Sanchayita Lahkar

The High Court of Bombay Three Judge Bench of Chief Justice Alok Aradhe, Justice M. S. Karnik, and Justice Shyam C. Chandak held that an order refusing a temporary injunction does not cease to be a discretionary order merely because the trial court did not find a prima facie case in favour of the plaintiff. The Court stated that appellate courts are bound to respect the discretionary nature of such orders and may only interfere if the discretion is shown to have been exercised arbitrarily, capriciously, or perversely. The Bench conclusively answered the reference made on account of conflicting views in prior judgments and directed that the pending appeal be placed before the appropriate Bench for disposal in accordance with law.

The case arose from a trademark dispute between the appellants, UTO Nederland B.V. and others, and Tilaknagar Industries Ltd., the respondent. The appellants, engaged in the business of trading in spirits and alcoholic beverages, had entered into a licensing agreement with the respondent in 1983 concerning trademarks such as 'Mansion House' and 'Savoy Club.' The appellants alleged that despite the termination of the agreement, the respondent continued using the marks and sought independent registration, prompting the appellants to initiate legal proceedings.

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In the suit filed before the trial court, the appellants prayed for interim relief restraining the respondent from using the marks. The trial court, however, rejected the application for temporary injunction in December 2011. Aggrieved, the appellants filed Appeal No. 66 of 2012 before the Bombay High Court.

During the pendency of the appeal, a Division Bench observed conflicting positions in the judgments of Colgate Palmolive Company v. Anchor Health, Parksons Cartamundi Pvt. Ltd. v. Suresh Kumar Jasraj Burad, and Goldmines Telefilms Pvt. Ltd. v. Reliance Big Entertainment Pvt. Ltd. on the issue of appellate interference in matters of temporary injunctions. Consequently, the Division Bench referred two questions for determination by a larger Bench:

1. Whether an order refusing a temporary injunction loses its discretionary character where the trial court finds no prima facie case.

2. What is the correct scope of appellate review of such orders.

During arguments, the appellants submitted that once a trial court decides rights on a prima facie basis, appellate courts have jurisdiction to interfere and substitute findings. They argued that appellate review must encompass factual reassessment and not merely examine whether discretion was rightly exercised.

The respondents contended that temporary injunction orders are purely discretionary and based on principles of balance of convenience, prima facie case, and irreparable injury. They submitted that the scope of appellate review is limited to examining whether discretion has been exercised judicially and consistent with settled legal principles. The respondents relied heavily on the Supreme Court’s decisions in Wander Ltd. v. Antox India Pvt. Ltd. and Gujarat Bottling Co. Ltd. v. Coca Cola Company to argue that substitution of discretion by the appellate court is impermissible except in rare cases.

The Court observed that the law relating to injunctions in India has its origin in equity jurisprudence of common law. It stated that "Injunction is a judicial process by which a party is required to do or to refrain from doing any particular act."

The Court recorded that for granting interim relief, three tests must be satisfied: "The cardinal principles for grant of injunction are: (i) Whether the plaintiff has prima facie case? (ii) Whether the balance of convenience lies in favour of the plaintiff? (iii) Whether the plaintiff would suffer irreparable injury if his prayer for interlocutory injunction is disallowed?"

It noted that the term prima facie case means a case which can be established if the evidence in support is believed. Referring to Martin Burn Ltd. v. R.N. Banerjee, the Court stated: "A prima facie case does not mean a case proved to the hilt but a case which can be said to be established if the evidence which is led in support of the same were believed."

On balance of convenience, the Court recorded: "The Court must weigh two matters. The first is to protect the plaintiff against injury by violation of his rights for which he could not be adequately compensated. The second is to protect the defendant against injury resulting from being prevented from exercising his own legal rights."

Discussing irreparable injury, the Court observed that it must be of a nature that cannot be compensated by damages. It recorded that "Irreparable injury must be such injury which cannot be adequately compensated by way of damages."

The Court stated that the grant of interim injunction is a discretionary remedy. It held: "Injunction is not a matter of right. It is discretionary in nature, and the party seeking injunction must come with clean hands and must not suppress material facts."

