Introduction
In the intricate tapestry of intellectual property law, few cases weave together tradition, commerce, and legal nuance as vividly as the dispute between the Khadi and Village Industries Commission (KVIC) and Girdhar Industries. This case, adjudicated by the High Court of Delhi, delves into the contentious realm of trademark rights, pitting a statutory body tasked with preserving the legacy of “Khadi” against a private entity wielding a registered composite mark. At its core, this legal battle questions the boundaries of trademark exclusivity, the validity of registrations, and the equitable principles governing interim relief.
Detailed Factual Background
The plaintiff, Khadi and Village Industries Commission (KVIC), is a statutory entity established under the Khadi and Village Industries Commission Act, 1956, with its inception tracing back to 1957. KVIC’s mandate is to promote and develop Khadi and village industries, particularly in rural India, as part of a broader socio-economic upliftment agenda. It adopted the trademark “KHADI” on September 25, 1956, integrating it into its corporate identity and using it across a wide range of goods and services.
KVIC holds multiple trademark registrations for “KHADI” and associated device marks under the Trade Marks Act, 1999, spanning various classes of the NICE classification, with claimed usage dating back to 1956 for most categories. The plaintiff operates an extensive network of over 8,050 sales outlets, hosts websites like www.kviconline.gov.in, and manages a mobile application, “Khadi India,” reinforcing its claim that “KHADI” is synonymous with its identity and products.
The defendants, Girdhar Industries (Defendant 1) and another entity (Defendant 2), operate under the registered trademark “GIRDHAR KHADI.” This mark was registered in Class 3 (covering soaps and detergents) effective from March 4, 2005, with claimed use since April 1, 2001, and in Classes 29 and 30 since July 18, 2007, with claimed use from April 1, 2004. Girdhar Industries markets products like soaps and detergents under “GIRDHAR KHADI,” achieving significant sales figures, including over ₹32 crore in 2020-2021.
KVIC alleges that the defendants’ use of “KHADI” infringes its registered trademarks and constitutes passing off, arguing that the prominence of “KHADI” in the defendants’ branding misleads consumers into associating their products with KVIC’s heritage.
The dispute escalated when KVIC discovered the defendants’ Class 3 registration in December 2020 and filed a rectification petition to cancel it, followed by this suit in 2022. The defendants counter that their mark is a composite one, distinct from KVIC’s “KHADI,” and that they have prior use and registration rights, bolstered by substantial market presence.
Detailed Procedural Background
The case, registered as CS(COMM) 130/2022, was filed by KVIC in the High Court of Delhi, seeking permanent injunctions against Girdhar Industries for trademark infringement and passing off. Alongside the suit, KVIC moved IA 3114/2022 under Order XXXIX Rules 1 and 2 of the Code of Civil Procedure, 1908, requesting interim injunctive relief to restrain the defendants from using “GIRDHAR KHADI” and “BR KHADI” pending the suit’s disposal.
KVIC’s legal journey included prior oppositions to the defendants’ trademark applications in 2017, notably against “GIRDHAR KHADI” (Application No. 3409591) in Class 29 and “BR KHADI” in Class 3, with counter-statements filed by the defendants on December 26, 2017. These interactions informed the court’s scrutiny of KVIC’s delay and disclosure claims. Meanwhile, KVIC’s rectification petition against the defendants’ Class 3 registration, filed in December 2020, remains pending, adding a layer of complexity to the interim relief analysis.
Issues Involved in the Case
- Whether KVIC established a prima facie case of trademark infringement under Section 29 of the Trade Marks Act, 1999, against the defendants’ registered “GIRDHAR KHADI” mark.
- Whether the defendants’ use of “KHADI” amounts to passing off by leveraging KVIC’s goodwill.
- Whether the defendants’ registration is invalid due to bad faith or lack of user evidence, thus overcoming the statutory presumption of validity under Section 31(1).
- Whether KVIC’s delay and alleged suppression of facts disentitle it to equitable relief.
- Whether the balance of convenience and irreparable loss favor granting an interim injunction.
Detailed Submission of Parties
KVIC argued that “KHADI” is a well-known mark indelibly linked to its identity, supported by extensive registrations and continuous use since 1956. She highlighted the defendants’ invoices and packaging, which emphasize “KHADI” over “GIRDHAR,” suggesting an intent to capitalize on KVIC’s reputation. Majumder cited prior judicial recognition of “KHADI” as a well-known mark in Khadi & Village Industries Commission v. Raman Gupta (2022 SCC OnLine Del 2264) and invoked N.R. Dongre v. Whirlpool Corporation ((1996) 5 SCC 714) to assert that passing off can proceed against a registered mark. She contested the validity of the defendants’ registration, alleging bad faith under Section 11(10)(ii) and lack of user proof, referencing National Bell Co. v. Metal Goods Manufacturing Co. Pvt Ltd ((1970) 3 SCC 665) to rebut the presumption of validity.
