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of <h1>NCLT lacks jurisdiction over non-insolvency disputes. Supreme Court sets aside NCLAT judgment.</h1> <h3>TATA Consultancy Services Limited Versus Vishal Ghisulal Jain, Resolution Professional, SK Wheels Private Limited</h3> TATA Consultancy Services Limited Versus Vishal Ghisulal Jain, Resolution Professional, SK Wheels Private Limited - 2022 (2) SCC 583, 2021 (14) SCALE 100 Issues Involved:1. Jurisdiction of the NCLT under Section 60(5)(c) of the IBC.2. Validity of the ad-interim stay on the termination of the Facilities Agreement.Issue-Wise Detailed Analysis:1. Jurisdiction of the NCLT under Section 60(5)(c) of the IBC:The primary issue was whether the NCLT could exercise its residuary jurisdiction under Section 60(5)(c) of the IBC to adjudicate the contractual dispute between the parties. The court noted that Section 238 of the IBC overrides other laws, including arbitration agreements. It emphasized that the NCLT's jurisdiction extends to questions of law or fact arising out of or in relation to the insolvency resolution of the Corporate Debtor. The Facilities Agreement, being an 'instrument' under Section 238, can be overridden by the provisions of the IBC. The court referenced its earlier decisions in Indus Biotech (P) Ltd. v. Kotak India Venture (Offshore) Fund and Gujarat Urja Vikas v. Amit Gupta & Ors., which affirmed the NCLT's wide discretion under Section 60(5)(c). However, the court clarified that the residuary jurisdiction could not be invoked if the termination of a contract is based on grounds unrelated to the insolvency of the Corporate Debtor.2. Validity of the Ad-Interim Stay on the Termination of the Facilities Agreement:The court analyzed whether the NCLT and NCLAT correctly imposed an ad-interim stay on the termination of the Facilities Agreement. The appellant had issued a termination notice citing multiple breaches by the Corporate Debtor. The court found that the termination was not motivated by the insolvency of the Corporate Debtor but was based on consistent deficiencies in services. It was emphasized that the NCLT and NCLAT had incorrectly upheld the interim stay without establishing a nexus between the termination notice and the insolvency resolution proceedings. The court referred to Gujarat Urja to highlight that judicial intervention should be limited and should not interfere with valid contractual terminations unless the termination would lead to the corporate death of the Corporate Debtor. The court concluded that the NCLT lacked jurisdiction over the dispute and that the ad-interim stay was improperly imposed.Conclusion:The Supreme Court set aside the judgment of the NCLAT dated 24 June 2020 and dismissed the proceedings initiated against the appellant for lack of jurisdiction. The court reiterated that the NCLT's residuary jurisdiction should be exercised cautiously and in line with the principles laid down in Gujarat Urja. The appeal was disposed of with no order as to costs.
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