The National Company Law Tribunal (NCLT), in a first, has passed orders restraining others from using the brand name and trademarks of a corporate debtor — Servomax India — currently undergoing corporate insolvency resolution process (CIRP).
NCLT has stepped into the issue of brand protection and trademark enforcement responding to the plea of resolution professional (RP) seeking to restrain the suspended directors of the corporate debtor and others from using brand name and trademarks pending CIRP.
“The intervention of the Tribunal to protect the intangible assets is evolving jurisprudence in the insolvency resolution ecosystem,” said VK Sajith, counsel for the RP.
Servomax India is currently under CIRP following the orders of NCLT in February last year on an application by Murali Krishna Power Controls, claiming Rs 8.77 crore dues.
RP Madhusudhan Rao G has moved the Tribunal seeking to restrain seven entities and persons from using the brand name and trademarks of Servomax India. These include Precious Power Technologies, SaveAWatt Power Electronics, Tushara Energy Ventures, Power Controls Systems, and suspended directors Avasarala Venkateswara Rao, Doppalapudi Harish Kumar, and Venkata Chandra Ravulapati.
The RP submitted to the Tribunal that the suspended directors of the corporate debtor and certain entities purportedly authorised by these suspended directors were using the brand name and trademarks of Servomax India, affecting its business.
According to the RP, the illegal use of brand and trademarks of Servomax India was “causing irreparable loss to the corporate debtor and adversely affecting the resolution process”.
Following the request of the committee of creditors (CoC) to safeguard and protect the corporate debtor’s brand and trademarks, the RP sought details from the seven respondents to provide the agreements or contracts entered into with the corporate debtor for use of brand and trademarks.
However, the RP told the Tribunal, he did not receive the information sought from the respondents. Accordingly, he sought the Tribunal to grant permanent injunction against all the respondents using the brand and trademarks of the corporate debtor.
Suspended director Avasarala Venkateswara Rao, in a counter filed before the Tribunal, claimed that his sole proprietary firm Precious Electronics owned the brand and trademarks Servomax, which were given to the corporate debtor for use on certain terms and conditions.
Further, he claimed that Servomax India in turn had entered into agreements with certain channel partners and others for use of brand for products manufactured for the corporate debtor.
The Tribunal was convinced with arguments of the RP that the documents submitted by suspended director Rao were created for the purpose of the case, while considering the fact that none of the respondents had responded to the RP to produce proofs over agreements.
The Tribunal has also observed that the Registrar of Trademarks had issued the certificate of registration in the name of Servomax India.
Accordingly, the judicial member of NCLT at Hyderabad, Ratakonda Murali, issued orders on Monday, restraining the respondents from using the brand name and trademarks of Servomax India, pending CIRP. While directing the respondents to file before the RP the documents and agreements, if any, under which they claimed to be authorised to use the brand and trademarks, the Tribunal permitted the RP to make a public announcement on the issue of brand and trademarks.