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2024 (11) TMI 671 - AT - IBCDismissal of application for refund of payment made, under protest, towards pre-CIRP electricity dues by the Successful Resolution applicant (SRA) to the Respondent, for the restoration of the Corporate Debtor s electricity connection, in order to revive the Corporate Debtor in terms of, and in compliance with, the Resolution Plan - scope of Section 60(5)(c) of the IBC - HELD THAT - The submissions made by the Respondent cannot be agreed upon as the Resolution Plan related to revival of sugar crushing factory located in Distt. Parbhani, Maharashtra. Admittedly a sugar crushing factory is operational generally for six months in a year during the crushing season from November to April and during this time electricity connection is crucial for the operation of its factory as without it the factory could not operate and may come to a standstill. The correspondence would rather reveal there was no option left for the appellant except to adhere to the demands raised by the Respondent lest the Respondent would not provide electricity in the coming sugar cane crushing season. Thus the payment of pre-CIRP dues by the appellant was paid under protest and under protection of the order of the Ld. NCLT and thus it related to the revival of the Corporate Debtor in terms of the Resolution Plan and to the Insolvency Resolution Process, hence the claim for refund of such amount is a matter which can be adjudicated under Section 60(5)(c ) of the IBC. In Tata Power Western Odisha Distribution Ltd (TPWODL) Anr Vs Jagannath Sponage Pvt Ltd, 2023 (9) TMI 1071 - SC ORDER and further in Southern Power Distribution Company of Andhra Pradesh Ltd Vs Gavi Siddeswara Steels (India) Pvt Ltd and Another 2023 (9) TMI 664 - SC ORDER , the Hon ble Supreme Court held the power distribution company cannot insist on the payment of arrears for the purpose of the restoration of the electricity connection and such a matter would fall within the ambit of Section 60(5)(c) of the IBC. It is crucial to note the Respondent without having filed any claim during the CIRP or having challenged the Resolution Plan is trying to benefit from its own default. The Resolution Plan provided for the payment of the Operational Creditors at an amount which was around 7% of the admitted claim. If the Respondent had filed its claim as an operational creditor it would have received rs.10.5 lakhs but today the Respondent had received Rs.2.11 crores towards the pre-CIRP dues - the Respondent cannot be permitted to benefit from its own failure to file the claim and coercing the appellant to pay pre-CIRP dues for restoring the electricity. Even if the payment was not made by the appellant under protest and so was made only because of compulsion due to the coming season then also the Respondent was barred from seeking arrears of the amount that stood extinguished by operation of law as a precondition for restoring the appellants electricity connection. Thus, it is evident the issue is squarely covered by Tata Power 2023 (9) TMI 1071 - SC ORDER and Southern Power Distribution Company 2023 (9) TMI 664 - SC ORDER and pertains to a dispute arising out of the non-compliance of the Respondent of para 30 of order dated 07.11.2019 whereby the NCLT had directed the restoration of all approvals and licenses. The present matter thus falls under Section 60(5)(c ) of IBC since it relates to the insistence of the Respondent for payment of pre-CIRP amounts that stood extinguished by way of the Resolution Plan. The impugned order is set aside - Appeal allowed.
Issues Involved:
1. Refund of pre-CIRP electricity dues paid under protest by the Successful Resolution Applicant (SRA). 2. Applicability of the Ghanashyam Mishra judgment regarding extinguishment of claims not part of the Resolution Plan. 3. Jurisdiction of NCLT under Section 60(5)(c) of the Insolvency and Bankruptcy Code (IBC) concerning disputes related to the insolvency resolution process. 4. The obligation of power distribution companies to restore electricity without insisting on pre-CIRP dues. 5. The consequences of a creditor's failure to file claims during the CIRP. Detailed Analysis: 1. Refund of Pre-CIRP Electricity Dues: The Appellate Tribunal examined the issue of whether the SRA was entitled to a refund of Rs.2,11,42,540/- paid under protest to the Respondent for pre-CIRP electricity dues. The Tribunal noted that the payment was made under protest and under the protection of the NCLT order, as the electricity connection was crucial for the revival of the Corporate Debtor's operations. The Tribunal concluded that the claim for a refund was valid as it related to the revival of the Corporate Debtor in terms of the Resolution Plan and the Insolvency Resolution Process. 2. Applicability of the Ghanashyam Mishra Judgment: The Tribunal referred to the Supreme Court's judgment in Ghanashyam Mishra & Sons vs. Edelweiss Asset Reconstruction Company Limited, which held that once a resolution plan is approved, all claims not part of the plan are extinguished. This judgment was pivotal in determining that the Respondent's claim for pre-CIRP dues was extinguished, as it was not included in the Resolution Plan. The Tribunal emphasized that the SRA cannot be burdened with claims not part of the approved plan, aligning with the principle that the Corporate Debtor must start with a clean slate post-resolution. 3. Jurisdiction Under Section 60(5)(c) of the IBC: The Tribunal addressed whether the dispute fell within the jurisdiction of the NCLT under Section 60(5)(c) of the IBC, which covers questions of priorities or law/facts related to insolvency proceedings. The Tribunal found that the issue of refunding pre-CIRP dues was intrinsically linked to the insolvency resolution process, thereby falling within the NCLT's jurisdiction. 4. Obligation of Power Distribution Companies: Citing precedents such as Tata Power Western Odisha Distribution Ltd and Southern Power Distribution Company of Andhra Pradesh Ltd, the Tribunal held that power distribution companies cannot insist on the payment of arrears as a precondition for restoring electricity. This principle was applied to the present case, reinforcing the SRA's position that the Respondent's demand for pre-CIRP dues was unjustified. 5. Consequences of Creditor's Failure to File Claims: The Tribunal criticized the Respondent for failing to file a claim during the CIRP, noting that had it done so, it would have received a significantly lower amount as an operational creditor. The Tribunal highlighted that the Respondent's attempt to recover pre-CIRP dues post-resolution plan approval was an attempt to benefit from its own default, which was impermissible under the IBC framework. Conclusion: The Tribunal allowed the appeal, setting aside the impugned order and directing the Respondent to refund the amount paid by the SRA within six weeks. The decision underscored the importance of adhering to the principles laid down in the Ghanashyam Mishra judgment and the IBC's objective of providing a clean slate to resolution applicants.
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