AND 9 OTHERS
its name, the brand 'YEZDI'. It is also the case of the appellant
that the family of Mr. Boman R. Irani migrated from the place
'YEZDI' in Persia (now Iran) to India, to remember the roots
from where they came from, 'YEZDI' was given as brand name
to the motorcycles produced by the Ideal Jawa company.
5. On 05.10.1972, the registration of mark in Class 12
bearing No.283322 was granted in favour of the Ideal Jawa.
6. In the year 1970-1971, the family members of
Mr. Boman R. Irani set up 'YEZDI Distilleries' in Mysuru. 'YEZDI
Distilleries' has registered various trade marks with the name
'YEZDI' (being the business name adopted by the family of
Mr. Boman R. Irani). The trade mark applications in relation to
the 'YEZDI Distilleries' would indicate the name of Mrs.
Porochee Irani (the mother of Mr. Boman R. Irani, who was a
partner in 'YEZDI Distilleries') as one of the first proprietors of
the trade mark 'YEZDI'. In June 1989, Mr. Rustom S. Irani died
leaving behind Mr. Boman R. Irani as his sole heir. It is the
case of the appellant-Mr. Boman R. Irani that upon the demise
of Mr. Rustom S. Irani, the title of 'YEZDI' brand devolved upon
him as the legal heir.
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AND 9 OTHERS
7. Three winding up petitions bearing Company Petition
Nos.76/1991, 5/1992 and 126/1992 came to be filed by three
creditors of the Ideal Jawa viz., M/s. Tide Water Oil Co. (India)
Ltd., M/s. IOL Ltd. and M/s. Addisons Paints and Chemicals Ltd.
respectively, seeking winding up of the Ideal Jawa. In the year
1996, the Ideal Jawa ceased production and manufacturing of
motorcycles and also stopped using the trade mark 'YEZDI' in
any manner. Since then, Mr. Boman R. Irani started operating
a website under the domain name 'www.yezdi.com'. It is the
case of the appellant-Mr. Boman R. Irani that he created and
operated the said website in an attempt to revive the brand.
The Board for Industrial and Financial Reconstruction in Case
No.131/1990 came to the conclusion that there was no
possibility of rehabilitation of the Ideal Jawa and it would be
just and equitable that the said company gets wound up.
8. The Company Court passed an order dated 17.08.2001 in
Company Petition Nos.76/1991, 5/1992 and 126/1992 for
winding up of the Ideal Jawa and for appointment of an OL.
The OL was to take stock of the assets of the company.
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AND 9 OTHERS
9. The secured creditor of the company viz., 'Indian Overseas
Bank' (IOB) was permitted to sell all the assets of the Ideal
Jawa in association with the OL. A Registered Valuer was
appointed on 10.06.2003 to value the entire assets of the
company in liquidation as per the list of assets determined by
the OL. The Registered Valuer appointed by the Court
submitted a Valuation Certificate, which was prepared in
collaboration with the OL. The Valuation Report did not mention
'YEZDI' mark as an asset of the Ideal Jawa. The same was not
considered as an asset having value, by the OL. Subsequently,
the secured creditors of the Ideal Jawa and IOB through the
Registered Valuer and the OL, valued the entire assets of the
Ideal Jawa at Rs.23 crores. A public notice in the newspaper
'The Economic Times' was issued by the secured creditor of the
Ideal Jawa inviting tenders for sale of "all moveable and
immoveable assets belonging to the Ideal Jawa". This public
notice did not mention 'YEZDI' mark as one of the assets of the
Ideal Jawa. The bid submitted by Mr. Aquil Qureshi of M/s.
Premier Iron and Metal Industries in response to the public
notice for sale of all the assets of the Ideal Jawa was sought to
be accepted by the OL by filing OLR No.485/2003 on
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AND 9 OTHERS
04.09.2003 before this Court. The Company Court passed an
order on 10.10.2003 in OLR No.485/2003 accepting the offer of
Mr. Aquil Qureshi to purchase the entire assets of the company
for Rs.26.70 crores.
10. Mr. Boman R. Irani has signed the Statement of Affairs on
19.01.2004 stating that the list of assets was based on the
balance sheet of the company as filed before the Registrar of
Companies (for short 'ROC').
11. Having considered the Statement of Affairs, the Company
Court passed an order on 19.03.2004 in Company Petition
No.76/1991 recording that all the assets mentioned in the
public notice as belonging to the company were duly sold in
favour of Mr. Aquil Qureshi for a total consideration of Rs.26.70
crores. A Sale Certificate came to be issued on 07.03.2006 in
favour of Mr. Aquil Qureshi recording that all the assets of the
company were purchased by him.
12. The registration of the trade mark 'YEZDI (DEVICE)' and
'YEZDI D250' expired on 05.10.2007 and 07.04.2008
respectively. The Trade Mark Registry issued an O-3 notices to
the Ideal Jawa represented by the OL under Section 25(3) of
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AND 9 OTHERS
the Trade Marks Act, 1999 read with Rule 64 of the Trade
Marks Rules, 2002 for the trade mark 'YEZDI (DEVICE)' (TM
No.283322).
13. The registration of TM No.283322 expired on 05.10.2007
and consequently, it was removed from the Register of Trade
Marks.
14. The Trade Mark Registry issued another 0-3 notice dated
28.02.2008 to the Ideal Jawa for the trade mark "YEZDI D250
CLASSIC' (TM No.360450).
15. The trade mark registrations in favour of the company
had lapsed in the year 2013-2014 and the company had not
used the trade marks for over a period of 15 years. It is the
case of the appellant-Mr. Boman R. Irani that the trade marks
came in the public domain and in July 2014, the appellant-
Mr. Boman R. Irani came to know that one Mr. Amit Soni had
applied for registration of 'YEZDI' trade marks and was using
the trade marks. Consequently, Mr. Boman R. Irani filed a suit
in CS(OS) No.3476/2014 before the Delhi High Court seeking
injunction against Mr. Amit Soni from using or asserting any
rights over the 'YEZDI' trade marks. On 18.11.2014, the Delhi
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AND 9 OTHERS
High Court passed an injunction order restraining Mr. Amit Soni
from asserting any right to use the trade mark 'YEZDI' or any
other deceptively similar trade mark.
16. On 17.06.2013, 14.09.2013, 01.01.2014 and 02.07.2014,
Mr. Boman R. Irani filed applications for registration of certain
marks both word and device of 'YEZDI' before the trade mark
offices at Delhi, Mumbai and Ahmedabad. On account of the
settlement arrived at between Mr. Amit Soni and Mr. Boman R.
Irani, on 08.01.2015, Mr. Amit Soni, by the Assignment Deed,
assigned the trade mark bearing Application No.2549874 (Class
12) to Mr. Boman R. Irani. The Suit CS(OS) No.3476/2014 filed
by Mr. Boman R. Irani was decreed by the Delhi High Court on
03.02.2015 in terms of the settlement and the Assignment
Deed dated 08.01.2015 entered into between the parties.
17. Classic Legends was incorporated on 17.06.2015 by
Mr. Boman R. Irani and Mahindra and Mahindra.
18. Almost 12 years after the date of sale of all the assets of
the Ideal Jawa and much after the expiry of the trade mark
'YEZDI' in the name of the Ideal Jawa, on 28.08.2015, the OL
addressed a letter to the Registrar of Trade Marks (at the
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AND 9 OTHERS
offices in Mumbai, Delhi, Kolkata, Ahmedabad and Chennai) for
the first time stating that Trade Mark Nos.283322 ('YEZDI'
DEVICE), 360450 ('YEZDI' D 250 Classic) and 259903 ('YEZDI')
were purportedly owned by the Ideal Jawa and the
directors/promoters were trying to register the trade marks
afresh and thus, these trade marks should not be registered in
the name of any other person.
19. The Trade Mark Registry, vide letters dated 08.09.2015
and 13.10.2015, replied to the OL stating that the letter dated
28.08.2015 contained incomplete details of the trade mark
applications. The Trade Mark Registry also informed the OL to
avail appropriate remedies under the Trade Marks Act i.e., to
file opposition proceedings under Section 21(1) of the Trade
Marks Act. The OL filed OLR No.343/2015 on 18.09.2015
seeking sanction from this High Court for sale of trade marks
and associated rights of the brand 'YEZDI'.
20. Mr. Boman R. Irani, who got the trade mark 'YEZDI'
registered in his name, granted Classic Legends, exclusive
licence to use the 'YEZDI' trade mark in connection with the
motorcycles on 01.02.2018. The OL filed Company Application
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AND 9 OTHERS
No.71/2018 in Company Petition No.76/1991 seeking a
declaration that the Trade Mark Certificates issued by the
Registrar of Trade Marks (Mumbai, Delhi and Ahmedabad) in
favour of Mr. Boman R. Irani are null and void and be set aside.
21. Rectification Applications were filed by the Employees'
Association against the registration of the trade mark 'YEZDI
(DEVICE)' being Application Nos.2549874, 2767024, 2767026,
2767027 and 2596403 in Class 12 in October/November, 2019.
While those applications were pending for rectification, the
Employees' Association filed Company Application Nos.125 to
128/2020 in OLR No.343/2015 for impleading the Employees'
Association to join the proceedings and seeking a direction to
the OL to take appropriate steps to record the ownership of the
Ideal Jawa over the trade marks. Further direction was sought
to the Registrar of Trade Marks to revoke the registrations
granted to the 'YEZDI' trade mark in the name of Mr. Boman R.
Irani and to restrain Mr. Boman R. Irani and others from using
the 'YEZDI' trade mark.
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AND 9 OTHERS
22. Classic Legends is said to have incurred huge expenses in
research, development, marketing and promotional activities of
its motorcycles.
23. The learned Single Judge, vide order dated 05.10.2021 in
Company Petition No.76/1991, has directed Mr. Boman R. Irani
and Classic Legends not to assign or transfer the 'YEZDI' trade
mark and to maintain accounts in relation to its usage.
However, no injunction was granted against Mr. Boman R. Irani
or Classic Legends regarding the usage of the 'YEZDI' trade
mark during the pendency of the proceedings and finally, the
learned Single Judge has passed the impugned judgment and
order dated 16.12.2022 declaring the Ideal Jawa as the owner
of the trade mark 'YEZDI' (word and device) and the
Registration Certificates issued by the Registrar of Trade Marks,
Mumbai, Delhi and Ahmedabad in favour of Mr. Boman R. Irani
in relation to the mark 'YEZDI' were also declared null and void.
The learned Single Judge further injuncted Mr. Boman R. Irani
and Classic Legends from using the mark 'YEZDI' or any other
mark containing the word 'YEZDI' as a word or device and
directed the Registrar of Trade Marks to cancel all the
registrations standing in the name of Mr. Boman R. Irani and to
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AND 9 OTHERS
forthwith effect transfer of all such registrations to the Ideal
Jawa (company in liquidation) through the OL. The learned
Single Judge has also directed the Registrar of Trade Marks not
to grant any such further registration of the trade mark 'YEZDI'
to Mr. Boman R. Irani or Classic Legends and further declared
that Mr. Boman R. Irani and Classic Legends are liable to
account and pay the company all the gains made from the use
of the trade marks. The OL has been allowed to sell all the
trade marks and such other associated rights in and over the
trade marks with all goodwill associated with the marks by
public auction and directed Mr. Boman R. Irani and Classic
Legends to pay costs of Rs.10,00,000/- each.
24. Mr. S.S. Naganand and Mr. Udaya Holla, the learned
Senior Counsels appearing for the appellants have advanced
extensive arguments on behalf of the appellants whereas, Dr.
Aditya Sondhi and Mr. Dhyan Chinnappa, learned Senior
Counsels have made submissions on behalf of the OL and the
Employees' Association respectively.
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AND 9 OTHERS
III. SUBMISSIONS ON BEHALF OF THE APPELLANTS:-
25. It is submitted on behalf of the appellants that the Ideal
Jawa (company in liquidation) cannot claim rights to the
'YEZDI' trade mark. The Ideal Jawa stopped production and
manufacturing of motorcycles and use of 'YEZDI' trade mark
way back in 1996. The OL did not take any action in respect of
the trade mark for over a period of more than 15 years. The
trade mark cannot remain in limbo for indefinite time.
26. 'YEZDI' is the trade mark under which the motorcycles
manufactured and produced by the Ideal Jawa were sold with
the trade mark 'YEZDI'. Therefore, the submission of the OL
that he would not know the existence of the trade mark being
used by the Ideal Jawa, could not have been accepted. The OL
did not take any steps to protect and revive the 'YEZDI' trade
mark for a period of more than 15 years after the date of the
winding up order passed by the Company Court. The books of
account and all the records of the company were with the OL.
27. The OL did not think and consider the trade mark 'YEZDI'
as the asset of the Ideal Jawa and it was not included for
valuation of the assets of the company in liquidation by the
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AND 9 OTHERS
Registered Valuer. An advertisement dated 28.07.2003 was
published in 'The Economic Times' for sale of all the moveable
and immoveable assets of the company and even as per the
order dated 10.10.2003, the Company Court held that the
secured creditor had got the entire assets of the company in
liquidation valued and the offer made by Mr. Aquil Qureshi to
purchase the entire assets of the company in liquidation for
Rs.26.70 crores were accepted and the Sale Certificate dated
07.03.2006 was issued in respect of all the assets of the
company in liquidation.
28. The Statement of Affairs of the company in liquidation
was signed by Mr. Boman R. Irani on 19.01.2004 after the
valuation of the assets by the Registered Valuer for which, the
advertisement dated 28.07.2003 was issued for sale of all the
assets. The Company Court passed the order dated
10.10.2003 accepting the offer of Mr. Aquil Qureshi to purchase
the entire assets of the company in liquidation.
29. The trade marks previously registered in the name of the
company viz., 255903 'YEZDI (DEVICE)', 283322 'YEZDI
(DEVICE)' and 360450 'YEZDI D 250 Classic' have not been
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AND 9 OTHERS
renewed since 1997, 2007 and 2008 respectively and have
lapsed. No action was taken to challenge the removal of the
Trade Marks 283322 and 360450 by the OL on behalf of the
Ideal Jawa. The OL did not take any action against third parties
who have adopted 'YEZDI' trade mark whereas, Mr.Boman R.
