Contractual Rights - The Legal Chamber

This Supreme Court judgment clarifies that validly terminated contracts do not constitute "assets" of a corporate debtor under the IBC, and its moratorium does not revive extinguished rights. It reaffirms that NCLT cannot interfere with terminations based on pre-existing, non-insolvency-related defaults. Furthermore, High Courts retain constitutional jurisdiction to direct statutory authorities, even during moratorium. Facts Of The Case: The dispute originated from a 2005 Development Agreement between Kher Nagar Sukhsadan Co-operative Housing Society and developer AA Estates for redevelopment of a dilapidated Mumbai building declared dangerous under municipal laws. The agreement required completion within 24 months, but the developer failed to meet this timeline. A Supple...

The Supreme Court quashed criminal proceedings under Section 420 IPC, ruling that a mere breach of contract does not constitute cheating. The essential ingredient of a dishonest intention at the inception of the agreement was absent. Allegations of supplying non-conforming goods disclosed only a civil dispute, not a criminal offense, making the FIR unsustainable. Facts Of The Case: The case originated from a business transaction dated 12.12.2017, where M/s Soma Stone Crusher (complainant) agreed to purchase a 'sand rrulla machine' from M/s Saini Engineering Works, run by Sarabjit Singh. An advance of ₹5,00,000 was paid via cheque. The complainant alleged that the appellant, Paramjeet Singh, acting on behalf of his brother, had assured that the machine would meet specific specifications (...

Tag: Contractual Rights

Supreme Court Slams Misuse of Criminal Law to Settle Civil Disputes, Quashes Proceedings