Abandonment of Trade Marks of Companies in Liquidation and Limits of Company Court Jurisdiction: Commentary on
Mr. Boman R. Irani v. The Official Liquidator of M/s Ideal Jawa (India) Ltd. (in liquidation), Karnataka High Court, 27 November 2025

1. Introduction

The “Yezdi” judgment of the Karnataka High Court Division Bench (D.K. Singh J. and Venkatesh Naik T. J.) concerns a high‑value dispute over the iconic “YEZDI” motorcycle brand, arising in the liquidation of Ideal Jawa (India) Ltd. It sits at the intersection of company law, intellectual property law, and insolvency practice.

Ideal Jawa, once a prominent manufacturer of “Yezdi” motorcycles, was ordered to be wound up in 2001. Many years after cessation of business and sale of its tangible assets, disputes arose regarding the ownership and exploitation of the “YEZDI” trade marks. The central protagonists are:

• Mr. Boman R. Irani – son of the founder, ex‑director of Ideal Jawa, and later registered proprietor of several “YEZDI” trade marks.
• Classic Legends Pvt. Ltd. – a Mahindra group joint venture with Mr. Irani, which relaunched Yezdi‑branded motorcycles under licence from him.
• Official Liquidator (OL) – attached to the Karnataka High Court, in charge of Ideal Jawa’s winding up.
• Ideal Jawa (India) Employees’ Association – representing workmen claiming an interest in the brand’s value for satisfying unpaid dues.

A learned Single Judge in 2022 had taken an expansive view of the Company Court’s powers, declared Ideal Jawa (in liquidation) as owner of the “YEZDI” marks, voided registrations in favour of Mr. Irani, restrained him and Classic Legends from using the marks, and directed transfer of registrations to the OL. Twelve Original Side Appeals were preferred by Mr. Irani and Classic Legends.

The Division Bench, in a detailed and far‑reaching judgment, has reversed that decision. The Court’s ruling clarifies:

• When trade marks of a company in liquidation are treated as abandoned and cease to be in custodia legis;
• The limits of the Company Court’s jurisdiction under Section 446 of the Companies Act, 1956 vis‑à‑vis the Trade Marks Act, 1999;
• How goodwill in a mark interacts with prolonged non‑use and winding up; and
• How delay and inaction by the OL can fatally weaken the estate’s claim over intangible assets.

2. Summary of the Judgment

2.1 Procedural Context

The appeals arose out of a common order dated 16.12.2022 passed in:

• OLR No. 343/2015 – OL’s report seeking sanction to sell “YEZDI” brands, trade marks, logos, designs, know‑how and associated rights with goodwill;
• CA No. 71/2018 – OL’s application to declare the trade mark registrations obtained by Mr. Irani as null and void;
• CA Nos. 125–128/2020 – Employees’ Association’s applications to:
  • implead itself,
  • restrain Mr. Irani from using marks allegedly belonging to Ideal Jawa,
  • direct OL and Registrar of Trade Marks to revoke/cancel registrations in favour of Mr. Irani and record Ideal Jawa as owner, and
  • prevent any further registrations of “YEZDI” marks in favour of third parties;
• OLR No. 343/2015 and CA Nos. 304/2021 & 308–312/2021 – Classic Legends’ impleadment applications as exclusive licensee of “YEZDI”.

The Single Judge had:

• Declared Ideal Jawa the owner of the “YEZDI” word and device marks;
• Declared all registrations in favour of Mr. Irani null and void;
• Injuncted Mr. Irani and Classic Legends from using “YEZDI” or any mark containing “YEZDI”;
• Directed the Registrar of Trade Marks to:
  • cancel registrations in Mr. Irani’s name; and
  • transfer them to Ideal Jawa (through the OL);
• Permitted OL to sell the trade marks and associated goodwill by public auction; and
• Directed Mr. Irani and Classic Legends to account for and pay over profits, and to pay costs of ₹10 lakhs each.

2.2 Questions Framed by the Division Bench

The Division Bench crystallised six core questions (¶66):

1. Could the trade marks registered in Ideal Jawa’s name and used since 1969 be treated as in custodia legis from the date of the winding‑up petition?
2. Were the company’s trade marks illegally removed from the Trade Marks Register for want of O‑3 notice to the OL?
3. Were Mr. Irani’s applications for registration (2013 onwards) and his 1998 registration of the domain www.yezdi.com contrary to the Companies Act?
4. Did non‑disclosure of trade marks in the Statement of Affairs by ex‑director Mr. Irani constitute mala fides or violation of Sections 454 and 468 of the Companies Act?
5. Did the trade marks and goodwill in “YEZDI” continue to subsist in favour of Ideal Jawa despite cessation of production since 1996?
6. Could the Company Court, exercising Section 446 powers, declare registered trade marks illegal and direct their cancellation/transfer by the Trade Marks Registry?

