the time "Turquoise

Cottage from the Orient" was functioning at Adchini Premises.

The agreement dated 1.4.2004 was followed by agreement dated 1.4.2005.

Under this agreement also „Star‟ was to raise bills of its invoices only for sale of

food and soft drinks whereas the invoices of „Adaab‟ were to be used for sale of

liquor. This agreement stipulated deduction of cost of liquor, costs of bar license

fees, costs of salary for managerial staff appointed for bar services, sales tax and a

specified percentage of sale or to minimum amount as stipulated in the agreement,

whichever were to be higher, from the liquor sale and payment of the balance

amount to „Star‟. This agreement also contained a clause which prohibited „Star‟

from opening any other restaurant under the brand name "Turquoise Cottage from

the Orient" till the time the said restaurant was functioning from Adchini premises.

2. The case of „Adaab‟ is that the parties also entered into an agreement dated

16.8.2006 though the execution of this agreement has been disputed by „Star‟. This

agreement permitted „Star‟ to open any restaurant under the name "Turquoise

Cottage from the Orient" in India except Delhi and NCR. It was also stipulated in

this agreement that the trade name „TC Restaurant and Pub‟ was the property of

„Adaab‟. The ownership of „Star‟ for its registered trademark was also recognized

in this agreement. Under this agreement, the commission deductable by „Adaab‟

from the liquor sale was fixed at 15% with a minimum of Rs 5 lakh per month for

the first year. The minimum figure was to increase to Rs 5,30,000/- in the second

year.

3. On 17.01.2000, „Adaab‟ applied for registration of the mark TC (in stylized

form) in class 29 and 33, claiming user of the said mark since December 17, 1999.

Later, they applied for registration of the said mark in class 42 on 12.10.2004,

claiming user since 30.06.2004. On 22.01.2007, Star applied for registration of the

mark Turquoise Cottage in class 42, claiming user since 01.01.2003. Prior to that

Mr. Sanjay Khullar, director of Star had applied for registration of trademark TC in

class 42 on 11.07.2005. When Star applied for registration of the trademark

Turquoise Cottage with TC logo in class 42, it was reported by the Trademark

Registry that a conflicting mark TC was already registered in favour of „Adaab‟ in

class 42. On the said examination report of the Trademark Registry being

forwarded to the plaintiff M/s O.P. Khaitan & Company, acting on its behalf, sent a

reply on 02.02.2008, stating therein that the trademark TC with logo was derived

from their trademark „Turquoise Cottage‟ which they were using since 2003. It

was further stated in the said reply that the trademark of the applicants was not

identical or similar to the conflicting marks and the marks, mentioned in the

examination report, were distinguishable. With respect to the trademark of

„Adaab‟, it was stated that the said mark was registered without logo, whereas the

applicant‟s trademark was inscribed in a specific device and, therefore, it will not

lead to any deception or confusion amongst the public. It was also claimed that

there was oral, visual and conceptual difference amongst the conflicting marks and

the trademark of the applicant. It was pointed out in the reply that the applicant‟s

trademark „Turquoise Cottage with a logo TC‟ was a composite mark being used

with a specific device in rectangle and circle, which on the face of it was different

from the conflicting marks as mentioned in the search report of Trademark

Registry and addition of the device had made a world of difference, as compared to

the conflicting marks mentioned in the search report. It was requested that the

applicant‟s trademark should be read as a whole in its entirety, i.e., along with the

device to distinguish the same from the conflicting marks.

4. The restaurant and bar which Star was running in the premises of „Adaab‟

were closed down on 03.08.2007 on account of the premises being sealed by the

MCD. Star then opened a restaurant under the name Turquoise Cottage on

08.10.2008. „Adaab‟ sent a legal notice to „Star‟ on 23.10.2008, informing it that it

was registered proprietor of the trademark TC in respect of the restaurant, pub,

coffee bar and lounge and claiming that the said mark had been extensively and

continuously used by it since 17.12.1999. Alleging that the mark being used by

Star was bound to deceive/confuse the general public, it was asked to cease and

desist from using TC as a name or a trademark. Since no reply, purporting to have

been sent by Star to this notice, is on record, the presumption is that this notice was

not replied. The Star, however, did not discontinue use of the mark which it had

adopted and later got registered.

5. „Adaab‟ opened a bar and restaurant under the name TC (in stylized form) in

the very same premises, where Star was running restaurant earlier as its licensee

and the opening of the said restaurant was advertised in newspapers, claiming that

it was „The Original‟, thereby seeking to convey, to the public, that this was the

same restaurant which Star was earlier running in that premises. It appears that

Star had put up a notice at the entrance of its restaurants, stating therein that TC bar

and restaurant opened at Adchini had no connection with them and the patrons

should not confuse the said restaurant with Turquoise Cottage from the Orient. A

notice dated 30.09.2010 was then sent by „Adaab‟ to „Star‟ through its counsel

asking it to immediately remove the said notice from its premises. It was stated

that the clients were well-educated and literate people, who were very well aware

of the difference between the names Turquoise Cottage and TC.

