Telangana High Court

Gloster Cables Limited vs Fort Gloster Industries Limited on 14 February, 2022

Bench: Satish Chandra Sharma, N.Tukaramji

THE HON'BLE THE CHIEF JUSTICE SATISH CHANDRA SHARMA
                        AND
        THE HON'BLE SRI JUSTICE N.TUKARAMJI

                 COMCA Nos.31 AND 32 OF 2021

COMMON JUDGMENT:      (Per the Hon'ble the Chief Justice Satish Chandra Sharma)


     These two appeals are arising out of the common

order and the parties in these two appeals are one and the

same, they are heard together and are being disposed of by

this common Judgment.


2.   The present appeals are arising out of a common

order dated 27.12.2019 passed in I.A.No.754 of 2019 and

I.A.No.755 of 2019 in C.O.S.No.43 of 2019, by the Court of

the XXIV Additional Chief Judge - cum - Commercial

Court, City Civil Court, Hyderabad.


3.   For the purpose of convenience, the parties are

referred to as they are arrayed in the Court below.


4.   The     facts   of    the       cases        reveal        that       the

petitioner/plaintiff has filed a suit for grant of injunction

against    the   respondent/defendant,            i.e.,   'Fort     Gloster

Industries Limited' with a view to prevent the misuse of the

petitioner's trade mark 'GLOSTER' bearing Registration

No.690772, 1980867, 3022764 and 3022775 which are

being used in relation to electrical cables and wires. The

petitioner/plaintiff has stated in the plaint that the

petitioner/plaintiff is manufacturer and merchant of

electrical wires and cables which are meant for use in

power stations and other industrial applications. The

petitioner/plaintiff company was earlier known as 'Crest

Cables Private Limited' and in the year 2004, the name was

changed as 'Gloster Cables Limited'. It has been further

stated in the plaint that the respondent/defendant

assigned the registration for trademark 'GLOSTER' bearing

No.690772 to the petitioner under a trademark agreement

dated 15.07.2008 and the said assignment as per the

petitioner/plaintiff became effective from 01.12.2016 and

there was a subsequent deed of assignment between the

petitioner/plaintiff and the respondent/defendant dated

20.09.2017 to record the completion and confirmation of

the assignment with goodwill of the Trademark 'GLOSTER'

under Registration No.690772 in favour of the

petitioner/plaintiff. It has been further stated in the plaint

that the petitioner/plaintiff has filed a request in Form TM-

P on 25.08.2018 which was taken on record by the

Trademarks Registry on 17.09.2018 and the name of the

petitioner/plaintiff was substituted as the Proprietor of the

Trademark 'GLOSTER' bearing registration No.690772. It

has been further stated in the plaint that the

petitioner/plaintiff holds independent registrations for the

Trademark 'GLOSTER' since 2010 with use claim since

1995 and it is being exclusively used by the

petitioner/plaintiff since 2003 and thereafter, the

respondent/defendant company ceased its operations. It

has been further stated that the respondent/defendant

was unable to discharge its obligation under its previous

agreement regarding quality control aspect of the product.

