Cease-and-Desist Notice Creates Cause of Action: Supreme Court Sets Aside Gujarat HC Order Rejecting Trademark Suit

The Supreme Court has held that the issuance of legal notices calling upon a party to cease and desist from using a trademark constitutes a cause of action for the recipient to initiate legal proceedings seeking declaration and injunction against the sender.

A Bench of Justices Sanjay Kumar and Sanjeev Sachdeva held that a suit for declaration and permanent injunction cannot be rejected under Order VII Rule 11 of the Civil Procedure Code (CPC) on the ground of non-disclosure of cause of action when such notices have been issued.

Order 7 Rule 11 of the CPC empowers a civil court to reject a plaint at the threshold (or at any stage before the conclusion of trial) if it satisfies specific statutory grounds.

Dealing with an appeal filed by M/s Shiv Textiles, Court held that the Gujarat High Court was incorrect in rejecting the plaint for lack of cause of action under Order VII Rule 11, as the issuance of cease and desist notices by the respondent created a valid cause of action for the appellant to institute a suit.

M/s Shiv Textiles, the appellant, was a sole proprietorship represented by its proprietrix, Varshaben Kantilal Talreja.

Talreja obtained registration of the trademark ‘Jolly Ranger Legwear’ in Class 25 in respect of ‘Jeans Pants’ on July 27, 2019. She claimed to have used the trademark from January 1, 2019.

Iconic IP Interests LLC, the respondent, which was incorporated in Delaware, United States of America, issued legal notices on April 28, 2023, June 9, 2023 and August 17, 2023, calling upon the appellant to cease and desist from using its trademark. The respondent claimed that it had been using ‘Jolly Rancher’ globally since 2004 for a variety of goods, including those in Class 25.

The respondent also claimed that it had started using the mark for candy in 1996.

Admittedly, the respondent applied for registration of the trademark ‘Jolly Rancher’ in Class 25 only on June 7, 2023, with the user detail stated as ‘proposed to be used’. The trademark was subsequently stated to have been registered on October 9, 2023.

Aggrieved by the legal notices, the appellant filed a Commercial Trade Mark Suit before the Commercial Court, Bhavnagar, Gujarat, against the respondent.

The suit sought a declaration and permanent and perpetual injunction against infringement of the appellant's registered trademark.

While the suit was pending, the respondent filed an application under Order VII Rule 11 of the CPC, seeking rejection of the plaint on the grounds of non-disclosure of a cause of action and non-joinder of necessary parties.

However, by an order dated November 22, 2024, the trial court rejected the application, observing that the suit could not be summarily dismissed at that stage as the grounds raised by the respondent did not fall within the ambit of Order VII Rule 11 of the CPC.

Aggrieved by the order, the respondent filed a special civil application under Article 227 of the Constitution before the Gujarat High Court at Ahmedabad.

By its impugned judgment dated May 9, 2025, a division bench of the high court allowed the petition and rejected the appellant's plaint on the ground that there was no cause of action.

Examining the challenge to the judgment, the Supreme Court noted that the respondent had thereafter filed a commercial suit before the Delhi High Court against the proprietrix of the appellant, seeking a permanent injunction restraining her from manufacturing, offering for sale, selling, displaying, advertising and marketing ready-made clothing, including jeans and pants, under the mark ‘Jolly Ranger’, which the respondent claimed was identically or deceptively similar to its mark ‘Jolly Rancher’.

Having heard counsel for the appellant and the respondent, the Bench said:

“We are at a loss to understand as to how the respondent can prevent the appellant from maintaining a suit against it by claiming there was no cause of action, despite issuing three cease and desist notices to it.”

Court opined that the issuance of such notices, by itself, constituted a cause of action for the appellant to initiate legal proceedings against the respondent.

“Further, institution of a suit by the respondent against the appellant on the very same issue, that is, with regard to the registered trademark being used by the appellant, clearly demonstrates that the appellant did have a cause of action for filing a suit,” the Bench said.

Court held that the high court was, therefore, not justified in drawing the inference that there was no cause of action for the appellant to have filed a suit at that point of time.

It said the high court had failed to attach necessary weight to the fact that it was the respondent that had created the cause of action for the appellant by issuing multiple cease and desist notices.

Court accordingly set aside the impugned judgment and restored the commercial trade mark suit to the file of the Commercial Court, Bhavnagar, Gujarat.

Allowing the appeal, Court directed that the proceedings should resume and continue in accordance with law.

Case Title: M/s Shiv Textiles Vs Iconic IP Interests LLC

Bench: Justices Sanjay Kumar and Sanjeev Sachdeva 

Date of Judgment: September 29, 2026