2.3 Key Holdings

The Division Bench answered all material questions in favour of the appellants (Mr. Irani and Classic Legends) and set aside the Single Judge’s order in toto. In essence:

• Abandonment: Ideal Jawa’s trade marks, unused since 1996 and not renewed for over 15 years, stood abandoned. They could not indefinitely remain in limbo or be treated as assets in custodia legis (¶67–69, ¶95–98).
• O‑3 Notices & Restoration: Even if O‑3 renewal notices were not served on the OL, the OL failed to seek restoration within the one‑year window under Section 25(4) of the Trade Marks Act. Hence, the legality of removal became irrelevant; the marks could not be restored (¶70–76).
• Irani’s Registrations & Domain Name: Once the company’s marks had lapsed and been abandoned, Mr. Irani was entitled, like any third party, to apply for and obtain new registrations following due process. His registration of www.yezdi.com in 1998 and subsequent trade mark registrations were not contrary to the Companies Act or Trade Marks Act (¶80–81).
• No Mala Fides in Statement of Affairs: The omission of “YEZDI” trade marks in the Statement of Affairs signed by Mr. Irani in 2004 was not mala fide or in violation of Sections 454 or 468. By then, the OL, valuer, and secured creditor had already treated “all assets” as sold without valuing or even identifying the mark as an asset (¶82–86).
• No Surviving Goodwill for Ideal Jawa: On the specific facts—30 years of no business, 15+ years of non‑use and non‑renewal, and sale of all assets—the Court held that goodwill in the “YEZDI” marks did not survive in favour of Ideal Jawa (¶87–98).
• Jurisdictional Limits of Company Court: Section 446 does not empower the Company Court to act as a rectification forum under the Trade Marks Act. Questions of validity, cancellation, or transfer of registered marks fall within the exclusive statutory scheme of the Trade Marks Act and its designated fora. The directions declaring Mr. Irani’s registrations void and ordering their transfer to Ideal Jawa were held to be without jurisdiction (¶99–107).

Consequently, the appeals were allowed, the Single Judge’s judgment was set aside, and all reliefs granted against Mr. Irani and Classic Legends were vacated (¶110).

3. Factual Background and Litigation History

3.1 Origin of the “YEZDI” Brand and Corporate Structure

• Ideal Jawa (India) Ltd. was incorporated by Mr. Rustom S. Irani, father of appellant Boman R. Irani (¶4).
• According to Mr. Irani, the word “YEZDI” was derived from a place in Persia (now Iran) from which the family migrated, and was licensed by Rustom Irani to Ideal Jawa as the brand name for motorcycles (¶4).
• Ideal Jawa used and registered several “YEZDI” trade marks in Class 12 (motor vehicles), including:
  • TM No. 283322 – “YEZDI” (device), registered 05.10.1972 (¶5);
  • TM No. 360450 – “YEZDI D 250 CLASSIC” (¶14);
  • TM No. 259903 – another variant of “YEZDI” (¶18, ¶47).
• Parallelly, family members set up “Yezdi Distilleries” in Mysuru (circa 1970–71), where “YEZDI” was registered as a trade mark in relation to alcoholic products, with Mr. Irani’s mother, Mrs. Porochee Irani, recorded as proprietor (¶6, ¶34).

3.2 Financial Distress and Winding Up of Ideal Jawa

• Three creditors—Tide Water Oil Co. (India) Ltd., IOL Ltd., and Addisons Paints & Chemicals Ltd.—filed winding‑up petitions (C.P. Nos. 76/1991, 5/1992, 126/1992) (¶7).
• Ideal Jawa’s production and use of “YEZDI” trade marks ceased in 1996 (¶7, ¶25).
• The Board for Industrial and Financial Reconstruction concluded rehabilitation was impossible, recommending winding up (¶7).
• The Karnataka High Court ordered winding up on 17.08.2001, appointing the Official Liquidator (¶8).

3.3 Sale of Assets and Treatment of the Trade Marks

• Secured creditor Indian Overseas Bank (IOB) was allowed to sell all assets of Ideal Jawa in association with the OL (¶9, ¶83).
• A registered valuer appointed in 2003 valued the “entire assets” of the company at ₹23 crores. The Valuation Report did not list “YEZDI” trade marks as assets (¶9, ¶27, ¶84).
• Public notice in The Economic Times (28.07.2003) invited tenders for sale of “all movable and immovable assets”; again, “YEZDI” marks were not specifically identified (¶9, ¶27).
• The Company Court, by order dated 10.10.2003 in OLR No. 485/2003, accepted an offer by one Mr. Aquil Qureshi to purchase the entire assets for ₹26.70 crores, culminating in a Sale Certificate dated 07.03.2006 (¶9–11).
• Mr. Boman Irani signed the Statement of Affairs on 19.01.2004, based on records filed with ROC. The trade marks were not shown as separate assets; the OL already had access to all records (¶10, ¶34, ¶82–84).

