Numerous legal issues about the precedence of IBC over other laws have previously been established by the confluence between IBC and other laws. When there is a conflict between the IBC and other existing laws, Section 230 of the IBC states that the IBC takes precedence. Another similar clause is section 60(5), which describes the scope of NCLT's authority in cases involving insolvency or liquidation under the Code or topics related thereto. This has also sparked questions about the NCLT's authority to rule on these issues because the earlier law might have established an entirely new forum for dispute resolution. The Gujarat Urja Vikas Nigam v. Amit Kumar case serves as a further explanation of the NCLT and IBC's respective purviews where they interact with other statutes.
Another similar clause in section 60(5), describes the scope of NCLT's authority in cases involving insolvency or liquidation under the Code or topics related thereto. This has also sparked questions about the NCLT's authority to rule on these issues because the earlier law might have established an entirely new forum for dispute resolution. The Gujarat Urja Vikas Nigam v. Amit Kumar case serves as a further explanation of the NCLT and IBC's respective purviews where they interact with other statutes.
In the instant case titled Gujarat Urja Vikas Nigam Limited Versus Mr Amit Gupta & Ors.the issues raised for clarification before the Supreme Court were:
Whether disputes resulting from contracts like the PPA fall under the IBC's purview of the NCLT/NCLAT.
Whether the IBC regulates the appellant's ability to terminate the PPA in accordance with Article 9.2.1(e) read in conjunction with 9.3.1.
With regard to the first issue, The NCLT has the authority to "deal with any question of priorities or any question of law or facts arising out of or in relation to the insolvency resolution or liquidation proceedings of the corporate debtor or corporate person under the Code," according to the Supreme Court's observation of Section 60(5) of the IBC. The IBC considered creating a single forum to handle insolvency-related issues that had previously been handled by several forums. Additionally, it was determined in the instance of Arcelor Mittal v. Satish Kumar Gupta that the NCLT is the only authority for entertaining or deciding applications against the Corporate Debtor in the IBC.
With regard to the second issue, the Supreme Court noted that the corporate debtor's main objective was to provide electricity to GUVNL pursuant to the PPA. If the PPA were to be terminated, GUVNL would be given the authority to do so in the event of CIRP under PPA provisions. The Supreme Court, however, determined that such a right would have disastrous effects because the corporate Debtor would no longer function as a going concern, negating the fundamental purpose of the IBC.
The Court categorically stated that,
"At the same time, we cannot lose sight of the fact that this Court is apprised with a novel situation where the going concern‘ status of a corporate debtor will be negated by the termination of its sole contract, on the basis of an ipso facto clause. It is pertinent to note that the IBC has been in effect since 5 August 2016, and has also been amended multiple times. Hence, if the going concern‘ status of corporate debtors was being affected on a regular basis due to ipso facto clauses (which are in vogue even in the present contracts similar to the current PPA), then the legislature may, if it is considered necessary, have proceeded to legislate on an explicit position with regard to the operation of ipso facto clauses. However, this Court in the present case is not required to resolve the broad question of whether the invalidation/stay of ipso facto clauses in India, generally, is legally permissible. This is a matter which raises complex issues of legal policy and balancing between distinct and conflicting values. Reform will have to take place through the legislative process. The stages through which legislative reform must take place -absolute or incremental – is a matter of legislative change. Our task is limited to the issue of deciding whether the NCLT correctly exercised the jurisdiction vested in it, in the facts of this case, to stay the termination of the PPA. In the absence of an explicit stand taken by the legislature, this Court‘s intervention in this matter would be guided by ascertaining the legislative intention from the provisions of the IBC.”
The current ruling provides excellent guidance for future challenges involving the junction of the IBC and other legislation. The ruling makes it clear that, to the extent of the contradiction, IBC would have precedence over other legislation. Furthermore, the primacy of IBC would be crucial in the revival of businesses if not the entire revival may be halted by terminating the PPA in matters relating to the CIRP of enterprises engaged in the production/distribution of electricity and related sectors. The NCLT and NCLAT ensure that they do not usurp the proper jurisdiction of other courts, tribunals, and fora when the issue does not simply arise from or relate to the insolvency of the corporate debtor, as the Supreme Court correctly clarified.