2022 (8) TMI 710 - Tri - Insolvency and Bankruptcy

Seeking enforcement of the Resolution Plan as approved by this Adjudicating Authority - Respondent Damodar Valley Corporation (DVC) is not complying with the Resolution Plan and this is causing prejudice to the applicant - Section 60(5) Insolvency and Bankruptcy Code, 2016, read with Rule 11 of the NCLT Rules, 2016 - HELD THAT - Once the Resolution Plan has been accepted and the claim of the DVC was pegged and allowed at Rs. 24.67 Crores, thereby excluding the total pre CIRP claim to the extent of Rs. 64.44 Crores, the claim became final for all practical purposes. The Corporate Debtor cannot have benefit on both counts. On the one hand, the Corporate Debtor has saved itself by waiver of all pre CIRP dues and on the other hand, if there is any adjustment of accounts in the applicant office, the Corporate Debtor cannot claim the same as its own receivables, and claim the said amount from the applicant. The applicant has borne all the pre CIRP dues as its bad debts and if it has fortunately adjusted some amounts that came to it through some decision of the Hon'ble Supreme Court. It should have the benefit of setting off that amount against its bad debts. There is no purpose to unjustly enrich the new investors who have entered the shoes of the Corporate Debtor by further exploiting and squeezing the DVC - there are no merit in the demand of the Corporate Debtor/applicant, the relief sought by the applicant staying the demand of the DVC beyond Rs. 24.67 Crores is thus rejected. Application dismissed.

Issues Involved:
1. Enforcement of the Resolution Plan.
2. Compliance with payment schedules under the Resolution Plan.
3. Validity of additional claims and demands by the Respondent (DVC).
4. Impact of COVID-19 on payment schedules.
5. Adjustment of dues and claims post-Resolution Plan approval.
6. Legal standing of claims not included in the Resolution Plan.
7. Reconnection of electricity supply and compliance with regulatory orders.

Issue-wise Detailed Analysis:

1. Enforcement of the Resolution Plan:
The applicant filed Interlocutory Application No. 708 of 2021 under Section 60(5) of the Insolvency and Bankruptcy Code (IBC), 2016, seeking enforcement of the Resolution Plan approved on October 11, 2018. The applicant argued that the Respondent (DVC) was not complying with the approved Resolution Plan, causing prejudice to the applicant.

2. Compliance with Payment Schedules under the Resolution Plan:
The Resolution Plan approved by the Adjudicating Authority on October 11, 2018, required the applicant to pay Rs. 24.67 crores to DVC in five installments. The applicant made the initial payment of Rs. 4.93 crores within the stipulated 30 days but failed to make subsequent payments due to the COVID-19 pandemic and disconnection of electricity supply. The applicant contended that the pandemic severely affected their business operations, preventing timely payments.

3. Validity of Additional Claims and Demands by the Respondent (DVC):
DVC issued a demand for Rs. 56.66 crores on July 3, 2021, for alleged electricity dues, which the applicant claimed was contrary to the approved Resolution Plan. The applicant argued that all claims not part of the Resolution Plan were extinguished upon its approval, citing the Supreme Court's decision in Ghanshyam Mishra and Sons Pvt. Ltd. vs. Edelweiss Asset Reconstruction Company Ltd.

4. Impact of COVID-19 on Payment Schedules:
The applicant highlighted that the national lockdown and subsequent business closures due to COVID-19 significantly impacted their ability to adhere to the payment schedule. This led to non-payment of installments due on March 31, 2020, and March 31, 2021. The applicant requested leniency in light of these unprecedented circumstances.

5. Adjustment of Dues and Claims Post-Resolution Plan Approval:
DVC argued that the applicant failed to pay the initial installment on time and defaulted on electricity bills from February 2020 to August 2020, totaling Rs. 15.94 crores. DVC contended that the applicant was seeking to avoid legitimate dues and unjustly enrich themselves. DVC also noted that the revised bills issued in 2020 and 2021 were for internal adjustments to reflect the actual bad debt.

6. Legal Standing of Claims Not Included in the Resolution Plan:
The Tribunal reiterated that once a Resolution Plan is approved, all claims not included in the plan are extinguished, and no further proceedings can be initiated regarding those claims. The Tribunal emphasized that the applicant could not seek adjustments or refunds for claims beyond the scope of the approved Resolution Plan.

7. Reconnection of Electricity Supply and Compliance with Regulatory Orders:
The applicant sought reconnection of electricity supply and compliance with the West Bengal Electricity Regulatory Commission's orders. DVC had disconnected the supply due to non-payment of current dues. The Tribunal directed DVC to reconnect the electricity supply upon completion of all formalities and deposit of the requisite amount by the applicant within one month.

Conclusion:
The Tribunal dismissed the application, stating that the applicant could not claim any amount beyond the Rs. 24.67 crores crystallized under the Resolution Plan. The Tribunal directed DVC to reconnect the electricity supply as per relevant rules upon the applicant's compliance with necessary formalities. The relief sought by the applicant to stay DVC's demand beyond Rs. 24.67 crores was rejected.

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