NCLAT Delhi: NCLT Has Jurisdiction To Decide The Issue Of Trademark U/S 60(5)(c) Of IBC

Background Facts:

While the Resolution Plan submitted by Gloster Limited (Respondent 2) for Fort Gloster Industries Ltd. (Corporate Debtor) was pending approval, Gloster Cables Ltd. (Appellant) applied to NCLT Kolkata.

The Appellant prayed for an Order directing the exclusion of rights in the Trade Mark “Gloster” from the assets of the Corporate Debtor if any Resolution Plan is approved. The exclusion also included the exclusion of the Trademark "Gloster" from the Corporate name of the Corporate Debtor since the said Trademark 'Gloster' is not an asset of the Corporate Debtor.

Further, it also prayed for an Order clarifying that with the approval of the Corporate Insolvency Resolution Process ('CIRP'), no presumption may be drawn as to any authorization or right emerging from the aforesaid approval that gives the right to the Corporate Debtor, or the successful H1, to continue to use the Trademark 'Gloster' or the term "GLOSTER" as part of the Corporate Debtor's corporate name.

However, on 27.09.2019, NCLT Kolkata dismissed the application and observed that all deeds executed between the Corporate Debtor and the Appellant were void. It held so since the transaction relied upon by the Appellant is an undervalued transaction, being hit by Section 45(2)(b) of IBC, and the registration was done post the imposition of moratorium under Section 14 of IBC. Aggrieved by the said order, the Appellant has filed the appeal before NCLAT.

NCLAT Verdict:

The NCLAT Delhi allowed the application and held that NCLT has the jurisdiction to decide the whether Trademark forms part of the assets of the Corporate Debtor under Section 60(5)(c) of IBC.

The Appellate Tribunal placed reference to Section 60(5)(c) of IBC:

Section 60: Adjudicating Authority for corporate persons

(5) Notwithstanding anything to the contrary contained in any other law for the time being in force, the National Company Law Tribunal shall have jurisdiction to entertain or dispose of—

(a) any application or proceeding by or against the corporate debtor or corporate person;

(b) any claim made by or against the corporate debtor or corporate person, including claims by or against any of its subsidiaries situated in India; and

(c) any question of priorities or any question of law or facts, arising out of or in relation to the insolvency resolution or liquidation proceedings of the corporate debtor or corporate person under this Code.

NCLAT observed that the NCLT has jurisdiction to adjudicate and entertain any question of law or facts, arising out of or concerning the insolvency or liquidation proceedings relating to the Corporate Debtor or Corporate Person.

It pointed out that presently, the CIRP (insolvency resolution) is in question since the Resolution Plan filed by the Resolution Professional has been approved by the CoC. Further, the question that has been raised in these proceedings relates to one of the assets of the Corporate Debtor i.e. the registered trademark which is an intangible asset.

In conclusion, NCLAT observed that the Adjudicating Authority has jurisdiction under Section 60(5) of IBC to decide concerning a question of law or fact as to whether the trademark is the property of the Corporate Debtor.

Case Title: Gloster Cables Ltd. vs. Fort Gloster Industries Ltd. and Ors.

Case No.: Comp. App (AT) (Ins) No. 1343 of 2019 & I.A. No. 3823, 3824, 3825 & 3826 of 2019 & 470 of 2020 & 3655 of 2023

Counsel for Appellant: Mr. Abhinav Vashisht & Mr. Chandar Lal, Sr. Advocates along with Ms. Varsha Banerjee, Ms. Nancy Roy, Ms. Mahima Ahuja, Ms. Prakriti Varshney, Ms. Yashi Agrawal & Mr. Abhinav Bhalla.

Counsel for Respondents: Mr. Shaunak Mitra, Mr. PK Jhunjhunwalla, Mr. Anil Agarwalla & Ms. Neha Sharma, for R-1. Mr. Anand Varma & Mr. Ayush Gupta, for RP. Mr. Nishit Agrawal, Ms. Kanishka Mittal & Ms. Vanya Agrawal, for Intervenors.

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