TMI Blog2020 (6) TMI 692X X X X Extracts X X X X X X X X Extracts X X X X ..... has jurisdiction under the IBC and the adjudicating authority under the Code is competent to pass any order. Further, clause (c) sub-Section (5) of Section 60 IBC vests the jurisdiction in NCLT to entertain and dispose of any question of priorities or any question of law or fact, arising out of or in relation to the insolvency resolution for liquidation proceedings. Therefore, the jurisdiction vested in NCLT while dealing with a resolution plan is of wide ambit and any question of law or fact in relation to the insolvency resolution has to be determined by the NCLT. Though there is a dispute between the parties on the aspect that in the absence of any assignment or a license issued in favour of LTHPL by the plaintiff how the benefit of such a license issued in favour of LIL could extend to the LTHPL however, neither party has filed the terms of agreement between LIL and LTHPL to clarify this aspect. However, as noted above, plaintiff has stated in the plaint that LTHPL was a SPV of LIL and that the Teesta VI Project was awarded to LTHPL - as per the resolution plan, dispute of the entitlement to the licenses or the benefit/privilege under the contract or license to which the cor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the design, manufacture, test, delivering and commissioning of facilities, that is, Turbine, Generator, Main Inlet Valve, Governing system, Excitation system, Control System for Hydro Electric Project for Teesta VI (in short Teesta VI Project'). The Teesta VI Project was awarded to Lanco Teesta Hydropower Limited (in short LTHPL) a Special Purpose Vehicle Company, a part of Lanco Group of Companies. Alstom entered into an agreement with LIL inter alia for supply of engineering drawings which were covered by the copyrights owned by Alstom and on global acquisition of Alstom by the plaintiff company, subject to the confidentiality protections for which the plaintiff states that it received part payment and huge payments were still outstanding against LIL. The drawings and documents submitted by Alstom to LIL were used in Teesta VI Project subject to the copyright therein vesting with Alstom. The General Conditions of Contract (in short GCC ) between Alstom and LIL also stipulated an undertaking of all confidential information given to LIL by Alstom in Clause 3.16. 4. On 7th August, 2017 insolvency proceedings commenced against LIL and the said company went into liquidation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reparable harm to the plaintiff and the defendant is liable to immediately pull down the said drawings and data from its webpage. The plaintiff had granted a conditional and limited license of these drawings to LIL vide the contract entered into on 18th May, 2009 and the said contract/license has been terminated on 24th May, 2020. Even by the process of resolution of LIL or LTHPL the defendant could not have acquired the license/proprietary rights in the drawings and data which belong to the plaintiff. The defendant cannot be permitted to plagiarise the drawings merely because the defendant is a State owned company. 7. When the defendant floated the single vendor tender it was conscious of the fact that the plaintiff had the proprietary rights in the drawings and the data, thus, the draft terms sent by the defendant to the plaintiff clearly recognised the said rights of the plaintiff. Merely because the single vendor tender was declined by the defendant on the ground that price of the plaintiff was abnormally higher than the tender check document, the defendant does not get vested with the license/right to use the drawings and pass it on to the world at large by way of publishin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or LHTPL or the defendant and the copyright in the said drawing and data would continue to vest in the plaintiff. Having accepted the conditional and limited license, LIL or its successors-in-interest cannot reverse the position and deny the existence of the copyright in favour of the plaintiff as held in the decision of this Court reported as 2012 (50) PTC 380 (Del.) Astrazeneca UK Ltd. Anr. vs. Orchid Chemicals. Since LIL was a licensee, it was paying to the plaintiff the contract price in consideration of the performance by the plaintiff. In Clause 3.42.3 of the agreement between the plaintiff and LIL it was clearly provided that upon termination of the contract LIL shall pay to the plaintiff all payments specified and only then would the plaintiff deliver to the LIL all drawings/specifications and other documents prepared by the plaintiff. Further copyright is an intangible asset and cannot be divested from the party owning the copyright except by way of assignment or a license and admittedly the defendant has neither any assignment deed in its favour nor any license deed. 10. Learned counsel for the plaintiff states that the objection of the learned counsel for the de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rd of Muslim Wakf Ors. Since Alstom was not into liquidation nor a resolution plan prepared and acquired by the defendant qua the assets of Alstom, based on the cause of action pleaded in the suit, the plaintiff is not required to be relegated to the NCLT or NCLAT and the jurisdiction of the civil court is not ousted. 