Full Judgment Text
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* IN THE HIGH COURT OF DELHI AT NEW DELHI
nd
Date of decision: 2 May, 20204
+ O.M.P.(I) (COMM.) 124/2024 & I.A. 9741/2024
BUNCH MICROTECHNOLOGIES PVT LTD ..... Petitioner
Through: Mr. Karun Mehta, Ms. Pratiksha
Mishra, Mr. Yugam Taneja and Ms.
Kaarunya Lakshmi, Advs.
versus
AMCP EDUTECH PVT LTD AND OTHERS ..... Respondents
Through: Ms. Amita Katragadda, Ms. Shikha
Tandon, Mr. Prafful Goyal, Ms.
Kamakshi Puri, Mr. Adhiraj Singh
Chauhan, Ms. Sejal Sethi & Ms. Diya
Narag, Advs. for R-2. (M:
8527569385)
CORAM:
JUSTICE PRATHIBA M. SINGH
Prathiba M. Singh, J.(Oral)
1. This hearing has been done through hybrid mode.
I.A. 9741/2024(for modification) & O.M.P.(I) (COMM.)-124/2024
2. The present petition has been filed under Section 9 of the Arbitration
and Conciliation Act, 1996 on behalf of the Petitioner- M/s Bunch
Microtechnologies Pvt. Ltd. against Respondent No.1- AMCP Edutech Pvt.
Ltd., of which Mr. Abhinay Sharma (Respondent No.2) and Mr. Abhishek
Sharma (Respondent No. 3) are the directors. The Petitioner vide the present
petition is inter alia seeking reliefs in terms of the Intellectual Property
Rights (‘IPR’) owned by Respondent No.2 which are stated to have been
transferred to Respondent No. 1 in terms of the Deed of Assignment (Prior
IP Agreement) dated 29th October, 2022. The said agreement is the key
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Digitally Signed
By:DEVANSHU JOSHI
Signing Date:06.05.2024
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factor in the Petitioner’s investment of approximately Rs. 4 crore in
Respondent No. 1 company. However, the Petitioner alleges breaches by
Respondent No. 2, including failure to transfer IP rights and
mismanagement, resulting in substantial losses for Respondent No. 1 and
endangering the Petitioner’s investment.
3. The Petitioner is stated to be an Indian ed-tech start-up known as
‘Classplus’ and is stated to have entered into agreements with Respondent
No.1 and Respondent No.2, who holds a majority stake in Respondent No.1.
These agreements outlined the transfer of IP rights and the Petitioner’s
investment in Respondent No.1 company. Respondent No.2, and
Respondent No.3 are siblings. The dispute in the present suit is stated to
have escalated due to alleged breaches by Respondent No.2, leading to
significant financial losses for Respondent No.1 and potential harm to the
Petitioner’s investment.
4. It is stated that the Petitioner along with its subsidiary ‘Testbook Edu
Solutions Pvt. Ltd.’ executed a binding term sheet dated 3rd October, 2022
wherein it was agreed between the parties that the Respondent No.2 will
take classes through a mobile application using technology offered by the
Petitioner company. Further, as per the said term sheet, the Respondent No.2
was obligated to incorporate a new company i.e., Respondent No.1. The
term sheet further states that the Respondent No.2 would transfer all his
Intellectual Property rights with respect to his YouTube channel and other
social media channels to the company-Respondent No.1. Clause 2 of the
term sheet dated 3rd October, 2022 reads as under:
“2. ASSIGNMENT OF THE IDENTIFIED IPR
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Digitally Signed
By:DEVANSHU JOSHI
Signing Date:06.05.2024
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2.1 In lieu of consideration mentioned in Clause 3 of
this Deed, the Assignor hereby irrevocably, absolutely,
exclusively, and perpetually grants, conveys, transfers,
assigns and delivers to the Assignee:
2.1.1 all its rights, titles, and interests in, to,
over and upon the Identified IPR together
with the goodwill of the business connected
with and symbolized by the Identified IPR;
and
2.1.2 the right to bring and defend
proceedings and obtain and retain any relief
recovered (including damages or an account
of profits) in respect of any infringement or
any other cause of action arising from
ownership, of any of the Identified IPR
whether occurring before, on, or after the
date of this Assignment.
2.2 The assignment/transfer shall be perpetual and
shall not be limited in any way to any territory or
jurisdiction.
2.3 Perpetual License to the videos, images and
content. The Assignor also grants to the Assignee an
irrevocable, perpetual, exclusive and worldwide right
in the videos, images and content that is already
uploaded on the social media platforms detailed in
Schedule A (“Social Media Channels”) by the
Assignee up to the Effective Date.
2.4 On or prior to the Effective Date, the Assignor
shall undertake the necessary steps to update the login
credentials and passwords to the Social Media
Channels to be of that Assignee and such that on and
from the Effective Date, such Social Media Channels
shall stand assigned and transferred to the Assignee.”
5. Further, on 22nd November, 2022 the Respondent No. 1 and 2 entered
into a further agreement wherein the Respondent No. 2 was engaged as the
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Digitally Signed
By:DEVANSHU JOSHI
Signing Date:06.05.2024
18:47:06
Chief Executive officer of Respondent No. 1 company for a remuneration of
Rs. 5 lakhs per month. The said agreement also recorded that the
Respondent No.2 has assigned his Intellectual Property rights in favour of
the Respondent No.1 company. Thereafter, an Investment Agreement was
th
executed on 29 November, 2022 wherein there were four parties i.e., the
Petitioner, on the one hand, and Respondent Nos. 1, 2 and 3, on the other
hand. As per this, the Respondent No.2 and 3 were the Directors in the
newly incorporated company-AMCP Edutech Pvt. Ltd. The Petitioner is
stated to have invested a sum of Rs. 4 crores in the said company and owned
40% of the shareholding.
