Bombay HC reiterates restraint on contract termination in CIRP cases
In short
The Bombay High Court said a contract can be protected from termination only if it is key to a successful insolvency resolution process. It also said Section 14(1)(a) of the IBC does not stop a corporate debtor from starting proceedings, including a counter-claim.
This matters for insolvency cases because it affects when a contract can be kept alive during CIRP.
What the reporting says
The Bombay High Court reiterated that a party can be restrained from terminating a contract only if the contract was central to the success of the corporate insolvency resolution process. The Taxscan summary says Section 14(1)(a) of the IBC bars proceedings against a corporate debtor, but not proceedings initiated by the corporate debtor itself, including a counter-claim. The brief cites the court’s reliance on the Supreme Court’s ruling.
Why it matters
The Bombay High Court reiterated a Supreme Court principle in an insolvency matter, saying restraint on terminating a contract applies only when the contract is central to the success of the CIRP. The summary also states that Section 14(1)(a) of the IBC does not bar proceedings initiated by the corporate debtor, such as a counter-claim. The brief concerns insolvency litigation and contract protection during resolution.