This post is about seven trademarks and their journey from owner to liquidator then to wrongful owner and then again back to the liquidator. This post proves that how people take wrong orders from the courts and misuse them for their own benefit. This post is about fake document and how people misuse them but in the end they are caught in their own web of lies. #trademark #liquidation #wrong #highcourt #delhi #benefit #document #fake #company #insolvency #journey #court #doublebench
Poulami Mukherjee Vs. Duckbill Drugs Pvt. Ltd. & Ors.
Date of Order: – 23.06.2023
In this matter, Appeal was filed by Appellant(Poulami) against the order dated 12.12.2022 of trial court. As trial court has refused to grant an order of injunction restraining the Respondent(Duckbill). The suit was that the plaintiff(Poulami) alleged the infringement of seven trademarks over which she claimed she had proprietary rights acquired through a deed of assignment executed in her favour by Defendant(Duckbill), the registered owner of those marks.
On 24th January, 2023 the appeal and the connected application for injunction (FMAT 9 of 2023) was listed by Hon’ble High Court. The Double Bench of High Court of Calcutta found that Ld trial court judge had found prima facie infringement of those trademarks by respondent(Duckbill) yet he refused to pass any order of injunction.
At the admission stage, without the assistance of the entire papers and detailed submissions, Hon’ble High Court said that if injunction is prima facie established, then an order of injunction necessarily follows. Hon’ble High Court granted an order of injunction restraining respondent(Duckbill) from using the marks.
On 28th January, 2023 respondent(Duckbill) made an application for setting aside order dated 24th January, 2023 and for reinstatement of the order of the learned trial court below, on the ground that the ex-parte order was obtained on 24th January, 2023 by misleading the court that inspite of service, respondent had not appeared.
The facts of this case are most extraordinary. Very rarely does one come across a case of this kind where there is such a serious allegation of fraud, misrepresentation and suppression of facts and cheating.
INSOLVENCY OF DUCKBILL(respondent)
NCLT commenced Corporate Insolvency Resolution Process (CIRP) against respondent(Duckbill) was 17th December, 2019, The order of liquidation of Duckbill was passed by the tribunal on 13th April, 2021.
The most valuable assets of the respondent company were seven out of its fourteen trademarks i.e. i) Laxit ii) Laxit Laxative Oral Emulsion (label) iii) Healzyme iv) Catalyd v) Laxit plus label vi) Brofentol plus label vii) Cyaptin with calcium (label).
On 29th June, 2021 the Liquidator had asked the trademarks registry to maintain status quo of the seven trademarks.
The assets which were handed over by Director(Swapan Kumar) of respondent(Duckbill) to the Liquidator on 12th February, 2022 were to be sold by e-auction as stated in the Liquidator’s notice of sale dated 23rd April, 2022. The liquidator fixed a reserve price of rupees five crores for this sale.
On 9th May, 2022 Liquidator held an auction under Section 35 (1)(f) of the Insolvency and Bankruptcy Code. On 11th May, 2022 they were sold in favour of Paul Brothers, a partnership firm, who were to run respondent(Duckbill) as a going concern and a sale certificate was also issued to them.
An extraordinary situation was created by the production of a deed of assignment dated 3rd April, 2017 under which seven trademarks were purportedly assigned by respondent(Duckbill) to appellant(Poulami) for a consideration of Rs.7,000/- only.
A letter dated 4th April, 2017 was produced by the appellant, which was send to respondent(Duckbill). That she had became the owner of seven trademarks;
A form dated 18th January, 2022 was shown, by appellant(Poulami) to the Registrar of Trademarks for recording this assignment in his records and a document issued by the Trade Marks registry showing that the assignment was registered on 14th June, 2022.
On 7th November, 2022, Paul Brothers wrote to the Liquidator that they had discovered that seven trademarks had been transferred to Poulami.
On 9th November, 2022 the Liquidator asked the Registrar of Trade Marks to reverse the transfer.
Respondent(Duckbill) submission is that a colossal fraud has been practised on them by appellant(Poulami).
These seven trademarks were all along the assets of the respondent company and were included in its assets proposed to be sold by e-auction by the Liquidator.
The assignment of 3rd April, 2017, is a fabricated document, so backdated that the assignment would appear to have been effected prior to two years of commencement of insolvency on 17th December, 2019.
According to respondent(Duckbill), Appellant(Poulami) in connivance with her father in law(Swapan Kumar) who was the director of respondent, wanted the liability of Duckbill to be met from the consideration paid by Paul Brothers and at the same time stake their wrongful claim on the seven trademarks.
On 14th November, 2022, Paul brothers filed a writ application in Calcutta High Court(WPA 24933 of 2022) asking inter alia for a writ of mandamus for cancellation of the assignment of the seven trademarks in favour of appellant(Poulami) and for its restoration in favour of respondent(Duckbill).
