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The binding effect of Interlocutory orders

In matters pertaining to Intellectual Property Rights, the orders passed by the Court on interim injunction application under 39 Rule 1 and 2 CPC plays crucial role in declining the right of the parties. Even though the observation made by the Hon'ble Courts on such interim injunction applications are prima facie in nature.

The orders passed by the Court on interim injunction application under 39 Rule 1 and 2 CPC are in fact Interlocutory orders. While adjudicating interim injunction applications and while while passing such Interlocutory order , the Courts makes observations on the merits of case.

Now question arises that what could be binding effect of such Interlocutory orders at the final stage of the proceeding? Let us say that if the Court has prima facie returned the finding in favour of one party to be prior adopter and user of subject matter Trademark, can it be said this observation is also binding at the final stage of the Suit?

Can a party take advantages of the positive findings returned by a court in its favour at the Interlocutory stage, in other proceeding pertaining to the subject matter Intellectual Property Rights? What weight has to be given to such prima facie observation made by the Court?

The Hon'ble Division Bench, High Court of Delhi, constituting the Hon'ble Justices namely Shri Vibhu Bakhru and Shri Amit Bansal, while passed the Judgement dated 06.10.2022 in commercial Appeal bearing FAO OS Comm No.06 of 2022 titled as Varun Gems Vs Precious Jewels and others dealt with one such issue.

The subject matter Appeal FAO OS Comm No.06 of 2022 titled as Varun Gems Vs Precious Jewels and others came from Judgement dated 06.04.2018 passed in Suit instituted by the Hon'ble Single Judge whereby the subject matter Suit, which pertain to the dispute for trade mark RAKYAN in relation to jewellery item, was dismissed.

The subject matter Suit was filed by the Appellant against the Respondents herein seeking the relief of permanent injunction from using the Trademark/Trade name RAKYAN.

Initially ex parte injunction was granted in favour of the Appellant , however subsequently the Respondents appeared and assailed the afore mentioned order of injunction not only before the Hon'ble Division Bench of India, but also to the Hon'ble Supreme Court of India.

There after , the Hon'ble Supreme Court of India vacated the injunction operating against the Respondents after observing "In our opinion, looking at the provisions of Section 35 of the Act, there is no prima facie case in favour of the plaintiff and therefore, the defendants could not have been restrained from doing their business. We, therefore, quash and set aside the impugned order granting interim relief in favour of the plaintiff and the appeal is allowed with no order as to costs."

After this the Respondents stopped Appearing in the matter and they were proceeded ex parte. Subsequently the Appellant lead the ex parte injunction, however the Hon'ble Single Judge after making reliance on the observation made by the Hon'ble Supreme Court of India and Hon'ble Division Bench, High Court of Delhi, was pleased to dismiss the Suit.

The Hon'ble Single Judge adopted the prima facie finding of the Hon'ble Supreme Court of India in favour of the Respondents , whereby the Respondents were given benefit of Section 35 of Trademarks Act 1999.

Section 35 Of The Trademarks Act 1999 Provides As Under:
Nothing in this Act shall entitle the proprietor or a registered user of a registered trade mark to interfere with any bona fide use by a person of his own name or that of his place of business, or of the name, or of the name of the place of business, of any of his predecessors in business, or the use by any person of any bona fide description of the character or quality of his goods or services."

From bare perusal of the afore mentioned Section, it is apparent that Section 35 of the Trademarks Act 1999 protects the use of bonafide use of name by a party. The Hon'ble High Court of Delhi, Single Judge based its reliance on the afore mentioned prima facie observation made in favour of the Respondents.

Now question was this, whether this order was rightly passed? Whether the Hon'ble Single Judge was right in dismissing the Suit of the Appellant only on the prima facie finding at the Interlocutory stage?

The Hon'ble Division while answering this question observed that It is settled that the findings given by the courts while deciding application under Order XXXIX Rule 1 & 2 are preliminary in nature and do not have any bearing on the final lis which is to be decided on the basis of evidence led by the parties as held in Colgate Palmolive v. Anchor Health: 2004 SCC ONLine Bom 909.

In the subject matter dispute , the Respondents were given benefit of Section 35 of Trademark Act 1999 after prima facie holding them to be bonafide user of the name. However at the final stage , the Respondents were supposed to lead the evidence to establish themselves to be bonafide use of name RAKYAN.

At the evidence stage, onus lies on the Respondents to prove that the same were the bonafide user of name RAKYAN. As the Respondents were proceeded ex parte , all the evidence lead by the Appellant remain unrebutted.

Hence the Hon'ble Division Bench observed that in the facts of the case, the Respondents were unable to discharge the onus of proving the same to be bonafide user of the subject matter Trademark RAKYAN.

After making the afore mentioned observation , the Hon'ble Division Bench of High Court of Delhi was pleased to set aside the order assailed, and was pleased to decree the Suit in favour of the Appellant and against the Respondents.

The afore mentioned Judgement clearly laid down that the observation made by a Court at the Interlocutory stage or observation made while adjudicating Interlocutory applications are merely prima facie nature and that the same has not binding effect in the said suit proceeding at the subsequent stage.

Case Law Discussed:
Varun Gems vs M/S Precious Jewels & Anr
Judgement date: 06.10.2022
Appeal No. FAO OS Comm 6 of 2019
Name of Court: Delhi High Court
Name of Hon'ble Justice: Vibhu Bakhru and Amit Mahajan, H.J.

Written By: Ajay Amitabh Suman, IPR Advocate, Hon'ble High Court of Delhi.
[email protected], 9990389539

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