Vide its letter dated 15.01.2011, „Star‟ asked „Adaab‟ to drop the trademark

TC and cease and desist from using the same. „Adaab‟ sent a reply to this notice

on 03.02.2011, claiming therein that under the agreement dated 16.08.2006, they

were entitled to use the trademark TC which was also their registered trademark.

This led to correspondence between the parties with respect to the agreement dated

16.08.2006 referred in the reply of „Adaab‟ dated 03.02.2011. „Adaab‟ did not

provide inspection of the original agreement to Star, but later on gave inspection of

a duly attested photocopy to the representative of „Star‟. Vide letter dated

01.03.2012, „Star‟ informed „Adaab‟ that it had not given inspection of the original

agreement to its representative and denied validity binding nature and subsistence

of the said agreement.

6. „Star‟ filed CS(OS) No. 1638/2012 on 28.05.2012 and filed IA No.

10641/2012, seeking interim injunction against use of the trademark TC by `Star‟.

Vide interim order dated 29.05.2012, this Court noted that the plaintiff (Star) was

the registered proprietor of the trademark Turquoise Cottage with TC logo and

restrained „Adaab‟ and its directors, managers, etc. from using the said trademark

or any other mark which is deceptively similar to the trademark of „Star‟. IA No.

11566/2012 has been filed by „Adaab‟ under Order 39 Rule 4 of CPC seeking

vacation of the interim order. Vide IA No. 11565/2012, „Adaab‟ has sought

dismissal of the suit on the ground that Star had concealed material facts from the

Court while obtaining the ad-interim ex parte injunction. It is stated in the

application that the Star has deliberately withheld inter alia the agreement dated

01.04.2004 and 16.08.2006 and the examination report issued by the Trademark

Registry in respect of its application for registration of the trademark Turquoise

Cottage with TC logo.

7. CS(OS) No.3230/2012 was filed by Adaab on 30.10.2012, seeking

injunction against use of the mark TC (logo) by „Star‟ as a part of its trademark.

IA No. 20272/2012 has been filed in this suit, seeking a similar interim injunction,

during pendency of the suit.

8. During the course of arguments, the learned senior counsel for Star

submitted that the agreement dated 16.08.2006 was not executed by Star and is a

fabricated and manipulated document. The learned senior counsel appearing for

Adaab, on the other hand, maintained that this agreement was duly executed by

Star through its director Mr Sanjay Khullar. I specifically asked the learned senior

counsel appearing for Star to file an affidavit of Mr Sanjay Khullar stating that this

agreement does not bear his signature. The learned senior counsel, on instructions,

stated that Mr Khullar was out of the country. Thereupon, I asked him to file

affidavit of another director of Star, who was present in the Court, stating therein

that the agreement dated 16.08.2006 does not bear signature of Mr Sanjay Khullar.

No such affidavit has, however, been filed.

Section 73 of Evidence Act provides that in order to ascertain whether a

signature, writing or seal is that of the person by whom it purports to have been

written or made, any signature, writing or seal admitted or proved to the

satisfaction of the Court to have been written or made by that person may be

compared with the one which is to be proved. The power of the Court to make

such a comparison was upheld in Sukhwinder Singh & Others versus State of

Punjab, 1994 (5) SCC 152, Ashok Kumar Uttam Chand Shah v. Patel Mohmad

Asmal Chanchad, AIR 1999 Guj. 108 and Satish Jayanthilal Shah v. Pankaj

Mashruwala, (1997) 2 Crimes 203 (Guj.).

I have compared purported signature of the director of the Star on the

agreement dated 16.08.2006 with other agreements between the parties which also

bear signature of Mr Sanjay Khullar as provided in Section 73 of Evidence Act and

prima facie it appears to me that the person, who signed the admitted agreement on

behalf of the Star, also signed the agreement dated 16.08.2006. Besides the

comparison made by me, there is circumstantial evidence suggesting execution of

the agreement dated 16.08.2006 by Star. Under this agreement, Adaab was to get

commission at the rate of 15% of the sale subject to a minimum of Rs 5 lakh per

month and during the course of arguments, it was submitted by the learned senior

counsel for the Star, on instructions, that Adaab was paid accordingly with effect