3.4 Lapse of Ideal Jawa’s Trade Mark Registrations

• Relevant registrations expired and were not renewed:
  • TM No. 283322 – expired 05.10.2007 (¶12–13);
  • TM No. 360450 – expired 07.04.2008 (¶12, ¶14);
  • Other marks likewise lapsed around 2013–2014 (¶15).
• O‑3 renewal notices under Section 25(3) / Rule 64 were issued by the Trade Marks Registry to Ideal Jawa through its then trade mark agents, Shah & Shah, at two Mumbai addresses (¶12, ¶14, ¶48–49).
• No renewal applications were filed by the company or OL; relevant marks were removed from the Register (¶13, ¶15, ¶49–51).

3.5 Mr. Irani’s Use and Registration of “YEZDI”

• Since about 1998, Mr. Irani operated www.yezdi.com as a brand‑centric website and fan platform (¶7, ¶31, ¶54).
• In 2013–2014, he filed several trade mark applications for “YEZDI” word and device marks in Classes 12 and related classes before the Delhi, Mumbai, and Ahmedabad registries (¶16).
• On discovering an application by one Amit Soni to register “YEZDI”, Mr. Irani filed a suit before the Delhi High Court (CS(OS) No. 3476/2014) and obtained an injunction (¶15).
• On 08.01.2015, Mr. Soni assigned his application (No. 2549874) to Mr. Irani via an Assignment Deed, and the Delhi suit was decreed in terms of the settlement (03.02.2015) (¶16).
• On 17.06.2015, Classic Legends Pvt. Ltd. was incorporated as a joint venture between Mahindra & Mahindra and Mr. Irani (¶17).
• By a Trade Mark Licence Agreement dated 01.02.2018, Mr. Irani granted Classic Legends an exclusive licence to use “YEZDI” marks for motorcycles (¶20, ¶55). Classic Legends subsequently invested heavily in product development, marketing, and relaunch of Yezdi motorcycles (¶22, ¶104).

3.6 OL’s Discovery and Subsequent Proceedings

• On 28.08.2015—about 14 years after the winding‑up order and 12 years after sale of tangible assets—the OL wrote to various Trade Marks Registries asserting that Ideal Jawa purportedly owned certain “YEZDI” marks and cautioning against registering them in anyone else’s name (¶18).
• The Registries responded in September and October 2015, pointing out deficiencies in details and advising the OL to avail statutory remedies, such as opposition (s.21) or rectification (¶19).
• On 18.09.2015, OL filed OLR No. 343/2015 seeking:
  • sanction to sell “YEZDI” brands, trade marks, logos, product designs, know‑how, and associated rights with past and future goodwill; and
  • approval of draft sale notices (¶2(i), ¶19, ¶46).
• In 2016, Mr. Irani applied (CA No. 586/2016) to implead himself in OLR 343/2015; this was allowed in 2017 (¶2(viii), ¶39).
• On 07.04.2016, the Registrar of Trade Marks filed an affidavit stating, inter alia:
  • certain records had been lost in floods;
  • “YEZDI” (word) still appeared as registered in Ideal Jawa’s name; and
  • orders of the High Court would bind the Registry (¶50).
• Between 2016 and 2017, despite OL’s caution letters, trade mark registrations were granted in favour of Mr. Irani (¶55).
• OL filed CA No. 71/2018 seeking declaration that registrations in Mr. Irani’s name were null and void (¶20, ¶56).
• Employees’ Association filed rectification applications before the Trade Marks authorities and CAs 125–128/2020 before the Company Court, seeking wide for reliefs including revocation of Mr. Irani’s marks, direction to OL to act, and injunctive relief against use of “YEZDI” (¶21).
• On 05.10.2021, the Single Judge directed Mr. Irani and Classic Legends to:
  • maintain accounts of “YEZDI” usage; and
  • not assign/transfer the marks;
  but did not injunct ongoing use (¶23).

