JUDGMENT :

DHANANJAYA Y. CHANDRACHUD, J.

(A) The appeal

1. By its judgment dated 29.8.2019, the National Company Law Tribunal¹ [“NCLT” or “Adjudicating Authority”] stayed the termination by the appellant of its Power Purchase Agreement² [“PPA”] with Astonfield Solar (Gujarat) Private Limited³ [“third respondent” or “Corporate Debtor”]. The order of the NCLT was passed in applications⁴ [C.A. No. 701/2019 (first respondent) and C.A. No. 700/2019 (second respondent)] moved by the Resolution Professional of the Corporate Debtor⁵ [“first respondent” or R.P.”] and Exim Bank ⁶ [“second respondent”] under Section 60(5) of the Insolvency and Bankruptcy Code, 2016⁷ [“IBC”]. On 15 October 2019, the NCLAT dismissed the appeal by the appellant⁸ [“appellant” or “GUVNL”] under Section 61 of the IBC. The decision by the NCLAT is called into question.

2. The appellant assails the order dated 15 October 2019 of the NCLAT on, inter-alia, two broad grounds: first, that the NCLT and NCLAT do not possess jurisdiction under the IBC to adjudicate on a contractual dispute between the appellant and the Corporate Debtor and second, in any event, the termination of the PPA was validly made under Article 9.2.1(e) and Article 9.3.1 of the PPA.

(B) The genesis of the PPA

3. The narrative of this case begins with the Government of Gujarat notifying the Solar Power Policy, 2009⁹ [“Policy”] on 6 January 2009, for development of Solar Power projects in the state. The appellant, a Government of Gujarat undertaking, is a successor to the Gujarat Electricity Board and is also the holding company of all the State Power Utilities in Gujarat.

4. On 1 August 2009, the Government of Gujarat allocated a 25-megawatt capacity to the Corporate Debtor for developing and setting up a solar photovoltaic based power project in the State of Gujarat. The Corporate Debtor expressed its desire to setup a Solar Photovoltaic Grid Interactive Power Plant¹⁰ [“Plant”] of 10-megawatt capacity and exercised its option for sale of the entire electrical energy produced from the plant to the appellant for commercial purposes.

5. In exercise of its powers under Sections 61(h), 62 and 86 of the Electricity Act, 2003¹¹ [“Electricity Act”] the Gujarat Electricity Regulatory Commission¹² [“State Commission” or “GERC”] published a draft tariff order for purchase of solar energy, inviting comments and suggestions from members of the public and stakeholders. Public hearings were held by the State Commission on the price at which power could be procured.

6. After the process of public hearings and consultations, a Tariff Order dated 29 January 2010¹³ [“First Tariff Order”] was issued by the State Commission for procurement of power by the appellant from power producers, under Section 86(1)(a) of Electricity Act. The tariff was determined on the basis of the then prevailing capital and financing costs, and debt equity ratio. It was envisaged that the PPA will be for 25 years, with higher tariffs in the first 12-15 years, and a scaled-down tariff for the remaining years. The tariff was to be applicable to solar projects commissioned within the control period of the First Tariff Order, i.e. from 29 January 2010 to 28 January 2012.

7. The appellant filed a petition before the State Commission on 28 May 2013, seeking initiation of proceedings for re-determination of the capital cost and tariff fixed under the First Tariff Order. This petition was filed on the basis that subsequent incentives given to power producers on 27 February 2010 had brought down their cost of capital and, as a consequence, the tariff fixed under the First Tariff Order should be revised. This petition was dismissed by the State Commission on 8 August 2013. An appeal against the order was dismissed by the Appellate Tribunal for Electricity¹⁴ [“APTEL”] on 22 August 2014. An appeal¹⁵ [Civil Appeal No. 10301 of 2014] against APTEL’s decision is pending before this Court, with notice having been issued on 28 November 2014.

8. The appellant and the