[Anamika Singh and Tarun Chittupalli are 3rd year B.A. LL.B. Hons. students at National Law Institute University, Bhopal]
In a recent decision in Gloster Limited v. Gloster Cables Limited (22 January 2026), the Supreme Court examined the scope of the National Company Law Tribunal’s (NCLT) jurisdiction under section 60(5) of the Insolvency and Bankruptcy Code, 2016 (IBC). The Court was called upon to determine whether, in the course of approving a resolution plan, the insolvency forum could conclusively decide disputed questions of ownership over a trademark that was key to the resolution process. The Court answered this in negative, holding that insolvency proceedings cannot be used to adjudicate title to property merely because such disputes arise during the pendency of the corporate insolvency resolution process (CIRP).
The decision reiterates the interpretation that treats section 60(5) as conferring wide but not unfettered jurisdiction. While the provision enables insolvency fora to deal with questions arising out of or in relation to insolvency, it does not authorise the assumption of jurisdiction over disputes that exist independently of the insolvency process and require determination by ordinary civil courts. Thus, the Court’s intervention reiterates that the objectives of timely resolution and value maximisation cannot justify a departure from settled limits on the Tribunal’s jurisdiction.
However, this insistence on jurisdictional restraint has immediate consequences for the conduct of the resolution process itself. The insolvency framework proceeds on the assumption that the assets of the corporate debtor are identifiable and capable of being dealt with conclusively during resolution. Where the ownership of a key asset is disputed and unresolved, the Court’s refusal to permit title adjudication within insolvency proceedings leaves the IBC without a clear mechanism to manage such uncertainty without either stalling the process or going beyond the jurisdictional boundaries.
This post examines how the Supreme Court’s ruling clarifies the limits of insolvency jurisdiction while simultaneously revealing a gap in the IBC’s treatment of disputed assets. It first outlines the Court’s approach to section 60(5) and its insistence on a real nexus with insolvency. It then identifies the structural lacuna that arises when ownership disputes arise at the resolution stage. Finally, it proposes a principled way of accommodating such disputes within insolvency proceedings without converting the insolvency forum into a court of title.
Section 60(5) and Limits of Insolvency Jurisdiction
Section 60(5) of the IBC confers residuary jurisdiction on the NCLT to decide questions of law or fact arising out of or in relation to the insolvency resolution process. The provision has been interpreted by the Supreme Court as enabling insolvency fora to effectively conduct proceedings under the IBC, while remaining confined to disputes that draw their character from insolvency itself.
The scope of this jurisdiction has been defined through successive decisions of the Supreme Court. In Embassy Property Developments Pvt. Ltd. v. State of Karnataka, the Court held that section 60(5) does not authorise insolvency fora to adjudicate disputes whose source lies in a legal regime independent of the insolvency framework, even where such disputes bear upon the assets of the corporate debtor. This understanding was refined in Gujarat Urja Vikas Nigam Ltd. v. Amit Gupta, where the Court clarified that the expression “arising out of or in relation to insolvency” requires a direct and substantive nexus with the insolvency resolution process, and is not satisfied where a dispute merely continues during insolvency or assumes commercial relevance to resolution. The same approach was reaffirmed in Tata Consultancy Services Ltd. v. SK Wheels Pvt. Ltd., where section 60(5) was construed as facilitative of insolvency proceedings, and not as a residual source of general civil jurisdiction over contractual or proprietary disputes that retain an existence independent of insolvency.
The decision in the Gloster case applies this settled jurisdictional framework to disputes concerning proprietary title. The Court declined to permit the insolvency forum to conclusively determine disputed questions of trademark ownership that predated and existed independently of the insolvency process. The significance of the asset to the resolution plan was held insufficient to sustain jurisdiction under section 60(5). Thus, the judgment affirms that insolvency jurisdiction remains anchored in the source and nature of the dispute, rather than in its perceived importance to the resolution outcome.
Disputed Assets and the Structure of the Resolution Framework
Under the IBC, section 18 empowers the resolution professional to take custody and control of the assets of the corporate debtor. The provision stems from the assumption that the asset in question belongs to the corporate debtor and does not provide for an enquiry into competing claims of ownership. The resolution professional’s role is confined to preservation and management of the estate during insolvency, rather than the determination of proprietary entitlements. The avoidance provisions under sections 43 to 45 and 66 operate within similarly defined confines. They address specific categories of suspect transactions identified by the IBC and do not extend to disputes over ownership that arise outside those statutory parameters or are governed by general civil law.
Furthermore, these provisions compel the resolution professional to proceed on the basis of asset identification even where ownership remains contested. In practice, resolution professionals are placed in a position where they must account for such assets despite the absence of any statutory guidance on how unresolved ownership claims are to be treated. The asset may be assumed to belong to the corporate debtor for valuation purposes, discounted to reflect legal risk, or informally excluded from consideration. Although each such response has a bearing on valuation, bid structure, and creditor recovery, none of them are structured or mandated by the resolution framework.
