Summary
| Category | Data |
|---|---|
| Court | Supreme Court of India |
| Case Number | C.A. No.-002996 – 2024 |
| Diary Number | 7939/2024 |
| Judge Name | HON’BLE MR. JUSTICE K.V. VISWANATHAN |
| Bench |
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| Precedent Value | Binding |
| Overrules / Affirms | Affirms precedents limiting the scope of Section 60(5)(c) and upholding finality of resolution plans |
| Type of Law | Insolvency and Bankruptcy Code, 2016 |
| Questions of Law | Whether an NCLT can, under Section 60(5)(c), adjudicate title to a trademark contrary to the terms of an approved resolution plan. |
| Ratio Decidendi |
The Court held that a resolution plan approved under Section 31(1) is binding on all stakeholders and cannot be modified by subsequent orders in Section 60(5) proceedings. Section 60(5)(c) jurisdiction is confined to disputes “arising out of or in relation to the insolvency resolution” and does not extend to property‐title disputes inconsistent with plan terms. An NCLT cannot grant better rights than those approved by the Committee of Creditors and the Adjudicating Authority. Any challenge to alleged undervalued or preferential transactions must be pursued separately under Sections 43–47 with proper notice. |
| Judgments Relied Upon |
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| Logic / Jurisprudence / Authorities Relied Upon by the Court |
Interpretation of Section 31(1) (binding nature of approved plans); Section 60(5)(c) (limiting residuary power to insolvency‐related disputes); duties of RP under Sections 18 & 25; plan‐finality principle; precedents delineating NCLT jurisdiction; distinction between “assets” and third-party property; requirement for separate avoidance applications under Sections 43–47. |
| Facts as Summarised by the Court | FGIL’s CIRP commenced on 09.08.2018; COC approved a plan by Gloster Limited (SRA) that recorded rival claims over the “Gloster” trademark; GCL filed a Section 60(5) application seeking exclusion of the trademark from plan assets; NCLT held the trademark belonged to FGIL/SRA and voided GCL’s transfer deeds; NCLAT reversed on jurisdiction and title grounds; both appeals reached the Supreme Court. |
Practical Impact
| Category | Impact |
|---|---|
| Binding On | All NCLT and NCLAT benches, subordinate courts dealing with IBC matters |
| Persuasive For | High Courts and insolvency practitioners on the scope of Section 60(5)(c) jurisdiction |
| Distinguishes |
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| Follows |
|
What’s New / What Lawyers Should Note
- Adjudicating authorities cannot grant property-title rights inconsistent with an approved resolution plan under Section 31(1).
- Section 60(5)(c)’s residuary jurisdiction is confined to disputes directly “arising out of or in relation to” insolvency resolution.
- A resolution plan approved by the COC and NCLT is the binding charter; no Section 60(5) application can modify its asset‐allocation terms.
- Challenges to alleged preferential or undervalued transactions must be pursued by distinct applications under Sections 43–47, with proper pleading and notice.
- Parties should ensure resolution plans expressly address known rival claims to preempt subsequent disputes.
Summary of Legal Reasoning
- Plan Finality (Section 31)
A resolution plan approved under Section 31(1) binds all stakeholders and cannot be altered by subsequent orders. - Scope of Section 60(5)(c)
Jurisdiction extends only to questions “arising out of or in relation to the insolvency resolution or liquidation proceedings”—not to general property‐title disputes. - Plan Contents and Rival Claims
The approved plan recorded rival claims to the “Gloster” trademark; it did not vest title in the SRA, only exclusive use was permitted. - Precedent Survey
The Court applied and distinguished key precedents (Embassy Property, Gujarat Urja, Tata Consultancy, SREI, Ebix) underscoring limits on NCLT power. - Finality and Non-Modification
Any declaration of title beyond plan terms constitutes impermissible modification of an approved plan. - Limits on Inherent Powers
Avoidance powers under Sections 43–47 require specific applications; they cannot be invoked sua sponte in Section 60(5) proceedings.
Arguments by the Parties
Appellant (SRA – Gloster Limited)
- GCL is estopped from contesting jurisdiction after invoking Section 60(5).
- Section 60(5)(c) covers disputes “in relation to” the CIRP; title to the trademark falls squarely within.
- Assignment deeds breached BIFR orders and IBC moratorium (Section 14); trademark is a CIRP asset under the plan.
- NCLT rightly invoked avoidance powers (Sections 43, 44, 45) to void undervalued or preferential assignments.
Respondent No.1 (GCL)
- Section 60(5)(c) does not empower NCLT to decide rival property‐title claims outside insolvency‐centric rights.
- Trademark assignment was effective upon SICA repeal (01.12.2016); registration is ministerial and not vitiated by the moratorium.
- BIFR’s injunction lapsed; Supplemental Agreement (15.07.2008) was contingent and valid; title vested pre-CIRP.
Resolution Professional
- Agreements were concealed until too late for forensic audit; no RP‐filed avoidance application under Sections 43–47.
- Financial statements and Information Memorandum treated the trademark as FGIL asset, justifying NCLT scrutiny of title.
- RP empowered to highlight material even without formal avoidance filing, given facts and creditor interests.
Factual Background
Fort Gloster Industries Ltd. (FGIL) entered CIRP on 09.08.2018. Gloster Limited’s resolution plan was approved by the COC, recording rival trademark claims. GCL filed a Section 60(5) IBC application to exclude its “Gloster” trademark from CIRP assets. NCLT held the trademark belonged to FGIL/SRA and voided GCL’s transfer deeds; NCLAT reversed on jurisdiction and title. The Supreme Court then heard the cross-appeals.
Statutory Analysis
- Section 31(1): Binds corporate debtor, creditors, guarantors and stakeholders to approved resolution plan.
- Section 60(5)(c): Grants NCLT jurisdiction over questions “arising out of or in relation to” insolvency resolution or liquidation.
- Section 14(1)(b): Moratorium on corporate debtor’s asset transfers from CIRP commencement date.
- Sections 43–47: Provide for avoidance of preferential, undervalued or fraudulent transactions—requiring specific applications and notice.
Alert Indicators
- ✔ Precedent Followed – The decision reaffirms established limits on Section 60(5)(c) jurisdiction and the binding nature of approved resolution plans.