  3.7 The Single Judge’s 2022 Order (Later Set Aside)

  By order dated 16.12.2022, the Single Judge granted sweeping reliefs in favour of the OL and Employees’ Association (¶23). The core findings were:

  • Ideal Jawa remained owner of “YEZDI” word and device marks;
  • Trade mark registrations in Mr. Irani’s name were void; his conduct was tainted by bad faith and breach of fiduciary duty;
  • Company Court had jurisdiction under Section 446(2) to:
    • declare the registrations void; and
    • direct cancellation and transfer to Ideal Jawa;
  • Boman Irani and Classic Legends were injuncted from using the marks, ordered to account for profits, and saddled with costs.

  It is this order that the Division Bench has now reversed.

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  4. Detailed Analysis

  4.1 Trade Marks in Liquidation: Custodia Legis and Abandonment

  4.1.1 Are Trade Marks of a Wound‑up Company Perpetually in Custodia Legis?

  Section 456 of the Companies Act, 1956 declares that upon a winding‑up order:

  • the liquidator must take into custody or control all property, effects, and actionable claims to which the company is or appears to be entitled (s.456(1)); and
  • all the property and effects of the company are deemed to be in the custody of the Court (s.456(2)) (¶77–78).

  The OL argued that since “YEZDI” was registered at the time of winding up (2001), the trade marks and their goodwill remained in custodia legis, and any subsequent registration or disposition without leave of the Court was void under Section 536(2).

  The Division Bench, however, distinguished between:

  • tangible property (land, plant, machinery), which automatically and statically fall into the Court’s custody; and
  • intangible property such as trade marks and goodwill, whose very existence depends on continued use and statutory renewal.

  The Court held that trade mark rights are inherently conditional and cannot exist “indefinitely in limbo” (¶67–69). Once:

  • the company ceased all use of the mark (since 1996); and
  • no steps were taken for renewal or protection for over 15 years after winding up,

  the company’s rights stood abandoned. When a trade mark is abandoned, it no longer remains “property” that the company is “entitled to” or “appears to be entitled to” for the purposes of Section 456.

  4.1.2 Reliance on Thapsons and National Bell

  The Court relied significantly on:

  • M/s Thapsons Pvt. Ltd. v. Ashoka Food Industries, AIR 1992 Del 11; and
  • National Bell Co. v. Metal Goods Mfg. Co. (P) Ltd., AIR 1971 SC 898,

  to emphasize that:

  • non‑renewal of registration extinguishes the status of a person as a “registered proprietor” (¶68);
  • a trade mark and its distinctiveness may be lost by:
    • extensive piracy leading to the mark becoming publici juris; or
    • abandonment by the proprietor’s inaction;
  • for passing off, the essential elements are:
    • distinctive features of the trade mark,
    • substantial user, and
    • wide reputation.
    These were not present for Ideal Jawa post‑1996 (¶68).

    Applying these principles, the Bench concluded it was “a case of abandonment” by Ideal Jawa and the OL (¶69, ¶78).

    4.2 O‑3 Notices, Restoration, and the OL’s Inaction

    4.2.1 Statutory Scheme Under Section 25 of the Trade Marks Act

    Section 25 of the Trade Marks Act, 1999 governs duration, renewal, removal, and restoration:

    • Sub‑section (3): Registrar must send O‑3 notice, before expiry, to the registered proprietor, indicating expiry date and renewal conditions. If these are not complied with, the Registrar may remove the mark from the Register (¶70–71).
    • Sub‑section (4): Where a mark is removed for non‑payment of fees, the proprietor may, after six months and within one year from the last registration’s expiry, apply for restoration and renewal upon payment of prescribed fee. This temporal window is rigid (¶72–74).

    The OL argued that:

    • O‑3 notices were not served on him (the OL), but only on the old trade mark agent; and
    • this breach of Section 25(3) rendered removal illegal and justified restoration at any time.

    4.2.2 Service on Agent and the Effect of Limitation

    The Court noted that:

    • The Registrar had served O‑3 notices on Shah & Shah, the registered agents, at addresses on record (¶48–49).
    • Under Rule 21 of the Trade Marks Rules, 2002, service on the agent is deemed service on the proprietor (¶76).

    Crucially, the OL:

    • never filed any application for restoration under Section 25(4); and
    • waited well beyond the one‑year restoration window and indeed beyond 10–15 years after expiry (¶74, ¶78).

    Relying on United Spirits Ltd. v. IPAB, 2011 SCC OnLine Cal 4307 (¶75), the Bench held:

    Even if the marks had been illegally removed for non‑compliance with Section 25(3), they could not be restored once the restoration applications were time‑barred. The legality of removal becomes irrelevant when limitation for restoration has expired.

    Therefore, the OL’s failure to act within the statutory window was fatal. The OL’s argument that defective service preserved rights indefinitely was rejected.

