# Srinivasa Reddy Velagala vs. Sravanthi Infratech Pvt. Ltd.

> SC judgment dated 2026-08-12. Citation: TCN-2026-SC-00106. Srinivasa Reddy Velagala (appellant/corporate debtor) initiated a bid for a 225 MW gas-based power…

- **Court:** SC
- **Order date:** 12 Aug 2026
- **Citation:** TCN-2026-SC-00106
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/supreme-court-of-india/srinivasa-reddy-velagala-vs-sravanthi-infratech-pvt-ltd-jpet1

## Summary

### Background

Srinivasa Reddy Velagala (appellant/corporate debtor) initiated a bid for a 225 MW gas-based power station in Andhra Pradesh. Sravanthi Infratech Pvt. Ltd. (respondent/operational creditor) was awarded the Engineering Procurement and Construction (EPC) contract for Rs. 827 crore, formalized by an agreement dated 09.02.2011, with a 14-month completion period. The appellant defaulted on payments for the initial milestones, paying only Rs. 50.15 crore out of Rs. 165.4 crore due, despite the respondent achieving milestones and submitting Billing Break-ups (BBUs) which the appellant acknowledged. Due to this non-payment, the respondent suspended works on 30.07.2011 and demobilized. The EPC contract was never formally terminated by either party. After sending three legal

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## Facts

The appeal arises from a NCLAT judgment dated 01.02.2021, which affirmed an NCLT order admitting an insolvency application under Section 9 of the IBC against the appellant.

The appellant (corporate debtor) invited an International Competitive Bid for setting up a 225 MW gas-based combined cycle Power Station.

The respondent (operational creditor) was awarded the EPC contract, and a Letter of Award (LOA) dated 24.12.2010 was issued for Rs. 827 crore.

An EPC agreement was entered into on 09.02.2011, with a stipulated completion period of 14 months and a clause for arbitration in case of disputes.

The payment schedule included an initial advance payment of 10% (Rs. 82.7 crore) upon completion of the first milestone.

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## Issues and analysis

### Issue 1: Whether the EPC contract entered into by and between the appellant and respondent was frustrated by …

**Ratio:** The doctrine of frustration of contract under Section 56 of the Indian Contract Act,

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**Reasoning:** The suspension of works by the respondent was a direct consequence of the appellant's

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**Interpretation:** The Court clarified that 'effluxion of time' refers to the natural close of a

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**Application:** Given that the appellant's failure to make payments led to the respondent's

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## Parties

- **Judges:** J.B. PARD…; Manoj M…
- **Respondents:** Srinivasa Reddy…; Sravanthi…
- **Other parties:** Analysis co…; HXsHnr3Ug9OhFhqk4g…
- **Advocates:** Shyam D…; Nitin Bha…

## Timeline

- **2010-12-13 — Bid Invit…**: The appellant invited an International Competitive Bid for setting up a 225 MW gas-based…
- **2010-12-24 — Letter of Award (LOA)…**: The appellant issued the Letter of Award to the respondent for the EPC project for an…

## Legal provisions

- [Insolvency and Bankruptcy Code, 2016, Section 9 — Application for initiation of corporate insolvency…](https://caseease.in/legal-provisions/insolvency-and-bankruptcy-code-2016/section-9)

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