In a recent legal dispute between Shakti Bhog Foods Ltd. & Anr. (SBFL) vs Kumar Food Industries Ltd. & Ors. (KFIL), the Delhi High Court issued a significant ruling. The dispute involved the alleged infringement of the ‘SHAKTI BHOG’ trademark amid insolvency proceedings. SBFL sought a permanent injunction, claiming infringement, passing off, damages, etc., while KFIL countered, asserting ownership of the ‘SHAKTI BHOG’ mark. The ruling navigates trademark complexities and ownership disputes and intertwines with insolvency proceedings.
Kewal Krishan Kumar (Defendant No. 10) established a business under the mark ‘SHAKTI BHOG’ for his proprietary concern in 1975. In the early 1990s, Shakti Bhog Foods Ltd and Kumar Food Industries Limited were incorporated by Defendant No.10. However, in 2017, Defendant No.10 resigned from Kumar Food Industries Limited, which is now run by his son and other directors. SBFL was aggrieved by the continued use of the mark ‘SHAKTI BHOG’, label and packaging, by KFIL and its contract manufacturers (Defendant Nos. 2 to 9) despite SBFL being in insolvency proceedings.
The plaintiff contended that there was a previous legal matter against SBFL. In 2015, a petition was filed to wind up SBFL’s business, and the court approved it in 2018. In 2018, another creditor filed a case with the National Company Law Tribunal (NCLT), resulting in an order in September 2023. The plaintiff asserted that SBFL was undergoing a financial process, with a committee of creditors figuring out how to fix SBFL’s business. Since the trade mark ‘SHAKTI BHOG’ belongs to SBFL, it was being claimed by KFIL resulting in the current suit.
Additionally, SBFL pointed out that Kumar Food Industries Ltd. & Ors. claimed to own the ‘SHAKTI BHOG’ trademark, as per an assignment deed dated December 30, 2017. SBFL argued that the document appeared to have been forged for various reasons. Among these, the stamp duty of Rs. 42 lakhs was not paid, the person signing the document was suspended from SBFL at the time, financial records of Kumar Food Industries Ltd. & Ors. conflicted with the deed, and no intangible assets were reported in their balance sheets. Moreover, a previous court case indicated that Kumar Food Industries Ltd. was using SBFL’s licenses and trade names for manufacturing and selling products under the mark ‘SHAKTI BHOG.’ SBFL emphasised that these discrepancies raise significant doubts about the authenticity of the assignment deed and KFIL’s claim to the trademark.
Further, SBFL stated that KFIL did not officially apply to transfer the trademarks, and renewals for the trademarks were managed by SBFL. The packaging of KFIL products indicated the use of the trademark under a license from SBFL. In response to a cease-and-desist notice from the SBFL in January 2023, KFIL did not mention the assignment deed. Therefore, SBFL submitted that the mark did not belong to KFIL, and an illegal claim was being made with respect to the mark ‘SHAKTI BHOG’, which belonged to SBFL.
The court observed that numerous trademarks are registered in favour of SBFL, as detailed in the complaint. KFIL, which claimed the assignment of the mark ‘SHAKTI BHOG,’ did not produce a stamped assignment deed. To prevent prejudice, the court directed the committee of creditors (CoC) to consider ‘SHAKTI BHOG’ as an asset for valuation. However, no final order on the mark was permitted at this stage. The court restrained KFIL from transferring any rights in the mark until any further court orders. Additionally, no new licenses for ‘SHAKTI BHOG’ branded products should be granted, and the trademark office should not entertain recordal requests without court approval. It was further held that other contract manufacturers could apply if they had licenses for ‘SHAKTI BHOG.’ The court also took note of a deplorable inspection report by the Department of Food Safety at KFIL premises.
First Published By: IP LINK here
