Jurisdiction of Civil Court in Matters Involving Insolvency of Party

Our Associate, Roohan Kathuria discusses “Jurisdiction of civil court in matters involving insolvency of party”

The Hon’ble Delhi High Court, in an order dated June 26, 2020, dismissed GE Power India Ltd.’s (“Plaintiff”) suit against NHPC Ltd. (“Defendant”), alleging infringement of copyright in six (6) architectural drawings and violation of its rights in related confidential data.

In this case, the Plaintiff, through its predecessor-in-interest, Alstom India Ltd. (“Alstom”), entered into a contract with Lanco Infratech Limited (“LIL”) for designing, manufacturing, testing, delivering and commissioning of facilities for a hydro-electric project. In the contract, the Plaintiff had granted to LIL a conditional and limited licence in respect of its drawings and data. The project was awarded to Lanco Teesta Hydropower Limited (“LTHPL”), a Special Vehicle Company that is part of the same group of companies as LIL. The drawings and documents submitted by Alstom to LIL were used in the project, subject to the copyright vesting with Alstom.

Subsequently, LIL went into liquidation and insolvency proceeding were initiated against it. Thereafter, owing to the NCLT’s decision, the Defendant acquired the project and issued an open tender while publishing, and disclosing to third-parties, the copyrighted drawings, and in pre-bid meetings, expressed its intention to hand over all drawings to the successful bidder.

The Plaintiff contended that the Defendant could not have used the drawings and data and publicized them without a license from the Plaintiff or without explicit permission of the Plaintiff. Reliance was placed on the judgement in Astrazeneca UK Ltd. & Anr. vs. Orchid Chemicals. The Plaintiff further contended that the Defendant’s publication of the drawings and the data was causing irreparable harm to the Plaintiff and the Defendant was liable to remove the drawings from its webpage. Further, it was contended that the Defendant’s website and the Central Public Procurement Portal (“CPPP”), on which the drawings were uploaded was more than an interactive website and permitted submission of bids online through the portal. Moreover, two companies have accessed the website from Delhi and have raised queries before submitting their bids.

The Defendant, on the other hand, contended the Hon’ble Court had no territorial jurisdiction to try the suit as neither the Plaintiff nor the Defendant reside or work for gain within the Court’s territorial jurisdiction. The Defendant also claimed that the website was not targeted to the consumers only in Delhi. Further, it was contended that the present suit is not maintainable as the dispute arises out of, or in relation to, the insolvency resolution process and can be decided only by the NCLT. Moreover, the Plaintiff has failed to plead how the copyright owned by Alstom vested in the Plaintiff. The Defendant took the plea of fair dealing.

The Court, while rejecting the plea of the Defendant regarding territorial jurisdiction, held that since the copyrighted drawings were fed into the computer of CPPP in Delhi and reproduced as an open tender, the cause of action has arisen in Delhi. Therefore, there exists the infringement of copyright vested in the Plaintiff’s drawings.

The Court, however, held that it did not have jurisdiction to try this matter because the Insolvency and Bankruptcy Code (“IBC”) lay a bar on the jurisdiction of a civil court in respect of any matter in which the NCLT and NCLAT have jurisdiction. The Court held that jurisdiction vested in NCLT is of wide ambit and any question of law or fact in relation to the insolvency resolution has to be determined by the NCLT. Reliance was placed by the Hon’ble Judge on the judgment of Swiss Ribbons Pvt. Ltd. Vs. Union of India.

Lastly, the court held that, since the Plaintiff’s drawings and confidential data was given to LIL, it could not have, without any written permission of the Plaintiff, passed on the said data to LTHPL or to the Defendant. Therefore, the suit could not be decided without making LIL and LTHPL parties to the suit.

Citation: GE Power India Ltd. v. NHPC Limited- CS(COMM) 140/2020. Order dt. 26.6.2020