Imagine a company with a famous brand name—a name that customers trust, that has been built over decades. Now, imagine that company goes bankrupt. Its assets are sold off to pay its debts. But what happens to that valuable brand name? Who gets to own it—the new company that buys the bankrupt firm, or another business that claims it bought the brand years earlier?
This isn’t a hypothetical
scenario. It’s exactly what happened in a landmark legal battle that reached
the Supreme Court of India in 2026. The case, Gloster Limited vs. Gloster
Cables Limited, is a masterclass in corporate law, insolvency rules, and
intellectual property. It shows how messy things can get when a company
collapses, and multiple parties fight over its most valuable intangible asset:
its trademark.
In this blog post, we’ll break
down this complex case in simple language. We’ll explore why the Supreme
Court’s decision is a big deal for businesses, investors, and anyone involved
in India’s bankruptcy process.
The Two Glosters: A Tale of Two Companies
First, let's meet the key
players:
1.Fort Gloster Industries
Limited (FGIL) – The "Corporate Debtor": This was the original
company that owned the trademark "Gloster." It was an old company
that fell on hard times. It was declared a "sick" company back in
2001 and was eventually pushed into insolvency under India's Insolvency and
Bankruptcy Code (IBC) in 2018.
2.Gloster Cables Limited (GCL)
– The Claimant: This is a different company. It claims that it bought the
"Gloster" trademark from FGIL long before the bankruptcy process
began.
3.Gloster Limited – The
"Successful Resolution Applicant" (SRA): This is a new company that
won the bid to take over the bankrupt FGIL. As part of its resolution plan (the
blueprint for reviving FGIL), it believed it was acquiring all of FGIL's
assets, including the "Gloster" trademark.
The heart of the dispute was
simple: Both Gloster Limited (the new owner of FGIL) and Gloster Cables Limited
claimed to be the true owner of the "Gloster" trademark. The case
asks a critical question: In a bankruptcy sale, can the new owner get more
rights than what was explicitly stated in the sale agreement?
The Twisted History: A Web of Agreements
To understand the fight, we need
to look at the long history between FGIL and GCL:
a. 1995: They signed a
Technical Collaboration Agreement. GCL was allowed to use the
"Gloster" trademark for making cables, paying FGIL a royalty.
b. 2004: A Trademark
License Agreement was signed. GCL paid FGIL a lump sum of ₹3 Crores plus an
annual royalty for an exclusive, long-term license to use the trademark.
c. 2006: GCL lent ₹10
Crores to the struggling FGIL. As security for this loan, FGIL hypothecated
(pledged) the "Gloster" trademark to GCL.
d. 2008: A Supplemental
Trademark Agreement was signed. This is the most controversial document. It
stated that FGIL agreed to assign (sell) the trademark to GCL for ₹10 Lakhs.
However, there was a catch. Because FGIL was under the supervision of the BIFR
(Board for Industrial and Financial Reconstruction, an old bankruptcy forum),
there was a court order restraining it from selling assets. The 2008 agreement
said the sale would only become effective once that BIFR order was lifted or if
FGIL was wound up.
e. 2016: The old BIFR law
was repealed. FGIL's case there ended.
f. 2017: A Deed of
Assignment was signed, confirming the 2008 agreement. GCL claimed the trademark
was now officially assigned to them, effective from a 2017 date.
g. 2018: In September
2018, the trademark was officially registered in GCL's name with the Trademark
Registry.
Here’s the crucial timeline:
FGIL's insolvency process (CIRP) began on August 9, 2018. The trademark was
registered in GCL's name on September 17, 2018—after the bankruptcy process had
started.
The Insolvency Drama: The Fight in the
Bankruptcy Court
When FGIL went bankrupt, Gloster
Limited (the SRA) submitted a plan to take it over. Their plan mentioned the
"Gloster" trademark. It listed all the past agreements with GCL but
then strongly argued that the final assignment to GCL was "illegal,"
done in "bad faith," and violated the law. The plan concluded by
saying the SRA believed and understood the trademark was rightfully FGIL's
property.
