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NLF TAX & LEGAL

Court overturns decision to dismiss Hakeem Hotel's trademark case against Hakeem Restaurant

The Hon'ble Delhi High Court in Jabir Hussain Trading as M/s Hakeem Hotel v. Ali Asgar Trading as M/s. Hakeem Restaurant, RFA(COMM) 88/2024, dated April 15, 2024, set aside the order of the Commercial Court that had returned the plaint for lack of territorial jurisdiction. The High Court held that for the purpose of determining jurisdiction, the averments in the plaint must be accepted as true at the threshold stage.


Facts of the Case:


The appellant, Jabir Hussain Trading as M/s Hakeem Hotel, filed a suit seeking permanent injunction against the respondent, Ali Asgar Trading as M/s Hakeem Restaurant, for trademark infringement and passing off. The appellant claimed to be the proprietor of registered trademarks "HAKEEM HOTEL" and "HAKEEM FOODS" in classes 43, 30, and 29, with applications dating back to 2014 and 2018.


The appellant alleged that the respondent was infringing and passing off these trademarks by operating a restaurant named "HAKEEM RESTAURANT" in Bhopal, Madhya Pradesh. The appellant claimed that the respondent was planning to open a franchise in North West Delhi and was actively networking in areas like Pitampura, Shalimar Bagh, Sultanpuri, and Rohini. The appellant stated that it learned about the respondent's activities in September 2023.


In the plaint, the appellant asserted that customers could book tables at the respondent's restaurant through interactive sites from Delhi, and food delivery services were accepting orders for delivery from the respondent's restaurant. The appellant specifically pleaded that the respondent was planning, marketing, and networking to operate a physical restaurant or franchisee in North West Delhi.


The Commercial Court had returned the plaint on the ground of lack of territorial jurisdiction, relying on the decision in Impresario Entertainment & Hospitality Pvt. Ltd. v. S&D Hospitality. The appellant challenged this order in the present appeal before the Delhi High Court.


Issue:


Whether the Commercial Court erred in returning the plaint under Order VII Rule 10 of the Code of Civil Procedure, 1908, on the ground of lack of territorial jurisdiction?



Held by the Court:


The Hon'ble Delhi High Court in RFA(COMM) 88/2024 held that:


  • The Court observed that the question of whether a plaint should be returned under Order VII Rule 10 of the Code of Civil Procedure, 1908, must be examined on a demurrer, accepting all averments made in the plaint as correct. The Court cited the Supreme Court's decision in Exphar SA & Anr. v. Eupharma Laboratories Ltd. & Anr. to support this principle. It held that the Commercial Court erred in considering defenses raised by the respondent at the threshold stage, emphasizing that for returning a plaint, only the averments in the plaint and documents filed by the plaintiff should be considered.


  • The Court opined that the present case was a quia timet action, seeking to prevent the respondent from infringing the appellant's trademarks within the territorial jurisdiction of the Commercial Court. Citing M/s. Allied Blenders & Distillers Pvt. Ltd. v. Prag Distillery Pvt. Ltd. & Anr., the Court held that an apprehension of future infringement can constitute a part of the cause of action. It noted that the appellant had specifically pleaded in the plaint that the respondent was planning to operate a physical restaurant or franchise in North West Delhi, which falls within the territorial jurisdiction of the Commercial Court.


  • The Court concluded that based on the averments in the plaint, a part of the cause of action had allegedly arisen in Delhi, and therefore, the Commercial Court had erred in returning the plaint. It set aside the impugned order and restored the suit before the Commercial Court. The Court clarified that while only the plaint's averments are to be examined for the purpose of Order VII Rule 10, the consideration of interim relief applications or summary judgment applications is not confined to the plaint alone.


  • The Court held that all rights and contentions of the parties are reserved, and directed the appellant to appear before the Commercial Court on May 6, 2024, for further proceedings. It emphasized that at the stage of filing the plaint, only the averment has to be made with regard to a material fact, and substantiation is a part of evidence that comes later.


Relevant Sections:


Order VII Rule 10 of the Code of Civil Procedure, 1908

Order XXXIX Rules 1 and 2 of the Code of Civil Procedure, 1908

Order XIIIA of the Code of Civil Procedure, 1908

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