Tribunal holds contractual disputes governed by foreign laws fall outside insolvency jurisdiction; Orders dismissal of Liquidator's application seeking refund of $92 million advance payment to Boeing
In a significant judgment dated September 11, 2026, the National Company Law Tribunal (NCLT), Mumbai Bench, presided over by Mr. Prabhat Kumar (Technical Member) and Mr. Sushil Mahadeorao Kochey (Judicial Member), dismissed the application filed by the Liquidator of Jet Airways (India) Limited seeking refund of advance payments amounting to approximately $92.13 million paid to The Boeing Company for undelivered aircraft.
The dispute arose from two Purchase Agreements entered into in 2013 between Jet Airways and Boeing for the procurement of Boeing Model 737-8 and 787-9 aircraft. Jet Airways had made substantial advance payments under these contracts, which remained undelivered due to the airline's financial difficulties leading to its insolvency and subsequent liquidation.
The Liquidator contended that these advance payments formed part of the liquidation estate and that Boeing was obligated to refund the amounts. Conversely, Boeing challenged the maintainability of the Liquidator's application before the NCLT, asserting that the claim was fundamentally a contractual dispute governed by foreign law (laws of Washington State, U.S.A.) and outside the Tribunal's jurisdiction under Section 60(5) of the Insolvency and Bankruptcy Code, 2016 (IBC).
Boeing also argued that the advance payments had already been set off against its admitted claims during the Corporate Insolvency Resolution Process (CIRP), as per Regulation 29 of the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016. The company maintained that no amount was due to Jet Airways after this adjustment.
The NCLT, after hearing extensive arguments and reviewing precedents including the Supreme Court's decisions in Gujarat Urja Vikas Nigam Limited v. Amit Gupta and others, emphasized that the jurisdiction of the NCLT under Section 60(5) is limited to issues directly arising from or related to the insolvency or liquidation process. The Tribunal clarified that it does not extend to adjudicating general civil or contractual disputes, particularly where the contracts are governed by foreign laws and require detailed trial and evidence.
The Tribunal noted that the dispute concerning the contractual rights and obligations under the Purchase Agreements necessitated interpretation of foreign law and evaluation of contractual terms, which could not be conducted in summary proceedings before the NCLT. Such disputes would be more appropriately adjudicated by competent courts of the foreign jurisdiction (U.S. courts, in this case) applying the doctrine of forum non conveniens.
Furthermore, the Tribunal highlighted that the Liquidator's attempt to enforce contractual obligations and claim refund without producing the contracts and without crystallized claims fell outside the ambit of insolvency proceedings. The Tribunal also observed that the question of set-off under Regulation 29 required full adjudication by a competent court and could not be summarily decided in the liquidation process.
Accordingly, the NCLT dismissed the Liquidator's application (I.A. 2737 of 2026) and also disposed of Boeing's interlocutory application (I.A. 3221 of 2026) raising maintainability issues, with no order as to costs.
This judgment underscores the principle that the NCLT's jurisdiction is circumscribed and cannot be invoked to resolve all disputes involving a corporate debtor, especially where such disputes are contractual in nature and governed by foreign laws. It also reiterates the importance of directing such disputes to the appropriate forums to avoid jurisdictional overreach and to respect the contractual choice of law and forum clauses.
Bottom Line:
Jurisdiction under Section 60(5) of the Insolvency and Bankruptcy Code, 2016, is limited to issues directly arising out of insolvency or liquidation processes and does not extend to adjudicating general contractual disputes, particularly when the contracts are governed by foreign laws.
Statutory provision(s):
Section 60(5) of Insolvency and Bankruptcy Code, 2016; Regulation 29 of Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016; Rule 11 of National Company Law Tribunal Rules, 2016
