Delhi HC Restrains ‘Zepto Finance’ From Using Zepto Trademark

Delhi High Court (HC) has granted Zepto an ex-parte interim injunction against entities operating under the name “Zepto Finance”, restraining them from using the “Zepto” trademark or any deceptively similar mark after finding a prima facie case of trademark infringement.

In an order dated July 22, Justice Jyoti Singh observed that Zepto had made out a prima facie case for the grant of interim relief and restrained the defendants, including Sailendra Kashyap and others, from advertising, promoting or marketing services using the marks “Zepto Finance” or any identical or deceptively similar variants until the next hearing. 

The court has also issued summons in the commercial suit, with the matter listed before the Joint Registrar on August 21 and before the court on November 30.

Zepto alleged that Zepto Finance, which is the operating name adopted by 1997-registered NBFC Naman Finlease Private Limited, was using the domain “zeptofinance.com” and an Instagram account under the same name to offer lending services.

The quick commerce startup noted that it was already operating under the registered “Zepto” trademark and had expanded into financial offerings such as Zepto Cash and buy-now-pay-later service, Zepto Pay Later. Zepto claimed it had issued cease-and-desist notices after discovering the alleged infringement in March this year, but the defendants denied any wrongdoing and continued using the marks.

The startup argued that the use of “Zepto Finance” had resulted in actual consumer confusion, with several legal notices and complaints relating to alleged loan frauds being mistakenly addressed to Zepto. 

It also submitted before the court that summons in a civil suit concerning a personal loan dispute were inadvertently served at one of its dark stores because of the similarity between the names.

Accepting these submissions at the interim stage, the court observed that Zepto has established significant goodwill in the market through continuous use of its trademarks since 2021 and has already diversified into payment wallet and BNPL services, making the defendants’ use of “Zepto Finance” for lending-related services likely to cause confusion among consumers. 

This is not the first trademark dispute involving Zepto. Last year, the quick commerce startup won a trademark case in the Delhi HC, which ordered the removal of the ‘Zepto’ trademark registered by Mohammad Arshad in 2014 after finding that he had never used it commercially.

The court ruled that Zepto, owned by Kiranakart, had built a strong brand since its launch in 2021, while Arshad’s trademark merely blocked the startup from registering its own mark.

Zepto’s IPO Bid

The latest order comes as Zepto prepares for a closely-watched stock market debut that could value the startup well below its peak private valuation of $7 Bn. As per reports, Zepto is eyeing an IPO within the month of August.

The quick commerce unicorn filed its updated draft red herring prospectus (UDRHP) with the SEBI last month. The IPO includes a fresh issue of shares worth ₹8,010 Cr and an offer for sale of up to 11.35 Cr shares.

The startup plans to use the fresh capital to expand its dark store network, fuel growth and marketing activities and enhance tech stack. Meanwhile, investors Nexus Venture Partners, Razor Capital and Contrary Capital will offload shares via the OFS component of the IPO.

Ahead of the opening of the issue, foreign investors are showing interest in backing the startup’s stock market ride at a valuation of about $4.5 Bn, which would imply a post-money valuation of roughly $5.1Bn, sources told Inc42 earlier this month.

The discount reflects concerns over Zepto’s cash burn and its path to profitability, as well as uncertainty in global markets. Even so, the offering continues to draw institutional interest.

Norway’s sovereign wealth fund Norges and Motilal Oswal are expected to account for about 40% to 45% of the anchor book, according to the sources. Domestic institutional investors have also sho wn interest, and the anchor book is said to be nearing completion.

The final valuation could still change before the anchor book closes and the price band is announced, with the eventual pricing likely to depend on investor demand and broader market conditions.

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