Supreme Court Clarifies Limits of NCLT’s Powers in Trademark Disputes
The Supreme Court of India has clarified that the National Company Law Tribunal (NCLT) cannot decide who owns a trademark simply because the issue comes up during a corporate insolvency resolution process (CIRP).
The Court explained that Section 60(5) of the Insolvency and Bankruptcy Code (IBC) does not give the NCLT unlimited power to decide all disputes involving a corporate debtor. The tribunal can only deal with matters that have a direct and close connection with insolvency proceedings.
The ruling came in a dispute over the trademark “Gloster” during the insolvency of Fort Gloster Industries Limited. While Gloster Limited emerged as the successful resolution applicant, Gloster Cables Limited claimed ownership of the trademark based on earlier agreements.
During CIRP, Gloster Cables approached the NCLT seeking exclusion of the trademark from the debtor’s assets. Although the NCLT rejected the request, it also stated that the trademark belonged to the corporate debtor, which effectively favoured the resolution applicant.
On appeal, the National Company Law Appellate Tribunal (NCLAT) held that the NCLT had the power to examine the issue but ruled in favour of Gloster Cables on ownership.
The Supreme Court disagreed with both approaches. It held that deciding trademark ownership was not directly linked to insolvency and therefore fell outside the NCLT’s jurisdiction. The Court also noted that the resolution plan itself recognised competing claims over the trademark and did not clearly transfer ownership to any party.
As a result, the Supreme Court set aside the findings of both the NCLT and NCLAT on trademark ownership and clarified that such disputes must be resolved before the appropriate forum, not insolvency tribunals.
