Termination of contract by BIDA justified despite insolvency proceedings due to prior breaches by Corporate Debtor, hence moratorium protections under IBC inapplicable.

JUDGMENT

(Hybrid Mode)

[Per: Arun Baroka, Member (Technical)]

The present Appeal has been filed under Section 61 of the Insolvency and Bankruptcy Code, 2016 (“IBC”) against the impugned order dated 06.06.2025 of Hon'ble National Company Law Tribunal, New Delhi, Court-IV passed in Application bearing IA/1619/ND/2020 IN CP IB/1581/ND/2019.

2. The Appellant seeks to set aside or modify the order dated June 6, 2025, passed by the Learned NCLT, New Delhi, Court-IV, in IA 1619/ND/2020 in CP (IB) 1581/ND/2019. They also request that the Respondent be directed to remove the blacklisting imposed on the Corporate Debtor. Furthermore, the Appellant prays for the release of retention money amounting to approximately Rs. 27,14,940, which is currently held by the Respondent, along with the release of the final payment of around Rs. 36,40,441.61 for the work completed. Beyond these specific monetary reliefs, the Appellant also asks the court to pass any other orders it deems fit and just, considering the facts of the case.

3. These reliefs are grounded on the contention that the termination of the contract was triggered by the insolvency of the Corporate Debtor, and therefore, the moratorium under Section 14 of the Insolvency and Bankruptcy Code should protect against such termination.

4. Appellant - Liquidator, Appellant in Liquidator Mr. Pradeep Upadhyay contends that the CIRP was initiated against the Corporate Debtor (CD), CD in M/s Dugal Associates Private Limited on 11.11.2019.

5. It claims that under an Agreement dated 07.10.2016 CD was engaged in a civil construction project for BIDA, BIDA – Bhadohi Industrial Development Authority. Appellant claims that while approximately 90% of the work has been completed in terms of physical progress across the various components of the project, this does not correspond to 90% of the contract value in monetary terms. This variance arises due to certain high-value tasks such as final finishes, services, or specialized components-being either partially completed or pending. These remaining elements constitute a significant portion of the contract value, though they represent a smaller portion of the physical volume of work. Hence, the extent of physical completion (approx. 90%) must be viewed distinctly from the proportion of value disbursed or due under the contract. The payments received thus far correspond strictly to certified portions of the work completed under the RA billing system, and no advance or unearned amount has been claimed or received.

6. On 23.01.2020, the Appellant formally informed the Respondent of the initiation of CIRP and the moratorium under Section 14 . On 27.01.2020, the Appellant personally met the CEO of BIDA and apprised him of the CIRP status and proposed completion of the balance work. This meeting was acknowledged by the Respondent in their reply before the Adjudicating Authority.

7. Vide order dated 24.12.2019, the District Collector of Bhadohi constituted a committee to examine delays in project execution and the Committee met on 19.02.2020, and the Corporate Debtor also participated. The delays were beyond the control of the CD and the said committee was formed to investigate the reason; however, blacklisting order was passed without waiting the outcome. Appellant claims that the act of the blacklisting of the Corporate Debtor have adversely impacted the revival of the Corporate Debtor as no PRAs came forward to submit the resolution plan.

8. However, even before the Committee could conclude its enquiry, the Respondent, by order dated 28.01.2020, terminated the Agreement, blacklisted the Corporate Debtor which resulted in Forfeiture of amount payable to CD in terms of Running Accoun