Gloster Cables Limited vs Fort Gloster Industries Limited

These two appeals are arising out of the common order and the parties in these two appeals are one and the same, they are heard together and are

being disposed of by this common Judgment.

The present appeals are arising out of a common order dated 27.12.2019 passed in I.A.No.754 of 2019 and I.A.No.755 of 2019 in C.O.S.No.43 of

2019, by the Court of the XXIV Additional Chief Judge â€" cum â€" Commercial Court, City Civil Court, Hyderabad.

For the purpose of convenience, the parties are referred to as they are arrayed in the Court below.

The facts of the cases reveal that the petitioner/plaintiff has filed a suit for grant of injunction against the respondent/defendant, i.e., ‘Fort Gloster

Industries Limited’ with a view to prevent the misuse of the petitioner’s trade mark ‘GLOSTER’ bearing Registration No.690772,

1980867, 3022764 and 3022775 which are being used in relation to electrical cables and wires. The petitioner/plaintiff has stated in the plaint that the

petitioner/plaintiff is manufacturer and merchant of electrical wires and cables which are meant for use in power stations and other industrial

applications. The petitioner/plaintiff company was earlier known as ‘Crest Cables Private Limited’ and in the year 2004, the name was changed

as ‘Gloster Cables Limited’. It has been further stated in the plaint that the respondent/defendant assigned the registration for trademark

‘GLOSTER’ bearing No.690772 to the petitioner under a trademark agreement dated 15.07.2008 and the said assignment as per the

petitioner/plaintiff became effective from 01.12.2016 and there was a subsequent deed of assignment between the petitioner/plaintiff and the

respondent/defendant dated 20.09.2017 to record the completion and confirmation of the assignment with goodwill of the Trademark

‘GLOSTER’ under Registration No.690772 in favour of the petitioner/plaintiff. It has been further stated in the plaint that the petitioner/plaintiff

has filed a request in Form TM-P on 25.08.2018 which was taken on record by the Trademarks Registry on 17.09.2018 and the name of the

petitioner/plaintiff was substituted as the Proprietor of the Trademark ‘GLOSTER’ bearing registration No.690772. It has been further stated in

the plaint that the petitioner/plaintiff holds independent registrations for the Trademark ‘GLOSTER’ since 2010 with use claim since 1995 and it

is being exclusively used by the petitioner/plaintiff since 2003 and thereafter, the respondent/defendant company ceased its operations. It has been

further stated that the respondent/defendant was unable to discharge its obligation under its previous agreement regarding quality control aspect of the

product.

It has been further stated by the petitioner/plaintiff that the petitioner/plaintiff has achieved sales exceeding Rs.3500 Crores and turnover for the

year 2018-19 was more than Rs.350 Crores. It has also been stated that the petitioner/plaintiff has spent more than Rs.40,00,000/- for advertising its

product with trademark ‘GLOSTER’ during the year 2018-19 and exclusive goodwill and reputation was accrued to the petitioner/plaintiff in

respect of the trademark ‘GLOSTER’. It has been stated that the petitioner/plaintiff is apprehending that the respondent/ defendant may

commence use, either by itself or by a third party, of the trademark ‘GLOSTER’ which is under the ownership of the petitioner/plaintiff and

under its exclusive use. There is also a mention of the proceedings of the National Company Law Tribunal, Kolkata (NCLT) in the affidavit. It is

further alleged in the plaint that the respondent/defendant may violate rights of the petitioner/plaintiff by taking advantage of NCLT proceedings. It has

been further stated in the plaint that there is an imminent threat that the respondent/defendant may alienate rights in respect of trademark

‘GLOSTER’ in favour of the third party and that the products of the petitioner/plaintiff with the trademark ‘GLOSTER’ are being sold all

over India and if either the respondent/defendant or the third party uses the said trademark, the petitioner/plaintiff’s business and goodwill attached

to its trademark ‘GLOSTER’ will suffer by reason of infringement and passing off. It has been contended that there is a threat of erosion of

distinctiveness of petitioner/plaintiff’s brand which may also result in damage to the petitioner/plaintiff’s goodwill and reputation and the acts

of the respondent/defendant would constitute violation of the statutory rights of the petitioner/plaintiff and infringement of the petitioner/plaintiff’s

well known trademark ‘GLOSTER’ under Section 29 of the Trademarks Act, 1999. It has been pleaded in the plaint that petitioner/plaintiff

would suffer irreparable loss and injury in case the respondent/defendant is not restrained by an immediate order of injunction from violating rights of

the petitioner/plaintiff in respect of the exclusive use of the trademark ‘GLOSTER’ and the petitioner/plaintiff has sought for interim injunction

to restrain the respondent/defendant and its successors and employees, agents, distributors, representatives and its Resolution Professional and

