Delhi High Court Refuses ITC Bid To Stop Adyar Gate Hotels' Use Of 'Dakshin' Mark

The Delhi High Court has refused to restrain Adyar Gate Hotels Limited from using the "DAKSHIN" trademark for its standalone Chennai restaurant.

It held that ITC Limited's trademark infringement claim was not maintainable. The court also found that ITC had failed to establish a prima facie case for passing off or copyright infringement.

A division bench of Justice C. Hari Shankar and Justice Om Prakash Shukla dismissed ITC's appeal against a single judge's order refusing interim relief. The court held that AGH's use of the DAKSHIN mark dated back to 1989. It also found that ITC had not established pre-existing goodwill in the mark before then and that AGH had built its own reputation through decades of continued use.

"The very first ingredient of passing off, which is the existence of goodwill, is not satisfied," the bench observed.

The dispute traces back to 1985, when AGH entered into an Operating Service Agreement with ITC for the operation of the Welcomgroup Park Sheraton hotel in Chennai. A South Indian restaurant named Dakshin began operating within the hotel in April 1989. It continued to function until the agreement ended in March 2015.

After the agreement expired, AGH partnered with the InterContinental hotel chain. It continued operating the Dakshin restaurant from the same premises under the Crowne Plaza Chennai Adyar Park brand. The building was demolished in 2024. AGH then opened a standalone Dakshin restaurant nearby. ITC responded by filing a suit alleging trademark infringement, passing off and copyright infringement, and sought an interim injunction.

The single judge had rejected ITC's plea. The court held that the Delhi High Court lacked territorial jurisdiction and that no interim relief was warranted on the merits.

The division bench disagreed with the finding on jurisdiction. It held that AGH's presence on Zomato was sufficiently interactive to amount to carrying on business in Delhi.

"Interactive accessibility is the key to determining territorial jurisdiction," the court observed.

The bench nevertheless upheld the refusal of interim relief after examining the merits of the dispute.

Interpreting the Operating Service Agreement, the court held that ITC functioned as a service provider to AGH in return for service and incentive fees. It found that AGH financed the hotel's operations. The bench rejected ITC's contention that AGH's use of the DAKSHIN mark effectively began only after the agreement ended in 2015. It held instead that AGH had been using the mark since the restaurant opened in 1989.

The court also concluded that ITC had not shown it possessed goodwill in the DAKSHIN mark before the restaurant began operations in 1989.

It further held that AGH, as the principal financier under the agreement, was entitled to claim the benefit of the goodwill generated through the restaurant's long-standing operations.

"AGH, being the prime financier under the OSA, would be entitled to claim the benefit of the said goodwill," the bench held.

The court also agreed that ITC's conduct disentitled it to interim relief. It noted that ITC did not object when AGH continued using the DAKSHIN mark after the Operating Service Agreement ended in 2015. Nor did it challenge AGH's registration of the mark through rectification proceedings.

The bench held that ITC's silence "amounts to tacitly allowing AGH to continue to use the mark till 2023 and, thereby, build up a reputation therein."

Finding no prima facie case for passing off, the division bench declined to interfere with the single judge's exercise of discretion. It dismissed ITC's appeal while clarifying that the Delhi High Court had territorial jurisdiction to entertain the suit.