The Madras High Court on Friday, September 29, 2023 decided to hear on Tuesday, October 3 the commercial division appeals preferred by former franchisees of Sangeetha Caterers and Consultants LLP seeking a stay of a single judge’s interim order restraining them from continuing to run restaurants across Chennai city under the brand name ‘Geetham.’
Chief Justice S.V. Gangapurwala and Justice P.D. Audikesavalu told Senior Counsel P.S. Raman, representing the former franchisees, that the case could be heard next week after serving of papers on Senior Counsel A.K. Sriram, representing Sangeetha Caterers and Consultants LLP which was on caveat.
When Mr. Raman feared initiation of contempt proceedings if the interim injunction, granted by Justice P.T. Asha on September 22, was not stayed immediately, the Chief Justice said, nothing would happen during the next three holidays and that the plea for stay would be considered on Tuesday after hearing the other side.
In the plaint filed in support of its civil suit, alleging infringement of trademark, before the single judge, Sangeetha Caterers and Consultants said, the first restaurant with the mark Sangeetha was opened in 1985 and the second in 1990. During the initial years, it was run as a family business by the founders P. Suresh and P. Rajagopal.
On November 22, 2001, it became a partnership firm and from April 1, 2015 it was converted into a Limited Liability Partnership (LLP). The business was expanded by running restaurants in as many as 29 locations in Chennai and 21 more foreign units in Belgium, France, US, UK, Qatar, Bahrain, UAE, Malaysia and Hong Kong.
The plaintiff had registered the trademarks, Sangeetha, Sangeetha Veg, SVR (Sangeetha Veg Restaurant), Sangeetha Express in India and had applied for registration of the marks even in foreign countries. Taking note of the success of the brand, one N. Murali had approached Mr. Suresh wanting to be the company’s franchisee.
The first franchise agreement was signed in 2009 to start a restaurant at Velachery in Chennai. Thereafter, over a period of time, several such agreements were signed with Rasnam Foods Pvt. Ltd., RSM Foods Pvt. Ltd., Prasanam Foods Private Limited and GVR Foods Private Limited for starting more restaurants across Chennai city.
Accordingly, they were opened in Thoraipakkam, Medavakkam, Tata Consultancy Services’ office in Siruseri, T. Nagar and Navalur. As per the agreements, the franchisees were not supposed to directly or indirectly pursue any competing business against the franchisor not only during the period of agreement but also up to five years after the termination of the agreements.
In violation of the specific clause, the franchisee companies had started competing businesses such as Udupi Ruchi in 2016 and also wanted to start a new restaurant of their own at Medavakkam in Chennai when the franchisor refused consent to shift the existing restaurant. Hence, all the franchisee agreements were cancelled with effect from May 31, 2022.
However, from June 1, 2022, the former franchisees began to run the restaurants in a deceptively similar trademark titled ‘Geetham’ and attempted to cash in on the popularity earned by Sangeetha. They also publicised that the menu, taste, service and everything else would continue to be the same except for the name, the plaintiff complained.
On the other hand, the former franchisees told the court that they sought permission to shift the Medavakkam restaurant to a new location only because of adverse effect on the business due to ongoing Metrorail works. Following the fiasco, they claimed that Sangeetha Caterers had permitted them to start their own restaurants after terminating the franchise agreements.
The former franchisees also asserted that ‘Geetham’ was a completely distinct mark and could not be termed deceptive. However, Justice Asha, prima facie, found that there had indeed been an infringement of trademark and that use of the name ‘Geetham,’ coupled with the promotion materials, had caused confusion in the minds of the customers.
Hence, she granted an interim injunction which the former franchisees now seek to get stayed by the Division Bench.
