2019 (12) TMI 1458 - Tri - Insolvency and Bankruptcy

Maintainability of application - initiation of CIRP - corporate debtor committed default in payment of its dues - existence of debt and dispute or not - service of notice - whether there is any distinction drawn between other normal units and banked units under the power purchase agreement? - HELD THAT - The electricity generated by the petitioner through its solar power plant could be injected into the electricity grid maintained by the DISCOM to be consumed by various consumers. Thereafter, the DISCOM acknowledges the receipt of particular of renewable energy and issues generation credit note (GCN). Then on the basis of energy settlement/report, the petitioner raises the invoice as per the units consumed by the end consumer - the energy settlement/report talks about two different units, i. e., other units and bank units. Whereas the corporate debtor claims that the energy generated by the petitioner is directed injected to the DISCOM and is banked and agreed and thus, there is no distinction between the normal units and the banked units. There is no provision or discussion regarding the normal units and the banked units in the entire solar power purchase agreement and addendums executed between the parties. Evidently, there has been an agreement of sale of electricity and purchase of electricity by and between the petitioner and the corporate debtor - there is a clear liability of payment of unpaid invoices in terms of the solar power purchase agreement and addendums between the parties, wherein the corporate debtor has agreed to buy the energies generated and supplied to the DISCOMs under the definitive arrangements and with the obligation to pay the said amounts within the stipulated agreed time. The liability of the corporate debtor cannot be absolved under the premise that they are liable to pay only at 3.70 per unit basing on the distinction drawn between the banked units and the other/normal units. This Adjudicating Authority, on perusal of the documents filed by the creditor, is of the view that the corporate debtor defaulted in paying the outstanding unpaid invoices raised by the petitioners in terms of the power purchase agreement and addendums thereto and also placed the name of the insolvency resolution professional to act as interim resolution professional and there being no disciplinary proceedings pending against the proposed resolution professional, therefore the application under section 9 is taken as complete - petition admitted - moratorium declared.

Summary

Issues Involved:
1. Default in payment of invoices under the solar power purchase agreement.
2. Dispute over the tariff rates for banked and normal units.
3. Invocation of arbitration clause by the corporate debtor.
4. Corporate debtor's claim of non-crystallization of liabilities.
5. Admissibility of the petition under section 9 of the Insolvency and Bankruptcy Code, 2016.

Detailed Analysis:

1. Default in Payment of Invoices:
The petitioner, Valuelabs LLP, initiated the corporate insolvency resolution process against the corporate debtor, Global Energy P. Ltd., due to a default in payment of ?3,92,29,844 as per section 9 of the Insolvency and Bankruptcy Code, 2016. The petitioner supplied power under a solar power purchase agreement, and despite providing signed settlement reports as proof, the corporate debtor failed to pay the outstanding dues. The petitioner also claimed an additional amount of ?5,67,70,860 towards interest at 24% per annum from the date of default.

2. Dispute Over Tariff Rates:
The corporate debtor contested the petitioner's claims, stating that the agreed tariff was revised multiple times through amendments and addendums to the agreement. They argued that from December 13, 2016, the parties agreed to a reduced price of ?3.70 per unit for banked energy, contrary to the billing structure proposed by the petitioner. The corporate debtor maintained that there should be no differentiation between banked and normal units in the performance of the agreement.

3. Invocation of Arbitration Clause:
The corporate debtor attempted to resolve the matter amicably and later invoked the arbitration clause as per the agreement. The corporate debtor issued a notice for arbitration on October 31, 2018, arguing that the petition before the Tribunal was premature due to the disputed price of electricity.

4. Non-crystallization of Liabilities:
The corporate debtor claimed that the liabilities could not be crystallized due to the disputed price and issues with reconciling accounts, citing software breakdown and loss of records. They acknowledged a willingness to pay at ?3.70 per unit but disputed the petitioner's higher claims.

5. Admissibility of the Petition:
The Tribunal examined the arguments and documents, noting that the energy settlement statements distinguished between banked and normal units. The Tribunal found that the unpaid invoices pertained to normal units, which were not subject to the reduced price of ?3.70 per unit. The Tribunal concluded that the corporate debtor defaulted on payments as per the terms of the agreements and addendums.

Conclusion:
The Tribunal admitted the petition under section 9 of the Insolvency and Bankruptcy Code, 2016, prohibiting the initiation or continuation of suits against the corporate debtor, transferring or disposing of assets, and other actions during the moratorium period. The Tribunal appointed an interim resolution professional to carry out the functions under the Code and directed the public announcement of the corporate insolvency resolution process. The petition was admitted, and the registry was instructed to communicate the order to both parties and the interim resolution professional immediately.