from August, 2006 onwards. The learned senior counsel for the plaintiff in this

regard further submitted that in fact, the enhanced minimum commission was paid

with effect from 01.08.2006 and not from 16.08.2006 as stipulated in the

agreement relied upon by Adaab. He also pointed out that though the said

agreement envisaged payment of interest free security deposit of Rs 5 lakh by Star

to Adaab, no such deposit was actually made. The fact that no such security

deposit was actually paid to Adaab was admitted by its senior counsel on

instructions. In my view, it would not be material that the enhanced minimum

commission was paid with effect from 01.08.2006 instead of 16.08.2006 as stated

in the agreement. It is quite probable that the parties orally agreed for payment of

enhanced minimum compensation with effect from 01.08.2006 and this term was

later reduced into writing by way of agreement dated 16.08.2006. Therefore, prima

facie, I am of the view that the agreement dated 16.08.2006 was actually executed

between the parties.

9. At the time of filing of the suit, the trademark Turquoise Cottage with TC

logo was duly registered in favour of Star, but the registration expired during

pendency of the suit and has not been restored so far. Therefore, Star is not entitled

to continuance of the interim injunction on account of infringement and the only

question which needs to be examined is whether any case of passing off is made

out by it or not.

10. In a recent order dated 3rd December, 2012 passed in CS(OS) No.258/2012,

Bourjoise Limited vs. Naunihal Singh and Ors., I summarized the legal position

with respect to passing off, as under:-

The law relating to passing off, which is an action in Common Law is by now well settled. Every person, whether natural or juridical, is entitled to carry and promote his business, under

such mark or trade name as he may choose to adopt for the purpose so long as such use does not give rise to a belief that the said business is being carried by some other person or has some business association or connection with that person. No one is entitled to use a trademark or a trade name which is likely to deceive the members of the public and divert the business of another person to him, on account of use of such trade mark/trade name. If a trademark/trade name has acquired a reputation in the mark, use of an identical or similar mark by other person for carrying his business is likely not only to be detrimental to the business of the person who adopted and built the mark, but is also likely to mislead and deceive the members of the public. Such use, besides being injuries to the owner of the trademark is also likely to create confusion with respect to origin/source of the goods since a person coming across goods and/or services in respect of which the impugned mark is used, may, on account of use of the same or similar trademark/trade name, believe that the goods/services being offered to him emanate from the owner of the trademark/trade name in question and that is why they were being sold under that trade mark/trade name. Everyone is entitled in law to work for and build a commercial goodwill for his business, but no one has a right to trade upon the goodwill and reputation of another person and exploit the same to his advantage."

11. It is by now settled proposition of law that delay in seeking redressal through

the process of the Court, though not a relevant factor in a case of infringement of a

trade mark is certainly a relevant consideration in an action based on passing off.

Another factor to be taken into consideration in such a case would be the extent of

delay in invoking the process of the Court and the injury which is likely to be

caused to the defendant in case injunction is granted in an action which is delayed

for a substantial period and there is no logical explanation for the delay in coming

to the court. Thus, it is not that every delay which constitutes acquiescence by

condoning the act of the defendant.

The following view taken by Christopher Wadlaw in his work "The Law of passing off" was quoted with approval by a Division Bench in B.L. & Co. And Others vs Pfizer Products, 2001 PTC 797 (Del) (DB):-

"Delay in applying for interlocutory reliefs is a very serious matter. As a rule of thumb, delay of up to about a month, or perhaps six weeks, generally has no adverse effect on an inter partes application and delay of up to twice that period need not be fatal if it can be explained and the plaintiff's case is otherwise strong. On an ex parte application even delay of a few days can be critical. Unjustified delay of more than a few months is almost always fatal to the plaintiff's case, even though delay of this order has no effect on the plaintiff's rights at trial. Unlike many of the issues which can arise on motion, the existence of delay does not normally admit or much argument.

Delay, if present, is therefore a short, safe and simple basis for refusing relief. This means that applications for interlocutory injunctions in which there is significant delay are unlikely even to get as far as a hearing, and those that do are quite likely to be refused without going into the merits or the balance of convenience."

In the case before the Division Bench, the respondent before this Court claimed that it had come to know only in January, 2001 about the launch of product of the appellant. Rejecting the plea, the Division Bench, inter alia, observed as under:-

"The respondent claims to be a multi-national corporation with turnover in Billions of Dollars with its products being sold in over 147 countries in the world. Such a Corporation can be expected to have its extensive communication network where it constantly surveys the markets and devises its future plans and strategies. In these facts, it is idle to contend that it was only in a recent internet search that the respondent learnt of the launch of the appellants product in January, 2001......

