Smaaash: Tribunal sets aside ‘fraudulent’ transfer of Smaaash brand

The Mumbai bench of the National Company Law Tribunal (NCLT) has annulled the change of ownership of the “Smaaash” brand calling it a “fraudulent” transaction by promoter Shripal Morakhia and directed that it be transferred back to the insolvent Smaaash Entertainment (SEPL) in what could enhance value for the debt-laden sports entertainment company that owes creditors led by Edelweiss ARC ₹452 crore.

The NCLT said Morakhia colluded with his associates to siphon off a “critical and valuable” asset of the company through an assignment agreement signed in 2022 which substantially reduced the financial proposal offered by prospective bidders for the company. It has directed Fun Gateway Arena (FGAPL) to return all the benefits earned by it on account of usage of the brand.

The court was deciding on the plea by resolution professional (RP) Bhrugesh Amin to disallow promoter Morakhia from transferring the trademarks of Smaaash to privately owned FGAPL after it was discovered that the brand was transferred through a back-dated deed of assignment signed in 2019.

Amin did not reply to an email seeking comment.

Morakhia had approached the registrar of trademarks in July 2022 for registering the brand name based on the original deed of assignment dated August 31, 2019. The court said Morakhia or other respondent could not explain the delay of more than three years for getting the brand name registered.

“This itself proves and establishes that the earlier deed of assignment as well as the deed of cancellation and the present deed of assignment are fabricated and bogus documents brought into existence by the respondents to scuttle the CIRP process and to take away the valuable asset of corporate debtor,” the order said, observing that the notarisation in both documents appears doubtful.In response to ET’s queries, Avanish Agarwal, chief marketing officer, FGAPL, said the brand still belongs to that company.