Conditional Permission to Liquidate Existing Stock Subject to Deposit of Sale Proceeds Pending Disposal of Injunction Challenge

The Appellant challenged an ex-parte ad-interim injunction order dated June 5, 2026, passed by a learned Single Judge in I.A. No. 15975/2026.

The Single Judge had restrained the Appellant from manufacturing or selling goods under the marks "DIZEST," "CELSIUSDIZEST," or "DYZEST," finding them deceptively similar to the Respondent's "ZEST" family of marks.

During the appeal, the Appellant expressed intent to file a vacation of stay under Order XXXIX Rule 4 of the CPC but sought permission to liquidate existing stock valued at approximately ₹27.91 Lakhs.

The Respondent consented to this sale provided the proceeds were secured by the Court.

1. Whether the Appellant should be permitted to dispose of existing inventory bearing the impugned trademarks pending the final adjudication of the injunction application?

The court exercised its appellate jurisdiction under the Code of Civil Procedure, 1908 (CPC), specifically considering the balance of equities inherent in Order XXXIX Rules 1, 2, and 4.

The court relied on the principle of "equitable interim relief," allowing a party to mitigate losses through a court-monitored sale where the opposing party provides consent.

The court did not delve into the merits of the trademark infringement or passing off claims, as the Appellant elected to pursue a vacation of the injunction before the Single Judge.

By recording the Respondent's "no objection" to the sale of the inventory—contingent upon the deposit of sale proceeds—the court created a safeguard for both parties.

The court determined that allowing the sale of unit-specific batches (as detailed in the Appellant's affidavit) by October 31, 2026, would prevent the total loss of the goods' value while ensuring the disputed revenue remains within the court's jurisdiction to satisfy any future decree.

The Appellant was directed to deposit 50% of the sale proceeds with the Registrar General of the High Court by November 15, 2026, which is to be kept in an interest-bearing FDR.

The Appellant must file an affidavit of sale/balance stock by the same date.

The Court clarified that this arrangement is without prejudice to the parties' rights in the main suit and the Appellant was granted liberty to file an application under Order XXXIX Rule 4 CPC before the Single Judge.