Turning to the scope of appellate review, the Court recorded the principle from Wander Ltd. v. Antox India Pvt. Ltd.: "The appellate court will not interfere with the exercise of discretion of the court of first instance and substitute its own discretion except where the discretion has been shown to have been exercised arbitrarily, capriciously, or perversely."

The Court also referred to Shyam Sel and Power Ltd., noting: "The appellate court would normally not be justified in interfering merely because it would have taken a different view."

Reviewing prior decisions, the Court found that Parksons Cartamundi and Goldmines Telefilms had not correctly applied the principle laid down in Colgate Palmolive Company. It observed that the departure in those decisions occurred without dealing with or overruling the binding precedent of Colgate Palmolive.

The Court observed that orders made under the Trade Marks Act, 1958 by the Registrar are distinct from orders made by trial courts under Order XXXIX of the Code of Civil Procedure and that principles governing appeals from Registrar’s decisions are inapplicable to interlocutory orders on injunctions.

The Court stated that an appellate court, while considering an appeal against an order refusing temporary injunction, must respect the discretion exercised by the trial court and may interfere only if the exercise of discretion is shown to be arbitrary, capricious, or perverse.

The Court stated that the Division Bench decision in Colgate Palmolive Company v. Anchor Health and Beauty Care Pvt. Ltd. lays down the correct position of law. It recorded that an order refusing temporary injunction does not cease to be a discretionary order merely because the trial court did not find any prima facie case in favour of the plaintiff.

The Court held that in matters concerning temporary injunctions, the court does not adjudicate upon the subject matter or any part thereof on merits but considers the application in the light of settled principles and exercises discretion after weighing relevant considerations, without expressing an opinion on merits of the case.

It recorded that the Division Bench decisions in Hiralal Parbhudas and National Chemicals and Colour Co., which relate to appeals against orders passed by the Registrar under the Trade and Merchandise Marks Act, 1958, are not applicable to appeals arising out of orders on injunction applications under Order XXXIX of the Code of Civil Procedure, 1908.

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The Court stated that the principles governing the scope of appeals from such orders are laid down by the Supreme Court in Wander Ltd. v. Antox India Pvt. Ltd., Shyam Sel and Power Ltd., and Ramakant Ambalal Choksi. It recorded that the appellate court will not interfere with the exercise of discretion by the court of first instance and substitute its own discretion except where the discretion has been shown to have been exercised arbitrarily, capriciously, or perversely, or where the trial court has ignored the settled principles governing grant or refusal of interlocutory relief.

The Court observed that while deciding such appeals, the appellate court may, in appropriate cases, adjudicate on facts even while respecting the discretionary nature of the impugned order, but must apply the legal standards laid down in Wander Ltd., Shyam Sel and Power Ltd., and Ramakant Ambalal Choksi.

The Court answered the reference accordingly and directed that the appeal be listed before the appropriate Bench for further hearing and disposal.

Advocates Representing the Parties

For the Appellants: Ms. L. M. Jenkins with Mr. Siddhant Dalvi, instructed by Laxmi Maria Jenkins., Mr. Ashish Kamat, Senior Advocate, with Mr. Karl Tamboly and Mr. Priyank Kapadia, instructed by Yashvi Panchal.

For the Respondents: Mr. Ravi Kadam, Senior Advocate, and Mr. Venkatesh Dhond, Senior Advocate, with Mr. H. W. Kane, Mr. Rohan Kelkar, Mr. Rohan Kadam, Mr. Manvendra Kane, Mr. Ashutosh Kane, Ms. Vedangi Soman, and Mr. I. K. Paranjape, instructed by H. W. Kane.

Case Title: UTO Nederland B.V. & Anr. v. Tilaknagar Industries Ltd.

Neutral Citation: 2025:BHC-OS:7110-DB

Case Number: Appeal No. 66 of 2012

Bench: Chief Justice Alok Aradhe , Justice M. S. Karnik, Justice Shyam C. Chandak

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