    4.3 Boman Irani’s Conduct: Fiduciary Breach or Lawful Re‑appropriation?

    4.3.1 Allegations of Suppression and Misfeasance

    The OL and Employees’ Association argued that:

    • Ex‑management had renewed one of the “YEZDI” marks in 2000 (after cessation of operations), showing they valued it as an asset;
    • Mr. Irani, as director, knew of the marks but suppressed their existence from the OL, failing to mention them in the Statement of Affairs (¶82); and
    • His subsequent personal registration of “YEZDI” marks while the company was in liquidation was a breach of fiduciary duties to creditors and employees (¶52–57).

    4.3.2 The Court’s Evaluation

    The Court took a contextual, chronological view (¶83–84):

    • By the time Mr. Irani signed the Statement of Affairs (19.01.2004):
      • the OL had been in control since 2001;
      • a valuer, working with the OL and IOB, had already valued “entire assets”;
      • the advertisement for sale of “all movable and immovable assets” had been published (July 2003); and
      • the Court had accepted the sale of “entire assets” in favour of Aquil Qureshi (10.10.2003).
    • All books and records were with the OL and available to the valuer; if the trade marks were not even identified as assets by the OL and valuer, Mr. Irani’s omission could not be singled out as mala fide.

    Section 454 requires a truthful Statement of Affairs but does not transform the director into the sole custodian of information when the OL already has the full books. Section 468 empowers the Court to direct delivery of assets to the liquidator, but no such direction was made in respect of trade marks until the impugned Single Judge’s order—long after abandonment and third‑party registrations (¶86).

    Accordingly, the Bench held there was no violation of Sections 454 or 468 by Mr. Irani (¶84–86). His subsequent registration of marks, after abandonment and lapse, did not amount to a “disposition” of company property in contravention of Sections 456, 457, or 536(2) (¶36, ¶80–81).

    4.3.3 Website and Trade Mark Applications

    The Bench also rejected the suggestion that registering www.yezdi.com in 1998 or filing trade mark applications from 2013 onwards was clandestine or undermined the liquidation (¶80–81):

    • The website had been live since 1998 and was publicly accessible;
    • Trade mark applications are published in Trade Marks Journals and open to opposition by “any person”;
    • Mr. Irani followed the statutory process and obtained registrations in due course.

    Once Ideal Jawa’s rights had lapsed and been abandoned, Mr. Irani was in no worse position than any other member of the public and thus free—legally—to appropriate and revive the mark.

    4.4 Goodwill and Non‑Use: Does Goodwill Survive Indefinite Business Cessation?

    4.4.1 OL’s and Employees’ Argument

    The OL and Employees’ Association advanced a nuanced goodwill‑based argument (¶42–44, ¶62–63):

    • Goodwill is a distinct, valuable property right, protectable independently of registration through passing off;
    • Mere cessation of business does not automatically extinguish goodwill or trade mark rights;
    • The enduring popularity of Yezdi motorcycles, fan pages, rider groups etc., showed that goodwill remained attached to Ideal Jawa as source;
    • Mr. Irani’s own pleadings in his impleadment application and earlier suits acknowledged that Yezdi’s reputation “continued” despite cessation of manufacture;
    • It was this goodwill that Classic Legends and Mahindra sought to monetise; hence the benefit should flow to the company’s creditors and employees, not to Mr. Irani personally.

    4.4.2 The Court’s Qualified Acceptance of the Principle

    The Bench accepted the general legal principle that:

    • “Mere cessation of business or stoppage of operation does not destroy the goodwill of a trade mark” (relying on R.R. Oomerbhoy Pvt. Ltd. v. Court Receiver, 2003 (5) MhLJ 372, ¶31–32; ¶88);
    • Goodwill is protectable under common law as a facet of passing off (s.27(2), Trade Marks Act);
    • Abandonment is not to be lightly inferred and must be strictly proved (relying also on Hardie Trading Ltd. v. Addisons Paint & Chemicals Ltd., (2003) 11 SCC 92, ¶47, 60–63).

    However, it stressed that whether goodwill subsists is fact‑sensitive. In this case:

    • Ideal Jawa had not manufactured or sold any Yezdi motorcycle since 1996;
    • No mark was renewed after expiry; several marks had been removed from the Register;
    • No business operations of any kind had been conducted by Ideal Jawa for nearly three decades by the time the dispute reached final hearing;
    • All tangible assets had long been sold without any reference to trade marks or valuation of intangible assets (¶89–90, ¶96–98).

