TATA CONSULTANCY SERVICES LIMITED v. VISHAL GHISULAL JAIN, RESOLUTION PROFESSIONAL, SK WHEELS PRIVATE LIMITED

1.5 A note of caution is issued to the NCLT and NCLAT regarding interference with a party’s contractual right to terminate a contract. Even if the contractual dispute arises in relation to the insolvency, a party can be restrained from terminating the contract only if it is central to the success of the CIRP. Crucially, the termination of the contract should result in the corporate death of the Corporate Debtor. The narrow exception crafted by this Court in Gujarat Urja must be borne in mind by the NCLT and NCLAT even while examining prayers for interim relief. The order of the NCLT does not indicate that the NCLT has applied its mind to the centrality of the Facilities Agreement to the success of the CIRP and Corporate Debtor’s survival as a going concern. The NCLT has merely relied upon the procedural infirmity on part of the appellant in the issuance of the termination notice, i.e., it did not give thirty days’ notice period to the Corporate Debtor to cure the deficiency in service. The NCLAT, in its impugned judgment, has averred that the decision of the NCLT preserves the ‘going concern’ status of the Corporate Debtor but there is no factual analysis on how the termination of the Facilities Agreement would put the survival of the Corporate A B C D E F G H 1084 SUPREME COURT REPORTS [2021] 10 S.C.R. A B C D E Debtor in jeopardy. Admittedly, this Court has clarified the law on the present subject matter in Gujarat Urja after the pronouncements of the NCLT and NCLAT. The exercise of the NCLT’s residuary powers should be governed by the said decision. The judgment of the NCLAT is set aside. The proceedings initiated against the appellant stand dismissed for absence of jurisdiction. [Para 28-31][1101-G-H; 1102-A; 1103-A-E]