5. It has been further stated by the petitioner/plaintiff

that the petitioner/plaintiff has achieved sales exceeding

Rs.3500 Crores and turnover for the year 2018-19 was

more than Rs.350 Crores. It has also been stated that the

petitioner/plaintiff has spent more than Rs.40,00,000/- for

advertising its product with trademark 'GLOSTER' during

the year 2018-19 and exclusive goodwill and reputation

was accrued to the petitioner/plaintiff in respect of the

trademark 'GLOSTER'. It has been stated that the

petitioner/plaintiff is apprehending that the respondent/

defendant may commence use, either by itself or by a third

party, of the trademark 'GLOSTER' which is under the

ownership of the petitioner/plaintiff and under its

exclusive use. There is also a mention of the proceedings of

the National Company Law Tribunal, Kolkata (NCLT) in the

affidavit. It is further alleged in the plaint that the

respondent/defendant may violate rights of the

petitioner/plaintiff by taking advantage of NCLT

proceedings. It has been further stated in the plaint that

there is an imminent threat that the respondent/defendant

may alienate rights in respect of trademark 'GLOSTER' in

favour of the third party and that the products of the

petitioner/plaintiff with the trademark 'GLOSTER' are

being sold all over India and if either the

respondent/defendant or the third party uses the said

trademark, the petitioner/plaintiff's business and goodwill

attached to its trademark 'GLOSTER' will suffer by reason

of infringement and passing off. It has been contended that

there is a threat of erosion of distinctiveness of

petitioner/plaintiff's brand which may also result in

damage to the petitioner/plaintiff's goodwill and reputation

and the acts of the respondent/defendant would constitute

violation of the statutory rights of the petitioner/plaintiff

and infringement of the petitioner/plaintiff's well known

trademark 'GLOSTER' under Section 29 of the Trademarks

Act, 1999. It has been pleaded in the plaint that

petitioner/plaintiff would suffer irreparable loss and injury

in case the respondent/defendant is not restrained by an

immediate order of injunction from violating rights of the

petitioner/plaintiff in respect of the exclusive use of the

trademark 'GLOSTER' and the petitioner/plaintiff has

sought for interim injunction to restrain the

respondent/defendant and its successors and employees,

agents, distributors, representatives and its Resolution

Professional and Resolution Applicant from alienating,

removing, moving, shifting, transferring, assigning, selling

or manufacturing, advertising, promoting any goods

marketed under 'GLOSTER' and to restrain them from

using the trademark 'GLOSTER' in any other manner. The

petitioner/plaintiff company has made the following prayer

in the suit:-

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

A. The Defendant, its successors, directors, partners, employees, servants, agents, distributors, franchises, representatives, suppliers, affiliates, subsidiaries, franchisees, licensees, representatives, group companies, assigns, creditors and its Resolution Professional and the Resolution Applicants are restrained by a decree of permanent injunction from:

(i) alienating, removing, moving, shifting, transferring, assigning, selling and/or manufacturing, advertising, promoting any goods under the mark GLOSTER and/or in any manner using the mark GLOSTER or any other mark which is identical or deceptively and confusing similar to the Plaintiff's well known trademark GLOSTER either as a trademark or part of a trademark, trade name, or part of a trade name, corporate name, email, domain name or part of a domain

name or in any manner which would amount to infringement of the registered trademark of the Plaintiff;

(ii) alienating, removing, moving, shifting, transferring, assigning, selling and/or manufacturing, advertising, promoting any goods under the mark GLOSTER and/or in any manner using the mark GLOSTER or any other mark which is identical or deceptively and confusing similar to the Plaintiff's well known trademark GLOSTER, either as a trademark or part of a trademark, trade name, or part of a trade name, corporate name, email, domain name or part of a domain name or in any manner or for providing any services whatsoever thereby passing off their goods as the goods of the Plaintiff;

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

(C) Any other relief which the Hon'ble Court deems and proper in the facts and circumstances of the case be allowed in favour of the Plaintiff and against the Defendant."

6. The respondent/defendant has filed counter before

the Court below and contended that the petitioner/plaintiff

is bound by the order of the NCLT and once the NCLT has

adjudicated the issue, the petitioner/plaintiff is stopped

from claiming any right to contrary. It has been stated that

consequent to the Judgment of the NCLT, the trademark

Registrar has to rectify the register of trademarks by

restoring the name of the respondent/defendant as owner

of the trademark 'GLOSTER' and that the

petitioner/plaintiff has fraudulently and in collusion and

connivance with the promoters of the respondent/

defendant company has purported to have acquired the

alleged right in the trademark 'GLOSTER' and in view of

the adjudication by the NCLT, the suit itself is not

maintainable.

7. The undisputed facts of the cases reveal that the

petitioner/plaintiff company is facing proceedings on an

Application preferred under Section 60(5) of the Insolvency

and Bankruptcy Code, 2016 before the National Company

Law Tribunal, Kolkata Bench, Kolkata and the NCLT has

passed the Order dated 27.09.2019. Paragraphs 44, 48,

50, 51, 52 and 95 of the aforesaid Order read as under:-

"44. The materials brought out before us sufficiently establish that the transaction related to the trademark by the Corporate Debtor in favour of GCL was not done in good faith. It has come out in evidence that GCL received a benefit from the preferential transaction not in good faith. They got the trademark at a reduced consideration. It has come out in evidence that the very same trademark has been hypothecated at a value of Rs.10 Crores has been assigned in favour of GCL for a nominal value of Rs.10 lakhs. In the above said proved facts let us consider the objection on the side of the GCL.