6. However, owing to multiple breaches by the Respondent No. 2, such
as cancellation of classes, Testbook terminated the Faculty Agreement on
2nd December, 2023. Pursuant thereto, Testbook initiated arbitration
proceedings against Respondent No. 2 under the Faculty Agreement, which
is stated to be currently pending before ld. Sole Arbitrator Justice Rajiv
Sahai Endlaw (Retd).
7. Today, this application on behalf of Respondent No. 2 has been filed
seeking modification of order dated 26th April, 2024. The submission of ld.
Counsel for the Respondents is that the initial agreement i.e., the investment
agreement and all the related agreements have been superseded by the
Consultant Faculty Agreement dated 16th November, 2023. It is her
submission that all the AMCP IP also forms part of the said agreement under
Clause 1.12 i.e., the consultant faculty content. She submits that this
agreement acknowledges the ownership of the Respondents in the entire IP
but only recognises that the Petitioner is to be given a perpetual, irrevocable,
sub-licensable world-wide license to use, distribute royalty fee, sub-license,
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Digitally Signed
By:DEVANSHU JOSHI
Signing Date:06.05.2024
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modify the recorded videos included in AMCP IP under clause 11.5 and also
under clause 21.2. The relevant clauses are extracted as under:
“11.5 The Consultant Faculty shall and cause his
Relative(s)to grant to the Companies, a perpetual,
irrevocable, sub-licensable, worldwide license to use,
distribute, royalty free, sub-license, modify, reproduce
the recorded videos included in the AMCP IP.
xxx xxx xxx
21.2 The Consultant Faculty hereby covenants and
agrees that during the Term and for a period of 6
months following the expiry or termination of this
Agreement, he shall not, for whatever reason, either
individually or in partnership or jointly or in
conjunction with any person as principal, agent,
employee, shareholder, investor, partner or in any other
manner whatsoever, carry on or be engaged in or be
concerned with or interested in providing services for
any Competing Business”
8. A perusal of the consultant faculty agreement would show that the
nature of rights given by Mr. Abhinay Sharma in favour of
Testbook/Petitioner are extremely wide i.e., they are irrevocable, sub-
licensable, perpetual, world-wide license to any consultant faculty
content. Under copyright laws, such rights could constitute partial ownership
rights. This in effect means that the Petitioner as also AMCP which is a joint
venture can continue to use the intellectual property of AMCP including
Abhinay Maths and all the You Tube content, etc. The Respondent No.1-
AMCP Edutech Pvt. Ltd is itself a joint venture company wherein the
Respondent No.2-Abhinay Sharma has 60% stake and the Petitioner has
40% stake.
Signature Not Verified
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Digitally Signed
By:DEVANSHU JOSHI
Signing Date:06.05.2024
18:47:06
9. The Petitioner has admittedly, made an investment of Rs.4 crores and
the IP as captured in schedule A had to vest with the Respondent No.1. It is
in order to safeguard the investment of the Petitioner as also the IP
belonging to the joint venture that the interim order dated 26th April, 2024
was passed.
10. Today, a modification of the said order is being sought and pleadings
filed before the ld. Arbitrator who is appointed pursuant to the Consultant
Faculty Agreement are being relied upon. It is the submission of
Respondent No.1 that AMCP Edutech Pvt. Ltd does not have any IP in any
manner.
11. In the opinion of this Court, the IP belonging to the Joint Venture
company cannot be permitted to be diluted during the time when the
disputes are pending adjudication.
12. Parties are acceptable for all the disputes between the parties
including under the investment agreement and all connected agreements to
be referred to the same ld. Arbitrator. Accordingly, the petition is disposed
of with the following directions:
i. All disputes arising out of the term sheet dated 3rd October,
2022, the investment agreement dated 29th November, 2022,
prior deed of assignment dated 29th October, 2022, further
agreements like branding agreement dated 7th October, 2022,
consultancy agreement dated 15th November, 2022, copyright
licensing agreement dated 15th November, 2022 and any other
connected agreements between the parties shall stand referred
for adjudication to the ld. Sole Arbitrator Justice Rajiv Sahai
Endlaw who is already seized of the disputes between the
Signature Not Verified
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Digitally Signed
By:DEVANSHU JOSHI
Signing Date:06.05.2024
18:47:06
parties under the Consultant Faculty Agreement dated 16th
November, 2023.
ii. The interim order dated 26th April, 2024 shall continue till the
first date of hearing before the ld. Arbitrator.
iii. The present Section 9 petition under the Act shall be treated as
Section 17 application before the ld. Arbitrator and the
pleadings and the documents filed by the Respondents shall
also be considered as a reply to the said Section 17.
iv. Ld. Arbitrator may, after hearing ld. Counsel for the parties
pass appropriate/interim orders in the matter.
v. The fee of the Arbitrator under this Reference shall be governed
by the Fourth Schedule of the Arbitration and Conciliation Act,
1996.
13. Parties are free to seek any further reliefs before the ld. Arbitrator. Ld.
Arbitrator shall not be bound by any of the observations made by this Court
in the present petition.
14. List before the Arbitrator on 13th May, 2024.
15. The petition is disposed of. All pending applications are disposed of.
16. The next date of hearing is cancelled.
PRATHIBA M. SINGH
JUDGE
MAY 2, 2024
dj/bh
Signature Not Verified
O.M.P.(I) (COMM.) 124/2024 Page 7 of 7
Digitally Signed
By:DEVANSHU JOSHI
Signing Date:06.05.2024
18:47:06