NCLT Cannot Decide Trademark Ownership Disputes Under IBC: Supreme Court in Gloster Cables

In Gloster Cables Ltd. v. Fort Gloster Industries Ltd., decided on January 22, 2026, the Supreme Court of India held that the National Company Law Tribunal (NCLT) cannot adjudicate disputes over trademark ownership under the Insolvency and Bankruptcy Code, 2016 (IBC), unless the dispute is directly tied to the insolvency resolution process. The Court ruled that determining title between rival claimants to a trademark falls outside the NCLT's limited jurisdiction under the IBC and must be decided by the competent civil court or the Intellectual Property Division of the relevant High Court. This ruling has significant implications for the intersection of insolvency law and intellectual property rights in India.

The Dispute Between Gloster Cables and Fort Gloster Industries

The case involved a dispute over the use of the "Gloster" trademark between two companies. Fort Gloster Industries Ltd. had undergone insolvency proceedings under the IBC, and during the resolution process, questions arose about whether the trademark rights associated with the "Gloster" name formed part of the corporate debtor's assets that could be transferred to the successful resolution applicant. Gloster Cables Ltd., which also claimed rights to the trademark, contested this position before the NCLT. The NCLT attempted to determine the ownership of the trademark as part of the insolvency proceedings, treating it as an asset of the corporate debtor that could be included in the resolution plan.

The Supreme Court's Reasoning on NCLT Jurisdiction

The Supreme Court held that the NCLT's jurisdiction under the IBC is limited to matters related to the insolvency resolution process. While the NCLT has the power to deal with claims against the corporate debtor and to approve resolution plans, it does not have the jurisdiction to decide contested questions of title over intellectual property rights between two independent claimants. The Court observed that trademark ownership disputes involve complex questions of prior use, registration, goodwill, and territorial scope that are governed by the Trade Marks Act, 1999, and must be adjudicated by forums that have the expertise and jurisdiction to deal with such matters. The NCLT's role in insolvency proceedings is to facilitate the resolution of the corporate debtor's financial distress, not to serve as a substitute for specialised intellectual property tribunals or civil courts.

IP Rights in Insolvency: The Broader Question

The Gloster Cables ruling addresses a growing area of concern in Indian insolvency law: the treatment of intellectual property assets during CIRP. When a company enters insolvency, its IP portfolio (including trademarks, patents, copyrights, and trade secrets) often constitutes a significant portion of its enterprise value. Resolution applicants typically seek to acquire these IP rights as part of the going-concern value of the business. However, complications arise when third parties claim competing rights to the same IP, or when IP rights are encumbered by licensing agreements, security interests, or prior assignments. The Supreme Court's ruling establishes that such competing claims cannot be summarily adjudicated by the NCLT and must be resolved through the appropriate legal proceedings. This protects the rights of third-party IP claimants who may otherwise find their rights extinguished through an insolvency process in which they had limited participation.

Practical Takeaways

Resolution professionals and members of the Committee of Creditors must exercise caution when including IP assets in resolution plans. If the corporate debtor's ownership of a trademark, patent, or other IP right is contested by a third party, the resolution plan should not assume that the NCLT can resolve the ownership dispute. Instead, the plan should either carve out the contested IP or make the transfer conditional on the resolution of the ownership dispute by the competent forum. For third-party IP claimants, this ruling provides reassurance that their rights will not be adjudicated by a tribunal that lacks specialised IP jurisdiction. For resolution applicants, due diligence on the IP portfolio of the corporate debtor is essential to identify potential third-party claims before submitting a resolution plan. The ruling also has implications for the valuation of corporate debtors, as contested IP assets may carry a significant discount in value if their ownership cannot be established during the CIRP timeline.