When Shared Goodwill And Silence Defeat An Injunction: Which Direction Should DAKSHIN Go?

The Delhi High Court’s July 1, 2026 Division Bench decision in ITC Limited & Anr. v. Adyar Gate Hotels Limited, FAO(OS) (COMM) 207/2025 declined to grant an interim injunction against Adyar Gate Hotels Limited's [AGH] use of the DAKSHIN mark for its restaurant. The Single Judge had also refused an interim injunction - finding that the Indian Tobacco Company Limited [ITC] failed to establish a prima facie case of passing off; its claim was hit by acquiescence; and its copyright claim in the logo was not sustainable at the interim stage. The Division Bench agreed, though it differed from the Single Judge on territorial jurisdiction.

‘Dakshin’ (meaning ‘south’ in the Hindi language) is a popular South Indian cuisine restaurant that opened its doors at the Park Sheraton Hotel in Chennai in April 1989. The hotel, owned by AGH, was operated by ITC under an Operating Service Agreement [OSA] entered into in 1985. The OSA expired in March 2015 and, thereafter, ITC withdrew from the hotel. AGH entered into a fresh arrangement with the InterContinental Hotel Group and continued operating the ‘Dakshin’ restaurant under the Crowne Plaza brand. It is significant to note here that ITC did not object to AGH’s continued use of the restaurant name from 2015 to 2023. Following demolition of the hotel building in 2024, AGH relocated the restaurant to a new venue on the same road. This prompted ITC to approach the Delhi High Court seeking an injunction.

ITC claimed that it was the proprietor of the trademark DAKSHIN and that AGH’s right to use the mark had ended with the termination of the OSA in 2015. ITC relied upon its trademark ‘Dakshin’ registered in Classes 29 and 30 in the year 2000, its extensive use and promotion of the mark, and its copyright registration in the artistic logo. It also contended that AGH’s continued use amounted to passing off as consumers could associate AGH’s restaurant with ITC. AGH, on the other hand, relied upon its own Class 42 ‘Dakshin’ registration for restaurants, its continuous use of the mark since 1989, the terms of the OSA, and ITC’s prolonged failure to object amounting to acquiescence.

PASSING OFF: A 3 course meal

Both parties were thus registered proprietors of the ‘Dakshin’ trademark, albeit in separate classes. Given the prevailing legal position that infringement actions do not lie against proprietors of registered trademarks (though the point is under judicial consideration), this case was analysed through the lens of a passing off claim which is tested on three factors: (1) goodwill; (2) misrepresentation; and (3) resulting damage.

Territorial Jurisdiction: Are we in the right place?

In trademark and copyright infringement disputes, the ordinary rule under Section 20 of the Civil Procedure Code (CPC) permits a suit where the defendant carries on business or where the cause of action arises. Sections 134(2) of the Trade Marks Act and 62(2) of the Copyright Act additionally permit an infringement action where the plaintiff resides or carries on business, although the Supreme Court in Indian Performing Rights Society Ltd v. Sanjay Dalia has cautioned against using these provisions for forum shopping. This additional forum is not available for a passing off action, which remains governed by Section 20 of the CPC.

The Single Judge had held that the Delhi High Court lacked territorial jurisdiction over ITC’s passing-off claim. The ability of customers in Delhi to reserve tables at AGH’s Chennai-based Dakshin restaurant through platforms such as Zomato was considered insufficient: a reservation could be cancelled or never acted upon, and the commercial transaction was completed only when the customer visited and paid at the restaurant in Chennai. The Court also found no evidence that AGH targeted Delhi, that its activities had damaged the goodwill of ITC’s Dakshin restaurant in Delhi, or that AGH intended to expand into Delhi so as to sustain a quia timet action.

The Division Bench took a different view. Drawing on Banyan Tree, World Wrestling Entertainment, Ultra Home Construction and related jurisprudence, it held that AGH had “purposefully availed” itself of Delhi by making its services available through e-commerce platforms. The Court emphasised that “interactive accessibility is the key to determining territorial jurisdiction”: mere accessibility of a passive webpage may not suffice, but where users within the forum can interact with the platform and enter into a commercial transaction, territorial jurisdiction may prima facie arise.

The broader jurisdictional rule applicable to online transactions, however, remains unsettled; in Hindustan Unilever v. Kwick Living, the Division Bench [order of September 2, 2026] upheld Delhi jurisdiction on the specific facts before it, while expressly declining to comment on the Single Judge’s reference of conflicting jurisdictional authorities to a Larger Bench.

