Insolvency Tribunals Cannot Decide Disputed Trademark Ownership: Supreme Court Draws a Clear Jurisdictional Line

The Supreme Court of India has, in a recent decision in Gloster Limited vs. Gloster Cables Limited & Ors., delivered an important clarification on the limits of insolvency jurisdiction, particularly where intellectual property ownership disputes intersect with the Corporate Insolvency Resolution Process (CIRP).

The ruling is significant for lenders, resolution applicants and insolvency professionals, as it reinforces that insolvency forums are not substitutes for civil courts in adjudicating complex title disputes.

Background: 

The dispute arose in the CIRP of Fort Gloster Industries Limited, where competing claims were raised over the ownership of the trademark “Gloster”.

• The successful resolution applicant asserted that the trademark was a corporate debtor asset, capable of being transferred under an approved resolution plan.

• Another party (who was assigned the rights over the trademark vide an assignment agreement, and was also an associate company of the corporate debtor) claimed independent ownership based on prior contractual arrangements, assignments, and long-standing use.

An application was filed before the National Company Law Tribunal under Section 60(5) of the Insolvency and Bankruptcy Code, 2016 (IBC), seeking a declaration on trademark ownership.

Conflicting Views of the NCLT and NCLAT:

• The NCLT proceeded to examine the contractual documents and effectively ruled on title and ownership, treating the trademark as part of the corporate debtor’s estate.

• On appeal, the National Company Law Appellate Tribunal reversed this approach, and ruled against the resolution applicant. 

The matter ultimately reached the Supreme Court.

Supreme Court’s Key Findings:

The Supreme Court upheld the NCLAT’s reasoning and firmly curtailed the expansion of insolvency jurisdiction.

1. Section 60(5) Is Broad—but Not Boundless:

While Section 60(5)(c) allows NCLT to decide questions “arising out of or in relation to insolvency resolution”, this does not extend to adjudicating contested civil or commercial titles, especially where:

• The dispute pre-dates insolvency, and

• Determination requires detailed examination of contracts, assignments, and factual evidence.

2. Insolvency Forums Cannot Decide IP Title Disputes:

Trademark ownership disputes involve substantive proprietary rights, which must be decided by appropriate civil or commercial courts, not insolvency tribunals functioning under summary jurisdiction.

The Court cautioned against converting CIRP proceedings into parallel civil trials.

3. Resolution Plans Cannot Be Altered Indirectly:

The Apex Court reiterated that once a resolution plan is approved:

• It cannot be modified, improved, or supplemented through collateral applications.

• Insolvency tribunals cannot “declare” additional assets or rights in favour of a resolution applicant outside the plan framework.

This protects the finality and commercial certainty of the IBC process.

4. Jurisdictional Discipline Is Central to the IBC:

Allowing NCLTs to decide complex ownership disputes would:

• Delay resolution timelines,

• Dilute the summary nature of CIRP, and

• Create uncertainty for lenders and bidders relying on disclosed asset pools.

The Court’s ruling restores discipline to the insolvency framework.

Why This Matters?

For lenders:

• Reinforces that asset pools in CIRP are limited to undisputed or clearly established assets.

• Reduces post-resolution litigation risk arising from tribunal overreach.

For resolution applicants:

• Emphasises the need for robust diligence on IP and other intangible assets.

• Confirms that insolvency orders cannot cure defective or disputed title.

For insolvency professionals:

• Clarifies that Section 60(5) should not be used as a catch-all provision for resolving non-insolvency disputes.

Author’s Disclosure:

The author had appeared on behalf of the Resolution Applicant in the proceedings before the National Company Law Tribunal. However, the analysis above is intended as an academic commentary based solely on the judgment as delivered, and is not intended to represent the position of any party to the proceedings.