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The application process of obtaining a trademark and assignment of a trademark as an individual entrepreneur can be seen as daunting due to the number of documents one needs to take care of, and it's often tricky to find information about the proper procedure. However, with this blog article, you'll know everything about the stamp duty for trademark assignment.

 Stamp Duty for Trademark Assignment:   Trademark assignment is the process of handing over trademark rights to someone else in order to use the same trademark. Sometimes, this switch can help your firm increase or improve its perspective and market share.

Table of Contents

Types of Trademark Assignment:

Partial assignment:.

Partial trademark assignment is when the trademark owner assigns part of the trademark to another business. It allows the business to receive legal protection until it becomes a complete trademark and ownership transfer happens. The retailer may use both pieces of information in advertisements to promote their company and verify that they are not breaking any laws.

Complete Assignment:

In a complete assignment, the assignee owns every right to sell, and earn royalties on the trademarks assigned to them.

With goodwill trademark assignment, the power of a registered trademark is assigned to someone else. The party that receives the assignment is named as the assignee on the trademark registration. Once a trademark is assigned with goodwill, it may be transferred or used by anyone. 

Without Goodwill:

Under these trademark assignments, only the trademark is transferred and not the brand value. And the assignor must use the trademark for any of their other businesses.

Applying Trademark Application

To apply for a trademark online in India, you need to create an account with the Trademark Registrar. After creating your account, you will need to identify your goods and services and provide relevant information such as the name of your company and the type of mark you are filing for. The Trademark Registrar offers a variety of documents to support your application, such as a drawing of your proposed mark, an affidavit of use or intent to use the mark in commerce, and proof of ownership of the mark. You will also be required to pay a filing fee and submit a verified original signature. Once your application is filed, it will be sent to an examiner who will decide whether to allow your mark into circulation. If your application is approved, you will receive a registration certificate that includes the symbol ® and identifying information.

Fees and Payments

To apply for a registered trademark online, you’ll need to pay the applicable filing fee and send in your application. Here’s a breakdown of what you’ll need to pay: 

• If you are not a start-up, small enterprise, or individual you will have to pay ₹ 9,000 for lodging an application electronically and ₹10,000 if you file in person with the Trademark Registrar.
• Individuals, small enterprises, or startups must file with the TM application by paying a fee of ₹ 4,500 for e-filing or ₹5,000 for filing by hand
• Based on the type of TM applied as per the stamp duty act, one needs to pay 5% stamp duty per TM application or assignment submitted

Forms of Identification

When applying for a registered trademark, it is important to have the appropriate forms of identification ready. There are a few different options available, and each has its own set of requirements:

• The first option is to submit a filing affidavit with your application. This document must be signed by the owner or owner’s representative and verified by an independent expert. The affidavit must include information such as the trademark’s logo, description, and date of first use. In addition, you must list the names and addresses of all owners or holders of rights to the mark.
• Another option is to submit an application containing only documents that establish trademark ownership. This document must include a copy of the registration of trademark certificate or a declaration from the entity claiming ownership that it is the true owner of the mark. The application must also include a statement from the applicant confirming that he or she is authorized to use the mark. Finally, you must provide contact information for any authorized representatives.

If neither of these options meets your needs, you can submit an application containing only extracts from previously filed documents. This document must include a statement confirming that you are copying copyrighted material without permission.

Benefits of Trademark Registration:

The benefits of trademark ownership can vary greatly depending on individual needs. Registering your mark, however, will help protect your financial and intellectual property rights. For beginning business owners that are not already familiar with trademark law, the process may seem a bit complicated and confusing to begin with.

If you are looking to apply for a registered trademark online and understand the fees involved, this article explains it all in detail. The process is relatively easy. Just go to the Trademark Registrar, fill out an application form, and pay the applicable fees. You will then need to send in citations of where your mark is currently being used, as well as additional documents if requested by the Trademark Registrar. Once the application is complete, you will be given details on when to send in your trademark registration certificate. 

Also, Read:

• How Are Trademarks Selected and Ownership ?
• Document Required for Assignment of Trademark
• How Do I Assign a Registered Trademark ?

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Assignment Licencing of Trademarks

Assignment of trademarks:.

Assignment of a trademark occurs when the ownership of Registered/Unregistered Trademark is transferred from one party to another party whether along with or without the goodwill of the business. In case of a registered Trademark, such assignment is required to be recorded in the Register of trademarks.

Can a Trademark be sold in India?

Yes, it can be sold in India.

Assignment of Trademark Procedure

Drafting of a Trademark Assignment Agreement is the most important step in the procedure of assigning the trademark in order to avoid future litigation. The given below are some of the major elements which be obliged while drafting the trademark assignment agreement:

• The effective date of transfer
• Stamp duty is charged under state laws
• Consideration of the trademark assignment
• Public notary
• Signature of both the parties.
• An assignment deed must be filed with the ipindiagov.in

Documents Required to Transfer Trademark

• Trademark Assignment agreement
• Affidavits from both the parties
• Power of attorney
• Other relevant documents like Invoices etc
• Board Resolution in case of Incorporated Company

How much does it Assignment Cost of a brand or Trademark?

Stamp duty on assignment of intellectual property or trademark in india, is registration of assignment deed compulsory in trademark registry, why do you need an attorney/advocate to draft an assignment trademark deed, how do i get a trademark assignment done, how are we different from others.

We are not any call centre agents who are offering pathetic services at markets by outsourcing the work to others with whom one may not get a Chance to interact with!.

We are Intellectual Property Law Firm, with specialization in Trademark Registration. who take pride in the services delivered by us and guarantee your satisfaction with our services and support.

How do you sell/ Buy a trademark?

Is a trademark worth money, how to sell a registered trademark or brand, how to transfer the ownership of trademark who can transfer.

A Trademark is an intellectual property, the same as a any other property like Plot, Land or Flat. Just like an owner of land has the right to sell or transfer his/her property, in the same way, the owner of a trademark also has the right to do the same to his/her trademark.

Assignment means transferring rights, interests, titles and benefits from one person to another. Assignment of a trademark means to transfer the owner's right in a trademark to another person. The transferring party is called the assignor, and the receiving party is called the assignee. An assignment deed must be filed with the relevant IP office in India

Benefits of Trademark Assignment transmission

• Monetary value
• Transfer to third party
• Transfer to own kith and kins
• Assignment and transmission of trademark help the assignee to use the already established trademark in the market to create their base. It also helps the assignee to save money and resources by not spending on marketing to create a brand.
• Legal Proof
• Expansion of Business
• Right to sue for Infringements
• Right of Priority
• Trademark assignment can also be done for some or all of the goods or services for which the trademark has been assigned. For example, a cement company having multiple other businesses like construction, quarrying and interior designing, may assign the trademark of its construction business only.

What is the difference between assignment of trademark and licensing of trademark?

Unregistered trademark be assigned.

Yes, an unregistered trademark can be transferred with or without the goodwill. Assignment deals with the transferring of the rights vested with the trademark of the proprietor, who was using the unregistered trademark over the period of a few years, to a third party.

The major difference between a registered and unregistered trademark is that the latter is not registered under the Trademarks Act, 1999.

Can a trademark be transferred from one person to another?

Advantages of trademark.

• TM allow customers to identify a business as the source of a product or service.
• Trademarks are the basis to create a company's brand and reputation
• Trademarks allow consumers to base their purchasing decisions
• Trademarks help prevent consumer confusion: they indicate the source of the products and a consistent level of quality.

