Jurisdiction of the NCLT over contractual disputes: Supreme Court

Jurisdiction of the NCLT over contractual disputes: Supreme Court

The Supreme Court bench comprising Justices DY Chandrachud and MR Shah said that when a contractual dispute based on the grounds of mere insolvency of the Corporate Debtor, the NCLT, under section 60(5)(c) authorized it to take jurisdiction over such matter.

As per the judgement, the NCLT empowered to adjudicate the matter under section 60(5)(c) considering the subject matter. The order also clarified that the NCLT is not restricted under section 60(5)(c) of the IBC solely because the IRP or the RP is responsible for the same. According to the order, there should exist a link leading to the liquidation of the Corporate Debtor. 

The order is with respect to the appeal filed by Gujarat Urja Vikas Nigam Limited against the NLCAT’s judgment. The appellant took the mandate of the NCLAT in negative by directing towards two aspects: a) the NCLT and the NCLAT is not authorized to facilitate the contractual dispute as per the IBC, b) There was a valid termination of the Power Purchase Agreement under Article 9.2.1 (e) and Article 9.3.1 of the PPA.