2019 (8) TMI 784 - Tri - Insolvency and Bankruptcy

Functions of Resolution Professional - supply of Natural Gas to Corporate Debtor - scope of 'aggrieved person' - HELD THAT - In the present case, R1 i.e. ONGC, is at liberty to take action under law or as per the contractual terms in between them to protect the interest of that Institution especially when such action is not prohibited u/s 14 of IBC. In this backdrop, the Corporate Debtor cannot further inflict ONGC to incur loss by supplying Gas to it that has already been not paying for the gas supplied to it. When it is clear that supply of gas by Rl to the Corporate Debtor does not fall within the ambit of any of the provisions of Section 14 of the Code, this Bench has no right to interfere with the rights and interests of this Public Sector Undertaking or any other person because such jurisdiction has not been conferred upon this Authority to interfere with the affairs of Rl. As to Public Sector Undertaking, when a person is pitted against public institution, public interest will always prevail over the interest of a private person. In any event, it is only a discussion over the effect of an order against public institution. This concept will become an issue if order does not violate the rights of adverse party. This Bench has no jurisdiction to pass any orders in respect to the reliefs sought by the Applicant, henceforth this application is hereby dismissed in limine.

Summary

Issues Involved:
1. Disconnection of gas supply by ONGC to the Corporate Debtor.
2. Applicability of Section 14 of the Insolvency and Bankruptcy Code (IBC) regarding essential supplies.
3. Jurisdiction of the National Company Law Tribunal (NCLT) to pass orders in this context.

Issue-wise Detailed Analysis:

1. Disconnection of gas supply by ONGC to the Corporate Debtor:
The Corporate Debtor entered into a Gas Supply Agreement (GSA) with ONGC on 19.04.2017 for the supply of natural gas. Due to the Corporate Debtor's failure to establish Letters of Credit (LCs) as required under the agreement, ONGC issued multiple notices and eventually disconnected the gas supply on 10.05.2019. The Corporate Debtor's operations halted as a result, prompting the Resolution Professional to file an application under Section 60(5) of the IBC seeking restoration of gas supply.

2. Applicability of Section 14 of the Insolvency and Bankruptcy Code (IBC) regarding essential supplies:
The applicant argued that the supply of natural gas was essential for the Corporate Debtor to continue its operations as a going concern, citing the Swiss Ribbons case. However, ONGC contended that natural gas does not fall within the ambit of "essential supplies" under Section 14 of the IBC read with Regulation 32 of the CIRP Regulations. The Tribunal noted that essential supplies, as defined, include electricity, water, telecommunication services, and information technology services, provided they are not direct inputs to the output produced by the Corporate Debtor. Since natural gas is a direct input for electricity production, it does not qualify as an essential supply under the relevant regulations.

3. Jurisdiction of the National Company Law Tribunal (NCLT) to pass orders in this context:
The Tribunal emphasized that for an application under Section 60(5) of the IBC, the applicant must demonstrate that their rights have been violated. The Tribunal found that the disconnection of gas supply by ONGC did not violate any provisions of the IBC or other laws. The Tribunal also highlighted that it does not have the jurisdiction to interfere with ONGC's rights and interests, especially when ONGC's actions are not prohibited under Section 14 of the IBC. The Tribunal reiterated that it is not a court with general jurisdiction but a specialized tribunal with limited jurisdiction conferred by the IBC.

Conclusion:
The Tribunal concluded that the supply of natural gas by ONGC does not fall within the definition of essential supplies under Section 14 of the IBC read with Regulation 32 of the CIRP Regulations. Consequently, the Corporate Debtor's application for restoration of gas supply was dismissed. The Tribunal also clarified that it lacks the jurisdiction to direct ONGC to consider the Corporate Debtor's request for gas supply, as such an order would violate ONGC's legitimate rights. The Tribunal's decision underscores the importance of adhering to the specific provisions and limitations of the IBC when seeking relief.