....The respondents knew all along as is evident from the documents filed by the respondents on record of the launch of the appellant's product, but they chose to wait till the appellant had developed them for any year and had obtained the requisite permission for its manufacture. Even after commencement of manufacture, the respondents did not take action for nearly 5 months and came to the Court only on 31.5.2001...

The factor of delay alone should have been sufficient to deny the respondents an ex parte restraint. The learned Single Judge erred in not noticing this aspect of the matter and passed an order of ex parte restraint which was likely to cause irreparable injury to the appellants. Learned Single Judge in our view with respect, failed to consider the matter in the light of the above principles."

In Ramdev Food Products Pvt. Ltd. v. Arvindbhai Rambhai Patel & Ors. 2006 (33) PTC 281 (SC), Supreme Court observed that principle of acquiescence would apply where: (i) sitting by or allow another to invade the rights and spending money on it; (ii) it is a course of conduct inconsistent with the claim for exclusive rights for trade mark, trade name, etc.

In M/s. Power Control Appliances and Others v. Sumeet Machines Pvt. Ltd. (1994) 2 SCC 448, Supreme Court stated:-

"Acquiescence is sitting by, when another is invading the rights and spending money on it. It is a course of conduct inconsistent with the claim for exclusive rights in a trade mark, trade name etc. It implies positive acts; not merely silence or inaction such as is involved in laches.."

Kerr in his "Treatise on the Law and Practice of Injunction", Sixth Edition at pages 360-361 states as under:-

"But delay may cause the Court to refuse an interlocutory injunction, especially if the defendant has built up a trade in which he has notoriously used the mark..."

12. The following material facts and circumstances emerged from the pleadings

and documents of the parties, which were referred during the course of the

argument:-

(i) Though `Adaab‟ is the registered proprietor of the trade mark TC

(Stylised), there is no evidence of its having used the said trade mark

at any time prior to its opening a restaurant in Adchini premises in

March, 2010, whereas there is documentary evidence of Star having

used the trade mark `Turquoise Cottage‟ with TC Logo at least since

the year 2003. The mark which Star is presently using is printed

prominently on a menu card of the year 2003 which was being used in

the restaurant Star running in Adchini premises of `Adaab‟. This was

the position not only in the restaurant but also in the bar which was

being run in those premises. The above referred trade mark was also

being used on the advertising and promotional material in respect of

the said bar and restaurant, as would be evident from the photocopies

of such material filed by Star. In fact, there was no dispute, during the

course of arguments, with respect to use of this mark in the bar as well

as restaurant being run in Adchini premises as also in various

activities undertaken to advertise and promote the bar and restaurant.

It is evident from the terms of the various agreements executed

between `Star‟ and `Adaab‟, that `Adaab‟ was not a partner in the

business of the restaurant and the bar being run under the name

`Turquoise Cottage‟. These agreements stipulated payment of a

minimum amount to `Adaab‟ irrespective of the sale and/or profits of

the restaurant and the bar. For example, the agreement dated

16.8.2003 envisaged payment of a minimum sum of Rs 3,50,000/- per

month to `Adaab‟ irrespective of the profit and turnover of the bar and

the restaurant. Of course, the amount payable to `Adaab‟ would have

increased in case 12% or 13%, as the case may be, of the sale was to

exceed that figure. The amount payable to `Adaab‟ under the said

agreement was to increase to Rs 3,71,000/- per month in the second

year, Rs 3,96,970/- per month in the third year even if the amount

calculated at 12% and 13% respectively of the turnover during these

years were to be less than Rs 3,71,000/- and Rs. 3,96,970/- per month

respectively. The agreement also envisaged reimbursement to

`Adaab‟ for the cost of liquor, cost of bar license fee, discount on

credit card collection and sales tax on the sale of liquor. It was clearly

stipulated in the agreement that `Adaab‟ will have no right or interest

in the name or the goodwill of the business under the name and style

`Turquoise Cottage‟ from the `Orient‟. Similar terms were

incorporated in the agreement dated 1.4.2004 and 1.4.2005. In the

event of there being loss in the business of the restaurant and/or bars,

that was not to be shared by `Adaab‟ and even in the event of the

restaurant and/or bar running in loss, it would have been entitled to the

license fee to the extent of minimum amount stipulated in the

agreements. This leaves no doubt that the commission payable to

`Adaab‟ under the agreement was nothing but a license fee which was

not to be less than the minimum figures stipulated therein though

which could exceed that figure in the event of higher turnover. It

appears from the documents that on the invoices of liquor issued in the

years 2001 and 2003, it was printed that Turquoise Cottage was a unit

of `Adaab Hotel Limited(LQR) and the invoices issued in the years

2005, 2006 and 2007 had the name Turquoise Cottage from the

Orient as well as Adaab Hotels Limited printed on them, but would be

immaterial considering the fact that even the business of liquor

belonged to Star and not to `Adaab‟ which was entitled only to the

agreed license fee irrespective of the profits and losses of the business.

