Gloster Limited vs. Gloster Cables Limited & Ors.

Case Name: Gloster Limited vs. Gloster Cables Limited & Ors. (with connected Civil Appeal No. 4493 of 2024)

Citation: 2026 INSC 81

Court: Supreme Court of India, Civil Appellate Jurisdiction

Date of Decision: January 22, 2026

Bench Composition: Hon’ble Mr. Justice J.B. Pardiwala and Hon’ble Mr. Justice K.V. Viswanathan

Judgment Delivered By: K.V. Viswanathan, J.

Brief Introduction

The case of Gloster Limited vs. Gloster Cables Limited & Ors. (2026) is a significant judicial pronouncement by the Supreme Court of India that clarifies the jurisdictional boundaries of the National Company Law Tribunal (NCLT) under the Insolvency and Bankruptcy Code, 2016 (IBC). The dispute primarily concerns the ownership of the trademark “Gloster,” which was claimed by both the Successful Resolution Applicant (SRA) and a third-party respondent, Gloster Cables Limited (GCL).

Context and Significance

The case defines the scope of Section 60(5)(c) of the IBC, emphasizing that the NCLT’s residuary power to decide questions of law or fact is limited to matters that arise “solely from or in relation to” the insolvency of the Corporate Debtor.

It reinforces that once a Resolution Plan is approved by the Committee of Creditors (CoC) and the Adjudicating Authority, it becomes a binding “charter”. The NCLT cannot use summary proceedings to grant the SRA better rights or titles than those explicitly recognized in the approved plan.

The judgment establishes that the NCLT cannot unilaterally declare transactions as “preferential” (Section 43) or “undervalued” (Section 45) without a formal application by the Resolution Professional and adherence to the principles of natural justice.

Why it is Important

This ruling is considered a landmark because it prevents the NCLT from “short-circuiting” traditional civil litigation for complex title disputes that are independent of the insolvency process. By setting aside the NCLT’s declaration of title, the Supreme Court protected the procedural integrity of the IBC, ensuring that the tribunal does not “usurp the legitimate jurisdiction” of other courts or authorities regarding intellectual property rights.

Facts of the Case

The dispute centers on the ownership and right to use the trademark “Gloster” (Registration No. 690772 in Class 9), which was historically associated with the Corporate Debtor.

Parties Involved

Fort Gloster Industries Limited (FGIL/Corporate Debtor): The original owner of the trademark, which underwent insolvency proceedings.

Gloster Cables Limited (GCL/Respondent No. 1): A company that claimed title to the trademark based on a series of agreements and a 2017 Deed of Assignment.

Gloster Limited (Appellant/Successful Resolution Applicant – SRA): The entity that took over the Corporate Debtor and claimed the trademark was a core asset of the company.

Chronological Sequence of Events

The material facts surrounding the trademark transfer are as follows:

September 10, 2001: FGIL was referred to the Board for Industrial and Financial Reconstruction (BIFR) under SICA. The BIFR passed a restraint order prohibiting FGIL from disposing of any fixed or current assets without consent.

July 29, 2004: FGIL granted a long-term license to GCL to use the “Gloster” trademark for 33 years in exchange for a ₹3 Crore fee and annual royalties.

November 10, 2006: GCL extended a ₹10 Crore loan to FGIL, creating a first and exclusive charge (hypothecation) over the trademark as security.

July 15, 2008: FGIL and GCL entered into a Supplemental Trademark Agreement. This agreement stipulated that the trademark would be assigned to GCL for ₹10 Lakhs, but the assignment was contingent: it would only become effective once the BIFR restraint order was vacated or discharged.

December 1, 2016: SICA was repealed, the BIFR reference abated, and all previous restraint orders ceased to exist.

September 20, 2017: A Deed of Assignment was executed to confirm the absolute transfer of the trademark from FGIL to GCL, effective from May 28, 2017.

August 9, 2018: The Corporate Insolvency Resolution Process (CIRP) commenced against FGIL.

September 17, 2018: During the moratorium period of the CIRP, the Trademark Registry recorded GCL as the registered proprietor of the trademark.

April 2019: The Resolution Professional (RP) alleged that the assignment agreements were only disclosed at the last stage of the CIRP, preventing a forensic audit of the transactions.

