Declaration of trademark title and residuary jurisdiction under Section 60(5)(c) limited; approval of resolution plan upheld

Residuary jurisdiction under Section 60(5)(c) of the IBC does not permit an adjudicating authority to determine ownership of a trademark when the dispute is not in relation to insolvency proceedings; therefore the Adjudicating Authority erred in declaring title. Findings that the assignment fell within avoidance provisions as preferential or undervalued transactions were set aside for lack of pleaded material and procedural infirmity, and NCLAT restored that such neutralisation required specific applications by the Resolution Professional. Observations made are not binding on other courts deciding trademark title on merits.

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Issues: Whether the Adjudicating Authority (NCLT), in adjudicating an application under Section 60(5) of the IBC filed by Gloster Cables Ltd., could on the facts of this case declare that the trademark "Gloster" was an asset of the Corporate Debtor and hence vest title in the Successful Resolution Applicant (Gloster Limited).

Analysis: The Court examined the scope of Section 60(5)(c) of the IBC (residuary jurisdiction of NCLT to hear questions of law or fact "arising out of or in relation to" insolvency proceedings) in the light of the statutory scheme including Sections 14 and 31, and the duty of the Resolution Professional under Sections 18 and 25. Authorities were applied that limit NCLT's jurisdiction to disputes that have a real nexus with the insolvency resolution and to situations where the dispute's resolution is necessary for preserving the corporate debtor as a going concern. The approved resolution plan is binding under Section 31 and its finality cannot be subverted by conferring rights in excess of what the CoC approved. The Court emphasized that avoidance claims under Sections 43, 45, 46 and related provisions require specific pleading, rigorous forensic scrutiny and that natural justice requires that the party against whom avoidance is sought be put on notice. On the facts the approved plan itself recorded rival claims to the trademark and the Resolution Applicant did not pursue avoidance remedies; no RP application under avoidance provisions was filed and the NCLT's declaration of title amounted to altering the approved plan and exceeded the jurisdiction conferred by Section 60(5)(c).

Conclusion: The Adjudicating Authority could not have declared title in the trademark "Gloster" in favour of the Successful Resolution Applicant on the facts of this case; the NCLT's finding that the trademark was an asset of the Corporate Debtor is set aside. This outcome is in favour of the Respondent.

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