The Khadi and Village Industries Commission (KVIC) has demanded Rs 525 crore compensation from lifestyle retailer FabIndia for its alleged unauthorised use of its trademark 'khadi'.
In a legal notice issued to FabIndia Overseas Private Limited on January 29, KVIC alleged that FabIndia was using the word 'khadi' in its price tags. It also accused the brand of deceiving customers by selling "factory made" cotton garments, which had been spun in mechanised spinning wheels, as khadi products, Hindustan Times reported. According to the KVIC, authentic khadi products are those that are spun in Ambar charkhas or hand-driven spinning wheels.
Moneycontrol reported that tests carried out on FabIndia samples by Textile Laboratory and Research Centre, Mumbai, found that the brand had been using blends of flax with cotton, while another report by an independent research institute also found samples were not khadi.
In its notice, the government agency which promotes khadi has specifically asked the retailer to pay "monetary damages for the loss of profit earned by them by using the trademark 'KHADI' and the Khadi Mark," the report adds.
The Khadi Mark Regulations, 2013, state that a Khadi Mark registration can only be issued by the KVIC. It prohibits any person or institution from selling products bearing the 'khadi' tag if they do not have a Khadi Mark certificate.
KVIC has warned FabIndia of legal proceedings if they do not comply with their demands.
Denying the allegations as 'baseless', a FabIndia spokesperson said that any legal action by the KVIC will be defended by them 'vigorously'.
"We are in receipt of the notice from lawyers instructed by KVIC, and are surprised at its contents. We have made it clear to 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. 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," the spokesperson told HT.
The dispute between KVIC and FabIndia can be dated back to 2015 when the former had sent a notice to the company for issuing advertisements to sell/trade fabric in the name of khadi. FabIndia stopped the advertisement two months later. It is reported FabIndia's application for a certificate was rejected later because it did not follow the due process.
However, it allegedly continued to flout norms.
In another notice issued in 2017, accusing FabIndia of violating rules, the KVIC said, "It is an illegal act and, in other words, amounts to indulging in unfair trade practice."