Resolution Plan Approval: The SRA (Gloster Limited) submitted a resolution plan that was approved by the Committee of Creditors. Notably, the plan explicitly recorded the SRA’s “belief” and “understanding” that the trademark assignment to GCL was mala fide and “bad in law,” asserting that the mark should remain the absolute property of the Corporate Debtor.

Legal Issues

The Supreme Court addressed several critical questions of law arising from the conflict between the Successful Resolution Applicant (SRA) and Gloster Cables Limited (GCL) regarding the title to the trademark “Gloster”. The legal issues were framed as follows:

1. Whether the Adjudicating Authority (NCLT) has the jurisdiction to decide complex questions of title to property—specifically intellectual property like trademarks—when such disputes do not arise solely out of the insolvency of the Corporate Debtor?
2. Whether the Adjudicating Authority, while adjudicating a side application, can pass a declaration of title that effectively modifies or alters the terms of a Resolution Plan already approved by the Committee of Creditors (CoC)?

• Whether the NCLT can validly neutralize a transaction as “preferential” or “undervalued” under Sections 43 and 45 of the IBC in the absence of a formal application by the Resolution Professional (RP) and without providing the affected parties a rigorous trial or specific notice?

1. Whether the registration of a trademark by the Trademark Registry during the moratorium period (Section 14) is void if the underlying assignment of that trademark was purportedly completed and effective prior to the commencement of the CIRP?
2. Whether a trademark assignment agreement executed during the operation of a BIFR restraint order is void ab initio under the Indian Contract Act, or if it can validly take effect once the restraint is vacated or the SICA proceedings abate?

Arguments Presented

The Supreme Court heard comprehensive arguments from the Successful Resolution Applicant (SRA), the Resolution Professional (RP), and Gloster Cables Limited (GCL) regarding the jurisdictional and substantive validity of the trademark assignment.

Submissions of the Appellant (SRA – Gloster Limited)

1. The SRA contended that the trademark “Gloster” remained an asset of the Corporate Debtor (FGIL) and that the NCLT was right to declare it as such.
2. GCL was estopped from questioning the NCLT’s jurisdiction because GCL itself had invoked that jurisdiction by filing the application to exclude the trademark.
3. The registration of the trademark in GCL’s name on September 17, 2018, occurred after the CIRP commenced on August 9, 2018. This violated Section 14(1)(b) of the IBC, which prohibits transferring or disposing of any assets or legal rights of the Corporate Debtor during the moratorium.
4. The Supplemental Agreement (2008) was executed while a BIFR restraint order was in force. Therefore, it was a void document under Section 23 of the Indian Contract Act, 1872, as it was opposed to public policy and judicial orders.
5. GCL made inconsistent claims regarding when it acquired title—pleading December 1, 2016, in court but stating May 28, 2017, in the Deed of Assignment.
6. GCL continued to pay license fees to FGIL for the financial year ending March 31, 2018, which proves they did not believe they owned the trademark at that time.

Submissions of the Resolution Professional (RP)

1. The RP supported the SRA, alleging that the trademark assignment was a fraudulent and undervalued transaction.
2. The Corporate Debtor and GCL deliberately suppressed the 2008 and 2017 agreements until April 2019, the very last stage of the CIRP. This prevented the RP from conducting a forensic audit of these transactions.
3. The trademark was assigned for a mere ₹10 Lakhs under the 2008 agreement, despite being used as security for a ₹10 Crore loan in 2006. This qualifies as an undervalued transaction under Section 45 of the IBC.
4. Throughout the CIRP, the audited balance sheets (2016-18) treated the trademark as an asset of FGIL, and FGIL continued to receive annual license fees of ₹2 Lakhs.

Submissions of the Respondent (GCL – Gloster Cables Limited)

1. GCL maintained that the trademark was its lawful property and the NCLT had no power to declare otherwise in a summary insolvency proceeding.
2. Under Section 60(5)(c) of the IBC, the NCLT can only decide questions “in relation to insolvency”. The title to a trademark is a civil/contractual matter independent of the insolvency process.
3. Under trademark law, title transfers immediately upon assignment; registration is merely a record of that transfer. Since the assignment happened before the CIRP, the trademark was not an asset of the Corporate Debtor at the commencement date.
4. The 2008 agreement was contingent and only became effective after the BIFR restraint was vacated.
5. The SRA cannot obtain better rights than what is provided in the approved plan. The plan only recognized a “belief” of ownership, not a finalized title.
6. GCL had used the mark since 1995, whereas FGIL had not used it since 2003; therefore, the public perceived GCL as the proprietor.

