# In the matter of Gujarat Urja Vikas Nigam Ltd. Vs. Yes Bank Limited and Anr. CA(AT)(Ins)No. 601 of 2020

> NCLAT judgment dated 2020-10-20. Citation: TCN-2020-NCLAT-00068. This appeal arises from an order passed by the Adjudicating Authority (NCLT, Hyderabad Bench)…

- **Court:** NCLAT
- **Order date:** 20 Oct 2020
- **Citation:** TCN-2020-NCLAT-00068
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclat-new-delhi/gujarat-urja-vikas-nigam-ltd-vs-yes-bank-limited-and-anr-ca-9dd2c790

## Summary

### Background

This appeal arises from an order passed by the Adjudicating Authority (NCLT, Hyderabad Bench) regarding an Interim Application in a corporate insolvency resolution process (CIRP). The core issue revolves around the termination of a Power Purchase Agreement (PPA) between Gujarat Urja Vikas Nigam Ltd. (GUVNL) and Lanco Infratech Ltd. (the corporate debtor), which is undergoing liquidation. IDBI Bank initiated CIRP against Lanco Infratech, leading to a liquidation order. Yes Bank, a financial creditor, argues that GUVNL's termination of the PPA hinders the maximization of the corporate debtor's asset value. GUVNL contends that it rightfully terminated the PPA due to the initiation of liquidation proceedings against Lanco Infratech, citing clauses within the PPA.

## Facts

Lanco Infratech Ltd. (corporate debtor) entered into a Power Purchase Agreement (PPA) with Gujarat Urja Vikas Nigam Ltd. (GUVNL) on 24.09.2010, agreeing to supply 15 MW of solar power. IDBI Bank initiated Corporate Insolvency Resolution Process (CIRP) against Lanco Infratech, leading to CIRP commencement on 07.02.2017. Due to the failure of resolution, a liquidation order was passed on 27.08.2018. Yes Bank Limited, a financial creditor, had extended a loan of Rs. 63,50,00,000 to Lanco Infratech, secured by the solar power plant. GUVNL issued a default notice on 23.07.2019, citing clause 9.2.1(e) of the PPA (related to insolvency proceedings) and terminated the PPA on 30.08.2019. Yes Bank contested the termination, arguing it hindered asset value maximization. The

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## Issues and analysis

### Issue 1: Whether the moratorium declared under Section 14 of IBC applies to the PPA along with other …

**Ratio:** Section 14(1)(b) of the IBC prohibits transferring, encumbering, alienating, or disposing

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**Reasoning:** The court reasoned that the PPA is a beneficial interest of the corporate debtor, and its

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**Interpretation:** Section 14 of the IBC imposes a moratorium on actions against the corporate

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**Application:** The court applied Section 14 to prevent GUVNL from terminating the PPA, as

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## Parties

- **Judges:** Jarat Kuma…; Alok Sriv…
- **Appellants:** Gujarat Urja…
- **Respondents:** Lanco Infratech…; Yes Bank L…

## Timeline

- **2010-04-29 — Power Purchase…**: PPA entered into between the corporate…
- **2010-05-24 — Facility…**: Yes Bank Limited provided a Facility…

## Legal provisions

- [Insolvency and Bankruptcy Code, 2016, Section 60(5) — Adjudicating Authority for corporate persons](https://caseease.in/legal-provisions/insolvency-and-bankruptcy-code-2016/section-60)

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