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The National Company Law Appellate Tribunal (NCLAT) has ruled in favour of Delhi Metro Rail Corporation (DMRC), stating that it is not obligated to revive a previously terminated concession agreement with Pratibha Industries Ltd (PIL). The agreement, linked to a multi-level parking project at the New Delhi Railway Station-Airport Express Line, had been terminated well before insolvency proceedings began. The decision modifies an earlier NCLT order that had directed DMRC to cooperate with the resolution plan. The ruling clarifies limits on tribunal authority over third-party contracts in insolvency cases.
The National Company Law Appellate Tribunal (NCLAT) has provided relief to Delhi Metro Rail Corporation by ruling that it is not obligated to revive a concession agreement with Pratibha Industries Ltd for a multi-level parking project. Advertisement
The issue relates to a resolution plan approved in the past year by the National Company Law Tribunal (NCLT), where a consortium of Crown Steels and Sunrise Industries had taken over PIL. Under this plan, DMRC was required to restore the concession agreement in full without imposing any additional liability on the successful bidder.
Following the approval, the successful resolution applicant approached the tribunal seeking directions to ensure implementation of the plan. In its order passed in the past year, NCLT had directed both the bidder and DMRC to take necessary steps to implement the resolution plan effectively.
DMRC had challenged this direction, arguing that the insolvency tribunal did not have jurisdiction to compel revival of a contract that had already been terminated. This objection was rejected by NCLT, prompting DMRC to approach the appellate tribunal.
The National Company Law Appellate Tribunal examined the matter and noted that the concession agreement, originally signed in 2010, had been terminated in 2017, well before the initiation of insolvency proceedings against PIL. Since the agreement was not active during the Corporate Insolvency Resolution Process (CIRP), the tribunal held that DMRC could not be directed to revive it.
The bench, led by Justice Ashok Bhushan along with a technical member, observed that DMRC was not a participant in the insolvency process. It further clarified that the adjudicating authority had exceeded its jurisdiction by issuing directions related to a contract that was no longer in force.
The agreement in question was linked to the development of a multi-level parking facility along with commercial components at the New Delhi Railway Station-cum-Airport Terminal on the Airport Express Line, a high-value transit-oriented infrastructure project in the capital.
By modifying the earlier NCLT order issued in the past year, NCLAT stated that neither the approval of the resolution plan nor subsequent directions could compel DMRC to restore the terminated agreement. This reinforces the principle that contractual obligations that ceased before insolvency proceedings cannot be automatically reinstated through resolution plans.
This ruling aligns with earlier judicial views where tribunals have maintained that third-party contracts cannot be altered or enforced beyond their original legal status during insolvency, unless all parties are part of the resolution process.
Source PTI
5th Jun, 2025
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