12. Objecting to the maintainability of the present suit learned counsel for the defendant submits that this Court has no territorial jurisdiction to try the suit as neither the plaintiff nor the defendant reside nor work for gain within the territorial jurisdiction of this Court. The plaintiff s registered office is in Mumbai whereas the defendant s registered office is in Faridabad. Learned counsel for the defendant further submits that mere publishing the tender on CPPP would not entail the territorial jurisdiction of this Court on the ground that the cause of action has arisen within Delhi. Reliance of learned counsel for the plaintiff on the decision in Banyan Tree (supra) is incorrect, rather the said decision goes in favour of the defendant. In Banyan Tree (supra) the Division Bench of this Court held that only if it is an interactive website and the cus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reafter the plaintiff submitted its claim to the Liquidator of LIL and against the financial claim of ₹1,63,55,66,682/- the Liquidator approved the claim of the plaintiff only to the extent of ₹74,09,89,663/- which is duly reflected in the email dated 5th May, 2018 addressed by the Liquidator of LIL. In case not satisfied by the decision of the Liquidator, the remedy with the plaintiff is of filing an appeal before NCLAT and not the present suit. The financial entitlement of the plaintiff is inextricably linked with the issue pertaining to vesting of copyrights in respect of alleged drawings of the plaintiff s predecessor and there being a clear connection or relation between the financial claim and the claim of exclusive copyright, if any, the same is also required to be decided by NCLT. Reliance is placed on the decision of this Court reported as 2019 (258) DLT 52 Liberty House Group Pvt Ltd. vs. State Bank of India Ors. 16. According to learned counsel for the defendant, in the suit the plaintiff has failed to plead how the copyright owned by Alstom Projects India Ltd. vested in the plaintiff. In the absence of the said disclosure, the plaintiff cannot claim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... states that the plaintiff s case in respect of the copyright is completely vague and plaintiff has shown no copyright in the drawings vested with it. Section 52 (1)(w) of the Copyright Act provides against perpetuation of any monopolistic rights in industrial drawings in the guise of copyright. The said provision recognizes the fair use of copyright in the contract of a technical drawing for industrial applications and specifically permits such use. Reliance is placed on the decision reported as (1982) RPC 133 Leco Instruments (U.K.) Ltd vs. Land Pyrometers Ltd. As the plaintiff has neither made out a prima facie case nor even a case of irreparable loss, the balance of convenience also lies in favour of the defendant no interim injunction be granted and the suit and the application be dismissed. 20. Before the suit and application can be proceeded forward on merits, two preliminary objections of the defendant i.e. want of territorial jurisdiction and also lack of the subject matter jurisdiction of this Court to try the suit are required to be determined. 21. Objection of learned counsel for the defendant that this Court has no territorial jurisdiction to entertain the pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eted. Therefore the effects test would have to be applied in conjunction with the sliding scale test to determine if the forum court has jurisdiction to try a suit concerning internet based disputes. 23. The Division Bench of this Court in Banyan Tree (supra) thus held that mere accessibility in the forum state based on the interactivity of the website is not sufficient to attract the jurisdiction of the forum court and it has to be examined whether the same results in a commercial transaction thereby causing an injurious effect on the plaintiff s business, goodwill and reputation within the forum state as a result of defendant s website being accessed in the forum state. Further the Hon'ble Supreme Court in the decision reported as 1994 (4) SCC 711 Oil Natural Gas Commission vs. Utpal Kumar Basu and Ors. dealing with the territorial jurisdiction of the Court to entertain a writ petition in the case of tender held that merely because the plaintiff became aware of the advertisement in Calcutta, it submitted its bid or tender from Calcutta and made representations demanding justice from Calcutta on learning about the rejection of its offer would not attract jur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecessary to advert to the pleadings of the plaintiff in the suit and the documents filed. 25. As per the plaint, plaintiff granted a conditional, limited license to these drawings to LIL vide the contract dated 18th May, 2009. Relevant provisions of the contract dated 18th May, 2009 are as under:- 3.0 General Conditions of Contract A Contract and Interpretation 3.1 DEFINITIONS The following words and expressions shall have the meanings hereby assigned to them: 3.1.0 Employer means the Lanco Energy Private Limited, Plot No.229, Udyog Vihar- Phase-1, Gurgaon-122016 and includes the legal successors or permitted assigns of the Client. 3.1.1 Client means the Lanco Infratech Limited, Plot No.229, Udyog Vihar - Phase 1, Gurgaon-122016 and includes the legal successors or permitted assigns of the Client. 