Goodwill: The amuse-bouche

Having found jurisdiction, the Court turned to the question of goodwill in the DAKSHIN mark. This required an in-depth analysis of the OSA between ITC and AGH. The Court found that “ITC was engaged by AGH as a service provider”. Highlighting the terms of the OSA, the Court stated that “Article V of the OSA specifically provided for payment, by AGH to ITC, of “Service Fee” and “Incentive Fee” “in consideration”. Article XVI stipulated that ITC would be “deemed to be acting entirely for the benefit of and the assistance to” AGH. AGH was, therefore, clearly the prime actor under the OSA”. ITC was held to be “merely a service provider under the OSA, engaged by AGH for providing services against service fee.”.

The Court deduced that goodwill generated through use of the mark during the validity of the OSA could not belong to ITC alone. The Court viewed AGH’s financial input in running the hotel as pivotal and remarked that “AGH cannot, quite obviously, be denied the benefit of the goodwill earned using the Dakshin’ mark till the expiry of the OSA”. Thus, goodwill existing in the mark was, prima facie, found to vest in both AGH and ITC.  

Misrepresentation: The missing ingredient

Goodwill being established, the Court explained the tort of passing-off as “…a tort of deceit, as it embodies the intent of the tortfeasor to represent, to the consumer public, that its goods or services are those of another”. Applying this test, it observed that “there is nothing to indicate that AGH, at any point of time, represented [misrepresented], to the public, the existence of any association between its Dakshin restaurant at Chennai and the various Dakshin outlets of ITC”. However, this is a prima facie view and the Court stated that “whether the consumer public is misled into believing an association between the two restaurants is a matter of trial”.

Damage: Off the menu

With shared goodwill and no prima facie misrepresentation established, ITC also faced difficulty on damage. According to the Court, there was no “material to indicate any damage to ITC” and the requirement of injury and damage was a “triable issue”. Thus, with both parties being owners of goodwill, lacking misrepresentation and damage, ITC could not carry the passing-off case across the line at the interim stage.

ACQUIESCENCE: The impact of prolonged silence

Acquiescence was another prime ingredient. AGH had continued to use the DAKSHIN mark after the expiry of the OSA in 2015 until 2023. ITC was aware of this use but opted not to object at any stage. Further, AGH’s registration in Class 42 had also been obtained in 2005 and ITC did not challenge this by way of opposition or rectification.

The law of acquiescence restricts an earlier trademark proprietor, who has knowingly acquiesced in the use of a later registered mark for a continuous period of five years, from subsequently seeking to restrain such use unless the registration was not applied in good faith. ITC’s prolonged silence was found to be fatal to the grant of an injunction. The Court observed that “there is no explanation worth the name for ITC’s continued silence between 2015 and 2023”.

The Court remarked that “even after the registration of the mark DAKSHIN in favour of AGH, ITC has not chosen, till date, to file any application seeking rectification of the register of trademarks by removal, therefrom, of the registered mark of AGH. ITC has also, therefore, allowed the registration to continue, unchallenged”. Thus, knowledge of continued use coupled with prolonged inaction can materially affect the availability of injunctive relief.

COPYRIGHT: Registration is not proof of ownership

With ITC unable to establish a prima facie passing off case, and acquiescence weighing heavily against it, its final course was to rely on copyright in the artistic label. The Court also rejected this claim at the interim stage as ITC could not establish ownership with evidence.

The copyright registration identified Indu Balachandran, an employee of the Hindustan Times Agency, as the author. While ITC argued that the copyright had subsequently been assigned to it, no written deed of assignment was produced. Per the Court, the Register of Copyright is simply a “prima facie evidence of the particulars entered in the Register” and the “existence of the certificate of registration cannot, therefore, amount to proof of ownership”.

Conclusion

The Division Bench ultimately dismissed ITC’s appeal.

The case serves as an example of how the history of adoption of a mark and its subsequent use, the contractual relationship between two parties, manner in which goodwill is generated, acquiescence, and the evidentiary basis for ownership of an IP right can all prove decisive against a business rival. This is a matter where the legal ingredients did not quite come together for ITC. Goodwill was shared, misrepresentation was missing, and years of silence left the claim with little appetite for an injunction. The real food for thought: sometimes what you leave on the table matters as much as what you put on it.

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