2022 (9) TMI 109 - AT - Insolvency and Bankruptcy

Modification/alteration of approved Resolution Plan - Resolution Plan is submitted to Resolution Professional claiming right to use brands and Trademarks, approved by CoC and Adjudicating Authority - declaration that the Corporate Debtor is the owner of Trademarks - alteration or modification of Resolution Plan approved by CoC is valid or not - Whether declaration of ownership over Trademarks after approval of Resolution Plan by CoC, which is not a part of Resolution Plan amount to modification or alteration of approved resolution Plan by CoC, if so, the order is liable to be set aside? - HELD THAT - Since the Resolution Plan satisfied the legal requirements, it was approved by CoC in its commercial wisdom and also approved by Adjudicating Authority subject to rider. The Resolution Professional filed IA No. 155/2018 claiming ownership on the brands Deccan Chronicle and Andhra Bhoomi during pendency of petition under Section 31 of IBC, but the IA No. 155/2018 was allowed by Adjudicating Authority. If for any reason the CoC decision i.e. approval is against any law, the course open to the Adjudicating Authority is to return the Plan for fresh consideration and approval - The role of Resolution professional is only a facilitator, cannot act either as Creditors or Corporate Debtor or Adjudicating Authority but the Resolution Professional has filed the I.A. No. 155/2018, may be to protect the interest of CoC for maximization of value of assets of Corporate Debtor. Right to use is distinct from right and title to incorporeal property, right to use is only licence but title creates ownership, which is superior right. Hence creation of superior right in incorporeal property i.e., Trademarks tantamount to alteration or modification of approved Plan by CoC in its commercial wisdom, though conditional and such conditional approval by Adjudicating Authority is contrary to law. There are no hesitation to conclude that right or ownership, if any, claimed after approval of Resolution Plan by CoC is extinguished and if ownership of Corporate Debtor is declared over the Trademarks, it would amount to modification or alteration of approved Resolution Plan by CoC which is impermissible. Hence the order of Adjudicating Authority to the extent of declaring the ownership of Corporate Debtor over the Trademarks Deccan Chronicle and Andhra Bhoomi is illegal and the Adjudicating Authority transgressed the jurisdictional limits. This point is held in favour the Appellant and against the Respondents. Whether the Adjudicating Authority under IBC is vested with jurisdiction to decide title or right or ownership over Trademarks, when jurisdiction is conferred on District Judge as per the provisions of Trademarks Act, if not the order passed is liable to be set aside? - HELD THAT - Since this point relates to jurisdiction of Adjudicating Authority to decide the ownership of Trademarks, no finding need be recorded in view of the above point, while leaving it open to the parties to approach appropriate authority or Tribunal at appropriate time, whenever need arises. Appeal allowed.

Summary

Issues Involved:
1. Whether the declaration of ownership over Trademarks after the approval of the Resolution Plan by the Committee of Creditors (CoC) amounts to modification or alteration of the approved Resolution Plan.
2. Whether the Adjudicating Authority under the Insolvency and Bankruptcy Code (IBC) is vested with jurisdiction to decide title, right, or ownership over Trademarks when such jurisdiction is conferred on the District Judge as per the provisions of the Trademarks Act.

Detailed Analysis:

Issue 1: Modification or Alteration of Approved Resolution Plan
The appellants contended that granting relief in I.A. No. 155 of 2018 amounts to the modification of the approved Resolution Plan, which is impermissible under the law. The respondents argued that the Resolution Plan was based on the Information Memorandum issued by the Resolution Professional, which included the Trademarks as assets of the Corporate Debtor. The Resolution Plan submitted by the Successful Resolution Applicant (SRA) did not claim ownership over the Trademarks but only the right to use them, as stated in clause 11.12 of the Resolution Plan. The CoC approved the Resolution Plan based on its commercial wisdom, which cannot be interfered with by the Adjudicating Authority or this Tribunal. The Adjudicating Authority allowed I.A. No. 155/2018 without the CoC's approval, which amounts to an alteration of the Resolution Plan. The Supreme Court in "Ghanshyam Mishra and Sons Vs. Edelweiss Asset Reconstruction Co. Ltd." held that claims not part of the Resolution Plan shall stand extinguished. Therefore, the claim of ownership over the Trademarks, made after the approval of the Resolution Plan by the CoC, is deemed extinguished. The Adjudicating Authority's order declaring the Corporate Debtor as the owner of the Trademarks is illegal and transgresses jurisdictional limits.

Issue 2: Jurisdiction of Adjudicating Authority
The appellants argued that the Adjudicating Authority under the IBC does not have the jurisdiction to decide the ownership of Trademarks, as such jurisdiction is conferred on the District Judge under the Trademarks Act. The respondents contended that the IBC has a non-obstante clause that overrides the provisions of the Trademarks Act, thus vesting the Adjudicating Authority with the power to decide such issues. However, the Tribunal did not record a finding on this point, given the findings on Issue 1, and left it open for the parties to approach the appropriate authority or Tribunal at the appropriate time.

Conclusion:
The appeal is allowed, and the order in I.A. No. 155/2018 in C.P.(IB) No. 41/7/HDB/2017 dated 14th August 2019, passed by the Adjudicating Authority, is set aside. The parties are left to approach the competent Court, authority, or Tribunal at the appropriate stage.