‘ipso Facto' Termination In India: Valid Or Invalid?

On March 8, 2021, Hon'ble Supreme Court delivered a judgement highlighting the need for the Legislature to provide clarity on the validity of ipso facto clauses in India in the context of insolvency laws. The Hon'ble Court, being well aware of its remit, adopted a 'workable formula', applicable only in the given factual matrix, to address the issue in question and did not encroach the legislature's role in formulating a policy with respect thereto. In fact, the Hon'ble Court has put forth a series of questions for consideration before the lawmakers regarding the validity of ipso facto clauses.

The dispute in the matter Gujarat Urja Vikas Nigam Ltd. v. Mr. Amit Gupta & Ors. [C.A. No. 9241/2019] (Captioned Case) revolved around the notice of termination dated May 1, 2019 issued by Gujarat Urja Vikas Nigam Limited (Appellant) for terminating the Power Purchase Agreement (PPA) entered into between the Appellant and Astonfield Solar (Gujarat) Private Limited (Corporate