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2022 (5) TMI 1269 - AT - Insolvency and BankruptcyCIRP - Recovery of electricity dues - Whether the Respondent No.1, the Successful Auction Purchaser in the liquidation proceeding of the Corporate Debtor, is liable to pay electricity dues due on the Corporate Debtor both pre-CIRP and during the CIRP? - HELD THAT - The IBC provides for detailed procedure and provisions for dealing with the claims of the creditors which are against the Corporate Debtor who is facing insolvency/ liquidation. Under Section 35 of the Code, the Liquidator is obliged to verify the claims of all the creditors. Section 36 deals with liquidation estate. Under Section 38, Liquidator has to receive/ collate the claims of creditor within 30 days from the date of commencement of the liquidation process. In the present case, the Appellant themselves has filed their claim before the Liquidator. In the reply filed by the Liquidator, details of the claim submitted by the Appellant has been given. When in the IBC proceedings, the Appellant has lodged his claim before the Liquidator pertaining to pre-CIRP dues, the same has to be dealt with as per the provisions of the Code. Pre-CIPR dues of the Appellant have been treated as operational debt and the same required to be paid as per Section 53 of the Code - the Appellant is entitled to receive pre-CIRP dues as per provisions of section 53. Hence, the Appellant cannot be heard in contending that he should realize the said amount from the Successful Auction Purchaser. The claim of the Appellant to realize the pre-CIRP dues from Successful Auction Purchaser is clearly in conflict of the statutory scheme as laid down in the Code. The submission of the Appellant that they are entitled to recover the entire pre-CIRP and post-CIRP dues from the Successful Auction Purchaser i.e. Respondent No. 1 cannot be accepted. The Adjudicating Authority did not commit any error in issuing the directions as contained in the order dated 05.10.2021. The Appellant is entitle to claim its electricity dues both pre-CIRP and post-CIRP in accordance with Section 53 of the Code - Appeal disposed off.
Issues Involved:
1. Liability of the Successful Auction Purchaser for pre-CIRP and post-CIRP electricity dues. 2. Applicability of Regulation 8.4 of the General Terms and Conditions of Supply. 3. Interpretation of Section 53 of the Insolvency and Bankruptcy Code (IBC), 2016. 4. Relevance of the Supreme Court judgment in 'Telangana State Southern Power Distribution Company Ltd. & Anr. vs. M/s Srigdhaa Beverages' to the present case. Issue-Wise Detailed Analysis: 1. Liability of the Successful Auction Purchaser for pre-CIRP and post-CIRP electricity dues: The Tribunal examined whether the Successful Auction Purchaser (Respondent No. 1) is liable to pay the electricity dues of the Corporate Debtor accrued both before and during the Corporate Insolvency Resolution Process (CIRP). The Tribunal concluded that the liability for these dues lies with the Corporate Debtor and not with the Successful Auction Purchaser. The dues incurred before the CIRP are considered operational debts and must be settled according to Section 53 of the IBC. The dues during the CIRP are treated as insolvency process costs, also payable under Section 53. Thus, the Successful Auction Purchaser is not liable for these dues. 2. Applicability of Regulation 8.4 of the General Terms and Conditions of Supply: Regulation 8.4 states that the seller of the property should clear all dues to the electricity company before selling the property. The Tribunal found that this regulation cannot override the provisions of the IBC. The IBC, being a special statute with an overriding effect under Section 238, takes precedence over the General Terms and Conditions of Supply. Therefore, the Appellant (electricity provider) cannot demand the Successful Auction Purchaser to clear the dues of the Corporate Debtor. 3. Interpretation of Section 53 of the Insolvency and Bankruptcy Code (IBC), 2016: Section 53 of the IBC outlines the order of priority for the distribution of proceeds from the sale of the liquidation estate. The Tribunal emphasized that the Appellant's claims for pre-CIRP and post-CIRP dues must be settled according to this section. The Tribunal noted that the Appellant had already filed its claim with the Liquidator, and these claims would be addressed as per the statutory scheme of the IBC. 4. Relevance of the Supreme Court judgment in 'Telangana State Southern Power Distribution Company Ltd. & Anr. vs. M/s Srigdhaa Beverages' to the present case: The Appellant cited this Supreme Court judgment to argue that the Successful Auction Purchaser should be liable for the electricity dues. However, the Tribunal distinguished the present case from the Supreme Court case, noting that the latter involved an auction under the SARFAESI Act, 2002, with specific terms making the purchaser liable for dues. In contrast, the present case involves a sale under the IBC, where the statutory scheme for settling claims under Section 53 must be followed. The Tribunal held that the Supreme Court judgment does not apply to the present case due to the different statutory contexts. Conclusion: The Tribunal upheld the Adjudicating Authority's order directing the Appellant to energize the electricity connection for the Corporate Debtor and refund the balance amount after retaining the security deposit. The Tribunal granted liberty to the Appellant to file an appropriate application before the Adjudicating Authority regarding its entitlement to pre-CIRP and post-CIRP costs if not already filed. The appeal was disposed of accordingly.
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