Court’s Reasoning and Analysis

The Supreme Court’s analysis focused on the jurisdictional limits of the Adjudicating Authority (NCLT) and the procedural requirements for handling disputed assets during the insolvency process.

Interpretation of Section 60(5)(c) and Jurisdictional Limits

The Court examined the phrase “arising out of or in relation to the insolvency resolution,” which defines the NCLT’s jurisdiction.

Drawing on Gujarat Urja Vikas Nigam Ltd. v. Amit Gupta, the Court held that the NCLT has jurisdiction only over disputes that arise solely from or relate directly to the insolvency of the Corporate Debtor.

Citing Embassy Property Developments Pvt. Ltd. v. State of Karnataka, the Court ruled that the NCLT cannot “short-circuit” judicial proceedings for rights that fall outside the IBC’s purview.

The Court noted that under Section 18(1)(f)(vi), the Resolution Professional’s duty to take custody of assets is “subject to the determination of ownership by a court or other authority,” implying the NCLT is not the primary forum for resolving complex title disputes.

On the facts of this case, the Court found that the trademark title dispute was a highly contentious civil matter that was not “in relation to the insolvency proceedings.”

Sanctity of the Approved Resolution Plan

The Court emphasized that the Resolution Plan is the governing “charter” for all stakeholders once approved.

The Court observed that the SRA’s own plan did not assert an undisputed title but only recorded a “belief” and “understanding” that the trademark belonged to the Corporate Debtor while acknowledging GCL’s claims.

Referring to SREI Multiple Asset Investment Trust v. Deccan Chronicle, the Court held that the NCLT cannot grant the SRA ownership rights that were not explicitly secured in the CoC-approved plan. Doing so constitutes an impermissible modification of the plan.

Procedural Errors in Avoidance Transactions (Sections 43 & 45)

The Court heavily criticized the NCLT’s suo motu declaration that the assignment was a preferential or undervalued transaction.

The Court agreed with the NCLAT that specific material must be pleaded and a formal application must be moved—typically by the Resolution Professional—before the NCLT can exercise its avoidance powers.

The Court held that declaring a transaction void by a “sidewind” during a plan approval hearing violates the principles of natural justice. The party whose rights are being neutralized (GCL) must be put on clear notice.

Such determinations require a “threadbare examination” of transactions, which cannot be carried out superficially in summary proceedings.

The Role of the BIFR Injunction

The Court found that the NCLT erred in holding the 2008 agreement void solely based on the BIFR restraint. It noted the agreement was contingent upon the vacation of that order, and once SICA was repealed and the order ceased to exist, the contingency was met.

Judgment and Ratio Decidendi

The Supreme Court, through its judgment dated January 22, 2026, disposed of the appeal filed by the SRA and the cross-appeal by GCL, setting aside the conclusive findings on the trademark title reached by both the NCLT and the NCLAT.

Final Decision of the Court

The Court set aside the Adjudicating Authority’s finding that the trademark “Gloster” was an asset of the Corporate Debtor (FGIL).

The Court also set aside the NCLAT’s determination that the title had definitively vested in GCL via the 2008 Supplemental Agreement.

The Court held that the NCLT’s attempt to neutralize the assignment by resorting to Sections 43 and 45 of the IBC was completely untenable and a “sidewind” that violated natural justice.

Ratio Decidendi (Legal Principles Established)

Under Section 60(5)(c) of the IBC, the NCLT has jurisdiction to adjudicate disputes only if they arise solely from or relate directly to the insolvency of the Corporate Debtor; it cannot usurp the jurisdiction of civil courts for independent title disputes.

The Adjudicating Authority cannot confer better rights upon a Successful Resolution Applicant (SRA) than those recognized in the Resolution Plan approved by the Committee of Creditors (CoC).

Any declaration of ownership that contradicts or goes beyond the “beliefs” or “understandings” recorded in the approved Resolution Plan constitutes an impermissible modification of the plan.

Transactions cannot be declared preferential or undervalued under Sections 43 and 45 without a formal application by the Resolution Professional, specific pleadings, and a rigorous examination of facts.

Directions and Orders Issued

The Court clarified that its observations were limited to setting aside the lower authorities’ overreach and should not prevent any other Court or authority from deciding the issue of title to the trademark “Gloster”.