    4.4.3 Comparative and Indian Authorities on Goodwill and Abandonment

    The Court drew on both Indian and foreign authorities:

    • Neon Laboratories Ltd. v. Medical Technologies Ltd., (2016) 2 SCC 672 – emphasising that the Trade Marks Act does not permit “hoarding or appropriation without utilisation” of marks, and prolonged non‑use may amount to abandonment; the “first in market” test and continuous use principles were highlighted (¶93).
    • Uncas Manufacturing Co. v. Clark & Coombs Co. – where abandonment under US law was found based on non‑use and lapse of control (¶94(i)).
    • Sutton Cosmetics (P.R.) Inc. v. Lander Co. Inc. – where the court discussed whether the first user of an abandoned mark automatically inherits prior secondary meaning. The Karnataka HC noted the caution that mere first use after abandonment does not carry over secondary meaning built by prior proprietor (¶94(ii)).
    • Star Industrial Co. Ltd. v. Yap Kwee Kor, (Privy Council, 1976) – holding that once a proprietor has ceased business in a jurisdiction and no longer trades there, its goodwill perishes and no passing off action lies (¶94(iii), ¶101(ii)).
    • CIT v. Chunilal Prabhudas & Co., 1969 SCC OnLine Cal 85; LIC v. Asia Udyog (P) Ltd., ILR 1982 Delhi 582; and others emphasising that goodwill is inseparable from the carrying on of business and does not survive in vacuo (¶98, ¶101).

    Synthesising these, the Court formulated a clear proposition (¶95–98, emphasis added):

    • Goodwill is directly proportional to the strength and continuity of the business to which it is attached.
    • Goodwill cannot exist in vacuum for years after the business has ceased and there is no genuine intention to resume.
    • When a company:
      • stops all business,
      • does not use its trade marks for decades,
      • fails to renew registrations,
      • takes no action to protect its marks against third parties, and
      • sells all its assets without even identifying the marks as assets,
      the goodwill in the mark is extinguished.

    On the facts, therefore, Ideal Jawa’s goodwill in “YEZDI” had died. Any goodwill now associated with “YEZDI” was the result of Mr. Irani’s and Classic Legends’ post‑registration efforts—especially via the website and the new product line—not residual corporate goodwill of Ideal Jawa (¶33–34, ¶89–90).

    4.5 Company Court’s Jurisdiction Under Section 446 vs the Trade Marks Act

    4.5.1 Breadth of Section 446(2)

    Section 446(2) of the Companies Act empowers the Company Court to entertain or dispose of, among other things:

    • “any suit or proceeding by or against the company” (s.446(2)(a));
    • “any claim made by or against the company” (s.446(2)(b)); and
    • “any question whatsoever … which may relate to or arise in the course of winding up” (s.446(2)(d)).

    The Single Judge relied on this to justify:

    • adjudicating on validity of Mr. Irani’s registered marks; and
    • directing the Trade Marks Registry to cancel and transfer registrations.

    The Division Bench acknowledged the philosophy behind Section 446 as explained by the Supreme Court in SUDARSHAN CHITS (I) LTD. V. O. Sukumaran Pillai, (1984) 4 SCC 657 (¶99, quoting ¶8–9 of that case):

    • to avoid multiplicity of suits;
    • to simplify and expedite realisation of assets; and
    • to provide a cheap, summary remedy within the winding‑up court.

    However, it emphasised that Section 446(2) must be read harmoniously with special statutes such as the Trade Marks Act (¶40–41, ¶99–107).

    4.5.2 Exclusive Scheme of the Trade Marks Act for Validity/Rectification

    Drawing on Patel Field Marshal Agencies v. P.M. Diesels Ltd., (2018) 2 SCC 112 (¶106), the Court underscored:

    • All questions regarding validity of registration and rectification of the register must be decided only by the statutory authorities under the Trade Marks Act (Registrar, High Court/IPAB).
    • Civil courts (and, by extension, company courts) are not empowered to directly adjudicate validity of registration.
    • Where invalidity is raised as a defence in a civil suit, the court must frame an issue and then refer parties to the rectification forum; it cannot decide rectification itself.

    The Division Bench analogised this to the Company Court: even if issues about trade marks arise “in the course of winding up”, the forum for deciding validity and rectification remains the same—Registrar/IPAB under the Trade Marks Act. Section 446 cannot be construed as conferring a parallel rectification jurisdiction on the Company Court.

    4.5.3 Limits Illustrated by Embassy Property

    The Bench also drew support from EMBASSY PROPERTY DEVELOPMENTS Pvt. Ltd. v. State of Karnataka, 2019 SCC OnLine SC 1542 (¶105). In that case, the Supreme Court had held:

    • the NCLT’s broad power over matters “arising out of or in relation to the insolvency resolution” (IBC s.60(5)(c)) does not extend to public law disputes under other statutes (like MMDR Act), especially where those issues are reserved to specialised fora or subject to judicial review under Article 226;
    • specialised tribunals under the IBC cannot usurp all jurisdiction concerning the corporate debtor, especially where the subject matter (e.g., mining leases) is governed by distinct statutory regimes.

