J U D G M E N T

SANJEEV NARULA, J.

I.A. No. 15801/2022 (seeking ex-parte ad-interim injunction u/O 39 Rule 1 and 2, r/w S. 151 of CPC, 1908)

1. The Plaintiff – Hogar Controls Pvt. Ltd. (formerly, Z-Wave India Pvt. Ltd.), a wholly owned subsidiary of Hogar Controls Inc, has brought the present suit to protect their intellectual property associated with the trademarks “HOGAR”, “HOGAR CONTROLS”, and “ ”, which they allege is being unlawfully usurped by Defendants No. 1 to 3, who are the erstwhile Directors of the Plaintiff.

THE CONSTITUTION, STATUS, AND RELATIONSHIP OF THE PARTIES

2. With the objective of providing home and office electric power automation systems at an affordable cost, the Defendants submit that on 01st July, 2014, Defendant No. 1 established a proprietary firm for conducting the business of home automation and ‘Internet of Things’ [“IoT”] devices. Gradually, the proprietorship concern was transformed into a partnership firm, with Defendants No. 1 to 3 as its partners. Later, on 11th April, 2017, to integrate a more structured business approach, Defendants No. 1 to 3 decided to convert M/s Z-Wave to a private limited company bearing the name Z-Wave India Pvt. Ltd.,1 wherein Defendants No. 1 and 3 were equal shareholders. Defendant No. 4 [Mr. Burri Venkata Surya Narayana] is the cousin of Defendants No. 1 to 3, who is stated to have been involved in Z-

Wave’s commercial operations.

3. In March 2017, Defendants No. 1 to 3 were introduced by one Mr. Vijay Raghava Reddy Mukkamalla to his two friends, Mr. Vishnu Vardhan Malikireddy and Mr. Veerabhadra Reddy Malikireddy, both brothers, who are Non-Resident Indians based in the USA. Pursuant to some negotiations, Mr. Vishnu Vardhan Malikireddy agreed to invest in Z-Wave’s business of home automation products and IoT devices. For this purpose, between August 2017 to February 2018, a total of Rs. 2.25 crores was advanced as loans to Z-Wave through loan agreements, by Smt. Santhamma, mother of Mr. Vishnu Vardhan Malikireddy. Consequently, on 22nd August, 2017, Mr. Vishnu Vardhan Malikireddy and Defendant No. 2 were appointed as

1 Hereinafter, “Z-Wave”.

Directors of Z-Wave. In view of negotiations between parties, Hogar Inc. was incorporated by Mr. Vishnu Vardhan Malikireddy, as the sole shareholder, on 15th September, 2017.

4. Soon thereafter, parties realized that Z-Wave is a communication protocol, akin to the word ‘Bluetooth’, owned by a consortium named Z- Wave based in Houston, Texas, USA. Therefore, to avoid infringement of rights of the consortium, it was mutually decided by the parties to change the name of Z-Wave to Hogar Controls India Pvt. Ltd. (the Plaintiff), which was effected on 07th May, 2018. Given that Mr. Vishnu Vardhan Malikireddy was pre-occupied with his business activities in the USA, Defendant No. 1 was appointed as the Managing Director of the Plaintiff and was entrusted with the day-to-day affairs of the company.

5. On 25th October 2018, Hogar Controls Inc. entered into a Common Stock Purchase Agreement with Mr. Vishnu Vardhan Malikireddy and Defendants No. 1 to 3, whereby Mr. Vishnu Vardhan Malikireddy purchased majority shareholding of Hogar Controls Inc. amounting to 55% of the shares, and the remaining minority shares amounting to 15% each (45% in total), were purchased by Defendants No. 1 to 3. On 26th October 2018, a Shareholders and Subscription Agreement was executed between Defendants No. 1 and 2, Plaintiff, and Hogar Controls Inc.2 Per this Agreement, an amount of approx. Rs. 1.84 crores was invested by Mr. Vishnu Vardhan Malikireddy in the Plaintiff. The shareholding pattern for Plaintiff, post the SSA, stood as under:

S.NO. NAME SHAREHOLDING

1. Anadasu Vijay Kumar (Defendant No. 1) 0.30%

2 Hereinafter, “SSA”.

2. Anadasu Ashwanth Kumar (Defendant No. 0.30%

3)

3. Hogar Controls Inc. 99.40%

6. Subsequently, on 02nd May, 2019, Mr. Vishnu’s brothers, Mr. Veerabhadra Reddy Malikireddy and Mr. Harsha Vardhan Malikireddy, were also appointed as Directors in Pl