2017 (9) TMI 1873 - Tri - Insolvency and Bankruptcy

Recovery of electricity bills in respect of the business premises during moratorium period - HELD THAT - Arrears of electricity bills shall be paid entirely within a period of 2 months in instalments but immediately after receipt of refund from the Bank. It was contended by the representative of the Corporate Debtor that provision with regard to the outstanding electricity charges has been made in the resolution plan already submitted. However the Resolution Applicant may have to file an amended resolution plan. Tagging being made by the lead Bank i.e. Punjab National Bank which is still being deducted - HELD THAT - Section 14(1) (a) and (c) of the Code prohibits even the execution of decree against the Corporate Debtor. The aforesaid recovery should rather have not been made by the Bank by tagging 5% of the amount being deposited on behalf of the Corporate Debtor in TRA account with effect from the date of commencement of the resolution process i.e. the day of admission of the application. The Punjab National bank is directed to refund the amount recovered under this letter after commencement of the insolvency process in the account of the Corporate Debtor within two weeks - Application allowed.

Summary

Issues Involved:
1. Payment of electricity bills during the moratorium period.
2. 5% tagging by Punjab National Bank on the Corporate Debtor's account.

Analysis:

Issue 1: Payment of Electricity Bills
The Tribunal considered the application filed under Section 10 of the Insolvency and Bankruptcy Code, 2016, which declared a moratorium and appointed an Interim Resolution Professional. The first issue raised was regarding the payment of electricity bills during the moratorium period. The Applicant argued that as electricity is an essential service, it cannot be disconnected for non-payment of bills, and the outstanding amount should be considered in the resolution plan. The Tribunal referred to Section 14(2) of the Code, which prohibits the termination of essential services during the moratorium period. The Electricity Department argued that since the Corporate Debtor is using electricity directly for production, the exemption from payment does not apply. The Tribunal directed the Resolution Professional to apply for separate electricity meters for different premises and pay arrears within two months from the sale proceeds.

Issue 2: 5% Tagging by Punjab National Bank
The second issue involved the 5% tagging by Punjab National Bank on the Corporate Debtor's account. The Bank had made deductions based on a previous arrangement, which the Tribunal found to be in violation of the moratorium declared under Section 14(1) of the Code. The Tribunal ordered the Bank to refund the amount recovered after the commencement of the insolvency process within two weeks. This refund would enable the Resolution Professional to clear the outstanding dues of the Electricity Department. The Tribunal disposed of the application with these directions, emphasizing compliance with the orders.

In conclusion, the Tribunal addressed the issues of payment of electricity bills and the 5% tagging by Punjab National Bank in the context of insolvency proceedings, ensuring compliance with the provisions of the Insolvency and Bankruptcy Code, 2016.