Delhi High Court Stops Ex-Franchisee From Running Restaurant Under ‘Moti Mahal’ Name After Licence Termination

Delhi High Court Stops Ex-Franchisee From Running Restaurant Under ‘Moti Mahal’ Name After Licence Termination

Introduction

The Delhi High Court has granted an ex-parte ad-interim injunction in favour of Moti Mahal Legendary Hospitality restraining its former franchisee, Sant Foods, from using the “MOTI MAHAL” trademark following termination of the franchise agreement. Justice Jyoti Singh held that once a franchise agreement stands terminated, the franchisee has no continuing right to operate a restaurant or conduct business under the licensor’s trademark.

Factual Background

Moti Mahal Legendary Hospitality, along with its proprietor Ashim Gujral, instituted a trademark infringement suit against Sant Foods alleging unauthorized use of the “MOTI MAHAL” mark after termination of their franchise arrangement.

Under a franchise agreement executed in 2025, Sant Foods had been granted a limited, non-exclusive licence to operate a restaurant under the “MOTI MAHAL” brand. The agreement required the franchisee to remit royalty payments and provide periodic disclosures regarding sales. The plaintiffs alleged that the franchisee breached these contractual obligations by failing to remit royalties and withholding sales information. Following termination of the agreement, the plaintiffs contended that Sant Foods continued to run its restaurant and promote services using the “MOTI MAHAL” name.

Procedural Background

Aggrieved by the alleged unauthorized use of its trademark, Moti Mahal Legendary Hospitality approached the Delhi High Court seeking urgent interim relief. The suit sought a restraining order prohibiting Sant Foods from operating or advertising any restaurant or catering business under the “MOTI MAHAL” trademark and directing removal of all infringing materials including menus, signage, stationery and online content.

Issues

1. Whether a former franchisee can continue to use a trademark after termination of the franchise agreement.

2. Whether continued use of the mark by the defendant constituted trademark infringement and passing off.

3. Whether the plaintiffs were entitled to interim injunctive relief.

Contentions of the Parties

The plaintiffs argued that they are the registered proprietors of the “MOTI MAHAL” trademark and that Sant Foods was granted only a limited licence to use the mark during the subsistence of the franchise agreement. They submitted that once the agreement was terminated due to breach of contractual obligations, the defendant had no legal right to continue using the trademark in any commercial capacity.

The plaintiffs further contended that continued operation of the restaurant under the “MOTI MAHAL” brand after termination amounted to infringement and passing off and would cause serious damage to the goodwill and reputation associated with the mark.

The defendants disputed the allegations and contested the plaintiffs’ claims regarding breach and continued use of the trademark.

Reasoning and Analysis

The Court observed that the plaintiffs had established a prima facie case for grant of interim protection. It noted that the “MOTI MAHAL” mark was a registered trademark belonging to the plaintiffs and that Sant Foods had been permitted to use it only under a non-exclusive and limited licence.

Justice Singh emphasised that once the franchise agreement is terminated, the franchisee loses any legal right to operate under the licensed trademark. Continued use of the mark after termination would therefore be unauthorized and likely to cause dilution of the brand’s reputation and goodwill.

The Court further held that allowing such use to continue would result in irreparable harm to the plaintiffs and that the balance of convenience lay in favour of protecting the trademark owner.

Decision

The Delhi High Court granted an ex-parte ad-interim injunction restraining Sant Foods from using the “MOTI MAHAL” trademark or any deceptively similar mark in relation to restaurants or catering services. The Court also directed the defendant to remove all infringing materials, including menus, signage, stationery and digital content from physical premises and online platforms within one week of receiving the order. The matter has been listed for further hearing on April 24, 2026.

In this case the plaintiff was represented by Advocate Rishabh Sharma. Meanwhile the defendant was represented by Advocates Anirudh Bhatia and Shreya Sethi.