Irani had been protecting the trade mark. Neither the company
in liquidation nor the OL considered the trade mark to be an
asset of the company, which is evident from the aforesaid facts
stated hereinabove. Once the trade mark is abandoned, the
same would be available in the public domain, where it may be
ceased immediately, providing such persons with superior
rights to the mark as against the previous registered owner
who has abandoned the mark due to action/inaction.
30. On behalf of the appellants, the following case laws have
been pressed into service:
(i) UNCAS MANUFACTURING COMPANY vs.
CLARK & COOMBS COMPANY, 200 F. SUPP 831;
(ii) SUTTON COSMETICS (P.R) INC. ET. AL. vs.
LANDER CO, INC, ET. Al 1971 WL 17176;
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AND 9 OTHERS
(iii) PRADEEP GUPTA vs. K. BRAHMANANDAM,
2024 (4) ALT 645;
(iv) OM PRAKASH GUPTA vs PRAVEEN KUMAR
& ANR, ILR (2000) II DELHI 124;
(v) NEON LABORATORIES LTD. vs MEDICAL
TECHNOLOGIES LTD. & ORS, (2016) 2 SCC 672.
31. It is further submitted that vide order dated 08.09.2005
passed in OLR No.485/2003, Krishna Kumar & Co., a Chartered
Accountant, was appointed with a direction to investigate the
affairs of the company to find out as to whether any act of
misfeasance has been committed by the erstwhile
management. Thereafter, the misfeasance proceedings were
initiated against the ex-Directors in the year 2006, which were
dismissed as the claims made against the ex-Directors were not
sustainable. Even during the investigation by the Chartered
Accountant, the trade marks were not mentioned/discovered.
No adverse inference was drawn against Mr. Boman R. Irani
during these proceedings, although he was operating the
website 'www.yezdi.com' since 1998.
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AND 9 OTHERS
32. No evidence has been put on record to prove that the
goodwill in respect of the 'YEZDI' trade mark subsists with the
Ideal Jawa (the company in liquidation). However, reliance has
been placed on Mr. Boman R. Irani's statements in his
application seeking impleadment in the proceedings. Only on
the basis of the claim made by Mr. Boman R. Irani, the goodwill
of trade mark 'YEZDI' would not subsist with the Ideal Jawa.
33. All the goodwill attached to the 'YEZDI' trade mark is
because of the efforts and resources expended by Mr. Boman
R. Irani towards the promotion and protection of the 'YEZDI'
trade mark. Mr. Boman R. Irani himself has been operating the
website 'www.yezdi.com' since 1998 in his own name and
whatsoever goodwill is generated, it would be due to the efforts
and expenses incurred by him. The goodwill in the trade mark
is directly proportional to the strength of the business of an
entity and that goodwill cannot exist in vacuum for several
years especially after all the assets are sold. The goodwill
cannot survive independent of the trade/business and
extinguishes when the business attached to it ceases to
function.
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AND 9 OTHERS
34. It is next submitted that the 'YEZDI' mark was always
associated with Mr. Boman R. Irani's family and there are trade
mark registrations subsisting in the name of other family
members of the appellant-Mr. Boman R. Irani including
Mr. Boman R. Irani's mother-Mrs. Porochee Irani. The family
members of the appellant-Mr. Boman R. Irani had set up
'YEZDI Distilleries' in Mysuru in 1970-1971 and the name
'YEZDI' is registered in the name of the partnership firm
comprising of the family members of Mr. Boman R. Irani-
appellant. Mrs. Porochee Irani, the mother of Mr. Boman R.
Irani, is one of the first proprietors of the trade mark 'YEZDI'.
The appellant-Mr. Boman R. Irani was a non-executive Director.
The Statement of Affairs was filed based on the records of the
ROC. Mr. Boman R. Irani was not in custody of the records of
the company and in fact, it was the OL who had the custody of
the records of the company.
35. It is also the submission of the learned Senior Counsel
appearing for the appellants that under Sections 446 and 456
of the Companies Act, 1956, the Company Court exercises
limited jurisdiction in relation to the affairs of the company in
the winding up process. The Trade Marks Act, 1999, being a
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AND 9 OTHERS
special statute, would override the Companies Act, 1956. The
Trade Marks Act is a complete code in itself which provides for
special statutory authorities which deal with the validity of
registration of the trade mark and revocation/rectification of
the same. The relief granted by the learned Single Judge in the
impugned order is beyond the jurisdiction of the Court. In the
impugned order, it was directed that all the trade marks
applied for and registered in the name of Mr. Boman R. Irani
are to be cancelled, whilst allowing the trade marks applied for
by other third parties to continue on the Register.
36. The direction issued by the Company Court directing the
transfer of the trade mark applications registered in the name
of the appellants is unsustainable since the provisions of the
Trade Marks Act, 1999 do not provide for such transfer of
registration from one person to another. In fact, transfer of
registration was not even prayed for by any of the parties in
the OLRs. Mr. Boman R. Irani applied for registration
independently by following the procedure contemplated under
the Trade Marks Act. The subsequent grant of registration of
the 'YEZDI' trade mark in favour of Mr. Boman R. Irani cannot
be termed as "disposition of the property".
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AND 9 OTHERS
37. At last, it is submitted that in terms of Section 458A of
the Companies Act, 1956 read with Article 137 of the Limitation
Act, the period of limitation for the OL to apply for the sale of
the 'YEZDI' mark was 4 years from the date of the winding up
order. It was only after a lapse of 14 years after the winding up
order, 12 years after sale of all the assets of the company by
the OL and 10 years after the expiry of the limitation period
prescribed under Section 458A of the Companies Act, 1956 that
the OL had filed OLR No.343/2015 for sanction of sale of
'YEZDI' trade mark. Therefore, the application in OLR
No.343/2015 was barred by limitation and ought to have been
rejected.
IV SUBMISSIONS ON BEHALF OF OFFICIAL
LIQUIDATOR:-
38. Dr. Aditya Sondhi, the learned Senior Counsel appearing
for the OL has supported the impugned order passed by the
learned Single Judge and submitted that under Section 446(2)
of the Companies Act, 1956, the Company Court has wide
powers conferred by the statute to entertain all suits and legal
proceedings by or against a company in liquidation. Section
446(2) begins with a non obstante clause and the Company
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AND 9 OTHERS
Court has jurisdiction to entertain any question "whatsoever,
whether of law or fact, which may relate to or arise in the
course of winding up of the company". The purpose of Section
446(2) is to save the company in liquidation from extensive
and prolix litigation in different jurisdictions while prosecuting
the claims and for quick disposal of the same by the Company
Court. It is the Company Court which has the absolute
jurisdiction to deal with the assets of a company in liquidation.
The claims regarding misappropriation of a trade mark of the
company by its Director during the winding up proceedings
have to be dealt with under Section 446(2) and not under the
provisions of the Trade Marks Act, 1999.
39. In the present case, the former Director of the company
in liquidation has himself subjected the issue of registration of
the disputed trade marks to the jurisdiction of this Court vide
his impleadment application bearing CA No.586/2016 in OLR
No.343/2015.
40. Section 446(2) is the special provision in respect of
winding up and dealing with the assets of the company in
liquidation whereas, the Trade Marks Act, 1999 is a general
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AND 9 OTHERS
statute which deals with registration etc., of a trade mark. If
there is an apparent conflict between two independent
provisions of law, the special provision must prevail. The Trade
Marks Act, 1999 does not oust the jurisdiction of the Civil
Courts. In fact, the Trade Marks Act confers jurisdiction both on
the Civil Court and the High Court under different
circumstances.
41. The OL acts as an Officer of the Court subject to the
control of the Company Court under Rule 232 of the Companies
(Court) Rules, 1959 as regards collection of the assets of the
company and the application of the assets in discharge of the
company's liabilities are concerned. Under Rule 233, the OL's
position is like a receiver of the property appointed by the
Court and the Company Court may, on an application of the OL,
enforce the acquisition or retention of any properties that are
custodia legis. Rule 9 confers inherent powers on the Company
Court to grant and mould relief in the manner it deems fit in
the interest of justice.
42. Vide order dated 17.08.2001, the Company Court ordered
winding up of the Ideal Jawa. The 'YEZDI' trade mark was on
- 43 -
AND 9 OTHERS
the Trade Mark Register and in the name of the company on
the date of the winding up. Therefore, all assets of the
company, both tangible and intangible, were deemed to be
custodia legis in terms of Section 456 of the Companies Act,
1956. De hors the registration, a trade mark can be protected
under the common law action for passing off as set forth under
Section 27(2) of the Trade Marks Act, 1999.
43. Goodwill is a property protected by the common law
action of passing off and stands on a different footing from the
rights of a registered owner under the Trade Marks Act, 1999.
Mere cessation of business or stoppage of operation does not
destroy the goodwill of a trade mark and such goodwill has an
important value in the sale of assets of the company. The
inherent goodwill of the 'YEZDI' brand subsists till date as is
evident from the promotion campaign of Mr. Boman R. Irani
and his Assignee, Classic Legends.
44. The existence of the registered trade marks in the name
of the Ideal Jawa was not disclosed to the OL or this Court until
2015 by the ex-management. In OLR No.365/2012, the annual
statement dated 16.08.2012 in respect of the company also did
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AND 9 OTHERS
not refer to the registered trade marks neither in the statement
of affairs filed by Mr. Boman R. Irani nor in any of the returns
with the ROC nor in the documents filed with the OL.
45. The valuation of certain immoveable properties of the
company was done at the behest of the secured creditor viz.,
IOB vide Valuation Report dated 10.06.2003. The immoveable
assets were brought to sale, but these did not include the trade
mark 'YEZDI' under the dispute inasmuch as it was not within
the knowledge of the OL.
46. After the OL came to know about the existence of the
registered trade mark 'YEZDI' in the name of the Ideal Jawa
(the company in liquidation), the OL noted the attempt of
Mr. Boman R. Irani to remove the said asset of the company
from the custody of this Court. The OL preferred OLR
No.343/2015 on 18.09.2015 to accord sanction for the sale of
trade marks, goodwill, brands, logos and all associated rights.
47. Without notice in Form O-3 to the OL, two of the trade
marks in the name of the company were removed from the
Trade Mark Register for failure to renew registration in the
years 2007 and 2008 respectively. The mark 'YEZDI', however,
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AND 9 OTHERS
was and continues till date to be on the Register. The trade
mark 'YEZDI' was renewed by the company in liquidation on
05.10.2000 of which Mr. Boman R. Irani was an integral part till
the date of winding up order. Therefore, the argument made on
the premise that the company in liquidation had abandoned the
trade mark 'YEZDI' in 1996 itself is incorrect and false.
48. Failure to issue O-3 notices to the OL in terms of the
mandatory requirements prescribed under Section 25(3) of the
Trade Marks Act, 1999 renders illegal, the removal of the marks
from the Register for non-renewal. The O-3 notices were given
to Shah and Shah on the following addresses:
* 1. 654, Jagannath Shankar Shet Marg,
Mumbai-400002, Maharashtra, India
* 'A' Aidun Bldg., 5th Floor, 1st Dhobi
Talao Lane, Mumbai-400002,
Maharashtra India
49. Shah and Shah were the registered agents of the
company and the ex-management never informed the OL about
the existence of such a principal agent relationship. As per Rule
101 of the Trade Marks Rules, 2017, the registered proprietor
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AND 9 OTHERS
or registered user of a trade mark should have informed the
Registrar of Trade Marks by way of a letter about the change in
the ownership of the company in liquidation. The address of the
OL should have been given to the Registrar of Trade Marks for
any communication. In fact, Mr. Boman R. Irani, being the
Director of the company in liquidation, failed to inform the OL
and also the Registrar of Trade Marks about the winding up
order. The order of the Registrar of Trade Marks for removal of
the trade marks from the Register without following the
provisions of Section 25(3) of the Trade Marks Act is void.
There is no limitation prescribed under the Trade Marks Act for
reinstatement of the marks wrongfully removed without issue
of Form O-3 notice.
50. The Registrar of Trade Marks was impleaded in the
proceedings of the applications before the learned Single Judge
upon submission of the Special Counsel for the OL pursuant to
which, the Registrar filed an affidavit dated 07.04.2016. The
Registrar expressly averred therein that all orders of this Court
regarding the disputed marks would be binding upon the Trade
Mark Registry and that there was no proof of issue of Form O-3
notice in respect of the mark 'YEZDI' (word) as all the records
- 47 -
AND 9 OTHERS
had been lost in the flood and the marks continued to remain
on the Register in the name of the Ideal Jawa.
51. As regards the other two registered trade marks which
were illegally removed are concerned, a mere computer
generated slips of O-3 notices without proof of their
dispatch/delivery to the OL would not satisfy the requirements
of Section 25 of the Trade Marks Act.
52. It is further submitted that the registration of 'the YEZDI'
trade mark in the name of Mr. Boman R. Irani is void ab initio.
Mr. Boman R. Irani has obtained registration of the marks in his
name with mala fide intention through deceptive means,
pending his impleading application in OLR No.343/2015 and
without the leave of this Court. The said registration was
granted subsequent to the filing of the affidavit dated
07.04.2016 by the Registrar of Trade Marks and therefore, is
non est and void ab initio.
53. Section 11(10) and Section 33(1)(b) of the Trade Marks
Act, 1999 recognize the principle of bad faith registration of a
trade mark. There is bad faith where the applicant intentionally
submits wrong or misleading information or where he tries to
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lay hands on the mark of a third party with whom he had
contractual or other relations. When a property is custodia legis
in terms of Section 456, any disposition of the same without
notice to the OL would render the disposition a nullity. No
vested rights can flow from suppression of material facts from
the Company Court. Section 536(2) of the Companies Act,
1956 statutorily recognizes that any transfer/disposition of the
assets of the company in liquidation post winding up without
the permission of the Company Court to be void.
