In the case of Deen Dayal Anand Kumar Saraf vs Paras Agarwal trading as Ms Purushottam Agarwal & Co. (2024) before the Delhi High Court, the court dealt with vacation of ex-parte interim injunction order on grounds of suppression of material facts.
The plaintiff, M/s Deen Dayal Anand Kumar Saraf, is a well-established business in the jewellery industry, operating under the registered trademarks “MD” and “MD-70”. The plaintiff’s product portfolio includes a wide range of jewellery, including anklets (payals), chains, silver ornaments, and other precious items under the said trademarks. It was alleged that the defendants had infringed upon the plaintiff’s trademarks by using marks like “MD Payal”, “MD Star Fancy Payal”, and “MD Star”, which were virtually identical or deceptively similar to the plaintiff’s trademarks.
The plaintiff approached the court seeking an injunction to prevent the defendants from continuing their infringing activities. On March 28, 2023, the court granted an ex-parte ad interim injunction in favour of the plaintiff. This injunction restrained the defendants from manufacturing, distributing, or selling products under the infringing marks.
The defendants filed an application before the court seeking vacation of the injunction order, basing that the plaintiff had concealed material facts while filing the present suit. Specifically, the defendants pointed to a cease-and-desist notice issued by the plaintiff on November 12, 2022, which involved the same trademarks, and the response sent by the defendants on November 30, 2022. The plaintiff had failed to disclose these correspondences in their plaint. It was argued that the plaintiff’s failure to disclose these facts amounted to suppression of material evidence, which, if known to the court at the time of granting the injunction, could have led to a different outcome. It was contended that the cease-and-desist notice by the plaintiff and the subsequent response by the defendant was directly relevant to the case.
The plaintiff did not deny the existence of the cease-and-desist notice or the defendants’ response; however, they responded in their reply to the vacation of injunction order application that the omission was unintentional since the suit had been filed in haste. The plaintiff contended that the omission had no bearing on the merits of the case and did not materially affect the reliefs sought. Relying on several precedents, the plaintiff countered that the failure to disclose the cease-and-desist notice did not constitute fraud.
Court’s Analysis
After hearing both sides, the court opined that the plaintiff’s failure to disclose the cease-and-desist notice and the defendants’ response was indeed a significant omission. It concluded that it was a fatal act of non-disclosure by the plaintiff when it was seeking a grant of an ex-parte ad interim injunction. The court considered the set precedents in S.J.S. Business Enterprises (P) Ltd. v State of Bihar & Ors., S.P. Chengalvaraya Naidu Vs. Jagannath, Canon Kabushiki Kaisha Vs. B. Mahajan and Ors and Kent RO System Ltd. & Anr. v Gattubhai & Ors. which reaffirms the settled position of law that any order/ judgment obtained by suppressing material facts and documents amounts to vitiation of the entire proceedings. The court emphasized that parties seeking equitable relief, such as an injunction, must approach the court with clean hands and disclose all material facts. The plaintiff’s failure to do so misled the court and the ex-parte injunction order was vacated.
The court also noted that despite becoming aware of the omission after the defendants filed their application, the plaintiff did not take any steps to rectify the situation or amend their pleadings. This inaction further supported the conclusion that the plaintiff had deliberately chosen to withhold the relevant documents to gain an unfair advantage in the proceedings.
The court’s decision underscores the importance of full disclosure in legal proceedings, particularly in cases involving interim reliefs like injunctions. It serves as a reminder that parties must present all relevant facts to the court and that any attempt to mislead the court can have serious consequences. This judgment also highlights the judiciary’s commitment to ensuring fairness in trademark disputes. While protecting intellectual property rights is essential, the courts are equally vigilant in ensuring that the legal process is not abused. In this case, the court’s decision to vacate the injunction sends a clear message that parties cannot use procedural shortcuts to gain an advantage in litigation.
