2020 (9) TMI 991 - Tri - Insolvency and Bankruptcy

Direction to First and Second Respondents to supply the Electricity to the Corporate Debtor in the present circumstances without insisting on the payment of past dues or any other preconditions so as to make the company as going concern - HELD THAT - The Respondent has filed the Counter wherein it is contended that since the electricity connection was disconnected on 23.10.2018 much prior to the commencement of the CIRP due to non-payment of the arrears and if aggrieved by the action of the Respondent a remedy is also open for the company namely, M/s. Supreme Coated Board Mills Private Limited to take recourse in approaching the concerned authority seeking for re-connection if aggrieved by the Applicant and not by approaching this Tribunal with the instant Application. It is to be noticed that the Hon'ble Supreme Court has repeatedly reiterated in relation to IBC, 2016 and proceedings thereunder that resolution of insolvency of the Corporate Debtor, if possible should be attempted at any cost instead of allowing the Company to go into liquidation - The Respondent was agreeable to such a course of action without prejudice to its contentions that this matter will not fall under the provisions of Section 14(2) of the Insolvency Bankruptcy Code, 2016. The request of the CoC expressed through the Applicants seems to be fair to the limited extent that since the machinery had been kept in idle condition for more than 8 to 9 months and which might be a detrimental factor to maximize the value of the assets appropriate directions given under the circumstances to the Respondents who are agreeable to such a course by directing them to give the re-connection of electricity for a limited period of three weeks with the date of commencement as to when the re-connection to be given to be intimated to the Respondent in advance by the Applicant at least a week prior in consultation with the CoC. Charges for re-connection as well as consumption charges for the three weeks period shall be duly remitted by the Applicant. Application disposed off.

Summary

Issues Involved:
Application seeking electricity reconnection without payment of arrears; Maximizing resolution value of the Company through operational status; Dispute over arrear amount for electricity; Expression of Interest (EoI) issuance and Resolution Applicants' conditions; Respondent's contention on disconnection before CIRP commencement; Application dismissal due to financial difficulties; Application filed during COVID-19 lockdown; Possibility of resolving insolvency without liquidation; CoC's request for limited reconnection period; Disposal of the application with specific directions.

Detailed Analysis:

1. Application for Electricity Reconnection: The Interim Resolution Professional (IRP) filed an application seeking the reconnection of electricity to the Corporate Debtor without insisting on payment of past dues or any preconditions to ensure the company's operational status as a going concern during the Corporate Insolvency Resolution Process (CIRP).

2. Maximizing Resolution Value: The Committee of Creditors (CoC) opined that the Company's resolution value would be maximized only if it is operational. The IRP was directed to take steps to secure electricity connection to start operations, subject to availability of interim finance.

3. Dispute over Arrear Amount: The Respondent insisted on settling arrear amounts of &8377; 3.01 crores before reconnecting electricity, citing disconnection prior to CIRP commencement due to non-payment of dues.

4. Expression of Interest (EoI) and Resolution Applicants: EoI was issued, with only two eligible Resolution Applicants from CoC expressing conditions related to machinery viability and providing interim finance for dry run and trial production.

5. Disconnection Dispute: Respondent contended that disconnection occurred before CIRP initiation, suggesting that the matter should be addressed outside the Tribunal, highlighting financial difficulties in recovering arrears.

6. Resolution Possibility and Liquidation: The Tribunal emphasized resolving insolvency over liquidation, proposing a limited reconnection period for machinery operation to maximize asset value for stakeholders.

7. Application Disposal: The Tribunal directed a three-week limited reconnection period for dry run and trial production, with charges to be borne by the Applicant and TANGEDCO representative presence during operations, ultimately disposing of the application with specific directions.