SUPREME COURT OBSERVES THAT TRADEMARK RIGHTS OF CORPORATE DEBTOR CONTINUE WITH IT TILL IT TRANSFERS THE SAME

A Two Judge Bench of the Supreme Court presided by Justice Ajay Rastogi and Justice Bela M. Trivedi passed a Judgment dated 17.03.2023 in the case of SREI Multiple Asset Investment Trust Vision India Fund Versus Deccan Chronicle Marketeers & Others in Civil Appeal No(S).1706 of 2023 and two others observed that a successful resolution applicant (SRA) has the exclusive right to use the brands of the corporate debtor, but does not have right over the ownership rights of trademark of the corporate debtor.

Facts:

Deccan Chronicle Holdings Ltd. (DCHL or Corporate Debtor), Respondent is into the business of printing, publication and sale of daily newspapers under the trade names, “Deccan Chronicle” (English) and “Andhra Bhoomi” (Telugu) (“Trademarks”).

The Corporate Insolvency Resolution Process (“CIRP”) was initiated under the Insolvency and Bankruptcy Code, 2016 (“IBC”) against DCHL by Canara Bank (Financial Creditor) before   the   Adjudicating Authority-National Company Law Tribunal (NCLT). Pursuant to initiation of Resolution Process, the Interim Resolution Professional (IRP) issued a public announcement and invited claims from the creditors of the Corporate Debtor. On receiving the claims, the IRP collated the same and constituted a Committee of Creditors. The Appellant, SREI Multiple Asset Investment Trust Vision India Fund is the successful resolution applicant (SRA) of the Corporate Debtor whose resolution plan (Resolution Plan) was approved by the Committee of Creditors (COC) of the Corporate Debtor with 81.39% voting share which was conditionally approved by the Adjudicating Authority (NCLT) by Order dated 03.06.2019.

The Resolution Plan submitted by the Appellant (SRA) was deliberated upon in the 20th meeting of the CoC held on 10.12.2018 and finally the Resolution Plan of the Appellant was approved by the CoC with 81.39% of voting rights and it was later approved by the Adjudicating Authority by an Order dated 03.062019 and the same became binding on Corporate Debtor, its employees,   members,   creditors   and   all   stakeholders involved in the Resolution Plan, but as regards the brand name of the Corporate Debtor, an Application bearing  I.A. No.155 of 2018 was pending seeking a Declaration by the Corporate Debtor that it is the owner of the trademarks (“Deccan Chronicle” and “Andhra Bhoomi”) and the said trademarks be treated as part of the assets of the Corporate Debtor.

The Adjudicating  Authority later decided the said Application and gave direction that the Resolution Professional has established that it is the Corporate Debtor / DCHL who has an exclusive right to use the trademarks and also made a declaration that the same belongs to the Corporate Debtor/DCHL under its Order dated 14.08.2019.

The first Respondent, DCHL by way of an appeal challenged the above Order dated 14.08.2019 before the NCLAT where it was decided that that the declaration made by the NCLT with respect to the trademark rights amounts to a modification/alteration of the approved Resolution Plan by the CoC, which is impermissible in law and accordingly set aside the same vide Order dated 02.09.2022 Aggrieved by the above Order dated 02.09.2022, the Appellant/SRA filed an Appeal before the Supreme Court.

Supreme Court Observations:

At the outset, the Supreme Court noted that the Resolution Plan was approved with majority of 81.39% voting rights of CoC and was in compliance of Section 30(2) and 30(4) (Submission of Resolution Plan) of the IBC. It further observed that the when the matter went for seeking approval   by the Adjudicating Authority (NCLT), it was conditionally approved by an Order dated 03.062019, subject to the result of I.A. No.155 of 2018 pending before the Adjudicating Authority in reference to the brand  names / trademarks of the Corporate Debtor.

The Hon’ble Supreme Court also observed that once   the   Resolution   Plan   stands   approved,   no alterations/modifications   are   permissible. It   is   either   to   be approved or disapproved, but any modification after approval of the Resolution Plan by the CoC, based on its commercial wisdom, is not open for judicial review unless it is found to be not in conformity with the mandate of the IBC Code.

The Apex Court further observed that the Resolution Plan was approved by the CoC with 81.39% of voting and it complied with   the   requirement   as   contemplated   under   Section   30(2)   and 30(4) of the IBC and so far as the exclusive right to use of brand names of “Deccan Chronicle” and “Andhra Bhoomi” is concerned, a specific reference was made in the Resolution Plan, and to be more particular in Clause 11.12 of the Resolution Plan.  The reference clearly indicated that what was approved by the CoC with 81.39% of its voting is to the effect that the Corporate Debtor has a perpetual   exclusive   right   to   use   the   brands,   namely,   “Deccan Chronicle”   and   “Andhra   Bhoomi”   and   it   nowhere   indicates regarding   the   right   of   ownership   over   the   trademarks/brands, “Deccan Chronicle” and “Andhra Bhoomi” of the Corporate Debtor. But the Adjudicating Authority while deciding I.A. No.155 of 2018, apart from upholding the exclusive right to use the trademarks,   “Deccan   Chronicle”   and   “Andhra   Bhoomi”,   made   a further   declaration   that   trademarks   belong   to   Corporate Debtor/DCHL under its Order dated 14.08.2019, which was a modification/alteration of the approved Resolution Plan which indisputably is impermissible in law.

The Hon’ble Supreme Court while explaining further said that in terms of the approved Resolution Plan, it was the perpetual exclusive right to use the brands, namely, “Deccan Chronicle” and “Andhra Bhoomi”, by the Corporate Debtor which were available to SRA i.e. the Appellant herein and once it has been approved by the Adjudicating Authority, certainly the right to exclusive use of the trademarks   belonging to the Corporate Debtor, on being approved by the Adjudicating Authority, is always available to the SRA i.e. the Appellant, but not the ownership rights of the trademarks of the Corporate Debtor. Hence the Apex Court found the Appeal devoid   of substance and accordingly dismissed the same.

Conclusion:-

Thus, for the reasons aforesaid, the Appeal filed by the Appellant was dismissed by the Supreme Court along with the pending applications without any costs.

Roopal Bardia

Associate

The Indian Lawyer