GCL panicked. They filed an
application in the National Company Law Tribunal (NCLT)—the bankruptcy
court—pleading: "When you approve the plan to sell FGIL, please exclude
the 'Gloster' trademark from the assets, because it belongs to us, not to
FGIL."
The NCLT had to decide two
things:
1.Should it even decide who owns
the trademark, or is that outside its jurisdiction?
2.Who actually owns it?
The First Judgment: NCLT Sides with the New
Owner
The NCLT did something bold. It
not only decided it had the power to look into the issue, but it also ruled in
favor of the new owner, Gloster Limited (the SRA). It said:
a. The 2008 agreement violated
the BIFR's order, so it was void.
b. The 2017 assignment happened
shortly before the bankruptcy and was an "undervalued transaction"
(selling a valuable asset for much less than it's worth) meant to cheat
creditors.
c. Therefore, the trademark was
still an asset of the bankrupt FGIL and now belonged to the SRA.
GCL appealed to the higher bankruptcy
court, the NCLAT.
The Second Judgment: NCLAT Sides with GCL
The NCLAT reversed the decision.
It said:
a. The NCLT did have the jurisdiction
to hear the matter.
b. However, it should not have
declared that the trademark belonged to FGIL/the SRA. The 2008 agreement was
valid but conditional. The issue of ownership was a complex factual dispute
that couldn't be decided summarily in a bankruptcy court application.
c. You can't accuse someone of an
"undervalued transaction" without a proper, detailed application and
investigation, which hadn't happened.
Both sides were unhappy. Gloster
Limited (SRA) appealed because they lost the trademark. GCL cross-appealed because
they disagreed with the NCLAT's finding on jurisdiction. The fight landed in
the Supreme Court.
The Supreme Court's Deep Dive: Principles Over
Possession
The Supreme Court, in a judgment
by Justice K.V. Viswanathan, cut through the noise and focused on fundamental
principles of insolvency law.
1. The Sacred Sanctity of the Approved
Resolution Plan
The Court emphasized that the
heart of the IBC is the resolution plan approved by the Committee of Creditors
(COC) and then by the NCLT. Once approved, this plan is the binding charter for
all parties—the new owner, the old company, and all its creditors.
The Court looked closely at
Gloster Limited's own approved plan. The plan did not say, "We own the
trademark." Instead, it narrated the history, alleged the assignment to
GCL was illegal, and then stated the SRA's belief that the trademark was FGIL's
property.
The Supreme Court's crucial
observation: The plan itself acknowledged there was a rival claim to the
trademark. The SRA took over FGIL knowing full well that GCL was contesting
ownership. The SRA could have asked the Resolution Professional to file a
formal application to cancel the assignment as fraudulent or undervalued, but
it didn't. You can't use a simple application filed by your rival (GCL) as a
shortcut to get a final declaration of ownership you didn't explicitly secure
in your own plan.
2. The Limited Power of the Bankruptcy
Court (NCLT)
The Court then examined the scope
of NCLT's power under Section 60(5)(c) of the IBC, which allows it to decide
questions "arising out of or in relation to" the insolvency process.
The Supreme Court referred to its
own past rulings to draw clear boundaries:
a. In the Gujarat Urja case, it
allowed NCLT to intervene when a power purchase agreement was terminated solely
because the company went bankrupt. The dispute had a direct "nexus"
to the insolvency.
b. In the Embassy Property case,
it said NCLT cannot decide matters of general public law (like mining leases)
that are unrelated to insolvency.
c. In the Tata Consultancy case,
it said NCLT cannot get involved in ordinary contract disputes unrelated to
insolvency.
Applying these principles, the
Court found that the core dispute over the trademark's ownership was not
"in relation to" the insolvency of FGIL. It was a separate property
dispute between two parties (SRA and GCL) about a transaction that happened
years ago. The insolvency was just the background event that brought the
conflict to a head.
3. You Can't Get More Than You Bargained For
This is the most impactful part
of the judgment. The Supreme Court referred to its 2024 ruling in SREI Multiple
Asset vs. Deccan Chronicle.