3.1.2 x x x 3.1.3 x x x 3.1.4 Contractor means M/s Alstom Projects India Limited (APIL), having their office at via. E.R.D.A.road, G.I.D.C. Maneja, Vadodara390013, Gujarat, whose bid has been accepted by the Client to perform the Contract and is named as such in the Contract Agreement, and includes the legal succes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to its Sub Contractor (s) such documents, data and other information it receives from the Client to the extent required for the Sub-Contractor (s) to perform its work under the Contract, in which event the Contractor shall obtain from such Sub Contractor (s) an undertaking of confidentiality similar to that imposed on the Contractor under this GCC Clause 3.16. 3.16.2 The Client shall not use such documents, data and other information received from the Contractor for any purpose other than the operation and maintenance of the Facilities and for any information to be furnished to Governing Authorities under the applicable law and regulations. Similarly, the Contractor shall not use such documents, data and other information received from the Client for any purpose other than the design, procurement of Plant and Equipment, construction or such other work and services as are required for the performance of the contract. 3.16.3 The obligation of a Party under GCC Sub-Clauses 3.16.1 and 3.16.2 above, however, shall not apply to that information which (a) now or hereafter enters the public domain through no fault of that Party. (b) can be proven to have been possessed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... olding such Approval, or to remedy the breach within twenty-eight (28) Days of such notice, or if the Contractor is still unable to carry out any of its obligations under the Contract for any reason attributable to the Client within twenty-eight (28) Days of the said notice, the Contractor may by a further notice to the Client referring to this GCC Sub-Clause 3.42.3.1 forthwith terminate the Contract. 3.42.3.2 The Contractor may terminate the Contract forthwith by giving a notice to the Client to that effect, referring to this GCC Sub-Clause 3.42.3.2, if the Client becomes bankrupt or insolvent has a receiving order issued against it, compounds with its creditors, or being a corporation, if a resolution is passed or order is made for its winding up (other than a voluntary liquidation for the purposes of amalgamation or reconstruction) a receiver is appointed over any part of its undertaking or assets or if the Client takes or suffer any other analogous action in consequence of debt. 3.42.3.3. If the Contract is terminated under GCC Sub-Clauses 3.42.3.1 or 3.42.3.2, then the Contractor shall immediately (a) cease all further work, except for such work as may be nece ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vt. Ltd., that is, LEPL, the employer mentioned in the agreement dated 18th May, 2009 between LIL and Alstom, the predecessor in interest of the plaintiff. 27. Though learned counsel for the plaintiff has repeatedly urged that the plaintiff had no privity with LTHPL and LTHPL being a third party in the absence of an assignment as mandated under Section 19 of the Copyright Act, LIL could not have parted with the drawings to LTHPL who in turn parted the drawings to NHPC who are further making copies and transmitting the same unauthorisedly, infringing the plaintiff s copyright, however, at this stage, it would be appropriate to note pleadings of the plaintiff in para-8 of the plaint i.e. Though the plaintiff claims that as LIL went into liquidation by virtue of an order dated 27th August, 2018 passed by the NCLT, Hyderabad Bench, the plaintiff believed that defendant improperly obtained plaintiff s copyrighted and confidential drawing when the defendant acquired the LIL s Special Purpose Vehicle, that is, LTHPL in the CIRP proceedings. It is thus evident that there is an admission of the plaintiff that LTHPL was a special purpose vehicle of LIL. Further, in the agreement dated 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cations and other documents prepared by the contractor or its sub-contractors as on the date of termination in connection with the facilities. It is for these terms in the agreements between the plaintiff and LIL that defendant contends that since the contract with LIL has been terminated due to LIL s insolvency, the plaintiff was required to deliver all the drawings, specifications and other documents to LIL and defendant having been assigned all the rights of the employer i.e. LTHPL successor-in-interest of LEPL on as is where is basis, the defendant steps into the shoes of employer, that is, LEPL and is thus retaining the right to use the drawings. 30. Defendant claims that the defendant received the drawings from LTHPL in terms of clause 16 sub-clause (b) of the resolution plan of LTHPL which reads as under: 16. BASIS OF PREPARATION The Resolution Applicant has prepared this Resolution Plan on the basis of the following, and upon approval of this Resolution Plan by the NCLT, the Corporate Debtor and the Resolution Applicant, as the case may be, shall be entitled to the following: (a) Consents and approvals, authorizations etc. xxx xxx xxx (b Licen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Clause 16 of the resolution plan thus clarifies that all consents, licenses, approvals, rights and entitlements, benefits, privileges whether under law, contract, lease or license granted in favour of the corporate debtor or to which the corporate debtor is entitled or accustomed to shall notwithstanding any provision to the contrary in their terms be deemed to continue without disruption for the benefit of the corporate debtor. Thus, the use of terms 'entitled or accustomed to' are of wide amplitude and ensure continuity of all benefits in favour of LHTPL to continue with the defendant. 