Hi hushar,

You state that they own a foreign trademark for your domain. An important question is whether or not they own trademark rights in India (either registered or common law rights). If yes, then you might well face trademark infringement problems especially if you're using the domain in the same industry as the trademark owner. There's more general info here.

Also, as chandan mentions above, it's important to know whether or not it's a generic word you're talking about. As a general rule, generic terms can't be trademarked - however there are exceptions such as when the generic word acquires a secondary meaning.

I hope the above helps.