2020 (6) TMI 692 - HC - Insolvency and Bankruptcy

Jurisdiction - Infringement of the Copyright of successful bidder - defendant is a State owned company - plea of the defendant of fair dealing protected under Section 52(1)(a) of the Copyright Act is misconceived for the reason fair dealing is only applicable to private or personal use including research and does not apply to commercial activity - HELD THAT - Sub-clause (b) of Clause 16 of the resolution plan thus clarifies that all consents, licenses, approvals, rights and entitlements, benefits, privileges whether under law, contract, lease or license granted in favour of the corporate debtor or to which the corporate debtor is entitled or accustomed to shall notwithstanding any provision to the contrary in their terms be deemed to continue without disruption for the benefit of the corporate debtor. Thus, the use of terms 'entitled or accustomed to' are of wide amplitude and ensure continuity of all benefits in favour of LHTPL to continue with the defendant - Sections 63 and 231 IBC create a bar on the jurisdiction of the civil court in respect of any matter in which the NCLT and NCLAT has jurisdiction under the IBC and the adjudicating authority under the Code is competent to pass any order. Further, clause (c) sub-Section (5) of Section 60 IBC vests the jurisdiction in NCLT to entertain and dispose of any question of priorities or any question of law or fact, arising out of or in relation to the insolvency resolution for liquidation proceedings. Therefore, the jurisdiction vested in NCLT while dealing with a resolution plan is of wide ambit and any question of law or fact in relation to the insolvency resolution has to be determined by the NCLT. Though there is a dispute between the parties on the aspect that in the absence of any assignment or a license issued in favour of LTHPL by the plaintiff how the benefit of such a license issued in favour of LIL could extend to the LTHPL however, neither party has filed the terms of agreement between LIL and LTHPL to clarify this aspect. However, as noted above, plaintiff has stated in the plaint that LTHPL was a SPV of LIL and that the Teesta VI Project was awarded to LTHPL - as per the resolution plan, dispute of the entitlement to the licenses or the benefit/privilege under the contract or license to which the corporate debtor is entitled or accustomed notwithstanding any provision to the contrary is a provision of wide amplitude and the disputes raised between the party would fall in relation to this right if that accrues in favour of the defendant. Thus the dispute raised in the present suit falls within the ambit of Section 60 (5) IBC as the same arises out of and/or is in relation to the insolvency resolution plan of LTHPL hence has to be adjudicated by the NCLT and the proceedings in the civil court are barred. The present suit would also be not maintainable in the absence of necessary parties LIL and LTHPL. It appears that LIL has deliberately not been made a party as the very impleadment of the LIL which has gone into liquidation would have ousted the jurisdiction of this Court to entertain the present suit. Even assuming that LTHPL had wrongly usurped or was infringing the copyright of the plaintiff in the drawings which is not the case of the plaintiff in the present suit, the defendant s right to use cannot be decided in the present proceedings. The present suit and application are dismissed as not maintainable before this Court in view of Sections 230 and 231 read with Section 60(5) of the Insolvency and Bankruptcy Code.

Summary

Issues Involved:
1. Territorial Jurisdiction
2. Subject Matter Jurisdiction
3. Infringement of Copyright
4. Confidentiality and Proprietary Rights
5. Fair Dealing under Copyright Act
6. Assignment and License of Copyright
7. Necessary Parties for the Suit

Detailed Analysis:

Territorial Jurisdiction:
The court rejected the defendant's objection regarding territorial jurisdiction. It was established that part of the cause of action arose in Delhi because the plaintiff's copyrighted drawings were uploaded on the Central Public Procurement Portal (CPPP) accessible in Delhi. This act constituted an infringement of the plaintiff's copyright under Section 14 of the Copyright Act. The court referred to the decision in Banyan Tree Holding (P) Ltd. vs. A. Murali Krishna Reddy & Anr., emphasizing that the injurious effect on the plaintiff’s business within the forum state due to the defendant’s actions provided sufficient grounds for jurisdiction.

Subject Matter Jurisdiction:
The court determined that the dispute fell within the ambit of Section 60(5) of the Insolvency and Bankruptcy Code (IBC), which grants the National Company Law Tribunal (NCLT) jurisdiction over matters arising out of or in relation to the insolvency resolution or liquidation proceedings. The court cited Sections 63 and 231 of the IBC, which bar civil courts from entertaining suits in matters where NCLT has jurisdiction. The court concluded that the present suit should be adjudicated by the NCLT, thus barring the civil court from proceeding.

Infringement of Copyright:
The plaintiff claimed that the defendant infringed on its copyright by publishing and disclosing six highly confidential drawings. The court noted that the plaintiff's copyright in the drawings was protected and that the defendant's actions of uploading these on the CPPP without permission constituted an infringement.

Confidentiality and Proprietary Rights:
The court acknowledged that the drawings and data provided by the plaintiff were confidential and proprietary. The plaintiff had granted a conditional and limited license to Lanco Infratech Limited (LIL), and upon termination of the contract, all rights to the drawings reverted to the plaintiff. The defendant’s actions of using and publishing these drawings without authorization violated the confidentiality agreement.

Fair Dealing under Copyright Act:
The defendant's plea of fair dealing under Section 52(1)(a) of the Copyright Act was rejected. The court clarified that fair dealing applies to private or personal use, including research, and not to commercial activities. The defendant’s use of the plaintiff’s drawings for commercial purposes did not qualify as fair dealing.

Assignment and License of Copyright:
The court highlighted that the plaintiff’s copyright in the drawings remained intact as there was no written assignment or license transferring these rights to LIL or its successors. The defendant, having acquired LTHPL (a special purpose vehicle of LIL), did not automatically obtain rights to the plaintiff’s copyrighted materials. The court emphasized that copyright is an intangible asset and cannot be transferred without a formal assignment or license.

Necessary Parties for the Suit:
The court noted that LIL and LTHPL were necessary parties to the suit. The absence of these parties hindered the determination of how the rights of use were transferred. The court inferred that the plaintiff deliberately did not include LIL, which was in liquidation, to avoid ousting the jurisdiction of the civil court.

Conclusion:
The court dismissed the suit and the application as not maintainable before the civil court, directing that the matter be adjudicated by the NCLT as per the provisions of the IBC. The order emphasized the necessity of including all relevant parties to resolve the dispute comprehensively.