The Supreme Court has held that a contract which has been lawfully terminated before the initiation of insolvency proceedings cannot be treated as an “asset” or “property” of the corporate debtor, and therefore does not enjoy the protection of the moratorium under Section 14 of the Insolvency and Bankruptcy Code.
The Bench observed that “once a contract stands lawfully terminated, it ceases to exist and cannot be treated as an ‘asset’ or ‘property’ of the corporate debtor. The moratorium under Section 14 does not have the effect of reviving or re-creating contractual rights that have been extinguished before insolvency.”
The Court further observed that a defaulting developer cannot take refuge under Section 14 of the…