2022 (11) TMI 1502 - HC - Indian Laws

Jurisdiction of Superintending Engineer, Pudukkottai Electricity Distribution Circle, Pudukkottai, TANGEDCO to make demand - Electricity dues payable to TANGEDCO not considered in the resolution plan - case of petitioner is that TANGEDCO failed to lodge its claim before the resolution professional within the time stipulated - HELD THAT - While TANGEDCO may not be able to enforce its claims, it can still decline to grant fresh electricity service connection for the premises in question or restore the earlier connection. It is true that Section 43 of the Electricity Act, 2003 casts duty on every distribution licensee to give supply of electricity on request. But this provision has to be read along with Sections 44 to 50. The amendment to the Supply Code was inserted with effect from 13.04.2011. As per Section 3(6) of the IBC, claim means right to payment or right to remedy for breach of contract. Even if the submissions of the learned counsel appearing for the petitioner anchored on Ghanashyam Mishra 2021 (4) TMI 613 - SUPREME COURT and Ruchi Soya 2021 (5) TMI 45 - MADRAS HIGH COURT are accepted, the result can only be that TANGEDCO cannot go after the petitioner to enforce its claim. But when the petitioner comes to TANGEDCO and seeks grant of fresh connection or restoration of supply, TANGEDCO can say sorry. This will not amount to enforcing its claim. It is also not a remedy for breach of contract. TANGEDCO would merely be acting in consonance with the statutory provisions governing it. Such a reading of the statutory scheme of the Electricity Act and the regulations framed thereunder in no way devalues the overriding effect of the Code. Once bitten, twice shy. Court cannot compel a creditor who has already had a massive hair-cut to continue to show his head to the defaulter. The writ petition is dismissed.

Summary

Issues:
1. Whether the electricity dues payable to TANGEDCO should be considered in the resolution plan under the Insolvency and Bankruptcy Code, 2016.
2. Whether the resolution plan approved by NCLT is binding on TANGEDCO despite ignoring the statutory dues.
3. Whether TANGEDCO can enforce its claims against the petitioner after the resolution plan has been approved.

Analysis:
1. The petitioner, a liquor manufacturing company, underwent insolvency proceedings under the Insolvency and Bankruptcy Code, 2016. TANGEDCO demanded payment of electricity dues from the petitioner post-resolution plan approval. The petitioner argued that TANGEDCO failed to lodge its claim within the stipulated time, and the electricity dues should be extinguished as per the Code. The petitioner relied on legal precedents to support their position, emphasizing the statutory scheme of the Code.

2. TANGEDCO contended that electricity dues cannot be ignored in a resolution plan, citing provisions of the Electricity Act, 2003. An amicus curiae highlighted that the resolution plan's validity depends on compliance with statutory requirements and proper publication. The court referred to a Supreme Court decision emphasizing that resolution plans must address statutory dues to be valid and binding on authorities. The court found that the resolution plan ignored TANGEDCO's dues, rendering it invalid and not binding on TANGEDCO.

3. The court acknowledged the petitioner's argument that the resolution plan may not be binding on TANGEDCO due to its apparent invalidity. However, the court declined to issue a Writ of Certiorari as sought by the petitioner. The court noted that while TANGEDCO may not enforce its claims, it can refuse to provide or restore electricity services based on outstanding dues. The court referenced relevant provisions of the Electricity Act, 2003, indicating that TANGEDCO can deny service connections until dues are paid, without violating the Code's principles. The court dismissed the writ petition, emphasizing that TANGEDCO's actions align with statutory provisions and do not amount to enforcing a claim or seeking a remedy for breach of contract.