KVIC Seeks Rs 525 Cr in Damages from Fabindia for Using Khadi Tag

The lawsuit claims Fabindia sold factory-made cotton garments falsely labeled as ‘khadi’ despite repeated warnings.

A Fabindia spokesperson dubbed the Khadi Commission claim as “baseless”, and said it will defend itself vigorously.

(Photo Courtesy: R City Mall)

The Khadi and Village Industries Commission (KVIC) has sent a legal notice to Fabindia, a retail chain of ethnic-wear outlets, demanding a whopping Rs 525 crore in damages for "illegally" using its trademark charkha and selling apparels with the khadi tag.

The KVIC, according to the legal notice, has also threatened to launch legal proceedings against Fabindia Overseas Pvt Ltd if it does not desist from displaying the trademark similar to its own.

A Fabindia spokesperson, however, dubbed the KVIC claim as baseless, and said it will defend itself "vigorously" if any action is taken in pursuance of the legal notice.

The KVIC asked the company "to cease and desist immediately and forthwith from displaying the charkha or using/selling products bearing the charkha or khadi mark or any similar marks on goods and use/sell products bearing the word/mark of khadi or any similar mark whatsoever or howsoever related to khadi."

It sought an “unconditional apology” and a written undertaking from Fabindia that it will not deal in any khadi or related products bearing the khadi trademark.

According to sources, KVIC, which is an autonomous body under the Ministry of Micro, Small and Medium Enterprises, sent the legal notice on 29 January and sought a response from Fabindia within seven days of receipt, failing which the Commission will approach court to protect its rights and goodwill.

“We are in receipt of the notice from lawyers instructed by KVIC, and are surprised at its contents. We have made it clear to the KVIC through extensive correspondence and in multiple meetings over the last two years that Fabindia is not in violation of any of the provisions of the KVIC Act or regulations framed thereunder,” a Fabindia spokesperson said.

The claims made in the notice are baseless. The notice has been entrusted to our lawyers, and any action taken in pursuance of the notice will be defended by us vigorously.

Fabindia Spokeperson

Dispute Goes Back to 2015

The KVIC's lawyer said in the legal notice that in July 2015, it was noticed that the company was "illegally" using the khadi mark tag and selling products bearing the trademark which was "identical" and "deceptively similar" to KVIC's registered trademark.

The products offered under the impugned mark khadi and the khadi mark tag were not even genuine khadi garments. You (Fabindia) were selling factory-made cotton garments as khadi, whereas khadi is handspun and handwoven, and thereby misleading the consumers.

KVIC Notice

The KVIC notice said it caused "irreparable loss, harm and damage to the goodwill" associated with the khadi trademark and also loss to the artisans.

It said the KVIC had earlier sent a notice to the company on 13 August 2015, asking it to stop the "illegal and unauthorised" use of the khadi mark and desist from issuing "misleading" advertisements for khadi products in newspapers.

This fresh notice claimed that, in response to an earlier notice sent by the KVIC, Fabindia had said it had stopped its advertisement campaign in all media and sent internal directions to stop selling apparel that claimed to be khadi.

KVIC in its statement said that around January 2017, it was shocked to learn that despite the undertaking, Fabindia kept using the khadi tag on products.

It claimed that the company “deliberately” used the similar trademark and the khadi tag with the sole intention to “trade upon the goodwill and reputation” of khadi and its products worldwide.

KVIC’s notice alleged that Fabindia continued to "deceive" public by pretending that its products are handwoven, and that its intentions were malafide. It contended that the company was liable for both civil and criminal proceedings.

The KVIC has sought monetary damages of Rs 525 crore for "loss of profit earned by Fabindia by using the trademark khadi and the khadi mark which is qualified at 25 percent of the average annual profits booked by Fabindia before the IT authorities in the preceding three years".

(This article was published in an arrangement with PTI)