Resolution Applicant from alienating, removing, moving, shifting, transferring, assigning, selling or manufacturing, advertising, promoting any goods

marketed under ‘GLOSTER’ and to restrain them from using the trademark ‘GLOSTER’ in any other manner. The petitioner/plaintiff

company has made the following prayer in the suit:-

“In the premises stated above, it is therefore, most respectfully prayed that, this Hon’ble Court may be pleased to:

A. The Defendant, its successors, directors, partners, employees, servants, agents, distributors, franchises, representatives, suppliers, affiliates,

subsidiaries, franchisees, licensees, representatives, group companies, assigns, creditors and its Resolution Professional and the Resolution Applicants

are restrained by a decree of permanent injunction from:

(i) alienating, removing, moving, shifting, transferring, assigning, selling and/or manufacturing, advertising, promoting any goods under the mark

GLOSTER and/or in any manner using the mark GLOSTER or any other mark which is identical or deceptively and confusing similar to the

Plaintiff’s well known trademark GLOSTER either as a trademark or part of a trademark, trade name, or part of a trade name, corporate name,

email, domain name or part of a domain name or in any manner which would amount to infringement of the registered trademark of the Plaintiff;

(ii) alienating, removing, moving, shifting, transferring, assigning, selling and/or manufacturing, advertising, promoting any goods under the mark

GLOSTER and/or in any manner using the mark GLOSTER or any other mark which is identical or deceptively and confusing similar to the

Plaintiff’s well known trademark GLOSTER, either as a trademark or part of a trademark, trade name, or part of a trade name, corporate name,

email, domain name or part of a domain name or in any manner or for providing any services whatsoever thereby passing off their goods as the goods

of the Plaintiff;

(B) Costs of the suit be awarded to the Plaintiff; and

(C) Any other relief which the Hon’ble Court deems and proper in the facts and circumstances of the case be allowed in favour of the Plaintiff

and against the Defendant.â€​

The respondent/defendant has filed counter before the Court below and contended that the petitioner/plaintiff is bound by the order of the NCLT

and once the NCLT has adjudicated the issue, the petitioner/plaintiff is stopped from claiming any right to contrary. It has been stated that consequent

to the Judgment of the NCLT, the trademark Registrar has to rectify the register of trademarks by restoring the name of the respondent/defendant as

owner of the trademark ‘GLOSTER’ and that the petitioner/plaintiff has fraudulently and in collusion and connivance with the promoters of the

respondent/ defendant company has purported to have acquired the alleged right in the trademark ‘GLOSTER’ and in view of the adjudication

by the NCLT, the suit itself is not maintainable.

The undisputed facts of the cases reveal that the petitioner/plaintiff company is facing proceedings on an Application preferred under Section 60(5)

of the Insolvency and Bankruptcy Code, 2016 before the National Company Law Tribunal, Kolkata Bench, Kolkata and the NCLT has passed the

Order dated 27.09.2019. Paragraphs 44, 48, 50, 51, 52 and 95 of the aforesaid Order read as under:-

“44. The materials brought out before us sufficiently establish that the transaction related to the trademark by the Corporate Debtor in favour of

GCL was not done in good faith. It has come out in evidence that GCL received a benefit from the preferential transaction not in good faith. They got

the trademark at a reduced consideration. It has come out in evidence that the very same trademark has been hypothecated at a value of Rs.10

Crores has been assigned in favour of GCL for a nominal value of Rs.10 lakhs. In the above said proved facts let us consider the objection on the side

of the GCL.

At this juncture, the learned Senior Counsel, referring to a judgment of the NCLT, Cuttack Bench in TP No.41/CTB/2019, CP (IB)

No.352/KB/2019, attempting to stress an argument that the Adjudicating Authority has no right to determine disputed title in respect of trademark

under challenge. He also cited a judgment of the Hon’ble National Company Law Appellate Tribunal, New Delhi in Company Appeal (AT)

Insolvency Nos.229 and 262 of 2018, wherein the Hon’ble Appellate Tribunal observed the following:

“16. In ‘Binani Industries Limited v. Bank of Baroda and other appeals in Company Appeal (At) (Insolvency) No.82 of 2018, etc, this Appellate

Tribunal held that Corporate Insolvency Resolution Process is not a money claim nor a suit or a litigation, therefore, we are of the view that the

Adjudicating Authority cannot decide the disputed question of fact including claim and counter claim made by one or other party qua, any material in

current case.â€​

Therefore, the contention that the Adjudicating Authority is not empowered to adjudicate as to the question of title involved in the Application in

hand, seems to be devoid of any merits. In view of the above said discussion, we are of the considered opinion that the transactions disputed in the

application is hit by sections 43 and 45 of the Code.

