SC dismisses GUVNL's appeal for termination of PPA with Lanco Infratech

The Supreme Court has dismissed an appeal by Gujarat Urja Vikas Nigam Ltd (GUVNL) against the order of tribunals to not terminate the power purchase agreement (PPA) between the Nigam and LANCO Infratech Ltd after latter's assets were taken over by lender YES Bank for Bhadrada Solar Power Project in Gujarat.

GUVNL had terminated the agreement for the solar power plant over the commencement of liquidation proceedings against LANCO Infratech Ltd. (owner of the power plant).

YES Bank was the financier for the project and had taken over the project consequent to liquidation proceedings.

The agreement was terminated by GUVNL despite the fact that YES Bank Limited was successfully operating the plant and generating electricity, the Supreme Court was told.

Earlier, both National Company Law Tribunal (NCLT) and its appellate body NCLAT had allowed the PPA to operate.

NCLAT had observed that the process of liquidation is going on and therefore, the liquidator should have full access to all assets of the corporate debtor to take meaningful steps for revival of the corporate debtor as a going concern.

GUVNL had challenged the orders in the Supreme Court.

The court observed that there is no cavil to the issue that the appellant seeks to wriggle out of the PPA albeit on the ground that they are entitled to do so in terms of the agreement.

Charanya Lakshmikumaran, partner at Lakshmikumaran & Sridharan Attorneys, represented YES Bank in the case. She said the judgement is in line with the most crucial objectives of the Insolvency and Bankruptcy Code (IBC) -- maximisation of value of assets.