Gujarat Urja Vikas Nigam Limited vs Mr. Amit Gupta & Ors

Bench: 2 — Dr. Dhananjaya Y Chandrachud, M. R. Shah

In Brief

Gujarat Urja Vikas Nigam Limited (GUVNL) sought to terminate a 25-year Power Purchase Agreement with Aston Field Solar (the Corporate Debtor) after the latter entered Corporate Insolvency Resolution Process under the IBC. The termination was sought citing an ipso facto clause treating insolvency as an event of default. The Supreme Court held that the NCLT has jurisdiction under Section 60(5)(c) of the IBC to prevent termination of contracts when the termination is solely due to insolvency and would result in the corporate death of the debtor. The Court stayed the termination, emphasizing the PPA's criticality to the debtor's survival, while declining to broadly invalidate ipso facto clauses, leaving that to Parliament.

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Insolvency and Bankruptcy Corporate Insolvency Resolution Process Jurisdiction of NCLT Power Purchase Agreement Ipso Facto Clauses Going Concern Status Contractual Rights and Insolvency Section 60(5)(c) IBC Section 14 Moratorium Comparative Insolvency Law Electricity Sector Regulation

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