Court says no: NCLT can't turn 'use' into 'own' in insolvency plan

The plan said 'use forever.' The tribunal said 'own it.' The Supreme Court said—no. On a Hyderabad afternoon in March 2023, two judges of India's highest court shut down a tribunal that had tried to rewrite a corporate rescue deal, turning a newspaper company's right to use its own brand names into a declaration of ownership that nobody had voted for.

The question was deceptively simple: once creditors approve a resolution plan and a court approves it, can a tribunal later add new rights that weren't in the deal? The answer would determine whether the insolvency process means what it says—or whether tribunals can keep editing the contract long after everyone has signed off.

When the newspaper company collapsed

Deccan Chronicle Holdings Ltd. (DCHL) was a household name in the South—publishing the English daily Deccan Chronicle and the Telugu newspaper Andhra Bhoomi. But by 2017, the company was drowning in debt. Canara Bank, one of its lenders, filed a petition to initiate the Corporate Insolvency Resolution Process (CIRP—the formal insolvency process under the Insolvency and Bankruptcy Code) before the National Company Law Tribunal (NCLT—the tribunal that handles corporate insolvency cases) in Hyderabad.

The NCLT admitted the petition on July 5, 2017, and imposed a moratorium (a legal freeze on all debt recovery actions against the company) under Section 14 of the Insolvency and Bankruptcy Code (IBC). DCHL was now in the hands of a resolution professional, and creditors had 180 days to find a buyer or a rescue plan.

SREI Multiple Asset Investment Trust Vision India Fund stepped in as the resolution applicant. It proposed a plan: the company would survive, but the brand names—Deccan Chronicle and Andhra Bhoomi—would be handled in a specific way. Clause 11.12 of the plan said DCHL would have a "perpetual exclusive right to use" these trademarks. Not own them. Use them. Forever, yes. But use, not ownership.

The 81.39% vote

The Committee of Creditors (CoC—the group of lenders who decide the fate of the company) met for its 20th meeting on December 10, 2018. They voted. The plan was approved with 81.39% of the voting share—well above the 66% threshold required by law.

The NCLT gave its conditional approval on June 3, 2019. But there was a catch: the tribunal said the plan was approved "subject to" a pending application—I.A. No. 155/2018—which dealt with the trademark issue. That application had been filed earlier, and the NCLT wanted to decide it separately before giving final effect to the plan.

On August 14, 2019, the NCLT disposed of that application. And here is where the trouble began. The tribunal did not just confirm the usage rights that the plan had granted. It went further. It declared that the trademarks "belong to" DCHL—that the company was the owner of the brand names, not merely a perpetual user.

The plan had said "use." The tribunal said "own." That is a very different thing.

Why ownership matters more than use

Ownership of a trademark means you can sell it, license it, sue others for infringement, and prevent anyone else from using it. A perpetual usage right means you can keep using it, but you cannot transfer it or stop the actual owner from doing so. In the insolvency context, declaring ownership of a brand name that the plan only meant to license could have enormous financial consequences—for the company, for the creditors, and for any future buyer.

The resolution professional and some creditors challenged this order before the National Company Law Appellate Tribunal (NCLAT—the appellate body that hears appeals from the NCLT). Their argument was straightforward: the CoC had approved a plan that granted usage rights, not ownership. The NCLT had no power to rewrite that plan after approval.

The NCLAT agreed. On September 2, 2022, it set aside the NCLT's ownership declaration, calling it an "impermissible modification" of the approved resolution plan. The tribunal could not add something that the creditors had never voted on.

The Supreme Court's final word

SREI appealed to the Supreme Court. The case landed before a bench of Justice Ajay Rastogi and Justice Bela M. Trivedi on March 17, 2023.

The core legal question was about Section 60(5) of the IBC—the provision that defines the jurisdiction (the legal authority) of the adjudicating authority (the NCLT) in insolvency matters. Could the NCLT, while exercising this jurisdiction, modify a resolution plan that had already been approved by the CoC and conditionally approved by the tribunal itself?

The Supreme Court's answer was a clear no.

The bench held that once a resolution plan is approved by the CoC based on its commercial wisdom—the business judgment of the creditors about what is best for the company—and subsequently approved by the adjudicating authority, no alterations or modifications to the plan are permissible. The adjudicating authority has only two options: approve the plan or disapprove it. It cannot pick and choose which parts to change.

In this case, the plan specifically provided for a perpetual exclusive right to use the trademarks. The NCLT could not expand this to a declaration of ownership. That was not a minor clarification. It was a fundamental change to the deal that the creditors had accepted.

The court cited two key precedents: Embassy Property Developments Private Limited v. State of Karnataka and Others and Ebix Singapore Private Limited v. Committee of Creditors of Educomp Solutions Limited & Another. Both cases stood for the same principle: the commercial wisdom of the CoC is not subject to judicial second-guessing, and post-approval modifications to a resolution plan are impermissible.

The Supreme Court dismissed SREI's appeal. The connected appeals—C.A. No. 8323/2022 and C.A. No. 8132/2022—were dismissed as infructuous (no longer requiring a decision) or on the same grounds. No costs were imposed.

What this means for every insolvency deal

For practitioners, the message is sharp and practical. If you are a resolution applicant, draft every clause with precision. If the plan says "use," the tribunal cannot later read "own" into it. If you are a creditor, vote carefully—because the plan you approve is the only plan you will get. The tribunal cannot fix a bad deal after the fact.

For tribunals, the judgment is a reminder of their limited role. The NCLT is not a super-creditor with the power to improve a plan. It is a gatekeeper: approve or reject, but do not rewrite.

THE PLAY: A resolution plan approved by the Committee of Creditors is a final contract—the adjudicating authority cannot add or alter its terms, even if the change seems logical or beneficial.

The plan said 'use forever.' The tribunal said 'own it.' The Supreme Court said the plan wins.