Usage Of Disputed Trademark Even After Filing Of Challenge Would Cause Serious Confusion To Public: Delhi High Court

The Delhi High Court division bench of Justice Prathiba M. Singh and Justice Shail Jain, while hearing a Section 37(1)(b) appeal under the Arbitration Act, observed that using the subject brand names after a dispute between the parties can cause enormous confusion to the public. People may associate the Respondent's outlets with the Appellants. Factual Matrix: The parties entered into two franchise agreements to open two outlets. A dispute arose between the parties concerning the franchise fee payment, etc. The Appellant filed Section 9 petitions, and the Ld. Commercial Court vide order dated 22.07.2025 granted an interim injunction. The Ld. Commercial Court restrained the Respondent from using the trade marks 'Mamagato' and 'Dhaba'. The Ld. Commercial Court vide the impugned order vacated the interim injunction and dismissed the Section 9 petitions. The Appellant filed the present petition u/s 37(1)(b) of the A&C Act, challenging the impugned order. Submissions: The Counsel for the Appellant made the following submissions: Clause 2.1 of the subject agreement recognises the Appellant's Intellectual Property rights concerning the trade names, which continue to be with the Appellant. 'Project Management Fee' under Clause 4.1 of the subject agreement comprises two distinct components. Due to the Respondent's failure to pay the 'Project Management Fee', the subject agreement was terminated on 01.03.2025.Concerning the termination of the subject agreement, the Respondent's right to use the brand name of the Appellant is curtailed in terms of Clause 6.5(a). The Counsel for the Respondent made the following submissions: Under Clause 6.1, there is a three-year lock-in period from the commencement of operations of the subject Restaurant. Furthermore, the Appellant did not render the Project Management Services in consonance with the subject agreement.Since the one-time brand fee amounting to ₹30 lacs has been paid for using the subject brand name, the Respondent should be permitted to use the same. Court's Analysis On the last date of the hearing, the bench observed that the Franchise Agreements had been terminated due to non-payment of the Project Management Fee. The Respondent cannot be allowed to use the subject brand name indefinitely. The bench observed that there is a serious dispute between the parties. Prima facie, once the Franchise Agreements are terminated, using the subject brand names could cause serious confusion to the public, who may still associate the Respondent's outlets with the Appellants. Considering the concerns of the Appellant and the Respondent's difficulty in immediately discontinuing using the subject brand names, the parties, on mutual terms, had decided to resolve their issue at the interim stage. The parties appointed Justice Manmohan Singh (Retd.) as the Sole Arbitrator to adjudicate the dispute. The Respondent has been allowed to use the subject brand name until 31.12.2025; the Appellant will supply the raw material to the Respondents. The bench in the above terms disposed of the appeals. Case Name: M/S Azure Hospitality Private Limited v. Amit Bhasin, Proprietor Of Retail India SolutionsCitation: 2025 LiveLaw (Del) 1115 Case Number: FAO (COMM) 222/2025 Counsel for the Petitioner: Mr. Jaspreet Singh, Ms. Nandini Singh & Mr. Keshav Tejpal, Advs. Counsel for the Respondent: Mr. N.K. Vohra & Mr. Lalit Kumar Vohra, Advs.Click Here To Read/Download The Order

Usage Of Disputed Trademark Even After Filing Of Challenge Would Cause Serious Confusion To Public: Delhi High Court

Mohd Talha Hasan

Tags