(ii) The learned counsel for `Adaab‟ referred to the communications sent

by `Star‟ to `Adaab‟, raising bill of service charges for bar operations

and in those communications, the bar was referred as TC which,

according to the learned counsel indicates that the bar business

belonged to Adaab and not to Star. I find no merit in the contention.

Reference to TC in these communications appears to be for the

purpose of identifying the service charges as those pertaining to bar

and operations. Considering the fact that `Adaab‟ was not entitled to

share either the profit or the loss of the bar business, there can be no

reasonable doubt that the bar business was being run and belonged to

`Star‟ and not `Adaab‟.

(iii) It is true that the sales tax registration and liquor license etc. were

issued in the name of `Adaab‟ but that would be immaterial

considering the fact that the business of the restaurant as well as the

bar belonged to `Star‟ and `Adaab‟ was to get only the agreed license

fee. Since the premises belonged to `Adaab‟ and `Star‟ was neither

the owner nor the tenant of the premises in which the bar was to be

run, it was only logical to obtain liquor license and sales tax

registrations in the name of `Adaab‟.

(iv) Since the business of the restaurant and the bar being run in Adchini

premises was owned by „Star‟ alone and „Adaab‟ was not to have any

right in the name or goodwill of `Turquoise Cottage from Orient‟ , use

of „TC‟ logo in the mark being used in documents such as invoices,

menu cards, advertising and promotional material etc would be taken

as use by „Star‟ and not by „Adaab‟. Though, it is claimed in the

pleadings of „Adaab‟ that „TC‟ stands for „Thai and Chinese‟, the facts

and circumstances of the case points out to the contrary and clearly

show that the mark „TC‟ was only acronym of „Turquoise Cottage‟,

which admittedly belongs to „Star‟. In the articles published in

„Hindustan Times‟ dated 26.5.2005 and „First City‟ magazine of

December, 2005, „Hindustan Times" dated 7.12.2005, „Cosmopolitan‟

Magazine of December, 2005, „HT City‟ dated 9.12.2005 and website

delhievents.com, „Turquoise Cottage‟ has been referred as „TC‟. This

clearly shows that the members of the general public always identified

„TC‟ as an acronym for Turquoise Cottage Restaurant and Bar, which

„Star‟ was running in Adchini premises of „Adaab‟.A perusal of news

report published in „Hindustan Times‟ dated 2.2.2011 would show that

Shri Deora, M.P. performed in Adchini restaurant which the

newspapers described as „Turquoise Cottage‟ in Adchini. This news

report indicate that members of the public continued to identify the

restaurant which „Adaab‟ is running in Adchini premises as

„Turquoise Cottage‟. This is happening primarily because of use of the

name „TC by them‟. Even „Adaab‟ has been trying to project the

restaurant opened by it in March, 2010 as the same restaurant which

„Star‟ was earlier running in the same premises and is using the mark

„TC‟ for this purpose, thereby indicating connection between „TC‟ and

„Turquoise Cottage‟. At the time of opening the restaurant in March,

2010, „Adaab‟ gave advertisement in the newspapers under the name

„TC Bar & Restaurant „The Original‟, thereby trying to convey that

the restaurant opened by it was the same which was earlier being run

under the name „Turquoise Cottage‟.

(v) The comments written by the customers on „Facebook‟ also indicate

that the members of the public identify „Turquoise Cottage‟ as „TC‟. It

is stated in the Basic Information with respect to the bar and restaurant

opened by „Adaab‟ that it was now opening at Adchini where it

always used to be, thereby trying to convey that it was the same

restaurant which was earlier being run in Adchini premises. Therefore,

it can hardly be disputed that any use of the mark TC is likely to be

associated with „Turquoise Restaurant‟ of „Star‟. Anyone who comes

across this mark, whether in promotional material or otherwise, is

likely to presume a connection between restaurant and bar which

„Adaab‟ is running under the name „TC‟ and the restaurant which

„Star‟ was earlier running in Adchini premises and is now running in

another premises as they are likely to presume, on account of use of

the mark „TC‟ that either the restaurant and bar which was earlier

being run under the name „Turquoise Cottage‟ has resumed business

under the name „TC‟ or that the restaurant and bar opened at Adchini

is a branch or franchisee of „Turquoise Cottage‟ and that it is being

run under the name „TC‟. As a result, the persons seeking to visit the

restaurant of „Star‟ are likely to get confused and end up visiting the

restaurant which „Adaab‟ is now running in Adchini premises under

the name „TC‟.

