TMI Blog2019 (1) TMI 1937X X X X Extracts X X X X X X X X Extracts X X X X ..... proceeding might lead to affectation of the intellectual property rights of the defendant at least in relation to the four marks, namely Numbers 1988894, 2353792, 3373391 and 3518558, in respect whereof the defendant is the registered holder of the trademarks - Since any decision in favour of the plaintiffs in this proceeding may likely to affect the assets of the corporate debtor and in maximizing its asset value during the pendency of the said proceeding, the suit and the interlocutory proceedings cannot proceed against the corporate debtor during the insolvency resolution process. The proceedings in the suit and the interlocutory proceedings therein are stayed till 30th June, 2019, with liberty to mention in the event the insolvency resolution process comes to an end prior to the adjourned date. The application is adjourned till 1st July, 2019. - G.A. No. 942 of 2018 and C.S. No. 73 of 2018 - - - Dated:- 30-1-2019 - Soumen Sen, J. For the Appellant : S.N. Mookherjee, Ratnanko Banerji, Sr. Advs., Arunabha Deb, Soumabho Ghosh, Deepan Sarkar, Subhradip Roy and Arti Bhattacharyya, Advs. For the Respondents : Jayanta Kr. Mitra, Ranjan Bachawat, Sr. Advs., Debnath Gho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ely popular that any use of the trade mark Kwality , which is the leading and essential feature of the petitioners' trademark in respect of same or similar goods is bound to mislead the consumers to believe that the other goods bearing the trade mark Kwality are originating from petitioners or are in some way associated with the petitioners. The grievance of the petitioner is that the respondent was using until recently the trade name 'Dairy Best' and has recently switched over to 'Kwality' with a view to create confusion in the mind of the public. The defendant has no right, proprietary or otherwise over the said trademark or any use of the trademark without the permission of the plaintiffs is unauthorized. The respondent, on the other hand, has contended that the respondent was incorporated in the 1980s and they have been using the said trademark 'Kwality' in relation to dairy products since long without any interruption. The respondent alleged that they have been using the word 'Kwality' as its corporate name openly since 1980s. The plaintiffs were aware of the fact that the defendant was using the word 'Kwality' at least since 2002 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ulated from any other action, like the present proceeding. Mr. Mookherjee has referred to the UNCITRAL Legislative Guide on Insolvency Law of the United Nations Commission on International Trade Law, 2005 and submits that the said guideline would show that it is the estate of corporate debtor which needs to be protected. 10. Mr. Mookherjee has referred to Paragraphs 26, 27, 28, 29, 30, 31, 33 and 35 of the guidelines to show that the object of the legislation is that the interest of all creditors need to be protected against individual action by one of them and a mechanism should be in place to protect the value of the insolvency estate that not only prevents creditors from commencing actions to enforce their rights through legal remedies during some or all of the period of liquidation or reorganization proceeding but also suspends actions already underway against the debtor. Mr. Mookherjee submits that the nexus is between the claim and the assets of the company out of which the claims could be realized. Apart from such monetary claim and eviction of a corporate debtor, no other suit or proceeding is prohibited under Section 14 of the said Act. The instant suit is not for recov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rofession is authorized under the Act to take control and custody of all such assets of all the intellectual property with the defendant, there is no scope for the Court to proceed with the hearing of the suit during the calm period . The interim resolution professional, during the calm period , is to take various steps under the Act. Mr. Mitra has referred to an unreported decision of this Court in G.A. No. 2791 of 2017 with C.S. No. 247 of 2010 dated 11th September, 2017 (Kanak Projects Ltd. Vs. Stewarts Lloyds of India Ltd.) by Justice Sahidullah Munshi for the proposition that Section 14 completely bars all suits irrespective of its nature. 13. In order to appreciate the rival contentions, it is necessary to refer to subsection 1 of section 14 of the Code, which reads- 14. Moratorium.- (1) Subject to provisions of sub-sections (2) and (3), on the insolvency commencement date, the Adjudicating Authority shall by order declare moratorium for prohibiting all of the following, namely:- (a) the institution of suits or continuation of pending suits or proceedings against the corporate debtor including execution of any judgement, decree or order in any court of law, tr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cribes a period for which the moratorium will be in effect. The Viswanathan Committee (Report of the Bankruptcy Law Reforms Committee, Volume I: Rationale and Design, Chapter 5) mooted the concept of calm period to enable peaceful resolution and focussed attention for resolving the insolvency. The idea behind introduction of moratorium is to preserve the value of the corporate debtor by ensuring that it continues to work as a going concern. The aforesaid report in Clause 5.3.1 has, inter alia, stated that the motivation behind the moratorium is that it is value maximising for the entity to continue operations even as viability is being assessed during the IRP. The Insolvency Law Committee in its report of 2018 took note of the repealed Sick Industrial Companies (Special Provisions) Act, 1986 (SICA) and considered the Notes on Clauses for Section 14 of the Code in order to understand the real intention of this provision. The scope of moratorium was discussed in Clause 5.1 of the said report in which it is stated that the scope of the moratorium is broader than the moratorium in the repealed SICA in two ways - First, under SICA, the actions barred could be instituted or continued wit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... remedy for breach of contract under any law for the time being in force, if such breach gives rise to a right to payment, whether or not such right is reduced to judgment, fixed, matured, unmatured, disputed, undisputed, secured or unsecured. 20. Section 3(11) defines 'debt' to mean a liability or obligation in respect of a claim which is due from any persons and includes a financial debt and an operational debt. Section 3(12) defines default which means non-payment of debt when whole or any part or instalment of the amount or debt has become due and payable and is not repaid by the debtor or the corporate debtor, as the case may be. The section contemplates three kinds of persons who can initiate corporate insolvency resolution process when a corporate debtor commits a default. The word 'default' has a crucial meaning in the entire Code as the initiation can take place only on a default as defined in Section 3(12) of the IBC. The three persons who can initiate corporate insolvency resolution process are a financial creditor, an operational creditor or the corporate debtor itself. The purpose of moratorium is to prevent immediate collapse of the corporate debto ..... X X X X Extracts X X X X X X X X Extracts X X X X
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