54. Mr. Boman R. Irani was appointed as the Director of the
company on 16.04.1990 and continued to be so on the date of
the winding up order dated 07.12.2021. The renewal of the
trade mark 'YEZDI' was done on 05.10.2000 under the name of
the company in liquidation by the ex-management. When the
company was in the process of winding up with effect from
25.07.1991, Mr. Boman R. Irani registered the website
'www.yezdi.com' in 1998 and continues to be its domain holder
considering the iconic brand value of the trade mark 'YEZDI'.
The website is active and promoting the re-launch of 'YEZDI'
bikes in 2022. In his capacity as Director, Mr. Boman R. Irani
filed the Statement of Affairs of the company as mandated
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AND 9 OTHERS
under Section 454 of the Companies Act, 1956. However, he
did not disclose the registered trade marks as assets of the
company in liquidation.
55. Mr. Boman R. Irani has entered into a Trade Mark Licence
Agreement on 01.02.2018 with the Classic Legends, the
Assignee, for the purpose of re-launching the 'YEZDI'
motorcycles in the Indian market and exploiting the 'YEZDI'
brand name. In spite of the OL's objections dated 28.07.2015
addressed to all the Trade Mark Registries and the affidavit of
the Registrar of Trade Marks dated 07.04.2016, Mr. Boman R.
Irani was able to get registration of the 'YEZDI' marks in the
years 2016 and 2017.
56. In view of the aforesaid, the OL, vide CA No.71/2018,
was constrained to seek a declaration that the registration in
respect of 'YEZDI' trade mark in favour of Mr. Boman R. Irani
was null and void and the said prayer has been allowed in the
impugned order passed by the learned Single Judge. It is
further submitted that the relief sought in CA No.71/2018 was
well within the period of limitation vis-a-vis the date of grant of
registration in favour of Mr. Boman R. Irani. The appellant-
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Mr. Boman R. Irani and his Assignee are not bona fide third
party strangers who can claim any relief or equity.
57. The pleadings made by Mr. Boman R. Irani would also
suggest that the 'YEZDI' marks were used by the company in
liquidation from 1969. Though the company has stopped
production of goods since 1996, the brand enjoyed extensive
reputation and goodwill till date. It is further submitted that
Mr. Boman R. Irani was in breach of his fiduciary duty to the
creditors of the company. When a company is insolvent, the
Directors have a fiduciary duty to take into account the
interests of the creditors and other stakeholders of the
company. So the Directors are accountable to the creditors for
the decisions they make. The conscience of a company is
confided to its Directors, whose duty is to ensure that the
properties of the company are not exploited for their personal
benefits to the detriment of the creditors. Unlike cases of
simpliciter termination of employment and demitting of office
where arguably the fiduciary duty of the Director towards the
company is co-terminus with the employment, in winding up,
the Director continues to have statutory responsibilities as
envisaged under Sections 456 and 468 of the Companies Act,
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AND 9 OTHERS
1956 for the benefit of the creditors. Once the company goes
under liquidation, the Directors detach themselves from the
affairs of the company and its assets. The assets and the trade
mark cannot be appropriated by the ex-Directors for their own
enrichment or business interest.
58. The removal of a registered trade mark on the ground of
non-use is triggered only on an application by a 'person
aggrieved' in terms of Section 47 of the Trade Marks Act, 1999.
Mr. Boman R. Irani has not preferred any such application.
59. Section 47(3) of the Trade Marks Act provides that there
can be no abandonment, if special circumstances exist or if
there is no intention to abandon. The intention to abandon the
trade mark is a necessary component of its non-use.
Abandonment, being in the nature of a forfeiture, must be
strictly proved. Any economic impracticability which includes
winding up proceedings would amount to special circumstances
and be a complete defence in respect of such non-use.
60. The prolonged use of the trade marks by the company
from 1969 was only interrupted by the special circumstance
vis-à-vis the order of winding up passed by this Court. In terms
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AND 9 OTHERS
of Section 457 of the Companies Act, 1956, the OL can only
continue to administer the affairs of the company in liquidation
only for the purposes of beneficial winding up of the company
in liquidation and this would constitute a special circumstance
for non-use of the trade mark by the company in liquidation
inasmuch as the business of the company was closed way back
in 1996 and the OL could carry out the liquidation of the
company by realizing all the assets and settlement of the dues
of various class of creditors.
61. The trade mark is not merely a symbol of an existing
goodwill. The fact that the mark has been left dormant for
some time does not destroy the right in it as a matter of law.
The question of a company in winding up carrying on business
is legally and commercially untenable with the exception of
Section 457(1)(b) which contemplates carrying on the business
"so far as may be necessary for the beneficial winding up of the
company" and no other. Mr. Boman R. Irani cannot be allowed
to take advantage of his own wrong in suppressing the factum
of the existence and registration of the trade marks.
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V. SUBMISSIONS ON BEHALF OF EMPLOYEES'
ASSOCIATION:-
62. Mr. Dhyan Chinnappa, the learned Senior Counsel
appearing for the Employees' Association has submitted that
cessation of business would not automatically result in
destroying the goodwill or the property in a trade mark. In
trade mark law, one must proceed to determine reputation and
goodwill from the point of view of a common man. In the
present case, the common man associates the source and
origin of the mark 'YEZDI' to the Ideal Jawa alone. The said
aspect has been admitted by Mr. Boman R. Irani and the
Classic Legends who claim to have been attempting to revive
this brand. Even to this date, there are numerous fan pages on
social media and groups of bike riders who want to cherish the
reputation and goodwill of 'YEZDI' brand.
63. Mr. Boman R. Irani, in C.A.No.586/2016, has stated that
although manufacturing of the bikes has stopped way back in
1996, the goodwill and reputation which the brand created for
itself has continued to vest in him. Mr. Boman R. Irani admits
that the goodwill and reputation of the brand have survived
despite cessation of the business by the Ideal Jawa. It is only
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AND 9 OTHERS
such goodwill which has driven Mr. Boman R. Irani to establish
Classic Legends with Mahindra and Mahindra. They intend to
take business advantage of this great legacy which is nothing
but the goodwill which always rests with the company and
continues even after registration of the trade mark ceases to
exist. It has been further submitted that prior to the removal of
the marks from the Register of Trade Mark, notices as
mandated under Section 25(3) of the Trade Marks Act were not
issued to the OL. No application was made for removal of the
marks on the ground of non-use, but on the ground of paying
necessary fee for renewal. Notwithstanding the same, no action
could have been taken in this regard without issuing a notice in
the prescribed form and manner.
64. The petition for winding up was presented in the year
1991, which is the relevant date to determine the assets and
properties of the company and to notice if any disposition has
in fact occurred of the properties of the company. The stoppage
of the business would not have any bearing on the rights of the
company over the trade marks. As such, there is no
abandonment of the marks either as on that date or prior to
the winding up of the company. It is, therefore, submitted that
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the appeals filed by the appellant-Mr. Boman R. Irani be
dismissed.
65. We have considered the submissions.
VI QUESTIONS FOR DETERMINATION:-
66. The following questions arise for our consideration in
these appeals:
1. Whether the trade marks which were
registered in the name of the company
and used since 1969 could be custodia
legis since the date of presentation of the
winding up petition?
2. Whether the trade marks registered
in the name of the company were
illegally removed without notice to the OL
as the O-3 notices were served only on
the previous trade mark agent of the
company viz., Shah and Shah and not to
the OL?
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3. Whether the registration of the trade
marks by Mr. Boman R. Irani by filing the
applications in the year 2013 and
registration of the website
'www.yezdi.com' in 1998 were against
the provisions of the Companies Act,
1956?
4. Whether when the trade marks were
not discovered and identified by the OL
as an asset of the company and the trade
marks were omitted from the Statement
of Affairs filed by the ex-Director
Mr. Boman R. Irani and therefore, it was
a mala fide action on the part of
Mr. Boman R. Irani in violation of
Sections 454 and 468 of the Companies
Act, 1956?
5. Whether the trade marks and goodwill
of the trade mark 'YEZDI' would continue
even after the production and business of
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AND 9 OTHERS
the 'YEZDI' motorcycle by the company
was discontinued since 1996?
6. Whether the Company Court, in
exercise of its powers under Section 446
of the Companies Act, 1956, is
empowered to declare the trade mark
registered as illegal and direct the Trade
Mark Registry to remove the registered
trade mark in favour of a person?
VII ANALYSIS AND CONCLUSIONS:-
RE. QUESTION NO.1:
67. It would be difficult to say in a wider proposition that the
company in liquidation can assert rights in the trade marks
when no action was taken for over 15 years for renewal of the
trade marks registered in the name of the company and the
trade marks were not used by the company since 1996 and the
registration of the trade marks got lapsed. The right over the
trade marks would not continue indefinitely in limbo. The trade
marks which were reflected in the Register were not in force
and expired in 1997 and 1998 and therefore, no right of the
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registered proprietor subsists in the trade marks once
registered in the name of the company and used until 1996.
68. In M/S. THAPSONS PVT. LTD. vs M/S. ASHOKA
FOOD INDUSTRIES AND ANOTHER (AIR 1992 DEL 11), it
has been held that the person in whose name trade mark is
registered could lose propriety rights in the registered trade
mark on account of not renewing the trade mark. The Delhi
High Court has placed reliance on the judgment in the case of
NATIONAL BELL CO. AND GUPTA INDUSTRIAL
CORPORATION vs METAL GOODS MFG. CO. (P) LTD., (AIR
1971 SC 898), wherein it was held that the distinctiveness of
the trade mark in relation to the goods of a registered
proprietor of such a trade mark may be lost in a variety of ways
i.e., by the extensive piracy so that the mark become publici
juris. The trade mark can also be lost by abandonment. Thus,
if a registered proprietor has abandoned the trade mark and
has not taken steps for renewal of its registration in the present
case for over a period of 15 years, it would amount to
abandonment of the trade mark. Paragraph 10 of the
judgment in THAPSONS's case (supra) is extracted
hereunder:-
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"10. Counsel for the defendants has
drawn my attention to Trade Marks
Journals dated January 1, 1991 and
January 16, 1991, showing that this
trade mark is shown registered in the
name of the said company of Calcutta
and as yet registered trade mark has not
been removed from the Register from
the name of the said company for non-
payment of renewal fees. It may be that
the trade mark has not yet been
removed from the Register of the
Registry of Trade Marks for non-
payment of the fees but the legal effect
is quite clear that if the trade mark is
not got renewed when it becomes due in
accordance with the provisions of the
Trade Marks Act, the person in whose
name the trade mark stood registered
cannot claim that he is the registered
trade mark owner. Be that as it may, if
the said owner deposits the fee and the
matter remains pending with the
Registry of Trade Marks for renewal of
trade mark, in that situation it could be
said that the person in whose name
trade mark stands registered has not
lost its proprietary rights in the said
registered trade mark on account of any
delay taking place in the office of the
Registry of Trade Marks in renewing the
said trade mark. Defendants have not
furnished any material to show that the
trade mark is not being renewed in the
present case on account of any such
delay taking place in the office of the
Registry of Trade Marks. Moreover,
there is nothing to show that the said
company is still marketing its goods
under the said trade mark. In National
Bell Co. and Gupta Industrial
Corporation v. Metal Goods Mfg. Co. (P)
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AND 9 OTHERS
Ltd., AIR 1971 SC 898, it was held that
the distinctiveness of the trade mark in
relation to the goods of a registered
proprietor of such a trade mark may be
lost in a variety of ways i.e. by the
goods not being capable of being
distinguished as the goods of such a
proprietor or by extensive piracy so that
the marks become public juris. The
trade mark can also be lost by
abandonment. What is essential for the
plaintiff to establish in an action for
passing off is the distinctive features of
a trade mark, substantial user and wide
reputation. The law casts an obligation
on the defendant not to pass off his own
goods as if they had been produced by
the plaintiff. In the present case, all
these ingredients are prima facie
satisfied by the plaintiff. In the present
case, the defendants are also
committing breach of the registered
copyright of the plaintiff. They have
adopted totally similar device of Lotus as
is being used by the plaintiff for which
plaintiff has got it registered under the
Copyright Act. Defendants have not
come up with any explanation as to how
defendants have chosen the similar get
up and device as is being used by the
plaintiff on its goods. In similar
circumstances temporary injunction was
granted in M/s. Anglo Dutch Paint,
Colour and Varnish Works Pvt. Ltd. v.
India Trading House, AIR 1977 Delhi 41.
It is well settled by a Division Bench of
this Court in Century Traders v. Roshan
Lal Duggar and Co., AIR 1978 Delhi 250,
that in an action for passing off in order
to succeed in getting an interim
injunction the plaintiff has to establish
user of the mark prior in point of time
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AND 9 OTHERS
than the impugned user by the
defendants and the registration of the
mark or similar mark prior in point of
time to user by the plaintiff is irrelevant
in an action for passing off and the mere
presence of the mark in the register
maintained by the Trade Marks Registry
does not prove its user by the persons in
whose name the mark is registered and
is irrelevant for purposes of deciding the
application for interim injunction unless
evidence has been led or is available of
user of their registered trade mark.
There is no evidence brought on the
record by the defendants to show that
the owner of the registered trade mark
is using the said trade mark in the
market. So, the law laid down by the
Division Bench on this aspect of the case
is clearly applicable to the facts of the
present case. Counsel for the defendants
has, on the other hand, placed reliance
on Gora Mal Hari Ram v. Bharat Soap
and Oil Industries, 23 (1983) DLT 401.
In the said case, instead of granting
interim injunction the Court has directed
the defendants only to maintain the
proper accounts and file copies of the
same in Court six monthly. It depends
on the facts of each case to decide
whether the plaintiff is entitled to have
the interim injunction or not. The Court
gave a finding on the peculiar facts of
this case that interim injunction could
not be granted there being no material
on the record as would establish that the
plaintiff enjoys such a reputation in
relation to 'Savera' soap as would impel
the Court to grant such injunction and it
was found that the registration has been
also granted of the said trade mark to
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some other manufacturers. The case is
distinguishable on facts."
69. We are of the view that it is a case of abandonment of
the trade mark by the company in not taking any action for
over a period of 15 years to get the trade mark
registered/renewed and protect it when the company was not
using the same since 1996. If the company had abandoned the
trade mark, it would not remain custodia legis since the date of
presentation of the winding up petition.