48. At this juncture, the learned Senior Counsel, referring to a judgment of the NCLT, Cuttack Bench in TP No.41/CTB/2019, CP (IB) No.352/KB/2019, attempting to stress an argument that the Adjudicating Authority has no right to determine disputed title in respect of trademark under challenge. He also cited a judgment of

the Hon'ble National Company Law Appellate Tribunal, New Delhi in Company Appeal (AT) Insolvency Nos.229 and 262 of 2018, wherein the Hon'ble Appellate Tribunal observed the following:

"16. In 'Binani Industries Limited v. Bank of Baroda and other appeals in Company Appeal (At) (Insolvency) No.82 of 2018, etc, this Appellate Tribunal held that Corporate Insolvency Resolution Process is not a money claim nor a suit or a litigation, therefore, we are of the view that the Adjudicating Authority cannot decide the disputed question of fact including claim and counter claim made by one or other party qua, any material in current case."

50. Therefore, the contention that the Adjudicating Authority is not empowered to adjudicate as to the question of title involved in the Application in hand, seems to be devoid of any merits. In view of the above said discussion, we are of the considered opinion that the transactions disputed in the application is hit by sections 43 and 45 of the Code.

51. The third objection is that the registration of trademark in the name of the Applicant, GCL, is invalid because it was registered in the name of GCL in violation of Section 14 of the I&B Code, 2016. The CP 61 of 2018 was admitted on 09.08.2018 by declaring moratorium under Section 14 of the Code. The application for registration was submitted on 15th September, 2018. The registrar upon receipt of no objection from Transfer Agents of GCL and CD, registered the trademark in the name of the GCL on 17th September, 2018. No doubt the registration by conferring title to the trademark owned by the CD is hit by Section 14(1)(b) of the Code. Having regard to what is discussed above, we do not find any illegality or irregularity or contravention of any of the provisions of the Code or applicable law and Regulation

in treating the trademark "Gloster" as one of the valuable assets of the CD.

52. Having regards to the facts and circumstances said above, we come to a legitimate conclusion that the application filed by GCL is liable to be dismissed holding that the trademark "GLOSTER" is the asset of the CD.

95. The resolution plan produced before us has fulfilled all the requirements in compliance of Section 29A, 30(2) and Regulation 38(1). RP has given certification of the correctness of the disclosures as provided under Regulation 39(4). He also certified that the plan is not subjected to any contingency. The resolution plan being found in compliance with all applicable provisions of the I&B Code and the regulations therein and it does not contravene any of the provisions of the law for the time being in force we are bound by the plan and the plan is liable to be approved.

8. The NCLT in C.A.No.713 of 2019 has declared the

Trademark 'GLOSTER' as an asset of the Corporate Debtor

(CD) and the petitioner/plaintiff has certainly filed an

Appeal before the NCLAT against the order passed by the

NCLT. As the trademark in question has been declared as

an asset of the corporate debtor, the trial Court had

dismissed the application for grant of temporary

injunction. The relevant paragraphs of the order passed by

the trial Court dismissing the application reads as under"-

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

petitioner is registered owner of the trademark, the court has to consider the other factors to decide whether the petitioner can seek for temporary injunction. To the extent of use of the trademark is concerned, enough material is placed before the court, to show that the petitioner has been using trademark. Usually in such circumstances the courts grant temporary injunction.

The learned counsel for the petitioner relies upon the judgment of the Hon'ble Supreme Court in Midas Hygiene Industries Private Limited v. Sudheer Bhatla ((2004) 3 SCC 90), in which, it was held that in cases of infringement either of trademark or of copy right normally an injunction must be passed. But there may be different circumstances which need to be considered particularly when the resolution professional has taken over the management of the affairs of the respondent company and in the light of order of the NCLT, Kolkata, which has treated the trademark as the asset of the respondent. There appears no immediate threat of infringement of trademark. The counsel for the petitioner contends that in the process of the resolution, it may suffer loss if the trademark is assigned to the third parties. On such apprehensions, the court cannot stall the resolution process ordered by the NCLT.

