| CASE NAME | Moti Mahal Delux Management Services Pvt. Ltd. and Ors. vs. SRMJ Business Promoters Pvt. Ltd. and Ors. |
| CITATION | (12.12.2024 – DELHC): MANU/DE/8917/2024 |
| COURT | Delhi High Court |
| PETITIONER | Moti Mahal Delux Management Services Pvt. Ltd. and Ors. |
| RESPONDENTS | SRMJ Business Promoters Pvt. Ltd. and Ors. |
| DECIDED ON | 12 December, 2024 |
INTRODUCTION
In Moti Mahal Delux Management Services Pvt. Ltd. v. SRMJ Business Promoters Pvt. Ltd., we have a significant case of trademark infringement, passing off and unfair trade practices before the Indian courts. The plaintiffs Moti Mahal Delux Management Services contend that the defendants continued to use trademarks and marks similar to theirs illegally after the termination of a Franchise Agreement. The case demonstrates not only the issues that arise with respect to intellectual property law but also the importance of contractual obligations in franchise relationships, consumer protection and the keeping of a brand intact.
This case is not just about a legal fight over trademarks, but also about the trust and responsibility that comes with franchise partnerships. It shows what happens when a franchisee keeps using the brand name even after the agreement has clearly ended. Beyond the legal issues, the matter also points to the risk of customers being misled and the harm that can be caused to a brand that has built its name over decades. The dispute highlights how important it is for businesses to protect their goodwill and for courts to step in quickly when that trust is broken. At the same time, it reflects the larger struggle between business growth and brand protection in today’s competitive market.
FACTS
- Parties involved:
Plaintiffs: Moti Mahal Delux Management Services Pvt. Ltd. and its companies (plaintiffs nos. 1-4) are the registered owners of several trademarks, including, for example, “MOTI MAHAL,” “MOTI MAHAL GROUP,” and “TANDOORI TRAIL.” The plaintiffs have a long history of success in the restaurant industry, spanning decades of operations and locations.
Defendants: SRMJ Business Promoters Pvt. Ltd., is the former franchisee of the plaintiffs, and they were permitted to operate under the plaintiffs’ trademarks by way of a Franchise Agreement dated October 5, 2013.
- Franchise Agreement: The Franchise Agreement gave the defendants the right to operate a franchise and use the plaintiffs’ trademarks for a limited period, expiring on October 5, 2022. The Franchise Agreement specified the terms on the use of trademarks and other standards for the operation of the restaurants.
- Termination and Communication: The plaintiffs alleged that they properly informed, many times, the defendants of the approaching expiration of the Franchise Agreement. After the expiration of the Franchise Agreement, the plaintiffs contacted the defendants on April 19, 2024, soliciting the defendants to renew the Franchise Agreement. The defendants were silent. The plaintiffs then issued a Cease and Desist Notice on October 23, 2023, to the defendants to stop all businesses under the marks in issue.
- Continued Use: The plaintiffs allege that the defendants continued to operate restaurants under the names “MOTI MAHAL DELUX TANDOORI TRAIL” and “MOTI MAHAL DELUX” in spite of the termination of the Franchise Agreement. They claim there is a confusing similarity to their registered trademarks, which would confuse customers and impede on the plaintiffs’ business interests.
- Developing Market Presence and Goodwill: The plaintiffs claim to be affiliated with an extensive history of goodwill to their marks going back to 1920. The plaintiffs have multiple locations throughout India, positive causative steps to develop their marks and brand through international expansion. The plaintiffs contend that the continued use by the defendants with their different, but similar marks dilutes the goodwill which plaintiffs have developed over decades.
ISSUES
The court reflected on several legal issues:
- Trademark Infringement: Did the defendants infringe upon the plaintiffs’ registered trademarks by continuously using similar branding even after the termination of the Franchise Agreement?
- Passing Off: Is there sufficient evidence to indicate that the defendants’ actions constitute passing off, thereby misleading consumers and damaging the plaintiffs’ reputation?
- Unfair Trade Practices: Do the defendants’ actions count as unfair trade practices that could hurt the plaintiffs’ business interests and market standing?
- Legal Exemptions: Are there any solid legal reasons for the defendants to argue that they still have the right to use the trademarks even after the Franchise Agreement was clearly terminated?
- Consumer Confusion: Is there a real chance that consumers might get confused because of the defendants’ similar branding, potentially leading them to misinterpret where the goods and services are coming from?
CONTENTIONS FROM BOTH SIDES
PLAINTIFFS’ CONTENTIONS
- Ownership and Rights: Plaintiffs claim that they own the trademarks “MOTI MAHAL,” “MOTI MAHAL GROUP,” and “TANDOORI TRAIL”, they maintain that they are the sole owner of these marks, with the respective registrations, in accordance with the Trade Marks Act, 1999. The plaintiffs state that their prior use of the marks has created a reputation in the hospitality business and has resulted in well known trademarks.
- Termination of Agreement: The plaintiffs state that the terms of the Franchise Agreement specifically state that the franchise expired on October 5, 2022 and that the defendants received notice of the expired agreement on numerous occasions. The plaintiffs add that there is no defense to the continued use of the trademarks as the agreement had expressly stated that upon expiration, the franchise agreement ended, and the defendants could no longer use the trademarks.
