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TMI Blog2020 (12) TMI 247X X X X Extracts X X X X X X X X Extracts X X X X ..... Code. So, once plan is approved, the parties upon which the plan is binding, cannot rake up past liabilities by invoking law that is inconsistent with the provisions of the Code - SPDCL cannot make its claim after plan has been approved. Restoration of power supply - HELD THAT:- Since power was disconnected somewhere in 2013 -several years before initiation of CIRP proceedings against this company, the Applicant cannot say that the Resolution Applicant is entitled to restoration of connection of HT service No. 328 and HT service No. 375 of the corporate debtor without making payment of security deposit, because security deposit is a precondition to sanction of High Tension power connection to Industries. Without making such security deposit, giving HT Connection will become in violation of Electricity Act, tomorrow if any problem comes, that security deposit can meet that eventuality provided deposit is there. It cannot be assumed that once plan is approved, corporate debtor is free to violate the laws in existence and this Authority shall grant reliefs blindfolded without looking at noncompliance of other laws. Moreover waiver of past liabilities will not tantamount to freei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st dues and without insisting for any fresh security deposit from the Resolution Applicant as the supply of electricity is an essential and integral part of the resolution of the corporate debtor (the company) and pass orders deem fit in this case. 2. On perusal of this application, it appears that power supply connection was issued to the company on 09.05.2008, as the company over a period of time failed to pay the dues to SPDCL, HT connections disconnected on 26.07.2013. Thereafter, upon initiation of IBC proceedings against the company, Moratorium was imposed on 14.08.2018, subsequent thereto this Adjudicating Authority approved the Resolution Plan (the Plan) on 14.02.2020. According to the Applicant, during the CIRP period, as no claim was raised by SPDCL against the company, plan was approved without dealing with dues of SPDCL, as usual a clause has been set out in the plan that past dues, if any left out, stood extinguished so as to give fresh lease of life to the Company by wiping out past liabilities. 3. In the backdrop of these facts, when SDPCL on 23.06.2020 made its claim of (???) 6,60,11,463 (Rupees six crores sixty lakhs eleven thousand four hundred sixty three o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... held under SARFAESI Act. For the completeness of this discussion let us put these two sections juxtaposed to each other to examine as to whether this argument fits in or not, sections are as follows: Section 35 of SARFAESI Act Section 238 of IBC 35. The provisions of this Act to override other laws:- The provisions of this Act shall have effect, notwithstanding anything inconsistent therewith contained in any other law for the time being in force or any instrument having effect by virtue of any such law. 238: Provisions of this Code to override other laws:- The provisions of this Code shall have effect, notwithstanding anything inconsistent therewith contained in any other law for the time being in force or any instrument having effect by virtue of any such law. 7. It is true that both sections are photo image to each other, except to the extent of saying ACT in SARFAESI, CODE in IBC, now the moot point is as to whether by seeing this resemblance, can we apply the principle applied in the case supra to this case as well to say that power dues arose before CIRP period sha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... een approved. 11. As to second relief, i.e., with regard to restoration of power supply, since power was disconnected somewhere in 2013 -several years before initiation of CIRP proceedings against this company, the Applicant cannot say that the Resolution Applicant is entitled to restoration of connection of HT service No. 328 and HT service No. 375 of the corporate debtor without making payment of security deposit, because security deposit is a precondition to sanction of High Tension power connection to Industries. Without making such security deposit, giving HT Connection will become in violation of Electricity Act, tomorrow if any problem comes, that security deposit can meet that eventuality provided deposit is there. It cannot be assumed that once plan is approved, corporate debtor is free to violate the laws in existence and this Authority shall grant reliefs blindfolded without looking at noncompliance of other laws. Moreover waiver of past liabilities will not tantamount to freeing the Resolution Applicant from following other laws after approval of plan. Moreover, it is not the case of the applicant that security deposit is still lying with the Department. Waiver is li ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s considered as essential supply to modern living. 12. In this background it cannot therefore be said that it is like any other renewal approval taken from various departments. It is part of the business, the only difference is this power supply business in some places rests with governments, in some places with private industries. 13. Another reason is, to generate power lot of money is required, for which Distribution companies pay hefty sums. In this context it is essential to visit a judgement passed by Honourable Supreme Court in between Ferro Alloys Corporation Limited vs. AP state Electricity Board (1993 Suppl. (4) SCC 136) vividly explaining what is meant by security deposit and the reasons for making security deposit as precondition. Distribution Companies are to make colossal advances for coal supplies and they don't get any interest over those advances. This security deposit is only to adjust short falls come in payment of bills, for which security deposit will be taken to offset bills for about three months. It is like maintaining running account. The transaction being of this nature, it will not fall within the scope of section 31(4) of the Code, therefore as ..... X X X X Extracts X X X X X X X X Extracts X X X X
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