2023 (6) TMI 69 - AT - Insolvency and Bankruptcy

Resolution Plan implemented - liability for power connection on account of which, the Resolution Applicant was made to pay an additional amount of Rs.40,43,001/- to KSEB for the bills raised for the month of October 2018 - It was submitted by the RP before the Adjudicating Authority that the Resolution Plan does not include this amount of Rs.40 Lakhs but was paid by the Resolution Applicant to keep the Company as a going concern. HELD THAT - The RP has categorically admitted that this amount which was paid towards the electricity bill was not a part of the Resolution Plan and that the Resolution Applicant had paid this amount of Rs.40 Lakhs for the month of October 2018, only to avoid disconnection of the Power Supply. It is an admitted fact that this electricity bill is for the period when the power was not consumed by the Resolution Applicant. It is also not in dispute that the Appellant/Sole Financial Creditor had received the entire balance payment without any objection. The Resolution Plan has been implemented. The Adjudicating Authority has categorically recorded in the Impugned Order that the Appellant herein had undertaken to return the original Title Deeds after receipt of the balance amount, but have not done so. It is also a matter of the record that the SRA has paid the balance amount of Rs.19,24,678/-. The electricity bills clearly reflect that the arrears as on 30.09.2018, is for the period which was prior to the Resolution Applicant having taken over the Company and, therefore, we do not see any substantial grounds in interfering with the directions given by the Adjudicating Authority that the amount paid by the Resolution Applicant towards the electricity bills, though not a part of the Resolution Plan, be set off from the interest portion of the Sole Financial Creditor. The electricity dues upto the transfer date are the liability of the Appellant and there are no substantial grounds to interfere with the well-reasoned Order of the Adjudicating Authority. This Tribunal is of the earnest view that the subject Title Deeds are to be handed over to the SRA within a week from the date of this Order. Appeal dismissed.

Summary

Issues involved:
The issues involved in this case include setting off an electricity bill paid by the Resolution Applicant, breach of terms of agreement, liability of the Resolution Applicant, and handing over of title deeds.

Issue 1: Setting off electricity bill payment:
The Appellate Tribunal dealt with an appeal against the Impugned Order dated 13.11.2019, where the Adjudicating Authority set off the electricity bill amount of Rs.40,43,001/- paid by the Resolution Applicant against the interest portion payable to the Financial Creditor. The Resolution Plan did not include this amount, but the Resolution Applicant paid it to ensure the smooth functioning of the Company. The Adjudicating Authority justified the set off, considering the Resolution Plan implementation and the Resolution Applicant's commitment to return the original Title Deeds.

Issue 2: Breach of terms of agreement:
The Financial Creditor contended that the Adjudicating Authority wrongly rewrote the terms of the agreement dated 16.05.2019 by setting off the electricity bill amount. The Resolution Applicant failed to make the complete payment on time, leading to disputes regarding the payment terms. The Resolution Applicant sought deferment of payment, which was agreed upon subject to interest payment, but later defaulted on the last tranche of payment, prompting the Financial Creditor to seek liquidation.

Issue 3: Liability of Resolution Applicant:
The Resolution Applicant, as the successful Resolution Applicant, was responsible for making payments as per the terms agreed upon. The Resolution Plan required handing over the Corporate Debtor as a going concern without any liabilities to the Resolution Applicant. However, the Resolution Applicant paid the outstanding electricity bills to avoid disconnection and ensure the Company's operations, leading to disputes over the payment amounts and terms.

Issue 4: Handing over of title deeds:
The Adjudicating Authority noted that the Resolution Applicant had not returned the original Title Deeds as agreed upon, even after receiving the balance amount. The Tribunal emphasized the importance of fulfilling this obligation within a week from the date of the Order, indicating the Resolution Applicant's failure to comply with the agreed terms.

In conclusion, the Appellate Tribunal dismissed the appeal, upholding the Adjudicating Authority's decision to set off the electricity bill amount from the interest payable to the Financial Creditor. The Tribunal found no substantial grounds to interfere with the decision, considering the Resolution Plan implementation and the Resolution Applicant's actions in ensuring the Company's operations. The importance of fulfilling obligations, such as returning the Title Deeds, was highlighted in the judgment.