TATA Consultancy Services Limited vs Vishal Ghisulal Jain, Resolution Professional, SK Wheels Private Limited

Bench: 2 — Dhananjaya Y. Chandrachud

In Brief

The Supreme Court examined whether the NCLT could stay TCS's termination of a Facilities Agreement with SK Wheels (a corporate debtor in insolvency). TCS had terminated the agreement for material breaches of service quality, unrelated to the insolvency. The Court held that while Section 238 of the IBC overrides arbitration clauses, the NCLT's residuary jurisdiction under Section 60(5)(c) applies only to disputes arising from the insolvency itself. Since the termination was based on contractual breaches, not insolvency, the NCLT lacked jurisdiction. The Court set aside the NCLAT's order, clarifying that contractual terminations can only be restrained if the contract is essential to the corporate debtor's survival.

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Insolvency and Bankruptcy Code Jurisdiction of NCLT Contractual Termination Moratorium Going Concern Residuary Powers of NCLT Section 238 Override Arbitration and IBC

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