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In Gloster Limited v. Gloster Cables Limited & Ors., Civil Appeal Nos. 2996 & 4493 of 2024, reported as (2026) INSC 81, the Supreme Court of India addressed an important dispute between Gloster Limited, the Successful Resolution Applicant (SRA), and Gloster Cables Limited (GCL) concerning the ownership of the trademark “Gloster”.
The central issue was whether the Adjudicating Authority under the Insolvency and Bankruptcy Code, 2016 (IBC) had jurisdiction to declare ownership of a trademark during insolvency proceedings. The Court’s ruling clarified the boundaries of insolvency jurisdiction and reinforced the principle that disputes over trademark title must be adjudicated by competent civil courts.
Background of the Case
The dispute traces back to a series of agreements between Fort Gloster Industries Limited (FGIL), the Corporate Debtor, and GCL. Beginning in 1995, GCL was permitted to use the trademark “Gloster” under a technical collaboration agreement. Over the years, further agreements were executed, including a Trademark License Agreement in 2004, a hypothecation arrangement in 2006, and a Supplemental Trademark Agreement in 2008 that contemplated assignment of the mark to GCL once restraint orders imposed by the Board for Industrial and Financial Reconstruction (BIFR) were lifted. Following the repeal of Sick Industrial Companies (Special Provisions) Act, 1985 (SICA) in 2016, the restraint orders ceased, and in 2017 a Deed of Assignment was executed confirming transfer of the trademark to GCL. In 2018, insolvency proceedings commenced against FGIL, and shortly thereafter the trademark was registered in GCL’s name.
Decisions of Lower Forums
The National Company Law Tribunal (NCLT), Kolkata, in 2019 dismissed GCL’s application, holding that the trademark was an asset of FGIL. It declared the 2017 Assignment Deed void as a preferential and undervalued transaction under Sections 43 and 45 of the IBC and further held that registration of the trademark during the Corporate Insolvency Resolution Process (CIRP) violated Section 14(1)(b) of the IBC.
In 2024, the National Company Law Appellate Tribunal (NCLAT) reversed the NCLT’s findings on title, holding that the assignment was validly contingent upon the vacation of BIFR orders. However, it upheld NCLT’s jurisdiction under Section 60(5)(c) of the IBC.
Arguments Presented
Gloster Limited and the Resolution Professional contended that registration of the trademark in GCL’s name after commencement of CIRP violated the moratorium under Section 14(1)(b). They argued that FGIL’s balance sheets consistently treated the trademark as its asset, that the 2008 agreement had been concealed during CIRP, and that the assignment was void ab initio as it violated BIFR injunctions and was undervalued. They further asserted that the Supplemental Agreement was void under Section 23 of the Contract Act.
Gloster Cables Limited argued that NCLT and NCLAT lacked jurisdiction to decide substantive title to trademarks, which must be adjudicated by civil courts. They maintained that ownership was acquired through the 2008 and 2017 agreements, that GCL had continuously used the mark since 1995, and that the Resolution Plan itself acknowledged rival claims without conclusively vesting ownership in FGIL.
Supreme Court’s Ruling
The Court held that while the NCLT has wide powers under Section 60(5)(c) of the IBC, those powers cannot extend to adjudicating matters unrelated to insolvency. Trademark title disputes are independent of insolvency proceedings and must be decided by civil courts. In support of this, the Court relied on Embassy Property Developments Pvt. Ltd. v. State of Karnataka ((2020) 13 SCC 308) and Gujarat Urja Vikas Nigam Ltd. v. Amit Gupta ((2021) 7 SCC 209), both of which emphasized that NCLT’s jurisdiction is confined to matters arising directly from insolvency.
The Court observed that the NCLT cannot modify an approved Resolution Plan to grant ownership rights that were not established in the plan itself. Citing SREI Multiple Asset Investment Trust Vision India Fund v. Deccan Chronicle Marketeers ((2023) 7 SCC 295), the Court reiterated that the sanctity of the Resolution Plan must be preserved, and rival claims acknowledged in the plan cannot be conclusively resolved by the insolvency forum.
The Court also observed that avoidance proceedings under Sections 43 and 45 of the IBC require specific applications by the Resolution Professional. The NCLT erred in declaring the assignment preferential without such an application, effectively deciding the matter “by a sidewind.” This was contrary to the principle laid down in Anuj Jain v. Axis Bank Ltd. ((2020) 8 SCC 401), which requires preferential or undervalued transactions to be specifically pleaded and examined.
Conclusion
The Supreme Court concluded that both NCLT and NCLAT exceeded their jurisdiction by declaring ownership of the trademark “Gloster.” It held that such disputes must be adjudicated by competent civil courts, uninfluenced by observations made during insolvency proceedings. The judgment reinforces the principle that insolvency forums cannot be used to settle substantive intellectual property disputes. For corporate stakeholders, the ruling underscores the sanctity of Resolution Plans, the limits of insolvency jurisdiction, and the importance of transparency in corporate transactions. It also observed the necessity of proper forums for adjudicating trademark ownership disputes, thereby preserving the integrity of both insolvency and intellectual property law.