Any future litigation regarding the trademark must be decided on its own merits, uninfluenced by the observations of the NCLT or NCLAT in these insolvency proceedings.

The Court directed that there would be no order as to costs for these appeals.

Critical Analysis

The judgment in Gloster Limited vs. Gloster Cables Limited & Ors. serves as a vital course correction regarding the perceived “limitless” powers of the Adjudicating Authority under the IBC. It balances the need for a time-bound insolvency process with the fundamental legal rights of third parties.

Evaluation of the Judgment

The Supreme Court’s reasoning is deeply rooted in the principle of jurisdictional discipline. By setting aside the NCLT’s declaration of title, the Court effectively curbed the “IBC bypass”—a trend where parties attempt to resolve complex civil or intellectual property disputes through summary insolvency proceedings to avoid the rigors of a full trial. The Court correctly identified that the NCLT’s residuary power under Section 60(5)(c) is not an “open sesame” for all types of litigation involving a Corporate Debtor.

Significance and Implications

The ruling ensures that third parties (like GCL) are not stripped of their assets or legal rights through a “sidewind” in an insolvency forum that lacks the specialized machinery to decide titles.

The judgment clarifies that Sections 43 (Preferential) and 45 (Undervalued) are not self-executing. They require a specific motion, typically by the Resolution Professional, and a rigorous examination of the facts to prevent serious breaches of natural justice.

The decision highlights that a Successful Resolution Applicant (SRA) cannot improve their legal position post-approval. If the SRA took over a company knowing that an asset’s title was “clouded” or disputed, they must litigate that title in the appropriate forum rather than seeking a summary declaration from the NCLT.

Strengths and Weaknesses of Reasoning

Strengths: The Court’s reliance on the “contextual interpretation” of Section 60(5) is a major strength. It reinforces the doctrine that the NCLT must have a “textual hook” for its actions and cannot derive power merely from the “spirit” of the IBC.

Weaknesses: From a purely commercial efficiency standpoint, the decision might be seen as a setback. By sending the parties back to civil court, the trademark’s ownership remains in limbo, which could hinder the SRA’s ability to fully revitalize the Corporate Debtor’s business, potentially impacting the objective of “maximization of value”.

Impact on Law and Society

This case solidifies the boundaries between Insolvency Law and General Civil/IP Law. It sends a clear message to Resolution Applicants to perform deep due diligence, as the NCLT will not act as a “clearing house” for disputed titles.

For the business community, it provides a sense of security that their pre-existing contracts and assignments with a company cannot be arbitrarily overturned by an Adjudicating Authority just because that company has entered insolvency.

Conclusion

The Supreme Court’s judgment in Gloster Limited vs. Gloster Cables Limited & Ors. stands as a definitive guide on the jurisdictional constraints of the Adjudicating Authority, ensuring that the Insolvency and Bankruptcy Code (IBC) is not used as a vehicle to bypass the general laws of the land.

Summary of Key Takeaways

• The NCLT’s residuary power under Section 60(5)(c) is strictly limited to matters that have a direct nexus with the insolvency of the Corporate Debtor. It does not extend to complex, independent title disputes that are governed by civil or intellectual property laws.
• A Resolution Plan approved by the Committee of Creditors (CoC) is a binding “charter”. The Adjudicating Authority cannot unilaterally grant an SRA better rights or absolute ownership of a disputed asset if the plan itself only recognized a “belief” or “understanding” of ownership.
• The court emphasized that Sections 43 and 45 (preferential and undervalued transactions) cannot be invoked by a “sidewind”. Any move to neutralize a transaction requires a formal application by the Resolution Professional, specific pleadings, and a rigorous scrutiny that respects natural justice.
• Agreements made contingent upon the vacation of a BIFR restraint order are not void ab initio and can validly mature once the legal restraint is removed by the repeal of SICA.

Lasting Impact of the Decision

This ruling reinforces the predictability and integrity of the Indian insolvency regime. For investors and Successful Resolution Applicants, it clarifies that the NCLT will not act as a “clearing house” for pre-existing title defects; therefore, rigorous due diligence during the CIRP is indispensable. For third parties, it provides a crucial safeguard against their proprietary rights being summarily extinguished without a fair trial in a competent civil forum. Ultimately, the decision preserves the IBC’s focus on corporate reorganization while upholding the constitutional and legal rights of all stakeholders to a fair adjudication of property disputes.