TaxTMI 
TaxTMI 
2020 (6) TMI 692
X X X X Extracts X X X X
X X X X Extracts X X X X
....Alstom Projects India Ltd.) (in short 'Alstom') entered into a contract with Lanco Infratech Limited (in short 'LIL') on 18th May, 2009 for 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 b....
X X X X Extracts X X X X
X X X X Extracts X X X X
....claims that the action of the defendant resulting in everyday listing of the said drawings and data on the worldwide web page is causing irreparable 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 docu....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d data, the plaintiff cannot be treated to have passed on the copyright vested in the plaintiff in the drawings and data to either LIL 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 it....
X X X X Extracts X X X X
X X X X Extracts X X X X
....orate debtor itself. Reliance is placed on the decision reported as 2014 (16) SCC 51 Bhanwar Lal & Anr. vs. Rajasthan Board 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 defend....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 15. In the insolvency proceedings against LIL vide order dated 26th August, 2018 NCLT ordered liquidation of LIL, thereafter the plaintiff submitted its claim to the Liquidator of LIL and against the financial claim of Rs.1,63,55,66,682/- the Liquidator approved the claim of the plaintiff only to the extent of Rs.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 Pro....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nance hence there is no admission in the single vendor tender. 19. Learned counsel for the defendant 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 le....
X X X X Extracts X X X X
X X X X Extracts X X X X
....lt by the Plaintiff it would have to be shown that viewers in the forum state were specifically targeted. 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 demandi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....T or if aggrieved by the order thereof before the NCLAT. To decide this issue it would be necessary 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.....
X X X X Extracts X X X X
X X X X Extracts X X X X
....third party any documents, data or other information furnished directly or indirectly by the other Party hereto in connection with the Contract, whether such information has been furnished prior to, during or following termination of the Contract. Notwithstanding the above, the Contractor may furnish 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 requi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....cution and/or completion of the Facilities, which the Client is required to obtain as per provision of the Contract or as per relevant applicable laws of the Country, then the Contractor may give a notice to the Client thereof, and if the Client has failed to pay the outstanding sum, to approve the invoice or supporting documents, to give its reasons for withholding 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....
X X X X Extracts X X X X
X X X X Extracts X X X X
....es to learned counsels for the plaintiff and defendant in regard to the relationship between LIL, Lenco Energy Power Ltd. (in short LEPL) i.e. the employer and LTHPL the successor-in-interest of the defendant. In this regard the defendant has placed on record the certificate of incorporation of LTHPL which was earlier known as Lanco Teesta Hydro Power Pvt. Ltd. and originally incorporated as Lanco Energy Pvt. 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 27....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ntractor was required to furnish the documents, data and information to its sub-contractor for performance of the contract. Further on termination of the contract by the contractor due to insolvency of the client which is the reason assigned in the notice dated 24th May, 2020, the contractor subject to payments specified in GCC sub-clause 3.42.3.4 was required to deliver to the client all drawings, specifications 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 ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e Corporate Debtor , whether arising under the terms of subsisting consents, licenses, approvals, rights, entitlements benefits and privileges whether under law, contract, lease or license, granted in favour of the Corporate Debtor or any contractual arrangements entered into by the Corporate Debtor shall notwithstanding any provision to the contrary in their terms stand extinguished without any resource. 31. Sub-clause (b) of 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....
X X X X Extracts X X X X
X X X X Extracts X X X X
....tion to entertain any suit or proceedings in respect of any matter on which National Company Law Tribunal or the National Company Law Appellate Tribunal has jurisdiction under this Code. Civil court not to have jurisdiction. 231. No civil court shall have jurisdiction in respect of any matter in which the Adjudicating Authority is empowered by, or under, this Code to pass any order and no injunction shall be granted by any court or other authority in respect of any 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 a....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e current state of the bankruptcy process was a highly fragmented framework, with powers of the creditor and the debtor under insolvency being provided for under different Acts; it is problematic that these different laws are implemented in different judicial fora giving rise to problems in implementation of the resolution framework; there is lack of clarity of jurisdiction, with decisions being appealed against; if economic value is indeed to be preserved, there must be a single forum 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 umbrel....
X X X X Extracts X X X X
X X X X Extracts X X X X
....idation and bankruptcy; (xii) Insolvency Professionals will assist in completion of insolvency resolution, liquidation and bankruptcy proceedings envisaged in the Code; (xiii) timely resolution of a corporate debtor who is in the red, by an effective legal framework, would go a long way to support the development of credit markets; (xiv) Rule 11 of the National Company Law Tribunal Rules, 2016 saves the inherent powers of the NCLT to make such orders as may be necessary for meeting the ends 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 ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the case of the plaintiff that the drawings and data were used for Teesta VI Project as is also evident from the agreement dated 18th May, 2009 between plaintiff and LIL. Further, as per the resolution plan, dispute of the entitlement to the licenses or the benefit/privilege under the contract or license to which the corporate debtor is entitled or accustomed notwithstanding any provision to the contrary is a provision of wide amplitude and the disputes raised between the party would fall in relation to this right if that accrues in favour 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....