Section 60(5)(c) of the IBC and the Outer Limits of NCLT’s Jurisdiction
Introduction
The enactment of the Insolvency and Bankruptcy Code, 2016 fundamentally restructured India’s corporate insolvency framework by creating a specialised adjudicatory mechanism to supervise the resolution and liquidation of corporate debtors. Central to this institutional design is the National Company Law Tribunal (NCLT) and its appellate forum, the National Company Law Appellate Tribunal (NCLAT), which function as the primary judicial authorities for insolvency proceedings.
Recognising that insolvency processes often generate a variety of interrelated disputes, Parliament conferred upon the NCLT a broad jurisdictional mandate under Section 60 of the IBC. In particular, Section 60(5)(c) empowers the tribunal to entertain “any question of law or fact arising out of or in relation to the insolvency resolution or liquidation proceedings of the corporate debtor.” This residuary jurisdiction was intended to prevent fragmentation of insolvency-related disputes across multiple forums and to ensure the efficient conduct of the corporate insolvency resolution process (CIRP).
However, the breadth of this provision has inevitably raised questions regarding its limits. In recent years, litigants have invoked Section 60(5)(c) to bring before the NCLT disputes that extend well beyond the traditional boundaries of insolvency law, including questions relating to contractual rights, property ownership, and regulatory decisions.
The Supreme Court’s decision in Gloster Limited v. Gloster Cables Limited (2026)1 addresses this issue directly. The Court clarified that while Section 60(5)(c) confers wide powers upon the NCLT, the provision cannot be interpreted as granting the tribunal jurisdiction over disputes that lack a direct and proximate nexus with the insolvency process. The ruling therefore provides important guidance on the outer limits of the NCLT’s jurisdiction.
Table of Contents
The Statutory Framework: Section 60(5)(c) of the IBC
Section 60 of the IBC designates the NCLT as the adjudicating authority for insolvency and liquidation proceedings involving corporate persons. Subsection (5)(c) supplements this framework by granting the tribunal jurisdiction to decide:
“any question of law or fact arising out of or in relation to the insolvency resolution or liquidation proceedings of the corporate debtor.”
This provision serves a functional purpose within the architecture of the Code. Insolvency proceedings frequently generate disputes concerning matters such as avoidance transactions, treatment of claims, contractual arrangements with operational creditors, and obligations of guarantors. Allowing such disputes to be litigated in multiple forums would undermine the speed and efficiency that the IBC seeks to achieve.
Accordingly, Section 60(5)(c) operates as a residuary jurisdictional provision, enabling the NCLT to address issues that are integrally connected to the insolvency process but may not fall squarely within the specific provisions of the Code.
At the same time, the statutory language itself imposes an inherent limitation: the dispute must arise out of or relate to the insolvency or liquidation proceedings. This requirement implies the existence of a direct and proximate nexus between the question raised and the insolvency process.
Factual Background of Gloster Limited v. Gloster Cables Limited
The dispute arose during the corporate insolvency resolution process of Gloster Cables Limited, a company engaged in manufacturing activities. The corporate debtor had been using the trademark “GLOSTER” pursuant to an arrangement with its sister concern, Gloster Limited.
During the CIRP, the resolution professional asserted that the trademark in question actually belonged to the corporate debtor. On this basis, the resolution professional demanded that Gloster Limited pay a substantial licence fee for continued use of the mark. When this demand was refused, the resolution professional initiated proceedings before the NCLT under Section 60(5)(c) of the IBC seeking a declaration that the trademark was the property of the corporate debtor.
The NCLT accepted the resolution professional’s contention and proceeded to adjudicate the dispute. The decision was subsequently affirmed by the NCLAT.
Gloster Limited challenged these orders before the Supreme Court, contending that the NCLT lacked jurisdiction to determine an independent dispute concerning ownership of a trademark.
Issues Before the Supreme Court
The principal questions before the Court were:
- Whether the NCLT possesses jurisdiction under Section 60(5)(c) of the IBC to adjudicate disputes relating to ownership of intellectual property.