(vi) The intention of „Adaab‟ to take advantage of the brand name

„Turquoise Cottage‟ is also evident from use of the name „Turquoise

Cottage‟ by them for various purposes. A perusal of the Fire and

Safety Certificate dated 6.7.2012 issued by Govt. of NCT to „Adaab‟

would show that they obtained the said certificate for the restaurant in

the name „Turquoise Cottage Restaurant‟. The NOC for this purpose

was granted by the Fire Department on 28.9.2010, years after the

restaurant being run under the name „Turquoise Cottage‟ was closed

down by „Star‟. The liquor license from 1.1.2010 to 31.3.2010 also

was obtained by „Adaab‟ in the name of „Turquoise Cottage

Restaurant‟. Later this license was renewed for the year 2010-2011.

This was done despite the fact that the restaurant and bar which „Star‟

was running in Adchini premises was closed down sometime in the

year 2007.

(vii) The restaurant at Adchini was opened by „Adaab‟ in March, 2010.

This is not the case of „Star‟ that it was not aware of the restaurant and

bar opened by „Adaab‟ under the name „TC‟. Not only was opening of

the restaurant and bar advertised in the newspapers, „Star‟ put up a

notice at this restaurant stating therein that the said restaurant had no

connection with „Turquoise Cottage‟. No attempt was made by „Star‟

to come to the Court at that stage, seeking injunction against use of the

name „TC‟ by „Adaab‟. Adaab sent a notice to „Star‟ on 30.9.2010

asking it to remove the notice which it had put at the entrance of its

restaurant in Vasant Vihar and Gurgaon. Even the receipt of this

notice did not prompt „Star‟ to come to the Court for redressal of its

grievance. After about 10 months of the opening of the restaurant by

„Adaab‟, „Star‟ sent a notice to it on 15.1.2011. A reply was sent by

„Adaab‟ on 3.2.2011 ascertaining its right to use the mark „TC‟.

Though „Star‟ continued to correspond with „Adaab‟, it did not come

to the Court even after receiving reply dated 3.2.2011 from „Adaab‟.

The suit was ultimately filed by „Star‟ on 28.5.2012, more than two

years after the restaurant was opened by „Adaab‟ at Adchini. During

the course of arguments, the learned senior counsel for „Adaab‟

submitted that the turnover from the restaurant opened by them at

Adchini had increased by about 50% for the year 2011-2012 as

compared to the year 2010-2011. Had „Star‟ approached the Court

soon after the restaurant at Adchini was opened by „Adaab‟ under the

name „TC‟, and obtained an injunction against use of that

name/trademark, it would have been possible for Adaab to adopt and

build an alternative mark instead of kept on promoting the trademark

„TC‟ for its restaurant and bar.

13. It was also submitted by the learned senior counsel for „Adaab‟ that the

agreement dated 16.8.2006 expressly recognized that „TC‟ Restaurant and Bar was

the property of „Adaab‟ Hotels and this acknowledgment amounted to a

permission/ no objection from „Star‟ to use of the name „TC‟ by „Adaab‟. The

submission was that if „Adaab‟ were to use the mark „TC‟, its right in respect of the

name „TC‟ Restaurant and Bar would not have been expressly acknowledged in the

agreement dated 16.8.2006. Though, „Star‟ has denied the agreement dated

16.8.2006 set up by „Adaab‟, prima facie, I have taken a view that the said

agreement was in fact executed between the parties. In the event of the Court

holding that the agreement dated 16.8.2006 permitted „Adaab‟ to use the name „TC

Restaurant and Bar‟, there may not be any justification for injuncting „Adaab‟ from

using the mark/name „TC‟ for its restaurant and bar at Adchini.

14. Star has withheld some material information from the Court while filing

CS(OS) No.1638/2012. It did not disclose to the Court that when it sought

registration of the trademark „Turquoise Cottage‟ in Class-42, the examination

report of Trademark Registry pointed out that the trademark „TC‟ was already

registered in the name of „Adaab‟ and that while responding to the Trademark

Registry, their counsel Mr. O.P. Khaitan & Company had stated that the trademark

of „Adaab‟ was not identical or similar to the Trademark „Turquoise Cottage‟ and

that their mark will not lead to any deception or confusion amongst the public.