RE. QUESTION NO.2:
70. Section 25 of the Trade Marks Act, 1999 deals with
duration, renewal, removal and restoration of registration of
the trade mark. Sub-section (3) thereof provides that before
the expiration of the last registration of the trade mark, the
Registrar shall send notice in the prescribed manner to the
registered proprietor of the date of expiration and the
conditions as to payment of fees and otherwise upon which, a
renewal of registration may be obtained, and if at the
expiration of the time prescribed in that behalf those conditions
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AND 9 OTHERS
have not been duly complied with, the Registrar may remove
the trade mark from the Register.
71. It cannot be said that the obligation to send notice under
sub-section (3) of Section 25 of the Trade Marks Act is not a
mandatory one. Therefore, without sending a notice as
contemplated under sub-section (3) of Section 25, a trade
mark cannot be legally removed and if it is removed, it would
be a wrongful removal and if the restoration of the trade mark
to Register is sought within the period of limitation, that would
be allowed as a matter of course.
72. Sub-section (4) of Section 25 of the Trade Marks Act,
1999 provides as under:-
"(4) Where a trade mark has been
removed from the register for non-
payment of the prescribed fee, the
Registrar shall, after six months and
within one year from the expiration of
the last registration of the trade mark,
on receipt of an application in the
prescribed form and on payment of the
prescribed fee, if satisfied that it is just
so to do, restore the trade mark to the
register and renew the registration of
the trade mark either generally or
subject to such conditions or limitations
as he thinks fit to impose, for a period of
ten years from the expiration of the last
registration."
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73. Thus, under sub-section (4) of Section 25, an application
for restoration of the trade mark which was removed from the
Register for non-payment of the prescribed fee is to be made
within one year from the expiration of the last registration of
the trade mark.
74. In the present case, the notice was served on the trade
mark agent of the company viz., Shah and Shah. It would also
be relevant to take note of the fact that the OL did not make
any application under sub-section (4) of Section 25 for
restoration of the trade mark which was removed from the
Register. If no applications were filed within the period of
limitation under sub-section (4) of Section 25, the question
whether the trade marks had been removed in violation of the
mandatory provisions of sub-section (3) of Section 25 would
not be relevant.
75. In the case of UNITED SPIRITS LIMITED vs.
INTELLECTUAL PROPERTY APPELLATE BOARD (2011 SCC
OnLine Cal 4307), it has been held in paragraphs 17 to 21 as
under:-
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"17. The question is whether in exercise
of its power under art. 226 this Court
should examine the correctness of the
prima facie opinions recorded by the
Board while deciding the interlocutory
applications. If it is found that the order
is vitiated by error of jurisdiction or
violation of the principles of natural
justice, in my opinion, this Court must
interfere with the order. The real
questions, therefore, are whether the
order is vitiated by any jurisdictional
error or by violation of the principles of
natural justice.
18. It has been contended that since the
removal was effected in contravention of
section 25(3), the Board staying the
operation of the orders directing
restoration of the trade marks has acted
without jurisdiction; and that, in any
case, the Board has acted without
jurisdiction by staying the operation of
the orders in terms whereof the trade
marks had already been restored to
register.
19. I am unable to accept the
contentions. I have already said that
restoration of the trade marks followed
by requisite advertisement in terms of
the orders under appeal could not limit
the power of the Board to consider the
question of staying the operation of the
orders and, if necessary, to stay the
operation thereof.
20. Removal of the trade marks in
contravention of sub-section (3) of
section 25 could have been virtually a
cast iron case for restoration of the
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trade marks to register, if the requisite
applications were filed within the period
of limitation mentioned in sub-section
(4) of section 25. When the question
was whether the applications were
within time, in my opinion, the question
whether the trade marks had been
removed in violation of the mandatory
provisions of sub-section (3) of section
25 could not be relevant, for even if the
trade marks had been illegally removed,
they could not be restored to register
allowing time-barred applications.
21. Whether the applications filed were
time-barred was to be decided by the
Assistant Registrar, who decided it
against Pernod, and there can be no
dispute that the question specifically
raised by Pernod in its appeals is to be
decided by the Board. The Board was
under an obligation to decide the
questions whether the two applications
filed for restoration were time-barred;
and whether by public notice the period
mentioned in sub-section (4) of section
25 could be extended."
76. It may be further noted that under Rule 21 of the Trade
Marks Rules, 2002, service on the agent of any document
relating to the proceeding or matter shall be deemed to be
service upon the person so authorising him. The Registrar of
Trade Marks has followed the due process of law and served
the O-3 notices on the address in the record of the Trade Mark
Registry. The said stand has been taken by the Registrar in his
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affidavit submitted before the Company Court. It was the duty
of the OL to ascertain the assets of the company and issue
notice to the Registrar. The Company Court, vide winding up
order dated 17.08.2001, had directed the OL to take stock of
the assets of the company. The books of accounts and the
records of the company were all in the custody of the OL and
therefore, the OL would have come to know of the name and
address of the trade mark agent of the company. If the OL had
failed to protect the trade mark for a long period of 15 years by
not taking any steps for renewal/restoration of registration, the
removal of the trade mark from the Register of Trade Marks
cannot be faulted with.
77. Section 456 of the Companies Act, 1956 mandates that
where a winding up order has been made or where a
provisional liquidator has been appointed, the liquidator or the
provisional liquidator, as the case may be, shall take into his
custody or under his control, all the property, effects and
actionable claims to which the company is or appears to be
entitled to. Section 457 empowers the liquidator in a winding
up proceedings to institute or defend any suit, prosecution or
other legal proceeding, civil or criminal, in the name and on
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behalf of the company etc., with the sanction of the Court.
Section 456 and Section 457 of the Companies Act, 1956 are
extracted hereunder:-
"456. Custody of company's
property.- (1) Where a winding up
order has been made or where a
provisional liquidator has been
appointed, the liquidator or the
provisional liquidator, as the case may
be, shall take into his custody or under
his control, all the property, effects and
actionable claims to which the company
is or appears to be entitled.
(1A) For the purpose of enabling the
liquidator or the provisional liquidator,
as the case may be, to take into his
custody or under his control, any
property, effects or actionable claims to
which the company is or appears to be
entitled, the liquidator or the provisional
liquidator, as the case may be, may by
writing request the Chief Presidency
Magistrate or the District Magistrate
within whose jurisdiction such property,
effects or actionable claims or any books
of account or other documents of the
company may be found, to take
possession thereof, and the Chief
Presidency Magistrate or the District
Magistrate may thereupon after such
notice as he may think fit to give to any
party, take possession of such property,
effects, actionable claims, books of
account or other documents and deliver
possession thereof to the liquidator or
the provisional liquidator.
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(1B) For the purpose of securing
compliance with the provisions of sub-
section (1A), the Chief Presidency
Magistrate or the District Magistrate may
take or cause to be taken such steps
and use or cause to be used such force
as may in his opinion be necessary.
(2) All the property and effects of the
company shall be deemed to be in the
custody of the Tribunal as from the date
of the order for the winding up of the
company."
"457. Powers of liquidator.- (1) The
liquidator in a winding up by the
Tribunal shall have power, with the
sanction of the Tribunal, -
(a) to institute or defend any suit,
prosecution, or other legal proceeding,
civil or criminal, in the name and on
behalf of the company;
(b) to carry on the business of the
company so far as may be necessary for
the beneficial winding up of the
company;
(c) to sell the immovable and movable
property and actionable claims of the
company by public auction or private
contract, with power to transfer the
whole thereof to any person or body
corporate, or to sell the same in
parcels;
(ca) to sell whole to the undertaking of
the company as a going concern;
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(d) to rise on the security of the assets
of the company any money requisite;
(e) to do all such other things as may be
necessary for winding up the affairs of
the company and distributing its
assets.
(2) The liquidator in a winding up by the
Court shall have power -
(i) to do all acts and to execute, in the
name and on behalf of the company, all
deeds, receipts, and other documents,
and for that purpose to use when
necessary, the company's seal;
(ia) to inspect the records and returns of
the company on the files of the Registrar
without payment of any fee;
(ii) to prove, rank and claim in the
insolvency of any contributory, for any
balance against his estate, and to
receive dividends in the insolvency, in
respect of that balance, as a separate
debt due from the insolvent, and
rateably with the other separate
creditors;
(iii) to draw, accept, make and endorse
any bill of exchange, hundi or
promissory note in the name and on
behalf of the company, with the same
effect with respect to the liability of the
company as if the bill, hundi, or note
had been drawn, accepted, made or
indorsed by or on behalf of the company
in the course of its business;
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(iv) to take out, in his official name,
letters of administration to any deceased
contributory, and to do in his official
name any other act necessary for
obtaining payment of any money due
from a contributory or his estate which
cannot be conveniently done in the
name of the company, and in all such
cases, the money due shall, for the
purpose of enabling the liquidator to
take out the letters of administration or
recover the money, be deemed to be
due to the liquidator himself:
Provided that nothing herein
empowered shall be deemed to affect
the rights, duties and privileges of any
Administrator-General;
(v) to appoint an agent to do any
business which the liquidator is unable
to do himself.
(2A) The liquidator shall -
(a) appoint security guards to protect
the property of the company taken into
his custody and to make out an
inventory of the assets in consultation
with secured creditors after giving them
notice;
(b) appoint, as the case may be, valuer,
chartered surveyors or chartered
accountant to assess the value of
company's assets within fifteen days
after taking into custody of property,
assets referred to in sub-clause (a) and
effects or actionable claims subject to
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such terms and conditions as may be
specified by the Tribunal;
(c) give an advertisement, inviting bids
for sale of the assets of the company,
within fifteen days from the date of
receiving valuation report from the
valuer, chartered surveyors or chartered
accountants referred to in clause (b), as
the case may be.
(2B) The liquidator shall, immediately
after the order for winding up or
appointing the liquidator as provisional
Liquidator is made, issue a notice
requiring any of the persons mentioned
in sub-section (2) of section 454, to
submit and verify a statement of the
affairs of the company and such notice
shall be served by the liquidator.
(2C) The liquidator may apply to the
Tribunal for an order directing any
person who, in his opinion, is competent
to furnish a statement of the affairs
under sections 439A and 454 and such
person shall for the said purpose be
served a notice by the liquidator in the
manner as may be prescribed.
(2D) The liquidator may, from time to
time, call any person for recording any
statement for the purpose of
investigating the affairs of the company
which is being wound up and it shall be
the duty of every such person to attend
to the liquidator at such time and place
as the liquidator may appoint and give
the liquidator all information which he
may require and answer all such
questions relating to winding up of
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company as may be put to him by the
liquidator.
(2E) Every bidder shall, in response to
advertisement referred to in clause (c)
of sub-section (2A), deposit, his offer in
the manner as may be prescribed, with
liquidator or provisional liquidator, as
the case may be, within forty-five days
from the date of the advertisement and
the liquidator or provisional liquidator
shall permit inspection of property and
assets in respect of which bids were
invited:
Provided that such bid may be
withdrawn within three days before the
last day of closing of the bid:
Provided further that the inspection of
property shall be open for not more than
five days before closing of the bid.
(2F) The advertisement inviting bids
shall contain the following details,
namely:-
(a) name, address of registered office of
the company and its branch offices,
factories and plants and the place where
assets of the company are kept and
available for sale;
(b) last date for submitting bids which
shall not exceed ninety days from the
date of advertisement;
(c) time during which the premises of
the company shall remain open for
inspection;
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(d) the last date for withdrawing the
bid;
(e) financial guarantee which shall not
be less than one-half of the value of the
bid ;
(f) validity period of the bids;
(g) place and date of opening of the bids
in public;
(h) reserve price and earnest money to
be deposited along with the bid;
(i) any other terms and conditions of
sale which may be prescribed.
(2G) The liquidator appointed shall -
(a) maintain a separate bank account for
each company under his charge for
depositing the sale proceeds of the
assets and recovery of debts of each
company;
(b) maintain proper books of account in
respect of all receipts and payments
made by him in respect of each
company and submit half yearly return
of receipts and payments to the
Tribunal.
(3) The exercise by the liquidator in a
winding up by the Court of the powers
conferred by this section shall be subject
to the control of the Court; and any
creditor or contributory may apply to the
Court with respect to the exercise or
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proposed exercise of any of the powers
conferred by this section."
78. Thus, the OL ought to have taken into custody or under
his control all the property, effects and actionable claims to
which the company would have been entitled to. The OL had
failed to take any action to protect the registered trade mark of
the company for over a period of 15 years and abandoned the
trade mark inasmuch as, the company did not use the trade
mark since 1996. The failure on the part of the OL to take
control of the properties of the company and exercise his
powers for renewal of the trade mark would amount to
abandonment of the trade mark. We are, therefore, of the
considered view that the trade mark could not be restored in
the name of the company on the ground that the O-3 notices
were not issued on the OL, but were issued to the trademark
agent viz., Shah and Shah. The OL must have come to know
the existence of the trade mark agent viz., Shah and Shan as
all the records of the company came to the possession of the
OL way back in the year 2001 itself.
79. The learned Senior Counsel representing the OL has
placed reliance on the judgment in the case of D. BASKARAN
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vs DEPUTY REGISTRAR OF TRADE MARKS AND ANOTHER
([2019] 78 PTC 274) to state that mere computer-generated
slips of the O-3 notices, without proof of their dispatch/delivery
to the OL, would not satisfy the requirements of Section 25 of
the Trade Marks Act. Reliance has also been placed on the
judgment in the case of UNION OF INDIA AND OTHERS vs
MALHOTRA BOOK DEPOT ([2012]49 PTC 354) (paragraphs
13 and 16) to state that failure to comply with the mandatory
requirements prescribed under Section 25(3) of the Trade
Marks Act, 1999 would render illegal, the removal of the marks
from the Register for non-renewal. The Registrar of Trade Mark
himself, in his affidavit dated 07.04.2016, had categorically
stated that those O-3 notices were served on the trade mark
agent viz., Shah and Shah. Service of notice on the trade
mark agent of the company would amount to service of notice
on the company.
