Trademark Disputes That Pre-Date Insolvency Fall Outside NCLT's Jurisdiction: Supreme Court

“Disputes Dehors Insolvency Cannot Be Dressed Up As CIRP Issues Merely Because They Arise During The Process” – In a ruling that will serve as a judicial compass for insolvency professionals, resolution applicants and adjudicating authorities alike, the Supreme Court in Gloster Limited v. Gloster Cables Limited & Ors., firmly held that insolvency tribunals cannot declare ownership of trademarks merely because the dispute surfaces during the Corporate Insolvency Resolution Process (CIRP). The Court set aside the finding of the National Company Law Tribunal (NCLT), Kolkata, which had declared the trademark “Gloster” as an asset of the Corporate Debtor.

Declaring that Section 60(5)(c) of the Insolvency and Bankruptcy Code, 2016 does not authorise the NCLT to adjudicate upon pre-existing proprietary disputes unrelated to the insolvency resolution itself, the Court observed, “The issue of the title of the Trademark was not ‘in relation to the insolvency proceedings’ on the facts of the present case.”

The apex court categorically ruled that NCLT’s “residuary jurisdiction” under Section 60(5)(c) cannot be used as a judicial shortcut to bypass civil litigation on trademark ownership. “Merely because a dispute arises during CIRP does not confer jurisdiction upon the Adjudicating Authority to grant declaratory reliefs on civil rights that stand disputed,” the Court noted, reaffirming the jurisprudence laid down in Embassy Property and Gujarat Urja.

“A Plan Is Not A Canvas For Claiming Undeclared Rights”: SC Invalidates Trademark Title Declaration Not Contained In Resolution Plan

The matter stemmed from the CIRP of Fort Gloster Industries Ltd. (FGIL), where the successful resolution applicant (SRA) Gloster Limited claimed that the trademark “Gloster” belonged to the Corporate Debtor and had therefore vested in it post-resolution. However, Gloster Cables Limited (GCL) had, prior to insolvency, entered into a string of licensing and assignment agreements with FGIL, culminating in the registration of the trademark in its own name during the moratorium.

Interestingly, while GCL had moved the NCLT under Section 60(5) IBC seeking only to ensure that the resolution plan excluded the trademark from FGIL’s assets, the NCLT not only dismissed GCL’s plea but went on to declare the trademark as an asset of FGIL. This declaration became the core legal controversy.

The Supreme Court, after analysing the resolution plan approved by the Committee of Creditors (CoC), noted, “Even in the approved plan it was the understanding of the appellant that there were rival claims over the title of the trademark ‘Gloster’.” The Court highlighted that the plan merely recorded the SRA’s belief and understanding that the trademark was wrongfully assigned and should be treated as FGIL’s asset—without any adjudication on the merits of title.

The bench comprising Justice J.B. Pardiwala and Justice K.V. Viswanathan warned against treating such expressions of belief as binding legal conclusions. “The appellant took FGIL under its fold with this understanding as set out in the plan. There was no definite assertion about any undisputed claim to the title,” the Court stated, adding, “Any grant of rights over and above what is recognised in the plan would amount to an impermissible modification.”

The Court drew a compelling analogy from its earlier ruling in SREI Multiple Asset Investment Trust v. Deccan Chronicle Marketeers, declaring that once a resolution plan is approved, the NCLT cannot travel beyond its terms to confer new rights.

“Residuary Jurisdiction Is Not A Judicial Carte Blanche”: Supreme Court Slams NCLT For Suo Motu Application Of Avoidance Provisions Without Pleadings

In a particularly stern rebuke to the NCLT, the Court struck down its invocation of Sections 43 and 45 IBC to declare the 2017 assignment deed between FGIL and GCL as a preferential and undervalued transaction—despite no application having been filed by the Resolution Professional (RP) or any eligible party.

“The findings of the NCLT are perverse and in gross violation of the principles of natural justice,” the Court said, holding that a summary declaration without notice or proper pleadings was procedurally flawed and legally unsustainable.

On this point, the Court sided with the National Company Law Appellate Tribunal (NCLAT), which had earlier held that in the absence of an application by the RP, the adjudicating authority could not examine transactions under Sections 43 to 47 of the Code. The Supreme Court reiterated, “The avoidance of transactions requires specific pleadings, rigorous scrutiny and compliance with principles of natural justice.”

Critically, the Court noted that while the RP later claimed to have discovered the relevant documents too late for forensic audit, “no application was filed and Respondent No.1 was not put on notice about the alleged suspicion shrouding the agreements.”

The Court also declined to approve the NCLAT’s own finding that the trademark vested with GCL by virtue of the 2008 Supplemental Agreement, clarifying that “that too was a matter over which the fora below could not have enquired into in the facts and circumstances.”

“The NCLT Cannot Be Used As A Backdoor To Cure Lethargy Or Ambiguity In Resolution Plans”

The judgment strongly reaffirms that an approved resolution plan is the constitutional charter between the SRA and all stakeholders and cannot be judicially rewritten post-facto by NCLT under the guise of interpretation. If the plan itself merely acknowledges a disputed claim to an asset, the Adjudicating Authority cannot declare ownership as a collateral determination.

“If the SRA perceived clouds hovering over its title, it is for the SRA to resort to remedies and protect its rights,” the Court observed. “NCLT, while adjudicating an application under Section 60(5), could not have passed a direction that effectively conferred proprietary rights not included in the plan.”

Importantly, the Court also protected the rights of the other party by holding that, “GCL could not have been rendered worse off in their own application.”

“Courts Must Respect Institutional Limits”: Apex Court Sends Trademark Dispute To Civil Forum

Bringing closure to the jurisdictional question, the Supreme Court clarified that the dispute over the trademark “Gloster”—involving complex questions of assignment, licensing, hypothecation and BIFR restrictions—was squarely a civil matter falling under the purview of trademark and contract law.

“These are highly contentious issues which are far beyond the ken of the Adjudicating Authority,” the Court declared. “All issues of trademark ownership are left open to be decided by appropriate forum uninfluenced by any observation made herein.”

In doing so, the Court reaffirmed a cardinal principle: Insolvency forums cannot morph into parallel civil courts for the resolution of property and IP disputes.

Date of Decision: 22 January 2026

Case Title: Gloster Limited v. Gloster Cables Limited & Ors.