NCLT has Jurisdiction to decide Trademark related issues u/s 60(5)(c) of IBC: NCLAT [Read Order]
NCLT has jurisdiction to decide trademark related issues u/s 60(5)(c) of IBC, rules NCLAT
NCLAT Delhi – National Company Law Tribunal – NCLT jurisdiction on trademark issues – NCLAT ruling on NCLT’s authority – Taxscan
NCLAT Delhi – National Company Law Tribunal – NCLT jurisdiction on trademark issues – NCLAT ruling on NCLT’s authority – Taxscan
The New Delhi Bench of the National Company Law Appellate Tribunal ( NCLAT ) held that National Company Law Tribunal ( NCLT ) has jurisdiction to decide trademark related issues under Section 60(5)(c) of the Insolvency and Bankruptcy Code, 2016 ( IBC ).
A former employee ( Jayant Panja ) of the Corporate Debtor, filed an application under Section 9 of the Insolvency and Bankruptcy Code, 2016 which was admitted on 09.08.2018. Initially, Manish Jain was appointed as the Interim Resolution Professional ( ‘IRP’ ) but later on he was replaced by the present IRP ( Respondent No. 3 ) on 04.12.2018.
Respondent No. 3 (RP) filed an application under Section 30(6) of the IBC seeking approval of the resolution plan of the Corporate Debtor submitted by Respondent No. 2, duly approved by the CoC by vote share of 73.21% of the members of the CoC.
All the objections have been maintained by the Adjudicating Authority holding that all deeds executed between Respondent No. 1 and the Appellant were void and illegal, the transaction relied upon by the Appellant is undervalued transaction and is hit by Section 45(2)(b) of the IBC and that the registration having been done after the imposition of moratorium is hit by Section 14 of the IBC. Aggrieved by the impugned order dated 27.09.2019, the present Appeal has been filed under Section 61 of the IBC by the Appellant.
It was alleged that the Corporate Debtor held a shareholding of 16.7% in the Appellant Company but exited the Appellant Company in March, 2004 and on 20.07.2004 the name of the Appellant was changed from Crest Cables Pvt. Ltd. to Gloster Cables Limited and that the Appellant entered into a trademark agreement on 29.07.2004 with the Corporate Debtor for a long term exclusive license to use the trademark for a consolidated fee of Rs. 3 Crores with an annual royalty of Rs. 2 Lakh. This agreement was executed for a period of 33 years which was to be renewed automatically.
The counsel for the Appellant has submitted that a technical collaboration agreement was entered into between the Appellant and the Corporate Debtor on 02.05.1995 by which the Appellant was granted the right to use the trade mark for marketing its products for a period of 8 years and the Appellant agreed to pay a royalty of 2% of ex-works prices of the products sold or leased.
It was submitted that determination of the title/ownership of the trademark is not within the jurisdiction of the Adjudicating Authority under the Code. In this regard, reliance has been placed upon the judgment of the Supreme Court rendered in the case of Gujarat Urja Vikas Nigam Limited Vs. Amit Gupta & Ors.
A Two-Member Bench comprising Justice Rakesh Kumar Jain, Member ( Judicial ) and Mr. Naresh Salecha, Member ( Technical ) observed that “We are of the considered opinion that the Adjudicating Authority had the jurisdiction which was though not challenged before it by the Appellant when it itself had filed the application for seeking a declaration/clarification as to whether the trademark is the property of the Corporate Debtor or the Appellant but still in view of Section 60(5)(c), we are of the opinion that if a question of law or fact arising out or in relation to the insolvency resolution then the Adjudicating Authority shall have the jurisdiction.”
To Read the full text of the Order CLICK HERE
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