RE. QUESTION NO.3:
80. It is not in dispute that the trade mark registration had
already lapsed and the trade marks had not been used since
1996. The OL did not assert any rights over the trade marks
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nor protected them. When the trade marks had lapsed and
abandoned for more than 15 years, it would be open to the
third party including Mr. Boman R. Irani to use and register the
trade marks. Mr. Boman R. Irani, being the former Director
and shareholder of the company, would not be in a
disadvantageous position than any third party who may get the
trade mark registered in such a case. The trade mark got
lapsed and not renewed. It is not the case of the respondents
that Mr. Boman R. Irani did not get the trade marks registered
by following the due process of law. The applications filed by
Mr. Boman R. Irani to register the trade mark is published in
the Trade Mark journals for objection by any member of the
public prior to the trade marks being registered.
81. We do not find much substance in the submission of the
respondents that by registering the trade marks, Mr. Boman R.
Irani had acted in any manner against the provisions of the
Companies Act or the Trade Marks Act and the Rules made
thereunder. Mr. Boman R. Irani had been maintaining the
website 'www.yezdi.com' and the said website was in public
domain since 1998. Therefore, it would not be proper to say
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that Mr. Boman R. Irani was self-inducedly registered the
website and was using the same.
RE. QUESTION NO.4:
82. It has been submitted on behalf of the OL and the
Employees' Association that the ex-management of the
company renewed one of the trade marks by filing application
in the year 2000. Mr. Boman R. Irani has suppressed the
existence of the trade mark as an asset of the company in the
statement of affairs filed by him and has mentioned 'NIL' in the
column reserved for 'other property'. The suppression of
existence of the trade mark as an asset of the company in the
statement of affairs filed by the ex-Director Mr. Boman R. Irani
was a mala fide conduct/action on the part of Mr. Boman R.
Irani which is in violation of Sections 454 and 468 of the
Companies Act, 1956 and therefore, he cannot claim any right
over the trade marks registered by him clandestinely. He has
acted prejudicial to the interests of the company in liquidation,
its creditors and the employees.
83. The statement of affairs was signed by Mr. Boman R.
Irani only on 19.01.2004. It would be relevant to take note of
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the following events which had taken place prior to the signing
of the statement of affairs by Mr. Boman R. Irani on
19.01.2004;
(i) The Company Court had passed the order dated 31.05.2002
whereby the IOB, being the secured creditor having charge
over the assets of the company, was permitted to remain
outside the winding up proceedings and conduct the sale of
assets of the company only in association with the OL.
(ii) The Valuation Report dated 10.06.2003 was prepared by
the Valuer appointed by the secured creditor-IOB and the OL to
value all the assets of the company. All the books of accounts
and the records of the company were with the OL, which were
made available to the Valuer for the purpose of valuation.
(iii) The advertisement dated 28.07.2003 was published in 'The
Economic Times' for sale of the assets of the company.
(iv) Vide order dated 10.10.2003, the Company Court had
accepted the offer made by Mr. Aquil Qureshi to purchase the
entire assets of the company in liquidation for a sum of 26.70
crores.
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84. When neither the OL nor the Valuer or the secured
creditor considered any value of the trade marks of the
company which were not in use since 1996 and were not
renewed, putting the blame on Mr. Boman R. Irani that he did
not disclose the existence of the trade mark in the statement of
the affairs signed by him, does not appear to be correct. All the
books of account and the records of the company were with the
OL, which were also made available to the Valuer for the
purpose of valuation. When all the assets (both tangible and
intangible) were sold which would obviously include the trade
mark of the company, by not mentioning the trade mark as a
valuable asset in the statement of affairs signed by Mr. Boman
R. Irani, cannot be said to be mala fide or in violation of
Sections 454 and 468 of the Companies Act. Section 454 of
the Companies Act, 1956 reads as under:-
"454. Statement of affairs to be
made to Official Liquidator.-
(1) Where the Court has made a
winding up order or appointed the
Official Liquidator as provisional
liquidator, unless the Court in its
discretion otherwise orders, there shall
be made out and submitted to the
Official Liquidator a statement as to the
affairs of the company in the prescribed
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form, verified by an affidavit, and
containing the following particulars,
namely :-
(a) the assets of the company, stating
separately the cash balance in hand and
at the bank, if any, and the negotiable
securities, if any, held by the company
;
(b) its debts and liabilities ;
(c) the names, residences and
occupations of its creditors, stating
separately the amount of secured and
unsecured debts ; and in the case of
secured debts, particulars of the
securities given, whether by the
company or an officer thereof, their
value and the dates on which they were
given ;
(d) the debts due to the company and
the names, residences and occupations
of the persons from whom they are due
and the amount likely to be realized on
account thereof;
(e) such further or other information as
may be prescribed, or as the Official
Liquidator may require.
(2) The statement shall be submitted
and verified by one or more of the
persons who are at the relevant date
the directors and by the person who is
at that date the manager, secretary or
other chief officer of the company, or
by such of the persons hereinafter in
this sub-section mentioned, as the
Official Liquidator, subject to the
direction of the Court, may require to
submit and verify the statement, that is
to say, persons--
(a) who are or have been officers of the
company ;
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(b) who have taken part in the
formation of the company at any time
within one year before the relevant date
;
(c) who are in the employment of the
company, or have been in the
employment of the company within the
said year, and are, in the opinion of the
Official Liquidator, capable of giving the
information required ;
(d) who are or have been within the
said year officers of, or in the
employment of, a company which is, or
within the said year was, an officer of
the company to which the statement
relates.
(3) The statement shall be submitted
within twenty-one days from the
relevant date, or within such extended
time not exceeding three months from
that date as the Official Liquidator or
the Court may, for special reasons,
appoint.
(4) Any person making, or concurring in
making, the statement and affidavit
required by this section shall be
allowed, and shall be paid by the
Official Liquidator or provisional
liquidator, as the case may be, out of
the assets of the company, such costs
and expenses incurred in and about the
preparation and making of the
statement and affidavit as the Official
Liquidator may consider reasonable,
subject to an appeal to the Court.
(5) If any person, without reasonable
excuse, makes default in complying
with any of the requirements of this
section, he shall be punishable with
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imprisonment for a term which may
extend to two years, or with fine which
may extend to one thousand rupees for
every day during which the default
continues, or with both.
(5A) The Court by which the winding up
order is made or the provisional
liquidator is appointed, may take
cognizance of an offence under sub-
section (5) upon receiving a complaint
of facts constituting such an offence
and trying the offence itself in
accordance with the procedure laid
down in the Code of Criminal Procedure
1898 (5 of 1898), for the trial of
summons cases by magistrates.
(6) Any person stating himself in
writing to be a creditor or contributory
of the company shall be entitled, by
himself or by his agent, at all
reasonable times, on payment of the
prescribed fee, to inspect the statement
submitted in pursuance of this section,
and to a copy thereof or extract there
from.
(7) Any person untruthfully so stating
himself to be a creditor or contributory
shall be guilty of an offence under
section 182 of the Indian Penal Code,
1860 (45 of 1860) ; and shall, on the
application of the Official Liquidator, be
punishable accordingly.
(8) In this section, the expression "the
relevant date" means, in a case where a
provisional liquidator is appointed, the
date of his appointment, and in a case
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where no such appointment is made,
the date of the winding up order."
85. Under sub-section (1) of Section 454, where an order of
winding up of a company has been passed and the OL, as a
provisional liquidator, has been appointed, a statement as to
the affairs of the company in the prescribed form verified by an
affidavit and containing the following particulars viz., the assets
of the company, its debts and liabilities, the particulars of
creditors, the debts due to the company and such further or
other information as may be prescribed, or as the OL may
require, are to be given to the OL. The statement shall be
submitted and verified by one or more of the persons who are
at the relevant date the directors and by the person who is at
the date the manager, secretary or other chief officer of the
company. Such statement is required to be furnished within 21
days from the relevant date or within such extended time not
exceeding 3 months from the date as the OL or the Court may
for special reasons appoint.
86. Section 468 of the Companies Act, 1956 empowers the
Tribunal to direct, after the winding up order, any trustee,
receiver, banker, agent, officer or other employee of the
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company to pay, deliver, surrender or transfer forthwith or
within such time as the Tribunal directs to the liquidator, any
money, property or books and papers in his custody or under
his control to which the company is prima facie entitled to. No
such order was earlier passed for the trade marks of the
company which were not used since 1996 and were not
renewed. The first order which has been passed is the
impugned order that too, after the trade mark got lapsed and
got registered by third parties including Mr. Boman R. Irani. We
are, therefore, of the view that there is no violation of Section
454 or Section 468 of the Companies Act by Mr. Boman R. Irani
or Classic Legends, as the case may be.
RE. QUESTION NO.5:
87. The learned counsel for the respondents have brought to
the notice of this Court the averments made by Mr. Boman R.
Irani in application seeking impleadment in OLR No.343/2015
filed by the OL. The submission is that Mr. Boman R. Irani has
time and again acknowledged the goodwill subsisting in the
trade marks by claiming the use of trade marks in his trade
mark applications since 1969 as well as in the proceedings filed
by him before the Delhi High Court against Mr. Amit Soni. The
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subsistence of goodwill in the trade marks is also admitted by
him in his impleading application. Therefore, mere cessation of
production of 'YEZDI' motorcycle by the company or cessation
of the business would not destroy the goodwill or the property
in trade mark. Such goodwill has an important value in the sale
of the assets of the company.
88. In support of the aforesaid submission, the reliance has
been placed on the decision in the case of R.R. OOMERBHOY
PVT. LTD., MUMBAI vs COURT RECEIVER, HIGH COURT,
BOMBAY (2003(5) Mh.L.J. 372), wherein it has been held
that mere cessation of business or stoppage of operation would
not destroy the goodwill or the property in a trade mark.
Paragraphs 31 and 32 of the said judgment have been pressed
into service to support this submission, which would read as
under:-
"31. There is no merit in this
contention. Section 94 of the Code of
Civil Procedure, 1908 empowers the
Court to appoint a Receiver of any
property in order to prevent the ends of
justice from being defeated. Then under
the provisions of clause (a) of Rule 1 of
Order 40, the Court may, by order
appoint a Receiver of any property
where it appears to the Court to be just
and convenient. The Court is
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empowered by clause (d) of Rule 1 to
confer upon the receiver all such
powers, as to bringing and defending
suits and for the realisation,
management, protection, preservation
and improvement of the property. The
Court Receiver who is appointed as
receiver of the assets of the partnership
in a suit for dissolution is vested with
the power of protecting and preserving
the property of the partnership. The
trade marks constitute assets of the
partnership. By the order of this Court
dated 30th July 2001 the Court
Receiver was appointed as Receiver of
the assets of the firm. The Receiver is
in that capacity perfectly justified and in
fact duty bound to take all necessary
steps as would the registered proprietor
of the trade marks for the protection
and preservation of the trade marks.
There is no infirmity in the conclusion of
the learned single Judge that the
Receiver is competent to exercise the
rights conferred by section 28 including
the right to obtain relief in respect of
the infringement, of the mark in the
same manner as could be exercised by
the registered proprietor. The Receiver
stands in the shoes or the owner and
would be entitled to bring an action for
infringement of the trade mark which is
in a sense an action in aid of preserving
and protecting the property of the
partnership.
32. The judgment of a learned single
Judge of this Court, M.F. Saldanha, J. in
Ratansi Mulji v. Vinod Ratilal Gandhi,
AIR 1991 Bombay 407 relied upon by
the appellant does not carry the case of
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the appellant any further. That was in
fact, a case where the learned single
Judge held that the owner of the trade
mark was not divested of his property
under the Textile Undertakings (Taking
Over of Management) Act, 1983 and
hence could not be prosecuted by the
Custodian of the property."
89. The OL, in his OLR No.343/2015, had conceded that the
trade marks had not been used after the operation of the
company was stopped in 1996 and it would be difficult to value
the trade marks. When the trade marks of the company were
not used for 15 years, it would be difficult to say that the value
or the goodwill subsisted in favour of the company when
Mr. Boman R. Irani applied for registration of the trade marks.
90. Mere statement of Mr. Boman R. Irani regarding the
goodwill of the trade mark 'YEZDI' itself would not be sufficient
to say that the goodwill of the trade mark existed even after 15
years from the date when the company stopped its operation
and business of manufacturing and selling of the motorcycle.
Mr. Boman R. Irani has acquired a right over the trade mark
after he has got the registration done in his name in
accordance with law. Mr. Boman R. Irani can be divested
therefrom only in accordance with the statute and not
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otherwise as held in CANBANK FINANCIAL SERVICES LTD.
vs CUSTODIAN AND OTHERS ([2004] 8 SCC 355).
Paragraph 85 of the said judgment which is relevant is
extracted hereunder:-
"85. The constitutional validity of the
Act came up for consideration before
this Court in Harshad Shantilal Mehta v.
Custodian [(1998) 5 SCC 1] . The vires
of the said statute was upheld, inter
alia, on the ground that by reason
thereof the right, title and interest in a
property belonging to Respondent 3 is
not affected. The interest of the
appellant, thus, was not affected by the
said Act or by the Benami Transactions
Act. Extinction in right, title and interest
in a property must be caused as a
result of operation of law and not
otherwise. Creation of title by an act of
parties is subject to law. Once a title
vests in a person he cannot be divested
therefrom except by reason of or in
accordance with a statute and not
otherwise. An admission does not
create a title; the logical corollary
whereof would be that an admission of
a party would not lead to
relinquishment of his right therein, if he
has otherwise acquired a title in the
property."