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Assignment of Trademark

Updated on : Feb 22nd, 2022

Trademark proprietors can transfer trademarks similarly to how they can transfer physical properties. One of the ways to transfer a trademark is through an assignment. Assignment means transferring rights, interests, titles and benefits from one person to another. Assignment of a trademark means to transfer the owner’s right in a trademark to another person.

The transferring party is called the assignor, and the receiving party is called the assignee. Section 2(1)(b) of the Trade Marks Act, 1999 states that assignment means an assignment of a trademark in writing by the act of the concerned parties. Both unregistered and registered trademarks can be assigned with or without the goodwill of the business.

Who can Assign a Trademark?

Section 37 of the Trade Marks Act, 1999 states that the person registered as proprietor of trademark in the register of trademarks has the power to assign a trademark and receive consideration for such assignment. Thus, a trademark proprietor can assign a trademark to another person.

Kinds of Trademark Assignment

The different kinds of trademark assignments are as follows:

Complete Assignment  

The trademark proprietor transfers all rights in the trademark to another person, including the right to earn royalties, to further transfer, etc. 

For example: X is the proprietor of brand ‘ABC’. X assigns his trademark ‘ABC’ completely through an agreement to Y. After this, X will not have any rights with respect to the brand ‘ABC’.

Partial Assignment

The trademark proprietor assigns the trademark to another person with respect to only specific services or goods. The transfer of ownership in the trademark is restricted to specific services or products.

For example: X is the proprietor of a brand ‘ABC’ used for sauces and dairy products. X assigns the rights in the brand ‘ABC’ with respect to only dairy products to Y and retains the rights in the brand  ‘ABC’ with respect to sauces.

Assignment with Goodwill of Business  

The trademark proprietor assigns the rights, entitlements and values associated with a trademark to another person. When the trademark is assigned with goodwill, the assignee can use the trademark for any class of goods or services, including the goods or services which were already in use by the assignor. 

For example: X is the proprietor of ‘Sherry’ brand relating to hair products. X assigns the brand ‘Sherry’ to Y with goodwill. Y will be able to use the brand ‘Sherry’ with respect to food products and any other products they manufacture.

Assignment without the Goodwill of Business  

The trademark proprietor assigns to the assignee rights and entitlements in a trademark with respect to the products or services that are not in use. The assignor restricts the transfer of the rights in the trademark in the case of assignment without goodwill. The assignor assigns with the condition that the assignee is not entitled to use the trademark relating to the goods or services already in use by the assignor.

For example: X is the proprietor of a brand ‘Sherry’ that he uses for manufacturing and selling bags. X assigns the brand ‘Sherry’ without goodwill to Y. Y will be able to use the brand ‘Sherry’ for any other product other than bags.

Pre-Requisites for Assignment of Trademark

• The trademark assignment should be in writing.
• The assignment should be between two identifying parties, i.e. assignor (owner of the trademark) and the assignee (buyer of the trademark).
• The assignor should have the intent and must consent for the trademark assignment.
• The trademark assignment should be for a proper and adequate consideration (amount).

Trademark Assignment Agreement

The proprietor of a trademark generally assigns it to the assignee through a properly executed trademark assignment agreement. The trademark assignment agreement should be drafted keeping the following points in mind:

• The rights of the trademark should not be detrimentally affected due to the obligations contained in the agreement.
• The decision and requirement regarding whether the assignment is with or without the goodwill of the business must be explicitly mentioned.
• The agreement should show a clear purpose of the transaction/assignment.
• The geographical scope of the location where the assignee possesses the values and rights in the trademark must be mentioned.
• The transfer of the right to collect and sue damages for future and past infringements must be mentioned.
• The agreement should be duly executed, i.e. it must be stamped and notarised as per the applicable Stamp Act.
• The signatures and witnesses must be mentioned.
• The place and date of agreement execution must be mentioned.
• The date and day of the assignment along with the parties to the assignment must be mentioned.
• The agreement should mention whether or not it would be binding on the legal heirs of the assignor and assignee.

Process of Assignment of Trademark

The process of assignment of the trademark in India are as follows:

• The proprietor of the trademark (assignor) assigns his/her rights in the trademark through a trademark assignment agreement to the assignee.
• The assignor or assignee, or both, can make a joint request to register the assignment by filing an application of a trademark assignment in Form TM-P to the register of trademarks.
• Form TM-P must be filed with the registrar of the trademark within six months from the date of the assignment. The application can be filed after six months of assignment, but the fee may vary accordingly.
• The assignment must be advertised in such a manner and within the period directed by the registrar of trademarks.
• The copy of the advertisement and the registrar’s direction should be submitted to the office of the registrar of trademarks.
• Upon the receipt of the trademark assignment application (form TM-P) and required documents, the registrar of trademarks will register the assignee as the proprietor of the trademark and record the specifications of the assignment in the register.

Documents Required for Assignment of Trademark

The following documents must be submitted to the registrar of trademark along with form TM-P:

• Trademark assignment agreement.
• Trademark certificate.
• NOC from the assignor.
• Identification documents of the assignor and assignee.

Restrictions on Assignment of Trademark

The Trademarks Act, 1999 provides the following restrictions on trademark assignment:

Parallel Use Restriction  

The assignor cannot assign a trademark when the assignment results in the creation of exclusive rights in different persons with relation to the same or similar products or services and will likely deceive or cause confusion. Thus, multiple exclusive rights relating to the same/similar products or services in different persons are not allowed. It prevents the parallel use of a trademark by more than one person in relation to the same/similar products or services.

Multiple Territorial Use Restriction  

The assignor cannot assign a trademark when the assignment results in the creation of an exclusive right in different persons in various parts of India relating to the same/similar products or services. The assignor cannot assign a trademark when the assignment results in the creation of an exclusive right in different persons in various parts of India relating to the same/similar products or services sold or delivered outside India. Thus, assigning rights in different parts of India relating to the same/similar products or services is not allowed.

Benefits of Trademark Assignment

• The trademark assignment enables the trademark proprietor to encash the value of his/her brand.
• The assignee obtains the rights of an already established brand due to trademark assignment.
• The trademark assignment supports the assignor and the assignee to expand their respective businesses.
• The trademark assignment agreement enables the assignor and the assignee to establish their legal rights in case of any dispute.

Disclaimer: The materials provided herein are solely for information purposes. No attorney-client relationship is created when you access or use the site or the materials. The information presented on this site does not constitute legal or professional advice and should not be relied upon for such purposes or used as a substitute for legal advice from an attorney licensed in your state.

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Trademark Registration in Delhi NCR– Process, Cost, and Documents Required

Introduction.

A Trademark is an intellectual property right. Every company needs to get Trademark registration done to protect their brand. You can Trademark a word, logo, slogan or a combination of both. Nowadays you can also Trademark unique smells, colours, sounds etc; but these are typically very difficult to register. Trademarks grant distinctiveness to your business and is an asset for the company.

Any individual or organisation can apply for a Trademark. Going for Trademark registration in Delhi NCR is a great choice. As the capital of India and one of the major metropolitan cities in India, there are many in Delhi NCR. To be able to protect your brand as well as stand out amongst the competition, Trademark registration is extremely important. In this article, we will be discussing everything that you need to know about Trademark registration in Delhi NCR.

