Delhi HC observes that interim relief cannot automatically follow without irreparable injury and damage are established

Delhi HC observes that interim relief cannot automatically follow without irreparable injury and damage are established

The court observed that interim relief of injunction is granted when all facts have yet to be proved in trial and at the same time the party seeking injunction pending trial has a "prima facie case" in its favour

A Delhi High Court bench of Justices Rajiv Sahai Endlaw and Asha Menon in the appeal case of Shrivats Rathi & Anr vs. Anil Rathi & Ors observed, "Even where a party discloses a prima facie case, interim relief will not automatically follow. The party would have to establish that the absence of such relief would cause it 'irreparable injury and damage' which would not be compensated by money and that the 'balance of convenience' lies in its favour." The HC observation came on 4 January 2021.

The present dispute had commenced as a result of appellant No.1 allegedly granting licenses to outsiders without adherence to the terms of the Trust Deed and the Memorandum of Understanding (MOU). It was alleged that the appellant No.1 had no right whatsoever, either under the Trust Deed or the MOU, during the lifetime of the respondent No.6, illegally issued eight licences to entities which were not connected to the family.

The respondent No.1, being a Lifetime Trustee of the Rathi Foundation, instituted the two suits seeking an injunction against the defendants in the suits from using the registered trademark of the Foundation in infringement and to restrain the appellants from wrongly issuing any further licences against the terms of the MOU and Trust Deed.

The focus of the arguments of Virmani and Sindhwani, senior counsel and Tanmay Mehta, Advocate, as advanced on behalf of the appellants is that the appellant No.1 was a lineal male descendant of late G.D. Rathi and like all family members, had the right to use the family name as a trademark under Section 35 of the Trademarks Act, 1999.

The counsels also pointed out that the respondent No.1 as a plaintiff in the appeal had wilfully suppressed facts relating the attempt to obtain registration, the Judge ought not to have granted the injunction as the respondent No.1 had no equities in his favour. The locus standi of the respondent No.1 to file the suit was also questioned since all the trustees had not passed a Resolution in his favour and as the plaint was actually signed by a Power of Attorney.

Sandeep Sethi, senior counsel appearing on behalf of the respondent No.1, submitted that the suit had been filed as a trustee on behalf of the trust and as per the express authority given in the Trust Deed, in order to protect the interest of the trust in the registered trademark. All allegations of concealment were against the respondent No.1 Anil Rathi as a person and there were no allegations against the Trust.

The High Court first dealt with the limitations on the powers of the appellate court while dealing with an appeal arising out of a discretionary order. The court noted, "Only where the discretion has been shown to have been exercised arbitrarily or capriciously or perversely or where the court had ignored the settled principles of law regulating grant or refusal of interim relief in the form of an injunction will the appellate court be justified in interfering with the decision."

Court further observed that interim relief of injunction is granted at a time when all facts have yet to be proved in the trial. At the same time, the court shall consider whether the party seeking such injunction pending trial has a "prima facie case" in its favour. If no prima facie case exists, in other words, the party seeking the interim injunction discloses no right in its favour, no interim injunction will be granted as it would not be justified.

The court placed its reliance in the case of Dorab Cawasji Warden Vs Coomi Sorab Warden (1990) where three cardinal principles for grant of interim injunction have been reiterated. First, the plaintiff has a strong case for trial. That is, it shall be of a higher standard than a prima facie case that is normally required for a prohibitory injunction. Second, it is necessary to prevent irreparable or serious injury which normally cannot be compensated in terms of money. Third, the balance of convenience is in favour of the one seeking such relief.

The Court upheld the decision of the Single Judge was right, in concluding that based on the MOU and the Trust Deed, the respondent No.1 had disclosed a prima facie case whereas the appellant No.1 had not disclosed any right to issue licenses for use of the trademark "RATHI" by outsiders. In view of the goodwill and brand value of the trademark "RATHI", the injury caused by the widespread unregulated and unlawful use of this trademark.

The Court noted, "It is a specious plea that without a hundred percent unanimity amongst the Trustees no legal action can be initiated because if a Trustee is found violating the terms of the MOU/Trust Deed, he would not be agreeable to a Resolution against him and in absence of such absolute unanimity, the terms of the Trust Deed would not be enforceable."

Therefore, the court while placing on the interpretation on the terms of the MOU/Trust Deed before the filing of suits cannot be accepted. The court found no reason to interfere with the reasoning and the conclusions in the impugned judgement as no perversity or illegality was being disclosed or was evident and the appeals were dismissed.