91. Section 34 of the Trade Marks Act, 1999 provides that
mere registration of a trade mark would not entitle the person
or the user of the registered trade mark to interfere with or
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restrain the use by any person of a trade mark identical with or
nearly resembling it in relation to goods or services to which
the person has continuously used the trade mark from the date
prior to the date of registration of the trade mark. Section 34
reads as under:-
"34. Saving for vested rights.--Nothing
in this Act shall entitle the proprietor or
a registered user of registered trade
mark to interfere with or restrain the
use by any person of a trade mark
identical with or nearly resembling it in
relation to goods or services in relation
to which that person or a predecessor
in title of his has continuously used that
trade mark from a date prior--
(a) to the use of the first-mentioned
trade mark in relation to those goods or
services by the proprietor or a
predecessor in title of his; or
(b) to the date of registration of the
first-mentioned trade mark in respect of
those goods or services in the name of
the proprietor of a predecessor in title
of his;
whichever is the earlier, and the
Registrar shall not refuse (on such use
being proved), to register the second
mentioned trade mark by reason only of
the registration of the firstmentioned
trade mark."
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92. Thus, a proprietor of a trade mark does not have the
right to prevent the use of identical or similar trade mark which
that person has continuously used prior to the use or date of
registration by the proprietor.
93. Section 47 of the Trade Marks Act provides that when a
trade mark has been taken off the register and it was not used
for a continuous period of 5 years or more, it would be
presumed that the mark was not used. The Trade Marks Act
does not permit the hoarding or appropriation of the trade
mark without utilisation. The Supreme Court, in the case of
NEON LABORATORIES LIMITED vs MEDICAL
TECHNOLOGIES LIMITED AND OTHERS ([2016] 2 SCC
672), has held in paragraphs 10 and 11 as under:-
"10. Section 47 of the Act is in the
same vein and statutory strain
inasmuch as it postulates the possibility
of a registered mark being taken off the
register on an application being made
by any aggrieved person, inter alia, on
the ground that for a continuous period
of five years and three months from the
date on which the trade mark was
registered, there was no bona fide use
thereof. In the case in hand, prima
facie, it appears that for over five years
after a registration application was
made by the appellant-defendant, the
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mark was not used. Facially, the Act
does not permit the hoarding of or
appropriation without utilisation of a
trade mark; nay the appellant-
defendant has allowed or acquiesced in
the user of the respondent-plaintiffs for
several years. The legislative intent
behind this section was to ordain that
an applicant of a trade mark does not
have a permanent right by virtue of its
application alone. Such a right is lost if
it is not exercised within a reasonable
time.
11. We must hasten to clarify that had
the appellant-defendant commenced
user of its trade mark Rofol prior to or
even simultaneous with or even shortly
after the respondent-plaintiffs'
marketing of their products under the
trade mark Profol, on the appellant-
defendant being accorded registration
in respect of Rofol which registration
would retrospectively have efficacy
from 19-10-1992, the situation would
have been unassailably favourable to it.
What has actually transpired is that
after applying for registration of its
trade mark Rofol in 1992, the
appellant-defendant took no steps
whatsoever in placing its product in the
market till 2004. It also was legally
lethargic in not seeking a curial
restraint against the respondent-
plaintiffs. This reluctance to protect its
mark could well be interpreted as an
indication that the appellant-defendant
had abandoned its mark at some point
during the twelve-year interregnum
between its application and the
commencement of its user, and that in
2004 it sought to exercise its rights
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afresh. It would not be unfair or fanciful
to favour the view that the appellant-
defendant's delayed user was to exploit
the niche already created and built-up
by the respondent-plaintiffs for
themselves in the market. The "first in
the market" test has always enjoyed
pre-eminence. We shall not burden this
judgment by referring to the several
precedents that can be found apposite
to the subject. In the interest of
prolixity we may mention only N.R.
Dongre v. Whirlpool Corpn. [N.R.
Dongre v. Whirlpool Corpn., (1996) 5
SCC 714] and Milmet Oftho Industries
v. Allergan Inc. [Milmet Oftho
Industries v. Allergan Inc., (2004) 12
SCC 624] In Whirlpool [N.R. Dongre v.
Whirlpool Corpn., (1996) 5 SCC 714] ,
the worldwide prior user was given
preference nay predominance over the
registered trade mark in India of the
defendant. In Milmet [Milmet Oftho
Industries v. Allergan Inc., (2004) 12
SCC 624] , the marks of pharmaceutical
preparation were similar but the prior
user worldwide had not registered its
mark in India whereas its adversary
had done so. This Court approved the
grant of an injunction in favour of the
prior user. Additionally, in the recent
decision in S. Syed Mohiden v. P.
Sulochana Bai [S. Syed Mohiden v. P.
Sulochana Bai, (2016) 2 SCC 683 :
(2015) 7 Scale 136] this Court has
pithily underscored that the rights in a
passing-off action emanate from
common law and not from statutory
provisions, nevertheless the prior user's
rights will override those of a
subsequent user even though it had
been accorded registration of its trade
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mark. The learned counsel for the
appellant-defendant has endeavoured
to minimise the relevance of Whirlpool
[N.R. Dongre v. Whirlpool Corpn.,
(1996) 5 SCC 714] as well as Milmet
[Milmet Oftho Industries v. Allergan
Inc., (2004) 12 SCC 624] by drawing
the distinction that those trade marks
had attained worldwide reputation.
However, we think that as world shrinks
almost to a global village, the relevance
of the transnational nature of a trade
mark will progressively diminish into
insignificance. In other words, the
attainment of valuable goodwill will
have ever increasing importance. At the
present stage, the argument in favour
of the appellant-defendant that we find
holds more water is that in both Milmet
[Milmet Oftho Industries v. Allergan
Inc., (2004) 12 SCC 624] and Whirlpool
[N.R. Dongre v. Whirlpool Corpn.,
(1996) 5 SCC 714] , as distinct from
the case before us, the prior user of the
successful party predated the date of
application for registration of the
competing party. The question to
examine, then, would be whether prior
user would have to be anterior to the
date of application or prior to the user
by the appellant-defendant. In other
words, the question before the Court
would remain whether the situation on
the date of application for registration
alone would be relevant, or whether the
developments in the period between
this date and the date of grant of
registration would have any bearing on
the rights of the parties. All these
considerations will be cast into a curial
cauldron to be appreciated by the Court
before which the suit is being
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contested. In these premises, we
cannot conclude that a prima facie case
has not been disclosed by the
respondent-plaintiffs."
94. It would be apt to take note of a few other judgments on
this point which are as under:-
(i) UNCAS MANUFACTURING
COMPANY vs. CLARK AND COOMBS
COMPANY (supra)
The district court's dismissal of the
plaintiff's complaint is affirmed, and the
order cancelling Irons and Russell's
assignment of the BARODA mark to the
plaintiff (and directing rectification of
the register under §37) stands. The
appellate court based its affirmance on
the district court's supported finding
that Griffith abandoned the mark under
§45 of the Lanham Act. Because the
abandonment finding disposed of the
case. The appellate court expressly did
not decide the district court's
alternative conclusions regarding Irons
and Russell's abandonment or the
validity of the assignments under §10."
"The facts of the said case were that
during 1955 the defendant Clark &
Coombs Company, another jewelry
manufacturer in Providence, began to
manufacture and sell finger rings set
with the same 32 facet, metal tipped
white imitation stones which it labeled
"IMPORTED BARODA. In Januar 1957
counsel for Griffith wrote to the
defendant complaining of its use of the
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word BARODA in connection with the
sale of its rings and threatening legal
proceedings unless it desisted.
Nevertheless the defendant, insisting
upon its right to use the name,
continued to do so. It heard no more
from Griffith or its counsel and later in
1957 at least two other local jewelry
manufacturers began to sell like finger
rings similarly marked without objection
by Griffith."
(ii) SUTTON COSMETICS PR INC vs.
LANDER CO INC (supra)
The court concluded Sutton Cosmetics
(P.R.) had established priority of use in
Puerto Rico, Dade County, Florida, and
metropolitan New York City and that
Lander's deliberate adoption of similar
packaging/advertising made confusion
and diversion of business likely. These
facts supported a preliminary
injunction. However, the court also
reasoned that Sutton could not show
irreparable injury in markets where it
had not been selling; therefore the
injunction's geographic scope must be
limited to markets in which Sutton
(P.R.) had actually made sales. The
court further explained that permanent
relief and finer legal questions (strength
of the surname mark, secondary
meaning, good-faith prior adoption
doctrine, limits to first-user rights
where public deception exists) required
fuller factual development at a plenary
hearing.
The essential facts are: Schering sold
the bulk of its remaining inventory to
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Sutton (P.R.), released the
manufacturer which supplied it with
deodorant from an exclusive production
contract, and formally abandoned the
trademark "Sutton." After the
abandonment, Sutton (P.R.) and Lander
both sold deodorant under the name
"Sutton." Sutton (P.R.) now claims that,
because it was the first to sell
deodorant under the "Sutton" name
after Schering abandoned the
trademark, it acquired a protectable
interest in the designation "Sutton."
The majority agrees with this argument
stating: "As the first bona fide user of
the abandoned Sutton mark, Sutton
Cosmetics (P.R.) had acquired
trademark rights in that mark...." In
view of the fact that "Sutton" is a weak
mark and is protectable only if a
secondary meaning has been
established, the proposition underlying
the majority decision is that the first
user of an abandoned mark acquires,
merely by virtue of that first use, the
secondary meaning associated with that
mark which the abandoning party
created. Neither authority nor policy
justifies this result.
(iii)STAR INDUSTRIAL COMPANY
LIMITED V YAP KWEE KOR
TRADING AS NEW STAR
INDUSTRIAL COMPANY (supra)
The Privy Council delivered a decisive
judgment affirming the dismissal of Star
Industrial Company's appeal. The core
determination hinged on the absence of
proprietary goodwill in Singapore at the
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time the passing-off claim was brought.
The Privy Council underscored that
goodwill is inherently tied to active
business operations within a specific
jurisdiction. Since Star Industrial had
ceased its toothbrush manufacturing
and export activities to Singapore
following the imposition of an import
duty in 1965, it effectively abandoned
its business there. Consequently,
without ongoing business operations,
the requisite goodwill necessary for a
passing-off claim had perished.
Furthermore, the Privy Council
scrutinized the appellant's attempt to
extend common law protections to
unregistered marks through business
arrangements with the Singapore
Company. The court refuted these
arguments, emphasizing that statutory
protections under the Trade Marks Act
were confined to registered trademarks,
thereby precluding the extension of
such protections to unregistered marks
via common law doctrines like passing-
off.
The facts of the case as noted in the
judgment are that it was not until 9th
February 1971 that the Hong Kong
Company started the proceedings that
are the subject of the instant appeal. By
writ of summons issued on that date it
claimed an injunction restraining the
respondent from passing-off his
toothbrushes as being toothbrushes of
the Hong Kong Company's own
manufacture and an inquiry as to
damages. There are, however,
concurrent findings of fact by the trial
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judge and the Court of Appeal: that, at
the time the writ was issued. the Hong
Kong Company who is the sole plaintiff
was not itself carrying on any business
in Singapore; that it had not, since the
imposition of the import duty more than
five years before, manufactured any
tooth-brushes for export to Singapore;
and that it had no intention of itself
resuming this part of its former trade."
95. In the present case, it is not in dispute that the trade
mark was not used for more than 15 years and not even
renewed. They were taken off the Register. Considering the
provisions of Section 47 of the Trade Marks Act, as the trade
marks have not been in the name of the company, we are of
the view that the company would not be entitled to claim right
over the trade marks and therefore, no value can be said to be
attached to the said trade mark.
96. The facts in R.R. OOMERBHOY (supra), the case relied
on by the learned counsel for the respondents, are that the said
judgment was passed in the context of the Partnership Act,
1932 and dissolution of partnership firm. Upon dissolution, the
goodwill was to be sold. It was recorded that the business of
the partnership firm was extensive and thriving where the
annual sales were around Rs.91.84 crores in 1999-2000 and
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the order was passed in 2003. The partners had agreed that
the trade marks were the assets of the partnership firm and
each of the partners agreed that they would not use the trade
marks. However, within a week of dissolution of the partnership
firm, one of the partners filed an application seeking
registration of a similar/identical trade mark, hence, the Court
Receiver initiated a suit against such partner for infringement of
trade mark and passing off.
97. In this case, it is not disputed that the trade marks were
not used since 1996 and no business was carried out by the
company even before the winding up order came to be passed.
We are, therefore, of the view that under these circumstances,
it cannot be said that the mark would have the goodwill or
value as contented by the respondents and such goodwill can
be valued in terms of money.
98. The goodwill in the trade mark is directly proportional to
the strength of the business of an entity and the goodwill
cannot exist in vacuum for several years in absence of any
intention to resume the business by the proprietor of the trade
mark. In the present case, all assets of the company were sold
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long back. The goodwill of the trade mark will not survive
independent of the trade/business and gets extinguished when
the business attached to it ceases to function and there is no
intention to resume the business. The following judgments on
the point are taken note of:-
(i) COMMISSIONER OF INCOME TAX, W.B. III vs M/S.
CHUNILAL PRABHUDAS & CO., (1969 SCC OnLine CAL.
85)
(ii) STAR INDUSTRIAL COMPANY LIMITED vs YAP KWEE
KOR TRADING AS NEW STAR INDUSTRIAL COMPANY
(1976 FSPLR 256)
(iii) LIFE INSURANCE CORPORATION OF INDIA vs M/S.
ASIA UDYOG (P) LTD AND OTHERS (ILR 1982 DELHI
582)
RE. QUESTION NO. 6:-
99. The learned counsel for the respondents have submitted
that Section 446 of the Companies Act confers wide powers on
the Company Court in respect of matters relating to the
company in liquidation and under Sections 47 and 57 of the
Trade Marks Act, the Company Court has concurrent
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jurisdiction to deal with the rectification application. The
Company Court was well within the power to cancel the
registration of the trade marks in favour of Mr. Boman R. Irani
in the impugned judgment and order passed by the learned
Single Judge. The learned counsel have relied on the following
judgments in support of their submissions;
1. SUDARSHAN CHITS (I) LTD. V.
O. SUKUMARAN PILLAI, (1984) 4
SCC 657
The Supreme Court gave purposive
analysis of Section 446(2). It traced the
absence of an equivalent provision in
the 1913 Act and noted that Parliament
introduced Section 446(2) (and
expanded it in 1960) to avoid
multiplicity of suits, accelerate
realisation of assets and facilitate
inexpensive, summary disposal within
the winding-up jurisdiction.