Advantages of Trademark Registration

There are many benefits of Trademark Registration in Delhi:

• First and foremost, engaging in trademark registration is a strategic necessity; it serves as a robust shield, enabling you to strengthen and preserve the identity of your brand. By registering your trademark, you not only secure the name, logo, or symbol associated with your brand, but you also gain the authority to prevent others from utilizing it. This exclusive right empowers you to maintain the uniqueness and integrity of your brand in the market.
• Secondly, the exclusive right bestowed upon you through trademark registration contributes significantly to the distinctiveness of your brand. This exclusivity establishes your brand as a singular entity, setting it apart from competitors in the industry. It’s not just a legal protection; it’s a mechanism that enhances the recognition and individuality of your brand in the minds of consumers.
• The third notable advantage of trademark registration lies in its legal ramifications. If, at any point, another entity ventures to use your trademark or something similar, you have the legal grounds to take swift and decisive action. This legal recourse ensures that your brand is shielded from potential infringements, maintaining its reputation and preventing any confusion among consumers.
• Lastly, beyond its protective role, a registered trademark transforms into a tangible and tradable asset for your business. This asset can be leveraged in various transactions, including licensing agreements or collaborations, adding a valuable dimension to your brand. By transforming your trademark into a negotiable asset, you not only enhance the financial value of your brand but also open up avenues for strategic partnerships and collaborations that can contribute to the overall growth and development of your business.

Documents Required for Trademark Registration

The following are the documents required for Trademark Registration in Delhi NCR:

• Proof of Applicant:  This includes documents such as PAN, Address Proof of applicant, and Certificate of Registration/Incorporation in case of applicants other than individuals. 
• Brand Name/ Logo/ Slogan: You have to provide the details of the Trademark that you are trying to register.
• Proof of TM Use:  Documentary proof such as invoices, registration certificates, etc. with the brand name/Logo. 
• MSME/ Start-up India Certificate: This works as proof of business. Additionally, partnership firms and body corporates (other than an individual) can avail 50% rebate on Government fees if they provide their MSME OR Start-up India registration certificate.
• Power of Attorney:  You have to file TM-48. It is a legal document that allows a Trademark attorney to file the Trademark on your behalf with the Trademark registry.
• Board Resolution:  Additionally, for private limited or public limited companies, it is mandatory to provide a board resolution from all the directors that allowed the company to apply for a Trademark. Private limited and public companies can only apply for a Trademark after receiving the approval.
• User Affidavit: Moreover, for claiming specific user data, you have to submit a user affidavit. This depends on the Trademark being registered. Your Trademark Attorney will ask for it before application submission.   

Process of Trademark Registration in Delhi NCR

The process for online Trademark registration in Delhi process is quite detailed and also requires the help of legal experts. In summary, it has the following steps.

• First, you have to pick the apt Trademark class for registration of your goods or services.
• Secondly, you need to check if anyone else has already registered a similar Trademark . To check, you have to use the IP India Trademark website.
• Thirdly, you have to fill out and submit a Trademark application either at the Trademark Registry or online on the IP India website. You can start using the TM symbol next to your Trademark after successful submission.
• The fourth step is for the Registrar to examine your Trademark as well as evaluate if it’s appropriate for Trademark Registration. They will either raise objections or approve the Trademark. In case of objections, you need a Trademark Attorney to file replies. You can also choose to not submit any reply and abandon the application.
• Once approved, the Trademark is published in Trademark Journal . Any person who feels that this Trademark is similar to their Trademark is required to file an opposition within 3 months from publication. If you receive opposition, once again you need a Trademark Attorney to file replies to it. The Trademark registry will evaluate your replies with the other party’s statements and decide if you can register your Trademark. You can also abandon the application at this point by not filing any replies.
• Finally, you will receive your registration certificate if there was no opposition or if the Trademark registry found your replies to the opposition to be satisfactory. After this, you can use the ® symbol next to your Trademark.

You can own a Trademark forever. However, you need to renew every Trademark every 10 years. To understand the Process for brand registration in Delhi in detail, you should go through this article: Understanding Trademark & its Registration Process in India

How to check TM Application Status

Steps to check TM status after going in for brand registration in Delhi:

• Go to IP India website.
• Select Trade Mark Application/Registered Mark from the left-hand side menu.
• Select National/IRDI Number.
• After that, enter your Trademark Application Number, enter the captcha, and click on the View Button.
• Now you should be able to see your Trademark Application Status. There will also be an alert showing the next steps.

Fees & Cost for Trademark Registration in Delhi NCR

Online Trademark Registration in Delhi carries two types of costs:

• Government Fees: The government fees depend on the business structure of the entity applying for Trademark Registration. Government fees are INR 4,500 if the applicant is an individual or sole proprietor. For non-individual applicants, generally, the fee is INR 9,000 (Exceptions exist for businesses with MSME or Startup India registration).
• Professional Fees: These vary from service provider to service provider.

Here are LegalWiz.in’s Packages:

Business Package from INR. 6,499

• Online TM Application under 1 class
• Suggestion for selection of class for Application

Executive Package from INR. 8,199

• Trademark Search Report
• Authorisation Letter (GPA)
• Stamp Duty on Authorisation Letter
• Final Application Filing using Registered Attorney
• Filing of Application for Individual or Start-Ups or MSME
• MSME Certificate

Premium Package from INR.10,999

Difference between tm (™) and r (®) symbol.

There are important differences between TM vs R symbols when it comes to protection. The main difference is that anyone who has applied for online Trademark registration in Delhi can use the TM symbol. On the other hand, one can only use the R symbol after successful Trademark Registration. Unregistered Trademarks cannot use the R symbol.

Delhi NCR is one of the economically important cities of India. There are innumerable businesses in Delhi, they are also forever growing. To be able to stand out in the competition, going for trade mark registration in Delhi is a necessity. Additionally, online Trademark registration in Delhi also gives you access to many benefits, such as easy legal redressal, exclusivity, standing out in the market, etc. With plans starting at as little INR 6499, going for trade mark registration in Delhi has become much easier. So, get TM registration in Delhi NCR, and protect your brand.

Frequently Asked Questions

With LegalWiz.in, the Trademark application submission process can be finished in as little as 4 days. After that, you can start using TM symbol text for your Trademark. The entire registration process typically takes 18-24 months.

An individual can file the initial Trademark application by themselves. But the application is quite technical and can be rejected if it has errors. Moreover, after initial application submission, many aspects of the Trademark registration process need a Trademark attorney. Hence it’s best to take the help of legal experts while submitting Trademark Registration Application.

You can Trademark any words, logos, and slogans that are distinctive and are being used for commerce. Nowadays there are Trademarks for smells, sounds, colours etc, also.

No, Trademark registration is not very expensive, in fact, LegalWiz.in has packages starting from as little as INR 6499!

Trademark Related Services

• Trademark Registration in Delhi
• Trademark Objection Reply in Delhi NCR
• Trademark Opposition in Delhi NCR
• Trademark Assignment in Delhi NCR

Trademark Related Articles

• Difference between TM (™) and R (®) symbol in trademark
• When and Why should you Trademark a Name?
• Kinds of Trade Mark Status in India
• All the Documents Required For Trademark Registration In India
• Simplifies guide on Trademark Search

Other IP Services

• Copyright Registration in Delhi NCR
• Online Patent Search in Delhi NCR
• Provisional Patent Application in Delhi NCR
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Monjima Ghosh

Monjima is a lawyer and a professional content writer at LegalWiz.in. She has a keen interest in Legal technology & Legal design, and believes that content makes the world go round.

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We are glad you find our articles interesting, feel free to connect with us in case you have any queries!

MY TM APPLICATION ON THE STAGE OF OBJECTED AND I REPLYING TO THE TM REGISTRAR BY ON LINE FILED THE OBJECTION BUT I AM NOT APPEARED BEFORE THE TRADEMARK REGISTRAR ON THE DATE. APPLICATION STILL OBJECTED , WHAT CAN I DO AT THE STAGE OF SITUATION

Hi, Kindly share your contact details with us at [email protected] and our team of experts will connect with you.

