While deciding application for interim injunction, Courts have to consider three tests of prima facie case, balance of convenience and irreparable injury: SC

Read Judgment: Shyam Sel & Power Limited & Another V. Shyam Steel Industries Limited 

Pankaj Bajpai

New Delhi, March 17, 2022: Noticing that the High Court had failed to take into consideration the three tests of prima facie case, balance of convenience and irreparable injury while deciding an application for ad-interim injunction on restraining the appellants from using in any way the mark ‘SHYAM’ or with a label or device containing the mark ‘SHYAM’ till the disposal of the trademark infringement suit, the Supreme Court has imposed cost of Rs 5 lakh on Shyam Steel Industries.

The Court held that an appellate court, after the findings of the trial court are recorded, has an advantage of appreciating the view taken by the trial judge and examining the correctness or otherwise thereof within the limited area available. If the appellate court itself decides the matters required to be decided by the trial court, there would be no necessity to have the hierarchy of courts, added the Court.

A Division Bench of Justice B.R Gavai and Justice L. Nageswara Rao therefore observed that an order for postponement of the issue with regard to grant of ad-interim injunction by the Single Judge cannot be construed to be a ‘judgment’ within the meaning of Clause 15 of Letters Patent and as such, the appeal to the Division Bench of the High Court was not tenable, when there was no adjudication with regard to the rights of the respondent to get an ad-interim injunction during the pendency of the suit. 

Going by the background of the case, Shyam Steel Industries (respondent) filed a suit against Shyam Sel & Power (appellants) for infringement of trade mark and passing off. It is the case of the respondent that it has trade mark registration in respect of the word ‘SHYAM’ and diverse label marks wherein the word ‘SHYAM’ features prominently. Both the respondent and the appellants manufacture and sell, inter alia, Thermo Mechanically treated bars (TMT bars). It is the case of the respondent that in the year 2015, it came to know that the appellants were using the mark ‘SHYAM’ in their products. The respondent therefore, through its advocate, objected to such use. The appellants agreed to phase out the products that they had manufactured with the mark ‘SHYAM’ and not to use the said mark ‘SHYAM’ on their products in future. Later, the appellants had applied for registration of the mark ‘SHYAM INFRA’, on which the respondent had filed its objection. 

Since the appellants did not file their counterstatement, the application lapsed and was treated as abandoned. Later, towards the end of 2018, the appellants started to use the word ‘SHYAM METALICS’ on the packaging of their TMT bars. According to respondent, though the appellants had used the word ‘SHYAM’ on their invoices and stationeries, they had not used the said word ‘SHYAM’ on their wrappers in which their TMT bars were packed, which was done only to take advantage of the growing and expanding business of the respondent. 

Accordingly, the respondent filed a civil suit claiming infringement of their registered trade mark ‘SHYAM’ and its variants and also for passing off by the appellants. The Single Judge made a prima facie observation that he was of the view that ‘SHYAM’ being a part of the business name of the appellants, no injunction should be passed to restrain the appellants from using the said word ‘SHYAM’ on their packaging. On appeal, the Division Bench granted an injunction restraining the appellants from, in any way, manufacturing, selling or advertising their goods with the mark ‘SHYAM’ or with a label or device containing the mark ‘SHYAM’ till the disposal of the suit. 

After considering the submissions, the Top Court noted that to come within the ambit of ‘judgment’, such an order must affect vital and valuable rights of the parties, which works serious injustice to the party concerned. 

Each and every order passed by the Court during the course of the trial, though may cause some inconvenience to one of the parties or, to some extent, some prejudice to one of the parties, cannot be treated as a ‘judgment’, added the Court. 

Speaking for the Bench, Justice Gavai found that what the Single Judge has done by the said order, was to grant two weeks’ time to the appellants to file affidavit-in-opposition and postpone the issue of grant of ad-interim injunction by three weeks. 

“No doubt, that the learned Single Judge has at one place observed that prima facie, he was of the view that ‘SHYAM’ being a part of the business name of the appellants defendants, no injunction should be passed to restrain the appellants defendants from using the said word ‘SHYAM’ on their packaging, but in the same order, he has clarified that all the observations he has made in the said order were prima facie for the purpose of passing an order at the adinterim stage and the same would have no relevance at the time of considering and deciding the said application after exchange of affidavits”, added the Bench. 

Justice Gavai therefore highlighted that the Single Judge had postponed the issue with regard to consideration of the prayer of the respondent for grant of ad-interim injunction by a period of mere three weeks and that too only in order to afford an opportunity to the appellants to file their affidavit-in-opposition.

Therefore, while observing that unwarranted proceedings at the behest of the parties who can afford to bear the expenses of such litigations, must be discouraged, the Apex Court allowed the appeal and directed the respondent to pay a token cost of Rs.5 lakh to the Supreme Court Middle Income Group Legal Aid Society (MIG).

The Single Judge is to decide the application filed by the respondent under Order XXXIX Rules 1 and 2 CPC as expeditiously as possible, requested the Top Court.