The decision affirms that a court's
jurisdiction under Section 446(2)
endures even when a winding-up order
is temporarily held in abeyance or when
only a Provisional Liquidator is
appointed. This facilitates efficient
recovery of company's assets and
underscores a purposive, creditor-
friendly interpretation of the Companies
Act without establishing a new ratio
beyond clarifying the scope of Section
446(2).
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Paragraphs 8 and 9 of the said judgment are extracted
hereinbelow:-
"8. Before we advert to the question of
construction of Section 446(2)(b), it
would be advantageous to notice the
historical evolution of the provision as
well as its present setting. Section 171
of the Indian Companies Act, 1913, the
predecessor of Section 446(1) did not
contain any provision similar or
identical to that of Section 446(2).
Section 171 only provided for stay of
suits and proceedings pending at the
commencement of winding-up
proceeding, and embargo against the
commencement of any suit or other
legal proceedings against the company
except by the leave of the court. This
provision with little modification is re-
enacted in Section 446(1). There was
no specific provision conferring
jurisdiction on the court winding up the
company analogous to the one
conferred by Section 446(2). Sub-
section (2) was introduced to enlarge
the jurisdiction of the court winding up
the company so as to facilitate the
disposal of winding-up proceedings. The
provision so enacted probably did not
meet with the requirement with the
result that the Committee appointed for
examining comprehensive amendment
to the Companies Act in its report
recommended that "a suit by or against
a company in winding up should
notwithstanding any provision in law for
the time being be instituted in the court
in which the winding-up proceedings
are pending [See para 207 of the
Company Law Committee Report]". To
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give effect to these recommendations,
sub-section (2) was suitably amended
to bring it to its present form by
Companies (Amendment) Act, 1960.
The Committee noticed that on winding-
up order being made and the Official
Liquidator being appointed a Liquidator
of the company, he has to take into his
custody company property as required
by Section 456. Section 457 confers
power on him to institute or defend any
suit, prosecution, or other legal
proceeding, civil or criminal, in the
name and on behalf of the company.
Power is conferred upon him to sell the
properties both movable and
immovable of the company and to
realise the assets of the company and
this was to be done for the purpose of
distributing the assets of the company
amongst the claimants. Now at a stage
when a winding-up order is made the
company may as well have subsisting
claims and to realise these claims the
Liquidator will have to file suits. To
avoid this eventuality and to keep all
incidental proceedings in winding-up
before the court which is winding up the
company, its jurisdiction was enlarged
to entertain petition amongst others for
recovering the claims of the company.
In the absence of a provision like
Section 446(2) under the repealed
Indian Companies Act, 1913, the
Official Liquidator in order to realise and
recover the claims and subsisting debts
owed to the company had the
unenviable fate of filing suits. These
suits as is not unknown, dragged on
through the trial court and courts of
appeal resulting not only in multiplicity
of proceedings but would hold up the
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progress of the winding up proceedings.
To save the Company which is ordered
to be wound up from this prolix and
expensive litigation and to accelerate
the disposal of winding up proceedings,
the Parliament devised a cheap and
summary remedy by conferring
jurisdiction on the court winding up the
company to entertain petitions in
respect of claims for and against the
company. This was the object behind
enacting Section 446(2) and therefore,
it must receive such construction at the
hands of the court as would advance
the object and at any rate not thwart it.
9. The fasciculus of sections included in
Part VII of the Companies Act bears the
heading "Winding up". Section 443 sets
out the circumstances in which a
company may be wound up by the
court. Section 444 provides that where
the court makes an order for the
winding up of a company, the court
shall forthwith cause intimation thereof
to be sent to the Official Liquidator and
the Registrar. Section 446(1) provides
that when a winding-up, order has been
made or the Official Liquidator has been
appointed as Provisional Liquidator, no
suit or other legal proceeding shall be
commenced, or if pending at the date of
the winding-up order, shall be
proceeded with, against the company,
except by leave of the court and subject
to such terms as the court may impose.
Then comes sub-section (2) of Section
446. It specifies the contours of the
jurisdiction of the court which is winding
up the company. It confers special
jurisdiction on the court which is
winding up the company to do things
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that are set out in the various sub-
clauses notwithstanding anything
contained in any other law for the time
being in force. Section 446(2) thus
conferred special jurisdiction on the
court winding up the company which
otherwise it may not have enjoyed. The
court in the Companies Act is defined in
Section 2(11) to mean with respect to
any matter relating to a company
(other than any offence against this
Act), the court having jurisdiction under
the Act with respect to that matter
relating to that company, as provided in
Section 10. Section 10 provides that the
court having jurisdiction under the Act
shall be the High Court having
jurisdiction in relation to the place at
which the registered office of the
company concerned is situate, except to
the extent to which jurisdiction has
been conferred on any District Court or
District Courts subordinate to that High
Court in pursuance of sub-section (2).
The winding-up petition has thus to be
presented in the High Court before the
Judge who is assigned the work under
the Companies Act. Therefore, the court
which is winding up the company will be
the court to whom the petition for
winding up was presented and which
passed the order for winding up the
company. In this case, the order was
made by the learned Company Judge in
the Kerala High Court directing winding-
up of the Company. An appeal lies
against the order for winding up the
Company under Section 483 to the
same Court to which and in the same
manner in which and subject to the
same conditions under which, appeals
lie from any order or decision of the
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Court in cases within its ordinary
jurisdiction. In exercise of this appellate
jurisdiction, the Appellate Bench
entertained the appeals and directed
that the winding-up order shall be held
in abeyance till the scheme is
implemented and if any default is
committed the winding-up order made
by the learned Company Judge would
be revived."
100. The learned counsel for the respondents has further
submitted that the OL acts as an officer of the Court and the
action or inaction of the OL cannot result in abandonment of the
trade marks of the company. Arguendo, admitting that the trade
marks were abandoned due to non-use, the fact that the
company was in liquidation is a defence and exception as per
Section 47(3) of the Trade Marks Act, 1999. In support of his
submission, the following judgments have been relied on and the
relevant paragraphs of the judgment are extracted hereunder:-
HARDIE TRADING LTD. V. ADDISONS
PAINT & CHEMICALS LTD (2003) 11
SCC 92
"47. That the proprietor's intention to
abandon the trade marks is a necessary
component of their non-user justifying
their removal, was recognized as early as
1884 by Chitty, J. in the case of Mouson
& Co. v. Boehm [26 Ch D 398] . In that
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case, the owner of the trade mark,
Boehm had adopted a trade mark for a
particular kind of soap. The soap was
manufactured and sent to the United
Kingdom in large quantities for about two
years. In the next six years, the
"manufacture and sale of soap thus
marked fell off until it practically ceased
and the existence of the particular mark
was forgotten" by Boehm. The same
mark was registered in the UK in respect
of soaps by Mouson & Co. Boehm sued
Mouson & Co. inter alia to restrain the
infringement of his trade mark and for
removal of the trade mark from the
Register. Mouson's defence was that
Boehm had abandoned the trade marks.
In negativing this, Chitty, J. held:
"Mr Boehm retained that mark, he did
not break up the moulds according to the
practice which he stated he adopted
when he intended to give up any
particular mark. He did not even erase
the trade mark from his books, and there
were persons in the market who got the
goods from him who were endeavouring
to effect sales, and he by sending over
those price lists to the number of 1200
during the years spoken to was himself
endeavouring to effect sales....
Here it appears to me there was no
absolute non-user for any sufficient time,
taken in connection with all the
circumstances, to show an intention to
abandon....
The trade mark was not of a very
great value to him (and on that I will
make an observation presently), still I
think it was his trade mark before, and
he has not lost it by abandonment."
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49. The law has since been changed
so that at present an "intent not to
resume" use of the marks is to be
proved. [See McCarthy on Trade Marks
and Unfair Competition (3rd Edn.), Vol.
2, para 17.03.] Nevertheless, "since
abandonment results in a forfeiture of
rights, the courts are reluctant to find an
abandonment". Under the majority rule,
evidence of abandonment must be clear
and convincing. The New York Court of
Appeals stated that "Abandonment being
in the nature of a forfeiture, must be
strictly proved."
60. In Mouson & Co. v. Boehm [26 Ch
D 398] it was said that:
"A man who has a trade mark may
properly have regard to the state of the
market and the demand for the goods; it
would be absurd to suppose he lost his
trade mark by not putting more goods in
the market when it was glutted."
61. More recently, Justice Ungoed
Thomas in Bali Trade Mark (Rectification
Ch D) [1966 RPC 387] said:
"It is quite clear, however, that the
proprietors, the Bali Company, could not
have used the Token Import Scheme,
unless an interested firm in this country
made the appropriate application and no
such application was made. It was thus
not possible for the company to import
under the Token Scheme, and that was
not their fault. Further, what has to be
considered is not merely the existence of
an absolute prohibition to import, as
might be thought from one passage in
the Assistant Comptroller's decision, or a
complete impossibility of importing, but,
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in the words of Evershed, L.J. (supra),
the existence of conditions 'making
impracticable the ordinary usages of
international trade'. A trade mark is a
commercial asset intended to be used
commercially by businessmen, and it
seems to me that 'special circumstances'
have to be understood and applied in a
business sense. In my view, this Token
Import Scheme modification to the
earlier general prohibition did not convert
what was before impossible into what
was, in a business sense, practicable,
even if a firm in this country had made
the necessary application under that
Scheme. The non-use of the trade mark
by the Bali Company, even during the
Token Import Scheme, is thus in my
view, shown to have been due to special
circumstances in the trade."
62. The Court of Appeal reversed this
decision on another issue. The House of
Lords in turn reversed the decision of the
Court of Appeal and reaffirmed the
decision of Justice Ungoed Thomas in
Berlei (U.K.) Ltd. v. Bali Brassiere Co.
Inc. [(1969) 2 All ER 812 : (1969) 1 WLR
1306 : 1969 RPC 472 (HL)]
63. This view has been accepted as
good law in this country. [See A.J. Vulcan
v. V.S.V. Palanichamy Nadar [AIR 1969
Cal 43 : 73 CWN 347] and Express
Bottlers Services (P) Ltd.v. Pepsi Inc.
[1989 PTC 14] ] The law, therefore, is
that even an economical impracticability
would amount to special circumstances."
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101. The scope and ambit of Section 446 of the Companies
Act, 1956 have been explained in the case of LIFE INSURANCE
CORPORATION OF INDIA VS M/S. ASIA UDYOG (P) LTD.,
AND OTHERS (ILR 1982 DELHI 582). The relevant
paragraphs of the said judgment are extracted hereunder:-
"(6) This being the object of Section 446
it is apparent that all those matters
where the claim is of such a nature which
can be investigated by the winding up
Court would be within the purview of
Section 446. It is a different matter
whether in any particular case even if the
case is one which is of a nature which is
within the purview of a Company Judge
leave may or may not be granted. We
are not concerned with the question
whether leave is to be granted or not
because that is a matter for the Company
Judge to .consider. We arc concerned
only with the question whether
proceedings under 1971 Act are such
legal proceedings as are covered within
the meaning of Section 446(1) of the
Companies Act, In the present case what
is being claimed is an order of eviction
contemplates must be taken to be a
summary proceeding by way of
application. It further observed that, "it
appears to us that, consistently with this
policy and with the scheme of the
Amending Act, where the liquidator has
to approach the Court under Section 446
for relief in respect of matters
legitimately falling within the scope
thereof elaborate proceedings by way of
a suit involving time and expense, to the
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detriment of the ultimate interests of the
company under liquidation, were not
contemplated."
(7) In the matter of Subhodbaya
Publications Ltd. the tenants who had
taken on lease the premises belonging to
the company applied for fixation of
standard rent before the House Rent
Controller, Madras. In order to continue
the proceedings before the Rent
Controller he applied under Section 171
of the Companies Act 1913
(corresponding to Section 446) seeking
leave of the Company Judge to continue
the proceedings. Ramaswamy, J. held
that this section prevents the
commencement of new proceedings or
the continuation of pending proceedings
against the company after the
appointment of a provisional liquidator or
after the making of a winding up order,
without the leave of the winding up
Court. The learned Judge further held
that this was a case where leave should
be applied for and secondly a fit case
where leave to proceed with the legal
proceedings should be granted. No doubt
the learned Judge observed that against
the company which was a lessee and for
recovery of damages for alleged
unauthorised occupation. De horse the
provisions of 1971 Act and Rent Control
Act these proceedings will have to be
initiated by a suit. Now it cannot be
disputed that if the landlord was to
proceed for recovery of possession of
premises or for recovery of. damages
against the company it would be
proceeding against the company within
the meaning of Section 446(2)(a) and
would also amount to a claim against the
company within Section 446(2)(b) of the
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Companies Act. Such a proceeding would
normally, therefore, be a matter which
would be appropriate for the winding-up
court to deal with and ipso facto such
proceedings could not be commenced or
continued except by leave of the court as
required by Section 446 of the Act. That
leave has to be obtained before filing a
suit to recover arrears of rent on account
of the premises which were on lease with
the company, was recognised in (supra).
(8) In (20 Chancery Division page 260)
(8) General Share and Trust Company V.
Wetley Brick and Pottery Company, the
owner of a mine which had leased the
same to the Company and against which
an order of winding-up had been moved,
applied for leave to diestrum or to re-
enter. The Vice-Chancellor refused leave
and held that he could not be allowed to
re-enter without establishing his right by
an action. The Court of Appeal
disapproved of such an approach and
while allowing the appeal Jessel M. R.
observed as follows: "I have often said
both here and at the Rolls, that when in a
winding-up a landlord comes to the Court
asking for the possession of property
which is under the control of the Court,
and the claim is one against which the
liquidator would have no defense, the
right course is to order the liquidator to
give up possession. It would be a cruel
hardship to put the applicant to the
expense of bringing an action when the
Court can see that there is nothing to be
tried."