Hi, please go to government’s page for forgotten UAM: https://registrationmsme.com/forgot-udyam-registration-number-urn-or-uam.php Fill the form on the page, they will guide you.

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Assignment of Trademark

GENERAL UNDERSTANDING:

As physical properties are transferred, the same way trademarks are also transferred. This transfer of trademark is called Assignment of trademark. In general terms, Assignment means transfer of title, rights, interest and benefits from one person to another person.

Thus, Assignment of trademark means transfer of Owner’s title, rights, interest and benefits to other person. The transferring party is called as “Assignor” and the receiving party is called as “Assignee”.

STATUTORY DEFINITION:

Section 2(1)(b) of the Trade Marks Act, 1999 “Assignment” means an assignment in writing by the act of the parties concerned;

WHO CAN ASSIGN A TRADEMARK:

As per section 37 of the Trade Marks Act, 1999, the person entered in the register of trademarks, as the proprietor of a trademark, shall have power to assign a trade mark and to give effectual receipt of for any consideration for such assignment.

ASSIGNABILITY OF REGISTERED OR UNREGISTERED TRADEMARK:-

As per section 38 of the Act, a registered trademark can be transferred with or without the Goodwill of the business concerned either in respect of all the goods or services in respect of which the said trademark is registered or of some of the goods or service.

Moreover, as per section 39 of the Act, an unregistered trademark may be assigned with or without the Goodwill of the business concerned.

  TYPES OF ASSIGNMENT:-

1. Assignment with Goodwill of Business: Where an assignor assigns to the assignee, the value, rights and entitlements also, as associated with a trademark with respect to the goods or services already in use by the assignor. After taking over the goodwill associated with the trademark, the assignee is free to use the trademark assigned to him for all goods or services including for the goods or services which were already in use by the Assignor. Such assignment is called assignment with Goodwill of Business.

For Example: Mr. X is the owner of a trademark “TM” who is already using the said trademark “TM” in relation to clothing and footwear. Mr.  X assign to Mr. Y the said trademark “TM” through an agreement (in writing) in relation to clothing and footwear alongwith the Goodwill associated with trademark “TM”.

In this case, Mr. X has also assigned to Mr. Y, the Goodwill associated with trademark “TM” for the business of clothing and footwear as well as for other goods or services. Therefore, Mr. Y is eligible to use the said trademark “TM”, for clothing and footwear including other goods or service dealt by Mr. Y.

2. Assignment without the Goodwill of Business: Where an assignor assigns to the assignee, the right and entitlements in a trademark with respect to the goods or services which are not in use by the assignor. In other words, where the assignor restricts the assignee with a condition that the assignee is not entitled to use the trademark assigned in relation to the goods or services already in use by the assignor. Such assignment is called assignment without the Goodwill of Business.

For Example: Mr. X is the owner of a trademark “TM” who is already using the said trademark “TM” in relation to clothing and footwear. Mr. X assign to Mr. Y the said trademark “TM” through an agreement (in writing) in relation to goods or services other than clothing and footwear without assigning the Goodwill associated with trademark “TM”.

In this case, Mr. X has not assigned to Mr. Y, the Goodwill associated with trademark “TM” for the business of clothing and footwear. Therefore, Mr. Y is not eligible to use the said trademark “TM”, for clothing and footwear. Thus, in case, Mr. Y wishes to use the said trademark “TM” in relation to other goods or services then he will be required to create separate Goodwill for trademark “TM” for such other goods or services dealt by him.

RESTRICTION ON ASSIGNMENT OF TRADEMARK:-

1. Parallel use Restriction: Where assignment results in creation of exclusive right in different persons, in relation to same or similar goods or services and the use of the trademark will be likely to deceive or cause confusion. Thus, multiple exclusive right in relation to same or similar goods or services, in different person is not allowed. This prevents the parallel use of a trademark by more than one person concerned in relation to same or similar goods or services. (Section-40)

2. Multiple Territorial use Restriction: Where the assignment results in creation of exclusive right, in different person in different parts of India, in relation to same or similar goods or services. Thus, assigning of scattered right in different parts of India is not allowed. (Section-41)  

PROCEDURE FOR ASSIGNMENT OF TRADEMARK:

REGISTRATION OF ASSIGNMENT OF TRADEMARK:

1. A person (subsequent proprietor) who becomes entitled by way of assignment, shall apply for registration of assignment before the Registrar of trademarks. (section 45)

2. After due satisfaction of the Registrar of trademarks, the Registrar shall enter the details of the assignee (subsequent proprietor) as the proprietor of the trademark assigned to him in respect of goods or services for which the assignment has been made. (section 45)

3. Where the validity of assignment is in dispute between the parties, the Registrar may refuse to register the assignment until the rights of the parties are determined by the competent court. (section 45)

4. Registrar of trademark shall dispose of the application for registration of assignment of trademark within a period of 3 (three) months from the date of receipt of application. (rule 76 of Trade Marks Rules, 2017 )

5. Registrar may, where there is reasonable doubt about the veracity of any statement or any document furnished, may call upon any person who has applied to be registered as proprietor of a registered trademark to furnish such proof or additional proof of title as the Registrar may think fit. (rule 77 of Trade Marks Rules, 2017)

6. Where in the opinion of the Registrar any document produced in proof of title of a person is not properly or sufficiently stamped, the Registrar shall impound and deal with it as per Chapter IV of the Indian Stamp Act, 1899 . (rule 78 of Trade Marks Rules, 2017)

7. Where the Registrar has allowed the registration of assignment, then there shall be entered in the register the particulars as follows(rule 84 of Trade Marks Rules, 2017):-

a) the name and address of the assignee;

b) the date of assignment;

c) where the assignment is in respect of any right in the trademark, a description of the right assigned;

d) the basis under which the assignment is made; and

e) the date on which the entry is made in the register.

RIGHT OF THE ASSIGNOR ON ASSIGNMENT OF TRADEMARK:

The assignor terminates to have his rights, title or any interest in the trademark, the moment assignment deed is executed in favour of the assignee, irrespective of the fact that the name of the assignee has not been updated in the record of the Registrar of trademarks.

In the matter of Classic Equipments Pvt. Ltd. Vs. Johnson Enterprises, 2009 (41) PTC 385 (Del), it was observed as follows:

“Once an Assignment Deed has executed, the Assignor ceases to have any right, title or interest in the property assigned. It is not open to the Assignor to cancel the assignment by means of communication”.

RIGHTS OF THE ASSIGNEE: WHEN ASSIGNMENT IS COMPLETE BUT REGISTRATION IS PENDING:

Though as per section 45 of the Act, it is mandated that the assignee shall apply before the Registrar of the trademarks to register his title. But this does not mean that recording of assignment of registered trademark asserts all rights or titles or interest in the assignee.

The reason behind this understanding are the opening words of section 45 of the Act, which says “where a person becomes entitled by assignment or transmission of a registered trademark, ……..”. Therefore, the first condition is entitlement of rights, title or interest by way of assignment or transmission of a registered trademark followed by registration of assignment of a registered trademark. Thus right in assignee does exist even before the registration of assignment.

In the matter of M/S. Modi Threads Limited vs M/S. Som Soot Gola Factory And…. on 4 th December, 1990: AIR 1992 Delhi 4, 1992 (22) DRJ 24 was observed as follows:

“It is true that the plaintiffs application for getting transferred the registered trade mark in its name in the office of the Registrar is still pending but that does not debar the plaintiff to protect the violation of the aforesaid trade mark at the hands of unscrupulous persons by filing an action in court of law for injunction. It is, prima facie, clear to me that during the interregnum period when the application of the plaintiff is kept pending for consideration by the Registrar of Trade Marks the dishonest persons cannot be allowed to make use of the said trade mark in order to get themselves illegally enriched earning upon the reputation built up qua that trade mark by the predecessor-in-interest of the plaintiff.”

