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The National Company Law Appellate Tribunal ("NCLAT") through its judgment dated 07.11.2025 in Pradeep Upadhyay v. Bhadohi Industrial Development Authority1, upheld that termination of contract for performance default is not barred by moratorium under Section 14 of the IBC.
NCLAT held that the termination was on valid contractual grounds due to persistent deficiencies and non-performance by the Corporate Debtor, unrelated to insolvency proceedings.
NCLAT observed that National Company Law Tribunal ("NCLT") lacks jurisdiction under Section 60(5)(c) of the IBC to adjudicate contractual disputes occurring independently of insolvency proceedings and held that the termination was integral / indispensable to the efficacious conduct of the Corporate Insolvency Resolution Process ("CIRP") and thus, the moratorium under Section 14 of the IBC does not apply, and the termination was not a smokescreen intended to evade insolvency protection.
Footnote
1.Company Appeal (AT) (Insolvency) No. 1152 of 2025.
