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TMI Blog2018 (9) TMI 1226X X X X Extracts X X X X X X X X Extracts X X X X ..... nment Electrical Undertaking (dues recovery) Act, 1956, therefore provisions of IB code shall prevail. The attached property is also a part of liquidation estate, under the purview of liquidation estate, which is available for benefit of all creditors as per provision of Section 36 (2) of the Code. If the attachment continues, the property would become available for the benefit of the respondents only, who are also secured operational creditors and ranks equally with other secured financial creditors under the Provisions of Section 53 of the Insolvency and Bankruptcy Code, 2016.Therefore, the property of the creditor which have been attached by the District Magistrate, Muzaffarnagar and Tehsildar, Muzaffarnagar is a part of liquidation estate. Since under liquidation process, it has to be sold and after that realised value will be distributed regarding provision of Section 53 of I.B. Code, 2016. It is also on record that by order of District Magistrate a notice board is on display at that attached property, which show that sale of the attached property is prohibited by order of the District Magistrate. In such situation, liquidator can never find any buyer to purchase the proper ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... suffered by the corporate debtor. As per the final bill dated 27th January 2017, total arrears works out to R. 4,32,33,883/-. 3. Since P.V.V.N.L. has provided electrical energy to the corporate debtor, therefore, it is an operational creditor within the definition provided under Section 5(20) and 5(21) of the I.B. Code, 2016. 4. The properties owned by the corporate debtor have been attached by District Collector, Muzaffarnagar vide its Order No. 1048 dated 12 January 2016 and Tehsildar, Muzaffarnagar vide its order 1423F dated 23.1.2016 and has prohibited the transfer of property by sale, donation or any other mode and create charge due to outstanding dues for supply of electrical energy by P.V.V.N.L . Agreement provides that outstanding dues will be a charge on the assets of the company. Therefore, P.V.V.N.L may be considered as secured operational creditor within the definition provided under Section 2 (30) and 2(31) of the I.B. Code, 2016. 5. The corporate debtor company is under liquidation and the liquidator s duty is to form liquidation estate of the corporate debtor in terms of Section 36(1) of the Insolvency and Bankruptcy Code 2016 and to consolidate claims ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r stated that it is under his powers to sell the property of the corporate debtor. 12. It is further contended that unless the attachment orders of the District Collector, Muzaffarnagar and Tehsildar, Muzaffarnagar are set aside by this Tribunal, no buyer would be willing to buy the property of the corporate debtor because of the uncertainty about the authority of the liquidator to sell the property. The proceeds from the sale of the liquidation assets shall be distributed in the order of priority prescribed under Section 53 of the I.B. Code, 2016 irrespective of anything contained in any other law. The provision of Insolvency and Bankruptcy Code has overriding effect over the inconsistence with the provisions of any other law. 13. It is further stated that on admission of claim of P.V.V.N.L, the same will be classified to priority prescribed under Section 53 of the Code, and the P.V.V.N.L would be entitled for pro-rata distribution of the proceeds along with the other secured creditors from the sale of liquidation assets. The other secured creditor of the corporate debtor is Union Bank of India, Muzaffarnagar, who has already submitted its claim. 14. Petitioner has furt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vision of the Electricity Act,2003 (hereinafter referred to as the Act) for distribution and /or retail supply and/or bulk supply of energy to various consumers within its licensed areas. 3(I) Consumer shall abide and be bounded by all the terms and conditions of the Electricity Supply Code-2005 (hereafter referred to as the Code ) approved by the Commission, and the amendments/revisions thereto, and the provisions of the Act together with the rules framed under the act and Indian Electricity Rules,1956 including any modifications thereof in so far as they are applicable to the Consumer. 8. This agreement shall be governed by the Electricity Act,2003 with all its amendments, various other laws of India for the time being in force, but not limited to various regulations of UPERC, as applicable to the State of U.P. and shall be subject to the jurisdiction of the Court subordinate to High Court of Judicature of Allahabad. 9. That the both parties do hereby agreed that the outstanding electricity dues will be first charged on the assets of the company (consumer) The direction prayed for is contrary to the Electricity Supply Code,2005 which has been fram ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... create charge due to outstanding dues for supply of electrical energy by PVVNL. The law provides that the liquidator has a duty to form liquidation estate of the assets of the corporate debtor in accordance with section 36(1) of the Insolvency and Bankruptcy Code,2016, consolidate claims of creditors in accordance with section 38, and distribute the proceeds of liquidated assets of creditors in the order of priority prescribed under section 53 ; further clause (b) of subsection 3 of section 36 states that the even the encumbered assets of corporate debtors forms a part of Liquidation estate. The liquidator has power as per section 35 (1) (f) to sell the immoveable and movable property and actionable claims of corporate debtor in such a manner as may be specified. 8 That the provisions of Insolvency and Bankruptcy Code 2016, has an overriding effect and is inconsistent with the provisions of any other law, as per section 238 of Insolvency and Bankruptcy Code, 2016. That there exists a direct inconsistency between the provisions for liquidation of a corporate debtor provided in Chapter III of Insolvency and Bankruptcy Code, 2016 and the provision for attachment of a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h parties are secured creditors, proceeds from the sale of liquidation assets after deduction of liquidation expenses and outstanding electricity dues will be distributed among Union Bank of India and PVVNL by section 53(1)(b) of IBC, 2016. In this process, PVVNL will be able to realise more than what is entitled for distribution by section 53(1)(b) of IBC, 2016 at the cost of Union Bank of India. Hence, there is a direct inconsistency between the provisions for liquidation of a corporate debtor provided in Chapter III of the IBC and clause 4.3(f) (i) of UP Electricity Supply Code, 2016. The Clause 4.3(f) (ii) provides that before sale of a premise is made, the outstanding dues will be cleared and, in the alternative, the deed to agreement/sale will specifically mention the outstanding dues and the method of its payment. There are inconsistencies between the provisions of IBC, 2016 and clause 4.3(f) (ii) of UP Electricity Supply Code 2005, because outstanding dues cannot be cleared before sale of premises is made. Further, mentioning of outstanding electricity dues in the deed of agreement/sale will not be logical because the entitlement for payment will be uncertain at the time ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ut they allowed themselves to be tied up in knots over compliance with the provisions of Clauses 4.41 and 4.49 which are rules framed for application in special cases in order to help industries which had fallen on difficult days, to recoup their losses and to bring their finances on an even keel. In the above mentioned case, the Hon ble Supreme Court has held that the High Court lost sight of the order of BIFR and confined itself to the provisions of clauses 4.41 and 4.49 of the UP electricity supply code 2005 framed under section 50 of the Electricity Act 2003. Thus it is clear that the provision of UP electricity supply code 2005 does not have override in effect over all other laws. The above mentioned case Hon ble Supreme Court has specifically held that the High Court passed the order only after considering the provision of UP electricity code 2005 but the High Court last sight of the order of the BIFR. Though the proceeding under the sick industrial Companies (special provisions) repeal act 2003 was not, having overriding effect over other laws. But section 238 of the Insolvency And Bankruptcy Code 2016 specifically provides that the provisions of this Court sha ..... X X X X Extracts X X X X X X X X Extracts X X X X
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