The assignee of a trademark is also entitled to file a civil suit, even though the recording of assignment of registered trademark is pending before the registrar of trademarks. Moreover, section 45 does not confer any title over the trademark assigned. Instead the registration granted under section 45 is only proof of title of the trademark of assignee or the person who acquired it by way of assignment.

IMPORTANT KEY POINTS

√ Assignment is to be in writing;

√  Registered or unregistered both type of marks can be assigned;

√  Assignment can be with or without the goodwill of the business;

√  Event of assignment asserts the rights and title in an assignee not the registration thereof;

√  Registration of assignment is only prima facie proof of title of trademark;

√  Rights in an assignee exists even before registration of assignment of trademark.

Conclusion: –

Assignment of trademarks allows the Proprietor thereof to en-cash their intellect, efforts, time and money. It is equally important to register the assignment of trademark, since on registration the details of the assignee are updated in the register of trademark, this serves as a notice to public at large. Moreover, preparation of assignment agreements are also important as it involves rights, entitlements, interests and obligation including the commercial terms between the assignor and the assignee.

Disclaimer: The entire content of this document has been prepared as per the relevant provisions of the Act and rules made thereunder, applicable at the time of preparation. Though proper care has been taken to ensure accuracy, completeness and reliability of the information provided therein. The users and readers agree that the information provided in this document is not professional advice. Therefore, we assume no responsibility therefrom. Further, this write up shall not be considered as solicitation in any manner.

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I. Case Reference

II. Full text of the judgment

Prathiba M. Singh, J. (Oral)

1. This hearing has been done through hybrid mode.

2. In the present suit, Plaintiff No.1 – Shakti Bhog Foods Ltd. ( hereinafter, ‘SBFL ’) is currently undergoing a Corporate Insolvency Resolution Process (CIRP) under the provisions of the Insolvency and Bankruptcy Code, 2016 ( hereinafter, ‘IBC, 2016 ’). The Plaintiff is represented through Plaintiff No. 2 – Mr. Ram Ratan Kanoongo who is the Resolution Professional.

3. In the insolvency proceedings against SBFL, the NCLT vide order dated 22nd September, 2022 in CP(IB)-24(PB)/2018 titled State Bank of India v. Shakti Bhog Foods Ltd. declared a moratorium under section 14 of the IBC, 2016. The operative portion of the said order reads as under:

“38. Moratorium is declared under Section 14 of IBC,2016, which shall have effect from the date of this Order till the completion of CIRP, for the purposes referred to in Section 14 (a) to (d) of the IBC, 2016.”

4. Currently, a committee of creditors is considering various proposals for restoration of the business of the SBFL.

5. The present suit has been filed by the Plaintiffs seeking permanent injunction restraining infringement, passing off, damages, etc qua the trade mark ‘SHAKTI BHOG’ of SBFL. Defendant No.1 has also filed a counterclaim claiming ownership in the mark ‘SHAKTI BHOG’.

6. The following parties have been arrayed as Defendants in the present suit:

7. The background is that Defendant No.10 – Mr. Kewal Krishan Kumar had established business under the mark ‘SHAKTI BHOG’ for his proprietary concern in 1975. Sometime in early 1990s, SBFL and Defendant No.1 – Kumar Food Industries Limited were incorporated by Defendant No.10. However, in 2017, Defendant No.10 resigned from the Defendant No.1 company. As per ld. Counsel for the Defendants, currently the Defendant No.1 is run by his son as also other directors.

8. The Plaintiffs are aggrieved by the continued use of the mark ‘SHAKTI BHOG’, label and packaging by Defendant No.1 and its contract manufacturers i.e. Defendant Nos. 2 to 9 despite SBFL being in insolvency proceedings.

9. Mr. Sethi, ld. Senior Counsel for the Plaintiffs submits that a winding up petition being Co.Pet.No. 987/2015 titled CFSIT. INC v. Shakti Bhog Foods Limited was initially filed against SBFL in December, 2015. The winding up petition was admitted by this Court on 18th January, 2018. Thereafter, CP(IB)-24(PB)/2018 came to be filed before the NCLT by another creditor leading to the order dated 22nd September, 2023. According to ld. Senior Counsel, the committee of creditors is currently considering various options of how to restore SBFL’s business and since the mark ‘SHAKTI BHOG’ belongs to SBFL but is illegally being claimed to be under the ownership of Defendant No.1, the present suit has been instituted.

10. Mr. Sethi, ld. Senior Counsel for the Plaintiffs submits that the genesis of the claim of ownership of the Defendant No.1 is an assignment deed dated 30th December, 2017 which has been placed on record. As per the said assignment deed, SBPL assigned the trademark ‘SHAKTI BHOG’ to Defendant No.1 for a total consideration of Rs.14.10 crores. Out of the said amount, Rs.13.50 crores is claimed to have been paid to SBFL and the remaining Rs.60 lakhs is to be paid at the time of foreign registration certificates being handed over to the Defendant No.1.

11. Ld. Senior Counsel for the Plaintiffs submits that this assignment deed is a forged document and also would not inspire confidence as the same is contrary to the publicly available records of the Defendant No.1. The submissions in this regard are as under:

● that the stamp duty of Rs. 42 lakhs qua the assignment deed dated 30th December, 2017 has not been paid;

● that the Defendant No.10 was suspended as a Director of SBFL on 3rd October, 2017 but has been reflected has having signed the assignment deed on 30th December, 2017;

● that the records of the Defendant No.1 reflects that the sum of Rs.13.50 crores has been given as a loan/advance within its own balance sheet which is clearly supported for the financial years ending 31st March, 2017 and 31st March, 2018;

● that there are no intangible assets which are reflected in the balance sheets of Defendant No.1 for the financial years 2016-17, 2017-18, and 2018-19;

● that the Defendant No.1 had filed a writ petition being W.P.(C) 12033/2021 titled M/s Kumar Food Industries Ltd. v. UOI & Ors . before this Court. In the said case vide order dated 10th March, 2022 it is mentioned that the Defendant No.1 uses Plaintiff’s licenses and trade names for manufacturing and selling products under the mark ‘SHAKTI BHOG’;

● that the Defendant No.1 has not applied for recordal of the alleged assignment of the registered trademarks and, all the registered trademarks continue to be in the name of the Plaintiff;

● that renewals for the SHAKTI BHOG’ marks have also been filed by the Plaintiff and not the Defendant No.1;

● that the physical packaging of Defendant No.1 shows that the mark is being used under license from SBFL;

● that the assignment deed was not mentioned in reply to the cease and desist notice issued by the Plaintiff in January, 2023.

12. On the strength of all these averments and the documents, it is submitted that the mark does not belong to Defendant No.1 and an illegal claim is being made in respect of the mark ‘SHAKTI BHOG’ which belongs to the Plaintiffs.

13. Mr. C.M. Lall, ld. Senior Counsel appearing for the Defendants submits he would be responding to all the allegations raised by the Plaintiff.

14. The Court has heard the submissions in part today.

15. A perusal of the record would show that there are a large number of trademarks which are registered in favour of the Plaintiff No.1, the details of the same are provided in the plaint. There is no recordal of assignment deed as on date in favour of Defendant No.1. Moreover, the assignment deed as filed by the Defendant No.1 has not even been stamped.

16. Today being the last day before the ensuing five-day holiday and the insolvency proceedings being underway, in order to ensure that no prejudice is caused to either party, the Court directs as under;

(i) that there would be no impediment in the committee of creditors considering the mark ‘SHAKTI BHOG’ as an asset of the Plaintiff and valuing the same.

