2021 (2) TMI 161 - Tri - Insolvency and Bankruptcy

Assignment Agreement Declared Void, Ownership Restored to Corporate Debtor. Lack of Jurisdiction Upheld.

The Tribunal declared an Assignment Agreement transferring intellectual property rights null and void, restoring ownership to the Corporate Debtor. The ... Approval of Resolution plan - Section 30 (6) of the Insolvency & Bankruptcy Code, 2016 - HELD THAT:- This Bench observes as under: (i) Several opportunities were given by this Tribunal to the applicant in full compliance of the rules of natural justice in the proceedings of MA/10/KOB/2020. But they had chosen not to appear before this Bench. (ii) In view of the Final order dated 26.02.2020 in MA/10/KOB/2020, the order dated 12.02.2020 declaring R3 as ex parte has attained finality. (iii) There is no reason to modify the order or dispense with the proceedings of this Tribunal in MA/10/KOB/2020 which had been concluded and have attained judicial finality. (iv) The Proviso to Section 420(2) of the Companies Act, 2013 states as under: “Provided that no amendment shall be made in respect of any order against which an appeal has been preferred under this Act”. This Bench find no merit in this application - Application dismissed. Issues Involved:1. Validity of Assignment Agreement transferring intellectual property rights.2. Setting aside ex parte order and condoning delay in filing application.3. Jurisdiction of the Tribunal to review or set aside its orders.Analysis:Issue 1: Validity of Assignment Agreement transferring intellectual property rightsThe dispute in the case revolved around an Assignment Agreement dated 15.11.2017, where the 3rd Respondent, who was in control of the Corporate Debtor, transferred a valuable intellectual property, the Trademark 'MERCURE,' to a related party for a nominal sum. The Tribunal found the Agreement undervalued, malafide, and fraudulently executed to defraud creditors. Consequently, the Tribunal declared the Agreement null and void, vesting back the Trademark with the Corporate Debtor and restoring their rightful ownership. The Registrar of Trademarks was directed to record the annulment of the Assignment Agreement and restore the Corporate Debtor as the sole proprietor of the Trademark.Issue 2: Setting aside ex parte order and condoning delay in filing applicationThe Applicant, who was set ex parte in the proceedings, sought to set aside the order and filed an application to condone the delay in filing. The Applicant argued that the delay was due to the national lockdown and relied on the Supreme Court's extension of limitation orders. However, Respondent No.1 opposed, stating that the Final Orders had been pronounced, and the Tribunal had become functus officio. The Tribunal observed that multiple opportunities were given to the Applicant, and the ex parte order had attained finality. Consequently, the Tribunal dismissed the application, citing no merit in setting aside the order.Issue 3: Jurisdiction of the Tribunal to review or set aside its ordersRespondent No.1 contended that the Tribunal lacked the power to review or set aside its orders once final orders had been pronounced. Citing judicial pronouncements and statutory provisions, Respondent No.1 argued against entertaining the application due to the Applicant's laches in properly representing itself despite opportunities provided. The Tribunal agreed with Respondent No.1, stating that the Final order had attained judicial finality, and there was no reason to modify or dispense with the proceedings.In conclusion, the Tribunal dismissed the application, emphasizing the finality of the orders pronounced and the lack of merit in setting aside the ex parte order. The judgment underscores the importance of timely representation in legal proceedings and the limitations on the Tribunal's jurisdiction to review finalized orders.