The third objection is that the registration of trademark in the name of the Applicant, GCL, is invalid because it was registered in the name of GCL

in violation of Section 14 of the I&B Code, 2016. The CP 61 of 2018 was admitted on 09.08.2018 by declaring moratorium under Section 14 of the

Code. The application for registration was submitted on 15th September, 2018. The registrar upon receipt of no objection from Transfer Agents of

GCL and CD, registered the trademark in the name of the GCL on 17th September, 2018. No doubt the registration by conferring title to the

trademark owned by the CD is hit by Section 14(1)(b) of the Code. Having regard to what is discussed above, we do not find any illegality or

irregularity or contravention of any of the provisions of the Code or applicable law and Regulation in treating the trademark “Gloster†as one of

the valuable assets of the CD.

Having regards to the facts and circumstances said above, we come to a legitimate conclusion that the application filed by GCL is liable to be

dismissed holding that the trademark “GLOSTERâ€​ is the asset of the CD.

The resolution plan produced before us has fulfilled all the requirements in compliance of Section 29A, 30(2) and Regulation 38(1). RP has given

certification of the correctness of the disclosures as provided under Regulation 39(4). He also certified that the plan is not subjected to any

contingency. The resolution plan being found in compliance with all applicable provisions of the I&B Code and the regulations therein and it does not

contravene any of the provisions of the law for the time being in force we are bound by the plan and the plan is liable to be approved.

The NCLT in C.A.No.713 of 2019 has declared the Trademark ‘GLOSTER’ as an asset of the Corporate Debtor (CD) and the

petitioner/plaintiff has certainly filed an Appeal before the NCLAT against the order passed by the NCLT. As the trademark in question has been

declared as an asset of the corporate debtor, the trial Court had dismissed the application for grant of temporary injunction. The relevant paragraphs of

the order passed by the trial Court dismissing the application reads as underâ€​-

“17. The consideration in this application is not whether the petitioner is registered owner of the trademark. Even if it is assumed to be true that the

petitioner is registered owner of the trademark, the court has to consider the other factors to decide whether the petitioner can seek for temporary

injunction. To the extent of use of the trademark is concerned, enough material is placed before the court, to show that the petitioner has been using

trademark. Usually in such circumstances the courts grant temporary injunction. The learned counsel for the petitioner relies upon the judgment of the

Hon’ble Supreme Court in Midas Hygiene Industries Private Limited v. Sudheer Bhatla ((2004) 3 SCC 90), in which, it was held that in cases of

infringement either of trademark or of copy right normally an injunction must be passed. But there may be different circumstances which need to be

considered particularly when the resolution professional has taken over the management of the affairs of the respondent company and in the light of

order of the NCLT, Kolkata, which has treated the trademark as the asset of the respondent. There appears no immediate threat of infringement of

trademark. The counsel for the petitioner contends that in the process of the resolution, it may suffer loss if the trademark is assigned to the third

parties. On such apprehensions, the court cannot stall the resolution process ordered by the NCLT.

The counsel for the petitioner also has relied upon the judgment of the Hon’ble Supreme Court in Power Control Appliances v. Sumeet

Machines Private Limited {(1994) 2 SCC 448], to contend that there can be only one owner of the trademark at a given point of time. It was observed

by the Hon’ble Supreme Court as follows:

“It is a settled principle of law relating to trade mark that there can be only one mark, one source and one proprietor. It cannot have two origins,

where, therefore, the first defendant-respondent has proclaimed himself, as a rival of the plaintiffs and as joint owner it is impermissible in law. Even

then, the joint proprietors must use the trade mark jointly for the benefit of all. It cannot be used in rivalry and in competition with each other.â€​

The case on hand is entirely on different pedestal and objection of the resolution professional is not based on the registration or ownership of the

trademark alone. In fact, the Hon’ble NCLT has decided the trademark under dispute is the property of the respondent and the challenge to this

finding is pending before the Hon’ble NCLAT. As long as the said finding is not modified by the Hon’ble NCLAT, this Court, for the purpose

of deciding the interlocutory application for ad interim reliefs cannot ignore the order of the Hon’ble NCLT.