(ii) However, it is made clear that there shall be no final order in respect of the mark ‘SHAKTI BHOG’. The valuation so made by the CoC shall be subject to further hearing and orders in this interim injunction application.

(iii) that the Defendant No.1 who claims to be the assignee of the mark ‘SHAKTI BHOG’ shall not transfer any right, title or interest in the mark until the hearing in the application is concluded and orders are passed by this Court.

(iv) that all the Defendants shall also ensure that no further licenses or permissions are granted for manufacture of ‘SHAKTI BHOG’ branded food products by any third party except the Defendants arrayed in the present suit.

(v) that the CGPDTM shall not entertain any request for recordal of assignment deed or license of the ‘SHAKTI BHOG’ mark by anyone without orders of this Court.

17. At this stage, Mr. Grover, ld. Counsel for the Defendants submits that there are other contract manufacturers apart from those who are impleaded herein, who have been issued licenses to the manufacturers of food products under the mark ‘SHAKTI BHOG’. If so, he is permitted to move an application in this regard.

18. Mr. Sethi, ld. Senior Counsel has pointed out that the Department of Food Safety, GNCTD had conducted an inspection at the premises of the Defendant No.1. The report by the Department of Food Safety, GNCTD shows that the conditions at the premises of the Defendant No.1 are deplorable. Let the said document be filed on record.

19. Defendant No.10 – Mr. Kewal Krishan Kumar shall remain present in Court on the next date of hearing.

20. List on 16th January, 2024.

21. This shall be treated as part-heard matter.

PRATHIBA M. SINGH JUDGE

NOVEMBER 10, 2023

– – – 

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Kedar Naniwadekar   --> 29 October 2015

Calculation of stamp duty for trademark assignment deed

What is the stamp duty for Trademark Assignment Deed and how is the stamp duty calculated for the same? Also what is the procedure for registration of Trademark Assignment Deed? I have been given 2 different advices 1) the stamp duty shall be 0.1% of the total value if the value is below Rs. 10 Lakhs and 0.2% if the total value is above Rs. 10 Lakhs; and 2) the stamp duty shall be 3% of the total value.

 1 Replies

Priyanka Kulkarni (Advocate and Intellectual Property Attorney Solicitor (England and Wales) (NP))     --> 30 October 2015

Being lawyer, first you need to check the relevant jurisdiction and decide which stamp Act applies e.g. Maharashtra Stamp Act (previously Bombay Stamp Act) and then read the relevant provision.

You may contact me at [email protected]

Priyanka Kulkarni

IP Attorney and Solicitor of England and Wales( NP)

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April 11, 2019

The dos and don’ts of licensing intellectual property in India

• What is licensing of intellectual property (”IP”)? An owner of IP can grant another person the right or permission to make, use or sell property or items embodying or covered by this IP by means of a contractual license. A license may apply to any type of IP – trademark, patent, copyright, design and/or know-how. Under the license, the licensor maintains title in the IP and the licensee is authorized to make use of the IP only in accordance with the terms and conditions of the license.
• What is a licensing agreement? A license agreement is a document, executed between two or more parties, evidencing the terms and conditions of such contractual license.
• Does a license agreement have to be in writing? Once an entity/individual has taken the decision to license its IP, it is imperative that the terms of the license be captured in writing and explicitly agreed between the parties. Provisions of several acts governing different types of IP such as trademarks, copyrights, patents and design state that the license agreement should be in writing. Know-How as an IP has no specific legislation and though not required to be in writing by statute, it is recommended that license of any know-how be in writing as well to avoid ambiguity.
• A license agreement should be in writing with the relevant terms clearly defined. But if the parties execute a term sheet, would that suffice as a valid license agreement? For a valid license, not only must the license terms be set out in writing but should also be in the form of a binding definitive document. A non-binding term sheet would not constitute a license agreement as held in the case of PVR Pictures Limited vs. Studio 18 by the Delhi High Court in 2009.
• Definition of Licensed Property;
• Exclusivity;
• Right to grant sub-licenses; and
• Revocability.
• What is an exclusive license and a non-exclusive license? An exclusive license excludes the use of the licensed rights for anyone but the licensee. It must be clear whether that is meant to exclude the licensor itself from making use of the intellectual property. A non-exclusive license can be granted as often by the licensor to as many licensees as desired. Most commercial software licensed today is licensed on a non-exclusive basis.
• Difference between exclusive license of IP and assignment of IP? There are numerous instances where the licensor has granted an exclusive license and the licensee has claimed that the same is an assignment of the IP. An exclusive license is not an assignment, when you license IP, you are granting the licensee permission to use your IP in a particular way while still retaining an interest in the IP being licensed. When assigning IP to another, there is a transfer of ownership from the assignor to the assignee. This is a permanent arrangement, and you cease to hold an interest in the IP once it is assigned. The terms of the license must explicitly state that it is a license (whether exclusive or non-exclusive) and define the mutual obligations. Most importantly, the clause on royalty payment should be drafted in a manner that does not give rise to implications that any downright payment is towards assignment of the IP.
• What is royalty? One of the goals of licencing is to enable the proprietor of IP to receive quantifiable sums of money based on a licensee’s use of such licensed IP. The royalty is the consideration amount to be provided to the owner/licensor of the IP for the grant of the license. The consideration may be a lump sum payment or a continuous periodic fee payment, also known as royalties or a combination of lump sum fee and periodic payments.
• A single up-front payment;
• A pre- determined amount that is paid periodically;
• A charge based on units of manufacture or sales; and
• On early stage technology, royalties can be based on development costs.
• Who owns any improvements, enhancements and modifications to the licensed IP? A person may create and design an improvement of an existing technology or a feature that enhances the use or functionality of the technology. The new invention may come about as a result of an idea that relates to the use of the licensed IP, or it may actually be the result of modification of that IP in order to produce any enhancement. An ”improvement” in the context of IP licenses, usually means a development within the field of the licensed technology that enhances the usability, functionality, efficiency, performance or other characteristic of the original IP. A license agreement must spell out what constitutes an improvement and who owns such improvement and all IP that vests in the same. The license agreement also needs to provide for ownership of IP if there is any joint development.
• Is stamp duty payable on license agreements? Stamp duty refers to a tax on a transaction which is paid to the government and the tax is levied on the instrument recording the transaction. Stamp duty is payable on license agreements and the rate of stamp duty payable varies in each State. Prior to the execution of a license agreement, it is important to understand if the benefit of executing the license agreement in a particular state and availing lower stamp duty rates(if possible).
• What are the consequences of not paying stamp duty? Under the Indian Stamp Act, 1899, if adequate stamp duty has not been paid on a document, such document cannot be admitted in evidence for any purpose nor can it be acted upon, registered or authenticated.
• Patents – The Patents Act, 1970 states that a license agreement must be registered and that a licensee should apply in writing to the Controller of Patents for registration of his title.
• Trademark – The Trade Marks Act, 1999 does not make registration of a license agreement mandatory, however it does provide for the concept of ‘registered user’. Provisions have been set forth to register any person other than the registered proprietor as the registered user for the use of the mark in commerce. The act provides that registered user can file infringement proceedings in his own name.
• Copyright – The Copyright Act, 1957 does not make registration of the license agreement mandatory.
• Design – The Designs Act, 2000 requires that an application for registration of title under a license agreement is filed with the Controller within six months from the execution of the license agreement. A license agreement in respect of which no entry has been made in the register cannot not be admitted in evidence in any court in proof of the title to copyright in a design or to any interest therein, unless otherwise directed by the court.

