Can NCLT Declare Trademark Title Invoking Its Power U/S 60(5) IBC ?: Supreme Court Answers

The Court was hearing appeals arising out of proceedings initiated during the Corporate Insolvency Resolution Process (CIRP) of Fort Gloster Industries Limited, wherein disputes arose regarding ownership of the trademark “Gloster” between Gloster Limited, the Successful Resolution Applicant, and Gloster Cables Limited.

A Bench comprising Justice J.B. Pardiwala and Justice K.V. Viswanathan examined whether the Adjudicating Authority, while deciding an application under Section 60(5) of the IBC, could go beyond the approved resolution plan and render a declaration on title to the trademark, and held: “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.”

Background

Fort Gloster Industries Limited was admitted into CIRP following a Section 9 application. During the resolution process, Gloster Limited submitted a resolution plan, which was approved by the Committee of Creditors and later by the Adjudicating Authority.

Gloster Cables Limited thereafter filed an application under Section 60(5) of the IBC seeking exclusion of the trademark “Gloster” from the assets of the Corporate Debtor, asserting that it was the registered proprietor of the trademark based on earlier agreements and a deed of assignment.

Gloster Cables contended that the trademark had been assigned to it pursuant to a Supplemental Trademark Agreement and a subsequent Deed of Assignment, and that it had long been using and building goodwill in the mark.

The Resolution Professional and the Successful Resolution Applicant opposed the application, contending that the alleged assignment was hit by restraint orders under the Sick Industrial Companies (Special Provisions) Act, was preferential and undervalued, and that the trademark continued to be an asset of the Corporate Debtor.

The NCLT rejected Gloster Cables’ application and held that the trademark was an asset of the Corporate Debtor, effectively vesting title in the Successful Resolution Applicant. The NCLAT, however, reversed this finding, holding that the Adjudicating Authority lacked jurisdiction to declare title and that the assignment could not be ignored in the manner done by the NCLT.

Both sides approached the Supreme Court.

Court’s Observation

The Supreme Court examined the scope of Section 60(5)(c) of the IBC and reiterated that the jurisdiction of the Adjudicating Authority is confined to questions of law or fact arising out of or in relation to insolvency resolution or liquidation proceedings.

The Court held that on the facts of the present case, the issue of title to the trademark “Gloster” did not arise out of or relate to the insolvency resolution process. The dispute was essentially one of trademark ownership between two competing entities and could not be summarily adjudicated under Section 60(5).

The Court noted that the approved resolution plan itself recorded rival claims over the trademark and reflected only the Resolution Applicant’s belief and understanding that the assignment was invalid. The plan did not confer an undisputed title over the trademark in favour of the Successful Resolution Applicant.

While relying on its decision in SREI Multiple Asset Investment Trust Vision India Fund v. Deccan Chronicle Marketeers (2023), the Bench reiterated that “the ultimate order of the NCLT recognising 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 stressed that “any grant of further rights over and above what is recognised in the plan would amount to modification or alteration of the approved plan”, while emphasising 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”.

The Court further held that in the absence of any avoidance application filed by the Resolution Professional under Sections 43, 45, or related provisions of the IBC, the Adjudicating Authority could not, in the guise of deciding a Section 60(5) application, undertake a full-fledged determination of title or invalidate transactions.

The Court also relied upon earlier judgments to reiterate that the NCLT’s jurisdiction under Section 60(5) is limited to questions “which arise solely from or which relate to the insolvency of the Corporate Debtors” and that “nexus must remain with the insolvency of the Corporate Debtor for adjudication of an issue and grant of relief under Section 60(5)(c).”

Stating that “the enquiry was primarily on the approval of the plan and on the application of GCL”, the Court concluded that “the findings of the NCLT are perverse and in gross violation of the principles of natural justice and beyond the scope of the enquiry as far as the present case is concerned”.

Conclusion

The Supreme Court held that the Adjudicating Authority acted beyond its jurisdiction in declaring title to the trademark “Gloster” in favour of the Successful Resolution Applicant under Section 60(5) of the IBC.

The appeals and the cross appeals were accordingly disposed of.

Cause Title: Gloster Limited v. Gloster Cables Limited (Neutral Citation: 2026 INSC 81)

Appearanes

Appellant: Senior Advocate Shyam Divan

Respondents: Senior Advocates Ranjit Kumar, Chander M. Lall, & Advocate Anand Varma

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