2022 (12) TMI 617 - AT - Insolvency and Bankruptcy

CIRP - Applicant has prayed that he should be provided the electricity connection without security deposit - HELD THAT - the Adjudicating Authority has rightly come to the conclusion that security deposit is a pre-condition for sanction of High Tension Power Connection to industries. The Applicant being a heavy industry huge power supply is required. The security deposit is only to adjust the shortfall which come in payment of bills. The Adjudicating Authority has rightly partly allowed the I.A. No. 2477 of 2020 insofar as past dues of Southern Power Distribution Company of A.P. Ltd. were concerned. There is no merit in the Company Appeal

Summary

Issues:
1. Dispute over restoration of electricity connections without payment of past dues.
2. Entitlement to electricity connection without security deposit.
3. Interpretation of statutory regulations regarding payment of outstanding dues for new service connection.

Analysis:
1. The Appeals were filed against an order passed by the Adjudicating Authority regarding the restoration of electricity connections for a Corporate Debtor. The Monitoring Committee sought directions for immediate restoration without payment of past dues. The Adjudicating Authority held that post-approval of the Resolution Plan, parties bound by the plan cannot claim past liabilities inconsistent with the insolvency laws. The Authority also ruled that restoration cannot occur without a security deposit. Two Appeals were filed: one by the Monitoring Committee and the other by the Southern Power Distribution Company of A.P. Ltd. The former challenged the denial of the second relief, while the latter contested the direction to restore connections without past dues payment.

2. In Company Appeal (AT) (Ins.) No. 866 of 2020, the Applicant sought electricity connection without a security deposit. The Adjudicating Authority correctly determined that a security deposit is mandatory for High Tension Power Connection to industries, especially heavy industries requiring substantial power supply. This decision was consistent with a previous Tribunal ruling in a similar case involving Damodar Valley Corporation. The Tribunal's direction emphasized adherence to relevant laws and regulations for payment of dues and security deposits.

3. The Company Appeal (AT) (Ins.) No. 914 of 2020 involved the insistence by Southern Power Distribution Company of A.P. Ltd. on payment of past dues. The Tribunal affirmed that post-approval of the Resolution Plan, all claims for past dues were extinguished. The Tribunal referred to statutory regulations regarding new service connections and outstanding dues payment. The Tribunal highlighted the overriding effect of the insolvency laws on conflicting regulations, emphasizing that Resolution Plans must comply with the insolvency laws, rendering other laws redundant in such cases. The Tribunal upheld the Adjudicating Authority's decision regarding the past dues of Southern Power Distribution Company of A.P. Ltd., dismissing the Appeal.

In conclusion, both Appeals were dismissed based on the interpretations of insolvency laws, security deposit requirements, and the extinguishment of past dues claims post-Resolution Plan approval. The Tribunal's decisions were guided by legal precedents and statutory regulations, ensuring compliance with insolvency laws and relevant provisions.