The statutory scheme does not indicate whether unresolved ownership claims are to be treated as exclusions from the resolution estate, as contingencies to be disclosed, or as risks to be expressly allocated within the resolution plan. Nor does it prescribe how such uncertainty is to be reflected in the information memorandum placed before prospective resolution applicants. As a result, the treatment of disputed assets is shaped by ad hoc assumptions at the resolution stage, rather than by any consistent practice derived from the legislation.
The resolution professional must nevertheless move forward within prescribed timelines and on the basis of an identified asset pool. The insolvency authority is constrained from determining title, while the resolution professional and resolution applicants are required to proceed as if that determination were not central to valuation and plan feasibility. The statutory framework thus encounters a category of assets that are integral to the resolution exercise, yet remain legally unsettled.
The Positive Suggestion: Treat Disputed Assets as Conditional Assets
The difficulty exposed in the Gloster case is not the absence of a competent forum to decide ownership, but the absence of a method within the resolution framework to proceed in the presence of unresolved ownership claims. A principled response is a must to preserve jurisdictional limits while enabling resolution to continue.
Firstly, disputed-title assets must be treated as conditional assets for the purposes of the CIRP. Under this approach, assets whose ownership is subject to a pre-existing and unresolved dispute are not conclusively declared to belong to the corporate debtor, nor are they excluded by default from the resolution estate. The resolution plan proceeds on the basis that the asset is transferred or dealt with subject to the outcome of adjudication. This means no declaration of title is made by the insolvency authority. The competent civil court continues to determine ownership, while the resolution professional does not proceed on an assumption of certainty that the law has not yet produced.
From an operational standpoint, this entails a clear allocation of risk at the resolution stage. The resolution applicant takes the asset subject to the possibility that ownership may ultimately be determined against the corporate debtor. Such a risk is reflected in valuation and bid structure. This risk is reflected in both valuation and bid structures, so that the creditors may assess resolution plans with the foreseeability of the legal uncertainty attached to the asset, rather than dealing with it after the resolution has been concluded. Thus, the resolution professional proceeds on disclosed uncertainty, rather than an implicit assumption.
This approach, crucially enough, does not alter the jurisdictional settlement affirmed by the Court. It does not expand the jurisdiction of the NCLT, read down section 60(5), or permit insolvency fora to adjudicate proprietary rights. Furthermore, it does not short-circuit civil adjudication. The determination of ownership remains where the law places it. The change is not in who decides title, but how insolvency accommodates the fact that title remains undecided.
Other comparative regimes operate on a similar understanding. Under section 541 of the U.S. Bankruptcy Code, the bankruptcy estate comprises whatever legal or equitable interest the debtor holds at the commencement of the case, without determining the validity or priority of competing claims of title. Estate inclusion operates based on the debtor’s interest, not on a declaration of ownership, and unresolved proprietary disputes continue to be governed by non-bankruptcy law.
This method of treating disputed assets as conditional is institutionally sound. It preserves the time-bound structure of insolvency by allowing resolution to proceed without awaiting the outcome of civil litigation. It avoids jurisdictional overreach by refusing to convert insolvency proceedings into a forum for title determination. It aligns with the logic of commercial risk allocation that already underpins resolution planning, by ensuring that legal uncertainty is priced and disclosed rather than ignored. Finally, it keeps adjudication where it belongs, while ensuring that its consequences are accounted for within the resolution process itself.
The Court’s insistence that insolvency cannot manufacture certainty where the law has not produced it points directly towards such an approach. The prerequisite of resolution lies in transparency and not artificial certainty.
Conclusion
The Supreme Court is right to insist that insolvency proceedings cannot become a substitute for ordinary civil adjudication. Jurisdictional discipline is not a technical constraint to be worked around, but a condition for the legitimacy of the insolvency framework. Allowing insolvency fora to resolve proprietary disputes by acceleration rather than adjudication would erode that foundation. At the same time, the IBC must operate in conditions where legal certainty is often incomplete, and the resolution process cannot be suspended indefinitely in anticipation of civil determinations, nor proceed on the assumption that unresolved disputes are irrelevant to valuation or plan design.
If insolvency law is to function effectively within the limits the Court has correctly drawn, it must learn how to manage uncertainty without pretending to resolve it. The treatment of disputed assets as conditional during the resolution process offers a principled way forward. It allows resolution to proceed on disclosed and priced uncertainty, preserves the boundary of civil courts in determining proprietary rights, and avoids converting insolvency into a forum of implied adjudication. This boundary is not merely doctrinal but functional, since when insolvency tries to decide what only general law can settle, it stops managing distress and starts distorting it.
– Anamika Singh & Tarun Chittupalli