2019 (2) TMI 1725 - Tri - Insolvency and Bankruptcy

Restoration of supply of electricity to three units of the corporate debtor - KSEB disconnected electricity supply owing to non-payment of dues - this Bench observed that RP deposited the dues in the Escrow Account as directed by this Bench - HELD THAT - Since the money already deposited in the Escrow Account being towards the bills raised during CIRP period, it shall be released to KSEB. Release of money lying in Escrow Account cannot be linked to the arrears already paid by the Corporate Debtor, adjustments or set-off is applicable only when mutual obligations subsisting, here no debt is payable by KSEB to the corporate debtor. Since the Escrow Account has come into existence by the order passed by this bench, once any money has come to Escrow Account towards the bills on the condition power would be supplied on deposit of bills in the Escrow Account, the RP is not at liberty to give treatment in the Resolution Plan towards the money paid against the preadmission dues. This application is hereby disposed of directing the Resolution Professional to release the money deposited in the Escrow Account to KSEB.

Summary

Issues involved:
1. Restoration of electricity supply to corporate debtor's units.
2. Resolution Professional's application for directions against the Respondent.
3. Dispute regarding the payment of dues to the Respondent.
4. Interpretation of the Resolution Plan regarding payment adjustments.
5. Classification of Respondent as an Operational Creditor.
6. Release of money deposited in the Escrow Account.

Detailed Analysis:
1. The Tribunal received an application from the Resolution Professional seeking directions for the restoration of electricity supply to three units of the corporate debtor due to disconnection by the Respondent (KSEB) over non-payment of dues.
2. The Bench directed the Resolution Professional to deposit an amount equivalent to the dues in an Escrow Account, leading to the restoration of power supply by the Respondent based on interim directions.
3. The Tribunal noted that the application had become infructuous as the supply had been restored, but the issue of payment adjustment during the CIRP period remained unresolved.
4. The Resolution Professional argued that the amount need not be paid in full as adjustments had been made in the resolution plan for payments made during the CIRP period.
5. The Respondent's counsel clarified that KSEB did not claim to be an operational creditor and disputed the treatment of payments already made as returnable to the corporate debtor.
6. The Tribunal emphasized that the Resolution Plan should have considered the involvement of KSEB and directed the release of the deposited money in the Escrow Account to KSEB for the bills raised during the CIRP period.
7. It was clarified that the release of Escrow Account funds should not be linked to arrears already paid by the corporate debtor, and adjustments were only applicable when mutual obligations existed.

In conclusion, the Tribunal disposed of the application by directing the Resolution Professional to release the deposited money in the Escrow Account to the Respondent, emphasizing the need for clarity in payment adjustments and the Resolution Plan's provisions.