Recently, Praharsh shared an interesting order, Kailash Kumar Jain v. Kundan Electro, with me concerning ex-parte proceedings—where the Delhi High Court called out non-recording of reasons by the trial court for granting ex-parte injunctions, setting the suit afresh. While there have been past instances where courts have criticized the unreasoned granting of interim ex-parte injunctions (see, e.g., here), the present case places special emphasis on this issue. Examining the current law and cases on ex-parte injunctions, the case raises the clarion call for treating such injunctions as an exception demanding careful consideration. It’s a welcome step, and I recommend that readers peruse this 9-page order here. For the previous SpicyIP discussion on the ex-parte orders (not necessarily limited to trademark cases), see here, and for a comprehensive post on interim injunctions, see here. In this tidbit post, I discuss the case and underscore the key takeaways.
(Note: It’s noteworthy that the impact of ex-parte injunctions can vary significantly across different types of intellectual property. For instance, such injunctions often have more severe public implications in patent cases than in trademark disputes. Likewise, defendants in trademark cases may have different reasons for not appearing in court, as copying a mark is typically less costly than replicating a patented invention.)
The case arose as an appeal against a trial court order concerning passing off and trademark infringement between NORWOOD (owned by the respondent/plaintiff) and FIREWOOD (adopted by the appellant/defendant). While the present appeal and this post do not delve into the case’s merits, it’s worth noting that the defendant appears to have registered the mark FIREWOOD. The High Court focused on the trial court’s abject failure to give reasons for granting an ex parte injunction.
The Court relied on two Supreme Court cases and one Delhi High Court case to clarify the issue’s scope and importance.
The first case dealt with was Shiv Kumar Chadha v. Municipal Corpn. of Delhi, which discussed Rule 3 of Order 39 of the Civil Procedure Code, 1908, focusing on the proviso introduced by the Civil Procedure Code (Amendment) Act, 1976. The rule requires the court to notify the opposite party before granting an interim injunction. The proviso clarifies that if an injunction is granted without notifying the opposite party, the court must “record the reasons” for its opinion that delaying the injunction would defeat its purpose while also prescribing other formalities for the plaintiff to fulfill. Underscoring the importance of proviso, the Supreme Court noted:
“34. … If it is held that the compliance with the proviso aforesaid is optional and not obligatory, then the introduction of the proviso by the Parliament shall be a futile exercise and that part of Rule 3 will be a surplusage for all practical purposes. Proviso to Rule 3 of Order 39 of the Code attracts the principle, that if a statute requires a thing to be done in a particular manner, it should be done in that manner or not all. …”
The second case relied upon was Morgan Stanley Mutual v. Fund v. Kartick Das, where the Supreme Court laid a multi-factor test for granting the ex-parte injunction, namely (see para 36):
“(a) whether irreparable or serious mischief will ensue to the plaintiff;
(b) whether the refusal of ex parte injunction would involve greater injustice than the grant of it would involve;
(c) the court will also consider the time at which the plaintiff first had notice of the act complained so that the making of improper order against a party in his absence is prevented;
(d) the court will consider whether the plaintiff had acquiesced for sometime, and in such circumstances, it will not grant ex parte injunction;
(e) the court would expect a party applying for ex parte injunction to show utmost good faith in making the application.
(f) even if granted, the ex parte injunction would be for a limited period of time.
(g) General principles like prima facie case, balance of convenience, and irreparable loss would also be considered by the court.”
The third case the Court relied upon was DHC’s Hulm Entertainment vs. SBN Gaming Network Private Limited. Citing the case, the Court stated that while the obligation to record reasons is a vital safeguard embedded in the statute, “the statutory imperative does not detract from the power of the court to proceed ex parte where circumstances so require.”
Finally, the Court allowed the appeal, set aside the trial court’s impugned order, and directed the revival of the suit for fresh proceedings.
On a side note, reading this case felt like witnessing a tale of justice—the High Court ultimately rescued a defendant wrongly wrung by the trial court. The lawyer, embodying the spirit of justice, argued compellingly to restart the suit afresh, to which the Court agreed. Voila, a happy ending for unreasoned ex-parte injunctions? So we hope. But let’s see how the future shapes this saga. After all, “Picture abhi baaki hai, dost!”