The judgment of Srei Multiple Asset Investment Trust Vision India Fund v. Deccan Chronicle Marketers & Others, Civil Appeal No. 1706 of 20231 has been field by the successful resolution applicant (“Appellant”) of the Deccan Chronical Holdings Ltd. (“Corporate Debtor”) challenging the impugned order of the National Company Law Appellate Tribunal (“NCLAT”)on the moot point revolving around the modification/alteration of theapproved resolution plan by the adjudicating authority.
The Corporate Debtor is registered at Hyderabad and has been into the business of printing, publication and sale of daily newspapers under the trade names, “Deccan Chronicle” (English) and “Andhra Bhoomi” (Telugu). Canara Bank, financial creditor of the Corporate Debtor initiated a corporate insolvency resolution process (“CIRP”) against the Corporate Debtor that was admitted by the adjudicating authority (“NCLT”) on July 05, 2017. The CIRP period of the Corporate Debtor ended on January 15, 2019, and a committee of creditors (“CoC”) was constituted. In accordance with the published expression of interest, the Appellant’s resolution plan was approved by 81.39% (eighty-onepoint three nine percent) voting of the CoC and conditionally by NCLT, Hyderabad Bench vide order dated June 03, 2019. Parallelly an I.A. No.155 of 2018 was pending against the Corporate Debtor seeking a declaration by the Corporate Debtor that it is the owner of the trademarks- “Deccan Chronicle” and “Andhra Bhoomi” and thus the said trademarks be treated as part of the assets of the Corporate Debtor. On August 14, 2019, the NCLT decided the application with a direction that the Corporate Debtor holds an exclusive right to use the trademarks and declared that trademarks belong to the Corporate Debtor.
Aggrieved by this decision, the Corporate Debtor filed an appeal before the NCLAT challenging the validity of the impugned order on merits. The NCLAT, after hearing the parties, arrived at a conclusion that the declaration made by the NCLT holding the ownership rights of the Corporate Debtor over the trademarks amount to a modification/alteration of the approved Resolution Plan by CoC, which is impermissible in law and held that the order of the adjudicating authority, in fact, has transgressed its jurisdiction and accordingly set aside the impugned order vide order dated September 02, 2022.
Aggrieved by the NCLAT order, the Appellant filed an appeal before the Hon’ble Supreme Court in this case.
Whether declaration of ownership over the trademark after approval of the resolution plan by CoC and not forming a part of the resolution plan amounts to modification/alternation of the approved resolution plan?
Appellant’s counsel contended that there was no alteration/ modification of the resolution plan as the clauses of the resolution plan clearly construes that the Appellant holds unfettered and exclusive rights to the trademarks of the Corporate Debtor. On the other hand, Respondent’s counsel submitted that as per the approved resolution plan the right to trademarks was only confined to the perpetual exclusive right to use the trademark without any financial implications for the purpose of running its business. Further, the counsel submitted that the NCLT has transgressed its jurisdiction as under Section 60(5) and Section 238 of IBC, the adjudicating authority is not permitted to decide the issue in respect to ownership of trademarks and since declaration of ownership over the trademarks was approved by the NCLT, it is impermissible in law and such a declaration could be claimed by the person aggrieved under Section 134 of the Trademarks Act, 1999. To substantiate upon the same, the counsel relied on the judgment of Embassy Property Developments Private Limited v. State of Karnataka & Ors.2.JUDGMENT
On perusal of the material available on record and referring to the judgment in Ebix Singapore Private Limited v. Committee of Creditors of Educomp Solutions Limited & Another3, wherein the Hon’ble Supreme Court observed that “Enabling withdrawals or modifications of the resolution plan at the behest of the successful resolution applicant, once it has been submitted to the adjudicating authority after due compliance with the procedural requirements and timelines, would create another tier of negotiations which will be wholly unregulated by the statute”, the Hon’ble Justice Rastogi of the Supreme Court dismissed the appeal filed by the Appellant and observed that in terms of the approved resolution plan, the Appellant had the perpetual exclusive right to use the brands of the Corporate Debtor but not the ownership rights of the trademarks of the Corporate Debtor.
In the case at hand, the Hon’ble Supreme Court had rightly discussed the adjudicating authority’s jurisdiction to review a resolution plan that is approved by a CoC based on their commercial wisdom. Any modification/ alternation of the approved resolution plan by the CoC by the court is impermissible in law and would lead to endless negotiations between the parties. Therefore, declaration of ownership over the trademark after approval of the resolution plan by CoC and not forming a part of the resolution plan would amount to modification/alternation of the approved resolution plan.