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2021 (10) TMI 117 - AT - Insolvency and BankruptcyApproval of resolution Plan - Section 31 of the Insolvency and Bankruptcy Code, 2016 - It is claimed by the Operational Creditor DVC that when the electricity supply was disconnected it was not aware of the initiation of Corporate Insolvency Resolution Process (CIRP) of the Corporate Debtor - HELD THAT - Once reconnection has been provided by the Appellant at the previously held contract demand of 10 MVA through a 33 KV power supply line, any change in the contract demand or an enhanced power supply voltage of 132 KV will not be covered under the provisions of the approved Resolution Plan. Insofar as the request of the successful resolution applicant regarding waiver of security deposit for 5 years for increase in the contract demand to 45 MVA and supply of power at an enhanced voltage of 132 KV is concerned, waiver of bank guarantee/cash as security deposit by DVC against regular power usage on basis of contract demand for at 132 KV for next five years from the date of approval of the Resolution Plan by the Adjudicating Authority is not given bya specific order by the Adjudicating Authority (NCLT). Similarly, providing power supply through 132 KV supply line is also not granted by a specific order of NCLT. Thus, these requests only remain as proposals which have not been accepted or approved by specific order of the Adjudicating Authority while approving the Resolution Plan - in the absence of any specific orders, the Appellant is not obliged to grant any waiver of payment of security deposit over the next five years for increase in contract demand or supply of electricity by a 132 KV supply line. The parties should take action regarding these or any subsequent dues including security deposit in accordance with the extant and relevant regulations of WBERC. The dues of electricity supplied by DVC to the Corporate Debtor during the CIRP period, if not paid, should be paid from out of CIRP costs and the Resolution Professional should ensure it - any security deposit or other charges for requested increase in contract demand and enhanced supply line for electricity will have to be paid to the discom DVC in accordance with the relevant and extant laws and regulations. The payment of dues for electricity supplied to the corporate debtor during the moratorium period, to keep the corporate debtor as a going concern, should be paid out of CIRP costs, and the payment should be ensured by the Resolution Professional. Appeal allowed.
Issues Involved:
1. Disconnection of electricity supply by the Operational Creditor (DVC) to the Corporate Debtor (CFAL). 2. Waiver of security deposit for increased contract demand and supply through a higher voltage powerline. 3. Payment of dues by the Successful Resolution Applicant under the approved Resolution Plan. 4. Payment of electricity bills during the Corporate Insolvency Resolution Process (CIRP) period. Detailed Analysis: 1. Disconnection of Electricity Supply by DVC: The Appellant, Damodar Valley Corporation (DVC), disconnected the electricity supply to the Corporate Debtor, Cosmic Ferro Alloys Limited (CFAL), due to non-payment of electricity dues and delay payment charges. The disconnection notice was given on 1.1.2018, and the supply was disconnected on 17.1.2018. DVC claimed it was unaware of the initiation of the Corporate Insolvency Resolution Process (CIRP) at the time of disconnection. The Corporate Debtor requested reconnection and promised to pay the arrears in installments. 2. Waiver of Security Deposit: The Successful Resolution Applicant requested an increase in contract demand from 10 MVA to 45 MVA and supply through a 132 KV powerline with a waiver of security deposit for five years. DVC sought a security deposit of ?6.43 crores for increasing the contract demand. The Resolution Plan did not explicitly provide for the waiver of the security deposit, and the Adjudicating Authority did not pass a specific order regarding the waiver. Therefore, DVC argued that the waiver was not applicable, and the request for increased contract demand and higher voltage supply should be governed by the West Bengal Electricity Regulatory Commission (WBERC) regulations. 3. Payment of Dues Under the Resolution Plan: The Appellant claimed that the Successful Resolution Applicant defaulted on the payment schedule under the approved Resolution Plan. The Appellant was to receive ?24.67 crores in installments, but only ?2.25 crores was paid within the stipulated 30 days. The Appellant argued that the monitoring committee failed to ensure payment as per the approved plan, leading to the disconnection notice. 4. Payment of Electricity Bills During CIRP: The Appellant claimed that the dues for electricity supplied during the CIRP should be paid as part of CIRP costs. The Respondent No. 1 (Successful Resolution Applicant) was in default of payment of electricity bills amounting to ?15.94 crores for the period February 2020 to August 2020. The Tribunal held that these dues should be paid in accordance with WBERC regulations and the payment for electricity supplied during the CIRP should be ensured by the Resolution Professional. Tribunal's Observations and Judgment: Regarding Waiver of Security Deposit: The Tribunal noted that the Resolution Plan approved by the Adjudicating Authority did not specifically approve the waiver of security deposit for increased contract demand and supply through a 132 KV powerline. The request for waiver remained a proposal and was not accepted or approved by a specific order of the Adjudicating Authority. Therefore, DVC was not obliged to grant any waiver of payment of security deposit over the next five years for increased contract demand or supply through a higher voltage powerline. Regarding Payment of Dues: The Tribunal emphasized that any statutory or legitimate dues for the supply of services should be paid by the Successful Resolution Applicant. The dues for electricity supplied during the CIRP should be paid from CIRP costs, and the Resolution Professional should ensure this payment. Any dues for electricity supplied after the moratorium period should be paid by the Corporate Debtor to DVC. Final Order: The Tribunal quashed and set aside the impugned order, clarifying that any security deposit or other charges for the requested increase in contract demand and enhanced supply line for electricity must be paid to DVC in accordance with relevant laws and regulations. The payment of dues for electricity supplied during the moratorium period should be paid from CIRP costs, and the Resolution Professional should ensure this payment. Any dues for electricity supplied after the moratorium period should be paid by the Corporate Debtor to DVC. The Adjudicating Authority could be approached in case of any difficulty. Costs: There was no order as to costs.
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