The defendants emphasized their prior adoption of “GIRDHAR KHADI” in 2001 and registration in 2005, predating KVIC’s active Class 3 registrations, which lapsed or were proposed-to-be-used. They argued that KVIC failed to prove prior use in soaps, pointing to the absence of pre-2001 evidence and the 2015 registration of KVIC’s domain name. Bansal underscored the defendants’ substantial market presence, with sales exceeding ₹40 crore, and invoked Section 34 to protect their vested rights. He accused KVIC of suppression, noting its awareness of the defendants’ registration since 2017, and cited Midas Hygiene Industries (P) Ltd v. Sudhir Bhatia ((2004) 3 SCC 90) to argue that delay alone does not negate relief but must be weighed with equities.
Detailed Discussion on Judgments Cited by Parties
- Khadi & Village Industries Commission v. Raman Gupta (2022 SCC OnLine Del 2264): KVIC cited this Delhi High Court ruling to assert “KHADI”’s status as a well-known mark.
- N.R. Dongre v. Whirlpool Corporation ((1996) 5 SCC 714): Passing off is actionable against a registered mark.
- National Bell Co. v. Metal Goods Manufacturing Co. Pvt Ltd ((1970) 3 SCC 665): Rebuttal of presumption of validity under Section 31(1).
- Automatic Electric Ltd. v. R.K. Dhawan ((1999) 77 DLT 292): “KHADI” is not generic if the defendant itself registered a composite mark.
- Ahmed Oomerbhoy v. Gautam Tank (146 (2008) DLT 774): “KHADI” is arbitrary for soaps.
- Bloomberg Finance LP v. Prafull Saklecha (207 (2014) DLT 35): Defendants’ use harms the mark’s reputation under Sections 29(4) and (5).
- Midas Hygiene Industries (P) Ltd v. Sudhir Bhatia ((2004) 3 SCC 90): Both sides relied on this for the impact of delay and equities.
- Toyota Jidosha Kabushiki Kaisha v. Prius Auto Industries Ltd ((2018) 2 SCC 1): High threshold for injuncting a registered mark.
- Raman Kwatra v. KEI Industries Ltd: Used to argue lack of reputation under Section 29(4).
- Vijay Kumar Ahuja v. Lalita Ahuja (2001 SCC OnLine Del 1215): Misstatement of cause of action affects relief.
- Corn Products Refining Co. v. Shangrila Food Products Ltd ((1960) 1 SCR 968): Supported distinctiveness of composite marks.
Detailed Reasoning and Analysis of Judge
The Court first examined infringement under Section 28, noting that a registered mark cannot typically be restrained unless its registration is invalid, per Section 31(1)’s presumption of validity. KVIC’s challenge to “GIRDHAR KHADI”’s validity rested on bad faith (Section 11(10)(ii)) and lack of user proof.
The judge found KVIC’s assertions insufficient: the assumption of Defendant 1’s awareness of KVIC’s mark in 2005 lacked evidence of dishonesty, and the defendants’ affidavit of use from 2004 satisfied registration requirements prima facie. The pending rectification petition precluded a definitive invalidity finding, leaving Section 28’s protection intact.
On passing off, the judge found scant pre-2001 evidence for KVIC’s use in soaps, whereas the defendants had established use since 2001. Suppression of facts, including KVIC’s 2017 opposition not disclosed in the plaint, fatally weakened its claim. The court found this concealment undermined KVIC’s request for equitable relief.
Balance of convenience favored the defendants due to their longstanding use and substantial sales. Irreparable loss weighed in favor of preserving the status quo, with an order requiring defendants to maintain transparent sales records.
Final Decision
The court declined KVIC’s prayer for an interim injunction against the use of “GIRDHAR KHADI” and “BR KHADI,” dismissing IA 3114/2022.
Law Settled in This Case
This judgment reaffirms that a registered trademark enjoys robust protection under Section 28, rebuttable only by strong evidence of invalidity. Bad faith under Section 11(10)(ii) requires proof of dishonesty, not just prior knowledge. Material suppression can defeat equitable relief, and delays matter when the defendant has a well-established presence.
Case Information
- Case Title: Khadi and Village Industries Commission Vs. Girdhar Industries and Anr.
- Date of Order: December 28, 2023
- Case No.: CS(COMM) 130/2022
- Court: High Court of Delhi at New Delhi
- Judge: Hon’ble Mr. Justice C. Hari Shankar
Disclaimer: The information shared here is intended to serve the public interest by offering insights and perspectives. However, readers are advised to exercise their own discretion when interpreting and applying this information. The content herein is subjective and may contain errors in perception, interpretation, and presentation.
Written By: Advocate Ajay Amitabh Suman, IP Adjutor – Patent and Trademark Attorney
Email: [email protected], Ph no: 9990389539
