Approved Resolution Plan Is Not a Platform to Smuggle in Proprietary Claims: Supreme Court

“You Take the Debtor As Is – With All Disputes Attached”, In a significant reaffirmation of the binding nature of resolution plans under the Insolvency and Bankruptcy Code, 2016, the Supreme Court on 22 January 2026 ruled that a Successful Resolution Applicant (SRA) cannot seek proprietary rights over a trademark where the approved resolution plan itself only records a belief or understanding of ownership, and not a clear title.

The Court, in Gloster Limited v. Gloster Cables Limited & Ors., Civil Appeal Nos. 2996 and 4493 of 2024, found that Gloster Limited, the SRA in the CIRP of Fort Gloster Industries Ltd. (FGIL), could not claim title over the trademark “Gloster” when its own plan merely noted an "understanding" and "belief" that the trademark had been unlawfully transferred to Gloster Cables Ltd. (GCL).

Justice K.V. Viswanathan, writing for the bench, underlined:

“There is no definite assertion about any undisputed claim to the title of trademark ‘Gloster’ and in fact to the contrary… it recognizes rival claims.”

The Court held that by submitting a resolution plan that explicitly acknowledged the existence of competing claims over the trademark, the SRA had accepted to step into the shoes of the Corporate Debtor with those disputes intact. There could be no post-approval assertion of absolute title based on such a conditional or belief-based clause.

“You Cannot Reap What You Didn't Sow in the Resolution Plan”

The Court conducted a detailed reading of Clause 6 of the resolution plan submitted by Gloster Limited, which clearly outlined the existence of:

• A License Agreement of 2004 between FGIL and GCL,
• A Supplemental Agreement in 2008 contemplating assignment,
• A Deed of Assignment dated 20 September 2017, and
• The SRA’s belief that these were mala fide and legally barred.

However, rather than asserting a concrete legal entitlement, the plan simply recorded:

“The RA believes that the said Agreement/s have been entered into by FGIL with its related party GCL with the intention of transferring the said Trademark to GCL with malafide intention… The RA understands that the said Trademark is the lawful property of the CD.”

The Court held that such subjective expressions cannot confer legal title, especially when the plan did not seek to nullify the alleged assignment through any avoidance proceedings under Sections 43 to 47 of the IBC.

“The appellant took FGIL under its fold with this understanding as set out in the plan,” the Court observed. “It cannot now demand rights beyond the scope of what was admitted in the resolution document.”

SRA Is Bound By What It Represents in the Plan – Not What It Later Asserts in Court

The ruling stresses that the plan is not a springboard for later expansion of rights. Once approved by the Committee of Creditors (CoC) and sanctioned under Section 31 IBC, it becomes the charter that governs the legal rights and liabilities of all stakeholders.

Quoting from its earlier precedent in SREI Multiple Asset Investment Trust v. Deccan Chronicle Marketeers, the Court reiterated:

“Any grant of further rights over and above what is recognised in the plan would amount to modification or alteration of the approved plan… This is impermissible in law.”

The Court was emphatic that a resolution applicant cannot plant a vague assertion of ownership in the plan and then ask the NCLT to declare title based on it—especially when such ownership was a matter of active legal contest.

Resolution Plans Must Be Precise, Not Speculative

This judgment sends a sharp message to future resolution applicants: if you intend to claim title over a disputed asset, either assert it clearly in the plan or seek its adjudication through the proper legal channels. Ambiguity in the plan cannot be clarified through post-resolution litigation or by asking the NCLT to declare ownership in proceedings meant only to approve the plan.

“A plan that recognises a dispute cannot serve as the basis for a declaration of absolute right,” the Court made clear.

In practical terms, this means that resolution applicants must conduct proper due diligence and not rely on the adjudicating authority to clean up title defects post-approval. They cannot hope to claim proprietary benefits beyond what has been vetted, disclosed and approved by the CoC.

Plan Finality Is the Cornerstone of IBC

This ruling not only upholds the sanctity and finality of the resolution plan but reinforces the principle that insolvency is not a process for private title adjudication. It confirms that resolution applicants must take the debtor “as is”, including all legal uncertainties surrounding the assets.

The decision serves as a constitutional reinforcement of commercial certainty within IBC, warning that:

“The plan is not a canvas to smuggle in proprietary rights that have neither been asserted nor adjudicated.”

Date of Decision: 22 January 2026