It is difficult to say whether disclosure of above referred material would have

resulted in denial of ex parte injunction to „Star‟ or not, but it can hardly be

disputed that these were material documents which necessarily ought to have been

disclosed to the Court. It is also settled proposition of law that a person coming to

the Court, for grant of equitable discretionary relief, should come with clean hands

and disclose all relevant material, irrespective of the fact whether that material is

against it or in its favour. It would be pertinent to note in this regard that the view

taken by the Supreme Court in S.P. Chengalvaraya Naidu v. Jagannath AIR 1994

SC 853), Udai Chand v. Shankar Lal & Ors. AIR 1978 SC 765 and Gujarat

Bottling Co. Ltd. v. Coca Cola & Ors. AIR 1995 SC 2372 where the Apex Court

emphasized upon the need to come to the Court with clean hands and refrain from

withholding any information which would have a bearing on the exercise of the

discretion by the Court.

15. The learned senior counsel for „Star‟ has referred to the decision of the

Supreme Court in Midas Hygiene Industries (P) Ltd. v. Sudhir Bhatia & Ors.

[(2004) 3 SCC 90], Cadila Health Care Ltd. v. Cadila Pharmaceuticals

Ltd.[(2001) 5 SCC 73] and decisions of this Court in Ansul Industries v Shiva

Tobacco Company [2007(4) RAJ 655(Del.)] and Hindustan Pencils (P) Ltd.v

India Stationery Products Co. & Anr. [38 (1989) Delhi Law Times 54]. In Midas

Hygiene (supra), the Apex Court held that in case of infringement normal

injunction must follow and mere delay in bringing the action is not sufficient to

defeat grant of injunction. This judgment would not be relevant for the reasons that

on account of registration of the trademark „Star‟ having expired during pendency

of the suit, no relief on account of alleged infringement can be granted to it and the

only question before the Court is whether any case of passing off is made out or

not. In Ansul Industries (supra) also, the plaintiff before this Court held registration

of a trademark and, therefore, this also was a case of infringement as well as for

passing off and not of passing off alone. In Hindustan Pencils (supra) also the

trademarks were duly registered in the name of the plaintiff and were valid and

subsisting when the suit was filed. In Cadila Health Care (supra), the Supreme

Court observed that passing off action depends upon the principle that anybody has

a right to represent its goods as goods of somebody. The Court in this regard

referred to five elements enumerated by Lord Diplock in Erven Warnink BV v. J.

Townend & Sons [(1979) 2 All ER 927 and those elements are; (i) a

misrepresentation, (ii) made by a trader in the course of trade, (iii) to prospective

customers of his or ultimate consumers of goods or services supplied by him, (iv)

which is calculated to injure the business or goodwill of another trader (in the sense

that this is a reasonably foreseeable consequence), and (v) which causes actual

damage to a business or goodwill of the trader by whom the action is brought or (in

a quia timet action) will probably do so. Applying the legal proposition laid down

in this regard, I do feel that a case of passing off is actually made out by „Star‟

against „Adaab‟. But, in the facts and circumstances of this case, that by itself

would not entitle „Star‟ to a blanket interim injunction and prohibition against use

of the mark „TC‟ by „Adaab‟. The interim relief to be granted in such a case would

depend upon all the relevant facts and circumstances of the case including the

conduct of the parties, balance of convenience and irreparable loss, if any, which

would be caused on account of refusal or grant of injunction as the case may be.

16. During the course of arguments, the learned counsel for „Adaab‟ sought

injunction against use of the mark „Turquoise Cottage‟ by „Star‟ on the ground that

the agreement dated 16.8.2006 prohibited it from opening any restaurant under the

name „Turquoise Cottage from the Orient" in Delhi and NCR. As noted earlier, this

agreement has been denied by „Star‟, though prima facie, the agreement appears to

have actually been executed. What is important in this regard is that this agreement,

to my mind, prohibits „Star‟ from opening any restaurant under the name

„Turquoise Cottage‟ in Delhi and NCR only during subsistence of the agreement

and not thereafter. There is no stipulation in this agreement that „Star‟ would not

open any restaurant in Delhi and NCR even after termination/ expiry of the terms

of the agreement. The agreement dated 1.4.2005 prohibited „Star‟ from opening

any restaurant under the name „Turquoise Cottage from the Orient‟ till the time the

restaurant at Adchini was functioning. Similar prohibition was contained in the

agreement dated 1.4.2004. Even in its correspondence with „Star‟, „Adaab‟ did not

object to use of the name „Turquoise Cottage‟. Therefore, it appears to me that the

prohibition against opening of any restaurant in the name „Turquoise Cottage‟ in

Delhi and NCR was to apply only during subsistence of the agreement and not

thereafter. Consequently, „Adaab‟ is not entitled to any injunction against use of

the mark „Turquoise Cottage‟ by „Star.

17. The next question which comes up for consideration is as to what would be

the appropriate interim order which should be in force during pendency of the suit.

