Kiran Raj

The Supreme Court of India Division Bench of Justice J.B. Pardiwala and Justice K.V. Viswanathan disposed of cross-appeals arising from a challenge to the NCLT’s decision on ownership of the trademark “Gloster” during a corporate insolvency resolution process. Holding that the NCLT’s residuary jurisdiction under Section 60(5) of the Insolvency and Bankruptcy Code cannot be used to adjudicate disputed questions of title to assets, including intellectual property such as trademarks, the Court said such issues can be examined only where they bear a direct and proximate nexus to the insolvency process and do not travel beyond the scope of the approved resolution plan. It set aside both the NCLT’s title declaration and the NCLAT’s observations on vesting, leaving the title issue to be decided elsewhere.

The dispute arose during the corporate insolvency resolution process of a company undergoing proceedings under the Insolvency and Bankruptcy Code, 2016. During the pendency of the resolution plan approval, a third party asserted ownership rights over the trademark “Gloster,” contending that the trademark did not form part of the corporate debtor’s assets. The applicant relied on a series of agreements, including a technical collaboration agreement, a trademark licence agreement, a supplemental trademark agreement, and a deed of assignment, to assert that ownership had vested in it prior to the commencement of insolvency proceedings.

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The resolution professional, the committee of creditors, and the successful resolution applicant opposed the claim, asserting that the alleged assignment was contrary to statutory restraints imposed during proceedings under the Sick Industrial Companies (Special Provisions) Act, 1985, violated provisions of the Insolvency and Bankruptcy Code, and amounted to a preferential and undervalued transaction. The adjudicating authority, while approving the resolution plan, rejected the third party’s application and recorded a finding that the trademark was an asset of the corporate debtor.

On appeal, the appellate tribunal examined both the jurisdiction of the adjudicating authority under Section 60(5) of the Code and the validity of findings relating to trademark ownership, leading to cross appeals before the Supreme Court.

The Court observed that “the issue of the title of the Trademark was not ‘in relation to the insolvency proceedings’, on the facts of the present case.” It recorded that the approved resolution plan itself acknowledged rival claims over the trademark and merely reflected the resolution applicant’s “belief” and “understanding” regarding ownership.

The Court stated that “under the insolvency regime, a plan approved by the COC and ultimately by the Adjudicating Authority is the charter by which stakeholders are governed.” It further observed that “any grant of further rights over and above what is recognized in the plan would amount to modification or alteration of the approved plan.”

Referring to precedent in Gujarat Urja Vikas Nigam Ltd. v. Amit Gupta and others, the court observed: “This Court examined the scope of Section 60(5). This Court held that under 60(5)(c) the Adjudicating Authority had jurisdiction to adjudicate disputes, which arise solely from or which relate to the insolvency of the Corporate Debtors. Administrating a note of caution, this Court observed that in doing so the authorities under IBC should ensure that they do not usurp the legitimate jurisdiction of other Courts, Tribunals and fora when the dispute is one which does not arise solely from or relate to the insolvency of the Corporate Debtor.”

The Court further observed: “the Adjudicating Authority cannot exercise its jurisdiction over matters dehors the insolvency proceedings since such matters would fall outside the realm of IBC.” It observed that disputes concerning trademark title involved “highly contentious issues which are far beyond the ken of the Adjudicating Authority” in the factual context of the case.

The Court noted that the adjudicating authority, while approving the resolution plan, “we have no doubt in our mind that in exercise of power under Section 60(5)(c) of IBC and while adjudicating the application of GCL on the facts of the present case, the Adjudicating Authority could not have declared title in the trademark “Gloster” in favour of the appellant SRA. The issue of the title of the Trademark was not “in relation to the insolvency proceedings”, on the facts of the present case.”

In this case, the submitted resolution plan recorded GCL’s claim; against that backdrop, the Court observed: “the ultimate order of the NCLT recognizing the title in the trademark “Gloster” with the SRA does not reconcile with the resolution plan as approved by the COC and later by the Adjudicating Authority.”

The Court added that “any grant of further rights over and above what is recognized in the plan would amount to modification or alteration of the approved plan. It should be remembered that the plan as it exists is the one duly approved by the COC and while adjudicating an application of GCL, no directions could be made by the NCLT conferring better rights. In a case like the present where the SRA has perceived clouds hovering over its title, it is for the SRA to resort to remedies and protect its rights. On the facts of the present case, while adjudicating an application under Section 60(5) of GCL, NCLT could not have passed the direction it ultimately passed.”

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The Court directed that “the finding of the Adjudicating Authority holding that the trademark ‘Gloster’ is the asset of the Corporate Debtor as recorded in para 52 of its order dated 27.09.2019 is set aside. The observations made hereinabove are only for the purpose of setting aside the finding of the Adjudicating Authority” and that “these observations would not come in the way of any other Court or authority deciding the issue of title to the trademark ‘Gloster’, if the parties herein litigate upon it.”

“The observations of the NCLAT in Para 26” to the effect that “the title in the trademark vested with the Appellant with the execution of the supplemental trademark agreement dated 15.07.2008” “cannot be sustained. The appeal and cross appeal are disposed of in the above terms.” and “there shall be no order as to costs.”

Case Title: Gloster Limited v. Gloster Cables Limited & Ors.
Neutral Citation: 2026 INSC 81
Case Numbers: Civil Appeal Nos. 2996 of 2024 and 4493 of 2024
Bench: Justice J.B. Pardiwala, Justice K.V. Viswanathan