NCLAT Holds DMRC Cannot Be Forced To Revive Prime Infrapark Concession Agreement Terminated Before CIRP

NCLAT Holds DMRC Cannot Be Forced To Revive Prime Infrapark Concession Agreement Terminated Before CIRP

Introduction

The National Company Law Appellate Tribunal has held that Delhi Metro Rail Corporation cannot be compelled under the Insolvency and Bankruptcy Code, 2016 to revive a concession agreement that had already been terminated years before commencement of CIRP against Prime Infrapark Pvt Ltd. The Tribunal ruled that a contract terminated in 2017 could not be brought back into the insolvency process initiated only in 2022, though it preserved the parties’ contractual remedies of conciliation and arbitration.

Factual Background

In 2009, Delhi Metro Rail Corporation issued a Letter of Acceptance to Pratibha Industries Ltd for development of a multi-level parking and commercial project at New Delhi Railway Station under the Airport Express Line. A formal concession agreement was executed on 1 April 2010 and later assigned to Prime Infrapark Pvt Ltd, a special purpose vehicle.

Following defaults in payment of dues amounting to ₹36.78 crore, DMRC issued a cure-cum-termination notice and terminated the concession agreement on 1 September 2017. Possession of the project facility was taken back the very next day.

The corporate debtor admitted the breach, sought revocation of termination, and also raised monetary claims of ₹340.44 crore. It invoked the dispute resolution clause under Clause 12 of the concession agreement, though no agreement for reinstatement was reached.

CIRP against the corporate debtor commenced much later on 12 August 2022. The information memorandum itself recorded that the concession agreement had already been terminated and that disputes under Clause 12 were pending.

Procedural Background

A resolution plan submitted by a consortium of Crown Steels and Sunrise Industries was approved on 30 July 2024. The plan envisaged revival of the concession agreement without additional financial burden on the corporate debtor.

After approval, the successful resolution applicant moved the NCLT through multiple applications seeking directions against DMRC, effectively attempting revival of the terminated concession framework.

The NCLT disposed of the applications with certain directions on 11 September 2025, leading DMRC to challenge the order before the NCLAT.

Issues

1. Whether a concession agreement terminated before commencement of CIRP can be revived through a resolution plan.

2. Whether the NCLT/NCLAT can direct a third-party counterparty like DMRC to revive a pre-CIRP terminated contract.

3. Whether the successful resolution applicant can still pursue contractual remedies under the dispute resolution clause.

Contentions of the Parties

Delhi Metro Rail Corporation argued that the concession agreement had ceased to exist on 1 September 2017 and therefore fell completely outside the CIRP initiated in 2022. It was submitted that the NCLT had no jurisdiction to compel revival of a contract that was no longer subsisting. DMRC also emphasized that it had not participated in the CIRP and could not be treated as a stakeholder bound by the terms of the resolution plan.

At the same time, DMRC indicated willingness to participate in conciliation or arbitration under Clause 12 of the agreement for adjudication of claims arising out of the termination.

The successful resolution applicant took a narrower stand, clarifying that it was not seeking an express judicial direction for revival, but only an opportunity to revive conciliation proceedings and have its proposal considered by DMRC.

Reasoning and Analysis

The Appellate Tribunal found no dispute on the foundational fact that the concession agreement had been terminated on 1 September 2017, i.e., nearly five years before initiation of CIRP. It emphasized that once a contract stands terminated prior to insolvency commencement, it cannot be treated as part of the corporate debtor’s existing rights or assets capable of revival under a resolution plan.

The bench of Chairperson Justice Ashok Bhushan and Technical Member Barun Mitra held that insolvency law cannot be used as a tool to resurrect a non-existent contractual relationship with a third party who is outside the CIRP framework. Any such direction would amount to rewriting the contract and compelling a non-participant to re-enter a commercial arrangement.

However, since the dispute resolution mechanism under Clause 12 had already been invoked by the corporate debtor, the Tribunal clarified that the parties remained free to pursue conciliation and arbitration with respect to all disputes arising out of the agreement, including the validity of termination and monetary claims.

Decision

The NCLAT modified the NCLT’s order and held that no direction can be issued to DMRC for revival of the concession agreement terminated prior to CIRP. At the same time, it expressly left open the remedy of conciliation and arbitration under Clause 12, permitting the parties to pursue their claims and disputes in accordance with law.

In this case the appellant was represented by Advocate General of India Venkataramani with Advocates Tarun Johri, A Gupta, Vishwajeet Tyagi.