32. Further, Sections 60, 63, 231 and 238 IBC which are relevant to ascertain as to whether the present dispute is required to be decided in this suit or before the NCLT, read as under: 60. (1) The Adjudicating Authority, in relation to insolvency resolution and liquidation for corporate persons including corporate debtors and personal guarantors thereof shall be the National Company Law Tribunal having territorial jurisdiction over the place where the registered office of the corporate person is located. (2) Without prejudice to sub-section (1) and notwithstanding anything to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... action taken or to be taken in pursuance of any order passed by such Adjudicating Authority under this Code. 238. The provisions of this Code shall have effect, notwithstanding anything inconsistent therewith contained in any other law for the time being in force or any instrument having effect by virtue of any such law. 33. Sections 63 and 231 IBC create a bar on the jurisdiction of the civil court in respect of any matter in which the NCLT and NCLAT has jurisdiction under the IBC and the adjudicating authority under the Code is competent to pass any order. Further, clause (c) sub-Section (5) of Section 60 IBC vests the jurisdiction in NCLT to entertain and dispose of any question of priorities or any question of law or fact, arising out of or in relation to the insolvency resolution for liquidation proceedings. Therefore, the jurisdiction vested in NCLT while dealing with a resolution plan is of wide ambit and any question of law or fact in relation to the insolvency resolution has to be determined by the NCLT. 34. On consideration of the provisions of Section 60, 63, 231 and 238 of the IBC, this Court in Liberty House Group (supra) following the decision of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that hears both sides of the case and makes a judgment based on both; in such an environment of legislative and judicial uncertainty, the outcomes on insolvency and bankruptcy are poor; if we are to bring financing patterns back on track with the global norm, we must create a legal framework to make debt contracts credible channels of financing; speed is of essence for the working of the bankruptcy code - the longer the delay, the more likely it is that liquidation will be the only answer, with the liquidation value going down with time as many assets suffer from a high economic rate of depreciation; (v) there was thus a need to bring the insolvency law in India under a single unified umbrella with the object of speeding up of the insolvency process; laws relating to economic activities should be viewed with greater latitude than laws touching civil rights such as freedom of speech, religion etc.; the legislature should be allowed some play in the joints, because it has to deal with complex problems which do not admit of solution through any doctrinaire or strait-jacket formula and this is particularly true in case of legislation dealing with economic matters; in the matter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ds of justice or to prevent abuse of the process of the Tribunal; (xv) once the Code gets triggered by admission of a creditor's petition, the proceeding i.e. before the NCLT, being a collective proceeding, is a proceeding in rem and being a proceeding in rem, it is necessary that the body which is to oversee the resolution process must be consulted before any individual corporate debtor is allowed to settle its claim; (xvi) till the CoC is constituted, a party can approach the NCLT directly, which may, in exercise of its inherent powers under Rule 11 of the NCLT Rules, allow or disallow an application for withdrawal or settlement; this will however be decided after hearing all the concerned parties; (xvii) vide Section 60 of the Code, the CoC does not have the last word on the subject of withdrawal; if the CoC arbitrarily rejects a just settlement and/or withdrawal claim, the NCLT, and thereafter, the NCLAT can always set aside such decision under Section 60 of the Code; (xviii) the RP has no adjudicatory powers; the RP cannot act in a number of matters without the approval of the CoC and which in turn decides by two-thirds majority; the RP is really a fa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r of the defendant. Thus the dispute raised in the present suit falls within the ambit of Section 60 (5) IBC as the same arises out of and/or is in relation to the insolvency resolution plan of LTHPL hence has to be adjudicated by the NCLT and the proceedings in the civil court are barred. 36. Learned counsel for the plaintiff vehemently contends that the license for the use, if any, by the plaintiff of his copyright in the drawings and data including the confidential data was given in favour of LIL. LIL without any written permission of the plaintiff could not have passed on the said data to LTHPL or to the defendant and even if passed down, in the absence of any written assignment or the license, the user thereof by the defendant is illegal. The contention of learned counsel cannot be decided in the present proceedings in the absence of LIL and LTHPL being parties. In the absence of the said two parties it cannot be determined how the rights of use with LIL were transferred to LTHPL or whether the plaintiff had consented to the same. Thus the present suit would also be not maintainable in the absence of necessary parties LIL and LTHPL. It appears that LIL has deliberately not ..... X X X X Extracts X X X X X X X X Extracts X X X X
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