commercial contracts

Ipso Facto’ Contract 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.