2021 (10) TMI 1328 - Tri - Insolvency and Bankruptcy

Liquidation proceedings under progress - Seeking direction to respondent to restore the electricity connection of Consumer - seeking direction to respondent to maintain uninterrupted supply of electricity to the Corporate Debtor from the date of restoration of such supply so that the Corporate Debtor can be kept as a going concern - HELD THAT - When a corporate debtor is sold in liquidation as a going concern , the Company survives, there will be no need for dissolution of the Company in terms of section 54 of the Code. The assets along with all attendant claims, limitations, licenses, permits or business authorizations remain in the Company. The Company survives as it was the ownership of the Company is transferred by the Liquidator to the acquirer. Hence, Corporate Debtor survives, only the ownership is transferred by the Respondent No. 1 Liquidator to the Applicant. All the rights, titles and interest in the Corporate Debtor including the legal entity is transferred to the Applicant. After the sale as a going concern , the Applicant will be carrying on the business of the Corporate Debtor. Since a deposit of Rs 24.50 Crore has already been made by the Applicant on behalf of the Corporate Debtor, Respondent No I is directed to conclude the necessary documentation with the Corporate Debtor and energise the connection to the Corporate Debtor within 3 days from the date of this order - Respondent No 1 is directed to energise the connection to the Corporate Debtor for 24 MW as per the load requirement of the Applicant - Respondent No 1 is directed to keep the security deposit amount as per regulations and refund the balance to the Applicant within 7 days from the date of this order - Corporate Debtor is directed to pay the electricity dues of the Respondent No. 1 from the date of connection by the Respondent No. 1 in accordance with the rules and regulation of Respondent No. 1. Application disposed off.

Summary

Issues:
1. Restoration of electricity connection for Corporate Debtor.
2. Maintaining uninterrupted supply of electricity for Corporate Debtor.
3. Legal entitlement to electricity connection post liquidation.
4. Payment of past electricity dues by the Corporate Debtor.
5. Interpretation of regulations regarding sale of Corporate Debtor as a going concern.
6. Obligations of the successful auction purchaser regarding electricity connection.
7. Application of Insolvency and Bankruptcy Code on electricity regulations.
8. Refund of excess security deposit by the electricity supplier.

Issue 1: Restoration of electricity connection for Corporate Debtor
The Applicant sought a direction to restore the electricity connection of the Corporate Debtor to facilitate necessary repair work and maintain it as a going concern. The Respondent No. 1 initially refused reconnection due to outstanding dues, leading to a deposit by the Applicant for reconnection.

Issue 2: Maintaining uninterrupted supply of electricity for Corporate Debtor
The Applicant also requested uninterrupted electricity supply post-restoration to ensure the Corporate Debtor's continuity as a going concern. Despite a substantial deposit made by the Applicant, the connection was not energized, leading to further discussions and legal actions.

Issue 3: Legal entitlement to electricity connection post liquidation
The debate centered on the Applicant's entitlement to a new electricity connection for the Corporate Debtor post liquidation sale. The Respondent No. 1 argued that a new connection could only be established after payment of accrued dues and signing of a new agreement with the successful bidder.

Issue 4: Payment of past electricity dues by the Corporate Debtor
The Respondent No. 1 insisted on clearing past electricity dues before establishing a new connection, citing regulatory requirements and contractual obligations. The Applicant contended that as a going concern sale, the Corporate Debtor should receive the connection in its name without liability for previous dues.

Issue 5: Interpretation of regulations regarding sale of Corporate Debtor as a going concern
The legal arguments delved into the interpretation of IBBI regulations regarding the sale of a corporate debtor as a going concern. The Applicant emphasized the survival of the Corporate Debtor post-sale and the transfer of ownership to the successful bidder, entitling the Corporate Debtor to receive the connection in its name.

Issue 6: Obligations of the successful auction purchaser regarding electricity connection
The Applicant, as the successful auction purchaser, fulfilled financial obligations and deposited security amounts for the electricity connection. The legal discourse revolved around the responsibilities of the successful bidder in ensuring the reconnection and maintenance of the Corporate Debtor's electricity supply.

Issue 7: Application of Insolvency and Bankruptcy Code on electricity regulations
The legal arguments extended to the application of the Insolvency and Bankruptcy Code on electricity regulations, emphasizing the overriding effect of the I&B Code on existing laws, including the Electricity Act, 2003. The Applicant's non-liability for dues pre-sale certificate issuance was highlighted.

Issue 8: Refund of excess security deposit by the electricity supplier
The final directives included the refund of any excess security deposit by the electricity supplier to the Applicant, along with specific instructions for documentation, energizing the connection, payment of statutory charges, and consideration of dues by the liquidator.

This comprehensive analysis reflects the intricate legal considerations and regulatory interpretations involved in the judgment, addressing each issue with detailed insights into the parties' arguments and the tribunal's final directives.