NCLT Ahmedabad Keeps MAHAGENCO's Termination Of Gensol's ₹292.5 Crore EPC Contract Inoperative During CIRP

The Ahmedabad Bench of the National Company Law Tribunal (NCLT) has held that Maharashtra State Power Generation Company Limited's (MAHAGENCO) termination of Gensol Engineering Limited's Rs 292.5 crore EPC contract will remain inoperative during the company's insolvency process.

The order by a bench of Judicial Member Shammi Khan and Technical Member Sanjeev Sharma came on an application filed by Resolution Professional Keshav Khaneja, who sought to restrain MAHAGENCO from giving effect to the termination of the Letter of Award dated October 19, 2023 and the Engineering, Procurement, and Construction (EPC) Contract dated February 21, 2024.

Gensol Engineering Limited had been awarded the EPC contract for setting up a 62 MW solar power project at Paras in Maharashtra's Akola district.

The contract, valued at approximately Rs. 292.5 crore, was a key part of the company's operations.

Gensol entered the Corporate Insolvency Resolution Process on June 13, 2025. Just over a month later, on July 15, MAHAGENCO terminated the contract, pointing to delays and alleged non-performance.

The Resolution Professional moved the Tribunal against this decision, maintaining that such a termination during CIRP was not permissible and would undermine efforts to keep the company running as a going concern.

According to the Resolution Professional, the EPC contract was integral to the company's functioning, and losing it would significantly weaken the chances of a successful resolution. It was also alleged that the delays were not solely on Gensol's account. MAHAGENCO, the RP claimed, had failed to hand over the full project site and did not follow the agreed payment structure, particularly the requirement to route funds through the designated Trust and Retention Account.

MAHAGENCO, however, took a different position. It argued that the dispute stemmed from a commercial EPC contract and fell squarely within the scope of arbitration under the contract's dispute resolution clause.

It contended that the application sought enforcement of contractual rights beyond the scope of the Tribunal's jurisdiction under the Insolvency and Bankruptcy Code.

Rejecting this objection, the Tribunal held, “The mere existence of an arbitration clause cannot oust the jurisdiction of this Tribunal where the relief sought pertains to protection of the CIRP and enforcement of Statutory moratorium. Contractual forums govern adjudication of inter se claims; however, questions relating to the impact of termination on insolvency proceedings fall squarely within the jurisdiction of this Authority. "

On the effect of the termination, the tribunal observed, “If the termination dated 15.07.2025 is permitted to operate during the subsistence of CIRP, the Same would have the effect of disrupting the ongoing operations of the Corporate Debtor and may adversely impact the resolution process, though this Tribunal is mindful of the Respondent's public utility role as per Gujarat Urja Vikas Nigam Ltd. v. Amit Gupta (2021) 7 SCC 209."

The court further observed that although it is not required to adjudicate upon the merits of the case, it can intervene if the termination of the contract materially affects the functioning of the corporate debtor.

"However, where termination of a subsisting contract during CIRP has the effect of materially affecting the Corporate Debtor's operations and its status as a going concern, this Adjudicating Authority is empowered to examine whether permitting such termination to operate would defeat the objectives of the Code."

Accordingly, the Tribunal directed that the termination letter dated July 15, 2025 issued by MAHAGENCO shall remain inoperative during the subsistence of the CIRP, without prejudice to the rights and contentions of the parties.

The application was accordingly allowed.