INSOLVENCY IS NOT A SHORTCUT TO TITLE: LIMITS OF SECTION 60(5) AND THE ADJUDICATORY REACH OF THE NCLT

INTRODUCTION
In Gloster Limited v. Gloster Cables Limited & Ors., 2026 INSC 81, decided on 22nd January 2026, the Supreme Court of India delivered a significant ruling on the limits of insolvency jurisdiction, particularly in relation to disputed intellectual property rights. The Judgment was authored by Justice K.V. Viswanathan, sitting in civil appellate jurisdiction and arose from cross-appeals challenging a decision of the National Company Law Appellate Tribunal.
At the heart of the dispute lay a deceptively simple yet legally complex question: whether, in the course of insolvency proceedings under the Insolvency and Bankruptcy Code, 2016, the National Company Law Tribunal could incidentally adjudicate title to a trademark and declare it to be an asset of the corporate debtor, thereby vesting it in the successful resolution Applicant. The Supreme Court answered this question with doctrinal clarity, cautioning against the transformation of insolvency fora into substitutes for civil courts on issues of proprietary title.

BRIEF FACTS
The Corporate Insolvency Resolution Process was initiated against Fort Gloster Industries Limited, the Corporate Debtor, under Section 9 of the IBC. During the pendency of the CIRP, a Resolution Plan submitted by Gloster Limited was approved by the Committee of Creditors and ultimately by the NCLT. However, before the plan could attain finality, Gloster Cables Limited, a group entity, moved an Application under Section 60(5) of the IBC asserting that the trademark “Gloster” did not belong to the Corporate Debtor and therefore could not form part of the resolution estate.
The claim of Gloster Cables Limited was founded on a long commercial history including a technical Collaboration Agreement, a trademark licence, a loan transaction, a supplemental trademark agreement and eventually a Deed of Assignment executed in 2017. According to Gloster Cables Limited, the assignment became effective after the repeal of the Sick Industrial Companies (Special Provisions) Act, 1985 and the trademark stood lawfully vested in it well before the commencement of the CIRP.
The NCLT rejected the Application of Gloster Cables Limited and went a step further by holding that the trademark “Gloster” was an asset of the Corporate Debtor. This finding effectively benefited the successful resolution Applicant. On appeal, the NCLAT reversed the declaration of title but held that the NCLT did possess jurisdiction to examine such a dispute. This led to cross-appeals before the Supreme Court.

ISSUES OF LAW
The Supreme Court was principally concerned with determining whether the Adjudicating Authority under the IBC could, while dealing with an Application under Section 60(5), record a binding declaration on ownership of a trademark, particularly where the resolution plan itself acknowledged the existence of rival claims. Closely allied to this was the question of the true scope of Section 60(5)(c) and whether disputes relating to intellectual property title could be said to arise “in relation to” insolvency resolution proceedings.

ANALYSIS OF THE JUDGMENT
The Supreme Court commenced its analysis by emphasising the structural logic of the Insolvency and Bankruptcy Code. The Code, the Court reiterated, is a framework for time-bound resolution, not a forum for adjudicating all conceivable disputes involving the Corporate Debtor. While Section 60(5)(c) undoubtedly confers wide jurisdiction, that width is not boundless. The expression “arising out of or in relation to the insolvency resolution process” must be interpreted contextually and cannot be stretched to absorb disputes that exist independently of insolvency.
A crucial factor that weighed with the Court was the content of the approved resolution plan itself. The Plan expressly recorded the existence of competing claims over the trademark “Gloster” and merely reflected the resolution Applicant’s belief and understanding that the assignment in favour of Gloster Cables Limited was invalid. The Court noted that the Plan did not assert an undisputed or crystallised title in favour of the Corporate Debtor. In such a scenario, the successful resolution Applicant could not, through the chance of an Application filed by a third party, secure a judicial declaration of ownership that went beyond the plan approved by the Committee of Creditors.
The Supreme Court found that neither the Resolution Professional nor the successful resolution Applicant had invoked the statutory avoidance mechanisms under Sections 43, 45 or 66 of the IBC to challenge the assignment as preferential, undervalued or fraudulent. In the absence of such proceedings and without placing Gloster Cables Limited on formal notice of avoidance allegations, the NCLT could not have unilaterally invalidated the assignment and declared title in favour of the corporate debtor.
Drawing extensively from precedents such as Embassy Property Developments, Gujarat Urja Vikas Nigam, and Tata Consultancy Services v. SK Wheels, the Court reaffirmed that Section 60(5) cannot be used as a procedural bypass to adjudicate disputes that properly belong to civil courts or other competent fora. Title to intellectual property, the Court held, is a matter requiring detailed examination of contractual arrangements, statutory compliance under trademark law and potentially oral and documentary evidence. Such questions do not arise solely because a corporate insolvency is underway.
The Supreme Court was particularly critical of the approach that allowed insolvency proceedings to be converted into instruments for quieting title. It observed that if Section 60(5) were interpreted so expansively, any disputed asset could be conclusively appropriated within CIRP, thereby unsettling settled principles of property law and due process. Insolvency jurisdiction, the Court stressed, must remain tethered to insolvency objectives and cannot be allowed to swallow general civil adjudication.

CONCLUSION
The Judgment in Gloster Limited v. Gloster Cables Limited stands as an important reaffirmation of jurisdictional discipline under the Insolvency and Bankruptcy Code. It draws a clear and necessary boundary between resolution of insolvency and adjudication of proprietary rights, particularly in relation to intellectual property.
By holding that the NCLT could not, on the facts of the case, declare title to the trademark “Gloster”, the Supreme Court has ensured that insolvency law does not become an inadvertent shortcut to ownership. The ruling protects both the integrity of the resolution process and the foundational principle that property rights, especially when disputed, must be adjudicated in appropriate fora through due process of law.
In doing so, the Court has reinforced a critical message for future insolvency proceedings: while the IBC is a powerful commercial statute, its strength lies in discipline and restraint, not in jurisdictional overreach.

SUSHILA RAM VARMA
Advocate & Chief Legal Consultant
The Indian Lawyer & Allied Services

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