Supreme Court Calls For Law To Clarify Validity Of ‘Ipso Facto’ Contractual Clauses In Relation To Insolvency

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Case: Gujarat Urja Vikas Nigam Limited vs. Amit Gupta

Coram: Justices DY Chandrachud and MR Shah

Case No: CA 9241 of 2019

Case observation: It is through the instrumentality of an inter-institutional dialogue that the doctrine of separation of powers can be operationalized in a nuanced fashion. The Court is at its heart, an institution that responds to concrete cases brought before it. It is not within its province to engraft into law its views as to what constitutes good policy.

This is a matter falling within the legislature’s remit. Equally, when presented with a novel question on which the legislature has not yet made up its mind, we do not think this Court can sit with folded hands and simply pass the buck onto the Legislature.

In such an event, the Court can adopt an interpretation – a workable formula – that furthers the broad goals of the concerned legislation, while leaving it up to the legislature to formulate a comprehensive and well-considered solution to the underlying problem.

To aid the legislature in this exercise, this Court can put forth its best thinking as to the relevant considerations at play, the position of law obtaining in other relevant jurisdictions, and the possible pitfalls that may have to be avoided.

It is through the instrumentality of an inter-institutional dialogue that the doctrine of separation of powers can be operationalized in a nuanced fashion. It is in this way that the Court can tread the middle path between abdication and usurpation.


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