Insolvency & BankruptcyIntersection of Copyright and Insolvency laws

July 27, 20200
High Court of Delhi 
GE Power India Ltd. v. NHPC Ltd.
[CS (COMM) 140/2020 & I.A 4016/2020] | 26.06.2020
The Plaintiff’s predecessor, Alstom India Ltd (“Altsom”) had entered into an agreement with the Lanco Infratech Ltd. (“LIL”) for Teesta VI Project. LIL awarded the Project to its special purpose vehicle, Lanco Teesta Hydropower Limited (“LTHPL”).
On acquisition, Plaintiff had received the copyright ownership over the engineering drawings. Alston had entered in an agreement with LIL to supply the drawing for the purpose of the project, subject to the confidentiality protection. Confidentiality was further assured through an undertaking under the General Conditions of Contracts.
Thereafter, LIL was liquidated and LTHPL was acquired by the Defendant through a resolution plan approved by the NCLT.
Consequently, the Defendant issued an open tender for the Project wherein it had allegedly published and disclosed Plaintiff’s copyrighted confidential drawings and also conveyed its intent to handover Plaintiff’s copyrighted drawings.
Hence, the suit has been filed for infringement of Plaintiff’s copyright over drawings and other documents prepared pursuant to the contract which was entered into by Plaintiff’s predecessor Alstom and Defendant’s predecessor LTHPL’s employer LIL.
The defendant has resisted the suit on the ground that the Delhi High Court do not   have the jurisdiction over the suit as it is barred under Sections 60, 63, 231, and 238 of the Insolvency and Bankruptcy Code, 2019 (“the Code”).
Whether the Court had the jurisdiction to decide over the copyright dispute arising out of or in relation to the insolvency resolution process?
The Court firstly observed that since there was no assignment or license in writing in favour of the Defendant, it cannot ipso facto have a right over the Plaintiff’s assets. Moreover, the assets did not belong to LIL in accordance to Section 36 (4) of the Code.
Although Section 36 (3) (d) of the Code stipulates inclusion of intellectual properties as intangible assets, Section 36 (4) clarified that the assets pursuant to contractual relationship, that limits the scope of assets to use only (and not transfer), cannot be included in the liquidation estate assets.
The Court perused Section 60, 63, 231 and 238 of the Code and held that Section 63 read with Section 231 created a bar on the jurisdiction of the Civil Court with regards to any dispute over which the NCLT/NCLAT had the jurisdiction under the Code. Thus, the adjudicating authority is the only competent authority for the disputes in connection to the Code.
The Court however finally held that the copyright dispute  was  covered under the ambit of Section 60 (5) of  the Code as it arose out of and is in relation to the insolvency resolution plan. The Court elucidated that –
“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.”
The Court placed reliance on decision in the case of Liberty House Group vs. State Bank of India & Ors., 2019 (258) DLT 52 and Swiss Ribbons Pvt Ltd vs Union of India, 2019 SCC Online SC 73 to conclude that the Code  envisages  a competent adjudicating authority, thus ousting the jurisdiction of the Civil Court.
Thus, any question of law or fact concerning insolvency resolution or liquidation proceedings, dealing with contracts creating or transferring intellectual property right would only be determined by the NCLT  or  NCLAT.
According to the Bankruptcy Law Reforms Committee Report, in order to ensure the sanctity of the liquidation or bankruptcy process, it is essential that the jurisdiction   of any civil court or authority should be specifically barred where NCLT has jurisdiction.
The Court herein though discussed the prima facie merits of the case in brief but rejected the suit on the ground of maintainability. It is imperative that the jurisdiction of the tribunals under the Code is upheld regardless of dispute having arisen after the completion of liquidation proceeding and that the dispute pertains  to  special legalisation like Copyright Act wherein civil courts have been authorized to have an exclusive jurisdiction.
The rationale behind this is that by bringing all litigation that may have a monetary impact on the economic value  of  corporate  debtor’s  assets within the jurisdiction of the NCLT, the liquidation or  bankruptcy process will be streamlined and efficient.
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