At the ad-interim stage on 6th April, 2023 learned single judge hearing the writ took note of the order dated 24th January, 2023 in the present matter, restraining respondent(Duckbill) from using the marks. Ld.Single Judge ruled, on appreciation of the prima facie case that Poulami be also restrained from using the marks.
After that an appeal was filed by Poulami of the order of Ld.Single Judge before a division bench of Calcutta High Court which while admitting the appeal on 20th April, 2023 ruled that the ad-interim order passed by the learned single judge without inviting affidavits had the effect of finally allowing the writ application. The said order of the learned single judge dated 6th April, 2023 was stayed.
The net result of this was that the writ application and the appeal are still pending before the respective courts.
On 28th November, 2022 Paul Brothers filed an application before NCLT claiming that the assignment and transfer of the seven trademarks by deed of assignment dated 3rd April, 2017 was fraudulent and undervalued and Duckbill was entitled to commercially exploit the trademarks.
The application (CAN 2 of 2023) has been filed by respondent(Duckbill) to set aside the said order. Records were placed before the court to show that respondent(Duckbill) received service of the papers in the evening of the day when the order was passed.
After seeing all the records, Hon’ble Court said that the contention of respondent appears to be true. So, the order dated:-24th January, 2023 was set aside.
DISCUSSION AND CONCLUSION BY HON’BLE COURT
Hon’ble Court was extremely suspicious about the authenticity of the deed of assignment for several reasons.
a) Being allegedly executed in 2017 it did not come to light when the corporate insolvency resolution process was started on 17th December, 2019, or on 13th April, 2021 when the liquidation proceedings were commenced.
b) On 12th February, 2022 the father-in-law of Appellant(Poulami), Director of respondent (Swapan Kumar) quietly handed over the possession and assets of the respondent company to the Liquidator without informing him that on 18th January, 2022, he had filed the application with the Registrar to record the assignment of the seven trademarks of the respondent company purportedly made on 3rd April, 2017.
On 23rd April, 2021 the liquidator identified fourteen trademarks belonging to the company which included the seven trademarks.
c) The liquidator found fourteen registered trademarks in the name of the company. He found nothing in the records to suggest that out of those trademarks, seven had been transferred in 2017.
d) All fourteen marks were valid on the date of execution of the deed of assignment whereas in 2022 only seven trademarks were valid.
e) Two of the marks were registered only in 2018, Then why only seven trademarks were allegedly assigned in 2017?
f) Why would the application for recording of the assignment of the seven trademarks be made on 18th January, 2022 about 5 years after it was purportedly assigned on 3rd April, 2017?
g) What is most significant is that these marks were assigned by the father-inlaw on behalf of the company to her daughter-in-law for only Rs.7,000/- whereas about rupees 5 crores have been paid by respondent(Duckbill) to purchase these marks.
h) The deed of assignment dated 3rd April, 2017 was sought to be lodged with the Registrar on 18th January, 2022 for registering the assignment.
It is absolutely plain that prima facie there was gross irregularity involved in the alleged assignment and in the registration thereof.
From the prima facie findings arrived at by the DB in the present case, there was every reason to believe that the deed of assignment was backdated.
Even if it is assumed that deed of assignment was not backdated, still the trademark registry had no power under Section 42 of the said Act to register the assignment when such assignment was presented after 5 years.
The Act required notification of this assignment by the assignee within the stipulated period of six months which might be extended by the Registrar by three months only, and if no such notification was made, the assignment would not have any effect. The trademark registry could not have registered the purported assignment on 14th June, 2022.
The involvement of the trademark registry in this fraud also needs to be investigated.
Final word from the DB of Hon’ble High Court
Court observed that prima facie, the purported assignment appears to be non-est and a nullity.
Under Chapter V of the Trade Marks Act, 1999 the right of assignment and transmission is vested in the registered proprietor. In case of these seven marks, the registered proprietor was respondent(Duckbill), the custodian of whose assets was the liquidator. So the real proprietor was the liquidator.
The dating of the deed of assignment that is 3rd April, 2017 raised eyebrows for another reason. It was more than two years before the commencement of insolvency proceeding on 17th December, 2019 so as to take it out of scanner and scrutiny under the 2005 Insolvency and Bankruptcy Code, 2016, as a fraudulent preference.
Finally the appeal was dismissed by vacating interim order dated 24th January, 2023.
The judgment and order were affirmed by substituting therein the reasons given by us in this judgment and order.
Hon’ble Calcutta High Court said that nothing in the injunction application before the court below. It is disposed of by this order.
The present appeal and all connected applications were disposed of.
The findings and observations in the present matter, were directed to be treated as prima facie in the suit.
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