NCLT Directs 33 Schools Using 'Presidium' Brand to Deposit Trademark Revenue Into CIRP Account

The National Company Law Tribunal (NCLT) at New Delhi has directed 33 schools operating under the “Presidium” name to render accounts of amounts received and profits generated from use of the trademark and deposit the same into the Corporate Insolvency Resolution Process (CIRP) account of Presidium Educational Institution Private Limited.

A coram of Judicial Member Manni Sankariah Shanmuga Sundaram and Technical Member Atul Chaturvedi held that the continued use of the trademark without a valid licence amounts to infringement of the corporate debtor's statutory and proprietary rights.

The tribunal said such use results in depletion and dilution of the assets of the corporate debtor and adversely affects the interests of its stakeholders.

The directions were issued on an application filed by the Resolution Professional under Section 60(5) read with Sections 18 and 25 of the Insolvency and Bankruptcy Code.

Presidium Educational Institution Private Limited was admitted into CIRP on November 29, 2022. During the insolvency process, the Resolution Professional found that the corporate debtor is the undisputed registered proprietor of the trademark “PRESIDIUM EDUCATIONAL INSTITUTION PVT. LTD.” Despite this, several schools across Delhi-NCR and other regions continued to operate under the brand name.

The Resolution Professional submitted that the trademark is an intangible asset of the corporate debtor and that it cannot be used without valid licence or authorisation. It was further submitted that the monies generated from such unauthorised use were not being credited to the corporate debtor and were being routed through various accounts.

The tribunal noted that the schools, arrayed as respondents, were “using the trademark registered in the name of the

Corporate Debtor without any valid licence or authorization from the Applicant”

It observed that “the monies generated from such unauthorized use are being diverted and routed through various accounts.”

The tribunal held that any unauthorised or unlicensed use of a registered trademark, or its assignment without lawful authority, amounts to infringement and constitutes unlawful exploitation of an asset belonging to the corporate debtor.

According to the tribunal, "Such acts not only constitute infringement of the Corporate Debtor's statutory and proprietary rights but also result in depletion and dilution of the assets of the Corporate Debtor, thereby adversely affecting the interests of the Corporate Debtor and its stakeholders."

The NCLT, accordingly, directed the schools to render true and complete accounts of all amounts received and profits generated from use of the “Presidium” brand from the insolvency commencement date of November 29, 2022.

The schools were directed to deposit the entire amount into the CIRP account.

The tribunal further ordered that all present and future receipts arising from use of the trademark be credited only to the CIRP account. It also directed the schools to place on record all franchise, licence, or collaboration agreements authorising use of the trademark.

Separately, the suspended board of directors was directed to file affidavits disclosing all arrangements and bank accounts into which monies were received from the schools during the CIRP period.

For Applicant: Advocates Rashmi Raj, Neha Shah, Kiran Bisht, Yashika, and Abhishek Periwal

For Respondents: Advocates Praveen, Ganesh Chandra, Raghav Dikshit, and Nimmi Babu