- Consumer Confusion and Harm: The plaintiffs state that there is high probability based on the confusion presented by the use of virtually identical branding, resulting in consumers thinking that the [defendants] were operating (present/use of trademarks), thus, damaging the plaintiff’s reputation and goodwill. The plaintiffs provide market research and consumer survey evidence to support their claims of confusion.
- Evidence of Infringement: The plaintiffs provided examples of previous trademark infringement and passing off decisions where the courts ruled in favor of the plaintiffs. The plaintiffs showed a pattern of infringing the plaintiffs’ previous rights both knowingly and deliberately.
- Irreparable harm: The plaintiffs claimed that, if the defendants continued to use the marks in the normal operation of their business they would suffer irreparable harm. For example, loss of brand equity, loss of consumer confidence, loss of money overall. The plaintiffs argued that the balance of convenience was in favor of the plaintiffs since the plaintiffs had established brand worth and brand equity that was at risk of loss because of the defendants’ actions.
DEFENDANTS’ CONTENTIONS
- Legal Use of Trademarks: The defendants assert that their use of the trademarks was lawful under the Franchise Agreement. They distinguish certain language in the Franchise Agreement as allowing for continued use under specific conditions they believe they met. The defendants argue that they were unaware they were operating contrary to the agreement and they had a reasonable belief that they were operating legally, according to their interpretation of the terms in the Franchise Agreement.
- Different Branding: The defendants assert that they have branded their company enough that no consumer would confuse it with the plaintiffs. The defendants assert their operations are different enough from the plaintiffs that no consumer would confuse their two companies. The defendants have provided evidence of their branding and marketing used to showcase the distinctiveness of their brand.
- Provisions to the Franchise Agreement: The defendants assert certain provisions of the Franchise Agreement allow for continued use of the trademarks unspecified in the Franchise Agreement after the preliminary term has expired. The defendants believe the plaintiffs have misread certain provisions of the Franchise Agreement to align with what they are claiming.
- Proposal for Mediation: The defendants’ prefer to resolve the dispute through mediation rather than litigation, as they said, they would welcome the opportunity to make something work amicably without being tied to litigating the dispute in court, and it would be more efficient for the parties.
- Absence of Bad Faith: The Defendants argue that they did not intend to infringe the Plaintiffs’ trademarks. They maintain that any overlap was unintentional and based on their prior franchise relationship, further asserting that they were not attempting to confuse consumers or harm the Plaintiffs’ brand.
JUDGMENT
The bench, comprising Hon’ble Ms. Justice Mini Pushkarna, made a number of interim orders favoring the plaintiff, and took a strong line on trademark rights and brand protection:
- Prima Facie Case: The bench found that the plaintiffs made out a prima facie case of trademark infringement and passing off.. The bench adopted the plaintiff’s position that the defendants continued use of an identical mark gave rise to consumer confusion, because of the continued use of the mark, the confusion that consumers would have about the source of the goods/services provided by the defendants.
- Irreparable Injury and the Balance of Convenience: The bench determined that the plaintiffs would suffer irreparable injury if the defendants were permitted to use the marks in issue. The balance of convenience favored the plaintiff, supporting an immediate injunction to safeguard the plaintiff’s established brand identity.
- Rejection of Legal Exemptions: The Court rejected the defendants’ assertions in respect of any legal exemptions under the Franchise Agreement because the Franchise Agreement had expired. The Court determined that the defendants had no rights to the marks after the termination and were infringing in their continued use.
- Injunction Granted: The court granted an injunction prohibiting the defendants from using the marks “MOTI MAHAL”, “MOTI MAHAL DELUX”, and “MOTI MAHAL DELUX TANDOORI TRAIL” in any regard; the defendants were obligated to remove all references to these marks from all advertising and promotional materials consequently protecting the plaintiffs’ trademarks.
- Next Hearings: The Court set dates for future hearings in which both parties could make additional arguments and present further evidence, and were working together with the two parties to explore next the potential of a resolution, and scheduled the next hearing, giving the parties opportunities to file responses, and support evidence in the interim of the next hearing.
CONCLUSION
The dispute between Moti Mahal Delux Management Services Pvt. Ltd. v. SRMJ Business Promoters Pvt. Ltd. demonstrates the importance of trademark protection and the duty of compliance with contractual obligations imposed under franchise agreements. The judiciary’s judgment contributes to a strong message on the brands sponsored to protect and the height of the judiciary to protect existing brands from sub-standard copycats that mislead and confuse consumers. As the case develops it is likely also to transform the legal landscape concerning trademark rights and the relationship of franchisees in India.
The decision will greatly impact both parties in terms of brand protection, preserving consumer confidence, and in a larger scope of the market in the hospitality industry. While the case transpires, the rights of the plaintiffs to preserve intellectual property ownership, and the capacity to practice business by the defendants will continue to be under severe focus. The case profoundly summarizes the complexities of intellectual property law, and affirms the need of brand owners to constantly protect their rights while managing the more complex relationships that present themselves in franchise arrangements.
In summary, this suit will show you the particulars of the complainants’ and defendants’ accounts. It will also add to the ongoing dialogue about enforcement of trademarks in India, and remind companies about being clear and specific with communication in building a brand and managing expectations in contracts. The implications from this case will not just resonate with the immediate parties but also direct other businesses, across whichever business framework they are using, likely find themselves in similarly worded cases, and also underscore one way in which public law can assist in protecting intellectual property rights.
‘This article has been written by Tamanna Jain from University Five Year Law College, University of Rajasthan.’