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Stamp Duty on Assignment of Receivables

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Updated as on 07.05.2024

The table below provides the rate of stamp duty applicable on assignment of receivables in major states across India:

[1] Notification G.O.Ms. No.305 dated 29.03.2004 issued by Registration and stamps Department, Government of Andhra Pradesh. This shall apply to ARC’s.

[2] Notification S.O.No.-1/M1-126-2004/2904 dated 29.12.2004 issued by Department of Registration, Government of Bihar. This shall apply to ARC’s.

[3] Notification No./F10-9-2004-C.T.-(R) –V-(32) dated 28.02.2004 issued by Financial and Planning Department {Commercial Tax (Registration) Department}, Government of Chhattisgarh.

[4] http://delhi.gov.in/wps/wcm/connect/DoIT_Revenue/revenue/home/registration+acts+and+rules/manuals%2Cnotifications%2Corders/reg260209

[5] https://www.rbi.org.in/Scripts/PublicationReportDetails.aspx?ID=166

[6] https://www.rbi.org.in/Scripts/PublicationReportDetails.aspx?ID=166

[7] https://www.rbi.org.in/Scripts/PublicationReportDetails.aspx?ID=166

[8] 1.  Notification No. Stamp-6/05/35723/R. dated 31.08.2005 issued by Revenue Department, Government of Orrisa. 2. Notification No. Stamp-6/05/35723/R. dated 31.08.2005 issued by Revenue Department, Government of Orrisa.

[9] http://igrs.rajasthan.gov.in/writereaddata/Portal/Images/pdf/notification-dated-26062015.pdf

[10] Notification No.K.N.5-1023/11-2005-500(137)-2003 dated 15.03.2005 as amended by No.K.N.5-1389/11-2005-500(137)/2003 dated 29.03.2005 issued by Kar Evam Nibandhan Anubhag-5, Government of Uttar Pradesh.

[11] Notification No.2307-F.T. dated 02.07.2004 issued by Finance (Revenue) Department, Government of West Bengal.

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can you please provide copy of the Notification No.2307-F.T. dated 02.07.2004 issued by Finance (Revenue) Department, Government of West Bengal.

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Adjudication of Stamp Duty: The Delhi High Court Directive

• In pursuant to the scheme of amalgamation of five Harita group companies with Uno Minda Ltd., the petitioner intends to get the documents registered and duly stamped. The petitioner has applied to the Divisional Commissioner, Revenue Department, GNCTD seeking adjudication of the stamp duty which is being delayed by the said authority and thus this petition has been filed by the petitioner seeking issuance of directions to the Respondents to adjudicate the stamp duty payable.  
• The second case is that the petitioner Reebok has converted its debentures into shares and seeks the issuance of stamp paper for the share certificates. Despite several requests over more than 1 year, the respondents have not issued challans to Reebok to purchase the stamp duty to be paid on the Share Certificate. Thus, Reebok has filed the petition that the Respondents be directed to issue the challans.
• What will be the relief in case of delay in adjudication of the stamp duty by the Collector of Stamps since the time limit for adjudication is not prescribed in the Act?
• Some documents have not the predetermined stamp duty given in the Indian Stamp Act, 1899. (ACT). Therefore, Section 31 of the Act shows that adjudication of the proper stamp duty would have to be made by the concerned Collector of Stamps. However, the time limit of the adjudication is not fixed under the Act.  
• However, some documents have a fixed time to get itself registered for which the adjudication of correct stamp duty is needed under a specific time period. For example, under Section 56 of the Companies Act, 2013 the company cannot register the transfer of securities unless the instrument of transfer is duly stamped, dated, and executed. Section 56(4) requires the said transmission to take place within a period of two months from the date of allotment or from the date of incorporation. In the case of allotment of debentures, the time limit fixed is six months.  
• The court observed that "the activities of individuals and companies would be depended upon various documents, instruments of transfer, etc., and the first step would be to seek adjudication of the stamp duty under Section 31 of the Indian Stamps Act, 1899, a time limit would be required to be followed by the Collector of Stamps for the said adjudication."[1]
• Uno Minda Limited vs. Deputy Commissioner Revenue Department (24.04.2023 - DELHC): MANU/DE/2985/2023

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Stamp Duty on Debt Assignment

Home | Knowledge Center | Thought Papers Stamp Duty on Debt Assignment

13th Feb, 2018

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Introduction

Assignment of debt is one of the most common forms of transactions in financial markets. It essentially entails transfer of a debt from a creditor (assignor) to a third-party (assignee). One of the biggest challenges faced in debt assignment transactions in India is the significant stamp duty implication on the deed of assignment. Considering the volume of assignment transactions undertaken generally by banks and financial institutions or by asset reconstruction companies (“ ARCs ”), the stamp duty levied becomes a significant cost in such transactions. The Constitution of India (“ Constitution ”) confers upon the Parliament and each State Legislature the power to levy taxes and other duties. The subjects on which the Parliament or a State Legislature or both can legislate are specified in the Seventh Schedule of the Constitution. The Seventh Schedule is divided into 3 (three) lists:

• Union List;
• State List; and
• Concurrent List.

The Parliament has the exclusive power to legislate on the subjects enumerated in the Union List. The State List enumerates the subjects on which each State Legislature can legislate and such laws operate within the territory of each State. The Parliament, as well as the State Legislatures, have the power to legislate over the subjects listed in the Concurrent List.

The entry pertaining to levy of stamp duty in the Union List is as follows: -

“91. Rates of stamp duty in respect of bills of exchange, cheques, promissory notes, bills of lading, letters of credit, policies of insurance, transfer of shares, debentures, proxies and receipts.”

The entry pertaining to levy of stamp duty in the State List is as follows: -

“63. Rates of stamp duty in respect of documents other than those specified in the provisions of List I with regard to rates of stamp duty.”

The entry pertaining to levy of stamp duty in the Concurrent List is as follows: -

“44. Stamp duties other than duties or fees collected by means of judicial stamps, but not including rates of stamp duty.” [emphasis supplied]

From the aforementioned entries, it is clear that the power to legislate on the rate of stamp duty chargeable on instruments of debt assignment (since it is not covered under Entry 91 of the Union List) is with the State Legislature. However, the power to determine whether stamp duty can be charged or not on a specific instrument is in the Concurrent List. In this regard, it may be noted that pursuant to the Enforcement of Security Interest and Recovery of Debt Laws and Miscellaneous Provisions (Amendment) Act, 2016 (“ Amendment Act ”), the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (“ SARFAESI ”) and the Indian Stamp Act were amended to provide for an exemption from stamp duty on a deed of assignment in favour of an ARC.

As mentioned above, the power to legislate on whether stamp duty is payable or not on an instrument is in the Concurrent List. Therefore, the Parliament has the power to legislate on the aforesaid subject.

Pursuant to the Amendment Act, section 5(1A) was inserted in SARFAESI which provides that any agreement or document for transfer or assignment of rights or interest in financial assets under section 5(1) of SARFAESI in favour of an ARC is not liable to payment of stamp duty.

In several States, notifications have been issued for remission and/ or reduction of stamp duties on debt assignment transactions. For instance, in Rajasthan, the stamp duty chargeable on any agreement or other document executed for transfer or assignment of rights or interests in financial assets of banks or financial institutions under section 5 of SARFAESI in favour of ARCs 1 has been remitted. Further, in Maharashtra, the stamp duty on instrument of securitization of loans or assignment of debt with underlying security has been reduced to 0.1% (zero point one percent) of the loan securitized or the debt assigned subject to a maximum of Rs. 1,00,000 (Rupees one lac) 2 .