The counsel for the respondent has taken an objection regarding the jurisdiction of the court to entertain the dispute in view of the provisions of the

Insolvency & Bankruptcy Code, 2016, Trademarks Act and Companies Act. In order to convince the court that this Court has jurisdiction to entertain

the application, the learned counsel for the petitioner has relied upon the judgment of the Hon’ble Apex Court in Dhruv Green Field Limited v.

Hukath Singh [(2002) 6 SCC 416] and KSRTC v. Bal Mukind Bairwa [(2009) 4 SCC 299]. But while deciding an application under Order XXXIX

Rules 1 and 2 CPC it is not desirable to decide the question of jurisdiction or maintainability to the suit in Civil Court. The court can only hold that the

respondent has raised objection regarding jurisdiction and maintainability of the suit.

The counsel for the petitioner contends that the NCLT, Kolkata has no jurisdiction to entertain the dispute or adjudicate a dispute relating to the claim

of title to any property and therefore, finding of the NCLT that the trademark under dispute is the asset of the respondent is erroneous. The counsel

for the petitioner relied upon the judgment of the Hon’ble NCLAT in CA (AT) (I) No.229/2018 in M/s.Dynepro Private Limited v.

M.V.Nagarajan (Resolution Professional). In the said judgment, the Hon’ble NCLAT has held that the adjudicating authority has no jurisdiction to

decide the claims and counter claims of the parties. But it is not for this court to decide whether the Hon’ble NCLT has exercised jurisdiction as

per law and as rightly contended by the counsel for the respondent, it is for the Hon’ble NCLAT to decide this issue and in view of the pendency

of the appeal before the Hon’ble NCLAT, this Court finds that it will be totally in appropriate for this court to deal with the said issue, at this stage

of the suit.

The counsel for the petitioner also relied upon the judgment of the Hon’ble Supreme Court on Civil Appeal No.8766-67 of 2019 in committee of

creditors of Essar Steel India Limited v. Satish Kumar Gupta, to contend that the power of the adjudicating authority are limited. But, as stated above,

it is not proper for the court to decide this issue at this stage.

To sum up, the petitioner who initially was allowed to use the trademark in view of its hypothecation to secure the loan and who could get an

assignment of the same after the prohibitory order passed by the BIFR, cannot claim the relief of temporary injunction, in view of the order of the

Hon’ble NCLT in CA (IB) No.713/KD/2019 in CA IB No.62/KD/2018 and the pendency of the appeal against the said order before the

Hon’ble NCLAT. The court cannot stall the process of resolution professional in implementation of resolution plan which affects the rights of the

committee of creditors (who are not parties to the present suit), when the petitioner has failed to establish prima facie case and irreparable injury that

will be suffered by him in case the injunction is not granted. It is also relevant to mention that the respondent also has raised strong objections

regarding jurisdiction of the Civil Courts and maintainability of the suit.

The petitioner has filed two applications with similar prayers and argued both of them separately. However, both the applications being similar, a

common order is passed. For the reasons stated above the court cannot grant temporary injunction as prayed for. The petitions are liable to be

dismissed.

In the result, the petitions are dismissed with costs.â€​

It is again an undisputed fact that after the order passed by the NCLT on 27.09.2019, civil suit has been filed in October, 2019. The undisputed

facts of the case further reveal that the resolution process is over and the resolution applicant has taken over as part of the bidding process. In the

considered opinion of this Court as the matter is pending before the NCLAT, as the NCLT has passed an order taking into Sections 44 and 46 of the

Insolvency and Bankruptcy Code, the learned Single Judge was justified in rejecting the application keeping in view the pendency of Appeal before the

NCLAT.

In the considered opinion of this Court, the order passed by the trial Court does not warrant any interference as the trademark has been treated to

be an asset of the respondent company, the order passed by the NCLT keeping in view the Sections 45 and 46 of IBC. An Appeal is pending before

the NCLAT and therefore, this Court is not commenting upon the Order passed by the NCLT as the same is subject matter of Appeal.

In the considered opinion of this Court, the discretion has rightly been exercised by the Court below and this Court does not find any reason to

interfere with the Order passed by the Court below keeping in view of the fact that the findings of the NCLT are subject matter of an Appeal before

the NCLAT.

Resultantly, the COMCAs are accordingly dismissed.

Miscellaneous applications, pending if any, shall stand closed. There shall be no order as to costs.