March 27, 2026 : The National Company Law Appellate Tribunal (NCLAT) has clarified that a contract terminated prior to the commencement of the Corporate Insolvency Resolution Process (CIRP) cannot be revived through a resolution plan or by directions of the adjudicating authority under the Insolvency and Bankruptcy Code. The ruling came in Delhi Metro Rail Corporation Ltd. v. Consortium of Crown Steels and Sunrise Industries & Ors, where the appellate tribunal modified the order passed by the National Company Law Tribunal (NCLT), New Delhi.
The dispute arose from a concession agreement executed on 01.04.2010 between Delhi Metro Rail Corporation (DMRC) and Pratibha Industries Ltd. for development of a multi-level parking facility with commercial components at the New Delhi Railway Station under the Airport Express Line. The project was subsequently assigned to a special purpose vehicle, Prime Infrapark Pvt. Ltd. Due to non-payment of outstanding dues amounting to ₹36.78 crore, DMRC issued a cure-cum-termination notice and eventually terminated the concession agreement on 01.09.2017, taking possession of the project the following day.
The corporate debtor admitted its default and sought reinstatement while also invoking arbitration and raising substantial monetary claims. However, no agreement for reinstatement was reached between the parties. Several years later, CIRP was initiated against the corporate debtor on 12.08.2022. The information memorandum acknowledged that the concession agreement had already been terminated and that dispute resolution proceedings had been invoked.
A resolution plan approved in 2024 contemplated revival of the concession agreement without imposing additional liabilities on the corporate debtor or the successful resolution applicant. Following approval, applications were moved before the NCLT seeking implementation of the plan and directions to DMRC for revival of the concession agreement. DMRC opposed the plea, contending that the agreement had ceased to exist long before CIRP and that the adjudicating authority lacked jurisdiction to compel revival of a terminated contract. It also emphasized that it was not a participant in the CIRP process, though it expressed willingness to engage in conciliation or arbitration as per the agreement.
The Appellate Tribunal noted that the termination of the concession agreement in 2017 was undisputed and had occurred well before the initiation of CIRP in 2022. It held that a contract which stood terminated prior to insolvency proceedings cannot be treated as part of the CIRP process, nor can any direction be issued for its revival. The tribunal observed that insolvency proceedings cannot be used as a mechanism to resurrect contractual arrangements that had already come to an end.
It further held that since DMRC was not a stakeholder in the CIRP, no obligations could be imposed upon it through a resolution plan. The NCLAT clarified that neither the approval of the resolution plan nor the NCLT’s order could be construed as directing revival of the concession agreement. To that extent, the appellate tribunal modified the impugned order and held that no such direction could be sustained in law.
At the same time, taking note of the submissions made by both sides, the tribunal observed that the parties were free to pursue conciliation or arbitration in accordance with the dispute resolution clause of the agreement. It clarified that all rights and contentions would remain open to be adjudicated in such proceedings, including any request relating to reinstatement.
The ruling reinforces the principle that insolvency law does not override pre-existing contractual terminations and cannot be used to revive extinguished rights against third parties. It also underscores that resolution plans cannot bind entities that were not part of the CIRP or impose fresh contractual obligations upon them.