Certain State Governments, such as those of Rajasthan and Tamil Nadu have reduced the stamp duty based on the nature of the financial asset being assigned. In Rajasthan, the stamp duty has been reduced for assignment of standard assets whilst in Tamil Nadu, the stamp duty has been reduced for assignment of non-performing assets and assignment in favour of ARCs.

This paper discusses a recent decision by the Allahabad High Court in the case of Kotak Mahindra Bank Limited v. State of UP & Ors. 3 (“ Kotak case ”), where it was held that an instrument of assignment is chargeable with stamp duty under Article 62(c) (Transfer) of Schedule 1B of the Indian Stamp Act, as applicable in Uttar Pradesh (“ UP Stamp Act ”), as opposed to Article 23 (Conveyance) of Schedule 1B of the UP Stamp Act.

The stamp duty payable in various States under Article 23 or the relevant provision for conveyance is on an ad valorem basis whereas the stamp payable under Article 62(c) or relevant provision for transfer of interest secured, inter alia, by bond or mortgage deed, is a nominal amount. For instance, in Uttar Pradesh, the stamp duty payable under Article 62(c) is Rs. 100 (Rupees one hundred).

Decision in the Kotak case

In the Kotak case, Kotak Mahindra Bank Limited (“ Kotak ”) had purchased and acquired certain loans from State Bank of India (“ Assignor ”) along with the underlying securities.

The question for consideration before the full bench of the Allahabad High Court was whether the deed executed by the applicant with the underlying securities would be chargeable with duty under Article 62(c) or Article 23 of Schedule 1B of the UP Stamp Act.

The court observed that in order to determine whether an instrument is sufficiently stamped, one must look at the instrument in its entirety to find out the true character and the dominant purpose of the instrument. In this case it was observed that the dominant purpose of the deed of assignment entered into between Kotak and the Assignor (“ Instrument ”), was to transfer/ assign the debts along with the underlying securities, thereby, entitling Kotak to demand, receive and recover the debts in its own name and right.

Article 11 of Schedule 1B of the UP Stamp Act provides that an instrument of assignment can be charged to stamp duty either as a conveyance, a transfer or a transfer of lease. The court observed that since the Instrument was not a transfer of lease, it would either be a conveyance or a transfer.

The court referred to the definition of conveyance in the UP Stamp Act, which reads as follows:

““ Conveyance ”. — “Conveyance” includes a conveyance on sale and every instrument by which property, whether movable or immovable, is transferred inter vivos and which is not otherwise specifically provided for [by Schedule I, Schedule IA or Schedule IB] [as the case may be];” [emphasis supplied]

The court held that the term conveyance denotes an instrument in writing by which some title or interest is transferred from one person to other and that the use of the words “on sale” and “is transferred” denote that the document itself should create or vest a complete title in the subject matter of the transfer, in the vendee. In this case since under the Instrument, the rights of the Assignor to recover the debts secured by the underlying securities had been transferred to Kotak, it was held that the requirement of conveyance or sale cannot be said to be satisfied.

The court further observed that debt is purely an intangible property which has to be claimed or enforced by action and not by taking physical possession thereof, in contrast to immovable and movable property. Where a transaction does not affect the transfer of any immovable or movable property, Article 23 of Schedule 1B cannot have any applicability.

The court’s view was that since debt along with underlying securities is an interest secured by bonds and/ or mortgages, transfer of such debt would be chargeable under Article 62(c).

The court further clarified that under the Instrument, merely the right under the contract to recover the debts had been transferred. Since the borrower(s) had never transferred the title in the immovable property given in security to the Assignor, the Assignor could merely transfer its rights i.e. mortgagee's rights in the property to recover the debts. It was further observed that the Assignor never had any title to the underlying securities and that it merely had the right to enforce the security interest upon default of the borrower(s) in repayment. The right transferred to Kotak was primarily the right to recover the debts, in accordance with law, by proceeding against the underlying security furnished by the bonds/ mortgage deed(s).

Therefore, the court held that the Instrument was chargeable with stamp duty under Article 62(c) of Schedule 1B of the UP Stamp Act.

Whilst coming to the conclusion that assignment of debt would not constitute a conveyance, the court referred to the definition of conveyance to state that debt is an intangible property which has to be claimed or enforced by action and not by taking physical possession thereof, in contrast to immovable and movable property.

In this regard, it may be noted that there are various judicial precedents 4 , where it has been held that an interest (including mortgage interest) in immovable property is itself immovable property.

However, even assuming assignment of debt with underlying securities over immovable property amounts to a conveyance, it

may be pertinent to refer to the definition of conveyance in the UP Stamp Act which specifically excludes a conveyance which is otherwise provided for by the Schedule to the UP Stamp Act.

Article 62(c) of the UP Stamp Act reads as follows:

“62. Transfer (whether with or without consideration) – … (c) of any interest secured by a bond, mortgagedeed or policy of insurance--”

In view of the above, transfer of any interest secured by a mortgage deed, which is covered under Article 62(c), would be excluded from the meaning of conveyance and would be chargeable to stamp duty under Article 62.

In this regard it may be pertinent to refer to the definitions of ‘bond’ and ‘mortgage deed’ under the UP Stamp Act, which is as follows:

“" Bond " includes

(a) any instrument whereby a person obliges himself to pay money to another, on condition that the obligation shall be void if a specified act is performed, or is not performed, as the case may be;

(b) any instrument attested by a witness and not payable to order or bearer, whereby a person obliges himself to pay money to another; and

(c) any instrument so attested, whereby a person obliges himself to deliver grain or other agricultural produce to another

“" Mortgage-deed ". — "mortgage-deed" includes every instrument whereby, for the purpose of securing money advanced, or to be advanced, by way of loan, or an existing or future debt, or the performance of an engagement, one person transfers, or creates, to, or in favour of another, a right over or in respect of specified property;”

In view of the above, where a debt secured by a bond or a mortgage deed is assigned under a deed of assignment, the stamp duty payable on such deed of assignment will be under Article 62(c) of the UP Stamp Act or corresponding provisions of the Stamp Act of other States.

However, in cases of unsecured loans or loans secured by an equitable mortgage (where there is no mortgage deed), the deed of assignment would attract ad valorem stamp duty chargeable on conveyance, since the same will not get covered under Article 62(c) or similar provisions in other states.

The market practice until now has been to stamp the deed of assignment of debt under the relevant article for Conveyance in the applicable Stamp Act. In fact, in States such as Maharashtra, the State Government has issued notifications for reduction of stamp duty on a deed of assignment under the article for Conveyance.

The judgment passed by the Allahabad High Court in the Kotak case may prove to be a welcome step in reducing the incidence of stamp duty on debt assignment transactions. However, it would need to be seen whether in other States a similar view is taken by stamp duty authorities.

This update has been prepared by Aastha (Partner), Debopam Dutta (Managing Associate) and Abhay Jain (Associate).

1 Notification No. F4(3)FD/Tax/2017-110 dated March 8, 2017 issued by Finance Department (Tax Division) Government Of Rajasthan.

2 Notification No.Mudrank-2002/875/C.R.173-M-1 dated May 6, 2002 issued by Revenue & Forests Department, Government of Maharashtra.

3 Reference Against MISC. Acts. No. 1 of 2016, order dated February 9, 2018.

4 Bank of Upper India Ltd. (in liquidation) v. Fanny Skinner and Ors., AIR 1929 All 161. See also Prahlad Dalsukhrai and Ors. v. Maganlal Muljibhai Tewar, AIR 1952 Bom 454 and Harihar Pandey v. Vindhayachal Rai and Ors., AIR 1949 Pat 170.

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