9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2019 (2) TMI 886 - Tri - Insolvency and BankruptcyInsolvency Resolution - RP raising interim finance - whether supplying electricity to the corporate debtor not falls within the definition of essential supplies classified in regulation 32 of IBBI CIRP regulations? - Expenses to be incurred on or by the resolution professional - Held that - As u/s. 25 of the Insolvency Code,Duties of Resolution Professional are prescribed according to which Resolution Professional is required to undertake the action for raising interim finance so that the business activity of the Corporate Debtor can be restored. Any cost incurred by the Resolution Professional in running the business of the Corporate Debtor as a going concern is to be treated as Insolvency Resolution Process Cost (Refer Section 5(13)(c) prescribing definition of Insolvency Resolution Process Cost ). The expenditure incurred to run the business of a Debtor Company is, therefore, to be borne by the Committee of Creditors. As far as the question of payment to be made to DGVCL is concerned, the Resolution Professional is hereby directed that electricity consumed on commencement of CIRP shall be paid as per the prescribed charges as cost of CIRP. The commencement of CIRP in this case is from the date of the Order i.e. 09.08.2018. For the old outstanding payment due as on the date of commencement of CIRP, DGVCL has an option to lodge its claim of electricity charges to the Resolution Professional as prescribed under Insolvency & Bankruptcy Code. A requisite form is required to be submitted to Resolution Professional for lodgement of claim which ought to be admitted for due consideration, either at the time of finalization of Resolution Plan or even at the time of Liquidation of Assets of the Debtor Company. The Application filed by the Electricity Company is therefore allowed in terms of the above directions. Miscellaneous Application as submitted by an employee of Oracle Home Textile Limited (Corporate Debtor) and contesting that this Application is on behalf of all the Employees and Workmen of the Corporate Debtor - Prayer of the Applicant is to give direction to Resolution Professional to consider the salary payment to all Employees and Workmen - Held that - The Employees and the Workmen of the Debtor Company are hereby directed to fully cooperate with the Resolution Professional so that the manufacturing activity as well as other business activity of the Debtor Company should not get hampered in any manner by the conduct of the Workmen/ Employees. The members of the Committee of Creditors shall induct Funds as per their respective voting share ratio so that the business of the going concern must not get adversely affected. The Resolution Professional shall put up the details of the expenditure incurred which is to be ratified by the members of the Committee of Creditors and also to be paid accordingly.
Issues Involved:
1. Classification of electricity supply as essential services under the Insolvency and Bankruptcy Code (IBC). 2. Payment of outstanding electricity dues by the Corporate Debtor. 3. Continuation of electricity supply during the moratorium period. 4. Financial obligations of the Committee of Creditors (CoC) and Resolution Professional (RP) in maintaining the Corporate Debtor as a going concern. 5. Payment of salaries to employees and workmen of the Corporate Debtor. Detailed Analysis: Issue 1: Classification of Electricity Supply as Essential Services The Applicant, Dakshin Gujarat Vij Company Limited, argued that the supply of electricity to the Corporate Debtor should not be classified as essential supplies under Regulation 32 of the IBBI (CIRP) Regulations. They contended that electricity used for the production of textiles does not fall under essential services protected by Section 14 of the IBC. However, the Tribunal emphasized that Section 14 of the IBC, which prescribes a moratorium, mandates that the supply of essential goods or services, including electricity, should not be terminated during the moratorium period. The Tribunal found that Regulation 32 cannot override the substantive provisions of Section 14. Issue 2: Payment of Outstanding Electricity Dues The Applicant sought the Tribunal's direction for the Corporate Debtor to deposit the outstanding amount of ?26,07,848.71. The Tribunal noted that while essential services must continue during the moratorium, the Corporate Debtor is still liable to pay for the electricity consumed. The Tribunal directed that the electricity consumed from the commencement of the CIRP should be paid as per the prescribed charges and classified as CIRP costs. The Applicant was advised to lodge a claim for the outstanding dues with the Resolution Professional for consideration during the resolution process or liquidation. Issue 3: Continuation of Electricity Supply During the Moratorium Period The Tribunal reiterated that the supply of essential services, including electricity, must not be interrupted during the moratorium period as per Section 14 of the IBC. The Tribunal referred to previous orders where it directed the restoration of the electricity connection and emphasized that the continuation of such services is crucial for the Corporate Debtor's operations. The Tribunal cited the case of Dakshin Gujarat VIJ Co. Ltd. v. ABG Shipyard Ltd. to support the position that current charges for essential services must be paid and are not covered by the moratorium. Issue 4: Financial Obligations of the CoC and RP The Tribunal highlighted that the costs incurred in running the Corporate Debtor as a going concern, including the payment for essential services, should be borne by the CoC. The Tribunal referred to Regulations 33 and 34 of the IBBI (CIRP) Regulations, which state that the expenses incurred by the interim resolution professional and the resolution professional constitute insolvency resolution process costs. The Tribunal emphasized the need for the CoC to infuse sufficient capital to maintain the Corporate Debtor's operations and avoid liquidation. Issue 5: Payment of Salaries to Employees and Workmen A Miscellaneous Application was submitted by an employee of the Corporate Debtor seeking directions for the payment of salaries to all employees and workmen. The Tribunal directed the employees and workmen to cooperate with the Resolution Professional to ensure smooth operations. The Tribunal reiterated that interim finances are required for running the Corporate Debtor and that the members of the CoC should not create obstacles. The Tribunal directed the CoC to induct funds as per their voting share ratio to ensure the business continues without disruption. Conclusion: The Tribunal disposed of both Miscellaneous Applications, emphasizing the need for the continuation of essential services during the moratorium, the financial responsibilities of the CoC and RP, and the cooperation of employees to maximize the value of the Corporate Debtor's assets. The Tribunal scheduled the next hearing for the submission of a Commencement Report by the Resolution Professional.
|