    Analogously, the Karnataka High Court reasoned that the Company Court’s Section 446 jurisdiction cannot be stretched to:

    • declare registered trade marks “null and void”; or
    • order the Trade Marks Registry to cancel and transfer registrations,

    thereby short‑circuiting or bypassing the statutory scheme of the Trade Marks Act (¶99–107).

    4.5.4 Role of OL as Officer of the Court vs Nature of Trade Marks

    The OL argued that his inaction could not be held against the company, as he is merely an officer of the Court and any failure should not result in loss of company’s rights. The Court disagreed in the context of trade marks (¶78, ¶103, ¶108–109):

    • Trade marks and goodwill, unlike land or machinery, are fragile rights that depend on continuous use and statutory formalities.
    • Both the company’s and the OL’s prolonged inaction resulted in abandonment; the law does not preserve trade mark rights in perpetuity merely because the company is in liquidation.
    • Section 47(3)’s “special circumstances” defence (e.g., war, import bans) is not a private shield for a particular entity’s internal financial or procedural constraints; it addresses trade‑wide or market‑wide impediments (¶59–60, ¶109).

    Therefore, the OL could not rely on his own failure as a “special circumstance” to prevent abandonment or to justify ultra vires rectification within the Company Court.

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    5. Complex Concepts Simplified

    5.1 What is “Custodia Legis” in Corporate Liquidation?

    “Custodia legis” means “in the custody of the law”. Under Section 456(2) of the Companies Act, once a winding‑up order is made, all property and effects of the company are deemed to be in the custody of the Company Court.

    However, this case clarifies that:

    • Only those rights and interests that legally continue to exist can be in custodia legis.
    • If a right (like a trade mark) has been abandoned or has legally expired (for want of renewal and use), it ceases to be property of the company and cannot be treated as in the Court’s custody.

    5.2 Trade Mark “Abandonment” vs Mere Non‑use

    Under trade mark law:

    • “Non‑use” alone, for a certain period (e.g., 5 years under s.47), can be a ground to remove a registered mark if a “person aggrieved” applies;
    • “Abandonment” is a more fundamental concept: it means the proprietor has effectively given up the mark and has no intent to resume use.

    Courts look at factors like:

    • duration of non‑use;
    • failure to renew or protect the mark;
    • absence of any genuine intention or steps to resume business; and
    • conduct indicating loss of interest in the mark.

    In this case, the Court held that 15+ years of non‑use, no renewal, no enforcement, and sale of all assets without mentioning the brand amounted to abandonment.

    5.3 Goodwill: Can It Survive After Business Stops?

    “Goodwill” is the attractive force that brings in custom—essentially the reputation of a business and its brands. It is legally recognised as a form of property.

    However:

    • Goodwill is attached to a going concern—it travels with the business or with a line of business (e.g., a brand with ongoing products/services).
    • If all business under a brand stops permanently, with no intention to resume, goodwill gradually dissipates.
    • Over a short time, goodwill may survive even if operations pause (e.g., temporary closure). Over decades, with no activity or intent, goodwill normally dies.

    Here, Ideal Jawa had no operations since 1996, no new Yezdi bikes, no marketing, and no protection of the mark. The Court held that any goodwill now associated with “YEZDI” derived from the new endeavours of Mr. Irani and Classic Legends.

    5.4 Section 446 Jurisdiction vs Trade Marks Act Remedies

    Section 446 gives the Company Court wide control over proceedings “by or against” the company during winding up. But when the dispute concerns trade mark registration, a different law—the Trade Marks Act—applies.

    The Trade Marks Act sets out specific procedures and authorities for:

    • granting registrations (Registrar);
    • rectifying the register; and
    • challenging validity.

    The Company Court cannot:

    • cancel or transfer a registered trade mark directly; or
    • act as a substitute for the Registrar or IPAB/High Court on these questions.

    If the company believes a mark registered in someone else’s name is invalid, its remedy is to use:

    • opposition proceedings (s.21), if still pending; or
    • rectification/cancellation proceedings (ss.47, 57) before the statutory forum.

    5.5 Role and Duties of the Official Liquidator vis‑à‑vis Intangible Assets

    The OL must:

    • identify all assets, including intangible assets like trade marks, patents, copyrights, and goodwill;
    • take timely steps to preserve, renew, and monetise them; and
    • act in the best interests of creditors and contributories.

