Gujarat electricity distribution and trading company – Gujarat Urja Vikas Nigam Ltd – has been barred by the Supreme Court to terminate the power purchasing agreement (PPA) with an insolvent company – Astonfield Solar (India) Pvt Ltd.
The Supreme Court on Monday dismissed an appeal by the GUVNL against an order by the National Company Law Appellate Tribunal (NCLAT), which had earlier stayed the termination of PPA on grounds that the power generator – Astonfield Solar (India) – had filed for insolvency.
The Gujarat power distribution company had moved Supreme Court saying that neither the National Company Law Tribunal (NCLT) nor the NCLAT had the jurisdiction to stay the termination, which was done as per the clauses of the agreement.
However, the apex court maintained that NCLT and NCLAT were correct in staying the termination of the PPA as GUVNL wanted to terminate the PPA with Astonfield Solar on the grounds that the latter had filed for insolvency.
The Supreme Court said that allowing GUVNL to terminate the PPA would certainly result in the corporate death of Astonfield Solar (Gujarat), which is undergoing corporate insolvency resolution process.