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2024 (9) TMI 1179 - AT - IBCEntitlement to the payment of its pre-CIRP dues from the Respondent in a manner different from the manner of payment provided for in the resolution plan, as approved by the Adjudicating Authority - appropriation of all payments made after CIRP commencement only towards current CIRP costs - HELD THAT - The insolvency commencement date was 18.05.2017. On completion of the CIRP proceedings, the resolution plan of the Corporate Debtor was approved by the Adjudicating Authority on 12.12.2017. It is also an undisputed fact that the resolution plan provided for payment of pre-CIRP dues of the Appellant and also prescribed the manner and modalities of how the payment of these pre-CIRP dues were to be provisioned. In terms of the resolution plan, the pre-CIRP dues were to be made good in 8 quarterly instalments commencing from June 2022 to March 2024. It is pertinent to note that though the Appellant had admittedly not filed their claims during CIRP, the payment of pre-CIRP dues of the Appellant had been provided for in the resolution plan. As the law stands today, no exception can be taken to such a plan as long as it provided for payment to the Appellant in accordance with Section 30(2)(b) of the IBC. In any case, the present is not a case where the Appellant is contending that payment of their dues is not as per provisions of Section 30(2)(b) of the IBC. It is neither a case where the Appellant is claiming entitlement to receive any higher amount in respect of pre-CIRP dues. Furthermore, the resolution plan not having been challenged, the terms of the resolution plan had attained finality and become binding on all stakeholders including the Appellant. The Appellant have not raised any dispute that the Respondent by their conduct had displayed any signs of disapproving or breaching or side-stepping or disturbing the schedule of payment as delineated in the plan in respect of meeting the pre-CIRP dues of the Appellant. There is nothing which has been placed by the Appellant on record, basis which, the intent of the Respondent to pay pre-CIRP dues in accordance with the resolution plan can be doubted - Merely because the Corporate Debtor had paid the pre-CIRP dues of Rs 1.76 Cr. in May-June 2017, the Appellant cannot insist that this payment has to be accounted only towards payment of pre-CIRP dues and that this amount cannot be subjected to adjustment against current CIRP electricity dues. The schedule and calendar of payment of pre-CIRP dues of the Appellant as given in the resolution plan is sacrosanct and cannot be allowed to be superseded simply because payment thereto had been voluntarily done earlier by the Corporate Debtor. If the payment of pre-CIRP dues is insisted upon being made in any manner which is not specified and factored in the resolution plan, that would amount to be an infraction of the resolution plan and cannot be countenanced. The Adjudicating Authority has rightly observed that any payment made by the Corporate Debtor to the Appellant after the insolvency commencement date cannot be appropriated towards electricity charges which have arisen prior to or became due as on the insolvency commencement date and that such payment, if already made, must be appropriated only towards the dues which become payable during CIRP period on account of availing of services during CIRP period only. Hence, any amount, if paid, by the Corporate Debtor after insolvency commencement date shall only be adjusted against CIRP dues while pre-CIRP dues shall be paid in accordance with the approved resolution plan. The Appellant was entitled to the payment of its pre-CIRP dues from the Respondent only in the manner as provided in the resolution plan of 12.12.2017 and hence payment of the pre-CIRP dues from the assets of the Corporate Debtor after insolvency commencement has been correctly appropriated by the Respondents towards current CIRP dues. The view taken by the Adjudicating Authority is therefore reasonable and sound and does not call for any interference. Appeal dismissed.
Issues Involved:
1. Entitlement of the Appellant to the payment of pre-CIRP dues in a manner different from the resolution plan. 2. Appropriation of payments made post-CIRP commencement towards pre-CIRP or CIRP dues. 3. Validity of LPS levied on pre-CIRP dues. 4. Reconciliation of dues between the Appellant and the Respondent. Issue-wise Detailed Analysis: 1. Entitlement of the Appellant to the payment of pre-CIRP dues in a manner different from the resolution plan: The main issue was whether the Appellant was entitled to receive payment of its pre-CIRP dues from the Respondent in a manner different from what was provided in the resolution plan approved on 12.12.2017. The resolution plan stipulated that pre-CIRP dues were to be paid in 8 quarterly installments commencing from June 2022 to March 2024. The Tribunal held that the Appellant could not insist on a different manner of payment, as the resolution plan had attained finality and was binding on all stakeholders. The Corporate Debtor's voluntary payment of pre-CIRP dues in May-June 2017 did not alter the binding nature of the resolution plan. 2. Appropriation of payments made post-CIRP commencement towards pre-CIRP or CIRP dues: The Tribunal noted that any payment made by the Corporate Debtor after the insolvency commencement date (18.05.2017) could not be appropriated towards pre-CIRP dues. Instead, such payments had to be appropriated towards CIRP dues arising during the CIRP period. The Tribunal emphasized that this was in line with the moratorium provisions under Section 14 of the IBC, which prohibits the alienation of the Corporate Debtor's assets during the CIRP. Therefore, the payments made by the Corporate Debtor after the insolvency commencement date were correctly appropriated towards CIRP dues. 3. Validity of LPS levied on pre-CIRP dues: The Tribunal upheld the Adjudicating Authority's finding that no LPS (Late Payment Surcharge) was due and payable up to the date of the approval of the resolution plan in respect of pre-CIRP dues. LPS could only be levied in accordance with the payment structure and timeline set out in the resolution plan. The Adjudicating Authority rightly directed that LPS should be computed in relation to pre-CIRP dues to the extent such dues were not paid in accordance with the approved resolution plan. 4. Reconciliation of dues between the Appellant and the Respondent: The Tribunal affirmed the directions of the Adjudicating Authority for the Appellant and Respondent to reconcile their dues. The Tribunal emphasized that the Respondent must pay the legitimate electricity dues to enjoy the benefit of electricity supply. The reconciliation of accounts and determination of the quantum of electricity dues payable was to be completed within two weeks from the date of the Tribunal's order. Any dues determined were to be paid by the Respondent within 30 days from the date of determination. In the event of non-payment, the Appellant was granted the liberty to take legal recourse. Conclusion: The Tribunal dismissed the appeals, upholding the Adjudicating Authority's order that payments made post-CIRP commencement should be appropriated towards CIRP dues, and pre-CIRP dues should be paid as per the resolution plan. The Tribunal also affirmed the directions for reconciliation of dues and payment of outstanding amounts by the Respondent.
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