    But if the OL allows:

    • registrations to lapse,
    • marks to be unused for long periods, and
    • makes no effort to protect or revive rights,

    then, as this judgment demonstrates, courts may hold that the marks have been abandoned and cease to belong to the liquidation estate.

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    6. Impact and Implications

    6.1 For Insolvency and Liquidation Practice

    • Urgency in Dealing with IP: Official liquidators must swiftly audit and protect intellectual property. Delay of the kind seen here (over a decade) can lead to complete loss of the estate’s rights.
    • Valuation of Intangible Assets: Valuation exercises in liquidation must explicitly consider trade marks and goodwill. Failure to list and value such intangibles may later be deemed conduct consistent with abandonment.
    • Section 446 is not a Cure‑all: Company Courts cannot resurrect lapsed or abandoned marks by relying on their general jurisdiction under Section 446. They must work within the Trade Marks Act framework.
    • Limitation and Statutory Time Bars: Restoration under Section 25(4) must be sought within one year from expiry; OLs cannot bypass this by invoking alleged irregularity in O‑3 notice service many years later.

    6.2 For Corporate Directors and Promoters

    • Post‑liquidation Constraints: Directors of companies in liquidation cannot appropriate active assets of the company. But where assets (like marks) have legally lapsed and been abandoned, they may lawfully re‑enter the field as any third party would.
    • Fiduciary Duties During Insolvency: The judgment does not dilute directors’ fiduciary duties in general; rather, it holds that on these specific facts, there was no surviving company right for Mr. Irani to usurp. In a different fact pattern (e.g., where OL is actively using/protecting marks), similar conduct may still be held to be a breach.
    • Transparency Still Advisable: Despite the outcome, ex‑directors should be cautious in dealing with heritage brands associated with insolvent companies, and should maintain transparency to avoid allegations of bad faith.

    6.3 For IP Law and Brand Strategy

    • “Heritage” Brands: This ruling sends a clear message: if a heritage brand is to be preserved for creditors or revival, steps must be taken during and not decades after cessation.
    • Non‑Use and Abandonment: The judgment reinforces the Supreme Court’s view in Neon Laboratories that the Trade Marks Act disfavors hoarding; even registered proprietors cannot sit on marks without using them.
    • Re‑branding Opportunities: Once a corporate mark is abandoned and falls into the public domain, third parties, including former promoters, may lawfully seek registration, subject to general constraints (e.g., bad faith, passing off against continuing users).

    6.4 For Employees and Other Creditors

    • Limited Recourse to Intangible Value: Employees had hoped the iconic Yezdi brand could be monetised to satisfy unpaid dues. This judgment shows that if IP has not been protected timely, such hopes may be unrealistic.
    • Need for Early Vigilance: Creditors and employee associations should be proactive in:
      • pressing OLs to secure and value IP; and
      • participating early in legal strategies involving brands and intangible assets.

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    7. Conclusion

    The Karnataka High Court’s Division Bench has reshaped the legal landscape concerning trade marks of companies in liquidation, especially where there is long‑term non‑use and administrative inaction.

    The key doctrinal contributions are:

    • Abandonment of corporate trade marks: Where a company has ceased using its trade mark for decades, failed to renew registrations, taken no steps to protect the mark, and even sold all assets without listing the brand, the trade mark and associated goodwill are treated as abandoned and no longer in custodia legis.
    • Interplay of limitation and defective notice: Even an irregular removal of a mark for non‑renewal cannot be undone if the proprietor or OL fails to seek restoration within the strict one‑year limit under Section 25(4) of the Trade Marks Act.
    • Jurisdictional boundaries: Section 446(2) of the Companies Act, while broad, does not confer rectification or cancellation powers over registered trade marks. Validity and rectification remain within the exclusive domain of the Trade Marks Act and its designated fora.
    • Goodwill’s dependency on business activity: Goodwill does not survive indefinitely in a vacuum; it requires continuing business activity or a genuine, demonstrable intention to resume trade. Long‑term non‑use without such intention extinguishes goodwill.

    On the facts, the Court concludes that:

    • Ideal Jawa’s rights in “YEZDI” had been irrevocably lost through abandonment and statutory lapse;
    • the OL’s belated attempt to reclaim and monetise the brand was legally unsustainable; and
    • Mr. Boman Irani’s subsequent registrations and licensing of “YEZDI” to Classic Legends were not contrary to the Companies Act or Trade Marks Act.

    This judgment thus serves as a cautionary tale to Official Liquidators and stakeholders: intangible assets like trade marks require active, timely stewardship during insolvency. If allowed to languish, the law will treat them as abandoned, and successors who lawfully register and revive such marks will be entitled to the fruits of their efforts, even if they were once associated with the defunct company.