The core issue in this case centers on a dispute over the ownership and title of the trademark “Gloster” between Gloster Limited (the Successful Resolution Applicant or SRA) and Gloster Cables Limited(GCL). The dispute arose during the Corporate Insolvency Resolution Process (CIRP) of Fort Gloster Industries Limited (the Corporate Debtor).
Procedural Background
- GCL’s Claim: GCL sought to exclude the trademark from the Corporate Debtor's assets, asserting ownership through a series of agreements dating back to 1995, including a 2008 Supplemental Agreement and a 2017 Deed of Assignment.
- NCLT Ruling: The Adjudicating Authority (NCLT) originally held that the trademark was an asset of the Corporate Debtor and that the SRA was entitled to it. It found the transfers to GCL invalid because they breached BIFR restraint orders and constituted preferential or undervalued transactions under the IBC.
- NCLAT Ruling: The NCLAT reversed this, ruling in favor of GCL and finding that the NCLT lacked the jurisdiction to declare the transfers void without a specific application from the Resolution Professional.
Key Insights and Legal Analysis
The Supreme Court analyzed the limits of the Adjudicating Authority’s power and the sanctity of the Resolution Plan:
- Jurisdiction under Section 60(5)(c): The Court clarified that while Section 60(5)(c) provides broad jurisdiction over matters "arising out of or in relation to" insolvency, it does not allow the NCLT to "short-circuit" judicial proceedings for complex title disputes that are dehors (outside) the insolvency realm. The nexus with insolvency must exist, and the NCLT should not usurp the jurisdiction of other courts for general property disputes.
- Sanctity of the Resolution Plan: The SRA’s approved plan explicitly recognized "rival claims" and stated that the SRA merely "believed" or "understood" the trademark belonged to the Corporate Debtor. The Court held that the NCLT cannot modify an approved plan to grant the SRA "better rights" than those contained in the plan voted on by the Committee of Creditors.
- Procedural Requirements for Avoidance: The Court criticized the NCLT for declaring the 2017 assignment preferential (Section 43) or undervalued (Section 45) "by a sidewind". Such declarations require "rigorous scrutiny" and formal applications to ensure natural justice, which did not occur in this case.
Conclusion
The Supreme Court set aside the findings of both the NCLT and the NCLAT regarding the title to the trademark,. It ruled that the Adjudicating Authority exceeded its jurisdiction by declaring the trademark an asset of the Corporate Debtor,. The Court made it clear that this decision does not prevent either party from litigating the title issue in an appropriate civil court or authority, where the matter will be decided on its own merits.
[Gloster Limited v Gloster Cables Limited & Ors, Supreme Court of India (INSC 2026 81)]
Disclaimer: The information contained in this article is intended for informational purposes only and does not constitute legal opinion or advice