No.155 of 2018 and that came to be decided by the adjudicating authority/NCLT, Hyderabad Bench by order dated 14 August, 2019 and that became the subject matter of challenge before the National Company Law Appellate Tribunal(for short “NCLAT”) at the instance of the Corporate Debtor wherein it was stated that what has been observed by the adjudicating authority while disposing of I.A. (DCHL), whose Resolution Plan was approved by the CoC of the Corporate Debtor with 81.39% voting share which was conditionally approved by the adjudicating authority (NCLT) by order dated 3 June, 2019.
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That the Expression of Interest (EoI) was published in the All- India edition of Business Standard dated 8 February, 2018 for a widespread coverage with the last date for receipt of the EoIs being 15 February, 2018 (6.00 p.m.) which was later extended upto 17 April, 2018 and after various rounds of meetings of the CoC, the Resolution Plan submitted by the appellant (SRA) was deliberated upon in the 20 meeting of the CoC held on 10 December, 2018 and finally the Resolution Plan of the appellant was approved by the CoC with 81.39% of voting rights. No.155
of 2018 was pending seeking a declaration by the Corporate Debtor that it is the owner of the trademarks (“Deccan Chronicle” and “Andhra Bhoomi”) and the said trademarks be treated as part of the assets of the Corporate Debtor. No.155 of 2018 with a direction that the Resolution Professional has established that it is the Corporate Debtor/DCHL who has an exclusive right to use the trademarks “Deccan Chronicle” and “Andhra Bhoomi” and also made a declaration that the trademarks (“Deccan Chronicle” and “Andhra Bhoomi”) belong to the Corporate Debtor/DCHL under its order dated 14 August, 2019.
Viswanathan, learned senior counsel appearing for the appellant submits that NCLAT has misinterpreted Clause 4.3 and Clause 11.12 of the Resolution Plan which categorically state that the appellant holds unfettered and exclusive rights to the trademarks without any financial implications and with these unforeseen commercial consequences if it only reserves the right to use the trademarks, the Resolution Plan is a non-starter. No.155 of 2018 is nothing but approving the Resolution Plan, which in no manner tantamount to alteration/modification of Clause 11.12 of the Plan and this being a manifest error committed by the NCLAT under the order impugned needs to be interfered by this Court. Chidambaram, learned senior counsel for the respondents, while supporting the findings returned by the NCLAT under order impugned submits that the Resolution Plan, particularly, with reference to the right to trademarks was only confined to the perpetual exclusive right to use the trademarks, namely, “Deccan Chronicle” and “Andhra Bhoomi” without any financial implications for the purpose of running its business, but while disposing of I.A. BRANDS OF THE CORPORATE DEBTOR 4.1 The Corporate Debtor as of now use the following brands/trademarks for running its business: a. In order to achieve the same, the above Financial Creditors shall be deemed to have released their right under the relevant security documents with respect to the said brands in favour of the Resolution Applicant on and from the date the above Financial Creditors stand paid in terms of Clause 3 of this Resolution Plan, in consideration of the settlement arrived at by virtue of this Resolution Plan.
Prayer to the Adjudicating Authority It is prayed to the Hon’ble Adjudicating Authority to sanction the Resolution Plan along with following prayers, reliefs, waivers and concessions: 11.1 The Adjudicating Authority to pass necessary orders/give appropriate directions to give effect to the reorganizations of shares capital of the Corporate Debtor as contemplated in Clause 1, including reduction, consolidation and cancellation, to the effect so that: 11.1.1 Upon approval of the Resolution Plan by the Hon’ble Adjudicating Authority, any increase in the Authorised Share Capital of the convertible debt into equity shares of the corporate debtor shall not require any further consent or approval from any shareholder, creditors or any other entity (including without limitation any regulatory and governmental authority) under the Applicable Laws; 11.1.2 At the time of capital reduction the requirement of adding “and reduced” in the name of the corporate debtor stands dispensed with; 11.1.3 The approval of this resolution plan by the adjudicating authority is to be deemed to have waived all the procedural requirements in terms of Section 66 of the Companies Act, 2013, and the NCLT (Procedure for Reduction of Share Capital) Rules, 2016; 11.12 Adjudicating Authority to pass necessary order/give appropriate directions to give effect that the corporate debtor has the perpetual exclusive right to use the brands namely (i) DECCAN CHRONICLES; (ii) ANDHRA BHOOMI; (iii) THE ASIAN AGE; (iv) FINANCIAL CHRONICLE; (v) DECCAN CHARGERS; AND (vi) ODYSSEY without any financial implications for the purposes of running its business;……” 17.
The Resolution Applicant further prayed for order/direction to use brand name of the Corporate Debtor.
Thus, Resolution Plan dated 11.12.2018 submitted by Resolution Applicant M/s SREI Multiple Asset Investment Trust Vision India Fund, which is approved by members of CoC having 81.39% voting share stands approved subject to reliefs refereed to at paras 12, 13, 14, 15, 16 & 17 stated above as per Section 31(1) of the Code.
The Resolution Applicant shall obtain necessary approval required under any law for the time being in force within a period of one year from the date of approval of the Resolution Plan or within such period as provided for in such law.” That after the conditional approval was granted by the NCLT under order dated 3 June, 2019, I.A. No.155 of 2018, the adjudicating authority had approved so far as the exclusive rights of the Corporate Debtor to use trademarks namely “Deccan Chronicle” and “Andhra Bhoomi” under its order dated 14 August, 2019, but at the same time, a further declaration was made in para 38 holding that trademarks “Deccan Chronicle” and “Andhra Bhoomi” belong to the Corporate Debtor, which indeed does not reconcile with the Resolution Plan approved by the CoC and later by the adjudicating authority under its order dated 3 June, 2019. The NCLAT, after taking into consideration the material available on record and Clause 11.12 of the Resolution Plan, in para 16 of the order of the adjudicating authority (NCLT) returned a finding that the ownership of the Corporate Debtor declared over the trademark after the approval of the Resolution Plan by the CoC, would amount to modification/alteration of the approved Resolution Plan by CoC which is impermissible in law and is not in terms of Section 60(5) of IBC. It clearly indicates that what was approved by the CoC with 81.39% of its voting is to the effect that the Corporate Debtor has a perpetual exclusive right to use the brands, namely, “Deccan Chronicle” and “Andhra Bhoomi” and it nowhere indicates regarding the right of ownership over the trademarks/brands, “Deccan Chronicle” and “Andhra Bhoomi” of the Corporate Debtor.
Hence, the order of Adjudicating Authority to the extent of declaring the ownership of Corporate Debtor over the Trademarks “Deccan Chronicle” and “Andhra Bhoomi” is illegal and the Adjudicating Authority transgressed the jurisdictional limits.
Since the 330 days’ outer limit of the CIRP under Section 12(3) IBC, including judicial proceedings, can be extended only in exceptional circumstances, this open-ended process for further negotiations or a withdrawal, would have a deleterious impact on the corporate debtor, its creditors, and the economy at large as the liquidation value depletes with the passage of time. If the legislature in its wisdom, were to recognise the concept of withdrawals or modifications to a resolution plan after it has been submitted to the adjudicating authority, it must specifically provide for a tether under IBC and/or the Regulations.
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the appellant herein
Case Title: SREI MULTIPLE ASSET INVESTMENT TRUST VISION INDIA FUND Vs. DECCAN CHRONICLE MARKETEERS (2023 INSC 251)
Case Number: C.A. No.-001706 / 2023
