The Supreme Court ruled on Monday that the National Company Law Tribunal (NCLT) had jurisdiction to settle disputes relating to the insolvency of a debtor company.
In a 138-page judgment, a bench of Justices DY Chandrachud and MR Shah said, “NCLT has jurisdiction to adjudicate disputes which arise solely from or relate to the insolvency of the debtor company.
However, the Supreme Court has issued a warning to the NCLT and its appeals tribunal, NCLAT, to ensure that they do not usurp the legitimate jurisdiction of other courts, tribunals and bodies when the litigation does not arise solely from or relate to the insolvency. of the debtor company.
The judgment was rendered on appeal filed by Gujarat Urja Vikas Nigam (GUVN) Ltd challenging an order by NCLAT, which upheld NCLT’s decision suspending the termination of the Power Purchase Agreement (PPA) between GUVN and a company Astonfield Solar (Gujarat) Private Limited.
The company then went bankrupt. The higher court rejected this appeal.
The court said that the PPA was terminated solely because of insolvency, and if insolvency did not exist, then there would be no reason to terminate the PPA.
“Therefore, we believe that the RP (resolution professional) can approach the NCLT for the resolution of disputes related to the insolvency resolution process,” noted the judiciary. However, the court added that the PR should apply to the competent authority competent to settle disputes arising from the insolvency of the debtor company.
“For example, if the dispute in this case was about the non-supply of electricity, the RP would not have been entitled to invoke the jurisdiction of the NCLT under the IBC. Due to the insolvency of the debtor company, NCLT is empowered to adjudicate this dispute under Article 60 (5) (c) of the IBC, ”the Supreme Court said.
The tribunal noted that the residual jurisdiction of the NCLT under Article 60 (5) (c) of the IBC gives it a broad discretion to adjudicate on questions of law or fact arising out of or in connection with the insolvency resolution procedure.
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