Introduction
This Delhi High Court Division Bench judgement in the long-standing “Dakshin” restaurant battle between ITC Limited and Adyar Gate Hotels Limited clarifies critical principles on trademark licensing, passing off, and territorial jurisdiction in the digital era. The ruling holds significant implications for businesses in hospitality, franchising, and IP owners navigating expired agreements and online presence.
Factual and Procedural Background
In 1985, ITC and Adyar Gate Hotels entered into an operating service agreement for the Welcomgroup Park Sheraton Hotel in Chennai. A South Indian restaurant named Dakshin opened there in 1989. The restaurant operated under the agreement until its expiry in March 2015.
- ITC claimed ownership of the Dakshin trademark, registered in its name, and the artistic logo.
- After expiry, AGH continued operating the restaurant on the same premises under a new hotel brand (Crowne Plaza) using the same mark without objection until 2023.
- In 2024, after demolition of the old building, AGH opened a standalone Dakshin restaurant nearby.
- ITC filed a commercial suit in Delhi seeking an injunction against AGH’s use of the mark, alleging infringement, passing off, and copyright violation.
- The single judge dismissed the application, finding no territorial jurisdiction in Delhi and no prima facie case on merits. ITC appealed.
Dispute Before the Court
The core issues were whether Delhi courts had territorial jurisdiction over the dispute and whether ITC could restrain AGH from using the Dakshin mark post-OSA expiry on grounds of ownership, passing off, or copyright.
Arguments by ITC
- Owned the mark and goodwill under the OSA.
- AGH’s continued use amounted to passing off.
- Online activities conferred jurisdiction in Delhi.
Arguments by AGH
- Claimed co-ownership or independent rights.
- Asserted ITC acquiesced.
- Argued no cause of action arose in Delhi.
Reasoning and Analysis of the Court
The Division Bench reviewed Section 134 of the Trade Marks Act and Section 62 of the Copyright Act for jurisdiction, alongside Section 20 of the CPC. It relied on Indian Performing Rights Society Ltd v. Sanjay Dalia (2015) 10 SCC 161 to clarify that special IP provisions provide additional forums but do not allow forum shopping where the cause of action arises elsewhere. However, online accessibility and commercial targeting via platforms like Zomato established a sufficient nexus in Delhi.
OSA Clauses and Trademark Rights
The court examined the 1985 OSA clauses, particularly Article XIII on trademarks, holding it vested rights in ITC. Precedents like Wander Ltd v. Antox 1990 (Supp) SCC 727 guided the interim relief scope.
AGH’s Claims
The Bench distinguished AGH’s claims of independent conception, finding evidence supported ITC’s role and goodwill. Acquiescence was rejected due to lack of dishonest adoption by AGH, but overall balance favoured ITC.
Copyright Issues
Copyright in the logo was also addressed, with a rebuttable presumption under the Copyright Act.
Purposive Interpretation
The court emphasised purposive interpretation favouring the party building brand reputation through continuous use and contractual intent.
Final Decision of the Court
The Division Bench allowed the appeal, set aside the single judge’s order dismissing the interim application, granted an injunction restraining AGH from using the Dakshin mark pending suit disposal, and restored the matter for further proceedings before the single judge.
Point of Law Settled
The judgement reinforces that in trademark licensing and operating agreements, goodwill and rights often remain with the brand owner (ITC) unless explicitly transferred. It clarifies evolving standards for territorial jurisdiction in IP cases involving e-commerce and online reservations. This will guide future hospitality and franchise disputes, emphasising contractual interpretation and preventing unjust enrichment post-agreement expiry.
Case Details
| Title of the Case | ITC Limited & Anr. vs Adyar Gate Hotels Limited |
|---|---|
| Date of Judgment/Order | 01.07.2026 |
| Case Number | FAO(OS)(COMM) 207/2025 |
| Neutral Citation | 2026:DHC:5165-DB |
| Name of Court | High Court of Delhi |
| Honourable Judges | Justice C. Hari Shankar and Om Prakash Shukla |
Written By: Advocate Ajay Amitabh Suman, IP Adjutor [Patent and Trademark Attorney], High Court of Delhi
Disclaimer: Images used herein do not reflect actual images used in the judgement, and the same are for illustrative purposes only. Readers are advised not to treat this as a substitute for legal advice, as it may contain errors in perception, interpretation, and presentation.