- Whether the residuary jurisdiction conferred by Section 60(5)(c) extends to disputes between the corporate debtor and third parties that are not intrinsically connected to the insolvency resolution process.
- Whether the NCLT’s exercise of jurisdiction in the present case was consistent with the statutory scheme of the IBC.
The Supreme Court’s Reasoning
The Supreme Court emphasised that Section 60(5)(c) cannot be interpreted as conferring unlimited jurisdiction upon the NCLT. Although the provision is framed in broad terms, the expressions “arising out of” and “in relation to” must be understood as requiring a close and direct nexus with the insolvency proceedings.
The Court observed that the dispute in the present case concerned the ownership of a trademark between two corporate entities. Determination of such a question would require adjudication of proprietary rights governed by intellectual property law, an issue that ordinarily falls within the jurisdiction of competent civil courts or High Courts exercising jurisdiction under the Trade Marks Act, 1999.
Importantly, the Court noted that the dispute did not arise from the insolvency proceedings themselves but concerned pre-existing proprietary rights between the parties. The mere fact that the dispute surfaced during the CIRP could not, by itself, justify the exercise of jurisdiction by the NCLT.
Permitting the tribunal to adjudicate such claims, the Court cautioned, would effectively transform the NCLT into a forum of general civil jurisdiction, a role that Parliament did not intend the tribunal to perform.
Accordingly, the Supreme Court set aside the orders of the NCLT and the NCLAT and held that the parties must pursue their remedies before the appropriate forum.
The Decision in the Context of Existing Jurisprudence
The Court’s reasoning is consistent with earlier decisions that delineate the boundaries of the NCLT’s jurisdiction under the IBC.
In Embassy Property Developments Pvt Ltd v State of Karnataka2, the Supreme Court held that the NCLT cannot exercise jurisdiction over disputes involving public law or administrative decisions, such as the cancellation of a mining lease. The Court emphasised that such matters fall within the domain of constitutional courts exercising judicial review.
Similarly, in Gujarat Urja Vikas Nigam Ltd v Amit Gupta3, the Court recognised that the NCLT may adjudicate certain contractual disputes where the termination of a contract would directly undermine the corporate insolvency resolution process. The decisive factor in that case was the close nexus between the contractual dispute and the viability of the CIRP.
In contrast, where a dispute concerns independent proprietary or commercial rights that exist outside the insolvency framework, the appropriate forum remains the ordinary civil courts or specialised statutory authorities.
The decision in Gloster Limited therefore reinforces the principle that Section 60(5)(c) is not intended to displace the jurisdiction of other legal forums in matters that fall outside the core insolvency process.
Implications for Insolvency Practice
The ruling has important implications for practitioners involved in insolvency proceedings.
First, it highlights that the NCLT’s jurisdiction under Section 60(5)(c) is functional rather than universal. The tribunal may adjudicate disputes that are necessary for the effective conduct of the insolvency process, but it cannot assume jurisdiction over every dispute involving the corporate debtor.
Second, the judgment serves as a caution against attempts to use the CIRP as a strategic forum for resolving unrelated commercial disputes. Such efforts may ultimately result in dismissal of proceedings and unnecessary delays in the insolvency process.
Finally, the decision reinforces the institutional design of the IBC, which envisages the NCLT as a specialised insolvency forum rather than a substitute for ordinary civil courts or sector-specific adjudicatory bodies.
Conclusion
Section 60(5)(c) of the Insolvency and Bankruptcy Code, 2016 plays an important role in enabling the National Company Law Tribunal to resolve disputes that are closely connected with insolvency proceedings. However, the provision was never intended to confer an unrestricted jurisdiction over all disputes involving a corporate debtor.
Through its decision in Gloster Limited v. Gloster Cables Limited, the Supreme Court has reaffirmed that the NCLT’s residuary jurisdiction is subject to clear boundaries. Only those disputes that bear a direct and proximate connection with the insolvency resolution or liquidation process fall within the tribunal’s competence.
By clarifying this limitation, the Court has preserved the specialised character of the insolvency framework while ensuring that disputes falling within other areas of law continue to be adjudicated by the appropriate forums.
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