Lack of Civil Court’s Jurisdiction if the Case is Arising Out of Insolvency Proceedings – Delhi High Court

“Civil Courts Lack Jurisdiction in Cases from Insolvency Proceedings” – Delhi High Court

The Hon’ble Justice Mukta Gupta of Hon’ble Delhi High Court in the judgment dated June 26, 2020, in the matter of Make GE Power India Limited V. NHPC Limited[1] held that ”Civil Court lacks territorial jurisdiction to entertain the matters, which have arisen from or in relation to insolvency proceedings, further Hon’ble Court dismissed the present petition as same is barred under Section 230,231 & Section 60(5) of Insolvency And Bankruptcy Code.”

Facts

GE Power Limited (Prior to Acquisition, was known as Alstom India Ltd, “Plaintiff”) entered into a contract with Lanco Infratech Limited (LIL) for designing, manufacturing, testing, 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. Further, Teesta VI project was conferred to Lanco Teesta Hydropower Limited (LTHPL). Inter alia, there was an agreement between Alstom and LIL regarding the supply of engineering drawings that were protected under copyrights. 

On liquidation of LIL, the Teesta VI project was acquired by NHPC limited (“Defendant”). On 11^th February 2020, the Defendant sent an intimation to offer Single Vendor Tender of Teesta VI Project to Plaintiff. Further, the bid of the Plaintiff was rejected on the ground that the price quoted by the Plaintiff was higher than tender check documents. Thereafter, on 5^th May 2020, the Defendant issued an open tender for Teesta VI, wherein, it disclosed the copyrighted and confidential drawings to the third parties.

Therefore, the present suit is filed claiming the violation of copyright.

Issues

The Hon’ble Court considered the following Questions of Law and Fact:

1. Whether the Hon’ble Court of Delhi has jurisdiction to entertain the present case?

Submissions

The learned counsel for the Plaintiff contended that the Plaintiff has exclusive rights over the drawings. Moreover, the drawings of the project being confidential, the proprietary rights over the drawings were illegally possessed by the Defendant and the same was published on worldwide web without any authority. Further, it is pertinent to note that the Defendant had knowledge as to the confidentiality and Plaintiff’s exclusive right over the drawings.

In regard to jurisdiction, the learned counsel submitted that the Defendant has circulated the tender drawings on Central Public procurement, which is an active procurement website in India, by uploading drawings on the said portal, the Defendant had violated the exclusive right of Plaintiff.

On the other hand, the learned counsel for the Defendant contended that the present court lacks territorial jurisdiction to entertain the present case as registered office of Plaintiff is situated at Mumbai and registered office Defendant is situated at Faridabad. Further, he contended that mere publishing the tender on Central Public Procurement Portal (‘CPPP website would not impose the territorial jurisdiction of this Court. He further contended that the matter is arising out of the insolvency resolution process and can be decided only by the NCLT, therefore, the jurisdiction of the civil court is barred.

It is pertinent to note that Section 60(5) of the IBC states that any question arising concerning the insolvency resolution or liquidation proceedings of the corporate debtor or corporate person under IBC will not be amenable to the jurisdiction of Civil Court. Further, Section 231 and 238 of IBC states that the provisions of IBC override the provisions of other enactments. Further, he contended that the Plaintiff has failed to explain, how the copyright owned by Alstom Projects India Ltd. vested in the Plaintiff. In the absence of the said disclosure, the Plaintiff cannot claim any copyright in the drawings on the pretext that it is a successor in interest of Alstom.

Further, learned counsel contended that the Plaintiff’s case in respect of the copyright is completely vague and he has no copyright vested with him. Section 52 (1)(w) of the Copyright Act provides against the perpetuation of any monopolistic rights in industrial drawings in the guise of copyright.

Observation And Judgement

While deciding the present case, the court has relied on following landmark judgements, wherein, the territorial jurisdiction has been widely explained. Further, the exclusive right over the copyrights have been enshrined:

In Banyan Tree Holding (P) Ltd. vs. A. Murali Krishna Reddy & Anr.[2] Hon’ble Court held that the “drawings and data in which the plaintiff has copyright having been communicated at Delhi and copies of the work which were not in circulation already having been issued for circulation at Delhi, this Court has territorial jurisdiction to entertain the suit.”

In Exxon Mobil Corporation vs. Exoncorp Pvt. Ltd. [3]“It was clearly held that once reservations are made in respect of a particular jurisdiction even if the same does not materialise, the same is sufficient to attract the jurisdiction of the Court.”

In Swiss Ribbons Pvt. Ltd. Vs. Union of India[4] “the words used in the statute are of vide amplitude and that the IBC was enacted to bring insolvency laws in India under a single unified umbrella with the object of speeding up of the insolvency process by reorganizing insolvency resolution of corporate debtors in a time bound manner and by maximising the value of assets. Therefore, IBC seeks to provide for designated NCLT thereby ousting the jurisdiction of the Civil Court.

Conclusion

The Hon’ble High Court keeping the law laid down by the Hon’ble Supreme Court in the various landmark judgments and having regard to the facts and circumstances of the present case the Court is of the opinion that, if the Copyright dispute arises out of or in relation to insolvency proceedings, NCLT is the proper jurisdictional court to decide on the matter, however, the civil court lacks the jurisdiction to try the matters which have been arisen from insolvency proceedings. Further, the learned judge dismissed the petition by taking shelter under Section 230, 231 & 60(5) of Insolvency and Bankruptcy Code.

[1] CS (COMM) 140/2020