Bombay High Court Restrains Mumbai Khadi and Village Industries Association From Selling Any Goods Under 'Khadi' Mark

"... prima facie, the plaintiff has made out a strong case in its favour for protection of its proprietary rights as regards the registered trademark and the defendant cannot avoid interim injunction by relying upon Section 34 of the Trademarks Act. It is also significant to note that the plaintiff holds registration for its wordmark KHADI, label mark and device mark, for a plethora of classes and not limited to cloth or textile products," Justice Manish Pitale said in the order.

The court was told that though the Commission has registered various trademarks only since 2014, the marks have been in use since September 1956. The plaintiff alleged that the defendant has been using the impugned marks consisting of the word 'KHADI' and a 'Charkha' logo in conjunction with its name, which infringes the plaintiff's marks.

Under Khadi and Village Industries Commission Act, the Commission performs various functions to ensure the development and operation of khadi and village industries. The Commission had earlier withdrawn the certificate issued to Mumbai Khadi and Village Industries Association for allegedly indulging in sale of textile and cloth products containing polyster and not khadi material.

The association, in an earlier suit by the Commission with a similar allegation, had given a statement that it was not selling any products called, labelled, or described as 'khadi' and would not sell any khadi product without a certificate. Adoption of the impugned mark is dishonest and against the undertaking given to the court in the aforementioned suit, the plaintiff argued.

Senior Advocate Dr. Birendra Saraf for the plaintiff contended that the defendant is prevented from selling any products using the name KHADI, and it also cannot use the word in its corporate name. The defendant cannot be permitted to use the plaintiff's registered trademark upon the withdrawal of the certificate, he said. The Commission produced two kurtas purchased from the defendant's shop to show that it made a false statement earlier that it was not selling any textile 'KHADI' item.

Senior Advocate Venkatesh Dhond for the defendant claimed that it was the prior user of the word 'KHADI' from 1946 under Section 34 of the Trademarks Act. It was also submitted that the defendant was abiding by the undertaking and if the plaintiff had any grievance in that regard, the proper remedy was to file an application under Section XXXIX, Rule 2A of the Code of Civil Procedure, 1908 (CPC) in the said disposed of suit.

The court noted that in its undertaking, the defendant claimed that it was not selling any product described as 'Khadi' and agreed not to sell any khadi product without certificate from the plaintiff. Therefore, the defendant cannot now turn around and rely upon definition of 'khadi' in Section 2(d) of the KVIC Act, as being limited to cloth or textile, the court said.

The court said that the annual reports from 1946 cannot help the defendants as they pertain only to cloth products of 'khadi' and only have marginal reference to other products. It noted that the plaintiff withdrew the defendant's certificate after complaints were received that the defendant was selling textile and cloth products containing polyester and not khadi.

The defendant's attempt to continue selling 'Khadi' products by infringing the plaintiff's registered trademark led to the earlier suit. This does not mean that the earlier suit or the present suit is based on the KVIC Act alone, the court said. Therefore, the plaintiff has a strong prima facie case, the court held.

The court said that the material such as the two kurtas purchased on the date of hearing from the defendant's outlet demonstrate the defendant's dishonesty and falsity.

It said that the defendant's affidavit claiming the lawyer 'inadvertently' stated that it is not selling textile products doesn't help its case. 

"This Court has perused the invoices dated 07.12.2022, issued by the outlet of the defendant and the two kurtas i.e. cloth products produced in the Court. The invoices use the word 'KHADI' and the two cloth products show the device of 'Charkha' with the word 'KHADI', thereby demonstrating that the aforesaid actions on the part of the defendant are dishonest. The defendant cannot get away by contending that the plaintiff would be at liberty to move an application under Order XXXIX, Rule 2A of the CPC..."

The court accepted the plaintiff's argument that the use of the word 'KHADI' which is the prominent, essential, fundamental, and substantial feature of the trademark in the defendant's corporate name prima facie amounts to passing off.

"This Court is of the opinion that unless the defendant is temporarily restrained from further indulging in such conduct, the plaintiff will suffer grave and irreparable loss, thereby indicating that the balance of convenience is also in favour of the plaintiff," it said further.

Case no. – Commercial IP Suit (L) No. 14302 of 2022

Case Title – Khadi & Village Industries Commission v. Board of Trustees, Mumbai Khadi and Village Industries Association