18. The counsel for the petitioner also has relied upon the judgment of the Hon'ble Supreme Court in Power Control Appliances v. Sumeet Machines Private Limited {(1994) 2 SCC 448], to contend that there can be only one owner of the trademark at a given point of time. It was observed by the Hon'ble Supreme Court as follows:

"It is a settled principle of law relating to trade mark that there can be only one mark, one source and one proprietor. It cannot have two origins, where, therefore, the first defendant-respondent has proclaimed himself, as a rival of the plaintiffs and as joint owner it is impermissible in law. Even then, the joint proprietors

must use the trade mark jointly for the benefit of all. It cannot be used in rivalry and in competition with each other."

The case on hand is entirely on different pedestal and objection of the resolution professional is not based on the registration or ownership of the trademark alone. In fact, the Hon'ble NCLT has decided the trademark under dispute is the property of the respondent and the challenge to this finding is pending before the Hon'ble NCLAT. As long as the said finding is not modified by the Hon'ble NCLAT, this Court, for the purpose of deciding the interlocutory application for ad interim reliefs cannot ignore the order of the Hon'ble NCLT.

19. The counsel for the respondent has taken an objection regarding the jurisdiction of the court to entertain the dispute in view of the provisions of the Insolvency & Bankruptcy Code, 2016, Trademarks Act and Companies Act. In order to convince the court that this Court has jurisdiction to entertain the application, the learned counsel for the petitioner has relied upon the judgment of the Hon'ble Apex Court in Dhruv Green Field Limited v. Hukath Singh [(2002) 6 SCC 416] and KSRTC v. Bal Mukind Bairwa [(2009) 4 SCC 299]. But while deciding an application under Order XXXIX Rules 1 and 2 CPC it is not desirable to decide the question of jurisdiction or maintainability to the suit in Civil Court. The court can only hold that the respondent has raised objection regarding jurisdiction and maintainability of the suit.

The counsel for the petitioner contends that the NCLT, Kolkata has no jurisdiction to entertain the dispute or adjudicate a dispute relating to the claim of title to any property and therefore, finding of the NCLT that the trademark under dispute is the asset of the respondent is erroneous. The counsel for the petitioner relied upon the judgment of the Hon'ble NCLAT in CA

(AT) (I) No.229/2018 in M/s.Dynepro Private Limited v. M.V.Nagarajan (Resolution Professional). In the said judgment, the Hon'ble NCLAT has held that the adjudicating authority has no jurisdiction to decide the claims and counter claims of the parties. But it is not for this court to decide whether the Hon'ble NCLT has exercised jurisdiction as per law and as rightly contended by the counsel for the respondent, it is for the Hon'ble NCLAT to decide this issue and in view of the pendency of the appeal before the Hon'ble NCLAT, this Court finds that it will be totally in appropriate for this court to deal with the said issue, at this stage of the suit.

The counsel for the petitioner also relied upon the judgment of the Hon'ble Supreme Court on Civil Appeal No.8766-67 of 2019 in committee of creditors of Essar Steel India Limited v. Satish Kumar Gupta, to contend that the power of the adjudicating authority are limited. But, as stated above, it is not proper for the court to decide this issue at this stage.

20. To sum up, the petitioner who initially was allowed to use the trademark in view of its hypothecation to secure the loan and who could get an assignment of the same after the prohibitory order passed by the BIFR, cannot claim the relief of temporary injunction, in view of the order of the Hon'ble NCLT in CA (IB) No.713/KD/2019 in CA IB No.62/KD/2018 and the pendency of the appeal against the said order before the Hon'ble NCLAT. The court cannot stall the process of resolution professional in implementation of resolution plan which affects the rights of the committee of creditors (who are not parties to the present suit), when the petitioner has failed to establish prima facie case and irreparable injury that will be suffered by him in case the injunction is not granted. It is also relevant to mention that the respondent also has raised strong objections

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

The petitioner has filed two applications with similar prayers and argued both of them separately. However, both the applications being similar, a common order is passed. For the reasons stated above the court cannot grant temporary injunction as prayed for. The petitions are liable to be dismissed.

In the result, the petitions are dismissed with costs."

9. It is again an undisputed fact that after the order

passed by the NCLT on 27.09.2019, civil suit has been filed

in October, 2019. The undisputed facts of the case further

reveal that the resolution process is over and the resolution

applicant has taken over as part of the bidding process. In

the considered opinion of this Court as the matter is

pending before the NCLAT, as the NCLT has passed an

order taking into Sections 44 and 46 of the Insolvency and

Bankruptcy Code, the learned Single Judge was justified in

rejecting the application keeping in view the pendency of

Appeal before the NCLAT.