Sagar Ratna Restaurants Pvt Ltd v. Shree Shubh Rathnam Associates and Ors.

1. This hearing has been done through hybrid mode.

2. The present suit has been filed by the Plaintiff - Sagar Ratna Restaurants Pvt Ltd. seeking protection of its registered trade mark and trade name ‘SAGAR RATNA’ which is used for restaurants. The suit has been filed against the following parties: • Defendant No.1 - Shree Shubh Rathnam Associates • Defendant No.2 - Ms. Harshita Bansal • Defendant No.3 - Ms. Sunil Bansal • Defendant No.4 - M/s S.S. Hospitality • Defendant No.5 - Sudarshan Lal Kataria • Defendant No.6 - Garib Nawaz Industries Private Limited

3. The case of the Plaintiff is that the name ‘SAGAR RATNA' was coined in the year 1980 when the use of the mark ‘SAGAR’ and ‘SAGAR RATNA’ commenced. The mark ‘SAGAR’ and ‘SAGAR RATNA have also been registered in Class 30 bearing no. 635503 and 635505 by the Plaintiff. There are various other registered trademarks of the Plaintiff which are as under: TM No. Trademark Used Used Since Registered Class 635505 SAGAR (Word mark)

4. The original owner of the said marks was Mr. Jayaram Banan, who later on assigned the mark along with the goodwill to the Plaintiff. It is submitted by the Plaintiff that it has more than 110 outlets in Delhi and other parts of the country. It has also entered into various franchise agreement in several locations including Ludhiana, Chandigarh Jalandhar, Meerut, Karnal, Panchkula, Jaipur, Kosi, Patiala, Guahati and Karkala in Karnataka. The Plaintiff also claims that it has been advertising the mark ‘SAGAR RATNA’ extensively. It claims to have earned various awards and accolades such as the award for the best South India restaurants by the Times of India Group in May, 2003. The turnover of the Plaintiff for the last financial year is stated to be more than 100 crores.

5. The Plaintiff also claims to have applied for registration of similar marks such as ‘SAGAR EXPRESS’ as an extension of the ‘SAGAR/SAGAR RATNA’ restaurant brands. The said restaurants not only serve South Indian food to the customers but also sell various other South Indian treats such as namkeen, Indian sweets, assorted snacks etc.

6. It is submitted that the Plaintiff entered into a franchise agreement dated 11th July, 2021 (hereinafter, ‘franchise agreement’) with Defendant Nos. 1 and 2 for running of a ‘SAGAR RATNA’ restaurant in Sector 35 C Chandigarh. The said restaurant was to be a franchisee of the Plaintiff. The term of the agreement was to be for a period of seven years i.e. to expire on 10th January, 2028. In the said agreement, the Defendant Nos. 1 and 2 clearly recognise the ownership of the mark ‘SAGAR RATNA’ by the Plaintiff. The Defendant Nos. 1 and 2 were granted a non-exclusive, nonassignable trademark license to be used in respect of the restaurant in Sector

7. The claim of the Plaintiff is that the Defendant Nos. 1 and 2 are connected to Defendant Nos. 3 to 6. Defendant No. 3 - Mr. Sunil Bansal is the father of Defendant Nos. 2 - Harshita Bansal.

8. It is submitted by Mr. Bansal, ld. Counsel for the Defendants that Defendant No. 3 and 5 applied for registration of marks ‘SAGAR EXPRESS’ since there was some dispute between the parties in respect of non-payment. On 13th February, 2023, the Defendants 1 and 2 terminated the agreement and thereafter started using the name ‘SAGAR EXPRESS’ for the same restaurant in Chandigarh. According to Mr. Bansal, the said mark is the registered trademark of Defendant Nos. 3, 4 and 5. It is submitted of behalf of the Defendants that they currently run seven outlets under the name ‘SAGAR EXPRESS’.

9. The Plaintiff is severely aggrieved by the said use of the mark ‘SAGAR EXPRESS’ which is a deceptively similar mark. In fact, ld. Counsel for the Plaintiff points out that the Defendant No. 4 issued a legal notice claiming that ‘SAGAR EXPRESS’ and ‘SAGAR RATNA’ are similar and called upon Plaintiff to stop uses of the mark ‘SAGAR RATNA’.

10. The Court has been taken through the clauses of the franchise agreement. Clause 4.2.8(iv) reads as under: “(vi) That it shall not use any names or mark other than the Franchiser’s Trade Mark in connection with the Business and at the Outlet. The Franchisee undertakes that it shall not use any name or mark liable to be confused with the Trade Mark of the Franchiser with respect to the conduct of the Business or the running of the Outlet, during the subsistence of this Agreement and for a further period of seven (7) years from the termination of this Agreement with respect to any other business undertaken by the Franchisee or, connected directly or indirectly with the Business, either by itself or through any Person.”

11. Ld. Counsel for the Plaintiff also relies upon the non-complete clause i.e. Clause 4.2.10 of the franchise agreement between the parties.

12. There is a connection between the Defendants. Further, Defendant Nos. 1 and 2 were the franchisees of the Plaintiff where there are several acknowledgements of the ownership of the mark. It is also noticed that, there is no interim injunction which is operating in this matter. Clearly, the matter would require further hearing. But in the meantime, a balance would have to be struck and any further damage or dilution of the mark would have to be curtailed.

13. Accordingly, the following directions are issued: i) the Defendants shall not open any further restaurant or issue any franchise under the name ‘SAGAR’ or ‘SAGAR EXPRESS’ to any third party. ii) Insofar as the restaurant at Sector 35 C Chandigarh is concerned, since the said restaurant was always known as ‘SAGAR RATNA’ of the Plaintiff, the Defendant no.1 and 2, ought to stop use of the mark ‘SAGAR EXPRESS’ at that location till further orders of this Court.

14. On the question of non-compete clause and whether specific performance of the franchise agreement can be granted or not, the arguments are inconclusive at the moment and the same would require further hearing.

15. In view thereof, senior officials from both the sides shall remain present on the next date of hearing.