102. In the case of SREE YELLAMA COTTON, WOOLEN
AND SILK MILLS CO. LTD.; (BANK OF
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MAHARASHTRA LTD., POONA vs OFFICIAL
LIQUIDATOR, HIGH COURT BUILDINGS) (1968 SCC
OnLine Kar 133). The scope and interplay between
Section 446 and Section 456 have been explained in the
following paragraphs:
"15. Another objection was that the
subject matter of Company Application
20 of 1968 could not have been properly
brought before Court by means of an
application but could only be made the
subject of a regular suit, and that if the
application has to be treated as a suit,
the proper Court fee as for a suit should
have been paid.
24. The position in the present case,
however, is quite different. The
Liquidator is not suing to recover any
debt or to recover any property
belonging to the Company. One of the
consequences of making an order for the
winding up of any company expressly
stated in sub-section (2) of Section 456
is:-
"All the property and effects of the
Company shall be deemed to be in the
custody of the Court as from the date of
the order for the winding up of the
Company." 25. 'Court' of course by
definition means the Company Court
which made the winding up order. Under
sub-section (1) of the same section, it is
provided:-
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"Where a winding up order has been
made .... the liquidator....... into his
custody or under his control, all the
property, effects and actionable claims to
which the Company Is or appears to be
entitled." shall take
26. Section 467 of the Act states, among
other things,-
"the Court shall cause the assets of the
Company to be collected and applied in
discharge of its liabilities."
27. According to Rule 232 of the
Companies (Court) Rules, 1959, the
duties imposed on the Court by sub-
section (1) of Section 467 of the Act with
regard to the collection of the assets of
the Company and the application thereof
in discharge of the Company's liabilities
shall be discharged by the Official
Liquidator as an officer of the Court
subject to control of the Court. Rule 233
states that the Official Liquidator shall for
the purpose of acquiring and retaining
possession of the property of the
company, be in the same position as if he
were a Receiver of the property
appointed by the Court and that the
Court may on his application enforce
such acquisition or retention accordingly.
Under sub-section (4) of Section 460, the
liquidator is authorised to apply to the
Court for a direction in relation to any
particular matter arising in the winding
up.
28. The powers of the winding up Court
under sub-section (2) of Section 446
include the jurisdiction to entertain and
dispose of any question of priorities or
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any other question whatsoever, whether
of law or of fact, which may relate to or
arise in the course of winding up of a
company, notwithstanding anything
contained in any other law for the time
being in force.
29. The total effect of all these provisions
is that all property and assets of the
company which has been ordered to be
wound up, immediately come under the
custody of the winding up Court and are,
in the eye of law, property in custodia
legis. The Official Liquidator is in the
position of a Receiver appointed by the
Court for the purpose of acquiring and
retaining the possession of all property
and assets of the Company, acting
subject to and in accordance with the
directions from time to time given by the
winding up Court.
30. Even in the case of properties of a
company which are mortgaged or
charged in favour of any of its creditors,
the creditor does not acquire rights which
are exhaustive of the entire title of the
Company in respect of the properties.
The properties continue to be the
properties of the company, although by
reason of a transfer of some interest
therein by way of security, the creditor is
enabled by law to enforce his security in
the manner provided by law for the
purpose of recovering moneys due to hin
even when a secured creditor wants to
exercise the option given to him by law
to him. Hence, stand outside the
insolvency and work out his rights, it
cannot be said that the winding up Court
is totally powerless or has no jurisdiction
whatever in respect of him or in respect
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of the property over which he claims a
certain right by way of security. In regard
to such properties, questions may and do
often arise either in respect of priorities
or in respect of any other matter
whatsoever, which may relate to the
winding up of the company's affairs.
31. In trying, therefore, to reduce to his
possession properties of the company,
whether mortgaged to third parties or
not, the Liquidator is not trying to
recover any property from anybody; he is
acting on behalf of the Court into whose
custody the properties have already
come by virtue of the winding up order.
In the event of any third party resisting
or opposing or questioning his attempts
to reduce the property to his possession
in the name of the Court, if the
Liquidator considers it necessary to
approach the Court for directions, he is
merely acting under sub-section (4) of
Section 460 of the Act and invoking the
powers of the Court under Section
446(2)(d) of the Act and Rule 233 of the
Companies (Code) Rules, 1959."
103. It is further submitted that in the financial statement put
on record by the appellants to show that the investment of
Rs.177 crores has been made for research and development in
respect of the products to be sold under the trade mark
'YEZDI'. However, the commercial terms of arrangement
between Mr. Boman R. Irani and the Classic Legends are not
known and that information should be called upon to be
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produced. If the former Director wants to exploit the goodwill of
the trade mark, he must clear the dues of the company. At
present, the dues of the company aggregate to around Rs.91
crores in principal and around Rs.200 crores with interest from
the creditor. The OL acts as an officer of the Court and the
action or inaction of the OL cannot result in abandonment of
the trade marks of the company. The fact that the company
was in liquidation is a defence and exception as per Section
47(3) of the Trade Marks Act.
104. It has been submitted on behalf of the appellants that the
Classic Legends is spending money to develop the products and
the trade marks and is running into losses as of today. No
consideration has been paid for licensing of the trade mark
since the goodwill had to be developed afresh by the Classic
Legends, which has incurred large amounts for setting up
manufacturing facilities for manufacturing the motorcycles,
which are completely different from the motorcycles previously
manufactured by the company in liquidation.
105. In the case of EMBASSY PROPERTY DEVELOPMENTS
PVT. LTD. vs STATE OF KARNATAKA AND OTHERS (2019
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SCC OnLine SC 1542), the Court meticulously examined the
jurisdictional contours of the High Court under Article 226 and
the NCLT under the IBC, 2016. It underscored that the IBC is a
comprehensive and exclusive framework governing insolvency
proceedings, establishing the NCLT as the adjudicating
authority with specific powers and jurisdictions. Central to the
Court's reasoning was the principle that High Courts should not
bypass statutory remedies provided under specialized tribunals
like the NCLT. The High Court's intervention was deemed
appropriate only when the NCLT exceeds its statutory
jurisdiction, especially in public law matters such as disputes
arising under the MMDR Act. Additionally, the Court clarified
that while the NCLT can inquire into fraud within insolvency
proceedings, it does not possess authority over administrative
decisions that fall outside the IBC's ambit. Thus, the High
Court's role in reviewing administrative actions by the State
was upheld. The relevant paragraphs of the judgment are
extracted as under:-
"30. The NCLT is not even a civil court,
which has jurisdiction by virtue of
Section 9 of the Code of Civil Procedure
to try all suits of a civil nature excepting
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suits, of which their cognizance is either
expressly or impliedly barred. Therefore
NCLT can exercise only such powers
within the contours of jurisdiction as
prescribed by the statute, the law in
respect of which, it is called upon to
administer. Hence, let us now see the
jurisdiction and powers conferred upon
NCLT.
37. From a combined reading of sub-
section (4) and sub-section (2) of
Section 60 with Section 179, it is clear
that none of them hold the key to the
question as to whether NCLT would
have jurisdiction over a decision taken
by the Government under the
provisions of the MMDR Act, 1957 and
the Rules issued thereunder. The only
provision which can probably throw
light on this question would be sub-
section (5) of Section 60, as it speaks
about the jurisdiction of the NCLT.
Clause (c) of sub-section (5) of Section
60 is very broad in its sweep, in that it
speaks about any question of law or
fact, arising out of or in relation to
insolvency resolution. But a decision
taken by the Government or a statutory
authority in relation to a matter which
is in the realm of public law, cannot, by
any stretch of imagination, be brought
within the fold of the phrase "arising
out of or in relation to the insolvency
resolution" appearing in clause (c) of
sub-section (5). Let us take for instance
a case where a corporate debtor had
suffered an order at the hands of the
Income Tax Appellate Tribunal, at the
time of initiation of CIRP. If Section
60(5)(c) of the IBC is interpreted to
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include all questions of law or facts
under the sky, an Interim Resolution
Professional/ Resolution Professional
will then claim a right to challenge the
order of the Income Tax Appellate
Tribunal before the NCLT, instead of
moving a statutory appeal under
Section 260-A of the Income Tax Act,
1961. Therefore the jurisdiction of the
NCLT delineated in Section 60(5)
cannot be stretched so far as to bring
absurd results. [It will be a different
matter, if proceedings under statutes
like Income Tax Act had attained
finality, fastening a liability upon the
corporate debtor, since, in such cases,
the dues payable to the Government
would come within the meaning of the
expression "operational debt" under
Section 5(21), making the Government
an "operational creditor" in terms of
Section 5(20). The moment the dues to
the Government are crystallised and
what remains is only payment, the
claim of the Government will have to be
adjudicated and paid only in a manner
prescribed in the resolution plan as
approved by the adjudicating authority,
namely, the NCLT.
40. If NCLT has been conferred with
jurisdiction to decide all types of claims
to property, of the corporate debtor,
Section 18(1) (1) (vi) would not have
made the task of the interim resolution
professional in taking control and
custody of an asset over which the
corporate debtor has ownership rights,
subject to the determination of
ownership by a court or other authority.
In fact an asset owned by a third party,
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but which is in the possession of the
corporate debtor under contractual
arrangements, is specifically kept out of
the definition of the term "assets" under
the Explanation to Section 18. This
assumes significance in view of the
language used in Sections 18 and 25 in
contrast to the language employed in
Section 20. Section 18 speaks about
the duties of the Interim resolution
professional and Section 25 speaks
about the duties of resolution
professional. These two provisions use
the word "assets", while Section 20(1)
uses the word "property" together with
the word "value". Sections 18 and 25
do not use the expression "property".
Another important aspect is that under
Section 25(2)(b) of the IBC, 2016, the
resolution professional is obliged to
represent and act on behalf of the
corporate debtor. This shows that
wherever the corporate debtor has to
exercise rights in judicial, quasi-Judicial
proceedings, the resolution professional
cannot short-circuit the same and bring
a claim before NCLT taking advantage
of Section 60(5).
53. The upshot of the above discussion
is that though NCLT and NCLAT would
have Jurisdiction to enquire into
questions of fraud, they would not have
jurisdiction to adjudicate upon disputes
such as those arising under the MMDR
Act, 1957 and the Rules issued
thereunder, especially when the
disputes revolve around decisions of
statutory or quasi-judicial authorities,
which can be corrected only by way of
judicial review of administrative action.
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Hence, the High Court was justified in
entertaining the writ petition and we
see no reason to interfere with the
decision of the High Court. Therefore,
the appeals are dismissed. There will be
no order as to costs."
106. In the case of PATEL FIELD MARSHAL AGENCIES AND
OTHERS VS PM DIESELS (2017 SCC OnLine SC 1388), in
paragraphs 31 and 34, it has been held as under:-
"31. Rather, from the résumé of the
provisions of the 1958 Act made above,
it becomes clear that all questions with
regard to the validity of a trade mark is
required to be decided by the Registrar
or the High Court under the 1958 Act or
by the Registrar or the IPAB under the
1999 Act and not by the civil court. The
civil court, in fact, is not empowered by
the Act to decide the said question.
Furthermore, the Act mandates that the
decisions rendered by the prescribed
statutory authority [Registrar/High
Court (now IPAB)] will bind the civil
court. At the same time, the Act (both
old and new) goes on to provide a
different procedure to govern the
exercise of the same jurisdiction in two
different situations. In a case where the
issue of invalidity is raised or arises
independent of a suit, the prescribed
statutory authority will be the sole
authority to deal with the matter.
However, in a situation where a suit is
pending (whether instituted before or
after the filing of a rectification
application) the exercise of jurisdiction
by the prescribed statutory authority is
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contingent on a finding of the civil court
as regards the prima facie tenability of
the plea of invalidity.
34. The intention of the legislature is
clear. All issues relating to and
connected with the validity of
registration has to be dealt with by the
Tribunal and not by the civil court. In
cases where the parties have not
approached the civil court, Sections 46
and 56 provide an independent
statutory right to an aggrieved party to
seek rectification of a trade mark.
However, in the event the civil court is
approached, inter alia, raising the issue
of invalidity of the trade mark such plea
will be decided not by the civil court but
by the Tribunal under the 1958 Act. The
Tribunal will however come into seisin
of the matter only if the civil court is
satisfied that an issue with regard to
invalidity ought to be framed in the
suit. Once an issue to the said effect is
framed, the matter will have to go to
the Tribunal and the decision of the
Tribunal will thereafter bind the civil
court. If despite the order of the civil
court the parties do not approach the
Tribunal for rectification, the plea with
regard to rectification will no longer
survive."
107. It is submitted that the OL himself has admitted that the
trade marks of the company could not be valued as they were
not used for many years. The value of an asset cannot be
linked to the dues of the company in liquidation. The alleged
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claim of dues of Rs.90 crores by the debtors of the company in
liquidation cannot be equated with the alleged value of the
trade mark as the two are completely unrelated.
108. If there is no registration of a trade mark, there can be a
common law right, acquired and retained only through
continued use of the trade mark. This right dissipates through
non-renewal (in case of registration) and non-use (in case of
common law rights). Trade marks are not tangible moveable or
immoveable properties. Action or inaction of the company in
liquidation or the OL dissipates the right, which by its very
nature, would not subsist in the absence of continuous use and
renewal of the registration. The company has not used the
trade marks since 1996. There was no renewal of the
registered trade marks. No efforts were taken by the company
for protection of its trade marks. The sale of all the assets were
without mentioning the trade marks and there has been no
business or production for last 30 years. Therefore, we are of
the view that no goodwill would subsist and survive.
109. Exception under Section 47(3) of the Trade Marks Act is
in respect of the special circumstances not applicable only to a
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particular individual, but for all trades in those particular goods.
We cannot accept the contention of the OL that the OL was
oblivious to the fact of existence of the trade mark of the
company 'YEZDI' inasmuch as the only business of the
company was production and sale of 'YEZDI' motorcycles.
110. In view of the aforesaid discussions, we allow the appeals
and set aside the impugned judgment and order passed by the
learned Single Judge.
In view of disposal of the appeals, pending interlocutory
applications, if any, do not survive for consideration and are
accordingly disposed of.
Sd/-
(D K SINGH)
JUDGE
Sd/-
(VENKATESH NAIK T)
JUDGE
BKV
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