Delhi High Court Dismisses ITC's Plea for Interim Injunction Against Adyar Gate Hotels in 'Dakshin' Trademark Dispute

In a significant ruling for intellectual property law, the Delhi High Court has dismissed an application for an interim injunction filed by ITC Limited against Adyar Gate Hotels Limited. Justice Amit Bansal, presiding over the case, held that the plaintiffs failed to establish territorial jurisdiction, and even on merits, the claim lacked sufficient prima facie evidence to warrant a preliminary restraint.

A Legacy Disputed: From Collaboration to Courtroom

The conflict centers on the well-known restaurant brand "DAKSHIN," which has gained immense prestige in the hospitality industry. The relationship between the two parties began in 1985 through an Operating Services Agreement for the Park Sheraton Hotel in Chennai.

In 1989, the parties collaborated to conceptualize and launch the South Indian restaurant brand "DAKSHIN." This partnership continued for decades, during whichITC expanded the brand across several of its own properties nationwide. However, the agreement expired in 2015. Following the terminal transition of the Chennai hotel—which was rebranded as the "Crowne Plaza, Chennai, Adyar Park"—the defendant continued to operate the restaurant under the "DAKSHIN" name.

The dispute escalated in 2024 when, after the demolition of the old hotel site, the defendant opened a new, standalone restaurant in Chennai under the same brand name. ITC filed a suit for trademark infringement and passing off, seeking an immediate injunction.

The Arguments: Proprietary Rights vs. Bona Fide User

ITC argued that it was the owner of the trademark and that the defendant’s use was merely a licensed activity that ended with the agreement. They further contended that the defendant’s online presence and interactive listings on platforms like Zomato targeted customers in New Delhi, creating a "dynamic effect" that justified the High Court's jurisdiction.

Adyar Gate Hotels countered that they were co-creators of the brand. They pointed to extensive evidence, including the involvement of their Chairman, TT Vasu, archives, and financial records, showing that the conceptualization and operation of the restaurant had been their initiative from the outset. Furthermore, the defendant asserted that the plaintiffs had acquiesced for nearly a decade, during which time the defendant independently built substantial goodwill.

Territorial Jurisdiction: The "Effects Test"

The Court's legal analysis focused heavily on whether, under Section 20(c) of the Code of Civil Procedure (CPC) or Section 134 of the Trade Marks Act, the suit was maintainable in Delhi.

Drawing from the principles established in Banyan Tree Holding (P) Limited v. A. Murali Krishna Reddy , Justice Bansal clarified that accessibility of a website in the forum state is not "intentional targeting." The court reiterated: > “Mere interactivity, without the possibility of concluding a commercial transaction across a website, cannot constitute part of the cause of action, so as to enable a plaintiff to sue the host of the website wherever the website can be accessed.”

Regarding the "dynamic effect" argument, the Court distinguished between rectification petitions, where this doctrine might apply, and infringement suits, emphasizing that the restaurant's commercial transaction—dining—takes place exclusively in Chennai, not New Delhi.

Key Observations

• On Infringement: "Admittedly, the plaintiffs and the defendant are registered proprietors of the mark ‘DAKSHIN’ in the relevant class... in terms of Section 28 (3) of the Trade Marks Act, 1999, no infringement action can lie against the defendant unless its registration is declared to be invalid."
• On Acquiescence: "The plaintiffs idly stood by and watched the defendant sales increase manifold. Delay and acquiescence has thus stepped in to defeat the plaintiffs’ claim for an ad interim injunction."
• On Copyright Precedent: "It is a well-settled law that acquiescence is a defence available in action for the infringement of copyright."

Findings and Final Orders

The Court found that ITC failed to make out a case for an interim injunction. Crucially, the Court observed that the defendant had been running the restaurant independently since 2015, and the plaintiffs' failure to object during this period suggested at least concurrent usage rights.

While denying the injunction, the Court recorded an undertaking from the defendant: "The defendant shall remain bound by the statement made by its counsel during the course of the hearing that the defendant shall not expand the operation of its ‘DAKSHIN’ restaurant beyond the city of Chennai till the final adjudication of the suit."

The matter has been listed for further proceedings in January 2026, marking a clear signal from the court that while the brand remains contested, its current status quo is preserved.