The Court established that a party's material breach of contract justifies the other party's termination, and the balance of convenience and public interest are crucial factors in determining injunctions.

JUDGMENT

Sanjeev Narula, J. - Meenakshi Energy Limited (through its Resolution Professional, Mr. Ravi Sankar Devarakonda) - the Petitioner herein [hereinafter referred to as MEL], has approached this Court under Section 9 of the Arbitration and Conciliation Act, 1996, [hereinafter referred to as the Act], seeking, inter alia: (i) the stay of operation of a termination notice dated 25th November, 2021, issued by PTC India Limited - being the Respondent No. 1 [hereinafter referred to as PTC] in terms of Clause 4.4(c) of the Power Purchase Agreement dated 9th October, 2018 executed between PTC and Bangladesh Power Development Board [hereinafter referred to as BPDB], and (ii) also stay of invoking of certain performance of bank guarantees.

2. FACTS

2.1. MEL is presently admitted to Corporate Insolvency Resolution Process (CIRP) in terms of the Insolvency and Bankruptcy Code, 2016, pursuant to an admission Order dated 07th November 2019 passed by National Company Law Tribunal, Hyderabad Bench (NCLT).

2.2. MEL and PTC entered into an Exclusive Power Purchase Agreement on 09th January 2018 to enable PTC to participate in a bid floated by BPDB for procurement of power. PTC was successful in the aforesaid bid and pursuant thereto, it executed the following agreements: (a) Power Purchase Agreement dated 9th October 2018 with BPDB [hereinafter referred to as BPDB-PPA], and (b) Long Term Power Purchase Agreement dated 29th October 2018 between Petitioner and PTC [hereinafter referred to as PTC-PPA], for supply of 200 MW of electricity from MEL to PTC for onward supply to BPDB.

2.3. The BPDB-PPA and the MEL-PPA have been executed on a back-to-back basis. The said agreements identify MEL as the power generation source, and Clause 2.1.2.1 of PTC-PPA notes that it is co-terminus with the BPDB-PPA.

2.4. With the assistance of the Committee of Creditors of MEL and PTC, the Resolution Professional was able to operationalise the PPAs by ensuring power supply to BPDB from 07th February 2020. Initially the supply was through an alternate generator, however, from 01st January 2021 the generation and supply of electricity was from MELs Project.

2.5. On account of certain irregularities in power supply to BPDB, predominantly due to unprecedented and unforeseen rise in price of imported coal and freight charges, MELs capital was wiped out. On 08th April 2020, BPDB issued a Notice of Default which was shared by PTC on a back-to-back basis along with its own Notice of Default, which relied upon BPDB's Notice of Default. The allegation made therein was that MEL had misrepresented facts. The same was refuted by MEL in its communications dated 6th April 2021, 27th April 2021 and 4th May 2021.

2.6. On 18th August, 2021, PTC issued a Notice of Intent to Terminate on a back-to-back basis also sharing a copy of the BPDB Notice of Intent to Terminate dated 04th August 2021. This was followed by Notice of Termination dated 25th November 2021, making no reference to any Termination Notice issued by BPDB.

2.7. In the aforenoted circumstances, MEL has approached this Court.

3. CONTENTIONS OF THE PETITIONER

3.1. Mr. Rajshekhar Rao, senior counsel on behalf of MEL, acknowledges that Courts are ordinarily reluctant to interfere in matters of termination of contracts, however, he argues the instant case is such that Courts intervention is warranted and necessary. He submits that the PPAs were executed on a back-to-back basis and therefore PTC cannot issue a standalone termination notice, as, pertinently, BPDB has not issued a termination notice.

3.2. All throughout, PTCs notices were issued on the basis of similar notices being issued by BPDB. Therefore, till such time the agreement between PTC and BPDB is not terminated by BTDB, PTC does not have any independent right to terminate the PTC-PPA.

3.3. Mr. Rao further submits that the CIRP proceedings are at its final stages. Two entities have shown interest for the revival of the Company. The PTC-PPA is the sole revenue generator, an