Bombay High Court imposes ₹50 lakh costs on litigant for suppressing facts to obtain injunction

The Bombay High Court recently imposed ₹50 lakh as exemplary costs on a litigant who obtained an ex parte injunction in a trademark infringement case by suppressing material facts [Shoban Salim Vs Chaitanya Arora]..Justice Arif S Doctor held that the plaintiff engaged in “gross suppression of material facts” and deliberately and systematically played fraud upon the Court.“The deliberate and selective withholding of such material, namely (i) the territorial limitation/disclaimer, (ii) the evidence of prior user by the Defendants of the impugned trade mark, and (iii) the Plaintiff’s stand before the Trade Marks Registry while obtaining registration in Class 25, is, in my view, clearly a fraud which has been played on this Court by the Plaintiff only to obtain the ex parte ad interim order” the Court said, directing payment of ₹25 lakh each to two defendants within four weeks..The plaintiff, proprietor of a footwear brand, had approached the High Court seeking a permanent injunction restraining the defendants—Delhi-based traders—from using a mark it claimed was deceptively similar to its registered trademark.On June 30, the Court granted an ex parte ad-interim injunction restraining the defendants from manufacturing and selling footwear bearing the mark. Acting on the order, the court receiver seized several consignments of the defendants’ goods from the market.The defendants thereafter moved an application under Order XXXIX Rule 4 of the Code of Civil Procedure (CPC) seeking vacation of the injunction on the ground that it was obtained through suppression of material facts. They contended that the plaintiff’s registration was limited to Maharashtra, that they were prior users of their own mark since 2022, and that the plaintiff had taken inconsistent positions before the Trade Marks Registry..The Court identified three critical facts that the plaintiff had concealed:- territorial limitation restricting the plaintiff's trademark registration exclusively to Maharashtra state; - evidence showing the defendants' prior use of the disputed mark since April 2022; and - plaintiff's own prior contradictory position before the Trade Marks Registry..During the proceedings, the plaintiff admitted that due to the limitation on their Class 25 registration, they would not have been entitled to an injunction operating beyond Maharashtra. Nevertheless, they sought and obtained a pan-India injunction without disclosing this crucial limitation."To even suggest this would, in my view, be an affront to the Court, and to condone such 'inadvertence' would amount to putting a premium on dishonesty," Justice Doctor stated when rejecting the plaintiff's claim that these omissions were merely inadvertent..Justice Doctor was particularly critical of the plaintiff's subsequent conduct. "Even after the defendants brought the limitation/disclaimer on record, the plaintiff made no attempt to modify and/or restrict the operation of the ex parte order to only the State of Maharashtra. Instead, the plaintiff filed multiple affidavits alleging contempt, which the court saw as a tactic to "ensure that the ex parte ad interim order continued," the Court said..In view of the above, the Court concluded that the plaintiff not only obtained the ex parte ad interim injunction by playing a fraud upon the Court and, thereafter, when the same was brought on record, it brazenly sought to ensure that the same continued.The judge cited the Supreme Court judgment in Ramjas Foundation v. Union of India and emphasised that every Court is not only entitled but is duty bound to protect itself from unscrupulous litigants who do not have any respect for truth and who try to pollute the stream of justice by resorting to falsehood or by making misstatements or by suppressing facts..Since the suit was a commercial dispute, the Court referred to Section 35 of the Code of Civil Procedure as amended by the Commercial Courts Act of 2015, and observed that the conduct of the plaintiff was a relevant factor while determining costs.“The conduct of the plaintiff which I have already noted above, is also a relevant factor when considering the aspect of costs. … Hence an Order of costs must follow,” Justice Doctor saidThe Court further noted that the defendants’ business had come to a standstill due to the ex parte order, and directed the plaintiff to pay ₹25 lakh each as exemplary costs to defendant 2 and 3..The plaintiff was represented by Senior Advocate Janak Dwarkadas with advocates Namrata Vinod, Rashmin Khandekar, Pooja Jain, Bhavi Gada, Samaruddhi Naik, Suhail Shariff, Sherin Baby and Mohammad Omar Hashmi..The defendants were represented by Advocate Hiren Kamod with Vaibhav Keni, Neha Iyer, Prem Khullar, Vatsala Batra, Gaurav Gogia, Anees Patel, Aviral Srivastava and Rajat A instructed by Legasis Partners..[Read Judgment]