In that case, the resolution plan
gave the new owner the exclusive right to use the "Deccan Chronicle"
trademark. However, the NCLT went further and declared that the new owner owned
the trademark. The Supreme Court had struck this down, stating it was an impermissible
modification of the approved plan.
The situation in the Gloster case
was identical. The SRA's plan expressed a belief about ownership. The NCLT,
while hearing GCL's application, granted a declaration of ownership. The
Supreme Court said this was wrong. The NCLT, while approving a plan or hearing
related applications, cannot confer rights on the new owner that were not
unequivocally granted in the plan approved by the creditors.
4. Natural Justice: No Trial by Ambush
The Supreme Court also criticized
the NCLT's approach of suddenly declaring the 2017 assignment as an
"undervalued transaction" violating the IBC.
Accusing someone of a fraudulent
or undervalued transaction is a serious matter. It requires a formal
application, detailed evidence, and a full opportunity for the accused party to
defend themselves. The NCLT did this as a side note while deciding GCL's
application, which was unfair to GCL. The Court upheld the principle of natural
justice: you cannot be condemned without a proper, specific charge and a fair
hearing.
The Supreme Court's Verdict and Its Lasting
Impact
The Supreme Court disposed of
both the appeal and cross-appeal. Its final order can be summarized as follows:
1.Jurisdiction: The NCLT
did have the jurisdiction to entertain GCL's application (so GCL's cross-appeal
on this point failed).
2.The Key Ruling: However,
the NCLT exceeded its jurisdiction by declaring that the "Gloster"
trademark was an asset of FGIL and now belonged to the SRA. This declaration
was set aside.
3.Ownership Undecided: The
Supreme Court explicitly stated that it was not deciding who actually owns the
trademark. It only decided that the NCLT could not decide it in the manner it
did. The observations in the NCLAT order suggesting title vested with GCL in
2008 were also set aside.
4.Open Road for Litigation:
The war over the trademark is not over. The Supreme Court clarified that its
judgment does not prevent either party from going to a regular civil court or
the appropriate IP tribunal to fight a full-fledged case over the trademark's
ownership. That battle must be fought on its own merits.
Why This Judgment is a Big Deal
Protects the Sanctity of the Resolution Plan:
It tells bidders in bankruptcy auctions: "Be clear in your plan about what
you think you're buying. If there's a dispute, address it through the plan or
separate legal action. Don't expect the bankruptcy court to gift you extra
rights later."
Limits the Bankruptcy Court's Role: It
reinforces that the NCLT is not a general civil court. Its primary job is to
oversee the insolvency process efficiently, not to resolve all underlying
property disputes that may have a tangential connection to a bankrupt company.
Highlights the Value of IP in Bankruptcy:
The case underscores that intellectual property like trademarks are critical,
high-value assets. Their ownership must be clear, and disputes around them can
derail or complicate bankruptcy resolutions.
Emphasizes Fair Procedure: The judgment is
a win for procedural fairness. You cannot label a transaction as fraudulent in
a summary proceeding without proper legal groundwork.
Conclusion: A Lesson in Clarity and Due
Process
The Gloster case is a fascinating
look at the intersection of insolvency law and intellectual property. For
companies, the lesson is to conduct thorough due diligence before bidding for a
bankrupt company. If a key asset like a trademark is clouded, you must either
factor the risk into your bid price or seek clarity before your plan is
finalized.
For the legal system, the
judgment strikes a careful balance. It allows the bankruptcy process to move
swiftly on its core mandate while directing complex, standalone ownership
disputes to the specialized forums designed to handle them. It affirms that
even in the fast-paced world of corporate bankruptcy, the principles of fair
notice and a proper hearing cannot be sacrificed.
The battle for the
"Gloster" brand name now moves to another courtroom. But the Supreme
Court has ensured it will be fought on a level playing field, with clear rules
of engagement.
Case Name: Gloster Limited
vs. Gloster Cables Limited & Ors. (Civil Appeal No. 2996 of 2024)
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