This is a fact that „Adaab‟ used the name „TC‟ for more than two years before it

was injuncted by this Court from using that name and no attempt was made by

„Star‟ to come to the Court for more than two years. It also cannot be disputed that

if the Court finds that the agreement dated 16.8.2006 was actually executed

between the parties and that agreement permitted „Adaab‟ to use the name „TC‟,

there would no injunction against use of the said mark by „Adaab‟. At the same

time, prima facie, adoption of the mark „TC‟ by „Adaab‟ appears to be dishonest

actuated by an intention to take advantage of the goodwill and reputation which the

restaurant „Turquoise Cottage‟ of „Star‟ enjoys amongst the members of the public.

Also, there is a strong likelihood of members of the public being deceived into

believing that the restaurant and bar being run by „Adaab‟ at Adchini was either the

same restaurant and bar which was earlier being run in the name „Turquoise

Cottage‟ or it was a branch or franchisee of „Turquoise Cottage‟ At this stage, there

is no evidence of the business of „Star‟ having been materially affected on account

of the use of the name „TC‟ by „Adaab‟ for its restaurant and bar at Adchini. On the

other hand, during the course of arguments, it was informed that „Adaab‟ had

turnover of more than Rs.6 crore, from the restaurant opened by it at Adchini for

the financial year 2011-2012. In these circumstances, I deem it appropriate to allow

use of the mark „TC‟ by „Adaab‟ during pendency of this suit, subject to the

conditions and limitations stated herein below:

(a) „Adaab‟ would publish notices in two leadings newspapers circulated in

Delhi and NCR i.e. „Times of India‟ and "The Hindustan Times" stating

therein that the „TC Restaurant & Bar‟ at Adchini has absolutely no

connection with „Turquoise Cottage‟, which was earlier being run in

Adchini premises and is now being run in Vasant Vihar and Gurgaon.

The advertisement would be colour advertisement of the same size as was

the advertisement at page 138 of the document filed by „Star‟ in CS(OS)

No.1638/2012 which appeared in „Hindustan Times‟ published from New

Delhi on 28.5.2010.

(b) „Adaab‟ will install a well-illuminated permanent board at the entrance of

its restaurant stating therein that the restaurant has no connection with

„Turquoise Cottage‟ which was earlier being run in Adchini premises

and is now being run in Vasant Vihar and Gurgaon. The board shall be

not less than 5‟x3‟ in size. If there are more than one entrances, such

boards shall be installed at every entrance.

(c) „Adaab‟ will upload a Disclaimer on TC Community Page of Facebook

stating therein that the „TC Restaurant & Bar‟ at Adchini has absolutely

no connection with „Turquoise Cottage‟, which was earlier being run in

Adchini premises and is now being run in Vasant Vihar and Gurgaon.

(d) The signboard, whether of Neon Signboard or otherwise, of the restaurant

of „Adaab‟ would carry a prominent disclaimer that the said restaurant

and bar has no connection with „Turquoise Cottage‟, which was earlier

being run in Adchini premises and is now being run in Vasant Vihar and

Gurgaon.

(e) All advertisements or promotional material of „TC Bar and Restaurant‟

would carry a disclaimer that that the „TC Restaurant & Bar‟ at Adchini

has absolutely no connection with „Turquoise Cottage‟, which was earlier

being run in Adchini premises and is now being run in Vasant Vihar and

Gurgaon.

(f) „Adaab‟ would not use the word „The Original‟ in its advertisement

and/or promotional material or elsewhere.

(g) The menus and invoices of „TC Bar and Restaurant‟ shall carry a

disclaimer that the „TC Restaurant & Bar‟ at Adchini has absolutely no

connection with „Turquoise Cottage‟, which was earlier being run in

Adchini premises and is now being run in Vasant Vihar and Gurgaon.

(h) If any website has been opened or is opened in future by „Adaab‟, that

website will not carry the name „TC‟.

(i) „Adaab‟ will inform the Fire Department and other departments where it

may have used the name „Turquoise Cottage‟ that it was running a

restaurant and bar under the name „TC‟ which has no connection with

„Turquoise Cottage Bar and Restaurant‟

All the above IAs, in both the suits, stand disposed of in terms of this order.

CS(OS) No. 1638/2012 Replication be filed within four weeks.

List before the Joint Registrar on 14.2.2013 for admission/denial of documents.

The matter be listed before the Court on 22.3.2013 for framing of issues. CS(OS) No. 3230/2012 Written statement be filed within four weeks. Replication can be filed two weeks thereafter.

List before the Joint Registrar on 04.2.2013 for admission/denial of documents.

The matter be listed before the Court on 22.3.2013 for framing of issues.

V.K.JAIN, J

DECEMBER 10, 2012 rd/bg/ks